Appeal No.370 of 2007,Summons for Judgment No.669 of 2003,Summary Suit No.2171 of 2004

26th June, 2008

Petitioner Counsel: Mr. D. D. MADON,Mr. H. N. THAKORE , Ms. AGNES BARODIA,M/s. Thakore Jariwala, Associates
Respondent Counsel: Mr. N. D. JAYWANT

Cases Cited:
Bombay Enamel Works Vs. Purshottam, AIR 1975 Bombay 128 [Para 1,4,16,25,27,36]
M/s. D. Shanalal Vs. Bank of Maharashtra, AIR 1989 Bombay 150 [Para 1,4,16,20,24,25,27,36]
S.I. Rooplal Vs. Lt. Governor through Chief Secretary, Delhi, A.I.R. 2000 SC 594 [Para 8,9]
Haryana Financial Corporation Vs. M/s. Jagdamba Oil Mills, 2003(4) ALL MR 808 (S.C.)=J.T. 2002(1) SC 484 [Para 10]
State of Maharashtra Vs. Prashram Jagannath Auti, 2007(5) ALL MR 711 (F.B.)=2007(5) BCR 847 [Para 11]
State of Punjab Vs. Devans Modern Breweries Ltd., (2004)11 SCC 26 [Para 12]
Commissioner of Customs (Fort) Vs. Toyota Kirloskar Motor (P) Ltd., (2007)5 SCC 371 [Para 13]
Union of India Vs. Godfrey Philips India Ltd., AIR 1996 SC 806 [Para 15]
Union of India Vs. Dhanwanti Devi, (1996)6 SCC 44 [Para 15]
State of Tripura Vs. Tripura Bar Association, AIR 1999 SC 1494 [Para 15]
Islamic Academy of Education Vs. State of Karnataka, (2003)6 SCC 697 [Para 15]
L.B.P. Chowdhury Vs. P. Jain, (1970)74 Cal WN 972 [Para 21]
Shah Babulal Khimji Vs. Jayaben, AIR 1981 SC 1786 [Para 21,29]
Narayan Putapa Vs. Vaikunt Subava, AIR 1927 Bom 1 [Para 22]
Mishri Lal (dead) by Lrs. Vs. Dhirendra Nath (dead) by Lrs., JT 1999(2) SC 586 [Para 25]
Milkfood Ltd. Vs. GMC Ice Cream (P) Ltd., 2004(5) ALL MR 624 (S.C.)=(2004)7 SCC 288 [Para 25]
S. Brahmanand Vs. K. R. Muthugopal (dead), (2005)12 SCC 764 [Para 25]
Ghanshyam Dass Vs. Dominion of India, (1984)3 SCC 46 [Para 28]
Satyadhyan Ghosal Vs. Smt. Deorajin Debi, AIR 1960 SC 941 [Para 30]
Sheonoth Vs. Ramnath, (1865)10 MIA 413 [Para 31]
Achal Misra Vs. Rama Shanker Singh, (2005)5 SCC 531 [Para 31]
Employer in Relation to Management of Central Mine Planning and Design Institute Ltd. Vs. Union of India, AIR 2001 SC 883 [Para 32]
. S. Saini Vs. D.C.M. Ltd., AIR 2004 Delhi 219 [Para 33]
Ajay Bansal Vs. Anup Mehta, 2007(3) ALL MR 385 (S.C.)=(2007)2 SCC 275 [Para 35]

JUDGMENT

SWATANTER KUMAR, C.J.:- Perplexed due to alleged divergent views expressed by two Division Benches of this Court viz. Bombay Enamel Works Vs. Purshottam, AIR 1975 Bombay 128 and M/s. D. Shanalal Vs. Bank of Maharashtra, AIR 1989 Bombay 150, on the question whether appellants are entitled to challenge the order passed by Court granting conditional leave to defend under Order 37 of the Civil Procedure Code while assailing the final decree passed in summary suit on the ground of non-compliance of conditional order, another Division Bench referred the question to larger Bench. While answering the reference, we do not find any conflict of views in the two Division Bench judgments and find that propriety, legality or correctness of an interlocutory order granting conditional leave or refusing leave to defend the Suit could be challenged by the aggrieved party in an appeal preferred against the final decree provided that the party had not unsuccessfully challenged that order during the pendency of proceedings, prior to passing of the decree or otherwise.

Facts :-

2. The plaintiff who has been carrying on the business under the name and style of M/s. Sagar Synthetics, brought a Summary Suit under the provisions of Order 37 of the Code of Civil Procedure against the defendants, a partnership concern and its partners for recovery of Rs.25,22,626/-. The suit was based on two bills for the textile goods supplied, being bill Nos.17 and 20 dated 4th August, 2001 and 10th August, 2001 respectively. The amount claimed included the price of the goods at Rs.11,58,892/- and Rs.13,63,734/- being interest at the rate of 30% per annum from the dates of the respective bills till the filing of the suit. The plaintiff also claimed pendente lite and future interest at the same rate. According to the plaintiff, in the suit, he had claimed the said amount from the defendants but despite repeated requests, the amount was not paid and the defendants, thus, were liable to pay the amount as claimed by the plaintiff.

3. On behalf of the defendants-partnership firm, defendant No.3 issued a cheque dated 15th July, 2004 bearing No.869975 for Rs.11,58,892/- drawn on Bank of Madura Ltd., presently ICICI Bank Ltd., towards the payment of the said amount. However, the cheque was returned unpaid by the bankers with the remarks account closed vide letter dated 15th July, 2004 written to the plaintiff. Faced with these circumstances, the plaintiff filed a suit under the provision of Order 37 of the Code of Civil Procedure against the defendants. The plaintiff took out Summons for Judgment No.669 of 2004 against the defendants. Upon service, the defendants filed affidavit in reply and prayed for grant of unconditional leave to defend the suit and also for dismissal of the Summons for Judgment. The defence taken was that no goods were supplied to the defendants and that no goods were ever received by the defendants. According to them, the alleged bills bore a rubber stamp without any signature of the person who alleged to have received the goods. The cheque book whereof cheque was allegedly issued and relied upon by the plaintiff as evidence, is stated to have been used/consumed between January, 1998 to December, 1999. The plaintiff might have been in possession of the cheque from the year 1999 and is misusing the cheque by putting the date as 15.7.2004, the date on which the defendant No.3 was in judicial remand. From 8.7.2004 to 5.8.2004, defendant No.3 was in judicial custody and could not have issued a cheque on 15.7.2004. On these facts, the defendants prayed for grant of unconditional leave to defend. Vide order dated 21st September, 2005, the learned Single Judge found that defence taken up by the defendants had no substance. After discussing the defence raised, the court granted conditional leave to defend and recorded following findings :

"However, with a view to give an opportunity to the defendants to defend the suit, I direct the defendants to deposit a sum of Rs.25.01 lacs within 4 weeks failing which plaintiff will be entitled to decree. If the said amount is deposited the Prothonotary and Senior Master is directed to invest the same in any Nationalised Bank in Fixed Deposit initially for a period of 3 years and then renew the same from time to time till further orders of this court. If the amount is deposited then suit is to be transferred to the list of Commercial Causes. Written Statement or points of defence to be filed within four weeks from the date of deposit. Affidavits, list of documents to be filed within four weeks thereafter. Inspection within four weeks thereafter. Suit to be on board of the learned Judge taking Commercial Causes."

