[O.47 R.1 CPC] Judgement Failing To Consider Precedent Available At Time Of Pronouncement But Not Shown To Court Is Not Reviewable: Calcutta High Court

The Calcutta High Court has recently held that a judgment which fails to consider a precedent which was available at the time of pronouncing the judgment but was not shown to the Court, is not reviewable on the ground of being per incuriam.

A single bench of Justice Moushumi Bhattacharya held:

A judgment containing an erroneous point of law is not reviewable; it is an appealable judgment. A judgment pronounced on a question of law which is subsequently reversed or modified by a superior Court is also not a reviewable judgment. A judgment which fails to consider a decision which was available at the time of pronouncing the judgment, but was not shown to the Court, by the same logic, is not reviewable on the ground of being per incuriam. Such a judgment would be open to challenge before a superior Court. Explanation to Order XLVII Rule 1 preserves the finality of a decision even where the question of law is subsequently unsettled by a superior Court. 

Brief facts

The applicant in the present case sought review of a judgement arising out of an arbitration petition, and alternatively, a direction on the award-debtor to deposit a sum of Rs 1.84 crores for the stay of operation of the arbitral award.

The judgement was passed on an application under Section 36(3) of the Arbitration & Conciliation Act, disposing of the application by directing the award debtor to deposit an amount of approx Rs 1.31 crores and restraining the award-holder from taking any steps for execution of the award upon compliance.

Counsel for the review applicant submitted that the Court directed the award-debtor to only secure the principal and not interest component, overlooking the direction of the Supreme Court in the case of Hyder Consulting (UK) Limited vs. Governor, State of Orissa (2015).

Counsel for the respondent submitted that the review was not maintainable since there was no error apparent in the judgment. It was argued that the application was an appeal in disguise.

Court's findings

Court looked at Order XLVII Rule 1 of the CPC which allows the review of a judgement by an aggrieved person upon:

• The discovery of new and important matter; or
• Evidence which was not within the applicant's knowledge or could not be produced by him at the time when the decree was made despite exercise of due diligence; or
• On account of some mistake or error apparent on the face of the record; or
• For any other sufficient reason.

The Bench also considered the explanation to the aforesaid order, which stated:

“The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior court in any other case, shall not be a ground for the review of such judgment."

It was held that since the judgement of Hyder Consulting was passed in 2014, and the impugned order was passed in 2021, the explanation would not apply to the present case and admittedly, the counsel for the award-holder had failed to place the judgement in Hyder Consulting before the Court.

Thus, the application was found to be maintainable.

In dealing with the merits, it was found that the entire case of the review applicant was based on Hyder Consulting wherein the Supreme Court had held that there can be no segregation between awarded sum and interest component.

However, in disagreeing with the contention of the applicant, the Bench held that Section 36(2) of the Arbitration Act preserves the enforcement of an arbitral award subject to the Court granting stay on the operation of the arbitral award on a separate application made for that purpose. It held

Section 36(3) preserves the discretion of the Court considering an application for stay of the arbitral award in the matter of imposition of conditions for the grant of stay which is to be articulated by way of reasons recorded in the order.

It was further stated that under Section 36(2) and (3), the Court had complete discretion on the quantum which an award-debtor must put in for stay of award, and the question for consideration was whether in light of Hyder Consulting, the Court could be denuded of such discretion.

In dealing with the parameters for review under Order 47 Rule 1, the Court observed that while it provided a wide berth for those aggrieved, it would only apply to an error apparent on the face of record, and not an error which is required to be discovered after unravelling layers of the judgement.

It was held that Hyder Consulting was not applied by the Court, because it was not relief upon by the award-holder, and that the point of law in both the cases were different.

Hyder Consulting did not disturb the discretion conferred on the Court in sections 36(2) and (3) that is the Court deciding an application for stay of an arbitral award. Therefore, the failure to consider Hyder Consulting or following the dictum thereof would not amount to an error apparent on the face of the record. i.e. forming a ground for altering the judgment under review, it was held.

Court further perused the but for test laid down by the Supreme Court pertaining to Order 47 Rule 1 and held that according to such a test, the impugned order would have been unreviewable but for the Hyder Consulting judgement.

The above proposition, i.e. the “but for” reasoning is however riddled with chaotic consequences and contrary to the regimen of Review under Order XLVII Rule 1 of the CPC, the Court said.

It was accordingly held that the discussion on Order 47 Rule 1 in the present case would be academic since the judgement had been passed entirely on discretion conferred on the court to stay an award under Section 36(2) and (3) of the Arbitration Act and hence there was no error apparent on the face of the record.

Accordingly, the review petition was dismissed.

Citation: 2024 LiveLaw (Cal) 69

Case: Everest Infra Energy Limited. Vs. Transmission (India) Engineers & Anr

Case No: RVWO 20 of 2022

Click here to read order