sajikoduvath

M.S. Ananthamurthy v. J. Manjula: Mere Word ‘Irrevocable’ Does Not Make a POWER OF ATTORNEY Irrevocable

Saji Koduvath, Advocate, Kottayam.

Abstract

If only an ‘interest’ is Created in favour of the Power Holder (Donee), then only a PoA becomes Irrevocable. It must have been to secure a proprietary interest.
Document requires Registration if ‘interest’ is created in an immovable property.
It is also pointed out – in an injunction suit, where there are necessary pleadings and appropriate issue, and the matter involved is simple and straightforward, then only the court would decide upon the issue regarding ‘title‘.

Power of Attorney: Basis in Law

It is that of the fiduciary relationship between ‘Principal & Agent’.

Chapter X of the Contract Act provides for “Agency” in general. Sections 1A and 2 of the Powers of Attorney Act, 1882 specifically deals with Powers-of-Attorney. Section 1-A of the Powers-of-Attorney Act defines power of attorney to include any instruments empowering a specified person to act for and in the name of the person executing it.

Section 2 of the owers of Attorney Act, 1882 reads as under:

“2. Execution under power of attorney—The donee of a power of attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof.
This section applies to powers of attorney created by instruments executed either before or after this Act comes into force.”

In M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273, it is held as under:

“27. A power of attorney derives its basic principles from Chapter X of the Contract Act which provides for “Agency” along with Sections 1A and 2 respectively of the Powers of Attorney Act, 1882. Agency is a fiduciary relationship between two persons, where one explicitly or implicitly agrees that the other will act on their behalf to influence their legal relations with third parties, and the other similarly agrees to act in this capacity or does so based on an agreement. The relationship between the executant of a general power of attorney and the holder of the power is one of principal and agent. A principal is bound by the acts done by an agent or the contracts made by him on behalf of the principal. Likewise, power of attorney in the nature of contract of agency authorizes the holder to do acts specified by the executant, or represent the executant in dealings with third persons.”

Power of Attorney: Genesis in Contract

In Syed Abdul Khader v. Rami Reddy, (1979) 2 SCC 601, the Supreme Court held that the relation between the donor of the power and the donee of the power is one of the principal and agent having its genesis in a contract. It is held as under:

“10. The first contention of the appellant is that it was impermissible in law for three persons to jointly grant a power of attorney in favour of Defendant 34. Barring the ipse dixit of the learned counsel nothing was shown to us to make such a joint power impermissible in law. The relation between the donor of the power and the donee of the power is one of the principal and agent and the expression “agency” is used to connote the relation which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties. The relation of agency arises whenever one person called the agent has authority to act on behalf of another called the principal and consents so to act. The relationship has its genesis in a contract. If agency is the outcome of a contract between the principal and the agent, in order to show that three principals jointly constituting an agent by a deed called “Power of Attorney” was impermissible, provisions of Contract Act or the general law of contract should have been shown as having been violated by such a contract.
Nothing of the kind was pointed out to us. On the contrary, in Halsbury’s Laws of England, Vol. I, 4th Edn., para 726, the following proposition has been stated:
“Co-principals may jointly appoint an agent to act for them and in such case become jointly liable to him and may jointly issue him.” We are in agreement with this view and, therefore, three principals could jointly appoint an agent.” (Quoted in M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273)

In State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, it is observed as under:

“13. Power of attorney: A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.” (Quoted in M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273)

No Termination, If Agent has an Interest

Section 201 of the Contract Act reads as under:

201. Termination of agency– An agency is terminated
- by the principal revoking his authority, or
- by the agent renouncing the business of the agency; or
- by the business of the agency being completed; or
- by either the principal or agent dying or becoming of unsound mind; or
- by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

Section 202 of the Contract Act reads as under:

202. Termination of agency, where agent has an interest in subject-matter— Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.”

Illustrations given to Sec. 202 explain what is ‘interest’ in Sec. 202 [viz., (i) to pay himself, out of the proceeds, the debts due to him from A; (ii) to repay himself out of the price the amount of his own advances].

Illustrations in Sec. 202 read as under:

(a) A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.

If only ‘INTEREST’ Created, PoA becomes Irrevocable

In M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273, it was contended that the GPA was coupled with interest, and made the agency irrevocable by virtue of Section 202 of the Contract Act; for, the PoA, read with the agreement to sell an immovable property, executed on the same day to the same person, categorically stated –

(i) the POA was executed for a consideration, and
(ii) the possession of the suit property was delivered to the holder.

Analysing Sec. 202, in the light of the illustrations, the Apex Court held as under in this case (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273):

“35. Therefore, the essentials of Section 202 of the Contract Act are,
first, there shall be a relationship in the capacity of ‘principal and agent’ between the parties and
secondly, there shall be agent’s interest in the subject-matter of the agency.
If both the conditions are fulfilled the agency becomes irrevocable and cannot be terminated unilaterally at the behest of the principal.”

In M.S. Ananthamurthy our Apex Court also points out that Section 202 of the Contract Act is an exception to the general rule under Section 201; and that Sec. 202 prescribes – where an agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot be terminated to the prejudice of such interest unless there is an express stipulation to the contrary.

The court extracted the following from Bowstead on Agency, 14th Edition, page 423. It reads as under:

“(i) Where the authority of an agent is given by deed or for valuable consideration, for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest. But it is not irrevocable merely because the agent has an interest in the exercise of it or has a special property in, or lien for advances upon, the subject matter of it, the authority not being given expressly for the purpose of securing such interest or advances;
(ii) Where a power of attorney, whenever created is expressed to be irrevocable and is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest, or the obligation remains undischarged, the power is irrevocable;
(iii) Authority expressed by this article to be irrevocable is not determined by the death, insanity or bankruptcy of the principal, nor ……where the principal is an incorporated company, but its winding up or dissolution, and cannot be revoked by the principal without the consent of the agent.”

The Supreme Court also referred to the following decisions, in this regard –

Dalchand v. Seth Hazarimal, 1931 SCC OnLine MP 57,
Palani Vannan v. Krishnaswami Konar, 1945 SCC OnLine Mad 119,
Shri Harbans Singh v. Smt. Shanti Devi, 1977 SCC OnLine Del 102.

If Full Sale Consideration Paid, PoA Becomes Irrevocable

In Akbarbhai Kesarbhai Sipai v Mohanbhai Ambabhai Patel, 2019-3 GLH 523, it is observed (J.B. Pardiwala, J.) as under:

“Indisputably, the so called irrevocable power of attorney coupled with interest is not a registered document. I am at one with Mr. Dave that the power of attorney is in substance in the form of a sale. In the last part of the document, it is clearly stated that full sale consideration of the property is being paid to the power of attorney by the plaintiffs. There is no doubt that law does not recognize such a sale.”

A document has to be seen as a whole.

The Apex Court further pointed out that the nomenclature of the POA does not determine its nature. Even a POA termed as a ‘general power of attorney’ may confer powers that are special in relation to the subject matter. Halsbury, Vol. 1, at page 151, is quoted:

“A general agent is one who has authority, arising out of and in the ordinary course of his business or profession, to do some act or acts on behalf of his principal in relation thereto; or one who is authorised to act on behalf of the principal generally in transactions of a particular kind or incidental to a particular business.”

The Court further referred the following decisions –

Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira, (1977) 3 SCC 474.
Manubhai Prabhudas Patel v. Jayantilal Vadilal Shah, 2011 SCC OnLine Guj 7028. (In this case Anantha Pillai v. Ratiinasabapatiiy Mudaliar, 1968 (2) MLJ 574, quoted which said – “The general principles regarding the construction of power of attorney are well settled. Powers of attorney must be strictly construed as giving only such authority as they confer expressly or by necessary implication.)

Document requires Registration if ‘interest’ Created in immovable property

With respect to registration of the document (under the provisions of the Registration Act, 1908) , it is stated in this decision (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273) as under:

“51. Section 17(1)(b) prescribes that any document which purports or intends to create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property is compulsorily registerable. Whereas, Section 49 prescribes that the documents which are required to be registered under Section 17 will not affect any immovable property unless it has been registered.”

In this regard the Apex Court referred the following decisions –

Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, (2012) 1 SCC 656,
Shyam Narayan Prasad v. Krishna Prasad, (2018) 7 SCC 646,
Channegowda v. N.S. Vishwanath 2023 SCC OnLine Kar 153.

Effect of Suit for Injunction Simpliciter

It was argued in this case (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273) that the plaintiff had not challenged the validity of the GPA and the agreement. Discarding the submission it was held –

“Where the question of title is “directly and substantially” in issue in a suit for injunction, and where a finding on an issue of title is necessary for granting the injunction, with a specific issue on title raised and framed, a specific prayer for a declaration of title is not necessary…..To summarize, where a finding on title is necessary for granting an injunction and has been substantially dealt with by the Trial Court in a suit for injunction, a direct and specific prayer for a declaration of title is not a necessity.”

The Apex Court relied on Anathula Sudhakar v. P. Buchi Reddy, (2008) 4 SCC 594, which, inter alia, held as under:

“(c) But a finding on title cannot be recorded in a suit for injunction, unless there are necessary pleadings and appropriate issue regarding title (either specific, or implied as noticed in Annaimuthu Thevar [Annaimuthu Thevar v. Alagammal, (2005) 6 SCC 202] ). Where the averments regarding title are absent in a plaint and where there is no issue relating to title, the court will not investigate or examine or render a finding on a question of title, in a suit for injunction. Even where there are necessary pleadings and issue, if the matter involves complicated questions of fact and law relating to title, the court will relegate the parties to the remedy by way of comprehensive suit for declaration of title, instead of deciding the issue in a suit for mere injunction.
(d) Where there are necessary pleadings regarding title, and appropriate issue relating to title on which parties lead evidence, if the matter involved is simple and straightforward, the court may decide upon the issue regarding title, even in a suit for injunction. But such cases, are the exception to the normal rule that question of title will not be decided in suits for injunction. …”

Conclusion

M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273 is an authority for the following –

1. Sec. 202 of the Contract Act determines when a PoA becomes irrevocable. It says –

If only an ‘Interest’ is Created in favour of the Power Holder (Donee), then only a PoA becomes Irrevocable.

It is explained in the illustrations of Sec. 202. It must have been to secure a proprietary interest. The instances shown are the following –

(a) To pay (from out of the proceeds) the (prior) debts due to the power-holder (donee) from the Principal.
(b) To repay (the power-holder himself, from out of the price) the amount he has made as advances to the Principal.
- A PoA will not be irrevocable merely for (i) it was executed for a consideration, and (ii) the possession of the suit property was delivered to the holder.

2. Document requires Registration if ‘interest’ created in immovable property.

3. Where there are necessary pleadings and appropriate issue, and the matter involved is simple and straightforward, then only the court would decide upon the issue regarding ‘title‘.

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General

Cancellation, Avoidance or Declaration of a Void or Voidable Deed

Taken from: Cancellation of Sale Deeds and Settlement Deeds & Powers of Sub-Registrar in Cancelling Deeds

Saji Koduvath, Advocate, Kottayam

PART I

Key Takeaways

A party to a (void or voidable) document alone need to get it cancelled; other persons can ignore it.
The true owner of a property cannot seek cancellation of a deed, executed by a stranger to the property.
When the plaintiff cannot establish his title without avoiding an instrument that stands as an insurmountable obstacle, the plaintiff has to seek a declaration.
A registered deed cannot be unilaterally cancelled by its executant. The only remedy available is to invoke Sec. 31, Sp. Relief Act.
If a person is aggrieved by a deed, the remedy open for him is to seek appropriate relief in the civil Court.
Registrar is not competent to cancel the registered document.
Does the Registering Authority hold Quasi-Judicial power? No.
Does the Registrar has duty to see – document is presented in accordance with law? Yes.
Does the Registrar hold power to desist from registering a document, submitted along with the necessary documents? No.
It forms no part of a Registering Officer’s duty to enquire into the validity of a document [except documents styled as marriage agreement] brought to him for registration. (Rule 67 of the Kerala Registration Rules)

1910 Settlement Register of Travancore – Basic Record of Land Matters

Taken from: Land Tenures, and History of Land Derivation, in Kerala

Saji Koduvath, Advocate, Kottayam.

Revenue Settlement Registers of Travancore in 1910, Basic Record of Land Matters

The Kerala High Court held in Mohandas v. Santhakumari Amma, 2018-3 KLT 606 as under:

“We notice that, a new survey and settlement was undertaken in the erstwhile Travancore State for the purpose of putting in place a sound Revenue administration. Accordingly, it appears that a complete survey and reassessment of the entire State ’embracing an accurate measurement, demarcation, mapping and valuation of properties of every description and a registration of titles, as the basis of a sound Revenue Administration’*^* was carried out. On the basis of such a statement a proclamation was issued by the Maharaja of Travancore on 14^th Kumbhom 1061 corresponding to 24^thFebruary 1886.”
*^* Refer “Revenue Settlement of Travancore 1058-1086 M.E.; 1883-1911 A.D.: Final Report” published in 1912

Godrej Projects: Did the SC Miss to State Something – on Forfeiture of Earnest Money?

Saji Koduvath, Advocate, Kottayam.

Abstract

Sec. 74 lays down two (enforceable) classes –
- 1. a sum named (or fixed or pre-estimated) as damages to be paid in case of breach; and,
- 2. any other stipulation by way of penalty.
Three restraints are discussed in Section 74.
- 1. A ‘reasonable compensation’ alone will be entitled to by the claimant.
- 2. The claimant is entitled compensation, ‘whether or not actual damage or loss is proved’.
- 3. It must be reasonable compensation ‘not exceeding the amount so named’.
The following (apparently antithetical) words in this Section (ex-facie, out of ‘ill-drafting’) Triggered Controversies.
- (1) “reasonable compensation”
- (2) ‘whether or not actual damage or loss is proved’ and
- (3) “not exceeding the amount so named”.
The following are the divergent views –
- 1. Earnest money (nominal sum , e. g. a shilling) can be forfeited but in dealing with the rest of the amount which was not admittedly earnest money Section 74 shall apply (Maula Bux v. Union of India, AIR 1970 SC 1955; 1969-2 SCC 554).
- 2. The court has to adjudge in every case reasonable compensation. Because, liability for damages is a matter for the civil court, and a party to an agreement cannot be an arbiter in its own cause (Union of India v. Raman Iron Foundry, AIR 1974 SC 1265: (1974) 2 SCC 231).
- 3. Earnest sum (i.e. pre-estimated damages) can be forfeited directly, if breach from other side (Satish Batra v. Sudhir Rawal, (2013) 1 SCC 345).
- 4. If breach alleged by a party is DENIED by the other, adjudication (is) necessary. If breach is admitted, injured party can forfeit, without aid of court (State of Karnataka v. Rameswara Rice Mill, (1987) 2 SCC 160).
- 5. Onus to prove that the same was ‘penal’ in nature squarely lies on the party seeking refund of the same. Failure to discharge such burden would treat any pre-estimated amount stipulated in the contract as a ‘genuine pre-estimate of loss’ (ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705).

Part I

Legal Background of Godrej Projects Development Limited v. Anil Karlekar (2025 INSC 143, Feb. 3, 2025)

What is Earnest-Money?

In law of contracts, earnest-money is the amount paid as advance in sale of a property and forms part of the purchase price when the transaction goes forward; and liable to be forfeited by the seller, in case the sale is failed owing to the fault of the purchaser (Shree Hanuman Cotton Mills v. Tata Aircraft Limited, 1970 (3) SCR 127).

In Maula Bux v. Union of India, AIR 1970 SC 1955; 1969-2 SCC 554, it is shown that the earnest money is a ‘nominal sum’. It is stated as under:

“According to Earl Jowitt in “The Dictionary of English Law” at P 689: “Giving an earnest or earnest-money is a mode of signifying assent to a contract of sale or the like by giving to the vendor a nominal sum (e. g. a shilling) as a token that the parties are in earnest or have made up their minds.”

In Authorised Officer, Central Bank of India v. Shanmugavelu, AIR 2024 SC 962; 2024-6 SCC 641, it is pointed out as under:

“83. The difference between an earnest or deposit and an advance part payment of price is now well established in law. Earnest is something given by the Promisee to the Promisor to mark the conclusiveness of the contract. This is quite apart from the price. It may also avail as a part payment if the contract goes through. …. Earnest need not be money but may be some gift or token given. It denotes a thing of value usually a coin of the realm given by the Promisor to indicate that the bargain is concluded between them and as tangible proof that he means business. Vide Howe vs. Smith, (1884) 27 Ch.D. 89.”

Section 74 of the Indian Contract Act holds the field.

Sec. 74 Says as to ‘Reasonable Compensation’

A genuine ‘pre-estimated damages’ (on breach) had been accepted in law of contracts, under the English Common Law. But, a penalty had not been enforced by common law courts, as it was a stipulation in terrorem.

Sec. 74 mandates that the contractual terms as to damages, should subserve the edicts under this Section.

Section 74 of the Indian Contract Act reads as under:

S. 74: “Compensation for breach of contract where penalty stipulated for: When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.”

Section 74 lays down two (enforceable) classes –

1. a sum named (or fixed or pre-estimated) as damages to be paid in case of breach; and,
2. any other stipulation by way of penalty.

Three restraints are discussed in Section 74.

1. A ‘reasonable compensation’ alone will be entitled to by the claimant.
2. The claimant is entitled compensation, ‘whether or not actual damage or loss is proved’.
3. It must be reasonable compensation ‘not exceeding the amount so named’.

The following (apparently antithetical) words in this Section Triggered Controversies..

(1) “reasonable compensation”
(2) ‘whether or not actual damage or loss is proved’ and
(3) “not exceeding the amount so named”.

Two points of Disputes on Application of Sec. 74

They are:

1. Whether Adjudication of court necessary for fixing damages (even if ‘breach’ admitted)?
2. Whether the pre-estimated damages can be forfeited (by the party concerned) in case ‘breach’ is ‘admitted’ by the other party?

First View – Earnest (Nominal) can be Forfeited; Rest Not

Maula Bux (1987) and Fateh Chand (1970) – Two Earlier Decisions on Earnest Money

In Fateh Chand v. Balkishan Das AIR 1963 SC 1405, the Constitution Bench of out Apex Court observed as under:

“11. …. In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of contract which expressly provides for forfeiture, the court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture….
15. …. The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. ….. The court has to adjudge in every case reasonable compensation to which the plaintiff is entitled from the defendant on breach of the contract. …..”

Gujrat High Court (MB Shah, J.) in State of Gujarat v. Mohanlal Motilal and Company, 1987-1 GLH 447, analysed Maula Bux v. Union of India, AIR 1970 SC 1955, and Fateh Chand v. Balkishan Das AIR 1963 SC 1405, and said as under:

“The Supreme Court (Maula Bux v. Union of India, AIR 1970 SC 1955) also considered the decision in Fateh Chand v. Balkishan Das AIR 1963 SC 1405 and held that the said decision recognised a principle that earnest money can be forfeited but in dealing with the rest of the amount which was not admittedly earnest money Section 74 shall apply.”
_{(But, note: Sec. 74 covers – “if a sum is named in the contract as the amount to be paid in case of such breach” (whereby, earnest is also covered by Sec. 74). It is the reason that these rulings are not consistently} _followed.)

