Bombay High Court
Praharsh Corporation Pvt. Ltd., ... vs International Asset Reconstruction ... on 8 May, 2024
2024:BHC-NAG:5845
Judgment
226 cra92.19 & 22.21
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR
CIVIL REVISION APPLICATION NO.92/2019
WITH
CIVIL REVISION APPLICATION NO.22/2021
CIVIL REVISION APPLICATION NO.92/2019
Praharsh Corporation Pvt. Ltd.,
formerly known as Praharsh
Investments Pvt. Ltd., a 'company' as
defined under the Companies Act, 2013,
having its registered office at Tanna House,
2nd Floor, 11/A, Nathalal Parekh
Marg, Mumbai - 400 039.
(original defendant No.1.). ..... Applicant.
:: V E R S U S ::
1. International Asset Reconstruction
Company Private Limited, a 'company'
as defined under the Companies Act,
2013 having its registered office at 701,
7th Floor, Ansal Bhawan 16, Kasturba
Gandhi Marg, New Delhi - 110001 and
Corporate Office at A-601/602/605, 6th
Floor, 215 Atrium, Kanakia Spaces,
Andheri Kurla Road, Andheri (East),
Mumbai - 400 093, acting in its capacity
as Trustee of IARF-I Trust Scheme 1.
2. Madhav Vidarbha Estate Pvt. Limited, a
'company' as defined under the
Companies Act, 2013 having its
.....2/-
Judgment
226 cra92.19 & 22.21
2
registered office at plot No.169, Ward
No.66, Ravindranath Tagore Marg, Civil
Lines, Nagpur - 440 001 and also at 6th
Floor, "Gupta House", 1, Ravindranath
Tagore Marg, Civil Lines, Nagpur - 440
001.
(original plaintiffs).
3. Riddhi Investment and Properties Pvt.
Ltd., a 'company' as defined under the
Companies Act, 2013 having its
registered office at 202/A-B Vyavasae,
2nd Floor, Near Verai Mata Mandir, Urmi
Dinesh Mill Road, Akota, Vadodara
and also at :
63-A, Kashi-Vishweshwar Township,
Opp. Bank of Baroda, Jetalpur Road,
Vadodara, Gujrat - 390 005.
(original defendant no.2).
4. Mr. Sawan Nandkumar Bhatewara, R/o
1101, Court Royal Khare Town, Behind
Batukbhai Jewelers, Dharampeth,
Nagpur.
(Original Defendant no.3) ..... Non-applicants.
=================================
Shri M.G.Bhangde, Senior Counsel assisted by Shri
R.M.Bhangde, Advocate for the Applicant.
Dr. (Shri) Anjan De, Counsel for Non-applicant Nos.1 & 2.
Shri C.J.Dhumane, Counsel & Shri S.V.Purohit, Advocate for
Non-applicant No.4.
=================================
CIVIL REVISION APPLICATION NO.22/2021
Shri Sawan Nandkumar Bhatewara,
R/o 1101, Court Royal, Khare Town,
.....3/-
Judgment
226 cra92.19 & 22.21
3
Behind Batukbhai Jewelers,
Dharampeth, Nagpur 440010.
(original defendant No.3.). ..... Applicant.
:: V E R S U S ::
1. International Asset Reconstruction
Company Private Limited, a
'company' as defined under the
Companies Act, 2013 having its
registered office at 701, 7th Floor,
Ansal Bhawan 16, Kasturba Gandhi
Marg, New Delhi - 110001 and
Corporate Office at A-601/602/605,
6th Floor, 215 Atrium, Kanakia Spaces,
Andheri Kurla Road, Andheri (East),
Mumbai - 400 093, acting in its capacity
as Trustee of IARF-I Trust Scheme 1.
2. Madhav Vidarbha Estate Pvt.
Limited, a 'company' as defined
under the Companies Act, 2013 having
its registered office at plot No.169,
Ward No.66, Ravindranath Tagore
Marg, Civil Lines, Nagpur - 440 001 and
also at 6th Floor, "Gupta House", 1,
Ravindranath Tagore Marg, Civil Lines,
Nagpur - 440 001.
(original plaintiffs).
3. Riddhi Investment and Properties
Pvt. Ltd., a 'company' as defined
under the Companies act, 2013 having
its registered office at 202/A-B
Vyavasae, 2nd Floor, Near Verai Mata
Mandir, Urmi Dinesh Mill Road, Akota,
Vadodara
and also at :
.....4/-
Judgment
226 cra92.19 & 22.21
4
63-A, Kashi-Vishweshwar Township,
Opp. Bank of Baroda, Jetalpur Road,
Vadodara, Gujrat - 390 005.
(original defendant no.2).
4. Praharsh Corporation Pvt. Ltd.,
formerly known as Praharsh
Investments Pvt. Ltd., a 'company' as
defined under the Companies Act,
2013, having its registered office at
Tanna House, 2nd Floor, 11/A,
Nathalal Parekh Marg, Mumbai.
(original defendant No.1.). . ..... Non-applicants.
=================================
Shri C.J.Dhumane, Counsel & Shri S.V.Purohit, Advocate for
the Applicant.
Dr. (Shri) Anjan De, Counsel for Non-applicant Nos.1 & 2.
Shri M.G.Bhangde, Senior Counsel assisted by Shri
R.M.Bhangde, Advocate for Non-applicant No.4.
=================================
CORAM : URMILA JOSHI-PHALKE, J.
CLOSED ON : 17/04/2024
PRONOUNCED ON : 08/05/2024
COMMON JUDGMENT
1. Heard learned Senior Counsel Shri M.G.Bhangde for
Praharsh Corporation Private Limited (applicant in Civil
Revision Application No.92/2019 and non-applicant No.4 in
Civil Revision Application No.22/2021); learned counsel Dr.
(Shri) Anjan De for International Asset Reconstruction
.....5/-
Judgment
226 cra92.19 & 22.21
Company Private Limited and Madhav Vidarbha Estate Pvt.
Limited (non-applicant Nos.1 and 2 in both Civil Revision
Applications), and learned counsel Shri S.V.Purohit for Mr.
Sawan Nandkumar Bhatewara (applicant No.4 in Civil
Revision Application No.92/2019 and applicant in Civil
Revision Application No.22/2021).
2. Rule.
3. By these Civil Revision Applications, applicants have
challenged order dated 8.4.2019 passed below Exhibits-20
and 38 by learned 18th Joint Civil Judge Senior Division,
Nagpur in Special Civil Suit No.408/2017 whereby the said
applications under Order VII Rule 11 of the Code of Civil
Procedure have been rejected.
4. Relevant facts necessary for disposal of civil revision
applications are as under:
Non-applicant No.1 - International Asset
Reconstruction Company Private Limited (hereinafter
.....6/-
Judgment
226 cra92.19 & 22.21
referred to as "IARCPL") and non-applicant No.2 - Madhav
Vidarbha Estate Private Limited (hereinafter referred to as
"MVEPL"), original plaintiffs, have preferred a civil suit
bearing Special Civil Suit No.408/2017. IARCPL is a
company registered under the Companies Act, 2013. City
Survey No.1757, Sheet No.60 of Mouza Sitabuldi together
with single storied house bearing No.169 having built up
area 255.82 square meters, situated at Ravindranath Tagore
Marg, Civil Lines, Ward No.66, Nagpur, is the subject matter
of the dispute. The above said suit property was originally
owned by Shri Manohar Puranik and other Puranik family
members. Puranik family vide sale deeds dated 9.3.1990 and
1.9.1990 sold the suit property along with its structure to
Smt.Punam Anand Agarwal and Smt.Savita Chandra
Agarwal. Smt.Punam Anand Agarwal and Smt.Savita
Chandra Agarwal executed sale deed on 21.9.1993 in favour
of Jyoti and Surendra Developers Private Limited, Nagpur.
As per the said sale deed dated 21.9.1993, the parties had
filed statement in Form No.37-I under Section 269 UC of the
.....7/-
Judgment
226 cra92.19 & 22.21
Income Tax Act, 1961 with the Income Tax Authorities. The
Income Tax Authorities at Ahmedabad vide its order dated
31.12.1993 held that it was a fit case for pre-emptive
purchase order under Section 269 UD(1) of the Income Tax
Act and obtained possession of the suit property. The said
order of the Income Tax Authorities was challenged by Jyoti
and Surendra Developers Private Limited before this court by
filing Writ Petition No.327/1994. During the pendency of
the said writ petition, the Income Tax Department held an
auction of the suit property on 19.9.1995. In the said
auction, non-applicant No.3 - Riddhi Investment and
Properties Private Limited was the highest bidder and,
therefore, the bid was accepted and sale was confirmed in
favour of Riddhi Investment and Properties Private Limited
on 21.9.1995 subject to the decision of Writ Petition
No.327/1994. The Income Tax Department, after having
accepted the bid of Riddhi Investment and Properties Private
Limited, granted possession of the suit property vide letter of
possession dated 25.1.1996. As per IARCPL, no sale deed
.....8/-
Judgment
226 cra92.19 & 22.21
was executed by the Income Tax Department in respect of the
suit property in favour of Riddhi Investment and Properties
Private Limited. Writ Petition No.327/1994 was dismissed
on 30.3.2015 by observing that the writ petition filed is
misconceived.
5. On 27.7.1996, Riddhi Investment and Properties
Private Limited entered into an agreement of sale with
Praharsh Corporation Private Limited (applicant in Civil
Revision Application No.92/2019 and non-applicant No.4 in
Civil Revision Application No.22/2021) for total
consideration of Rs.70.00 lacs and received sum of Rs.65.00
lacs on that day itself. Riddhi Investment and Properties
Private Limited again on 26.3.1997 entered into an
agreement of sale with Nimish Investment Private Limited
(subsequently known as "M/s.Madhyadesh Construction and
Finance Private Limited") for total consideration of
Rs.1,15,00,000/- and received amount as advance of
Rs.15.00 lacs. M/s.Madhyadesh Construction and Finance
Private Limited filed Special Civil Suit No.242/1998 in the
.....9/-
Judgment
226 cra92.19 & 22.21
court of Civil Judge Senior Division, Nagpur against Riddhi
Investment and Properties Private Limited for refund of the
earnest amount. Praharsh Corporation Private Limited was
defendant No.2 in the said suit. On 18.4.2002, the aforesaid
Special Civil Suit No.242/1998 was compromised. As per
compromise decree dated 18.4.2002, agreement dated
26.3.1997 executed between plaintiff i.e. M/s.Madhyadesh
Construction and Finance Private Limited and Riddhi
Investment and Properties Private Limited was cancelled. By
this compromise, it was agreed that Riddhi Investment and
Properties Private Limited shall pay Rs.57,50,000/- to
plaintiff M/s.Madhyadesh Construction and Finance Private
Limited and it was accordingly repaid. The schedule of
repayment was mentioned in the compromise decree. It was
further agreed that agreement dated 27.7.1996 executed in
favour of Praharsh Corporation Private Limited for sale of
house No.169 along with an open plot situated at ward
No.66, Ravindranath Tagore Marg, Nagpur, admeasuring
1273.45 square meters with structure by Riddhi Investment
.....10/-
Judgment
226 cra92.19 & 22.21
and Properties Private Limited is valid, subsisting and
binding upon Riddhi Investment and Properties Private
Limited, who was defendant No.1 in the said suit. It was
further agreed that defendant No.1 Riddhi Investment and
Properties Private Limited confirmed that out of total
consideration of Rs.70.00 lacs payable by Praharsh
Corporation Private Limited to defendant No.1 Riddhi
Investment and Properties Private Limited. Defendant No.1
Riddhi Investment and Properties Private Limited received
Rs.65.00 lacs from time to time and Praharsh Corporation
Private Limited now only is required to pay balance amount
Rs.5.00 lacs at the time of execution of sale deed and on
receipt of vacant possession. Riddhi Investment and
Properties Private Limited, further agreed that it shall within
a period of three months from the date of compromise obtain
conveyance from the appropriate authority to directly
execute the sale deed in favour of Praharsh Corporation
Private Limited. If Riddhi Investment and Properties Private
Limited fails to execute or cause appropriate authority to
.....11/-
Judgment
226 cra92.19 & 22.21
execute conveyance in favour of Praharsh Corporation
Private Limited as set out, Praharsh Corporation Private
Limited shall deposit balance amount of consideration of
Rs.5.00 lacs in court and shall obtain the sale deed and
possession of the property through court shown in Schedule-
A by executing compromise decree. As per the terms and
conditions of the said compromise, Riddhi Investment and
Properties Private Limited agreed, undertook, and declared
to the court that its title to the suit property is clear,
marketable, and there is no mortgage, charge, lien or any
encumbrances or any third party right in suit property and
also agreed that it would not create any encumbrances in
respect of the suit property. On 18.4.2002, accordingly, 2 nd
Joint Civil Judge Senior Division, Nagpur passed compromise
decree in Special Civil Suit No.242/1998.
6. On 5.8.2005, Praharsh Corporation Private Limited
filed Special Darkhast No.221/2005 to execute the
compromise decree dated 18.4.2002. Prior to filing of
execution proceeding, on 4.12.2004, Riddhi Investment and
.....12/-
Judgment
226 cra92.19 & 22.21
Properties Private Limited entered into Memorandum of
Understanding (MoU) with Praharsh Corporation Private
Limited. As per this MoU, Riddhi Investment and Properties
Private Limited received Rs.65.00 lacs from Praharsh
Corporation Private Limited in connection to agreement to
sale. As per clause No.1 of the said MoU, Riddhi Investment
and Properties Private Limited agreed in lieu of the said
amount, to sale properties for total consideration of
Rs.67,78,000/- against Rs.65.00 lacs payable by Riddhi
Investment and Properties Private Limited to Praharsh
Corporation Private Limited which were adjusted and in this
connection Riddhi Investment and Properties Private Limited
had executed agreement to sale in favour of Praharsh
Corporation Private Limited to this effect. In view of this
MoU, properties situated at Vadodara were agreed to sale to
Praharsh Corporation Private Limited against amount of
Rs.65.00 lacs. On 20.10.2005, the Income Tax Department
executed registered sale deed in favour of Riddhi Investment
and Properties Private Limited regarding the suit property.
.....13/-
Judgment
226 cra92.19 & 22.21
On the same day i.e. on 20.10.2005 Riddhi Investment and
Properties Private Limited executed the sale deed in favour of
"MVEPL". On 16.1.2015, in view of order passed by learned
6th Joint Civil Judge Senior Division, Nagpur, the Nazir
executed the sale deed of the suit property in favour of
Praharsh Corporation Private Limited. On 2.2.2016, a
warrant of possession was executed and Praharsh
Corporation Private Limited was put in possession of the suit
property.
