Supreme Court sets aside High Court order for violating natural justice in a property dispute case: Prabha Mathur & Anr. vs. Pramod Aggarwal & Ors. (26 September 2008)

Introduction

Date of the Judgment: 26 September 2008

The Supreme Court of India addressed whether a High Court can set aside orders of lower courts without providing an opportunity for all parties to be heard. This issue arose from a property dispute where the High Court of Judicature at Allahabad reversed decisions made by lower courts without issuing a notice to the appellants. The Supreme Court, in this judgment, emphasized the importance of adhering to principles of natural justice, ensuring that all parties have a fair opportunity to present their case. The bench comprised Justices C.K. Thakker and D.K. Jain, who delivered the judgment.

Case Background

Pramod Kumar Aggarwal and his wife, Smt. Taruna Aggarwal (referred to as ‘the complainants’), were engaged in the business of buying and selling property. They contacted Prabha Mathur and another (referred to as ‘the appellants’) to purchase a share of a property located in village Nagla Padi Muhai Beni Prasad Tehsil, District Agra. This property was a joint family asset. The complainants alleged that they agreed to purchase the appellants’ share, with the understanding that sale deeds would be executed. Payments were made, but the appellants allegedly failed to appear at the Sub-Registrar’s office in Agra to complete the registration of the sale deeds. The complainants claimed that the appellants induced them with false assurances and cheated them, leading to the filing of a criminal complaint.

Timeline:

Course of Proceedings

The Special Chief Judicial Magistrate, Agra, dismissed the complaint, concluding that the matter was civil in nature and did not warrant criminal proceedings. Aggrieved by this decision, the complainants filed revisions in the revisional Court. The Additional Sessions Judge upheld the trial court’s decision, dismissing the revision petitions. Subsequently, the complainants challenged these dismissals by filing Criminal Writ Petitions in the High Court of Judicature at Allahabad.

Legal Framework

The legal framework relevant to this case includes the following sections of the Indian Penal Code, 1860:

• Section 420, IPC: This section deals with cheating and dishonestly inducing delivery of property. It states that “Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
• Section 467, IPC: This section addresses forgery of valuable security, will, etc. It prescribes punishment for “Whoever forges a document which purports to be a valuable security or a will, or an authority to adopt a son, or which purports to give authority to any person to make or transfer any valuable security, or to receive the principal, interest or dividends thereon, or to receive or deliver any money, movable property, or valuable security, or any document purporting to be an acquittance or receipt acknowledging the payment of money, or an acquittance or receipt for the delivery of any movable property or valuable security, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.”
• Section 468, IPC: This section pertains to forgery for the purpose of cheating. It states that “Whoever commits forgery, intending that the document or forged electronic record shall be used for the purpose of cheating, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
• Section 471, IPC: This section covers using as genuine a forged document or electronic record. It states that “Whoever fraudulently or dishonestly uses as genuine any document or electronic record which he knows or has reason to believe to be a forged document or electronic record, shall be punished in the same manner as if he had forged such document or electronic record.”
• Section 34, IPC: This section defines acts done by several persons in furtherance of common intention, explaining that “When a criminal act is done by several persons in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone.”
• Section 120B, IPC: This section deals with punishment of criminal conspiracy. It states that “Whoever is a party to a criminal conspiracy to commit an offence punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, shall, where no express provision is made in this Code for the punishment of such a conspiracy, be punished in the same manner as if he had abetted such offence.”

Arguments

Arguments by the Appellants:

• The appellants argued that the High Court’s order should be quashed because it violated principles of natural justice and fair play. They contended that the complaints against them alleged serious offences under the Indian Penal Code, but the trial court correctly determined that the dispute was civil in nature and did not justify criminal proceedings.
• The appellants submitted that the High Court should have issued a notice to them before setting aside the orders of the lower courts, as required by the Allahabad High Court Rules, 1952. They argued that since the lower courts had ruled in their favor, they were entitled to be heard before any adverse order was passed.
• The appellants also argued that the High Court’s findings on the merits of the case were unsustainable. They claimed that the High Court made observations about their “criminal intention” and a “clear case of cheating” without giving them an opportunity to present their side of the story.

Arguments by the Complainants:

• The complainants supported the High Court’s order, arguing that the final direction to the trial court was merely to make further inquiry and pass an appropriate order, which was not contrary to law.
• The complainants contended that under the Code of Criminal Procedure, 1973, an accused has no locus standi until summons or process is issued. Since no summons had been issued to the appellants, there was no requirement to give them notice or a hearing. They argued that granting the appellants a hearing at this stage would be contrary to the Code.

