Legal Blog: September 2011

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Friday, September 30, 2011

Need to Review the Law Relating to Adverse Possession : Supreme Court

Justice Dalveer Bhandari
Supreme Court of India
The Supreme Court in State of Haryana v. Mukesh Kumar & Ors. has reiterated the need for a review of the law relating to adverse possession in India. The present case raised a vital question whether the State, which is in charge of protection of life, liberty and property of the people can be permitted to grab the land and property of its own citizens under the banner of the plea of adverse possession? Justice Dalveer Bhandari and Justice Deepak Verma have succinctly traced out the law relating to adverse possession while recommending the abolition of such a law. The relevant extracts from the judgment are as under;

26. In a democracy, governed by rule of law, the task of protecting life and property of the citizens is entrusted to the police department of the government. In the instant case, the suit has been filed through the Superintendent of Police, Gurgaon, seeking right of ownership by adverse possession. 

27. The revenue records of the State revealed that the disputed property stood in the name of the defendants. It is unfortunate that the Superintendent of Police, a senior official of the Indian Police Service, made repeated attempts to grab the property of the true owner by filing repeated appeals before different forums claiming right of ownership by way of adverse possession. 

28. The citizens may lose faith in the entire police administration of the country that those responsible for the safety and security of their life and property are on a spree of grabing the properties from the true owners in a clandestine manner. 

29. A very informative and erudite Article was published in Neveda Law Journal Spring 2007 with the title ‘Making Sense Out of Nonsense: A Response to Adverse Possession by Governmental Entities’. The Article was written by Andrew Dickal. Historical background of adverse possession was discussed in that article.

Historical background 

30. The concept of adverse possession was born in England around 1275 and was initially created to allow a person to claim right of “seisin” from his ancestry. Many felt that the original law that relied on “seisin” was difficult to establish, and around 1623 a statue of limitations was put into place that allowed for a person in possession of property for twenty years or more to acquire title to that property. This early English doctrine was designed to prevent legal disputes over property rights that were time consuming and costly. The doctrine was also created to prevent the waste of land by forcing owners to monitor their property or suffer the consequence of losing title. 

31. The concept of adverse possession was subsequently adopted in the United States. The doctrine was especially important in early American periods to cure the growing number of title disputes. The American version mirrored the English law, which is illustrated by most States adopting a twenty-year statue of limitations for adverse possession claims. As America has developed to the present date, property rights have become increasingly more important and land has become limited. As a result, the time period to acquire land by adverse possession has been reduced in some States to as little as five years, while in others, it has remained as long as forty years. The United States has also changed the traditional doctrine by preventing the use of adverse possession against property held by a governmental entity. 

32. During the colonial period, prior to the enactment of the Bill of Rights, property was frequently taken by states from private land owners without compensation. Initially, undeveloped tracts of land were the most common type of property acquired by the government, as they were sought for the installation of public road. Under the colonial system it was thought that benefits from the road would, in a newly opened country, always exceed the value of unimproved land. 

33. The doctrine of adverse possession arose in an era where lands were vast particularly in the United States of America and documentation sparse in order to give quietus to the title of the possessor and prevent fanciful claims from erupting. The concept of adverse possession exits to cure potential or actual defects in real estate titles by putting a statute of limitation on possible litigation over ownership and possession. A landowner could be secure in title to his land; otherwise, long-lost heirs of any former owner, possessor or lien holder of centuries past could come forward with a legal claim on the property. Since independence of our country we have witnessed registered documents of title and more proper, if not perfect, entries of title in the government records. The situation having changed, the statute calls for a change. 

34. In Hemaji Waghaji Jat v. Bhikhabhai Khengarbhai Harijan and Others (2009) 16 SCC 517 (one of us Bhandari, J.), this Court had an occasion to examine the English and American law on “adverse possession”. The relevant paras of that judgment (Paras 24 and 26 to 29) are reproduced as under: 
“24. In a relatively recent case in P.T. Munichikkanna Reddy v. Revamma (2007) 6 SCC 59, this Court again had an occasion to deal with the concept of adverse possession in detail. The Court also examined the legal position in various countries particularly in English and American systems. We deem it appropriate to reproduce relevant passages in extenso. The Court dealing with adverse possession in paras 5 and 6 observed as under: (SCC pp. 66-67) 
“5. Adverse possession in one sense is based on the theory or presumption that the owner has abandoned the property to the adverse possessor on the acquiescence of the owner to the hostile acts and claims of the person in possession. It follows that sound qualities of a typical adverse possession lie in it being open, continuous and hostile. (See Downing v. Bird 100 So 2d 57 (Fla 1958), Arkansas Commemorative Commission v. City of Little Rock 227, Ark 1085 : 303 SW 2d 569 (1957); Monnot v. Murphy 207 NY 240 : 100 NE 742 (1913); City of Rock Springs v. Sturm 39 Wyo 494 : 273 P 908 : 97 ALR 1 (1929).) 
6. Efficacy of adverse possession law in most jurisdictions depends on strong limitation statutes by operation of which right to access the court expires through efflux of time. As against rights of the paper-owner, in the context of adverse possession, there evolves a set of competing rights in favour of the adverse possessor who has, for a long period of time, cared for the land, developed it, as against the owner of the property who has ignored the property. Modern statutes of limitation operate, as a rule, not only to cut off one’s right to bring an action for the recovery of property that has been in the adverse possession of another for a specified time, but also to vest the possessor with title. The intention of such statutes is not to punish one who neglects to assert rights, but to protect those who have maintained the possession of property for the time specified by the statute under claim of right or colour of title. (See American Jurisprudence, Vol. 3, 2d, p. 81. It is important to keep in mind while studying the American notion of adverse possession, especially in the backdrop of limitation statutes, that the intention to dispossess cannot be given a complete go-by. Simple application of limitation shall not be enough by itself for the success of an adverse possession claim.” 
35. A person pleading adverse possession has no equities in his favour since he is trying to defeat the rights of the true owner. It is for him to clearly plead and establish all facts necessary to establish adverse possession. Though we got this law of adverse possession from the British, it is important to note that these days English Courts are taking a very negative view towards the law of adverse possession. The English law was amended and changed substantially to reflect these changes, particularly in light of the view that property is a human right adopted by the European Commission. 

This Court in Revamma (supra) observed that to understand the true nature of adverse possession, Fairweather v. St Marylebone Property Co [1962] 2 WLR 1020 : [1962] 2 All ER 288 can be considered where House of Lords referring to Taylor v. Twinberrow [1930] 2 K.B. 16 termed adverse possession as a negative and consequential right effected only because somebody else's positive right to access the court is barred by operation of law. 

As against the rights of the paper-owner, in the context of adverse possession, there evolves a set of competing rights in favour of the adverse possessor who has, for a long period of time, cared for the land, developed it, as against the owner of the property who has ignored the property. 

36. The right to property is now considered to be not only constitutional or statutory right but also a human right. Human rights have already been considered in realm of individual rights such as right to health, right to livelihood, right to shelter and employment etc. But now human rights are gaining a multi faceted dimension. Right to property is also considered very much a part of the new dimension. Therefore, even claim of adverse possession has to be read in that context. 

37. The changing attitude of the English Courts is quite visible from the judgment of Beaulane Properties Ltd. v. Palmer (2005) 3 WLR 554. The Court here tried to read the human rights position in the context of adverse possession. But what is commendable is that the dimension of human rights have widened so much that now property dispute issues are also being raised within the contours of human rights. With the expanding jurisprudence of the European Courts of Human Rights, the Court has taken an unkind view to the concept of adverse possession. 

