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Impact Of Rejection Of Special Leave Petition

Subject : Income Tax Law
Month-Year : Dec 2000
Author/s : Kishor Karia
Rajendra Chitale

Chartered Accountants
Topic : Impact Of Rejection Of Special Leave Petition
Article Details :

 
1.1   Introduction :
Under Articles 132 to 136 of the Constitution of India, the Appellate Jurisdiction is conferred on the Supreme Court. Article 136 of the Constitution confers a special discretionary jurisdiction on the Supreme Court. It is a residuary power in the sense that it confers an Appellate Jurisdiction on the Supreme Court subject to the Special Leave being granted in such matters as may not be covered by the other Articles. It is an overriding provision conferring a special jurisdiction providing for invoking of the Appellate Jurisdiction of the Supreme Court not fettered by the sweep of the preceding articles.
1.2  

The exercise of the jurisdiction under Article 136 consists of two steps viz, (I) granting special leave to appeal; and (ii) hearing the appeal.

1.3  

In many cases, at the first stage, Special Leave Petition (SLP) is dismissed by the Supreme Court. In such cases, the question of legal implications and the impact of an order rejecting such SLP to appeal under Article 136 has arisen in the past before the Supreme Court under different circumstances.

1.4  

Recently, in the case of Kunhayammed Vs State of Kerala, the Supreme Court has analysed in detail its power under Article 136 and has also explained the impact of the order passed rejecting the SLP to appeal under Article 136. Therefore, it is thought to consider this judgement in this column.

KUNHAYAMMED Vs STATE OF KERALA – 245 ITR 360 (SC)

2.1  

In the above case, the facts were : The Kerala Private Forests (Vesting & Assignment) Act, 1971 (hereinafter referred to as Private Forests Act) was enacted by the State of Kerala to provide for vesting in the Government of private forests in the State and other related matters. Under this Act, any dispute as to whether any land is a private forest or not or whether any private forest or portion thereof is vested in the Government or not was to be entrusted for decision to the Tribunal constituted under the said Act (popularly known as Forest Tribunal) and against the decision of such Tribunal, provision for appeal to the High Court was made. There was no statutory remedy of appeal, revision or review provided against the Order of the High Court.

  2.1.1.

Under the Private Forests Act, one large family raised a dispute before the Forest Tribunal with reference to vesting of land in the Government to the tune of 1020 acres. The Forest Tribunal, under its Order dated 11.8.1982 held that the land did not vest in the Government. The appeal was preferred by the State of Kerala before the High Court which was dismissed by an elaborate order dated 17.12.1982 (hereinafter referred to as the First Order of the High Court). Against such an order, the SLP to appeal was filed by the State which was also dismissed by the Supreme Court by an order dated 18.7.1983. The rejection order reads thus: “ Special Leave Petition is dismissed on merits “.

  2.1.2.

On 9.1.1984, the State of Kerala filed an application for review before the High Court for seeking review of the First Order of the High Court. Thereafter, a retrospective amendment in 1986 with effect from 19.11.1983 was also made in Private Forests Act providing for specific power to the Government to file appeal or an application before the High Court for review of it’s order. At the time of hearing of the review application, a preliminary objection was raised as to maintainability of the review petition which was heard and disposed of by the High Court by an order dated 14.12.1995 wherein the High Court overruled the preliminary objection as to maintainability of the review petition and directed that the review petition be posted for hearing on merits. Against such an order of the High Court, SLP was filed by the petitioners before the Supreme Court for leave to appeal, and such leave was granted by the Supreme Court on 16.9.1996. When the matter came-up for hearing before a Bench of two judges on 14.3.2000, it was directed that the matter should be referred to another Bench of three judges having regard to the importance of the question involved. Accordingly, the matter was heard by the larger Bench of three judges in the above case.

2.2  

On behalf of the Appellant, two contentions were raised: (I) that the First Order of the High Court is merged into the order of the Supreme Court dated 18.7.1983 and hence the First Order of the High Court ceased to exist in the eye of law and, therefore, an application seeking review of its First Order is clearly misconcieved (i.e. Doctrine of Merger applies); (ii) the order of the Supreme Court dated 18.7.1983 (rejecting SLP) amounts to affirmation of the First Order of the High Court and therefore, the High Court cannot entertain a prayer for review of it’s First Order much less disturb the order in exercise of review jurisdiction.

