Case Note & Summary
The case involves a dispute over 75,001 shares of Bombay Oxygen Investments Ltd. (BOIL). The appellants (Ruias) and respondent No.3 (MGG) entered into a settlement agreement on 05.12.2002, under which MGG transferred the shares to the Ruias. Respondent No.1 (MHL) filed Suit No.2410 of 2008 in 2008 seeking cancellation of the settlement agreement and declaration of ownership over the shares. The Ruias raised a preliminary issue of limitation under Section 9A of the CPC (Maharashtra Amendment), arguing that the suit was barred by limitation as the settlement was in 2002. The learned Single Judge allowed the Ruias' application, holding that MHL had knowledge of the claim as early as 2002 when it was impleaded in another suit. The Division Bench reversed, holding that MHL's cause of action arose only on 14.10.2005 when it received a copy of the settlement agreement, and thus the suit was within limitation. The Supreme Court, however, noted that Section 9A had been repealed and, in view of the decision in Nusli Neville Wadia v. Ivory Properties (2019) 13 SCALE 620, it was not necessary to decide the merits of the limitation issue. The Court allowed the appeal, set aside the Division Bench order, and remitted the matter to the High Court for fresh consideration of the limitation issue in accordance with the amended law.
Headnote
A) Civil Procedure - Limitation - Section 9A CPC (Maharashtra Amendment) - Repeal of Section 9A - The Supreme Court considered the effect of the repeal of Section 9A of the Code of Civil Procedure, 1908 (Maharashtra Amendment) and the saving clause in the Code of Civil Procedure (Maharashtra Amendment) Act, 2018. The Court held that in view of the change in law and the judgment in Nusli Neville Wadia v. Ivory Properties & Ors. (2019) 13 SCALE 620, it was not necessary to consider the merits of the limitation issue, as the preliminary issue under Section 9A was no longer required to be decided separately. (Paras 15-17) B) Limitation - Cause of Action - Knowledge of Settlement - The Division Bench of the Bombay High Court had held that the suit filed by MHL in 2008 was within limitation because MHL obtained knowledge of the settlement agreement dated 05.12.2002 only on 14.10.2005. The Supreme Court did not decide the merits of this issue due to the change in law regarding Section 9A. (Paras 11-13) C) Civil Procedure - Preliminary Issue - Section 9A CPC - The Supreme Court noted that Section 9A of the CPC (Maharashtra Amendment) was repealed with effect from 27.06.2018, and the saving clause provided that preliminary issues framed before the repeal would still be decided as preliminary issues. However, the Court found it unnecessary to consider the merits of the limitation issue in light of the larger Bench decision in Nusli Neville Wadia. (Paras 15-17)
Issue of Consideration
Whether the suit filed by respondent No.1 (MHL) in 2008 is barred by limitation, and whether the Division Bench correctly held that the cause of action arose only on 14.10.2005 when MHL obtained knowledge of the settlement agreement.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order of the Division Bench dated 08.08.2019 as corrected on 19.09.2019, and remitted the matter to the High Court for fresh consideration of the preliminary issue of limitation in accordance with the amended law and the decision in Nusli Neville Wadia. The Court directed that the issue of limitation be decided along with other issues as per Order XIV CPC.
Law Points
- Limitation
- Section 9A CPC (Maharashtra Amendment)
- Repeal of Section 9A
- Preliminary Issue
- Cause of Action
- Knowledge of Settlement
