Legal Blog: December 2010

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Tuesday, December 28, 2010

'I would fight for Binayak Sen' : Ram Jethmalani

Ram Jethmalani

Refusing to follow his party's line, eminent lawyer and Bharatiya Janata Party (BJP) member Ram Jethmalani on Tuesday said he can fight the case for convicted rights activist Binayak Sen against the party's government in Chhattisgarh. 

Sen, 59, was on Dec 24 held guilty of sedition by a Chhattisgarh court and sentenced to life term. He is vice president of the People's Union for Civil Liberties. 

"I would do it for him, I would fight for Binayak Sen. No party line says a lawyer should not fight a case," Jethmalani told CNN-IBN. 

He stressed that the case was based on weak evidence. 

"I have not seen the judgment, but on the basis of the case that was filed I can say it was a case of low evidence," he added. 

Jethmalani, a Rajya Sabha MP from BJP, earlier appeared for Sen in the Supreme Court when he was seeking bail. He argued against the state government following which Sen was granted bail. 

The BJP, which is the ruling party in Chhattisgarh where Sen has been convicted by a court, has been maintaining a hard stance against the Maoists. It believes Sen is a Maoist sympathiser.

Attachment Orders against Sanjay Dutt


The Bombay High Court has ordered attachment of two properties of film actor Sanjay Dutt in keeping with an arbitration award passed by the Indian Motion Pictures Producers' Association in January this year on a financial dispute between him and producer Shakeel Noorani.

Noorani has claimed Rs 2.03 crore from the actor which includes Rs 50 lakh paid to him as signing amount for an under-production film 'Jaan Ki Baazi'.

In case of financial disputes of this nature, there is an agreement between Cine Artists Association and IMPPA which provides for arbitration. The agreement empowers IMPPA to act as an arbitrator and pass an award.

IMPPA applied for execution of a decree recently and the execution department of the High Court issued warrant under Civil Procedure Code against Sanjay last week, following which bailiff of Sheriff's court today pasted notices of attachment of properties on the premises of the actor, Noorani's lawyer Ashok Sarogi told reporters.

Sarogi said the actor has an option to pay the money claimed by the producer within 30 days or else his properties (residence and office) would be auctioned. He can challenge this order in High Court. So far, Sanjay has not challenged IMPPA's arbitration order and hence notices of attachment of properties were pasted on his premises, the lawyer said.

Sanjay's lawyer Satish Maneshinde told PTI that "we will have a look at the decree execution order of the High Court and also the IMPPA award and then decide on appropriate action to be taken in this matter."

The properties mentioned in the execution order of the High Court are his residence in Imperial Heights building at Pali Hill, Nargis Dutt Road, Bandra and his office, Sanjay Dutt Productions, Mayfair Melody at Tagore Road in Santacruz.

According to IMPPA award, Noorani had paid Rs 50 lakh to Sanjay for his film in October 2001. The film is 50 per cent complete because the actor failed to give dates for the shooting as a result of which the producer suffered financial loss of Rs 1.53 crore payable to the financiers, a copy of the award, available to PTI, said.

IMPPA had called Sanjay for hearing him but the arbitration committee adjourned the case twice on his request. On another occasion, he failed to appear, the award said.

Sunday, December 26, 2010

Part Performance under the Transfer of Property Act & Limitation : The Law

Justice VN Khare
The Supreme Court in Shrimant Shamrao Suryavanshi vs Pralhad Bhairoba Suryavanshi has discussed the law relating to Part Performance under S. 53 A of the Transfer of Property Act and whether such a defence could be taken by a person to protect his property, even though the limitation to bring an action for specific performance to enforce such contract has expired. The Supreme Court while examining the law in England has held as under;

A perusal of Section 53-A shows that it does not forbid a defendant transferee from taking a plea in his defence to protect his possession over the suit property obtained in part performance of a contract even though the period of limitation for bringing a suit for specific performance has expired. It also does not expressly provide that a defendant transferee is not entitled to protect his possession over the suit property taken in part performance of the contract if the period of limitation to bring a suit for specific performance has expired. In absence of such a provision, we have to interpret the provisions of Section 53-A in a scientific manner. It means to look into the legislative history and structure of the provisions of Section 53- A of the Act.

Earlier, the assistance of historical facts or any document preceding the legislation was very much frowned upon for purposes of construction of statutes. At that time, there was some injunction against applying principle of looking into the historical facts or reports preceding the legislation in construing a statute. However, by passage of time, this embargo has been lifted.

In R.S. Nayak vs. A.R. Antulay - 1984 (2) SCC 183, it was held thus :

" Report of the Committee which preceded the enactment of a legislation reports of Joint Parliament Committee report of a commission set up for collecting information leading to the enactment are permissible external aid to construction. If the basic purpose underlying construction of legislation is to ascertain the real intention of the Parliament why should the aids which Parliament availed of such as report of a Special Committee preceding the enactment existing State of Law, the environment necessitating enactment of legislation and the object sought to be achieved be denied to Court whose function is primarily to give effect to the real intention of the Parliament in enactment of the legislation. Such denial would deprive the Court of a substantial and illuminating aid to constructions.

The modern approach has to a considerable extent eroded the exclusionary rule even in England."

Now the accepted view is that the document or report preceding the legislation can legitimately be taken into consideration while construing the provisions of an Act.

We, therefore, proceed to examine the question before us in the light of facts stated hereinafter.

In England, the provisions of the law of Property Act of the Statute of Fraud provided that no suit or action would be brought on agreement relating to a property which was not in writing signed by the parties. The aim and object of the statute was to protect a party against fraud. However, certain difficulties were experienced when it was found that under an oral agreement a party has performed his part of the contract, yet he was unable to bring any action or suit against other party viz., transferor for a specific performance of the agreement which was not in writing in view of the provisions contained in the Statute of Fraud. Under such situations, transferors managed to play fraud on innocent buyers who entered into an oral agreement and performed their part of the contract. In view of such prevailing circumstances in England, the Court of Equity intervened on the ground of equity and took action to enforce specific performance of a parole agreement. The view taken by the Court of Equity was that the object behind the Law of Property of the Statute of Fraud was to protect against a fraud, but the provisions of Law of Property of Statute of Fraud were being used as an instrument to help and protect fraud. Thus, the Court of Equity did not permit the Statute of Fraud to be used as an instrument to cover the fraud by the transferors where there was a part performance of a parole agreement.

When the Transfer of Property Act was enacted, Section 53-A did not find place in it. In the absence of Section 53-A, there arose difference of opinion between various courts in India as regards the application of English doctrine of part performance of contract as it was then prevailing in England. Since there was a difference of opinion on question of the application of English equitable doctrine of part performance in various courts of India, the Govt. of India resolved to set up a Special Committee for making recommendations amongst others whether the British equitable doctrine of part performance be extended in India also. The Special Committee was of the view that an illiterate or ignorant buyer who had partly performed his part of contract required statutory protection. The Committee was of the further view that where a transferee in good faith that lawful instrument i.e. a written contract would be executed by the transferor takes possession over the property, the equity demanded that the transferee should not be treated as trespasser by the transferor and subsequently evict him through process of law in the absence of lawful transfer instrument. The Special Committee also considered the question whether protection under the proposed Section 53-A to a transferee would also be available even if the period of limitation for bringing an action for specific performance of an agreement to sell has expired. On the said question, the Committee was of the view that even after expiry of period of limitation, the relationship between the transferor and transferee remains the same as it was within the period of limitation and, therefore, the possession over the property taken in part performance of an agreement is required to be protected even if the period of limitation for bringing an action for specific performance has expired.

The aforesaid recommendation of the Special Committee were accepted by the Govt. of India as the same is well reflected in the aims and objects of amending Act 1929 whereby Section 53-A was inserted in the Act.

