Recently, in a landmark judgement, a five-judge bench (“Reference Court”) of the Hon’ble Supreme Court (“Supreme Court”) in High Court Bar Association, Allahabad vs. State of Uttar Pradesh and Ors. (“Reference”) overturned the decision of the full bench in Asian Resurfacing of Road Agency(p) Ltd. v. CBI  (“Asian Resurfacing”), and held that there cannot be an automatic lapse of stay proceedings on the expiry of a period of six months from the date of passing the order for stay of proceedings.

SUPREME COURT IN ASIAN RESURFACING

“In all pending matters before the High Courts or other courts relating to the PC Act or all other civil or criminal cases, where stay of proceedings in a pending trial is operating, stay will automatically lapse after six months from today unless extended by a speaking order on the above parameters.”

In Asian Resurfacing, the full bench, whilst dealing with the question of whether an order of framing charge was an interlocutory order under the provisions of the Prevention of Corruption Act, 1988, passed directions qua the jurisdiction of the High Court to grant stay of trial proceedings and the contours concerning the same.

The full bench was of the view that stay proceedings have a deleterious effect on the administration of justice by causing inordinate delays in trials, which in turn affects faith in the Rule of Law and efficacy of the legal system, and therefore, prima facie case ought not to be enough and a speaking order must be passed elucidating exceptional circumstances for passing an order of stay of proceedings.

Being vary of inordinate delay and prejudice being caused to the other parties, the full bench directed the proceedings to be concluded within a span of three months, and if the same is not possible owing to limitations of the legal system, the full bench directed the stay granted in all pending cases of civil and/or criminal nature to come to an end on expiry of six months, unless an express extension is granted by the adjudicating court via a speaking order which too should show exceptional and pertinent nature of staying the proceedings.

REFERENCE TO THE LARGER BENCH

The Supreme Court expressed their reservation qua the aforementioned rationale passed in Asian Resurfacing, citing miscarriage of justice if there is an automatic vacation of stay without application of judicial mind, and without the fault/lacunas in the conduct by the parties. Resultantly, the position of law was referenced to a five-judge bench i.e., the Reference Court in Reference, which broadly posed the following questions:

1. Whether the Supreme Court can order for automatic vacation of stay on proceedings by way of expiry of a certain period?

1. Whether the Supreme Court, in the exercise of jurisdiction under Article 142, can direct the High Court to decide pending cases in which an order for a stay of proceedings has been granted on a priority basis within a fixed period?

I.WHETHER AN INTERIM ORDER CAN COME TO AN END AUTOMATICALLY ONLY DUE TO THE LAPSE OF TIME?

“All interim orders of stay passed by all High Courts cannot be set at naught by a stroke of pen only on the ground of lapse of time.”

Primarily, in the Reference it was observed that interim relief is generally granted in the aid of final relief sought in the case, and an order for a stay of proceedings, being in the nature of an interim relief, is granted by the High Court in case the matter for interim relief cannot be taken up for final hearing immediately. Further, the Reference Court disagreed with the limitation imposed by Asian Resurfacing on the High Courts with respect to passing of orders of stay of proceedings only in exceptional circumstances and expounded that the High Court, whilst passing interim orders for stay, assesses/bears in mind the three factors i.e., prima facie case, irreparable loss, and balance of convenience.

The Reference Court also observed that automatic vacation of stay proceedings goes against the tenets/elementary principles of natural justice which dictate that an order vacating interim relief shall only be passed after hearing all the affected parties, and there must be thorough and proper application of mind, and not merely basis the fact that there is a delay in hearing of the matter, especially when the litigant is not responsible for the same.

The Reference Court, thus, held:

“No litigant should be allowed to suffer due to the fault of court”. 

Further, the case of Deputy Commissioner of Income Tax & Anr. v. Pepsi Foods Limited was cited to expound on the manifestly arbitrary nature of even provisions which mandated automatic vacation of stay, and therefore, were held to be violative of Article 14 of the Constitution of India.

