Jay Pee Himachal Cement Project vs Babu Ram

Sanjay Karol, J.—The issue which arises for consideration in all these petitions is identical, as such with the consent of learned counsel for the parties they are being disposed of by a common order.

Facts are not in dispute. For public purpose, proceedings under the provisions of Land Acquisition Act, 1894 (hereinafter referred to as the Act), were initiated by the State of Himachal Pradesh. The present petitioners i.e. M/s. Jaiparkash Associates Limited are the beneficiaries.

Notification u/s 4 of the Act, acquiring land belonging to the present respondents, was issued on 12.4.2005. Award u/s 11 of the Act was passed by the Collector Land Acquisition, Arki on 28.1.2006. It is not in dispute that land of the present respondents is covered by the very same notification.

Aggrieved of the inadequate amount of compensation so awarded by the Collector, on different dates in the month of March, 2006, various land owners, including the present respondents, filed petitions under the provisions of Section 18 of the Act. Allegedly subsequent to filing of such petitions, respondents/land owners entered into private compromise with the petitioners herein. Such agreement(s) were entered into directly or through their authorized representatives whereby respondents herein agreed not to press their claims for enhancement of compensation in lieu of receipt of enhanced amount of compensation. Consequently, petitioners herein filed applications under Order 23 Rule 3 of the C.P.C., seeking dismissal of the reference petitions.

Such application(s) were vehemently opposed by the respondents herein. Execution, legality or validity of such agreements is seriously disputed. Respondents specifically deny execution of the agreements. According to respondents, amount received, if any, by them was not towards the enhanced amount of compensation or having agreed not to pursue their petitions but as a goodwill gesture so extended by the petitioners herein.

Vide impugned orders these applications stand rejected by the Court below, inter alia on the ground that agreements are in violation of Section 28 of the Indian Contract Act. Significantly the Court did not record its satisfaction about the validity or the factum of execution of such agreements. Hence the Court below erred in adopting such an approach.

Applications had to be considered in the light of statutory provisions.

Order 23 Rule 3 of the C.P.C. reads as under:-

Compromise of suit.- Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit.

Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.

Now in the instant case, as is evident from the provisions of the statute, the Court did not record its satisfaction about the execution or validity of the agreements allegedly executed between the parties. It was the duty of the Court to have decided the issue.

The Apex Court in Mahalaxmi Co-operative Housing Society Ltd. and etc. Vs. Ashabhai Atmaram Patel (D) Th. L.Rs. and Others, , has held as under:-

"42. The proviso to Rule 3 as inserted by the Amendment Act, 1976 enjoins the court to decide the question where one party alleges that the matter is adjusted by an agreement or compromise but the other party denies the allegation. The court is, therefore, called upon to decide the lis one way or the other. The proviso expressly and specifically states that the court shall not grant such adjournment for deciding the question unless it thinks fit to grant such adjournment by recording reasons."

[Also see: Sneh Gupta Vs. Devi Sarup and Others, ]

In Arjan Singh Vs. Punit Ahluwalia and Others, , the apex Court has held that proviso to Order 23 Rule 3 is in two parts. The first part applies where parties to the suit enter into a compromise in terms whereof a decree may become executable on the basis of the compromise. The second part shall apply in a case where claim of the plaintiff stands satisfied and no further action is required to be taken by the parties in terms of the consent decree. [Also see: Pushpa Devi Bhagat (D) th. LR. Smt. Sadhna Rai Vs. Rajinder Singh and Others, ].

The apex Court in Kishun @ Ram Kishun (Dead) through LRs. Vs. Bihari (D) by LRs., , while dealing with the identical circumstances has observed as under:-

That apart, we are of the view that the High Court was in error in holding that the appeal filed by Kishun against the decree of the trial court accepting a compromise which was disputed by him, was not maintainable. When on a dispute in that behalf being raised, an enquiry is made (now it has to be done in view of the proviso to Order XXIII Rule 3 of the Code added by Act 104 of 1976) and the suit is decreed on the basis of a compromise based on that enquiry, it could not be held to be a decree passed on consent within the meaning of Section 96(3) of the Code. Section 96(3) contemplates non-appealability of a decree passed by the court with the consent of parties. Obviously, when one of the parties sets up a compromise and the other disputes it and the court is forced to adjudicate on whether there was a compromise or not and to pass a decree, it could not be understood as a decree passed by the court with the consent of parties. As we have noticed earlier, no appeal is provided after 1.2.1977, against an order rejecting or accepting a compromise after an enquiry under the proviso to Order XXIII Rule 3, either by Section 104 or by Order XLIII Rule 1 of the Code. Only when the acceptance of the compromise receives the imprimatur of the court and it becomes a decree, or the court proceeds to pass a decree on merits rejecting the compromise set up, it becomes appealable, unless of course, the appeal is barred by Section 96(3) of the Code. We have already indicated that when there is a contest on the question whether there was a compromise or not, a decree accepting the compromise on resolution of that controversy, cannot be said to be a decree passed with the consent of the parties. Therefore, the bar u/s 96(3) of the Code could not have application. An appeal and a second appeal with its limitations would be available to the party feeling aggrieved by the decree based on such a disputed compromise or on a rejection of the compromise set up.

In Star Construction and Transport Co. and Others Vs. The India Cements Ltd., , the apex Court has held that Order 23 Rule 3 CPC is a provision for making a decree on any lawful agreement or compromise between the parties during the pendency of the suit by which claim is satisfied or adjusted. The agreement, compromise or satisfaction may relate to the whole of the suit or part of the suit or it may also include matters beyond the subject-matter of the suit. But Rule 3 clearly envisages a decree being passed in respect of part of subject-matter on a compromise. Whether in fact there has been compromise or adjustment of the suit claim or any part thereof is itself put in dispute in this case. Unless it is clearly established that such accord or compromise has been entered into between the parties, the powers under Order 23 Rule 3 CPC could not be exercised.

As such, impugned orders passed by the Court below, dismissing the applications filed by the petitioners under Order 23 Rule 3 C.P.C. are quashed and set aside with the following directions:-

(i) The Court shall decide the applications afresh, in accordance with law.

(ii) The Court shall decide the issue; record its satisfaction about the execution, if any, of the agreement/compromise, having entered into between the parties. Also its legality and validity shall be considered.

(iii) The Court shall afford adequate opportunity for leading evidence, if so required by the parties. Parties undertake to co-operate and not take any unnecessary adjournment.

(iv) Parties shall appear before the trial Court on 20.8.2014.

(v) Since petitions were filed in the year 2006, hearing is expedited and the Court shall decide the applications and if so required the main petition itself, expeditiously and not later than nine months from the first hearing.

With the aforesaid observations, present petitions stand disposed of, so also pending application(s), if any.