The Special Committee's report which is reflected in the aims and objects of amending Act 1929 shows that one of the purposes of enacting Section 53-A was to provide protection to a transferee who in part performance of the contract had taken possession of the property even if the limitation to bring a suit for specific performance has expired. In that view of the matter, Section 53-A is required to be interpreted in the light of the recommendation of Special Committee's report and aims, objects contained in amending Act 1929 of the Act and specially when Section 53-A itself does not put any restriction to plea taken in defence by a transferee to protect his possession under Section 53-A even if the period of limitation to bring a suit for specific performance has expired.

But there are certain conditions which are required to be fulfilled if a transferee wants to defend or protect his possession under Section 53-A of the Act. The necessary conditions are

1) there must be a contract to transfer for consideration any immovable property;

2) the contract must be in writing, signed by the transferor, or by someone on his behalf;

3) the writing must be in such words from which the terms necessary to construe the transfer can be ascertained;

4) the transferee must in part performance of the contract take possession of the property, or of any part thereof;

5) the transferee must have done some act in furtherance of the contract; and

6) the transferee must have performed or be willing to perform his part of the contract.

We are, therefore, of the opinion that if the conditions enumerated above are complied with, the law of limitation does not come in the way of a defendant taking plea under Section 53-A of the Act to protect his possession of the suit property even though a suit for specific performance of a contract has barred by limitation.

Decision on Questions Regarding Admissibility of Document in Evidence : The Appropriate Stage

Justice KT Thomas
Questions as to admissibility of a document in evidence are often raised during a trial. Most Courts while recording such objection tend to delay / postpone the decision as to the admissibilty of the document, at the stage of final arguments. The Supreme Court in Bipin Shantilal Panchal vs State Of Gujarat And Anr has laid down the procedure to be followed by the trial courts while dealing with such objections. The relevant extracts from the said judgment are reproduced hereinbelow;

"On that day the defence raised another objection regarding admissibility of another document. The trial judge heard elaborate arguments thereon and upheld the objection and consequently refused to admit that particular document. What the prosecution did at that stage was to proceed to the High Court against the said order and in the wake of that proceeding respondent filed an application on 9.11.2000, for enlarging him on bail on the strength of the order passed by this Court on 31.3.2000 (extracted above).
We are compelled to say that the trial judge should have shown more sensitivity by adopting all measures to accelerate the trial procedure in order to reach its finish within the time frame indicated by this Court in the order dated 31.3.2000 since he knew very well that under his orders an accused is continuing in jail as an under-trial for a record period of more than seven years. Now, we feel that the Additional Judge, whether the present incumbent or his predecessor, was not serious in complying with the directions issued by this Court, though the parties in the case have also contributed their share in bypassing the said direction.
As pointed out earlier, on different occasions the trial judge has chosen to decide questions of admissibility of documents or other items of evidence, as and when objections thereto were raised and then detailed orders were passed either upholding or overruling such objections. The worse part is that after passing the orders the trial court waited for days and weeks for the concerned parties to go before the higher courts for the purpose of challenging such interlocutory orders.
It is an archaic practice that during the evidence collecting stage, whenever any objection is raised regarding admissibility of any material in evidence the court does not proceed further without passing order on such objection. But the fall out of the above practice is this: Suppose the trial court, in a case, upholds a particular objection and excludes the material from being admitted in evidence and then proceeds with the trial and disposes of the case finally. If the appellate or revisional court, when the same question is re-canvassed, could take a different view on the admissibility of that material in such cases the appellate court would be deprived of the benefit of that evidence, because that was not put on record by the trial court. In such a situation the higher court may have to send the case back to the trial court for recording that evidence and then to dispose of the case afresh. Why should the trial prolong like that unnecessarily on account of practices created by ourselves. Such practices, when realised through the course of long period to be hindrances which impede steady and swift progress of trial proceedings, must be recast or re-moulded to give way for better substitutes which would help acceleration of trial proceedings.
When so recast, the practice which can be a better substitute is this: Whenever an objection is raised during evidence taking stage regarding the admissibility of any material or item of oral evidence the trial court can make a note of such objection and mark the objected document tentatively as an exhibit in the case (or record the objected part of the oral evidence) subject to such objections to be decided at the last stage in the final judgment. If the court finds at the final stage that the objection so raised is sustainable the judge or magistrate can keep such evidence excluded from consideration. In our view there is no illegality in adopting such a course. (However, we make it clear that if the objection relates to deficiency of stamp duty of a document the court has to decide the objection before proceeding further. For all other objections the procedure suggested above can be followed.)
The above procedure, if followed, will have two advantages. First is that the time in the trial court, during evidence taking stage, would not be wasted on account of raising such objections and the court can continue to examine the witnesses. The witnesses need not wait for long hours, if not days. Second is that the superior court, when the same objection is re-canvassed and reconsidered in appeal or revision against the final judgment of the trial court, can determine the correctness of the view taken by the trial court regarding that objection, without bothering to remit the case to the trial court again for fresh disposal. We may also point out that this measure would not cause any prejudice to the parties to the litigation and would not add to their misery or expenses.
We, therefore, make the above as a procedure to be followed by the trial courts whenever an objection is raised regarding the admissibility of any material or any item of oral evidence.

Registration of a Document & Admissibility in Evidence : The Law

Justice Mathur
The Supreme Court in K.B. Saha & Sons v. Development Consultant Ltd. has explained the law pertaining to Registration of Documents and its effect on the admissibility of such unregistered documents in evidence. While examining the various sections of the Indian Registration Act and the Indian Evidence Act, the court opined that though a document, being unregistered, cannot be admitted in evidence, the same can be looked into for collateral purposes. The analysis of the law, as aforesaid, enabled the Bench to cull out the principles involved, while dealing with unregistered documents. The relevant extracts from this judgment are reproduced hereinbelow; 

15. Section 49 clearly provides that a document purporting to be a lease and required to be registered under Section 107 will not be admissible in evidence if the same is not registered. Proviso to this section, however, as noted hereinabove, provides that an unregistered lease deed may be looked into as evidence of collateral facts. Mr. Mukherjee, learned Counsel for the appellant argued before us that the tenancy in question was exclusively granted for the benefit of the named officer and his family and unless the landlord gave his consent, no other person could use it and such condition in the lease agreement is admissible for ascertaining the purpose of allotting the suit premises which according to the appellant is a collateral fact.

16. Having heard the learned Counsel for the appellant, we are of the view that the decision of this Court in Smt. Juthika Mullick's case [supra], on which strong reliance was placed by the learned Counsel for the appellant is of no help to the appellant because as rightly pointed out by the High Court, the said decision was based on a registered deed of lease. In Smt. Juthika Mulick's case [supra], as noted herein earlier, it has been held that the language of Section 13 of the Act makes it clear that notwithstanding anything to the contrary contained in any other law, an order or decree for the recovery of possession of any premises shall be made by the court in favour of the landlord against a tenant on the grounds mentioned in that section. It was further observed that in view of the language of Section 13(1) of the Act, the parties have freedom to contract out of the Section. In the aforesaid judgment of this Court, on which strong reliance was placed by the appellant, the fact was that the predecessor-in-interest of the respondents in that appeal leased out the premises in question in favour of one Lal Bihari Mulick in a registered deed of lease at a monthly rental of Rs. 160/- and the lease deed contained a covenant that the lease was for the lifetime of the lessee and his heirs, executors, administrators, representatives and the heirs must yield up and deliver quiet, peaceful and vacant possession of the demised premises within three months from the date of death of the lessee unconditionally and without any objection whatsoever. It was further stipulated that they shall have no right to handover the demised premises after the said period under any circumstances. The lessee died on 16th of December, 1970 and his heirs did not deliver vacant possession in favour of the lessors or their successors in interest and this necessitated filing of the suit for eviction of the defendants. In that decision, the main defence raised in the written statement was that the original lessee Lal Bihari Mulick, having died on 16th of December, 1970, the registered lease dated 11th of July, 1966 shall fall under the category of the West Bengal Premises Tenancy Act and the tenants were residing in the demised premises with the said lessee namely Lal Bihari Mullick during his lifetime became monthly tenants under the plaintiffs of that case by operation of law. In view of the aforesaid facts and considering the fact that the aforesaid decision of this Court was rendered on the basis of a registered lease deed, we are of the view that the said decision is clearly distinguishable from the present case because of the fact that in the present case, there was no registered deed of lease nor was there any such covenant as mentioned hereinabove. Therefore, we do not find any ground to place any reliance on the aforesaid decision of this Court.

