High Courts, in second appeal, may exercise limited factual review under section 103 CPC.
In the matter of K.N Nagarajappa & Ors Vs. H. Narasimha Reddy; Civil Appeal No. 5033-5034 of 2009 decided by the Hon’ble Supreme Court on 09.09.2021.
Facts of the Case-
The Respondent filed the first suit for declaration of title and recovery of possession in relation to the suit properties on the basis of a registered sale deed (Ex-1) which was executed on 28.05.1973 in respect of the suit lands between the purchaser/Respondent and the seller/Appellants. The Appellants on the other hand, filed the second suit contending that the alleged sale deed was a nominal one and was executed as a security for the loan advanced by the Respondent. The Appellant relied upon an alleged agreement to sell (Exb-3) wherein the Appellants were to pay Rs 9000/- to the Respondent within three years and after receiving the full payment, the Respondent were to reconvey the suit properties to them.
On the basis of the evidence produced by the parties, the trial court held that the Respondent was the absolute owner of the suit property. This decision was challenged in the 1st appellate court, which reversed the findings of the Trial Court and held that the sale deed in favour of the Respondent was a nominal one and was not meant to act upon. In the second appeal, the Karnataka High Court framed the question as to ‘whether the lower appellate court was justified in granting the decree in favour of the Respondent on the basis of Exb-3’.
On the genuineness of Exb-3, the High Court noted that the trial court’s findings were based on several factors i.e., the manner of writing in Exb-3 was very different from the registered sale deed, Exb.3 did not contain any particulars with respect to suit properties, Exb.3 did not contain any condition regarding payment of interest on the sale consideration amount which was allegedly a loan and the Appellant also did not produce any evidence to establish that principal amount and interest of loan was paid back. Based on the said facts, the High Court reversed the order of the 1st Appellate Court and the said decision is challenged by the Appellants via special Leave petition.
It is the contention of the Appellant that in a second appeal, the jurisdiction of the High court is limited to examining only substantial questions of law, however, the High Court proceeded to appreciate the evidence, and differ with the findings of the first appellate court, which is the final court of facts and has therefore, erred in interfering with the decree of the 1st Appellate Court.
Analysis and Conclusion of the Hon’ble Court-
The Hon’ble Apex Court observed that the jurisdiction which a High Court derives under Section 100 is based upon its framing of a substantial question of law. As a matter of law, it is axiomatic that the findings of the first appellate court are final. However, the rule that sans a substantial question of law, the High Court’s cannot interfere with findings of the lower Court or concurrent findings of fact, is subject to two important caveats. The first is that, if the findings of fact are palpably perverse or outrage the conscience of the court; in other words, it flies on the face of logic that given the facts on the record, interference would be justified. The other is where the findings of fact may call for examination and be upset, in the limited circumstances spelt out in Section 103 CPC.
The Court placed reliance on Sec 103 of CPC and the judgment of Municipal Committee, Hoshiarpur v. Punjab State Electricity Board; (2010) 13 SCC 216 wherein the Court had held that ‘there is no prohibition on entertaining a second appeal even on a question of fact provided the court is satisfied that the findings of fact recorded by the courts below stood vitiated by non-consideration of relevant evidence or by showing an erroneous approach to the matter.’
The Apex Court further observed that the High Court recorded sound and convincing reasons why the 1st Appellate Court’s judgment required interference. The 1st Appellate Court fell into error in overlooking important evidence and appreciating the record in its true perspective and reversed the decree of the trial court. Moreover, the High Court, in second appeal proceeded to examine the documents in light of the evidence led and corrected the findings as it were under Section 103. The Court further observed that ‘if the appellants’ arguments were to prevail, the findings of fact based upon an entirely erroneous appreciation of facts and by overlooking material evidence would necessarily have to remain and bind the parties, thereby causing injustice and for this reason also, the High Courts are empowered to exercise limited factual review under Section 103 CPC.’