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CASE NO.: Appeal (civil)  5295 of 2005

PETITIONER: Rajeshwari                               

RESPONDENT: Puran Indoria                                                    

DATE OF JUDGMENT: 25/08/2005

BENCH: G.P. MATHUR & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  ( SPECIAL LEAVE PETITION (CIVIL) NO. 16821 OF 2002)

P.K. BALASUBRAMANYAN, J.

               Leave granted.    1.           This appeal is by the defendant.  The plaintiff-respondent  sued for specific performance of an agreement to sell the suit property  having an extent of 2000 sq.feet.   The price fixed was Rs. 2,500/-.  A  sum of Rs. 1,000/- was paid as advance.  The agreement was  entered  into on 23.2.1981.  The agreement did not fix any date for performance.   The plaintiff issued a notice to the defendant on 31.7.1989, more than  seven years after the agreement, calling upon the defendant to execute  the sale deed on receipt of the balance consideration.  The defendant  not having responded, the plaintiff filed the suit on 01.11.1990 for  specific performance.

2.              The defendant having denied the claim for specific  performance made by the plaintiff and having raised several defences  the trial court raised the following issues for trial:

(1)     Whether the plaintiff had been ready and willing to  perform his part of the contract in pursuance of the  agreement dated 23rd February, 1981 with respect to the  part of the land measuring to 50 x 40 ft. described in  paragraph no.2 of the plaint?

(2)     Whether the plaintiff cancelled the aforesaid agreement to  sell the land after receiving a sum of Rs. 3,500/- from the  defendant?

(3)     Whether the suit had been filed by the plaintiff within  time?

(4)     Relief.

               The trial court answered these issues in favour of the  plaintiff and decreed the suit.  The defendant filed an appeal under  Section 96 of the Code of Civil Procedure, 1908.    The Additional  District Judge concurred with the decision of the trial court and  dismissed the appeal, thus, confirming the decree of the trial court.   Feeling aggrieved, the defendant filed a second appeal before the High  Court under Section 100 of the Code of Civil Procedure, 1908.  The  defendant submitted in his memorandum of second appeal that the  following substantial questions of law were involved in the case.

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"A.     Whether the courts below have committed a grave  legal error in not taking into consideration the  great variance between the pleading and the proof  of the plaintiff which was sufficient for dismissing  the suit of the plaintiff for specific performance of  the agreement for sale?

B.      Whether the courts below were wrong in passing a  decree for specific performance  of the agreement  for sale in favour of the plaintiff as a matter of  course by ignoring the legal position that the grant  of relief of specific performance is always  discretionary and the courts are not bound to grant  the same in all cases?

C.      Whether the courts below have committed a grave  legal error in holding the suit of the plaintiff to be  within the period of limitation although the same  was filed after 7 years of the agreement for sale  which was clearly time barred?

D.      Whether the courts below have committed a grave  legal error in not dismissing the suit of the plaintiff  on the ground of delay and latches even assuming  that the same was filed within the period of  limitation?

E.      Whether the courts below have committed a grave  legal error in rejecting the document Ex-A-1 on  irrelevant considerations which was executed by  the plaintiff after obtaining a consideration of  Rs.3500/-?"

               When the second appeal came up before the High Court,  the High Court dismissed the same in the following words:                         "Heard Learned Counsel.

I do not find the appeal to be involving any  substantial question of law.  The appeal thus lacks  merit and is hereby dismissed summarily."

Aggrieved by this dismissal, the defendant filed the petition for special  leave before this Court invoking Article 136 of the Constitution of  India.  This Court issued notice thereon in the following words.         "Issue notice to the respondent to show cause why  the appeal be not remanded to the High Court for  examining, if any, the question of law suggested in the  memorandum of second appeal deserves to be heard as  substantial question of law"

On receipt of the notice, the plaintiff-respondent appeared and sought  an early hearing of the matter and with the consent of counsel, it was  heard in detail, and the matter is being disposed of finally by this  judgment.  