7. During pendency of the execution proceedings,
IARCPL filed an application for adding it as a party dated
17.12.2014 on the ground that the aforesaid compromise
decree is in collusion, which was rejected. The order of
learned Civil Judge Senior Division denying to add IARCPL as
a party was subject matter of Writ Petition No.2761/2014 on
the ground that compromise decree is collusive. As per
contentions of IARCPL, MVEPL became owner of the suit
property vide registered sale deed executed by Riddhi
Investment and Properties Private Limited on 20.10.2005. It
.....14/-
Judgment
226 cra92.19 & 22.21
is further contention of IARCPL, by MoU dated 4.12.2004
entered into by Praharsh Corporation Private Limited and
Riddhi Investment and Properties Private Limited, agreement
to sale between Praharsh Corporation Private Limited and
Riddhi Investment and Properties Private Limited was
cancelled. It is further contention of IARCPL that in view of
the said MoU, the agreement to sale dated 27.7.1996 and
compromise decree dated 18.4.2002 were cancelled. It is
further contended that Riddhi Investment and Properties
Private Limited and Praharsh Corporation Private Limited
both approached to MVEPL with a request to purchase the
suit property and handed over the photo copy of MoU dated
4.12.2004. Thus, compromise decree dated 18.4.2002 stood
in fact cancelled on execution of MoU dated 4.12.2004.
Praharsh Corporation Private Limited filed an execution
bearing No.221/2005 on 5.8.2005 and suppressed facts from
the executing court. The act of cancellation of agreement of
sale dated 27.7.1996 and the compromise decree dated
18.4..2002 were also cancelled. It is further contended that
.....15/-
Judgment
226 cra92.19 & 22.21
MVEPL became owner of the suit property after purchasing
from Riddhi Investment and Properties Private Limited vide
registered sale deed dated 20.10.2005.
8. In fact, Gupta Metallic and Power Limited had
borrowed loan of Rs.25.00 crores from the Axis Bank
Limited. MVEPL had given guarantee to the said loan and
mortgaged the suit property with the Axis Bank Limited for
securing the due payment of the said loan. Gupta Metallic
and Power Limited failed to pay defaulted amount because of
which its loan account was classified as NPA. The Axis Bank
Limited vide Deed of Assignment dated 30.12.2011 has
unconditionally and irrevocably assigned, transferred, and
released the rights in respect of suit property in favour of
IARCPL as well as the debt of Gupta Metallic and Private
Limited together with all the underlying securities, interests,
the rights, the tittle of the Axis Bank Limited. IARCPL
exercised its statutory rights under the Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act (the SARFAESI Act) and took physical
.....16/-
Judgment
226 cra92.19 & 22.21
possession of the suit property being secured assets on
17.5.2012. As per contentions of IARCPL, Praharsh
Corporation Private Limited filed execution proceeding on
5.8.2005 suppressing from executing court, the act of
cancellation of agreement of sale dated 27.7.1996 and
thereby compromise decree 18.4.2002 is cancelled. The sale
deed was executed by the Income Tax Department in favour
on Riddhi Investment and Properties Private Limited on
20.10.2005 and on the same day Riddhi Investment and
Properties Private Limited executed the sale deed in favour of
MVEPL and possession was also handed over to MVEPL. As
per MoU dated 4.12.2004, the agreement to sale between
Praharsh Corporation Private Limited and Riddhi Investment
and Properties Private Limited in respect of suit properties is
cancelled and amount received by Riddhi Investment and
Properties Private Limited from Praharsh Corporation Private
Limited has been adjusted against new properties at
Vadodara. Praharsh Corporation Private Limited, thus, duly
waived its claim and rights against the suit property. In view
.....17/-
Judgment
226 cra92.19 & 22.21
of the said MoU dated 4.12.2004, the compromise decree
became unexecutable and in fact having stood satisfied,
Praharsh Corporation Private Limited has no further rights to
file or pursue the execution proceeding. It is further
contentions of IARCPL that in execution proceeding it being
necessary party was required to be permitted to intervene,
but the executing court rejected the application by holding
that it is not necessary party. IARCPL preferred Writ Petition
No.2761/2014 before this court contending that compromise
decree is collusive. It is observed by this court that remedy of
IARCPL is not in execution, but elsewhere and dismissed the
writ petition.
9. IARCPL has challenged the order of this court in
Special Leave Petition No.34239/2014, which was also
dismissed by the Honourable Apex Court on 15.12.2014.
Thereafter, IARCPL filed an application on 17.12.2014 for its
impleadment which was rejected on 3.8.2015. IARCPL
challenged the order by preferring RCA No.461/2015 before
learned District Judge at Nagpur. The said appeal was
.....18/-
Judgment
226 cra92.19 & 22.21
dismissed on 11.12.2015. Thereafter, on 20.1.2015, IARCPL
filed an application for setting aside ex parte compromise
decree which was rejected on 2.12.2016. By order dated
2.12.2016, warrant of possession issued and Praharsh
Corporation Private Limited was put in possession.
Thereafter, on 3.3.2016, Sawan Nandkumar Bhatewara (non-
applicant No.4 in Civil Revision Application No.92/2019 and
the applicant in Civil Revision Application No.22/2021)
purchased the suit property from Praharsh Corporation
Private Limited vide sale deed and he was put in possession
of the suit property. On 5.6.2017, IARCPL filed suit bearing
No.408/2017 for declaration, permanent injunction and
possession of the suit property. Vide Exhibits-20 and 38,
Praharsh Corporation Private Limited and Sawan Nandkumar
Bhatewara preferred applications under Order VII Rule 11 of
the Code for rejection of the plaint on the ground that plaint
does not disclose cause of action against them and barred by
law of limitation. Both these applications are rejected by
learned 18th Joint Civil Judge Senior Division, Nagpur.
.....19/-
Judgment
226 cra92.19 & 22.21
10. Being aggrieved and dissatisfied with the same, the
present Civil Revision Applications are filed by Praharsh
Corporation Private Limited and Sawan Nandkumar
Bhatewara, who are defendant Nos.1 and 3in the above suit.
11. During pendency of Civil Revision Applications,
IARCPL filed Civil Application No.20/2024 for taking action
against Sawan Nandkumar Bhatewara as he has committed
breach of oral status quo order.
12. Learned Senior Counsel Shri M.G.Bhangde appearing
for Praharsh Corporation Private Limited, submitted that
while considering application under Order VII Rule 11 of the
Code, the trial court has not even referred to provisions of
Section 47 and Order XX1 Rule 2 of the Code. Thus, there is
a total lack of consideration and non-application of mind by
the trial court. IARCPL and MVEPL, who are original
plaintiffs in Special Civil Suit No.408/2017, are transferee
pendente lite from the judgment debtor of decree passed on
18.4.2002. He submitted that there is no dispute that
.....20/-
Judgment
226 cra92.19 & 22.21
compromise decree was passed in view of the settlement
arrived at between plaintiffs and defendants in Special Civil
Suit No.242/1998 which was filed by Nimish Investment
Private Limited against Riddhi Investment and Properties
Private Limited and Praharsh Corporation Private Limited.
By way of the said compromise decree, the agreement
executed in favour of Nimish Investment Private Limited was
cancelled. Riddhi Investment and Properties Private Limited
agreed and confirmed that the agreement dated 27.7.1996
made between Riddhi Investment and Properties Private
Limited and Praharsh Corporation Private Limited for sale of
house No.169 with structure thereon is held to be valid,
subsisting and binding upon Riddhi Investment and
Properties Private Limited. It was further agreed that as
Praharsh Corporation Private Limited has paid Rs.65.00 lacs
out of Rs.70.00 lacs as a consideration amount, remaining
Rs.5.00 lacs agreed to be paid at the time of execution of sale
deed and on receipt of vacant possession of the said property.
By way of the compromise decree, Riddhi Investment and
.....21/-
Judgment
226 cra92.19 & 22.21
Properties Private Limited further agreed to obtain
conveyance from the appropriate authority under the Income
Tax Act and, thereafter, execute the sale deed in favour
Praharsh Corporation Private Limited or cause the
appropriate to directly execute the sale deed in favour of
Praharsh Corporation Private Limited. In case, the
appropriate authority fails to execute the sale deed, the time
for execution of sale deed in favour of Praharsh Corporation
Private Limited shall extend automatically. It was further
agreed by this compromise that if Riddhi Investment and
Properties Private Limited fails to execute the conveyance in
favour of Praharsh Corporation Private Limited, Praharsh
Corporation Private Limited shall deposit the balance amount
in the court and shall obtain sale deed and possession of the
property through the court. Riddhi Investment and
Properties Private Limited further agreed that there is no
encumbrance on the property and it would not create the
same in future. Thus, in view of the said compromise decree,
the agreement to sale is held to be valid and subsisting. As
.....22/-
Judgment
226 cra92.19 & 22.21
no sale deed was executed in favour of Praharsh Corporation
Private Limited, Praharsh Corporation Private Limited
preferred Special Darkhast No.221/2005 for execution of the
sale deed on 5.8.2005. The learned Civil Judge Senior
Division, while executing the decree through Nazir, executed
the sale deed in favour of Praharsh Corporation Private
Limited on 16.1.2015. The possession was also handed over
by order dated 2.2.2016. Thus, it became the owner of the
suit property in view of the sale deed executed in favour of
Praharsh Corporation Private Limited in view of the order
passed by the court.
13. Learned Senior Counsel Shri M.G.Bhangde, further
submitted that notice of execution was issued to IARCPL and
IARCPL filed its reply. In response to the notice, IARCPL
contended that the notice itself is bad in law as the company
was not party to the darkhast proceeding. The property was
mortgaged with it; decree holder, judgment debtor, and one
MVEPL with hand in gloves creating legal impediments in the
way for disposing of the property. Learned Civil Judge Senior
.....23/-
Judgment
226 cra92.19 & 22.21
Division rejected the said contentions. The order of learned
Civil Judge was challenged by IARCPL in Writ Petition
No.2761/2014. While disposing of the said writ petition, this
court held that there is merit in the submission of learned
Senior Counsel for Praharsh Corporation Private Limited that
there is no flaw or any fault in the compromise decree. If the
petitioner therein has any grievances against the compromise
decree, remedy lies elsewhere and not by objecting in the
executing proceeding that too when the petitioner therein
had not sought any intervention, but was permitted to
participate at the instance of the court. It is further observed
by this court that the petitioner therein being a transferee
pendente lite may have only limited right that too by filing
an independent proceeding and not to object the decree
holder in an execution proceeding and dismissed the writ
petition. During the pendency of the writ petition, IARCPL
also filed an application before the executing court for
adding it as party. The same was also rejected by learned
Civil Judge Senior Division by observing that it is not
.....24/-
Judgment
226 cra92.19 & 22.21
necessary party. The order passed by learned Civil Judge
Senior Division was challenged by IARCPL by preferring RCA
No.461/2015. The same was also dismissed by learned
District Judge by observing that the sale deed executed in
favour of MVEPL is void and ab initio and dismissed the
appeal. The said order of learned District Judge remained
unchallenged and attended finality. Subsequently to the
order passed by learned District Judge, by order of learned
Civil Judge Senior Division, the sale deed was executed in
favour of Praharsh Corporation Private Limited.
14. Learned Senior Counsel Shri M.G.Bhangde, further
submitted that the suit is filed by IARCPL bearing Special
Civil Suit No.408/2017. If the prayer clause of the suit is
seen, compromise decree is not challenged in the said suit.
However, IARCPL claimed relief of declaration that the sale
deed dated 16.1.2015 be declared as null and void. Further
declaration sought is, sale deed in favour of Sawan
Nandkumar Bhatewara be declared as null and void. IARCPL
seeks declaration that possession of Praharsh Corporation
.....25/-
Judgment
226 cra92.19 & 22.21
Private Limited as well as Sawan Nandkumar Bhatewara is
illegal and obtained fraudulently and to deliver the
possession. The alternative prayer of IARCPL is that
Praharsh Corporation Private Limited and Riddhi Investment
and Properties Private Limited shall pay amount
Rs.5,06,00,000/- along with interest and damages to IARCPL.
The prayer clauses show that the compromise decree is not
challenged. As far as pleading of plaintiffs is concerned, it
shows that it was Riddhi Investment and Properties Private
Limited who executed the sale deed in favour of MVEPL on
20.10.2005 when the agreement of sale was in existence and
executed in favour of Praharsh Corporation Private Limited
and execution petition was pending. He submitted that now
the suit is filed on ground that after compromise decree is
passed, Praharsh Corporation Private Limited and Riddhi
Investment and Properties Private Limited entered into MoU
and agreed to adjust amount of Rs.65.00 lacs paid by
Praharsh Corporation Private Limited to Riddhi Investment
and Properties Private Limited and in lieu of the suit
.....26/-
Judgment
226 cra92.19 & 22.21
property, the agreement of sale, regarding other properties
situated at Vadodara, is executed in favour of Praharsh
Corporation Private Limited. Thus, in view of the said MoU
dated 4.12.2004, Praharsh Corporation Private Limited
waived its right and the compromise decree became
unexecutable as it stood satisfied and Praharsh Corporation
Private Limited has no further right to file or pursue the
execution proceeding. It is further alleged that Praharsh
Corporation Private Limited has suppressed this MoU from
the executing court and got executed the decree fraudulently.
He submitted that in fact this MoU was not brought on
record either by IARCPL or by Riddhi Investment and
Properties Private Limited. If the MoU is entered between
the parties against the compromise decree, in view of
Section 47 and Order XXI Rule 2 of the Code, it shall be
recorded and certified before the court. A payment of
adjustment, which has not been certified or recorded, as the
aforesaid, shall not be recognized by any court executing the
decree. He submitted that the trial court has not considered
.....27/-
Judgment
226 cra92.19 & 22.21
this aspect. Satisfaction of decree is only by executing court
under Section 47 and Order XXI Rule 2 of the Code. He
submitted that in view of Order XXIII Rule 3(a) of the Code,
there is a bar to the suit to set aside the compromise decree
and, therefore, the suit against Praharsh Corporation Private
Limited is not maintainable. He submitted that there is no
dispute that plaintiffs are transferees pendente lite and being
transferees pendente lite it has limited right. The MoU is
not recognized by any law. The sale deed is executed by the
court. This court, while disposing of the writ petition filed by
IARCPL, already held that there is no flaw in the compromise
decree. The order passed in the writ petition was subject
matter of challenge in Special Leave Petition No.34239/2014
and the same was dismissed by the Honourable Apex Court
by observing that no ground for interference is made out in
exercise of jurisdiction under Article 136 of the Constitution
of India.