Second View Damages, Only After Adjudication

Liability for damages is a matter for the civil court, and a party to an agreement cannot be an arbiter in its own cause. This proposition is followed in the following cases:

Bharat Sanchar Nigam Ltd. v. Motorola India Pvt. Ltd., AIR 2009 SC 357: 2009 2 SCC 337;
Rambal Co. v. Kerala State Science & Technology Museum, 2000 (3) Arb. LR 212;
Union of India v. Raman Iron Foundry, AIR 1974 SC 1265: (1974) 2 SCC 231.
Mohammed Kunhi v. Executive Engineer, 2001(3) KLT 733;
Union of India v. Tejinder Kumar Dua, 2013-200 DLT 60;
Tulsi Narayan Garg v. Madhya Pradesh Road Development Authority, Bhopal, 2019 SCC OnLine SC 1158.
Latheef v. Superintending Engineer, ILR 1993(2) Ker 426;
Abdul Rahiman v. Divisional Forest Officer, AIR 1989 Ker 1;

SThird View – Earnest Sum Can be Forfeited Directly, if Breach From Other Side

It is the view in Satish Batra v. Sudhir Rawal, (2013) 1 SCC 345.

Fourth View – If Breach Admitted (otherwise, not), Injured Party can Forfeit, Without aid of Court

Where a sum is named in the contract as the amount to be paid in case of breach, and the breach is admitted (or not disputed) the injured party can forfeit (by himself); and need not seek the aid of court.

State of Karnataka v. Rameswara Rice Mill, (1987) 2 SCC 160
Kaikkara Construction Company v. State Of Kerala, (2022) 1 Ker HC 541
Abdul Rahiman v. Divisional Forest Officer, 1988 (2) Ker LT 290

In other words, if breach alleged by a party is DENIED by the other, adjudication (is) necessary.

State of Kerala v M.K. Jose, (2015) 9 SCC 433,
JG Engineers Private Limited v. Union of India, AIR 2011 SC 2477: (2011) 5 SCC 758,
State of Karnataka v. Rameshwara Rice Mills, Thirthahalli, AIR 1987 SC 1359,
Build Tech India Ltd. v. State of Kerala, 2000 (2) Ker LJ 142 (breach – not admitted).

Fifth View – Onus to Prove ‘Penal’ lies on the Party Seeking Refund

Referring ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, it is held in Desh Raj v. Rohtash Singh, 2023 AIR SC 163; 2023-3 SCC 714, as under:

“35. …. Hence, in a scenario where the contractual terms clearly provide the factum of the pre estimate amount being in the nature of ‘earnest money’, the onus to prove that the same was ‘penal’ in nature squarely lies on the party seeking refund of the same. Failure to discharge such burden would treat any pre-estimated amount stipulated in the contract as a ‘genuine pre-estimate of loss’.”

Two Divergent Decisions Holds the Field- Satish Batra (2013) and Kailash Nath (2015)

The divergent views are the following –

1. The words ‘whether or not actual damage or loss is proved’ are to be given effect. Thereby, the entire “earnest” money could be forfeited by seller, of his own, in case the buyer breaches the contract.
2. The implication of the word ‘reasonable’ is that the compensation is a matter always left to be determined by the appropriate court of law or other legal forum. Even if the parties to the contract have pre-estimated the damages, the injured party cannot appropriate the pre-estimated damages, of his own and the reasonable compensation or damages was always subject to,or depended upon, the judicial determination.

Injured party can appropriate the pre-estimated damages, of his own

It is held in Satish Batra v. Sudhir Rawal (2013 (1) SCC 345) as under:

“15. The law is, therefore, clear that to justify the forfeiture of advance money being part of “earnest money” the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non- performance by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get double the amount, if it is so stipulated. It is also the law that part-payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part- payment of consideration and not intended as earnest money then the forfeiture clause will not apply.
16. When we examine the clauses in the instant case, it is amply clear that the clause extracted hereinabove was included in the contract at the moment at which the contract was entered into.
It represents the guarantee that the contract would be fulfilled. In other words, “earnest” is given to bind the contract, which is a part of the purchase price when the transaction is carried out and it will be forfeited when the transaction falls through by reason of the default or failure of the purchaser. There is no other clause that militates against the clauses extracted in the agreement dated 29-11-2011.
17. We are, therefore, of the view that the seller was justified in forfeiting the amount of Rs 7,00,000 as per the relevant clause, since the earnest money was primarily a security for the due performance of the agreement and, consequently, the seller is entitled to forfeit the entire deposit. The High Court has, therefore, committed an error in reversing the judgment of the trial court.”

Kailash Nath v. DD Authority, (2015) 4 SCC 136) took an Opposite View

In Kailash Nath (2015), the Supreme Court categorically held in para 43 as under:

“43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:-
Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
The Section applies whether a person is a plaintiff or a defendant in a suit.
The sum spoken of may already be paid or be payable in future.
The expression “whether or not actual damage or loss is proved to have been caused thereby” means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.
Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application.”

In Satish Batra v. Sudhir Rawal (2013 (1) SCC 345) our Apex Court had (first) taken an extreme-view that the claimant can enforce the compensation clause ‘of his own’ and it could be forfeited. In Kailash Nath v. Delhi Development Authority, (2015) 4 SCC 136, the Supreme Court took the (second) extreme-view that no amount, even a nominal sum, could be forfeited as earnest money by the seller ‘of his own’ ; he has to approach the civil court.

(Note: It had already been pointed out that that the acceptable legal position lies midway between the two differing views.)

Part II

Godrej Projects Development Limited v. Anil Karlekar

At the outset it may be pointed out – the aforestated controversy remains unanswered by this decision also. And it may be added – without addressing the controversy the Apex Court applied both principles (laid down in both the cases Satish Batra v. Sudhir Rawal and Kailash Nath v. Delhi Development Authority) without analysing and deciphering the principles thereto.

Facts in Brief

It is a case from National Consumer Disputes Redressal Commission.
The Complainant before the Consumer Commission had booked an apartment in the opposite-party, (Godrej) Projects.
He paid Rs. 51,12,310/-. An Agreement was entered into between the parties.
It was stipulated that 20% of the Basic Sale Price (BSP) would be ‘earnest money’.
It could be forfeited in case of fault by the buyer.
Godrej thereafter gave/offered possession to the Complainant.
The Complainant refused to take possession.

The Supreme Court stated as regards the conduct of the Opposite Party as under:

“It is thus clear that the Respondents had cancelled the deal since there was recession in the market. Not only that, but the NCDRC has specifically observed as under:
“Hence, the action of the OPs in cancelling the apartment and forfeiting the amount as per terms and conditions of the application form and/or the BBA cannot be faulted with. However, the condition of forfeiture of 20% of BSP, being the earnest money liable for forfeiture in case of cancellation appears unreasonable. It will be in the interest of justice and fair play to both sides, if OPs are allowed to deduct only 10% of the BSP as earnest money i.e. Rs.17,08,140/- and refund the balance amount to the complainants.”

Courts Can Strike Down Unfair And Unreasonable Contracts

The Supreme Court referred to Central Inland Water Transport Corporation Limited and Another vs Brojo Nath Ganguly (AIR 1986 SC 1571, 1986 (3) SCC 156). It held that courts can strike down unfair and unreasonable contracts, especially when parties have unequal bargaining power.

The Court also referred to Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan, where similar one-sided clauses in an agreement were considered as an “unfair trade practice”.

The Court emphasized that forfeiture of earnest money should not be a penalty, and if it is disproportionate, then Section 74 of the Indian Contract Act, 1872 would be applicable.

The Apex Court distinguished Satish Batra v. Sudhir Rawal

The Apex Court distinguished Satish Batra v. Sudhir Rawal and Desh Raj v. Rohtash Singh. In these cases, forfeiture of earnest money was upheld on the finding that the contracts were not ‘one-sided’ (and here, it is otherwise).

The Apex Court (in Godrej Projects Development Limited) extracted Paras 15, 16 and 17 (quoted above) of Satish Batra and said as under:

“19. This Court has held that to justify the forfeiture of advance money being part of “earnest money” the terms of the contract should be clear and explicit. It has been observed that the earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non- performance by the depositor. However, this Court clarified that if the payment is made only towards part-payment of consideration and not intended as earnest money then the forfeiture clause will not apply.”

Apex Court Did Not Discern the “Extreme-Views”

From the above, it is clear that the Apex Court rushed without discerning the aforementioned “extreme-views“ as regards forfeiture by “ones own”.

The Opposite Party Godrej approached the Supreme Court claiming that the NCDRC had no reason to interfere with the terms of the contract which provided for forfeiture of 20% as earnest money. NCDRC Ordered to deduct 10% cancellation charges of the BSP (not 20% – obviously applying “reasonable” compensation), and to return the balance with 6% interest. It is definite – application of the doctrine of “reasonable” compensation (in this juncture) is the application of the principles in Kailash Nath.

The Apex Court observed as under:

“38. It can be seen that this Court has held that if the forfeiture of earnest money under a contract is reasonable, then it does not fall within Section 74 of the Indian Contract Act, 1872, inasmuch as, such a forfeiture does not amount to imposing a penalty. It has further been held that, however, if the forfeiture is of the nature of penalty, then Section 74 would be applicable. This Court has further held that under the terms of the contract, if the party in breach undertook to pay a sum of money or to forfeit a sum of money which he had already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty.”

The Supreme Court pointed out that under the Agreement, Godrej was entitled to forfeit the entire earnest money upon termination of the agreement for non-payment by the buyer. And that the NCDRC had rightly held that the Appellant was entitled to cancel the apartment and “forfeit” the amount. It appears that the NCDRC and the Apex Court proceeded (in this juncture) on the ‘principles’ in Satish Batra.

The Apex Court also looked into the “reasonableness” of the provision for compensation/ forfeiture on another independent aspect _{(actually it related to Sec. 23 Contract Act – says as to void nature of the contract. See: Central Inland Water Transport Corporation Limited v. Brojo Nath Ganguly, (1986) 3 SCC 156)}. Looking into the corresponding obligation of the developer the Court found – under the agreement, the compensation payable to the buyer in case of delay in giving possession by the developer was only meagre. Thus the agreement was one-sided. And it was found that of forfeiture of 20% of the BSP was not ‘reasonable’ and requires reduction to 10% of the BSP. The NCDRC and the Apex Court proceeded (in this juncture) on the principles in Kailash Nath.

The Court said it as under:

“39. Relying on the aforesaid observations of this Court, the NCDRC, in a series of cases right from the year 2015, has held that 10% of the BSP is a reasonable amount which is liable to be forfeited as earnest money. The NCDRC has initially taken this view in the case of DLF Ltd. v. Bhagwanti Narula (supra). The said view has been followed subsequently in various judgments of the NCDRC. We see no reason to upset the view consistently taken by the NCDRC based on the judgment of this Court in the case of Maula Bux (supra).”

The Apex Court further found that the NCDRC was not justified in awarding interest on the amount to be refunded.

Conclusion

It is a simple thing – the entire difficulties have arisen out of the ‘ill-drafting’ (of Sec. 74).

As stated above, in Satish Batra v. Sudhir Rawal (2013) our Apex Court had taken an extreme-view that the claimant could enforce the compensation clause ‘of his own’ and it could be forfeited. In Kailash Nath v. Delhi Development Authority (2015), the Supreme Court took the (opposite) extreme-view that no amount – even a nominal sum – could be forfeited as earnest money by the seller ‘of his own’ ; he has to approach the civil court. When one considers these matters, it stands as an “elementary” and fundamental thing that requires resolution.

The Apex Court has to consider, in a proper case, the various aspects of this matter and lay down a settled principle. Or, the Parliament has to do the needful.

Tail Piece: Who will bell the cat? How much longer must we endure this ‘volatile’ situation – leaving it to the sweet will of the courts (on this “elementary” matter)?

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Krishnadatt Awasthy v. State of MP, 2025 INSC 128: a Case on Natural Justice – Paradoxes Surged; But, Adjudged on Sound Judicial Principles.

Calvin Principle, and the Doctrine “to do a great right” court can do “a little wrong”, not applied.

Saji Koduvath, Kottayam.

Introduction

In Krishnadatt Awasthy v. State of M.P., 29 January, 2025 (Sudhanshu Dhulia, Hrishikesh Roy, S.V.N. Bhatti), the Supreme Court of India rendered the final verdict in a referred matter from a two-judge (split) verdict (Krishnadatt Awasthy v. State of Madhya Pradesh, 2024-4 SCR 151). Doctrines of rule against bias (nemo judex in causa sua)and the right to a fair hearing (audi alteram partem) were considered in detail in this case. In the final pivotal words the Apex Court said as under:

“Therefore, for an allegation of bias to be proved, it is imperative that the procedural safeguards of a fair hearing are observed allowing for establishment of the relevant facts.”

A Paradox

(When looked on ‘non-impleadment’ of necessary parties – and not ‘hearing’ them – as a ground as to violation of Natural Justice.)

Justice K.V. Vishwanathan found – the legal process was faulty for “gross violation” of the principles of natural justice (for non-impleadment) : : but, he upheld the selection and allowed the appeal.
Justice J.K. Maheshwari found – no violation of natural justice (for “non-impleadment is a useless formality“) :: but, held the selection illegal and dismissed the appeal. _{(Of course, no doubt, the Appeal is allowed on the specific finding – on violation of natural justice}_on_‘_bias_‘.)
(The Three Judge Bench, in reference, upheld the view of Justice K.V. Vishwanathan)

Facts in Brief

Some Teachers (Shiksha Karmis) were appointed in 1998.
An unsuccessful candidate challenged the selection and appointment of the Appellants.
Nepotism, corruption and bias, in the selection process, were the allegations.
Ten appointees were alleged to be the relatives of the members of the selection committee.
The Collector accepted the challenge and set aside the appointments.
The Appellants filed a Revision Petition. It was dismissed.
They filed a Writ Petition but it was also dismissed. Hence before the SC.

Contentions of the Appellants (Selected Teachers)

They highlighted the distinction between cases of “no opportunity at all” and “adequate opportunity”. They were not heard at all by the Collector.
Merely being relatives, undue favour cannot be presumed. Marks allocation was objective.
Collector’s decision was violation of natural justice. They were not made parties in the appeal.
There was No clear evidence of prejudice or unfair advantage.
The appellants were finally heard in revision proceedings. It cured the procedural defects.
Ultimately, it is pleaded that the appellants have been working for the last 25 years and that one of the appellants has, in fact, retired while others are on the verge of retirement.

Respondent’s Arguments

They contend there was no “prejudice” due to the non-compliance of the principles of natural justice by the non hearing of the Collector.
Even though the appellants received less marks in the basic qualifying examination, they have obtained higher marks in the interview.
The relatives have come to be appointed.
There was reasonable likelihood of bias and that the relatives of committee members have obtained higher marks during the interview.

The Supreme Court: Split Verdict by Two-Judge-Bench.

Justice K.V. Vishwanathan, concluded that the selection of appellants was erroneously set aside, in breach of the principle of audi alteram partem. The principle must be adhered to at the original stage. Furthermore, Rule 9 of the Appeal and Revision Rules, 1995 was not complied with. It was also observed that the orders of the Collector made no reference either to definition of ‘relative’ in explanation to Section 40(c) of Adhiniyam nor to the resolution providing for recusal. Non-impleadment of parties amounted to ‘no opportunity at all’ for hearing. Though found that the selection process was faulty for Collector’s decision was violation of natural justice (for they were not made parties in the appeal) upheld the selection and allowed the appeal holding as under:
“Approaching the home stretch, one question still remains:- Whether at this distance of time should the matter be remitted back to the Collector for a fresh enquiry? The selection is of the year 1998. By virtue of interim orders through out, the appellants have functioned in office and are discharging their duties for the past more than twenty five years. One of them has even superannuated. At this distance of time, it will not be in the interest of justice to remand the matter for a fresh enquiry.”
Justice J.K. Maheshwari upheld the decision to cancel the appointment of the appellants and opined that the first limb of natural justice i.e. ‘rule against bias’ was irrefutably proved, as reasonable likelihood of bias was established. The plea of non-impleadment was considered to be a useless formality. Unless prejudice is demonstrated, mere non-joinder at the initial stage does not violate the principles of natural justice.
Hence, the case was before the three-Judge Bench.

Supreme Court Final Verdict by Three-Judge-Bench

The Apex Court (three-judge-bench) considered three issues.They were the following:

A. Whether the selection is vitiated for violation of the first limb of natural justice i.e. rule against bias?
B. Where it is a case of violation of the principle of audi alteram partem? Is demonstration of prejudice necessary to succeed with a claim of violation of the principle of audi alteram partem?
C. Whether the breach of the principle of audi alteram partem at the original stage can be cured, at the Revisional stage?

The first issue (related to nepotism, corruption and bias, in the selection process) is answered in favour of the selected persons (Appellants) as under –

“The selection is not vitiated on account of violation of the nemo judex rule”.

The second issue (related to Collector’s decision – whether violation of natural justice, for the selected persons were not heard by him, before taking a decision against them) is also answered in favour of the (Appellants) as under –

“In the absence of notice, the breach strikes at the fundamental core of procedural fairness, rendering the decision invalid unless exceptional circumstances justify such deviation. The vitiation of selection was not only a breach of the principles of natural justice but also contrary to the express statutory provision that required for an opportunity to show cause and an opportunity to provide self-defence. The prejudice theory must be understood as an exception to the general rule and cannot therefore be the norm. In view of the foregoing, a gross violation of the principle of audi alteram partem is noticed in the present case.”

The third issue related to Collector’s decision – the selected persons (Appellants) were not heard by him. This allegation of the selected persons was resisted by the Respondents/petitioners saying that the defect had been cured by the proceedings before the revisional/appellate body. It is also answered in favour of the selected persons (Appellants) as under –

” … it must be concluded that a defect at the initial stage cannot generally be cured at the appellate stage. Even in cases where a ‘full jurisdiction’ may be available at the appellate stage, the Courts must have the discretion to relegate it to the original stage for an opportunity of hearing. Therefore, the ex-parte decision to set aside the appellants selection stands vitiated.”

The Court, in Conclusion, upheld the opinion of Justice KV Vishwanathan, observing as under:

“68. The principle of audi alteram partem is the cornerstone of justice, ensuring that no person is condemned unheard. This principle transforms justice from a mere technical formality into a humane pursuit. It safeguards against arbitrary decision-making, and is needed more so in cases of unequal power dynamics [Upendra Baxi, ‘Preface: The Myth and Reality of the Indian Administrative Law’, in IP Massey(ed) ‘Administrative Law’ (8th edn, EBC 2012)].
69. An allegation of bias, can only be proved if facts are established after giving an opportunity of hearing. This process requires a fair and transparent procedure in which the concerned parties are given an adequate opportunity to present their case. Such an opportunity allows the accused party or the affected individuals to respond to the allegations, provide evidence, and clarify any misgivings regarding the decision-making process. Therefore, for an allegation of bias to be proved, it is imperative that the procedural safeguards of a fair hearing are observed allowing for establishment of the relevant facts.”

ISSUE A : Authorities Referred to.

This issue related to nepotism, corruption and bias, in the selection process.

AK Kraipak v Union of India, (1969) 2 SCC 262

When a statute specifies the procedure for administrative decision making, the principles of natural justice supplement do not substitute the statutory procedure. However, even if the statute does not provide for the administrative procedure, the authorities are bound to make decisions in adherence to the principles of natural justice.

Dimes v. Proprietors of the Grand Junction Canal(1852) 3 HLC 759

The principle of nemo judex causa sua found its origin in English law. In this decision the House of Lords in a case concerning pecuniary interest observed that the rule against bias extends not only to actual bias but also to the appearance of bias. This principle was later extended to other forms of interest in R v. Sussex Justices ex parte McCarthy [1924] 1 KB 256 where it was held that ‘even a suspicion that there has been improper interference with the course of justice’, would lead to the vitiation of proceedings. Lord Hewart noted that it is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done. Lord Denning in Metropolitan Properties Co. (FGC) v Lannon(1969) 1 QB 577 noted that, ‘if right minded persons would think that, in the circumstances, there was a ‘real likelihood of bias’ on his part, he should not sit. And if he does sit, his decision does not stand’. It was further held that ‘there must be circumstances from which a reasonable man would think it likely or probable that the justice, or chairman as the case may be, would, or did, favour one side at the expense of the other.’