3.              Normally, a suit for specific performance of an agreement  for sale of immovable property, involves the question whether the  plaintiff was ready and willing to perform his part of the contract in  terms of Section 16 of the Specific Relief Act, whether it was a case for  exercise of discretion by the court to decree specific performance in  terms of Section 20 of the Specific Relief Act and whether there were  latches on the part of the plaintiff in approaching the court to enforce  specific performance of the contract.  In some cases, a question of  limitation may also arise in the context of Article 54 of the Limitation  Act on the terms of the agreement for sale.  Other questions like the

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genuineness of the agreement, abandoning of the right to specific  performance, a novation and so on, may also arise in some cases.   No  doubt, a finding on the three primary aspects indicated earlier would  depend upon the appreciation of the pleadings and the evidence in the  case in the light of the surrounding circumstances.  Could it be  appropriate to understand these questions purely as questions of fact in  the context of Section 100 of the Code of Civil Procedure, 1908?   In  Raghunath Prasad Singh Vs. Deputy Commissioner of Pratabgarh,  ( 54 Indian Appeals 126), the Privy Council, though, in the context of  Section 110 of the Code of Civil Procedure, negatived the theory that to  be a substantial question of law,  a question of law has to be of general  importance and stated that "a substantial question of law’ is a  substantial question of law as between the parties in the case involved.   This approach was adopted by this Court in Deputy Commissioner  Vs. Rama Krishna,  (AIR 1953 SC 521).  This Court held, again in the  context of Section 110 of Code of Civil Procedure, that since the  ground on which the appeal was dismissed by the High Court raised a  question of law of importance to the parties, on that ground alone the  appellant was entitled to a certificate under Section 110 of the Code.  In  Chunilal V. Mehta and Sons Ltd. Vs. Century Spinning and  Manufacturing Co. Ltd.  ( AIR 1962 SC 1314) this Court, again in the  context of Section 110 of the Code and Article 133 (1) (a) of the  Constitution of India, had occasion to consider the question.  A  Constitution Bench of this Court held that 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.  Thus, it was accepted that a question of law would be a  substantial question of law if it directly and substantially affects the  rights of the parties and if it was not covered by a decision of the  Supreme Court or of the Privy Council or of the Federal   Court.  

4.              The right to specific performance of an agreement for sale  of immovable property, when filed, raises questions of substantial  importance between the parties as to whether the plaintiff has satisfied  the requirements of Section 16 of the Specific Relief Act,  whether it is  a case in which specific performance of the contract is enforceable in  terms of Section 10,  whether in terms of Section 20 of the Act, the  discretion to decree specific performance  should be exercised by the  court and in some cases, whether the suit was barred by limitation and  even if not, whether the plaintiff has been guilty of negligence or  latches disentitling him to a decree for specific performance.  These  questions, by and large, may not be questions of law of general  importance.  But they cannot also be considered to be pure questions of  fact based on an appreciation of the evidence in the case.  They are  questions which have to be adjudicated upon, in the context of the  relevant provisions of the Specific Relief Act and the Limitation Act (if  the question of limitation is involved).  Though, an order in exercise of  discretion may not involve a substantial question of law,  the question  whether a court could, in law, exercise a discretion at all for decreeing  specific performance, could be a question of law that substantially  affects the rights of parties in that suit.  Therefore, in the case on hand,  the High Court was not justified in dismissing the second appeal in the  manner in which it has done.  Be it noted, that the High Court has also  not spoken while dismissing the second appeal.   We are therefore of  the view that it is necessary for the High Court to consider whether a  substantial question of law is involved or not and to give its reasons for

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coming to its conclusion either way, and if it finds that a substantial  question of law or substantial questions of law is or are involved, to  frame that question or those questions and to answer it or them in  accordance with law.   In the context of the notice issued by this Court  while entertaining the Petition for Special Leave to Appeal, the proper  course to adopt is to set aside the judgment and decree of the High  Court in the second appeal and remand the second appeal to the High  Court for a consideration of the question whether any substantial  question of law is involved in the case in the light of the pleadings and  the facts established and if it arises, to decide whether any interference  in second appeal under Section 100 of the Code of Civil Procedure,  1908 is warranted or justified.