15. Learned Senior Counsel Shri M.G.Bhangde, further
submitted that in the light of the above observations, a
.....28/-
Judgment
226 cra92.19 & 22.21
question arises whether cognizance of MoU can be taken into
account which is not certified by the court in view of Order
XXI Rule 2 of the Code. Thus, no cause of action arose
against Praharsh Corporation Private Limited and, therefore,
Praharsh Corporation Private Limited filed an application
under Order VII Rule 11 of the Code. The compromise
decree attained its finality. The argument of collusion is
already rejected. As such, the order passed by learned Civil
Judge Senior Division rejecting the application filed under
Order VII Rule 11 of the Code deserves to be quashed and set
aside.
16. Learned Senior Counsel Shri M.G.Bhangde, further
submitted that as per plaintiffs IARCPL and MVEPL, when the
agreement of sale was executed in favour of Praharsh
Corporation Private Limited, Riddhi Investment and
Properties Private Limited was not owner of the suit property
and only bid was confirmed in favour of Riddhi Investment
and Properties Private Limited and possession was given.
Thus, Riddhi Investment and Properties Private Limited was
.....29/-
Judgment
226 cra92.19 & 22.21
not owner and was not having any right to sale the property.
But, this act of Riddhi Investment and Properties Private
Limited covers under Section 43 of the Transfer of Property
Act and, therefore, this ground is also not available to
IARCPL. For all above those grounds, revision applications
deserve to be allowed.
17. In support of his contentions, learned Senior Counsel
Shri M.G.Bhangde placed reliance on various decisions. The
relevant decisions would be referred at relevant time of
discussion.
18. Learned counsel Shri S.V.Purohit, appearing for Sawan
Nandkumar Bhatewara (non-applicant No.4 in Civil Revision
Application No.92/2019 and applicant in Civil Revision
Application No.22/2021), adopting arguments canvassed by
learned Senior Counsel Shri M.G.Bhangde, submitted that
Sawan Nandkumar Bhatewara has purchased the suit
property from Praharsh Corporation Private Limited after the
sale deed was executed in favour of Praharsh Corporation
.....30/-
Judgment
226 cra92.19 & 22.21
Private Limited on 3.3.2017. Thus, he is a bona fide
purchaser and no cause of action arose against him. The
plaint does not disclose any cause of action against him and
the suit is also barred by law of limitation. He further
submitted that a civil application is filed by IARCPL alleging
that Sawan Nandkumar Bhatewara disobeyed the oral order
of this court directing to maintain the status quo. He
submitted that the said oral order was communicated to
Sawan Nandkumar Bhatewara. This court was pleased to
orally direct not to proceed with the construction over the
suit property. He had communicated the same to Sawan
Nandkumar Bhatewara via mobile call around 3:30 pm..
After receipt of the referred information, Sawan Nandkumar
Bhatewara informed the contractor and directed him to stop
the work. However, the contractor informed that on
25.1.2024 in all four pits were dug at the site by using
drilling machine. Out of these four pits, drilling of three pits
was completed and digging of four pits was midway. It was
further informed that drilling work could not have been
.....31/-
Judgment
226 cra92.19 & 22.21
stopped at that stage as ready mixed concrete had reached at
the site which needs to be filled to avoid untoward incident
and for the safety of the labourers visiting the site and
boundary wall of the adjoining house owners would be at
risk. So, there is no intentional disobedience by Sawan
Nandkumar Bhatewara and, therefore, civil applications
deserve to be rejected.
19. In support of his contentions, learned counsel Shri
S.V.Purohit placed reliance on various decisions which would
be referred at the relevant time of discussion.
20. Learned counsel Dr. (Shri) Anjan De appearing for
IARCPL and MVEPL, submitted that pillars of Order VII Rule
1 of the Code are that; (1) only plaint's contents are to be
considered, (2) contents are considered as correct, (3)
validity of documents can not be challenged, and (4) only
documents relied on in plaint or filed with plaint have to be
considered as part of plaint. He submitted that facts in issue
show that auction of property by the Income Tax Department
.....32/-
Judgment
226 cra92.19 & 22.21
was in favour of Riddhi Investment and Properties Private
Limited who was higher bidder on 19.9.1995 which was
subject to the decision in Writ Petition No.327/1994. Though
possession was given to Riddhi Investment and Properties
Private Limited, no sale deed was executed on 25.1.1996.
Agreement between Riddhi Investment and Properties Private
Limited and Praharsh Corporation Private Limited was
executed on 27.7.1996 and consideration amount was fixed as
Rs.70.00 lacs. Subsequent to the agreement with Praharsh
Corporation Private Limited, Riddhi Investment and Properties
Private Limited entered into an agreement with Nimish
Investment Private Limited. Nimish Investment Private
Limited filed suit and the said suit was compromised. The
compromise is not tenable under Order XXIII Rule 3 of the
Code as the agreement was not lawful. Praharsh Corporation
Private Limited was not the decree holder. Agreement with
Riddhi Investment and Properties Private Limited and Baldev
Agriculture and Plantation Limited dated 4.4.2002 was with
consent of Praharsh Corporation Private Limited. Thereafter,
.....33/-
Judgment
226 cra92.19 & 22.21
agreement of sale with MVEPL dated 25.11.2004 was
entered into. MoU dated 4.12.2004 between Riddhi
Investment and Properties Private Limited and Praharsh
Corporation Private Limited, by which amount of Rs.65.00
lacs was adjusted, as against three properties in Vadodara,
original agreement to sale between Praharsh Corporation
Private Limited and Riddhi Investment and Properties Private
Limited was cancelled. By the said MoU, the compromise
decree is also cancelled. Praharsh Corporation Private
Limited executed the compromise decree by suppressing the
MoU. Whereas, MVEPL was bona fide purchaser in whose
favour Riddhi Investment and Properties Private Limited has
executed sale deed on 20.10.2005. As the decree was not
passed, right to enforce the compromise does not exist.
Praharsh Corporation Private Limited has waived its right
and, therefore, the compromise decree became unexecutable.
He submitted that in view of the observation by this court in
Writ Petition No.2761/2014, IARCPL, who was petitioner
therein, can put his grievance against the compromise
.....34/-
Judgment
226 cra92.19 & 22.21
decree by filing appropriate proceedings and, therefore,
IARCPL and MVEPL filed the suit against Praharsh
Corporation Private Limited and others to declare the sale
deed executed in favour of Praharsh Corporation Private
Limited be declared as null and void. IARCPL has also
claimed the relief of possession from Praharsh Corporation
Private Limited and Sawan Nandkumar Bhatewara. In the
alternative, IARCPL claimed refund of the amount. He
submitted that two golden Rules of Order VII Rule 11 require
to be kept in mind that the plaint is to be read as a whole.
Praharsh Corporation Private Limited has played a fraud and
therefore, every thing is to be nullified. There should be
lawful agreement between the parties. Even, the agreement
to sale was executed in favour of Praharsh Corporation
Private Limited when Riddhi Investment and Properties
Private Limited was not owner of the property. Agreement
does not create any title in favour of Praharsh Corporation
Private Limited. After getting the title, Riddhi Investment
and Properties Private Limited executed the sale deed in
.....35/-
Judgment
226 cra92.19 & 22.21
favour of MVEPL and it became the owner. As MVEPL stood
guarantor to the loan obtained by Gupta Metallic and Power
Limited and the suit property was mortgaged to the Axis
Bank Limited by MVEPL, as a guarantor to the loan and
Gupta Metallic and Power Limited failed to pay the loan
amount, the loan account was classified as NPA. The Axis
Bank Limited has unconditionally and irrevocably assigned
and transferred the rights in favour of IARCPL. IARCPL
exercised its statutory rights under the SARFAESI Act and
took physical possession of the suit property being the
secured asset on 17.5.2012. Thus, IARCPL became the owner
of the suit property. The transaction entered with Praharsh
Corporation Private Limited was not real transaction. The
compromise decree is a fraudulent one and it was not final
decree. There was no final adjudication between Praharsh
Corporation Private Limited and Riddhi Investment and
Properties Private Limited and, therefore, the title of IARCPL
is a legal title and the sale deed executed in favour of
Praharsh Corporation Private Limited is null and void. The
.....36/-
Judgment
226 cra92.19 & 22.21
trial court has rightly considered the legal position that the
plaint cannot be rejected in part and rejected the application
under Order VII Rule 11 of the Code and, therefore, no
interference is called for and prays for rejection of civil
revision applications.
21. Learned counsel Dr. (Shri) Anjan De, further
submitted that as to the civil application filed by IARCPL to
take appropriate action against Sawan Nandkumar
Bhatewara for disobedience of the order, he submitted that
despite of the order passed by this court, Sawan Nandkumar
Bhatewara continued with digging activity and there was
intentional breach of the order passed by this court and,
therefore, appropriate action needs to be taken against him.
22. In support of his contentions, learned counsel Dr.
(Shri) Anjan De placed reliance on various decisions. The
relevant decisions would be referred at the relevant time of
discussion.
.....37/-
Judgment
226 cra92.19 & 22.21
23. By preferring the suit, original plaintiffs IARCPL and
MVEPL claimed following reliefs:
"i) declare that the sale deed dated
16.1.2015 executed in favour of the
present Defendant No.1 by Court Nazir on
behalf of the present Defendant No.2,
being the outcome of the fraud played by
the Defendant no.1 on the Courts and the
parties, is null and void and not binding on
the Plaintiffs.
I(a) declare that the sale deed 3-3-2017
executed by the Defendant No.1 Praharsh
Investments Private Limited in favour of
Shri Sawan Nandkumar Bhatewara is null
and void and not binding on the plaintiffs.
ii) Declare that the Defendant No.1 is in
illegal and unlawful possession of the suit
property, and has obtained the same
fraudulently.
iii) Direct the Defendant nos.1 and 2 to
deliver the possession of the Suit Property
to the plaintiffs.
iii(a) declare the defendant Shri Sawan
Nandkumar Bhatewara is in illegal and
unlawful possession of the suit property
and has obtained the same mala fidely and
fraudulently and further direct Shri Sawan
.....38/-
Judgment
226 cra92.19 & 22.21
Nandkumar Bhatewara to deliver the
possession of the suit property to the
plaintiffs.
iv) In the alternative direct the Defendant
nos.1 and 2 to pay the Plaintiff No.1
amount of Rs.5,06,00,000/- (Rupees Five
Crores Six Lakhs Only) along with interest
at the rate of 24% amount from the date of
filing of the suit till the amount is received
by the plaintiffs. And
v) Direct the defendants 1 to 2 to pay
damages and compensation of
Rs.20,00,00,000/- (Rupees Twenty Crores
only) with interest at 24% per annum from
date of filing of the suit till the receipt of
the amount by the plaintiffs.
vi) Grant permanent injunction restraining
the Defendants from dealing with the Suit
Property.
vii) Grant any other relief deemed fit."
24. Thus, as per Praharsh Corporation Private Limited,
sale deed was executed by the Income Tax Department in
favour of Riddhi Investment and Properties Private Limited
on 20.10.2005. On the same day, Riddhi Investment and
.....39/-
Judgment
226 cra92.19 & 22.21
Properties Private Limited executed sale deed in favour
MVEPL contrary to the terms of compromise decree. As
MVEPL was guarantor to the debtor Gupta Metallic and
Power Limited, the said debtor Gupta Metallic and Power
Limited failed to repay the loan amount of Rs.25.00 cores
and the loan account became NPA. The Axis Bank Limited
vide deed of assignment dated 30.12.2011 has
unconditionally, irrevocably assigned, transferred, and
released in favour of IARCPL the debt of Gupta Metallic and
Power Limited. IARCPL exercised its statutory right, title,
and interest of the Axis Bank Limited. There is no dispute
that the Income Tax Department put the suit property in
auction and the highest bid of Riddhi Investment and
Properties Private Limited was accepted on 19.9.1995. On
21.9.1995, the Income Tax Department confirmed the
auction sale subject to the decision of Writ Petition
No.327/1994. The said writ petition was dismissed
subsequently. On 25.1.1996, the Income Tax Department
delivered the possession of the suit property to Riddhi
.....40/-
Judgment
226 cra92.19 & 22.21
Investment and Properties Private Limited. On 27.7.1996,
Riddhi Investment and Properties Private Limited entered
into an agreement of sale with Praharsh Corporation Private
Limited for total consideration of Rs.70.00 lacs and received
sum of Rs.65.00 lacs on 27.7.1996. The Riddhi Investment
and Properties Private Limited also entered into an
agreement of sale with Nimish Investment Private Limited
which was known as M/s.Madhyadesh Construction and
Finance Private Limited for total consideration of
Rs.1,15,00,000/- and obtained advance of Rs.15.00 lacs on
26.3.1997. As the sale deed was not executed in favour of
M/s.Madhyadesh Construction and Finance Private Limited,
the suit was filed bearing Special Civil Suit No.242/1998 for
refund of the earnest money. Praharsh Corporation Private
Limited was party to the suit. M/s.Madhyadesh Construction
and Finance Private Limited and Riddhi Investment and
Properties Private Limited entered into a compromise. As
per the said compromise, the agreement between them on
26.3.1997 was cancelled and Riddhi Investment and
.....41/-
Judgment
226 cra92.19 & 22.21
Properties Private Limited paid amount Rs.57,50,000/-. In
view of the said compromise dated 18.4.2002, agreement
dated 27.7.1996 executed in favour of Praharsh Corporation
Private Limited regarding suit property was decided to be
held as valid subsisting and binding on Riddhi Investment
and Properties Private Limited. Accordingly, compromise
decree was passed on 18.4.2002. Praharsh Corporation
Private Limited filed Special Darkhast No.221/2005 to
execute the compromise decree dated 18.4.2002. During the
pendency of execution proceeding, the Income Tax
Department executed sale deed in favour of Riddhi
Investment and Properties Private Limited on 20.10.2005.