17. As we have already noted that under the proviso to Section 49 of the Registration Act, an unregistered document can also be admitted into evidence for a collateral fact/collateral purpose, let us now look at the meaning of "collateral purpose" and then ascertain whether Clause 9 of the lease agreement can be looked into for such collateral purpose. In Haran Chandra Chakrvarti v. Kaliprasanna Sarkar AIR 1932 Cal 83(2), it was held that the terms of a compulsorily registrable instrument are nothing less than a transaction affecting the property comprised in it. It was also held that to use such an instrument for the purpose of proving such a term would not be using it for a collateral purpose and that the question as to who is the tenant and on what terms he has been created a tenant are not collateral facts but they are important terms of the contract of tenancy, which cannot be proved by admission of an unregistered lease-deed into evidence.

18. The High Court in the impugned Judgment relied on a decision of the Allahabad High Court in the case of Ratan Lal and Ors. v. Harisankar and Ors.MANU/UP/0198/1980 : AIR1980All180 to hold that since the appellant wanted to extinguish the right of the respondent with the help of the unregistered tenancy, the same was not a collateral purpose. In Ratan lal's case [supra], while discussing the meaning of the term "Collateral Purpose", the High Court had observed as follows:

The second contention was that the partition deed, even if it was not registered could certainly be looked into for a collateral purpose, but the collateral purpose has a limited scope and meaning. It cannot be used for the purpose of saying that the deed created or declared or assigned or limited or extinguish the right to immovable property...term collateral purpose would not permit the party to establish any of these acts from the deed.

19. In the case of Bajaj Auto Limited v. Behari Lal Kohli MANU/SC/0327/1989 : [1989]3SCR730 , this Court observed that if a document is inadmissible for non-registration, all its terms are inadmissible including the one dealing with landlord's permission to his tenant to sub-let. It was also held in that decision that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose. Again this Court in Rai Chand Jain v. Chandra Kanta Khosla MANU/SC/0185/1991 : AIR1991SC744 reiterated the above and observed in paragraph 10 as under:

...the lease deed Ex. P1 dated 19th May, 1978 executed both by the appellant and the respondent i.e. the landlady and the tenant, Rai Chand Jain, though unregistered can be considered for collateral purposes and as such the findings of the Appellate Authority to the effect that the said deed cannot be used for collateral purposes namely to show that the purpose was to lease out the demised premises for residential purposes of the tenant only is not at all legally correct. It is well settled that unregistered lease executed by both the parties can be looked into for collateral purposes. In the instant case the purpose of the lease is evident from the deed itself which is as follows: "The lessor hereby demises House No. 382, Sector 30-A, Chandigarh, to lessee for residential purposes only". This clearly evinces that the property in question was let out to the tenant for his residence only....

20. In the case of Rana Vidya Bhushan Singh v. Ratiram MANU/SC/0562/1969, the following has been laid down:

A document required by law to be registered, if unregistered, is inadmissible as evidence of a transaction affecting immovable property, but it may be admitted as evidence of collateral facts, or for any collateral purpose, that is for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property. As stated by Mulla in his Indian Registration Act, 7th En., at p. 189:
The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir; the former Chief Court of Oudh; the Judicial Commissioner's Court of Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17 and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it.
21. From the principles laid down in the various decisions of this Court and the High Courts, as referred to hereinabove, it is evident that:

1. A document required to be registered, if unregistered is not admissible into evidence under Section 49 of the Registration Act.

2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the Proviso to Section 49 of the Registration Act.

3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.

4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immoveable property of the value of one hundred rupees and upwards.

5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.

