Test For Determining Whether Question Of Law Raised Is Substantial Would Be To See Whether It Directly And Substantially Affects Rights Of Parties : Supreme Court

The Supreme Court, in a judgment delivered in an appeal against Appellate Tribunal for Electricity, explained the test for determining whether a case involves substantial question of law.

The bench of Justices S. Abdul Nazeer and Krishna Murari said that the appropriate test for determining whether the question of law raised in the case is substantial would be to see whether it directly and substantially affects the rights of the parties.

Section 125 of the Electircity Act, 2003, provides for an appeal to the Supreme Court against the decision or order of the APTEL. In this case, BSES Rajdhani Power Ltd. and BSES Yamuna Power Ltd. had filed appeal. According to the appellants, six issues decided by the APTEL give rise to substantial question of law. The respondent- raised a preliminary objection to this appeal contending that appeals do not involve any substantial question of law as required under Section 125 of the 2003 Act read with Section 100 of the CPC.

The bench noted that the existence of a 'substantial question of law' arising from the judgment of the APTEL is sine qua non for exercise of jurisdiction by this Court under Section 125 of the 2003 Act.

The court added that an appeal is judicial examination of a decision of a subordinate court by a higher court to rectify any possible error(s) in the order under appeal. The court then referred to observations made in Sir Chunilal V. Mehta & Sons Ltd. v. The Century Spg. & Mfg. Co. Ltd AIR 1962 SC 1314 regarding the test to determine whether a question is a substantial question of law or not. It noted:

"Thus, the word 'substantial' as qualifying 'question of law' means, of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic. For determining whether a case involves substantial question of law, the test is not merely the importance of the question, but its importance to the case itself necessitating the decision of the question. The appropriate test for determining whether the question of law raised in the case is substantial would be to see whether it directly and substantially affects the rights of the parties. If it is established that the decision is contrary to law or the decision has failed to determine some material issue of law or if there is substantial error or defect in the decision of the case on merits, the court can interfere with the conclusion of the lower court or tribunal. The stakes involved in the case are immaterial as long as the impact or effect of the question of law has a bearing on the lis between the parties. 

Thus, in a second appeal, the appellant is entitled to point out that the order impugned is bad in law because it is de hors the pleadings, or it was based on no evidence or it was based on misreading of material documentary evidence or it was recorded against the provision of law or the decision is one which no Judge acting judicially could reasonably have reached. Once the appellate court is satisfied, after hearing the appeal, that the appeal involves a substantial question of law, it has to formulate the question and direct issuance of notice to the respondent/

The bench thereafter observed that the appeals involve substantial questions of law and finally allowed the appeals.

Case details

BSES Rajdhani Power Ltd. vs Delhi Electricity Regulatory Commission | 2022 LiveLaw (SC) 857  | CA 4324 OF 2015 | 18 October 2022 | Justices S. Abdul Nazeer and Krishna Murari

Counsel: Sr. Adv Arvind P. Dattar and Sr. Adv Dhruv Mehta for appellants, Sr. Adv Nikhil Nayyar for respondent

Headnotes

Code of Civil Procedure, 1908 ; Section 100 - Electircity Act, 2003 ; Section 125 -For determining whether a case involves substantial question of law, the test is not merely the importance of the question, but its importance to the case itself necessitating the decision of the question. The appropriate test for determining whether the question of law raised in the case is substantial would be to see whether it directly and substantially affects the rights of the parties. If it is established that the decision is contrary to law or the decision has failed to determine some material issue of law or if there is substantial error or defect in the decision of the case on merits, the court can interfere with the conclusion of the lower court or tribunal. The stakes involved in the case are immaterial as long as the impact or effect of the question of law has a bearing on the lis between the parties - In a second appeal, the appellant is entitled to point out that the order impugned is bad in law because it is de hors the pleadings, or it was based on no evidence or it was based on misreading of material documentary evidence or it was recorded against the provision of law or the decision is one which no Judge acting judicially could reasonably have reached. Once the appellate court is satisfied, after hearing the appeal, that the appeal involves a substantial question of law, it has to formulate the question and direct issuance of notice to the respondent. (Para 30-31)

Electircity Act, 2003 ; Section 125 - The existence of a 'substantial question of law' arising from the judgment of the APTEL is sine qua non for exercise of jurisdiction by this Court under Section 125 of the 2003 Act. (Para 27)

Words and Phrases - Appeal - An appeal is judicial examination of a decision of a subordinate court by a higher court to rectify any possible error(s) in the order under appeal. The law provides the remedy of an appeal in recognition of the fact that those manning the judicial tiers too may commit errors. (Para 28)

Words and Phrases - Substantial Question Of Law - The word 'substantial' as qualifying 'question of law' means, of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic. (Para 30)

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