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Saturday, March 17, 2012

without framing substantial question of law , no second appeal is to be decided. in a specific performance suit, when a lower court order for refund of the earnest money, the appellant court set aside the lower court decree and order for specific performance of the sale agreement. which was reversed by the High court in a second appeal with out framing any substantial question of law- which was set aside by the apex court by this judgement and further strongly retreated that no court should go liberally interfering the appellant court judgement in second appeal with out framing a substantial question of law.


                                                         REPORTABLE




              IN THE SUPREME COURT OF INDIA


                CIVIL APPELLATE JURISDICTION

             CIVIL  APPEAL NO.    2870      OF 2012

          (Arising out of SLP (Civil) No. 15574 of 2011)




Hardeep Kaur                                                   ....

Appellant


                                    Vs.


Malkiat Kaur                                                 ....

Respondent







                              JUDGMENT





R.M. Lodha, J.





              Leave granted.




2.            The   defendant   is   in   appeal   aggrieved   by   the


judgment   dated   March   9,   2011   of   the   High   Court   of   Punjab


and Haryana whereby the Single Judge of that Court allowed


the   second   appeal   filed   by   the   respondent   -   plaintiff;   set


aside   the   judgment   and   decree   dated   January   5,   2001


passed by the District Judge, -



Sangrur   and   restored   the   judgment   and   decree   dated  April


21, 1997 passed by the Civil Judge, Junior Division, Dhuri.



3.             The short question that arises for consideration in


this appeal by special leave is whether a second appeal lies


only on a substantial question of law and it is essential for the


High Court to formulate a substantial question of law before


interfering   with   the   judgment   and   decree   of   the   lower


appellate   court.       This   question   arises   in   this   way.     The


respondent (hereinafter referred to as `plaintiff') filed a suit for


specific   performance   of   the   contract   dated   May   22,   1993.


According to the plaintiff, the appellant (hereinafter referred to


as   `defendant')   being   co-owner   having   1/12th  share   in   the


agricultural land admeasuring 183 bighas 19 biswas situate in


Ferozepur Kuthala, Tehsil Dhuri,  by an agreement dated May


22,   1993,   agreed   to   sell   15   bighas   4   biswas   of   land   to   the


plaintiff at the rate of Rs. 15000/- per bigha.   The defendant


received Rs. 1,48,000/- as earnest   money.     The sale deed


was   to   be   executed   on   or   before   March   10,   1994   and   the


possession of the land was also to be delivered at the time of


registration   of   the   sale   deed   on   receipt   of   remaining


consideration of Rs. 80,000/-.  The defendant got the time for


execution of sale deed extended upto May 10, -



1995   with   the   consent   of   the   plaintiff.     However,   despite


repeated   requests   by   the   plaintiff,   she   did   not   execute   the


sale deed.   It is the plaintiff's case that she had been always


ready and willing to perform her part of the contract, but since


the  defendant  failed  to   perform   her   part   of   the   contract,   the


suit for specific performance of the contract had to be filed.



4.             The defendant contested the suit and denied the


execution   of   the   agreement   of   sale   dated   May   22,   1993.


She   also   denied   having   received   any   earnest   money.     She


stated   that   she   was   illiterate   lady   and   did   not   know   how   to


write   and   sign   and   the   subject   agreement   was   false   and


fabricated   document.       On   the   pleadings   of   the   parties,   the


trial court framed the following issues:-



               1.     Whether   the   defendant   executed   an

                      agreement to sell on 22.5.93 and executed


                    writing   dated   10.3.94   on   the   back   of   the

                    agreement  and  received  Rs.  1,48,000/- as

                    earnest money?


             2.     Whether   plaintiff   is   entitled   to   specific

                    performance   of   the   agreement   and   for

                    possession?


             3.     Whether   the   plaintiff   has   got   no   cause   of

                    action to file the present suit?


             4.     Whether   the   plaintiff   is   ready   and   willing

                    and is still ready and willing to perform her

                    part of contract?


