Supreme Court Sets Aside High Court Order in Property Dispute: Ramdas Waydhan Gadlinge vs. Gyanchand Nanuram Kriplani (2021)

Date of the Judgment: 28 July 2021

Citation: 2021 INSC 507

Judges: Hon’ble Mr. Justice Vineet Saran and Hon’ble Mr. Justice Dinesh Maheshwari

Can a High Court summarily dismiss a second appeal after admitting it on substantial questions of law? The Supreme Court of India recently addressed this crucial procedural question in a property dispute case. The core issue revolved around whether the High Court of Judicature at Bombay, Bench at Nagpur, was justified in dismissing a second appeal in a summary manner after having admitted it on specific questions of law. The Supreme Court bench, comprising Justice Vineet Saran and Justice Dinesh Maheshwari, set aside the High Court’s order, emphasizing the importance of a detailed examination of the formulated questions of law.

Case Background

The dispute began when the predecessor of the respondents filed a suit for possession and damages in the Court of Civil Judge (Senior Division), Akola, claiming that he had purchased the suit property from the predecessor of the appellants via a registered sale deed dated 01 October 1992, for ₹27,500. The plaintiff asserted that the defendant had put him in possession of the property but later placed his own lock on it and inducted tenants. Consequently, the plaintiff filed a police complaint and then the suit on 03 August 1995, seeking recovery of possession and damages.

The defendant countered that the sale deed was not an outright sale but a nominal one executed as security for a loan of ₹27,500. He claimed to have repaid ₹19,750 in cash and cheque, and also given a refrigerator worth ₹7,500.

Timeline

Course of Proceedings

The Trial Court, after examining the evidence, found that the plaintiff had not established that he was put in possession of the property. It also noted that the defendant paid municipal taxes and electricity bills, inferring that the sale deed was not an outright sale but security for a loan. The Trial Court also observed that no payment was made at the time of registration of the sale deed. Consequently, the Trial Court dismissed the suit.

The First Appellate Court disagreed, disbelieving the defendant’s claim of repayment through cheques, noting the absence of endorsements on the returned cheques. The Appellate Court concluded that the sale deed was a genuine sale and not a loan transaction, and thus allowed the appeal and decreed the suit.

Legal Framework

The Supreme Court referred to Section 100 of the Code of Civil Procedure, 1908 (CPC), which governs second appeals to the High Court. This section states that a second appeal can be made to the High Court from a decree passed in appeal by a subordinate court if the High Court is satisfied that the case involves a substantial question of law.
The Court also referred to Order XLII of the CPC, which outlines the procedure for second appeals. Rule 1 of Order XLII states that the rules of Order XLI, which govern first appeals, apply to second appeals as far as possible. Rule 2 of Order XLII allows the court to formulate substantial questions of law and direct that the second appeal be heard on those questions.

Section 100 of the CPC states:

“100. Second appeal .—(1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law.
(2) An appeal may lie under this section from an appellate decree passed ex parte.
(3) In an appeal under this section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.
(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(5) The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:
Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law, not formulated by it, if it is satisfied that the case involves such question.”

Rules 1 and 2 of Order XLII of the CPC state:

“1. Procedure.—The rules of Order XLI shall apply, so far as may be, to appeals from appellate decrees.
2. Power of Court to direct that the appeal be heard on the question formulated by it .—At the time of making an order under Rule 11 of Order XLI for the hearing of a second appeal, the Court shall formulate the substantial question of law as required by Section 100, and in doing so, the Court may direct that the second appeal be heard on the question so formulated and it shall not be open to the appellant to urge any other ground in the appeal without the leave of the Court, given in accordance with the provision of Section 100.”

Arguments

Appellants’ Arguments:

• The High Court erred in summarily dismissing the second appeal after admitting it on substantial questions of law.
• The Trial Court had dismissed the suit based on relevant considerations and cogent findings, which the First Appellate Court reversed without adequately addressing the reasoning and findings of the Trial Court.
• Substantial evidence indicated that the transaction was a loan, not a sale, and the High Court failed to examine these relevant questions.
• The High Court should have examined the evidence, including the defendant’s claim of repayment through cheques and the testimony of a bank employee (DW-4) regarding a specific cheque payment.

Respondents’ Arguments:

• The First Appellate Court meticulously examined the matter, and its findings of fact did not warrant any interference.
• The High Court was justified in dismissing the second appeal, even if admitted on a few questions, as they related to matters of fact.

