The case of Narayan Sitaramji Badwaik (Dead) Through Lrs. v. Bisaram And Others adjudicated by the Supreme Court of India on February 17, 2021, presents a significant development in the interpretation and application of Sections 100 and 103 of the Code of Civil Procedure (CPC). This case revolves around a dispute concerning the validity and enforceability of a sale deed which the appellants argue was merely a collateral security for a loan, rather than an actual sale transaction. The parties involved include Narayan Sitaramji Badwaik, represented by his legal successors, as the appellant, and Bisaram along with other respondents.

The key issues in this case are:

• Whether the sale deed executed was genuine or merely a collateral security.
• The appropriate application of Sections 100 and 103 of the CPC in handling second appeals.
• The High Court's handling of factual and legal determinations in the appeal process.

The appellant filed a suit seeking possession of disputed property based on a sale deed dated September 26, 1978, for a sum of Rs. 10,000. The respondents contested the validity of this sale, asserting that the document was intended as collateral for a loan rather than a genuine sale agreement. The Trial Court dismissed the appellant's suit in 1995, a decision that was overturned by the District Judge in 1997, favoring the appellant. However, the High Court reinstated the Trial Court's decision, dismissing the appellant's suit.

Upon reaching the Supreme Court, it was noted that the High Court had erred in its approach by not adequately considering the evidence and by improperly applying legal provisions. The Supreme Court criticized the High Court for deciding the appeal without a proper assessment of the evidence, relying instead on a cursory analysis. Consequently, the Supreme Court set aside the High Court's order and remanded the matter back for fresh consideration, emphasizing the need to adhere to the correct application of Sections 100 and 103 CPC.

The judgment extensively references several key precedents that elucidate the application of Sections 100 and 103 CPC in second appeals:

• Santosh Hazari v. Purushottam Tiwari (2001) 3 SCC 179: Established that a second appeal under Section 100 CPC is permissible only on substantial questions of law.
• Municipal Committee, Hoshiarpur v. Punjab State Electricity Board (2010) 13 SCC 216: Highlighted that Section 103 CPC is not an exception to Section 100 but serves a similar purpose, allowing the High Court to determine issues of fact under specific circumstances.
• Jagdish Singh v. Natthu Singh [(1992) 1 SCC 647]; Karnataka Board Of Wakf v. Anjuman-E-Ismail Madris-Un-Niswan [(1999) 6 SCC 343]; and Dinesh Kumar v. Yusuf Ali [(2010) 12 SCC 740]: Emphasized the High Court's limited scope in reviewing factual findings unless they are perverse or vitiated by legal errors.
• Bharatha Matha v. R. Vijaya Renganathan [(2010) 11 SCC 483]: Defined the parameters of when factual findings by lower courts could be considered perverse.

The Supreme Court's reasoning focused on the proper interpretation of Sections 100 and 103 CPC:

• Section 100 CPC: Pertains to second appeals that lie only on substantial questions of law. This section does not inherently restrict the High Court from considering factual issues if they are intertwined with legal errors.
• Section 103 CPC: Empowers the High Court to determine any issue of fact if the evidence is sufficient and if the lower courts have either not addressed the issue or have erred in their factual determinations due to legal misapprehensions.

The High Court, in this case, failed to adequately assess the evidence and instead relied on a limited interpretation of the legal principles, thereby neglecting Section 103 CPC's provision to evaluate factual disputes when legal errors are evident. The Supreme Court underscored that the High Court should have either remanded the case back for a thorough factual analysis or exercised its authority under Section 103 CPC to decide the factual issues itself.

Furthermore, the Supreme Court criticized the High Court for its mechanical approach in upholding the Trial Court's decision without a comprehensive evaluation of the evidence. This oversight led to a miscarriage of justice, warranting the remand for fresh consideration.

This judgment clarifies the boundaries and interplay between Sections 100 and 103 of the CPC in second appeals. It reinforces the High Court's role in ensuring that both legal and factual aspects are thoroughly examined, especially when the lower courts' decisions may have been influenced by legal misinterpretations. The decision serves as a precedent for:

• Ensuring that High Courts do not overlook factual assessments when legal errors are apparent.
• Affirming the necessity for comprehensive evaluations of evidence in second appeals.
• Guiding lower appellate courts on the appropriate handling of evidence and legal principles in their judgments.

Consequently, future cases involving second appeals will draw upon this judgment to balance legal reasoning with factual scrutiny, ensuring fair and just outcomes.

Second Appeal Under Section 100 CPC

A second appeal is a process where a party can challenge the judgment of a lower appellate court (like the First Appellate Court) in a higher court (like the High Court). Section 100 CPC allows such appeals only if they involve substantial questions of law, meaning significant legal principles or interpretations.

Determining Issues of Fact Under Section 103 CPC

Section 103 CPC grants the High Court the authority to decide on factual matters in a second appeal, but only under specific conditions:

• The issue was not addressed by the lower courts.
• The issue was incorrectly determined due to legal errors by the lower courts.

This ensures that factual determinations are only reassessed when necessary, preventing unnecessary re-litigation of established facts.

Perverse Findings of Fact

A "perverse" finding of fact is one that is so unreasonable or illogical that no reasonable person could arrive at it based on the evidence. In such cases, the High Court can overturn these findings as they indicate a significant error in judgment.

Nominal Sale-Deed

A nominal sale-deed refers to a document that appears to transfer ownership of property but, in reality, serves another purpose—such as securing a loan. In this case, the appellant alleged that the sale-deed was not a genuine sale but a collateral security for a loan.

The Supreme Court's decision in Narayan Sitaramji Badwaik Through Lrs. v. Bisaram And Others underscores the critical importance of accurately applying procedural laws in appellate courts. By remanding the High Court's decision due to its inadequate assessment of evidence and improper application of legal provisions, the Supreme Court reinforced the necessity for High Courts to balance both legal reasoning and factual analysis.

This judgment serves as a foundational reference for future litigants and courts, ensuring that second appeals are handled with due diligence and comprehensive scrutiny. It highlights the judiciary's role in safeguarding fair trial principles and reinforces the meticulous application of procedural laws to uphold justice.