The Supreme Court Decision in Asian Resurfacing of Road Agency

Yesterday, a Three-Justices' Bench of the Indian Supreme Court decided a batch of forty-six petitions referred to it, with the lead petition being Asian Resurfacing of Road Agency P. Ltd. v. Central Bureau of Investigation [Crl. Appeal Nos. 1375-76 of 2013, (Asian Resurfacing)]. The decision carries two separate opinions - one by Justice Goel for himself and Justice Sinha, and a concurrence by Justice Nariman. The issues common to these petitions (which date back to 2013), were (i) what is the scope of Section 19(3)(c) of the Prevention of Corruption Act, 1988 [PC Act] (which places some prohibitions on granting of stays in corruption trials), and (ii) whether an order on charge in trials for PC Act offences can be challenged in Revision proceedings before a High Court under Section 397 Cr.P.C. The Court answered these questions as follows: (i) Section 19(3)(c) of the PC Act prohibits granting of stays for any reason, but does not take away the inherent powers of High Courts to grant stays under Section 482 Cr.P.C., and (ii) an order an charge in PC Act cases can be challenged via Revision proceedings before the High Court, as it is not a purely interlocutory order [orders on charge being the judicial stamp on the allegations by the prosecution, where the judge concludes there is enough basis to start taking evidence in the case]. 

Neither opinion answers both issues - Justice Goel mainly addresses the Revision petition problem [Paragraphs 25, 35], and Justice Nariman engages with the issue of stays [Paragraphs 8-11]. If one was to be a purist, these parts of the opinions are what form the ratio, or that part which should be followed in later cases. But such fine lines are hardly ever drawn with Supreme Court decisions, especially so with those by three Justices. And Asian Resurfacing might well prove more important for the large parts of obiter in Justice Goel's opinion, for he created new rules for how stay orders will be granted by courts - "stay orders" here being orders by which the proceedings can be halted by a superior court while it decides a petition brought before it. Now, stay orders shall lapse in all civil or criminal cases upon the expiry of six months unless "in an exceptional case" the presiding judge passes a "speaking order" explaining why continuing the stay was more important than proceeding with the trial [Paragraphs 35-36, Goel J.]. Having explained the effect of the decision, let me now turn to the reasoning adopted for deciding the two questions, before addressing the other remarkable parts in both opinions.

What Was The Problem?

The problem arose because of a decision by a two judges' bench of the Delhi High Court delivered by the current CJI in Anur Kumar Jain [2011) 178 DLT 501 (DB)] (previously discussed here and here). In that case, the Delhi High Court had held that (i) there can be no revision proceeding against orders on charge in PC Act cases, and (ii) while proceedings under Section 482 Cr.P.C. or under Article 226 / 227 of the Constitution were not barred, no order staying the trial could be passed because it was barred by Section 19(3)(c). The practical effect of this was that litigants challenged orders on charge through petitions under Section 482 Cr.P.C. but without getting a stay of proceedings. It should be clear why stay orders were so sought after - if the trial kept proceeding, then any order from the High Court on the point of charge could potentially be useless. Since the High Court could not grant a stay, litigants turned to request the trial court to defer recording of evidence until the High Court decided the petition. Now, High Courts have clogged dockets, and without extremely reputed counsel one is unlikely to get a petition disposed fast enough, and even then most petitions would eventually prove futile. This legal position made it unfairly prohibitive for litigants (both with means and without) to challenge orders on charge despite having good bases to do so.

