Supreme Court reaffirms that no review lies upon change in law by subsequent ruling of superior court or larger Bench

Recently, a three-judge Bench of the Supreme Court in Govt. of NCT Delhi (through Secretary, Land and Building Dept.) v. KL Rathi Steels Ltd., (“KL Rathi [3-Judge]”) held that a review petition would not be maintainable upon a change or reversal of a proposition of law by a superior court or by a larger Bench of the same court, overruling its earlier exposition of law whereon the judgment under review was based.

This decision was passed while the Court was hearing a reference arising out of a split verdict of a Division Bench (“KL Rathi [2-Judge]”), on the question of the maintainability of review petitions which urged for a review of judgments and orders that relied on Pune Municipal Corporation v. Harakchand Misirimal Solanki, (“Pune Municipal Corporation”) in light of Pune Municipal Corporation being held per incuriam in the case of Indore Development Authority v. Shailendra, (“Shailendra [3-Judge]”) and being subsequently overruled in Indore Development Authority v. Manoharlal, (“Manoharlal”).

While the primary issue before the Court in KL Rathi [3-Judge] was the maintainability of review petitions, the matter stemmed from a series of decisions interpreting Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”). Section 24(2) provided that in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 (“1894 Act”), where an award had been made more than five years prior to the commencement of the 2013 Act, but physical possession of the land had not been taken or compensation had not been paid, then the said proceedings shall be deemed to have lapsed.

The three-judge Bench in Pune Municipal Corporation held that the word “paid” in Section 24(2) meant actual payment to the landowners and not mere deposit in the government treasury. Immediately after the decision in PMC, several writ petitions were filed in different High Courts across the country seeking a declaration that acquisition proceedings initiated under the 1894 Act stood lapsed. Subsequently, civil appeals were instituted before the Supreme Court against the orders in the writ proceedings before the High Courts. The review petitions in question arose out of the orders passed dismissing such civil appeals.

Thereafter, a two-judge Bench of the Supreme Court in Indore Development Authority v. Shailendra, (“Shailendra [2-Judge]”) doubted the correctness of Pune Municipal Corporation and opined that the issue should be considered by a larger Bench. Consequently, in Shailendra [3-Judge], the majority held that Pune Municipal Corporation was per incuriam. The Court also stated that the decisions rendered on the basis of Pune Municipal Corporation were “open to be reviewed in appropriate cases on the basis of this decision."

Given the uncertainty rendered by two contradictory decisions by Benches of co-equal strength, a five-judge Constitution Bench was constituted. The five-Judge Bench in Indore Development Authority v. Manoharlal, (“Manoharlal”) overruled Pune Municipal Corporation and all other decisions which followed it, and partially overruled Shailendra [3-Judge] to the extent that it dealt with the interpretation of ‘or’ in the proviso to Section 24(2) of the 2013 Act, as it was not placed for its consideration.

Based on this changed position of law enunciated in Manoharlal, the ‘liberty’ granted by the Court in Shailendra [3-Judge], and the broad interpretation of the phrase “sufficient reason” in Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (“CPC”) developed in Board of Control for Cricket in India v. Netaji Cricket Club, (“Netaji Cricket Club”), the petitioners whose civil appeals had been dismissed by the Supreme Court filed review petitions before the Supreme Court.

This resulted in a split verdict in KL Rathi [2-Judge], where Justice MR Shah allowed the review petitions considering it to be in the larger public interest and wanting to give some meaning to the overruling of Pune Municipal Corporation and all decisions following it. Justice BV Nagarathna however dissented, holding that the review petitions could not be entertained in view of the specific bar against the maintainability of a review petition based on the subsequent overruling of a determinative judgment in the Explanation to Order XLVII Rule 1. Justice Nagarathna added that Pune Municipal Corporation and decisions relying on it had attained finality and were binding on the parties, and allowing review of these decisions would be contrary to the public policy underlying the Explanation to Order XLVII Rule 1 of CPC viz. it is in the interest of the State for there to be an end to litigation.

This split verdict led to the reference which was answered in KL Rathi [3-Judge]. The major issues for consideration of the Court that arose were (i) whether Shailendra [3-Judge] granted ‘liberty’ to parties to seek a review of Pune Municipal Corporation and decisions relying on it; (ii) whether such ‘liberty’ survived after Manoharlal; and (iii) whether the review petitions could be held to be maintainable in light of the Explanation in Order XLVII Rule 1. The Court unanimously answered all questions in the negative, upholding Justice Nagarathna’s view in KL Rathi [2-Judge].

