Kumar Builders Thr. Its ... vs Kumar City Residents ...
2021 Latest Caselaw 1812 Bom

                                                                1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20




                                        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                                CIVIL APPELLATE JURISDICTION

                                               CIVIL REVISION APPLICATION NO.665 OF 2019

                            Kumar Builder & Ors.                       ..Applicants
                                  Vs
                            Kumar City residents Co-Operative
                            Housing Society Ltd. & Ors.                ..Respondents
                                                             ----
                            Mr.Virag Tulzapurkar a/w Mr.Mihir Govilkar i/b Govilkar and
                            Associates LLP for the Applicants.

         Digitally signed
                            Mr.Anturkar, Senior Advocate for Respondent No.1.
Nilam    by Nilam
         Kamble                                             ----
Kamble   Date:
         2021.02.13                                 CORAM : C.V. BHADANG, J.
         16:15:32 +0530


                                                           RESERVED ON : 02nd December 2020

                                                           PRONOUNCED ON : 28th January 2021


                            JUDGMENT :

1. The challenge in this revision application is to the

common order dated 11th July 2019 below application Exhibit-37

Exhibit-52 and Exhibit-86 passed by the learned Senior Civil Judge,

Pune in Special Civil Suit No.556/2019. By the impugned order the

learned trial court has refused to reject the plaint under Order VII

Rule 11 of the Code of Civil Procedure ( CPC for short).

N.S. Kamble page 1 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

2. The facts necessary for the disposal of the application

may be stated thus :-

The aforesaid suit has been filed by the first respondent

Kumar City Residents Cooperative Housing Society Ltd (Plaintiff)

against the petitioners ( Defendant nos 1 to 5) and the respondent

nos 2 to 4( defendant nos 6 to 8) for declaration, mandatory and

prohibitory injunction, conveyance and damages etc.

Land Survey No.14 admeasuring 8 H 70.3 Ares and S

No.13B Hissa No 1+2+3 admeasuring about 7H 69.5 Ares totally

admeasuring about 16H 39.38 Ares i.e. 1,63,938 Sq. Mts of Village

Vadgaon Sheri Tq Haveli Dist-Pune is the land which is referred to as

the 'Project Land'. The said land was belonging to Tukaram Mulik

and others. In the year 1991-92 the land owners had entrusted the

development rights of the land to the defendant no 2 Sukumar

Estates Ltd. The defendant No.2 after obtaining necessary

permission has executed a residential project on the land by name

'Kumar City', comprising of Plots, Row houses and bungalows, which

were transferred to the purchasers, under the Maharashtra

Ownership of Flats Act 1963 (MOFA, for short) who had formed the

plaintiff Society. It was represented to the members/purchasers that

'Kumar City' would be a state of the Art project having various civic

amenities including a exclusive club house. At the time of the

N.S. Kamble page 2 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

purchase, the members had paid club membership fees ranging from

Rs 50,000/- to Rs 75,000/-. It is the material case that at the

relevant time the defendant no 2 instead of providing the Club

House and other Amenities as per the agreed terms had only

provided the facility of a Swimming Pool,Health Club, Tennis Court,

Badminton Court, Squash Court to the members, on a portion of the

land admeasuring 23,096 Sq Mts from out of the Project Land. The

said portion is the subject matter of dispute, which is referred to as

the 'Suit Land'.

3. In the year 2007 the defendant Nos.1 to 4 started

demolishing the Club House, which led the plaintiff to file RCS no

1262/2007 against the defendant Nos.1 to 4 for declaration and

injunction. The parties however reached a settlement and the suit

came to be decreed on the basis of Consent Terms (Ex-122 ) on 18 th

July 2011. According to the plaintiff the defendant nos 1 to 4 had

accepted to provide the agreed amenities/facilities including a club

house of a bigger area. It is the material case that till date the

defendant Nos.1 to 4 have not complied with the agreed terms by

constructing a new club house and constitution of an Advisory board

of the club and by executing a conveyance deed in respect of land

N.S. Kamble page 3 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

admeasuring 51,967.85 Sq Mts from out of the 'Project Land', within

ninety days of the execution of the consent terms.

4. The plaintiff was required to approach the District

Deputy Registrar (DDR) for an order of a deemed conveyance.

Eventually the deemed conveyance was executed on 17th February

2018 in pursuance of an order dated 11th June 2015. In short it is

the material case that the defendant nos 1 to 4 failed to abide by the

contractual terms, as also the terms of the consent decree, which

would go to show that since inception the defendants had no

intention to comply with the same. It is contended that under the

consent terms the defendant Nos.1 to 4 appointed their sister

concern Kumar City Club Ltd (defendant no 8) for development and

the management of the Club house, which was subcontracted. It is

also contended that the club facilities were mismanaged.