             5.     Relief.





5.           On recording the evidence and thereafter hearing


the parties, the trial court decided issue nos. 1 to 4 in favour


of the plaintiff and decreed the plaintiff's suit on April 21, 1997


by directing the defendant to execute the sale deed by May


31, 1997, failing which it was declared that plaintiff would be


entitled to get the same executed through court on payment


of remaining consideration.



6.           The   defendant   challenged   the   judgment   and


decree  of  the  trial  court   in  appeal  before   the  District  Judge,


Sangrur.  The District Judge, Sangrur, on hearing the parties,


although did not interfere with the finding of the trial court in


respect of the execution of agreement dated May 22, 1993,


but   held   that   both   the   parties   had   contributed   towards


frustration   of   the   execution   of   the   sale   deed   and,   therefore,


the   plaintiff   was   not   entitled   to   specific   performance   of   the


agreement.     The   District   Judge,   accordingly,   modified   the


decree of the trial court by directing refund of Rs. 1,48,000/-


along   with   interest   at   the   bank   rate   from   the   date   of   the


agreement until realization.



-



7.            Being not satisfied with the judgment and decree


dated January 5, 2001 passed by the District Judge, Sangrur,


the   plaintiff   preferred   second   appeal   before   the   Punjab   and


Haryana   High   Court.     As   noted   above,   the   Single   Judge


allowed the appeal; set aside the judgment and decree of the


first appellate court and restored the judgment and decree of


the trial court.



8.            The   perusal   of   the   judgment   of   the   High   Court


shows   that   no   substantial   question   of   law  has   been   framed


and yet second appeal was allowed.


9.         Sections   100,   101   and   103   of   the   Code   of   Civil


Procedure, 1908 (for short, `CPC') read as follows:-



           "S.-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."


           "S.101.-Second appeal on no other grounds.-

           No second appeal shall lie except on the ground

           mentioned in section 100."




               "S.103.-  Power   of   High   Court   to   determine

               issues   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."




10.            The   jurisdiction   of   the   High   Court   in   hearing   a


second   appeal   under   Section   100   CPC   has   come   up   for


consideration   before   this   Court   on   numerous   occasion.     In


long     line   of   cases,   this   Court   has   reiterated   that   the   High


Court has a duty to formulate -



the   substantial   question/s   of   law   before   hearing   the   second


appeal.    As   a   matter   of   law,   the   High   Court   is   required   to


formulate substantial question of law involved in the second


appeal   at   the   initial   stage   if   it   is   satisfied   that   the   matter


deserves   to   be   admitted   and   the   second   appeal   has   to   be


heard and decided on such substantial question of law.   The


     two   decisions   of   this   Court   in   this   regard   are:    Kshitish


     Chandra Purkait  v.  Santosh Kumar   Purkait and Others1,


     and  Dnyanoba     Bhaurao     Shemade  v.  Maroti     Bhaurao


     Marnor2.   It needs to  be clarified  immediately  that  in  view


     of   sub-section (5) of Section 100, at the time of  hearing   of


     second   appeal,    it is open to the High Court to re-formulate


     substantial   question/s     of   law   or   formulate   fresh   substantial


     question/s of law or hold that no substantial question of law is



     involved.  This   Court   has   repeatedly   said   that   the   judgment


     rendered by the  High Court  under Section  100 CPC without


     following   the   procedure   contained   therein   cannot   be



     sustained. That the High Court  cannot  proceed to hear  the


     second  appeal  without  formulating  a  substantial  question


     of law   in   light   of the   provisions   contained in Section 100


     CPC has   been  reiterated in -





1


      (1997) 5 SCC 438




2


     (1999) 2 SCC  471  
     


     Panchugopal   Barua   and   Others  v.  Umesh   Chandra


     Goswami   and Others;3,  Sheel Chand  v.  Prakash Chand4;


     Kanai   Lal   Garari   and   Others  v.  Murari   Ganguly   and


     Others5;  Ishwar Dass Jain (Dead) through L.Rs.  v.  Sohan


     Lal (Dead) by L.Rs.6;  Roop Singh (Dead) through L.Rs.  v.


     Ram   Singh   (Dead)   through   L.Rs.;7  Santosh   Hazari  v.


     Purushottam Tiwari (Deceased) by L.Rs.8; Chadat Singh v.