The legal basis of the Delhi High Court's opinion was tenuous on both issues. It had decided that the order on charge in PC Act cases was an "interlocutory" order, and so could not be challenged through a Revision petition because of the specific bar against this under Section 397(2) Cr.P.C. But it had come to this conclusion by attempting to distinguish earlier Supreme Court precedent in Madhu Limaye [(1977) 4 SCC 551], by suggesting it had been modified by another Supreme Court decision in V.C. Shukla [1980 (Supp) SCC 92] (discussed previously here). With respect to the ban on stay orders, the High Court relied on the Supreme Court decision in Satya Narayan Sharma [(2001) 8 SCC 607] which had held that Section 19(3)(c) of the PC Act completely prohibits granting any stay orders by any court, including by the High Court under Section 482 Cr.P.C. The Supreme Court had arrived at this conclusion in Satya Narayan Sharma without discussing the nature of inherent powers under Section 482, and how several decisions including Madhu Limaye had interpreted the scope of these powers being untrammelled as they were intended to do justice and prevent abuse of process.

How did the Supreme Court Decide the Issues?

The Court held that the Delhi High Court in Anur Kumar Jain was wrong on both counts, while it did correctly hold that exclusion of Revision petitions did not control the scope of a High Court's inherent powers or constitutional jurisdiction. The issue on the nature of orders on charge was straightforward enough - the Court approved the legal position in Madhu Limaye, which had held that "interlocutory" for purposes of Section 397(2) Cr.P.C. was not to be seen as referring to everything except the final judgment. In doing so, it relegated the decision in V.C. Shukla to historical insignificance by holding that that the decision was purely limited to the special statute it was concerned with, and did not affect the position of law. So, the position of law governing PC Act cases remained what the Court had held in Madhu Limaye, and by that standard, orders on charge were not "interlocutory" and remained open to challenge through Revision petitions under Section 397 Cr.P.C. [Paragraphs 24-25, Goel J.].

The legal aspects of the issue regarding granting stay orders in PC Act cases was addressed by Justice Nariman. He reasoned, first, that while Section 19(3)(c) of the PC Act did go beyond merely sanction issues [contrary to what the Petitioners argued (Paragraphs 7-8, Nariman J.)], it did not cast an absolute ban on granting stay orders. Rather, he read this together with Section 19(3)(b), and said that the power to grant stay orders to prevent failures of justice did exist [Paragraph 8, Nariman, J.]. The second part of his reasoning extended this power to High Courts. For this, he reasoned that inherent powers of a High Court were not granted by the Criminal Procedure Code but arose because of the High Court being a Court of Record with powers to punish for its contempt, and the origins of inherent power were thus properly traced to the Constitution itself. Section 19 of the PC Act, by overriding application of anything in the Criminal Procedure Code, therefore could not affect exercise of the constitutional authority by High Courts - under Section 482 Cr.P.C. as well as Articles 226 / 227 of the Constitution [Paragraphs 9-11, Nariman, J.]. High Courts had full powers to grant stay orders even in PC Act cases, and this conclusion meant that the Court's earlier decision in Satya Narayan Sharma was no longer good law.

Everything Else - Rules on Stay Orders and the Ghost of Suneja

Both opinions are curious things - Justice Goel says nothing about the legal issue on stays, and yet his opinion will shake up how courts across the country regulate stay orders in all sorts of cases. And then there is the ghost of Girish Kumar Suneja v. CBI [(2017) 14 SCC 809 (Suneja)] - another decision by three Justices where the Supreme Court considered the same issues. Let's take up both in order.

Limits on Stay Orders 

In recent years, several government bodies have cast a beady eye on stay orders and the delays they cause in the legal system (see here and here). The Court itself has been quite vocal about stay orders being granted too loosely and matters dragging on endlessly. In Asian Resurfacing itself, the Court notes how the FIR was registered in 2001 - seventeen years ago - and the case is still at the stage of charge (although no explicit mention of stay orders is made). Thus, a move which tightens this process can arguably be considered as a positive move for the Indian legal system. To this extent, I agree, but I maintain a cautious optimism over what this case could achieve. We must remember that this is happening in appeals where two specific legal issues regarding the PC Act were referred to a larger bench of the Supreme Court, and none of them was about delays through stay orders in the entire legal system. Thus, it remains fully possible for a subsequent bench of the Court to go ahead and remind us that these observations could not be binding. The chances of this are not remote, considering how a large part of litigation in India involves lawyers strategically using stay orders. On a related note, it should also concern us that the Court was ready to come at these sweeping conclusions without citing any recent data on the problem - it cited portions of a 2012 decision in Imtiaz Ahmed [(2012) 2 SCC 688] which had nothing to do with civil litigation either. Do we know how many cases will be affected by this ruling? Was there a better way than to issue a diktat sitting from New Delhi, that will now rumble on slowly through the vast legal system across India and cause havoc in several cases? Perhaps there was, but now, unless something changes one can expect a fair bit of turmoil as all courts across the country determine the impact of what the Supreme Court said in Asian Resurfacing.