Firstly, the Court narrowly interpreted the ‘liberty’ granted by Shailendra [3-Judge] as intending to say that only those review petitions pending on the date Shailendra [3-Judge] was decided, and which sought a review of decisions relying on PMC, could be entertained. It added that the ‘liberty’ did not constitute a carte blanche to the land acquiring authorities to apply for review of decisions already made by courts relying on Pune Municipal Corporation even though the remedy of appeal or review had not been pursued earlier. The Court found that if the words “open to be reviewed” used in Shailendra [3-Judge] were interpreted as connoting a ‘liberty’ granted to apply for review, any number of review petitions could be filed of decisions between parties which have attained finality causing utter chaos and confusion in the justice delivery system.

The Court further held that, assuming arguendo that ‘liberty’ was granted by Shailendra [3-Judge], it would not survive in view of Manoharlal. While Manoharlal did not expressly overrule Shailendra [3-Judge], the very basis for Shailendra [3-Judge] to declare Pune Municipal Corporation as per incuriam was removed. Therefore, the Court held that the consequential observation that is said to have granted ‘liberty’ to file the review petitions would not survive.

The Court then analysed several precedents regulating the exercise of review jurisdiction by the Supreme Court, specifically on whether a change in the proposition of law on which a decision is based can be a ground for review. It noted that the power to review under Section 114 read with Order XLVII of the CPC is available to be exercised on the limited grounds of (i) discovery of new and important matter or evidence; (ii) mistake or error apparent on the face of the record; or (iii) any other sufficient reason. For ground (iii), the Court relied on Chajju Ram v. Neki, (“Chhajju Ram”) where the Privy Council held that the words “any other sufficient reason” means “a reason sufficient on grounds at least analogous to those specified immediately previously." In doing so, the Court disagreed with other decisions like Netaji Cricket Club and Jagmohan Singh v. State of Punjab, which interpreted the phrase “any other sufficient reason” expansively and found that these decisions turned on the specific facts and circumstances of the cases and therefore, did not apply.  

Further, the Court noted that the insertion of the Explanation to Order XLVII by the Parliament after accepting the recommendations of the 54^th Law Commission Report, left little room for debate on whether Order XLVII authorizes review of a decree which was right when it was made on the ground of some subsequent event, like change in interpretation of the law. The Explanation to Order XLVII, Rule 1 of the CPC states that:

“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.”

The Court declined to permit what was prohibited by the statute and observed that the principle deducible from the precedents on the Explanation to Order XLVII, Rule 1 of the CPC is that it does not authorize a review of a decree, which was right at that time, on the happening of a subsequent event. Thus, the Court held that no review is available upon a change or reversal of a proposition of law by a superior court or by a larger Bench of the same Court overruling its earlier exposition of law on which the judgment/ order under review was based. The Court emphasised that even though Pune Municipal Corporation was overruled, the civil appeals/ special leave petitions decided while Pune Municipal Corporation was the law of the land, would not be a ground for review within the parameters of Order XLVII of the CPC.

Moreover, the Court noted that the Constitution Bench in AR Antulay v. RS Nayak, held that a court can always remedy its own order in exercise of its inherent jurisdiction in any proceeding pending before it without insisting on the formalities of a review application. However, when the statutory power of review is invoked, which also has provisions regulating the exercise of this review power, it would be inappropriate for the court to travel beyond the contours of the provision conferring the very power. Thus, this review power of the court must be separated from the court’s inherent power to recall any order. Relying on Padam Sen v. State of Uttar Pradesh, the Court held that the inherent powers of the court under Section 151 of the CPC cannot be invoked if there exists a remedy made available by the CPC itself.

Finally, despite dismissing the review petitions, given the impact of this decision on public interest at large as well as to secure uniformity and consistency in its decisions, the Court in the exercise of its inherent powers under Article 142 of the Constitution, issued guidelines, inter alia, extending the time limit for initiation of fresh acquisition proceedings in terms of the provisions contained in Section 24(2) of the 2013 Act.

The issue dealt with in this judgment concerns competing principles and interests of justice. On one hand, as indicated to some extent by Justice Shah, it would be unjust to deny relief to persons prejudiced by an erroneous interpretation of the law. Given that the judiciary has now corrected itself on the interpretation, it would only make sense to correct and review its orders relying on the overruled interpretation.

On the other, it is a fundamental principle of public policy that there must be an end to litigation. As Justice Nagarathna explained, allowing review petitions on grounds of a change in the interpretation of law would result in hundreds of review petitions flooding the Courts and overburdening the judiciary. This would open a Pandora’s Box, upset the binding nature of decisions between parties and be contrary to the doctrine of finality in litigation. Most common law countries like the UK, US, Canada, Australia and South Africa follow the same principle that overruling an earlier exposition of law would not be a ground for review. The decision in KL Rathi [3-Judge] has now further solidified the doctrine of finality in litigation, keeping India’s approach aligned with the rest of the common law countries.

About the authors: Lalan Gupta is a Partner, and Aboli Mandlik and Eeshan Sonak are Associates at Shardul Amarchand Mangaldas & Co.

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