Holding

The Supreme Court set aside the High Court judgment and remitted the matter to it for fresh consideration after proper formulation of substantial questions of law.

Summary

The appellant, Abdul Raheem (Karnataka Electricity Board), entered into a sale agreement for land with Respondent No.1, who later sued for specific performance alleging the appellant's failure to perform. The trial court dismissed the suit, and the first appellate court upheld the dismissal, finding that the plaintiff had not been ready to perform and had not approached the court with clean hands. The High Court reversed, holding that the lower courts erred in interpreting the agreement and in applying Section 22 of the Specific Relief Act, and framed three substantial questions of law under Section 100 CPC. The appellant contended that the High Court’s questions did not meet the requirements of Section 100 and that the High Court should not have interfered with the factual findings of the lower courts. The Supreme Court held that a substantial question of law arises when irrelevant facts are considered or relevant facts ignored, and that the High Court had failed to properly formulate such questions, but, in the interest of justice, remitted the matter for fresh consideration. Consequently, the appeal was allowed and the case was sent back to the High Court to frame proper substantial questions of law.

Issues considered

Whether the High Court correctly framed substantial questions of law under Section 100 of the CPC.
Whether consideration of irrelevant facts or omission of relevant facts gives rise to a substantial question of law.
Whether the plaintiff's readiness to perform his part of the contract is a substantial question of law.
Whether the High Court could interfere with the factual findings of the trial and first appellate courts.

Legislation cited

Code of Civil Procedure, 1908s. 100
Specific Relief Act, 1963s. 22

Subjects

Specific performanceSubstantial question of lawSection 100 CPCSpecific Relief ActContractSale of landHigh Court jurisdictionIrrelevant factRelevant fact

Judgment

;;... .
ABDUL RAHEEM A
v.
THE KARNATAKA ELECTRICITY BOARD AND ANR.

NOVEMBER 20, 2007
B
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.]
.,
~·

Civil Procedure Code, 1908; Section I 00:

Substantial question of law-Formulation of-Specific c
performance of contract-Agreement for sale of land entered into
between appellant and respondent No.I-Suit for specific
performance on ground ofnon-performance ofpart ofcontract by other
party-Dismissed by trial Court-Appeal dismissed by first appellate
Court-Appeal filed thereagainst dismissed by High Court holding that D
appellate Court failed to interpret terms ofthe agreement-On appeal,
, Held: Non-consideration of relevant fact and consideration of
irrelevant fact would give rise to a substantial question of law-
Reversal offindings offact arrived at by first appellate Court ignoring
vital document may also lead to a substantial question of law-High E·
Court failed to formulate the substantial questions oflaw-Hence, the
matter remitted to High Court for consideration afresh upon
formulation of the question-Specific Relief Act, 1963-Non-
performance ofpart of contract.
• . .J -<

F
...,. An agreement for sale ofland in question was entered into by and
between the appellant and respondent No.1. Since appellant did not
perform his part of contract, respondent No.1 filed suit for specific
performance of contract. The same was dismissed by trial Court. An
appeal preferred thereagainst by respondent No.1 was dismissed by
--.. G
the first appellate Court. Second appeal preferred by respondent No.1
"'"-/ before the High Court was allowed by the High Court holding that the ·
first appellate Court failed to interpretthe clauses of the agreement in
their proper perspective; and that it applied the provisions contained in
389 H
390 SUPREME COURT REPORTS [2007] 12 S.C.R.

- ..,,:..
A Section 22 of the Specific Relief Act directing refund of the earnest
amount in a mechanical manner. Hence the present appeal.

Appellant contended that the purported substantial questions of
law formulated by the High Court do not meet the requirements of
Section 100 of the Code of Civil Procedure Code; and that having regard
B
to the factual findings arrived at by the first appellate Court, the High ,.
Court should not have interfered therewith in exercise of its power ~

under Section 100 of the Code.