Contrary to the terms of settlement and the compromise
decree, Riddhi Investment and Properties Private Limited
executed sale deed in favour of MVEPL. In the said
compromise decree, it was agreed that Praharsh Corporation
Private Limited has already paid Rs.65.00 lacs out of
Rs.70.00 lacs and Rs.5.00 lacs remained to be paid which is
to be paid at the time of execution of sale deed and on the
.....42/-
Judgment
226 cra92.19 & 22.21
receipt of vacant possession of the property. It was further
decided that Riddhi Investment and Properties Private
Limited shall obtain conveyance from the appropriate
authority under the Income Tax Act and, thereafter, execute
sale deed in favour of Praharsh Corporation Private Limited.
It was also agreed, if Riddhi Investment and Properties
Private Limited fails to execute or cause appropriate
authority to execute conveyance in favour of Praharsh
Corporation Private Limited, Praharsh Corporation Private
Limited shall deposit the balance consideration amount of
Rs.5.00 lacs in court and shall obtain sale deed and
possession of the property through the court. In the said
compromise decree, Riddhi Investment and Properties
Private Limited further undertook that title of the suit
property is clear and marketable and free from all
encumbrances and will not create any encumbrances or any
third party right. Thus, the sale deed appears to be executed
by Riddhi Investment and Properties Private Limited during
the pendency of execution proceeding i.e. the suit property
.....43/-
Judgment
226 cra92.19 & 22.21
was transferred pendente lite contrary to the compromise
decree.
25. The facts further show that on 25.3.2008 MVEPL
stood as a guarantor to the loan of Rs.25.00 crores obtained
by Gupta Metallic and Power Limited and created equitable
mortgage of the suit property in favour of the Axis Bank
Limited. As debtor Gupta Metallic and Power Limited failed
to repay the loan amount, the Axis Bank Limited executed
deed of assignment in favour of IARCPL. On 17.5.2012,
IARCPL exercised its rights under the SARFAESI Act and took
the possession of the suit property on 17.5.2012.
26. As the compromise decree was passed in Special Civil
Suit No.242/1998 by which Riddhi Investment and
Properties Private Limited agreed to execute the sale deed in
favour of Praharsh Corporation Private Limited, Praharsh
Corporation Private Limited filed execution application
bearing Special Darkhast No.221/2005 and claimed reliefs as
under :
.....44/-
Judgment
226 cra92.19 & 22.21
(a) that this Hon'ble Court be pleased to
construe the decree herein as a decree for
specific performance under Order XXI Rule
32; decree for execution of document that
is Sale Deed under Order XXI Rule 34;
decree for possession of the decreetal
property as contemplated under Order XXI
Rule 35 and issue all necessary directions
and pass all necessary orders so as to grant
effectual relief to the Decree Holder in
terms of the decree already passed.
(b) that the reliefs to be granted to the
Decree Holder may be moulded by this
Hon'ble Court in an appropriate manner as
deemed just and reasonable so that the
Decree Holder is able to obtain the result of
the decree forthwith which has remained
unexecuted for several long year because of
deliberate and contemptuous conduct of
the Judgment debtor amounting to
Contempt of Court and breach of
undertaking given to this Hon'ble Court.
(c) That the question relating to right of
alleged transferees of the property pending
execution proceedings may be kept open
for being decided under Order 21 Rule 98
of the Code of Civil Procedure if the third
party resists execution of warrant of
possession when it is being executed and
the claim and the contentions of the third
.....45/-
Judgment
226 cra92.19 & 22.21
party be decided at that stage when
execution of warrant of possession is
resisted by the third party and application
under Order 21 Rule 97 is made by the
Decree Holder.
(d) that this Hon'ble Court be pleased to
permit substituted service of notice of draft
Sale Deed by publication in newspaper
with liberty to Judgment Debtor to take
inspection of the Draft Sale Deed and raise
objections if any within a time as may be
allowed.
(e) that this Hon'ble Court be pleased to
make suitable alterations in the draft Sale
Deed as this Hon'ble Court deems so as to
grant effectual relief in all respects to the
Decree Holder;
(f) that this Hon'ble Court be pleased to
appoint an officer of this Hon'ble Court or a
practicing Advocate or some other fit and
proper person as Receiver of the decreetale
property with direction to execute the Sale
Deed immediately for and on behalf of in
name of the Judgment Debtor.
(g) for costs of execution proceedings and
incidental thereto;
.....46/-
Judgment
226 cra92.19 & 22.21
(h) for such further and other reliefs as the
nature and circumstances of the case may
require.
27. As per submissions of Praharsh Corporation Private
Limited, IARCPL filed its reply to the reliefs claimed in the
execution application stating that the reliefs claimed by the
decree holder if granted, it would be intervention in the
jurisdiction of the Debt Recovery Tribunal. The property in
question has been mortgaged with it under an assignment
from the Axis Bank Limited. The decree holder was not at all
interested to get the alleged compromise decree executed
from the court in spite of the fact that they were aware that
the judgment debtor has sold and transferred the said
property to MVEPL. Thus, in the reply, IARCPL nowhere
stated that the agreement in favour of Praharsh Corporation
Private Limited is cancelled in view of MoU dated 4.12.2004
and thereby waived its right. The application filed by
IARCPL for impleading it as a party in execution vide Exhibit-
19 was rejected on 30.12.2013. Prior to that, the order
passed by the executing court in favour of decree holder in
.....47/-
Judgment
226 cra92.19 & 22.21
favour of Praharsh Corporation Private Limited was
challenged by IARCPL in Writ Petition No.2761/2014. The
said writ petition was also dismissed by observing that there
is no flaw or any fault in the compromise decree. If the
petitioner therein has any grievances against the compromise
decree, remedy lies elsewhere and not by objecting in the
executing proceeding that too when the petitioner therein
had not sought any intervention, but was permitted to
participate at the instance of the court. It was further
observed by this court that the petitioner therein being a
transferee pendente lite may have only limited right that too
by filing an independent proceeding and not to object the
decree holder in an execution proceeding and dismissed the
writ petition. Special Leave Petition No.34239/2014 filed by
IARCPL was also dismissed by the Honourable Apex Court
on 15.12.2014. The application filed by IARCPL for adding it
as a party was also rejected by the executing court by order
dated 3.8.2015. In the said application also, there was no
reference of MoU dated 4.12.2004 by IARCPL. The order of
.....48/-
Judgment
226 cra92.19 & 22.21
learned Civil Judge Senior Division was challenged in RCA
No.461/2015. Learned District Judge, while dismissing the
appeal, observed that the compromise decree was already
passed and, therefore, the sale deed executed in favour of
MVEPL is void ab initio. It is further observed by learned
District Judge that it is hit by Section 52 of the Transfer of
Property Act.
28. After dismissal of the writ petition by this court,
decree holder Praharsh Corporation Private Limited filed an
application for possession of immovable property i.e. the suit
property under Order XXI Rule 35(1) and 35(3) of the Code.
IARCPL also filed an application for setting aside the
compromise decree vide Exhibit-103 wherein first time
IARCPL came with the case of MoU and contented that in
view of the MoU executed subsequent to the compromise
decree, Praharsh Corporation Private Limited waived its
claim and the agreement of sale executed in favour of
Praharsh Corporation Private Limited is cancelled. The
application filed by IARCPL was rejected holding that a lis
.....49/-
Judgment
226 cra92.19 & 22.21
pendens transferee cannot agitate for direction to the decree
holder as lis pendens transferee has no right to challenge the
decree and rejected the application. By the common order,
possession warrant claimed by Praharsh Corporation Private
Limited was issued under Order XXI Rule 35(1) and Rule
35(3) of the Code for possession of the property in question.
As observed earlier, by passing of judgment in RCA
No.461/2015, the district court observed that the sale deed
executed in favour of MVEPL is void ab initio and was not
challenged further. The order passed below Exhibit-103 for
setting aside compromise decree was also not challenged.
Thus, finding of the district court that the sale deed executed
in favour of MVEPL is void ab initio and remained
unchallenged and became final.
29. In view of the order passed by learned Civil Judge
Senior Division below Exhibit-102, possession warrant was
issued and Praharsh Corporation Private Limited was put in
possession. On 16.1.2015, as per the order of the court,
Nazir of learned Civil Judge Senior Division executed sale
.....50/-
Judgment
226 cra92.19 & 22.21
deed of the suit property in favour of Praharsh Corporation
Private Limited. Thereafter, Special Civil Suit No.408/2017
is filed by IARCPL as plaintiff No.1 and MVEPL as plaintiff
No.2 on the ground that MoU dated 4.12.2004 was not
brought to the notice of executing court and Praharsh
Corporation Private Limited has played fraud with the
executing court. It is further alleged that by way of the said
MoU, Praharsh Corporation Private Limited has waived its
right and settled its claim by adjusting the same against other
properties at Vadodara. Thus, Praharsh Corporation Private
Limited has abandoned all its claims and right against the
suit property. In view of the said MoU dated 4.12.2004
executed between Praharsh Corporation Private Limited and
Riddhi Investment and Properties Private Limited, the
compromise decree was unexecutable and in fact having
stood satisfied. Therefore, Riddhi Investment and Properties
Private Limited has no further right to pursue the execution
proceeding and claimed relief of declaration that the sale
deed dated 16.1.2015 executed in favour of Riddhi
.....51/-
Judgment
226 cra92.19 & 22.21
Investment and Properties Private Limited by court Nazir
being the outcome of fraud played by Riddhi Investment and
Properties Private Limited with the court be declared as null
and void. It is further claimed that sale deed executed in
favour of Sawan Bhatewara by Praharsh Corporation Private
Limited be declared as null and void and claimed the
possession from it. Admittedly, the alleged MoU was
subsequent to the compromise decree.
30. After going through the relevant facts and documents
on record, the entire issue revolves around the compromise
decree and the sale deed executed in favour of Praharsh
Corporation Private Limited. IARCPL filed suit on the ground
that subsequent to the compromise decree dated 18.4.2002,
Praharsh Corporation Private Limited and Riddhi Investment
and Properties Private Limited entered into MoU by which
amount paid by Praharsh Corporation Private Limited
Rs.65.00 lacs is adjusted against the other properties
situated at Vadodara. By the said MoU, agreement to sale
executed in favour of Praharsh Corporation Private Limited is
.....52/-
Judgment
226 cra92.19 & 22.21
cancelled. In view of the said MoU, the compromise decree
became unexecutable as Praharsh Corporation Private
Limited duly waived its claim and rights against the suit
property.
31. Questions for determination arises are as under:
1. Whether cognizance of MoU can be taken?
2. Whether the plaint can be rejected against some of
defendants: and
3. Whether the plaint does not disclose cause of
action against Praharsh Corporation Private Limited
and Sawan Bhatewara and barred by limitation
warranting rejection against them in terms of Order
VII Rule 11(a) and (d) of the Code?
32. The first limb of submissions of learned Senior
counsel Shri M.G.Bhangde is that the suit is barred by
Section 47 of the Code. He submitted that the compromise
decree is passed in favour of Praharsh Corporation Private
Limited and according to IARCPL, the agreement executed in
favour of Praharsh Corporation Private Limited stood
.....53/-
Judgment
226 cra92.19 & 22.21
cancelled, settled and satisfied on the execution of MoU. He
submitted that the compromise decree is passed on
18.4.2002 by which judgment debtor Riddhi Investment and
Properties Private Limited agreed to execute the sale deed in
favour of Praharsh Corporation Private Limited after the
competent authority of the Income Tax Department executes
conveyance in it favour. The judgment debtor further agreed
that the agreement to sale executed in favour of Praharsh
Corporation Private Limited is subsisting, valid, and legal.
He undertook that if he fails to execute the sale deed, decree
holder Praharsh Corporation Private Limited shall get it
executed through the court by depositing remaining
consideration amount of Rs.5.00 lacs. The judgment debtor
Riddhi Investment and Properties Private Limited further
agreed that he would keep the suit property free from all
encumbrances. Now, the suit is filed on the ground that in
view of MoU dated 4.12.2004, the agreement between
Praharsh Corporation Private Limited and Riddhi Investment
and Properties Private Limited stood cancelled as the decree
.....54/-
Judgment
226 cra92.19 & 22.21
is satisfied by adjusting the amount paid by Praharsh
Corporation Private Limited. The said MoU dated 4.12.2004
was executed subsequent to passing of the compromise
decree. Admittedly, Praharsh Corporation Private Limited
had filed execution proceeding bearing Special Darkhast
No.221/2005 to execute the compromise decree on
5.8.2005. Thus, after passing of the compromise decree and
before filing execution proceeding, the alleged MoU dated
4.12.2004 was executed. Subsequent to filing of execution
proceeding on 5.8.2005, the Income Tax Department
executed sale deed in favour of judgment debtor on
20.10.2005. On the same day, contrary to the terms of the
compromise decree, the sale deed was executed by judgment
debtor in favour of MVEPL. He raised the question whether
the cognizance of such MoU can be taken and referred
Section 47 and Order XXI Rule 2 of the Code and submitted
that adjustment against the decree, which is not certified,
cannot be taken into consideration.
.....55/-
Judgment
226 cra92.19 & 22.21
33. Before considering the submissions, it is necessary to
refer relevant Section 47 and Order XXI Rule 2 of the Code,
which reproduced for reference:
47. Questions to be determined by the Court
executing decree .-
(1) All questions arising between the parties to
the suit in which the decree was passed, or their
representatives, and relating to the execution,
discharge or satisfaction of the decree, shall be
determined by the Court executing the decree and
not by a separate suit.
[* * *]
(3) Where a question arises as to whether any
person is or is not the representative of a party,
such question shall, for the purposes of this
section, be determined by the Court.
[Explanation I .-For the purposes of this section, a
plaintiff whose suit has been dismissed and a
defendant against whom a suit has been
dismissed are parties to the suit.
Explanation II .-(a) For the purposes of this
section, a purchaser of property at a sale in
execution of a decree shall be deemed to be a
party to the suit in which the decree is passed;
and
.....56/-
Judgment
226 cra92.19 & 22.21
(b) all questions relating to the delivery of
possession of such property to such purchaser or
his representative shall be deemed to be questions
relating to the execution, discharge or satisfaction
of the decree within the meaning of this section.]
Order XXI Rule 2:
Payment out of Court to decree-holder.
(1) Where any money payable under a decree of
any kind is paid out of Court. [or decree of any
kind is otherwise adjusted] in whole or in part to
the satisfaction of the decree-holder, the decree-
holder shall certify such payment or adjustment
to the Court whose duty it is to execute the
decree, and the Court shall record the same
accordingly.
(2) The judgment-debtor [or any person who has
become surety for the judgment-debtor] also may
inform the Court of such payment or adjustment,
and apply to the Court to issue a notice to the
decree- holder to show cause, on a day to be fixed
by the Court, why such payment or adjustment
should not be recorded as certified; and if, after
service of such notice, the decree-holder fails to
show cause why the payment or adjustment
should not be recorded as certified, the Court
record the same accordingly.
