Liability of Director in Cheque Bounce Cases : Principles

Justice P. Sathasivam

Supreme Court of India

The Supreme Court in National Small Industries Corp. Ltd. v. Harmeet Singh Paintal, has examined the provisions of the Negotiable Instruments Act vis-a-vis the liability of a Director for the offences committed by a company for cheque bouncing. While examining the authorities on the topic, the Supreme Court has culled out broad principles for determining the liability of directors in such cases. The relevant extracts from the judgment are reproduced hereinbelow;

9) Section 138 of the Act refers about penalty in case of dishonour of cheque for insufficiency of funds in the account. We are more concerned about Section 141 dealing with offences by Companies which reads as under:- 

141. Offences by companies.--(1) If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. 

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.-- For the purposes of this section,-- 

(a) `company' means any body corporate and includes a firm or other association of individuals; and 

(b) `director', in relation to a firm, means a partner in the firm. 

It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in-charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a Company who was not in- charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in-charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. 

10) Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent No.1 was in-charge of or was responsible to the accused company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in-charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141. 

11) In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company. 

12) In the light of the above provision and the language used therein, let us, at the foremost, examine the complainta filed by National Small Industries Corporation Limited and the DCM Financial Services Ltd. In the case of National Small Industries Corpn. Ltd., the High Court has reproduced the entire complaint in the impugned order and among other clauses, clause 8 is relevant for our consideration which reads as under: 

8. That the accused No. 2 is the Managing Director and accused No. 3 is the Director of the accused company. The accused No. 2 and 3 are the in-charge and responsible for the conduct of the business of the company accused No. 1 and hence are liable for the offences. 

13) In the case of DCM Financial Services Ltd., in complaint- Annexure-P2 the relevant clause is 13 which reads as under: 

13. That the accused No. 1 is a Company/Firm and the accused Nos. 2 to 9 were in charge and were responsible to the accused No. 1 for the conduct of the business to the accused No. 1 at the time when offence was committed. Hence, the accused Nos. 2 to 9 in addition to the accused No. 1, are liable to be prosecuted and punished in accordance with law by this Hon'ble Court as provided by section 141 of the N.I. Act, 1881. Further the offence has been committed by the accused No. 1 with the consent and connivance of the accused Nos. 2 to 9. 

14) Now, let us consider whether the abovementioned complaint in both cases has satisfied the necessary ingredients to attract Section 141 insofar as the respondents, namely, Directors of the company are concerned. Section 141 of the Act has been interpreted by this Court in various decisions. As to the scope of Section 141 of the Act, a three-Judge Bench of this Court considered the following questions which had been referred to it by a two-Judge Bench of this Court in SMS Pharmaceuticals vs. Neeta Bhalla and Anr. (2005) 8 SCC 89: 

(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. 

(b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. 

(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against. 

While considering the above questions, this Court held as under: 

18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. 

19. In view of the above discussion, our answers to the questions posed in the reference are as under: 

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. 

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases. 

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141. 

Therefore, this Court has distinguished the case of persons who are in-charge of and responsible for the conduct of the business of the company at the time of the offence and the persons who are merely holding the post in a company and are not in-charge of and responsible for the conduct of the business of the company. Further, in order to fasten the vicarious liability in accordance with Section 141, the averment as to the role of the concerned Directors should be specific. The description should be clear and there should be some unambiguous allegations as to how the concerned Directors were alleged to be in- charge of and was responsible for the conduct and affairs of the company. 

15) In Sabitha Ramamurthy vs. R.B.S. Channabasavaradhya, (2006) 10 SCC 581, this Court while dealing with the same issue observed as under: ......It may be true that it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused are vicariously liable. Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance with the statutory requirements would be insisted. Not only the averments made in para 7 of the complaint petitions do not meet the said statutory requirements, the sworn statement of the witness made by the son of the respondent herein, does not contain any statement that the appellants were in charge of the business of the Company. In a case where the court is required to issue summons which would put the accused to some sort of harassment, the court should insist strict compliance with the statutory requirements. In terms of Section 200 of the Code of Criminal Procedure, the complainant is bound to make statements on oath as to how the offence has been committed and how the accused persons are responsible therefor. In the event, ultimately, the prosecution is found to be frivolous or otherwise mala fide, the court may direct registration of case against the complainant for mala fide prosecution of the accused. The accused would also be entitled to file a suit for damages. The relevant provisions of the Code of Criminal Procedure are required to be construed from the aforementioned point of view. 

16) In Saroj Kumar Poddar vs. State (NCT of Delhi) (2007) 3 SCC 693, while following SMS Pharmaceuticals case (supra) and Sabhita Ramamurthy case (supra), this Court held that with a view to make the Director of a company vicariously liable for the acts of the company, it was obligatory on the part of the complainant to make specific allegations as are required under the law and under Section 141 of the Act and further held that in the absence of such specific averments in the complaint showing as to how and in what manner the Director is liable, the complaint should not be entertained. The relevant portion of the judgment is reproduced hereinbelow:- 

12. A person would be vicariously liable for commission of an offence on the part of a company only in the event the conditions precedent laid down therefor in Section 141 of the Act stand satisfied. For the aforementioned purpose, a strict construction would be necessary. 

13. The purported averments which have been made in the complaint petitions so as to make the appellant vicariously liable for the offence committed by the Company read as under: That Accused 1 is a public limited company incorporated and registered under the Companies Act, 1956, and Accused 2 to 8 are/were its Directors at the relevant time and the said Company is managed by the Board of Directors and they are responsible for and in charge of the conduct and business of the Company, Accused 1. However, cheques referred to in the complaint have been signed by Accused 3 and 8 i.e. Shri K.K. Pilania and Shri N.K. Munjal for and on behalf of Accused 1 Company. 

14. Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in para 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act. 

17) In a subsequent decision in N.K. Wahi vs. Shekhar Singh & Ors., (2007) 9 SCC 481 while following the precedents of SMS Pharmaceuticals's case (supra), Sabhita Ramamurthy's case (supra) and Saroj Kumar Poddar's case (supra), this Court reiterated that for launching a prosecution against the alleged Directors, there must be a specific allegation in the complaint as to the part played by them in the transaction. The relevant portion of the judgment is as under: 

7. This provision clearly shows that so far as the companies are concerned if any offence is committed by it then every person who is a Director or employee of the company is not liable. Only such person would be held liable if at the time when offence is committed he was in charge and was responsible to the company for the conduct of the business of the company as well as the company. Merely being a Director of the company in the absence of above factors will not make him liable. 