5.              In view of the fact that we are remanding the second  appeal for a proper decision by the High Court, we are not adverting to  the contentions raised on behalf of the plaintiff-respondent that there is  no question of limitation in this case and that no substantial question of  law arose for decision.  It is open to the plaintiff-respondent to raise all  available contentions before the High Court, while that court considers  the second appeal afresh pursuant to the remand.  We once again clarify  that this remand is based only on the argument that the High Court has  not properly applied its mind to the aspects that may have to be  considered in the second appeal and has dismissed the second appeal in  a cursory and unsatisfactory manner.     6.              Before parting, we feel that we would be justified in  pointing out that the amendment brought to Section 100 of the Code  with effect from 1.2.1977 by Act 104 of 1976, has really not advanced  the cause of justice.  Earlier, interference could be had under Section  100 of the code if the decision was contrary to law or some usage  having the force of law; or the decision had failed to determine some  material issue of law or usage having the force of law; or suffered from  a substantial error or defect in procedure provided by the Code or any  other law for the time being in force, which may possibly have  produced the error or defect in the decision of the case upon the merits.   The provision enabled the court to correct errors of law or of procedure  in an appropriate case and even unreasonable appreciation of evidence  could have been brought within the contours of error of law in the  circumstances of a given case.  But by introducing the concept of  "substantial question of law" in Section 100 of the Code, the right of  the litigant to have a decision after a re-appraisal of the relevant  materials by the High Court has been curtailed.  Though, courts   of  first appeal are made the final courts of facts, there are instances when  first appellate courts merely, mechanically, confirm the findings of fact  rendered by the trial court without an independent reappraisal of the  pleadings and the evidence in the case.  Since a judgment of affirmance  need not be as elaborate as a judgment reversing the decision of the  court below, it is often contended that the judgment of the appellate  court satisfies the requirements of Order XLI Rule 31 of the Code.   There are occasions when the High Court feels the constraint of Section  100 and reluctantly declines to interfere though interference would  have been proper to render justice between the parties.  High Courts are  often confronted with an argument that even if what was  involved was  a mixed question of fact and law or even a question of law, that did not  constitute a substantial question of law justifying interference under  Section 100 of the Code.  Why not an error of law committed by the  appellate court be corrected in Second Appeal?  Why should not a  litigant have an opportunity of having the decision in his case corrected  for an error of law by the High Court at the second appellate stage?   When a substantial question of law as expounded by this Court is only  an open question of law substantial as between the parties, a restoration  of the position as it existed prior to 1.2.1977 does not appear to be re- opening of the door too wide.  It must be remembered, that now, after  the amendment of the Code by Act 22 of 2002, interference in revision  under Section 115 of the Code of Civil Procedure, 1908 has also been

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substantially curtailed.  Even if the High Court is satisfied that there  would be failure of justice if the order is allowed to stand, the High  Court cannot interfere under Section 115 of the Code, in view of the  deletion of the particular proviso which existed prior to the amendment.   Therefore, the High Courts cannot  correct errors that could lead to a  mis-trial or a finding of fact to be arrived at based on an erroneous  approach that is proposed then and there by exercising a revisional  jurisdiction, even at the initial stage so that at a later stage, a remand by  the first appellate court is avoided.  The curtailment of the right to  interfere under Section 115 of the Code has only resulted in the High  Courts being flooded with proceedings under Article 227 of the  Constitution of India challenging all sorts of interlocutory orders.  It is  for the law makers to consider whether it would not be more  appropriate to restore Section 115 of the Code as it existed prior to its  amendment by Act 22 of 2002 and confer a broader right of second  appeal as it existed prior to the introduction of the concept of  substantial question of law into Section 100 of the Code, by Act 104 of  1976.

7.              It is true that it is in consonance with public policy, to  curtail a right of appeal (that too, a second appeal) so as to ensure that a  litigation attains finality as early as possible.  At the same time, it has  also to be ensured that justice, according to law, is made available to  the litigant who approaches the court.  Our experience, as lawyers and  Judges of High Courts shows that more often than not, first appellate  courts, simply, mechanically, reiterate what is stated by the trial court  and confirm findings of fact rendered by the trial court without making  an independent reappraisal of the pleadings and the evidence in the case  as they are bound to do as courts of appeal.  But even in such cases, the  High Courts find it difficult to interfere, though, they do interfere, when  the injustice caused to the litigant is so apparent that the same could not  be overlooked and the judgment under appeal allowed to pass muster.   There have also been occasions when the High Courts had felt  compelled to interfere, notwithstanding the limitation imposed by the  wording of Section 100 of the Code of Civil Procedure, and on  occasions such decisions have been interfered with by this Court, on  the ground that the High Court has exceeded its jurisdiction under  Section 100 of the Code of Civil Procedure.  After all, the purpose of  the establishment of courts of justice is to render justice between the  parties.  Is it necessary to unduly curtail the jurisdiction of the High  Courts, either under Section 100 of the Code of Civil Procedure or  under Section 115 of the Code of Civil Procedure in that context?  Of  course, the High Courts have to act with circumspection while  exercising these jurisdictions.  Certainly, it is for the Parliament to take  into account all the relevant aspects.  We are making these observations  only with a view to highlight the position that has emerged in the light  of the amendments to Sections 100 and 115 of the Code of Civil  Procedure as they are now obtaining.     8.              In view of our conclusion in the present case that the High  Court was not justified in dismissing the second appeal by a non- speaking order, we allow the appeal, set aside the judgment and decree  of the High Court and remand the second appeal to the High Court for a  fresh hearing and disposal and we make it clear that we have not  decided whether the second appeal involves any substantial question of  law or expressed any view on any of the aspects on the merits of the  case.  The parties are directed to appear in the High Court on  26.9.2005.