4. The order dated 21st September, 2005 was not assailed in appeal by the defendants and in terms of the said order, the suit was listed before the court on 30th November, 2005 and was finally decreed for the amount claimed by the plaintiff. In the judgment which led to the passing of the decree dated 30th November, 2005 it was a case that the order dated 21st September, 2005, granting conditional leave to the defendants, was not complied with and the plaintiff had filed the compilation of original documents which was taken on record and marked as Exhibit "A" collectively and after recording satisfaction, the decree was passed in favour of the plaintiff. The defendants challenged the judgment and decree dated 30th November, 2005 by preferring present appeal being Appeal (L) No.43 of 2007. On 20th February, 2007 when the appeal came up for hearing before the Bench, it was recorded that the appellants were ready and willing to deposit the decreetal amount within two weeks and that liberty was being granted. The parties were directed to maintain status-quo. The learned counsel for appellants while relying upon the judgment in Bombay Enamel Works Vs. Purshottam S. Somaiya, AIR 1975 Bombay 128, contended that in the appeal itself, they were entitled to challenge the question of correctness and legality of the order dated 21st September, 2005 granting conditional leave to defend. Another Division Bench judgment of this court in the case of M/s. D. Shanalal and etc. Vs. Bank of Maharashtra, AIR 1989 Bombay 150 was pointed out where the court held that when the defendant fails to comply with the conditional order, the Defendant is precluded from further contesting the Plaintiff's claim. The learned Bench hearing the matter found that there was some divergence of opinion between the afore-stated Division Bench judgments and referred the matter to a larger Bench, as in the opinion of the Bench, it was an important question. The order of reference reads as under:

"1. Heard. Admit.

2. The Appeal raises the questions as to whether the Appellants are entitled to challenge the order passed by the court granting conditional leave under Order 37 of Code of Civil Procedure, while assailing the final decree passed in the summary suit on the ground of non-compliance of the conditional order.

3. The learned advocate appearing for the Appellants has brought to our notice two decisions taking divergent views on this aspect. In Bombay Enamel Works Vs. Purshottam, AIR 1975 Bombay 128, a Division Bench of this court taken a view that although no appeal may lie from an order refusing leave to defend, the propriety of the order can be canvassed in the appeal from the final decree. However, in a later judgment in the case of M/s. D. Shanalal Vs. Bank of Maharashtra, AIR 1989 Bombay 150, a Division Bench of this Court has held that when the leave is not obtained or leave is refused or when the Defendant fails to comply with the conditional order, the Defendant is precluded from further contesting the Plaintiff's claim. It is pertinent to note that the Division Bench in D. Shanalal's case had no advantage of perusing the earlier decision of the Division Bench in Bombay Enamel Works' case as is apparent from the reported judgment that there is no reference to the said case in the said judgment. In view of this divergent views taken on the important point of law, it would be appropriate to place the matter before the Hon'ble Chief Justice to refer the issue to a larger Bench for appropriate decision on the point in issue. The Registry to do the needful.

4. Meanwhile, the Appellants are directed to register the appeal leaving all the objections, which are sought to be raised by the Registry, open to be decided by the Court in appeal itself."

5. This is how the matter has been placed before the Full Bench for clearly stating the law and to declare which of the above two referred Division Bench judgments of this court lays down the law correctly. Having referred to the facts giving rise to the present reference, now we shall proceed to examine the legal principles that would help the court in discernly enunciating the principles of law. The Law of Precedent and whether there is conflict of judicial opinion between the two Division Bench Judgments as referred in the order of reference.

6. The concept of precedent has attained important role in administration of justice in the modern times. The case before the Court should be decided in accordance with law and the doctrines. The mind of the Court should be clearly reflecting on the material in issue with regard to the facts of the case. The reason and spirit of case make law and not the letter of a particular precedent. Halsbury's "The Laws of England", explained the word "ratio decidendi" as It may be laid down as a general rule that part alone of a decision by a Court of Law is binding upon Courts of coordinate jurisdiction and inferior Courts which consists of the enunciation of the reason or principle upon which the question before the Court has really been determined. This underlying principle which forms the only authoritative element of a precedent is often termed the ratio decidendi. It is by the choice of material facts that the Court create law. The law so created would be a good precedent for similar subsequent cases unless it falls within the exceptions hereinafter indicated."

7. The doctrine of precedent relates to following of previous decisions within its limitations. It introduces the concept of finality and adherence to the previous decisions and while attaining it, it creates consistency in application of law. The later judgment should be similar to the earlier judgment, which on material facts are the same. Finding ratio decidendi is not a mechanical process but an art which one gradually acquires through practice. What is really involved in finding the ratio decidendi of a case is the process of abstraction. Ratio decidendi is a term used in contrast to obiter dictum which is not necessarily binding in law. According to Sir John Salmond, a precedent is a judicial decision, which contains in itself a principle. The only principle which forms its authoritative element is often termed the 'ratio decidendi'. The concrete decision is binding between the parties to it, but it is the abstract ratio decidendi which alone has the force of law as regards the world at large. According to Austin, the general reasons or principles of judicial decision abstracted from peculiarities of the case are commonly styled by writers on jurisprudence as 'ratio decidendi'.

8. Amongst the principles of law governing the binding value of judgments, doctrine of precedent is not only a well accepted principle but is one of the most pertinent facets of judicial interpretation. A ruling of Bench of higher court is considered to be binding on the lower courts and the courts having a smaller Bench structure. Earlier judgments are even taken to be binding on subsequent equi Bench unless and until reasons compelling for taking a divergent view are stated. To apply this principle, the court must examine by process of appropriate reasoning as to the applicability of the precedent cited before the court or even which of the views expressed by a higher court or even a larger Bench or even a Bench of equi strength is more aptly applicable to the facts and circumstances of the case in hand. The essence of law of precedent is its applicability on the basis of ratio decidendi. The importance and significance of adherence to law of precedent was emphasized by the Supreme Court in the case of S.I. Rooplal and another Vs. Lt. Governor through Chief Secretary, Delhi and others, A.I.R. 2000 SC 594.