8. To launch a prosecution, therefore, against the alleged Directors there must be a specific allegation in the complaint as to the part played by them in the transaction. There should be clear and unambiguous allegation as to how the Directors are in-charge and responsible for the conduct of the business of the company. The description should be clear. It is true that precise words from the provisions of the Act need not be reproduced and the court can always come to a conclusion in facts of each case. But still, in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable. 

18) The said issue again came up for consideration before a three-Judge Bench of this Court recently in Ramraj Singh vs. State of M.P. & Anr. (2009) 6 SCC 729. In this case, the earlier decisions were also considered in detail. Following the decisions of SMS Pharmaceuticals' case (supra), Sabhita Ramamurthy's case (supra), Saroj Kumar Poddar's case (supra) and N.K. Wahi's case (supra) this Court held that it is necessary to specifically aver in a complaint under Section 141 that at the time when the offence was committed, the person accused was in-charge of, and responsible for the conduct of the business of the company. Furthermore, it held that vicarious liability can be attributed only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused/Director therein vicariously liable for the offence committed by the company. It was further held that before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted. Thus, the issue in the present case is no more res integra and has been squarely covered by the decisions of this Court referred above. It is submitted that the aforesaid decisions of this Court have become binding precedents. 

19) In the case of second SMS Pharmaceuticals vs. Neeta Bhalla, (2007) 4 SCC 70, this Court has categorically held that there may be a large number of Directors but some of them may not assign themselves in the management of the day-to-day affairs of the company and thus are not responsible for the conduct of the business of the company. 

Para 20 of the said judgment is relevant which is reproduced hereunder:- 

20. The liability of a Director must be determined on the date on `which the offence is committed. Only because Respondent 1 herein was a party to a purported resolution dated 15-2-1995 by itself does not lead to an inference that she was actively associated with the management of the affairs of the Company. This Court in this case has categorically held that there may be a large number of Directors but some of them may not associate themselves in the management of the day-to-day affairs of the Company and, thus, are not responsible for the conduct of the business of the Company. The averments must state that the person who is vicariously liable for commission of the offence of the Company both was in charge of and was responsible for the conduct of the business of the Company. Requirements laid down therein must be read conjointly and not disjunctively. When a legal fiction is raised, the ingredients therefor must be satisfied. 

20) Relying on the judgment of this Court in Everest Advertising Pvt. Ltd. vs. State Govt. of NCT of Delhi & Ors., (2007) 5 SCC 54, learned counsel for the appellants argued that this Court has not allowed the recalling of summons in a criminal complaint filed under sections 138 and 141. However, a perusal of the judgment would reveal that this case was of recalling of summons by the Magistrate for which the Magistrate had no jurisdiction. Further, para 22 of the judgment would reveal that in the complaint allegations have not only been made in terms of the wordings of section but also at more than one place, it has categorically been averred that the payments were made after the meetings held by and between the representative of the Company and accused nos. 1 to 5 which would include Respondent Nos. 2 and 3. In para 23, this Court concluded that it is therefore, not a case where having regard to the position held by the said respondents in the Company, they could plead ignorance of the entire transaction. Furthermore, this Court has relied upon S.M.S. Pharamaceutical's case (three-Judge Bench) (supra), Saroj Kumar Poddar's case (supra) and N.K. Wahi's case (supra). 

21) Relying on the judgment of this Court in N. Rangachari vs. Bharat Sanchar Nigam Ltd., (2007) 5 SCC 108, learned counsel for the appellants further contended that a payee of cheque that is dishonoured can be expected to allege is that the persons named in the complaint are in-charge of its affairs and the Directors are prima facie in that position. However, it is pertinent to note that in this case it was specifically mentioned in the complaint that (i) accused no. 2 was a director and in charge of and responsible to the accused Company for the conduct of its business; and (ii) the response of accused no. 2 to the notice issued by BSNL that the said accused is no longer the Chairman or Director of the accused Company was false and by not keeping sufficient funds in their account and failing to pay the cheque amount on service of the notice, all the accused committed an offence. Therefore, this decision is clearly distinguishable on facts as in the said case necessary averments were made out in the complaint itself. Furthermore, this decision does not and could not have overruled the decisions in S.M.S. Pharmaceutical's case (three-Judge Bench)(supra), Ramraj Singh's case (three-Judge Bench)(supra), Saroj Kumar Poddar's case (supra) and N.K. Wahi's case (supra) wherein it is clearly held that specific averments have to be made against the accused Director. 

22) Learned counsel for the appellants after elaborately arguing the matter, by inviting our attention to Paresh P. Rajda vs. State of Maharashtra & Anr., (2008) 7 SCC 442 contended that a departure/digression has been made by the Court in the case of N. Rangachari vs. BSNL (supra). However, in this case also the Court has observed in para 4 that the High Court had noted that an overall reading of the complaint showed that specific allegations had been leveled against the accused as being a responsible officer of the accused Company and therefore, equally liable. In fact, the Court recorded the allegations in the complaint that the Complainant knew all the accused and that accused no. 1 was the Chairman of the accused Company and was responsible for day to day affairs of the Company. This Court though has only noted the decision in N. Rangachari's case (supra) and observed that an observation therein showed a slight departure vis-`-vis the other judgments (i.e. S.M.S. Pharmaceuticals first case and S.M.S. Pharmaceutical's second case), but then Court went on to record that in N.K. Wahi's case (supra) this Court had reiterated the view in S.M.S. Pharmaceutical's case (supra). The Court then concluded in para 11 that it was clear from the aforequoted judgments that the entire matter would boiled down to an examination of the nature of averments made in the complaint. On facts, the Court found necessary averments had been made in the complaint. 

23) Though, the learned counsel for the appellants relying on a recent decision in K.K. Ahuja vs. V.K. Vora & Anr., (2009) 10 SCC 48, it is clearly recorded that in the complaint it was alleged that the accused were in-charge of and was responsible for the conduct of the day-to-day business of the accused Company and further all the accused were directly and actively involved in the financial dealings of the Company and the same was also reiterated in the pre-summoning evidence. Furthermore, this decision also notes that it is necessary to specifically aver in a complaint that the person accused was in-charge of and responsible for the conduct of the business of the Company. After noting Saroj Kumar Poddar's case (supra) and N.K. Wahi's case (supra), this Court further noted in para 9 that ......the prevailing trend appear to require the Complainant to state how a Director who is sought to be made an accused, was in-charge of the business of the Company, as every Director need not be and is not in-charge of the business of the Company...... In Para 11, this Court has further recorded that .....When conditions are prescribed for extending such constructive criminal liability to others, courts will insist upon strict literal compliance. There is no question of inferential or implied compliance. Therefore, a specific averment complying with the requirements of Section 141 is imperative... Though the Court then said that an averment in the complaint that the accused is a Director and in-charge of and responsible for the conduct of the business may be sufficient but this would not take away from the requirement that an overall reading of the complaint has to be made to see whether the requirements of Section 141 have been made out against the accused Director or not. Furthermore, this decision cannot be said to have overruled the various decisions of this Court. 

