A.V.M. (Retired) K.G. Mohan ... vs Arun Mohan Chandra And Ors.
2007 Latest Caselaw 2172 Del

ORDER

Shiv Narayan Dhingra, J.

1. This suit was fixed for recording of statements of parties before framing of issues, on 4th October, 2005. On that day counsel for plaintiff, defendant No. 1, defendant No. 2 and defendants No. 3and4 were present and during the course of hearing, the parties agreed to enter into a compromise for settlement of the dispute raised in the suit. The terms of settlement agreed between the counsel of parties during the course of hearing were got recorded by the counsel and formed part of the order dated 4th October, 2005. After recording the terms of settlement, this Court observed that the parties shall abide by the terms of the settlement as the same were commonly accepted by each one of them. The Court was informed that the parties shall make a written compromise application on the basis of agreed terms as recorded in the order and the case was adjourned for disposal of the compromise application on 10th November, 2005. On 10th November 2005 counsel for parties appeared and sought more time to file the required application and the case was adjourned to 14th December, 2005. On 14th December, 2005 again adjournment was sought on the same ground and the matter was fixed for 21st February, 2006. It seems that on 21st February, 2006 again a short adjournment was sought and the matter was re-listed on 27th February, 2006. Till that day no application under Order 23 Rule 3 CPC was made by the parties and on that day also the matter was adjourned to 24th March, 2006. The matter was again adjourned to 17th April, 2007 and then on 1st May, 2006. Till 1st May, 2006 parties did not file application under Order 23 Rule 3 CPC and rather raised a dispute about the interpretation of the terms of the compromise recorded in the order dated 4th October, 2005. The controversy continued, the matter was adjourned for the one or the other reason and was ultimately fixed on 8.12.2006 before the same Bench before whom the parties had entered into the compromise. In between other interlocutory applications were also made. While entertaining the applications, this Court observed that Counsel appearing for plaintiff, defendant No. 1 and defendant Nos. 3 and 4 respectively stated that they had no objection to the terms recorded in the order dated 4th October, 2005. However, there was dispute in respect of implementation of the agreed terms and counsel for Defendants No. 3 and 4 wanted that his suggestions regarding implementation be taken into consideration while passing final order. Counsel for defendant No. 2 submitted that price of the portion of defendant No. 2 was fixed in the settlement dated 4th October, 2005 and payments were to be made within a stipulated time. However, defendant No. 1 and plaintiff took advantage thereof to the prejudice of defendant No. 2. Plaintiff and defendant No. 1 submitted that they were to make payment only when possession was delivered to them by defendant No. 2. Considering the controversy, this Court observed that in case of fault, intentional or otherwise, attributed to a party, the Court could grant interest or such other compensation as the Court may deem fit to balance the equities between the parties. The parties however, still did not file an application under Order 23 Rule 3 CPC. The counsel for plaintiff therefore, urged that this Court should decree the suit in terms of the settlement arrived at between the parties on 4th October, 2005 without an application under Order 23 Rule 3 CPC by the parties. It was submitted that the Court may pass an appropriate order awarding suitable interest or compensation for the period of delay in making the payments as recorded in order dated 4.10.2005. The Counsel for defendant No. 2 however, did not agree to this. The counsel for defendants No. 3 and 4 also stated that there has been problems in respect of transfer of shares. The matter was again heard on 5th July, 2007 and it became clear during arguments that counsel for defendants No. 2, 3 and defendant No. 4 were not prepared to sign the application under Order 23 Rule 3 CPC in terms of the order passed by this Court on 4th October, 2005 and 8th December, 2006. Defendant No. 2 raised the issue that amount of Rs.30 lac as share of defendant No. 2 was agreed in October, 2005 since at that time the defendant No. 2 would have been able to purchase an alternate property within that amount and move to the property so purchased vacating the portion occupied by him in the suit property. But the amount was not paid at that time and if Rs.30 lac is paid today, then defendant No. 2 would not be able to purchase an alternative property within that amount, looking into the rise of the price of the properties. Counsel for defendant No. 3 and 4 also pressed for adequate interest over the amount, agreed to, be paid to Defendant No. 3 and 4 on the ground of delay in payment of the amount.