(2A) No payment or adjustment shall be recorded
at the instance of the judgment- debtor unless-
.....57/-
Judgment
226 cra92.19 & 22.21
(a) the payment is made in the manner provided
in rule 1; or
(b) the payment or adjustment is proved by
documentary evidence; or
(c) the payment or adjustment is admitted by, or
on behalf of, the decree-holder in his reply to the
notice given under sub-rule (2) of rule 1, on
before the Court.
(3) A payment or adjustment, which has not been
certified or recorded as aforesaid, shall not be
recognized by any Court executing the decree.
34. Learned Senior Counsel Shri M.G.Bhangde, submitted
that the alleged MoU dated 4.12.2004 has not been certified
by the court and, therefore, it cannot be recognized in the
court of law in view of the mandatory provisions.
Admittedly, MoU dated 4.12.2004 is neither got certified by
the decree holder nor by the judgment debtor. Though
IARCPL served with a notice, after filing of executing
proceeding, though it was not party to the original
proceeding by court suo motu, IARCPL, who was in
possession of the suit property, has not raised plea in its reply
.....58/-
Judgment
226 cra92.19 & 22.21
to the notice issued by the court. On the contrary, before the
executing court, in response to the notice, IARCPL came with
a case that the notice issued to it is bad in law as the
company was not party to the original proceeding. It is
further contended before the executing court that the
property was mortgaged with the company and the decree
holder, judgment debtor, and MVEPL with hand in gloves
created legal impediments. The said contentions were
rejected by learned Civil Judge Senior Division as well as this
court in Writ Petition No.2761/2014. The order of this court
was challenged before the the Honourable Apex Court in
Special Leave Petition No.34239/2014 which was also
rejected. Thus, the issue, raised that by the MoU dated
4.12.2004 agreement executed in favour of Praharsh
Corporation Private Limited was cancelled, was not raised at
earlier point of time. It was firstly raised when IARCPL filed
an application vide Exhibit-103 for setting aside the
compromise decree, but not applied for certification of the
said adjustment. Learned Senior Counsel submitted that
.....59/-
Judgment
226 cra92.19 & 22.21
adjustment/satisfaction of the decree, which is not certified
in accordance with provisions of Order XXI Rule 2(3) of the
Code, cannot be recognized in the court of law. Since the
suit of plaintiffs is based on the MoU, which is not certified,
the suit is barred by law. He further submitted that in view
of Article 125 of the Limitation Act, within 30 days,
concerned party shall apply to the court to certify out of
court settlement and, therefore, sole basis which is MoU for
filing the suit, which is not recognized in law, cannot be
acted upon.
35. In support of his contentions, learned Senior Counsel
Shri M.G.Bhangde placed reliance on the decision of the
Honourable Apex Court in the case of Gangabai Gopaldas
Mohta vs. Fulchand and ors 1 wherein in paragraph No.8 it is
held that Section 47 of the Code is couched in a very wide
language. The very object is to avert another suit concerning
the decree under execution. Sub-section (i) has made it clear
that dispute between a party to the suit and another claiming
1 (1997)10 SCC 387
.....60/-
Judgment
226 cra92.19 & 22.21
to be his representative have to be resolved in execution
proceedings i.e. fortified in view of sub-section (3) which
states that where a question arises as to whether any person
is or is not the representative of a party, such question shall,
for the purposes of this section, be determined by the
executing court. It is further held that even a transferee
pendente lite is representative of his transferor within the
meaning of sub-section (3) of Section 47, one who claims to
be transferee by operation of law would as well be a
representative and if his claim to be a representative is
disputed either by the opposite party or by the party under
whom he claims, such dispute must also be resolved by the
executing court itself. The word "representative" used in
Section 47 is obviously much wider than the words "legal
representative" as used in Section 50 of the Code.
36. Learned Senior Counsel Shri M.G.Bhangde, further
placed reliance on the decisions of the Honourable Apex
Court in the cases of Sultana Begum vs. Prem Chand Jain 2;
2 (1997)1 SCC 373
.....61/-
Judgment
226 cra92.19 & 22.21
Laxmi Narayanan vs. S.S.Pandian 3, and Badamo Devi and ors
vs. Sagar Sharma4.
37. Per contra, learned counsel Dr. (Shri) Anjan De
submitted that Praharsh Corporation Private Limited waived
its right claimed against the suit property. In the light of the
MoU, the compromise decree became unexecutable. In fact,
the compromise decree stood satisfied.
38. In support of his contentions, learned counsel Dr.
(Shri) Anjan De also placed reliance on the decision of the
Honourable Apex Court in the case of Badamo Devi and ors
vs. Sagar Sharma supra.
39. Thus, in the light of catena of decisions, learned
Senior Counsel Shri M.G.Bhangde submitted that settled
legal position is that an uncertified adjustment of decree out
of the court held cannot be entertained by the executing
court. Order XXI Rule 2 of the Code applies to a specific set
of circumstances. If any money is payable under a decree,
3 (2000)7 SCC 240
4 (1999)6 SCC 30
.....62/-
Judgment
226 cra92.19 & 22.21
irrespective of the nature of decree and such money is paid
out of the court, decree holder has to certify such payment
before the court.
40. Thus, the Honourable Apex Court in the case of
Sultana Begum vs. Prem Chand Jain supra, as relied upon by
learned Senior Counsel Shri M.G.Bhangde, settles legal
position by observing in paragraph Nos.19, 20, 21, 22, and
23, which are as under:
"19. Order XXI Rule 2 applies to a specific
set of circumstances. If any money is
payable under a decree, irrespective of the
nature of decree, and such money is paid
out of court, the decree-holder has to
certify such payment to the court whose
duty is to execute the decree and that court
has to record the same accordingly.
Similarly if a decree, irrespective of its
nature, is adjusted in whole or in part to
the satisfaction of the decree-holder, the
decree-holder has to certify such
adjustment to that court which has to
record the adjustment accordingly. If the
payment or adjustment is not reported by
the decree-holder, the judgment-debtor has
been given the right to inform the court of
such payment or adjustment and to apply
.....63/-
Judgment
226 cra92.19 & 22.21
to that court for certifying that payment or
adjustment after notice to the decree-
holder. Then comes Sub-rule (3) which
provides that a payment or adjustment
which has not been certified or recorded
under Sub-rule (1) or (2), shall not be
recognised by the court executing the
decree.
20. The words "or the decree of any kind is
otherwise adjusted" are of wide amplitude.
It is open to the parties namely, the decree-
holder and the judgment-debtor to enter
into a contract or compromise in regard to
their rights and obligations under the
decree. If such contract or compromise
amounts to an adjustment of the decree, it
has to be recorded by the court under Rule
2 of Order XXI. It may be pointed out that
an agreement, contract or compromise
which has the effect of extinguishing the
decree in whole or in part on account of
decree being satisfied to that extent will
amount to an adjustment of the decree
within the meaning of this Rule and the
Court, if approached, will issue the
certificate of adjustment. An uncertified
payment of money or adjustment which is
not recorded by the court under Order XXI
Rule 2 cannot be recognised by the
executing court. In a situation like this, the
only enquiry that the executing court can
do is to find out whether the plea taken on
.....64/-
Judgment
226 cra92.19 & 22.21
its face value, amounts to adjustment or
satisfaction of decree, wholly or in part,
and whether such adjustment or
satisfaction had the effect of extinguishing
the decree to that extent. If the executing
court comes to the conclusion that the
decree was adjusted wholly or in part but
the compromise or adjustment or
satisfaction was not recorded and/or
certified by the court, the executing court
would not recognize them and will proceed
to execute the decree.
21. The problem can be looked into from
another angle on the basis of the maxim
"generalia speciallibus non derogant."
22. Section 47, as pointed out earlier, gives
full jurisdiction and power to the executing
court to decide all questions relating to
execution, discharge and satisfaction of the
decree. Order XXI Rule 3, however, places a
restraint on the exercise of that power by
providing that the executing court shall not
recognize or look into any uncertified
payment of money or any adjustment of
decree. If any such adjustment or payment
is pleaded by the judgment- debtor before
the executing court, the latter, in view of
the legislative mandate, has to ignore it if it
has not been certified or recorded by the
court.
.....65/-
Judgment
226 cra92.19 & 22.21
23. The general power of deciding
questions relating to execution, discharge
or satisfaction of decree under Section 47
can thus be exercised subject to the
restriction placed by Order XXI Rule 2
including Sub-rule (3) which contain
special provisions regulating payment or
money due under a decree outside the
court or in any other manner adjusting the
decree. The general provision under
Section 47 has, therefore, to yield to that
extent to the special provisions contained
in Order XXI Rule 2 which have been
enacted to prevent a judgment-debtor from
setting up false, or cooked- up pleas so as
to prolong or delay the execution
proceedings."
41. In the case of Laxmi Narayanan vs. S.S.Pandian supra
also the Honourable Apex Court held that after the rights of
the parties are crystallized on passing of a decree by a
competent court, in law they are not precluded from settling
their disputes outside the court. But, to have the compromise
recognised by a court, it has to be recorded under Rule 2 of
Order XXI of the Code. The consequence of not having it so
recorded is contained in Rule 3 of Order XXI of the code
.....66/-
Judgment
226 cra92.19 & 22.21
which prohibits every Court executing the decree from
recognizing a payment or adjustment which has not been
certified or recorded by the Court.
42. In the case of Badamo Devi and ors vs. Sagar Sharma
supra, also the Honourable Apex Court held that any
payment made under a decree made out of court or any
adjustment of a decree has to be certified under Order XXI
Rule 2 of the Code, failing which the same would not be
recognized by the executing court.
43. Thus, an uncertified payment of money or adjustment
which is not recorded by the court under Order XXI Rule 2 of
the Code cannot be recognized by the executing court.
44. In a situation like this, the only enquiry that the
executing court can do is to find out whether the plea taken
on its face value, amounts to adjustment or satisfaction of
decree, wholly or in part, and whether such adjustment or
satisfaction had the effect of extinguishing the decree to that
extent. If the executing court comes to the conclusion that
.....67/-
Judgment
226 cra92.19 & 22.21
the decree was adjusted wholly or in part but the
compromise or adjustment or satisfaction was not recorded
and/or certified by the court, the executing court would not
recognize them and will proceed to execute the decree.
45. The expression "or the decree of any kind is otherwise
adjusted" are of wide amplitude. It is open to the parties
namely, the decree-holder and the judgment-debtor to enter
into a contract or compromise in regard to their rights and
obligations under the decree. If such contract or compromise
amounts to an adjustment of the decree, it has to be recorded
by the court under Rule 2 of Order XXI. an agreement,
contract or compromise which has the effect of extinguishing
the decree in whole or in part on account of decree being
satisfied to that extent will amount to an adjustment of the
decree within the meaning of this Rule and the Court, if
approached, will issue the certificate of adjustment. An
uncertified payment of money or adjustment which is not
recorded by the court under Order XXI Rule 2 cannot be
recognised by the executing court. In a situation like this, the
.....68/-
Judgment
226 cra92.19 & 22.21
only enquiry that the executing court can do is to find out
whether the plea taken on its face value, amounts to
adjustment or satisfaction of decree, wholly or in part, and
whether such adjustment or satisfaction had the effect of
extinguishing the decree to that extent. If the executing court
comes to the conclusion that the decree was adjusted wholly
or in part but the compromise or adjustment or satisfaction
was not recorded and/or certified by the court, the executing
court would not recognize them and will proceed to execute
the decree.
46. The general power of deciding questions relating to
execution, discharge or satisfaction of decree under Section
47 can thus be exercised subject to the restriction placed by
Order XXI Rule 2 including Sub-rule (3) which contain
special provisions regulating payment or money due under a
decree outside the court or in any other manner adjusting the
decree.
.....69/-
Judgment
226 cra92.19 & 22.21
47. As seen from the above, Rule 2 of Order XXI of the
Code places emphasis not on the decree being satisfied, but
on the same being adjusted. The term 'adjusted' is obviously
wider than the terms "satisfied". There may be an agreement
which merely satisfies the decree and nothing more.
Whereas, there may be another agreement which apart from
satisfying the decree as it stands, does something in addition
to it.
48. Thus, it is well settled that the adjustment to fall
within the ambit of Order XXI Rule 2 of the Code does not
necessarily have to be in respect of the entire decree. The
parties are at liberty to adjust some and not all aspects of the
decree. But, the uncertified payment of money or adjustment
which is not recorded by the court under Order XXI Rule 2 of
the Code cannot be recognized by the executing court. If the
adjustment or satisfaction was not recorded or certified by
the court, the only option remain with the executing court is
to proceed with the execution of the decree.
.....70/-
Judgment
226 cra92.19 & 22.21
49. In the present cases, admittedly, the alleged
adjustment by way of the MoU was neither certified by the
executing court nor it is brought before the executing court
to find out whether the plea taken on its face value amounts
to adjustment or satisfaction of a decree wholly or in part.
50. The application filed by Praharsh Corporation Private
Limited before the trial court under Order VII Rule 11 of the
Code, on the ground that the suit is barred by law of
limitation and, therefore, in view of Order VII Rule 11(d) of
the Code, the plaint deserves to be rejected. Learned Senior
Counsel Shri M.G.Bhangde, submitted that cause of action
shown is illusory. Articles 58 and 59 of the Limitation Act
provide limitation for declaration of suit is of three years.
The suit for declaration is to be filed within three years under
Article 58 when the cause of action first arose. In case of
Article 59, a suit, challenging decree, has to be filed within
three years from the date when the facts entitling plaintiff to
have instrument or decree cancelled or set aside or the
contract resented first became known to plaintiff. IARCPL
.....71/-
Judgment
226 cra92.19 & 22.21
got knowledge of the compromise decree on 10.9.2012 as
IARCPL filed an application under Order XXII Rule 10 of the
Code wherein IARCPL pleaded that the executing court suo
motu issued show cause notice dated 6.9.2012 to IARCPL to
show cause against the execution application. This show
cause notice was issued on 10.9.2012 and IARCPL placed
appearance through counsel and filed reply Exhibit-45 and
opposed the execution proceeding as well as relief claimed in
Exhibit-26. Thus, IARCPL was having knowledge on
10.9.2012. Whereas, MVEPL got knowledge of compromise
decree on 20.10.2005. He further submitted that the
pleading of the plaintiffs itself shows that Praharsh
Corporation Private Limited and Riddhi Investment and
Properties Private Limited approached MVEPL with a request
that it should purchase the suit property for valuable
consideration and handed over the photocopy of MoU dated
4.12.2004. Praharsh Corporation Private Limited and
Riddhi Investment and Properties Private Limited informed
MVEPL that it would be necessary to cancel the compromise
.....72/-
Judgment
226 cra92.19 & 22.21
decree and for that purpose they would be required original
MoU. Thus, MVEPL was knowing about the MoU prior to
execution of the sale deed in its favour as well as about the
compromise decree, but the suit is not filed within three
years either from 10.9.2012 or from 20.10.2005.