24) Section 291 of the Companies Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorized to exercise and do. A company, though a legal entity, can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in-charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other Directors are concerned, they can be prosecuted only if they were in-charge of and responsible for the conduct of the business of the company. A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses 24, 26, 30, 31 and 45 of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company: 

(a) the Managing Director/s; 

(b) the whole-time Director/s; 

(c) the Manager; 

(d) the Secretary; 

(e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act; 

(f) any person charged by the Board of Directors with the responsibility of complying with that provision; Provided that the person so charged has given his consent in this behalf to the Board; 

(g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors: Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form. 

But if the accused is not one of the persons who falls under the category of persons who are responsible to the company for the conduct of the business of the company then merely by stating that he was in-charge of the business of the company or by stating that he was in- charge of the day-to-day management of the company or by stating that he was in-charge of, and was responsible to the company for the conduct of the business of the company, he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act. 

25) From the above discussion, the following principles emerge : 

(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction. 

(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. 

(iii) Vicarious liability can be inferred against a company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by company along with averments in the petition containing that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. 

(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. 

(v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with. 

(vi) If accused is a Director or an Officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in complaint. 

(vii) The person sought to be made liable should be in- charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.

Indigent Person under the Code of Civil Procedure, 1908 : The Concept Explained

Justice G.S. Singhvi
Supreme Court of India

The Supreme Court in Mathai M. Paikeday Vs. C.K. Antony has discussed the concept of 'indeigent person' as defined under Order 33 of the Code of Civil Procedure, 1908. While discussing the relevant judgments on the subject, the court held as under;

9. Order 33 of the Code of Civil Procedure deals with suits by indigent persons whereas Order 44 thereof deals with appeals by indigent persons. 

10. Order 33 Rule 1 of the Code of Civil Procedure provides for instituting of suits by indigent person, stating: 

"1. Suits may be instituted by indigent person-- Subject to the following provisions, any suit may be instituted by an indigent person. 

Explanation I.--A person is an indigent person,-- 

(a) if he is not possessed of sufficient means (other than property exempt from attachment in execution of a decree and the subject-matter of the suit) to enable him to pay the fee prescribed by law for the plaint in such suit, or 

(b) where no such fee is prescribed, if he is not entitled to property worth one thousand rupees other than the property exempt from attachment in execution of a decree, and the subject-matter of the suit. 

Explanation II.--Any property which is acquired by a person after the presentation of his application for permission to sue as an indigent person, and before the decision of the application, shall be taken into account in considering the question whether or not the applicant is an indigent person. 

Explanation III.--Where the plaintiff sues in a representative capacity, the question whether he is an indigent person shall be determined with reference to the means possessed by him in such capacity." 

11. Order 44 of Code of Civil Procedure provides for instituting an appeal as an indigent person. The provision reads :- 

"1. Who may appeal as an indigent person - Any person entitled to prefer an appeal, who is unable to pay the fee required for the memorandum of appeal, may present an application accompanied by a memorandum of appeal, and may be allowed to appeal as an indigent person, subject, in all matters, including the presentation of such application, to the provisions relating to suits by indigent person, in so far as those provisions are applicable." 

12. The object and purpose of Order 33 and Order 44 of the Code of Civil Procedure are to enable a person, who is ridden by poverty, or not possessed of sufficient means to pay court fee, to seek justice. Order 33 and Order 44 of the Code of Civil Procedure exempts such indigent person from paying requisite court fee at the first instance and allows him to institute suit or prosecute appeal in forma pauperis. 

13. In A.A. Haja Muniuddin v. Indian Railways, (1992) 4 SCC 736, this Court has observed: "5. ... Access to justice cannot be denied to an individual merely because he does not have the means to pay the prescribed fee." 

14. In Union Bank of India v. Khader International Construction, (2001) 5 SCC 22, this Court has held: 

"20. Order 33 CPC is an enabling provision which allows filing of a suit by an indigent person without paying the court fee at the initial stage. If the plaintiff ultimately succeeds in the suit, the court would calculate the amount of court fee which would have been paid by the plaintiff if he had not been permitted to sue as an indigent person and that amount would be recoverable by the State from any party ordered by the decree to pay the same. It is further provided that when the suit is dismissed, then also the State would take steps to recover the court fee payable by the plaintiff and this court fee shall be a first charge on the subject- matter of the suit. So there is only a provision for the deferred payment of the court fees and this benevolent provision is intended to help the poor litigants who are unable to pay the requisite court fee to file a suit because of their poverty. Explanation I to Rule 1 Order 33 states that an indigent person is one who is not possessed of sufficient amount (other than property exempt from attachment in execution of a decree and the subject-matter of the suit) to enable him to pay the fee prescribed by law for the plaint in such suit. It is further provided that where no such fee is prescribed, if such person is not entitled to property worth one thousand rupees other than the property exempt from attachment in execution of a decree and the subject-matter of the suit he would be an indigent person." 

15. In R.V. Dev v. Chief Secretary, Govt. of Kerala, (2007) 5 SCC 698, this Court has held: 

"8. Order 33 of the Code of Civil Procedure deals with suits by indigent persons whereas Order 44 thereof deals with appeals by indigent persons. When an application is filed by a person said to be indigent, certain factors for considering as to whether he is so within the meaning of the said provision are required to be taken into consideration therefor. A person who is permitted to sue as an indigent person is liable to pay the court fee which would have been paid by him if he was not permitted to sue in that capacity, if he fails in the suit at the trial or even without trial. Payment of court fee as the scheme suggests is merely deferred. It is not altogether wiped off." 

16. The concept of indigent person has been discussed in Corpus Juris Secundum (20 C.J.S. Costs ' 93) as following: 

"' 93. What constitutes indigency: The right to sue in forma pauperis is restricted to indigent persons. A person may proceed as poor person only after a court is satisfied that he or she is unable to prosecute the suit and pay the costs and expenses. A person is indigent if the payment of fees would deprive one of basic living expenses, or if the person is in a state of impoverishment that substantially and effectively impairs or prevents the pursuit of a court remedy. However, a person need not be destitute. Factors considered when determining if a litigant is indigent are similar to those considered in criminal cases, and include the party's employment status and income, including income from government sources such as Social Security and unemployment benefits, the ownership of unencumbered assets, including real or personal property and money on deposit, the party's total indebtedness, and any financial assistance received from family or close friends. Not only personal liquid assets, but also alternative sources of money should be considered." 