38. Paragraphs from 26 to 29 of Hemaji Waghaji Jat (supra) are set out as under:- 
26. With the expanding jurisprudence of the European Court of Human Rights, the Court has taken an unkind view to the concept of adverse possession in the recent judgment of JA Pye (Oxford) Ltd. v. United Kingdom (2005) 49 ERG 90 which concerned the loss of ownership of land by virtue of adverse possession. In the said case, “the applicant company was the registered owner of a plot of 23 hectares of agricultural land. The owners of a property adjacent to the land, Mr and Mrs Graham (the Grahams) occupied the land under a grazing agreement. After a brief exchange of documents in December 1983 a chartered surveyor acting for the applicants wrote to the Grahams noting that the grazing agreement was about to expire and requiring them to vacate the land.” The Grahams continued to use the whole of the disputed land for farming without the permission of the applicants from September 1998 till 1999. In 1997, Mr Graham moved the Local Land Registry against the applicant on the ground that he had obtained title by adverse possession. The Grahams challenged the applicant company’s claims under the Limitation Act, 1980 (the 1980 Act) which provides that a person cannot bring an action to recover any land after the expiration of 12 years of adverse possession by another. 
27. The judgment was pronounced in JA Pye (Oxford) Ltd. v. Graham (2000) 3 WLR 242 : 2000 Ch 676. The Court held in favour of the Grahams but went on to observe the irony in law of adverse possession. The court observed that the law which provides to oust an owner on the basis of inaction of 12 years is “illogical and disproportionate”. The effect of such law would “seem draconian to the owner” and “a windfall for the squatter”. The court expressed its astonishment on the prevalent law that ousting an owner for not taking action within limitation is illogical. The applicant company aggrieved by the said judgment filed an appeal and the Court of Appeal reversed the High Court decision. The Grahams then appealed to the House of Lords, which, allowed their appeal and restored the order of the High Court. 
28. The House of Lords in JA Pye (Oxford) Ltd. v. Graham (2003) 1 AC 419 : (2002) 3 WLR 221 : (2002) 3 All ER 865 (HL), observed that the Grahams had possession of the land in the ordinary sense of the word, and, therefore, the applicant company had been dispossessed of it within the meaning of the Limitation Act of 1980. 
29. We deem it proper to reproduce the relevant portion of the judgment in P.T. Munichikkanna Reddy v. Revamma (2007) 6 SCC 59: (SCC p. 79, paras 51-52) 
“51. Thereafter the applicants moved the European Commission of Human Rights (ECHR) alleging that the United Kingdom law on adverse possession, by which they lost land to a neighbour, operated in violation of Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (‘the Convention’). 
52. It was contended by the applicants that they had been deprived of their land by the operation of the domestic law on adverse possession which is in contravention with Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (‘the Convention’), which reads as under: 
‘Every natural or legal person is entitled to the peaceful enjoyment of his possession. No one shall be deprived of his possession except in the public interest and subject to the conditions provided for by law and by the general principles of international law. 
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’ ” 
This Court in Revamma case also mentioned that the European Council of Human Rights importantly laid down three-pronged test to judge the interference of the Government with the right of “peaceful enjoyment of property”: (SCC p. 79, para 53) 

“53. ... [In] Beyeler v. Italy [GC] No. 33202 of 1996 §§ 108-14 ECHR 2000-I, it was held that the ‘interference’ should comply with the principle of lawfulness and pursue a legitimate aim (public interest) by means reasonably proportionate to the aim sought to be realised.” 

The Court observed:(Revamma case 79-80, paras 54-56) 
“54. ... ‘The question nevertheless remains whether, even having regard to the lack of care and inadvertence on the part of the applicants and their advisers, the deprivation of their title to the registered land and the transfer of beneficial ownership to those in unauthorized possession struck a fair balance with any legitimate public interest served. 
In these circumstances, the Court concludes that the application of the provisions of the 1925 and 1980 Acts to deprive the applicant companies of their title to the registered land imposed on them an individual and excessive burden and upset the fair balance between the demands of the public interest on the one hand and the applicants’ right to the peaceful enjoyment of their possessions on the other. 
There has therefore been a violation of Article 1 of Protocol 1.’ 
55. The question of the application of Article 41 was referred for the Grand Chamber Hearing of the ECHR. This case sets the field of adverse possession and its interface with the right to peaceful enjoyment in all its complexity. 
56. Therefore it will have to be kept in mind the courts around the world are taking an unkind view towards statutes of limitation overriding property rights.” 
39. In Hemaji Waghaji Jat case, this Court ultimately observed as under: 
“32. Before parting with this case, we deem it appropriate to observe that the law of adverse possession which ousts an owner on the basis of inaction within limitation is irrational, illogical and wholly disproportionate. The law as it exists is extremely harsh for the true owner and a windfall for a dishonest person who had illegally taken possession of the property of the true owner. The law ought not to benefit a person who in a clandestine manner takes possession of the property of the owner in contravention of law. This in substance would mean that the law gives seal of approval to the illegal action or activities of a rank trespasser or who had wrongfully taken possession of the property of the true owner. 
33. We fail to comprehend why the law should place premium on dishonesty by legitimising possession of a rank trespasser and compelling the owner to lose his possession only because of his inaction in taking back the possession within limitation.” 
Fifth Amendment of the U.S. Constitution – a principle of a civilized society 

40. Another important development in the protection of property rights was the Fifth Amendment. James Madison was the drafter and key supporter for the Fifth Amendment. The Fifth Amendment states: “nor shall private property be taken for public use, without just compensation”. The main issue is to pay just compensation for acquiring the property. There are primarily two situations when a landowner may obtain compensation for land officially transferred to or depreciated by the government. First, an owner may be entitled to compensation when a governmental entity intentionally acquires private property through a formal condemnation proceeding and without the owner’s consent. The State’s power to take property is considered inherent through its eminent domain powers as a sovereign. Through the condemnation proceedings, the government obtains the necessary interest in the land, and the Fifth Amendment requires that the property owner be compensated for this loss. 

41. The second situation requiring compensation under Fifth Amendment occurs when the government has not officially acquired private property through a formal condemnation proceeding, but “nonetheless takes property by physically invading or appropriating it”. Under this scenario, the property owner, at the point in which a “taking” has occurred, has the option of filing a claim against the government actor to recover just compensation for the loss. When the landowner sues the government seeking compensation for a taking, it is considered an inverse condemnation proceeding, because the landowner and not the government is bringing the cause of action. 

42. We inherited this law of adverse possession from the British. The Parliament may consider abolishing the law of adverse possession or at least amending and making substantial changes in law in the larger public interest. The Government instrumentalities – including the police – in the instant case have attempted to possess land adversely. This, in our opinion, a testament to the absurdity of the law and a black mark upon the justice system’s legitimacy. The Government should protect the property of a citizen – not steal it. And yet, as the law currently stands, they may do just that. If this law is to be retained, according to the wisdom of the Parliament, then at least the law must require those who adversely possess land to compensate title owners according to the prevalent market rate of the land or property in question. This alternative would provide some semblance of justice to those who have done nothing other than sitting on their rights for the statutory period, while allowing the adverse possessor to remain on property. 

While it may be indefensible to require all adverse possessors – some of whom may be poor – to pay market rates for the land they possess, perhaps some lesser amount would be realistic in most of the cases. The Parliament may either fix a set range of rates or to leave it to the judiciary with the option of choosing from within a set range of rates so as to tailor the compensation to the equities of a given case. 