5. The members of the plaintiff, received a notice dated

29th May 2018 from the defendant No.8 thereby unilaterally

terminating the membership of the Club House and forfeiting the

one time membership fees. The plaintiff raised objection to the said

unilateral action taken by the defendant no 8 in collusion with

defendant Nos.1 to 4. The club facility was unilaterally closed with

N.S. Kamble page 4 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

effect from 1st July 2018 purportedly for repairs. The matter was

tried to be sorted out by holding meeting with the defendant No.3.

However the issues are not resolved. On the basis of information

obtained under the Right to Information Act ( RTI Act) it was learnt

that the defendant Nos.1 to 4 have obtained a development

permission from the defendant nos 6 and 7 vide commencement

certificate dated 8th January 2018 for construction of a huge

Commercial Shopping Mall on the suit land which is reserved as a

amenity space on which such development is impermissible. The

permission granted is against the statutory provisions and the

Development Control Rules (DC Rules) and is without obtaining the

permission from the members of the plaintiff.

6. Somewhere in third week of March 2019 the plaintiff

learnt that the said commercial project, is being executed by M/s

Shubh Promoters and Developers, in the suit plot.

7. It is in these circumstances that the plaintiff filed the

suit seeking following reliefs:-

(a) The Suit of the Plaintiff may kindly be decreed with cost.

N.S. Kamble page 5 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

(b) It be declared that Consent Terms Exh.122 filed in AND Consent Decree dated 18.07.2011 passed in RCS No.1262 of 2007 are got executed by the Defendant Nos.1 to 4 by way of Fraud and misrepresentation and therefore the same are null, void and not binding upon the Plaintiff and its Members.

(c) It be declared that construction permission obtained vide Commencement Certificate No.2614 of 2017, dated 08.01.2018 is null, and not binding upon the Plaintiff AND the same be cancelled as per the provisions of Maharashtra Municipal Corporation Act.

(d) The Defendants, their assignees, agents, servants, workers, contractors etc. may kindly be restrained by a decree of Perpetual Injunction from proceeding with the construction on the basis of alleged Commencement Certificate No.2614 of 2017, dated 08.01.2018 and the Building Plans sanctioned on the basis of the same.

(e) The Defendant Nos.1 to 5 be directed to execute and register Conveyance Deed in respect of Suit Plot in favour of Plaintiff, as per the provisions of Maharashtra Ownership of Flats Act, 1963.

(f) The Defendant Nos.1 to 4 and 8 be directed by way of Mandatory Injunction to immediately re-open all the Amenities/ Facilities provided in Suit Plot for the Plaintiff and its Members, and to deliver the exclusive possession

N.S. Kamble page 6 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

of the same in the hands of Plaintiff for running and managing the same at their own.

(g) The Defendant Nos.1 to 5 and 8 may kindly be perpetually restrained from entering into the Suit Plot and also from running/managing the Club Facilities in any manner.

(h) The Defendant Nos.1 to 4 be directed to erect New Club House adm.7136.95 Sq. Mtrs. As per layout sanctioned vide DPO/SE-V/0081/09/dt.12.05.2009 at the Suit Plot and hand over the possession thereof to the Plaintiff.

(i) The Defendant be further directed to pay Damages of Rs.10,00,00,000/- to the Plaintiff.

(j) Interim/ad interim orders in terms of prayer Clause Nos.(d) and (f) above be passed in favour of the Plaintiff.

(k) Any other just and equitable orders be passed in the interest of justice.

8. Three applications Ex-37, 52 and 86 came to be filed by

defendant Nos.2, 5 and 4 respectively under Order VII Rule 11 of

CPC for rejection of plaint, interalia on the ground that the plaint,

N.S. Kamble page 7 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

does not disclose cause of action and the plaint from the statement

made in it appears to be barred by law.

9. The applications were opposed by the plaintiff.

10. The learned trial court by the impugned common order

dated 11th July 2019 has rejected the applications, thus refusing to

reject the plaint as prayed, which brings the petitioners to this court

11. It may be mentioned that the learned trial court by a

separate order dated 10th August 2020 below Ex-5 and Exh-129 has

granted temporary injunction against defendant Nos.1 to 5 from

demolishing the existing club facilities, water bodies, compound

wall etc and from using the consent terms in RCS No.1262/2007

against the plaintiff and from carrying out construction on the basis

of the commencement certificate dated 8 th January 2018 and 23 rd

December 2019 pending the suit. That order is subject matter of

challenge at the instance of the petitioners in AOST No. 92414/2020

and Shubh Capital in AOST No.92454/2020. The survival of the

challenge in these appeals, eventually depends upon the outcome of

the present revision application. In such circumstances the revision

application is taken up for final disposal by consent of parties.

N.S. Kamble page 8 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

12. I have heard Mr.Tulazapurkar the learned senior counsel

for the petitioners and Mr.Anturkar the learned senior counsel for

the contesting respondent no 1 (original plaintiff). With the

assistance of the learned counsel for the parties I have gone through

the record.

