K S Kler vs H S Vedi
2017 Latest Caselaw 1592 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                  Reserved on: January 04, 2017.
                                                  Date of decision: March 27, 2017.


+              CS (OS) 415A/1988 & IA 22587/2014, 22588/2014,
               22821/2014, 22822/2014, 25277/2015

       K S KLER                                                 ..... Plaintiff
                               Through: Mr. Arun Kumar Varma, Senior
                               Advocate with Ms. Anita Sahani, Mr. Aman
                               Bhalla, Advocates.

                               versus

       H S VEDI                                             ..... Defendant
                               Through: Mr. M.A. Niyazi, Ms. Kirti Jaswal,
                               Advocates for LRs.

                                        And

               IA 22866/2014, 22865/2014 in O.M.P. 147/1987

       HS VEDI                                              ..... Petitioner
                               Through: Mr. M.A. Niyazi, Ms. Kirti Jaswal,
                               Advocates for LRs.

                               versus

       KS KLER                                              ..... Respondent
                               Through: Mr. Arun Kumar Varma, Senior
                               Advocate with Ms. Anita Sahani, Mr. Aman
                               Bhalla, Advocates.




CS (OS) No. 415-A of 1988 & OMP No. 147 of 1987                            Page 1 of 42
        CORAM: JUSTICE S. MURALIDHAR

                               JUDGMENT

%                               27.03.2017

Introduction

1.1 The central issue in these matters concerns an application being I.A. No. 22587 of 2014 filed by the Legal Representatives (LRs) of late Mr H. S. Vedi under Order XXIII Rule 3 of the Code of Civil Procedure 1908 (CPC) praying that the suit and the companion petition arising out of arbitration proceedings be disposed of in terms of a Compromise Deed dated 28th October 2007 executed by the parties.

1.2 If the said application is allowed, it will bring the curtain down on a three decade old litigation. If on the other hand, as contended by Mr K.S. Kler, the said application does not purport to settle the disputes between him and late Mr Vedi, but only the disputes both of them had with Mrs Veena Duggal, then the Court will have to decide the objections of the LRs of Mr Vedi to an Award dated 17th December 1987.

1.3 For the reasons to follow, this judgment concludes that the Compromise Deed dated 28th October 2007 brings an end to all disputes between the parties, including the disputes inter se between Mr Vedi and Mr Kler. The Court holds that the earlier Award dated 17th December 1987 does not survive and that both the suit and the petition and other applications stand disposed of in terms of the said Compromise Deed.

Background facts

2. Mr. K. S. Kler [the Plaintiff in CS (OS) No. 415-A of 1988 and Respondent No. 1 in OMP No. 147 of 1987], late Mr. H.S. Vedi (Defendant in CS (OS) No. 415-A of 1988 and the Petitioner in OMP No. 147 of 1987] and late Mr. K.K. Duggal were friends since the time they were students of architecture. They started a joint business in various countries including India, Sharjah, Bahrain, Iraq and Kuwait. All three were qualified Architects.

3. A Deed of Partnership dated 1st January, 1975 was executed between the three partners in respect of the firm under the name of „Architectural Construction Team and Gulf Design Group‟ at Sharjah. A Supplementary Partnership Deed was executed on 1st July, 1983 between the three partners with the purpose of transferring the business of „Architectural Construction Team and Gulf Design Group‟ to ACT Holdings (Jersey), which was incorporated in Jersey (England). It is stated that under Clause 17 of the Partnership Deed dated 1st July, 1983, it was provided that in the event of a partner dying, the surviving partners were to carry on the business and hold the share of the deceased partner‟s interest for the benefit of the children and widow of the deceased partner. Clause 19 contained an arbitration clause whereby disputes arising out of or in relation to the conduct of the business of the partnership were to be referred to arbitration by mutual agreement of the parties concerned.

4. On or about 7th April 1978, a firm under the name and style of Bucheery ACT Company WLL, a joint venture of the three with one Ali Mohd. Haji Bucheery was registered in Bahrain. The Architectural Construction

Company was registered in Iraq.

5. It is stated that Mr. Duggal died in a car accident near Rampur in Uttar Pradesh on 26th May, 1985. He left behind his widow, Mrs. Veena Duggal, and three minor daughters. In terms of the aforementioned Partnership Deed, Mrs. Veena Duggal became a partner/share holder in the firm.

Mrs Duggal's suits

6. Mrs. Veena Duggal filed Suit No. 2079 of 1986 in October 1986 in this Court seeking rendition of accounts of the partnership firm Architectural Construction Team and the company ACT Holdings (Jersey) Ltd. In the said suit, Mr. K.S. Kler filed an application under Section 34 of the Arbitration Act, 1940 („the 1940 Act‟) seeking stay and reference of the disputes to arbitration.

7. Thereafter, Mrs. Veena Duggal filed another suit being Suit No. 2312-A of 1986 under Section 20 of the 1940 Act for reference of the disputes arising out of the business of ACT Holdings (Jersey) Ltd. to arbitration A third suit being Suit No. 2313-A of 1986 was filed by Mrs. Veena Duggal under Section 20 of the 1940 Act for reference of the disputes arising between the partners in relation to business of „Gulf Design Group‟ to arbitration.

8. Mr. Kler who was looking after the partnership business in Bahrain decided to shift back to New Delhi. According to Mr Kler he and Mr Vedi entered into a handwritten agreement dated 20th December 1986 whereunder inter alia it was agreed by him and Mr Vedi that Mr Kler would

receive 2 million US Dollars (USD) and 35,000 UK pounds (UKP) for giving up his control/shares in some of the firms and companies wholly in favour of Mr Vedi. The said agreement also contained an arbitration clause which stated that the disputes arising under the agreement would be referred to two Arbitrators - Mr Gulshan Rai and Mr Ravinder Nath.

Mr Vedi's case in OMP 147 of 1987

9. Mr Vedi on the other hand denies that any such agreement was entered into. His version is set out in detail in O.M.P. No. 147 of 1987 which he filed under Section 33 of the 1940 Act praying that this Court should declare that there does not exist any binding or valid arbitration agreement; that even the writing dated 20th December, 1986 could not have led to a reference of disputes to arbitration and there was no valid reference as such. Alternatively, it was prayed that Mr Rai and Mr Nath (Respondent Nos. 2 and 3 respectively) should be restrained from acting as Arbitrators; their appointment be rescinded and a sole Arbitrator be appointed to adjudicate the disputes between the parties.

10. In the said petition, O.M.P. 147 of 1987, Mr Vedi claimed that on the pretext of defending the suits filed by Mrs. Duggal, Mr Kler continued remaining in India while drawing huge sums of money from the accounts of the partnership from the Bahrain Banks. Mr Vedi alleged that Mr. Kler collected and misappropriated the amounts to the extent of Rs. 3 crores and above from the Indian labour engaged and employed in different countries for the execution of the projects of their partnership firm.

11. Mr Vedi stated that Mr. Gulshan Rai, Chartered Accountant („CA‟) was an old friend of Mr. Kler. He was engaged by Mr. Kler to prepare the accounts of the partnership firm for which he travelled to Sharjah, Kuwait, Bahrain and Iraq. It was alleged that Mr Rai was paid huge amounts from time to time on account of fees and expenses. Mr Vedi alleged that Mrs. Duggal filed the above suits only because Mr. Rai was unable to prepare a true and fair statement of accounts of the firms.

