Holding

The High Court exceeded its jurisdiction under Section 100 CPC by interfering with findings of fact without formulating a substantial question of law; the appeal is set aside and remitted for de novo determination after framing such a question.

Summary

The Supreme Court examined a civil appeal challenging a High Court judgment that set aside the concurrent findings of fact of the trial court and the first appellate court without formulating any substantial question of law, as required by Section 100 of the Code of Civil Procedure (amended 1976). The Court reiterated that the 1976 amendment restricts the High Court's jurisdiction in a second appeal to matters involving a clearly framed substantial question of law, and that interference with factual findings is impermissible. Citing a long line of precedents, the Court held that the High Court had exceeded its jurisdiction. Consequently, the impugned judgment was set aside and the second appeal was remitted to the High Court to be heard de novo after framing the requisite substantial question of law. The parties were directed to appear before the High Court promptly and to bear their own costs.

Issues considered

Whether the High Court correctly exercised jurisdiction under Section 100 of the Code of Civil Procedure, 1908 (as amended in 1976) by setting aside concurrent findings of fact without formulating a substantial question of law.
Whether the Supreme Court should set aside the High Court's judgment and remit the second appeal for fresh hearing.

Legislation cited

Code of Civil Procedure, 1908s. 100

Subjects

Section 100 CPCsecond appealsubstantial question of lawappellate jurisdictioncivil procedure1976 amendmentconcurrent findings of factremandjudicial hierarchy

Judgment

[2009] 3 S.C.R. 574

A KOPPISETTY VENKAT RATNAM (D) THROUGH LRS.
'.
v.
PAMARTI VENKAYAMMA
(Civil Appeal No.1165 of 2009)
FEBRUARY 23, 2009
B
[DALVEER BHANDARI AND HARJIT SINGH BEDI, JJ.)

Code of Civil Procedure, 1908:

c S.100 after 1976 Amendment - Despite clear
enunciation of law by Supreme Court, concurrent findings of
fact are disturbed by High Courts without formulating
substantial question of law - Remitting such matters lead to
loss of several years in the process - For the litigants it is both
extremely expensive and time consuming leading to delay
0 *
in administration of justice in civil matters - In the facts of the
case, the second appeal is remitted to High Court which would
dispose it of as expeditiously as possible - 54th Report of Law
Commission of India.

E Bholaram v. Amirchand (1981) 2 SCC 414; Kshitish

-
Chandra Purkait v. Santosh Kumar Purkait (1997) 5 SCC
438; Dnyanoba Bhaurao Shemade v. Maroti Bhaurao Marnor
(1999) 2 SCC 471; Sheet Chand v. Prakash Chand (1998) 6
SCC 683; Kanai Lal Garari v. Murari Gangu/y (1999) 6 SCC
F 35; Panchugopa/ Barua v. Umesh Chandra Goswami (1997)
4 SCC 713; Santosh Hazari v. Purushottam Tiwari (2001) 3
SCC 179; K. Raj and Anr. v. Muthamma (2001) 6 SCC 279;
lshwar Dass Jain v. Sohan Lal (2000) 1 SCC 434; Roop
Singh v. Ram Singh (2000) 3 SCC 708; Kamti Devi (Smt.)
G and Anr. v. Poshi Ram (2001) 5 SCC 311; Thiagarajan v. Sri
Venugopalaswamy 8. Koil (2004) 5 SCC 762; Commissioner,
Hindu Religious & Charitable Endowments v. P.
Shanmugama (2005) 9 SCC 232; State of Kera/a v. Mohd.
Kunhi (2005) 10 SCC 139; Madhavan Nair v. Bhaskar Pillai
H 574
KOPPISETIY VENKAT RATNAM (D) THROUGH LRS. v. 575
PAMARTI VENKAYAMMA
-· . (2005) 10 SCC 553; Harjeet Singh v. Amrik Singh (2005) 12 A
SCC 270; H. P. Pyarejan v. Dasappa (2006) 2 SCC 496;
Chandrika Singh (Dead) by LRS & Another v. Sarjug Singh
& Another (2006) 12 SCC 49; Chacko & Another v .
• Mahadevan (2007) 7 SCC 363; Bokka Subba Rao v. Kukka/a
Balakrishna & Others (2008) 3 SCC 99; Nune Prasad & B
Others v. Nune Ramakrishna (2008) 8 SCC 258; Basayyal
.. Mathad v. Rudrayya S. Mathad & Others (2008) 3 SCC 120;
Dharam Singh v. Kamai/ Singh & Others, (2008) 9 SCC 759;
Narendra Gopa/ Vidyarthi v. Rajat Vidyarthi, 2008 (16)
SCALE 122 and U.R. Virupakshaiah v. Sarvamma &
Another, 2009 (1) SCALE 89, referred to.
c
CIVIL AP PELLATE JURISDICTION : Civil Appeal No.1165
of 2009.