13. Mr.Tulazapurkar the learned counsel for the petitioners

has made the following submissions:-

(i) A meaningful reading of the plaint shows that it essentially challenges the consent decree dated 18 th July 2018 on the ground that it was obtained by fraud and misrepresentation. Such a challenge is impermissible under Order XXIII Rule 3A of CPC. It is submitted that under Explanation to Order 23 Rule 3 of CPC any agreement or compromise which is void or voidable under the Indian Contract Act, shall not be deemed to be lawful, within the meaning of the said rule. It is submitted that section 19 and 19 A of the Contract Act make it clear that when the consent to an agreement is obtained by coercion, fraud, misrepresentation or undue influence such agreement is voidable in nature. Thus an agreement that is alleged to be vitiated by coercion, fraud, misrepresentation or undue influence, is covered by the provisions of Order 23 and the suit to set aside any such decree would be barred under Order XXIII Rule 3A of CPC.

N.S. Kamble page 9 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

(ii) Reliance in this regard is placed on the decision of the Supreme Court in Banwarilal Vs Chando Devi Horil Vs Keshav and Triloki Nath Singh Vs Aniruddha Singh and ors and a decision of the Delhi High Court in Bhai Sarabjit Singh Vs Indu Sabharwal and Rajwanti Vs Kishan Chand Shehrawat.

(iii) It is submitted that reliance placed by the plaintiff on the decision in Dadu Dayal Mahasabha, is misplaced as it relates to a compromise prior to 1977 that is before introduction of Rule 3A.

(iv) It is submitted that the reliance on the decision of a learned Single Judge of this court in Jethallal Thakkar Vs Lalbhai Hiralal Shah and Shreyas Alias Ashok Narayan Pathare Vs CVK Associates is impermissible in view of the Division Bench Judgment in Vishankumar Udaysingh Varma and Ors Vs Vijaysingh Rajsingh Varma and Ors.

(v) It is submitted that the learned trial Court was in error in placing reliance on A A Gopalkrishnan, as it involved a writ petition, filed by a third party challenging a compromise and contained allegations against a statutory authority

N.S. Kamble page 10 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

(vi) It is submitted that the suit is otherwise based on a illusory cause of action and is vexatious in as much as there are no allegations of fraud relatable to the time of passing of the consent decree. It is submitted that the plaintiff has no interest in the larger land except 51967.85 Sq Mts. as recorded in the consent decree. Thus the plaintiff has no right or claim in respect of the land on which the club facilities stand.

(vii) It is submitted that the alleged non compliance by the petitioners with the terms of the consent decree subsequent to the passing of the same are not relevant to decide whether the consent decree is vitiated by alleged fraud or misrepresentation.

(viii) The plaintiff has accepted that it has no right to file a suit on the subject matter of the consent decree.

(ix) It is submitted that the allegations about a mortgage on the land and the involvement of Kumar City cooperative Housing Society Ltd are vexatious and and an eyewash to create an illusion of cause of action.

(x) It is submitted that the prayer for conveying the amenity plot is beyond limitation. Mr Divender Kumar Dhamija Is not shown to be authorised to file the suit. The defendant no 5 being a cooperative society the suit is barred by the provisions of section 163(1) (b) read with section 91(1)(e) of the Maharashtra Cooperative

N.S. Kamble page 11 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

Societies Act. 1960. The suit against the municipal Corporation is not competent in view of the provisions of the Maharashtra Regional and Town Planning Act ('MRTP Act' for short) and the Development Control rules ( DC Rules).

14. Mr Anturkar the learned Senior counsel for the first

respondent has supported the impugned order. Mr.Anturkar has

made the following submissions.

(I) That there is a distinction between fraud played

on the court and a case where the consent terms and

the consequent decree is vitiated on account of a party

playing fraud and inducing the other to enter into the

compromise/settlement. It is submitted that this

distinction continues even after the 1976 amendment to

order XXIII Rule 3 of CPC.

(II) Is submitted that Rule 3A of Order XXIII uses the

term 'lawful' not in a generic sense but it has to be

understood in the context of the meaning assigned to it

under the proviso appended there to. In the submission

of the learned senior counsel a Civil Suit would be

barred only when the question of fraud is so palpable

N.S. Kamble page 12 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

which "cries hoarse" from the record and it can be

decided without granting any adjournment or leading

evidence, in as much as, the jurisdiction under provisio

to order XXIII Rule 3 is summery in nature.

(III) It is submitted that where the case of one party

practicing fraud on the other ( which is distinct from

the fraud practiced on the court itself) such question

cannot be decided in the limited/summary jurisdiction

under Order XXIII Rule 3 of CPC. Consequently a

separate suit in such a case cannot be said to be barred

under Order XXIII Rule 3A of CPC.

(IV) It is submitted that the explanation to Rule 3 of

Order 23 applies only to that Rule and not Rule 3A of

Order 23 CPC. It is submitted that the only change

brought about by the 1976 amendment is that prior to

the said amendment even a voidable

contract/agreement could form the basis of a

compromise/consent terms without the party who was

entitled to avoid the contract/agreement taking steps to

avoid/rescind the same or it being set aside by the court

N.S. Kamble page 13 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

as required under section 19A of the Contract Act.