Issues Framed by the High Court

The High Court admitted the second appeal on the following substantial questions of law:

1. Is the judgment of the appellate court erroneous for being based on an erroneous formulation of points for determination, since the question relating to the nature of the transaction was not framed?
2. Is the judgment of the appellate court sustainable when the findings of fact recorded by the trial court are set aside without holding that those are illegal, erroneous, and unsustainable?
3. Are the findings recorded by the first appellate court liable to be regarded as perverse?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the provisions of Section 100 of the Code of Civil Procedure, 1908 and Order XLII of the Code of Civil Procedure, 1908.

Judgment

How each authority was viewed by the Court:

• The Court relied on Section 100 of the Code of Civil Procedure, 1908* to emphasize that a second appeal admitted on substantial questions of law cannot be disposed of summarily.
• The Court also used Order XLII of the Code of Civil Procedure, 1908* to highlight the procedure for hearing second appeals and the requirement for the High Court to formulate substantial questions of law.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the procedural lapse of the High Court in summarily dismissing a second appeal after admitting it on substantial questions of law. The Court emphasized the importance of a detailed examination of the formulated questions and the need to address the reasoning and findings of the lower courts. The Court’s reasoning focused on the procedural requirements of Section 100 of the Code of Civil Procedure, 1908 and Order XLII of the Code of Civil Procedure, 1908, which mandate a thorough review of the substantial questions of law in a second appeal. The Court also highlighted the need for the High Court to consider the evidence presented by the parties, including the defendant’s claim of a loan transaction.

Logical Reasoning:

The Supreme Court considered alternative interpretations but rejected them, emphasizing the clear procedural requirements for hearing second appeals. The Court concluded that the High Court’s summary dismissal was not in accordance with the law, and a detailed examination of the formulated questions was necessary.

The decision was based on the following reasons:

• The High Court did not examine the relevant points arising from the submissions of the parties.
• The High Court did not examine whether the First Appellate Court was justified in reversing the findings of the Trial Court.
• The High Court failed to consider the evidence presented by the defendant, including the claim of repayment through cheques and the testimony of a bank employee.

“Having heard learned counsel for the parties and having examined the record, we are clearly of the view that the High Court, after having admitted the second appeal and having formulated substantial questions of law, could not have disposed of the same by only stating its satisfaction on the findings of the First Appellate Court without examining the relevant points arising from the submissions of the parties and without examining as to whether the First Appellate Court was justified in reversing the findings of the Trial Court.”

“With respect, the impugned judgment and order dated 08.03.2016 is akin to that of a summary disposal of the second appeal and that cannot be approved, because the second appeal had been admitted on specific questions.”

“Obviously, a second appeal, after its admission with formulation of substantial question of law, cannot be disposed of summarily.”

Key Takeaways

• High Courts must conduct a detailed examination of the formulated questions of law in a second appeal after admitting it.
• Summary dismissal of a second appeal after admitting it on substantial questions of law is not permissible.
• High Courts must address the reasoning and findings of the lower courts when reversing their decisions.
• Evidence presented by the parties, including claims of loan transactions, must be duly considered.
• The judgment reinforces the importance of procedural compliance in second appeals under Section 100 of the Code of Civil Procedure, 1908.

Directions

The Supreme Court set aside the High Court’s judgment and order and remanded the matter for reconsideration by the High Court on the substantial questions of law already formulated by it. The Supreme Court also requested the High Court to assign a reasonable priority to the matter and take a final decision in the appeal expeditiously.

Specific Amendments Analysis

Not Applicable

Development of Law

The ratio decidendi of this case is that a High Court cannot summarily dismiss a second appeal after admitting it on substantial questions of law. The High Court is required to examine the relevant points arising from the submissions of the parties and determine whether the First Appellate Court was justified in reversing the Trial Court’s findings. This judgment reinforces the procedural requirements for second appeals under Section 100 of the Code of Civil Procedure, 1908, and clarifies the High Court’s obligations in such cases.

Conclusion

The Supreme Court’s decision in Ramdas Waydhan Gadlinge vs. Gyanchand Nanuram Kriplani emphasizes the importance of procedural compliance in second appeals. By setting aside the High Court’s order and remanding the matter, the Supreme Court has underscored the need for a detailed examination of substantial questions of law and a thorough consideration of evidence and reasoning from lower courts. This judgment serves as a reminder to High Courts to avoid summary dismissals in such cases and to ensure a fair and comprehensive review of the issues at hand.