43. The Parliament must seriously consider at least to abolish “bad faith” adverse possession, i.e., adverse possession achieved through intentional trespassing. Actually believing it to be their own could receive title through adverse possession sends a wrong signal to the society at large. Such a change would ensure that only those who had established attachments to the land through honest means would be entitled to legal relief. 

44. In case, the Parliament decides to retain the law of adverse possession, the Parliament might simply require adverse possession claimants to possess the property in question for a period of 30 to 50 years, rather than a mere 12. Such an extension would help to ensure that successful claimants have lived on the land for generations, and are therefore less likely to be individually culpable for the trespass (although their forebears might). A longer statutory period would also decrease the frequency of adverse possession suits and ensure that only those claimants most intimately connected with the land acquire it, while only the most passive and unprotective owners lose title. 

45. Reverting to the facts of this case, if the Police department of the State with all its might is bent upon taking possession of any land or building in a clandestine manner, then, perhaps no one would be able to effectively prevent them. 

46. It is our bounden duty and obligation to ascertain the intention of the Parliament while interpreting the law. Law and Justice, more often than not, happily coincide only rarely we find serious conflict. The archaic law of adverse possession is one such. A serious re-look is absolutely imperative in the larger interest of the people. 

47. Adverse possession allows a trespasser – a person guilty of a tort, or even a crime, in the eyes of law - to gain legal title to land which he has illegally possessed for 12 years. How 12 years of illegality can suddenly be converted to legal title is, logically and morally speaking, baffling. This outmoded law essentially asks the judiciary to place its stamp of approval upon conduct that the ordinary Indian citizen would find reprehensible. 

48. The doctrine of adverse possession has troubled a great many legal minds. We are clearly of the opinion that time has come for change.

49. If the protectors of law become the grabbers of the property (land and building), then, people will be left with no protection and there would be a total anarchy in the entire country. 

50. It is indeed a very disturbing and dangerous trend. In our considered view, it must be arrested without further loss of time in the larger public interest. No Government Department, Public Undertaking, and much less the Police Department should be permitted to perfect the title of the land or building by invoking the provisions of adverse possession and grab the property of its own citizens in the manner that has been done in this case. 

51. In our considered view, there is an urgent need for a fresh look of the entire law on adverse possession. We recommend the Union of India to immediately consider and seriously deliberate either abolition of the law of adverse possession and in the alternate to make suitable amendments in the law of adverse possession. A copy of this judgment be sent to the Secretary, Ministry of Law and Justice, Department of Legal Affairs, Government of India for taking appropriate steps in accordance with law.

Friday, September 23, 2011

Jurisdiction of Courts in Cheque Bouncing Matters : The Law

Justice P. Nandrajog
Delhi High Court
The Delhi High Court in Shree Raj Travels & Tours Ltd.& Ors. v. Destination of the World (Subcontinent) Pvt. Ltd. had the occasion to review the law relating to jurisdiction of criminal courts vis a vis the commission of acts / omissions constituting an offence in matters pertaining to Section 138 of the Negotiable Instruments Act. The Court while considering the previous dicta laid down by the Hon'ble Supreme Court has held as under;

8. It is the case of the petitioners that the cheques in question were drawn at Mumbai. The drawee bank is at Mumbai, notice issued by the respondent to the petitioner company was received at Mumbai and thus merely because the respondent posted the notice from Delhi and deposited the cheque with its bank at Delhi would not confer jurisdiction on Courts in Delhi.

9. The issue has to be debated with reference to Section 138 of the NI Act and the applicable provisions of the Code of Criminal Procedure i.e. Sections 177, 178 and 179 of the Code of Criminal Procedure.

10. In the decision reported as 1999 (7) SCC 510 K.Bhaskaran Vs. Shankaran Vaidhyan Balan & Anr., the Supreme Court has opined, after considering Sections 178 to Section 179 of the Code of Criminal Procedure, that an offence may be completed in different localities and thus can be tried in any Court having jurisdiction over said localities. To put it pithily, in relation to territorial jurisdiction, qua an offence, law recognizes more than 1 court having territorial jurisdiction and the issue of territorial jurisdiction would have to be decided with reference to whether a part of an offence was committed within the territorial jurisdiction of a court. The issue is no longer res integra and I just need to note the decision of the Supreme Court in K.Bhaskaran‟s case (supra) and highlight that the aforesaid is to be culled out from paras 11 and 12 of the said decision.

11. The next logical question would be, what are the contours of Section 138 of the NI Act pertaining to acts to be performed in relation to an offence contemplated by the said Section? It hardly be re-emphasized that it are acts of commission or omission which constitute offences, with or without the requisite mens rea, depending upon whether the offence is an absolute offence or not.

12. Let me thus note Section 138, NI Act which reads as under:-
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may extend to two year, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless-
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
13. In Bhaskaran‟s case (supra) the Supreme Court had an occasion to deal with the issue of territorial jurisdiction in relation to Section 138 of the NI Act, and of necessity, the discussion required the Supreme Court to identify the various acts of commission and omission which constituted the offence punishable under Section 138 of the NI Act and suffice would it be to highlight that in para 14 of the decision, the Supreme Court highlighted that there are 5 acts which are the components of the offence punishable under Section 138 of the NI Act and I re-produce the same from para 14 of the decision of the Supreme Court. They read as under:-

(i) drawing of the cheque,

(ii) presentation of the cheque to the bank, 

(iii) returning the cheque unpaid by the drawee bank, 

(iv) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, 

(v) failure of the drawer to make payment within 15 days of the receipt of the notice.

14. After holding that 5 acts would constitute the components of an offence under Section 138 of the NI Act, in paras 15 and 16 the Supreme Court observed as under:-
"15. It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But a concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful. It is extracted below:
....
16. Thus it is clear, if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one ofthose courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act." (Emphasis Supplied)
15. On the issue of service of notice required to be given by the complainant to the accused, the Supreme Court observed as under:-
"17. The more important point to be decided in this case is whether the cause of action has arisen at all as the notice sent by the complainant to the accused was returned as "unclaimed". The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in clauses (b) to (c) of the proviso to Section 138 of the Act. The said clauses are extracted below:
.....
18. On the part of the payee he has to make a demand by "giving a notice" in writing. If that was the only requirement to complete the offence on the failure of the drawer to pay the cheque amount within 15 days from the date of such "giving", the travails of the prosecution would have been very much lessened. But the legislature says that failure on the part of the drawer to pay the amount should be within 15 days "of the receipt" of the said notice. It is, therefore, clear that "giving notice" in the context is not the same as receipt of notice. Giving is a process of which receipt is the accomplishment. It is for the payee to perform the former process by sending the notice to the drawer at the correct address.
 .....
20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure.
21. ....The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in clause (b) of the proviso to Section 138 of the Act show that the payee has the statutory obligation to "make a demand" by giving notice. The thrust in the clause is on the need to "make a demand". It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is despatched his part is over and the next depends on what the sendee does.
22. It is well settled that a notice refused to be accepted by the addressee can be presumed to have been served on him (vide Harcharan Singh v. Shivrani and Jagdish Singh v. Natthu Singh).
23. Here the notice is returned as unclaimed and not as refused. Will there be any significant difference between the two so far as the presumption of service is concerned? In this connection a reference to Section 27 of the General Clauses Act will be useful. The section reads thus:
.....
24. No doubt Section 138 of the Act does not require that the notice should be given only by "post". Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice.
25. Thus, when a notice is returned by the sendee as unclaimed such date would be the commencing date in reckoning the period of 15 days contemplated in clause (c) to the proviso of Section 138 of the Act. Of course such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address. In the present case the accused did not even attempt to discharge the burden to rebut the aforesaid presumption." (Emphasis Supplied)
16. The expressions: "presentation of the cheque to the Bank‟ and "if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act‟ to be found in paras 14 and 16 respectively in Bhaskaran‟s case (supra) have been understood by many to mean that the Court within local limits of which the payee Bank i.e. the Bank where the complainant deposited the cheque is situated has the jurisdiction to try the complaint under Section 138 of the NI Act, and the understanding appears to be fortified by the observations of the Supreme Court in paras 15 and 16 that if the 5 acts contemplated as the ingredient of an offence under Section 138 of the NI Act were done in 5 different localities, any one of the court exercising jurisdiction in any one of the 5 local areas would have jurisdiction.