2.3  

The Court, then, proceeded to examine the first contention of applicability of doctrine of merger to the First Order of the High Court on account of dismissal of SLP to appeal referred to in para 2.2 above . The Court, then, stated that the doctrine of merger is neither a doctrine of constitutional law nor a doctrine statutorily recognised. It is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery system. The Court, on more than one occasions, had an opportunity of dealing with the doctrine of merger. The Court, then, analysed certain judgements of the Supreme Court considering the doctrine of merger and observed as under (page 368) :

“ The logic underlying the doctrine of merger is that there cannot be more than one decree or operative order governing the same subject matter at a given point of time. When a decree or order passed by an inferior court, Tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put into jeopardy. Once the superior court has disposed of the lis before it either way- whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, Tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, Tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid shall have to be kept in view. “

2.4  

The Court, then, proceeded to consider the second contention raised by the appellant (referred to in para 2.2. above) to the effect that on dismissal of SLP to appeal against the First Order of the High Court, such order of the High Court is to be treated as affirmed by the Supreme Court and hence, the same cannot be reviewed by the High Court. The Court, then, referred to its power under Article 136 referred to in para 1.1 above. The Court, then, stated that Article 136 opens with a non obstante clause and conveys a message that even in the field covered by the preceding articles, jurisdiction conferred by article 136 is available to be exercised in an appropriate case. It is an untrammelled reservoir of power incapable of being confined to definitional bounds; the discretion conferred on the Supreme Court being subject to only one limitation, that is, the wisdom and good sense or sense of justice of the judges. No right of appeal is conferred in this Article upon any party; only a discretion is vested in the Supreme Court to interfere by granting leave to an applicant to enter in its appellate jurisdiction not open otherwise and as of right. Accordingly, the exercise of jurisdiction under this Article consists of two stages: (i) granting special leave to appeal; and (ii) hearing the appeal. The Court, then, referred to the rules contained in the Order XVI of the Supreme Court Rules framed under Article 145 of the Constitution. The Court, then, noted that under rule 13, the respondent to whom a notice in SLP is issued or who had filed a caveat, shall be entitled to oppose the grant of leave or interim orders without filing any written objections. He shall also be at liberty to file his objections only by setting out the grounds in opposition to the questions of law or grounds set out in the SLP. On hearing, the Court may refuse the leave and dismiss the petition for seeking special leave to appeal either ex-parte or after issuing notice to the opposite party. If the Court grants the leave to appeal, then, such appeal will be dealt with in accordance with the prescribed procedure. Accordingly, SLP seeking leave to appeal and the appeal itself, though both are dealt with by Article 136 of the Constitution, are two clearly distinct stages. Having analysed and defined these two stages, the Court stated that the legal position which merges is as unde (pages 369/370):

“ 1. While hearing the petition for special leave to appeal, the court is called upon to see whether the petitioner should be granted such leave or not. While hearing such petition, the court is not exercising its appellate jurisdiction; it is merely exercising its discretionary jurisdiction to grant or not to grant leave to appeal. The petitioner is still outside the gate of entry though aspiring to enter the appellate arena of the Supreme Court. Whether he enters or not would depend on the fate of his petition for special leave;

2. If the petition seeking grant of leave to appeal is dismissed, it is an expression of opinion by the court that a case for invoking the appellate jurisdiction of the court was not made out;

3. If leave to appeal is granted the appellate jurisdiction of the court stands invoked; the gate for entry in the appellate arena is opened. The petitioner is in and the respondent may also be called upon to face him, though in an appropriate case in spite of having granted leave to appeal, the court may dismiss the appeal without noticing the respondent.

4. In spite of a petition for special leave to appeal having been filed, the judgement, decree or order against which leave to appeal has been sought for, continuous to be final, effective and binding as between the parties. Once leave to appeal has been granted, the finality of the judgement, decree or order appealed against is put in jeopardy though it continues to be binding and effective between the parties unless it is nullity or unless the court may pass a specific order staying or suspending the operation or execution of the judgement, decree or order under challenge “.

