Demystifying The ‘Substantial Question Of Law’ In Civil Second Appeals
By Shalini Prem
The Code of Civil Procedure, 1908 (hereinafter ‘CPC’) confers upon the High Courts the jurisdiction to hear appeals from appellate decrees, i.e., second appeals. The right to second appeal is not a vested right but a statutory one; it is conferred by the statute and can only be availed if the conditions laid down in the statute are satisfied.
Considering the recommendations laid down by the Law Commission of India, Section 100 of the CPC was amended in 1976 to restrict the scope of second appellate jurisdiction for reducing judicial delays due to the increased burden on High Courts. The procedure relating to second appeals can be inferred from the amended Section 100 read with Order 42 of the CPC.
As per these provisions, the High Court is permitted to allow an appeal from an appellate decree only if it is satisfied that the case involves a ‘substantial question of law’; but not on any other ground. It further requires the appellant to precisely state the substantial question of law involved, in the memorandum of appeal. If the High Court is satisfied that there does exist a substantial question of law in the case, it shall formulate the same and hear the appeal on the question so formulated by it.
At the time of such hearing, the respondent shall have the right to present his arguments regarding the absence of such substantial question of law in the case, since he usually does not have the right of an audience during the admission of an appeal.
Finally, the Proviso to Section 100(5) empowers the High Court to hear the appeal on “any other substantial question of law” that was not formulated by it at the time of admission as long as it is satisfied that such a question is involved in the case and records reasons for the same. This power was conferred upon the High Courts to protect the litigant from injustice due to the mistaken or inadvertent non-formulation of such questions by the Courts while admitting the appeal.
At this juncture, it is important to highlight the significance of understanding the meaning of the phrase, ‘substantial question of law’ due to its role in determining the High Court’s second appellate jurisdiction in civil disputes.
However, since the expression is not clearly defined in the CPC, this paper navigates through judicial pronouncements to identify the meaning, scope and importance of the phrase ‘substantial question of law’, in the context of the second appeal. Further, an attempt is made to determine if the responsibility to ensure the existence of such a question is on the High Courts or the Appellants.
Navigating Through Judicial Pronouncements
Though not defined, the expression ‘substantial question of law’ has through a series of judicial pronouncements acquired a certain definite connotation. Reference to this phrase can be found in various other provisions of law including Article 133 of the Constitution of India, 1950.
It was in the context of Article 133, that this phraseology was contemplated by a Constitutional Bench in Chunilal V. Mehta and Sons Ltd. v. Century Spg. & Mfg. Co. Ltd (hereinafter ‘Chunilal’), which laid down the following test to determine the existence of a substantial question of law in a given case:
The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views.
Further, High Courts have the duty to ensure that the case does not involve a mere question of law but a substantial question of law. Hence, they have to satisfy this test to acquire jurisdiction under Section 100 of the CPC to entertain second appeals.
The Supreme Court in Hero Vinoth v. Seshammal, while discussing Section 100 of the CPC, reaffirmed the test laid down in Chunilal and defined the word ‘substantial’ as “having substance, essential, real, of sound worth, important or considerable.” The phrase ‘question of law’ is qualified by the word ‘substantial’, indicating that merely the existence of a question of law would not satisfy the requirements of Section 100. Rather, the question of law has to be a substantial one that involves a fairly debatable legal issue that is not previously settled by any specific legal provisions or legal principles emerging from binding precedents and must also materially affect the rights of the parties in the case.
Differentiating between the question of law and the substantial question of law, it was observed in SBI v S.N. Goyal (hereinafter ‘S.N. Goyal’) that the former “arises incidentally or collaterally, having no bearing in the final outcome” while the latter will influence the final outcome of the case.
Further, it is not sufficient if there is merely a ‘substantial’ question of law, but Section 100 necessitates this question to be one that arises between the parties in the case involved. In Nazir Mohamed v. J. Kamala, it was observed that:
To be a question of law “involved in the case”, there must be first, a foundation for it laid in the pleadings, and the question should emerge from the sustainable findings of fact, arrived at by Courts of facts, and it must be necessary to decide that question of law for a just and proper decision of the case.
Further, it has been settled by a number of Supreme Court judgements that the existence of a substantial question of law is sine qua non for the High Court to entertain a second appeal under Section 100 of the CPC. In Umer Khan v. Bismillabi, Justice RM Lodha opined, “The judgment of the High Court is rendered patently illegal, if a second appeal is heard and the judgment and decree appealed against is reversed without formulating a substantial question of law.” Hence, the existence of a substantial question of law is a jurisdictional pre-condition for allowing a second appeal and Section 100 casts an obligation upon the High Court to satisfy itself as to the existence of a substantial question of law before entertaining the second appeal.
As stated earlier, the Proviso to Section 100(5) permits the High Court to formulate ‘any other substantial question of law’ at the time of hearing the second appeal, by recording reasons for the same. However, the phrase “on any other substantial question of law” clearly indicates that, in order to exercise the exceptional power conferred by this proviso, there should already exist a substantial question of law that was formulated at the time of admission of the second appeal; and the High Court if satisfied, can reformulate the substantial question or formulate a fresh substantial question of law or hold that there was no such question, to begin with. Nevertheless, in case no such question was initially formulated at the time of admission, the second appeal shall not be allowed and the proviso is inapplicable.
Ambiguities Surrounding Substantial Questions of Law
Despite the scope of a High Court’s second appellate jurisdiction being restricted by the 1976 amendment, it has been observed by the Supreme Court that High Courts tend to liberally construe and apply Section 100, frustrating the object behind such restriction.
