Sir Chunilal V. Mehta And Sons, Ltd v. The Century Spinning and Manufacturing Co, Ltd.

DATE OF JUDGMENT: 05/03/1962

COURT: Supreme Court of India

JUDGES: Sinha, Bhuvneshwar P, Kapur, J.L., Hidayatullah, M., Shah, J.C., Mudholkar, J.R.

REFERENCE: 1962 AIR 1314

PARTIES

Petitioner: Sir Chunilal V. Mehta And Sons, Ltd

Respondent: The Century Spinning and Manufacturing Co, Ltd.

SUBJECT: The judgment answers the question of what constitutes a substantial question of law under Article 133 of the Constitution.

FACTS: The appellants were appointed managing agents of the respondents for 21 years. Under cl. 10 of the agreement the appellants were entitled to a remuneration equal to 10% of the gross profits of the respondents subject to a minimum of Rs. 6,000 per month. Clause 14 provided that if the agreement was terminated otherwise in accordance with the provisions thereof the appellants would be entitled to liquidated damages “of not less than Rs. 6,000” per month for the unexpired portion of the agreement. The respondent wrongfully terminated the agreement before the expiry of the stipulated period. The appellants filed a suit for recovery of damages for breach of contract on the basis of 10% of the gross profits of the respondents. The trial judge granted a decree for Rs. 2,34,000 calculating the amount at Rs. 6,000 per month. On appeal by the appellants the High Court affirmed the decree.

The appellants, therefore, moved this Court under Art. 136 of the Constitution for grant of special leave.

IMPORTANT PROVISIONS:

The Indian Constitution:

  • Article 133(1): An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies under Article 134A
  • that the case involves a substantial question of law of general importance; and
  • that in the opinion of the High Court the said question needs to be decided by the Supreme Court
  • Article 136: Special leave to appeal by the Supreme Court
  • Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.
ISSUES:
  1. Whether the appellant was entitled to a special leave certificate to appeal to the Supreme Court?
JUDGEMENT:

The petitioner contended that, the lower Courts erroneously granted a sum of 2,34,000 as damages while the actual damage suffered amounts to 26 lakhs. Thus, misinterpretation by the lower Courts has denied the appellant a huge sum which he was supposed to receive as per the agreement. Therefore, they requested a special leave to appeal to the SC. They further contended that, the HC has dismissed their request following the Bombay HC’s decision in Kaikhushroo Pirojsha Ghaira v. C. P. Syndicate Ltd. which runs contrary to the Privy Council’s decision in Raghunath Prasad Singh v. Deputy Commissioner of Partabgarh, therefore a this confusion needs to be addressed by this Hon’ble Court in the present case by which further confusions do not arise in the future.

The respondents contended that, interpretation of the agreement involved in the present case is only a question of law and not a substantial question of law and therefore the special leave certificate is denied.

The Court upon hearing the parties held that, that the case involved a substantial question of law and the appellants were entitled to the certificate as of right. A substantial question of law is one which is of general public importance or which directly and substantially affects the rights of the parties and which have not been finally settled by the Supreme Court the Privy Council or the Federal Court or which is not free from difficulty or which calls for discussion of alternative views.

However, with regard to the agreement and damages claim the Court held that, the lower Courts were right in interpreting the agreement and the appellants were entitled only for Rs. 2,34,000 as damages. Accordingly the petition was dismissed.

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