12. Mr. Vedi alleged that Mr. Ravinder Nath, Advocate was also a close friend of Mr. Kler. He had been engaged by Mr. Kler to defend him in the various suits filed by Mrs. Duggal. At the instance of Mr. Kler, Mr. Vedi who was staying in Kuwait, joined Mr Kler in defending the suits by engaging Mr. Ravinder Nath. The defence of Mr. Kler and Mr. Vedi was common in the suits filed by Mrs. Duggal.

13. According to Mr. Vedi, Mr. Kler, Mr. Ravinder Nath and Mr. Rai gave him to understand that after having worked out the complete accounts, including goodwill of all the firms and the companies, a total amount of 2 million USD and 35,000 UKP would come to the share of Mr. Kler. Mr. Vedi alleged that the said three persons tried to brainwash him to agree to the payment of the said amount. Mr. Vedi alleged that by this time he did not know that Mr. Kler had already withdrawn considerable amounts from the accounts of the firms with the banks in Sharjah and Bahrain as well as the sum of about Rs. 3 crores which had been collected in cash by Mr. Kler from a large number of workers engaged by him for execution of the various contracts in countries abroad. It is stated that such cash amounts were

collected from the workmen against the legal liability and responsibility of the partnership for the safe and sure return of such workmen.

14. Mr. Vedi stated that a draft agreement was then prepared and signatures were obtained by Mr. Kler without giving him a chance to read and understand them. The case of Mr. Vedi is that he signed the documents in good faith as Mr. Ravinder Nath was engaged as their counsel and was respected by them. It is stated that only after returning to Kuwait after signing the above document Mr. Vedi learnt of the withdrawals made by Mr. Kler to the extent of Rs. 3 crores from the accounts of the firm in Iraq, Sharjah and Bahrain.

15. Mr Vedi further claimed that although on 20 th December 1986, Mr. Kler, Mr Rai and Mr Nath gave him to understand that there were no liabilities whatsoever of the firm in Bahrain, when Mr. Vedi reached Bahrain, he was surprised to know that there were Court orders requiring him to surrender his passport till the firm's liabilities towards labour wages, staff salaries, indemnities and payments to suppliers were cleared. This resulted in Mr. Vedi having to arrange substantial loans for getting the payments due cleared. This included labour and staff stuck in Bahrain for want of their wages, salaries and other benefits including their tickets for return journey to India. Mr. Vedi alleged lack of cooperation from Mr. Kler in discharging the above liabilities.

16. Mr. Vedi states that he was surprised to receive an arbitration notice on 31st August, 1987 from Mr. Nath and Mr. Rai stating that as Arbitrators they had entered upon reference . He was asked to appear before them on 10 th

September, 1987. Mr Vedi stated that the notice dated 31st August 1987 mentioned that Mr Kler had invoked the arbitration clause in the agreement dated 20th December 1986. Mr Vedi, who was at Kuwait at that time, asked to be sent the original of the said agreement but was only provided with a typed copy thereof. Mr Vedi found it to be different from what had been mooted for a possible mutual settlement.

17. Mr. Vedi received another arbitration notice dated 12 th September, 1987. Mr. Vedi protested saying that there was no arbitration agreement between him and Mr. Kler. Further, no arbitration proceedings could be initiated without the involvement of Mrs. Duggal who was already a party to various pending litigation. When the arbitration proceedings continued, Mr. Vedi by a letter dated 31st October, 1987 written from Kuwait informed the two Arbitrators that he (Mr. Vedi) had not been a party to any arbitration agreement much less an agreement to refer disputes to the said two persons as Arbitrators.

18. In para 21 of OMP No. 147 of 1987, it was stated that Mr. Vedi was "not aware of the further doings of the Respondents in regard to the so-called arbitration proceedings." In his letter dated 23 rd November, 1987 to the two Arbitrators, Mr. Vedi stated that till further notice his address was Mr. H. S. Vedi, C/o Mr. B.S. Mehta, C-13 West End, New Delhi - 110021.

19. At the time when OMP No. 147 of 1987 was filed, the arbitral proceedings had not concluded. In any event, Mr. Vedi refused to recognise the legality of the said arbitration proceedings. Mr. Vedi, therefore, called upon the Court to decide "whether the writing dated 20.12.86 was a

concluded agreement between Mr. Vedi and Mr. Kler". If the answer was in the affirmative, the effect of Clause 14 of the agreement would have to be examined. Alternatively, it was submitted that the two Arbitrators should be removed and the Court should, in their place, substitute another Arbitrator of its choice. It was inter alia prayed that the original writing dated 20th December, 1986 should be asked to be produced and its validity be decided by the Court.

20. The main ground of challenge in OMP No. 147 of 1987 by Mr. Vedi was that the two Arbitrators along with Mr. Kler had connived to make it appear that there was an arbitration agreement. It was pointed out that considering that various cases were already pending in this Court concerning the business of Architectural Construction Team, ACT Holdings (Jersey) Ltd., Gulf Design Group, ACT Bucheery WLL etc. to which all three, viz., Mr. Vedi, Mr. Kler and Mrs. Duggal were party, no reference could have been made to arbitration or any agreement arrived at in relation thereto without Mrs. Duggal being made a party. Accordingly, it was submitted that the so- called arbitration proceedings "are the result of connivance and collusion" between the two Arbitrators and Mr. Kler with the "ulterior motive to expropriate the wealth, assets and finances of the Petitioner."

21. OMP No. 147 of 1987 came up for hearing first before this Court on 18 th December, 1987 and while issuing notice on that day, the Court restrained Respondent Nos. 2 and 3 from making and publishing any Award. At the next hearing on 19th April, 1988, the Court was informed that despite the injunction order, Respondent Nos. 2 and 3 had in fact published an Award.

Proceedings in Suit 415-A of 1988

22. At this stage, it is necessary to note that Suit No. CS (OS) 415-A of 1988 was registered in this Court after the two Arbitrators filed their Award dated 17th December, 1987. On 24th February, 1988, the Registrar directed notice to be issued to the parties about the filing of the Award.

23. Mr. Kler filed IA No. 1124 of 1988 in which inter alia he prayed for attachment of the properties of Mr. Vedi; restraining him from selling, transferring or creating any encumbrances or disposing of his personal assets; restraining him from representing himself as an agent of Mr. Kler or admitting any liability on his behalf and representing himself as proprietor of the various joint businesses of the parties. Inter alia it was pointed out by Mr. Kler in the application that the Award of the two Arbitrators was in his favour and against Mr. Vedi in excess of 2 million USD.

24. When the above application came up for hearing before this Court on 1st March 1988, an ex parte interim order was passed in terms of the aforementioned prayers. Mr. Vedi then filed IA No. 2945 of 1988 under Sections 30 and 33 of the 1940 Act raising objections to the said Award. He also filed a reply to IA No. 1124 of 1988. The objections to the Award were more or less on the same lines as OMP No. 147 of 1987. A prayer inter alia was made to consolidate the two matters.

25. On 19th September 1989, the following order was passed by the Court in Suit No. CS (OS) 415-A of 1988:

"S.No. 415/88, IA No. 8111/88 & IAs 1124, 2945/88 On the last date of hearing i.e. 5th September, 1989, an order

was made in I.A. No. 8111/88, directing the learned arbitrator to file original agreement between the parties regarding the arbitration their power and possession. By mistake that order was not typed. I, therefore, direct the learned arbitrators to file original agreement between the parties regarding the arbitration, if not already filed within ten days from today in a sealed cover. List on 17th November, 1989."