17. But, it is apparent that the observations in para 15 and 16 are an obiter as it is not 5 places where the 5 acts constituting an offence under Section 138 of the NI Act can possibly be performed. The acts can be performed, as would be explained hereinafter, only at 4 places and I would immediately state that act No.2 and act No.3 relate to only one place i.e. the place where the drawee bank is located.

18. The second and the third act, of the 5 listed by the Supreme Court, as constituting the offence under Section 138 of the NI Act are: (a) presentation of the cheque to the bank; and (b) returning the cheque unpaid by the drawee bank.

19. The third act is the return of the cheque unpaid by the drawee bank and thus there is no scope for any argument as to which bank is contemplated with reference to the said act. The second act pertains to the act of presentation of cheque to the bank. I highlight that the twin words used are „the bank‟.

20. In the decision reported as 2001 (3) SCC 609 Shri Ishar Alloy Steels Ltd. Vs. Jayaswals Neco Ltd., a 3 Judge Bench of the Supreme Court, having as a member of the Bench the author of the judgment in Bhaskaran‟s case (supra), dealt with and decided as to what would be meant by „ the bank‟ as mentioned in Section 138 of the NI Act. Was it the drawee bank or the payee bank? The Supreme Court answered the question in the following words:-
"2. (a) What is meant by, "the bank" as mentioned in clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881?
(b) Does such bank mean the bank of the drawer of the cheque or the payee of the cheque?
(c) To which bank the cheque is to be presented for the purposes of attracting the penal provisions of Section 138 of the Act?, are the questions to be determined by this Court in this appeal.
.....
7. It has further to be noticed that to make an offence under Section 138 of the Act, it is mandatory that the cheque is presented to "the bank" within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn which has to be presented to "the bank" within the period specified therein. When a post- dated cheque is written or drawn, it is only a bill of exchange. The post-dated cheque become a cheque under the Act on the date which is written on the said cheque and the six months' period has to be reckoned, for the purposes of Section 138 of the Act, from the said date.
8. Section 138 provides that where any cheque drawn by a person on an account maintained by him with a "banker" for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by "the bank" unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence punishable with imprisonment as prescribed therein subject to the conditions mentioned in clauses (a), (b) and (c) of the proviso. Section 3 of the Act defines the "banker" to include any person acting as a banker and any post office savings bank. Section 72 of the Act provides that a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relations between the drawer and his banker has been altered to the prejudice of the drawer.
9. The use of the words "a bank" and "the bank" in the section is an indicator of the intention of the legislature. The former is an indirect ( sic indefinite) article and the latter is prefixed by a direct (sic definite) article. If the legislature intended to have the same meanings for "a bank" and "the bank", there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the word "banker" in Section 3 of the Act is prefixed by the indefinite article "a" and the word "bank" where the cheque is intended to be presented under Section 138 is prefixed by the definite article "the". The same section permits a person to issue a cheque on an account maintained by him with "a bank" and makes him liable for criminal prosecution if it is returned by "the bank" unpaid. The payment of the cheque is contemplated by "the bank" meaning thereby where the person issuing the cheque has an account. "The" is the word used before nouns, with a specifying or particularising effect as opposed to the indefinite or generalising force of "a" or "an". It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. "The" is always mentioned to denote a particular thing or a person. "The" would, therefore, refer implicitly to a specified bank and not any bank. "The bank" referred to in clause (a) to the proviso to Section 138 of the Act would mean the drawee bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued.
10. It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued.......The non-presentation of the cheque to the drawee bank within the period specified in the section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 3, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee." (Emphasis Supplied)
21. Though the decision in Ishar Alloy‟s case (supra) has been rendered in the context of limitation for presentation of a cheque, the said decision brings out in no uncertain terms that Section 138 of the NI Act contemplates that a cheque is required to be presented for encashment to the drawee Bank and that the payee Bank, merely acts as an agent of the payee/complainant for the purposes of presenting the cheque in question for encashment to the drawee Bank.

22. Thus, the 2nd act to which the Supreme Court referred to in Bhaskaran's case as one of the 5 which constitutes the offence under Section 138 of the NI Act was the presentation of the cheque to the drawee bank and needless to state the 3rd act which constitutes an ingredient of the offence is the return of the cheque unpaid by the drawee bank and thus it becomes crystal clear that the 2 nd and 3rd act constituting the offence would relate to only one place i.e. the place where the drawee bank is located.

23. These are my humble reasons to hold that the observations in paras 15 and 16 have to be read as an orbiter and thus the 5 acts contemplated as constituting the offence are capable of being performed not in 5 but only in 4 places and since deposit of the cheque with the payee bank is not an act contemplated as an ingredient of the offence, the place where the payee bank is located would be irrelevant for purposes of determining jurisdiction of the criminal court.

24. It is settled law that a decision is an authority for the point it decides and not what can be logically deduced therefrom and the ratio of a decision has to be gathered with reference to the facts of a case and I just highlight only one decision of the Supreme Court being the decision reported as Dhodha House v S.K. Maingi (2006) 9 SCC 41.

25. The matter regarding jurisdiction can also be decided with reference to Section 6, Section 7, Section 64 and Section 72 of the NI Act.

26. The relevant portion of Section 6, Section 7 and Section 64 of NI Act and Section 72 of the NI Act reads as under:-
Section 6. Cheque: - A ''cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
X X X
Section 7. The maker of a bill of exchange or Cheque is called the "drawer"; the person thereby directed to pay is called the "Drawee".
X X X
Section 64. Presentment for payment. -- (1)]Promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties thereto are not liable thereon to such holder........
X X X
Section 72. Subject to the provisions of section 84 a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer.
27. A co-joint reading of Sections 6, 7, 64 and 72 as also of Section 138 of the NI Act brings out that in order to attract penal provisions of Section 138 of the NI Act a cheque is required to be presented for encashment to the drawee Bank and that the payee Bank acts merely as an agent of the payee/complainant for the purposes of presenting the cheque in question to the drawee Bank. The necessary corollary thereof is that no part of cause of action for the offence punishable under Section 138 of the NI Act arises in the Court within the local limits of which the collecting Bank of the complainant i.e. payee Bank is situated and thus said Court has no jurisdiction to try a complaint under Section 138 of the NI Act filed by the complainant.

28. This takes me to the consideration of second question involved in the present case i.e. whether the court within the local limits of which the place from where the complainant had sent a notice contemplated under proviso (b) appended to Section 138 of the NI Act is situated has the jurisdiction to try a complaint filed under Section 138 of the NI Act.

