Supreme Court Overrules Automatic Stay Vacation in Civil and Criminal Cases: High Court Bar Association, Allahabad vs. State of U.P. (29 February 2024)

Date of the Judgment: 29 February 2024
Citation: 2024 INSC 150
Judges: Dr Dhananjaya Y. Chandrachud, CJI, Abhay S. Oka, J., J. B. Pardiwala, J., Manoj Misra, J., Pankaj Mithal, J. (Concurring)
Can a High Court’s interim stay order in civil or criminal proceedings automatically expire after a set period, even if the court hasn’t heard the case? The Supreme Court of India recently addressed this critical question, clarifying the powers of High Courts and the principles of natural justice. The Court has overruled its previous judgment in *Asian Resurfacing of Road Agency Private Limited & Anr. v. Central Bureau of Investigation*, which mandated automatic vacation of stay orders after six months. This judgment emphasizes the importance of judicial review and the need for reasoned decisions, ensuring fairness to all parties involved. The majority opinion was authored by Justice Abhay S. Oka, with a concurring opinion by Justice Pankaj Mithal.

Case Background

The case arose from a reference made by a three-judge bench of the Supreme Court on 1st December 2023, which expressed doubts about the correctness of the directions issued in the case of *Asian Resurfacing of Road Agency Private Limited & Anr. v. Central Bureau of Investigation*. The core issue in *Asian Resurfacing* was whether a High Court could automatically vacate a stay order on civil or criminal proceedings after six months, irrespective of the case’s merits or the parties’ conduct.

The *Asian Resurfacing* judgment had directed that all interim orders of stay in civil or criminal trials would automatically expire after six months, unless extended by a speaking order. This was intended to prevent delays in trials, particularly in corruption cases. However, this direction led to concerns about fairness and the rights of litigants who had obtained stay orders.

The High Court Bar Association, Allahabad, challenged the automatic vacation of stay orders, arguing that it amounted to judicial legislation and violated the principles of natural justice. They contended that the High Court is a constitutional court, not subordinate to the Supreme Court, and its powers under Article 226 of the Constitution cannot be curtailed.

Timeline

Course of Proceedings

The Supreme Court, noting the concerns raised against the automatic vacation of stay orders, referred the matter to a larger bench. This reference was made due to the potential for miscarriage of justice, as the automatic vacation of stay orders could occur without any application of judicial mind to the specifics of each case.

Legal Framework

The judgment primarily discusses the following legal provisions:

• Article 142 of the Constitution of India: This article grants the Supreme Court the power to pass orders necessary for doing complete justice in any case or matter pending before it. The court clarified that this power cannot be used to override substantive rights or principles of natural justice.
• Article 226 of the Constitution of India: This article empowers High Courts to issue writs for the enforcement of fundamental rights and for any other purpose. The court emphasized that this power is part of the basic structure of the Constitution and cannot be curtailed by the Supreme Court.
• Article 226(3) of the Constitution of India: This clause provides for the automatic vacation of an interim order if the High Court does not dispose of an application for vacation of such order within two weeks. The court clarified that this clause applies only to ex-parte interim orders and not to orders passed after hearing all parties.
• Section 254(2A) of the Income Tax Act, 1961: This provision, which was struck down by the Supreme Court in *Deputy Commissioner of Income Tax & Anr. v. Pepsi Foods Limited*, provided for the automatic vacation of a stay order granted by the Income Tax Appellate Tribunal if the appeal was not disposed of within 365 days. The court used this as an example of how automatic vacation of stay orders can be arbitrary and unjust.

The Court emphasized that the power of judicial review vested in the High Courts under Article 226 is an integral part of the basic structure of the Constitution. It also highlighted that the High Courts are not judicially subordinate to the Supreme Court and have independent powers of superintendence over subordinate courts.

Arguments

The following arguments were made by the parties involved:

The innovativeness of the arguments lies in the emphasis on the constitutional independence of High Courts and the substantive rights of litigants, challenging the Supreme Court’s power to issue blanket directions that could override these rights.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether this Court, in the exercise of its jurisdiction under Article 142 of the Constitution of India, can order automatic vacation of all interim orders of the High Courts of staying proceedings of Civil and Criminal cases on the expiry of a certain period?
2. Whether this Court, in the exercise of its jurisdiction under Article 142 of the Constitution of India, can direct the High Courts to decide pending cases in which interim orders of stay of proceedings has been granted on a day-to-day basis and within a fixed period?