17. The eligibility of person to sue in forma pauperis has been considered in American Jurisprudence (20 Am. Jur. 2d Costs ' 100) as thus: 

"100. Eligibility to sue in forma pauperis; generally: The burden of establishing indigency is on the defendant claiming indigent status, who must demonstrate not that he or she is entirely destitute and without funds, but that payments for counsel would place an undue hardship on his or her ability to provide the basic necessities of life for himself or herself and his or her family. Factors particularly relevant to the determination of whether a party to a civil proceeding is indigent are: 

(1) the party's employment status and income, including income from government sources such as social security and unemployment benefits; 

(2) the ownership of any unencumbered assets, including real or personal property and monies on deposit; and finally 

(3) the party's total indebtedness and any financial assistance received from family or close friends. Where two people are living together and functioning as a single economic unit, whether married, related, or otherwise, consideration of their combined financial assets may be warranted for the purposes of determining a party's indigency status in a civil proceeding." 

18. To sum up, the indigent person, in terms of explanation I to Rule 1 of Order 33 of the Code of Civil Procedure, is one who is either not possessed of sufficient means to pay court fee when such fee is prescribed by law, or is not entitled to property worth one thousand rupees when such court fee is not prescribed. In both the cases, the property exempted from the attachment in execution of a decree and the subject-matter of the suit shall not be taken into account to calculate financial worth or ability of such indigent person. Moreover, the factors such as person's employment status and total income including retirement benefits in the form of pension, ownership of realizable unencumbered assets, and person's total indebtness and financial assistance received from the family member or close friends can be taken into account in order to determine whether a person is possessed of sufficient means or indigent to pay requisite court fee. Therefore, the expression "sufficient means" in Order 33 Rule 1 of the Code of Civil Procedure contemplates the ability or capacity of a person in the ordinary course to raise money by available lawful means to pay court fee.

Arbitral Tribunal Cannot Travel Beyond Terms of Reference : Supreme Court Reiterates

Justice Dr. B.S. Chauhan
Supreme Court of India

The Supreme Court in M/s MSK Projects (I) (JV) Ltd. v. State of Rajasthan & Anr., has reiterated the principle that the arbitral tribunal cannot go beyond the terms of the reference and any attempt to do so would be void and without any jurisdiction. The relevant extracts from the judgment are reproduced hereinbelow;

6. The issue regarding the jurisdiction of the Arbitral Tribunal to decide an issue not referred to is no more res integra. It is a settled legal proposition that special Tribunals like Arbitral Tribunals and Labour Courts get jurisdiction to proceed with the case only from the reference made to them. Thus, it is not permissible for such Tribunals/authorities to travel beyond the terms of reference. Powers cannot be exercised by the Tribunal so as to enlarge materially the scope of reference itself.

If the dispute is within the scope of the arbitration clause, it is no part of the province of the court to enter into the merits of the dispute on the issue not referred to it. If the award goes beyond the reference or there is an error apparent on the face of the award it would certainly be open to the court to interfere with such an award. (Vide: Grid Corporation of Orissa Ltd. & Anr. v. Balasore Technical School, AIR 1999 SC 2262; and Delhi Development Authority v. R.S. Sharma and Company, New Delhi, (2008) 13 SCC 80).

7. In Associated Engg. Co. v. Govt. of Andhra Pradesh & Anr., AIR 1992 SC 232, this Court held that an umpire or arbitrator cannot widen his jurisdiction by deciding a question not referred to him by the parties. If he exceeded his jurisdiction by so doing, his award would be liable to be set aside. Thus, an arbitrator cannot be allowed to assume jurisdiction over a question which has not been re- ferred to him, and similarly, he cannot widen his jurisdiction by holding contrary to the fact that the matter which he wants to decide is within the submission of the parties.

8. If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders out - side the contract and deals with matters not allotted to him, he com- mits a jurisdictional error. Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The ra- tionale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence ex- trinsic to the award. (See: Gobardhan Das v. Lachhmi Ram & Ors., AIR 1954 SC 689; Seth Thawardas Pherumal v. The Union of India, AIR 1955 SC 468; Union of India v. Kishorilal Gupta & Bros., AIR 1959 SC 1362; Alopi Parshad & Sons. Ltd. v. Union of India, AIR 1960 SC 588; Jivarajbhai Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors., AIR 1965 SC 214; and Renusagar Power Co. Ltd. v. General Electric Company & Anr., AIR 1985 SC 1156).

9. In Kishore Kumar Khaitan & Anr. v. Praveen Kumar Singh, (2006) 3 SCC 312, this Court held that when a court asks itself a wrong question or approaches the question in an improper manner, even if it comes to a finding of fact, the said finding of fact cannot be said to be one rendered with jurisdiction. The failure to render the necessary findings to support its order would also be a jurisdictional error liable to correction.

(See also: Williams v. Lourdusamy & Anr., (2008) 5 SCC 647)

10. In Cellular Operators Association of India & Ors. v. Union of India & Ors., (2003) 3 SCC 186, this Court held as under: 

As regards the issue of jurisdiction, it posed a wrong question and gave a wrong answer................The learned TDSAT, therefore, has posed absolutely a wrong question and thus its impugned decision suffers from a misdirection in law.

11. This Court, in Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd., AIR 2003 SC 2629; and Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445), held that an arbitration award contrary to substantive provisions of law, or provisions of the Act, 1996 or against terms of the contract, or public policy, would be patently illegal, and if it affects the rights of the parties, it would be open for the court to interfere under Section 34(2) of the Act 1996.

12. Thus, in view of the above, the settled legal proposition emerges to the effect that the arbitral tribunal cannot travel beyond terms of reference; however, in exceptional circumstances where a party pleads that the demand of another party is beyond the terms of contract and statutory provisions, the tribunal may examine by he terms of contract as well as the statutory provisions. In the absence of proper pleadings and objections, such a course may not be permissible.

The Concept of 'Finality of Judgment' : Supreme Court Explains

Justice Dalveer Bhandari
Supreme Court of India

Justice Dalveer Bhandari and Justice H.L. Dattu of the Supreme Court of India, in Indian Council for Enviro-Legal Action v. Union of India & Ors., have examined the concept of finality of judgment and how the adversarial system in India is being abused by litigants, and its adverse impact of the administration of justice. While examining various authorities on the subject, the Hon'ble court has also examined the law prevalent in other countries such as England, Canada, Fiji and Australia. The relevant extracts from the judgment are reproduced hereinbelow;

FINALITY OF JUDGMENT 

114. The maxim `interest Republicae ut sit finis litium' says that it is for the public good that there be an end of litigation after a long hierarchy of appeals. At some stage, it is necessary to put a quietus. It is rare that in an adversarial system, despite the judges of the highest court doing their best, one or more parties may remain unsatisfied with the most correct decision. Opening door for a further appeal could be opening a flood gate which will cause more wrongs in the society at large at the cost of rights. 