29. I have already noted the observations made by the Supreme Court in Bhaskaran‟s case (supra) in the foregoing paras and would highlight that in paras 17 to 23 the Supreme Court has reflected upon the limitation within which the notice has to be given to the accused. The Supreme Court was considering the expression „giving a notice‟ in proviso (b) to Section 138 of the NI Act, with reference to the 15 days‟ time contemplated then by which the requisite notice had to be served, which time is now 30 days.

30. Another decision of the Supreme Court, reported as (2009) 1 SCC 720 Harman Electronics Private Limited v National Panasonic India Private Limited is worth noting on the subject.

31. In Harman‟s case (supra) the question which had arisen before the Supreme Court was precisely the same question which arises for consideration in the present petition i.e. whether the court within the local limits of which the place from where the complainant had sent a notice contemplated under proviso (b) to Section 138 of the NI Act is situated has the jurisdiction to try a complaint filed under Section 138 of the NI Act. Answering the aforesaid question in the negative, the Supreme Court observed as under:-
"12. .....The only question, therefore, which arises for consideration is that as to whether sending of notice from Delhi itself would give rise to a cause of action for taking cognizance under the Negotiable Instruments Act.
13. It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonour of a cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence under Section 138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If the ingredients for constitution of the offence laid down in provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act are intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As it is only on receipt of the notice that the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of the notice would.
.......For constitution of an offence under Section 138 of the Act, the notice must be received by the accused. It may be deemed to have been received in certain situations. The word "communicate" inter alia means "to make known, inform, convey, etc".
.....
20. ..... A court derives a jurisdiction only when the cause of action arose within its jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, the commission of an offence completes. Giving of notice, therefore, cannot have any precedent over the service. It is only from that view of the matter that in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltdemphasis has been laid on service of notice." (Emphasis Supplied)
32. At a first blush reading of the decisions of the Supreme Court in Bhaskaran and Harman‟s cases (supra) it may strike to the reader that there is a conflict between the two decisions inasmuch as in Bhaskaran‟s case (supra) it was held that the expression „giving of notice‟ occurring in proviso (b) to Section 138 of the NI Act means „sending of notice‟ whereas in Harman‟s case (supra) it was held that the said expression means „receipt of notice‟.

33. A careful reading of the two decisions shows that there is no conflict between the said decisions inasmuch as they have been rendered in different contexts. The decision in Bhaskaran‟s case (supra) was rendered in the context of starting point of limitation period of 15 days prescribed in proviso (b) to Section 138 of the NI Act and it was in that context i.e. the context of limitation that it was held by the Supreme Court that the expression giving of notice‟ occurring in proviso (b) to Section 138 of the NI Act means „sending of notice‟. The decision in Harman‟s case (supra) was rendered in the context of cause of action for filing a complaint under Section 138 NI Act within jurisdiction of a particular court and in that context it was held by the Supreme Court that the expression giving of notice‟ occurring in proviso (b) to Section 138 of the NI Act means „receipt of notice‟.

34. Now, same expression can have different meanings in different context as held by the Supreme Court in the decision reported as Malik Lal Majumdar v Gouranga Chandra Dey (2004) 12 SCC 448 wherein it was observed that a word occurring in a statutory provision can have different meanings in different context within the same statute.

35. Thus, the inevitable conclusion would be that the 4 th act contemplated as an ingredient of the offence as highlighted in Bhaskaran‟s case i.e. „giving notice in writing to the drawer of cheque‟ demanding payment of the cheque amount, for purposes of limitation would have a meaning as explained in Bhaskaran‟s case and for purposes of jurisdiction would have a meaning as explained in Ishar Alloy‟s case (supra).

36. Before concluding I would be failing not to lodge a caveat. With electronic banking and facility payable at par of clearance provided by bankers and especially in metropolitan cities, where cheques are cleared by not being presented to the drawee bank but at nodal branches of the concerned banks, the subject matter of jurisdiction may have to be decided keeping in view that the drawee bank has created an agency where the cheque in question is transmitted for clearance and the situs where the clearance takes place would then arguably become the place where the cheque would be required to be treated as presented to „the bank‟ i.e. the drawee bank. But, in such circumstances, properly constituted pleadings have to be found in a complaint and lodging the caveat, I leave it at that for the debate to be properly argued in an appropriate case with the necessary relevant pleadings.

Saturday, September 17, 2011

Refusal to Defend and Duties of Advocates : The Law

Justice Markandey Katju
Supreme Court of India
The Supreme Court in A.S. Mohammed Rafi Vs. State of Tamil Nadu Rep. By Home Dept. has deprecated the practice of Bar Associations passing resolutions thereby directing advocates not to represent a certain person or class of persons. The Bench, while highlighting the duties of an advocate, have held that such practices / resolutions are wholly illegal, against all traditions of the bar, and against professional ethics. The relevant extracts are reproduced hereinbelow;

14. Before parting with this case, we would like to comment upon a matter of great legal and constitutional importance which has caused us deep distress in this case. It appears that the Bar Association of Coimbatore passed a resolution that no member of the Coimbatore Bar will defend the accused policemen in the criminal case against them in this case. 

15. Several Bar Association all over India, whether High Court Bar Associations or District Court Bar Associations have passed resolutions that they will not defend a particular person or persons in a particular criminal case. Sometimes there are clashes between policemen and lawyers, and the Bar Association passes a resolution that no one will defend the policemen in the criminal case in court. Similarly, sometimes the Bar Association passes a resolution that they will not defend a person who is alleged to be a terrorist or a person accused of a brutal or heinous crime or involved in a rape case. 

16. In our opinion, such resolutions are wholly illegal, against all traditions of the bar, and against professional ethics. Every person, however, wicked, depraved, vile, degenerate, perverted, loathsome, execrable, vicious or repulsive he may be regarded by society has a right to be defended in a court of law and correspondingly it is the duty of the lawyer to defend him. 

17. We may give some historical examples in this connection. 

18. When the great revolutionary writer Thomas Paine was jailed and tried for treason in England in 1792 for writing his famous pamphlet `The Rights of Man' in defence of the French Revolution the great advocate Thomas Erskine (1750-1823) was briefed to defend him. Erskine was at that time the Attorney General for the Prince of Wales and he was warned that if he accepts the brief, he would be dismissed from office. Undeterred, Erskine accepted the brief and was dismissed from office. 

19. However, his immortal words in this connection stand out as a shining light even today : 
"From the moment that any advocate can be permitted to say that he will or will not stand between the Crown and the subject arraigned in court where he daily sits to practice, from that moment the liberties of England are at an end. If the advocate refuses to defend from what he may think of the charge or of the defence, he assumes the character of the Judge; nay he assumes it before the hour of the judgment; and in proportion to his rank and reputation puts the heavy influence of perhaps a mistaken opinion into the scale against the accused in whose favour the benevolent principles of English law make all assumptions, and which commands the very Judge to be his Counsel" 
20. Indian lawyers have followed this great tradition. The revolutionaries in Bengal during British rule were defended by our lawyers, the Indian communists were defended in the Meerut conspiracy case, Razakars of Hyderabad were defended by our lawyers, Sheikh Abdulah and his co-accused were defended by them, and so were some of the alleged assassins of Mahatma Gandhi and Indira Gandhi. In recent times, Dr. Binayak Sen has been defended. No Indian lawyer of repute has ever shirked responsibility on the ground that it will make him unpopular or that it is personally dangerous for him to do so. It was in this great tradition that the eminent Bombay High Court lawyer Bhulabhai Desai defended the accused in the I.N.A. trials in the Red Fort at Delhi (November 1945 - May 1946). 

21. However, disturbing news is coming now from several parts of the country where bar associations are refusing to defend certain accused persons. 