     Bahadur   Ram   and   Others9;  Sasikumar   and   Others  v.


3


       (1997) 4 SCC 713




4


       (1998) 6 SCC 683




5


       (1999) 6 SCC 35




6


       (2000) 1 SCC 434




7


       (2000) 3 SCC 708




8


       (2001) 3 SCC 179




9


       (2004) 6 SCC 359


      Kunnath   Chellappan   Nair   and   Others10;  C.A.   Sulaiman


      and   Others  v.  State   Bank   of   Travancore,   Alwayee   and


      Others11; Bokka Subba Rao v.   Kukkala  Balakrishna  and


      Others12;    Narayanan   Rajendran     and       Another  v.


      Lekshmy     Sarojini     and     Others13  and  Municipal


      Committee, Hoshiarpur  v. Punjab State Electricity Board


      and Others14.  



      11.             Some   of   the   above   decisions   and   the   provisions


      contained   in   Sections   100,   101   and   103   CPC   were


      considered  in a -





10


        (2005) 12 SCC 588




11


        (2006) 6 SCC 392




12


       (2008) 3 SCC 99




13


       (2009) 5 SCC 264




14


       (2010) 13 SCC 216


      recent decision of this Court in Umerkhan v. Bismillabi alias


      Babulal   Shaikh   and   Others.15.  One   of   us   (R.M.   Lodha,J.)


      speaking   for   the   Bench   in  Umerkhan15                       stated   the   legal
                                                                     




      position   with   regard   to   the   jurisdiction   of   the   High   Court   in


      hearing   a   second   appeal   in   paragraphs   11   and   12   of   the


      Report (page 687) thus:



                       "11.    In   our   view,   the   very   jurisdiction   of   the

                       High   Court   in   hearing   a   second   appeal   is

                       founded   on   the   formulation   of   a   substantial

                       question   of   law.       The   judgment   of   the   High

                       Court is rendered patently illegal,   if a   second

                       appeal   is   heard   and   judgment   and   decree

                       appealed against is reversed without formulating

                       a   substantial   question   of   law.     The   second

                       appellate    jurisdiction   of  the  High   Court     under

                       Section   100   is   not   akin   to   the   appellate

                       jurisdiction   under   Section   96   of   the   Code;   it   is

                       restricted   to   such   substantial   question   or

                       questions   of   law   that   may   arise   from   the

                       judgment   and   decree   appealed   against.    As   a

                       matter of law, a second appeal is entertainable

                       by  the High Court only upon its satisfaction that

                       a   substantial   question   of   law  is   involved   in  the

                       matter and its formulation thereof.   Section 100

                       of   the   Code   provides   that   the   second   appeal

                       shall be heard on the question so formulated. It

                       is, however, open to the High Court to reframe

                       substantial question of law or frame substantial

                       question of law afresh or hold that no substantial

                       question of law is involved at the time of hearing

                       the second appeal  but reversal of the judgment



15


       (2011) 9 SCC 684


                      and   decree   passed   in   appeal   by   a   court

                      subordinate to it in exercise of jurisdiction under

                      Section   100   of   the   Code   is   impermissible

                      without   formulating   substantial   question   of   law

                      and a decision on such question".


                                                            (emphasis

                      supplied)





                      -


                      12.    This Court has been bringing to the notice

                      of   the   High   Courts   the   constraints   of   Section

                      100   of   the   Code   and   the   mandate   of   the   law

                      contained in Section 101 that no second appeal

                      shall   lie   except   on   the   ground   mentioned   in

                      Section 100, yet it appears that the fundamental

                      legal position concerning jurisdiction of the High

                      Court   in   second   appeal   is   ignored   and

                      overlooked time and again. The present appeal

                      is  unfortunately one of such matters where  the

                      High   Court   interfered   with   the   judgment   and

                      decree   of   the   first   appellate   court   in   total

                      disregard of the above legal position."  





      The above principle of law concerning jurisdiction of the High


      Court under Section 100 CPC laid down in  Umerkhan15  has


      been   reiterated   in   a   subsequent   decision   in  Shiv   Cotex  v.