• From the Judgment and Order dated 3.10.2007 of the High D
Court of Judicature, Andhra Pradesh at Hyderabad in S.A. No.
865 of 1997.

A.T.M. Rangaramanujam, Gouri Karuna Das, Anu Gupta
and Rani Jethmalani for the Petitioner.
E
T.N. Rao, M. Mahapatra and Manjeet Kirpal for the
..or Petitioner .

• The following Order of the Court was delivered:
F
ORDER

1. Leave granted.

2. This appeal is directed against the judgment dated
3.10.2007 passed by the High Court of Andhra Pradesh at G
:.t Hyderabad in Second Appeal No.865 of 1997.

3. Learned senior counsel appearing for the appellant
raised a preliminary objection that in the impugned judgment,
the High Court has set-aside the concurrent findings of facts
H
576 SUPREME COURT REPORTS (2009] 3 S.C.R.

A of two courts without formulating any substantial question of law
..
which is mandatory according to Section 100 of the Code of
Civil Procedure after 1976 Amendment.

4. There is considerable material which led to 1976
Amendment in the Code of Civil Procedure.
B
Legislative Background in the 54th Re~ort of the Law
Commission of India submitted in 1973:

5. The comprehensive 54th Report of the Law
c Commission of India submitted to the Government of India in
1973 gives historical background regarding ambit and scope
of Section 100 C.P.C. According to the said report, any rational
system of administration of civil law should recognize that
litigation in civil cases should have two hearings on facts - one
D by the trial court and one by the court of appeal. •
6. In the 54th Report of the Law Commission of India, it is
incorporated that it may be permissible to point out that a
search for absolute truth in the administration of justice,
however, laudable, must in the very nature of things be put under
E some reasonable restraint. In other words, a search for truth has
to be reconciled with the doctrine of finality. In judicial hierarchy
finality is absolutely important because that gives certainty to •
the law. Even in the interest of litigants themselves it may not
be unreasonable to draw a line in respect of the two different
•
F categories of litigation where procedure will say at a certain
stage that questions of fact have been decided by the lower
courts and the matter should be allowed to rest where it lies
-
without any further appeal. This may be somewhat harsh to an
individual litigant; but, in the larger interest of the administration
G of justice, this view seems to us to be juristically sound and
pragmatically wise. It is in the light of this basic approach that
we will now proceed to consider some of the cases which were
decided more than a century ago.
7. The question could perhaps be asked, why the litigant
H

-
KOPPISETIY VENKAT RATNAM (0) THROUGH LRS. v. 577
-.. PAMARTI VENKAYAMMA

who wishes to have justice from the highest Court of the State A
should be denied the opportunity to do so, at least where there
is a flaw in the conclusion on facts reached by the trial court or
by the court of first appeal. The answer is obvious that even
litigants have to be protected against too persistent a pursuit
of their goal of perfectly satisfactory justice. An unqualified right B
of first appeal may be necessary for the satisfaction of the
defeated litigant; but a wide right of second appeal is more in
the nature of a luxury.

8. The rational behind allowing a second appeal on a
question of law is, that there ought to be some tribunal having c
jurisdiction that will enable it to maintain, and, where necessary,
re-establish, uniformity throughout the State on important legal
issues, so that within the area of the State, the law, in so far as
• it is not enacted law, should be laid down, or capable of being
laid down, by one court whose rulings will be binding on all D
courts, tribunals and authorities within the area over which it has
jurisdiction. This is implicit in any legal system where the higher
courts have authority to make binding decisions on questions
of law.
E
9. It may be relevant to recall the statement of Douglas
Payne on "Appeals on Questions of Fact" reported in (1958)
Current Legal Problem 181. He observed that the real
justification for appeals on questions of this sort is not so much
that the law laid down by the appeal court is likely to be superior
~ F
to that laid down by a lower court as that there should be a final
rule laid down which binds all future courts and so facilitates
the prediction of the law. In such a case the individual litigants
are sacrificed, with some justification, on the altar of law-making
and must find such consolation as they can in the monument
of a leading case. G

Historical Perspective:

10. The predecessors of the High Courts in their civil
appellate jurisdiction were the Sadar Divani Adalats. The right H
578 SUPREME COURT REPORTS (2009] 3 S.C.R.