9. The obligation upon the court to follow the precedent law is subject to well accepted limitation. These limitations play an effective role for helping the court to provide sound reasoning, wherever there are divergent views taken by equi-benches of the highest court of land. The Court would be guided by the settled principles in making up its mind whether the judgments cited before it is a precedent to be followed or not depending on the facts of a given case. Normally, the judgments pronounced by a later equi Bench would prevail provided it has not ignored or has not failed to notice the view of the earlier Benches. The law of precedent thus is a respected canon of judicial administration and subsequent Benches essentially must follow the views of the earlier Benches unless they fall within any of the stated exceptions. The Hon'ble Supreme Court in S.I. Rooplal (supra) held as under:-

"..... Precedents which enunciate rules of law form the foundation of administration of justice under our system. This is a fundamental principle which every Presiding Officer of a Judicial Forum ought to know, for consistency in interpretation of law alone can lead to public confidence in our judicial system. This Court has laid down time and again precedent law must be followed by all concerned; deviation from the same should be only on a procedure known to law. A subordinate Court is bound by the enunciation of law made by the superior Courts. A coordinate Bench of a Court cannot pronounce judgment contrary to declaration of law made by another Bench. It can only refer it to a larger Bench if it disagrees with the earlier pronouncement.

xx xx xx xx xx xx

We are indeed sorry to note the attitude of the tribunal in this case which after noticing the earlier judgment of a coordinate Bench and after noticing the judgment of this Court, has still thought it fit to proceed to take a view totally contrary to the view taken in the earlier judgment thereby creating a judicial uncertainty in regard to the declaration of law involved in this case. Because of this approach of the latter Bench of the tribunal in this case, a lot of valuable time of the Court is wasted and the parties to this case have been put to considerable hardship.........."

10. The Hon'ble Apex Court further observed that a caution need to be taken while applying the principle of judicial precedents as decision of the court and its observations must be read in context in which they appear. In a judgment discussion is meant to explain and not to define. In this regard, reference can be made to the case of Haryana Financial Corporation & Anr. Vs. M/s. Jagdamba Oil Mills & Anr., J.T. 2002(1) SC 484 : [2003(4) ALL MR 808 (S.C.)].

11. It is clear from the above dictum that precedents are to be applied with due regard to facts while adhering to the principles of "ratio decidendi". Precedents are described as, Authorities to follow in determinations in Courts of Justice. Precedents have always been greatly regarded by the Sages of the Law. The Precedents of Courts are said to be the laws of the Courts; and the Court will not reverse a judgment, contrary to many Precedents. Even for a precedent to be binding, it cannot be without judicial decision or arguments that are of no moment. To be a good precedent, it has to be an adjudged case or decision of a court of competent jurisdiction considered as furnishing an example or authority for an identical or similar case or a similar question of law afterward arising. It is the ratio understood in its correct perspective that is made applicable to a subsequent case on the strength of a binding precedent. In a recent judgment, a Full Bench of this court in the case of State of Maharashtra Vs. Prashram Jagannath Auti, 2007(5) Mh. L.J. 403 : 2007(5) BCR 847 : [2007(5) ALL MR 711 (F.B.)], while referring to the binding precedents, held as under :-

"The ratio is variously defined to be the relation between two magnitudes of the same kind in terms of quality and quantity. Ratio decidendi is the reason for deciding as reasoning is the soul of decision making process. It is formulation of an opinion by the Judge which is necessary in the facts of the case for determination of the controversy. In the case of C.D. Kamdar Vs. State of Orissa, (1985) Tax L.R. 2497, expressing its views in relation to the binding precedents, the Court held as under:-

"Mr. R. Mohanty, the learned counsel for some of the petitioners submitted that the power of the Board under section 90(7) of the Act is to levy fees simpliciter. He cited the case reported in (1978)34 Cut.LT 122 (S.C.) (Laxmidhar Sahu Vs. Supdt. Of Excise Berhampur) in support of the contention. Reading the entire judgment, the contention as raised by Mr. Mohanty, is not spelt out. A Decision is an authority only for what it actually decided and not for what may logically follow from it. Every judgment must be read as applicable to the particular factors proved, or assumed to be proved, since the generality of the expressions, which may be found there, are not intended to be expositions of the whole law but governed or qualified by particular facts of the case in which such expressions are to be found. See AIR 1983 SC 1246. (Sreenivasa General Traders etc Vs. State of Andhra Pradesh). The case of Laxmikanta Sahu (supra) was considered by the Supreme Court in AIR 1975 SC 1121 : (1975 Tax.LR 1569) (Harsankar Vs. Dy. Excise and Taxation Company). In para 61 at page 1134 it has been observed that in that case it was expressly contended on behalf of the State of Orissa that the levy was a tax and not a fee. The decision being based on a concession did not involve the determination of the point whether the fee levied under section 90 (7) of the Act is a fee simpliciter."

2. We have already indicated that the law in its due course changes its form and application but existence of reasoning with the changing law is a mandatory requirement of judicial process. Ratio est legis anima, mutata legis ratione, mutatur et lex is a maxim for the proposition that law must state reasons and reasons should have a reasonable nexus to the facts of the case. It is said that reason and authority are the two brightest lights of the world and thus it follows that providing of correct reasoning for every decision is the basic feature of rule of law."

12. In order to apply a judgment as a precedent, the relevant laws and earlier judgments should be brought to the notice of the court and they should be correctly applied. Mere observations in a previous judgment may not be binding on a subsequent Bench if they are not truly applicable to the facts and controversies in a subsequent case as per settled principle of "ratio decidendi". The rule of precedent, thus, places an obligation upon the Bench considering such judgments that the Court should discuss the facts and the law of both the cases and then come to a conclusion whether the principle enunciated in the previous judgment is actually applicable on facts and law to the subsequent case. This principle would equally apply when the Courts have to consider which of the two views expressed y earlier equi or other Benches is applicable to the subsequent case. The rule of precedent is not without exceptions. It has its own limitations. Besides that, the law changes with the changed circumstances and even good law may be rendered ineffective or unconstitutional because of passage of time, as reflected in the principle "cessante ratione cessat ipsa lex". Adopting this Maxim, the supreme Court in the case of State of Punjab and another Vs. Devans Modern Breweries Ltd. and another, (2004)11 SCC 26, stated that, with changes that are bound to occur in an evolving society, the judiciary must also keep abreast of these changes in order that the law is considered to be good law. This is extremely pertinent especially in the current era of globalisation where the entire philosophy of society, on the economic front, is undergoing vast changes. Besides this well accepted precept, there are exceptions to the rule of precedent. There are judiciously accepted exceptions to the rule of precedent and they are decisions per incuriam, sub-silentio and stare decisis. These principles explain when and where a precedent, which is otherwise a good law, necessarily need not be accepted in subsequent judgments if it fully satisfies essentials of these exceptions.