26. On 17th January 1990, it was noticed that the above order still had not been complied with. The position persisted even as on 1 st October, 1991. Although on 9th March, 1992 it was recorded by the Court that the original arbitration agreement had been filed, on 29th April, 1992, in an application being IA No. 3903 of 1992 filed by Mr. Vedi, it was stated that on inspection it was found that no arbitration agreement dated 20th December, 1986 was in fact available on the Court record. Fresh notices were again issued on that day to the Arbitrators to file the original arbitration agreement. The position persisted even on 29th April, 1993 when the Court directed the two Arbitrators to appear in person on the next date i.e., 14th May, 1993 along with the original arbitration agreement. On the next date, Mr. Ravinder Nath and Mr. Gulshan Rai appeared before the Court. Mr. Ravinder Nath stated that he had the original arbitration agreement and he would file it within two days.

Issues framed in both matters

27. Meanwhile, as far as OMP No. 147 of 1987 was concerned, the following issues were framed for consideration:

"1. Whether the plaintiff‟s suit is that there was no agreement between him and the defendants to make a reference to the Arbitrator?

2. Whether the plaintiff‟s suit is that his signatures on the agreement dated 26th December, 1986 were obtained by undue influence and in collusion?

3. Whether the Arbitrator had jurisdiction to make the award in question?

4. Whether the Arbitrator has misconducted himself in passing the order in question?

5. Whether the award in question is to be set aside?

6. Whether the award in question is violative of the provisions of Foreign Exchange Regulation Act?"

28. It was observed by the Court in its order dated 15th November, 1995 in OMP No. 147 of 1987 that no separate issues needed to be framed in CS (OS) No. 415-A of 1988. Both matters were consolidated.

Subsequent proceedings

29. For a long time thereafter, there were adjournments since the admission/denial of documents could not take place. This was because the file containing the original documents had not been summoned.

30. An application was filed by Mr. Vedi being IA No. 186 of 1996 in CS (OS) 415A of 1988 for amending the issues. In the said application, an order was passed on 7th July, 1998 in which it was held that the 6 issues framed were comprehensive enough and there was no necessity for framing any further issues.

31. Affidavits by way of evidence were filed by both parties.

32. On 23rd January, 2003 a statement was made by counsel for the parties that the matter should be adjourned sine die with liberty to the parties to apply for revival of the case as and when it became necessary. In between, on 26th September, 2005, the case was listed. None appeared. The earlier order that the matter should not be listed till either party applies for revival was reiterated by the Court.

Disposal of the suit and petition in March 2012

33. It was only on 15th July, 2011 that counsel for Mr. Kler appeared informing the Court that no settlement had been reached. It was noted by the Court that no steps at all had been taken by the parties for a long period of almost 8 years. Court notice, without process fee, was issued to Mr. Vedi and his counsel on 16th August, 2011 returnable on 26th September, 2011.

34. However, on the next date i.e., 26th September, 2011, the Court noted that none appeared for Mr. Vedi. Notice was again issued to Mr. Vedi, returnable on 7th February, 2012.

35. On 5th March, 2012, an order was passed in OMP No. 147 of 1987 noting that the attempt to serve Mr. Vedi had failed. The Court was of the view that since the matter had been adjourned sine die at the request of the parties including Mr. Vedi, the latter was duty bound to inform the Court of any settlement or seek revival of the petition. It is observed that the "Petitioner is not interested in pursuing this matter." The petition was, accordingly, dismissed for non-prosecution.

36. In CS (OS) No. 415-A of 1988, the Court passed an order in which it

noticed that despite notices being served to Mr. Vedi in the arbitral proceedings, none appeared on his behalf and, therefore, the ex parte Award was passed. The Court perused the Award and observed that there was no infirmity. Accordingly, the Award was made Rule of the Court.

37. Mr. Kler initiated proceedings to enforce the Award which had been made Rule of the Court. When notice was served on the LRs of Mr. Vedi in those proceedings, they filed two sets of applications for setting aside the ex parte Awards - IA Nos. 9640-43 of 2014 and 9645 of 2014 in CS (OS) No. 415-A of 1988 and IA Nos. 9636-37 of 2014 in OMP No. 147 of 1987.

Suit and petition restored by DB in appeal

38. On 14th August, 2014, two separate orders were passed. As far as CS (OS) No. 415-A of 1988 is concerned, the Court set aside the impugned judgment and decree dated 5th March, 2012 accepting the explanation of the LRs of Mr. Vedi that they were not aware of the pendency of the proceedings. It was noticed that Execution Petition No. 214 of 2013 had been rendered infructuous.

39. At that stage, IA No. 9642 of 2014 under Order XXIII Rule 3 CPC was pending before the Court for passing a decree in terms of a compromise stated to have been arrived at between the parties on 28th October, 2007. The counsel appearing for Mr. Vedi stated that he would withdraw the said application as he wished to inspect the record "more closely and, if necessary, re-file the application." The said application was dismissed as withdrawn with liberty as prayed for.

40. As far as OMP No. 147 of 1987 was concerned, by a separate order of the same date i.e., 14th August, 2014, the earlier ex parte order dated 5th March, 2012 dismissing the said petition was set aside and the petition was restored to its original position.

41. Aggrieved by both the orders, Mr. Kler filed FAO (OS) Nos. 390 and 391 of 2014 before the Division Bench („DB‟) of this Court. The DB by its judgment dated 3rd September, 2014 concurred with the view taken by the Single Judge and highlighted that "the parties were somewhat induced into slumber." The DB also noted the grievance of Mr. Kler that Mr. Vedi had disposed of most of the properties and, at that stage, only three were available viz.:

"i. Commercial Flat No. 8-B, Hansalaya Building, Barakhamba Road, New Delhi;

ii. Residential Plot No. A-129, New Friends Colony, New Delhi;

iii. Three residential flats, 3rd Floor, Aradhana Building, Burmah Shell Housing Society, Opp. Hyatt Hotel, Ring Road, New Delhi."

42. The DB expressed the hope that the Single Judge would ensure that the aforementioned "three properties are available and are not dissipated till the two proceedings are adjudicated." A hope was expressed that the Single Judge would dispose of both petitions during the current calendar year. However, for some reason or the other, the matters could not be taken up. On 10th May, 2016, a direction was issued to the parties to file their respective written submissions.

The Compromise Deed

43. It must be noticed at this stage that IA No. 22587 of 2014 was filed by Mr. Vedi under Order XXIII Rule 3 CPC in CS (OS) No. 415-A of 1988 for disposing of the suit in terms of a Compromise Deed dated 28th October, 2007 entered into between Mr. Kler, Mr. Vedi and Mrs. Duggal purporting to settle all their inter se disputes.

44. In the said application, an order was passed on 10th February, 2016 directing that the original Compromise Deed dated 28th October, 2007 should be filed within one week. However, another application being IA No. 3174 of 2016 was filed by Mr. Vedi for exemption from filing the original copy of the Compromise Deed dated 28th October, 2007. On 8th March, 2016, the Court noted that the original of the said Compromise Deed had been brought to the Court. Accordingly, the prayer was not opposed by the counsel for Mr. Kler and the application was disposed of.

45. At this stage, it is necessary to describe in some detail the Compromise Deed dated 28th October, 2007 between Mr. Kler, Mr. Vedi and Mrs. Veena Duggal as well as ACT Developers Private Limited as the fourth party.