..
A of appeal to the Sadar Divani Adalat was very wide initially, but
came to be severely curtailed in the course of time. The
"Conwallis Scheme", for example, made provision for two
appeals in every category of cases, irrespective of its value.
By 1814, this was reduced to one appeal only. Only in cases
B of Rs.5,000 or over, there could be two appeals; one to the
Provincial Court of Appeal and second to the Sadar Divani
Adalat. As Lord Hastings observed, -
>

"The facility of appeal is founded on a most laudable
principle of securing, by double and treble checks, the
c proper decision of all suits, but the utopian idea, in its
attempt to prevent individual injury from a wrong decision,
has been productive of general injustice by withholding
redress, and general inconvenience, by perpetuating
litigation".
D •
Arrears:

11. The primary cause of the accumulation of arrears of
second appeal in the High Court is the laxity with which second
E appeals are admitted without serious scrutiny of the provisions
of Section 100 C.P.C. It is the bounden duty of the High Court
to entertain second appeal within the ambit and scope of
Section 100 C.P.C.

12. The question which is often asked is why should a
F litigant have the right of two appeals even on questions of law?
The answer to this query is that in every State there are number
of District Courts and courts in the District cannot be final
arbiters on questions of law. If the law is to be uniformly
interpreted and applied, questions of law must be decided by
G the highest Court in the State whose decisions are binding on
all subordinate courts. •
Rationale behind permitting second appeal on question
of law:

H 13. The rationale behind allowing a second appeal on a
KOPPISETTY VENKAT RA TNAM (D) THROUGH LRS. v. 579
PAMARTI VENKAYAMMA
.... question of law is, that there ought to be some tribunal having A
: a jurisdiction that will enable it to maintain, and, where
necessary, re-establish, uniformity throughout the State on
important legal issues, so that within the area of the State, the
law, in so far as it is not enacted law, should be laid down, or
capable of being laid down, by one court whose rulings will be B
binding on all courts, tribunals and authorities within the area
over which it has jurisdiction. This is implicit in any legal system
" where the higher courts have authority to make binding
decisions on question of law.

14. Now, after 1976 Amendment, the scope of Section 100 c
has been drastically curtailed and narrowed down. The High
Courts would have jurisdiction of interfering under Section 100
C.P.C. only in a case where substantial questions of law are
involved and those questions have been clearly formulated in
(
the memorandum of appeal. At the time of admission of the D
second appeal, it is the bounden duty and obligation of the
High Court to formulate substantial questions of law and then
only the High Court is permitted to proceed with the case to
decide those questions of law. The language used in the
amended section specifically incorporates the words as E
"substantial question of law" which is indicative of the legislative
intention. It must be clearly understood that the legislative
intention was very clear that legislature never wanted second
• appeal to become "third trial on facts" or "one more dice in the
gamble". The effect of the amendment mainly, according to the F
amended section, was:

(i) The High Court would be justified in admitting the
second appeal only when a substantial question of
law is involved;
,;
G
" (ii) The substantial question of law to precisely state
such question;

(iii) A duty has been cast on the High Court to formulate
substantial question of law before hearing the H
580 SUPREME COURT REPORTS (2009] 3 S.C.R.

A appeal; ~ -
(iv) Another part of the Section is that the appeal shall
be heard only on that question.

