Smt. Surinder Kaur & Ors vs S Rajdev Singh & Ors
2008 Latest Caselaw 1183 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+
        IA.No.6029/2008 in CS(OS) 1806/1999

%                                          Date of decision :       30.07.2008



SMT. SURINDER KAUR & ORS                                        ......        Plaintiffs
                                      Through:    Shri Arun Khosla, Advocate for
                                                  Plaintiff No.1.
                                                  Mr Riju Raj Jamwal, Advocate for
                                                  Plaintiff Nos 2 and 3.



                                             Versus


S RAJDEV SINGH & ORS                                            ........ Defendants

                                      Through :   Mr P.S. Khandelwal, Advocate for
                                                  the defendant No.1.
                                                  Mr Ravinder Sethi, Sr Advocate with
                                                  Mr Ajoy Bhushan Kalia, Mr Puneet
                                                  Sharma,     Advocates    for    the
                                                  Defendant No.2.
                                                  Mr Sanjeev Sachdeva, Advocate for
                                                  Defendant No.3.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
     1.

Whether reporters of Local papers may be allowed to see the judgment? YES

2. To be referred to the reporter or not? YES

3. Whether the judgment should be reported YES in the Digest?

RAJIV SAHAI ENDLAW, J

1. The plaintiff Nos 1 and 2 have filed this application under

Order 23 Rule 3 CPC. The application is not signed by other parties,

rather opposed by them. This order shall decide whether the suit

can be decreed as sought by plaintiff Nos 1 and 2.

IA.No.6029/2008 in CS(OS) 1806/1999 page no.1 of 13

2. The plaintiffs have instituted the present suit for

restraining the defendants from dispossessing the plaintiffs from

estate bearing Municipal No. 124, Janpath, New Delhi and the

building comprising of Hotel Imperial constructed thereon and for

permanent injunction restraining the defendants from dealing with

the said property and for declaration and other reliefs relating to

running of hotel Imperial, New Delhi. The suit has been contested

vigorously by the defendants. On 18th July, 2007, while hearing

arguments on various pending applications, this court gave the

parties a chance of mediation and directed that counsel for both the

parties shall hold a meeting and explore the possibility of mediation.

Thereafter, the proceedings were adjourned from time to time on

statement that conciliation attempts were being made. Thereafter,

the matter was ordered to be taken in Chamber. On 17th

November, 2007 the following order was passed :

"Parties present in person in my Chamber.

The parties are litigating in this Suit. The efforts are being made for compromise and resolving all disputes between parties. Parties were counseled for considerable time today in the Chamber Meeting. Parties have ultimately agreed to sort out all their disputes. It is basically agreed that the defendants, who are managing the hotel presently, shall pay a sum of Rs 15 crore to Smt Gobinder Kaur and Rs 15 crore to Inderdev Singh for Smt Surender Kaur, legal heir of Late Smt Gyan Kaur and Rs 30 crore to Smt Surender Kaur, legal heir of Late Smt Gyan Kaur and Rs 30 crore to Sh Surender Singh Sibia on behalf of himself and on behalf of his two children.

After payment of this amount, as agreed between the parties, all claims of recipients in respect of the property in the hotel shares account shall stand settled and the recipients of the amount shall lay no further claim on the hotel business or the hotel property. No further accounting shall be got done and this will be considered as a final figure of the settlement. The details of the agreement shall be prepared by the parties in

IA.No.6029/2008 in CS(OS) 1806/1999 page no.2 of 13 consultation with each other, which also shall give modalities of payment of this amount.

The amount will be payable within a period of two years from today in a equal quarterly installments. The details of the agreement shall be prepared by the parties in consultation with each other, their Chartered Accountants and Advocates. No interest shall be payable for a period of 2 years. However, if the payment is delayed beyond a period of two years, the interest will be payable on the unpaid amount for the delayed period @ 10% per annum. The parties shall file draft agreement in the Court within a period of two weeks from today. List this matter now on 27th November, 2007"

However, on the next date i.e., 27th November, 2007, the

following order was passed :

"Present: Mr Riju Raj Jamwal, Advocate for plaintiffs No. 2 and 3.

CS (OS) No. 1806/1999

At request, list this matter for arguments on 14th December, 2007."