13. In the case of Commissioner of Customs (Fort) Vs. Toyota Kirloskar Motor (P) Ltd., (2007)5 SCC 371, the Supreme Court stated the law relating to precedents and held that a decision, as is well known, is an authority for what it decides and not what can logically be deduced therefrom. The ratio of a decision must be culled out from the facts involved in a given case and need not be an authority in generality without reference to the reasons, discussions and facts of the case.

14. A Bench of two Judges cannot over-turn or disagree with an equi Bench, if the decision is otherwise a good precedent, their limited option would be to refer the matter to a larger Bench. Such option of reference even normally should be supported by reasons and a mechanical process need to be avoided, unless the decision of a coordinate Bench ceases to be good law due to any subsequent event or change in law. It is settled principle that it is not every thing said by a Judge, while giving judgment, that constitutes a precedent. The only thing in a Judge's decision which bind parties is the principle upon which the case is decided and for this reason it is important to analyse the decision and isolate "ratio decidendi" from it. Its three essential features are (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above.

15. Furthermore, ratio decidendi of a judgment has to be found out only on reading the entire judgment. The ratio of the judgment is what is set out in the judgment itself. Answer to the question necessarily would have to be read in the context what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons or principles, the other part of the judgment must be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. The reasoning could be deciphered upon reading the judgment in its entirity and then applying these principles to the subsequent cases. (Reference : (i) Union of India Vs. Godfrey Philips India Ltd., AIR 1996 SC 806; (ii) Union of India Vs. Dhanwanti Devi, (1996)6 SCC 44; (iii) State of Tripura Vs. Tripura Bar Association, AIR 1999 SC 1494 and (iv) Islamic Academy of Education Vs. State of Karnataka, (2003) 6 SCC 697).

16. In light of the above enunciated principles relating to law of precedent, now let us examine whether the opinion expressed by the Division Bench of this Court in Bombay Enamel Work's case (supra) and in subsequent judgment of another Division Bench of this Court in the case of M/s. D. Shanalal (supra) are in fact divergent views and are in conflict with each other. The facts and principles of law stated in the case of Bombay Enamel Works (Supra) :

17. A summary suit was filed against Bombay Enamel Works under the provisions of Order 37 of the Code of Civil Procedure, 1908, based on five hundis alleged to have been executed by the defendants- a partnership concern, the total claim being for a sum of Rs.11,500/-. The suit was filed on 7th December, 1968. Summons for Judgment was taken out by the plaintiff on 14th January, 1969, to which a reply affidavit was filed on 5th February, 1969. The Summons for Judgment was heard by the Court and the Court granted the defendants leave to defend subject to deposit of Rs.7,500/- being made within ten weeks and upon such deposit being made, granted four weeks' time to file the written statement. The defendants failed to make the deposit within the time stipulated by the Court. The defendants had taken out Chamber Summons, the copy of which was not served upon the other Counsel. However, vide order dated 24th April, 1969, the Chamber Summons was dismissed with no order as to costs. After the Chamber Summons was dismissed, the Court passed a decree as prayed even when the Advocate appearing for the defendants was not present. It may also be noticed here that no application under Order 37, Rule 4 of the Civil Procedure Code, to set aside the decree, was made by the defendants in the suit.

18. Thereafter, First Appeal was filed which was admitted by the Court on 28th April, 1969. In that First Appeal, it was argued that the learned Judge ought to have allowed the Chamber Summons and extended time to enable the defendants to fulfil the condition of deposit and avail of leave to defend. It was also argued that the defendants should have been granted unconditional leave to defend as that being a First Appeal from the decree passed by the City Civil Court, the matter was at large. The appellant-defendant in the suit were entitled to take up all the pleas although no revision or any other remedy was taken against both the orders passed during the pendency of the suit.

19. While dealing with different contentions raised in greater detail, the court in the above facts came to the conclusion that the order imposing conditional leave was justified and the defence taken by the appellant was sham one. The court while deciding different controversies raised in the appeal, spelt out the principle in relation to a right of a party to question the propriety of any interlocutory or interim order made during the trial, in the appeal itself. Paragraph 17 of the judgment which requires attention of the court, reads as under:-

"17. Now it is to be noticed that when the conditional order for granting leave to defend was passed on 6th February, 1969 the defendants accepted the order and did not seek to challenge it by filing a revision application in the High Court, a course which was clearly available to them. Mr. Khare, however, contends that as this is a first appeal he is entitled to take up this contention namely that the learned trial Judge ought to have granted defendants unconditional leave to defend. He referred to a Calcutta judgment which he said supported his contention but did not actually cite or read it out to us. It would appear that the Calcutta judgment referred to by Mr. Khare is a judgment reported in ILR (1955)1 Cal 299 and although the authority is not before us it would appear that it is laid down in this judgment that although no appeal may lie from an order refusing leave to defend the propriety of the order can be canvassed in the appeal from the decree. Broadly speaking it would appear to us to be a correct proposition of law that in a first appeal the propriety of any interlocutory or interim order made during the proceedings in the trial court could be challenged."

Facts and principle of law stated in Shanalal's case."

20. Now, let us examine the facts and principle of law stated by the Division Bench of this court in M/s. D. Shanalal (supra). There, Bank of Maharashtra had filed a suit under Order 37 of the Code of Civil Procedure to recover monies payable by the appellants in the appeal based upon Bills of Exchange. After entering upon appearance in the suit and Summons for Judgment were taken out in terms of Rules 2 and 3(2) of Order 37 of the Code by the Bank, the defendants applied for leave to defend. The court granted conditional leave to defend requiring them to deposit the amount in question. Aggrieved from the order granting conditional leave, the defendants preferred an appeal before the Division Bench which upheld the order of the learned Single Judge. The order of the Division Bench then was challenged in Special Leave Petition by the defendants before the Supreme Court. The Supreme Court rejected the Special Leave Petition against which order a review petition was filed which also met the same fate. As the defendants failed to furnish the security, the learned Judge proceeded to decide the suit in terms of Rule 3(6)(b) of Order 37 of the Code. After taking the documents on record, the trial Judge passed the decree as prayed for by the plaintiffs against the defendants.