However after the 1976 amendment such an

agreement/Contract cannot be termed as 'lawful',

within the meaning of the Explanation, because the

court cannot be asked to act or be a party in putting its

seal on such agreement,elevating it to the status of a

decree.

(V) The learned counsel however in all fairness did

not dispute that the case of Dadudayal Mahasabha

would not be applicable as it arose prior to 1976 and

out of the unamended provisions of Order 23 Rule 3 of

CPC.

(VI) It is submitted that the decisions relies upon on

behalf of the petitioners all involved case of fraud being

practiced on the court, unlike in the present case. He

therefore submitted that those decisions would be of no

help.

(VII) Mr Anturkar the learned Senior Counsel, has then

pointed out the pleadings of fraud as made in the

N.S. Kamble page 14 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

plaint. Broadly speaking he has pointed out ten such

heads/instances which according to the learned counsel

clearly make out a case of a fraud being practiced on

the respondent/plaintiff which induced the plaintiff to

enter into the consent terms in RCS 1262/2007.

(VIII) The instances of fraud are (a) non execution of a

conveyance as agreed and opposing the application for

deemed conveyance before the competent authority. (b)

Failure to provide new club house within two years as

agreed and on the contrary closing down of the existing

club facility with a proposal for construction of a

multistoried commercial Mall which is explained in

paras 11, 21 and 25 of the plaint. (c) Concealment of

the Sanctioned plan dt 14th May 2010 thereby reducing

the area of the club house to 1792.37 Sq Mts from

7136.95 Sq mts in the plan dt 12th May 2009. (d)

Failure to form an advisory board for the Club House

particularly when the petitioners had agreed to take

two members of the plaintiff on the advisory board. (e)

Failure to disclose the term loan obtained from ICICI

Bank on the suit plot on 13th June 2011 prior to the

N.S. Kamble page 15 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

execution of the consent terms on 18th July 2011. The

existing club facilities as well as the proposed new club

facilities were to be developed on the suit Plot and thus

it was incumbent on the petitioners to disclose the

same. (Para 23 of the plaint) (f) As per the draft

Conveyance deed attached to the Consent terms Plot no

24 1 and 3 from Cluster no 1 was shown reserved.

However the same was 'smartly separated' from the

sanctioned layout without the order from the competent

authority. The plaintiff has an undevided interest in the

said plot no 17 admeasuring 666.92 Sq Mts which is

illegally merged in the reserved plot which is 'active

concealment' according to the plaintiff (para 24 of the

plaint). (g) The petitioners had formed Kumar City Co-

op Housing Society, much prior to the formation of the

plaintiff society. A conveyance in respect of 13 H 16

Ares of land was executed in favour of the said Society

on 4th January 2005 which was concealed, while

executing the consent terms ( Para 26) (h) At the time

of the consent terms Kumar City Club Pvt Ltd was a

Professional Company to run the Club effectively.

However it subsequently turned out to be the sister

N.S. Kamble page 16 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

concern of the petitioners which is acting in collusion

with the petitioners, in terminating the club

membership of the members of the plaintiff and

forfeiting the membership fees. (I) the water storage

tank, transformer room is situated within the suit plot

which can be gathered from the consent terms.

However the existing Building plans relating to the suit

plot were changed behind the back of the plaintiff (j)

This according to the plaintiff amounts to fraud and

misrepresentation under section 17 to 19 of the

Contract Act.

(IX) It is submitted that while examining the question

of rejection of plaint the court has to confine to the

averments in the plaint and cannot look into any

defence. It is therefore submitted that the learned trial

court has rightly refused to reject the plaint.

15. I have carefully considered the rival circumstances and

the submissions made.

N.S. Kamble page 17 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

16. The following points fall for determination in this

application.

(i) What is the scope of the bar under Order XXIII

Rule 3A of the C.P.C ? Whether it applies only to a case

where the fraud is alleged to be practiced on the Court

and not where the fraud is allegedly practiced on the

plaintiff ?

(ii) Whether on a meaningful reading of the plaint

and the documents filed along with it, a case of fraud

being practiced on the plaintiff can be made out ?

(iii) Whether the impugned order suffers from

infirmity requiring interference ?

17. Point No.(i):-

In order to appreciate the rival contentions it is

necessary to reproduce Rule 3 and 3A of Order XXIII of CPC as

under:-

"Rule 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 agrement of compromise

N.S. Kamble page 18 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

(in writing and signed by the parties), or where the defendant satisifies 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 satisfcation to be recorded, and shall pass a decree in accordance therewith [so far as it relates to the parties tot he 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].

3A Bar to suit- Not suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful."

18. Rule 3A and the proviso and the explanation to Rule 3

were added by the amendment of the year 1976 with effect from 1 st

February 1977.

