M/S Pushpa Builder Ltd vs Dr.Vikram Hingorani & Ors
2012 Latest Caselaw 253 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                            Judgment reserved on : 11.01.2012
                             Judgment delivered on: 13.01.2012


+      CM (M) No.29/2012 & CM Nos.426-27/2012

M/S PUSHPA BUILDER LTD                               ..... Petitioner
                  Through          Mr. Ravi Gupta, Sr. Advocate
                                   with Mr. Ashish Aggarwal and
                                   Ms. Basli Kala, Adv.

                    versus

DR.VIKRAM HINGORANI & ORS                    ..... Respondents
                 Through           Mr. Aman Hingorani, Adv.



CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J.

1. Order impugned is the order dated 23.09.2011 vide which

the two applications filed by defendants Nos. 4, 5 & 6 under the

proviso to Order 23 Rule 3 of the Code of Civil Procedure

(hereinafter referred to as the „Code‟) as also a third application

filed by defendant Nos. 4 & 5 under Section 151 of the Code had

been dismissed.

2. Record shows that the present suit is a suit for delivery of

legacy/shares in immovable property with the consequential

reliefs of partition, perpetual and mandatory injunction as also for

rendition of accounts. There were 6 plaintiffs and 5 defendants;

subsequently defendant No. 6 i.e. ING Vysya Bank was also added

as a party. Averments in the plaint disclose that plaintiffs No. 1 to

6 and defendant No. 1 were the successors in interest of the

original owners i.e. Mr. Hardasmal Banasing Hingorani and Mrs.

Sati Tahilramani; vide a decree dated 25.11.1975 passed in suit

No. 640-A/1974, both the aforenoted persons were recognized as

50% co-owners in the suit property. The suit property is a

bunglow situated at 13, Patel Road, West Patel Nagar, Delhi. On

20.09.1998 a collaboration agreement, in terms of which

defendant Nos. 4 & 5 (hereinafter referred to as the collaborators)

had to construct flats/units on the suit land and thereafter were to

receive 50% of the sale proceeds, this collaboration agreement

had been entered into by the predecessor of defendant No. 2 i.e.

Sati Thilramani with the collaborators; contention in the plaint is

that in terms of this collaboration agreement the collaborators

were not to get any title in this property; at best they were

entitled to 50% of the sale proceeds of the flats/units which were

to be constructed within a period of 20 months from the date of

the sanctioned plan and these sale proceeds were to be shared

equally by Sati Thilramani and the collaborators. Admittedly, the

construction of the property was not completed within the

stipulated period. Further contention being that the collaborators

had in contravention of the terms of the collaboration agreement

inducted defendant No. 6 as a licensee in the suit land and have

illegally parted with possession of the property to defendant No.

6; as noted supra relief of partition and delivery of possession of

property as also rendition of accounts had been sought against

defendants No. 1 to 5; defendant No. 6 was added subsequently

i.e. after filing of the original plaint.

3. During the course of the suit proceedings on 18.03.2008, a

compromise was entered into between the six plaintiffs and

defendants No. 1 to 3; pursuant to this compromise, a final decree

of partition was passed on 24.04.2008 wherein the rights and

shares in the suit land of the plaintiffs and defendants No. 1 to 3

were determined. A preliminary decree has been passed for

rendition of accounts as well. Record further shows that on this

date i.e. on 24.04.2008, defendants No. 4 to 6 were also

represented by the counsel.

4. The impugned order has been assailed by defendants No. 4

to 6. Learned counsel for the petitioners/defendants No. 4 to 6 has

submitted that on 24.04.2008, they had reserved their right to file

their objections to the aforenoted compromise pursuant to which

the present application under Order 23 Rule 3-A of the Code as

also the application under Section 151 of the Code had been filed;

this is disputed by learned counsel for the non-applicant who

states that the submission noted in the last few lines of the order

dated 24.04.2008 only related to the right of the petitioners to file

objections/reply to the pending application under Order XXXIX

Rule 10 of the Code. This submission of the respondent is

substantiated as record shows that there were three applications

which were pending on 24.04.2008 i.e. one application under

Order XXXIX Rules 1 & 2 of the Code and two applications under

Order XXXIX Rule 10 of the Code of which reply had been filed by

defendants No. 4 to 6 only on two applications and they were yet

to file reply/objection to the third application under Order XXXIX

Rule 10 of the Code and the order dated 24.04.2008 had recorded

their right to file their reply only to this application under Order

XXXIX Rule 10 of the Code and not on any other count.

