http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

CASE NO.: Appeal (civil)  4306 of 2007

PETITIONER: Boodireddy Chandraiah and Ors

RESPONDENT: Arigela Laxmi and Anr

DATE OF JUDGMENT: 17/09/2007

BENCH: Dr. ARIJIT PASAYAT & D.K. JAIN

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 4306 OF 2007 (Arising out of SLP (C) No. 25543 of 2004)

Dr. ARIJIT PASAYAT, J.

1.      Leave granted.  

2.      The appellants call in question legality of the judgment of  a learned Single Judge of the Andhra Pradesh High Court  allowing the Second Appeal filed by the respondents in terms  of Section 100 of the Code of Civil Procedure, 1908 (in short  the ’CPC’).  Though many points were urged in support of the  appeal, primarily it was contended that the  Second Appeal  was allowed without formulating any substantial question of  law which is mandatory in law.  

3.      Learned counsel for the respondents submitted that  though no question has rightly been formulated, but the basic  factors have been taken into account and after considering the  materials on record the second appeal was allowed.  

4.      After the amendment a second appeal can be filed only if  a substantial question of law is involved in the case.  The  memorandum of appeal must precisely state the substantial  question of law involved and the High Court is obliged to  satisfy itself regarding the existence of such a question.  If  satisfied, the High Court has to formulate the substantial  question of law involved in the case.  The appeal is required to  be heard on the question so formulated.  However, the  respondent at the time of hearing of the appeal has a right to  argue that the case in the court did not involve any  substantial question of law.  The proviso to the section  acknowledges the powers of the High Court to hear the appeal  on a substantial point of law, though not formulated by it with  the object of ensuring that no injustice is done to the litigant  where such a question was not formulated at the time of  admission either by mistake or by inadvertence.

5.      It has been noted time and again that without insisting  for the statement of such a substantial question of law in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

memorandum of appeal and formulating the same at the time  of admission, the High Courts have been issuing notices and  generally deciding the second appeals without adhering to the  procedure prescribed under Section 100 of the CPC.  It has  further been found in a number of cases that no efforts are  made to distinguish between a question of law and a  substantial question of law.  In exercise of the powers under  this section in several cases, the findings of fact of the first  appellate court are found to have been disturbed.  It has to be  kept in mind that the right of appeal  is neither a natural nor  an inherent right attached to the litigation.  Being a  substantive statutory right, it has to be regulated in  accordance with law in force at the relevant time.  The  conditions mentioned in the section must be strictly fulfilled  before a second appeal can be maintained and no court has  the power to add or to enlarge those grounds.  The second  appeal cannot be decided on merely equitable grounds.  The  concurrent findings of facts will not be disturbed by the High  Court in exercise of the powers under this section. Further, a  substantial question of law has to be distinguished from a  substantial question of fact.  This Court in Sir Chunilal V.  Mehta and Sons Ltd. v. Century  Spg. & Mfg. Co. Ltd. (AIR  1962 SC 1314) held that :

       "The proper test for determining whether a  question of law raised in the case is substantial  would, in our opinion, 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."

6.      It is not within the domain of the High Court to  investigate the grounds on which the findings were arrived at,  by the last court of fact, being the first appellate court.  It is  true that the lower appellate court should not ordinarily reject  witnesses accepted by the trial court in respect of credibility  but even where it has rejected the witnesses accepted by the  trial court, the same is no ground for interference in second  appeal when it is found that the appellate court has given  satisfactory reasons for doing so.  In a case where from a given  set of circumstances two inferences of fact are possible, one  drawn by the lower appellate court will not be interfered by the  High Court in second appeal.  Adopting any other approach is  not permissible.  The High Court will, however, interfere where  it is found that the conclusions drawn by the lower appellate  court were erroneous being contrary to the mandatory  provisions of law applicable or its settled position on the basis  of pronouncements made by the Apex Court, or was based  upon inadmissible evidence or arrived at by ignoring material  evidence.          7.      The question of law raised will not be considered as a  substantial question of law, if it stands already decided by a  larger Bench of the High Court concerned or by the Privy  Council or by the Federal Court or by the Supreme Court.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