Allowing the appeal, the Court
c
HELD: 1.1. A substantial question oflaw ordinarily would arise
from the finding offacts arrived at by the trial Court and the first appellate
Court. The High Court's junsdiction in terms ofSection 100 of the Code
is undoubtedly limited. [Para 10) [394-CJ
D
1.2. The question as to whether the plaintiff was ready and willing
to perform its part of contract by itself may not give rise to a substantial ~

question oflaw. [Para 11 J [394-D]

1.3. However, there cannot be any doubt whatsoever that
E consideration ofirrelevant fact and non-consideration of relevant fact
would give rise to a substantial question oflaw. Reversal of a finding of
fact arrived at by the first appellate Court ignoring vital documents may
also lead to a substantial question oflaw. [Para 12) [394-EJ

F Vidhyadharv. manikrao & Anr., [1999) 3 SCC 573, relied on.

2. Ordinarily, on the failure of the High Court to formulate *
substantial questions oflaw within the meaning of Section 100 of the
Code, the appeal should have been allowed. However, since respondent
no.1 had already parted with a substantial portion of the consideration
G amount as also upon having paid a large sum towards conversion ~

charges, in the interest of justice another opportunity should be given -...=
to the High Court to frame proper substantial questions oflaw arising
in the matter. Hence, the impugned judgment is set aside and the matter
is remitted back to the High Court for consideration of the matter afresh
H
4
ABDUL RAHEEM v. KARNATAKA ELECTRICITY 391
.;...-
BOARD [SINHA, J.]
upon formulation of a substantial question oflaw. A
[Para 13and15] [395-A, B; 396-E]

Commissioner ofCustoms (Preventive) v. Vijay Darsharath Patel,
[2007] 4 SCC 118 and P. Chandrasekharan & Ors. v. S Kanakarajan &
prs., [2007) 5 sec 669, relied on. B
• ~"' CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5320 of
2007.
From the Judgment/final Order dated 15.9.2005 of the High Court
of Kamataka at Bangalore in R.S.A. No. 238/2000.
c
Nagendra Rai, Praveen Swarup, Anis Ahmed Khan, R.K. Singh,
Shoaib Ahmad and Rahmat Ullah Kotwal for the Appellant.
Basava l'rabhu S. Patil, V.N. Raghupathy, B. Subrahmanya Prasad,
.
' Narayan P. Kengasur and Chander Shekhar Ashri for the Respondents . D
•
~ The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. Defendant in a suit for specific performance of contract is before
us aggrieved by and dissatisfied with a judgment and order dated E
15.09.2005 passed by the High Court ofKamataka in R.S. A. No. 238
of 2000 whereby and whereuqder the appeal preferred by Respondent
No. 1 herein arising out of a judgment and decree dated 25.01.2000
-' ' passed in R.A. No. 5 of 1992 was dismissed.
.... F
3. An agreement for sale was entered into by and between the
defendant - appellant and the plaintiff - Respondent No. 1 for sale of 4
acres, 4 guntas ofland in Survey No. 112/A, Chhidri village. A suit for
specific performance of contract was filed by the plaintiff - Respondent
No. 1 on the premise that the appellant did not perform his part of G
=.../
contract. The said suit was dismissed. It was, however, inter alia held
by the Trial Court that Respondent No. 1 was all along ready and willing
to perform its part of contract. An appeal preferred thereagainst by the
respondent No. 1 was dismissed.
H
392 SUPREME COURT REPORTS [2007] 12 S.C.R.

A 4. The First Appellate Court in arriving at its decision inter alia held:
(i) Respondent No. 1 without any reason withheld payment of
balance consideration of Rs. 13, 100/- and, thus, failed to
perform its part of contract.