51. In support of his contentions, learned Senior Counsel
Shri M.G.Bhangde placed reliance on the decision of the
Honourable Apex Court in the case of Zee Telefilms Limtied
(now known as Zee Entertainment Enterprises Limited vs.
Suresh Production and ors5 and on the decision of this court
in the case of Jahangir @ Jawahar Kaikashrau Karanjia (since
deceased) Smt.Mehbi Karanjia and ors vs. Maureen De
Sequeira6.
52. Per contra, learned counsel Dr. (Shri) Anjan De
submitted that the suit is within limitation as cause of action
arose in the year 2016 when the Praharsh Corporation
Private Limited obtained possession of the suit fraudulently.
5 (2020)5 SCC 353
6 2017(6) Mh.L.J. 270
.....73/-
Judgment
226 cra92.19 & 22.21
He submitted that the possession of the suit property was
handed over to Praharsh Corporation Private Limited on
2.2.2016 when warrant of possession was executed and
Praharsh Corporation Private Limited was put in possession.
IARCPL filed the suit on 5.6.2017, which was within
limitation.
53. There is no dispute as to fact that Praharsh
Corporation Private Limited filed Special Darkhast
No.221/2005 to execute compromise decree dated
18.4.2002. In the execution, Praharsh Corporation Private
Limited had claimed relief of possession of the suit property.
Admittedly, the possession was handed over by way of
possession warrant on 2.2.2016. The pleading of IARCPL
shows that it has filed an application under Order XXII Rule
10 of the Code for adding it as a party. In the said
application, IARCPL claimed that it received the notice of the
execution The fact that IARCPL put its appearance in the
execution application and filed an application under Order
XXII Rule 10 and admitted about the notice received from the
.....74/-
Judgment
226 cra92.19 & 22.21
executing court indicates that it had a knowledge of
compromise decree on 10.9.2012, whereas the suit is filed on
5.6.2017.
54. The Honourable Apex Court, in the case of Zee
Telefilms Limited (now known as Zee Entertainment
Enterprises Limited vs. Suresh Production and ors supra, as
relied by learned Senior Counsel Shri M.G.Bhangde, in
paragraph No.19 has held that cause of action to a plaintiff to
file a suit accrues when there is a clear and unequivocal
threat to infringe a right. The Honourable Apex Court, by
referring the decision in the case of Privy Council in Bolo vs.
Koklan7, observed that there can be no 'right to sue' until
there is an accrual of the right asserted in the suit and its
infringement, or at least a clear and unequivocal threat to
infringe that right, by the defendant against whom the suit is
instituted.
55. This Court, in the case of Jahangir @ Jawahar
Kaikashrau Karanjia (since deceased) Smt.Mehbi Karanjia
7 AIR 1930 PC 270
.....75/-
Judgment
226 cra92.19 & 22.21
and ors vs. Maureen De Sequeira supra, has also dealt the
issue of right to sue and held that starting point of limitation
for filing a suit for declaration under Article 58 of the
Limitation Act is when the right to sue "first accrues". The
expression "right to sue" has not been defined in the Act, but
the said expression has been considered in several cases by
the Honourable Apex Court. In the decision of State of
Punjab vs. Gurdev Singh8, the said expression was explained
as, the words "right to sue" ordinarily mean the right to seek
relief by means of legal proceedings. Generally, the right to
sue accrues only when the cause of action arises, that is, the
right to prosecute to obtain relief by legal means. The suit
must be instituted when the right asserted in the suit is
infringed or when there is a clear and unequivocal threat to
infringe that right by the defendant against whom the suit
is instituted. This Court further referred the decision of Daya
singh and another vs. Gurdev Singh (Dead) by Lrs and ors 9
and reproduced paragraph Nos.13 and 14 of the judgment.
8 (1991)4 SCC 1
9 (2010)2 SCC 194
.....76/-
Judgment
226 cra92.19 & 22.21
The said praragraph Nos.13 and 14 are reproduced for
reference:
13. Let us, therefore, consider whether the
suit was barred by limitation in view of
Article 58 of the Act in the background of
the facts stated in the plaint FA No. 21/2006
itself. Part III of the Schedule which has
prescribed the period of limitation relates to
suits concerning declarations. Article 58 of
the Act clearly says that to obtain any other
declaration, the limitation would be three
years from the date when the right to sue
first accrues.
14. In support of the contention that the suit
was filed within the period of limitation, the
learned Senior Counsel appearing for the
appellant-plaintiffs before us submitted that
there could be no right to sue until there is
an accrual of the right asserted in the suit
and its infringement or at least a clear and
unequivocal threat to infringe that right by
the defendant against whom the suit is
instituted. In support of this contention the
learned Senior Counsel strongly relied on a
decision of the Privy Council in reported in
AIR 1930 PC 270, Bolo Vs. Koklan. In this
decision Their Lordships of the Privy Council
observed as follows:
.....77/-
Judgment
226 cra92.19 & 22.21
"There can be no right to sue until
there is an accrual of the right
asserted in the suit and its
infringement, or at least a clear and
unequivocal threat to infringe that
right, by the defendant against whom
the suit is instituted."
It can thus be seen that the cause of action
for the purposes of Article 58 of the
Limitation Act, accrues only when FA No.
21/2006 the right asserted in the suit is
infringed, or at least when there is a clear
and unequivocal threat to that right (see the
case of C.Mohammad Yunus vs. Syed
Unnissa, AIR 1961 SC 808).
56. The Honourable Apex Court in the case of State of
Madhya Pradesh vs. Bhailal Bhai and ors 10 observed that the
maximum period fixed by the legislature as the time within
which relief by a suit in a Civil Court must be claimed may
ordinarily be taken to be a reasonable standard. Thus, it is
well settled that in view of Article 59, the suit for
cancellation or setting aside an instrument, limitation would
not be more than three years.
10 AIR 1964 SC 1006
.....78/-
Judgment
226 cra92.19 & 22.21
57. In the suit, though IARCPL has not pleaded about the
notice issued by the executing court suo motu, it pleaded
that it filed application on 17.12.2014 under Order XXII Rule
10 of the Code seeking impleadment as party to execution
proceedings bearing Special Darkhast No.221/2005 and
Special Civil Suit No.242/1998 and relied upon various
documents.
58. Under Order VII Rule 11 of the Code, a duty cast on
the court is to determine whether the cause of action is
disclosed in the plaint.
59. The Honourable Apex Court in the case of Dahiben vs.
Arvindbhai Kalyanji Bhanusali (Gajra)(D) thr. LRS and ors 11,
as relied upon by learned Senior Counsel Shri M.G.Bhangde
and learned counsel Dr. (Shri) Anjan De, in paragraph
No.23.6, observed that, "under Order VII Rule 11, a duty is
cast on the Court to determine whether the plaint discloses a
cause of action by scrutinizing the averments in the plaint,
11 (2020)7 SCC 366
.....79/-
Judgment
226 cra92.19 & 22.21
read in conjunction with the documents relied upon, or
whether the suit is barred by any law.
60. In the case of I.T.C.Limited vs. The Debts Recovery
Appellate Tribunal and ors 12, the Honourable Apex Court
held that law cannot permit clever drafting which creates
illusions of a cause of action. If, however, by clever drafting
of the plaint, it has created the illusion of cause of action, the
Honourable Apex Court in the case of Madanuri Sri Rama
Chandra Murthy vs. Syed Jalal13 held that it should be nipped
in the bud so that bogus litigation will end at early stage.
61. In the case of Liverpool and London S.P. & I
Association Limited vs. M.V.Sea Success and anr 14, as relied
upon by learned counsel Shri S.V.Purohit, the Honourable
Apex Court by referring Order VII Rule 4 of the Code
observed in paragraph No.142, thus:
"In the instant case the 'Club' not only annexed
certain documents with the plaint but also filed a
12 (1998)2 SCC 170
13 (2017)13 SCC 174
14 (2004)9 SCC 512
.....80/-
Judgment
226 cra92.19 & 22.21
large number of documents therewith. Those
documents having regard to Order 7 Rule 14 of
the Code of Civil Procedure are required to be
taken into consideration for the purpose of
disposal of application under Order 7 Rule 11(a)
of the Code of Civil Procedure."
62. The decisions in the cases of Dahiben vs. Arvindbhai
Kalyanji Bhanusali (Gajra)(D) thr. LRS and ors supra and
Liverpool and London S.P. & I Association Limited vs. M.V.Sea
Success and anr supra indicate that while considering an
application under Order VII Rule 11 of the Code of Civil
Procedure, it is not only the plaint averments, but also the
documents annexed with the plaint, can be looked into for
the purpose of determining whether requirements under
Order VII Rule 11 of the Code of Civil Procedure are satisfied.
The logic on which it is based, appears to be that the
documents annexed with the plaint are relied upon by the
plaintiff for the purpose of the plaint averments and thus
form an integral part of the plaint. The matter, therefore, has
to be viewed in the light of the above legal proposition.
.....81/-
Judgment
226 cra92.19 & 22.21
63. In the instant case, IARCPL also pleaded that it had
filed an application under Order XXII Rule 10 of the Code
before the executing court seeking impleadment as party.
The copy of the said application shows that there was
pleading in the said application that it had received notice
from the executing court which was replied by placing
appearance. Though the notice received is not pleaded,
documents filed and pleading in the said application under
Order XXII Rule 10 of the Code show that such notice was
received. If the averments of the plaint are read in
conjunction with documents filed, it shows that knowledge of
compromise decree was got by IARCPL on 10.9.2012 and suit
is filed on 5.6.2017. Thus, the suit apparently is not within
limitation of three years from the date of knowledge in the
light of the mandate of Article 59 of the Limitation Act on
account of which it can safely be said that the requirement of
Order VII Rule 11(d) of the Code stands satisfied and the
plaint deserves to be rejected under Order VII Rule 11(d) of
the Code being barred by limitation.
.....82/-
Judgment
226 cra92.19 & 22.21
64. Whether the plaint can be rejected, against both
Praharsh Corporation Private Limited and Sawan Nandkumar
Bhatewara, also a question which is required to be answered.
65. IARCPL filed suit for declaration, permanent
injunction, and possession of the suit property mainly on the
ground that Praharsh Corporation Private Limited suppressed
the MoU. As observed earlier, adjustment through the MoU
is not certified and, therefore, the said MoU cannot be
recognized in law.
66. It is well settled that an uncertified payment of money
or adjustment, which is not certified by the court under
Order XXI Rule 2 of the Code, cannot be recognized by the
executing court. If the executing court comes to the
conclusion that decree was adjusted wholly or in part, but
the compromise of adjustment or the satisfaction was not
recorded or certified by the court, the executing court would
not recognize them and would proceed to execute the decree.
.....83/-
Judgment
226 cra92.19 & 22.21
67. The contention of learned counsel Dr. (Shri) Anjan De
is that the compromise decree is unexecutable in view of the
MoU and, therefore, the sale deed is executed and it is fraud
and, therefore, cause of action arose against Praharsh
Corporation Private Limited and Sawan Nandkumar
Bhatewara. It is further submitted that Praharsh Corporation
Private Limited got executed the sale deed in his favour
fraudulently by suppressing the MoU. Moreover, Praharsh
Corporation Private Limited is not a decree holder. In fact,
decree is obtained in collusion.
68. In support of his contentions, learned counsel Dr.
(Shri) Anjan De placed reliance on catena of decisions, as
follows:
1. S.P.Chengalvaraya Naidu vs. Jagannath15;
2. Shakti Bhog Food Industries Limited vs. Central
Bank of India and anr 16;
3. Kamala vs. K.T.Eshwara SA17, and
15 1993 LawSuit (SC) 908
16 2020(17) SCC 260
17 2008 LawSuit (SC) 653
.....84/-
Judgment
226 cra92.19 & 22.21
4. Shrihari Hanumandas Totala vs. Hemant Vithal
Kamat and ors18.
69. In the case of Shrihari Hanumandas Totala vs. Hemant
Vithal Kamat and ors supra, the Honourable Apex Court laid
down guiding principles of deciding an application under
Order VII Rule 11(d) of the Code. Whereas, in the rest of the
decisions, the principles to be considered while deciding an
application under Order VII Rule11 are laid down. It is laid
down that while deciding an application under Order VII
Rule 11 of the Code, few lines or passage from the plaint
should not be read in isolation and pleadings ought to be
read as a whole to ascertain its true import.
70. Thus, relative scope and applicability, as laid down by
the Honourable Apex Court, is that where a plaint as a whole
did not disclose cause of action, Order VII Rule 11(a) of the
Code is applicable and it stops continuation of suit. If the
conditions mentioned under Order VII Rule 11 are fulfilled,
the entire plaint has to be rejected.
18 (2021)9 SCC 99
.....85/-
Judgment
226 cra92.19 & 22.21
71. There is no dispute as far as the legal position is
concerned. The facts on record show that when the
compromise decree was passed on 18.4.2002, IARCPL and
MVEPL were not in picture. As regards the allegation that the
compromise decree is obtained by fraud, this court in Writ
Petition No.2761/2014 observed that there is no flaw or any
fault in the compromise decree. It is specifically observed
that the petitioner therein (IARCPL) being a transferee
pendente lite may have only limited right that too by filing
an independent proceeding. This finding is maintained by
the Honourable Apex Court as the Special Leave Petition filed
by IARCPL was dismissed.