Girish Kumar Suneja

Which brings me to Suneja - a decision that had been the subject of some criticism on this blog (see here, and here) [Full disclosure: I was involved in the litigation in a connected petition for petitioners who had challenged the impugned order, and thus lost in the Supreme Court]. Suneja also addressed both of these issues (unnecessarily, as I argued previously), and had come at diametrically opposite conclusions: the Court had held that (i) Revision proceedings against PC Act orders on charge are barred, (ii) that this prohibition also barred challenging such orders under Section 482 Cr.P.C. as this indirectly lifted the ban on Revision proceedings, and finally (iii) that Section 19(3)(c) of the PC Act completely barred stay orders from being granted. Now, since Suneja was also decided by three Justices, the Supreme Court could not overrule it in Asian Resurfacing. So we find both opinions trying to arrive at a compromise - holding that the conclusions in Suneja were incorrect without actually saying that the decision was wrong. And it makes for a sad spectacle. Justice Goel's opinion admits that "seemingly conflicting observations" were made in Suneja, but it did not displace Madhu Limaye, which remained good law through all these years [Paragraph 25, Goel J.], and strangely enough, goes ahead and favourably cites Suneja to begin his lament against delays [Paragraph 26, Goel, J.]. 

Justice Nariman tries to salvage Suneja by indirectly admitting that some parts of that decision were incorrect and conflicted with other parts which contain "an exposition of the law correctly setting out what has been held earlier in Madhu Limaye". But judgments must be read as a whole, and thus he asks that these parts be read "harmoniously" to arrive at the correct conclusion, i.e. the one that he has arrived at [Paragraph 17, Nariman, J.]. I am yet to fully wrap my head around how this happens: the parts of Suneja that are admittedly incorrect are in fact the holding of the case on two PC Act issues that we have flagged here [Paragraphs 25, 29 and 32 of Suneja]. The lone paragraph in Suneja that Justice Nariman says is "correctly setting out" the law [Paragraph 38 of Suneja], comes when the Court is deciding whether or not litigants could challenge orders on charge through Article 226 / 227 of the Constitution, after the Court has already decided that litigants cannot challenge these orders under the Cr.P.C. And even if one agrees that Paragraph 38 of Suneja should control, I struggle to understand how it controls on the issue of granting stays, which it says nothing about. 

Conclusions

Asian Resurfacing has already made headlines for its limits on stay orders. Those observations are of undoubted significance, but for reasons that I already expressed above, I remain wary of hailing it as a game-changer just yet. The decision is also striking for providing an insight into a peculiar problem that the Supreme Court has often faced - genuine disagreement between two sets of benches on what the law should be. The institutional dynamics of the Court have not always been conducive to neat solutions in these scenarios, and something similar has happened between Asian Resurfacing and the 2017 decision in Suneja. The Supreme Court in Asian Resurfacing has tried to remove the ground on which Suneja stood without finding it incorrect, but the reconciliation is far from satisfactory. Despite how both opinions refused to call it so, the conclusions in Asian Resurfacing are certainly in conflict with what was held by the three Justices in Suneja, which makes the conclusions arrived at in Asian Resurfacing of questionable legal force. This means that, technically, one can argue that the decision in Asian Resurfacing is little more than a bright facade with a hollow core and should not be followed by courts. Only time will tell how the decision is received.