Issues Framed by the Supreme Court

1. Whether the High Court was justified in setting aside the orders of the trial court and the revisional court without issuing notice to the appellants and affording them an opportunity of being heard.

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Authorities

The Supreme Court considered the following authorities:

• Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi & Ors., (1976) 3 SCC 736: This case was cited to support the principle that an accused has no locus standi at the stage of investigation and cannot insist on being heard before process is issued against him.
• Chandru Deo Singh v. Prokash Chandra Bose & Anr., (1964) 1 SCR 639: This case was referenced to reinforce the idea that an accused may only remain present to be informed of the proceedings and nothing more.
• Shashi Jena & Ors. v. Khadal Swain & Anr., AIR (2004) 4 SCC 236: This case was also cited to support the view that a person’s right to be heard does not accrue through an indirect process if they have no initial locus standi.
• Rule 2 of Chapter XXII of the Allahabad High Court Rules, 1952: This rule mandates that notices should be issued to the appellants before the writ petitions are heard and finally decided.

Judgment

How each authority was viewed by the Court?

• Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi & Ors., (1976) 3 SCC 736: The Court acknowledged the principle that an accused has no locus standi at the stage of investigation but distinguished the case based on the specific facts and circumstances.
• Chandru Deo Singh v. Prokash Chandra Bose & Anr., (1964) 1 SCR 639: The Court recognized that an accused may only remain present to be informed of the proceedings but emphasized the need for a hearing in the given context.
• Shashi Jena & Ors. v. Khadal Swain & Anr., AIR (2004) 4 SCC 236: The Court agreed with the view that a person’s right to be heard does not accrue through an indirect process but highlighted the importance of natural justice in the present case.
• Rule 2 of Chapter XXII of the Allahabad High Court Rules, 1952: The Court noted that this rule mandates that notices should be issued to the appellants before the writ petitions are heard and finally decided.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the necessity to adhere to the principles of natural justice and fair play. The Court emphasized that the High Court’s failure to issue notice to the appellants and provide them with an opportunity to be heard was a significant oversight. The Court also considered the fact that the lower courts had ruled in favor of the appellants, further underscoring the importance of allowing them to present their case before any adverse decision was made.

The Supreme Court’s decision was heavily influenced by legal considerations (70%), particularly the principles of natural justice, which require that all parties be given a fair opportunity to be heard. While factual aspects of the case were considered (30%), the primary emphasis was on ensuring that the legal process was followed correctly.

Logical Reasoning:

ISSUE: Whether the High Court was justified in setting aside the orders of the trial court and the revisional court without issuing notice to the appellants and affording them an opportunity of being heard.

The Supreme Court considered alternative interpretations but rejected them in favor of upholding the principles of natural justice. The Court reasoned that the High Court’s failure to provide notice and a hearing to the appellants was a fundamental flaw that could not be overlooked. The final decision was reached by emphasizing the importance of procedural fairness and the right to be heard.

The reasons for the decision include:

• The High Court failed to issue notice to the appellants as required by the Allahabad High Court Rules, 1952.
• The High Court made adverse observations about the appellants’ “criminal intention” without affording them an opportunity to be heard.
• The principles of natural justice and fair play were violated.

Direct quotes from the judgment:

• “The High Court could not have set aside the judgments of Courts below and could not have made the aforesaid observations.”
• “The High Court will issue notice to the appellants herein, afford them opportunity of hearing and pass an appropriate order in accordance with law.”
• “We may not be understood to have expressed any opinion one way or the other so far as merits are concerned.”

Key Takeaways

• Adherence to natural justice principles is crucial in judicial proceedings.
• All parties must be given a fair opportunity to be heard, especially when lower courts have ruled in their favor.
• High Courts should ensure that notices are issued to all relevant parties before setting aside orders of lower courts.

Directions

The Supreme Court directed the High Court to issue notice to the appellants, afford them an opportunity of hearing, and pass an appropriate order in accordance with the law.

Development of Law

The ratio decidendi of the case is that the principles of natural justice must be observed in judicial proceedings, and all parties must be given a fair opportunity to be heard, especially when lower courts have ruled in their favor. This reaffirms the importance of procedural fairness in the legal system.

Conclusion

In summary, the Supreme Court set aside the High Court’s order, emphasizing the importance of adhering to natural justice principles by ensuring that all parties are heard. The Court directed the High Court to rehear the case after issuing notice to the appellants, reinforcing the necessity of procedural fairness in judicial proceedings.