Surinder Kr.Malik vs Narinder Kr.Malik
2008 Latest Caselaw 1574 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+    CM No.12796/2005 & RFA No.649/2004

     SURINDER KR. MALIK                      ..... Appellant
              Through: Mr.Harish Malhotra, Sr. Advocate
                        with Mr.Rajender Agarwal, Adv.

                versus

     NARINDER KR. MALIK              ..... Respondent
              Through: Mr.Anuj Sehgal, Adv.

%                DATE OF DECISION:
                     08.09.2008

     CORAM:

*    Hon'ble Mr.Justice Pradeep Nandrajog
     Hon'ble Mr.Justice Suresh Kait

1.   Whether reporters of local papers may be allowed
     to see the judgment?

2.   To be referred to the Reporter or not?

3.   Whether judgment should be reported in Digest?

:    PRADEEP NANDRAJOG, J. (Oral)

1. By way of the above captioned application the

appellant seeks disposal of the appeal by directing the

respondent to comply with the terms of a Memorandum of

Understanding executed between the parties on 9.2.2005

through the process of mediation.

2. Briefly noted, relevant facts are that the appellant

has questioned the legality of an order dated 4.11.2004 passed

by the learned Trial Judge which is in the nature of preliminary

decree holding that the appellant and the respondent have

50% share in the suit property. A Local Commissioner has

been appointed to suggest whether the property could be

partitioned by metes and bounds.

3. The respondent was the plaintiff. The appellant was

the defendant. They are brothers. Dispute related to a plot

ad-measuring 3149 sq. yds. held under a perpetual leasehold

tenure granted by DDA.

4. According to the claim of the plaintiff he and the

defendant were the co-owners of the plot and hence were

entitled to half share each.

5. According to the defendant the plot was owned by a

partnership firm M/s. Narender Kumar Surender Kumar and

that the partnership firm owned the plot.

6. Noting that the appellant and the respondent were

the only 2 partners of the firm, the learned Trial Judge has held

that whether the plot was to be partitioned pursuant to the

dissolution of the firm or was to be partitioned treating the 2

brothers to be the co-owners thereof it hardly made any

difference for the reason, under either eventuality, the 2

brothers would have half share in the plot.

7. During the pendency of the instant appeal an

attempt was made by this Court to have a settlement through

mediation. On 17.12.2004 an order was passed with consent

of parties that the 2 brothers would appear before

Mr.M.L.Mehta, ADJ, Delhi who was requested to be a Mediator.

8. On 17.3.2005 it was noted by this Court that the

parties have entered into a settlement before the Mediator.

Matter was renotified to receive the report of the Mediator and

have the appeal disposed of as per the settlement.

9. The agreement between the parties before the

learned Mediator stands reduced in writing in the form of a

Memorandum of Understanding executed by the parties on

9.2.2005.

10. The terms of the settlement are as under:-

i.) that Party No.1 has agreed to sell his share i.e. 50% area of the said Industrial plot to party No.2 at the settled and agreed consideration of Rupees three crores fifty lacs only and party No.2 has agreed to purchase the said share at the said consideration.

ii.) that the second party has paid a sum of Rs.10,00,000-00 (Rupees ten lacs) in cash and Rs.15,00,000-00 vide Payee's A/c cheque No.131112 dated 05-02-2005 drawn on UCO Bank, Punjabi Bagh in favour of the first party as a token money and the first party has accepted the same.

iii) that as agreed the second party shall make the balance payment of Rs.3.25 crores within a maximum period of 150 days from the date of execution of this MOU i.e. upto or before 9th day of July, 2005. However, this period of 150 days is extendable by another 10 to 20 days, if need be, with the consent of both the parties but not more.

iv) that on receiving the full consideration of Rupees three crores, fifty lacs the first party shall execute the necessary documents like GPA, Release Deed, Sale Deed etc. as advised in favour of the second party or his nominee and hand over the physical, peaceful and vacant possession of his share to the second party or his nominee as the case may be.

v) that the First party i.e. Shri Narinder Kumar Malik is presently out of India, but his counsel/advocate Shri J.R.Bajaj alongwith Shri Rohit Malik son of the first party and Shri Ashok Kumar Marwaha, Advocate have been authorised to sign this MOU for and on his behalf.

vi) that both the parties shall be jointly responsible for payment of ground rent/lease money and all other statutory taxes etc. in respect of the Industrial plot upto the date of execution of this MOU, but thereafter only party No.2 and/or his nominee shall be liable to pay the same.

vii) that all the expenses like stamp duty, registration charges etc. for the registration of necessary documents shall be borne by party No.2 or his nominee in whose favour the documents of ownership are to be executed.

viii) that the parties may, if required, make any amendment in the MOU with the consent of each other for purposes of smooth sailing in closing the deal amicably."

