2021 INSC 0257
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6124 OF 2011
NARAYAN SITARAMJI BADWAIK … APPELLANTS
(DEAD) THROUGH LRS.
V ERSUS
BISARAM AND OTHERS … RESPONDENTS
J U D G M E N T
N.V. R AMANA ,  J.   
1. When the matter came up last time, on 03.02.2021, this Court
passed the following order:
“In   spite   of   service,   no   one   has   appeared   on
behalf of the respondents.
Heard learned counsel for the appellants.
Taking into consideration the non­appearance of
the   counsel   for   the   respondents   and   to   know   the
exact   position   of   the   disputed   property   as   well   as
whether   any   compromise   has   taken  place  between
the   parties,   we  grant   two   weeks   to   the   counsel   for
the appellants to do the needful.
List the matter immediately after two weeks.”
2. Even today, when the matter was called out, nobody appeared
for the respondents in spite of service of notice. 
1 REPORTABLE

3. Heard the learned counsel appearing for the appellants.
4. In   response   to   our   earlier   query,   it   is   represented   by   the
learned   counsel   for   the   appellants   that   no   settlement   has   taken
place   between   the   parties,   and   according   to   her   the   parties   intend
to continue with the litigation. 
5. Taking   into   account   the   long   pendency   of   the   present   appeal
before   this   Court,   and   the   fact   that,   despite   service   of   notice,   the
respondents   have   not   entered   appearance   from   the   very   beginning
as   per   the   Office   Reports,   we   are   of   the   opinion   that   we   should
dispose   of   the   matter   with   the   assistance   of   the   counsel   for   the
appellants. 
6.   The facts of the case necessary for the disposal of the present
appeal   are   as   follows:   the   Narayan   Sitaramji   Badwaik   (since
deceased   and   now   represented   through   his   legal   representatives
and who shall hereinafter for the sake of convenience be referred to
as the appellant)   had filed a suit for possession of the property in
dispute,   on   the   basis   of   a   sale   deed   dated   26.09.1978,   for   Rs.
10,000   from   some   of   the   respondents.   On   the   other   hand,   the
respondents contend that no such sale took place, and in fact, the
document   executed   was   only   collateral   for   a   loan   extended   by   the
appellant   to   respondents.   The   appellant   sought   possession   of   the
property   on   05.09.1987,   and   subsequently   instituted   the   present
suit on 07.03.1989.  The Trial Court, after looking into the evidence
placed on record, dismissed the suit of the appellant  vide   judgment
dated   21.09.1995.   On   appeal,   the   District   Judge   reversed   the
findings   of   the   Trial   Court   and   decreed   the   suit   in   favour   of   the
2

appellant   vide   judgment   dated   05.08.1997.   Aggrieved   by   the
judgment of the First Appellate Court, some of the respondents filed
a   second   appeal   before   the   High   Court   wherein   the   High   Court
upheld   the   findings   of   the   Trial   Court   and   allowed   the   second
appeal   vide   the impugned judgment, thereby dismissing the suit of
the appellant.   
7. We   have   carefully   perused   the   impugned   judgment   by   the
High Court with the assistance of the counsel for the appellant. 
8. The   High   Court,   vide   the   impugned   judgment,  noted   that   the
First   Appellate   Court   had   considered   irrelevant   material   and   had
erred in appreciating  the legal issue involved. The High Court held
as follows:
“8.   I   may   mention   that   it   is   neither   party's   case
that   the   transaction   is   void   or   voidable.   It   is
defendants'   simple   case   that   although   they   had
executed   a   sale­deed,   it   was   nominal   and   was   not
to   be   acted   upon   as   sale­deed   was   executed   as   a
collateral   security.   One   does   not   understand   why
the   learned   joint   District   Judge   considered   the
question as to whether the transaction between the
plaintiff and the defendants is void or voidable. The
contract becomes void when it is opposed to public
policy   and   voidable   when   it   is   brought   about   by
fraud,   undue   influence,   coercion   or   fraud.   As
stated earlier, it is neither party's case that the
document   was   brought   about   by   fraud,   undue
influence, coercion or misrepresentation. There
was,   therefore,   no   question   of   considering   this
aspect  at all.  It  seems  that the  learned  District
Judge   instead   of   considering   the   provisions   of
Section   91   and   92   of   the   Evidence   Act,
considered a totally irrelevant aspect … ”
3