R v Gough 1993 AC 646

The emphasis on ‘likely or probable’ as noted by Lord Denning, was considered in R v Gough 1993 AC 646 where the Court shifted the focus to the possibility of bias rather than its probability. The test articulated in Gough(supra), was whether there was a ‘real danger of bias’ rather than a ‘real likelihood’ of bias. It prioritised the court’s assessment of bias over the perception of a fair-minded and informed observer emphasising that the court ‘personifies the reasonable man’. This test was criticised in other common law jurisdictions for veering away from the public perception of bias.

Porter v Magill(2002) 1 All ER 465

The House of Lords modified the said test in Porter v Magill (2002) 1 All ER 465 and pronounced as under:
“The Court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased, it must then ask whether those circumstances would lead to a fair minded and informed observer to conclude that there was a real possibility that the Tribunal was biased.”

Manak Lal v Dr. Prem Chand Singhvi 1957 SCC OnLine SC 10;

Also:

Ranjit Thakur v. Union of India (1987) 4 SCC 611;
Rattan Lal Sharma v. Managing Committee, Dr. Hari Ram (Co-Education) Higher Secondary School, (1993) 4 SCC 10;
S Parthasarathi v. State of AP (1974) 3 SCC 459;
SK Golap and others v Bhuban Chandra Panda 1990 SCC OnLine Cal 264;
GN Nayak v Goa University (2002) 2 SCC 712.
Indian Courts have consistently adopted the ‘real likelihood’ test to determine bias

CORE (Central Organisation for Railway Electrification v. M/s ECI SPIC SMO MCML 2024 SCC OnLine SC 3219) –

A Constitution bench speaking through DY Chandrachud CJ summarised the Indian position thus:
“Although there have been vacillations about the test in England, the Indian courts have been largely consistent in their approach by applying the test of real likelihood of bias or reasonable apprehension of bias. Recently, the court has used the real danger of bias test. However, the above discussion shows that there is no significant difference between the real danger of bias test and the real possibility of bias test if the question of bias is inferred from the perspective of a reasonable or fair-minded person.”

Union of India v Tulsiram Patel, (1985) 3 SCC 398; Swadesh Cotton Mills v Union of India, (1981) 1 SCC 664 .

The nemo judex rule is subject to the rule of necessity and yields to it.

J Mohapatra v State of Orissa, (1984) 4 SCC 103

The doctrine of necessity serves as an exception to the rule against bias.

Charanjit Singh v Harinder Sharma(2002) 9 SCC 732

In a small town like Mansa, it would be difficult to constitute a Selection Committee of total strangers. The relative of some candidate or the other is bound to find a place on the Committee. Therefore, the Court is required to see whether the prescribed balancing mechanism was followed when a relative of the member of the Selection Committee was being considered.

A.K. Kraipak & Ors. V. Union of India , (1969) 2 SCC 262

Significantly expanded the scope of judicial review of administrative decisions. It is Cited in Javid Rasool Bhat v. State of Jammu & Kashmir(1984) 2 SCC 682 where distinguished Kraipak(supra) as under:
“Great reliance was placed by the learned counsel on A.K. Kraipak & Ors. V. Union of India on the question of natural justice. We do not think that the case is of any assistance to the petitioners. It was a case where one of the persons, who sat as member of the Selection Board, was himself one of the persons to be considered for selection. He participated in the deliberations of the Selection Board when the clams of his rivals were considered. He participated in the decisions relating to the orders of preference and seniority. He participated at every stage in the deliberations of the Selection Board and at every stage there was a conflict between his interest and duty. The court had no hesitation coming to the conclusion that there was a reasonable likelihood of ibis and therefore, there was a violation of the principles of natural justice. In the case before us, the Principal of the Medical College, Srinagar, dissociated himself from the written test and did not participate in the proceedings when his daughter was interviewed. When the other candidates were interviewed, he did not know the marks obtained either by his daughter or by any of the candidates. There was no occasion to suspect his bona fides even remotely. There was not even a suspicion of bias, leave alone a reasonable likelihood of bias. There was no violation of the principals of natural justice.”

Ashok Kumar Yadav v State of Haryana (1985) 4 SCC 417

A five-judge constitution bench of this Court endorsed the decision in Javed Rasool(supra) and held that when a near relative of a member of the Public Service Commission is a member of the Selection Committee, it will be enough if the concerned member desists from interviewing his relation. He should withdraw from the committee when his relative appears for the interview and he should not participate in discussion in regards to the merit of the candidate and even the marks should not be disclosed to the concerned member.

Jaswant Singh Nerwal v State of Punjab 1991 Supp (1) SCC 313,

The father of one of the selected candidates was in the selection committee conducting the interview. However, he did not participate in the deliberation when his son appeared for viva voce. It was held therein that selection was thus not vitiate

ISSUE B : Authorities Referred to.

This issue related to Collector’s decision – whether violation of natural justice, for the selected persons were not heard by him, before taking a decision against them.

Ridge v Baldwin[1964] AC 40

It is a significant landmark decision in British administrative law and is often referred to as a magna carta of natural justice.

Mohinder Singh Gill v. Chief Election Commr (1978) 1 SCC 405. It is held as under:

“Today in our jurisprudence, the advances made by natural justice far exceed old frontiers and if judicial creativity belights penumbral areas, it is only improving the quality of government by injecting fair play into its wheels.. law lives not in a world of abstractions but in a cosmos of concreteness and to give up something good must be limited to extreme cases. If to condemn unheard is wrong, it is wrong except where it is overborne by social necessity.”

Swadeshi Cotton Mills v. Union of India(1981) 1 SCC 664. It is held as under:

“This rule of fair play must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. The Court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications.”

Maneka Gandhi v Union of India(1978) 1 SCC 248

Justice Bhagwati, described natural justice as a profound ‘humanising principle’ designed to imbue the law with fairness and ensure justice.

Wade and Forsyth H W R Wade and C F Forsyth, Administrative Law (Oxford University Press, 11th ed, 2014). It is held as under:

“Judges are naturally inclined to use their discretion when a plea of natural justice is used as the last refuge of a claimant with a bad case. But that should not be allowed to weaken the the basic principle that fair procedure comes first, and that it is only after hearing both sides that merits can be properly considered. In the case of a tribunal which must decide according to, it may be justifiable to disregard a breach of natural justice where the demerits of the claim are such that it would in any case be hopeless. But in the case of a discretionary administrative decision, such as dismissal of a teacher or expulsion of a student, hearing their case will often soften the heart of the authority and alter their decision, even though it is clear from the outset that punitive action would be justified. This is the essence of a good and considerate administration, and the law should take care to preserve it.”

Olga Tellis v. Bombay Municipal Corporation (1985) 3 SCC 545)

The opportunity of hearing is considered so fundamental to any civilised legal system that the courts have read the principles of natural justice into an enactment to save it from being declared unconstitutional on procedural grounds

SL Kapoor v Jagmohan(1980) 4 SCC 379

Justice Chinappa Reddy, considered such arguments to be ‘pernicious’ and held that ‘the non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary’. The Court, however, has drawn out an exception where ‘on admitted or indisputable facts only one conclusion is possible, and under the law, only one penalty is permissible, then the Court may not compel the observance of natural justice’ (Also Referred: Swadeshi Cotton Mills v Union of India (1981) 1 SCC 664; Aligarh Muslim University v Mansoor Ali Khan (200) 7 SCC 529).

Professor I.P. Massey, Administrative Law (8th Edition,2012). It is held as under:

“Before the decision of the Highest Court in SL Kapoor v Jagmohan, the rule was that the principles of natural justice shall apply only when the an administrative action has caused some prejudice to the person, meaning thereby that he must have suffered some ‘civil consequences’.
Therefore, the person had to show something extra in order to prove ‘prejudice’ or civil consequences. This approach had stultified the growth of administrative law within an area of highly practical significance. It is gratifying that in Jagmohan, the Court took a bold step in holding that a separate showing of prejudice is not necessary. The non-observance of natural justice is in itself prejudice caused. However, merely because facts are admitted or are undisputable it does not follow that the principles of natural justice need not be observed.”

Bank of Patiala v SK Sharma, (1996) 3 SCC 364

Where an enquiry is not convened by any statutory provision and the only obligation of the administrative authority is to observe the principles of natural justice, the Court/tribunal should make a distinction between a total violation of the rule of fair hearing and violation of the facet of that rule. In other words, a distinction must be made between ‘no opportunity’ or ‘no adequate opportunity’. In the case of the former, the order passed would undoubtedly be invalid and the authority may be asked to conduct proceedings afresh according to the rule of fair hearing. But in the latter case, the effect of violation of a facet of the rule of fair hearing has to be examined from the standpoint of prejudice.

Dharampal Satyapal Ltd. v. Dy. Comm. Of Central Excise, Gauhati and Ors. (2015) 8 SCC 519. It is held as under:

“42. So far so good. However, an important question posed by Mr Sorabjee is as to whether it is open to the authority, which has to take a decision, to dispense with the requirement of the principles of natural justice on the ground that affording such an opportunity will not make any difference? To put it otherwise, can the administrative authority dispense with the requirement of issuing notice by itself deciding that no prejudice will be caused to the person against whom the action is contemplated? Answer has to be in the negative. It is not permissible for the authority to jump over the compliance of the principles of natural justice on the ground that even if hearing had been provided it would have served no useful purpose. The opportunity of hearing will serve the purpose or not has to be considered at a later stage and such things cannot be presumed by the authority. This was so held by the English Court way back in the year 1943 in General Medical Council v. Spackman [1943 AC 627].
This Court also spoke in the same language in Board of High School and Intermediate Education v. Chitra Srivastava [(1970) 1 SCC 121]……”

State of UP v Sudhir Kumar Singh(2021) 19 SCC 706

The position of law was summarised as under:
“(1) Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.
(2) Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.
(3) No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.
(4) In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.
(5) The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.”

Madhyamam Broadcasting Ltd. v. Union of India(2023) 13 SCC 401. It is held as under:

“55.1.Firstly, procedural fairness was no longer viewed merely as a means to secure a just outcome but a requirement that holds an inherent value in itself. In view of this shift, the courts are now precluded from solely assessing procedural infringements based on whether the procedure would have prejudiced the outcome of the case. [S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379; “The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary; also see Swadeshi Cotton Mills v. Union of India, (1981) 1 SCC 664 : AIR 1981 SC 818] Instead, the courts would have to decide if the procedure that was followed infringed upon the right to a fair and reasonable procedure, independent of the outcome. In compliance with this line of thought, the courts have read the principles of natural justice into an enactment to save it from being declared unconstitutional on procedural grounds. [Olga Tellis v. Bombay Municipal Corpn., (1985) 3 SCC 545; C.B. Gautam v. Union of India, (1993) 1 SCC 78; Sahara India (Firm) (1) v. CIT, (2008) 14 SCC 151; Kesar Enterprises Ltd. v. State of U.P., (2011) 13 SCC 733]
55.2. Secondly, natural justice principles breathe reasonableness into the procedure. Responding to the argument that the principles of natural justice are not static but are capable of being moulded to the circumstances, it was held that the core of natural justice guarantees a reasonable procedure which is a constitutional requirement entrenched in Articles 14, 19 and 21. The facet of audi alteram partem encompasses the components of notice, contents of the notice, reports of inquiry, and materials that are available for perusal.
While situational modifications are permissible, the rules of natural justice cannot be modified to suit the needs of the situation to such an extent that the core of the principle is abrogated because it is the core that infuses procedural reasonableness. The burden is on the applicant to prove that the procedure that was followed (or not followed) by the adjudicating authority, in effect, infringes upon the core of the right to a fair and reasonable hearing. [See para 12 of Bhagwati, J.’s judgment in Maneka Gandhi v. Union of India, (1978) 1 SCC 248]”

CORE (Central Organisation for Railway Electrification v. M/s ECI SPIC SMO MCML 2024 SCC OnLine SC 3219. It is held as under:

The five judge bench described the object of observing the principles of natural justice as under:
“80. …The object of observing the principles of natural justice is to ensure that “every person whose rights are going to be affected by the proposed action gets a fair hearing.” The non-observance of natural justice is itself a prejudice to any person who has been denied justice depending upon the facts and circumstances of each case. The principle of procedural fairness is rooted in the principles of the rule of law and good governance. In Madhyamam Broadcasting Limited v. Union of India(2023) 13 SCC 401 , this Court held that the requirement of procedural fairness “holds an inherent value in itself.”

State Govt. Houseless Harijan Employees Association v State of Karnataka (2001) 1 SCC 610

The question about whether prejudice was caused due to non-observance of the principles of natural justice could not be raised where such principles are incorporated into statutory procedure.

Considering the above, Justice Vishwanathan noted as under:

“At least at the stage when the Collector identified all the 14 names, Rule 9 of the A&R Rules, ought to have been complied with and notices ought to have been issued giving an opportunity to the selected candidates to set out their version and thereafter hold such enquiry as the Collector may deem necessary. This was also not done. This is all the more when only the appointment of the 14 candidates of the 249 appointees/candidates were set aside on the ground that 33 they were relatives and it was not a case of setting aside of the entire selection.
It is well settled that in service matters when an unsuccessful candidate challenges the selection process, in a case like the present where the specific grievance was against 14 candidates under the category of relatives and when the overall figure was only 249, at least the candidates against whom specific allegations were made and who were identified ought to have been given notices and made a party. This Court has, even in cases where the selected candidates were too large, unlike in the present case, held that even while adjudicating the writ petitions at least some of the selected candidates ought to be impleaded even it is in a representative capacity. It has also been held that in service jurisprudence, if an unsuccessful candidate challenges the selection process the selected candidates ought to be impleaded. [See J.S. Yadav vs. State of Uttar Pradesh and Another, (2011) 6 SCC 570 (para 31) and Prabodh Verma and Others vs. State of Uttar Pradesh and Others, (1984) 4 SCC 251 (para 28) and Ranjan Kumar and Others vs. State of Bihar and Others, 2014:INSC:276 = (2014) 16 SCC 187 (paras 4,5,8,9 & 13)] This is not a case where the allegation was that the mischief was so widespread and all pervasive affecting the result of the selection in a manner as to make it difficult to sift the grain from the chaff. It could not be said and it is not even the case of the State that it was not possible to segregate the allegedly tainted candidates from the untainted candidates. [See Union of India and Others vs. G. Chakradhar, (2002) 5 SCC 146 (paras 7 & 8), Abhishek Kumar Singh vs. G. Pattanaik and Others, 2021:INSC:305 = (2021) 7 SCC 613 (para 72).”

East India Commercial Co. Ltd. v. Collector of Customs AIR 1962 SC 1893; Uma Nath Pandey and Ors. v state of UP (2009) 12 SCC 40

Clear distinction has been crafted between the service of notice and the requirement of fair hearing.

Ridge vs. Baldwin1964 AC 40

Referring this classic case it was recorded that where there is a total violation of principles of natural justice, the violation would be of a fundamental nature. It did not deal with the violation of the first limb of audi alteram partem principles, a situation of non-service of notice. The judgment in fact explicitly records that “a distinction ought to be made between violation of the principle of natural justice, audi alteram partem, as such, and violation of a facet of the said principle. In other words, distinction between “no notice” “no hearing” and “no adequate hearing” or to put it in different words, “no opportunity” and “no adequate opportunity”, was highlighted. The judgement in SK Sharma (supra) is therefore inapplicable to the present matter which is a case of no notice whatsoever.

ISSUE C : Authorities Referred to.

This issue related to Collector’s decision – the selected persons (Appellants) were not heard by him. Therefore, whether the defect had been cured (Calvin principle) by the proceedings before the revisional body.

High Court of Australia in Australian Workers’ Union v Bowen (No. 2) (1948) 77 C.L.R. 601.

Bowen contested his dismissal by the General Council of the Union, claiming bias because the Union Secretary acted as both prosecutor and judge. While the Commonwealth Court of Conciliation and Arbitration ruled in his favour, the decision was overturned on appeal. The appellate court held that the Secretary’s role did not violate the rule against bias and, even if it had, any flaw in the original proceedings was remedied by a fair appeal to the Annual Conference, which Bowen did not dispute.

Lord Denning in Annamunthodo v Oilfield Workers’ Trade Union [1961] AC 945 (PC)

It was ruled that a flaw in natural justice during the initial hearing could not be remedied by an appeal.

Leary v. National Union of Vehicle Builders(1970) 2 All ER 713

It is a leading authority on the point that a failure of natural justice at the initial stage cannot be cured at the appellate stage. The case involved the plaintiff’s expulsion by a Branch Committee of his trade union, at a meeting about which he was unaware. He approached the Appeals Council for relief against the order of the branch Committee, which conducted a full rehearing but upheld the Branch Committee’s decision. The plaintiff then filed a writ, seeking declarations that his expulsion from union membership as well as his position as area organizer was unlawful, invalid, and void. Megarry J framed the question thus:
“if a man has never had a fair trial by the appropriate trial body, is it open to an appellate body to discard its appellate function and itself give the man the fair trial that he has never had?. If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal?… Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him’
It was held that the proper course in such a situation would be to hear the matter afresh:
“If one accepts the contention that a defect of natural justice in the trial body can be cured by the presence of natural justice in the appellate body, this has the result of depriving the member of his right of appeal from the expelling body. If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him. I cannot think that natural justice is satisfied by a process whereby an unfair trial, though not resulting in a valid expulsion, will nevertheless have the effect of depriving the member of a right of appeal when a valid decision to expel him is subsequently made. Such a deprivation is a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body.”

Calvin v Carr (1979) 2 WLR 755

The Judicial Committee of the Privy Council only gave a qualified endorsement to the Leary principle. In Lloyd v McMahon(1987) 1 AC 625, Lord Templeman considered the Calvin principle but commented that instead of laying down general principles, the question arising in that case must be answered by considering the particular statutory provisions applicable therein. In that case, a distinction was drawn between full appeals where all the evidence may be examined and limited appeals on questions of law only or where the appellate body does not investigate findings of fact.

Indian courts have applied the Leary principle as a rule. See:

Institute of Chartered Accountants v. L. K. Ratna (1986) 4 SCC 537;
Fareed Ahmed v Ahmedabad Municipality AIR 1976 SC 2095;
Shri Mandir Sita Ramji v Government of Delhi (1975) 4 SCC 298;
Mysore SRT Corp v Mirza Khasim AIR 1977 SC 747;
Laxmidhar v State of Orissa AIR 1974 Ori 127;
Kashiram Dalmia v State AIR 1978 Pat 265;
G Rajalakshmi v Appellate Authority AIR 1980 AP 100;
Serajuddin Co. v State of Orissa AIR 1974 Cal 296 .

And the Calvin principle as an exception. See:

Charan Lal Sahu v Union of India, (1990) 1 SCC 613;
Jayantilal Ratanchand Shah v Reserve Bank of India, (1996) 9 SCC 650;
United Planters’ Association of Southern India v KG Sangameswaran, (1997) 4 SCC 741

This is more so due to the institutional structure as the writ court does not usually go into facts and judicial review of administrative action is limited to the decision-making process and not the decision itself. In our view, the provision for an appeal should not rest on the assumption that the appellate body is infallible. When one party is denied the opportunity to present their case, the initial decision fails to provide meaningful guidance to the appellate authority, in achieving a fair and just resolution.

Professor Wade H. W. R. Wade, Administrative Law ((Oxford: Clarendon Press 1982)

It is observed as under:
“In principle, there ought to be an observance of natural justice at both stages… If natural justice is violated at the first stage, the right to appeal is not so much a true right to appeal as a corrected initial hearing: instead of fair trial followed by appeal., the procedure is reduced to an unfair trial followed by fair trial.”