46. The recitals preceding the actual Compromise Deed are contained in 6 pages which trace the entire history. Interestingly, the first clause of the Compromise Deed states that the recitals and annexures to the Compromise Deed formed an integral part thereof. A detailed discussion of the recitals will be undertaken hereinafter. However, for the present purposes, it requires to be noticed that in terms of the Compromise Deed:

(i) the entire share holding of late Shri K.K. Duggal in all firms and companies as stated in the recitals was to be shared equally between Mr. Kler and Mr. Vedi, and in consideration thereof:

(a) two villas at Sharjah, UAE in the area measuring 800 sq. yards each were to vest in Mrs. Duggal.

(b) House No. C-540, Defence Colony, New Delhi was to be transferred in the name of Mrs. Duggal who shall be responsible for payment of stamp/transfer charges and she shall continue to be in possession of the said property.

(ii) Mrs. Duggal on behalf of herself and all other LRs of Mr. Duggal agreed to release in the joint names of Mr. Kler and Mr. Vedi the shares of Mr. Duggal in the real estate in Industrial Area Nos. 1 and 5 in Sharjah, United Arab of Emirates („UAE‟), real estate in Bushgarh Area, Sharjah, UAE and 1/3rd shareholding or its value on liquidation and the other assets in the name of Mr. Duggal in the Company, Gulf Design Group (currently under liquidation); 1/3rd shareholding and such other assets in the name of Mr. Duggal in M/s. Sertech; the share of Mr. Duggal in all payments to be received from the Court in connection with Case No. 169/1997 pending before the Sharjah Courts; the share of Mr. Duggal in any other properties in the UAE.

(iii) It was clarified that all liabilities in respect of the properties/assets taken over by Mr. Kler and Mr. Vedi and in respect of unknown liabilities in UAE (past and present) shall be the sole responsibility of Mr. Kler and Mr. Vedi

jointly and severally.

47. Clauses 4 to 12 of the Compromise Deed talked of the rights, liabilities and responsibilities of the parties qua the properties falling to the share of Mrs. Duggal and the consequences thereof. Clause 13 stated that all the assets, liabilities and properties of the firm would come to the share of Mr. Vedi and Mr. Kler.

48. Clauses 14 and 15 of the Compromise Deed read as under:

"(14) That it has been agreed between the parties that any of the parties shall be free to file this Compromise Deed in the proceedings pending against each other and to have such proceedings decreed in terms of this Compromise Deed. However, the parties undertake, to withdraw all pending, litigations against each other on the basis of the compromise in courts in India as well as in Foreign Countries.

(15) That with the execution of this Compromise Deed, the parties hereto acknowledge that they have no claims left against each other of any nature whatsoever subject to the transfer of the property bearing No. C-540, Defence Colony, New Delhi and the two Villas situated at Sharjah UAE, in favour of the Third Party."

49. While Clause 16 dealt with property at C-540, Defence Colony and two villas in Sharjah and Clause 17 about the liabilities against Mr. Duggal having come to an end, the remaining clauses dealt with covenants of all the parties. In particular, Clauses 18 to 23 read as under:

"(18) That the parties agree that the consideration as agreed herein are adequate and no party shall ever challenge this Deed on the ground of adequacy of consideration.

(19) That it is mutually agreed between the first party, second party and third party that each party would render all cooperation to each other in respect of the fulfilment of the terms and conditions of this Compromise Deed either in India or foreign countries and each party would execute the necessary papers as and when required.

(20) That this Compromise Deed shall be valid and effective in U.K. Iraq, Bahrain, India, Sudan, Kuwait and Sharjah and would be used to give effects in the firms and companies in the said Foreign Countries.

(21) That the parties to this deed hereby give their free will and consent to this compromise and there is no fraud, threat, coercion or undue influence from any corner whatsoever.

(22) That the parties shall be bound by the terms and conditions of this Compromise Deed and none of them shall violate the same under any circumstances.

(23) That in case any party does not comply with the terms of this Compromise Deed the beneficiary can get this Compromise Deed specifically enforced from the Court of Law."

50. Clause 24, which was the last clause of the Compromise Deed, said that any stamp duty / court fee charges payable on the Compromise Deed would be paid by Mr. Kler and Mr. Vedi jointly and severally. It requires to be noticed that the above Compromise Deed was entered into at New Delhi and was witnessed by two persons, Ms. Shikha Duggal and Ms. Jaspreet Kler.

I.A. 22587 of 2014

51. It is on the basis of the said Compromise Deed that the LRs of Mr. Vedi filed IA No. 22587 of 2014 under Order XXIII Rule 3 CPC. It was stated in the said application that the Compromise Deed had been given effect to in

all aspects and judgments having been passed by competent Courts at Sharjah. It was stated that not less than 4 to 5 crores of rupees had been disbursed to Mr. Kler as a result thereof. It was further stated that Mr. Kler was still receiving huge rental income from the joint property of the partnership business of the parties in Sharjah. It was stated that out of the three joint properties at Sharjah, one was auctioned by the Court in order to pay the dues / shares of the local partner. After auctioning one property and paying the share of the local partner, the left over money as well as the rental income from the two other properties were distributed between Mr. Kler and Mr. Vedi and each one of them in or around October 2011 got around 2.8 million dirhams that is equivalent to around Rs. 4.5 crores in Indian currency.

52. It was submitted that Mr. Kler ought to have disclosed the above fact to this Court when he sought to revive the proceedings. Reference was also made to a Settlement Agreement dated 30th March, 2012 entered into at Sharjah in Suit No. 169 of 1997 which was consequent upon the Compromise Deed dated 28th October, 2007.

53. With the application IA No. 22587 of 2014, the LRs of Mr. Vedi enclosed the following documents to show that the Compromise Deed dated 28th October 2007 had been acted upon by the parties:

(i) copy of the additional fee agreement dated 30th December 2001 and covering letter dated 6th January 2002 between Mr. Kler and Mr. Vedi on the one hand and their common lawyer in Sharjah on the other.

(ii) copies of the judgments of the trial court and appellate court in Sharjah.

(iii) copy of the handwritten note of Mr. Vedi mentioning the shares of all the partners.

(iv) copies of the cheques/DD and transaction documents.

(v) copy of the chart showing the conversion rate of dollar vis-a-vis rupee.

54. As noticed earlier, the original of the Compromise Deed dated 28th October, 2007 was in fact brought in the Court as noticed in the order dated 8th March, 2016. Therefore, there is no opposition of any party that such a Compromise Deed was in fact entered into between them.

Mr Kler's opposition

55. However, Mr. Arun Kumar Varma, learned Senior counsel appearing for Mr. Kler stoutly resisted the said application on the principal ground that the Compromise Deed was only in respect of the properties that had to come to the share of Mr. Duggal and was not intended to settle all the disputes between Mr. Kler and Mr. Vedi. He insisted that as a result of the agreement dated 20th December 1986, the Award dated 17th December, 1987 had been passed in favour of Mr. Kler and against Mr. Vedi and that was not meant to be dealt with by the Compromise Deed. In fact, according to him, the Compromise Deed makes no mention whatsoever of the said settlement agreement or the Award. The categorical statement in the reply filed is that "no compromise or other settlement has ever taken place between the Plaintiff and the deceased Mr. H.S. Vedi or the Applicant person herein at

any point in time."

56. It is further contended by Mr Varma that what came to be resolved by way of the compromise was Suit Nos. 2079/86, 2312-A/86 and 2313-A/86, and OMP 241/2004 and FAO 94/2004 filed by Mrs. Duggal. It is further pointed out that CS (OS) No. 2009 of 2012 filed by Mrs. Duggal against Mr. Kler and Mr. Vedi and the company was still pending in the court. It is stated that while Mr. Vedi failed to prosecute his objections to the Award dated 17th December, 1987, Mr. Kler was "actively prosecuting his own suit pursuant to the self-revival of the cases before this Hon‟ble Court." It is denied that Mr. Kler was still receiving huge rental income from the joint properties of the partnership business in Sharjah. It is stated that Mr. Kler "has received a sum of Dirhams 2,88,000/- as his share and as part of the amount awarded under the Award dated 17th December, 1987."