N.S. Kamble page 19 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

The contention on behalf of the applicant is that the suit

is barred under order 3A while according to the respondent no1 the

present case of the fraud being played on the plaintiff would not be

covered by the bar under section 3A. In short according to the first

respondent this is not case where the issue can be decided under a

limited and summery enquiry under proviso to Rule 3.

19. In my considered opinion the issue is no longer

resintegra as it is covered by the decision of the Supreme Court and

this Court. First a reference needs to be made to the decision of the

Supreme Court, in the case of Pushpadevi Bhagat. In that case the

plaintiffs/landlords filed a suit for eviction against five defendants,

the defendant no 1 being a partnership firm. On 23 rd May 1991 the

plaintiffs along with their counsel and the counsel for the

defendants made a statement that the matter has been compromised

and the defendants had interalia undertaken to vacate the premises

by a particular date. The trial court directed the statement of both

the parties to be recorded. It subsequently transpired that the

counsel appearing for the defendants in whose presence the

statement/compromise was recorded had filed Vakalatnama only for

defendant nos 1 2 and 5 and not the defendant nos 3 an 4.

Subsequently an application was made under section 151 and 152

N.S. Kamble page 20 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

of CPC after the counsel filed Vakalatnama for defendant nos 3 and

4 also. It was pointed out that the the defendant no1 partnership

was already dissolved. Accordingly a fresh decree was drawn on 18 th

July 2001 in terms of the final order dated 23rd May 2001.

20. On 21st August 2001 the second defendant filed an

application under section 151 of the CPC for setting aside of the said

decree interalia on the ground that she had not instructed the

counsel to enter into any compromise on her behalf and there was

no written compromise between the parties duly signed by the

parties. It was thus contended that there was no lawful agreement

or compromise. The second defendant however did not pursue the

application and instead filed an appeal challenging the said decree.

The appellate court allowed the appeal and remitted the suit back

for trial in accordance with law after ignoring the statement of the

counsel made on 23rd May 1991. The landlords challenged the same

before the Delhi High Court in an appeal under order 43 Rule (1)

(u) of CPC. The second defendant died during the pendancy of the

appeal and her daughter was brought on record as her legal

representative. The High Court allowed the appeal interalia holding

that the consent decree in the case fell under second part of Rule 3

of order XXIII which did not require any document in writing signed

N.S. Kamble page 21 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

by the parties. It was also held that the counsel indeed had authority

to enter into the compromise. That is how the matter reached the

Supreme Court, at the instance of the daughter of second

defendant(since deceased).

21. The Supreme Court after considering the 1976

amendment summerised the principles in para 17 of the Judgment

thus:-

"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.

17. ..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

N.S. Kamble page 22 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

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 27-8-2001) filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by the second defendant was not maintainable, having regard to the express bar contained in Section 96(3) of the Code."

(Emphasis Supplied)

22. In R Rajanna, a Suit was filed by the plaintiff in the year

1982 which was decreed by the trial court in 1991. The defendant

challenged the same before the High Court where the matter was

compromised. Subsequently in the year 2005 the plaintiff filed a suit

N.S. Kamble page 23 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

challenging/disputing the validity of the Compromise. The

defendant sought rejection of the plaint as being barred by order

XXIII Rule 3A of CPC. The trial court rejected the plaint in the 2005

suit. Subsequently the plaintiff approached the High Court and

reopened the appeal by filing an application under order XXIII rule

3A of CPC. The High Court dismissed the application holding that

the plaintiff had not taken the 2005 Suit to its logical conclusion.

The plaintiff challenged the same before the Hon'ble Supreme

Court. The Hon'ble Supreme Court placing reliance on the decision

in the case of Pushadevi Bhagat held that the separate suit to

challenge the compromise decree was not maintainable and

remitted the matter back to the High Court.

23. The Supreme Court found that the precise question

which fell for consideration was whether the High court was right in

directing the appellant/plaintiff to seek redress in the suit having

regard to the provisions of Order XXIII Rule 3 A of CPC. In the

context of the said issue this is what is held in para 11 of the

Judgment.

"11. It is manifest from a plain reading of the above that in terms of the proviso to Order XXIII Rule 3 where one party alleges and the other denies adjustment or

N.S. Kamble page 24 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

satisfaction of any suit by a lawful agreement or compromise in writing and signed by the parties, the Court before whom such question is raised, shall decide the same. What is important is that in terms of Explanation to Order XXIII Rule 3, the agreement or compromise shall not be deemed to be lawful within meaning of the said rule if the same is void or voidable under Indian Contract Act, 1872. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties, the question whether the agreement or compromise is lawful has to be determined by the Court concerned. What is lawful will in turn depend upon whether the allegations suggest any infirmity in the compromise and the decree that would make the same void or voidable under the Contract Act. More importantly, Order XXIII Rule 3A clearly bars a suit to set aside a decree on the ground that the compromise on which the decree is based was not lawful. This implies that no sooner a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise, it is that Court and that Court alone who can examine and determine that question. The Court cannot direct the parties to file a separate suit on the subject for no such suit will lie in view of the provisions of Order XXIII Rule 3A of CPC. That is precisely what has happened in the case at hand. When the appellant filed OS No.5326 of

