Radha Soami Satsang Beas vs Rajiv Popli & Others

(i),Defendant No.1 (Rajiv Popli-grandson),30%

(ii),Defendant No.2 (Son-now plaintiff No.2),30%

(iii),Defendant No.3(Ms.Kiran Jethi-Daughter),30%

(iv),Plaintiff No.1,10%

Learned counsel appearing for plaintiff No. 2 however states that at best, even in terms of the order dated 23.11.2017, defendant No. 3 had time only",,

up to 4th or 5th December, 2017 to make the payment. As he has defaulted, plaintiff No.2 is not obliged to carry forward the transaction. He states",,

that settlement Agreement dated 31.08.2017 recorded in court now stands frustrated and has to be given a go bye. He presses for a preliminary,,

decree in his favour. He further states that his client lives in UK and has ended up wasting his time only by entering into the settlement.,,

The controversy remains is as to whether this delay of one month in offering the payment by defendant no.3 would result in frustration of the,,

family settlement that was entered between the parties in court on 31.08.2017. The settled legal position in this regard is that in a contract regarding,,

immovable property, it would normally be presumed that the time is not the essence of the contract. In Smt. Chand Rani (dead) by LRs. Vs. Smt.",,

Kamal Rani (dead) by LRs (1993) 1 SCC 519, the Supreme Court held as follows:-",,

“18. It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact,",,

there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under,,

the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter",,

but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which,,

completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time",,

the essence of the contract must be expressed in unequivocal language.â€​,,

To the same effect is the judgment of the Supreme Court in Gomathinayagam Pillai & Ors. vs, Oakabuswanu Nadar, AIR 1967 SC 868.",,

A perusal of the order dated 31.08.2017 shows that there was nothing in the said settlement to show or indicate that the time was the essence of,,

the contract that was entered into and recorded between the parties. Clause (c) of the settlement that was recorded did note that defendant No. 3,,

would on behalf defendants No. 1 and 2 pay an amount of Rs.3.20 crores by 15.11.2017 before the Sub-Registrar. Other than giving this time limit,",,

there is nothing to show that the time was the essence of the contract between the parties. Defendant no.3 is carrying in court a bankers’ cheque,,

for Rs.2.7 Crores in favour of the plaintiff No.2. At best there is a delay of one month in making the payment. Reasons have also been given for the,,

delay i.e. confusion about execution of the relinquishment deed. A sum of Rs. 10 lakhs was deposited in court on 23.11.2017 by defendant No.3 to,,

show his bona fide.,,

I may also note that pursuant to this settlement dated 31.08.2017, defendant No.3 has already paid Rs.40 lakhs to plaintiff No. 1 who have moved",,

out of the suit. Similarly, defendant No.2, namely, the sister has also relinquished her share in favour of defendant No.3. Defendant No.1 is the son of",,

defendant No.3.,,

So what is the status of settlement duly recorded in the court on 31.08.2017 and signed by all the parties on the order sheet. Merely because, there",,

is a delay of one month in tendering the payment by defendant No.3 would it mean the said settlement becomes non-est and non-enforceable. In my,,

opinion, the answer has to be in negative. I may first look at the Order 23 Rule 3 CPC.",,

Order 23 Rule 3 CPC reads as follows:-,,

“3. 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 than 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.â€​,,

The issue that would arise is whether the settlement as recorded on 31.08.2017 can be termed to be a lawful agreement/compromise in writing,,

and signed by the parties. The Supreme Court in Gurpreet Singh vs. Chatur Bhuj Goel AIR 1988 SC 400, noted as follows:",,

“8. For a proper appreciation of the contentions advanced, it is necessary to set out the Statement of Objects and Reasons which is in these terms:",,

Clause 77 (iii). It is provided that an agreement or compromise under Rule 3 should be in writing and signed by the parties. This is with a view to,,

avoiding the setting up of oral agreements or compromises to delay the progress of the suit.,,

The words 'lawful agreement or compromise' in Rule 3 have given rise to a conflict in the matter of interpretation. One view is that agreements which,,

are voidable under Section 19A of the Contract Act are not excluded. While this stand is taken by the High Courts of Allahabad, Calcutta. Madras",,

and Kerala, a contrary view has been expressed by the High Courts of Bombay and Nagpur. An Explanation has, therefore, been added to the rule to",,

clarify the position. A proviso has been added to clarify that no adjournment should ordinarily be granted where a decision is necessary as to whether,,

an adjustment or satisfaction has or has not been arrived at.,,

In view of the words 'so far as it relates to the suit' in Rule 3, a question arises whether decree which refers to the terms of a compromise in respect",,

of matters beyond the scope of the suit is executable or whether the terms of the decree relating to the matters outside the suit can be enforced only,,

by a separate suit. The amendment seeks to clarify the position.,,

The provision contained in Order XXIII, Rule 3 of the Code, as amended, provides:",,

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.,,

Explanation. An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful",,

within the meaning of this rule.,,

Under Rule 3 as it now stands, when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise",,

must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or",,

compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal,",,

there is no reason why the requirement that the compromise should be reduced in writing in the form of an instrument signed by the parties should be,,

dispensed with. The Court must therefore insist upon the parties to reduce the terms into writing.,,

In our considered opinion, the view to the contrary expressed by the High Court in Manohar Lal and Anr. v. Surjan Singh and Anr. [1983] Pun LJ",,

402 that the first part relates to a lawful agreement or compromise arrived at by the parties out of Court, does not seem to be correct. Sandhawalia,",,

CJ speaking for himself and' Tewatia, J. observes that the word 'or' makes the two parts disjunctive and they visualise two distinct and separate",,

classes of compromise. According to the learned Judges, the first part relates to a lawful agreement or compromise arrived at by the parties out of",,

Court, while the second is applicable where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit.",,

Such a restricted construction is not warranted by the language used in Rule 3. The word 'satisfies' denotes satisfaction of the claim of the plaintiff,,

wholly or in part, and for this there need not he an agreement in writing signed by the parties. It is open to the defendant to prove such satisfaction by",,

the production of a receipt or payment through bank or otherwise. The satisfaction of the claim could also be established by tendering of evidence. It,,

is for the Court to decide the question upon taking evidence or by affidavits as to whether there has in fact been such satisfaction of the claim and,,

pass a decree in accordance with Order XXIII, Rule 3 of the Code.â€​",,

It is manifest that the parties had entered into a lawful agreement and  compromise in writing which was duly signed by the parties. In fact the,,

sanctity of the agreement is more as the agreement and compromise was recorded in court and was also duly signed by the parties in court.,,

Subsequent to the agreement, defendant No.3 has partly acted on the basis of the agreement. He has paid plaintiff No. 1 a sum of Rs.40 lakhs on",,

receipt of which plaintiff no.1 has moved out of the suit. To show his bona fade, he has also deposited Rs.10 lakhs with the Registrar General of this",,

court and is today also carrying a demand draft of the balance amount payable to plaintiff No. 2 which is in favour of the Registrar General of this,,

court.,,

Keeping in view the above facts, the settlement is a lawful agreement duly signed by the parties. It is a fit case for this court to pass a decree in",,

terms of the settlement recorded on 31.08.2017. This would be in exercise of powers under Order 23 Rule 3 CPC.,,

I, accordingly, pass a decree in terms of the settlement recorded in court on 31.08.2017. The decree sheet shall incorporate all the terms and",,

conditions of the settlement. The suit and all the pending applications stand disposed of.,,

The sum of Rs.10 lacs lying can be withdrawn by plaintiff No.2 as part payment of the agreed amount.,,