115. It should be presumed that every proceeding has gone through infiltration several times before the decision of the Apex Court. In the instant case, even after final judgment of this court, the review petition was also dismissed. Thereafter, even the curative petition has also been dismissed in this case. The controversy between the parties must come to an end at some stage and the judgment of this court must be permitted to acquire finality. It would hardly be proper to permit the parties to file application after application endlessly. In a country governed by the rule of law, finality of the judgment is absolutely imperative and great sanctity is attached to the finality of the judgment. Permitting the parties to reopen the concluded judgments of this court by filing repeated interlocutory applications is clearly an abuse of the process of law and would have far reaching adverse impact on the administration of justice. 

116. In Manganese Ore (India) Ltd. v. The Regional Assistant Commissioner of Sales Tax, Jabalpur(1976) 4 SCC 124 this court held that the doctrine of stare decisis is a very valuable principle of precedent which cannot be departed from unless there are extraordinary or special reasons to do so. 

117. In Green View Tea & Industries v. Collector, Golaghat and Another (2002) 1 SCC 109 this court reiterated the view that finality of the order of the apex court of the country should not lightly be unsettled. 

118. A three-Judge Bench of this court in M/s Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi (1980) 2 SCC 167 held that a party is not entitled to seek a review of this court's judgment merely for the purpose of rehearing and for a fresh decision of the case. Departure from the normal principle that the court's judgment is final would be justified only when compelling our substantial circumstances make it necessary to do so. Such circumstances may be that a material statutory provision was not drawn to the court's attention at the original hearing or a manifest wrong has been done. 

119. In Union of India & Another v. Raghubir Singh (Dead) by L.Rs. (1989) 2 SCC 754, this Court held that the plea for reconsideration is not to be entertained merely because the petitioner chooses to reagitate the points concluded by the earlier decision in Sub-committee on Judicial Accountability. 

120. In Mohd. Aslam v. Union of India & Others (1996) 2 SCC 749, the Court considered the earlier decisions and held that the writ petition under article 32 of the Constitution assailing the correctness of a decision of the Supreme Court on merits or claiming reconsideration is not maintainable. 

121. In Khoday Distilleries Ltd. and Another v. Registrar General, Supreme Court of India (1996) 3 SCC 114, the Court held the reconsideration of the final decision of the Supreme Court after review petition is dismissed by way of writ petition under article 32 of the Constitution cannot be sustained. 

122. In Gurbachan Singh & Another v. Union of India & Another (1996) 3 SCC 117, the Court held that the judgment order of this court passed under Article 136 is not amenable to judicial review under Article 32 of the Constitution. 

123. Similar view was taken in Babu Singh Bains and others v. Union of India and Others (1996) 6 SCC 565, a three-Judge bench of this Court held that a writ petition under Article 32 of the Constitution against the order under Article 136 of the Constitution is not maintainable. 

124. Another three-Judge bench of this Court in P. Ashokan v. Union of India & Another (1998) 3 SCC 56, relying upon the earlier cases held that the challenge to the correctness of a decision on merits after it has become final cannot be questioned by invoking Article 32 of the Constitution. In the instant case the petitioner wants to reopen the case by filing the interlocutory application. 

125. In Ajit Kumar Barat v. Secretary, Indian Tea Association & Others (2001) 5 SCC 42, the Court placed reliance on the judgment of a nine-judge Bench in Naresh Shridhar Mirajkar v. State of Maharashtra and another AIR 1967 SC 1 and the Court observed as under: It is difficult to see how this decision can be pressed into service by Mr. Setalvad in support of the argument that a judicial order passed by this Court was held to be subject to the writ jurisdiction of this Court itself.... In view of this decision in Mirajkar case it must be taken as concluded that judicial proceedings in this Court are not subject to the writ jurisdiction thereof. 

126. The Court in the said case observed that having regards to the facts and circumstances of the case, this is not a fit case to be entertained to exercise jurisdiction under Article 32 of the Constitution. 

127. In Mr. X v. Hospital Z (2000)9 SCC 439, this Court held thus: 

Writ petition under Article 32 of the Constitution against the judgment already passed by this Court cannot be entertained. Learned counsel for the petitioner stated that prayer (a) which seeks overruling or setting aside of the judgment already passed in Mr X v. Hospital Z may be deleted. This prayer shall accordingly be deleted. So also, the other prayers which indirectly concern the correctness of the judgment already passed shall stand deleted. Learned counsel for the petitioner stated that the petition may not be treated as a petition under Article 32 of the Constitution but may be treated as an application for clarification/directions in the case already decided by this Court, viz., Mr X v. Hospital Z (CA No. 4641 of 1998). 

128. In Triveniben v. State of Gujarat (1989)1 SCC 678 speaking for himself and other three learned Judges of the Constitution Bench through Oza, J., reiterated the same principle. The court observed: (SCC p. 697, para 22) ...It is well settled now that a judgment of court can never be challenged under Articles 14 or 21 and therefore the judgment of the court awarding the sentence of death is not open to challenge as violating Article 14 or Article 21 as has been laid down by this Court in Naresh Shridhar Mirajkar (supra) and also in A.R. Antulay v. R.S. Nayak, the only jurisdiction which could be sought to be exercised by a prisoner for infringement of his rights can be to challenge the subsequent events after the final judicial verdict is pronounced and it is because of this that on the ground of long or inordinate delay a condemned prisoner could approach this Court and that is what has consistently been held by this Court. But it will not be open to this Court in exercise of jurisdiction under Article 32 to go behind or to examine the final verdict reached by a competent court convicting and sentencing the condemned prisoner and even while considering the circumstances in order to reach a conclusion as to whether the inordinate delay coupled with subsequent circumstances could be held to be sufficient for coming to a conclusion that execution of the sentence of death will not be just and proper.... 

129. In Rupa Ashok Hurra (supra), this Court observed thus: 

24. ... when reconsideration of a judgment of this Court is sought the finality attached both to the law declared as well as to the decision made in the case, is normally brought under challenge. It is, therefore, relevant to note that so much was the value attached to the precedent of the highest court that in The London Street Tramways Co. Ltd. v. London County Council (1898 AC 375) the House of Lords laid down that its decision upon a question of law was conclusive and would bind the House in subsequent cases and that an erroneous decision could be set right only by an Act of Parliament. ... ... ... 