Friday, December 24, 2010

Cross Objections under the Code of Civil Procedure : The Law


Justice Wadhwa
The Supreme Court examined the nature and scope of cross objections as provided in Order 41 of the Code of Civil Procedure, 1908, in Superintending Engineer & Ors. vs B. Subba Reddy. The Supreme Court, speaking through Justice D.P. Wadhwa, has culled out the principles applicable to cross objections, and the relevant extracts from the judgment are reproduced hereunder;
12. In Sahadu Gangaram Bhagade v. Special Deputy Collector. Ahmadnagar and Anr. , this Court was considering the question of nature of cross-objections in the context of payment of court fee under the Bombay Court Fees Act, 1959. It was submitted that Article 3 of Schedule 1 of the said Act was inapplicable because that article referred to "plaint, application or petition (including memorandum of appeal), to set aside or modify any award otherwise than under the Arbitration Act, 1940" and that no court fee was payable on cross-objections, This Court held as under ;
Before Article 3 of Schedule 1 can be attracted, there must be (1) a plaint, application or petition (including a memorandum of appeal); (2) in that plaint, application or petition (including memorandum of appeal), there must be a prayer to set aside or modify any award; and
(3) the award in question must not be one under the Arbitration Act, 1940. There is no dispute that the proceedings with which we are concerned in this case fulfil two out of the three requirements enumerated above. The award concerned in the proceedings is not one made under the Arbitration Act, 1940 and through his cross-objection the appellant seeks to get the award modified. The only point in controversy is whether the cross-objection filed by the appellant can be considered as "application or petition" within the meaning of Article 3 of Schedule I. The words in the bracket "including memorandum of appeal" in our opinion refer to the word 'petition' immediately preceding those words. In other words the word 'petition' includes the memorandum of appeal as well. The question is whether a cross-objection filed by a respondent in an appeal can be considered as a memorandum of appeal. We have no doubt that it is a memorandum of appeal in substance though not in form. It is a right given to a respondent in an appeal to challenge the order under appeal to the extent he is aggrieved by that order. The memorandum of cross-objection is but one form of appeal. It takes the place of a cross-appeal. It is true that while Article 1 of Schedule 1 refers to 'cross-objection', Article 3 of that Schedule does not refer to cross-objection as such but that in our opinion make no difference. It is only an inartistic drafting.
13. In Hakam Singh v. Gammon (India) Ltd. , the appellant was aggrieved by the order of the Allahabad High Court directing that a petition filed under Section 20 of the Arbitration Act, 1940 in a subordinate ' court be returned to him for presentation to the proper court. This Court upheld the order of the High Court and said, with reference to Section 41 of the Act, that the Code in its entirety applied to proceedings under that Act and that the jurisdiction of the courts under the Act to entertain a proceeding for filing an award was accordingly governed by the provisions of the Code.
14. In N. Jayaram Reddy and Anr. v. Revenue Divisional Officer and Land Acquisition Officer, Kurnool , this Court was considering the nature of cross-appeals and cross-objections. It said:
Cross-appeal and cross-objections provide two different remedies for the same purpose and that is why under Order 41, Rule 22, cross-objections can be preferred in respect of such points on which that party could have preferred an appeal. If such be the position of cross-objections and cross-appeal a differentiation in the matter of their treatment under Rules 3 and 4 cannot be justified merely on the ground that in case of cross-objections they form part of the same record while cross-appeals are two independent proceedings.
To say that cross-appeals are independent of each is to overlook the obvious position which parties adopt in cross-appeals. Interdependence of cross-appeals is the same as interdependence appeal and cross-objections because as in the case of appeal and cross-objections a decision with regard to appeal would directly impinge upon the decision in cross-objections and vice versa. Indubitably the decision in one of the cross-appeals would directly impinge upon the decision in the other because both ultimately arise from the same decree. This is really the interdependence of cross-appeals and it is impossible to distinguish cross-appeals from appeal and cross-objections".
This Court then said that the cases which have taken the view that the view in cross-appeals the position is different than the one in appeal and cross-objections do not proceed on any discernible legal principle. Nor can they be explained by any demonstrable legal principle but in fact they run counter to the established legal principle.
15. In Ms. H.M. Kamaluddin Ansari & Co. v. Union of India and Ors. , this Court was again considering the ambit and scope of Section 41 of the Arbitration Act. It said:
The appellant in the instant case took the stand that there was no concluded contract between the parties including arbitration. Therefore, the order of injunction passed in the instant case could not be for the purpose of and in relation to arbitration proceedings. Faced with this difficulty Shri S.N. Kaicker, learned Counsel for the appellant, fell back upon Clause (a) of Section 41 to content that Clause (a) makes the CPC applicable to all proceedings before the court and to all appeals under the Act and, therefore, the appellant was entitled to invoke Order 39 of the Code to get an injunction order even if the conditions of Clause (b) of Section 41 were not satisfied. We are afraid this contention cannot be accepted.
Clause (a) of Section 41 makes only the procedural rules of the CPC applicable to the proceedings in court under the Arbitration Act. This Clause does not authorise the court to pass an order of injunction. The power is conferred by Clause (b) of Section 41. The source of power, therefore, cannot be traced to Clause (a). If the contention of Shri Kaicker is accepted, the appeals would lie under Sections 96, 100 or 104 of the CPC but the Arbitration Act itself provides for appeal under Section 39. Besides, if Clause (a) of Section 41 gave wide powers to pass an order of injunction, Clause (b) of Section 41 would become otiose.
16. In Alopi Nath and Ors. v. Collector, Varanasi [1986] Supp. SCC 693 this Court in a brief order said:
We have heard learned Counsel for the parties. The short question is as to the admissibility of the cross-objection under the provisions of the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959 where an appeal against quantum has been filed and the respondent has not preferred an appeal. We have looked into the provisions of Sections 377, 379 and 381 of the Act and are inclined to take the view that the provision of Order 41 Rule 22 of the CPC would be inconsistent with the provisions of the Act inasmuch as an appeal is admissible only by a certificate or special leave as provided in provisions (a) and (b) respectively of Section 381(1). It is difficult to contend that a cross-objection is anything other than an appeal as generally understood in law. In the circumstances, benefit of Section 377 or of Sub-section (4) of Section 381 of the Act is not available. The appeal therefore fails. There is no order as to costs.
17. In R. Modill & Company Pvt. Ltd. v. Gouri Shankar Sarda and Ors. , one of questions before the Court was whether the provisions of Order 23 of the Code apply to an application for stay of suit filed under Section 34 of the Act. It referred to Section 41 of the Act which provided that provisions of the Code shall apply to all proceedings before the court subject of course to the provisions of the Arbitration Act and of any rules made . thereunder. This Court in that case referred to a commentary by R.S. Bachawat on the Law of Arbitration wherein the author with reference to various decisions of the High Court pointed out as to which provisions of the Code have been held to be applicable to proceedings under the Act. Reference was also made to some early decisions of this Court and it was held that provision; of Order 23 of the Code were applicable in view of Section 41 of the Act.
18. In Ramanbhai Ashabhai Patel v. Debhi Ajitkumar Fulsinji and Ors. , the main question for consideration before this Court was whether the appellant could be said to be guilty of a corrupt practice as contemplated by Section 123(3) of the Representation of People Act, 1951. When counsel for the respondent referred to the finding of the High Court regarding the validity of the second respondent's nomination paper, counsel for the appellant raised a preliminary objection to the effect that the first respondent was not competent to challenge the correctness of the finding as he had not preferred an appeal therefrom. In the course of discussion in the judgment, this Court observed:
Apart from that we think that while dealing with the appeal before it this Court has the power to decide all the points arising from the judgment appealed against and even in the absence of an express provision like Order XLI, 22 of the CPC it can devise the appropriate procedure to be adopted at the hearing. There could be no better way of supplying the deficiency than by drawing upon the provisions of a general law like the CPC and adopting such of those provisions as are suitable. We cannot lose sight of the fact that normally a party in whose favour the judgment appealed from has been given will not be granted special leave to appeal from it. Considerations of justice, therefore, require that this Court should in appropriate cases permit a party placed in such a position to support the judgment in his favour even upon grounds which were negatived in that judgment.
19. Following this decision, this Court again in Bhanu Kumar Shastri v. Mohan Lal Sukhadia and Ors. , on the question of challenging of findings without preferring an appeal observed that the considerations of justice required that " this Court should in appropriate cases permit a party placed in such a position to support the judgment in his favour even upon grounds which are negatived in that judgment.
20. However, both the above cases are not the cases where the Court was considering the scope and substance of cross-objection.
21. We may also refer to two decisions of the High Courts--one of the Patna High Court and the other of the Calcutta High Court. A Division Bench of the Calcutta High Court in Ramasray Singh v. Bibhisan Sinha , was considering the objection that though statutory right of appeal is given under Section 38(3) of the Bengal Money Lenders Act, there is no right given to file cross-objection and that if a litigant is aggrieved by a decision of any court under Section 38 of the said Act his remedy is to file an appeal. High Court negatived the contention and held:
It is to be observed that by Section 38, Bengal Money-Lenders Act, a right of appeal is given in express terms. By Sub-section (3) of Section 38, a declaration under that section is to be subject to an appeal, if any, as if it were a decree of the Court. The right of appeal, under that section is given to an established Court, namely, the Court of the District Judge. Nothing is stated expressly in the Sub-section as to the procedure regulating such appeal. In our view, where nothing is stated expressly as to the procedure of an appeal before a District Judge, the law will import that the ordinary procedure of that Court on appeal will apply. The ordinary procedure of an appeal is that the respondent has the right to file cross-objection and therefore it is quite clear that the respondent has the right to file a cross-objection.
22. In Bihar State Electricity Board v. Khalsa Bros. , a Division Bench of the Patna High Court speaking through L.M. Sharma, J. (as His Lordship then was) said:
The Supreme Court cases arose under the Representation of the People Act, 1951 and the Calcutta case under the Bengal Money Lenders Act. The observations made- in these cases support the principle which Mr. Chatterjee is relying. So far the arbitration Act is concerned, the view in favour of the maintainability of a cross-objection appears to be stronger inasmuch as Section 41 of the Act says that subject to the provisions of, and the rules made under the Act, the Civil Procedure Code shall apply to all proceedings before the court and to all appeals under the Act. There does not appear to be any provision inconsistent with the application of the Civil Procedure Code. The decision of the Court so far it has gone against the plaintiff-respondent is clearly appealable under Section 39 and I, therefore, hold that the cross-objection is maintainable.
23. While there was no provision like Section 41 of the Arbitration Act in the Bengal Money Lenders Act in the Calcutta case. Patna case was under the Arbitration Act itself. As we will presently see Patna case does not appear to lay good law.
24. From the examination of these judgments and the provisions of Section 41 of the Act and Order 41 Rule 22 of the Code, in our view, following principles emerge:
(1) Appeal is a substantive right. It is a creation of the statute. Right to appeal does not exist unless it is specifically conferred.
(2) Cross objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and the provisions of Rule 1 of Order 41 of the Code, so far as these relate to the form and contents of the memorandum of appeal apply to cross-objection as well.
(3) Court fee is payable on cross-objection like that on the memorandum of appeal. Provisions relating to appeals by indigent person also apply to cross-objection.
(4) Even where the appeal is withdrawn or is dismissed for default, cross-objection may nevertheless be heard and determined.
(5) Respondent even though he has not appealed may support the decree on any other ground but if wants to modify it, he has to file cross-objection to the decree which objections he could have taken earlier by filing an appeal. Time for filing objection which is in the nature of appeal is extended by one month after service of notice on him of the day fixed for hearing the appeal. This time could also be extended by the Court like in appeal.
(6) Cross-objection is nothing but an appeal, a cross-appeal at that. It may be that the respondent wanted to give quietus to whole litigation by his accepting the judgment and decree or order even if it was partly against his interest. When, however, the other party challenged the same by filing an appeal statute gave the respondent a second chance to file an appeal by way of cross-objection if he still felt aggrieved by the judgment and decree or order.