( emphasis supplied )
9. However,   after   highlighting   the   legal   infirmities   of   the
judgment   of   the   First   Appellate   Court,   and   answering   the
substantial question  of law framed in favour  of the respondents, it
appears   that   the   High   Court   did   not   note   that   the   First   Appellate
Court,   due   to   its   erroneous   approach,   had   failed   to   consider   the
evidence in the correct light. In such a circumstance, it would have
been   appropriate   for   the   High   Court   to   remand   the   matter   to   the
First Appellate Court to determine the factual issues in light of the
legal   point   as   decided   by   it,   or   should   have   itself   taken   a   decision
on the facts under Section 103 of the Civil Procedure Code.     
10. It   is   a   settled   position   of   law   that   a   second   appeal,   under
Section   100   of   the   Code   of   Civil   Procedure,   lies   only   on   a
substantial question of law [refer  Santosh Hazari v. Purushottam
Tiwari (deceased) by LRs , (2001) 3 SCC 179 ]. However, this does
not mean that the High Court cannot, in any circumstance, decide
findings   of   fact   or   interfere   with   those   arrived   at   by   the   Courts
below   in   a  second   appeal.   In  fact,  Section   103  of   the   Code   of  Civil
Procedure   explicitly   provides   for   circumstances   under   which   the
High Court may do so. Section 103 of the Code of Civil Procedure is
as follows:
Section 103.        Power of High Court to Determine
Issue of Fact
In   any   second   appeal,   the   High   Court   may,   if   the
evidence on the record is sufficient, determine any
issue necessary for the disposal of the appeal,­
4

(a)   which   has   not   been   determined   by   the   lower
Appellate   Court   or   both   by   the   Court   of   first
instance and the lower Appellate Court, or
(b)   which   has   been   wrongly   determined   by   such
Court   or   Courts   by   reason   of   a   decision   on   such
question of law as is referred to in section 100.
11. A bare perusal of this section clearly indicates that it provides
for   the   High   Court   to   decide   an   issue   of   fact,   provided   there   is
sufficient evidence on record before it, in two  circumstances.   First ,
when an issue necessary for the disposal of the appeal has not been
determined   by   the   lower   Appellate   Court   or   by   both   the   Courts
below.   And   second ,   when   an   issue   of   fact   has   been   wrongly
determined   by   the   Court(s)   below   by   virtue   of   the   decision   on   the
question   of   law   under   Section   100   of   the   Code   of   Civil   Procedure.
This   Court,   in   the   case   of   Municipal   Committee,   Hoshiarpur   v.
Punjab   State   Electricity   Board ,   (2010)   13   SCC   216 ,   held   as
follows:
“ 26.   Thus, it is evident that Section 103 CPC is not
an exception to Section 100 CPC nor is it meant to
supplant it, rather it is to serve the same purpose.
Even   while   pressing   Section   103   CPC   in   service,
the   High  Court   has  to   record   a  finding   that   it  had
to   exercise   such   power,   because   it   found   that
finding(s)   of   fact   recorded   by   the   court(s)   below
stood vitiated because of perversity. More so, such
power   can   be   exercised   only   in   exceptional
circumstances and with circumspection, where the
core   question   involved   in   the   case   has   not   been
decided by the court(s) below.
27 .       There   is   no   prohibition   on   entertaining   a
second   appeal   even   on   a   question   of   fact
provided the court is satisfied that the findings
5

