Supreme Court Modifies Order on FIR Quashing: Gagan Banga vs. State of West Bengal (2024)

Date of the Judgment: September 23, 2024
Citation: 2024 INSC 722
Judges: Sanjay Kumar, J and Aravind Kumar, J.

Can the Supreme Court modify its own order in a disposed of case? The Supreme Court of India recently addressed this question while considering applications for modification and recall of its earlier order in a case involving multiple FIRs against a financial institution. This judgment clarifies the circumstances under which the Supreme Court can modify its orders and the importance of adhering to principles of natural justice. The bench consisted of Justices Sanjay Kumar and Aravind Kumar.

Case Background

Gagan Banga and Indiabulls Housing Finance Limited filed a writ petition under Article 32 of the Constitution of India, seeking guidelines to prevent the initiation of criminal proceedings against financial institutions at the behest of disgruntled borrowers. They also sought the quashing of three FIRs registered against them in different states. The petitioners contended that these FIRs were an abuse of the process of law, giving a criminal color to what were essentially civil disputes.

Initially, the Supreme Court stayed proceedings related to these three FIRs. Subsequently, the petitioners filed applications to implead additional parties and challenge a new FIR and an Enforcement Case Information Report (ECIR). The Court then disposed of the writ petition, directing the petitioners to approach the jurisdictional High Courts to challenge the FIRs and the ECIR within two weeks. The Court also extended the interim stay on the first three FIRs until the High Courts decided on the matter. However, this order led to applications for modification and recall.

Timeline

Course of Proceedings

The writ petitioners initially approached the Supreme Court seeking relief against multiple FIRs. After the Supreme Court disposed of the matter by directing the petitioners to approach the High Courts, several applications were filed seeking modification and recall of the order. Respondent No. 5, Amit Walia, sought modification to allow investigation to continue, while the Enforcement Directorate sought recall of the order because it was not heard before the disposal of the case. The Allahabad High Court had reserved judgment in two cases, while the Delhi High Court had scheduled final arguments in one case. The Calcutta High Court had already passed an interim order in a related case before the Supreme Court’s intervention.

Legal Framework

The judgment references the inherent powers of the Supreme Court under Rule 6 of Order LV of the Supreme Court Rules, 2013, which allows the Court to make orders necessary for justice or to prevent abuse of process. The Court also emphasized the principle of natural justice, requiring that no adverse order should be passed against a party without hearing them. The Court also referred to Section 482 of the Code of Criminal Procedure, 1973, which allows the High Court to pass orders to prevent abuse of the process of any court or to secure the ends of justice.

The relevant legal provisions are:

• Rule 6 of Order LV of the Supreme Court Rules, 2013:
  “Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.”
• Section 482 of the Code of Criminal Procedure, 1973:
  “Saving of inherent powers of High Court. Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”

Arguments

Submissions of the Applicants seeking Modification/Recall:

• Amit Walia, Respondent No. 5, argued that the Supreme Court’s order barred investigation until the High Courts made a final decision, which was not proper.
• The Enforcement Directorate contended that the order should be recalled because they were not given a hearing before the case was disposed of, which is a violation of natural justice.
• The Enforcement Directorate also argued that the order was passed without considering the fact that the ECIR was not even made the subject matter of challenge in the writ petition.

Submissions of the Original Writ Petitioners:

• The original writ petitioners had initially sought a stay on all proceedings and the quashing of the FIRs, contending that they were an abuse of the process of law.
• They had also sought directions to prevent the initiation of criminal proceedings against financial institutions in similar cases.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this judgment. However, the primary issue before the Court was whether the order dated 04.07.2023 should be modified or recalled, considering the applications filed by the Enforcement Directorate and Amit Walia.

The sub-issues that the court dealt with were:

• Whether the Supreme Court can modify its own order in a disposed of case.
• Whether the principles of natural justice were violated by not hearing the Enforcement Directorate before passing the order.
• Whether the directions given in the order dated 04.07.2023 were appropriate, considering that the petitioners were relegated to the High Courts.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court relied on several authorities to support its decision:

Judgment

The Supreme Court modified its earlier order dated 04.07.2023, noting that certain errors had crept in due to oversight. The Court observed that the Enforcement Directorate was not heard before the order was passed, violating the principles of natural justice. The Court also found that the directions given to the High Courts were not proper, as they could be misconstrued as observations on the merits of the case.

The Court recalled the order insofar as it pertained to ECIR No. ECIR/HIU-1/06/2023, leaving it open for the Allahabad High Court to consider the challenge on its merits. The Court also modified the order by substituting the words ’till final disposal of the respective petitions’ with ’till the filing of the respective petitions,’ thereby allowing the High Courts to entertain applications for interim relief and decide cases on their own merits.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ Jaipur Vidyut Vitran Nigam Ltd. and others vs. Adani Power Rajasthan Ltd. and another [2024 INSC 213]:* Used to emphasize that modification of orders is rare.