57. Mr. Varma had placed before the Court a tabulation which shows, according to Mr. Kler, that a total sum of Rs. 13,60,61,776 was due to him in terms of the Award dated 17th December, 1987 out of which he had received Rs. 3,67,49,269 leaving a shortfall of Rs. 9,93,12,507. The aforesaid sums were arrived at by converting the 2 million USD and 35,000 UKP at the exchange rate prevalent as of October 2011. It is stated that if interest were to be added at 16.5% from 1st February 1987 in USD and UKP, the total amount due worked out to Rs. 39,00,92,406 + Rs. 1,07,13,762 and after deducting a sum of Rs. 3,67,49,269, the sum due to Mr. Kler which worked out to Rs. 36,40,56,899.

58. Mr. Varma relied on the decision in Pushpa Devi Bhagat v. Rajinder Singh & Ors. (2006) 5 SCC 566 and submitted that the Court will have to determine whether the said settlement fell under Part 1 or Part 2 of Rule 3 of Order XXIII CPC as discussed therein. After a decree was passed under Part 1 of the said Rule, the Award had to be upheld as the settlement would be on the basis that the applicant admitted that there were certain sums to be paid as claimed in the suit. Since everything was to be divided equally between the parties, the exact half share to be given to Mr. Kler would have to be determined.

59. Mr. Varma submitted that it was not the case of Mr. Vedi that the total assets were worth Rs. 7.2 crores of which Rs. 3.67 crores had been given to Mr. Kler. Lastly, it was submitted that the decree that was passed by the Court requires to be determinative and tangibly executable. Relying on the decision in Sundar Sahu Gountia & Ors. v. Chamra Sahu Gountia & Ors. AIR 1954 Orissa 80, Mr. Varma submitted that the Court was not bound to record that the Agreement dated 28th October, 2007 was a valid agreement "without regard to the adequacy or otherwise of the consideration for the compromise." He posed the question as to why Mr. Kler, who was owed more than Rs. 10 crores without interest as of the date of the Compromise Deed, would agree to the amount already received by him as being in full and final settlement of all his claims.

60. It was submitted by Mr. Varma that the sum of Rs. 3.67 crores was received by Mr. Kler only pursuant to proceedings in a suit in Sharjah Court with one of the properties there being sold on the direction of the Court.

That amount according to him was not paid as a result of the Compromise Deed dated 28th October, 2007. It is further submitted that the rate of exchange would be taken as on the date of the payment as held by the Supreme Court in Forasol v. ONGC AIR 1984 SC 241. On that basis, Mr. Kler was entitled to Rs. 3,67,49,269.

Reply of the LRs of Mr Vedi

61. Countering the above submissions Mr. M.A. Niyazi, learned counsel appearing for LRs of Mr. Vedi, referred to the decisions in Kohli Housing and Development Pvt. Ltd. & Ors. v. Convenience Enterprises Pvt. Ltd. 159 (2009) DLT 177 (DB), Vinay Kumar Malhotra & Ors. v. Vashist Malhotra 185 (2011) DLT 535, KS Financial Services Lits. & Anr. V. N. Devendran & Ors. AIR 2003 Mad 369 and Vibha Mehta v. Hotel Marina & Ors. 2014 (142) DRJ 528 (DB) to submit that where the terms of the agreement are clear, then the Court should bind the parties to the compromise agreement. Mr. Niyazi also referred to the decision in ONGC v. Schlumberger Asia Services Ltd. 2006 (91) DRJ 370 where inter alia it was observed that the construction of contract was a question of law and the ascertainment of the meaning of a particular word is a question of fact.

62. Mr. Niyazi further pointed out that Mr. Kler does not deny receiving Rs. 3.67 crores which was far more than Rs. 2,62,97,200 that he had to receive as of the date of the so called agreement dated 20 th December, 1986. He stated that that original agreement was not produced till several years later and that too was extremely suspicious. He submitted that the arbitral Award dated 17th December, 1987 too was passed under suspicious circumstances.

It is the case of Mr. Vedi that it was back dated after the order was passed by this Court on 18th December, 1987 in OMP No. 147 of 1987. Mr Niyazi submitted that Mr. Kler deliberately suppressed from this Court the facts concerning the Compromise Deed when he appeared in July 2011 and even thereafter when the suit was disposed of on 5th March, 2012. His conduct should disentitle him to any further relief.

63. Lastly, it was submitted that the continuation of present litigation, despite the Compromise Deed nearly a decade ago, was vexatious and burdensome for the LRs of Mr. Vedi who wanted quietus. He submitted that it was unfair to them to keep the litigation on for no real purpose.

Award dated 17th December, 1987 and challenge thereto

64. At the outset, the Court would like to observe that the very basis for CS (OS) No. 415-A of 1988 was the filing of the Award dated 17th December, 1987 by the Arbitrators. It appears from the file notings, that the said Award was filed sometime on 27th January, 1988 by the two Arbitrators of their own. A noting was made by the Court officials on that day that "this Award may be returned for want of its proceedings and evidence etc." Below that is the noting of one of the Arbitrators that "the proceedings will be filed after the case is numbered in order to ensure that they are not lost / misplaced."

65. A query was raised on 6th February, 1988 - "find out from the M.C. whether any suit relating to this award has been filed after 17/12/87." Below that is the noting that "Kindly see report of the M.C.: OMP 147/87 related to the Award already filed... It is suggested that this award may be treated as a suit and be listed before the Court along with OMP 147/87 on

24/2/88..."

66. What is plain from the above notings is that the Award was filed in this Court only after notice had been issue in OMP 147/87 on 18th December 1987. While there was no sitting of the Court on 24th February, 1988 and, therefore, OMP No. 147 of 1987 was adjourned to 19th April, 1988, Suit No. 415-A of 1988 was listed before the Registrar on that day. The Registrar noted that the Award had been filed along with the proceedings which were directed to be taken on record. The notice of filing was made returnable for 22nd April, 1988.

67. There was an order passed in IA No. 1097 of 1988 for sealing of the original documents. That application was allowed and the documents were directed to be sealed in the presence of the Deputy Registrar. This was done on 26th February, 1988 in the presence of counsel for the Arbitrators.

68. Interestingly, these sealed documents at that stage did not include the original of the hand written agreement dated 20th December, 1986. The file shows that the original of the said handwritten agreement was filed by Mr. Ravinder Nath, the co-Arbitrator only on 20th May, 1993 after nearly seven years and that too after several orders having been passed in that regard by the Court. A perusal of the handwritten agreement shows that below the signatures of Mr. Vedi and Mr. Kler, there are signatures of both Arbitrators stating that the agreement was arrived at in their presence and the date is given as 20th December, 1986. There is a stamp (perhaps of the office of the Collector of Stamps) bearing the date of 8th December, 1987. Acting on the said agreement, the Award appears to have been made.

69. Although the Award shows that Mr. Vedi was represented by Mr. Jain at the proceedings on 16th October, 1987, Mr. Jain sought an adjournment for seeking further instructions. On the adjourned date i.e., 26th October, 1987, Mr. Jain did not appear. At the further adjournment dated 31st October, 1987, again, there was no appearance for Mr. Vedi. A final opportunity was granted by adjourning the case to 7th November, 1987 and then again on 14th November, 1987.