21. Being aggrieved by the said judgment and decree, the defendants filed appeal. Preliminary objection as to the maintainability of the appeal was taken that as the defendants had failed to comply with the order of the court for deposit of the conditional securities, the issues could not be raised before the Appellate Court and the appeals should be rejected. The Division Bench of the court noticed the contentions raised and felt that there was nothing in the provisions of Order 37 which expressly or by implication barred presentation of appeals in suits governed under the summary procedure. The court stated the principle: "It is also settled law that the order of a Single Judge refusing or granting leave to defend the suit instituted under Order 37 of the Code is a 'judgment' within the meaning of Clause 15 of the Letters Patent and would be appealable". It may be noticed that the Division Bench noticed the judgment of the Division Bench of Calcutta High Court in L.B.P. Chowdhury Vs. P. Jain, (1970)74 Cal WN 972 and held that the point in issue was squarely answered and concluded by the judgment of the Supreme Court in the case of Shah Babulal Khimji Vs. Jayabento, AIR 1981 SC 1786 the effect that order of conditional leave to defend was a judgment within the meaning of Clause 15 of Letters Patent and appeal would lie against it.

22. In paragraph 6 of the Judgment, the Division Bench specifically noticed that the order passed during the pendency of suit granting conditional leave to defend to the Defendants was challenged in appeal which appeal was rejected. The matter was then taken to the Supreme Court which again was dismissed and, therefore, it was not disputed by the learned counsel for the appellants that it was no longer open to the appellants to make any submission about the correctness or propriety of the said orders of the learned Single Judge. Admittedly, the defendants have not deposited the amount or furnished the security as directed by the court. Thus, it was held that appellant was not entitled to question the said order. Another important aspect of law which was examined by the Division Bench in this case that even in cases where leave is not applied or where conditional orders are not complied with decree against the defendant cannot follow as a matter of course and the court still has a duty to look into questions regarding the legality of plaintiff's claim. The court also noticed that though there was default in making the deposit, order granting conditional leave had attained finality, an appeal against the final decree would be maintainable but technically, though the appeal would lie on merits, it would not have the slightest chance of success was another matter. In this regard, the court has referred to the observations of the Chief Justice in the Full Bench decision in Narayan Putapa Vs. Vaikunt Subava, AIR 1927 Bom 1 :

"But to avoid any misconception I may add that though pro forma an appeal may lie, still in the vast majority of cases, the appeal will be one of those known as 'hopeless', because the conditions imposed by the lower Court will be reasonable ones, and accordingly if they are not fulfilled, the only result will be that the appeal will be dismissed with costs."

23. As regard the right of the appellant to challenge the correctness of the order granting conditional leave which had attained finality, as is evident from the facts afore noticed, the court held as under :

"In most of the reported cases cited before us the Defendant's Appeal had been in substance an Appeal from an order on summons wherein the conditional order granting leave had been appealed against. In the instant cases, the said question of granting leave to the Defendant on condition of furnishing security is no longer open. Therefore, even in law although an Appeal lies from the ex parte decree passed under O.37, R.3, the consistent judicial view has been that the finality of a conditional order practically precludes the Defendant-Appellant from assailing the decree on merits."

Facts distinguished and no conflict of opinion noticed

24. Firstly, we must notice that these two judgments have been pronounced by the court on entirely different facts and laid down principles of law which cannot be termed as contradictory or in conflict with each other. Every principle of law stated in a judgment essentially must be read on the basis of the facts stated in the judgment and the reasons recorded for arriving at such conclusion. The facts have no similarity much less that they are identical. The fact of the matter is that in the case of M/s. D. Shanalal (supra), the orders passed by the court granting conditional leave were challenged not only by filing an intra Court appeal but even a Special Leave Petition before the Supreme Court was rejected. Thus, the defendants in that suit had exercised their option of challenging the order at the very initial stage and the challenge was found to be without merit. It was in these circumstances that the Division Bench held that the defendants-appellants in the appeal had no right to challenge that order in an appeal. This conclusion of law is primarily based upon the doctrine of finality and is not founded on the interpretation of Clause 15 and/or for that matter, section 105 of the Code of Civil Procedure. We have already noticed in great detail that for a judgment to be applied as an acceptable precedent, it must satisfy the test of "ratio decidendi".

25. In the case of Bombay Enamel Works (supra), the conditional order was neither complied with nor challenged in appeal during the pendency of the suit and in the terminology of law, had not attained finality. An order passed during the pendency of the suit, its correctness or otherwise, could be challenged in appeal by taking appropriate grounds in memorandum of appeal. Another aspect of the case is that in paragraph 8 of the judgment in D. Shanalal's case, the court has specifically noticed that they had invited counsel for the appellants to point out reported decisions in which the defendants against whom an ex parte decree has been made under Order 37 had successfully urged any point on merits of plaintiffs' claim. No such judgments were brought to the notice of the court. As is apparent from the discussions of the judgments, the Division Bench judgment of this court in the case of Bombay Enamel Works (supra) was not cited before the Bench hearing M/s. D. Shanalal's case (supra). The judgment of equi-bench on the same principle with similar facts, if is a precedent applicable in law, goes unnoticed in a subsequent judgment, the subsequent judgment may not be termed as a good law in face of the doctrine of stare decisis. While interpreting the judgment, the court has to pin point its attention to the ratio of the judgment. Keeping in view the principle of stare decisis a view which has been holding the fort need not be disturbed only because another view would be possible. The judgments which have held the field for a fairly long time ought not to be disturbed unless there is a prepondering necessity dictated by the demands of justice to overturn them. Taking of a different view on a mere thought that it would have been proper that a different view was taken is not healthy tradition to the law of precedents. The doctrine of stare decisis is based upon rule of convenience, expectancy and public policy. It is to be adhered to even if it is not imperative to do so. Applicability of law must be determined in respect of each case to avoid error of fact and law. Controversies must be determined in each case by use of discretion by the court. It may be appropriate not to perpetuate errors but it should also be ensured that consistency of law is not done away with by such discretion. Reference can be made in the cases of (i) Mishri Lal (dead) by Lrs. Vs. Dhirendra Nath (dead) by Lrs. & ors., JT 1999(2) SC 586, (ii) Milkfood Ltd. Vs. GMC Ice Cream (P) Ltd., (2004)7 SCC 288 : [2004(5) ALL MR 624 (S.C.)], and (iii) S. Brahmanand and others Vs. K. R. Muthugopal (dead) and others, (2005)12 SCC 764.

26. Of course, even the rule of stare decisis is not so imperative or inflexible as to preclude a departure therefrom in any case, but its application must be determined in facts of each case by the discretion of the court and previous decisions should be respected on true test of ratio decidendi while not perpetuating a wrong decision.