✓ Supertech Ltd. vs. Emerald Court Owner Resident Welfare Association and others [(2023) 10 SCC 817]:* Used to highlight that substantive modifications are not allowed in the guise of clarification.

✓ Delhi Administration vs. Gurdip Singh Uban and others [(2000) 7 SCC 296]:* Used to caution against using clarification applications to seek review.

✓ Common Cause vs. Union of India and others [(2004) 5 SCC 222]:* Used to reiterate that clarification applications should not be disguised review petitions.

✓ Meghmala and others vs. G. Narasimha Reddy and others [(2010) 8 SCC 383]:* Used to discourage repeated applications after final judgment.

✓ Rashid Khan Pathan and Vijay Kurle and others, in re [(2021) 12 SCC 64]:* Used to emphasize the importance of finality of judgments.

✓ V.K. Jain v. High Court of Delhi through Registrar General and others [(2008) 17 SCC 538]:* Used to acknowledge the fallibility of judges and the need to correct errors.

✓ Rajendra Prasad Arya v. State of Bihar [(2000) 9 SCC 514]:* Used to assert the Court’s power to rectify its mistakes.

✓ Asit Kumar Kar vs. State of West Bengal and others [(2009) 2 SCC 703]:* Used to highlight the principle of natural justice.

✓ State of Punjab v. Davinder Pal Singh Bhullar and others [(2011) 14 SCC 770]:* Used to differentiate between recall and review powers.

✓ Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra and others [2021 INSC 253]:* Used to emphasize that criminal proceedings should not be scuttled.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to correct procedural errors and uphold the principles of natural justice. The Court recognized that its earlier order had inadvertently created issues by not hearing the Enforcement Directorate and by giving directions that could be misconstrued by the High Courts. The Court emphasized that while finality of judgments is important, it is equally important to rectify errors and ensure that all parties are given a fair hearing. The Court also noted that it should not bind the High Courts with directions when relegating parties to them.

The Court considered the procedural lapse of not hearing the Enforcement Directorate and the potential for misinterpretation of its directions by the High Courts. The Court rectified these issues by recalling the order pertaining to the ECIR and modifying the directions to allow the High Courts to decide on their own merits. This highlights the Court’s focus on procedural correctness and fairness.

The Court quoted the following from the judgment:

“Therefore, if any such abuse of process is noticed after the disposal of the case or if a modification is found essential to meet the ends of justice, this Court would be justified in entertaining an application in a disposed of case and exercising such power.”

“It is a settled principle that no adverse order should be passed against a party without hearing it. This is the fundamental principle of natural justice and it is a basic canon of jurisprudence.”

“That being so and as no compelling reasons were recorded by this Court in the order dated 04.07.2023 to justify deviation in the case on hand, it clearly manifests that it was purely unintentional and due to sheer oversight.”

Key Takeaways

• The Supreme Court can modify its own orders in disposed of cases to correct errors and prevent abuse of the process of law.
• The principles of natural justice must be strictly followed, and no adverse order should be passed against a party without hearing them.
• When relegating parties to the High Courts, the Supreme Court should not bind the High Courts with directions that could be misconstrued as observations on the merits of the case.
• High Courts are free to decide on interim relief and the main cases on their own merits, without being influenced by any observations made by the Supreme Court.
• The Supreme Court’s power to modify orders is an exception to the general rule of finality of judgments, and such power is to be exercised only when necessary to meet the ends of justice.

Directions

The Supreme Court directed that the order dated 04.07.2023 stands recalled insofar as it pertains to ECIR No. ECIR/HIU-1/06/2023. The High Court of Allahabad is left to consider the challenge thereto on merits and in accordance with law. The order dated 04.07.2023 was also modified by substituting the words ‘till final disposal of the respective petitions…’ with the words ‘till the filing of the respective petitions’.

Development of Law

The ratio decidendi of this case is that the Supreme Court has the power to modify its own orders in disposed of cases to correct errors and prevent abuse of the process of law, while ensuring adherence to the principles of natural justice. This judgment reinforces the existing legal position regarding the inherent powers of the Supreme Court and the importance of procedural fairness.

Conclusion

The Supreme Court’s judgment in Gagan Banga vs. State of West Bengal clarifies the circumstances under which the Court can modify its own orders in disposed of cases. The Court emphasized the need to correct errors and ensure that all parties are given a fair hearing, while also respecting the autonomy of the High Courts. This ruling underscores the importance of procedural correctness and the principles of natural justice in the Indian legal system.