22. The Sixth Amendment to the US Constitution states "In all criminal prosecutions the accused shall enjoy the right .......to have the assistance of counsel for his defence". 

23. In Powell vs. Alabama 287 US 45 1932 the facts were that nine illiterate young black men, aged 13 to 21, were charged with the rape of two white girls on a freight train passing through Tennessee and Alabama. Their trial was held in Scottsboro, Alabama, where community hostility to blacks was intense. The trial judge appointed all members of the local bar to serve as defense counsel. When the trial began, no attorney from the local bar appeared to represent the defendants. The judge, on the morning of the trial, appointed a local lawyer who undertook the task with reluctance. The defendants were convicted. They challenged their convictions, arguing that they were effectively denied aid of counsel because they did not have the opportunity to consult with their lawyer and prepare a defense. The U.S. Supreme Court agreed. Writing for the court, Mr. Justice George Sutherland explained : 
"It is hardly necessary to say that the right to counsel being conceded, a defendant should be afforded afair opportunity to secure counsel of his own choice. Not only was that not done here, but such designation of counsel as was attempted was either so indefinite or so close upon the trial as to amount to a denial of effective and substantial aid....." 
24. In the same decision Justice Sutherland observed: 
"What, then, does a hearing include? Historically and in practice, in our own country at least, it has always included the right to the aid of counsel when desired and provided by the party asserting the right. The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally, of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defense, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence. If that be true of men of intelligence, how much more true is it of the ignorant and illiterate, or those of feeble intellect. If in any case, civil or criminal, a state or federal court were arbitrarily to refuse to hear a party by counsel, employed by and appearing for him, it reasonably may not be doubted that such a refusal would be a denial of a hearing, and, therefore, of due process in the constitutional sense". 
25. In this connection we may also refer to the legendry American lawyer Clarence Darrow (1857-1930) who was strongly of the view that every accused, no matter how wicked, loathsome, vile or repulsive he may be regarded by society has the right to be defended in court. Most lawyers in America refused to accept the briefs of such apparently wicked and loathsome persons, e.g. brutal killers, terrorists, etc. but Clarence Darrow would accept their briefs and defend them, because he was firmly of the view that every persons has the right to be defended in court, and correspondingly it was the duty of the lawyer to defend. His defences in various trials of such vicious, repulsive and loathsome persons became historical, and made him known in America as the `Attorney for the Damned', (because he took up the cases of persons who were regarded so vile, depraved and despicable by society that they had already been condemned by public opinion) and he became a legend in America (see his biography `Attorney for the Damned'). 

26. In Re Anastaplo, 366 US 82 (1961), Mr. Justice Hugo Black of the US Supreme Court in his dissenting judgment praised Darrow and said : 
"Men like Lord Erskine, James Otis, Clarence Darrow, and a multitude of others have dared to speak in defense of causes and clients without regard to personal danger to themselves. The legal profession will lose much of its nobility and its glory if it is not constantly replenished with lawyers like these. To force the Bar to become a group of thoroughly orthodox, time-serving, government-fearing individuals is to humiliate and degrade it." 
27. At the Nuremberg trials, the Nazi war criminals responsible for killing millions of people were yet defended by lawyers. 

28. We may also refer to the fictional American lawyer Atticus Finch in Harper Lee's famous novel `To Kill a Mocking Bird'. In this novel Atticus Finch courageously defended a black man who was falsely charged in the State of Alabama for raping a white woman, which was a capital offence in that State. Despite the threats of violence to him and his family by the racist white population in town, and despite social ostracism by the predominant while community, Atticus Finch bravely defended that black man (though he was ultimately convicted and hanged because the jury was racist and biased), since he believed that everyone has a right to be defended. This novel inspired many young Americans to take up law as a profession in America. 

29. The following words of Atticus Finch will ring throughout in history : 

"Courage is not a man with a gun in his hand. It is knowing you are licked before you begin, but you begin anyway and you see it through no matter what. You rarely win, but sometimes you do." 

30. In our own country, Article 22(1) of the Constitution states : 
"No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for which arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice". 
31. Chapter II of the Rules framed by the Bar Council of India states about `Standards of Professional Conduct and Etiquette', as follows : 
"An advocate is bound to accept any brief in the Courts or Tribunals or before any other authorities in or before which he proposes to practice at a fee consistent with his standing at the Bar and the nature of the case. Special circumstances may justify his refusal to accept a particular brief". 
32. Professional ethics requires that a lawyer cannot refuse a brief, provided a client is willing to pay his fee, and the lawyer is not otherwise engaged. Hence, the action of any Bar Association in passing such a resolution that none of its members will appear for a particular accused, whether on the ground that he is a policeman or on the ground that he is a suspected terrorist, rapist, mass murderer, etc. is against all norms of the Constitution, the Statute and professional ethics. It is against the great traditions of the Bar which has always stood up for defending persons accused for a crime. Such a resolution is, in fact, a disgrace to the legal community. We declare that all such resolutions of Bar Associations in India are null and void and the right minded lawyers should ignore and defy such resolutions if they want democracy and rule of law to be upheld in this country. It is the duty of a lawyer to defend no matter what the consequences, and a lawyer who refuses to do so is not following the message of the Gita. 

33. The Registry of this Court will circulate copies of this judgment/order to all High Court Bar Associations and State Bar Councils in India. The High Court Bar Associations are requested to circulate the judgment/order to all the District Court Bar Associations in their States/Union territories.

Wednesday, September 14, 2011

Abuse of Article 136 of the Constitution : Supreme Court

Justice Markandey Katju
Supreme Court of India
The Supreme Court in Mathai @ Joby Vs. George has lamented the abuse of Article 136 of the Constitution whereby unscrupulous litigants approach the Supreme Court at the drop of a hat, thereby clogging up the justice delivery system. The Supreme Court has held that there is an urgent need to address the issue and has accordingly placed the matter before a larger bench for framing guidelines for entertaining Special lave petitions under Article 136 of the Constitution. The relevant extracts from this judgment are reproduced hereinbelow;


4. We are prima facie of the opinion that such special leave petitions should not be entertained by this Court. Now-a-days all kinds of special leave petitions are being filed in this Court against every kind of order. For instance, if in a suit the trial court allows an amendment application, the matter is often contested right up to this Court. Similarly, if the delay in filing an application or appeal is condoned by the Trial Court or the appellate court, the matter is fought upto this Court. Consequently, the arrears in this Court are mounting and mounting and this Court has been converted practically into an ordinary appellate Court which, in our opinion, was never the intention of Article 136 of the Constitution. In our opinion, now the time has come when it should be decided by a Constitution Bench of this Court as to in what kind of cases special leave petitions should be entertained under Article 136 of the Constitution. 

5. Article 136, no doubt, states that the Supreme Court may in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India. 

However, it is not mentioned in Article 136 of the Constitution as to in what kind of cases the said discretion should be exercised. 

Hence, some broad guidelines need to be laid down now by a Constitution bench of this Court otherwise this Court will be flooded (and in fact is being flooded) with all kind of special leave petitions even frivolous ones and the arrears in this Court will keep mounting and a time will come when the functioning of this Court will become impossible. It may be mentioned that Article 136, like Article 226, is a discretionary remedy, and this Court is not bound to interfere even if there is an error of law or fact in the impugned order. 