N.S. Kamble page 25 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

2005 to challenge validity of the compromise decree, the Court before whom the suit came up rejected the plaint under Order VII Rule 11 CPC on the application made by the respondents holding that such a suit was barred by the provisions of Order XXIII Rule 3A of the CPC. Having thus got the plaint rejected, the defendants (respondents herein) could hardly be heard to argue that the plaintiff (appellant herein) ought to pursue his remedy against the compromise decree in pursuance of OS No.5326 of 2005 and if the plaint in the suit has been rejected to pursue his remedy against such rejection before a higher Court."

(Emphasis supplied)

24. In a more recent decision in the case of T riloki Nath

Singh the question before the Supreme Court was whether a decree

passed on a compromise can be challenged by a stranger to the

proceedings in a separate suit. The Supreme Court after taking note

of the earlier decision in the case of Pushpadevi Bhagat and R.

Rajanna held that it could not be done. Following observations in

paras 16 to 19 on the changes brought about by the 1976

amendment and introduction of rule 3A of Order 23 of CPC are to

the point.

16. By introducing the amendment to the Civil Procedure Code(Amendment) 1976 w.e.f. 1st February, 1977, the legislature has brought into force Rule 3A to

N.S. Kamble page 26 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

Order 23, which create bar to institute the suit to set aside a decree on the ground that the compromise on which decree is based was not lawful. The purpose of effecting a compromise between the parties is to put an end to the various disputes pending before the Court of competent jurisdiction once and for all.

17. Finality of decisions is an underlying principle of all adjudicating forums. Thus, creation of further litigation should never be the basis of a compromise between the parties. Rule 3A of Order 23 CPC put a specific bar that no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. The scheme of Order 23 Rule 3 CPC is to avoid multiplicity of litigation and permit parties to amicably come to a settlement which is lawful, is in writing and a voluntary act on the part of the parties. The Court can be instrumental in having an agreed compromise effected and finality attached to the same. The Court should never be party to imposition of a compromise upon an unwilling party, still open to be questioned on an application under the proviso to Rule 3 of Order 23 CPC before the Court.

18. It can be further noticed that earlier under Order 43 Rule 1(m), an appeal which recorded the compromise and decide as to whether there was a valid compromise or not, was maintainable against an order

N.S. Kamble page 27 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

under Rule 3 of Order 23 recording or refusing to record an agreement, compromise or satisfaction. But by the amending Act, aforesaid clause has been deleted, the result whereof is that now no appeal is maintainable against an order recording or refusing to record an agreement or compromise under Rule 3 of Order 23. Being conscious of this fact that the right of appeal against the order recording a compromise or refusing to record a compromise was being taken away, a new Rule 1A was added to Order 43 which is as follows:

"1A. Right to challenge nonappealable orders in appeal against decree.-- (1) Where any order is made under this Code against a party and thereupon any judgment is pronounced against such party and a decree is drawn up, such party may, in an appeal against the decree, contend that such order should not have been made and the judgment should not have been pronounced. (2) In an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded."

19. Thus, after the amendment which has been introduced, neither any appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3A of Order 23 CPC. As such, a right has been given under Rule

N.S. Kamble page 28 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

1A(2) of Order 43 to a party, who denies the compromise and invites order of the Court in that regard in terms of proviso to Rule 3 of 23 CPC while preferring an appeal against the decree. Section 96(3) CPC shall not be a bar to such an appeal, because it is applicable where the factum of compromise or agreement is not in dispute.

25. In Banwarilal the compromise was signed by the parties

challenging the same. It was interalia held thus in para 7 of the

Judgment:-

"7. By adding the proviso along with an explanation the purpose and the object of the amending Act appears to be to compel the party challenging the compromise to question the same before the Court which had recorded the compromise in question. That Court was enjoined to decide the controversy whether the parties have arrived at an adjustment in a lawful manner. The explanation made it clear that an agreement or a compromise which is void or voidable under the Indian Contract Act shall not be deemed to be lawful within the meaning of the said Rule. Having introduced the proviso along with the explanation in Rule 3 in order to avoid multiplicity of suit and prolonged litigation, a specific bar was prescribed by Rule 3A in respect of institution of a separate suit for setting aside a decree on basis of a compromise."

N.S. Kamble page 29 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

26. A useful reference can now be made to the decision of

the Division Bench of this Court in Vishankumari. In that case the

trial court had dismissed the suit as not maintainable in view of the

bar contained in Order XXIII Rule 3A of CPC. In that case the suit

was filed challenging a compromise decree on the ground of fraud.

