2005 Supreme(SC) 1347

2005(8) Supreme 219
Supreme Court of India
(From Delhi High Court)
Mrs. Ruma Pal & Dr. AR. Lakshmanan, JJ.
Amteshwar Anand —Appellant
versus
Virender Mohan Singh & Ors. —Respondents
Civil Appeal No. 6326 of 2005
(Arising out of SLP (C) No. 11884 of 2003)
With
CA No. 6327 of 2005
(@ SLP (C) No. 17856 of 2003)
Decided on 7-10-2005
Counsel for the Parties :
For the Appellants : Ms. Malvika Rajkotia, Lakshmi Raman Singh, Arun Mohan, R.N. Karanjawala, Ms. Jasmine Dhamakewala and Ms. Manik Karanjawala, Advocates.
For the Respondents : Uday U. Lalit, Sr. Advocate, K.L. Janjani, Pankaj Kumar Singh, Dr. Vinod Tewari, J.P.N. Gupta, Ashok Sethi, Hari Mohan, Arvind Minocha, Rohan Thawani, Prashant Kumar, Advocates.

Important point
Courts lean in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds particularly when the parties have mutually received benefits under the arrangement.

Headnote:(i) Civil Procedure Code, 1908—Order XXIII, Rule 3 r/ws 151—Consent decree—Procedure envisaged under Order XXIII Rule 3—Obligation on Court to be satisfied that a suit has been adjusted wholly or in part by a lawful agreement or compromise in writing and signed by parties—Mandate to record the agreements Court has to order the agreement to be recorded —This is normally done simultaneously with the passing of the decree—Legal tussel between heirs over the properties of DS—Disputes in two suits between the parties were resolved by three agreements—Parties had separately signed their agreements and approached the Court at different points of time, seeking to get a decree passed in terms of their agreements—Final decree passed was on basis of all three agreements—Application was filed for setting aside the agreement and decree on allegation of fundamental breach of the compromise—Applications rejected by two Courts below holding these as misconceived, amounting to a misuse of process of Court—Whether findings of fact arrived at concurrently by the Courts below requires interference by this Court—(No)—Whether the two agreements between the parties were conditional—(No)—Whether procedure prescribed under Order XXIII Rule 3 of the Code had been complied with by the Courts in passing the final decree—(Yes).

       Held : We are of the view that the findings of fact arrived at concurrently by the courts below do not require interference by this Court. It cannot be said that the conclusions were unsupported by or were contrary to the evidence on record. On the legal issues also there has been no disagreement. The first issue is whether the two agreements between the appellants and VMS were conditional. Both the Courts below have construed the agreements and answered the issue in the negative. As we have already said, each of the first two agreements recorded the relinquishment of rights by AA, KK and Guneeta in the suit properties and assignment of such rights to VMS. This was recorded in the agreements as already having taken place. As far as the first agreement was concerned, the relinquishment of VMS’ rights in the Bhopal house was effected by clause (e). Clause (d) of the second agreement recorded that AA had already received the consideration in respect of the properties mentioned from VMS. The further payments to be made by VMS to the three appellants were, on the other hand, to be made in future. The phrase “subject to the payments being made” in clause (d) of the first agreement and clause (f) of the second agreement does not operate as a precondition to the relinquishment of the rights of KK, Guneeta and AA in the suit properties. According to these clauses of the agreements, vesting had already taken place or was to take place with the execution of the agreements. In this context, to construe the phrase `subject to’ as amounting to a pre-condition would be contrary to the body of the clauses in which the phrase appears. The only meaning we can give to the phrase consistently with the other terms of the agreement, is that it imposed a personal obligation on VMS to make the payments {See Re Lester, (1942) Ch. 324; 326}. By the agreement, as has been rightly held by courts below, the parties had finally resolved disputes with regard to their shares in the suit properties. Therefore, even if VMS had defaulted in making payment to the appellants of the amounts as specified in the agreements that would not give the appellants a ground to rescind the agreements. (Para 27)