72. There is no dispute as to the fact that Riddhi
Investment and Properties Private Limited entered into an
agreement of sale with Praharsh Corporation Private Limited
on 27.7.1996. Subsequent to the said agreement of sale, it
further entered into an agreement of sale in favour of Nimish
Investment Private Limited. Nimish Investment Private
Limited filed a suit for refund of the amount wherein the
.....86/-
Judgment
226 cra92.19 & 22.21
compromise decree was passed. As per the said compromise
decree, the agreement to sale executed in favour of Praharsh
Corporation Private Limited is held to be valid, in existence
and Riddhi Investment and Properties Private Limited agreed
to execute sale deed in favour of Praharsh Corporation
Private Limited after conveyance is executed by the Income
Tax Department in its favour. As per the terms of the said
compromise decree, if Riddhi Investment and Properties
Private Limited fails to execute the sale deed, Praharsh
Corporation Private Limited is at liberty to get it executed
through the court. Riddhi Investment and Properties Private
Limited further agreed to keep the said property
encumbrances free. Contrary to the terms and conditions of
the compromise decree, the sale deed was executed by
Riddhi Investment and Properties Private Limited in favour
of MVEPL on 20.10.2005 when Special Darkhast
No.221/2005 filed by Praharsh Corporation Private Limited
on 5.8.2005 was pending. MVEPL was the transferee
pendente lite. The IARCPL received possession of the suit
.....87/-
Judgment
226 cra92.19 & 22.21
property as MVEPL mortgaged the suit property to the Axis
Bank Limited and the Axis Bank Limited assigned the right of
the debts to IARCPL Thus, the sale deed was executed during
the pendency of the execution proceeding and was clearly hit
by Section 52 of the Transfer of Property Act.
73. In the cases of Usha Sinha vs. Dina Ram and ors 19 and
Silverline Forum Private Limited vs. Rajiv Trust and anr 20, it
is laid down that person purchasing property from the
judgment debtor during the pendency of suit has no
independent right to property to resist. It is further laid
down that such purchasers were presumed to be aware of
pending litigation in the competent court and they could not
said to be purchasers without notice.
74. Thus, IARCPL MVEPL being transferees pendente lite
have limited rights and its claim is hit by Section 52 of the
Transfer of Property Act.
19 (2008)7 SCC 144
20 (1998)3 SCC 723
.....88/-
Judgment
226 cra92.19 & 22.21
75. Another limb of submissions of learned counsel Dr.
(Shri) Anjan De is that when the agreement of sale is
executed in favour of Praharsh Corporation Private Limited
by Riddhi Investment and Properties Private Limited, Riddhi
Investment and Properties Private Limited has no title and
right to sale the property. He submitted that the Income Tax
Department executed the sale deed in favour of Riddhi
Investment and Properties Private Limited on 20.10.2005.
Thus, on the date of agreement i.e. 27.7.1996, Riddhi
Investment and Properties Private Limited has no right in the
property to execute agreement to sale. Thus, the said
agreement is executed by Riddhi Investment and Properties
Private Limited without having any title.
76. On the contrary, learned Senior Counsel Shri
M.G.Bhangde submitted that in view of Section 43 of the
Transfer of Property Act, where a person fraudulently or
erroneously represents that he is authorized to transfer
certain immovable property and professes to transfer such
property for consideration, such transfer shall, at the option
.....89/-
Judgment
226 cra92.19 & 22.21
of the transferee, operate on any interest which the
transferor may acquire in such property at any time during
which the contract of transfer subsists. Thus, if, at the time
of transfer, the vendor/transferor might have a defective title
or have no title or no right or interest, however subsequently
the transferor acquires the right, title or interest, and the
contract of transfer subsists, in that case, at the action of the
transferee, such transfer is valid. In such a situation, the
transferor cannot be permitted to challenge the transfer.
77. Undisputedly, the said suit property was originally
owned by Shri Manohar Puranik and other Puranik family
members. Puranik family vide sale deeds dated 9.3.1990 and
1.9.1990 sold the suit property along with its structure to
Smt.Punam Anand Agarwal and Smt.Savita Chandra
Agarwal. Smt.Punam Anand Agarwal and Smt.Savita
Chandra Agarwal executed sale deed on 21.9.1993 in favour
of Jyoti and Surendra Developers Private Limited, Nagpur.
However, there was no compliance and the Income Tax
Authorities vide order dated 31.12.1993 held that it was a fit
.....90/-
Judgment
226 cra92.19 & 22.21
case for pre-emptive purchase order under Section 269
UD(1) of the Income Tax Act and obtained possession of the
suit property. The said order of the Income Tax Authorities
was challenged by Jyoti and Surendra Developers Private
Limited before this court by filing Writ Petition No.327/1994.
During the pendency of the said writ petition, the Income Tax
Department held an auction of the suit property on
19.9.1995. In the said auction, Riddhi Investment and
Properties Private Limited was the highest bidder and,
therefore, the bid was accepted and sale was confirmed in
favour of Riddhi Investment and Properties Private Limited
on 21.9.1995 subject to the decision of Writ Petition
No.327/1994. The Income Tax Department, after having
accepted the bid of Riddhi Investment and Properties Private
Limited, granted possession of the suit property vide letter of
possession dated 25.1.1996. Thus, though the sale deed was
not executed in favour of Riddhi Investment and Properties
Private Limited by the Income Tax Department, the bid was
.....91/-
Judgment
226 cra92.19 & 22.21
confirmed and possession was handed over to Riddhi
Investment and Properties Private Limited.
78. It is to be noted that the relevant words of Section 43
of the Transfer of Property Act are, "where a person
fraudulently or erroneously represents" and that emphasizes
for the purpose of the Section that it matters not whether the
transferor acted fraudulently or innocently in making the
representation and what is material is that he did make a
representation and the transferee has acted on it. Where the
transferee knew the fact that the transferor did not possess
the title, he cannot be said to have acted on it when taking a
transfer.
79. The Honourable Apex Court in the case of Tanu Ram
Bora vs. Pramod Ch.Das21 dealt with this issue and held that
intention and objects behind Section 43 of the T.P. Act seems
to be based on the principle of estoppel as well as the equity.
The intention and objects seems to be that after procuring
the money (sale consideration) and transferring the land,
21 2020(1) Mh.L.J. 163
.....92/-
Judgment
226 cra92.19 & 22.21
thereafter the transferor is estopped from saying that though
he has sold/transferred the property/land on payment of sale
consideration, still the transfer is not binding to him. That is
why Section 43 of the T.P. Act gives an option to the
transferee and not the transferor. The intention of Section 43
of the Act seems to be that nobody can be permitted to take
the benefits of his own wrong. In the facts and circumstances
of the case, Section 43 of the Act would come into play and
protect the rights of Praharsh Corporation Private Limited.
It is further held that where the transferee does act on
the representation, there is no reason why he should not
have the benefit of the equitable doctrine embodied in
Section 43, however fraudulent the act of the transferor
might have been.
80. Section 43 of the Act contemplates a transfer. An
Agreement of Sale is not a transfer.
81. Admittedly, on 20.10.2005, the Income Tax
Department executed registered sale deed in favour of Riddhi
.....93/-
Judgment
226 cra92.19 & 22.21
Investment and Properties Private Limited regarding the suit property.
Prior to that, bid was confirmed in favour of Riddhi Investment and
Properties Private Limited and possession was handed over to Riddhi
Investment and Properties Private Limited. Riddhi Investment and
Properties Private Limited executed sale deed in favour of Praharsh
Corporation Private Limited as per order of court on 16.1.2015.
82. The entire contentions of learned counsel Dr. (Shri) Anjan De
are that, while considering an application under Order VII Rule 11 of the
Code, (1) only plaint's contents are to be considered; (2) contents are to
be considered as correct; (3) validity of the documents cannot be
challenged, and (4) only documents relied and filed with plaint have to
be considered as part of the plaint. He further submitted that the plaint
cannot be rejected against some of defendants. A plaint can only be
rejected as a whole against all defendants and not against some of
defendants.
83. On the contrary, it is submitted by learned Senior
Counsel Shri M.G.Bhangde that the suit is filed for
declaration wherein the compromise decree is not
challenged. There was no privity of contract between
.....94/-
Judgment
226 cra92.19 & 22.21
Praharsh Corporation Private Limited and IARCPL and,
therefore, no cause of action arose against Praharsh
Corporation Private Limited. The entire suit revolves around
the MoU which is not certified or the satisfaction is not
certified before the executing court and, therefore, it cannot
be recognized. It is further submitted that there is no legal
impediment in rejecting a plaint against some of defendants.
84. Considering the rival submissions, Order VII Rule 11
of the Code deals with circumstances under which a plaint
can be rejected. The plaint can be rejected when no cause of
action is disclosed in the plaint. Praharsh Corporation
Private Limited raised ground that as no cause of action
arose, the suit is barred by law of limitation.
85. Learned counsel Dr. (Shri) Anjan De, placed reliance
on various decisions wherein the settled principles are
reiterated that a plaint has to be read as a whole to find out
whether it discloses a cause of action or whether suit is
barred under any law.
.....95/-
Judgment
226 cra92.19 & 22.21
86. At the stage of exercising powers under Order VII Rule
11 of the Code, the stand of defendants in the written
statements or in the applications for rejection of the plaint is
wholly immaterial.
87. Learned counsel Dr. (Shri) Anjan De, with the help of
catena of decisions referred above, submitted that guiding
principles for deciding application are laid down in the
decisions supra and it shows that plaint has to be read as a
whole and cannot be rejected against some of defendants.
88. Learned Senior Counsel Shri M.G.Bhangde, placed
reliance on following decisions:
1. Suresh Kumar Dagla vs. Sarwan and anr 22;
2. Jahangir @ Jawahar Kaikashrau Karanjia (since
deceased) Smt.Mehbi Karanjia and ors vs. Maureen
De Sequeira supra;
3. Chetana Shankar Manapure vs. Bandu s/o Tanaji
Barapatre23;
22 (2014)14 SCC 254
23 2020(4) Mh.L.J. 481
.....96/-
Judgment
226 cra92.19 & 22.21
4. Sheela Ram Vidhani and anr vs. M/s.S.K.Trading
Company & ors24.
He submitted that in the decisions referred above, it is
held that there is no legal embargo on rejecting the plaint as
a whole against some of defendants.
89. Learned counsel Shri S.V.Purohit, also placed reliance
on the decision of the Honourable Apex Court in the case of
Rajendra Bajoria and ors vs. Hemant Kumar Jalan and ors 25
wherein it is held that reliefs sought in plaint cannot be
granted and only option available to a court is to reject the
plaint.
He further placed reliance on the decision of the
Honourable Apex Court in the case of Liverpool and London
S.P. & I Association Limited vs. M.V.Sea Success and anr supra
wherein it is held that a cause of action is a bundle of facts
which are required to be pleaded and proved for the purpose
of obtaining relief claimed in the suit. For the
24 AIR OnLine 2021 BOM 1682
25 (2022)12 SCC 641
.....97/-
Judgment
226 cra92.19 & 22.21
aforementioned purpose, the material facts are required to
be stated but not the evidence except in certain cases where
the pleading relies on any misrepresentation, fraud, breach
of trust, wilful default, or undue influence.
90. As regards learned counsel Dr. (Shri) Anjan De who
placed reliance on various decisions of the Honourable Apex
Court including in the cases of Sejal Glass Limited vs. Navilan
Merchants Private Limited 26 and Madhav Prasad Aggarwal
and anr vs. Axis Bank Limited and anr 27 wherein the
Honourable Apex Court held that it is not permissible to
reject a plaint qua any particular portion of a plaint
including some of defendants and continued the same
against the others. Learned Senior Counsel Shri
M.G.Bhangde placed reliance on the decision in the case of
Sheela Ram Vidhani and anr vs. M/s.S.K.Trading Company &
ors supra wherein the Division Bench of this Court placed
reliance on the decision in the case of The Church of Christ
Charitable Trust & Educational Charitable Society,
26 (2018)11 SCC 780
27 (2019)7 SCC 158
.....98/-
Judgment
226 cra92.19 & 22.21
represented by its Chairman vs. M/s Ponniamman
Educational Trust represented by its Chairperson/Managing
Trustee which is prior decision of Madhav Prasad Aggarwal
and anr vs. Axis Bank Limited and anr supra case wherein
the Honourable Apex Court had ruled that a plaint as a
whole can be rejected against some of defendants in terms of
Order VII Rule 11 of the Code.
91. I have gone through the decision in the case of The
Church of Christ Charitable Trust & Educational Charitable
Society, represented by its Chairman vs. M/s Ponniamman
Educational Trust represented by its Chairperson/Managing
Trustee supra wherein it is ruled that a plaint as a whole can
be rejected against some of defendants. The said decision
was rendered by two judges bench of the Honourable Apex
Court. The later decision of Madhav Prasad Aggarwal and
anr vs. Axis Bank Limited and anr supra is also rendered by
two judges bench of the Honourable Apex Court wherein the
earlier decision in the case of The Church of Christ Charitable
Trust & Educational Charitable Society, represented by its
.....99/-
Judgment
226 cra92.19 & 22.21
Chairman vs. M/s Ponniamman Educational Trust
represented by its Chairperson/Managing Trustee supra was
not considered. In this context, the Honourable Apex Court
in the case of Sundeep Kumar Bafna vs. State of
Maharashtra28 observed that the decision rendered by a co-
equal bench or a larger bench, earlier in time, would prevail.
The relevant observation in this regard, are as follows:
"17. The Constitution Bench in Union of India
vs. Raghubir Singh, (1989) 2 SCC 754 has
come to the conclusion extracted below : (SC
pp 777-78, para 27)
"27..........It is in order to guard against the
possibility of inconsistent decisions on points
of law by different Division Benches that the
rule has been evolved, in order to promote
consistency and certainty in the development
of the law and its contemporary status, that
the statement of the law by a Division Bench is
considered binding on a Division Bench of the
same or lesser number of Judges. This
principle has been followed in India by several
generations of Judges."
92. In view of the foregoing settled position of law, I am
of view that earlier decision rendered by the Honourable
28 (2014)16 SCC 623
.....100/-
Judgment
226 cra92.19 & 22.21
Apex Court The Church of Christ Charitable Trust &
Educational Charitable Society, represented by its Chairman
vs. M/s Ponniamman Educational Trust represented by its
Chairperson/Managing Trustee supra needs to be followed
which has laid down that the plaint as a whole can be
rejected against some of defendants. In fact, this position has
also been considered by the Division Bench of this Court in
the case of Sheela Ram Vidhani and anr vs. M/s.S.K.Trading
Company & ors supra.