The objection based on the bar under order XXIII Rule 3 A of CPC

was taken by the defendant no 24. It was contended before this

court on behalf of the plaintiff that apart from the challenge to the

compromise decree there are other independent prayers in the suit.

On behalf of the plaintiff reliance was placed on the decision of the

learned single Judge of this court in J ethalal Thakkar Vs Lalbhai

Hiralal Shah (1985 Mh.L.J. 299) and the decision of the Andhra

Pradesh High Court in Smt Anita Vs Rambilas (AIR 2003 AP 32) .

The Division Bench after taking note of the decision of the Supreme

Court in (i) Banwarilal (ii) Pushpadevi Bhagat and (iii) R. Rajanna

found that the suit was rightly dismissed as not maintainable. The

Division Bench in para 13 held thus:-

"13. In view of the authoritative pronouncements of the Supreme Court in the case of Banwarilal (supra) and in the case of R.Rajanna (supra) reliance on behalf of the appellants on the decision of the learned single Judge of this Court in Jethalal Thakkar's case (supra) is inappropriate. We may note that in Banwarilal the

N.S. Kamble page 30 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

Supreme Court had considered issue of collusion and fraud as had arisen in the said case namely a contention that a fabricated petition of compromise was filed, which is clear from the contents of para 4 of the decision of the Supreme Court examining the said issue the Supreme Court had come to a conclusion that a separate suit was not maintainable as noted by us above in extension. In view of this clear position in law as laid down in Banwarilal (supra), the appellants contention relying on Jethalal Thacker's case, that as the appellant had pleaded fraud in relation to the compromise a separate suit was maintainable, cannot be accepted."

27. Coming to the decisions relied upon on behalf of the

first respondent, in so far as the decision of the Supreme Court in

the case of Dadudayal Mahasabha is concerned the learned senior

counsel for the first respondent as noticed earlier in all fairness did

not dispute that the said case arose prior to the 1976 amendment. In

that case a suit instituted by a registered society was withdrawn by a

unauthorised person representing that he was the elected secretary

of the Society. In such circumstances the application made under

section 151 of CPC by the duly elected Secretary for recalling the

order of withdrawal was held to be maintainable.

N.S. Kamble page 31 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

28. On behalf of the first respondent strong reliance is

placed on the decision of this court in the case of Jethalal Thakkar.

However it would appear that in view of the subsequent decisions of

the Supreme Court as referred above the Division Bench of this

court in the case of Vishankumari has observed that the reliance on

the decision in Jethalal Thakkar is inappropriate. It was submitted

on behalf of the first respondent that the Division Bench has not

either overruled or dissented from the decision in Jethalal and

therefore the law as laid down in Jethalal needs to be considered.

The contention in my considered view cannot be accepted. The

Division Bench in Vishankumari has held that in view of the law laid

down by the Supreme Court the reliance on Jethalal is

inappropriate.

29. In the case of CVK and Associates before another Single

Judge of this court, one Pathare had filed a suit in the year 2010

interalia for setting aside a sale deed dated 13th December 2007 and

the addendum dated. 5th August 2009 as vitiated by fraud and for a

declaration that these were not binding on him and for several other

reliefs including for a direction to the defendant CVK to restore the

first floor flat to its original condition and for injunction restraining

CVK from applying for regularization. It can thus be seen that in that

N.S. Kamble page 32 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

case there were several reliefs sought apart from cancellation of an

agreement as recorded in the order passed on 2 nd/6th July 2009. In

that case CVK had filed a notice of Motion under order VII Rule 11

of CPC for rejection of plaint on the ground that a separate suit does

not lye. What is significant is that the notice of motion was allowed

by this court and the plaint was rejected granting liberty to Pathare

to file appropriate proceedings in the execution case filed by CVK

arising out of a 2006 suit which was decreed by consent. In my

considered view the case turned on its own facts.

30. The reliance placed on the decision of the Andhra

Pradesh High Court in Anita V/s. Rambilas to my mind is misplaced.

That was a case where the parties who were husband and wife had

filed a petition under Section 13(B) of the Hindu Marriage Act for

dissolution of marriage by consent. After the petition was kept

pending for six months for reconciliation, the same came to be

allowed and the marriage was dissolved by mutual consent. After

six months of the said decree the applicant wife filed an interim

application in the original petition under Section 13B for

recalling/reviewing of the decree on the ground that the consent of

wife was obtained by the husband by threat, undue

influenced/coercion. The parties led evidence and the Trial Court

N.S. Kamble page 33 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

dismissed the application which was subject matter of challenge

before the High Court, at the instance of the wife. The question

which fell for consideration of the High Court as noticed in

paragraph 15 is whether the review/recall petition was maintainable

against a consent decree. The High Court taking note of Section 151

of the C.P.C. held that the review/recall petition would not lie. In

that case on facts it was held that the wife had failed to establish

that there was any fraud coercion and undue influence practiced.