Professor Laurence Tribe Lawrence H. Tribe, ‘American Constitutional Law’ ((The Foundation Press 1978)

It is pertinently observed that whatever the outcome, a valued human interaction in which the affected person experiences atleast the satisfaction of participating in the decision that vitally concerns her is of utmost importance:
“Both from the right to be heard and the right to be told why, are analytically distinct from the right to secre a different outcome; these rights to interchange express the elementary idea that to be a person, rather than a thing, is at atleast to be consulted about what is done with one.”

Institute of Chartered Accountants v. L. K. Ratna, 1986-4 SCC 537

The Supreme Court endorsed the position adopted by Megarry J. Rejecting the argument that an appeal to the High Court under Section 22A of the Chartered Accountants Act, 1949, could rectify the initial defect, Pathak J. declared the order null, void, and of no effect. This ruling was consistent with two earlier Supreme Court decisions in State of U.P. v. Mohammed Nooh1958 SCR 595 and Mysore State Road Transport Corporation v. Mirja Khasim (1977) 2 SCC 457, both of which established that an appeal cannot validate what is clearly a nullity.

Charan Lal Sahu v Union of India(1990) 1 SCC 613

The Supreme Court has invoked the Calvin principle only in exceptional circumstances. It is a case concerning a challenge to the validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, the Court applied the Calvin principle, given the fact that the settlement fund was held to be sufficient to meet the needs of just compensation to the victims of the Bhopal gas leak tragedy, it was held that the grievance on the score of not hearing the victims first would not really survive. It recorded that “to do a great right” after all it is permissible sometimes “to do a little wrong”.

Conclusion

In this case, the Apex Court did not apply the Calvin principle, and the doctrine “to do a great right” it is permissible sometimes “to do a little wrong”. The Court was of the opinion that it is not a fit case to apply these principles as they are applied “only in exceptional circumstances“. The Court definitely found that violation of Natural Justice is ‘serious’. It is expressed in the following words –

“67. Following the above discussion, it must be concluded that a defect at the initial stage cannot generally be cured at the appellate stage. Even in cases where a ‘full jurisdiction’ may be available at the appellate stage, the Courts must have the discretion to relegate it to the original stage for an opportunity of hearing. Therefore, the ex-parte decision to set aside the appellants selection stands vitiated.”

Finally, the Court (though did not apply the Calvin Principle) allowed the appeal in favour of the appointees (not ‘paradoxically’; but, on sound judicial principles) observing as under:

“71. Since the selection pertains to the year 1998, and the appellants have continuously held office and performed their duties for over twenty-five years under interim orders, remanding the matter for a fresh inquiry would hardly be a practical exercise and will be an injustice to the appointees. The time lag can be better appreciated by bearing in mind that one of the appellants has already superannuated.”

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H. Anjanappa v. A. Prabhakar: An ‘Aggrieved’ Stranger or a ‘Prejudicially Affected’ Third-Party (also) Can File Appeal with the ‘Leave of the Court’.

Jojy George Koduvath.

Abstract

Supreme Court of India on January 29, 2025, in H. Anjanappa v. A. Prabhakar (J.B. Pardiwala, R. Mahadevan, JJ.) held –

“Where a judgment and decree prejudicially affects a person who is not a party to the proceedings, he can prefer an appeal with the leave of the court”.

It is also pointed out that the injury complained of must not be “remote or indirect”.

The Apex Court pointed out two interesting propositions in this regard:

1. The Applicant must be “bound by the decree or judgment in that proceeding and who would be precluded from attacking its correctness in other proceedings”.
2. The applicant must be “a person who might properly have been a party”.

Part I

Facts in a Nutshell

The Plaintiffs had entered into an agreement for sale of the suit property owned by the defendants.

The Plaintiffs filed the suit for specific performance.
One of the Defendants sold a portion of property to Respondents 1 & 2.
The sale was in contravention of the injunction order, in that case.
IA filed by Respondents 1 & 2 to implead themselves as Defendants was rejected.
(No appeal therefrom; and “thereby, the said issue has attained finality”.)
The suit was decreed allowing Specific Performance.
The High Court dismissed the appeal (filed by the defendants).
After about 2 years of the Judgment and 11 years from filing the Impleadment Application, the subsequent purchasers, Respondents 1 & 2, filed Applications before the High Court, challenging the Decree and praying to condone the delay of 586 days, seeking leave of the Court to file the appeal .
This prayer was allowed.
Hence the Plaintiffs filed SLP before the Apex Court.
The Apex Court allowed the appeal.

Law Governing The Grant Of Leave To Appeal

Sections 96 and 100 respectively of the Code of Civil Procedure, 1908 provide for preferring an appeal from any original decree or from decree in appeal respectively.

The Apex Court pointed out that the aforesaid provisions do not enumerate the categories of persons who can file an appeal. The Court proceeded into the issue analysing the following two well-founded legal propositions –

A stranger cannot be permitted to file an appeal in any proceedings unless he satisfies the court that he falls within the category of aggrieved persons.
It is only where a judgment and decree prejudicially affects a person who is not a party to the proceedings, he can prefer an appeal with the leave of the appellate court.

Part II

Earlier decisions and authorities referred to:

Sri V.N. Krishna Murthy v. Sri Ravikumar (Civil Appeal Nos.2701-2704 of 2020, decided on 21st August 2020)].
Nagendra Nath Dey v. Suresh Chandra Dey, AIR 1932 PC 165.
Adi Pherozshah Gandhi v. H.M.Seervai, AIR 1971 SC 385
Smt. Sukhrani v. Hari Shanker, AIR 1979 SC 1436
Smt. Jatan Kumar Golcha v. Golcha Properties Pvt Ltd, (1970) 3 SCC 573
Shanti Kumar R. Canji v. Home Insurance Co. of New York, (1974) 2 SCC 387
State of Rajasthan v. Union of India, (1977) 3 SCC 592
In re Markham Markham vs. Markham, (1881) 16 Ch D 1;
In re Padstow Total Loss and Collision Assurance Association, (1882) 20 Ch. D 137
Attorney General vs. Marquis of Ailesbury, (1885) 16 QBD 408
In re Ex Tsar of Bulgaria, (1921) 1 Ch D 107
Annual Practice for 1951 at page 1244
Halsbury’s Laws of England, Vol. 26, page 115.
Seton on Judgments and Orders, 7th Edn., Vol. 1, at p. 824.

No Definition Of ‘Appeal‘

The five-Judge Bench of the Privy Council in Nagendra Nath Dey v. Suresh Chandra Dey, AIR 1932 PC 165, speaking through Sir Dinshaw Mulla observed that there is no definition of appeal in the CPC, but there is no doubt that any application by a party to an appellate Court, asking it to set aside or revise a decision of a subordinate Court, is an appeal within the ordinary acceptation of the term, and that it is no less an appeal because it is irregular or incompetent.

Applicant must have been aggrieved by an order or causes him some prejudice

A person who is not a party to a litigation has no right to appeal merely because the judgment or order contains some adverse remarks against him

In Adi Pherozshah Gandhi v. H.M. Seervai, AIR 1971 SC 385, the Constitution Bench of the Apex Court held as under:

“46. Generally speaking, a person can be said to be aggrieved by an order which is to his detriment, pecuniary or otherwise or causes him some prejudice in some form or other. A person who is not a party to a litigation has no right to appeal merely because the judgment or order contains some adverse remarks against him. But it has been held in a number of cases that a person who is not a party to suit may prefer an appeal with the leave of the appellate court and such leave would not be refused where the judgment would be binding on him under Explanation 6 to section 11 of the Code of Civil Procedure.”

A Higher Court is Not Precluded from Considering Order in IA again at a Later Stage

In Smt. Sukhrani v. Hari Shanker, AIR 1979 SC 1436, an interlocutory order was not challenged. The same was challenged after the final order was passed by the court. It was held as under:

“5. It is true that at an earlier stage of the suit, in the proceeding to set aside the award, the High Court recorded a finding that the plaintiff was not entitled to seek reopening of the partition on the ground of unfairness when there was neither fraud nor misrepresentation. It is true that the plaintiff did not further pursue the matter at that stage by taking it in appeal to the Supreme Court but preferred to proceed to the trial of his suit. It is also true that a decision given at an earlier stage of a suit will bind the parties at later stages of the same suit. But it is equally well settled that because a matter has been decided at an earlier stage by an interlocutory order and no appeal has been taken therefrom or no appeal did lie, a higher Court is not precluded from considering the matter again at a later stage of the same litigation.”

Leave Should Be Granted If Applicant Would Be Prejudicially Affected

In Smt. Jatan Kumar Golcha vs. Golcha Properties Private Limited, (1970) 3 SCC 573 it was held as under:

“It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the Appellate Court and such leave should be granted if he would be prejudicially affected by the Judgment.”

Applicant must Be bound by the order or is aggrieved or is prejudicially affected

In State of Punjab v. Amar Singh, (1974) 2 SCC 70, while dealing with the maintainability of appeal by a person who is not party to a suit, has observed thus:

“Firstly, there is a catena of authorities which, following the dictum of Lindley, L.J., in re Securities Insurance Co., [(1894) 2 Ch 410] have laid down the rule that a person who is not a party to a decree or order may with the leave of the Court, prefer an appeal from such decree or order if he is either bound by the order or is aggrieved by it or is prejudicially affected by it.”

Person Aggrieved Must Be One Whose Right Is Affected By The Judgment

In Baldev Singh v. Surinder Mohan Sharma, (2003) 1 SCC 34, it is held that an appeal under Section 96 of the CPC would be maintainable only at the instance of a person aggrieved by and dissatisfied with the judgment and decree. While dealing with the concept of person aggrieved, it was observed in paragraph 15 as under:

“A person aggrieved to file an appeal must be one whose right is affected by reason of the judgment and decree sought to be impugned.”

Consider Nature And Extent Of Injuries Suffered

In A. Subash Babu v. State of A.P., (2011) 7 SCC 616, it is held as under:

“The expression ‘aggrieved person’ denotes an elastic and an elusive concept. It cannot be confined that the bounds of a rigid, exact and comprehensive definition. Its scope and meaning depends on diverse, variable factors such as the content and intent of the statute of which contravention is alleged, the specific circumstances of the case, the nature and extent of the complainant’s interest and the nature and extent of the prejudice or injuries suffered by him.”

Person aggrieved must have jeopardized; Not an imaginary injury

Referring Shanti Kumar R. Canji v. Home Insurance Co. of New York, (1974) 2 SCC 387 and State of Rajasthan v. Union of India, (1977) 3 SCC 592, it is observed that the expression ‘person aggrieved’ does not include a person who suffers from a psychological or an imaginary injury; but, it must, therefore, necessarily be one, whose right or interest has been adversely affected or jeopardized.

Test Whether Precluded From Attacking in Other Proceedings

Division Bench of the Madras High Court, in Srimathi K. Ponnalagu Ammani v. The State of Madras, AIR 1953 Mad 485, laid down the test to find out whether it would be proper to grant leave to appeal as under:

“Now, what is the test to find out when it would be proper to grant leave to appeal to a person not a party to a proceeding against the decree or judgment in such proceedings? We think it would be improper to grant leave to appeal to every person who may in some remote or indirect way be prejudicially affected by a decree or judgment. We think that ordinarily leave to appeal should be granted to persons who, though not parties to the proceedings, would be bound by the decree or judgment in that proceeding and who would be precluded from attacking its correctness in other proceedings.”

Court Of Appeal In Its Discretion Allows Third Party Appeal

In Province of Bombay v. W.I. Automobile Association, AIR 1949 Bom 141 (Chagla C.J. and Bhagwati J.), held as under:

“The Civil Procedure Code does not in terms lay down as to who can be a party to an appeal. But it is clear and this fact arises from the very basis of appeals, that only a party against whom a decision is given has a right to prefer an appeal. Even in England the position is the same. But it is recognised that a person who is not a party to the suit may prefer an appeal if he is affected by the order of the trial Court, provided he obtains leave from the Court of appeal; therefore whereas in the case of a party to a suit he has a right of appeal, in the case of a person not a party to the suit who is affected by the order he has no right but the court of appeal may in its discretion allow him to prefer an appeal.” (referred to: Indian Bank Limited, Madras v. Seth Bansiram Jashamal Firm through its Managing Partner, AIR 1934 Mad 360, In re Securities Insurance Company, (1894) 2 Ch D 410.)

The position is thus stated in the Annual Practice for 1951, at page 1244, as under:

“Persons not parties on the record may, by leave obtained on an ‘ex parte’ application to the Court of appeal, appeal from a judgment or order affecting their interests, as under the old practice.”

“A person who might properly have been a party”

Halsbury’s Laws of England, Vol. 26, page 115, says as under:

“A person who is not a party and who has not been served with such notice (notice of the judgment or order) cannot appeal without leave, but a person who might properly have been a party may obtain leave to appeal.”

In ‘more or less similar terms, the rule and its limits are stated’ in Seton on Judgments and Orders, 7th Edn., Vol. 1, at p. 824:

“Where the appellant is not a party to the record he can only appeal by leave to be obtained on motion ‘ex parte’ from the Court of Appeal….. Leave to appeal will not be given to a person not a party unless his interest is such that he might have been made a party.” (Emphasis supplied)

The Apex Court Concluded this part of the decision in para 43 as under:

“43. The principles governing the grant of leave to appeal may be summarised as under:
i. Sections 96 and 100 of the CPC respectively provide for preferring an appeal from an original decree or decree in appeal respectively;
ii. The said provisions do not enumerate the categories of persons who can file an appeal;
iii. However, it a settled legal proposition that a stranger cannot be permitted to file an appeal in any proceedings unless he satisfies the court that he falls within the category of an aggrieved person;
iv. It is only where a judgment and decree prejudicially affects a person who is not a party to the proceedings, he can prefer an appeal with the leave of the court;
v. A person aggrieved, to file an appeal, must be one whose right is affected by reason of the judgment and decree sought to be impugned;
vi. The expression “person aggrieved” does not include a person who suffers from a psychological or an imaginary injury;
vii. It would be improper to grant leave to appeal to every person who may in some remote or indirect way be prejudicially affected by a decree or judgment; and viii. Ordinarily leave to appeal should be granted to persons who, though not parties to the proceedings, would be bound by the decree or judgment in that proceeding and who would be precluded from attacking its correctness in other proceedings.

Part III

Lis Pendens’ and Order I rule 10 CPC.

The Apex Court analysed the matter “from a different angle” – on ‘lis pendens’ (Section 52 of the Transfer of Property Act) and Order I rule 10 CPC, also.

Decisions Referred in this regard

Nagubai Ammal & Ors. vs. B. Shama Rao & Ors., AIR 1956 SC 593
Vinod Seth v. Devinder Bajaj, (2010) 8 SCC 1
Thomson Press (India) Ltd. v. Nanak Builders & Investors P. Ltd., [2013] 2 SCR 74
Smt. Saila Bala Dassi vs. Sm. Nirmala Sundari Dassi and Anr., [1958] SCR 1287
Dhurandhar Prasad Singh vs. Jai Prakash University, (2001) 6 SCC 534
Amit Kumar Shaw v. Farida Khatoon, AIR 2005 SC 2209.

The Apex Court Concluded this part of its decision in para 58 as under:

“58. From a conspectus of all the aforesaid judgments, touching upon the present aspect, broadly, the following would emerge:

.i. First, for the purpose of impleading a transferee pendente lite, the facts and circumstances should be gone into and basing on the necessary facts, the Court can permit such a party to come on record, either under Order I Rule 10 CPC or under Order XXII Rule 10 CPC, as a general principle;
ii. Secondly, a transferee pendente lite is not entitled to come on record as a matter of right;
iii. Thirdly, there is no absolute rule that such a transferee pendente lite, with the leave of the Court should, in all cases, be allowed to come on record as a party;
iv. Fourthly, the impleadment of a transferee pendente lite would depend upon the nature of the suit and appreciation of the material available on record;
v. Fifthly, where a transferee pendente lite does not ask for leave to come on record, that would obviously be at his peril, and the suit may be improperly conducted by the plaintiff on record;
vi. Sixthly, merely because such transferee pendente lite does not come on record, the concept of him (transferee pendente lite) not being bound by the judgment does not arise and consequently he would be bound by the result of the litigation, though he remains unrepresented;
vii. Seventhly, the sale transaction pendente lite is hit by the provisions of Section 52 of the Transfer of Property Act; and, viii. Eighthly, a transferee pendente lite, being an assignee of interest in the property, as envisaged under Order XXII Rule 10 CPC, can seek leave of the Court to come record on his own or at the instance of either party to the suit.”

Result of the Decision of the Court

The Appeal is allowed.

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Power of attorney

Evidence Act – General

Sec. 65B

Admission, Relevancy and Proof

Law on Documents

Documents – Proof and Presumption

Interpretation

Contract Act

Law on Damages

Easement

Stamp Act & Registration

Divorce/Marriage

Negotiable Instruments Act

Arbitration

Will

Book No. 2: A Handbook on Constitutional Issues

Religious issues

Book No. 3: Common Law of CLUBS and SOCIETIES in India

Book No. 4: Common Law of TRUSTS in India

General Principles
Dedication and Vesting
Trustees and Management
Breach of Trust
- Breach of Trust and Removal of Trustees
Suits by or against Trusts
Law on Hindu Religious Endowments
Temples, Gurudwaras, Churches and Mosques – General
- Legal Personality of Temples, Gurudwaras, Churches and Mosques
Constitutional Principles
Ayodhya and Sabarimala Disputes
General

Courts to Apply Different ‘STANDADARDS’ in Appreciation of Evidence

Old Document: Recent Challenge – Direct Evidence Need Not Be as Strong as might be Naturally Expected in a Recent Transaction.

Taken from: Proof on ‘Truth of Contents’ of Documents, in Indian Evidence Act

Saji Koduvath, Advocate, Kottayam.

Different ‘STANDADARDS of Proof’

In the process to take a fact ‘proved’, ‘disproved’, or ‘not proved’ the courts have to weigh probabilities. In Bater v Bater, (1950) 2 All ER 458, Lord Denning pointed out – ‘there is no absolute standard’, and higher degree of proof is required for more serious matters like criminal cases. Therefore, the courts apply different ‘STANDADARDS of Proof’ in different cases and the courts use distinctive scales in the judicial process of pondering on probabilities.

From the above, it can be concluded –

‘Proof of Documents’ envisaged in the Evidence Act is proof of ‘facts’ as to the ‘existence’ or ‘contents’ of a document.
TRUTH of contents of documents being remain in the judicial discretion, it could not have been expressly or directly dealt with in Evidence Act with precision.
According to Sec. 3 of the Evidence Act ‘a fact is said to be proved when, after considering the matters before it, the Court either BELIEVES it to exist, or CONSIDERS its existence so PROBABLE that a prudent man ought under the circumstances of the particular case to act upon the supposition that it exists …’.
According to Sec. 114 of the Evidence Act ‘the Court may presume the existence of any fact which it THINKS likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business …’
That is, TRUTH (or otherwise) of a disputed point is left to the SUBJECTIVE SATISFATION of the court inasmuch as the question whether a fact is proved (or not) is left to the evaluation of the court. Further, the court is specifically required to appraise – how a prudent man in the given circumstances “acts upon“. The court is also authorised to presume the existence of any fact which it thinks likely to have happened “regard being had to the common course of natural events, human conduct” etc.
It is equally important – TRUTH of a disputed item is to be appreciated on the legal (subjective) reasoning after OBJECTIVE “consideration of the matters before it” (Sec. 3 Evid. Act).

Our Apex Court in Mahasay Ganesh Prasad Ray v. Narendra Nath Sen, AIR 1953 SC 431, while dealing with 30-year-old Book of Accounts, though it came from the possession of its keeper, held as under:

“3. … … … Exhibit 32 series as noticed by the High Court, consists of loose sheets of papers. They have not the probative force of a book of account regularly kept. Being old documents, naturally, the writer is not called and barring the fact that they were produced from the Receiver’s possession there is nothing to show their genuineness. Section 90, Evidence Act, does not help the appellants because this is not a case where the signature of a Particular person is in question or sought to be established. … …”.