6. This Court in the case of N. Suriyakala Vs. A. Mohandoss and Others (2007) 9 SCC 196 observed as under: 
"In this connection we may clarify the scope of Article 136. Article 136 of the Constitution is not a regular forum of appeal at all. It is a residual provision which enables the Supreme Court to interfere with the judgment or order of any court or tribunal in India in its discretion." 
7. Article 136(1) of the Constitution states: 
"Article 136(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India." 
8. The use of the words "in its discretion" in Article 136 clearly indicates that Article 136 does not confer a right of appeal upon any party but merely vests a discretion in the Supreme Court to interfere in exceptional cases vide M/s. Bengal Chemical & Pharmaceutical Works Ltd. vs. Their Employees AIR 1959 SC 633(635), Kunhayammed & Ors. Vs. State of Kerala & Anr. 2000(6) SCC 359 and State of Bombay Vs. Rusy Mistry AIR 1960 SC 391(395). In Municipal Board, Pratabgarh & Anr. Vs. Mahendra Singh Chawla & Ors. 1982(3) SCC 331 and in Chandra Singh Vs. State of Rajasthan AIR 2003 SC 2889 (vide para 43 & 45), this Court observed that under Article 136 it was not bound to set aside an order even if it was not in conformity with law, since the power under Article 136 was discretionary. 

9. Though the discretionary power vested in the Supreme Court under Article 136 is apparently not subject to any limitation, the Court has itself imposed certain limitations upon its own powers vide Ram Saran Das and Bros. Vs. Commercial Tax Officer, Calcutta & Ors. AIR 1962 SC 1326(1328) and Kunhayammed Vs. State of Kerala 2000(6) SCC 359 (para 13). The Supreme Court has laid down that this power has to be exercised sparingly and in exceptional cases only. Thus, in Pritam Singh Vs. The State AIR 1950 SC 169, this Court observed (vide para 9) as under:- 
"On a careful examination of Art.136 along with the preceding article, it seems clear that the wide discretionary power with which this Court is invested under is to be exercised sparingly and in exceptional cases only, and as far as possible a more or less uniform standard should be adopted in granting special leave in the wide range of matters which can come up before it under this article." 
10. In Tirupati Balaji Developers Pvt. Ltd. Vs. State of Bihar AIR 2004 SC 2351, this Court observed about Article 136 as under:- 
"It is an extraordinary jurisdiction vested by the Constitution in the Supreme Court with implicit trust and faith, and extraordinary care and caution has to be observed in the exercise of this jurisdiction. Article 136 does not confer a right of appeal on a party but vests a vast discretion in the Supreme Court meant to be exercised on the considerations of justice, call of duty and eradicating injustice." 
11 In Jamshed Hormusji Wadia Vs. Board of Trustees, Port of Mumbai AIR 2004 SC 1815 (para 33), this Court observed as under:- 
"The discretionary power of the Supreme Court is plenary in the sense that there are no words in Article 136 itself qualifying that power. The very conferment of the discretionary power defies any attempt at exhaustive definition of such power. The power is permitted to be invoked not in a routine fashion but in very exceptional circumstances as when a question of law of general public importance arises or a decision sought to be impugned before the Supreme Court shocks the conscience. This overriding and exceptional power has been vested in the Supreme Court to be exercised sparingly and only in furtherance of the cause of justice in the Supreme Court in exceptional cases only when special circumstances are shown to exist." 
In the same decision this Court also observed as under:- 
"It is well settled that Article 136 of the Constitution does not confer a right to appeal on any party; it confers a discretionary power on the Supreme Court to interfere in suitable cases. Article 136 cannot be read as conferring a right on anyone to prefer an appeal to this Court; it only confers a right on a party to file an application seeking leave to appeal and a discretion on the Court to grant or not to grant such leave in its wisdom. When no law confers a statutory right to appeal on a party, Article 136 cannot be called in aid to spell out such a right. The Supreme Court would not under Article 136 constitute itself into a tribunal or court just settling disputes and reduce itself to a mere court of error. The power under Article 136 is an extraordinary power to be exercised in rare and exceptional cases and on well-known principles." 
12. In Narpat Singh Vs. Jaipur Development Authority (2002) 4 SCC 666, this Court observed as under:- 
"The exercise of jurisdiction conferred by Art.136 of the Constitution on the Supreme Court is discretionary. It does not confer a right to appeal on a party to litigation; it only confers a discretionary power of widest amplitude on the Supreme Court to be exercised for satisfying the demands of justice. On one hand, it is an exceptional power to be exercised sparingly, with caution and care and to remedy extraordinary situations or situations occasioning gross failure of justice; on the other hand, it is an overriding power whereunder the Court may generously step in to impart justice and remedy injustice." 
13. In Ashok Nagar Welfare Association Vs. R.K. Sharma AIR 2002 SC 335, this Court observed that even in cases where special leave is granted, the discretionary power vested in the Court continues to remain with the Court even at the stage when the appeal comes up for hearing. 

14. Now-a-days it has become a practice of filing SLPs against all kinds of orders of the High Court or other authorities without realizing the scope of Article 136. Hence we feel it incumbent on us to reiterate that Article 136 was never meant to be an ordinary forum of appeal at all like Section 96 or even Section 100 CPC. Under the constitutional scheme, ordinarily the last court in the country in ordinary cases was meant to be the High Court. The Supreme Court as the Apex Court in the country was meant to deal with important issues like constitutional questions, questions of law of general importance or where grave injustice had been done. If the Supreme Court entertains all and sundry kinds of cases it will soon be flooded with a huge amount of backlog and will not be able to deal with important questions relating to the Constitution or the law or where grave injustice has been done, for which it was really meant under the Constitutional Scheme. After all, the Supreme Court has limited time at its disposal and it cannot be expected to hear every kind of dispute. 

15. Mr. K.K. Venugopal, Senior Advocate and a very respected lawyer of this Court in his R.K. Jain Memorial Lecture delivered on 30.01.2010 has pointed out that an alarming state of affairs has developed in this Court because this Court has gradually converted itself into a mere Court of Appeal which has sought to correct every error which it finds in the judgments of the High Courts of the country as well as the vast number of tribunals. Mr. Venugopal has further observed that this Court has strayed from its original character as a Constitutional Court and the Apex Court of the country. He further observed that if the Apex Court seeks to deal with all kinds of cases, it necessarily has to accumulate vast arrears over a period of time which it will be impossible to clear in any foreseeable future. According to him, this is a self-inflicted injury, which is the cause of the malaise which has gradually eroded the confidence of the litigants in the Apex Court of the country, mainly because of its failure to hear and dispose of cases within a reasonable period of time. He has further observed that it is a great tragedy to find that cases which have been listed for hearing years back are yet to be heard. He has further observed as under: 
"We have, however, to sympathize with the judges. They are struggling with an unbearable burden. The judges spend late nights trying to read briefs for a Monday or a Friday. When each of the 13 Divisions or Benches have to dispose off about 60 cases in a day, the functioning of the Supreme Court of India is a far cry from what should be desiderata for disposal of cases in a calm and detached atmosphere. The Judges rarely have the leisure to ponder over the arguments addressed to the court and finally to deliver a path-breaking, outstanding and classic judgment. All this is impossible of attainment to a Court oppressed by the burden of a huge backlog of cases. The constant pressure by counsel and the clients for an early date of hearing and a need to adjourn final hearings which are listed, perforce, on a miscellaneous day i.e. Monday or a Friday, where the Court finds that it has no time to deal with those cases, not only puts a strain on the Court, but also a huge financial burden on the litigant. I wonder what a lawyer practising in 1950 would feel if he were today to enter the Supreme Court premises on a Monday or a Friday. He would be appalled at the huge crowd of lawyers and clients thronging the corridors, where one finds it extremely difficult to push one's way through the crowd to reach the Court hall. When he enters the Court hall he finds an equally heavy crowd of lawyers blocking his way. I do not think that any of the senior counsel practicing in the Supreme Court, during the first 3-4 decades of the existence of the Court, would be able to relate to the manner in which we as counsel argue cases today. In matters involving very heavy stakes, 4-5 Senior Advocates should be briefed on either side, all of whom would be standing up at the same time and addressing the court, sometimes at the highest pitch possible. All these are aberrations in the functioning of an Apex Court of any country." 
16. Mr. Venugopal has pointed out that in the year 1997 there were only 19,000 pending cases in this Court but now, there are over 55,000 pending cases and in a few years time the pendency will cross one lakh cases. In 2009 almost 70,000 cases were filed in this Court of which an overwhelming number were Special Leave Petitions under Article 136. At present all these cases have to be heard orally, whereas the U.S. Supreme Court hears only about 100 to 120 cases every year and the Canadian Supreme Court hears only 60 cases per year. 