Question of Law

27. We have already observed that in law there is hardly any conflict between the two judgments of different Division Benches of this Court as noticed in the order of reference, but keeping in view the importance of the question of law referred, we consider it appropriate to deal with and answer the question in accordance with law. Certain observations made by the respective Division Bench in the above cases, of Bombay Enamel (supra) and M/s. D. Shanalal (supra), can hardly be termed as stated principles of law as facts in both the cases are substantially different. One judgment is based upon the principle of finality given to the interim orders granting conditional leave to defend, which were subject to appeal, while the view of the other Division Bench is based on the factum that the legality or correctness of the interim order was not at all questioned by the parties by filing appeal. To appropriately answer the framed question of law, it will be necessary for the Court firstly to examine the relevant provisions of law and its principles.

28. Order 37 is a Code in itself which provides for the institution, prosecution and procedure that the Court of competent jurisdiction is expected to follow while dealing with Summary Suits. Order 37 has a restricted application, but wherever such a Suit is instituted, the defendant has to enter an appearance in the prescribed manner. When Summons for Judgment is served upon the defendant, he has to file an affidavit praying for leave to defend the Suit. The Court, after hearing the parties, may grant conditional or unconditional leave to defend the Suit or even may refuse leave to defend in the facts and circumstances of a given case. The Court has been vested with the discretion even to condone the delay in entering an appearance by the defendant or even in applying for leave to defend the Suit. This discretion is to be exercised when sufficient cause is shown and in accordance with settled judicial principles. Order 37, Rule 4 is a provision which needs to be noticed as even when a decree is passed for any of the reasons stated in earlier rules of Order 37, whenever special circumstances are shown, such a decree passed by the Court can be set aside on such directions as the Court may think appropriate. The Court is also vested with the power to stay or set aside the execution of such a decree. The scheme of Order 37, thus, is to provide to a defendant liberty to apply for setting aside of a decree which has been passed against him for failure on his part to put an appearance within time or seeking leave to defend the Suit within the prescribed period. Thus a decree passed under Order 37 is subject to being set aside where special circumstances as contemplated under Rule 4 of Order 37 are shown by the defendant. This is one aspect emerging from these provisions which shows that the orders passed during the pendency of the proceeding in a Summary Suit, resulting in passing of a decree, can be examined by the Court and the decree which had been passed by the Court, in given circumstances, can be set aside. Granting or refusing to grant leave to defend, conditional or otherwise, are the orders which are passed by the Court during pendency of the Summary Suit. Wherever the leave is refused or condition imposed in order granting conditional leave to defend the suit to defendant is not complied with, the Court, upon due application of mind, may pass a decree under the provisions of Order 37. Once a decree is passed, an Appeal lies, before the competent appellate Court as an appeal from original decree would lie. In an appeal under Order 41, of the Code of Civil Procedure or Clause 15 of the Letters Patent, wherever it is applicable, the appellate Court while deciding the appeal shall not be confined to the grounds of objection set forth in the Memorandum of Appeal or grounds taken by leave of the Court under this Rule provided the Court provides sufficient opportunity to the party to contest the grounds so taken in terms of Order 41 Rule 2. Section 105 of the Code of Civil Procedure provides that, save as otherwise expressly provided, no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal. Similarly, under Order 43, Rule 1-A, where any order is made under this Code against a party and thereupon any judgment is pronounced against such party and a decree is drawn, such party may, in an appeal against the decree, contend that such order should not have been made and the judgment should not have been pronounced. An order made under Order 37 is not appealable under Order 43, Rule 1, but now it is a settled principle of law, which in fact, we shall shortly proceed to discuss in greater detail, that an order granting conditional leave or refusing to grant leave, is appealable under Clause 15 of the Letters Patent. There is no specific provision which expressly provides that orders of the above kind cannot be challenged in such appeal. Once such orders are appealed against and they attain finality, the party concerned may not be able to challenge their correctness while preferring an appeal against the final decree. An appeal thus preferred may hardly have any merit inasmuch as it is a consequential decree on default committed by the concerned party in complying with the orders of the Court which have attained finality. But the situation will be entirely different where a party has not challenged the order and only prefers a regular appeal against the judgment and decree passed by the Court as a consequence of non-compliance or default and there is nothing in law which debars such a party from challenging the legality or correctness of the interim orders passed by the Court in the Memorandum of Appeal. The legislative scheme reflected under the provisions of the Act does not in any way dispel such an approach. In fact it would be in conformity with the provisions of the Code. Orders against which an appeal does not lie and where no such appeal was preferred even if it lay, can logically and validly be questioned as grounds of attack to the judgment in the main appeal preferred by the party. To raise such ground is a right granted to the party under the scheme of the Code and in law there can hardly be any justification for depriving a party of such a valuable right. This should be adhered to most strictly in the cases where the decree has been passed as a consequence of default or non compliance of Court's orders by the party or where the order could not have been passed in relation to the facts and circumstances of a given case. The procedural law is always construed to achieve ends of justice and not to create a legal impediment to a party claiming the right of appeal. In Ghanshyam Dass and others Vs. Dominion of India and others, (1984)3 SCC 46, the Supreme Court spelt out the detailed dictum that substantial justice should not be sacrificed for hyper technical pleas based on strict adherence to procedural provisions. It is not so indicated specifically in the language of the Code. A cumulative reading of Clause 15 of the Letters Patent, Section 105, Order 41, Rule 2 and Order 43, Rule 1-A fairly suggests that the above approach would be in consonance with the settled canons of judicial interpretation.

29. Let us examine some of the judgments which would throw some light in relation to the principles involved in the present case. Right from the case in Shah Babulal Khimji Vs. Jayaben D. Kania and another, AIR 1981 SC 1786, the Court discussed in detail the meaning of the word "judgment" appearing in Clause 15 of the Letters Patent and its scope. The basic test to determine as to whether an order would be a judgment within the meaning of the clause or not, being the order which decide matters of moment or affect vital and valuable right of the parties and which will cause serious injustice to the parties concerned would normally be judgment within the meaning of the charter and thus appealable. The Supreme Court clearly stated that an order refusing leave to defend the Suit under Order 37 would be an order which would be covered under the scope of judgment.

30. Satyadhyan Ghosal and others Vs. Smt. Deorajin Debi and another, AIR 1960 SC 941, was a case where the Court noticed that principle of "res judicata" is based on the need of giving a finality to a judicial decision and once a res is adjudicated, it shall not be adjudged again. The purpose is to prevent the parties from re-agitating issues over and over again. In that case where the landlord had obtained a decree for ejectment against the tenant, an application under Order 9, Rule 13 for setting aside the decree was filed which was dismissed and thereafter an application was made by the tenant under Section 28 of the Calcutta Thika Tenancy Act who prayed for assignment of the decree. While determining the plea of res judicata, the Court squarely dealt with the question whether the interlocutory orders which were not appealable or where no appeal was preferred could or could not be challenged in the final decree preferred. The Court held s under :-

"16. It is clear therefore that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken could be challenged in an appeal from the final decree or order. A special provision was made as regards orders of remand and that was to the effect that if an appeal lay and still the appeal was not taken the correctness of the order of remand could not later be challenged in an appeal from the final decision. If however an appeal did not lie from the order of remand the correctness thereof could be challenged by an appeal from the final decision as in the cases of other interlocutory orders. The second subsection did not apply to the Privy Council and can have no application to appeals to the Supreme Court, one reason being that no appeal lay to the Privy Council or lies to the Supreme Court against an order of remand."