11. Relevant would it be to note that party No.1 referred

to in the Memorandum of Understanding is the respondent. He

agreed to transfer his 50% share in the plot to the appellant for

a total sale consideration of Rs.3.5 crores and received Rs.25

lacs as recorded in para (ii) of the Memorandum of

Understanding. Balance amount of Rs.3.25 crores was to be

paid by the appellant to the respondent within 150 days i.e. on

9.7.2005. This has been recorded by the parties in Clause (iii)

of the agreement.

12. That the date 9.7.2005 was not sacrosanct is

evident from the fact that in Clause (iii) itself, it was recorded

that the date was extendable by another 10-20 days, if need

be.

13. As the date of making final payment as per the

memorandum was nearing, on 22.6.2005, the appellant sent a

lawyer's notice to the respondent stating that the respondent

should receive Rs.3.25 crores and executed the necessary

documents. In the notice it was clearly stated that the

appellant had arranged the necessary funds and that the

respondent was to execute the transfer documents.

14. The respondent received the lawyer's notice afore-

referred and responded vide a reply sent by his lawyer on

30.6.2005. The respondent through his counsel called upon

the appellant to pay him Rs.3.25 crores on 7.7.2005 at 10:00

AM at his premises being 885, East Park Road, Karol Bagh, New

Delhi.

15. But, it is to be noted that the respondent whispered

not a word about the finalization of the document which was to

be executed by him to effect transfer of his 50% share in the

property.

16. On 8.7.2005, through his counsel the appellant

responded to the reply sent by the respondent on 30.06.2005

through his counsel. In the said reply dated 8.7.2005, the

appellant disclosed that he had obtained 3 banker's cheques in

sum of Rs.1 crore, Rs.1 crore, and Rs.1.25 crores respectively.

The particulars of the said 3 banker's cheques were disclosed

in the lawyer's reply. Photocopies of the 3 banker's cheques

were enclosed. The respondent was called upon to settle the

terms of the document required to be executed by him to

transfer his 50% share in the land to the appellant and receive

payment.

17. Nothing happened thereafter till CM No.12796/2005

was filed by the appellant on 18.8.2005 praying to this Court

that in terms of the settlement the respondent be called upon

to receive Rs.3.25 crores from him and execute the necessary

transfer documents.

18. Order 23 Rule 3 of the Code of Civil Procedure reads

as under:-

"3. Compromise of suit.- Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful 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 recorded, and shall pass a decree in accordance therewith [so far as it relates to 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."

19. It is urged by learned counsel for the appellant that

the Memorandum of Understanding is a settlement between

the parties requiring the appeal to be disposed of as per the

settlement.

20. Learned counsel for the respondent does not

dispute that the Memorandum of Understanding executed on

9.2.2005 records a settlement between the parties but urges

that since the settlement was executory, evidence has to be

led as to who is in default.

21. Learned counsel for the respondent further urges

that on 19.7.2005 this Court passed an order noting the

dispute between the parties and directed that the respondent

should refund Rs.25 lacs to the appellant. Learned counsel

urges that the instant application was filed thereafter. Counsel

urges that the further orders passed show that parties were

attempting to renegotiate the dispute and for that purpose

were referred to a panel of Mediators, namely, Shri

A.S.Chandhiok, Sr. Advocate and Ms. Swati Singh, Advocate.

Counsel urges that said mediation failed. Conclusion drawn by

learned counsel is that the subsequent events show that the

parties abandoned their claim under the MOU dated 9.2.2005.

22. As noted hereinabove, the MOU dated 9.2.2005 is

executory in nature. The dispute between the parties is

whether the appellant has frustrated the execution of the MOU

or whether the respondent has frustrated the implementation

thereof. Thus, ex facie, the subsequent dispute related to the

issue of default in non-complying with the terms of the MOU.

