Aapka Consultant Judgment Series- In this series, we are providing case analysis of Landmark Judgments of Hon’ble Supreme Court of India.
Sir Chunilal V. Mehta and Sons, Ltd. Vs. The Century Spinning and Manufacturing Co., Ltd.
AIR 1962 SC 1314, [1962] Supp 3 SCR 549
Hon’ble Judges/Coram : J.R. Mudholkar, B.P. Sinha, C.J., J.C. Shah, J.L. Kapur and M. Hidayatullah, JJ.
Date of Decision: 05.03.1962
FACTS: –
Chunilal Mehta & Co., Bombay was appointed Managing Agents of the respondent company for a term of 21 years by an agreement. On April 23, 1951, the Board of Directors of the Company terminated the agreement of 1933 and passed a resolution removing the appellant as Managing Agents. The appellant thereupon filed a suit on the original side of the Bombay High Court claiming Rs. 50 lakhs by way of damages for wrongful termination of the agreement. Eventually with the permission of the Court it amended the plaint and claimed instead Rs. 28,26,804/-. The company admitted before the Court that the termination of the appellants’ employment was wrongful and so the only question which the learned Judge before whom the matter went had to decide was the quantum of damages to which the appellant was entitled. This question depended upon the construction to be placed upon clause 14 of the Managing Agency agreement. The claim in appeal before the High Court was for about 26 lakhs of rupees. Being aggrieved by the decision of the High Court, the appellant applied for a certificate under Art. 133(1)(a) of the Constitution. The judgment of the High Court in appeal was in affirmance of the judgment of the learned single Judge dismissing the appellant’s suit for damages and therefore, it was necessary for the appellant to establish that a substantial question of law was involved in the appeal. The Learned Judge refused to certify the matter fit for the consideration by the Apex Court. Therefore, present Special leave Petition.
ISSUE: –
What is Substantial Question of Law?
JUDGMENT: –
The proper test for determining whether a question of law raised in the case is substantial would be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law.
Applying these tests it would be clear that the question involved in this appeal, that is, the construction of the Managing Agency agreement is not only one of law but also it is neither simple nor free from doubt. In the circumstances, the High Court was in error in refusing to grant the appellant a certificate that the appeal involves a substantial question of law.
HELD: –
Court held that construction of the terms of the agreement with the purpose of determining the quantum of compensation is a substantial question of law.
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