In Harihar Prasad Singh v. Deonarain Prasad, AIR 1956 SC 305, the Apex Court observed as under:

“8. Strong reliance was placed by the respondents on Exhibits F-1 and F-1(1), which are khatians relating to the suit lands published on 7-12-1909, recording them as in the possession of the defendants of the second party as ‘kaimi’ and on the presumption under S. 103-B that entry is correct.

Court to invoke Presumptions Judiciously

In Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi), 2023 CrLJ 311; 2022-4 JT 477; 2022-6 Scale 794; 2022-4 SCR 989, it is held as under:

“In any case, when there is legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial Court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the burden of separating the wheat from the chaff where facts are contested. To say it differently, the quashing proceedings must not become an expedition into the merits of factual dispute, so as to conclusively vindicate either the complainant or the defence.”

In Nepurjan Bibi Choudhury v. Musabbir Ali Choudhury, AIR 2018 Gau 151, it is emphasised as under:

“Court needs to exercise the discretion judiciously while taking presumption under Section 90 of the Evidence Act, keeping in mind the underlying object of the provision, being the necessity and convenience and also the precondition required for taking a presumption. Section 90 of the Evidence Act provides that before taking a presumption, two basic ingredients should be there, namely the document sought to be proved must be of 30 years old and it must be produced from proper custody.”

‘Loose and Unfettered Discretion is a Dangerous Weapon‘

In Naresh Chandra Mital v. Bishamber Nath Chopra, 1966-2 DLT 352, it is observed as under:

“The Court has in exercising its discretion to keep in view the desirability of facilitating speedy decisions of suits upon bills of exchange, promissory notes and hundis and also to keep in view the drastic nature of the provisions contained in Rules 2 and 3 of Order 37. The presumption of consideration in the case of negotiable instruments on the one hand and the plea of the defendant and the attending circumstances tending to discount such presumption have to be considered and weighed judiciously by the Court. In otherwords, the Court has to exercise judicial discretion, keeping in view the basic dictates of justice when determining the question whether or not to permit the defendant to contest the suit and if so, whether unconditionally or on terms and what terms. The idea of discretion, which is always to be exercised in a disciplined and responsible manner, really represents a compromise between the idea that those who possess power should be trusted with free hand and not tied down to narrow and rigid groves and the competing notion that loose and unfettered discretion is a dangerous weapon to entrust to any one including Courts.”

Old Document: Recent Challenge – Vigor of Direct Evidence Need Not Be as Strong as might be Naturally Expected in a Recent Transaction.

In Jagna Sanyasiah v. Mycherla Peda Atchanna Naidu, AIR 1921 Mad 624, it is held as under:

“5. The respondents’ contention in their memorandum of objections would, in my opinion, have to be allowed as the passing of consideration for a document which is more than 30 years old and which was ever questioned till this suits was brought should be taken as proved even if the direct evidence is not as strong as might be naturally expected in respect of recent transactions.”

In Muthialpet Benefit Fund Ltd. v. V. Devarajulu Chetty, AIR 1955 Mad 455, it is held as under:

“7. To my mind, neither of the first two points is convincing because the first is based on the rather over-optimistic and facile profession of faith made in every minors suit that he the minor is going to win and to which the statistics of our Courts do not unfortunately lend any support and especially so in this case and in the circumstances set out above, which make out prima facie that the mortgagee public institution made proper and bona fide enquiry as to the existence of necessity and did all that was reasonable to satisfy itself as to the existence of such necessity. In such a case even if there was no necessity in fact or even if the money borrowed was not applied to meet the necessity, the alienation will be upheld. The recitals of necessity in the deed are admissible in evidence as admissions of the Manager or father and also amount to representation of necessity though in the case of RECENT TRANSACTIONS evidence aliunde*^* would be NORMALLY EXPECTED. These elementary propositions require no buttressing by citations (See Mulla, Hindu Law, Edn.10, p.285; Raghavachari: Hindu Law, Edn.3, p.335 and following; Mayne: Hindu Law, Edn.11, Re-print pp.474-475). Secondly, it is in the best interest of the mortgagors themselves to prevent the deterioration of the value of the corpus and market it into cash and keep the sale proceeds in Court pending and abiding the result of the suit.”
(*^*from other sources)

Proof is given to find truth of the evidence, for adjudicate the issues

Evidence is given to to establish the truth of the questions in controversy. It is necessary for the adjudication of the issues.

Following general propositions will show the nexus between Proof and Truth.

Evidence Act does not expressly say as to “TRUTH“: Indian Evidence Act and other procedural laws do not expressly say anything as to “TRUTH of contents” of documents.
Truth is left to the discretion of the court. In proper cases court can presume truth.
Presumption as to truth: Presumption as to truth of the contents of a (proved) document can be invoked in proper cases. Official record is taken as correct on the presumption that the entries thereof are made only after satisfying its truth.
Courts to save the TRUTH: Function of the Court is to save the TRUTH from falsehood, and the Courts are created for the very object of finding the TRUTH.
Formal proof & Truth: Proof of documents includes –
- formal proof, and
- truth of its contents.
Proof by one who can vouchsafe: Generally, proof must be given through persons who can vouchsafe for the truth.

Subjective Satisfaction and Objective Consideration by the Court

It is evident from Sec. 3 of the Indian Evidence Act that TRUTH (or otherwise) of a disputed matter is left to the Subjective Satisfaction of the court. The definition of ‘proved’ in Sec. 3 of the Evidence Act says that ‘a fact is said to be proved when (after considering the matter before it) the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists’. Further, S.114 of the Evidence Act allows the court to presume the existence of any fact which it thinks likely to have happened regard being had to the common course of natural events, human conduct, etc.

The Evidence Act itself lays down the objective methods, including adequate restrictions, to arrive at the subjective satisfaction to determine the truth. The definition of ‘proved’ itself provides for ‘consideration of the matters before it’. The provision in Sec. 27 which bars the use of statement, given to police while an accused is in custody, is an important restriction in that line.

In Karunakaran v. State, (1960) 2 Ker LR 247, it is observed as under:

“The practice of attestation of confessional statement by witnesses is an objectionable one. It prejudices the accused to safeguard whose interest the Legislature has enacted Ss. 24 fo 26 of the Evidence Act. It has no legal sanction behind it. There is no harm in recording the accused’s statement in the first person at any great length in the case diary when the accused is arrested and questioned and in the preamble to the recovery mahazar reference to the reasons leading to the recovery may be made.
The whole thing appears to be an “intentional whittling down” of the wholesome provisions of Ss. 25 and 26 of the Evidence Act. It is very easily said that the incriminating portion of a lengthy confessional “statement should be excluded. But it is a very difficult mental process to close your eyes to the details in the confessional statement and see only the bracketed portion and remain uninfluenced by the confession of the accused. This feat is possible of performance only by a few specially trained experts. There is no reason why the overburdened judicial officers should be saddled with an additional burden which has not the support of law or procedure.” (Quoted in: Mohammed v. State of Kerala, 1963 Cri LJ 175; Thadiyanevida Nazeer @ Ummer Haji v. State of Kerala (2022) and K Babu v. State of Kerala, 2023(6) KLT 96)

Courts are Created for the Very Object of Finding TRUTH

Following decisions of our Apex Court bespeak, as to the significance of TRUTH in judicial determinations, as under:

It is the function of the Court to save the truth from falsehood–

Bhagwan Tana Patil v. State of Maharashtra, AIR 1974 SC 1974

There is a legal duty for the courts to find the truth and administer justice–

Mohanlal Shamji Soni v. Union of India, 1991 Supp (1) SCC 271.

The Courts are created for the very object of finding the truth–

Mohan Singh v. State of MP, (1999) 2 SCC 428.

Right from the inception of the judicial system establishment of truth is the main purposes underlying existence of Courts of justice–

Zahira Habibullah Sheikh v. State of Gujarat, (2006) 3 SCC 374.

The trial should be a search for the truth–

Himanshu Singh Sabharwal v. State of Madhya Pradesh, (2008) 3 SCC 602,

The people would have faith in Courts when they would find that truth alone triumphs in Courts–

Chandra Shashi v. Anil Kumar Verma, (1995) 1 SCC 421.

The truth should be the guiding starin the entire legal process and it is the duty of the Judge to discover truth to do complete justice–

Maria Margarida Sequeria Fernandes v. Erasmo Jack de Sequeria, (2012) 5 SCC 370,.

It is the bounden duty of the Court to uphold the truth and do justice–

Shanmugam v. Ariya Kshatriya, (2012) 6 SCC 430.

Now a question comes – Which provision of the Indian Evidence Act deals with ‘deducing or deriving’ TRUTH ?

In such an inquisition, we legitimately arrive at in-

(i) the definition of “Proved” in Sec. 3, and
(ii) “Presumption” in Sec. 114, Evidence Act.

The definition of “Proved” in Sec. 3 gives vast discretion to the court. It reads as under:

” ‘Proved‘ — A fact is said to be proved when, after considering the matters before it, the Court; either BELIEVES it to exist, or CONSIDERS its existence so PROBABLE that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.”

To fulfill the prime and onerous duty on the court, that is deducing or deriving TRUTH from the disputed matters, the Evidence Act further enables and authorises the court to invoke PRESUMPTION under Sec. 114 Evidence Act, wherever it is required.

Sec. 114 reads as under:

“114. Court may presume existence of certain facts —The Court may PRESUME the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.”

Presumption of Truth is taken ‘on something Proved‘, or taken for granted

In Izhar Ahmad Khan v. Union of India, AIR 1962 SC 1052, the Supreme Court definitely observed that presumption of truth is taken ‘on something proved or taken for granted ‘. It reads as under:

“The term ‘presumption’ in its largest and most comprehensive signification, may be defined to mean inference, affirmative or dis-affirmative of the truth or falsehood of a doubtful fact or proposition drawn by a process of probable reasoning from something proved or taken for granted.”

The Apex Court further quoted James Bradley Tayer (American jurist and author of Treatise on Evidence) which reads as under:

“Presumptions are aids to reasoning argumentation, which assume the truth of certain matters for the purpose of some given inquiry. …”.

In State of West Bengal v. Mir Mohammad Omar, 2000-8 SCC 382, it is observed as under:

“33. Presumption of fact is an inference as to the existence of one fact from the existence of some other facts, unless the truth of such inference is disproved. Presumption of fact is a rule in law of evidence that a fact otherwise doubtful may be inferred from certain other proved facts. When inferring the existence of a fact from other set of proved facts, the court exercises a process of reasoning and reach a logical conclusion as the most probable position. The above principle has gained legislative recognition in India when Sec. 114 is incorporated in the Evidence Act. It empowers the court to presume the existence of any fact which it thinks likely to have happened. In that process court shall have regard to the common course of natural events, human conduct etc. in relation to the facts of the case.”

TRUTH is left to Discretion or Presumption of Court

Sec. 67, Evidence Act lays down the fundamental principles as to the proof of documents. Sec. 67 reads as under:

“67. Proof of signature and handwriting of person alleged to have signed or written document produced—If a document is alleged to be signed or to have been written wholly or in part by any person, the signature or the handwriting of so much of the document as is alleged to be in that person’s handwriting must be proved to be in his handwriting.”

Sec. 67 says as to ‘proof of signature and handwriting’ alone. Neither Sec. 67 nor any other section of the Ev

In this premise, it is legitimate to deduce the following inferences –

Evidence Act does not expressly proffer anything as to “TRUTH of contents” of documents.
It is left to the discretion (Sec. 3) of the court. In proper cases court can presume (Sec. 114) truth.
In most cases, ‘proof of execution’ may lead the court to presume ‘proof of truth’.
It is more so, when a document is admitted (by the other side) without objection.
But, when proof as to ‘truth’ is in issue, or in dispute, the party in whom the burden thereof rests has to discharge it.

Adjudication to Find Out Truth & Doctrines of Substantive Rights, Prejudice to Other Side, Procedure – a Handmaid Matter

In Jai Jai Ram Manohar Lal, (1969) 1 SCC 869 our Apex Court held, while dealing with amendment of pleadings, as under:

“5. …. Rules of procedure are intended to be a handmaid to the administration of justice. A party cannot be refused just relief merely because of some mistake, negligence, inadvertence or even infraction of the Rules of procedure. (Quoted in Varun Pahwa v. Renu Chaudhary, AIR 2019 SC 1186)

In Uday Shankar Triyar v. Ram Kalewar Prasad Singh, (2006) 1 SCC 75, our Apex Court held that procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure should never be made a tool to deny justice or perpetuate injustice by any oppressive or punitive use. The Court held as under:-

“17. Non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice.
Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. The well-recognised exceptions to this principle are:
.(i) where the statute prescribing the procedure, also prescribes specifically the consequence of non- compliance;
(ii) where the procedural defect is not rectified, even after it is pointed out and due opportunity is given for rectifying it;
(iii) where the non-compliance or violation is proved to be deliberate or mischievous;
(iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the court;
(v) in case of memorandum of appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant.” (Quoted in Varun Pahwa v. Renu Chaudhary, AIR 2019 SC 1186.)

Adjudication is to Render Justice; it is Unmindful of Consequences

It was held by the Kerala High Court in Gopalakrishnan v. Joint Registrar of Co operative Societies (General), 08 Dec 2015, (Dama Seshadri Naidu, J) as under:

“23. I am very conscious that this Court, as a constitutional adjudicatory machinery, is called upon to interpret the statute straight and simple and render justice. Justice is not an inventive judicial instrument; it is rather a necessary corollary to the judicious application of the law to the facts following certain accepted cannons of construction of the statutes and the Constitution, too. The whole process is compendiously called judicial adjudication. Trite is the truth that adjudication is unmindful of consequences; it is, on the other hand, in the legislative wisdom to consider all the eventualities and bring about legislation or legislative changes to see that the varied needs of the organisations and institutions, including the administrative agencies, are best served—adverse fallout on the application of law is avoided.

30 Years Old Documents- No ‘Absolute’ Presumption of Truth of Contents, under Sec. 90 Evidence Act

90. Presumption as to documents thirty years old –– Where any document, purporting or proved to be thirty years old, is produced from any custody which the Court in the particular case considers proper, the Court may presume that the signature and every other part of such document, which purports to be in the handwriting of any particular person, is in that person’s handwriting, and, in the case of a document executed or attested, that it was duly executed and attested by the persons by whom it purports to be executed and attested.
Explanation.–– Documents are said to be in proper custody if they are in the place in which, and under the care of the person with whom, they would naturally be; but no custody is improper if it is proved to have had a legitimate origin, or if the circumstances of the particular case are such as to render such an origin probable.
This explanation applies also to section 81.

Under Sec. 90, Not Truth of Contents, but, only presumption of Genuineness of a document (i.e., existence or handwriting), is drawn. Therefore, besides TRUTH, the contents of the documents also have to be proved by cogent evidence.
- Indian Evidence Act and other procedural laws do not expressly say anything as to “TRUTH of contents” of documents. In proper cases court can presume truth.
- No doubt, under Sec. 114, TRUTH can be presumed, directly, in proper cases, in their peculiar ensuring facts (regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case).
- That is, if the document is a public document an “added presumption” (as to correctness) under Section 114(e) is available -Iqbal Basith and others v. N Subbalakshmi, (2021) 2 SCC 718.
Sec. 90 CPC, basically, speaks about two things – as regards 30-year-documents:
- 1. A document purports to be in the handwriting of any particular person is presumed to be in his handwriting.
- 2. A document purports to be executed or attested is presumed to be duly executed and attested.
The presumption, under Section 90, Evidence Act, as to regularity for documents having more than 30 years of age does not apply to Wills (Unless Sec. 71 Evid. Act can be Invoked).

Sec. 90, Evid. Aact – Not Truth of Contents; But, Genuineness Drawn

Under Sec. 90, Not Truth of Contents, but, only presumption of Genuineness of a document (i.e., existence or handwriting), is drawn (Union of India v. Ibrahim Uddin: (2012) 8 SCC 148). Therefore, besides TRUTH, the contents of the documents also have to be proved by cogent evidence.

No doubt, under Sec. 114, TRUTH can be presumed, directly, in proper cases, in their peculiar ensuring facts (regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case).
That is, if the document is a public document an “added presumption” (as to correctness) under Section 114(e) is available -KalitaIqbal Basith and others v. N Subbalakshmi, (2021) 2 SCC 718.

Our Courts Act Upon ‘LEGAL TRUTH’; and not ‘ULTIMATE TRUTH’

As shown above, the very duty of a court is to find TRUTH. Our courts are said to be functioning in ‘adversarial system’ where advocates present the case of their parties before an impartial judge for determining the truth and for getting a judgment accordingly. In such a system, the courts are concerned with ‘PROCEDURAL TRUTH’ or ‘LEGAL TRUTH’ as emerged from the pleadings and evidence; and not ULTIMATE TRUTH.

In State of Rajasthan v. Asharam @ Ashumal, AIR 2023 SC 2228, it is observed as under:

“In a well-designed system, judicial findings of formal legal truth should coincide with substantive truth.” (Also see: Kailash Vijayvargiya v. Rajlakshmi Chaudhuri, 2023-6 JT 138.)

Viscount Simon LC, explained it in Hickman v. Peacey, [1945] AC 304, as under:

“A court of law … is not engaged in ascertaining ultimate verities: it is engaged in determining what is the proper result to be arrived at, having regard to the evidence before it.”

Conjectures and Suspicion Should Not take the place of Legal Truth.

In Ritesh Chakarvarti v. State of Madhya Pradesh, 2007-1 SCC(Cr) 744, our Apex Court warned as under:

“There is another aspect of the matter, which cannot be lost sight of. While dealing with a case of grave nature like the present one, there is always a danger that conjectures and suspicion may take the place of legal truth.” (See also: Aloke Nath Dutta v. State of West Bengal, 2007-12 SCC 230.)

“Preponderance of Probabilities”

Difference in appreciation of evidence in Criminal and Civil matters.

Civil courts proceeds on the principle – “preponderance of probability”. Criminal courts proceeds on the principle – guilt of the accused must be ‘proved beyond all reasonable doubts’.

Preponderance of Probabilities

‘Preponderance’ is used for it carries or conveys the idea that the conscience of the judge is important in appreciation of evidence and law in civil matters. It is also used in contrast to ‘certainty beyond doubt’ (pertains to criminal law). In the process of appreciation of evidence, the ‘slight’ evidence may ‘tilt the balance’ in Civil cases on applying the principle of ‘preponderance’. Therefore, it is said that the evidence is to be weighed. That is, ‘count’ is not the material thing, for a ‘genuine’ judge. It is laid down in Section 134 of the Evidence Act which reads as under:

“No particular number of witnesses shall in any case be required for the proof of any fact.”

In Narayan Ganesh Dastane v. Sucheta Narayan Dastane, AIR 1975 SC 1534, our Apex Court observed as under:

“The normal rule which governs civil proceedings is that a fact can be said to be estabilshed if it is proved by a preponderance of probabilities. This is for the reason that under the Evidence Act, Sec. 3, a fact is said to be proved when the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. The belief regarding the existence of a fact may thus be founded on a balance of probabilities. A prudent man faced with conflicting probabilities concerning a fact-situation will act on the supposition that the fact exists, if on weighing the various probabilities he finds that the preponderance is in favour of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. The first step in this process is to fix the probabilities, the second to weigh them, though the two may often intermingle. The impossible is weeded out at the first stage, the improbable at the second. Within the wide range of probabilities the court has often a difficult choice to make but it is this choice which ultimately determines where the preponderance of probabilities lies.”