31. No provision has been brought to our notice which on its plain language or even by necessary implication, would support the view that the orders made during the pendency of the suit, particularly orders under Rule 3 of Order 37 which ultimately may result into passing of the decree, cannot be assailed or challenged in an appeal against the decree. The appellant challenging the final decree can safely argue that the orders passed during the pendency of the suit ought not to have been passed and the judgment could not have been pronounced. However, this is subject to the condition that the orders made during the pendency of the suit were not affirmed by the appellate court or court of higher jurisdiction in an appeal taken out by the aggrieved party against whom finally a decree is made. The doctrine of finality and principles of res judicata, constructive or otherwise, would justify introduction of such an exception. The parties cannot be permitted to agitate and re-agitate the same issues which have attained finality at different stages of the suit or even in an appeal. This can be viewed from another angle. During the pendency of the suit different kinds of orders could be passed, the ones which are interlocutory orders of procedural nature hardly have any bearing on the matters in issue or on the rights of the parties, while the others are interlocutory orders which determine the controversy and affect the rights of the parties to the suit. Such orders could prejudice the interest of the party against whom they are passed. The former class of orders which are not appealable under Order 43 would also not be appealable with the aid of clause 15 of the Letters Patent, while the latter class of orders would be appealable under either of the statutory provisions. We have already discussed in some detail the orders which would squarely fall within the ambit of expression "judgment" in clause 15 of the Letters Patent. Does it mean that the party is bound to appeal every interlocutory order which even may be a step in the procedure that leads to a final decree? This question was answered in the negative by the Privy Council in Sheonoth Vs. Ramnath, (1865)10 MIA 413 and explained by the Supreme Court in Achal Misra Vs. Rama Shanker Singh, (2005)5 SCC 531. The Supreme Court held as under :

"13. This principle is recognised by Section 105(1) of the Code of Civil Procedure and reaffirmed by Order 43, Rule 1-A of the Code. The two exceptions to this rule are found in Section 97 of the Code of Civil Procedure, 1908, which provides that a preliminary decree passed in a suit could not be challenged in an appeal against the final decree based on that preliminary decree and Section 105(2) of the Code of Civil Procedure, 1908 which precludes a challenge to an order of remand at a subsequent stage while filing an appeal against the decree passed subsequent to the order of remand. All these aspects came to be considered by this Court in Satyadhyan Ghosal Vs. Deorajin Debi wherein, after referring to the decisions of the Privy Council, it was held that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay, an appeal was not taken, can be challenged in an appeal from a final decree or order. It was further held that a special provision was made in Section 105(2) of the Code of Civil Procedure as regards orders of remand where the order of remand itself was made appealable. Since Section 105(2) did not apply to the Privy Council and can have no application to appeals to the Supreme Court, the Privy Council and the Supreme Court could examine even the correctness of an original order of remand while considering the correctness of the decree passed subsequent to the order of remand. The same principle was reiterated in Amar Chand Butail Vs. Union of India and in other subsequent decisions."

32. In a more recent judgment in the case of Employer in Relation to Management of Central Mine Planning and Design Institute Ltd. Vs. Union of India and another, AIR 2001 SC 883, in view of the expression judgment occurring in clause 10 of the Letters Patent of the High Court of Judicature at Patna, the Supreme Court stated that interlocutory order dealing with an application under section 17-B of the Industrial Disputes Act would be a judgment and appeal would lie and the test of section 2(9) of the Code of Civil Procedure would not operate stricto senso in examining the scope of judgment under clause 10. The court held as under :

.............................

"8. A close reading of the provision, quoted above, shows that it has three limbs : the first limb specifies the type of judgments of one Judge of the High Court which is appealable in that High Court and the categories of judgments/orders which are excluded from its ambit: the second limb provides that notwithstanding anything provided in the first limb, an appeal shall lie to that High Court from judgment of one Judge of the High Court or one Judge of any Division Court, pursuant to Section 108 of the Government of India Act (now Article 225 of the Constitution of India), on or after February 1, 1929, passed in exercise of appellate jurisdiction in respect of a decree or order made in exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court where the Judge who passed the judgment declares that the case is a fit one for appeal; and the third limb says that the right of appeal from other judgments of Judges of the said High Court or such Division Court shall be to us, our heirs or successors in our or their Privy Council, as hereinafter provided."

.......................

"10. The above analysis of Clause 15 of the Letters patent will equally apply to Clause 10 of the Letters Patent of Patna. It follows that an appeal shall lie to larger Bench of the High Court of Judicature at Patna from a judgment of one judge of the said High Court or one judge of any Division Court pursuant to Article 225 of the Constitution of India. The following categories of judgment are excluded from the appealable judgments under the first limb of Clause 10 of the Letters Patent:

(i) a judgment passed in exercise of appellate jurisdiction in respect of a decree or order made in exercise of appellate jurisdiction by a Court subject to superintendence of the said High Court in other words no letters patent appeal lies to the High Court from a judgment of one judge of the High Court passed in second appeal:

(ii) an order made by one judge of the High Court in exercise of revisional jurisdiction; and

(iii) a sentence or order passed or made in exercise of power under the provisions of Section 107 of Government of India Act, 1935 (now Article 227 of the Constitution of India) or in exercise of criminal jurisdiction."

11.................

"12. The next question which needs to be considered is, what does the expression 'judgment' mean? That expression is not defined in Letters Patent. It is now well-settled that definition of 'judgment' in Section 2(9) of Code of Civil Procedure, has no application to Letters Patent. That expression was interpreted by different High Courts of India for purposes of Letters Patent. In Asrumati Debi Vs. Kumar Rupedra Deb, Rajkot, 1953 SCR 1159 : (AIR 1953 SC 198), a four-Judge Bench of this Court considered the pronouncements of the High Court of Calcutta in Justices of the Peace for Calcutta Vs. Oriental Gas Co., (1872)8 Beng LR 433, the High Court of Ragoon in Dayabhai Vs. Murugappa Chettiar, (1935) ILR 13 Rang 457: (AIR 1935 Rangoon 267)(FB), the High Court of Madras in Tuljaram Vs. Alagappa, (1912) ILR 35 Mad 1, the High Court at Bombay in Sonebai Vs. Ahmedbhai, (1871)9 Bom HCR 398 (FB), as also the High Court at Nagpur, the High Court at allahabad and Lahore High Court and observed as follows:

In view of this wide divergence of judicial opinion, it may be necessary for this Court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word 'judgment' as it concurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts."

