Supreme Court orders fresh consideration of property dispute: Narayan Sitaramji Badwaik vs. Bisaram (2021) INSC 71

Introduction

Date of the Judgment: 17 February 2021

Citation: (2021) INSC 71

Judges: N.V. Ramana, J., Surya Kant, J., and Aniruddha Bose, J.

What happens when a lower appellate court makes errors in its judgment? The Supreme Court of India recently addressed this question in a property dispute case. The Court clarified the appropriate steps a High Court should take when reviewing a second appeal where the first appellate court has made mistakes in evaluating the facts and law. This judgment emphasizes the importance of proper procedure in appellate reviews to ensure fair and just outcomes.

Case Background

The case revolves around a property dispute. Narayan Sitaramji Badwaik (the appellant), now deceased and represented by his legal heirs, filed a suit seeking possession of a property. The appellant claimed ownership based on a sale deed dated 26 September 1978, for a sum of Rs. 10,000, allegedly executed by some of the respondents. However, the respondents contested this claim, arguing that the sale deed was not a genuine sale but merely a collateral security for a loan they had taken from the appellant. The appellant sought possession of the property on 5 September 1987 and subsequently filed the suit on 7 March 1989.

Timeline:

Course of Proceedings

The Trial Court initially dismissed the appellant’s suit on 21 September 1995, after reviewing the evidence. However, the District Judge, in the first appeal, reversed the Trial Court’s findings on 5 August 1997, and decreed the suit in favor of the appellant. Subsequently, some of the respondents filed a second appeal before the High Court. The High Court, in its judgment, upheld the findings of the Trial Court and allowed the second appeal, thereby dismissing the appellant’s suit. The appellant then approached the Supreme Court.

Legal Framework

The Supreme Court discussed the powers of the High Court in second appeals, particularly under Section 100 and Section 103 of the Code of Civil Procedure (CPC). Section 100 of the CPC states that a second appeal can only be filed on a substantial question of law. However, Section 103 of the CPC provides an exception, allowing the High Court to determine issues of fact under certain conditions. Section 103 of the Code of Civil Procedure states:

“Section 103. Power of High Court to Determine Issue of Fact

In any second appeal, the High Court may, if the evidence on the record is sufficient, determine any issue necessary for the disposal of the appeal,–

(a) which has not been determined by the lower Appellate Court or both by the Court of first instance and the lower Appellate Court, or

(b) which has been wrongly determined by such Court or Courts by reason of a decision on such question of law as is referred to in section 100.”

The Court noted that Section 103 of the CPC allows the High Court to decide an issue of fact if sufficient evidence is present, especially when the lower courts have not determined the issue or have wrongly determined it due to an error in law.

Arguments

The appellant argued that the High Court erred in upholding the Trial Court’s decision without properly assessing the evidence. The appellant contended that the High Court should have either remanded the matter back to the First Appellate Court or decided the factual issues itself under Section 103 of the Code of Civil Procedure, especially since the First Appellate Court had made errors in its approach. The respondents, despite being served notice, did not appear before the Supreme Court to present their arguments.

The High Court had observed that the First Appellate Court considered irrelevant material and erred in appreciating the legal issue involved. The High Court noted that the First Appellate Court had wrongly considered whether the transaction was void or voidable, when it was not the case of either party. The High Court further observed that the First Appellate Court did not consider the provisions of Section 91 and 92 of the Evidence Act. However, despite pointing out the errors of the First Appellate Court, the High Court then upheld the Trial Court’s decision without any assessment of the evidence.

Issues Framed by the Supreme Court

• Whether the High Court was correct in upholding the decision of the Trial Court without assessing the evidence on record, after noting the errors of the First Appellate Court?

Treatment of the Issue by the Court

Authorities

The Supreme Court referred to the following authorities:

• Section 103 of the Code of Civil Procedure: This provision empowers the High Court to determine issues of fact in a second appeal under specific circumstances.
• Santosh Hazari v. Purushottam Tiwari (deceased) by LRs, (2001) 3 SCC 179: This case clarified that a second appeal under Section 100 of the Code of Civil Procedure lies only on a substantial question of law.
• Municipal Committee, Hoshiarpur v. Punjab State Electricity Board, (2010) 13 SCC 216: This case explained that Section 103 of the Code of Civil Procedure is not an exception to Section 100, but rather serves the same purpose, and that the High Court can exercise power under Section 103 only in exceptional circumstances when the findings of fact are perverse.
• Jagdish Singh v. Natthu Singh [(1992) 1 SCC 647]
• Karnataka Board of Wakf v. Anjuman-E-Ismail Madris-Un-Niswan [(1999) 6 SCC 343]
• Dinesh Kumar v. Yusuf Ali [(2010) 12 SCC 740]
• Bharatha Matha v. R. Vijaya Renganathan [(2010) 11 SCC 483]

Judgment

Santosh Hazari v. Purushottam Tiwari (deceased) by LRs, (2001) 3 SCC 179*: The Supreme Court cited this case to reiterate that a second appeal under Section 100 of the Code of Civil Procedure is generally limited to substantial questions of law.