... ... ... 

26. ...This Court will not sit as a court of appeal from its own decisions, nor will it entertain applications to review on the ground only that one of the parties in the case conceives himself to be aggrieved by the decision. It would in our opinion be intolerable and most prejudicial to the public interest if cases once decided by the Court could be reopened and reheard: 

There is a salutary maxim which ought to be observed by all courts of last resort -- interest reipublicae ut sit finis litium. (It concerns the State that there be an end of lawsuits. It is in the interest of the State that there should be an end of lawsuits.) Its strict observance may occasionally entail hardship upon individual litigants, but the mischief arising from that source must be small in comparison with the great mischief which would necessarily result from doubt being thrown upon the finality of the decisions of such a tribunal as this. 

32. ...When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. 

33. In Maganlal Chhaganlal (1974) 2 SCC 402 case a Bench of seven learned Judges of this Court considered, inter alia, the question: whether a judgment of the Supreme Court in Northern India Caterers case (1967) 3 SCR 399 was required to be overruled. Khanna, J. observed: (SCC p. 425, para 22) 

At the same time, it has to be borne in mind that certainty and continuity are essential ingredients of rule of law. Certainty in law would be considerably eroded and suffer a serious setback if the highest court of the land readily overrules the view expressed by it in earlier cases, even though that view has held the field for a number of years. 

In quite a number of cases which come up before this Court, two views are possible, and simply because the Court considers that the view not taken by the Court in the earlier case was a better view of the matter would not justify the overruling of the view. The law laid down by this Court is binding upon all courts in the country under Article 141 of the Constitution, and numerous cases all over the country are decided in accordance with the view taken by this Court. Many people arrange their affairs and large number of transactions also take place on the faith of the correctness of the view taken by this Court. It would create uncertainty, instability and confusion if the law propounded by this Court on the basis of which numerous cases have been decided and many transactions have taken place is held to be not the correct law. 

42. The concern of this Court for rendering justice in a cause is not less important than the principle of finality of its judgment. We are faced with competing principles -- ensuring certainty and finality of a judgment of the Court of last resort and dispensing justice on reconsideration of a judgment on the ground that it is vitiated being in violation of the principles of natural justice or giving scope for apprehension of bias due to a Judge who participated in the decision-making process not disclosing his links with a party to the case, or on account of abuse of the process of the court. Such a judgment, far from ensuring finality, will always remain under the cloud of uncertainty. Almighty alone is the dispenser of absolute justice -- a concept which is not disputed but by a few. We are of the view that though Judges of the highest court do their best, subject of course to the limitation of human fallibility, yet situations may arise, in the rarest of the rare cases, which would require reconsideration of a final judgment to set right miscarriage of justice complained of. In such case it would not only be proper but also obligatory both legally and morally to rectify the error. After giving our anxious consideration to the question, we are persuaded to hold that the duty to do justice in these rarest of rare cases shall have to prevail over the policy of certainty of judgment as though it is essentially in the public interest that a final judgment of the final court in the country should not be open to challenge, yet there may be circumstances, as mentioned above, wherein declining to reconsider the judgment would be oppressive to judicial conscience and would cause perpetuation of irremediable injustice. 

130. A four-judge bench of this court in Sumer v. State of U.P. (2005) 7 SCC 220 observed as under: 

In Rupa Ashok Hurra (supra) while providing for the remedy of curative petition, but at the same time to prevent abuse of such remedy and filing in that garb a second review petition as a matter of course, the Constitution Bench said that except when very strong reasons exist, the court should not entertain an application seeking reconsideration of an order of this Court which has become final on dismissal of review petition. In this view, strict conditions including filing of certificate by a Senior Advocate were provided in Rupa Ashok Hurra (supra). Despite it, the apprehension of the Constitution Bench that the remedy provided may not open the flood gates for filing a second review petition has come true as is evident from filing of large number of curative petitions. It was expected that the curative petitions will be filed in exceptional and in rarest of rare case but, in practice, it has just been opposite. This Court, observing that neither it is advisable nor possible to enumerate all the grounds on which curative petition may be entertained, said that nevertheless the petitioner is entitled to relief ex debito justitiae if he establishes (1) violation of principles of natural justice in that he was not a party to the lis but the judgment adversely affected his interests or, if he was a party to the lis, he was not served with notice of the proceedings and the matter proceeded as if he had notice, and (2) where in the proceedings a learned Judge failed to disclose his connection with the subject-matter or the parties giving scope for an apprehension of bias and the judgment adversely affects the petitioner. To restrict filing of the curative petitions only in genuine cases, Rupa Ashok Hurra (supra) provided that the curative petition shall contain a certification by a Senior Advocate with regard to the fulfilment of all the requirements provided in the judgment. Unfortunately, in most of the cases, the certification is casual without fulfilling the requirements of the judgment. 

131. In Sita Ram Bhandar Society, New Delhi v. Lieutenant Governor, Government of NCT, Delhi & Others (2009)10 SCC 501, this Court held thus: 

41. We must also observe that the petitioner has been able to frustrate the acquisition and development of the land right from 1980 onwards by taking recourse to one litigation after the other. The record reveals that all the suits/writ petitions, etc. that had been filed had failed. Undoubtedly, every citizen has a right to utilise all legal means which are open to him in a bid to vindicate and protect his rights, but if the court comes to the conclusion that the pleas raised are frivolous and meant to frustrate and delay an acquisition which is in public interest, deterrent action is called for. This is precisely the situation in the present matter. 

42. The appeals are, accordingly, dismissed with costs which are determined at rupees two lakhs. The respondents, shall, without further loss of time proceed against the appellant. 

132. This court in a recent judgment in M. Nagabhushana v. State of Karnataka and others (2011) 3 SCC 408 observed that principle of finality is passed on high principle of public policy. The court in para 13 of the said judgment observed as under: 

That principle of finality of litigation is based on high principle of public policy. In the absence of such a principle great oppression might result under the color and pretence of law inasmuch as there will be no end of litigation and a rich and malicious litigant will succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The doctrine of res judicata has been evolved to prevent such an anarchy. That is why it is perceived that the plea of res judicata is not a technical doctrine but a fundamental principle which sustains the rule of law in ensuring finality in litigation. This principle seeks to promote honesty and a fair administration of justice and to prevent abuse in the matter of accessing court for agitating on issues which have become final between the parties. 

133. In order to discourage a litigation which reopens the final judgment of this court, while dismissing the petition imposed costs of rupees 10 lakhs. 