Doctrine of Merger : Supreme Court Explains

Justice Lahoti
The Bench comprising Justice Thomas, Justice Mohapatra and Justice R.C. Lahoti have explained the Doctrine of Merger. The Bench speaking through Justice Lahoti has examined the various judicial pronouncements on the doctrine and has formulated the various principles  regarding the same. The Bench has also examined the effect of the dismissal of an SLP, in limine, and whether the same precludes the rights of a party to agitate an issue in subsequent proceedings. While dealing with the same the Court has held as under;

The Doctrine of Merger :

The doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. On more occasions than one this Court had an opportunity of dealing with the doctrine of merger. It would be advisable to trace and set out the judicial opinion of this Court as it has progressed through the times.

In Commissioner of Income-tax, Bombay Vs. M/s Amritlal Bhogilal and Co. AIR 1958 SC 868 this Court held :

There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the decision of the tribunal. As a result of the confirmation or affirmance of the decision of the tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement.

However, in the facts and circumstances of the case this Court refused to apply the doctrine of merger. There, an order of registration of a firm was made by the Income-tax Officer. The firm was then assessed as a registered firm. The order of assessment of the assessee was subjected to appeal before the Appellate Commissioner. Later on the order passed by the Income-tax Officer in respect of registration of the firm was sought to be revised by the Commissioner of Income-tax. Question arose whether the Commissioner of Income-tax could have exercised the power of revision. This Court held that though the order of assessment made by the ITO was appealed against before the Appellate Commissioner, the order of registration was not appeallable at all and therefore the order granting registration of the firm cannot be said to have been merged in the appellate order of the Appellate Commissioner. While doing so this Court analysed several provisions of the Income-tax Act so as to determine the nature and scope of relevant appellate and revisional powers and held if the subject matter of the two proceedings is not identical, there can be no merger. In State of Madras Vs. Madurai Mills Co.Ltd. AIR 1967 SC 681 this Court held that the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.

In M/s Gojer Brothers Pvt.Ltd. Vs. Shri Ratanlal AIR 1974 SC 1380 this Court made it clear that so far as merger is concerned on principle there is no distinction between an order of reversal or modification or an order of confirmation passed by the appellate authority; in all the three cases the order passed by the lower authority shall merge in the order passed by the appellate authority whatsoever be its decision whether of reversal or modification or only confirmation. Their Lordships referred to an earlier decision of this court in U.J.S. Chopra Vs. State of Bombay AIR 1955 SC 633 wherein it was held.

A judgment pronounced by a High Court in exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties would replace the judgment of the lower court, thus constituting the judgment of the High Court the only final judgment to be executed in accordance with law by the courts below.

In S.S. Rathor Vs. State of Madhya Pradesh AIR 1990- SC 10 a larger Bench of this Court (Seven-Judges) having reviewed the available decisions of the Supreme Court on the doctrine of merger, held that the distinction made between courts and tribunals as regards the applicability of doctrine of merger is without any legal justification; where a statutory remedy was provided against an adverse order in a service dispute and that remedy was availed, the limitation for filing a suit challenging the adverse order would commence not from the date of the original adverse order but on the date when the order of the higher authority disposing of the statutory remedy was passed. Support was taken from doctrine of merger by referring to C.I.T. Vs. Amritlal Bhogilal & Co. (supra) and several other decisions of this Court.

The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the same subject-matter at a given point of time. When a decree or order passed by inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way - whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid shall have to be kept in view.

Stage of SLP and post-leave stage The appellate jurisdiction exercised by the Supreme Court is conferred by Articles 132 to 136 of the Constitution. Articles 132, 133 and 134 provide when an appeal thereunder would lie and when not. Article 136 of the Constitution is a special jurisdiction conferred on the Supreme Court which is sweeping in its nature. It is a residuary power in the sense that it confers an appellate jurisdiction on the Supreme Court subject to the special leave being granted in such matters as may not be covered by the preceding articles. It is an overriding provision conferring a special jurisdiction providing for invoking of the appellate jurisdiction of Supreme Court not fettered by the sweep of preceding articles. Article 136 opens with a non- obstante clause and conveys a message that even in the field covered by the preceding articles, jurisdiction conferred by Article 136 is available to be exercised in an appropriate case. It is an untrammeled reservoir of power incapable of being confined to definitional bounds; the discretion conferred on the Supreme Court being subjected to only one limitation, that is, the wisdom and good sense or sense of justice of the Judges. No right of appeal is conferred upon any party; only a discretion is vested in Supreme Court to interfere by granting leave to an applicant to enter in its appellate jurisdiction not open otherwise and as of right.

The exercise of jurisdiction conferred on this Court by Article 136 of the Constitution consists of two steps : (i) granting special leave to appeal; and (ii) hearing the appeal. This distinction is clearly demonstrated by the provisions of Order XVI of the Supreme Court Rules framed in exercise of the power conferred by Article 145 of the Constitution. Under Rule 4, the petition seeking special leave to appeal filed before the Supreme Court under Article 136 of the Constitution shall be in form No.28. No separate application for interim relief need be filed, which can be incorporated in the petition itself. If notice is ordered on the special leave petition, the petitioner should take steps to serve the notice on the respondent. The petition shall be accompanied by a certified copy of the judgment or order appealed from and an affidavit in support of the statement of facts contained in the petition. Under Rule 10 the petition for grant of special leave shall be put up for hearing ex-parte unless there be a caveat. The court if it thinks fit, may direct issue of notice to the respondent and adjourn the hearing of the petition. Under Rule 13, the respondent to whom a notice in special leave petition is issued or who had filed a caveat, shall be entitled to oppose the grant of leave or interim orders without filing any written objections. He shall also be at liberty to file his objections only by setting out the grounds in opposition to the questions of law or grounds set out in the S.L.P.. On hearing the Court may refuse the leave and dismiss the petition for seeking special leave to appeal either ex-parte or after issuing notice to the opposite party. Under Rule 11, on the grant of special leave, the petition for special leave shall, subject to the payment of additional court fee, if any, be treated as the petition of appeal and it shall be registered and numbered as such. The appeal shall then be set down for hearing in accordance with the procedure laid down thereafter. Thus, a petition seeking grant of special leave to appeal and the appeal itself, though both dealt with by Article 136 of the Constitution, are two clearly distinct stages. In our opinion, the legal position which emerges is as under :-

1. While hearing the petition for special leave to appeal, the Court is called upon to see whether the petitioner should be granted such leave or not. While hearing such petition, the Court is not exercising its appellate jurisdiction; it is merely exercising its discretionary jurisdiction to grant or not to grant leave to appeal. The petitioner is still outside the gate of entry though aspiring to enter the appellate arena of Supreme Court. Whether he enters or not would depend on the fate of his petition for special leave;

2. If the petition seeking grant of leave to appeal is dismissed, it is an expression of opinion by the Court that a case for invoking appellate jurisdiction of the Court was not made out;

3. If leave to appeal is granted the appellate jurisdiction of the Court stands invoked; the gate for entry in appellate arena is opened. The petitioner is in and the respondent may also be JJ

called upon to face him, though in an appropriate case, in spite of having granted leave to appeal, the court may dismiss the appeal without noticing the respondent.

4. In spite of a petition for special leave to appeal having been filed, the judgment, decree or order against which leave to appeal has been sought for, continues to be final, effective and binding as between the parties. Once leave to appeal has been granted, the finality of the judgment, decree or order appealed against is put in jeopardy though it continues to be binding and effective between the parties unless it is a nullity or unless the Court may pass a specific order staying or suspending the operation or execution of the judgment, decree or order under challenge.