2. It is argued by the counsel for the plaintiff and defendant No. 1 that the terms of agreement as entered into between the parties on 4th October, 2005 were binding on the parties and the Court was bound to pass a decree on the basis of these terms under Order 23 Rule 3 CPC.

3. Order 23 Rule 3 reads as under: Compromise of suit. - Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise [in writing and signed by the parties) or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit]: [Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.]

4. It is apparent that in order to dispose of a suit on the basis of compromise between the parties, there must be a written agreement or compromise duly signed by the parties or their counsel before the Court, so that the Court passes a decree on the basis of that compromise. The question arises 'whether the order dated 4th October, 2005 amounts to a written agreement between the parties' A perusal of order itself shows that the parties had sought to file a written agreement in the Court. If the recording of terms of settlement in the order itself had been sufficient compliance of Order 23 Rule 3 CPC, this Court would not have awaited for written agreement to be filed before it and the suit would have been disposed of on the basis of compromise. The very fact that this Court did not dispose of suit on 4th October, 2005 and required the parties to make an application under Order 23 Rule 3 CPC shows that the order dated 4th October, 2005 was not sufficient to pass a decree under Order 23 Rule 3 CPC. The order also shows that there was no authority issued by defendant Nos. 3 and 4 in favor of their counsel, rather counsel for defendant No. 2 informed the Court that he was authorized on behalf of the defendants No. 3 and 4 and authority would be sent by them after a short while. In fact, the case on 4th October, 2005 was fixed for personal appearance of defendants No. 3 and 4, for recording their statements before framing of issues and defendants No. 3 and 4 had not appeared on that day neither any authority on behalf of defendants No. 3 and 4 was filed on that day. This Court in Vijay Sagar v. Sunder Lal Sagar 2006(3) AD (Delhi) 210 had observed that time was the essence of compromise and as the value of property had gone up tremendously, it would be most inequitable to enforce the settlement against the defendants besides the fact that the defendants were not giving consent for implementation of the order. The compromise is always based on the principle of mutuality and consent of the parties and such consent of the parties must be available before the Court at all relevant times. For a compromise to be effective and binding, it has to be a voluntary act on the part of the parties, free and fair consent should be there at all relevant times and the Court would be instrumental in having agreed compromise effected and finality attached to the same, provided the same is lawful and the satisfaction to that effect is recorded by the Court.

5. The purpose of Order 23 Rule 3 CPC and passing of a decree by consent of parties on the basis of a contract entered into between the parties is to shorten the litigation between the parties. However, here is a case where the parties in the Court agreed to certain terms but later on refused to file an application under Order 23 Rule 3 CPC as required under law for passing of compromise decree. Almost for two years parties kept on contesting that the terms agreed on 4th October, 2005 were not binding. The very purpose of Order 23 Rules 3 CPC therefore got defeated.

6. I consider that for passing a decree under Order 23 Rule 3 CPC on the basis of compromise the parties must give consent voluntarily for terms of compromise by signing the terms of agreement. If the parties do not agree to the terms of compromise and do not file a written agreement to that effect in the Court, the Court cannot pass a decree under Order 23 Rule 3 CPC and cannot dispose of the suit. The settlement arrived at between parties to this Suit on 4th October, 2005 was a tentative settlement arrived at during the course of hearing and the terms of settlement were to be given a formal shape by filing an application under Order 23 Rule 3 CPC duly signed by all the parties and their respective counsel. The terms of settlement recorded in the order of 4th October, 2005 cannot be considered to be sufficient compliance of Order 23 Rule 3 CPC and this Court cannot pass a decree in terms of the settlement. I, therefore, decline the request of the plaintiff and defendant No. 1 of passing a decree in terms of the order dated 4th October, 2005.

The suit be listed before the Regular Bench on 20th November, 2007, subject to the orders of Hon'ble the Chief Justice.