70. The Arbitrators then stated in paras 3 and 3.01 of the Award as under:

"3. An objection having been raised in this behalf, the original Agreement dt. 20th Dec. 1987, was duly submitted to the Collector of Stamps and stamped in accordance with law.

3.01 We may add that by our order dt.31st Aug. 1987, we had appointed Mr. Justice Sultan Singh (Retired), ex Judge of the High Court of Delhi, as an Umpire in the present proceedings and obtained his prior consent to act as such."

71. Thereafter, the Arbitrators proceeded to discuss the "binding agreement dated 20th December, 1986" and passed Award in favour of Mr. Kler for a sum of 2 million USD which was required to be paid by Mr. Vedi to Mr. Kler forthwith "along with interest @ 16½ % per annum with effect from the date of this Award till payment be paid by the Respondent to the Claimant forthwith." A further sum of Rs. 5,000 ordered as costs of arbitration to be paid by Mr. Vedi to Mr. Kler.

72. As already noticed, objections were filed to the above Award by Mr. Vedi under Sections 30 and 33 and the issues as already noticed were

framed common to both Suit CS (OS) No. 415-A of 1988 as well as OMP No. 147 of 1987. Issues 1 and 2 were in particular reference to the handwritten agreement dated 20th December, 1986 to incorporate the stand of Mr. Vedi that the signatures thereon were obtained by "undue influence and collusion." Another issue was whether the Award was required to be set aside and whether it was in violation of the Foreign Exchange Regulation Act, 1973. It was made clear that both Suit CS (OS) No. 415-A of 1988 and OMP No. 147 of 1987 were to be disposed of by a common judgment. One of the first attempts at settling the case after the filing of affidavit of evidence by the parties was on 20th September, 1999 where it was noted "at joint request so as to unable the parties to make efforts to arrive at a settlement, adjourned to 1st December 1999."

73. On 24th January, 2000 and 9th May, 2000, adjournments were sought by counsel for the parties on the ground that they were attempting settlement. Again, on 13th September, 2001 and 25th September, 2002, the same request was made. Thereafter, on 23rd January, 2003, the parties asked the Court to adjourn the case sine die with liberty to the parties to apply for revival.

Conduct of Mr Kler

74. It is, therefore, plain that for a period of over 15 years from the date of the passing of the Award dated 17th December, 1987, Mr. Kler really did not make any serious effort for getting the Award to be made rule of the Court. This is an important circumstance and was taken note of in the order passed by the learned Single Judge of this Court in para 6.1 of his order 14th August, 2014 in CS (OS) No. 415-A of 1988 setting aside the ex parte order

dated 5th March 2012 as under:

"6.1 I must, however, add a footnote to my order, which is that, though the court adjourned the matter sine die giving them liberty to seek revival of the proceedings, both parties, (metaphorically speaking) appear to have become comatose. The order dated 23.01.2003 was passed, I was given to understand during the course of arguments, to enable parties to arrive at a settlement. See also order dated 25.09.2002 where this fact is recorded. Upon elapse of a decent interval, one or both parties have not taken recourse to an appropriate methodology, as prescribed in law, to inform the court, as to what was the status of their inter se disputes. The courts legitimate anxiety or not have cases on record, which remain undecided often lead to such situations. The matter was listed not because of alacrity of parties but because of the courts usual and general review of pending matters. With the hope that the parties will attend to the proceedings with due diligence, from here on, the applications are allowed."

75. The DB, too, while affirming the above order on 3rd September, 2014, noticed that "the parties were somewhat induced into slumber."

76. It will be recalled that on 26th September, 2005 when the cases were listed, none appeared for the parties. The Court noted the earlier order and directed that the case would be listed only when the parties sought their revival. In the circumstances, it is not clear how the cases were suddenly listed before the Court on 15th July, 2011. Interestingly, there is no item number mentioned in the orders passed on that date. In para 4.2 of the order dated 14th August, 2014, the learned Single Judge noted:

"4.2 However, the matter, once again, got listed on 15.07.2011. It is obvious, that the matter must have got listed on a review of the pending cases by the office. Be that as it may, the learned counsel for the non-applicant/plaintiff appeared in court and, on

his request, it was directed that CS(OS) 415A/1988 should be listed along with OMP 147/1987. The matter was consequently, adjourned to 16.08.2011."

77. What is, however, significant is that on 15th July, 2011, counsel appearing for Mr. Kler did not bring to the notice of the Court that a Compromise Deed had been entered into between the parties on 28th October 2007. Even on 5th March 2012 Mr. Kler was represented by counsel and did not care to bring to the notice of the Court the developments that took place leading to the Compromise Deed dated 28th October, 2007. That indeed is very strange. The same is the story as far as the proceedings that took place on the same day in connected OMP No. 147 of 1987. In the order dated 5th March, 2012 in OMP No. 147 of 1987 in para 2 it is noted by the Court "on 15.7.2011 Mr. Kirti Uppal, learned Senior counsel for the Respondent (Mr. Kler) had informed the Court that there has been no settlement." All of this makes it even more strange that Mr. Kler can be totally silent about the settlement deed dated 28 th October, 2007 and did not instruct his counsel in that regard. This conduct of Mr. Kler is not acceptable to the Court. What is even more strange is the execution petition filed by him.

78. The LRs of Mr. Vedi stated that they were taken by surprise when notice was issued in Execution Petition No. 214 of 2013 filed by Mr. Kler. In those proceedings on 10th February, 2014 a copy of the execution petition was handed over by counsel for Mr. Kler and immediately thereafter on 11 th February, 2014 an application was filed by the LRs of Mr. Vedi for setting aside the ex parte orders dated 5th March, 2012.

79. In this regard, it should be noticed that in IA No. 9640 of 2014 filed by Mr. Vedi‟s LRs there is a detailed narration of how Mr. Vedi has on his visit from Kuwait to India met Mr. Kler very often and this continued till his death in 2013. In August 2013, Mr. Vedi stated to have suffered TSA in 2007, and in 2009 he was suffering from cancer of the colon and lever since January 2011. It is stated that during the period between 2011 and 2013 Mr. Kler and Mr. Vedi met not less than 15 to 20 times but Mr. Kler did not mention anything about the revival of the present suit and petition or the fact that there was an ex parte decree passed on 5th March, 2012. It is obvious that it is only after the death of Mr. Vedi that the execution petition was filed in which notice was issued to LRs of Mr. Vedi.

80. The reply filed to this application did not deny about the filing of the execution petition and service of notice thereon to the LRs. Apart from stating that the LRs of Mr. Vedi deliberately did not appear in the Court, there was no denial to the fact that Mr. Kler never mentioned to Mr. Vedi during the numerous visits during the pendency of the matters. A reference is only made to some reply by Mr. Vedi to the counsel of Mrs. Duggal on 21st April, 2012. All that is said is that the Compromise Deed dated 28th October, 2007 did not bring an end the disputes between Mr. Vedi and Mr. Kler.

