Khoday Distilleries Ltd. and Others v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd., Kollegal

A cooperative sugar factory in liquidation sued the appellants in the City Civil Court, Bangalore, for about ₹1 crore with interest. The trial court held the money payable but dismissed the suit as time-barred. In appeal, the Karnataka High Court held the suit to be within time and decreed it with interest. The appellants' special leave petition against the decree was dismissed by a non-speaking order.

The appellants then applied to the High Court for review, contending that the decree awarded more than had been claimed. The High Court declined to entertain the review because the special leave petition had been dismissed. As Abbai Maligai Partnership Firm v. K. Santhakumaran had disapproved of a High Court entertaining a review after the dismissal of a special leave petition, while Kunhayammed v. State of Kerala had held such a review maintainable, the question was placed before a three-judge Bench.

The Court restated the two stages of Article 136: the petition seeking leave, and the appeal that follows only if leave is granted. An order refusing leave, whether or not it gives reasons, is not an exercise of appellate jurisdiction and does not attract the doctrine of merger, so the High Court's judgment remains the operative decision. Where the order refusing leave gives reasons, the law it declares binds under Article 141, but that is a matter of precedent, not merger.

Abbai Maligai was explained as a decision on its peculiar facts, without discussion of the governing principle, whereas Kunhayammed had examined the question fully and was to be followed. On that footing, the timing of the review petition, before the special leave petition was filed or after it was dismissed, made no difference.