Where the facts required for a point of law have not been  pleaded, a litigant should not be allowed to raise that question  as a substantial question of law in second appeal.  Mere  appreciation of facts, the documentary evidence or the  meaning of entries and the contents of the documents cannot  be held to be raising a substantial question of law.  But where  it is found that the first appellate court has assumed  jurisdiction which did not vest in it, the same can be  adjudicated in the second appeal, treating it as a substantial  question of law.  Where the first appellate court is shown to  have exercised its discretion in a judicial manner, it cannot be  termed to be an error either of law or of procedure requiring  interference in second appeal.  This Court in Reserve Bank of  India v. Ramkrishna Govind Morey (1976 (1) SCC 803) held  that whether the trial court should not have exercised its  jurisdiction differently is not a question of law justifying  interference.([See: Kondiba Dogadu Kadam v. Savitribai Sopan  Gujar and Others (1999(3) SCC 722)].          8.      The phrase "substantial question of law", as occurring in  the amended Section 100 of the CPC is not defined in the  Code.  The word substantial, as qualifying "question of law",  means \026 of having substance, essential, real, of sound worth,  important or considerable.  It is to be understood as  something in contradistinction with \026 technical, of no  substance or consequence, or academic merely.  However, it is  clear that the legislature has chosen not to qualify the scope of  "substantial question of law" by suffixing the words "of general  importance" as has been done in many other provisions such  as Section 109 of the CPC or Article 133(1)(a) of the  Constitution.  The substantial question of law on which a  second appeal shall be heard need not necessarily be a  substantial question of law of general importance.  In Guran  Ditta v. T. Ram Ditta (AIR 1928 PC 172) , the phrase  ’substantial question of law’ as it was employed in the last  clause of the then existing Section 100 CPC (since omitted by  the Amendment Act, 1973) came up for consideration and  their Lordships held that it did not mean a substantial  question of general importance but a substantial question of  law which was involved in the case. In Sri Chunilal’s case  (supra),  the Constitution Bench expressed agreement with the  following view taken by a full Bench of the Madras High Court  in Rimmalapudi Subba Rao v. Noony Veeraju (AIR 1951 Mad.  969):

"When a question of law is fairly arguable, where  there is room for difference of opinion on it or  where the Court thought it necessary to deal with  that question at some length and discuss  alternative views, then the question would be a  substantial question of law.  On the other hand if  the question was practically covered by the  decision of the highest court or if the general  principles to be applied in determining the  question are well settled and the only question  was of applying those principles to be particular  facts of the case it would not be a substantial  question of law."

9.      This Court laid down the following test as proper test, for  determining whether a question of law raised in the case is  substantial:

       "The proper test for determining whether a  question of law raised in the case is substantial

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

would, in our opinion, 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."

10.     In Dy. Commnr. Hardoi v. Rama Krishna Narain (AIR  1953 SC 521) also it was held that a question of law of  importance to the parties was a substantial question of law  entitling the appellant to a certificate under (the then) Section  100 of the CPC.

11.       To be "substantial" a question of law must be debatable,  not previously settled by law of the land or a binding  precedent, and must have a material bearing on the decision  of the case, if answered either way, insofar as the rights of the  parties before it are concerned. To be a question of law   "involving in the case" there must be first a foundation for it  laid in the pleadings and the question should emerge from the  sustainable findings of fact arrived at by court of facts and it  must be necessary to decide that question of law for a just and  proper decision of the case.  An entirely new point raised for  the first time before the High Court is not a question involved  in the case unless it goes to the root of the matter.  It will,  therefore, depend on the facts and circumstance of each case  whether a question of law is a substantial one and involved in  the case, or not; the paramount overall consideration being  the need for striking a judicious balance between the  indispensable obligation to do justice at all stages and  impelling necessity of avoiding prolongation in the life of any  lis. (See :Santosh Hazari v. Purushottam Tiwari (deceased) by  Lrs. [(2001) 3 SCC 179].

12.     The principles relating to Section 100 CPC, relevant for  this case, may be summerised thus:- (i)     An inference of fact from the recitals or contents of  a document is a question of fact. But the legal effect  of the terms of a document is a question of law.  Construction of a document involving the  application of any principle of law, is also a question  of law. Therefore, when there is misconstruction of a  document or wrong application of a principle of law  in construing a document, it gives rise to a question  of law.  (ii)    The High Court should be satisfied that the case  involves a substantial question of law, and not a  mere question of law. A question of law having a  material bearing on  the decision of the case (that is,  a question, answer to which affects the rights of  parties to the suit) will be a substantial question of  law, if it is not covered by any specific provisions of  law or settled legal principle emerging from binding  precedents, and, involves a debatable legal issue. A  substantial question of law will also arise in a  contrary situation, where the legal position is clear,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

either on account of express provisions of law or  binding precedents, but the court below has decided  the matter, either ignoring or acting contrary to  such legal principle. In the second type of cases, the  substantial question of law arises not because the  law is still debatable, but because the decision  rendered on a material question, violates the settled  position of law.   13.     The general rule is that High Court will not interfere with  concurrent findings of the Courts below. But it is not an  absolute rule. Some of the well recognized exceptions are  where (i) the courts below have ignored  material evidence or  acted on no evidence; (ii) the courts have drawn wrong  inferences from proved facts by applying the law erroneously;  or (iii) the courts have wrongly cast the burden of proof. When  we refer to ’decision based on no evidence’, it not only refers to  cases where there is a total dearth of evidence, but also refers  to any case, where the evidence, taken as a whole, is not  reasonably capable of supporting the finding.

14.     In spite of several decisions of this Court highlighting the  requirement of formulating the substantial question of law, if  any, before adjudicating the Second Appeal, time and again, it   has come to our notice that the mandatory requirement is not  being followed.  

15.     The impugned order is set aside and the matter is  remitted to the High Court to formulate substantial question of  law, if any, and thereafter decide the appeal.  Needless to say if  there is no substantial question of law involved, the appeal  has to be dismissed.  We make it clear that we have expressed  any view as to whether any substantial question of law is  involved.     16.     The appeal is allowed.  There shall be no order as to  costs.