81. Mr. Kler, at one stage, demanded that the original of the said Compromise Deed should be produced. Later, he appears to have accepted that the original did exist. In this context, it is important to note that LRs of

Mr. Vedi filed IA No. 3174 of 2016 in which it was stated as under:

"3. It is humbly submitted before this Hon'ble Court that the Plaintiff on the last date of hearing also did not dispute the, existence of the said Compromise Deed dated 28-10-2007. Plaintiff does not dispute his signature on the said document. There is no denial of its existence in the reply filed by the Plaintiff to the application of the applicants under Order 23 Rule 3 CPC. The plaintiff has sought production of the original copy in his reply. The applicants had produced the original Compromise Deed dated 28-10-2007 on the last date of hearing and shall produce the same on all the dates of hearing and further as and when this Hon'ble Court directs. All three parties have one original signed copy with them.

4. One of the applicant namely Anita Vedi is in America, the other one is in Noida as well as in Kuwait. The business/assets of the parties namely the plaintiff and the defendant are/were in Middle East as well as in America and UK. The applicants have only one original copy with them, attested copy of which has already been brought on record. The applicants may require this original to be shown/produced before foreign courts, authorities for various purposes. Therefore, the applicants seek leave of this Hon'ble Court for exemption from filing the original Compromise Deed dated 28-10-2007 and the applicants undertake to produce the original copy of the same on all the dates of hearing before this Hon'ble Court and further as and when this Hon'ble Court directs."

82. On 8th March, 2016, the Court disposed of the said application IA 3174 of 2016 by the following order :

"The present application has been filed by the defendant for exemption from filing the original copy of Compromise Deed dated 28th October, 2007. The same has been brought in the Court. The prayer is not opposed by learned counsel for the plaintiff. The same is allowed.

The application is disposed of."

83. The above order was passed in the presence of counsel for Mr. Kler. Thereafter no question has been raised by Mr. Kler regarding the Compromise Deed dated 28th October, 2007. The Court, therefore, proceeds on the basis that there is no challenge to the fact that there was a Compromise Deed dated 28th October, 2007 signed by the three parties i.e., Mr. Kler and Mr. Vedi and Mrs. Veena Duggal.

84. The only question that then arises is whether the said Compromise Deed was intended to settle all the disputes between Mr. Kler and Mr. Vedi or only the disputes that the two of them had with Mrs. Duggal.

Compromise Deed covers all disputes

85. It is necessary now to revert to the Compromise Deed. The recitals in the Preamble of the said document note that there were as many as 8 companies and firms that had been formed by Mr. Kler, Mr. Vedi and late Mr. Duggal. The names of those 8 companies and firms were set out in the Preamble. The Preamble noted that after demise of Mr. Duggal "various disputes arose between the first party, second party and the third party in India and other foreign countries including the disputes with regard to the share of late Mr. K. K. Duggal in pursuance to which legal proceedings were initiated in the District Courts and High Court of Delhi." This, therefore, indicates that the Compromise Deed was not confined to the disputes pertaining to the share of Mr. Duggal but dealt with all other disputes inter se between the parties.

86. The next clause in the Preamble makes this abundantly clear when it

states:

"And whereas, the parties to this Compromise Deed have agreed to resolve their disputes with regard to the companies mentioned herein above, the assets of the Companies as well as shareholding of late Shri K.K. Duggal and the companies and the firm which terms of compromise are being penne down by the parties in this deed."

87. The clauses of the Compromise Deed dealt with both the share of Mr. Duggal as well as the inter se disputes between the other parties. Clause 14 which has been extracted hereinbefore records the undertakings of the party to "withdraw all pending litigations against each other on the basis of the compromise in Courts in India as well as in foreign countries." This clause does not refer exclusively to the disputes between Mr. Kler and Mr. Vedi on the one hand and Mrs. Duggal on the other. It envisages all the disputes which will include the inter se disputes between Mr. Kler and Mr. Vedi. Clauses 18 and 23 further make this abundantly clear. Clause 18 talks of all the parties without singling out any one of them. It clearly states that "no party shall ever challenge this deed on the ground of inadequacy of consideration."

88. Clause 20 makes it clear that Compromise Deed was to be valid and effective in several countries including India. This included disputes in the other countries involving Mr. Kler and Mr. Vedi. For e.g., pursuant to the said Compromise Deed a settlement agreement was filed in Suit No. 169 of 1997 in the Court in Sharjah. The parties there stated that they had entered into the said compromise of their own free will and "that there was no fraud, threat, coercion or undue influence from any corner whatsoever". The

parties were bound by the terms and conditions of the Compromise Deed as spelt out in Clause 22. Clause 23 stated that in the event that any of the parties does not comply with the terms of the compromise, the beneficiary can get the said Compromise Deed specifically enforced from the court of law.

89. The Court, therefore, is unable to accept the contention of Mr. Kler that the aforementioned Compromise Deed was meant only to bring to an end the disputes that Mr. Kler, Mr. Vedi on the one hand and Mrs. Duggal on the other but not the disputes inter se between Mr. Kler and Mr. Vedi. Much was said by Mr Varma about the above Compromise Deed making no mention of the earlier agreement dated 20th December, 1986 and the consequent Award dated 17th December, 1987. The fact of the matter is that the aforementioned Compromise Deed was executed nearly two decades after the Award dated 17th December, 1987 was passed. That Award was already under challenge before this Court by Mr. Vedi. Interestingly, Mr. Kler himself did not proceed with the said suit by which he was proceeding to make the Award the decree of the Court. It is understandable, therefore, that the parties decided not to go back to the stage where the said Award was sought to be enforced. Clearly, the parties wanted to bring to an end to all the disputes inter se between them by way of the Compromise Deed. The parties have entered into a Compromise Deed with open eyes and without any coercion. There is absolutely no reason for this Court to doubt the validity and authenticity of the Compromise Deed.

Decisions on Order XXIII Rule 3 CPC

90. At this juncture, it is important to refer to the decisions cited by the parties as regards Order XXIII Rule 3 CPC. The decision of the Orissa High Court in Sundar Sahu Gountia & Ors. v. Chamra Sahu Gountia & Ors. (supra) relied upon by Mr. Varma was rendered at a time when Order XXIII Rule 3 had not undergone an amendment. In any event, all that the said judgment holds is that the Court should look into the issue whether in a valid settlement, the consideration of the compromise is adequate. In the present case, it cannot be said that the Compromise Deed is in the nature of a valid settlement. Therefore, the said judgment may not, in a strict sense, apply to the facts of the present case. What nevertheless the Court has to examine is whether the agreement was lawful and in writing.

91. In Pushpa Devi Bhagat v. Rajinder Singh & Ors. (supra), the Supreme Court explained that Order XXIII Rule 3 consisted of two parts. The first part provides that 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, the court shall order such agreement, compromise or satisfaction to be recorded and as such shall pass a decree in accordance with the Award. The second part provides that where a Defendant satisfies the Plaintiff in respect of the whole or any part of the subject matter of the suit, the court shall order such satisfaction to be recorded and pass a decree in accordance therewith.

92. In para 19 of the said judgment, the Supreme Court explained the difference between the two parts as under:

"19. What is the difference between the first part and the second part of Rule 3? The first part refers to situations where an

agreement or compromise is entered into in writing and signed by the parties. The said agreement or compromise is placed before the court. When the court is satisfied that the suit has been adjusted either wholly or in part by such agreement or compromise in writing and signed by the parties and that it is lawful, a decree follows in terms of what is agreed between the parties. The agreement/compromise spells out the agreed terms by which the claim is admitted or adjusted by mutual concessions or promises, so that the parties thereto can be held to their promise/s in future and performance can be enforced by the execution of the decree to be passed in terms of it. On the other hand, the second part refers to cases where the defendant has satisfied the plaintiff about the claim. This may be by satisfying the plaintiff that his claim cannot be or need not be met or performed. It can also be by discharging or performing the required obligation. Where the defendant so 'satisfies' the plaintiff in respect of the subject-matter of the suit, nothing further remains to be done or enforced and there is no question of any 'enforcement' or 'execution' of the decree to be passed in terms of it...."