93. The next point for determination is, whether the
plaint does not disclose any cause of action against Praharsh
Corporation Private Limited and Sawan Nandkumar
Bhatewara. IARCPL filed a suit for declaration and
injunction and prayed that the sale deed executed in favour
of Praharsh Corporation Private Limited and subsequently in
favour Sawan Nandkumar Bhatewara by Praharsh
Corporation Private Limited be declared as null and void. The
entire suit revolves around the MoU which is admittedly
subsequent to the compromise decree dated 18.4.2002. The
.....101/-
Judgment
226 cra92.19 & 22.21
execution proceeding was filed bearing Special Darkhast
No.221/2005 wherein the said MoU was neither produced
nor certified from the court being adjusted. Thus, the
adjustment which was allegedly between Praharsh
Corporation Private Limited and Riddhi Investment and
Properties Private Limited was not certified before the
executing court. The settled law regarding the same is
already discussed which shows that an uncertified
adjustment or a compromise cannot be recognized by the
executing court and, therefore, the executing court has only
an option to proceed to execute the decree.
94. Whether the plaintiffs can claim the reliefs without
challenging the compromise decree, regarding the same, as
IARCPL and MVEPL, admittedly, have not challenged the
compromise decree in pursuance of which the sale deed was
executed in favour of Praharsh Corporation Private Limited
and only declaration is claimed. The executing court cannot
go beyond the decree. In a suit also, unless consent decree is
.....102/-
Judgment
226 cra92.19 & 22.21
set aside, the relief of setting aside sale deed cannot be
granted.
95. The Honourable Apex Court, in the case of Edukanti
Kistamma and ors vs. Venkatareddynad ors 29 , as relied upon
by learned Senior Counsel Shri M.G.Bhangde, held that it is
legal obligation on the part of the party to challenge the basic
order and only if the same is found to be wrong,
consequential order may be examined.
96. As observed by this court in Writ Petition
No.2761/2014 already held that there is no flaw or fault in
the compromise decree, in the light of Order XXIII rule 3 of
the Code, no appeal is maintainable against the consent
decree having regard to the specific bar contained in Section
96(3) of the Code. No appeal is maintainable against the
order of the court recording the compromise (or refusing to
record compromise) in view of deletion of Clause (m) Rule 1
Order XLIII. No independent suit can be filed for setting
aside a compromise decree on the ground that the
29 (2010)1 SCC 756
.....103/-
Judgment
226 cra92.19 & 22.21
compromise was not lawful in view of the bar contained in
Rule 3(a) of the Code. The 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 proviso to Rule 3 of Order XXIII.
97. The Honourable Apex Court, in the case of Basavaraj
vs. Indira and ors30, held that 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.
30 (2024)3 SCC 705
.....104/-
Judgment
226 cra92.19 & 22.21
98. It requires to be noted that Praharsh Corporation
Private Limited and Sawan Nandkumar Bhatewara only have
resorted to Order VII Rule 11 of the Code. After noting the
above, it reveals that only Praharsh Corporation Private
Limited and Sawan Nandkumar Bhatewara filed applications
vide Exhibits-20 and 38 on the ground that no cause of
action arose against them and the suit is barred by law of
limitation. As per their contentions, from the plaint, the
entire case of plaintiffs is based on alleged fabricated MoU
dated 4.12.2004 which was allegedly suppressed from the
executing court. The facts and contentions are that the
adjustment or satisfaction or cancellation of decree needs to
be certified before the executing court. As observed earlier
that an uncertified payment of money or adjustment, which
is not recorded by the court under Order XXI Rule 2 of the
Code, cannot be recognized by the executing court,
admittedly, the said MoU was not certified either by Riddhi
Investment and Properties Private Limited or by MVEPL
though it was aware about the execution of the MoU between
.....105/-
Judgment
226 cra92.19 & 22.21
Praharsh Corporation Private Limited and Riddhi Investment
and Properties Private Limited.
99. Thus, the compromise or adjustment or satisfaction,
which is not recorded or certified by the court and cannot be
recognized in law, cause of action referred by the plaintiffs is
frustrated.
100. It is true that only on the basis of the averments made
in the plaint, it could be ascertained as to whether cause of
action is made out or not. It is equally true that for finding
out the same, the entire pleadings in the plaint will have to
be read and that too at its face value and defence taken by
the defendants cannot be looked into. It could thus be seen
that the court has to find out as to whether in the
background of facts, the reliefs as claimed in the plaint can
be granted to the plaintiffs. It has been consistently held that
if the court finds that none of reliefs sought in the plaint can
be granted to the plaintiffs under the law, question then
arises as to whether such a suit is to be allowed to continue
.....106/-
Judgment
226 cra92.19 & 22.21
and go for trial. The Honourable Apex Court answered the
said question by holding that such a suit should be thrown
out at the threshold. The position is also considered by the
Honourable Apex Court in the case of Anathula Sudhakar vs.
P.Buchi Reddy (dead) by LRs and ors31.
101. Admittedly, the power conferred on the court to
terminate civil action is a drastic one and the conditions
enumerated under Order VII Rule 11 of the Code are
required to be strictly adhered to. However, under Order VII
Rule 11, duty is cast upon the court is to determine whether
the plaint discloses a cause of action by scrutinizing the
averments in the plaint and read in conjunction with
documents relied upon or whether the suit is barred by any
law. Underlying object of Orders VII Rule 11 of the Code is
that when a plaint does not disclose a cause of action, the
court would not permit plaintiff to unnecessarily protract
proceedings. It has been held that in such a case, it will be
31 AIR 2008 SC 2033
.....107/-
Judgment
226 cra92.19 & 22.21
necessary to put an end the litigation so that further judicial
time is not wasted.
102. The remedy under Order VII Rule 11 of the Code is
independent and special remedy wherein the court is
empowered to summarily dismiss a suit at the threshold
without proceeding to record evidence and conducting a trial
if it is satisfied that action should be terminated on any of
grounds contained therein. The underlying object of Order
VII Rule R11(a) is that if in a suit no cause of action discloses
or suit is barred by limitation under clause (d), the court
would not permit a plaintiff to unnecessarily protract
proceedings in the suit. A duty cast on the court is to
determine whether a plaint discloses a cause of action by
scrutinizing the averments in plaint read with documents
relied on or whether the suit is barred by law. A cause of
action, thus, means every fact which if is traversed, would be
necessary for plaintiff to prove in order to support his right.
It is a bundle of facts taken with the law applicable to them
which gives the plaintiff a right to relief against the
.....108/-
Judgment
226 cra92.19 & 22.21
defendant. It must include some act done by the defendant
since in the absence of such an act no cause of action can
possibly accrue. It is not limited to the actual infringement of
the right sued on but includes all the material facts on which
it is founded.
103. The words "right to sue" ordinarily mean the right to
seek relief by means of legal proceedings. "The right to sue"
accrues only when the cause of action arises. In a suit for
declaration, starting point of limitation is when "right to sue"
accrues. The cause of action for purposes of Article 59 of the
Limitation Act accrues only when right asserted in a suit is
infringed.
104. In the light of the above well settled law, knowledge
of the compromise decree came to IARCPL on 10.9.2012 and
knowledge to MVEPL on 20.10.2005 when sale deed is
executed in his favour.
105. Admittedly, the plaint claims to disclose cause of
action against Praharsh Corporation Private Limited on the
.....109/-
Judgment
226 cra92.19 & 22.21
basis of the MoU. The adjustment through the MoU is
neither certified nor recorded. IARCPL and MVEPL are
transferees pendente lite who have limited rights. Whereas,
the sale deed executed in favour of Praharsh Corporation
Private Limited is on the basis of the compromise decree.
The payment or adjustment made outside the court, which is
not certified, will not give rise to the cause of action for
possession under guise of sale deed which is executed during
the pendency of the execution proceeding.
106. It is well settled that the rights of the transferee
pendente lite are limited rights. As far as alternate relief
claimed by plaintiffs for refund of earnest amount is
concerned, the same is against Riddhi Investment and
Properties Private Limited as payment was made by MVEPL
to Riddhi Investment and Properties Private Limited and,
therefore, the plaint can be rejected as a whole against
Praharsh Corporation Private Limited and Sawan Nandkumar
Bhatewara, who are subsequent purchasers. Insofar as
Riddhi Investment and Properties Private Limited is
.....110/-
Judgment
226 cra92.19 & 22.21
concerned, there are sufficient averments against it
disclosing cause of action and the suit ought to be continued
against it.
107. During the pendency of the suit, IARCPL filed Civil
Application No.20/2024 for taking action against Sawan
Nandkumar Bhatewara as he has committed breach of oral
status quo order of this court. It is contended that on
25.1.2024 this court had orally directed Sawan Nandkumar
Bhatewara not to continue with any construction activity. In
spite of order of this court, at about 1:00 pm, Sawan
Nandkumar Bhatewara continued with digging activity and
there was breach of order passed by this court. It is
contended that action of contempt of court deserves to be
taken against Sawan Nandkumar Bhatewara and his defence
is to be struck down and the application filed by it deserves
to be rejected. The said application is strongly opposed by
Sawan Nandkumar Bhatewara by contending that this court
orally directed it not to proceed with the construction over
the suit property. The counsel informed him through a
.....111/-
Judgment
226 cra92.19 & 22.21
phone call around 3:30 pm.. After receipt of the referred
information, the same was communicated to the contractor.
The contractor informed that till that time, in all four pits
were dug at the site by using drilling machine. Out of these
four pits, drilling of three pits was completed and digging of
four pits was midway. He also communicated that if the said
pits were kept open as it is, there is an apprehension of
damage to the property of applicant's neighbour as well as
apprehension of danger to the safety of labourers working
therein.
108. After hearing both sides on this issue, it is required to
be seen whether there is any wilful disobedience or mere
disobedience. For finding a person guilty of wilful
disobedience under Order XXXIX Rule 2(a) of the Code, not
only there has to be mere disobedience but also it should be
wilful disobedience. The allegation of wilful disobedience
has to be proved to the sanction of the court that the
disobedience was not mere disobedience, but a wilful
disobedience.
.....112/-
Judgment
226 cra92.19 & 22.21
109. Insofar as the civil application is concerned, Sawan
Nandkumar Bhatewara has admitted that the order was
communicated to him and he has communicated the same to
the contractor, but the contractor filled the said pits
considering the apprehension of causing damage to the other
properties and considering the safety of labourers. The said
pits are filled. There is no evidence on record to show that it
was a wilful disobedience.
110. The Honourable Apex Court in the case of
U.C.Surendranath vs. Mambally's Bakery 32 held that
allegation of willful disobedience being in the nature of
criminal liability, the same has to be proved to the
satisfaction of the court that the disobedience was not mere
"disobedience" but a "willful disobedience.
111. As such, the explanation given by Sawan Nandkumar
Bhatewara is acceptable one.
32 (2019)20 SCC 666
.....113/-
Judgment
226 cra92.19 & 22.21
112. As noted above, the entire suit of IARCPL and MVEPL
is revolving around the MoU, which is uncertified and not
recorded before the executing court and thus cannot be
recognized. The sale deed executed in favour of Praharsh
Corporation Private Limited by the court order is on the basis
of the consent decree which is not challenged. IARCPL and
MVEPL being transferees pendente lite have the limited
rights.
113. As observed earlier that the consent decree is not
challenged in the suit and the consent decree operates as an
estoppel and is valid and binding unless it is set aside by the
court which passed the consent decree, the only remedy
available to the party to consent decree is to avoid such
consent decree to approach the court which recorded the
compromise and established that there was no compromise.
As the said consent decree is not challenged by the parties,
the consequential reliefs claimed by IARCPL and MVEPL
would not be tenable. Moreover, the suit filed against both
.....114/-
Judgment
226 cra92.19 & 22.21
Praharsh Corporation Private Limited and Sawan Nandkumar
Bhatewara is beyond limitation.
114. The law laid down by the Honourable Apex Court
applies to the facts of the present case and the reliefs sought
by applicants Praharsh Corporation Private Limited and
Sawan Nandkumar Bhatewara for rejection of the plaint as
against them deserve to be granted.
115. It is significant that applicants Praharsh Corporation
Private Limited and Sawan Nandkumar Bhatewara are not
seeking rejection of plaint qua particular portion of the plaint
or qua any relief sought in the plaint, but they are seeking
rejection of plaint as a whole as against them.
116. It is significant to note that in the plaint, IARCPL and
MVEPL have sought relief of declaration on the basis of the
MoU which is neither recorded nor registered before the
executing court.
.....115/-
Judgment
226 cra92.19 & 22.21
117. As noted above, applying the law laid down by the
Honourable Apex Court in the case of The Church of Christ
Charitable Trust & Educational Charitable Society,
represented by its Chairman vs. M/s Ponniamman
Educational Trust represented by its Chairperson/Managing
Trustee supra to the facts of the present cases, accepting the
contentions raised on behalf of Praharsh Corporation Private
Limited and Sawan Nandkumar Bhatewara, amounts to
rejection of plaint as a whole against them and it cannot be
said that the plaint is being split and that only a part of plaint
is being rejected which is not permitted.
118. In the light of the above, the Civil Revision
Applications deserve to be allowed and the same are allowed.
The orders dated 8.4.2019 passed below Exhibits-20 and 38
by learned 18th Joint Civil Judge Senior Division, Nagpur in
Special Civil Suit No.408/2017 whereby applications under
Order VII Rule 11 of the Code have been rejected, are hereby
quashed and set aside. Consequently, the plaint is rejected as
against defendant No.1 Praharsh Corporation Private Limited
.....116/-
Judgment
226 cra92.19 & 22.21
and defendant No.3 Sawan Nandkumar Bhatewara, who filed
applications Exhibits-20 and 38 before the court below.
The Civil Revision Applications stand disposed of.
Rule is made absolute in the aforesaid terms. However, there
shall be no order as to costs.
In view of disposal of Civil Revision Applications, Civil
Application(s) pending, if any, also stands disposed of.
(URMILA JOSHI-PHALKE, J.)
1. Learned counsel Dr. (Shri) Anjan De, submits that on
the suit property construction is going on. If the construction
is completed, the entire object of filing of the suit would be
frustrated and there would be multiplication of proceedings.
As such, he prays that implementation of this order be stayed
for a further period of six weeks so as to enable him to
approach the Honourable Supreme Court in appeal.
.....117/-
Judgment
226 cra92.19 & 22.21
2. Learned Senior Counsel Shri M.G.Bhangde, opposes
the prayer made by learned counsel Dr. (Shri) Anjan De.
3. Till further period of six weeks from today, the parties
shall maintain status quo as on today and the same shall
cease to operate automatically thereafter.
(URMILA JOSHI-PHALKE, J.)
!! BrWankhede !!
Signed by: Mr. B. R. Wankhede
Designation: PS To Honourable Judge ...../-
Date: 07/06/2024 12:08:49