15. The fact that, in a series of cases, this court was
B compelled to interfere was because the true legislative
intendment and scope of Section 100 C.P.C. have neither been
appreciated nor applied. A class of judges while administering
law honestly believe that, if they are satisfied that, in any second
appeal brought before them evidence has been grossly
c misappreciated either by the lower appellate court or by both
the courts below, it is their duty to interfere, because they seem
to feel that a decree following upon a gross misappreciation
of evidence involves injustice and it is the duty of the High Court
to redress such injustice. We would like to reiterate that the
D justice has to be administered in accordance with law. >

16. When Section 100 C.P.C. is critically examined then,
according to the legislative mandate, the interference by the
High Court is permissible only in cases involving substantial
questions of law.
E
Some leading Cases decided after 1976 amendment

17. In Bholaram v. Amirchand (1981) 2 SCC 414 a three-
Judge Bench of this court reiterated the statement of law. The ;

F High Court, however, seems to have justified its interference
in second appeal mainly on the ground that the judgments of
the courts below were perverse and were given in utter
disregard of the important materials on the record particularly
misconstruction of the rent note. Even if we accept the main
reason given by the High Court the utmost that could be said
G
was that the findings of tact by the courts below were wrong or ~

grossly inexcusable but that by itself would not entitle the High
Court to interfere in the absence of a clear error of law.

18. In Kshitish Chandra Purkait v. Santosh Kumar
H Purkait ((1997) 5 SCC 438], a three judge Bench of this court
KOPPISETTY VENKAT RATNAM (0) THROUGH LRS. v. 581
PAMARTI VENKAYAMMA

held: (a) that the High Court should be satisfied that the case A
involved a substantial question of law and not mere question
of law; (b) reasons for permitting the plea to be raised should
also be recorded; (c) it has the duty to formulate the substantial
questions of law and to put the opposite party on notice and
give fair and proper opportunity to meet the point. The court also B
held that it is the duty cast upon the High Court to formulate
substantial question of law involved in the case even at the initial
stage.

19. This court had occasion to determine the same issue
in Dnyanoba Bhaurao Shemade v. Maroti Bhaurao Marnor C
(1999) 2 SCC 471. The court stated that the High Court can
exercise its jurisdiction under Section 100 C.P.C. only on the
basis of substantial questions of law which are to be framed
at the time of admission of the second appeal and the second
appeal has to be heard and decided only on the basis of the D
such duly framed substantial questions of law.

20. A mere look at the said provision shows that the High
Court can exercise its jurisdiction under Section 100 C.P.C.
only on the basis of substantial questions of law which are to .E-
be framed at the time of admission of the second appeal and~.:.&>~

- the second appeal has to be heard and decided only on the ~-k .-
basis of such duly framed substantial questions of law. The
impugned judgment shows that no such procedure was followed
by the learned Single Judge. It is held by a catena of judgments F
·

...... by this court, some of them being, Kshitish Chandra Purkait
v. Santosh Kumar Purkait (1997) 5 SCC 438 and Sheel
Chand v. Prakash Chand (1998) 6 SCC 683 that the judgment
rendered by the High Court under Section 100 C.P.C. without
following the aforesaid procedure cannot be sustained. On this G
. short ground alone, this appeal is required to be allowed .

21. In Kanai Lal Garari v. Murari Ganguly (1999) 6 SCC
35 the court has observed that it is mandatory to formulate the
substantial question of law while entertaining the appeal in
absence of which the judgment is to be set aside. In H
~ .. KOPPISETIY VENKAT RATNAM (0) THROUGH LRS. v. 583
PAMARTI VENKAYAMMA

100 C.P.C .. The court observed that an obligation is cast on A
the appellant to precisely state in the memorandum of appeal
the substantial question of law involved in the appeal and which
the appellant proposes to urge before the court. In the said
judgment, it was further mentioned that the High Court must be
satisfied that a substantial question of law is involved in the B
case and such question has then to be formulated by the High
Court. According to the court the word substantial, as qualifying
"question of law", means - of having substance, essential, real,
of sound worth, important or considerable. It is to be understood
as something in contradistinction with - technical, of no c
substance or consequence, or academic merely. However, it
is clear that the legislature has chosen not to qualify the scope
of "substantial question of law" by suffixing the words "of
general importance" as has been done in many other
provisions such as Section 109 of the Code of Article 133( 1) D
(a) of the Constitution.