       Order XXIII, Rule 3 casts an obligation on Court to be satisfied that a suit has been adjusted wholly or in part by a lawful agreement or compromise in writing and signed by the parties. On the material before it, the High Court would have had no reason to hold that the suits had not been adjusted as affirmed by the parties to the application. It was not necessary for the Court to say in express terms that it was satisfied that the compromise was a lawful one. There is a presumption that the Court was so satisfied unless the contrary is proved. (Para 28)

       The second obligation cast on Court by Order XXIII Rule 3 is to order the agreement to be recorded. This is normally done simultaneously with the passing of the decree. In the present case the rights of the other parties to the suit in respect of the suit properties had not yet been agreed upon, the stages were split into two. This does not mean that the orders dated 18th March, 1993 and 27th May, 1993 were not in keeping with the provisions of Order XXIII Rule 3. What the High Court has done by the two orders dated 18th March, 1993 and 27th May, 1993 is to comply with the mandate to record the agreements. Finally the Court is required to pass decree in accordance with the agreement or compromise. The learned Single Judge correctly came to the conclusion that no decree could be passed disposing of the suits at that stage as the other parties in the suit had not yet entered into any settlement. When the third agreement was also filed subsequently, the Court recorded the statements of VMS who had also signed the third agreement as the assignee of the appellants, as well as the statements of the representatives of the other heirs. All the parties to the suits by this time had settled their differences in the pending suits. The submission of the appellants that their statements were required to be recorded is unacceptable in view of our finding that they had assigned their rights in the suit properties (except as provided in the two agreements) and in view of their affidavits which were already on record. (Paras 29 and 30)

       It is not the appellants’ case that the agreements required registration under any other Act. Apart from this, there is the principle that Courts lean in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds particularly when the parties have mutually received benefits under the arrangement. (See Kale & Ors. Vs. Deputy Director of Consolidation & Ors. AIR 1976 SC 807). Both the courts below had concurrently found that the parties had enjoyed material benefits under the agreements. We have ourselves also re-scrutinized the evidence on record on this aspect and have found nothing to persuade us to take a contrary view. Furthermore, in this case the agreements had merged in the decree of the Court which is also excepted under Sub section 2 (vi) of Section 17 of the Registration Act, 1908. (Para 31)

       The disputes in the two suits between all the parties were resolved by the three agreements. But in concluding the three agreements, care was taken to see that the terms and conditions of one agreement did not conflict with the terms and conditions of another. Parties had separately signed their agreements and approached the Court (albeit at different points of time) seeking to get a decree passed in terms of their agreements. As such it was not necessary for the parties to one agreement to sign the other two agreements. It was thus also not necessary for any of the appellants to have signed the third agreement entered. The final decree dated 25th August, 1993 was on the basis of all three agreements each of which had been signed by the concerned parties and their statements in support thereof were on record in compliance with Order XXIII Rule 3 of the Code. (Para 33)

       The pleadings of fraud in both the applications of the appellants were in any event grossly inadequate. Both the Trial Court and the Division Bench have correctly held so. In fact the basic cause for which the appellants initially came to the Court was a non payment of amounts as specified under the agreements by VMS. We concur with the finding of the learned Single Judge that the appellants could execute the decree for the monies due under compromise decree dated 25th August 1993. Mere non-payment was certainly not supportive of a ground for setting aside the decree on the basis of an allegation of fraud. (Para 35)

       (ii) Registration Act, 1908—Sections 17(1)(b), 17(2)(vi)—Legal tussel between heirs over properties—Compromise between parties—Whether would require registration—(No).

       Held : Section 17(1) of the Registration Act, 1980 in so far as it is relevant, requires under Clause (b) thereof, registration of “non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property”. Sub section (2) of Section 17 creates exceptions to the mandatory requirements of Section 17(1)(b) and (c). One of the exceptions made in Section 17(2) of the Registration Act 1908, is Clause (i). This exception pertains to “any composition deed”. In other words all composition deeds are exempt from the requirement to be registered under that Act. (Para 31)