134. We find full corroboration of this principle from the cases of other countries. We deem it appropriate to mention some of these relevant cases in the succeeding paragraphs. 

ENGLAND 

135. The England cases have consistently taken the view that the judgments of final court must be considered final and conclusive. There must be certainty in the administration. Uncertainty can lead to injustice. Unless there are very exceptional or compelling reasons the judgment of apex courts should not be reopened. 

136. In Regina v. Gough, [1993] 1 A.C. 646, with regards to setting aside judgments due to judicial bias, the House of Lords held that there is only one established special category and that exists where the tribunal has a pecuniary or proprietary interest in the subject matter of the proceedings as in Dimes v. Proprietors of Grand Junction Canal , (1852) 3 H.L. Cases 759. The courts should hesitate long before creating any other special category since this will immediately create uncertainty as to what are the parameters of that category and what is the test to be applied in the case of that category. Lord Goff of Chievely stated that I wish to draw attention to the fact that there are certain cases in which it has been considered that the circumstances are such that they must inevitably shake public confidence in the integrity of the administration of justice if the decision is to be allowed to stand. Such cases attract the full force of Lord Hewart C.J.'s requirement that justice must not only be done but must manifestly be seen to be done. These cases arise where a person sitting in a judicial capacity has a pecuniary interest in the outcome of the proceedings. In such a case, as Blackburn J. said in Reg. v. Rand (1866) L.R. 1 Q.B. 230, 232: any direct pecuniary interest, however small, in the subject of inquiry, does disqualify a person from acting as a judge in the matter. The principle is expressed in the maxim that nobody may be judge in his own cause (nemo judex in sua causa)... In such a case, therefore, not only is it irrelevant that there was in fact no bias on the part of the tribunal, but there is no question of investigating, from an objective point of view, whether there was any real likelihood of bias, or any reasonable suspicion of bias, on the facts of the particular case. The nature of the interest is such that public confidence in the administration of justice requires that the decision should not stand (p. 661). 

137. In R v. Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No 2) (1999) 2 W.L.R. 272, the House of Lords set aside one of its earlier orders. In this case, the majority at the House of Lords had earlier ruled whether Augusto Pinochet, the former dictator of Chile, could be extradited to Spain in order to stand trial for alleged crimes against humanity and was not entitled to sovereign immunity. Amnesty International had been an intervener in this case in opposition to Pinochet. Lord Hoffman, one of the majority judges, was a director of Amnesty International Charitable Trust, an organization controlled by Amnesty International, and Lady Hoffman had been working at AI's international secretariat since 1977. The respondent was not aware of Lord Hoffman's relationship to AI during the initial trial. In this case, the House of Lords cited with approval the respondents' concession acknowledging the House of Lords' jurisdiction to review its decisions - 

In principle it must be that your Lordships, as the ultimate court of appeal, have power to correct any injustice caused by an earlier order of this House. There is no relevant statutory limitation on the jurisdiction of the House in this regard and therefore its inherent jurisdiction remains unfettered. 

138. According to the English law, the judgment of the Apex Court can be reviewed in exceptional circumstances particularly when the judge associated with any of the organizations to be a good ground for reviewing the judgment. 

139. In Pinochet test in Regina (Edwards) v Environment Agency and others [2010] UKSC 57, the Supreme Court of the United Kingdom overruled an earlier order of costs made by the erstwhile apex court, the House of Lords, on the grounds that the House of Lords had made a substantive error in the original adjudication. However, this appeal was lodged under Rule 53 of the The (U.K.) Supreme Court Rules, 2009, 2009 No. 1603 (L. 17). Rule 53 provides as follows: 

53. (1) A party who is dissatisfied with the assessment of costs made at an oral hearing may apply for that decision to be reviewed by a single Justice and any application under this rule must be made in the appropriate form and be filed within 14 days of the decision. 

(2) The single Justice may (without an oral hearing) affirm the decision made on the assessment or may, where it appears appropriate, refer the matter to a panel of Justices to be decided with or without an oral hearing. 

(3) An application may be made under this rule only on a question of principle and not in respect of the amount allowed on any item in the claim for costs. 

140. In this case, Lord Hope, citing the Pinochet case stated that: 

The Supreme Court is a creature of statute. But it has inherited all the powers that were vested in the House of Lords as the ultimate court of appeal. So it has the same powers as the House had to correct any injustice caused by an earlier order of the House or this Court... In this case it seems that, through no fault of the appellant, an injustice may have been caused by the failure of the House to address itself to the correct test in order to comply with the requirements of [certain EU] directives [at para. 35]. 

CANADA 

141. The Canadian Supreme Court is of the same view that judicial bias would be a ground for reviewing the judgment. In Wewaykum Indian Band v. Canada [2003] 2 SCR 259 the court relied on Taylor Ventures Ltd. (Trustee of) v. Taylor 2005 BCCA 350 where principle of judicial bias has been summarized. 

142. The principles stated in Roberts regarding judicial bias were neatly summarized in Taylor Ventures Ltd. (Trustee of) (supra), where Donald J.A. stated - 

(i) a judge's impartiality is presumed; 

(ii) a party arguing for disqualification must establish that the circumstances justify a finding that the judge must be disqualified; 

(iii) the criterion of disqualification is the reasonable apprehension of bias; 

(iv) the question is what would an informed, reasonable and right-minded person, viewing the matter realistically and practically, and having thought the matter through, conclude; (iv) the test for disqualification is not satisfied unless it is proved that the informed, reasonable and right-minded person would think that it is more likely than not that the judge, whether consciously or unconsciously, would not decide fairly; 

(v) the test requires demonstration of serious grounds on which to base the apprehension; (vi) each case must be examined contextually and the inquiry is fact-specific (at para 7). 

143. Cases from Australia also support the proposition that a final judgment cannot ordinarily be reopened, and that such steps can be taken only in exceptional circumstances. 

144. In State Rail Authority of New South Wales v. Codelfa Constructions Propriety Limited (1982) 150 CLR 29, the High Court of Australia observed: 

... it is a power to be exercised with great caution. There may be little difficulty in a case where the orders have not been perfected and some mistake or misprision is disclosed. But in other cases it will be a case of weighing what would otherwise be irremediable injustice against the public interest in maintaining the finality of litigation. The circumstances that will justify a rehearing must be quite exceptional. ... 