Our Apex Court referred the following two English decisions-

(1) Per Dixon,J.in Wright v.Wright (1948)77 C.L.R.191. It observed as under:

“The nature and gravity of an issue necessarily determines the manner of attaining reasonable satisfaction of the truth of the issue”;

(2) Blyth v. Blyth, [1966] 1 A.E.R. 524 (Lord Denning). It is observed as under:

“The degree of probability depends on the subject-matter. In proportion as the offence is grave, so ought the proof to be clear”

Standard of proof required under Sect. 139 NI Act is ‘preponderance of probabilities’

In Rangappa v. Sri Mohan, (2010) 11 SCC 441, our Apex Court held that Sec. 139, Negotiable Instruments Act, 1881 (“It shall be presumed, unless the contrary is proved”) contains ‘reverse onus clause‘; and that under Sect. 139, the standard of proof required for rebutting that presumption is ‘preponderance of probabilities’. (Followed in Anss Rajashekar v. Augustus Jeba Ananth, AIR 2019 SC 942).

In Basalingappa v. Mudibasappa, 2019-5 SCC 418, while considering the presumption in 138 NI Act, it is held that when financial capacity is questioned, it was incumbent on the complainant to have explained his financial capacity and that the Court cannot insist on a person to lead negative evidence.

In Oriental Bank of Commerce v. Prabodh Kumar Tewari (AS Bopanna, Dhananjaya Y Chandrachud), 2022-7 SCR 72, it is held as under:

“12. Section 139 of the Act mandates that it shall be presumed, unless the contrary is proved, that the holder of a cheque received it, in discharge, in whole or in part, of a debt, or liability.
The expression “unless the contrary is proved” indicates that the presumption under Section 139 of the Act is rebuttable. Terming this as an example of a “reverse onus clause” the three-Judge Bench of this Court in Rangappa held that in determining whether the presumption has been rebutted, the test of proportionality must guide the determination. The standard of proof for rebuttal of the presumption under Section 139 of the Act is guided by a preponderance of probabilities.”

Reasonable Possibility alone is needed to Rebut Presumption

In Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808, it was laid down by our Apex Court as under:

“23. ……One of the cardinal principles which has always to be kept in view in our system of administration of justice for criminal cases is that a person arraigned as an accused is presumed to be innocent unless that presumption is rebutted by the prosecution by production of evidence as may show him to be guilty of the offence with which he is charged. The burden of proving the guilt of the accused is upon the prosecution and unless it relieves itself of that burden, the courts cannot record a finding of the guilt of the accused. There are certain cases in which statutory presumptions arise regarding the guilt of the accused, but the burden even in those cases is upon the prosecution to prove the existence of facts which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist, the Court can raise the statutory presumption and it would, in such an event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not as heavy as is normally upon the prosecution to prove the guilt of the accused. If some material is brought on the record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal.” (Quoted in: Basalingappa v. Mudibasappa: 2019-5 SCC 418.)

In M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39 (SB Sinha), it was held that a probable defence or reasonable possibility alone is needed to rebut the presumption, which must meet the standard of “preponderance of probability”. In M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39 (SB Sinha) observed as under:

“In Hiten P. Dalal v. Bratindranath Banerjee [(2001) 6 SCC 16], a 3- Judge Bench of this Court held that although by reason of Sections 138 and 139 of the Act (NI Act), the presumption of law as distinguished from presumption of fact is drawn, the court has no other option but to draw the same in every case where the factual basis of raising the presumption is established. Pal, J. speaking for a 3-Judge Bench, however, opined:
- “Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.
- In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, ‘after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists’. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the ‘prudent man’.”

Standard of Proof in Civil and Criminal Cases

Our Apex Court continued in Narayan Ganesh Dastane v. Sucheta Narayan Dastane, AIR 1975 SC 1534, as under:

“In civil cases this, normally, is the standard of proof to apply for finding whether the burden of proof is discharged. Proof beyond reasonable doubt is proof by a higher standard which generally governs criminal trials or trials involving inquiry into issues of a quasi-criminal nature. A criminal trial involves the liberty of the subject which may not be taken away on a mere preponderance of probabilities. If the probabilities are so’ nicely balanced that a reasonable, not a vascillating, mind cannot find where the preponderance lies, a doubt arises regarding the existence of the fact to be proved and the benefit of such reasonable doubt goes to the accused. It is wrong to import such considerations in trials of a purely civil nature.”

See Post: Appreciation of Evidence by Court and ‘Preponderance of Probabilities’ & ‘Probative Value of Evidence

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Civil Suits: Procedure & Principles

Book No, 1 – Civil Procedure Code

Principles and Procedure

PROPERTY LAW

Title, ownership and Possession

Adverse Possession

Land Laws/ Transfer of Property Act

Land Reform Laws

Power of attorney

Evidence Act – General

Sec. 65B

Admission, Relevancy and Proof

Law on Documents

Documents – Proof and Presumption

Interpretation

Contract Act

Law on Damages

Easement

Stamp Act & Registration

Divorce/Marriage

Negotiable Instruments Act

Arbitration

Will

Book No. 2: A Handbook on Constitutional Issues

Religious issues

Book No. 3: Common Law of CLUBS and SOCIETIES in India

Book No. 4: Common Law of TRUSTS in India

General Principles
Dedication and Vesting
Trustees and Management
Breach of Trust
- Breach of Trust and Removal of Trustees
Suits by or against Trusts
Law on Hindu Religious Endowments
Temples, Gurudwaras, Churches and Mosques – General
- Legal Personality of Temples, Gurudwaras, Churches and Mosques
Constitutional Principles
Ayodhya and Sabarimala Disputes
General

Claim of Adverse Possession Carries (Implied) Admission of Title of Other Party – State of Haryana v. Amin Lal, 2024-4 CurCC(SC) 222

Saji Koduvath, Advocate, Kottayam.

In State of Haryana v. Amin Lal (Vikram Nath, Prasanna B. Varale JJ), November 19, 2024, it is held by the Supreme Court of India as under:

“By asserting adverse possession, the appellants have impliedly admitted the plaintiffs’ title.”

Facts & Findings – in a Nutshell

In the suit for recovery of possession, plaintiffs relied on jamabandi (revenue) entries, and sale deeds – a chain of title, to establish their ownership.
Revenue records are maintained by officials in regular course of duties. It carries a presumption of correctness under Sec. 35, Evid. Act.
While it is true that revenue entries do not by themselves confer title, they are admissible as evidence of possession.
And can support a claim of ownership when corroborated by other evidence.

HC decreed the suit holding –

By taking the plea of adverse possession, the defendants impliedly admitted the title of the plaintiffs.

Dismissing the appeal filed by the defendant, SC held:

In a suit for possession plaintiffs must establish their ownership.
Here, defendants did not specifically deny plaintiffs’ ownership.
Instead, they primarily relied on plea of adverse possession.
Under O. VIII r. 5 CPC, facts not denied are deemed to be admitted.
By asserting Adv. Possn., the appellants impliedly admitted the plaintiffs’ title.
Defendants claim – long possession perfected title – Not sustainable. Instead, claim of hostile title in denial of the title of true owner needed for supporting plea of adverse possession.

Key Takeaways

(i) “By asserting adverse possession, the appellants have impliedly admitted the plaintiffs’ title.”
(ii) “The appellants claim that due to their long and continuous possession of the suit property since 1879-80, they have perfected their title, is also not sustainable in law.”
(iii) “However, it is a fundamental principle that the State cannot claim adverse possession over the property of its own citizens.”

Important Findings

“8. The appellants _(defendants) contention that plaintiff failed to prove their title and ownership is completely misplaced for the reasons and analysis made hereunder:

8.1 We find this argument unconvincing for several reasons: In their written statement before the Trial Court, the appellants did not specifically deny the plaintiffs’ ownership of the suit property. Instead, they primarily relied on the plea of adverse possession. Under Order VIII Rule 5 of the Code of Civil Procedure, 1908, allegations of fact not denied specifically are deemed to be admitted. By asserting adverse possession, the appellants have impliedly admitted the plaintiffs’ title.
8.2 The plaintiffs relied on jamabandi entries to establish their ownership. The jamabandi for the year 1969-70 (Exhibit P1) records the name of Shri Amin Lal as owner to the extent of half share. Revenue records are public documents maintained by government officials in the regular course of duties and carry a presumption of correctness under Section 35 of the Indian Evidence Act, 1872. While it is true that revenue entries do not by themselves confer title, they are admissible as evidence of possession and can support a claim of ownership when corroborated by other evidence.
8.3 The respondents_(plaintiffs) have produced copies of registered sale deeds and mutation records before this Court, which were part of the additional documents filed with the counteraffidavit. Plaintiff No. 1, Shri Amin Lal, derived title through a registered sale deed dated 5th July 1960, and mutation No. 8329 was sanctioned on 20th April 1982. Plaintiff No. 2, Shri Ashok Kumar, derived his title through a registered sale deed dated 12th March 1973, and mutation No. 8330 was sanctioned on 20th April 1982. These documents establish a chain of title and cannot be ignored.
8.4 The appellants_(defendants) did not dispute the plaintiffs’ title in their pleadings or during the trial. The First Appellate Court’s finding that the plaintiffs are not the true owners is based on conjecture and lacks evidentiary support. The appellants_(defendants) cannot now, at this appellate stage, challenge the plaintiffs’ ownership without having raised a specific denial earlier.
9. The appellants’_(defendants) next submission that the burden of proof lay on the plaintiffs to establish their title is equally not borne out from the records. It is a well-settled principle that in a suit for possession based on title, the plaintiffs must establish their ownership. In the present case, the plaintiffs have done so by producing revenue records and, subsequently, the registered sale deeds and mutation entries. Furthermore, as the appellants_(defendants) failed to deny the plaintiffs’ title specifically and instead relied on adverse possession, the burden has shifted to the appellants to prove their adverse possession. In the present case, the plaintiffs have sought possession based on their title, which they have established through documentary evidence.
10. The appellants_(defendants) claim that due to their long and continuous possession of the suit property since 1879-80, they have perfected their title, is also not sustainable in law. However, it is a fundamental principle that the State cannot claim adverse possession over the property of its own citizens.”

Claimant must have accepted title of the true owner

It is a basic factor in adverse possession- the claimant thereof must have accepted the title of the true owner.

In In Kurella Naga Druva Vudaya Bhaskara Rao v. Galla Jani Kamma Alias Nacharamma, (2008) 15 SCC 150, it was pointed out – if according to the defendant, the plaintiff was not the true owner, his possession would not have been sufficient to term it ‘hostile’ to the plaintiff’s title; and that the defendant had to show, to attract adverse possession, that his possession was also hostile to the title and possession of the true owner.

In Nand Ram v. Jagdish Prasad, (2020) 9 SCC 393, it was pointed out by the Apex Court :

The question of adverse possession without admitting the title of the real owner is not tenable.

In Uttam Chand v. Nathu Ram, 2020-11 SCC 263, AIR 2020 SC 461, our Apex Court allowed the appeal, negating the claim of adverse possession raised by the defendant, inter alia, for not accepting the title of the plaintiff (true owner), by the defendant. It was observed as under:

“16. In the present case, the defendants have not admitted the vestingof the suit property with the Managing Officer and the factum of its transfer in favour of the plaintiff. The defendants have denied the title not only of the Managing Officer but also of the plaintiff.”

KNOWLEDGE of True Owner sine qua non of ADVERSE POSSESSION

1. For a possession to be “ADVERSE”, it must be one obviously arose by Dispossessing true owner, admitting his Title (Knowing him).

It is trite law – after 1963 Limitation Act, under Article 65 – the defendants should have founded its case on “adverse” possession with the pleading –

Started with wrongful dispossession,
- – obviously – knowing True Owner.
hostile or notoriousenough
- with a view to make True Owner aware
specifying date of starting
- – obviously – knowing True Owner
admitting ‘real/true’ owner as ‘rightful’ owner,
- – obviously – knowing True Owner
with some overt act (Gaya Prasad Dikshit v. Dr. Nirmal Chandar, 1984(2) SCC 286; Government of Kerala v. Joseph –AIR 2023 SC 3988).
- – obviously – knowing True Owner”

See:

RadhesiamLal v. Sandhya – AIR 2024 SC 1595
Government of Kerala v. Joseph – AIR 2023 SC 3988
Ram NaginaRai v. DeoKumarRai – 2019-13 SCC 324.
Karnataka Board of Wakaf v. Govt of India – AIR 2004 SC 2096;
T. Anjanappa v. Somalingappa – [(2006) 7 SCC 570]; and
PT Munichikkanna Reddy v. Revamma – AIR 2007 SC 1753;
Nand Ram v. Jagdish Prasad, (2020) 9 SCC 393
Gaya Prasad Dikshit v. Dr. NirmalChandar 1984(2) SCC 286, P.N. Bhagwati, D.P. Madon
T. Lakshmi Reddi v. L. Lakshmi Reddi 1957 SCR 195).

2. If permissive holder, no adverse possession. See:

State of Haryana v. AminLal – 19 Nov. 2024 SC
NeelamGupta v. Rajendrakumar – 2024 INSC 769
Ram Nagina Rai v. Deo Kumar Rai – 2019-13 SCC 324
Thakur Kishan Singh v. Arvind Kumar, 1994-6 SCC 591
L.N. Aswathama v. P. Prakash (2009) 13 SCC 229
R. Hanumaiah v. Secretary to Government of Karnataka, (2010) 5 SCC 203.

3. Permissive holder is Estopped from raising claim of Adverse Possession

Nand Ram v.Jagdish Prasad, (2020) 9 SCC 393.

4. Mere possession, however long, insufficient. It must be adverse. There is drastic change after 1963 Limitation Act.

Govt. of Kerala v. Joseph – AIR 2023 SC 3988
T. Anjanappa v. Somalingappa – 2006(7) SCC 570.
Gaya Prasad Dikshit v. Dr. Nirmal Chandar 1984(2) SCC 286.
Karnataka Board of Wakf v. Govt. of India – (2004) 10 SCC 779.

It not sure who the true owner is, there will be no Adverse Possession

Adverse possession is hostile possession which is expressly or impliedly in denial of title of the true owner. To attract adverse possession there must be animus possidendi to hold the land adverse to the title of the true owner (Chatti Konati Rao v. Palle Venkata Subba Rao, 2010-14 SCC 316; M. Venkatesh v. BDA, 2015-17 SCC 1; Brijesh Kumar v. Shardabai, 2019-9 SCC 369) with the knowledge of the true owner. If the defendants are not sure who the true owner is, there will be no question of possessing the property hostile to the true owner.

In T. Anjanappa v. Somalingappa, 2006-7 SCC 570, it is held as under:.

…The High Court has erred in holding that even if the defendants claim adverse possession, they do not have to prove who is the true owner and even if they had believed that the Government was the true owner and not the plaintiffs, the same was inconsequential. Obviously, the requirements of proving adverse possession have not been established. If the defendants are not sure who is the true owner the question of their being in hostile possession and the question of denying title of the true owner do not raise…… Therefore, the defendants are in possession and enjoyment of the property knowing fully well that the property belonged to the plaintiff’s father and the plaintiff’s vendor also did not take any action to evict them and the plaintiff and his vendor were aware that the properties belonged to them and despite the same, the plaintiff’s vendor did not take any action to evict them. Hence, the appellants/defendants have also perfected title by adverse possession. Therefore, the 2nd substantial question of law of is answered in favour of the appellants/defendants.” (Followed in: Uttam Chand v. Nathu Ram, 2020-11 SCC 263, AIR 2020 SC 46.)

No Adverse Possession Without Admitting Title of Real Owner

In Nand Ram v. Jagdish Prasad, AIR 2020 SC 1884; (2020) 9 SCC 393, it was pointed out by the Apex Court :

“The question of adverse possession without admitting the title of the real owner is not tenable.”

Our Apex Court, in Ayodhya case Judgment, M Siddiq v. Mahant Suresh Das, 2020-1 SCC 1, it is held as under:

“747. A plea of adverse possession is founded on the acceptance that ownership of the property vests in another against whom the claimant asserts a possession adverse to the title of the other.”

This principle is laid down in the following decisions also:

The State of Haryana v. Amin Lal, 2024-4 CurCC(SC) 222,
Kurella Naga Druva Vudaya Bhaskara Rao v. Galla Jani Kamma, (2008) 15 SCC 150,
Uttam Chand v. Nathu Ram, 2020-11 SCC 263, AIR 2020 SC 461.

Claim of Adverse Possession by Tenant

In Nand Ram v. Jagdish Prasad, (2020) 9 SCC 393, the claim of adverse possession by the tenant was negatived by the Apex Court on the following grounds:

The respondent-tenant had admitted the ownership of the landlord in earlier proceedings.
Such plea operates as estoppel. The subsequent claim of adverse possession of the tenant as owner is not sustainable.
The respondent was to prove his continuous, open and hostile possession to the knowledge of true owner for a continuous period of 12 years. The respondent has not led any evidence of hostile possession to the knowledge of true owner.
He has also not surrendered possession before asserting hostile, continuous and open title to the knowledge of the true owner. (In terms of Sec. 108(q) of the TP Act possession of tenant remains permissive till it has been actually restored to the landlord.)

In Bishwanath Agarwala v. Sabitri Bera -2009(15) SCC 693 (Deepak Varma & SB Sinha, JJ) it is held as under:

“The landlord in a given case though may not be able to prove the relationship of landlord and tenant, but in the event, he proves his general title, may obtain a decree on the basis thereof.”

The Apex Court referred to Champalal Sharma v. Smt. Sunita Maitra, 1990 (1) DJLR 298, where SB Sihna, J. himself held:

“It is also well settled that one such relationship is admitted or established tenant would be estopped and precluded from challenging the title of the landlord; and if he does so, under the general rule, make himself liable for eviction on that ground”.

Plea of Title or permissive Possession And Adverse Possession Are Mutually Contradictory.

Adverse possession can be raised only against the property owned by another person. In Abdul Hameed Rawther v. Basheer, ILR 2024-2 Ker 527; 2024-3 KLT 812, it is held as under:

“25. The law is well settled that the plea of adverse possession can be raised only against the property owned by another person against whom he asserts possession adverse to the title of the other (Raghavan v. Devayani [2024 (2) KHC 417] and Shri Uttam Chand (D) through LRs. v. Nathu Ram (D) through LRs. and Others [2020 KHC 6034]).”

In Government of Kerala v. Joseph, AIR 2023 SC 3988, it is held as under:

“21.9 Claim of independent title and adverse possession at the same time amount to contradictory pleas. The case of Annasaheb Bapusaheb Patil v. Balwant, (1995) 2 SCC 543 elaborated this principle as:
“15. Where possession can be referred to a lawful title, it will not be considered to be adverse. The reason being that a person whose possession can be referred to a lawful title will not be permitted to show that his possession was hostile to another’s title. One who holds possession on behalf of another, does not by mere denial of that other’s title make his possession adverse so as to give himself the benefit of the statute of limitation. Therefore, a person who enters into possession having a lawful title, cannot divest another of that title by pretending that he had no title at all.”
This principle was upheld in the case of Mohan Lal v. Mirza Abdul Gaffar (AIR 1996 SC 910, 1996 1 SCC 639 –two Judge Bench) –
“4. As regards the first plea, it is inconsistent with the second plea. Having come into possession under the agreement, he must disclaim his right thereunder and plead and prove assertion of his independent hostile adverse possession to the knowledge of the transferor or his successor in title or interest and that the latter had acquiesced to his illegal possession during the entire period of 12 years, i.e., up to completing the period of his title by prescription nec vi, nec clam, necprecario. Since the appellant’s claim is founded on Section 53-A, it goes without saying that he admits by implication that he came into possession of the land lawfully under the agreement and continued to remain in possession till date of the suit. Thereby the plea of adverse possession is not available to the appellant.”
The Court in Uttam Chand (Sri Uttam Chand v. Nathu Ram AIR 2020 SC 461) has reiterated this principle of adverse possession.”