3. Thereafter, an application being IA.No.14432/2007 was filed

by the defendant No.2 under Sections 151 and 152 of the CPC for

amendment of the order dated 17th November, 2007 and for

necessary directions. It was, inter alia, stated in the said

application that the defendant No.2 was willing to go ahead with

the settlement only to buy peace and was ready to make the

payment only if there was no tax liability on the defendant No.2 or

on the partnership firm M/s Akoi Saab; it was further stated in the

application that the chartered accountants and tax advisor of the

defendant No.2 had advised that the consequence of making the

payment as recorded in the order dated 17th November, 2007 would

be far reaching and unaffordable. The defendant No.2, therefore,

IA.No.6029/2008 in CS(OS) 1806/1999 page no.3 of 13 sought direction that the plaintiffs and the defendant No.4 should

indemnify the defendant No.2 against any tax liability. This

application was dismissed on 25th March, 2008 on the submission of

the counsel for the defendant that the settlement arrived at on 17th

November, 2007 was tentative and since no final settlement could

be arrived at and no application for compromise was filed, this

application be dismissed as withdrawn.

4. On the contrary, the counsel for the plaintiffs on 25th March,

2008 submitted that the suit should be decreed in terms of

compromise in terms of proviso to Order 23 Rule 3 CPC. The court,

on this submission of the counsel for the plaintiffs, recorded that

the parties were, pursuant to the order dated 17th November, 2007,

to file an application under Order 23 Rule 3 CPC setting out the

modalities of payment in terms of understanding arrived at between

the parties and since no application under Order 23 Rule 3 CPC had

been made by the parties, it may not be possible for the court to

pass a decree. The counsel for the plaintiffs, thereafter, sought

time to make submissions and file appropriate application under

Order 23 Rule 3 CPC for disposal of the suit in terms of compromise

vis-à-vis defendant Nos 2 and 3. Thereafter, the instant application

came to be filed.

5. Extensive arguments have been addressed on the application.

The counsel for the plaintiffs has urged that the settlement

recorded by the court in the order dated 17th November, 2007 even

without signatures of the parties is compromise within the meaning

IA.No.6029/2008 in CS(OS) 1806/1999 page no.4 of 13 of Order 23 Rule 3 CPC; that the order dated 17th November, 2007

is self-contained and nothing else remained to be settled or agreed

between the parties; that the plaintiffs and the defendant No.4 to

whom the money is to be paid in terms of the order are both

aggreable to the same; that the defendant No.2 himself had moved

IA.No.14432/2007 admitting the compromise contained in the order

dated 17th November, 2007 but illegally seeking certain

modifications thereto and which application was also dismissed as

withdrawn; that none had challenged the order dated 17th

November, 2007 and if, inspite of the same, the decree under Order

23 Rule 3 CPC in terms thereof is not passed, the same would

offend the sanctity and lower the majesty of the court. The counsel

further urged that the order dated 17th November, 2007 contained

admissions of the defendant No.2 to the entitlements of the

plaintiffs and the defendant No.4 of the amounts mentioned therein

and the plaintiffs were entitled to a decree for recovery of the said

amounts in terms of the order dated 17th November, 2007, even on

admissions, if not under Order 23 Rule 3 CPC. Reliance has been

placed on M/s Silver Screen Enterprises v Devki Nandan

Nagpal : AIR 1970 SC 669; State of Maharashtra v Ramdas

Shrinivas Nayak & Another : AIR 1982 SC 1249; Jineshwardas

(Dead) Through L.Rs. & Ors v Smt Jagrani & Anr. JT 2003

(Suppl.2) SC 158; Pushpa Devi Bhagat (D) Through LR. Smt

Sadhna Rai v Rajinder Singh & Ors : JT 2006 (6) SC 235.

6. Per contra, the senior counsel for the defendant No.2 has

contended that the application moved by the plaintiffs is under

IA.No.6029/2008 in CS(OS) 1806/1999 page no.5 of 13 Order 23 Rule 3 CPC and not seeking judgment/decree on

admissions; that the disputes and controversies subject matter of

the suit were not sorted out on 17th November, 2007 but were only

agreed to be sorted out and the said order was part of an ongoing

process in an attempt to conciliation; that the details of the

agreement were to be worked out and further consultations were to

take place and the chartered accounts and advocates of the parties

were to be involved; that the order also mentions that only the

draft agreement and not the final agreement was to be filed before

the court and which was to be subject matter of further discussions;

that the dismissal of IA.No.14432/2007 was of no avail; that the

evidence of the parties was underway and no admissions of fact had

been made and monies were tentatively agreed to be paid only to

get rid of the litigation and not in admission of any liability.

Reliance has been placed on Gurpreet Singh v Chatur Bhuj Goel

: 1988(1) SCC 270; Kamla Devi v Prabhat Chand 1997(65) DLT

986; A.V.M.(RETD) K.G. Mohan Chandra v Arun Mohan

Chandra & Ors : 2007 (145) DLT 428; Som Dev & Ors v Rati

Ram And Anr : 2006(10) SCC 788; K. Venkatachala Bhat & Anr

v Krishna Nayak (D) by LRs & Ors : 2005(4) SCC 117; M/s

Rickmers Verwaltrung Gimb H. v Indian Oil Corporation Ltd :

AIR (1999) SCC 504; S.P. Minocha v Lila Ram AIR (2002) DELHI

223.