5. Be that as it may, the application under Order 23 Rule 3-A of

the Code was filed on 21.08.2008 i.e. after a lapse of almost about

four months.

6. The averments contained in the said application are largely

to the effect that the compromise between the plaintiffs and

defendants No. 1 to 3 is collusive and against the interest of

defendants No. 4 to 6 who have been prejudiced as their rights in

terms of the collaboration agreement dated 20.09.1998 gives a

right to the collaborators/defendants No. 4 & 5 to take possession

of the property, to demolish it and without any interference by the

first party (defendant No. 2) to make a construction on the

basement, ground, mezzanine, first and second floors as per the

building bye laws and on completion of this building, the sale

proceeds shall be shared between the two parties.

7. A scrutiny of this agreement shows that the only right given

to defendants No. 4 & 5 was to take possession of property for the

purpose of construction and after completion of construction to

share 50% of the sale proceeds along with defendant No. 2. This

agreement clearly shows that defendants No. 4 & 5 were only

acting as an agent of defendant No. 2 and their agency having

been terminated by defendant No. 2 by a legal notice dated

17.10.1992 as also by a subsequent public notice dated

24.03.1994, it is clear that right of the agent to remain in the suit

premises and thereafter to handover the possession of the same to

defendant No. 6 when admittedly this was in contravention of a

status quo order which had been passed in suit No. 740/1994

dated 06.04.1994 was negatived. Relevant would it be to state at

this stage that this suit i.e. Suit No. 740/1994 had been filed by

defendants No. 4 & 5 challenging the termination of their contract

against defendant No. 2 in which this status quo order dated

06.04.1994 had been passed; this suit had thereafter been

dismissed in default on 24.09.1998.

8. The Apex Court in AIR 1990 SC 673 Southern Roadways

Ltd. Vs. S.M. Krishnan while dealing with the concept of an

agent‟s possession in the suit land had noted herein as under:-

"The respondents possession of the suit premises was on behalf of

the company and not on his own right. It is, therefore,

unnecessary for the company to file a suit for recovery of

possession. The agent has no right to remain in possession of the

suit premises after termination of his agency." In 43 (1991) DLT

719 Master Builder Vs. U.S.A., a Division Bench of this Court had

noted that where a contract agreement of the builder has been

terminated, the said builder/contractor could not be allowed to

remain in possession of the property and could not hold on to the

property; a wrongful termination of his contract would be

challenged by an independent claim i.e. an action for damages or

breach of contract which in the instant case had been done by

defendants No. 4 & 5 who had filed the suit No. 740/1994 against

predecessor of defendant No. 2 which had thereafter been

dismissed in default.

9. Learned counsel for the respondent submits that the

application under Order 23 Rule 3-A of the Code was not

maintainable and in fact he had raised this objection before the

trial Court as well. Attention has been drawn to the statutory

provision as contained in the proviso to Order 23 Rule 3 of the

Code which clearly speaks of a party to the compromise alone who

can challenge the said compromise and the decree. In National

Small Industries Corporation Ltd. Vs. Industrial Textile Products

(P) Ltd. 2001 (60) DRJ 144 a Bench of this court had noted that

where a compromise is either refused or allowed under the

proviso of Order 23 of the Code it is an appealable under Order

XLIII Rule 1-A of the Code. The statutory mandate of proviso of

the Order 23 Rule 3 of the Code as also in view of the

pronouncement of this Court reported as H.C. Shastri Vs. Dolphin

Canpack P Ltd. 67 (1997) DLT 652 where a Bench of this court

has noted that a person who is not a party to the compromise

cannot seek a setting aside of the said compromise under the

proviso of Order 23 Rule 3 of the Code; only remedy would be by

way of an appeal.