B (ii) Respondent No. 1 was not always ready and willing to
perform its part of contract and somehow wanted to transfer
liability on the defendant as regards conversion fine and
measurement charges.
(lii) The findings of the Trial Court that the plaintiff - Respondent
c No. I was always ready and willing to perform its part of
contract was not correct.
(iv) The plaintiff - Respondent No. 1 did not approach the court
with clean hands and, thus, was not entitled to tlte discretionary
D relief of specific performance of contract.
5. On a second appeal having been preferred by Respondent No. ~
I before the High Court, the follov.ing substantial questions oflaw were
framed:
E "(i) Whether both the courts have erred in refusing the specific
performance although the respondents received full consideration
amount and a sum of Rs. 8,000/-towards development charges?
(ii) Whether the appellate court is justified in holding that the plaintiff
was not ever ready and willing to perform his part oftl1e contract?
.....
F
(iii) Whether the courts below have not committed any error in
directing to refund the earnest money?"

6. The High Court inter alia considering the stipulations made in
agreement for sale and other evidences brought on records, opined:
G
(i) It was for the defendant to bear the conversion expenses.
Admittedly when the amount of Rs. 94,000/- and odd was
paid to him, he was bound to perform his part of contract by
executing a deed of sale in favour of the plaintiff - Respondent
H No. I.
ABDUL RAHEEM v. KARNATAKA ELECTRICITY 393
BOARD [SINHA, J.]
.::,.._,;.-
(ii) The First Appellate Court failed to interpret the clauses of the A
agreement in their proper perspective.
(lii) It applied the provisions contained in Section 22 of the Specific
Relief Act directing refund of the earnest amount only in a
mechanical manner.
B
7. The plea of Respondent No. 1 that it was ready and willing to
forgo four guntas ofland was held by the High Court sufficient to meet
the demand of the defendant - appellant stating:
"15. For the foregoing reasons, it is to be held that both the Court
below have erred in interpreting Ex. P.1 in the proper perspective
c
and rejecting for specific performance. Hence, the substantial
question No. 1 rests in favour of the appellant and further the finding
of the lower appellate court for the plaintiff was not ready and
willing to perform his part of contract is with a basis and as such D
the same is to be reversed and as also the 2nd substantial question
of law to be held in favour of the appellant. In so far as the 3rd
substantial question of law is concerned in the event if the courts
below have considered the fact of hardship and in the event ifthe
courts below would have ordered for specific performance, then E
order for refund of money instead of ordering for specific
performance would be perverse. Accordingly, it is held necessarily
in favour of the appellant."

8. Mr. Nagendra Rai, learned senior counsel appearing on behalf
of the appellant submitted that the purported substantial questions of law F
formulated by the High Court do not meet the requirements of Section
I 00 of the Code of Civil Procedure (Code). It was further urged that
having regard to the factual findings arrived at by the First Appellate Court,
the High Court should not have interfered therewith in exercise ofits power
under Section 100 of the Code. G
9. Mr. Basava Prabhu S. Patil, lea..'11ed counsel appearing on behalf
of the respondents, on the other hand, drew our attention to the factual
matrix involved in the matter. It was contended that Respondent No. I
was put in possession pursuant to the agreement for sale. A question, H
394 SUPREME COURT REPORTS [2007] 12 S.C.R.

A however, arose as to who on conversion of the user of the land would
pay the conversion fine. It was submitted that Respondent No. 1 paid
the said amount also.
In the aforementioned situation, interpretation of Clause 3 of the
B agreement arose for consideration in the factual matrix obtaining in the
matter, viz., Respondent No. 1 not only paid a sum of Rs. 73,000/- out
of the total amount of consideration of Rs. 86, 100/- but also paid a sum '.
of Rs. 21,431.55 and Rs. 35.00 towards the conversion fine and
measurement fees respectively.
C 10. A substantial question of law ordinarily would arise from the
finding of facts arrived at by the Trial Court and the First Appellate Court.
The High Court's jurisdiction in terms of Section 100 of the Code is
undoubtedly limited.