1. SCOPE OF EXERCISE OF POWERS OF THE SUPREME COURT UNDER ARTICLE 142 OF THE CONSTITUTION

“The jurisdiction of this Court cannot be exercised to make such a judicial legislation. Only the legislature can provide that cases of a particular category should be decided within a specific time.”

The Reference Court categorically noted that the full bench in Asian Resurfacing delved into an issue which did not specifically arise for its consideration, and therefore, the same was outside the scope of the lis therein.

The five-judge bench, expounding on the intent of Article 142 being to further the cause of justice and secure complete justice, held that the same could not be invoked routinely to pass blanket orders to nullify the interim protection tendered by the constitutional courts such as the High Courts, especially without hearing the contesting parties.

Pertinently, taking a cue from the Constitution benches in Prem Chand Garg & Anr. v. The Excise Commissioner, U.P. and Ors. Supreme Court Bar Association v. Union of India & Anr., the Reference Court affirmed that under Article 142, the Courts can issue directions to courts for streamlining procedural aspects to further expeditious and timely disposals of cases, but they cannot in the process ignore express statutory provisions and/or ignore substantive rights of the litigants, and must inhibit and be in conformity with the fundamental rights guaranteed to the litigants by the Constitution of India.

Moreover, the Reference Court was of the view that the application of Article 142 cannot interfere with the powers conferred with the High Courts under Article 227 of the Constitution qua exercising superintendence over all the courts including its power to grant orders of stay on the proceedings, and therefore, the blanket orders such as the one in Asian Resurfacing constrain the powers of High Court and have delirious impact on the jurisdiction exercised by the High Courts under Article 226 and 227 of the Constitution of India.

Apart from the judgement of Asian Resurfacing impeding on the jurisdiction and powers of the High Court, the directions therein effectively impose timelines for the disposal of such cases, which vest solely with the legislature, and amount to judicial legislation, which is not only beyond the scope of Article 142, but also encroaching upon the powers solely vested with the legislature. The Supreme Court also analysed Section 254 (2A) of the Income Tax Act and even then considered that even if the legislature were to come out with such a provision for automatic vacation of stay, the same may not stand judicial scrutiny as it may suffer from manifest arbitrariness.

The Reference Court was cognisant of the fact that the matters which deal with orders of stay/interim reliefs should be disposed of expeditiously, however, it also took judicial note of the docket explosion and the burden of the High Courts across the country dealing with such load, and therefore, were of the view that the Supreme Court, under Section 142, could not fix a time-bound schedule for disposal of cases pending in any court. This was also observed noting that such directions shall be discriminatory to the litigants who are not able to approach the higher court for priority decision in their facts and circumstances.

The Reference Court succulently held the following:

“The situation at the grassroots level is better known to the judges of the concerned courts. Therefore, the issue of giving out-of-turn priority to certain cases should be best left to the concerned courts”

SUBSTANCE OVERTURNED, SPIRIT FURTHERED

While it is evident that the Reference Court herein was not in agreement with the dicta laid down by the bench in Asian Resurfacing, it was in full consonance and understanding of the intent behind the same and therefore, passed certain procedural directions which could be adopted by the High Courts while passing interim order of stay of proceedings and for dealing with the applications for vacating interim stay, which were inter alia the following:

1. Necessary priority ought to be given in cases for interim relief where ad-interim relief has been granted, and while there is no mandate for detailed reasons being accorded by the High Courts, there must be sufficient indication qua application of mind to the relevant factors;
2. Priority must be given to applications for vacation of the order for stay of proceedings, but the same must entail sufficient opportunity of being heard accorded to the party in whose favour the interim order was passed;

CONCLUSION

The Reference Court was unable to concur with the directions issued in paragraphs 36 and 37 by the full bench in Asian Resurfacing and answered both the questions posed in Reference in the negative. Pertinently, the Reference Court also clarified that where trials have been concluded basis the decision of Asian Resurfacing, the orders of automatic vacation of stay shall remain valid, and answered the Reference accordingly.