Dismissal at stage of special leave - without reasons - no res judicata, no merger

Having so analysed and defined the two stages of the jurisdiction conferred by Article 136, now we proceed to deal with a number of decisions cited at the Bar during the course of hearing and dealing with the legal tenor of an order of Supreme Court dismissing a special leave petition. In Workmen of Cochin Port Trust Vs. Board of Trustees of the Cochin Port Trust and Another 1978 (3) SCC 119, a Three-Judges Bench of this Court has held that dismissal of special leave petition by the Supreme Court by a non-speaking order of dismissal where no reasons were given does not constitute res judicata. All that can be said to have been decided by the Court is that it was not a fit case where special leave should be granted. That may be due to various reasons. During the course of the judgement, their Lordships have observed that dismissal of a special leave petition under Article 136 against the order of a Tribunal did not necessarily bar the entertainment of a writ petition under Article 226 against the order of the Tribunal. The decision of Madras High Court in The Management of W. India Match Co. Ltd. Vs. Industrial Tribunal, AIR 1958 Mad 398, 403 was cited before their Lordships. The High Court had taken the view that the right to apply for leave to appeal to Supreme Court under Article 136, if it could be called a right at all, cannot be equated to a right to appeal and that a High Court could not refuse to entertain an application under Article 226 of the Constitution on the ground that the aggrieved party could move Supreme Court under Article 136 of the Constitution. Their Lordships observed that such a broad statement of law is not quite accurate, although substantially it is correct.

In Indian Oil Corporation Ltd. Vs. State of Bihar and Ors. - AIR 1986 SC 1780 there was a labour dispute adjudicated upon by an award made by the Labour Court. The employer moved the Supreme Court by filing special leave petition against the award which was dismissed by a non-speaking order in the following terms :-

The special leave petition is dismissed. Thereafter the employer approached the High Court by preferring a petition under Article 226 of the Constitution seeking quashing of the award of the Labour Court. On behalf of the employee the principal contention raised was that in view of the order of the Supreme Court dismissing the special leave petition preferred against the award of the Labour Court it was not legally open to the employer to approach the High Court under Article 226 of the Constitution challenging the very same award. The plea prevailed with the High Court forming an opinion that the doctrine of election was applicable and the employer having chosen the remedy of approaching a superior court and having failed therein he could not thereafter resort to the alternative remedy of approaching the High Court. This decision of the High Court was put in issue before the Supreme Court. This Court held that the view taken by the High Court was not right and that the High Court should have gone into the merits of the writ petition. Referring to two earlier decisions of this Court, it was further held :-

the effect of a non-speaking order of dismissal of a special leave petition, without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to be that this Court had decided only that it was not a fit case where special leave should be granted. This conclusion may have been reached by this Court due to several reasons. When the order passed by this Court was not a speaking one, it is not correct to assume that this Court had necessarily decided implicitly all the questions in relation to the merits of the award, which was under challenge before this Court in the special leave petition. A writ proceeding is a wholly different and distinct proceeding. Questions which can be said to have been decided by this Court expressly, implicity or even constructively while dismissing the special leave petition cannot, of course, be re- opened in a subsequent writ proceeding before the High Court. But neither on the principle of res judicata nor on any principle of public policy analogous thereto, would the order of this Court dismissing the special leave petition operate to bar the trial of identical issues in a separate proceeding namely, the writ proceeding before the High Court merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. It is not correct or safe to extend the principle of res judicata or constructive res judicata to such an extent so as to found it on mere guesswork.

It is not the policy of this Court to entertain special leave petitions and grant leave under Article 136 of the Constitution save in those cases where some substantial question of law of general or public importance is involved or there is manifest injustice resulting from the impugned order or judgment. The dismissal of a special leave petition in limine by a non-speaking order does not therefore justify any inference that by necessary implication the contentions raised in the special leave petition on the merits of the case have been rejected by this Court. It may also be observed that having regard to the very heavy backlog of work in this Court and the necessity to restrict the intake of fresh cases by strictly following the criteria aforementioned, it has very often been the practice of this Court to grant special leave in cases where the party cannot claim effective relief by approaching the concerned High Court under Article 226 of the Constitution. In such cases also the special leave petitions are quite often dismissed only by passing a non-speaking order especially in view of the rulings already given by this Court in the two decisions afore-cited, that such dismissal of the special leave petition will not preclude the party from moving the High Court for seeking relief under Article 226 of the Constitution. In such cases it would work extreme hardship and injustice if the High Court were to close its doors to the petitioner and refuse him relief under Article 226 of the Constitution on the sole ground of dismissal of the special leave petition.

[emphasis supplied]

In our opinion what has been stated by this Court applies also to a case where a special leave petition having been dismissed by a non- speaking order the applicant approaches the High Court by moving a petition for review. May be that the Supreme Court was not inclined to exercise its discretionary jurisdiction under Article 136 probably because it felt that it was open to the applicant to move the High Court itself. As nothing has been said specifically in the order dismissing the special leave petition one is left merely guessing. We do not think it would be just to deprive the aggrieved person of the statutory right of seeking relief in review jurisdiction of the High Court if a case for relief in that jurisdiction could be made out merely because a special leave petition under Article 136 of the Constitution had already stood rejected by the Supreme Court by a non-speaking order.

In M/s. Rup Diamonds and others Vs. Union of India and others AIR 1989 SC 674, the law declared by this Court is that it cannot be said that the mere rejection of special leave petition could, by itself, be construed as the imprimatur of this Court on the correctness of the decision sought to be appealed against.

In Wilson Vs. Colchester Justices 1985 (2) All England Law Reports 97, the House of Lords stated;

There are a multitude of reasons why, in a particular case, leave to appeal may be refused by an Appeal Committee. I shall not attempt to embark on an exhaustive list for it would be impossible to do so. One reason may be that the particular case raises no question of general principle but turns on its own facts. Another may be that the facts of the particular case are not suitable as a foundation for determining some question of general principle. . Conversely the fact that leave to appeal is given is not of itself an indication that the judgments below are thought to be wrong. It may well be that leave is given in order that the relevant law may be authoritatively restated in clearer terms.

In Supreme Court Employees Welfare Association Vs. Union of India and Another 1989 (4) SCC 187, and Yogendra Narayan Chowdhury and Others Vs. Union of India and Others 1996 (7) SCC 1, both decisions by Two-Judges Benches, this Court has held that a non-speaking order of dismissal of a special leave petition cannot lead to assumption that it had necessarily decided by implication the correctness of the decision under challenge.

We may refer to a recent decision, by Two-Judges Bench, of this Court in V.M. Salgaocar & Bros. Pvt. Ltd. Vs. Commissioner of Income Tax 2000 (3) Scale 240, holding that when a special leave petition is dismissed, this Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. What the Court means is that it does not consider it to be a fit case for exercising its jurisdiction under Article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a non- speaking order. Here the doctrine of merger applies. In that case the Supreme Court upholds the decision of the High Court or of the Tribunal. This doctrine of merger does not apply in the case of dismissal of special leave petition under Article 136. When appeal is dismissed, order of the High Court is merged with that of the Supreme Court. We find ourselves in entire agreement with the law so stated. We are clear in our mind that anorder dismissing a special leave petition, more so when it is by a non-speaking order, does not result in merger of the order impugned into the order of the Supreme Court.

A few decisions which apparently take a view to the contrary may now be noticed. In Sree Narayana Dharmasanghom Trust Vs. Swami Prakasananda and Others 1997 (6) SCC 78, it was held that a revisional order of the High Court against which a petition for special leave to appeal was dismissed in limine could not have been reviewed by the High Court subsequent to dismissal of S.L.P. by Supreme Court. This decision proceeds on the premises, as stated in para 6 of the order, that It is settled law that even the dismissal of special leave petition in limine operates as a final order between the parties. In our opinion, the order is final in the sense that once a special leave petition is dismissed, whether by a speaking or non- speaking order or whether in limine or on contest, second special leave petition would not lie. However, this statement cannot be stretched and applied to hold that such an order attracts applicability of doctrine of merger and excludes the jurisdiction of the Court or authority passing the order to review the same.