Be that as it may it does not appear from the said judgment that the

issue about the maintainability of the petition fell for consideration

of the High Court in the context of the provisions of Order XXIII

Rule 3A of the C.P.C.

31. In any event in view of the authoritative

pronouncement of the Supreme Court as referred above and the

decision of the Division Bench of this Court in the case of

Vishankumari it is not possible to accept that the suit is maintainable

in view of the bar under Order XXIII Rule 3 A of CPC.

32. It was submitted on behalf of the first respondent that

the enquiry contemplated under the proviso to Rule 3 is a summery

enquiry wherein the court is required to decide "the question"

N.S. Kamble page 34 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

without granting an adjournment. It is thus submitted that only such

cases where the fraud is so palpable which 'cries hoarse', from the

record which can be decided under the said proviso and in only such

cases a separate suit would be barred. The contention in my

considered view cannot be accepted. Even assuming that the inquiry

contemplated is a summery enquiry where the court is required to

decide the question without granting any adjournment, the

subsequent part of the rule would show that in an appropriate case

the court can grant such adjournment if found fir for reasons to be

recorded.

33. In my humble view, in view of the decisions of the

Supreme Court as noted above it is not now open for this Court to

revisit these provisions and to arrive at a different

conclusion/interpretation.

34. It can thus be seen that an independent suit challenging

the consent decree is barred in view of the provisions of Order XXIII

Rule 3 of the C.P.C. as held by the Supreme Court. The point is

answered accordingly.

N.S. Kamble page 35 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

35. Point No.(ii) :-

I have already reproduced in all 10 heads in paragraph

15(VIII) which according to the first respondent are the instances of

the fraud practiced. The contention on behalf of the applicant is

that any such allegations regarding fraud have to be antecedent to

the execution of the consent terms. It is submitted that if the

allegations are about non-compliance of the consent terms it is

essentially subsequent to the passing of the consent decree and at

the highest it would be in the nature of a breach or non-compliance

of the consent terms/decree. In order to buttress the said

contention it is pointed out that the first respondent had relied upon

the consent decree before the DDR in an application for Deemed

Conveyance.

36. I have carefully considered the circumstances and the

grounds as set out by the first respondent and the contention raised

on behalf of the applicant and at least prima facie, I do not find that

the material allegations would make out any case of fraud as

alleged. The averments in the plaint at the highest are

predominantly about breach/non-compliance of the consent

terms/consent decree. It is trite that there is a clear distinction

between a case of an agreement/contract being result of fraud and

N.S. Kamble page 36 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

the case of breach of contract. In the later the breach is essentially

subsequent to the entering of the agreement/contract. In order to

show that the agreement/contract or the consent terms, were a

result of fraud and or misrepresentation, the allegations must be

antecedent to the entering of such contract/agreement/consent

terms. However I would hasten to add that these observations are

limited for the purposes of the examination of the issue about the

rejection of the plaint. It is thus made clear that if the first

respondent resorts to the appropriate remedy under Order XXIII

Rule 3 of C.P.C., if so advised the trial Court shall not be influenced

by the same.

The point is answered accordingly.

37. Point No.(iii) :-

A perusal of the impugned order shows that the trial

Court had held that in the suit apart from challenge to the consent

decree there are other reliefs sought and therefore in the opinion of

the Trial Court at this stage it cannot be said that the plaintiff has no

clear cause of action or the plaint is barred by Order XXIII Rule 3 of

the C.P.C. It is necessary to note that the reliefs are principally based

on the challenge to the consent decree, else otherwise all the

disputes between the parties were settled by the said consent decree

N.S. Kamble page 37 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

in the suit of the year 2007. Thus in my considered view the trial

Court is not right in refusing to reject the plaint on the ground that

there are other reliefs than the challenge to the consent decree.

38. The rival contentions of the parties during the course of

the argument at a bar principally entered around the bar of

separate suit, under Order XXIII Rule 3 of the C.P.C. In view of the

fact that on a meaningful reading of the plaint as a whole, it is

found that the plaint is barred under Order XXIII Rule 3A of the

C.P.C., the revision succeeds.

39. In the result, the Revision Application is allowed. The

impugned order is hereby set aside. Consequently, the plaint in

Special Civil Suit No.556 of 2019, stands rejected as being barred by

the provisions of Order XXIII Rule 3A of the C.P.C.

40. In the circumstances, the parties to bear their own

costs.

41. At this stage, the learned counsel for the respondent

No.1 states that the operation and effect of this order be stayed for a

period of six weeks in order to enable the respondent to take

N.S. Kamble page 38 of 39 1-Jud-CRA-665-19 with IASt-92417-20 in AOSt-92414-20

further steps as may be advised in the mater. The learned counsel

for the applicant, strenuously opposed the same. However,

considering the overall circumstances, in order to afford a fair

opportunity to the respondent no.1, the operation and effect of the

present order is stayed for a period of six weeks from today.

C.V. BHADANG, J.

N.S. Kamble                                                        page 39 of 39