Khoday Distilleries Ltd. Vs Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. (Supreme Court of India)
Hon’ble Supreme Court (SC) in the case of Khoday Distilleries Ltd. The SC has explained the judicial effect of the dismissal of a Special Leave Petition, filed under Article 136 of the Indian Constitution.
Facts of the case:
– Mahadeshwara Sahakara Sakkare Karkhane Ltd. (MSSKL) had recoverable dues of around INR 1,00,76,630/- crores, along with interest from Khoday Distilleries Ltd. (KDL). The brief chronology of the events is outlined as under:
The Hon’ble Supreme Court (SC) framed the question of law as under:
Whether review petition is maintainable before the High Court seeking review of a judgement against which the special leave petition has already been dismissed by the Supreme Court?
Key observations and the decision of the SC:
– The SC, after carefully considering the conflicting views which had been expressed by two-Judge Benches in various earlier judgments, referred the matter to a larger bench consisting of 3 judges.
– The 3 judge bench of the SC, while considering the substantial question of law, referred to it, deliberated on two previous three Judge Bench decisions.
- In the case of Abbai Maligai Partnership Firm v. K. Santhakumaran  7 SCC 386, it was held by the SC that, the review petition cannot be entertained by the HC once the judgment and decree passed by the HC is affirmed by the SC with the dismissal of the SLP. MSSKL took support of this decision.
- The second judgment was in the case of Kunhayammed v. State of Kerala 2000 taxmann.com 2237/113 Taxman 470 which laid down various ways in which SLPs can be disposed of. It also laid down the principles, in which cases a review by the HC would be permissible and where such a review should not be entertained. Further it also expounded on the doctrine of merger and res judicata, etc.
– The SC took note of both the above judgments and observed that the decision in Abbai Maligai (supra) was decided on its peculiar facts, with no discussion on any principle of law. It further observed that the decision in the case of Kunhayammed (supra) elaborately explained and is based on well accepted propositions of the applicable law.
– The SC held that the decision in the case of Kunhayammed (supra) lays down the correct law and there is no need to refer the cases to a larger Bench as requested by KDL.
– The SC affirmed the findings of the judgement of Kunhayammed (supra) and summarised as under:
- An order refusing special leave to appeal may be a non-speaking order or a speaking one. In both cases, the doctrine of merger is not attracted and does not stand substituted in place of the order under challenge. It only means that the Court is not inclined to exercise its discretion so as to allow the appeal being filed.
- If the order refusing the leave to appeal is a speaking order, and 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 SC in accordance with Article 141 of the Constitution of India.
- Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the SC, 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.
- However, it does not mean that the order of the court, tribunal or authority below has stood merged in the order of the SC, rejecting the SLP or that the order of the SC is the only order binding as res judicata in subsequent proceedings between the parties.
- If the leave to appeal is granted and the appellate jurisdiction of the SC is invoked, the consequent order passed on appeal would attract the doctrine of merger. Further, the order may be of reversal, modification or merely affirmation.
- The SC concluded that once an appeal is preferred or a petition seeking leave to appeal is converted into an appeal before the SC, then the jurisdiction of the High Court to entertain a review petition is lost as is provided by sub-rule (1) of Rule 1 of Order 47 of Civil Procedure Code.
The SC judgment reiterates its earlier decision in the case of Kunhayammed (supra) that an order dismissing a SLP by the SC, can be vide, a speaking order or a non-speaking order. In both such cases, the doctrine of merger does not apply, that is, the lower judicial authority’s order does not stand merged with the SC order. Consequently, if the SLP is dismissed by the SC in limine or by a speaking order, the parties have the right to approach the HC for a review of its order.
However, if the SLP is admitted, it would get converted into an appeal and the subsequent order passed by the SC, would merge with the order of the lower judicial authorities. Consequently, the HC would not have the power to review its earlier order.