  2.4.1.

The Court, then, dealt with a number of judgements including its recent decision, by two judge Bench, in the case of V.M. Salgaocar & Bros. Pvt. Ltd. (243 ITR 383) wherein the Court has taken a view that while dismissing SLP to appeal, the Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. What the court means is that it does not consider it to be a fit case for exercising its jurisdiction under article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a non-speaking order. Here the doctrine of merger applies. In that case, the Supreme Court upholds the decision of the High Court or of the Tribunal. This doctrine of merger does not apply in the case of dismissal of a special leave petition under article 136. Having referred to this, the Court observed as under (page 373) :

“ …….We find ourselves in entire agreement with the law so stated. We are clear in our mind that an order dismissing a special leave petition, more so when it is by a non-speaking order, does not result in merger of the order impugned in to the order of the Supreme Court. “

  2.4.2.

The Court, then, noticed few decisions which apparently took a view to the contrary than the above referred view expressed by the Court. The Court referred to the judgement in the case of Sree Narayana Dharmasanghom Trust Vs Swami Prakasananda (6 SCC 78) in which it was held that revisional order of the High Court against which the SLP to appeal was dismissed in limine could not have been reviewed by the High Court subsequent to the dismissal of the SLP by the Supreme Court. The Court explained this decision as under (pages 373/374) :

“ …… This decision proceeds on the premises as stated in para. 6 of the order, that “ It is settled law that even the dismissal of special leave petition in limine operates as a final order between parties.” In our opinion, the order is final in the sense that once a special leave petition is dismissed, whether by a speaking or non speaking order or whether in limine or on contest, a second special leave petition would not lie. However, this statement cannot be stretched and applied to hold that such an order attracts the applicability of the doctrine of merger and excludes the jurisdiction of the court or authority passing the order to review the same. “

  2.4.3.

The Court, then, referred to judgement in the case of State of Maharashtra Vs Prabhakar Bhikaji Ingle (3 SCC 463) wherein a view is taken by two judge Bench of the Supreme Court that the dismissal of a SLP without a speaking order does not constitute rest judicata but the order dealt with in the SLP disposed of by a non-speaking order cannot be subject to review by the Truibunal. Referring to this judgement, the Court took the view as under (page 374) :

“……. In our opinion, the law has been too broadly stated through the said observation. The learned judges have been guided by the consideration of judicial discipline which, as we would shortly deal with, is a principle of great relevance and may be attracted in an appropriate case. But we find it difficult to subscribe to the view, as expressed in this decision, that dismissal of a S.L.P. without a speaking order amounts to confirmation by the Supreme Court of the order against which leave was sought for and the order had stood merged in the order of the Supreme Court.”

2.5  

The Court, then, proceeded further to explain the effect of dismissal of SLP to apeal , and for that purpose referred to two other judgements of the Supreme Court to support its view referred to hereinbefore. Having referred to such judgements, the Court stated that a careful reading of such decisions bring out the correct statement of law and fortifies us in taking the view as under (pages 375/376):

“ A petition for leave to appeal to this court may be dismissed by a non-speaking order or by a speaking order. Whatever be the phraseology employed in the order of dismissal, if it is a non-speaking order, i.e., it does not assign reasons for dismissing the special leave petition, it would neither attract the doctrine of merger so as to stand substituted in place of the order put in issue before it nor would it be a declaration of law by the Supreme Court under article 141 of the Constitution for there is no law which has been declared. If the order of dismissal be supported by reasons then also the doctrine of merger would not be attracted because the jurisdiction exercised was not an appellate jurisdiction but merely a discretionary jurisdiction refusing to grant leave to appeal. We have already dealt with this aspect earlier. Still the reasons stated by the court would attract applicability of article 141 of the Constitution if there is a law declared by the Supreme Court which obviously would be binding on all the Courts and tribunals in India and certainly the parties thereto. The statement contained in the order other than on points of law would be binding on the parties and the court or tribunal, whose order was under challenge on the principle of judicial discipline, this court being the apex court of the country. No court or tribunal or parties would have the liberty of taking or canvassing any view contrary to the one expressed by the court. The order of the Supreme Court would mean that it has declared the law and in that light the case was considered not fit for grant of leave. The declaration of law will be governed by article 141 but still, the case not being one where leave was granted, the doctrine of merger does not apply. The court sometimes leaves the question of law open. Or it sometimes briefly lays down the principle, may be, contrary to the one laid down by the High Court and yet would dismiss the special leave petition. The reasons given are intended for purposes of article 141. “