7. The counsel for defendant No.3 has also opposed the

application and has argued that besides this suit, other legal

proceedings were also pending inter se parties; that there could be

IA.No.6029/2008 in CS(OS) 1806/1999 page no.6 of 13 no settlement/compromise in this suit only, without composite

settlement vis-à-vis all legal proceedings; that the defendants had

never admitted any liability to the plaintiffs; that the issues relating

to tax burden were discussed on 17th November, 2007 also and that

is why the order of that date records of consultation with the

chartered accountants; that there is no unequivocal admission of

facts or liability; that the plaintiff No.3 was not even present on 17 th

November, 2007 and the application even is not signed by all the

plaintiffs. Reliance was placed on para 14 of Pushpa Devi Bhagat

(supra). It was further argued that even in M/s Silver Screen

Enterprises (supra) there was an agreement in writing and in any

case the said judgment is of prior to the amendment to Order 23

Rule 3 CPC.

8. Order 23 Rule 3 CPC has two limbs. The court is empowered

to decree the suit when satisfied either (i) that the suit has been

adjusted wholly or in part by any lawful agreement or compromise

in writing and signed by the parties or (ii) where the defendant

satisfies the plaintiff in respect of the whole or any part of the

subject matter of the suit. The Apex Court in Gurpreet Singh

(supra) has held that when the parties enter into a compromise

during the hearing, there is no reason why the requirement that the

compromise should be reduced in writing in the form of an

instrument signed by the parties should be dispensed with and has

further held that the court must insist upon the parties to reduce

the terms into writing. It is exactly this which the order dated 17th

November, 2007 has done. The order provides for the parties filing

IA.No.6029/2008 in CS(OS) 1806/1999 page no.7 of 13 draft agreement in the court. However, no such draft agreement

came to be filed. In Gurpreet Singh it is further laid down that for

the second limb of Order 23 Rule 3 there need not be an agreement

in writing signed by the parties and it is open to the defendant to

prove such satisfaction by production of a receipt or payment

through bank or otherwise; the satisfaction of the claim could also

be established by tendering of evidence. Thus, the limb of Order 23

Rule 3 which does not require any written argument has to be of a

settlement or adjustment already effected. The said limb has no

application in "to do" compromise. In Gurpreet Singh case also

the facts were that the one party was required to pay monies by a

bank draft on a stipulated date but before the stipulated date

resiled from the proposed compromise saying that it was

detrimental to his interest. The Apex Court held that the same did

not fall in the second limb of Order 23 Rule 3 and the compromise

of such nature could only be under the first limb of Rule 3 and

which had to be in writing. The Apex Court further held that

without such agreement in writing being filed, the court had no

option but to hear the suit on merits.

9. A.V.M.(RETD) K.G. Mohan Chandra is a case

decided by the same Hon'ble Judge who had in the present case

also passed the order dated 17th November, 2007 (supra) and the

facts thereof are close to that of the present case. In that case also

during the hearing before the court, the parties had agreed to enter

into a compromise on the terms recorded in the order of the court

and, in fact, the court had also observed that the parties shall abide

IA.No.6029/2008 in CS(OS) 1806/1999 page no.8 of 13 by the terms of the settlement as recorded in the order. However,

the court was informed that the parties shall make a Written

compromise application on the basis of agreed terms. However, no

compromise application came to be filed. Prayer was made to the

court to decree the suit on the terms recorded earlier by the court.

However, this court held that even 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 the law, the court

cannot pass a decree under Order 23 Rule 3 CPC and cannot

dispose of the suit.

10. The present case is not of the second limb of Order 23

Rule 3 CPC which can be without writing, in as much as the

settlement recorded on 17.11.2007 was of "To do" category and not

of adjustment already affected. The counsel for plaintiffs has urged

that the Apex Court in Jineshwar Das and Pushpa Devi Bhagat

(supra) has expanded what was laid down in Gurpreet Singh. In

both Jineshwar Das and Pushpa Devi the proceeding was disposed

of as compromised and which was sought to be reopened/set aside.

It is this crucial element which distinguishes the present case,

making the said two dicta inapplicable here.

11. Rather a perusal of the order dated 17th November, 2007

shows that only the "basic agreement" reached between the parties

in the chamber is recorded therein. The parties appear to be also

aware that all the terms and conditions had not been settled and

certain details were yet to be worked out by the parties in

IA.No.6029/2008 in CS(OS) 1806/1999 page no.9 of 13 consultation with each other. The said details were not only of the

modalities of payment, inasmuch as separate reference to details

and modalities of payment is made in the order. The order also

refers to the consultations which the parties were required to do

with their chartered accountants and advocates and which the

parties must have informed the court.