of   fact   recorded   by   the   courts   below   stood
vitiated   by   non­consideration   of   relevant
evidence   or   by   showing   an   erroneous   approach
to   the   matter   i.e.   that   the   findings   of   fact   are
found   to   be   perverse.   But   the   High   Court   cannot
interfere   with   the   concurrent   findings   of   fact   in   a
routine   and   casual   manner   by   substituting   its
subjective satisfaction in  place of that  of the lower
courts.   (Vide   Jagdish   Singh   v.   Natthu   Singh   [(1992)
1 SCC 647];   Karnataka Board of Wakf   v.   Anjuman­
E­Ismail   Madris­Un­Niswan   [(1999)   6   SCC   343]
and   Dinesh   Kumar   v.   Yusuf   Ali   [(2010)   12   SCC
740].)
28.   If   a   finding   of   fact   is   arrived   at   by   ignoring
or excluding relevant material or by taking into
consideration   irrelevant   material   or   if   the
finding  so outrageously  defies  logic   as to  suffer
from   the   vice   of   irrationality   incurring   the
blame   of   being   perverse,   then   the   finding   is
rendered   infirm   in   the   eye   of   the   law .   If   the
findings   of   the   Court   are   based   on   no   evidence   or
evidence which is thoroughly unreliable or evidence
that suffers from the vice of procedural irregularity
or the findings are such that no reasonable person
would   have   arrived   at   those   findings,   then   the
findings may  be said to be perverse. Further  if the
findings are either  ipse dixit  of the Court or  based
on   conjecture   and   surmises,   the   judgment   suffers
from   the   additional   infirmity   of   non­application   of
mind   and   thus,   stands   vitiated.   (Vide   Bharatha
Matha   v.   R.   Vijaya   Renganathan   [(2010)   11   SCC
483]”
( emphasis supplied )
12. With   respect   to   the   present   case,   it   is   clear   from   the
observations   passed   by   the   High   Court   in   the   impugned   judgment
that the First Appellate Court approached the matter incorrectly. As
6

such, the High Court ought to have either remanded the matter, or
exercised its powers under Section 103, Code of Civil Procedure and
decided the issues of fact. Instead, after negativing the observations
and   holding   of   the   First   Appellate   Court,   the   High   Court
mechanically upheld the decision rendered by the Trial Court in the
following terms:
“11. This decision makes it clear that a party has a
right to show that the document was not intended
to be acted upon and what is written in it is of no
consequence.   The   Learned   judge   of   the   trial   court
has   rightly   held   that   the   defendants   had   actually
shown   that   the   sale­deeds   were   nominal   and   they
were   not   to   be   acted   upon   and   therefore,   the
plaintiff   was   not   entitled   to   possession.   The
Learned District Judge fell in error in setting aside
the   finding   of   the   trial   court   that   the   sale­deed   in
favour of the plaintiff was a nominal on the ground
that the defendant ought to have got the sale­deeds
set   aside.   The   Learned   Civil   Judge   has   rightly
considered the evidence and has held the sale­deed
to be nominal and having been executed by way of
collateral   security.   The   finding   of   the   Learned
District   Judge   that   the   suit   was   not   maintainable
unless   sale­deed   was   got   set   aside   by   defendants,
therefore, was not proper. The substantial question
of   law   is   answered   accordingly.   The   appeal   is,
therefore, allowed and judgment and decree passed
by the first appellate court is set aside and that of
the trial court restored.”     
13. A   perusal   of   the   above   clearly   indicates   that   the   High   Court
decided   the   appeal   without   any   assessment   of   the   evidence   on
record, in a single paragraph. In the circumstances highlighted, we
are of the opinion that this was not appropriate.  
7

14. In   view   of   the   above,   we   are   of   the   considered   view   that   the
impugned order of the High Court is liable to be set aside, and the
matter be remanded. 
15. We,   accordingly   set   aside   the   order   of   the   High   Court   and
remand  the  matter   to  the said Court  for  fresh  consideration  of  the
appeal, on facts and law, if necessary. We also leave it open to the
High   Court   to   modify   the   question   of   law   framed,   or   frame
additional   questions   of   law   after   giving   an   opportunity   to   the
parties. It is clarified that we have not made any observations as to
the   merits   of   the   case,   or   the   correctness   of   holding   of   the   High
Court on the legal issue. 
16. Taking   into   consideration   the   long   pendency   of   the   litigation,
we request the High Court to dispose of the matter within a period
of six months from the date of communication of this order.
17. The Appeal is disposed of in the afore­stated terms.
…………………………………………J
(N.V. RAMANA)
…………………………………………J
(SURYA KANT)
…………………………………………J
(ANIRUDDHA BOSE)
NEW DELHI;
FEBRUARY 17, 2021.
8