In State of Maharashtra and Anr. Vs. Prabhakar Bhikaji Ingle 1996 (3) SCC 463, the view taken by a Two-Judges Bench of this Court is that the dismissal of special leave petition without a speaking order does not constitute res judicata but the order dealt with in S.L.P., disposed of by a non-speaking order cannot be subjected to review by the Tribunal. In our opinion the law has been too broadly stated through the said observation. Learned Judges have been guided by the consideration of judicial discipline which, as we would shortly deal with, is a principle of great relevance and may be attracted in an appropriate case. But we find it difficult to subscribe to the view, as expressed in this decision, that dismissal of SLP without a speaking order amounts to confirmation by Supreme Court of the order against which leave was sought for and the order had stood merged in the order of Supreme Court.

Dismissal of SLP by speaking or reasoned order - no merger but Rule of discipline and Article 141 attracted. The efficacy of an order disposing of a special leave petition under Article 136 of the Constitution came up for the consideration of Constitution Bench in Penu Balakrishna Iyer and Ors. Vs. Ariya M. Ramaswami Iyer and Ors. - AIR 1965 SC 165 in the context of revocation of a special leave once granted. This Court held that in a given case if the respondent brings to the notice of the Supreme Court facts which would justify the Court in revoking the leave earlier granted by it, the Supreme Court would in the interest of justice not hesitate to adopt that course. It was therefore held that no general rules could be laid down governing the exercise of wide powers conferred on this Court under Article 136; whether the jurisdiction of this Court under Article 136 should be exercised or not and if used, on what terms and conditions, is a matter depending on the facts of each case. If at the stage when special leave is granted the respondent- caveator appears and resists the grant of special leave and the ground urged in support of resisting the grant of special leave is rejected on merits resulting in grant of special leave then it would not be open to the respondent to raise the same point over again at the time of the final hearing of the appeal. However, if the respondent/caveator does not appear, or having appeared, does not raise a point, or even if he raised a point and the Court does not decide it before grant of special leave, the same point can be raised at the time of final hearing. There would be no technical bar of res judicata. The Constitution Bench thus makes it clear that the order disposing of a special leave petition has finality of a limited nature extending only to the points expressly decided by it.

The underlying logic attaching efficacy to an order of the Supreme Court dismissing S.L.P. after hearing counsel for the parties is discernible from a recent Three-Judges Bench decision of this Court in Abbai Maligai Partnership Firm & Anr. Vs. K. Santhakumaran & Ors. 1998 (7) SCC 386. In the matter of eviction proceeding initiated before the Rent Controller, the order passed therein was subjected to appeal and then revision before the High Court. Special leave petitions were preferred before the Supreme Court where the respondents were present on caveat. Both the sides were heard through the senior advocates representing them. The special leave petitions were dismissed. The High Court thereafter entertained review petitions which were highly belated and having condoned the delay reversed the orders made earlier in civil revision petitions. The orders in review were challenged by filing appeals under leave granted on special leave petitions. This Court observed that what was done by the learned single Judge was subversive of judicial discipline. The facts and circumstances of the case persuaded this Court to form an opinion that the tenants were indulging in vexatious litigations, abusing the process of the Court by approaching the High Court and the very entertainment of review petitions (after condoning a long delay of 221 days) and then reversing the earlier orders was an affront to the order of this Court. However the learned judges deciding the case have nowhere in the course of their judgment relied on doctrine of merger for taking the view they have done. A careful reading of this decision brings out the correct statement of law and fortifies us in taking the view as under.

A petition for leave to appeal to this Court may be dismissed by a non-speaking order or by a speaking order. Whatever be the phraseology employed in the order of dismissal, if it is a non-speaking order, i.e. it does not assign reasons for dismissing the special leave petition, it would neither attract the doctrine of merger so as to stand substituted in place of the order put in issue before it nor would it be a declaration of law by the Supreme Court under Article 141 of the Constitution for there is no law which has been declared. If the order of dismissal be supported by reasons then also the doctrine of merger would not be attracted because the jurisdiction exercised was not an appellate jurisdiction but merely a discretionary jurisdiction refusing to grant leave to appeal. We have already dealt with this aspect earlier. Still the reasons stated by the Court would attract applicability of Article 141 of the Constitution if there is a law declared by the Supreme Court which obviously would be binding on all the courts and tribunals in India and certainly the parties thereto. The statement contained in the order other than on points of law would be binding on the parties and the court or tribunal, whose order was under challenge on the principle of judicial discipline, this Court being the apex court of the country. No court or tribunal or parties would have the liberty of taking or canvassing any view contrary to the one expressed by this Court. The order of Supreme Court would mean that it has declared the law and in that light the case was considered not fit for grant of leave. The declaration of law will be governed by Article 141 but still, the case not being one where leave was granted, the doctrine of merger does not apply. The Court sometimes leaves the question of law open. Or it sometimes briefly lays down the principle, may be, contrary to the one laid down by the High Court and yet would dismiss the special leave petition. The reasons given are intended for purposes of Article 141. This is so done because in the event of merely dismissing the special leave petition, it is likely that an argument could be advanced in the High Court that the Supreme Court has to be understood as not to have differed in law with the High Court.

Incidentally we may notice two other decisions of this Court which though not directly in point, the law laid down wherein would be of some assistance to us. In Shankar Ramchandra Abhyankar Vs. Krishnaji Dattatraya Bapat AIR 1970 SC 1, this Court vide para 7 has emphasized three pre conditions attracting applicability of doctrine of merger. They are : i) the jurisdiction exercised should be appellate or revisional jurisdiction; ii) the jurisdiction should have been exercised after issue of notice; and, iii) after a full hearing in presence of both the parties. Then the appellate or revisional order would replace the judgment of the lower court and constitute the only final judgment. In Sushil Kumar Sen Vs. State of Bihar AIR 1975 SC 1185 the doctrine of merger usually applicable to orders passed in exercise of appellate or revisional jurisdiction was held to be applicable also to orders passed in exercise of review jurisdiction. This Court held that the effect of allowing an application for review of a decree is to vacate a decree passed. The decree that is subsequently passed on review whether it modifies, reverses or confirms the decree originally passed, is a new decree superseding the original one. The distinction is clear. Entertaining an application for review does not vacate the decree sought to be reviewed. It is only when the application for review has been allowed that the decree under review is vacated. Thereafter the matter is heard afresh and the decree passed therein, whatever be the nature of the new decree, would be a decree superseding the earlier one. The principle or logic flowing from the above-said decisions can usefully be utilised for resolving the issue at hand. Mere pendency of an application seeking leave to appeal does not put in jeopardy the finality of the decree or order sought to be subjected to exercise of appellate jurisdiction by the Supreme Court. It is only if the application is allowed and leave to appeal granted then the finality of the decree or order under challenge is jeopardised as the pendency of appeal reopens the issues decided and this court is then scrutinising the correctness of the decision in exercise of its appellate jurisdiction.

In Gopalbandhu Biswal Vs. Krishna Chandra Mohanty & Ors. 1998 (4) SCC 447 there are observations vide para 8 and at a few other places that rejection of a special leave petition against the order of administrative tribunal makes the order of the Tribunal final and binding and the party cannot thereafter go back to the Tribunal to apply for review. However, paras 12 & 13 of the judgment go to show that (i) the applications for review before the Tribunal were not within the principle laid down under Order 47 Rule 1 of the C.P.C., (ii) did not comply with the relevant rules contained in Central Administrative Tribunal (Procedure) Rules, 1987, (iii) the review applicants were not in the category of persons aggrieved, and (iv) the review petitions were filed beyond the period of limitation prescribed and the delay was not explained. Thus the case proceeds on the peculiar facts of its own.