(Note: Mutually destructive plea is impermissible: (2006) 12 SCC 233, AIR 2009 SC 2355).

End Notes – 1

The same matter _{(adv. possn. is founded on acceptance of ownership of opposite side)} has been examined in M Siddiq (D) through LRs v. Mahant Suresh Das (2020) 1 SCC 1 (Constitution Bench – Ayodhya Case).

It has been held – a plea of adverse possession is founded on the acceptance of ownership of the property with the other side.

The Court held as under:

“747. A plea of adverse possession is founded on the acceptance that ownership of the property vests in another against whom the claimant asserts a possession adverse to the title of the other. Possession is adverse in the sense that it is contrary to the acknowledged title in the other person against whom it is claimed.

Evidently, therefore, the plaintiffs in Suit 4 ought to be cognisant of the fact that any claim of adverse possession against the Hindus or the temple would amount to an acceptance of a title in the latter.

Dr Dhavan has submitted that this plea is a subsidiary or alternate plea upon which it is not necessary for the plaintiffs to stand in the event that their main plea on title is held to be established on evidence. It becomes then necessary to assess as to whether the claim of adverse possession has been established.
748. A person who sets up a plea of adverse possession must establish both possession which is peaceful, open and continuous – possession which meets the requirement of being ‘nec vi nec claim and nec precario’. To substantiate a plea of adverse possession, the character of the possession must be adequate in continuity and in the public because the possession has to be to the knowledge of the true owner in order for it to be adverse. These requirements have to be duly established first by adequate pleadings and second by leading sufficient evidence. Evidence, it is well settled, can only be adduced with reference to matters which are pleaded in a civil suit and in the absence of an adequate pleading, evidence by itself cannot supply the deficiency of a pleaded case. Reading paragraph 11(a), it becomes evident that beyond stating that the Muslims have been in long exclusive and continuous possession beginning from the time when the Mosque was built and until it was desecrated, no factual basis has been furnished. This is not merely a matter of details or evidence. A plea of adverse possession seeks to defeat the rights of the true owner and the law is not readily accepting of such a case unless a clear and cogent basis has been made out in the pleadings and established in the evidence.”

It is Quoted in:

Neelam Gupta v Rajendra Kumar Gupta, AIR 2024 SC 5374
M. Radheshyamlal v. V Sandhya, 2024 AIR SC 1595
Sri Uttam Chand v. Nathu Ram, 2020-11 SCC 263, AIR 2020 SC 461.

End Notes – 2

Easement: Dominant Owner Cannot Dispute The Title Of The Servient Owner

Note: Prescriptive easement is also created by adverse user, by the hostile use (Kantaben Parsottamdas v. Ganshyambhai Ramkrishan Purohit, AIR 2022 Guj 146).

It is trite law that the dominant owner cannot dispute the title of the servient owner (Reghuprasad v. M. Raghunathan, AIR 2020 Ker 16).

In Omana v. Reji Kurian, AIR 2022 Ker 91, it is held (K. Babu, J.) as under:

“19. Yet another aspect that requires consideration is that the pleadings of the defendants in the written statement go in the line, denying the title of the plaintiff over the ‘B’ schedule way. One of the fundamental ingredients in a claim of easement is the admission of the title of the servient owner by the dominant owner. On this ground alone, the claim of the defendants over plaint ‘B’ schedule property by way of easement by prescription must fail.”

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Read in this cluster (Click on the topic):

Civil Suits: Procedure & Principles

Book No, 1 – Civil Procedure Code

Principles and Procedure

PROPERTY LAW

Title, ownership and Possession

Adverse Possession

Land Laws/ Transfer of Property Act

Land Reform Laws

Power of attorney

Evidence Act – General

Sec. 65B

Admission, Relevancy and Proof

Law on Documents

Documents – Proof and Presumption

Interpretation

Contract Act

Law on Damages

Easement

Stamp Act & Registration

Divorce/Marriage

Negotiable Instruments Act

Arbitration

Will

Book No. 2: A Handbook on Constitutional Issues

Religious issues

Book No. 3: Common Law of CLUBS and SOCIETIES in India

Book No. 4: Common Law of TRUSTS in India

General Principles
Dedication and Vesting
Trustees and Management
Breach of Trust
- Breach of Trust and Removal of Trustees
Suits by or against Trusts
Law on Hindu Religious Endowments
Temples, Gurudwaras, Churches and Mosques – General
- Legal Personality of Temples, Gurudwaras, Churches and Mosques
Constitutional Principles
Ayodhya and Sabarimala Disputes
General

Cuddalore Powergen Corporation Ltd. v. Chemplast Cuddalore Vinyls Ltd., Neutral Citation: 2025 INSC 73 – A Land Mark Decision on Order II rule 2, CPC

Saji Koduvath, Advocate, Kottayam

Abstract

The Supreme Court found in this case: to attract Order II Rule 2 CPC –
- the omission in the fist suit must have been “deliberate“
- the relief in the second suit must have been “available” at the time of first suit.
- cause of action in both suits must have been the identical in substance and not merely technically.
- evidence required to support the claims must have been the same.
Brief Facts: The sale deed executed between the parties could not have been registered owing to the ‘ban’ under a GO. The purchaser filed a suit for injunction to restrain the ‘previous’ owner. Subsequently the GO was quashed by the HC. The second suit for Sp. Performance was resisted by the ‘previous’ owner saying – ‘no injunction against owner’. Trial Court rejected the plaint allowing the Order II Rule 2 CPC petition. First Appellate Court confirmed the Order. But the HC reversed. The SC dismissed the appeal.

Agreement for Sale between plaintiff and defendant

The original plaintiff entered into an agreement for sale of suit property with original defendant no. 1 (owner). The plaintiff (purchaser) was put in possession of the property.

The purchaser visited the office of the Sub Registrar on multiple occasions for the purpose of registering the sale deed executed between the parties. However, the registration was refused pointing out general ban against registration under a G.O. The Writ Petition was filed challenging the decision of the revenue authorities.

Plaintiff (purchaser) filed Suit for injunction

The defendant (owner) started to interfere with the peaceful possession and enjoyment of the plaintiff (purchaser). Hence he filed the “first suit” before the Principal District Judge for permanent injunction to restrain the defendant (owner) from interfering with the peaceful possession and enjoyment of the suit property.

The defendant (owner) in its written statement stated that he was in possession of the suit property, at the time of both the sale agreement and the sale deed. And, that the plaintiff (purchaser) cannot seek an injunction against the appellant, as he was the actual owner in possession of the suit property and that the injunction suit was still pending before the concerned court.

Plaintiff (purchaser) filed the second OS for Specific Performance

Subsequently, the Division Bench of the Madras High Court quashed the G.O. The High Court directed the revenue authorities to receive and register all the documents.

In this situation the plaintiff (purchaser) filed the second Original Suit praying (inter alia) that the defendant (owner) “be directed to specifically perform the terms and conditions of the agreement for sale”.

Argument of Appellant defendant (owner)

In Vurimi Pullarao v. Vemari Venkata Radharani, (2020) 14 SCC 110, it was held that (in the light of earlier injunction suit) the second suit for specific performance was barred under Order II Rule 2.

HC found – no “deliberate omission” in suing for Sp. Performance, earlier

The defendant (owner), contending that the second suit is hit by the bar under Order II Rule 2 CPC, moved an I.A. under Order VII Rule 11 read with Section 151 CPC, for the rejection of plaint. It was allowed by the Trial Court. The First Appellate Court confirmed the order. But the High Court allowed the second appeal ex-parte and restored the plaint finding that the second suit was not hit by the bar under Order II Rule 2. It observed that there was no “deliberate omission on the part of the plaintiff to make a claim in the earlier suit”. The High Court held:

“Further, in a case of this nature wherein the possession of the suit property is said to have been handed over to the agreement holder, it is not an unusual situation of sudden interference by the land owner warranting the agreement holder to file a suit for bare injunction. Therefore, if any such situation arises, the agreement holder cannot be precluded from claiming or seeking an immediate and emergent relief first in order to prevent further damage or abuse. Therefore, filing of such suit for bare injunction also by reserving the right to file a comprehensive suit later cannot be construed or considered as the one arising out of same cause of action in order to bring it under the hammer of Order 2 Rule 2 C.P.C.”

Hence the defendant (owner) filed this Appeal before the Supreme Court.

Findings of the SC, on Order II Rule 2 CPC, in a Nutshell

Appeal is dismissed by the Supreme Court (in Cuddalore Powergen Corporation Ltd. v. Chemplast Cuddalore Vinyls Ltd., Neutral Citation: 2025 INSC 73, J.B. Pardiwala and Justice R. Mahadevan, JJ.) on the following main observations.

i. Order II Rule 2 contemplate – where a plaintiff omits or relinquishes
- a part of a claim which he is entitled to make and,
- secondly, one out of the several reliefs that he could have claimed in the suit.
ii. The mandate of Order II Rule 2 is the inclusion of the whole claim arising in respect of one and the same cause of action, in one suit; it is not different causes of action arising from the same transaction.
iii. Several definitions have been given to the phrase “cause of action” and it can safely be said to mean – “every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”. Such a cause of action has no relation whatsoever to the defence that may be set up by the defendant, nor does it depend upon the character of the relief which is prayed for by the plaintiff but refers to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.
iv. The applicability of Order II Rule 2 is depended upon the particular facts and circumstances of each case.
v. Additionally, if the evidence required to support the claims is different, then the causes of action can also be considered to be different.
vi. The plaintiff must have been entitled to more than one relief in respect of that cause of action.
vii. The plaintiff, without any leave of the Court, omitted to sue for the relief for which the second suit had been filed.
vi. The plaintiff must have deliberately relinquished the relief.
vii. Since the plea is a technical bar, it has to be established satisfactorily and cannot be presumed merely on the basis of inferential reasoning.

The Supreme Court Court held in para 44 as under:

“44. Therefore, the phrase “cause of action” for the purposes of Order II Rule 2 would mean the cause of action which gives an occasion for and forms the foundation of the suit. If that cause enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot be permitted to recover the balance reliefs through independent proceedings afterwards, especially when the leave of the court has not been obtained.”

Authorities relied on by the Apex Court While Discussing General Principles on Order II Rule 2

1. Stroud’s Judicial Dictionary: Words and Phrases (4th Edn.): “cause of action” – existence of those facts which give a party the right to judicial interference on his behalf. It is the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which, if traversed, the plaintiff must prove in order to obtain a judgment.

2. Black’s Law Dictionary – Cause of action is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a court or a tribunal; a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person.

3. Halsbury’s Laws of England (4th Edn.): ‘Cause of action’ -simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. It includes every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. “’Cause of action’ has also been taken to mean that particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject-matter of grievance founding the action, not merely the technical cause of action.”

4. Mohammad Khalil Khan v. Mahbub Ali Mian, AIR 1949 PC 78

“Cause of action” is facts for the Plaintiff to prove to get a judgment
It depends on the particular facts of each case.
It is the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.
The test is whether the foundation of the cause of action is distinct from that of the former suit.
The evidence to support the claims determines whether the cause of action is different or not.
The causes of action is same if they are identical in substance and not merely technically identical.
Cause of action distinct from that which was the foundation of the former suit.
The cause of action has no relation to the defence that may be set up by the defendant. It is not depended on the character of the relief prayed for by the Plaintiff, also.

5. In Brunsden v. Humphrey (14 Q.B.D. 141)

The principal consideration is whether the same cause of action in both suits.
One of the tests that is applied is whether the same evidence will maintain both suits.
If the evidence required to support the claims is different, then the causes of action are also different.
The application of the rule depends, not upon any technical consideration of the identity of forms of action, but upon matter of substance.
The cause of action arising from damage to the plaintiff’s cab is in substance identical with that which accrues in consequence of the damage caused to his person.

6. Soorjomonee Dayee v. Suddanund [12 Beng. [(1873) 12 Beng L.R. 304, 315]

Cause of action is to be construed with reference rather to the substance than to the form of action.

7. Krishna Behari Roy v. Brojeswari Chowdranne [(1875) LR 2.I.A. 283, 285.

Cause of action cannot be taken in its literal and most restricted sense.

8. Pittapur v. Sri Rajah Venkata Mahipati Surya [(1885) L.R. 12.I.A. 116]

The plaintiff sued to recover immovable property he being improperly turned out of possession; and afterwards sued to recover from the same defendant, in consequence of its wrongful detention. It was held that the causes of action in the two suits were distinct.

9. Muhammad Hafiz v. Muhammad Zakariya [(1921) L.R. 49.I.A. 9, 15]:

If the cause enables a man to ask for larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings.

10. Brunsden v. Humphrey (14 Q.B.D. 141)

The cause of action which gave occasion for and formed the foundation for the first suit in that case was different from the cause of action which gave occasion for and formed the foundation for the second suit.

11. Gurbux Singh v. Bhoorala, AIR 1964 SC 1810 (Constitutional Bench)

The plaint in the former suit would have to be produced in the subsequent suit.
The “cause of action” would be the facts which the plaintiff had then alleged to support the right to the relief that he claimed.
The defendant who seeks to take recourse to a successful plea under Order II Rule 2(3) must make out the following:
.(a) that the second suit was in respect of the same cause of action as that on which the previous suit was based;
(b) that in respect of that cause of action, the plaintiff was entitled to more than one relief; and
(c) that being thus entitled to more than one relief, the plaintiff, without any leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed.

The Court had observed further as under:

“6. In order that a plea of a Bar under Order 2 Rule 2(3) of the Civil Procedure Code should succeed the defendant who raises the plea must make out;
.(i) that the second suit was in respect of the same cause of action as that on which the previous suit was based;
(2) that in respect of that cause of action the plaintiff was entitled to more than one relief;
(3) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court omitted to sue for the relief for which the second suit had been filed.
From this analysis it would be seen that the defendant would have to establish primarily and to start with, the precise cause of action upon which the previous suit was filed, for unless there is identity between the cause of action on which the earlier suit was filed and that on which the claim in the latter suit is based there would be no scope for the application of the bar. No doubt, a relief which is sought in a plaint could ordinarily be traceable to a particular cause of action but this might, by no means, be the universal rule.
As the plea is a technical bar it has to be established satisfactorily and cannot be presumed merely on basis of inferential reasoning. It is for this reason that we consider that a plea of a bar under Order 2 Rule 2 of the Civil Procedure Code can be established only if the defendant files in evidence the pleadings in the previous suit and thereby proves to the Court the identity of the cause of action in the two suits. It is common ground that the pleadings in CS 28 of 1950 were not filed by the appellant in the present suit as evidence in support of his plea under Order 2 Rule 2 of the Civil Procedure Code.
The learned trial Judge, however, without these pleadings being on the record inferred what the cause of action should have been from the reference to the previous suit contained in the plaint as a matter of deduction. At the stage of the appeal the learned District Judge noticed this lacuna in the appellant’s case and pointed out, in our opinion, rightly that without the plaint in the previous suit being on the record, a plea of a bar under Order 2 Rule 2 of the Civil Procedure Code was not maintainable.”

12. S. Nazeer Ahmed v. State Bank of Mysore, (2007) 11 SCC 75

It is necessary to mark the earlier plaint in evidence and then make out that there was a relinquishment of a relief by the plaintiff, without the leave of the Court.

13. Virgo Industries (Eng.) Private Limited v. Venturetech Solutions Private Limited, (2013) 1 SCC 625

The bar under Order II Rule 2 would apply to the subsequent suits filed for specific performance when the plaintiff itself had claimed in the first set of suits for injunction that the defendant had no intention to honour the agreement to sell.

14. Inbasagaran v. S. Natarajan reported in (2015) 11 SCC 12

The respondent was allotted the suit property as a house site by the Housing Board through a lease-cum-sale agreement, however, on a condition that a sale deed would be executed in favour of the respondent only when he constructs a building in the suit property. In the meantime, the respondent had entered into an agreement for sale with the appellant and obtained a part of the sale consideration as well.
It was agreed that the appellant shall prepare a plan for construction of the building in the suit property, the respondent would get it approved and thereafter, the appellant would undertake the construction at his own cost. The appellant took possession of the suit property and completed the construction. Thereafter, the Housing Board on 18.02.1985 had executed the sale deed in favour of the respondent. The appellant alleged that the respondent attempted to forcefully take possession of the building constructed on the suit property and was therefore, constrained to file a suit for permanent injunction on 11.09.1985. In response to this, the respondent also filed a similar suit for permanent injunction to restrain the appellant from interfering with his possession and enjoyment of the suit property.
It was in this suit for injunction that the respondent disclosed to the appellant that the execution of the sale deed in his favour by the Housing Board was complete. After the said factum of transfer was brought to the notice of the appellant, he had sent a legal notice to the respondent and on 25.04.1986, he filed another suit for specific performance of the agreement to sell. In short, since the plaintiff-appellant only came to know of the sale deed executed by the Housing Board in favour of the respondent after the institution of the first suit, the cause of action was held to be different and distinct in both the suits.

14. Rathnavati v. Kavita Ganashamdas, (2015) 5 SCC 223

The Court refused to accept the submission that the second suit for specific performance was barred by the principles underlying Order II Rule 2. Here, an agreement for sale was entered into between the plaintiff and defendant no. 2 for the sale of the suit house and part payment was also made by the plaintiff. Later, the plaintiff had filed the first suit against the defendants for seeking permanent injunction restraining the defendants from interfering with the plaintiff’s possession over the suit house since the defendant no. 1 who is a total stranger to the suit house, along with defendant no. 2 who was the vendor.

15. Vurimi Pullarao v. Vemari Venkata Radharani, (2020) 14 SCC 110

It is held as under:

“The cause of action for the suit for specific performance had arisen when the plaintiff had notice of the denial by the defendant to perform the contract. On 30-10- 1996 when the suit for injunction was instituted, the plaintiff was entitled to sue for specific performance. There was a complete identity of the cause of action between the earlier suit (of which para 2 of the plaint has been reproduced in the earlier part of the judgment) and the cause of action for the subsequent suit. Yet, as the record indicates, the plaintiff omitted to sue for specific performance. This is a relief for which the plaintiff was entitled to sue when the earlier suit for injunction was instituted. Having omitted the claim for relief without the leave of the Court, the bar under Order 2 Rule 2(3) would stand attracted.”

16. Ramjilal v. Board of Revenue, Rajasthan, AIR 1964 Raj 114

The Rajasthan High Court had opined that Order II Rule 2 does not require that a person must seek all the remedies to which he may be entitled to even though it would be impossible for him to obtain the remedy from the opposite party. That is, the relief in the second suit became “available” on the happening of a subsequent event; post the institution of the first suit. Hence, the bar under Order II Rule 2 would not stand in the way of the plaintiff for claiming those reliefs.

17. National Security Assurance Company Ltd. v. S.N. Jaggi, AIR 1971 All 421

The Allahabad High Court held that a subsequent suit in respect of a claim which was barred at the time of the earlier suit but revived later on by an enactment would not be hit by the provisions of Order II Rule 2. Here also the relief became “available”, post the institution of the first suit.

