N.G. Prabhakar vs Manali Housing Development Company Limited

Anand Byrareddy, J.—Heard the learned Senior Advocate Shri S.S. Ramdas appearing for the counsel for the petitioners and the learned Senior Advocate Shri Dhyan Chinnappa appearing for the counsel for the respondents.

The present petitions are filed by the plaintiffs in the following background, that the suit filed by the plaintiffs in the year 1995 for the reliefs of declaration and injunction was settled by way of a compromise entered into between the parties in a compromise petition which was decreed in terms thereof by order and decree dated 10.08.1999. It is later, namely on 22.04.2006, that the plaintiffs sought to raise a fresh contention that certain terms of the compromise had not been finally settled and hence, were before the Court. The said application was contested by the defendants and ultimately the Court arrived at a finding that there was no substance in the claim but however, proceeded to observe that if the plaintiffs sought to set up a claim which was not supported by material evidence or the terms of the compromise, it is open for the petitioner to agitate before an appropriate forum. It is that order which is sought to be questioned in the present proceedings.

The learned Senior Advocate Shri Ramdas would firstly point out that on facts, the Court was not justified in summarily rejecting the claim though evidence was tendered in support of the claim even in the proceedings that were reopened and there having been admissions made by the defendants to the extent of stating that cheques were indeed issued in favour of the plaintiffs which was in consideration of the plaintiffs withdrawing certain pending suits and since those suits had not been withdrawn as agreed, the Banker of the defendants had been informed to dishonour the cheques and it is in that background that the cheques were dishonoured. Therefore, the learned Senior Advocate would submit that there was substance in the claim which could not have been rejected, while construing the terms of the compromise, when there was an admission by the defendants.

Secondly it is contended on a point of law that the observation of the court below as to the petitioners being required to institute independent proceedings before an appropriate forum, was also not in consonance with the law. In this regard, he places reliance on the decision of the Supreme Court in the case of Pushpa Devi Bhagat (D) th. LR. Smt. Sadhna Rai Vs. Rajinder Singh and Others, , wherein, the legal position that would emerge from the amended Order XXIII CPC, has been summed up thus:

"12. The position that emerges from the amended provisions of Order 23, can be summed up thus:

(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in section 96(3) CPC.

(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) Rule 1, Order 43.

(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3A.

(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 of Order 23.

Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree, is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made. The second defendant, who challenged the consent compromise decree was fully aware of this position as she filed an application for setting aside the consent decree on 21.8.2001 by alleging that there was no valid compromise in accordance with law. Significantly, none of the other defendants challenged the consent decree. For reasons best known to herself, the second defendant within a few days thereafter (that is on 27.9.2001), filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by second defendant was not maintainable, having regard to the express bar contained in section 96(3) of the Code."

Therefore, the learned Senior Advocate would submit that both on facts and in law, the Trial Court had erred and hence this Court in exercise of power of superintendence under Article 227 of the Constitution of India could enter upon the legality of the same and address the question whether the court below was justified in rejecting the application on the aforesaid grounds.

While the learned Senior Advocate appearing for the counsel for the respondents would seek to justify the order of the court below and would point out that the so-called cheques that are referred to on the basis of which a claim is sought to be made is not even remotely referred to in the course of the suit or in the compromise petition. An admission having been elicited through the defendant as to the same having been issued for a particular purpose, is also not tenable as there is no such admission. It is sought to be pointed out by the learned Senior Advocate Shri Dhyan Chinnappa that the suggestion put by the counsel for the defendants to the effect that cheques had been issued in consideration of withdrawal of certain suits which were instituted, and which was denied by the plaintiffs is sought to be construed as an admission of that circumstance by the defendant and it is sought to be suggested that there was a claim which could be pursued and the court below having rejected the same, is unfair. It is emphatically asserted that there is no admission made by the defendant as to any cheques being issued in respect of an alleged withdrawal of the suit. Hence the suggestion made by the learned counsel for the defendant while cross-examining a witness for the plaintiffs to be construed as being an admission, is untenable and hence would submit that by any stretch of imagination, there is no factual foundation laid to the claim and hence, the rejection of the same is in order.

While this Court in its power of superintendence under Article 227 of the Constitution of India would certainly examine the legality of an order of a Court within its jurisdiction, it is not that this Court should impose its opinion over a finding of fact arrived at by the court below. Since there was evidence tendered on the application filed by the plaintiffs and after consideration of the material facts and evidence in support thereof, the court having arrived at a finding, would fully and finally close the proceedings. The appropriate remedy for a person seeking to question the compromise decree as laid down by the Apex Court would be before that very court which passed the decree. Though Order XLIII Rule 1(a) sub-rule (2) does provide for an appeal against a decree passed in the suit after recording a compromise upon refusing to record a compromise on the ground that the compromise should or should not have been recorded, the Karnataka Amendment to sub-rule (2) is not of the same tenor and therefore, the contention that an appeal would lie under Order XLIII Rule 1(a)(2) is also not tenable, as the Karnataka amendment is a departure from the language of sub-rule (2) as contained in the Code. The law as rightly pointed out by Shri Ramdas is as laid down by the Apex Court in the case of Pushpa Devi Bhagat''s case and hence, the observation of the Trial court that it would be still open for the petitioner to pursue the remedy before some other forum, is not the correct legal position.

Except holding that the court below was not justified in suggesting that the petitioner could approach some other forum, as that very court was the final authority insofar as the compromise decree was concerned, having adjudicated upon the claim sought to be set up by the plaintiffs, could not again leave the question open to be agitated before some other forum. With that observation, the petitions stand disposed of.