17. In Bihar Legal Support Society Vs. Chief of Justice of India and Anr. (1986) 4 SCC 767 (vide para 3) a Constitution Bench of this Court observed as under:- 
"It may, however, be pointed out that this Court was never intended to be a regular court of appeal against orders made by the High Court or the sessions court or the magistrates. It was created for the purpose of laying down the law for the entire country ...............It is not every case where the apex court finds that some injustice has been done that it would grant special leave and interfere. That would be converting the apex court into a regular court of appeal and moreover, by so doing, the apex court would soon be reduced to a position where it will find itself unable to remedy any injustice at all, on account of the tremendous backlog of cases which is bound to accumulate. We must realize that in the vast majority of cases the High Courts must become final even if they are wrong". 
18. In this connection Paul Freund has set out the opinion of Mr. Justice Brandeis', the celebrated Judge of the U.S. Supreme Court in the following words: 
"... he was a firm believer in limiting the jurisdiction of the Supreme Court on every front as he would not be seduced by the Quixotic temptation to right every fancied wrong which was paraded before him. ...... Husbanding his time and energies as if the next day were to be his last, he steeled himself, like a scientist in the service of man, against the enervating distraction of the countless tragedies he was not meant to relieve. His concern for jurisdictional and procedural limits reflected, on the technical level, an essentially stoic philosophy. For like Epictetus, he recognized 'the impropriety of being emotionally affected by what is not under one's control'. 
The only way found practicable or acceptable in this country (U.S.A.) for keeping the volume of cases within the capacity of a court of last resort is to allow the intermediate courts of appeal finally to settle all cases that are of consequence only to parties. This reserves to the court of last resort only questions on which lower courts are in conflict or those of general importance to the law." 

19. Justice K.K. Mathew, an eminent Judge of this Court, in an article published in (1982) 3 SCC (Jour) 1, has referred to the opinion of Mr. Justice Frankfurter, the renowned Judge of the U.S. Supreme Court as follows : 
"The function of the Supreme Court, according to Justice Frankfurter, was to expound and stabilize principles of law, to pass upon constitutional and other important questions of law for the public benefit and to preserve uniformity of decision among the intermediate courts of appeal. The time and attention and the energy of the court should be devoted to matters of large public concern and they should not be consumed by matters of less concern, without special general interest, merely because the litigant wants to have the court of last resort pass upon his right. 
The function of the Supreme Court was conceived to be, not to remedying of a particular litigant's wrong, but the consideration of cases whose decision involved principles, the application of which were of wide public or governmental interest and which ought to be authoritatively declared by the final court. Without adequate study, reflection and discussion on the part of judges, there could not be that fruitful interchange of minds which was indispensable to thoughtful, unhurried decision and its formulation in learned and impressive opinions and therefore Justice Frankfurter considered it imperative that the docket of the court be kept down so that its volume did not preclude wise adjudication. He was of the view that any case which did not rise to the significance of inescapability in meeting the responsibilities vested in the Supreme Court had to be rigorously excluded from consideration". 

20. According to Justice Mathew, the Supreme Court, to remain effective, must continue to decide only those cases which present questions whose resolution will have immediate importance far beyond the particular facts and parties involved. It is Justice Mathew's opinion that- 
"To say that no litigant should be turned out of the Supreme Court so long as he has a grievance may be good populistic propaganda but the consequence of accepting such a demand would surely defeat the great purpose for which the Court was established under our constitutional system. It is high time we recognize the need for the Supreme Court to entertain under Article 136 only those cases which measure up to the significance of the national or public importance. The effort, then, must therefore be to voluntarily cut the coat of jurisdiction according to the cloth of importance of the question and not to expand the same with a view to satisfy every litigant who has the means to pursue his cause." 
21. Mr. Venugopal has suggested the following categories of cases which alone should be entertained under Article 136 of the Constitution. 

(i) All matters involving substantial questions of law relating to the interpretation of the Constitution of India; 

(ii) All matters of national or public importance; 


(iii) Validity of laws, Central and State; 

(iv) After Kesavananda Bharati, (1973) 4 SCC 217, the judicial review of Constitutional Amendments; and 

(v) To settle differences of opinion of important issues of law between High Courts. 

22. We are of the opinion that two additional categories of cases can be added to the above list, namely (i) where the Court is satisfied that there has been a grave miscarriage of justice and (ii) where a fundamental right of a person has prima facie been violated. However, it is for the Constitution Bench to which we are referring this matter to decide what are the kinds of cases in which discretion under Article 136 should be exercised. 

23. In our opinion, the time has now come when an authoritative decision by a Constitution Bench should lay down some broad guidelines as to when the discretion under Article 136 of the Constitution should be exercised, i.e., in what kind of cases a petition under Article 136 should be entertained. If special leave petitions are entertained against all and sundry kinds of orders passed by any court or tribunal, then this Court after some time will collapse under its own burden. 

24. It may be mentioned that in Pritam Singh Vs. The State AIR 1950 S.C. 169 a Constitution Bench of this Court observed (vide para 9) that "a more or less uniform standard should be adopted in granting Special Leave". Unfortunately, despite this observation no such uniform standard has been laid down by this Court, with the result that grant of Special Leave has become, as Mr. Setalvad pointed out in his book ` My Life', a gamble. This is not a desirable state of affairs as there should be some uniformity in the approach of the different benches of this Court. Though Article 136 no doubt confers a discretion on the Court, judicial discretion, as Lord Mansfield stated in classic terms in the case of John Wilkes, (1770) 4 Burr 2528 "means sound discretion guided by law. It must be governed by rule, not humour: it must not be arbitrary, vague and fanciful" 

25. The Apex Court lays down the law for the whole country and it should have more time to deliberate upon the cases it hears before rendering judgment as Mr. Justice Frankfurter observed. However, sadly the position today is that it is under such pressure because of the immense volume of cases in the Court that Judges do not get sufficient time to deliberate over the cases, which they deserve, and this is bound to affect the quality of our judgments. 

26. Let notice issue to the respondents. Issue notice also to the Supreme Court Bar Association, Bar Council of India and the Supreme Court-Advocates-on-Record Association. 

27. Since the matter involves interpretation of Article 136 of the Constitution, we feel that it should be decided by a Constitution Bench in view of Article 145(3) of the Constitution. 

Let the papers of this case be laid before Hon'ble the Chief Justice of India for constitution of an appropriate Bench, to decide which kinds of cases should be entertained under Article 136, and/or for laying down some broad guidelines in this connection.
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