......

The difference between the two parts is this : Where the matter falls under the second part, what is reported is a completed action or settlement out of court putting an end to the dispute, and the resultant decree recording the satisfaction, is not capable of being enforced by levying execution. Where the matter falls under the first part, there is a promise or promises agreed to be performed or executed, and that can be enforced by levying execution. While agreements or compromises falling under the first part, can only be by an instrument or other form of writing signed by the parties, there is no such requirement in regard to settlements or satisfaction falling under the second part. Where the matter falls under second part, it is sufficient if the plaintiff or plaintiff's counsel appears before the court and informs the court that the subject matter of the suit has already been settled or satisfied."

93. The stand of LRs of Mr. Vedi has been that in consideration of Mr. Kler

getting 2 million USD and 35,000 UKP dollars he agreed to relinquish all his rights/shares/interest in all the business/assets in India and in the foreign countries. One part of the Compromise Deed has been given effect to. Of the three joint properties in Sharjah, one was auctioned at the instance of the Court in Sharjah in order to pay the shares/dues of the local partner. After paying the share of the local partner, the rest of the money was distributed between Mr. Kler and Mr. Vedi in October 2011 where each one received 2.8 million dirhams which was equivalent to around Rs. 3.67 crores in Indian currency. It is pointed out that this amount is not in lieu of the 2 million USD that was to be given to Mr. Kler in lieu of his relinquishment of shares/interest/business assets in all foreign countries. It is stated that this amount was as a result of the Compromise Deed dated 28th October, 2007 and Mr. Kler is still the half owner/shareholder of all the companies/firms and assets and business of the parties in foreign countries. Reference has been made to several emails exchanged between the parties and their common lawyer in this regard.

94. There is merit in the contention of the LRs of Mr. Vedi that after the Compromise Deed dated 28th October, 2007 there is no surviving dispute between him and Mr. Kler that requires to be decided. Clause 15 of the Compromise Deed makes it clear that with its execution the parties acknowledge that "they have no claims left against each other of any nature whatsoever subject to the transfer of the property bearing No. C-540, Defence Colony, New Delhi and the two villas situated at Sharjah UAE, in favour of the third party." Mr. Kler does not deny that he continues to hold share of 50% in all the companies and firms forming the subject matter of

the Compromise Deed.

95. For the purposes of Order XXIII Rule 3 CPC, the Court has to be satisfied that a suit has been adjudicated wholly or in part by any lawful agreement or compromise in writing and signed by the parties. In the considered view of the Court, this part of Order XXIII Rule 3 CPC stands satisfied in the present case inasmuch as the Compromise Deed dated 28th October, 2007 is in writing and has been signed by all the parties. It is a lawful agreement of compromise. The mere fact that the compromise agreement may not mention the earlier Award dated 17 th December 1987 or the agreement dated 20th December, 1986 will not in any manner impinge on the validity of the Compromise Deed. The fact that the parties acted on the compromise and proceeded to have several suits pending in other courts in other countries withdrawn is not denied by Mr. Kler. That he received Rs. 3.67 crores in his account in October 2011 is also not disputed.

96. In Kohli Housing and Development Pvt. Ltd. & Ors. v. Convenience Enterprises Pvt. Ltd. (supra), the Court reiterated the settled position that once a compromise is genuine and lawful it must be acted upon. Likewise, in Vinay Kumar Malhotra & Ors. v. Vashist Malhotra (supra), the Court acted on the compromise when it was shown to its satisfaction that the compromise was entered into between the parties voluntarily and the amounts in terms of the compromise were also paid to the beneficiaries therein. The statement to that effect made by the parties was held to be sufficient. In Vibha Mehta v. Hotel Marina & Ors. (supra), the aforementioned legal position was reiterated.

97. In that view of the matter, the attempt by Mr. Kler to convert the amount granted by way of the Award dated 17th December, 1987 i.e., 2 million USD dollars plus 35000 UKP by applying the current rate of exchange to the said amount is, in the considered view of the Court, misconceived. After the Compromise Deed dated 28th October, 2007, neither the agreement dated 20th December, 1986 nor the Award dated 17th December, 1987 can be said to be surviving. Clause 15 of the Compromise Deed dated 28th October, 2007 puts an end to any claims that Mr. Kler may have had under the agreement dated 20th December, 1986 or the Award dated 17th December, 1987.

98. This also follows from the own conduct of Mr. Kler in not pursuing either Suit No. 415-A of 1988 or OMP No. 147 of 1987 till 2011. His conduct disentitles him from pursuing the said claims at this stage. It is too late in the day for Mr. Kler to avoid the consequences of the Compromise Deed dated 28th October, 2007.

99. Mr. Varma sought to place emphasis on paras 18 and 19 of the decision in Pushpa Devi Bhagat v. Rajinder Singh & Ors. (supra) to bring out the difference between the first and second part of Order XXIII Rule 3 CPC. The Court finds that in terms of the law explained in the said judgment, it is Part I of Order XXIII Rule 3 CPC that will apply and not Part II. It was then submitted that as per Order XXIII Rule 3, a decree has to be formulated and passed by the Court.

100. All that the Court would like to mention at this stage is that as long as

the Compromise Deed dated 28th October 2007 has been found to be lawful and a decree has been passed, the parties are required to act in terms thereof and rearrange their affairs in terms of the decree passed by the Court. It is only when there is any doubt about any aspect of the division of the assets between the LRs of Mr. Vedi and Mr. Kler that there would be any need for any further clarification in that regard. It transpires that since 28th October, 2007, the parties do not appear to have had any difficulty in acting on the Compromise Deed and arranging their affairs accordingly. In any event, if there is any such difficulty hereafter, it will be open to the parties to take steps in accordance with law.

Conclusion

101. A quietus has to be laid to a three-decade old litigation. Mrs. Duggal does not appear to have any surviving grievance as the parties have given effect to the compromise as far as she is concerned. Even as regards Mr. Kler, he has got the payments in terms of the compromise at least to the extent of Rs. 3.67 crores and he continues to have 50% share of the remaining assets. It is not as if Mr. Kler has had a raw deal already in the brink. In other words, it cannot be said that the consideration for which he entered into in the above compromise was inadequate. It is not his case that he was coerced or compelled to sign the Compromise Deed.

102. For all the aforementioned reasons, the objection of Mr. Kler to the Court taking on record the Compromise Deed dated 28th October 2007 and passing a decree in terms thereof is hereby negatived.

103. Accordingly, IA No. 22587 of 2014 filed by the LRs of Mr. Vedi under

Order XXIII Rule 3 CPC is hereby allowed and the suit stands decreed in terms of the Compromise Deed dated 28th October 2007 which will form part of the decree. Since the original of the said Compromise Deed has been shown to the Court without any objection on the part of Mr. Kler, the photocopy of the said Compromise Deed available on record will be appended to the decree drawn up in terms of this order.

104. The Award dated 17th December 1987 does not survive in view of the Compromise Deed and it is accordingly hereby set aside. CS (OS) No. 415- A of 1988 and OMP No. 147 of 1987 stand disposed of.

105. In view of the above order, the interim orders passed by the Court hereby stand vacated. IA No. 22588 of 2014 is accordingly disposed of. All other pending applications stand disposed of.

S. MURALIDHAR, J MARCH 27, 2017 dn