High Courts often overlook the procedural aspects laid down in the Code and admit second appeals in the following circumstances: (a) no substantial question of law involved in the case; (b) non-formulation of a substantial question of law; © formulation of a standard or mechanical question as a substantial question of law; (d) failure to formulate relevant substantial question of law involved; (e) reformulation of a substantial question of law at the time of dictating the judgement, consequently denying opportunity to the parties to present their arguments; and/or (f) non-distinction between a question of law from a substantial question of law.
Thus, assuming and exercising jurisdiction not in possession with the High Courts, creates a confusion in the minds of the litigants as to what the jurisdictional extent of second appeals are. Resultantly, it has been observed that the parties to the suit, “mention anything and everything as a substantial question of law [in the memorandum of appeal] to get their matter admitted in the High Court for the second appeal”, consequently burdening the courts with several frivolous cases.
Hearing a second appeal without formulation of a substantial question of law involved is improper and the judgement rendered will be set aside for being patently illegal. There have also been instances where High Court orders have been set aside due to the dismissal of a second appeal by the High Courts on the ground that there was no substantial question of law when there was, in fact, an apparent substantial question of law involved in the case.
Illustrations Of Substantial Question of Law
To overcome this apparent confusion, the following is a non-exhaustive summary illustrating issues that qualify as a substantial question of law involved in the case and those that do not.
To begin with, the Supreme Court in S.N. Goyal judgement observed that there exists no substantial question of law when there is a pre-existing “clear and settled enunciation on a question of law”, by either the Supreme Court or the concerned High Court, notwithstanding the fact that it might be one of general importance. However, it further reiterated that a substantial question of law would arise if any subordinate court “ignored, misinterpreted or misapplied” such a clearly enunciated law and a correct application of the settled law would have led to a different outcome.
Additionally, the Court observed that a substantial question of law would arise, despite the correct application of settled legal principle by the subordinate court, “if the appellant is able to persuade the High Court that the enunciated legal position needs reconsideration, alteration, modification or clarification or that there is a need to resolve an apparent conflict between two viewpoints.”
If a core issue, i.e., an issue around which an entire case evolves, is not adjudicated upon, then such a question would be a substantial question of law. However, an entirely new point cannot be raised before the High Court for the first time, under the second appeal, unless it is a core issue.
Further, a substantial question of law arises when the subordinate court exercises jurisdiction not vested in it by law; or records a finding without any evidence on record; or disregards relevant or admissible evidence; or considers irrelevant or inadmissible evidence; or misconstructs a document having a material bearing on the case; or places the onus of proof on the wrong party.
However, no substantial question of law arises on concurrent findings of facts recorded by the subordinate courts; or if the High Court is not satisfied with the reasoning given by the subordinate court in exercise of its judicial discretion.
These are mere illustrations, as a straitjacket application of this expression is not possible; for what is a substantial question of law would ultimately depend upon the facts and circumstances of a case.
Whose Responsibility Is It Anyway?
As discussed, the right to second appeal is a statutory right and the pre-conditions laid down in Section 100 have to be met in order to avail this right. Consequently, the appellant does not have the right to approach the High Court for a second appeal in the absence of a precisely stated substantial question of law in the memorandum of appeal.
However, it has also been observed that the appellants oftentimes present before the High Court mere questions of law and questions of facts as substantial questions of law. It has also been established that this confusion created in the minds of the litigants, as to what would qualify as a substantial question of law, is a consequence of the judicial oversight of the High Courts while admitting second appeals. The High Courts also have a duty to not admit second appeals if such a question is not stated in the memorandums of appeal.
For this, Section 100 further provides for an element of judicial satisfaction which necessitates the High Court to exercise its judicial mind by examining and analysing the memorandum of appeal; to check whether the question stated in it is prima facie a ‘substantial question of law’. The words “shall formulate that question” in Section 100(4) of the CPC make it evident that the responsibility is ultimately that of the High Court to ensure the existence of a substantial question of law before admitting the second appeal.
The Supreme Court has made it abundantly clear that the High Court acquires its jurisdiction to hear second appeals only upon formulation of a substantial question of law involved in the case. The High Court has this responsibility irrespective of the duty cast on the appellant. The role of the appellant is, therefore, limited to stating a substantial question of law in the memorandum of appeal.
If this additional burden to determine the existence of a substantial question of law is shifted to the appellants, then the element of judicial satisfaction would be eliminated; for the High Court will now only have to spell out the question mentioned in the memorandum of appeal, verbatim. Consequently, the process of ‘formulation’ of a substantial question of law becomes obsolete for there is no requirement to apply the judicial mind by the High Court to ensure whether the question stated in the memorandum is one that is ‘substantial’ as well as one that is ‘involved’ in the lis between the parties.
Thus, the Author concludes that the duty to distinguish between a question of law and a substantial question of law while admitting second appeals is with the High Court. Therefore, hearing such an appeal would be beyond the jurisdictional scope of the High Court as the limited jurisdiction conferred under Section 100 can only be acquired by High Courts upon formulation of a substantial question of law at the stage of admission. It is only after the formulation of the substantial question at the stage of admission by the High Court, that the parties are even required to make necessary arguments pertaining to that question, as is evident from Section 100(4). Hence, it is the duty of the High Courts to filter out and admit only those second appeals that involve a prima facie substantial question of law.