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Court considered the following authorities:

Judgment

The Supreme Court held that the directions issued in paragraphs 36 and 37 of the *Asian Resurfacing* judgment, which mandated automatic vacation of stay orders, were incorrect. The Court emphasized that interim orders of stay cannot be automatically vacated merely due to the lapse of time. The Court also held that such blanket directions cannot be issued in the exercise of jurisdiction under Article 142 of the Constitution of India.

The Court clarified that High Courts are empowered to vacate or modify interim orders, but only after hearing all concerned parties. The Court emphasized that the principles of natural justice must be followed, and orders cannot be vacated without application of judicial mind.

The Court further held that the Supreme Court cannot fix a time-bound schedule for the disposal of cases pending in any court, except in extraordinary circumstances. The issue of prioritizing cases should be left to the concerned courts.

The Court also clarified that the directions in *Asian Resurfacing* are not applicable to cases where trials have been concluded based on the automatic vacation of stay orders.

What weighed in the mind of the Court?

The Court’s decision was heavily influenced by the need to uphold the principles of natural justice, the constitutional independence of High Courts, and the substantive rights of litigants. The Court was concerned that the automatic vacation of stay orders, as directed in *Asian Resurfacing*, would lead to injustice by setting aside validly passed interim orders without any fault on the part of the litigant.

The Court also emphasized that the power under Article 142 of the Constitution is meant to do complete justice and cannot be used to override substantive rights or the principles of natural justice. The Court was also mindful of the practical difficulties faced by High Courts and trial courts in disposing of cases within fixed time frames.

The Court’s reasoning was primarily based on legal principles and constitutional provisions, with a lesser emphasis on the specific facts of the cases before it.

The Court considered the argument that automatic vacation of stay orders would expedite trials but rejected it, emphasizing that justice cannot be sacrificed for speed. The Court also considered the legislative attempt to provide for automatic vacation of stay in the Income Tax Act, but held that such provisions are arbitrary and unjust.

The majority opinion was delivered by Justice Abhay S. Oka, with a concurring opinion by Justice Pankaj Mithal. Justice Mithal’s concurring opinion highlighted the similarities between the directions in *Asian Resurfacing* and Article 226(3) of the Constitution, but also emphasized the importance of following the principles of natural justice.

The Court’s decision has significant implications for future cases, as it clarifies the limits of the Supreme Court’s power under Article 142 and emphasizes the importance of judicial review and reasoned decisions.

The following are direct quotes from the judgment:

• “The jurisdiction under Article 142 cannot be invoked to pass blanket orders setting at naught a very large number of interim orders lawfully passed by all the High Courts, and that too, without hearing the contesting parties.”
• “Elementary principles of natural justice, which are well recognised in our jurisprudence, mandate that an order of vacating interim relief or modification of the interim relief is passed only after hearing all the affected parties.”
• “Constitutional Courts, in the ordinary course, should refrain from fixing a time-bound schedule for the disposal of cases pending before any other Courts.”

Key Takeaways

• Automatic vacation of stay orders by High Courts is not permissible.
• Interim orders cannot be vacated without hearing the concerned parties.
• The Supreme Court cannot fix time-bound schedules for disposal of cases in other courts, except in extraordinary circumstances.
• High Courts have the power to modify or vacate interim orders, but only after application of judicial mind and following the principles of natural justice.
• The Supreme Court’s power under Article 142 cannot be used to override substantive rights or principles of natural justice.

Directions

The Court directed the Registry to place the pending petitions before the appropriate benches for expeditious disposal.

Development of Law

The ratio decidendi of this case is that the Supreme Court cannot order automatic vacation of stay orders passed by High Courts and cannot direct High Courts to decide cases on a day-to-day basis. This is a significant change from the previous position of law as laid down in the case of *Asian Resurfacing of Road Agency Private Limited & Anr. v. Central Bureau of Investigation*.

Conclusion

The Supreme Court’s judgment in *High Court Bar Association, Allahabad vs. State of U.P.* is a landmark decision that reinforces the principles of natural justice and the constitutional independence of High Courts. By overruling the automatic vacation of stay orders, the Court has ensured that the rights of litigants are protected and that judicial decisions are based on reasoned judgments and not on arbitrary time limits. This judgment provides clarity on the scope of the Supreme Court’s powers under Article 142 and sets a precedent for future cases involving interim orders and the powers of constitutional courts.