      Tirgun   Auto   Plast   Private   Limited   and   Others.  16.    This





16


       (2011) 9 SCC 678


Court     through   one   of   us     (R.M.   Lodha,J.)   observed   in


paragraph 11 of the Report (page 681) as follows:-



             "The   judgment   of   the   High   Court   is   gravely

             flawed   and   cannot   be   sustained   for   more   than

             one reason.     In the first  place, the High  Court,

             while   deciding   the   second   appeal,   failed   to

             adhere to the necessary requirement of Section

             100   CPC   and   interfered   with   the   concurrent

             judgment and decree of the courts below without

             formulating any substantial question of law.  The

             formulation   of   substantial   question   of   law   is   a

             must   before   the   second   appeal   is   heard   and

             finally disposed of by the High Court.  This Court

             has       reiterated   and   restated   the   legal   position

             time   out   of   number   that            formulation   of

             substantial question of law is a condition -


             precedent for entertaining and deciding a second

             appeal......".





12.            The   relevant   discussion   in   the   judgment   by   the


High Court reads as follows:



              "After  hearing   learned  counsel  for  the   parties

              and going through the records of the case, this

              appeal deserves acceptance and the judgment

              and decree passed by the trial court deserves

              to   be   restored   for   the   reasons   to   be   given

              hereinafter.


              In   this   case,   the   defendant-respondent   could

              not   produce   any   evidence   on   record   to   show

              that the said agreement to sell was forged or a

              fabricated   document   or   it   was   the   result   of

              fraud   or   misrepresentation.     The   plaintiff-

              appellant   proved   on   record   that   she   had

              always been ready and willing to perform her


part of the agreement.  In fact, filing of the suit

by the plaintiff-appellant itself showed that she

was   ready   and   willing   to   perform   her   part   of

the   agreement.     The   defendant-respondent

had   denied   her   signatures   on   the   agreement

to   sell   (Exhibit   P.1)   and   the   endorsement

(Exhibit   P.3)   made   on   the   back   of   the

agreement, vide which the date of execution of

the sale deed was extended from 10.3.1994 to

10.5.1995   by   claiming   that   she   did   not   know

how   to   write   and   sign.     However,   there   is

evidence   of   Telu   Ram   (P.W.4),   produced   by

the plaintiff.  Telu Ram (P.W.4) had brought the

original   file   No.   2110   concerning   the

defendant-respondent  Hardeep  Kaur whereby

she   had   taken   loan.     On   the   application

(Exhibit   P.5)   for  taking   loan,   on  the  receipt   of

payment   of   loan   amount   (Exhibit   P.6)   and   on

the other documents pertaining to the sanction

of   loan   (Exhibits   P.7   to   P.12),   the   defendant

had   put   her   signatures.     It,   thus,   belied   the

stand of the defendant that she usually thumb

marked the documents and had not signed the

agreement   to   sell     (Exhibit   P.1)   and   the

endorsement (Exhibit P.3).  -


Both these documents i.e., Exhibit P.1 and P.3

prove in certain terms that the defendant had

agreed to sell the land measuring 15 Bighas 4

Biswas to the plaintiff for Rs. 2,38,000/-.  Major

part   of   the   sale   consideration   i.e.,   Rs.

1,48,000/- had already been paid at the time of

execution   of   the   agreement   to   sell   (Exhibit

P.1).        The   remaining   amount   of   sale

consideration   of   Rs.   80,000/-   was   deposited

by the plaintiff in the trial court.   It shows that

the plaintiff has always been ready and willing

to perform her part of the agreement.   Under

the   circumstances,   the   lower   appellate   court

was   not   justified   in   confining   the   relief   of   the

plaintiff to the return of earnest money only.


                Under   the   circumstances,   this   appeal

                succeeds.   The same is, accordingly, allowed.

                The judgment and decree passed by the lower

                appellate court are set aside and those of the

                trial   court   are   restored.     However,   there   shall

                be no order as to costs."