10. Reliance by learned counsel for the petitioner on the

judgment of a Bench of this Court reported as AIR 1980 Delhi 99

Smt. Kiran Arora and others VS. Ram Prakash Arora and others to

support his submission that such an application would be

maintainable is misplaced. This was a case for dissolution of

partnership and accounts wherein a compromise had been

entered into between the plaintiff and defendants No. 1 & 2;

contention of defendant No. 3 all along was that he is also a

partner; his right was yet to be adjudicated and the compromise

effected between the plaintiff and defendants No. 1 & 2 ousting

defendant No. 3 was unlawful and illegal in terms of Section 23 of

the Indian Contract Act; court had noted that the object of the

agreement was to deprive defendant No. 3 of his right in the

immoveable property and this compromise was thus hit by Section

23 of the Indian Contract Act. Facts of the said case are distinct

and decipherable. In the instant case, the compromise decree

dated 24.04.2008 passed between the plaintiffs and defendants

No. 1 to 3 has adjudicated their rights and shares in the suit

property; admittedly in terms of collaboration agreement dated

20.09.1988, defendants No. 4 & 5/petitioners did not have any

right, title or interest in the property; in terms of said

collaboration agreement, they at best had to get 50% of the sale

proceeds and that too only after the sale of the suit property. It is

also relevant to state that on the date when the compromise

decree was passed, presence of counsel for the said respondents

has been noted and it was in their effective presence that the said

compromise decree was recorded; it is also a matter of record that

the application under Order 23 Rule 3 of the Code had been filed

on 18.03.2008 pursuant to which a final decree dated 24.04.2008

had been passed on this application. In these circumstances, the

ratio of this judgment does not come to the aid of the present

petitioners; the submission of the learned counsel for the

respondent that the application was not maintainable under Order

23 Rule 3 of the Code is thus an objection which carries weight. It

is only on the allegation by one party which is denied by the other

party that the question has to be decided as to whether the

compromise arrived at under Order 23 Rule 3 of the Code on the

adjustment and satisfaction has been arrived at or not which has

then to be answered; a person who is not a party to this

compromise is not covered by this provision.

11. The present petitioner being only an agent of the

predecessor in interest of defendant No. 2 (Sati Thilramani) and

being aggrieved by that fact that defendant No. 2 has not

honoured the collaboration agreement (on the basis of which their

claim is based), had in fact challenged the termination of this

contract in suit No.740/1994 which had subsequently been

dismissed in default on 24.09.2009 and admittedly no steps had

been taken by the petitioner thereafter to get that suit revived.

The claim of the petitioner in terms of the collaboration

agreement was only to share 50% of the sale proceeds of the suit

land after its sale; admittedly the construction of the suit land is

yet to be completed; the question of sale did not arise; rightly or

wrongly this collaboration agreement had been terminated by Sati

Tahilramani against which the suit filed by the petitioner had

been dismissed. In this factual scenarios, the petitioner was well

within his right to file an appeal against this compromise decree

dated 24.04.2008 under Order XLIII Rule 1-A of the Code but he

has not done so; application filed under Order XXIII Rule 3 of the

Code after a lapse of four months would also be hit by latches.

12. In AIR 1993 SC 1139 Banwari Lal Vs. Smt. Chando Devi

(through L.R.) the Apex Court has enunciated that the remedy

available for such a person is a remedy under Order XLIII Rule 1-

A of the Code and the bar of Section 93 (3) would also not come in

the way. Not only such an application in the present form was not

maintainable but even on its merits there is no case made out in

favour of the petitioner to have the compromise decree dated

24.04.2008 set aside. This compromise decree was a sharing of

rights in the suit property between the co-owners; the present

petitioners on the basis of their collaboration agreement have no

such rights. Nothing precluded some of the parties to the suit i.e.

the plaintiffs and defendants No. 1 to 3 to enter into a

compromise; the law permits it. The judgment reported as 1970

(3) SCC 124 Bai Chanchal & Others Vs. Syed Jalaluddin and

others enunciates this position.

13. Impugned judgment in no manner suffers from any infirmity.

14. Petition is without any merit. Dismissed.

INDERMEET KAUR, J JANUARY 13, 2012 A