24. In Kamti Devi (Smt.) and Anr. v. Poshi Ram (2001) 5
SCC 311 the court came to the conclusion that the finding thus
reached by the first appellate court cannot be interfered with in
~
a second appeal as no substantial question of law would have E
flowed out of such a finding.
~.

t 25. In Thiagarajan v. Sri Venugopa/aswamy B. Kail
[(2004) 5 SCC 762), this court has held that the High Court in
its jurisdiction under Section 100 C.P.C. was not justified in F
interfering with the findings of fact. The court observed that to
say the least the approach of the High Court was not proper. It
is the obligation of the courts of law to further the clear
intendment of the legislature and not frustrate it by excluding
... the same. This court in a catena of decisions held that where
G
"' findings of fact by the lower appellate Court are based on
evidence, the High Court in second appeal cannot substitute
its own findings on reappreciation of evidence merely on the
ground that another view was possible.

26. In the same case, this court observed that in a case H
584 SUPREME COURT REPORTS (2009) 3 S.C.R.
••
A where special leave petition was filed against a judgment of
the High Court interfering with findings of fact of the lower
appellate court. This court observed that to say the least the
approach of the High Court was not proper. It is the obligation
of the courts of law to further the clear intendment of the
B legislature and not frustrate it by excluding the same. This court
further observed that the High Court in second appeal cannot
substitute its own findings on reappreciation of evidence merely '
on the ground that another view was possible.

27. This court again reminded the High Courts in
c Commissioner, Hindu Religious & Charitable Endowments v. ,
P. Shanmugama [(2005) 9 SCC 232] that the High Court has
no jurisdiction in second appeal to interfere with the finding of
facts.

D 28. Again, this court in the case of State of Kera/av. Mohd.
Kunhi [(2005) 10 SCC 139] has reiterated the same principle
that the High Court is not justified in interfering with the
concurrent findings of fact. This court observed that, in doing
so, the High Court has gone beyond the scope of Section 100
E of the Code of Civil Procedure. "
29. Again, in the case of Madhavan Nair v. Bhaskar Pillai ,
[(2005) 10 SCC 553]. this court observed that the High Court
was not justified in interfering with the concurrent findings of
fact. This court observed that it is well settled that even if the
F
first appellate court commits an error in recording a finding of
fact, that itself will not be a ground for the High Court to upset
the same.

30. Again, in the case of Harjeet Singh v. Amrik Singh
G [(2005) 12 sec 270], this court with anguish has mentioned • ~

that the High Court has no jurisdiction to interfere with the
findings of fact arrived at by the first appellate court. In this case,
the findings of the trial court and the lower appellate court
regarding readiness and willingness to perform their part of
H contract was set aside by the High Court in its jurisdiction under
KOPPISETIY VEN KAT RATNAM (D) THROUGH LRS. v. 585
~· . PAMARTI VENKAYAMMA

Section 100 C.P.C. This court, while setting aside the judgment A
of the High Court, observed that the High Court was not
justified in interfering with the concurrent findings of fact arrived
at by the courts below.

31. In the case of H. P. Pyarejan v. Dasappa [(2006) 2
B
sec 496] delivered on 6.2.2006, this court found serious
infirmity in the judgment of the High Court. This court observed
that it suffers from the vice of exercise of jurisdiction which did
not vest in the High Court. Under Section 100 of the Code (as
amended in 1976) the jurisdiction of the court to interfere with
the judgments of the courts below is confined to hearing of c
substantial questions of law. Interference with the finding of fact
by the High Court is not warranted if it invokes reappreciation
of evidence. This court found that the impugned judgment of
the High Court was vulnerable and needed to be set aside.
D
32. In Chandrika Singh (Dead) by LRS & Another v.
Sarjug Singh & Another (2006) 12 SCC 49, this court again
reiterated legal position that the High Court under section 100
CPC has limited jurisdiction. To deal with cases having a
substantial question of law, this court observed as under: E

' "12 .... While exercising its jurisdiction under Section 100
of the Code of Civil Procedure, the High Court is required
to formulate a substantial question of law in relation to a
finding of fact. The High Court exercises a limited
jurisdiction in that behalf. Ordinarily unless there exists a F
sufficient and cogent reason, the findings of fact arrived
at by the courts below are binding on the High Court ... "

33. In Chacko & Another v. Mahadevan (2007) 7 SCC
.... ,, 363, while dealing with the jurisdiction of sections 96 and 100 G
CPC, this court laid down as under:

"6. It may be mentioned that in a first appeal filed under
Section 96 CPC, the appellate court can go into
questions of fact, whereas in a second appeal filed under
H
A
586 SUPREME COURT REPORTS (2009] 3 S.C.R.
' .
Section 100 CPC the High Court cannot interfere with the
findings of fact of the first appellate court, and it is confined
only to questions of law."