In Junior Telecom Officers Forum & Ors. Vs. Union of India & Ors. 1993 Supp.(4) SCC 693 also the view taken by a Two- Judges Bench of this Court is that the dismissal of the SLP, though in limine, was on merits and the Court had declined to interfere with the impugned judgment of the High Court except to a limited extent as noticed therein whereafter the Tribunal could not have reopened the matter. The order passed earlier by the Supreme Court is quoted in para 5 of the report. It clearly states that on SLP itself the Court heard counsel of both the sides. While dismissing the special leave petition on merits, this Court had to some extent interfere with the order of the High Court which was put in issue before the Supreme Court. It is clear that the Supreme Court had exercised appellate jurisdiction vested in it under Article 136 of the Constitution and heard both the sides though the leave was not formally granted and the special leave petition was not formally converted into an appeal. Hence this decision rests on the special facts of that case.

In Supreme Court Employees Welfare Associations case (supra), this Court held :-

When Supreme Court gives reasons while dismissing a special leave petition under Article 136 the decision becomes one which attracts Article 141. But when no reason is given and the special leave petition is summarily dismissed, the Court does not lay down any law under Article 141. The effect of a non-speaking order of dismissal of a special leave petition without anything more indicating the grounds or reasons of its dismissal must, by necessary implication, be taken to be that the Supreme Court had decided only that it was not a fit case where special leave petition should be granted.

Leave granted - dismissal without reasons - merger results It may be that in spite of having granted leave to appeal, the Court may dismiss the appeal on such grounds as may have provided foundation for refusing the grant at the earlier stage. But that will be a dismissal of appeal. The decision of this Court would result in superseding the decision under appeal attracting doctrine of merger. But if the same reasons had prevailed with this Court for refusing leave to appeal, the order would not have been an appellate order but only an order refusing to grant leave to appeal.

Doctrine of Merger and Review :-

This question directly arises in the case before us.

The doctrine of merger and the right of review are concepts which are closely inter-linked. If the judgment of the High Court has come up to this Court by way of a special leave, and special leave is granted and the appeal is disposed of with or without reasons, by affirmance or otherwise, the judgment of the High Court merges with that of this Court. In that event, it is not permissible to move the High Court by review because the judgment of the High Court has merged with the judgment of this Court. But where the special leave petition is dismissed - there being no merger, the aggrieved party is not deprived of any statutory right of review, if it was available and he can pursue it. It may be that the review court may interfere, or it may not interfere depending upon the law and principles applicable to interference in the review. But the High Court, if it exercises a power of review or deals with a review application on merits - in a case where the High Courts order had not merged with an order passed by this Court after grant of special leave - the High Court could not, in law, be said to be wrong in exercising statutory jurisdiction or power vested in it.

It will be useful to refer to Order 47 Rule 1 of the Code of Civil Procedure 1908. It reads as follows :

R.1. Application for review of judgment.

(1) Any person considering himself aggrieved, -

(a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred,

(b) by a decree or order from which no appeal is allowed, or

(c) by a decision on reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order.

(2) A party who is not appealing from a decree or order may apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of such appeal is common to the applicant and the appellant, or when, being respondent, he can present to the Appellate Court the case on which he applies for the review.

[Explanation. - The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment.]

For our purpose it is clause (a) sub-rule(1) which is relevant. It contemplates a situation where an appeal is allowed but no appeal has been preferred. The Rule came up for consideration of this Court in Thungabhadra Industries Ltd. Vs. The Govt. of A.P. (AIR 1964 SC 1372) in the context of Article 136 of the Constitution of India. The applicant had filed an application for review of the order of the High Court refusing to grant a certificate under Article 133 of the Constitution. The applicant also filed an application for special leave to appeal in respect of the same matter under Article 136 along with an application for condonation of delay. The Supreme Court refused to condone the delay and rejected the application under Article 136. When the application for review came up for consideration before the High Court, it was dismissed on the ground that the special leave petition had been dismissed by the Supreme Court. This Court held that the crucial date for determining whether or not the terms of Order 47 Rule 1(1) CPC are satisfied is the date when the application for review is filed. If on that date no appeal has been filed it is competent for the Court hearing the petition for review to dispose of the application on the merits notwithstanding the pendency of the appeal, subject only to this, that if before the application for review is finally decided the appeal itself has been disposed of, the jurisdiction of the Court hearing the review petition would come to an end. On the date when the application for review was filed the applicant had not filed an appeal to this Court and therefore there was no bar to the petition for review being entertained.

Let us assume that the review is filed first and the delay in the SLP is condoned and the special leave petition is ultimately granted and the appeal is pending in this Court. The position then, under Order 47 Rule 1 CPC is that still the review can be disposed of by the High Court. If the review of a decree is granted before the disposal of the appeal against the decree, the decree appealed against will cease to exist and the appeal would be rendered incompetent. An appeal cannot be preferred against a decree after a review against the decree has been granted. This is because the decree reviewed gets merged in the decree passed on review and the appeal to the superior court preferred against the earlier decree - the one before review - becomes infructuous.

The Review can be filed even after SLP is dismissed is clear from the language of Order 47 Rule 1 (a). Thus the words no appeal has been preferred in Order 47 Rule 1(a) would also mean a situation where special leave is not granted. Till then there is no appeal in the eye of law before the superior court. Therefore, the review can be preferred in the High Court before special leave is granted, but not after it is granted. The reason is obvious. Once special leave is granted the jurisdiction to consider the validity of the High Courts order vests in the Supreme Court and the High Court cannot entertain a review thereafter, unless such a review application was preferred in the High Court before special leave was granted. Conclusions :-

We have catalogued and dealt with all the available decisions of this Court brought to our notice on the point at issue. It is clear that as amongst the several two-Judges Bench decisions there is a conflict of opinion and needs to be set at rest. The source of power conferring binding efficacy on decisions of this Court is not uniform in all such decisions. Reference is found having been made to (i) Article 141 of the Constitution, (ii) doctrine of merger, (iii) res-judicata, and (iv) Rule of discipline flowing from this Court being the highest court of the land.

A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the Court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the apex court of the country and so on. The expression often employed by this Court while disposing of such petitions are - heard and dismissed, dismissed, dismissed as barred by time and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the meritworthiness of the petitioners prayer seeking leave to file an appeal and having formed an opinion may say dismissed on merits. Such an order may be passed even ex-parte, that is, in the absence of the opposite party. In any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion neither doctrine of merger nor Article 141 of the Constitution is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by Order 47 Rule 1 of the C.P.C. or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from Order 47 Rule 1 of the C.P.C. act as guidelines) are not necessarily the same on which this court exercises discretion to grant or not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of special leave petition does not take away the jurisdiction of the court, tribunal or forum whose order forms the subject matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However this would be so not by reference to the doctrine of merger.

Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non- speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court.

To merge means to sink or disappear in something else; to become absorbed or extinguished; to be combined or be swallowed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. (See Corpus Juris Secundum, Vol. LVII, pp. 1067-1068)

We may look at the issue from another angle. The Supreme Court cannot and does not reverse or modify the decree or order appealed against while deciding a petition for special leave to appeal. What is impugned before the Supreme Court can be reversed or modified only after granting leave to appeal and then assuming appellate jurisdiction over it. If the order impugned before the Supeme Court cannot be reversed or modified at the SLP stage obviously that order cannot also be affirmed at the SLP stage.

To sum up our conclusions are :-

(i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.

ii) The jurisdiction conferred by Article 136 of the Constitution is divisible into two stages. First stage is upto the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal.

(iii) Doctrine of merger is not a doctrine of universal or unlimite application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under Article 136 of the Constitution the Supreme Court may reverse, modify or affirm the judgment-decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can therefore be applied to the former and not to the latter.

iv) An order refusing special leave to appeal may be a non- speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed.

v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.

(vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.

(vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a revew petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C.P.C.
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