12. The question which arises for determination is whether

the order dated 17th November, 2007 can be said to contain even a

lawful agreement between the parties. For a lawful agreement, the

parties have to be ad idem on each and every aspect. The reference

in the order to the basic agreement, details to be prepared in

consultation with chartered accountants and advocates shows that

the parties were till then not ad idem. Though a mere reference to a

formal contract will not prevent a binding bargain between the

parties, I find that in the present case, the parties did not intend to

be bound until a formal application under Order 23 Rule 3 CPC was

signed. For this reason also no valid agreement can be said to have

come into existence. In fact in the present case making, signing

and filing of an application under Order 23 Rule 3 CPC was made a

condition of the proposed settlement and if the application is not

approved and signed, there is no concluded contract. Lord Cairns

said in Rassier v Miller [3 A.C. 1124]

"If you find not an unqualified acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfilled, no contract is to arise then you cannot find a concluded contract."

IA.No.6029/2008 in CS(OS) 1806/1999 page no.10 of 13

13. The further consultations between the parties and the

consultations of the parties with their advocates and chartered

accountants contemplated in the order cannot be reduced to an

empty exercise and there is nothing to show that nothing was to

turn on the said consultations. A reading of the said order, as the

counsel for the plaintiffs would want, would reduce several parts of

the order otiose and the order cannot be read in that fashion. If due

weightage is given to the further consultations, the conclusion is

inescapable that the agreement contained in the order was

tentative and was only an agreement to agree in future and which is

not enforceable in law. Thus I hold that irrespective of the

requirement of signing as required by Rule 3 being not satisfied,

there is no lawful agreement also between the parties as contained

in the order dated 17th November, 2007 inasmuch as the parties

were still to work out the modalities and the complete details of the

agreement.

14. The next question to be considered is whether the

plaintiffs, even though not entitled to a decree under Order 23 Rule

3, are, in the aforesaid facts, entitled to a judgment/decree on

admissions as prayed. At the outset, it would be highly inequitable

and unjust to do by way of admissions what cannot be done under

Order 23 Rule 3 CPC. Under the CPC as amended in 2002, a duty

has been cast upon the court to explore the possibility of settlement

and alternate means of adjudication of disputes and controversies

between the parties under Section 89 CPC. Several offers and

counter offers may be exchanged between the parties during such

IA.No.6029/2008 in CS(OS) 1806/1999 page no.11 of 13 parleys held by the court. When under the law, what transpires in

such parleys is not enforceable, the same cannot also constitute an

admission to entitle the parties to apply for judgment on

admissions. If the parties are permitted to seek orders/judgments

on what is contained in the orders of the court made during the said

process of settlement/conciliation, the same will seriously hinder

the settlement attempts by the courts. The parties would be loathe

to give offers and counter offers lest the same are held against them

in the event of the compromise attempts failing. Section 81 of the

Arbitration and Conciliation Act, 1996 also prohibits the parties

from relying upon or introducing as evidence in arbitral or judicial

proceedings views expressed or suggestions made by the other

party in respect of possible settlement of the dispute or admission

made by the party in the course of conciliation proceedings. The

courts ought not to allow such a procedure which would be contrary

to the spirit of introduction of Section 89 in the CPC in the year

2002 and which will negate the same.

15. Even otherwise, it is the stand of defendants that they had

agreed to make payment, not in admission of any liabilities but to

finish the litigation. Thus, there is no admission, lest absolute

unequivocal, unambiguous admission.

16. The plaintiffs are, therefore, not entitled to relief claimed in

the application. The application is dismissed.

IA.No.6029/2008 in CS(OS) 1806/1999 page no.12 of 13

17. I had during the course of hearing inquired from the senior

counsel for the defendant No.2 as to why the parties could not

proceed further in terms of the order dated 17th November, 2007

and suggested the difficulties, if any, faced by the defendant No.2 in

making the payments as recorded in the said order, could be

discussed and attempted to be resolved. However, he fairly stated

that no purpose would be served in spending further time on the

mediation efforts. In the circumstances, since considerable time of

the court has been spent in attempting mediation/settlement

between the parties and consequently in the disposal of this

application, as indicated at the time of hearing, the defendant No.2

is burdened with costs of Rs 40,000/- payable to Delhi Legal

Services Authority.

RAJIV SAHAI ENDLAW, J.

July 30, 2008.

M

IA.No.6029/2008 in CS(OS) 1806/1999 page no.13 of 13