A Court of Small Causes does not have jurisdiction to set aside a consent decree merely on an application. A substantive suit is required for the purpose.

Headnote:
CONSENT DECREE - SETTING ASIDE - JURISDICTION - COURT OF SMALL CAUSES - STAMP ACT - SECTION 34 - AD INTERIM INJUNCTION - BALANCE OF CONVENIENCE - DELAY IN PROSECUTING SUIT - APPLICANTS' FAILURE TO SERVE WRIT OF SUMMONS - VACATION OF AD INTERIM INJUNCTION - COSTS.
Fact of the Case:

The applicants filed an application in the Court of Small Causes to set aside a consent decree passed on 13th September, 1978, on the ground that it was obtained by fraud and/or misrepresentation. The respondent filed an affidavit-in-rejoinder objecting to the jurisdiction of the Court of Small Causes to set aside the consent decree. The Court of Small Causes passed an ad interim injunction order operative till 22nd July, 1980 against the respondent in terms of prayer (c) of the application. The ad interim injunction was extended until further orders on 12th August, 1980. The applicants filed a Notice of Motion in the High Court for Receiver of the Hughes Road property and injunction. A limited ad interim injunction was granted restraining the respondent from parting with possession of flat on the 3rd, 2nd and 6th floors to defendants 2, 3 and 4 respectively and also restraining the latter from disposing of the said flats. The applicants filed Miscellaneous Petition No. 1243 of 1983 in the High Court against the respondent for quashing the orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980 and for stay of operation of those orders pending the disposal of the petition. The matter was referred to the High Court for hearing along with High Court Suit No. 1660 of 1981 filed by the applicants for setting aside the consent decree.
Finding of the Court:

The Court held that the Court of Small Causes had no jurisdiction to set aside the consent decree merely on an application and that a substantive suit was required for the purpose. The Court also held that the consent terms did not require to be stamped and that even if they did, the defect could be cured by payment of penalty. The Court further held that the applicants had not shown any new circumstances that would justify the perpetuation of the ad interim injunction and that the balance of convenience lay in vacating the injunction.
Issues: 1. Whether the Court of Small Causes had jurisdiction to set aside the consent decree? 2. Whether the consent terms required to be stamped? 3. Whether the applicants had shown any new circumstances that would justify the perpetuation of the ad interim injunction? 4. Where the balance of convenience lay.
Ratio Decidendi: 1. The Court of Small Causes does not have jurisdiction to set aside a consent decree merely on an application. A substantive suit is required for the purpose. 2. A consent decree creating a charge on immovable property which is not the subject matter of the suit does not require to be stamped. 3. The applicants had not shown any new circumstances that would justify the perpetuation of the ad interim injunction. 4. The balance of convenience lay in vacating the injunction.
Final Decision: The Court vacated the ad interim orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980 in Misc. Application No. 568 of 1980. The applicants were directed to pay to the respondent the costs of the hearing fixed at Rs. 750/-.

JUDGMENT - LENTIN B., J.: - The learned Chief Justice directs me to dispose of the prayer for interim relief contained in prayer (c) of Misc. Application No. 568 of 1980 (in R.A.R. Suit No. 1247/4477 of 1978) ordered to be treated as a Notice of Motion by my learned brother Sawant.

2. The undisputed albeit vertiginous, sequence of events are as under:-

(A) On 4th September, 1978, R.A.R. Suit No. 1247/4477 of 1978 was filed by L.H. Shah against J.C. Thakkar and his 2 sons in the Court of Small Causes for recovery of a loan against construction amounting to Rs. 2,60,500/- inclusive of interest. On 13th September, 1978, consent terms were filed by the parties wherein it was provided inter alia that a certain property at Hughes Road belonging to J.C. Thakkar was to be conveyed to L.H. Shah (except the ground floor) for Rs. 15 lacs payable in the manner stated in the consent terms. The decree was to operate as a conveyance.

(B) On 24th April, 1980, J.C. Thakkar filed Miscellaneous Application No. 568 of 1980 in the Court of Small Causes in R.A.R. Suit No. 1247/4477 of 1978 for (a) setting aside the consent decree passed on 13th September, 1978, (b) condonation of delay and (c) an interim injunction restraining L.H. Shah from selling, alienating, disposing of or parting with possession of the Hughes Road Property.

(C) On 16th June, 1980, L.H. Shah filed an application under section 34 of the Arbitration Act in Miscellaneous Application No. 568 of 1980. On 8th July, 1980, he filed his affidavit-in-rejoinder objecting to the jurisdiction of the Court of Small Causes to set aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978.

(D) On 8th July, 1980, an ad interim injunction order operative till 22nd July, 1980 was passed by the Court of Small Causes against L.H. Shah in terms of prayer (c) of Miscellaneous Application No. 568 of 1980. On 12th August, 1980, the ad interim injunction was extended until further orders.

(E) On the 10th September, 1981, J.C. Thakkar and his 2 sons filed Suit No. 1660 of 1981 in this Court against L.H. Shah and the purchasers of flats in the Hughes Road property, for setting aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978, possession, accounts and alternatively for damages in the sum of Rs. 33,95,000/-. On 11th September, 1981, J.C. Thakkar also filed Suit No. 4096 of 1981 in the Court of Small Causes for setting aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978.

(F) On 5th October, 1981, J.C. Thakkar took out a Notice of Motion against L.H. Shah and the other defendants in High Court Suit No. 1660 of 1981 for Receiver of the Hughes Road property and injunction. A limited ad interim injunction was granted restraining L.H. Shah (viz. the 1st defendant) from parting with possession of flat on the 3rd, 2nd and 6th floors to defendants 2, 3 and 4 respectively and also restraining the latter from disposing of the said flats.

(G) Lengthy affidavits were thereafter filed by the warring parties in that Motion which was finally disposed of by my learned brother Pendse, who on 10th February, 1983 dismissed it with costs. J.C. Thakkar's appeal was summarily dismissed by the Division Bench on 3rd March, 1983. His Special Leave Petition to the Supreme Court was also dismissed on 22nd March, 1983. The Supreme Court however directed that the hearing of High Court Suit No. 1660 of 1981 be expedited.

(H) On 31st March, 1983, L.H. Shah filed Miscellaneous Petition No. 1243 of 1983 in this Court against J.C. Thakkar and others (i) calling for the proceedings in Miscellaneous Application No. 568 of 1980 (referred to in sub-para (B) above) and quashing the orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980 (referred to in sub-para (D) above) and (ii) for stay of operation of those orders pending the disposal of Miscellaneous Petition No. 1243 of 1983. On 5th April, 1983, my learn

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