Validity of automatic vacation of stay | Supreme Court reserves judgement

Automatic vacation of stay is arbitrary, judgement in Asian Resurfacing was wrong, SG Mehta argues

Today, a five-judge Constitution Bench of the Supreme Court led by Chief Justice D.Y. Chandrachud reserved its judgement in a case deciding whether a temporary stay granted by a Court in pending cases automatically ceases to operate after six months.

The Bench also comprising Justices Abhay S. Oka, J.B. Pardiwala, Pankaj Mithal, and Manoj Misra was reconsidering a March 2018 judgement in Asian Resurfacing of Road Agency Pvt Ltd and Another v Central Bureau of Investigation (2018). They heard arguments from Senior Advocates Rakesh Dwivedi, Vijay Hansaria, Solicitor General Tushar Mehta and advocates Mahfooz Nazki and Amit Pai. 

The case before the Supreme Court 

In Asian Resurfacing, a three-judge Bench of the Supreme Court comprising Justices Adarsh Kumar Goel, Navin Sinha and Rohinton Nariman held that in ordinary circumstances, a stay Order should not exceed two to three months. They also held that a stay should not be unconditional or for an indefinite duration.

The Court had directed that in all civil and criminal proceedings where a stay Order is granted, the Order would be in operation only for six months and would expire after that.

Further, any extension of stay could only be granted by a subsequent reasoned Order showing that the case is of “such exceptional nature that continuing the stay was more important than having the trial finalised.”

On 1 December, a three-judge Bench led by the Chief Justice expressed reservations on the correctness of the conclusions in Asian Resurfacing and referred the matter to a five-judge Constitution Bench.

Dwivedi: Automatic vacation of stay disregards application of mind

Dwivedi, appearing for the High Court Bar Association of Allahabad, contended that the judgement in Asian Resurfacing was an example of judicial legislation. This, he said, was something that the Court “does not engage (itself) in.”

He went on to argue that the directions of the Court in Asian Resurfacing prescribe a “general norm” for the conduct of judicial proceedings and is therefore akin to the Court enacting a fresh provision.

When an Order of stay is automatically vacated, there is no “application of mind” involved, Dwivedi noted. He asserted that the application of mind is the essence of judicial decision-making. Without this, judicial decisions would be arbitrary. He cited multiple examples where the Court cautioned against arbitrariness in decision-making.

Dwivedi further argued that the arbitrary and discriminatory character of the decision in Asian Resurfacing arises from the fact that it “lumps together” different cases irrespective of facts, nature of jurisdiction and determination of fault.

CJI Chandrachud: Automatic vacation of stay is a judicial act, not an administrative act

During the proceedings, the Chief stated that the automatic vacation of stay Orders prejudiced litigants irrespective of their conduct. 

“Vacation of stay is a judicial act and not an administrative act,” the Chief Justice observed, expressing further reservations about the Court’s earlier decision.

He also highlighted that the problem is magnified in larger High Courts of the country where the volume of cases is high and even matters which are listed may not get a chance to be heard. “It gets impossible for the board to be completed”, he said.

Mehta: The party opposing stay has to do nothing except be negligent

Mehta argued that the Court’s judgement in Asian Resurfacing treats “unequal litigants equally” by creating a situation where a party that has convinced the Court to grant a stay is disadvantaged.

Article 226(3) of the Constitution prescribes the procedure for making an application to a High Court for the vacation of a stay Order. However, the Asian Resurfacing judgement effectively goes around the procedure prescribed by the Constitution. “Here… he (the party) has to do nothing except be negligent,” Mehta said.

Further, he argued that High Courts hold the discretion  on interim orders under Article 226 and Section 482 of the Code of Criminal Procedure 1973. By automating the process, the Supreme Court had, “by a judicial mandamus”, taken away the High Court’s discretion to impose a stay for a period of more than six months.

Mehta noted that stays are granted based on three conditions — strong prima facie evidence, balance of convenience (comparing the benefit or inconvenience that each party will face if an injunction is granted) and irreparable injury to the plaintiff. Automatically vacating a stay Order, Mehta urged, ignores potential changes to these conditions at the expiry of six months. 

Lastly, Mehta submitted that laying down timelines for judicial proceedings was a matter of parliamentary discretion, and not judicial discretion.

After a day of arguments, the Bench reserved judgement in the case.