While shedding full light on the question of whether a consent decree would or would not serve as an estoppel, a two Judge Bench of the Apex Court comprising of Justice Mohan M Shantanagoudar and Justice Vineet Saran in Compack Enterprises India (P) Ltd vs Beant Singh [Special Leave Petition (Civil) Nos. 2224-2225 of 2021] delivered on February 17, 2021 has observed that a consent decree would not serve as an estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. This case arose out of a suit for possession and mesne profits filed by one Beant Singh against Compack Enterprises with respect to the ground floor of the property owned by the former.
Factual Background
These petitions arose out of judgments of the High Court of Delhi. By the first impugned judgment dated 14.02.2019, the High Court disposed of the regular first appeal in RFA No. 253/2018 filed by the Petitioner against judgment and order of the Ld. Additional District Judge, Rohini dated 23.09.2017 in Suit filed by the Respondent. Whereas by the second impugned judgment dated 25.7.2019, the High Court disposed of Review Petition filed by the Petitioner against the judgment in RFA No. 253/2018.
Case of the Petitioner
The Petitioner contended in its review petition that the High Court in the first appeal had erred in recording the terms of the consent decree agreed to by the Petitioner. First, the judgment records that the mesne profits be increased by 10% every 12 months, instead of recording a 10% increase every 24 months. Second, the judgment erroneously records that the Petitioner will hand over possession of the entire suit property measuring 5,472 sq. ft., when the documents on record would show that the Petitioner was only ever in possession of 2,200 sq. ft.
The High Court, rejecting the Petitioner’s contentions, held that there was no error apparent on the face of the record to justify its review jurisdiction, and that the Petitioner was dishonestly trying to wriggle out of the consent decree by attempting to overreach the Court. The review petition was dismissed with exemplary costs of Rs.1,00,000/- payable by the Petitioner to the Respondent.
Reasoning and Decision of the Court
Before adverting to the specific contentions raised by the learned senior counsel for the Petitioner, the Court stated that it would be useful to briefly summarise the law governing consent decrees that shall inform our conclusions on the present matter. It is well settled that consent decrees are intended to create estoppels by judgments against the parties, thereby putting an end to further litigation between the parties. Resultantly, this Court has held that it would be slow to unilaterally interfere in, modify, substitute or modulate the terms of a consent decree, unless it is done with the revised consent of all the parties thereto.
“However, this formulation is far from absolute and does not apply as a blanket rule in all cases. This Court, in Byram Pestonji Gariwala v. Union Bank of India & ors., (1992) 1 SCC 31, has held that a consent decree would not serve as an estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. Further, this Court in the exercise of its inherent powers may also unilaterally rectify a consent decree suffering from clerical or arithmetical errors, so as to make it conform with the terms of the compromise.”
At this stage, the Court felt it relevant to note that even the judgment dated 23.09.2017 and the final decree dated 15.11.2007 passed by the Trial Court also awards a 10% increase only on each alternative year. Further, the original terms of the licence agreement between the parties also incorporated a 10% increase in license fee once every 30 months/2.5 years. Thus, the learned Single Judge’s order dated 14.02.2019 has given rise to a lot of confusion. Given this background, and looking at the preponderance of probabilities, we are inclined to give benefit of doubt to the Petitioner. Therefore, we hold that the intention of the compromise between the parties was that there should be a 10% increase in mesne profits every alternate year. The recording of a 10% increase after every 12 months in the consent decree was an inadvertent error, which we have now rectified.
As a corollary, it is then stated in paras 29 that,
“To this limited extent, the second impugned judgment dated 25.07.2019 is overturned, and the consent decree recorded by the learned Single Judge’s judgment dated 14.02.2019 stands modified.”
The Bench registered its displeasure at the Petitioner’s repeated and persistent efforts to reagitate the question of delivery of possession to the Respondent, in an attempt to circumvent complying with the view taken by the High Court in the judgment which has now attained finality. Despite the clear direction in that judgment to vacate possession in favour of the Respondent, pending any adjudication on the separate proceedings for possession and specific enforcement initiated by Mr. Gosain, the Petitioner handed over possession to Mr. Gosain in July, 2015. Possession has to this date not been handed over to the Respondent, who has been dragged to the court time and again due to the Petitioner’s conduct. This was an instance of blatant disregard for the Court’s orders, and an abuse of judicial process.
“Hence the present petitions are disposed of, with direction to the Petitioner to take steps for handing over possession of the suit property measuring 5,472 sq. ft. to the Respondent within eight weeks from today, without fail. Further, the Registry is directed to expeditiously release the arrears of mesne profits, if any, already deposited by the Petitioner before this Court to the Respondent. The Petitioner is further directed to pay to the Respondent all arrears as directed in order dated 14.2.2019, with the limited modification that the mesne profits are to be treated as increasing by 10% every alternate year, from 2009 till the date of handover of possession.”
The Petitioner was additionally directed to pay costs of Rs. 1 lakh to the Respondent as stated in the impugned order dated 25.7.2019.
Held
The Special Leave Petitions was disposed of accordingly.
Case Details
Name: Compack Enterprises India (P) Ltd vs Beant Singh
Case No.: Special Leave Petition (Civil) Nos. 2224-2225 of 2021
Date of Decision: February 17, 2021
Bench: Justice Mohan M Shantanagoudar and Justice Vineet Saran
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