23. Thus, the second stage mediation was obviously

relatable to the dispute as to who is responsible for the non-

implementation of the MOU i.e. 9.2.2005 and the adjudication

process was to find a settlement, if possible, relatable to the

said dispute.

24. Thus, today this Court has to decide a limited issue:

whether a settlement was arrived at as recorded in the MOU

dated 9.2.2005. If yes, to determine as to who is at fault.

25. No evidence is required because execution of the

MOU dated 9.2.2005 is an admitted fact. Exchange of lawyers'

notices dated 22.6.2005, 30.6.2005 and 8.7.2005 is also not in

dispute. Notices inter-se exchanged between the lawyers,

annexed as Annexure B, C and D to the application, have been

admitted.

26. Thus, the dispute has to be resolved in relation to

the MOU and the exchange of the notices by the lawyers of the

respective parties.

27. Suffice would it be to state that where a party

alleges a lawful compromise and proves to the satisfaction of

the Court that a lawful agreement has been arrived at

compromising the subject matter of the dispute the Court is

required to adjudicate thereon if the opposite party raises a

dispute to the compromise.

28. That the parties compromised the dispute as per

the MOU dated 9.2.2005 is not in dispute.

29. The only dispute is whether the appellant breached

the MOU or the respondent breached the same.

30. Exchange of notices between the lawyers is not in

dispute. That the appellant had obtained 3 banker's cheques

drawn in favour of the respondent totaling Rs.3.25 crores on

8.7.2005 is a matter of fact evidenced by the production of the

photocopies of the 3 cheques prepared by the banker of the

appellant.

31. The date of completion of the transaction under the

MOU was fixed on 9.7.2005. The said date was not sacrosanct

evidenced by the fact that the parties recorded the same to be

extendable by another 10-20 days.

32. By showing availability of funds on 8.7.2005 and by

sending photocopy of the 3 pay orders drawn by the

appellant's banker in the name of the respondent, the

appellant has satisfied requirement of proving the appellant's

readiness and willingness to comply with the MOU dated

9.2.2005.

33. The respondent has not been able to show to us the

willingness of the respondent to settle the terms of the

documents to be executed by the respondent while releasing

his 50% interest in the plot at the time he received the balance

price.

34. A perusal of the notices exchanged between the

counsel for the parties show an attempt of the respondent to

wriggle out of the MOU evidenced by the fact that the

respondent through his counsel referred to a place where he

would receive the balance money payable under the MOU but

did not commit himself to the finalization of the contents of the

documents to be executed by him to release his 50% share in

the plot.

35. It is unfortunate, but a fact which we would like to

point out. It is being noted that after entering into settlement

before Mediators, attempts are made by one party or the other

to get over the settlement in land related disputes. The love of

the Goddess of Gold is probably responsible. Overnight,

property prices rise or fall in Delhi. This market phenomenon

induces either party to walk out of the settlement.

36. This appears to have happened in the instant case.

During arguments learned counsel for the respondent sought

to urge that the price of the property has gone up

phenomenally. 150 days period in the MOU to complete the

transaction is responsible for what has happened. Obviously,

price of the property rose in said period. This has probably

induced the respondent to wriggle out of the compromise.

37. With dockets of courts exploding, mediation as an

alternative dispute resolution mechanism has to be

strengthened by rigorously binding parties to settlements

before the mediators.

38. Admitted documents between the parties not only

evidence a settlement but even evidence the appellant's

readiness and willingness to comply with his obligations under

the MOU. The evidence shows that the respondent was the

recalcitrant party and is responsible for the executory

settlement falling through.

39. We thus dispose of the application and along

therewith the appeal by passing the following directions:-

A.) The appellant shall deposit Rs.3.5 crores with the

learned Trial Judge within a period of 2 weeks from today. (The

appellant is being directed to deposit Rs.3.5 crores because

the appellant has received back Rs.25 lacs pursuant to interim

orders passed in the appeal.)

B.) Along with the deposit, the appellant shall file a

draft of the document which the appellant desires to be

executed by the respondent to convey respondent's 50% share

in the subject property.

C.) The learned Trial Judge would thereupon finalize the

document to be executed and the respondent would thereafter

execute the document drawn up and on execution of the same

would be entitled to receive Rs.3.5 crores from the learned

Trial Judge.

40. No costs.

PRADEEP NANDRAJOG, J.

SURESH KAIT, J.

SEPTEMBER 08, 2008 vg