34. In Bokka Subba Rao v. Kukkala Balakrishna & Others
B (2008) 3 sec 99, this court has clearly laid down that without
formulating substantial questions of law under section 100 CPC,
the High Court cannot interfere with the findings of fact. The
court laid down as under:

"4 .... It is now well settled by a catena of decisions of this
c Court that the High Court in second appeal, before allowing
the same, ought to have formulated the substantial
questions of law and thereafter, to decide the same on
consideration of such substantial questions of law .... " ;..

D 35. In Nune Prasad & Others v. Nune Ramakrishna
(2008) 8 sec 258, this court laid down that the legislature has
conferred a limited jurisdiction under section 100 CPC on the
High Court to deal with the cases where substantial question
of law is involved.
E 36. In Basayyal Mathad v. Rudrayya S. Mathad & Others
(2008) 3 sec 120, this court has held that interference by the
High Court without framing substantial question of law is clearly
contrary to the mandate of section 100 CPC.

F 37. In Dharam Singh v. Kamai/ Singh & Others, (2008)
9 sec 759, this court again crystallized the legal position in
the following words:

"13. The plea about proviso to Sub-section (5) of Section
100 instead of supporting the stand of the respondent
G rather goes against them. The proviso is applicable only "
when any substantial question of law has already been
formulated and it empowers the High Court to hear, for
reasons to be recorded, the appeal on any other
substantial question of law. The expression "on any other
H
KOPPISETIY VENKAT RATNAM (D) THROUGH LRS. v. 587
PAMARTI VENKAYAMMA

.. t substantial question of law" clearly shows that there must A
be some substantial question of law already formulated
and then only another substantial question of law which was
not formulated earlier can be taken up by the High Court
for reasons to be recorded, if it is of the view that the case
involves such question." B
38. In Narendra Gopal Vidyarthi v. Rajat Vidyarthi, 2008
(16) SCALE 122, this court laid down that the High Court would
. be justified to interfere under section 100 CPC only if it involves
substantial question of law.
c
39. In a recent judgment U.R. Virupakshaiah v. Sarvamma
& Another, 2009 (1) SCALE 89, this court has once again
crystallized the legal position after 1976 Amendment of the
CPC. The court observed as under:
D
~
"The Code of Civil Procedure was amended in the year
1976 by reason of Code of Civil Procedure (Amendment)
Act, 1976.J'n terms of the said amendment, it is now
essential f r the High Court to formulate a substantial
1
question of 1aw. The judgments of the trial court and the
E
First Appellate Court can be interfered with only upon
formulation lot a substantial question of law... "

40. It is a mlatter of common experience in this court that
1
despite clear en unciation of law in a catena of cases of this
(
court, a large number of cases are brought to our notice where F
the High Court lunder section 100 CPC are disturbing the
concurrent findings of fact without formulating the substantial
question of law.: We have cited only some cases and these
cases can be ea~ily multiplied further to demonstrate that this
'
court is compelled to interfere in a large number of cases G
.. ~
decided by the High Courts under section 100 CPC. Eventually
this court has to 13et aside these judgments of the High Courts
and remit the casesI
to the respective High Courts for deciding
them de novo after formulating substantial question of law.
Unfortunately, sJveral years are lost in the process. Litigants H
!
588 SUPREME COURT REPORTS (2009] 3 S.C.R.

A find it both extremely expensive and time consuming. This is
one of the main reasons of delay in the administration of justice
in civil matters.

41. In this view of the matter, we are constrained to set-
B aside the impugned judgment of the High Court and remit the
second appeal to the High Court for deciding it de nova on
merits after framing the substantial question of law. In order to
further avoid delay, we direct the parties to appear before the
High Court on 16.3.2009. This case has been pending for quite
a long time, therefore, we request the High Court to dispose
C of the second appeal as expeditiously as possible.

42. The appeal is accordingly disposed of leaving the
parties to bear their own costs.

G.N. Appeal disposed of.

•