145. In Bailey v. Marinoff (1971) 125 CLR 529, Judge Gibbs of the High Court of Australia observed in a dissenting opinion: 

It is a well-settled rule that once an order of a court has been passed and entered or otherwise perfected in a form which correctly expresses the intention with which it was made the court has no jurisdiction to alter it. .. ....The rule tests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were jurisdiction to rehear a matter decided after a full hearing. However, the rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court, but is inherent in the court.... And, further: 

The authorities to which I have referred leave no doubt that a superior court has an inherent power to vary its own orders in certain cases. The limits of the power remain undefined, although the remarks of Lord Evershed already cited suggest that it is a power that a court may exercise if, in its view, the purposes of justice require that it should do so. 

146. In DJL v. Central Authority (2000) 170 ALR 659, the High Court of Australia observed: 

...It is now recognized both in Australia and England that orders made by ultimate appellate courts may be reopened by such courts in exceptional circumstances to repair accidents and oversights which would otherwise occasion a serious injustice. In my view, this can be done although the order in question has been perfected. The reopening may be ordered after due account is taken of the reasons that support the principle of finality of litigation. The party seeking reopening bears a heavy burden to demonstrate that the exceptional course is required without fault on his part. ... 

147. Lastly, in Lexcray Pty. Ltd. v. Northern Territory of Australia 2003 NTCA 11, the Court appeals of the Supreme Court of the Northern Territory expressly stated: ...As a final court of appeal the High Court of Australia has inherent jurisdiction to vacate its orders in cases where there would otherwise be an irremediable injustice.... 

148. American courts also follows a similar pattern. In United States of America v. Ohio Power Company 353 US 98 (1957), the U.S. Supreme Court vacated its earlier order denying a timely petition for rehearing, on the ground that the interest in finality of litigation must yield where interests of justice would make unfair, strict application of Supreme Court's Rules. 

149. In Raymond G. Cahill v. The New York, New Haven and Hartford Railroad Company 351 US 183, the Supreme Court observed: 

...There are strong arguments for allowing a second petition for rehearing where a rigid application of this rule would cause manifest injustice. 

FIJI 

150. The Supreme Court of Fiji Islands incorporating Australian and British case law summarized the law applicable to review of its judgments. It has been held that the Supreme Court can review its judgments pronounced or orders made by it. The power of the appellate courts to re- open and review their orders is to be exercised with great caution. 

151. The cases establish that the power of appellate courts to re-open and review their orders is to be exercised with great caution. The power, and the occasions for its exercise were considered in In Re Transferred Civil Servants (Ireland) Compensation (1929) AC 242, 248-52; and State Rail Authority NSW v Codelfa Construction Pty Ltd (1982) HCA 51 : (1982) 150 CLR 29, 38-9, 45-6, where earlier Privy Council cases are referred to. The principles were summarised in Smith v NSW Bar Association (1992) 176 CLR 252, 265 where the High Court of Australia said: 

The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation. Thus, if reasons for judgment have been given, the power is only exercised if there is some matter calling for review ... these considerations may tend against the re-opening of a case, but they are not matters which bear on the nature or the review ... once the case is re-opened ... the power to review a judgment ... where the order has not been entered will not ordinarily be exercised to permit a general re- opening ... But ... once a matter has been re- opened, the nature and extent of the review must depend on the error or omission which has led to that step being taken. 

152. The principles were further considered in Autodesk Inc v Dyason (No 2) (1993) HCA 6 : (1993) 176 CLR 300, 303 where Mason CJ said: 

What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and this ... cannot be attributed solely to the neglect of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases. 

153. The ratio of these judgments is that a court of final appeal has power in truly exceptional circumstances to recall its order even after they have been entered in order to avoid irremediable injustice. 

154. Reviewing of various cases of different jurisdictions lead to irresistible conclusion that though the judgments of the apex court can also be reviewed or recalled but it must be done in extremely exceptional circumstances where there is gross violation of principles of natural justice. 

155. In a case where the aggrieved party filing a review or curative petition was not a party to the lis but the judgment adversely affected his interest or he was party to the lis was not served with notice of the proceedings and the matter proceeded as if he had notice. This court in State of M.P. v. Sugar Singh & Others on 9th March, 2010 passed the following order in a curative petition : 

Though there were eight accused persons, only four accused were arrayed as party respondents in the said appeals namely, Sughar, Laxman, Onkar and Ramesh. Other accused, namely,Bhoja, Raghubir, Puran and Balbir were not impleaded as respondents in these Criminal Appeals and consequently notices were not issued to them. This Court, by judgment on 7th November, 2008 in the aforesaid Criminal Appeals, reversed the acquittal of the accused by the High Court and found them guilty of the offences punishable under Section 304 Part-II read with Section 149 of the I.P.C. and sentenced them to undergo imprisonment for a period of six years. The conviction of the accused for the offences punishable under Section 148 as also Section 326 read with the Section 149 of the I.P.C. and the sentence imposed by the Sessions Court in regard to the said offences was upheld by this Court. 

We have heard learned counsel for the petitioners. The respondent State, though served with a notice through standing counsel, has not chosen to enter appearance. These Curative Petitions have been filed by accused No.2 (Raghubir) and by accused no.4 and 5 (Sughar Singh and Laxman) on the ground that acquittal of Bhoja, Raghubir, Puran and Balbir have been reversed without affording an opportunity of being heard. We see that there is serious violation of principles of natural justice as the acquittal of all the accused has been set aside even though only four of them were made respondents before this Court and the others were not heard. We are, therefore, constrained to recall the 3 judgment passed by this Court in Criminal Appeal Nos.1362- 1363 of 2004 on 7th November, 2008. 

Consequently, the accused Sughar Singh, Laxman, Onkar and Ramesh, if they are in custody, are directed to be released forthwith. 

In the result, these Curative Petitions are disposed of and the Criminal Appeal Nos.1362- 124 1363 of 2004 are restored to the file for being heard afresh with a direction that the other four accused (Bhoja, Raghubir, Puran and Balbir) be impleaded as respondents and all accused be served with fresh notices. 

156. In the instant case, the applicants had adequate opportunity and were heard by the court at length on number of occasions and only thereafter the writ petition was disposed of. The applicants aggrieved by the said judgment filed a review petition. This review petition was also dismissed. In the instant case even the curative petition has also been dismissed. The applicants now want to reopen this case by filing these interlocutory applications. 

157. The applicants certainly cannot be provided an entry by back door method and permit the unsuccessful litigant to re- agitate and reargue their cases. The applicants have filed these applications merely to avoid compliance of the order of the court. The applicants have been successful in their endeavour and have not permitted the judgment delivered on 3.2.1996 to acquire finality till date. It is strange that other respondents did not implement the final order of this court without there being any order or direction of this court. These applications being devoid of any merit deserve to be dismissed with heavy costs.