D 11. The question as to whether the plaintiff was ready and willing to
perform its part of contract by itself may not give rise to a substantial
question of law. Substantial question of law should admittedly be
formulated relying on or on the basis of findings of fact arrived at by the
Trial Court and the First Appellate Court.
E 12. However, there cannot be any doubt whatsoever that
consideration of irrelevant fact and non-consideration of relevant fact
would give rise to a substantial question of law. Reversal of a finding of
fact arrived at by the First Appellate Court ignoring vital documents may
also lead to a substantial question oflaw.
F
In Vidhyadhar v. Manikrao and Anr., [1999] 3 SCC 573, this .-
Court held:
"23. The findings of fact concurrently recorded by the trial court
as also by the lower appellate court could not have been legally
G upset by the High Court in a second appeal under Section 100
CPC unless it was shown that the findings were perverse, being
based on no evidence or that on the evidence on record, no
reasonable person could have come to that conclusion."
H [See also Iswar Bhai C Patel alias Bachu Bhai Patel v. Harihar
ABDUL RAHEEM v. KARNATAKA ELECTRICITY 395
BOARD [SINHA, J.]
Behera and Anr., [1999] 3 SCC 457] A
13. Ordinarily, we would have allowed the appeal on the failure of
the High Court to formulate substantial questions oflaw within the meaning
of Section 100 of the Code, but, we feel that as the plaintiff - Respondent
No. 1 had already parted with a substantial portion of the consideration B
amount as also upon having paid a large sum towards conversion charges,
in the interest ofjustice another opportunity should be given to the High
Court to frame proper substantial questions of law arising in the matter.
14. We may, however, notice a few decisions in regard to the.
jurisdiction of the High Court under Section 100 of the Code. C
In Commissioner of Customs (Preventive) v. Vij'ay Dasharath
Patel, [2007] 4 SCC 118, this Court held:
"22.We are not oblivious of the fact that the High Court's
jurisdiction in this behalf is limited. What would be substantial D
question oflaw, however, would vary from case to case.
23. Moreover, although, a finding of fact can be interfered with
when it is perverse, but, it is also trite that where the courts below
have ignored the weight of preponderating circumstances and E
allowed the judgment to be influenced by inconsequential matters,
the High Court would be justified in considering the matter and in
coming to its own independent conclusion. (See Madan Lal v.
Gopi.)
24. The High Court shall also be entitled to opine that a substantial F
question of law arises for its consideration when material and
relevant facts have been ignored and legal principles have not been
applied in appreciating the evidence. Arriving at a decision, upon
taking into consideration irrelevant factors, would also give rise to
a substantial question oflaw. It may, however, be different that only G
on the same set of facts the higher court takes a different view.
[See Collector of Customs v. Swastic Woollens (P) Ltd. and
Metroark Ltd. v. CCE.]
25. Even in a case where evidence is misread, the High Court would H
396 SUPREME COURT REPORTS [2007] 12 S.C.R.

A have power to interfere. (See W.B. Electricity Regulatory
Commission v. CESC Ltd. and also Commr. of Customs v.
Bureau Veritas.)

26. In Dutta Cycle Stores v. Gita Devi Sultania this Court held:
B (SCC p. 587, para 4)
"4. Whether or not rent for the two months in question had
been duly paid by the defendants is a question of fact, and
with a finding of such fact, this Court does not ordinarily
interfere in proceedings under Article 136 of the Constitution,
c particularly when all the courts below reached the same
conclusion. But where the finding of fact is based on no
evidence or opposed to the totality of evidence and contrary
to the rational conclusion to which the state of evidence must
reasonably lead, then this Court will in the exercise of its
D discretion intervene to prevent miscarriage of justice.""
[See also P. Chandrasekharan and Ors. v. S. Kanakarajan and
Ors., [2007] 5 SCC 669].
15. We, therefore, set aside the impugned judgment and remit the
E matter back to the High Court for consideration of the matter afresh upon
formulation of a substantial question oflaw. The appeal is allowed. No
costs.
S.K.S. Appeal allowed.
. ... _-