Municipal Committee, Hoshiarpur v. Punjab State Electricity Board, (2010) 13 SCC 216*: The Supreme Court relied on this case to emphasize that the High Court can exercise its power under Section 103 of the Code of Civil Procedure in exceptional circumstances, particularly when the findings of fact by lower courts are perverse.

The Supreme Court held that the High Court should have either remanded the matter to the First Appellate Court or exercised its powers under Section 103 of the Code of Civil Procedure to decide the factual issues. The Court noted that the High Court, after identifying the errors of the First Appellate Court, should not have mechanically upheld the Trial Court’s decision without assessing the evidence. The Supreme Court set aside the High Court’s order and remanded the matter for fresh consideration.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the procedural lapses of the High Court. The Court emphasized the importance of proper appellate review, particularly when the first appellate court has erred in its legal and factual analysis. The Supreme Court underscored that the High Court should not have mechanically upheld the Trial Court’s decision after identifying the errors of the First Appellate Court, but should have either remanded the matter or exercised its powers under Section 103 of the Code of Civil Procedure to assess the evidence itself. The Court’s reasoning focused on ensuring that the factual issues were properly considered and decided upon by the appropriate court.

The Supreme Court’s reasoning was based on the following points:

• The High Court correctly identified that the First Appellate Court had erred in its approach.
• The High Court failed to either remand the matter to the First Appellate Court or exercise its power under Section 103 of the Code of Civil Procedure to decide the factual issues itself.
• The High Court mechanically upheld the Trial Court’s decision without assessing the evidence.
• The Supreme Court emphasized the importance of proper appellate procedure to ensure fairness and justice in the legal process.

The Court considered and rejected the High Court’s approach of simply upholding the Trial Court’s decision after noting errors in the First Appellate Court’s judgment. The Supreme Court emphasized that the High Court should have taken a more active role in ensuring that the factual issues were properly addressed.

The decision was reached by emphasizing the importance of proper appellate procedure and ensuring that factual issues are properly considered and decided upon by the appropriate court. The Court did not express any opinion on the merits of the case or the High Court’s holding on the legal issue.

The Supreme Court quoted the following from the High Court’s judgment:

“The Learned Civil Judge has rightly considered the evidence and has held the sale-deed to be nominal and having been executed by way of collateral security.”

“The Learned District Judge fell in error in setting aside the finding of the trial court that the sale-deed in favour of the plaintiff was a nominal on the ground that the defendant ought to have got the sale-deeds set aside.”

“This decision makes it clear that a party has a right to show that the document was not intended to be acted upon and what is written in it is of no consequence.”

There were no minority opinions in this case. All three judges concurred with the decision.

Key Takeaways

• High Courts must properly assess evidence in second appeals, especially when the first appellate court has erred.
• High Courts should either remand cases to the first appellate court or use Section 103 of the Code of Civil Procedure to decide factual issues when necessary.
• Mechanical upholding of lower court decisions without proper assessment is not appropriate.
• The judgment reinforces the importance of proper appellate procedure in ensuring justice.

This judgment clarifies the High Court’s role in second appeals and emphasizes the need for a thorough review of both legal and factual issues. It highlights that High Courts should not merely rubber-stamp lower court decisions but should actively ensure that justice is served.

Directions

The Supreme Court set aside the High Court’s order and remanded the matter back to the High Court for fresh consideration of the appeal. The High Court was directed to consider the matter on both facts and law, if necessary. The Supreme Court also left it open for the High Court to modify the question of law or frame additional questions of law after giving an opportunity to the parties. The High Court was requested to dispose of the matter within six months from the date of communication of the order.

Specific Amendments Analysis

There were no specific amendments discussed in this judgment.

Development of Law

The ratio decidendi of this case is that a High Court, in a second appeal, must not mechanically uphold the decision of the Trial Court after identifying errors in the First Appellate Court’s judgment. Instead, the High Court should either remand the matter back to the First Appellate Court or exercise its powers under Section 103 of the Code of Civil Procedure to decide the factual issues itself. This judgment reinforces the importance of proper appellate procedure and ensures that factual issues are given due consideration. There is no change in the previous position of law, but the judgment provides a clear direction on the application of Section 103 of the Code of Civil Procedure.

Conclusion

In the case of Narayan Sitaramji Badwaik vs. Bisaram, the Supreme Court set aside the High Court’s order and remanded the matter for fresh consideration. The Court held that the High Court erred by mechanically upholding the Trial Court’s decision after identifying errors in the First Appellate Court’s judgment. The Supreme Court emphasized the importance of proper appellate procedure and directed the High Court to either remand the matter or exercise its powers under Section 103 of the Code of Civil Procedure. This judgment ensures that factual issues are properly considered in appellate proceedings.