Second Appeal- High Courts Can Exercise Limited Factual Review Under Section 103 CPC: Supreme Court

The Supreme Court observed that High Courts are empowered to exercise limited factual review under Section 103 of the Code of Civil Procedure.

The bench of Justices L. Nageswara Rao and S. Ravindra Bhat observed that the rule that sans a substantial question of law, the High Courts cannot interfere with findings of the lower Court or concurrent findings of fact, is subject to the following two important caveats.

First, 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.

Second, where the findings of fact may call for examination and be upset, in the limited circumstances spelt out in Section 103 CPC.

In this appeal, before the Apex Court against a High Court judgment allowing second appeal, the appellants contended that the High Court's jurisdiction is limited to examining only substantial questions of law. In this case, the court proceeded to appreciate the evidence, and differ with the findings of the first appellate court, which is the final court of facts, they contended.

Addressing this argument, the court observed thus in para 14 of the judgment:

Undoubtedly, 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 Courts 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.

Section 103 deals with the power of High Court to determine issues of fact. It provides that 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:

(a) which has not been determined by the lower Appellate Court or both by the Court of first instance and the lower Appellate Court

(b) which has been wrongly determined by such Court or Courts reason of a decision on such question of law as is referred to in section 100.

The court noted that in Municipal Committee, Hoshiarpur v. Punjab State Electricity Board (2010) 13 SCC 216, the following observations have been made:

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.

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.

The court also referred to observations made in recent judgment in Narayan Sitaramji Badwaik (Dead) Through Lrs. v Bisaram :

"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. 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. It is precisely for such reasons that the High Courts are empowered to exercise limited factual review under Section 103 CPC. However, that such power could be exercised cannot be doubted. The impugned judgment does not expressly refer to that provision. In the circumstances of the case, it is evident that the High Court exercised the power in the light of that provision.", the court said while dismissing the appeal.

Case: K.N. Nagarajappa Vs. H. Narasimha Reddy ; CA 5033-5034 OF 2009
Citation: LL 2021 SC 433
Coram: Justices L. Nageswara Rao and S. Ravindra Bhat

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