13.            Apparently,   the   High   Court   has   ignored   and


overlooked   the   mandatory   requirement   of   the   second


appellate   jurisdiction   as   provided   in   Section   100   CPC   and


that vitiates its decision as no substantial question of law has


been   framed   and   yet   the   judgment   and   decree   of   the   first


appellate   court   has   been   reversed.     However,   Mr.   Neeraj


Kumar   Jain,   learned   senior   counsel   for   the   respondent,


submitted   that   though   no   substantial   question   of   law   has


been expressly framed by the High Court while accepting the


second appeal,  but  the  above discussion by  the  High  Court


clearly   shows   that   the   High   Court   considered   the   questions


whether  the -



plaintiff   was   entitled   to   the   grant   of   decree   of   specific


performance of the contract once execution of agreement has


been   duly   proved   and   the   plaintiff   was   always   ready   and


willing   to   perform   her   part   of   the   contract     and   whether   the


      first   appellate   court   has  correctly exercised  the  discretion  in


      terms   of   Section   20   of   the   Specific   Relief  Act,   1963   while


      refusing   the   decree   for   specific   performance   of   the   contract


      as   was   ordered   by   the   trial   court.     In   this   regard,   he   relied


      upon a decision of this Court in M.S.V. Raja and Another  v.


      Seeni Thevar and Others17.



      14.             In paragraph 18 (pages 659-660) of the Report in


      M.S.V. Raja17   this Court observed as follows:



                      "We  are   unable   to   accept   the   argument   of  the

                      learned   Senior   Counsel   for   the   appellants   that

                      the impugned judgment cannot be sustained as

                      no   substantial   question   of   law   was   formulated

                      as required under Section 100 CPC.  In para 22

                      of   the   judgment   the   High   Court   has   dealt   with

                      substantial questions of law.   Whether a finding

                      recorded   by   both   the   courts   below   with   no

                      evidence to support it was itself considered as a

                      substantial question of law by the High Court.   It

                      is   further   stated   that   the   other   questions

                      considered and dealt with by the learned Judge

                      were also substantial questions of law.   Having

                      regard   to   the   questions   that   were   considered

                      and   decided   by   the   High     Court,   it   cannot   be

                      said   that   substantial   questions   of   law   did   not

                      arise   for   consideration   and   they   were   not

                      formulated.  Maybe, substantial questions of law

                      were -





17


       (2001) 6 SCC 652


               not   specifically   and   separately   formulated.     In

               this   view,   we   do   not   find   any   merit   in   the

               argument of the learned counsel in this regard."





15.            In  M.S.V.   Raja17   this   Court   found   that   the   High
                                       





Court in paragraph 22 of the judgment   under consideration


therein had dealt with substantial questions of law.  The Court


further observed that the finding recorded by both the courts


below with no evidence to support it was itself considered as


a substantial question of law by the High Court.  It was further


observed that the other questions considered and dealt with


by   the   learned   Judge     were   substantial   questions   of   law.


Having   regard   to   the   questions   that   were   considered   and


decided   by  the   High   Court,   it   was   held   by  this   Court   that   it


could not be said that the substantial questions of law did not


arise   for   consideration   and   they  were   not   formulated.      The


sentence   `maybe   substantial   questions   of   law   were   not


specifically and separately formulated' in  M.S.V. Raja17   must
                                                                           





be   understood   in   the   above   context   and   peculiarity   of   the


case under consideration.  The law consistently stated by this


Court that formulation of substantial question of law is a sine


qua   non  for   exercise   of   jurisdiction   under   Section   100   CPC


admits of no ambiguity and permits no departure.



-



16.            In the present case,   the High Court has allowed


the second appeal and set aside the judgment and decree of


the   first   appellate   court   without   formulating   any   substantial


question of law, which is impermissible and that renders the


judgment of the High Court unsustainable.



17.            Consequently,   the   appeal   is   allowed   and   the


impugned   judgment   of   the   High   Court   is   set   aside.     The


second appeal (R.S.A. No. 1679 of 2001 - Malkiat Kaur vs.


Hardeep   Kaur)     is   restored   to   the   file   of   the   High   Court   for


fresh   consideration   in   accordance   with   law.   No   order   as   to


costs.





                                                                        .............

                                                                ................ J.

                                                                                 (R.M.


Lodha)


                       ........................

                                .....J.

                      (H. L. Gokhale)


NEW DELHI

MARCH  16, 2012.