The Supreme Court summarised the General Principles under Order II Rule 2 CPC as under:

i. The object of Order II Rule 2 is to prevent the multiplicity of suits and the provision is founded on the principle that a person shall not be vexed twice for one and the same cause.
ii. The mandate of Order II Rule 2 is the inclusion of the whole claim arising in respect of one and the same cause of action, in one suit. It must not be misunderstood to mean that all the different causes of action arising from the same transaction must be included in a single suit.
iii. Several definitions have been given to the phrase “cause of action” and it can safely be said to mean – “every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”. Such a cause of action has no relation whatsoever to the defence that may be set up by the defendant, nor does it depend upon the character of the relief which is prayed for by the plaintiff but refers to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.
iv. Similarly, several tests have been laid out to determine the applicability of Order II Rule 2 to a suit. While it is acknowledged that the same heavily depends on the particular facts and circumstances of each case, it can be said that a correct and reliable test is to determine whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation of the former suit. Additionally, if the evidence required to support the claims is different, then the causes of action can also be considered to be different. Furthermore, it is necessary for the causes of action in the two suits to be identical in substance and not merely technically identical.
v. The defendant who takes shelter under the bar imposed by Order II Rule 2(3) must establish that
(a) the second suit was in respect of the same cause of action as that on which the previous suit was based;
(b) in respect of that cause of action, the plaintiff was entitled to more than one relief; and
(c) being thus entitled to more than one relief, the plaintiff, without any leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed.
vi. The defendant must also have produced the earlier plaint in evidence in order to establish that there is an identity in the causes of action between both the suits and that there was a deliberate relinquishment of a larger relief on the part of the plaintiff.
vii. Since the plea is a technical bar, it has to be established satisfactorily and cannot be presumed merely on the basis of inferential reasoning.

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General

‘Suppression of Facts’: Not a Weapon of Technicality; No Suppression, if the Facts are ‘Known to Each Other’.

Jojy George Koduvath.

Abstract

The intent and purport of the ‘Doctrine of Suppression of Facts’, articulated by our Apex Court (through various decisions), can be foreshowed as under:

It is not to arm one party with a weapon of technicality over its adversary. It is to serve as a crucial safeguard against the abuse of the judicial process. It is to ensure that a party approaches Court, he must place all the facts before the Court without any reservation.
It must be a material suppression; that is, it must have a crucial role to play in determination of the lis, or the merits of the case.
The suppression could only be where a fact is known to the particular person; and it was intentionally/deliberately withheld by him, to cause injury or prejudice to another.
And, there will be no “suppression” if the facts are “known” to the opposite side. But, in proper cases ‘suppressio veri’ and ‘suggestio falsi’ itself may bring adverse results.

Part I

Suppression of Facts – Only a Safeguard

This principle is not designed to provide one party with an advantage based on technicalities over its opponent.

In Government of NCT of Delhi v. BSK Realtors LLP, 2024-7 SCC 370, relying on S.J.S. Business Enterprises (P) Ltd v. State of Bihar and others, (2004) 7 SCC 166 and Arunima Baruah v. Union of India and others, (2007) 6 SCC 120, it is held as under:

“30. Law is well settled that the fact suppressed must be material in the sense that it would have an effect on the merits of the case. The concept of suppression or non-disclosure of facts transcends mere concealment; it necessitates the deliberate withholding of material facts — those of such critical import that their absence would render any decision unjust. Material facts, in this context, refer to those facts that possess the potential to significantly influence the decision-making process or alter its trajectory. This principle is not intended to arm one party with a weapon of technicality over its adversary but rather serves as a crucial safeguard against the abuse of the judicial process.”

CONCEALMENT – There must be a Direct Attempt to Hide

In T. Ashok Pai v. Commissioner of Income Tax, Bangalore, 2007-7 SCC 162, (S.B. Sinha & Markandey Katju, JJ.) while dealing with ‘concealment’ of income as provided in Section 271 of the Income Tax Act, 1961, it is pointed out that ‘Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi’. The Court said further as under:

“14. In Dilip N. Shroff v. Joint Commissioner of Income-Tax, Mumbai delivered today, this Court (2007-6 SCC 329, S.B. Sinha & P.K. Balasubramanyan, JJ.) observed:
“The expression “conceal” is of great importance. According to Law Lexicon, the word “conceal” means: “to hide or keep secret. The word “conceal” is con plus celare which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income tax authorities.”

Suppression of Material Facts – Disqualifies litigants from obtaining any Relief

In SJS Business Enterprises (P) Ltd. v. State of Bihar, AIR 2004 SC 2421, it is pointed out – as a general rule, suppression of material fact by a litigant disqualifies such litigant from obtaining any relief.

Suppression of Material Facts – Evolved to deter Abusing the Process of court

In the recent decision, The Auroville Foundation v. Natasha Storey (17^th March, 2025; Neutral Citation: 2025 INSC 348), it is held that this rule has been evolved out of the need of the Courts to deter a litigant from abusing the process of court by deceiving it; and pointed out that similar view has been taken in General Manager, Haryana Roadways v. Jai Bhagwan, (2008) 4 SCC 127, in Prestige Lights Ltd. v. State Bank of India, (2007) 8 SCC 449.

Suppression of Material Facts – Writ Court may Refuse to Entertain Petition

In Prestige Lights Ltd. v. State Bank of India, 2007- 8 SCC 449 (C.K. Thakker, Altamas Kabir, JJ.), it was held as under:

“The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter.”(Quoted in G. M. Haryana Roadways v. Jai Bhagwan, S.B. Sinha & V.S. Sirpurkar, JJ., 2008-4 SCC 127)

SUPPRESSION Must be one that is Material for Determination of the Lis

In Arunima Baruah v. Union of India and others, (2007) 6 SCC 120 (S.B. Sinha and Markandey Katju, JJ.), it was held that it was obligatory on the part of the appellant to disclose the fact that the writ petition was filed only when no order of interim injunction was passed in a civil suit. It was held thus:

“12. It is trite law that so as to enable the court to refuse to exercise its discretionary jurisdiction suppression must be of material fact. What would be a material fact, suppression whereof would disentitle the appellant to obtain a discretionary relief, would depend upon the facts and circumstances of each case. Material fact would mean material for the purpose of determination of the lis, the logical corollary whereof would be that whether the same was material for grant or denial of the relief. If the fact suppressed is not material for determination of the lis between the parties, the court may not refuse to exercise its discretionary jurisdiction. It is also trite that a person invoking the discretionary jurisdiction of the court cannot be allowed to approach it with a pair of dirty hands. But even if the said dirt is removed and the hands become clean, whether the relief would still be denied is the question.” (Referred to in Sardar Associates v. Punjab & Sind Bank, S.B. Sinha & Deepak Verma, AIR 2010 SC 218; 2009-8 SCC 257; G. M. Haryana Roadways v. Jai Bhagwan, S.B. Sinha & V.S. Sirpurkar, JJ., 2008-4 SCC 127)

In Prestige Lights Ltd. v. State Bank of India, (2007) 8 SCC 449, the Apex Court held as under:

“The High Court is exercising discretionary and extraordinary jurisdiction under Article 226 of the Constitution. Over and above, a Court of Law is also a Court of Equity. It is, therefore, of utmost necessity that when a party approaches a High Court, he must place all the facts before the Court without any reservation. If there is suppression of material facts on the part of the applicant or twisted facts have been placed before the Court, the Writ Court may refuse to entertain the petition and dismiss it without entering into merits of the matter.” (Quoted in: G. M. Haryana Roadways v. Jai Bhagwan, S.B. Sinha & V.S. Sirpurkar, JJ., 2008-4 SCC 127)

SUPPRESSION – Material One That Affects Merits of the case.

In S.J.S. Business Enterprises (P) Ltd v. State of Bihar, (2004) 7 SCC 166 it is held that a fact suppressed must be material; that is, if it had not been suppressed, that would have influenced the merits of the case. It was held thus:

“13. As a general rule, suppression of a material fact by a litigant disqualifies such litigant from obtaining any relief. This rule has been evolved out of the need of the courts to deter a litigant from abusing the process of court by deceiving it. But the suppressed fact must be a material one in the sense that had it not been suppressed it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the court, whatever view the court may have taken ……
14. Assuming that the explanation given by the appellant that the suit had been filed by one of the Directors of the Company without the knowledge of the Director who almost simultaneously approached the High Court under Article 226 is unbelievable (sic), the question still remains whether the filing of the suit can be said to be a fact material to the disposal of the writ petition on merits. We think not…… the fact that a suit had already been filed by the appellant was not such a fact the suppression of which could have affected the final disposal of the writ petition on merits.” (Referred to in: Mayar (H. K. ) LTD. v. Owners & Parties, Vessel M. V. Fortune Express, AIR 2006 SC 1828; 2006 3 SCC 100)

CONCEALMENT – Implicit a Deliberate Act to Injure or Prejudice Another

In K. C. Builders v. Assistant Commissioner of Income Tax, 2004-2 SCC 731, our Apex Court considered the what is ‘concealment’, while dealing with Section 271 of the Income Tax Act, 1961 which lays down the effect of ‘failure to furnish returns, comply with notices, concealment of income, etc.’ The supreme Court said as under:

“15. One of the amendments made to the abovementioned provisions is the omission of the word “deliberately” from the expression “deliberately furnished inaccurate particulars of such income”. It is implicit in the word “concealed” that there has been a deliberate act on the part of the assessee. The meaning of the word “concealment” as found in Shorter Oxford English Dictionary, 3rd Edition, Volume I, is as follows:-
“In law, the intentional suppression of truth or fact known, to the injury or prejudice of another.”
The word “concealment” inherently carried with it the element of mens rea. Therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of non-disclosure, it cannot by itself take out the case from the purview of furnishing inaccurate particulars.”
Quoted in: T. Ashok Pai v. Commissioner of Income Tax, Bangalore, 2007-7 SCC 162
Hemant Mahipatray Shah v. Anand Upadhyay, 2024 0 BHC(AS) 32589
Commissioner, Sales Tax, U. P., Lucknow v. Bhawani Paper Mills Ltd. 2006-2 ADJ 204
Northland Development and Hotel Corp. v. Commr. of Income-tax, 2006-285 ITR 265;
Commissioner of Wealth Tax v. Someshwar Saran Kothiwal, 2006 205 CTR 448
Bharat Rice Mills v. Commissioner of Income Tax, 2006 200 CTR 481; 2005 278 ITR 599)

Merely for some figures were not disclosed, by itself, not Concealment

In Shri T. Ashok Pai v. Commissioner of Income Tax, Bangalore, 2007-7 SCC 162,it is observed as under:

“It is implicit in the word ‘concealed’ that there has been a deliberate act on the part of the assessee. The meaning of the word ‘concealment’ as found in Shorter Oxford English Dictionary, third edition, Volume I, is as follows: ‘In law, the intentional suppression of truth or fact known, to the injury or prejudice of another.’ The word ‘concealment’ inherently carried with it the element of mens rea. Therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if it takes out the case from the purview of non-disclosure, it cannot by itself, even if it takes out the case from the purview of non-disclosure, it cannot by itself take out the case from the purview of non-disclosure, it cannot by itself take out the case from the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In order that a penalty under Section 271 (1) (iii) may be imposed, it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of his income.”

When a fact is not known to the concerned person, No Suppression

In Life Insurance Corporation of India v. Manju Sharma, 2003-2 CLT 700; 2003-2 CPC 91; 2003-1 CPJ 620; 2003-2 CPR 175, it is held as under:

“The insured did not know about the disease and he cannot be said to have suppressed the material fact. The suppression could only be where a fact is known to a particular person. When a fact is not known to that person how could he be said that the fact has been suppressed.”

Recently, in Bhushan Sadashiv Raut v. Priyanka Ravindra Ghatage, 27 January, 2025, our Apex Court expunged certain adverse comments of the High Court against an advocate saying as under:

“We find that the High Court was not justified in making the observations against the appellant herein, inasmuch as the order of the Family court was very much on record. As such, there could be no question of suppression of facts. We, therefore, expunge the observations made in paragraph 10 of the impugned judgment and order dated 05.09.2024 passed by the Division Bench of the High Court.”

Part II

No “Suppression” if the facts are “Known” to the Court or Opposite Side

In a taxation matter, in Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay, 1995 Suppl. (3) SCC 462, it is held as under:

“Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.”
Quoted in: Anand Nishikawa Company Ltd. v. Commissioner of Central Excise, AIR 2005 SC 3660, 2005-7 SCC 749.
Uniworth Textiles Ltd. v. Commissioner Of Central Excise, Raipur, 2013-9 SCC 753.

In Nizam Sugar Factory v. CCE, A.P. 2008 (9) STR 314 (SC). Supreme Court held as under:

“9. Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same hold that there was no suppression of facts on the part of the assessee/appellant.”

In Prakash Singh Thakur v. Bharti, AIR 2001 MP 1; 2000 2 DMC 368, it is held as under:

“19. Moreover, it may be noted that the parties were known to each other from much prior to their marriage. In the circumstances, it is inconceivable that the appellant would not have come to know about the earlier marriage or divorce of the respondent and would have come to know of the said fact on the next day, immediately after their marriage on 4.5.94. As noticed earlier, the statement of appellant is not only unsubstantiated, but appears to be unnatural and untrustworthy.”

In State of Bihar v. Rajballav Prasad, AIR 2017 SC 630; 2017 2 SCC 178, it is held as under:

Statement of Principal Additional Advocate General that the State had no objection for the consideration of the bail application by the said Court has been recorded in the beginning of the order itself and, therefore, question of suppression thereof does not arise. This fact was known to this Court when the SLP was entertained and notice was issued. Therefore, the question of misleading the Court on this count does not arise.”

In Virinder Nayar v. Jatinder Singh, 19 Sep 2023, 2023 Supreme (P&H) 351, it is held as under:

“10. In terms of the above discussion, in the present set of facts wherein the petitioner himself was party-tenant to the previous litigation qua the same premises, having complete knowledge of its outcome, the non-disclosure thereof merely in the eviction petition though the same having been acknowledged in their rejoinder by the respondents as well as in her cross-examination by respondent No.2 (PW-5) can’t be taken to be an act of concealment or suppression of material fact, the same being not an information exclusively known to respondents. Besides it, nothing has been pointed out from the side of petitioner about any prejudice having been caused to him on account of non-disclosure of filing or dismissal of previous ejectment petition. ….. Thus the non-disclosure of the previous eviction petition was rightly not considered to be a material concealment by the Authorities below as the outcome of the previous eviction petition in no manner affected or impacted the rights of the parties in the present eviction petition, the same being based on entirely a fresh and new cause of action with material change in circumstances.

In P. S. Agarwal v. Life Insurance Corporation of India, 2003 3 CPJ 579, it is observed that there would be no suppression of material facts, if every fact was known to the Insurance.

In National Insurance Co. Ltd. v. Kusum Devi Mishra, 1998 1 MPLJ 676, 1999(2) ACJ 1213, it is held as under:

“In view of the above, the contention that the insurer is not liable to pay compensation and the policy is void due to suppression of material fact, has no merit. Even otherwise, there was no suppression of material fact. The agent of the Insurance Company knew full well that the owner is a minor. He accepted the premium and the policy of insurance covering third party risks was issued in the name of the minor by the appellant. The said policy was never repudiated or cancelled.” (Referred to in: Gaurav Sharma v. National Insurance Company Limited, 2018-5 LawHerald 4064; 2018-3 PLR 106)

Suppressio Veri and Suggestio Falsi – Gravity Differs in “Material”or “Trivial Matter”

Though it is definite – no “suppression” if the facts are

(i) Not Material and
(ii) “Known” to the opposite side.

But, in proper cases ‘suppressio veri’ and ‘suggestio falsi’ itself may bring adverse results. Still, gravity of it is depended upon the nature of suppression – whether it is on a “material” matter or on a “technical or trivial” matter.In Avtar Singh v. Union of India, (2016) 8 SCC 471, (in a case of information given to the employer by a candidate) it is held as under:

“34. No doubt about it that verification of character and antecedents is one of the important criteria to assess suitability and it is open to employer to adjudge antecedents of the incumbent, but ultimate action should be based upon objective criteria on due consideration of all relevant aspects.
35. Suppression of “material” information presupposes that what is suppressed that “matters” not every technical or trivial matter. The employer has to act on due consideration of rules/instructions, if any, in exercise of powers in order to cancel candidature or for terminating the services of employee. Though a person who has suppressed the material information cannot claim unfettered right for appointment or continuity in service but he has a right not to be dealt with arbitrarily and exercise of power has to be in reasonable manner with objectivity having due regard to facts of cases.
36. What yardstick is to be applied has to depend upon the nature of post, higher post would involve more rigorous criteria for all services, not only to uniformed service. For lower posts which are not sensitive, nature of duties, impact of suppression on suitability has to be considered by authorities concerned considering post/nature of duties/services and power has to be exercised on due consideration of various aspects.
38. We have noticed various decisions and tried to explain and reconcile them as far as possible. In view of the aforesaid discussion, we summarise our conclusion thus:
38.1. Information given to the employer by a candidate as to conviction, acquittal or arrest, or pendency of a criminal case, whether before or after entering into service must be true and there should be no suppression or false mention of required information.
38.2. While passing order of termination of services or cancellation of candidature for giving false information, the employer may take notice of special circumstances of the case, if any, while giving such information.
38.3. The employer shall take into consideration the government orders/instructions/rules, applicable to the employee, at the time of taking the decision.
38.4. In case there is suppression or false information of involvement in a criminal case where conviction or acquittal had already been recorded before filling of the application/verification form and such fact later comes to knowledge of employer, any of the following recourses appropriate to the case may be adopted:
38.4.1. In a case trivial in nature in which conviction had been recorded, such as shouting slogans at young age or for a petty offence which if disclosed would not have rendered an incumbent unfit for post in question, the employer may, in its discretion, ignore such suppression of fact or false information by condoning the lapse.
38.4.2. Where conviction has been recorded in case which is not trivial in nature, employer may cancel candidature or terminate services of the employee.
38.4.3. If acquittal had already been recorded in a case involving moral turpitude or offence of heinous/serious nature, on technical ground and it is not a case of clean acquittal, or benefit of reasonable doubt has been given, the employer may consider all relevant facts available as to antecedents, and may take appropriate decision as to the continuance of the employee.
38.5. In a case where the employee has made declaration truthfully of a concluded criminal case, the employer still has the right to consider antecedents, and cannot be compelled to appoint the candidate.
38.6. In case when fact has been truthfully declared in character verification form regarding pendency of a criminal case of trivial nature, employer, in facts and circumstances of the case, in its discretion, may appoint the candidate subject to decision of such case.
38.7. In a case of deliberate suppression of fact with respect to multiple pending cases such false information by itself will assume significance and an employer may pass appropriate order cancelling candidature or terminating services as appointment of a person against whom multiple criminal cases were pending may not be proper.
38.8. If criminal case was pending but not known to the candidate at the time of filling the form, still it may have adverse impact and the appointing authority would take decision after considering the seriousness of the crime.
38.9. In case the employee is confirmed in service, holding departmental enquiry would be necessary before passing order of termination/removal or dismissal on the ground of suppression or submitting false information in verification form.
38.10. For determining suppression or false information attestation/verification form has to be specific, not vague. Only such information which was required to be specifically mentioned has to be disclosed. If information not asked for but is relevant comes to knowledge of the employer the same can be considered in an objective manner while addressing the question of fitness. However, in such cases action cannot be taken on basis of suppression or submitting false information as to a fact which was not even asked for.
38.11. Before a person is held guilty of suppressio veri or suggestio falsi, knowledge of the fact must be attributable to him.”

Avtar Singh v. Union of India, (2016) 8 SCC 471, is referred to in:

Union of India v. Shishu Pal, AIR 2024 SC 3652
Ravindra Kumar v. State of U. P., 2024 5 SCC 264
State of West Bengal v. Mitul Kumar Jana, 2023-14 SCC 719
Ex-Const/Dvr Mukesh Kumar Raigar v. Union Of India, AIR 2023 SC 482
Satish Chandra Yadav v. Union Of India, 2023-7 SCC 536
Pawan Kumar v. Union of India, 2022 AIR SC 2829; 2023-12 SCC 317
State of Madhya Pradesh v. Abhijit Singh Pawar, 2018-18 SCC 733

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