"13.......................

14. In the instant case, we are concerned with the last mentioned category. From the above discussion, it follows that to determine the question whether an interlocutory order passed by one judge of a High Court falls within the meaning of 'judgment' for purposes of Letters Patent the test is : whether the order is a final determination affecting vital and valuable rights and obligations of the parties concerned. This has to be ascertained on the facts of each case.

15. Adverting to the facts of this case, Section 17-B of the I.D. Act confers valuable rights on the workmen and correspondingly imposes an onerous obligations on the employer. The order in question passed by the learned single Judge determines the entitlement of the workmen to receive benefits and imposes an obligation on the appellant to pay such benefits provided in the said section. That order cannot but be 'judgment' within the meaning of Clause 10 of Letters Patent, Patna. The High Court is obviously in error in holding that the said order is not judgment within the meaning of Clause 10 of the Letters Patent of Patna."

33. Thus, it is not required of a party to appeal against the interlocutory order which even substantially affects the rights of the parties and is determinative in it and could even lead to passing of a final decree as the party could challenge or raise objections to the passing of such orders even in appeal against the final decree passed by the court. A Bench of Delhi High Court in the case of V. S. Saini and another Vs. D.C.M. Ltd., AIR 2004 Delhi 219 also took a similar view wherein it is held as under :

"3.......................... On a deeper cogitation, it appears to me that if an order in respect of which the redress of an appeal has deliberately and consciously not been formally provided for can nevertheless be assailed in appeal by deeming or treating it as a judgment, no other remedy can be legitimately invoked where an appeal is eventually available against an order. Therefore, in my opinion the Khimji dicta would apply a fortiori to legal assaults of the present genre, where the unsuccessful defendant can certainly avail of a second opportunity to present its defence by way of filing an appeal."

34. Proper analysis of the above-stated principles, which are well established, show that the contention raised on behalf of the respondents herein, that in the appeal against the decree passed by the trial court, the appellants are debarred from raising challenge to the interlocutory orders, is not sustainable. Admittedly, in the present case, the interlocutory order passed under Order 37, Rule 3 was not challenged by the parties to the lis at any stage. As a result of non compliance of the terms of the order dated 21st September, 2005 granting conditional leave to defend the Suit to the defendant, the Court passed the decree on 30th November, 2005 noticing that there was no defence to the Suit. This decree for the first time has been challenged in appeal by the appellant. The orders which were passed during the pendency of the Suit and ultimately resulted in passing of the decree, can be challenged by the appellant by taking appropriate grounds in the memorandum of appeal, filed by the appellant, against the judgment and decree dated 30th November, 2005. The legality of the unchallenged orders could always be challenged by the appellant while preferring an appeal against the decree. This in any way does not offend the principles of public policy and concept of finality and is also not hit by the principles of res judicata. The provisions of Civil Procedure Code discernly indicate availability of such right to a party which is aggrieved from the interim orders and had not taken benefit of remedy of appeal, if such orders were otherwise appealable in law. An interlocutory order could either be appealed against within the scope of Order 43 or Clause 15 of the Letters Patent. Of course, the situation will be entirely different where a party has availed of the remedy of appeal against such interim orders deciding rights of the parties and has remained unsuccessful before the appellate court. Wherever the appellate court has decided such appeal on merits holding that the order was passed by the trial Court is not liable to be set aside, in that event the aggrieved party cannot re-agitate the legality or correctness of such interlocutory order as and when the aggrieved party prefers an appeal against the final decree. It is also a settled canon of law that principles of res judicata are also attracted at the interim stages of a Suit. An interim order like the order granting conditional leave to defend which is challenged in an appeal and has been confirmed by the appellate Court and the appeal is dismissed on merits, re-opening of such issue by taking it up as a ground in the appeal against the decree again would not be permissible.

35. In a very recent judgment, the Supreme Court in the case of Ajay Bansal Vs. Anup Mehta and others, (2007)2 SCC 275 : [2007(3) ALL MR 385 (S.C.)], discussed various aspects of the provisions of Order 37 while holding that setting aside of an order refusing leave to defend by itself may not have the effect of setting aside the decree passed by the Court, the Apex Court stated the principle that even in such cases the order refusing leave to defend could be challenged in the appeal filed against the final decree. The Court observed that refusing to grant leave is a judgment and held as under :-

"16. The defendant in such a case can also be left to appeal against the decree and therein challenge the order refusing leave to defend in terms of Section 105(1) of the Code."

36. The above principle of law is a clear precedent to be applied to the facts and circumstances of the present case. The minor distinction on facts is inconsequential. In both the cases, before the Supreme Court and in the case before us, the decree has followed as a result of refusal of leave to defend the Suit and/or non compliance to the order granting conditional leave. The order passed during pendency of Suit, despite an independent remedy, was permitted to be challenged in the appeal against the decree. In light of the above precedent, the question of law can clearly be answered, besides the fact that, for the detailed reasons recorded by us in this judgment, there is no reason for taking any other view. The view taken by the Division Bench in Bombay Enamel Works (supra) is more in consonance with the statutory provisions and settled principles of law. It was rightly held in that case that in First Appeal the propriety of any interlocutory or interim order made during the proceedings in the trial Court could be challenged. However, we may hasten here to add an exception that when such an order had been challenged before the Court of competent jurisdiction and the appellant remained unsuccessful, challenge to such order cannot again be made in the appeal against decree finally passed. In the case of M/s. D. Shanalal (supra), the order granting conditional leave to defend and its non-compliance had resulted in passing of the decree. The order passed granting conditional leave was assailed by the parties upto the Supreme Court and had remained undisturbed. In those circumstances, certainly the parties could not be permitted to re-agitate or reopen the contentions raised in relation to passing of the said order as it has already attained finality. This approach would certainly be in consonance with canons of law and public policy.

37. In view of our above detailed discussion, while concluding, we state the principle of law as under :-

"Propriety, legality or correctness of an interlocutory order granting conditional leave or refusing leave to defend the Suit could be challenged by the aggrieved party in an appeal preferred against the final decree provided that the party had not unsuccessfully challenged that order during the pendency of proceedings, prior to passing of the decree or otherwise."

38. Now these Appeals be placed before the appropriate Bench for decision in accordance with law.

Reference answered accordingly.