2.6  

The Court, then, again referred to the doctrine of merger on which reli ance was placed by the appellant as stated hereinbefore and finally observed as under (page 378):

“ The doctrine of merger and the right of review are concepts which are closely interlinked. If the judgement of the High Court has come up to this court by way of a special leave, and special leave is granted and the appeal is disposed of with or without reasons, by affirmance or otherwise, the judgement of the High Court merges with that of this court. In that event, it is not permissible to move the High Court by review because the judgement of the High Court has merged with the judgement of this court. But where the special leave petition is dismissed – there being no merger, the aggrieved party is not deprived of any statutory right of review, if it was available and he can pursue it. It may be that the review court may interfere, or it may not interfere depending upon the law and principles applicable to interferences in the review. But the High Court, if it exercises a power of review or deals with a review application on the merits – in a case where the High Court’s order had not merged with an order passed by this court after grant of special leave - the High Court could not, in law, be said to be wrong in exercising statutory jurisdiction or power vested in it.”

2.7  

The Court also referred to a situation with regard to the power of a High Court to review its order where the application for such a review is filed first and the SLP is filed subsequently and the special leave to appeal is ultimately granted and the appeal is pending before the Supreme Court. In such cases, according to the Court, it is still possible for the High Court to dispose of the review petition. In such a case, if the review of a decree is granted before the disposal of the appeal against the decree by the Supreme Court, the decree appealed agasinst will cease to exist and the appeal would be rendered incompetent. According to the Court , the appeal cannot be preferred against a decree after a review against the decree has been granted. This is because the decree reviewed gets merged in the decree passed on review and the appeal to the superior court preferred against the earlier decree - the one before review - becomes infructuous.

2.8  

Finally, the Court summed-up its conclusions as under (pages 382/383):

“(I) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before a superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.

(ii) The jurisdiction conferred by article 136 of the Constitution is divisible into two stages. The first stage is upto the disposal of the prayer for special leave to file an appeal The second stage commences if and when the leave to appeal is granted and the special leave petition is converted into an appeal.

(iii) The doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under article 136 of the constitution, the Supreme Court may reverse, modify or affirm the judgement decree or order appealed against while exercising it’s appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of a petition for special leave to appeal. The doctrine of merger can, therefore, be applied to the former and not to the latter.

(iv) An order refusing special leave to appeal may be a non-speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the court was not inclined to exercise its discretion so as to allow the appeal being filed.

(v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.

(vi) Once leave to appeal has been granted and the appellate jurisdiction of the Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.

(vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before the Supreme Court the jurisdiction of the High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of rule 1 of Order XLVII of the Code of Civil Procedure. ”

2.9  

Based on the above analysis, the Court also disposed of the case which was under appeal and held that the First Order of the High Court did no merge with the order of the Supreme Court dated 18.7.1983 (wherein the SLP to appeal was dismissed). Therefore, the High Court was justified in entertaining the review application of the State of Kerala. The Court also stated that, moreover, such a right of review is statutorily conferred on the High Court on account of the retrospective amendment made in Private Forests Act referred to in para 2.1.2 above. The Court also noted that the constitutionality of the said amendment has not been challenged.

CONCLUSION

3.1   The above judgement of the Supreme Court explains, in detail, its power under Article 136 of the Constitution and the legal implications and the impact of the orders passed by the Supreme Court while exercising its jurisdiction under that article.
3.2  

In number of tax matters, SLPs are rejected by the Supreme Court, with or without reasons. In such cases, to understand the legal implications and the impact of such orders, the above judgement would be of great use.

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