Jolly Steel Industries Pvt. Ltd. . vs Steel Gupta Industries

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1996 Supreme(Bom) 387

IN THE HIGH COURT OF BOMBAY
M.B. Shah, C.J. and P.S. Patankar, J.
M/s. Jolly Steel Industries Pvt. Ltd..... Applicants.
Versus
Steel Gupta Industries.... Respondents.
C.A. No. 3588 of 1991 in First Appeal No. 1 of 1990 and C.A. No. 3589 of 1991 in F.A. No. 2 of 1990, C.P. No. 81 of 1993 in C.A. No. 1686 of 1992 in F.A. No. 1 of 1990, C.A. No. 1415 of 1993 in F.A. No. 1 of 1990 with C.A. No. 1413 of 1993 in F.A. No. 2 of 1990, C.A. No. 3580 of 1992 in F.A. No. 1 of 1990 with C.A. No. 3581 of 1992 in F.A. No. 2 of 1990, C.A. No. 1414 of 1993 in F.A. No. 1 of 1990 with C.A. No. 1412 of 1993 in F.A. No. 2 of 1990 C.A. No. 1686 of 1992 in F.A. No. 1 of 1990 with C.A. 1690 of 1992 in F.A. No. 2 of 1990, decided on 18-7-1996.
Advocates appeared :
N.H.Gurushani with S.M.Paranjape i/b Thakordas Madgaonkar, for appellants.
A.S. Bobde with S.V. Pitre, for the respondents.

Headnote:Sections 96, 148-A and 151-contract Act. 1872. Sections 10 and 74-Provision in nature of penalty for ensuring payment by plaintiff-Plaintiff given up his valuable claims in interest of compromise.- The consent terms clearly show that the plaintiffs entered into the compromise for getting delivery of possession of the properties by 31.3.1992 and for that they had agreed to make the payments. Even the consent was given in the compromise term by providing that decree passed by the trial Court for arrears was also to be waived by the plaintiffs. In order to ensure definite payments by the plaintiffs to the defendant. Clause 6 was incorporated which provided that suits would stand dismissed on plaintiffs failure to pay. Therefore in the facts it is quite clear that Clause 6 was in the nature of penalty intended to ensure the payment of the said amount to the defendant for delivery of possession of machinery and for vacating the land belonging to the plaintiffs by 31.3.1992. It is also clear that after the period of agreement was over the defendant was wrongfully in possession of the machinery and the land and enjoying the same. Prima facie the defendant was liable to pay enhanced amount and therefore was required by this Court in the appeals to deposit Rs. 65.000/ - per month for each plaintiff (instead of Rs. 30.000/-) as per agreement. The plaintiffs even agreed to give up the said enhancement claimed. The High Court accept the contention that in order that there should be some explanation for the same which can be offered to the tax authorities by the defendant it was mentioned in the consent terms &s a return of excess payment made by the defendant to the plaintiffs. Therefore in fact the plaintiffs have given up their valuable claim and it cannot be said that the plaintiffs were not paying out of their pocket and only refunding what was deposited by the defendants or that plaintiffs were only given concession.
       Sections 148-A and 151-Contract Act, 1872, Section 74-Slight delay in payment-Necessary to extend time to avoid manifest and serious Injustice to plaintiff -It is not possible to accept that necessities of Sections 148 and 151 of Civil Procedure Code are not attracted in the present case or that Court becomes functus officio after the consent terms were signed. It is not possible to accept that under no circumstances extension of time cannot be granted or there is no jurisdiction with the Court to vary the consent terms. First it is to be noted that there was delay of loss than 4 weeks in depositing the first instalment as per consent terms. The second instalment was correctly deposited. The plaintiffs have explained the small delay and statements in support thereof are not disputed by the defendant. Consideration the facts of the case it is necessary to extend the time in order to avoid manifest and serious justice to the plaintiffs, It is an exceptional case, and that if the time is not extended the plaintiffs would be losing not only all rights accrued under consent terms, but the entire landed property and machinery belonging to them for a small fault.
       Sections 10 and 74-See Civil Procedure Code, 1908, Sections 96, 148-A and 151.
       Section 74-See Civil Procedure Code, 1908, Sections 148-A and 151.

JUDGMENT- P.S. PATANKAR, J. :---Both these applications are filed by the two plaintiffs (respondents in Appeals) against original defendant (appellant in appeal). The prayer made is the same i.e. to relieve the plaintiffs-applicants from the consequences envisaged by Clause 6 of the consent terms entered into between the parties in the aforesaid two appeals dated 9-4-1991. The prayer arises in view of the following facts. Hereafter the reference shall be made to the parties as plaintiffs and defendant.

2.The plaintiffs are owners of two re-rolling Steel Mills situated at Pune. Two agreements for conducting those 2 mills were entered into between two plaintiffs and defendant on 9-4-1980 and supplementary agreement on clarifying the term regarding the payment of compensation. The period fixed was 3 years from the date of taking over possession i.e. 12-4-1980. As the period came to an end, the plaintiffs on 19-4-1983 demanded possession of machinery and to stop incidental use of premises. However, the defendant invoked viz. major clause and declined to follow the agreements. Hence on 11-2-1987 the plaintiffs issued notices to the defendant claiming possession of machinery and the premises mainly on the ground of (1) expiry of period and (b) breach of terms of agreements. It is also the case that defendant has not made the payment as per agreements and there was balance of Rs. 5,16,401/-. The defendant sent no reply and hence 2 suits came to be filed by the plaintiffs on 19-5-1987. The trial Court passed the order of ex-parte appointment of Court Receiver. The same came to be challenged by the defendant by filing appeals in this Court. The defendant agreed to pay Rs. 65,000/- per month to each plaintiff instead of Rs. 30,000/- and hence the order of Receiver came to be vacated.

3.The suits came to be decreed on 1-1-1990 in favour of the plaintiffs. If was held that the plaintiffs have legally terminated the agreements and defendant was ordered to hand over possession of the machinery in working condition. The defendant was ordered to pay Rs. 21,37,500/- towards compensation at the rate of Rs. 25,000/- per day. Claim of the plaintiffs for outstanding amount of Rs. 3,86,224/- and Rs. 1,36,000/- with 12% per annum interest from 15-2-1987 was granted. Some other reliefs were also granted to the plaintiffs. Against those decrees, the defendant filed two appeals. Appeals came up for hearing and parties entered into consent terms on 9-4-1991.

4.As per the consent terms, the plaintiffs were required to refund the amount paid in excess due to the interim orders passed in the appeals. There was delay of a few days in depositing the amount as per the consent terms. The defendants also had not handed over possession of the property in question i.e. land, plant and machinery, to the plaintiffs. The plaintiffs thereafter filed applications for condoning the delay of four weeks in depositing the amount and to grant extension of period to that extent. Those applications were rejected. Hence, these Civil Applications. In our view, this is a most appropriate case for grant of such extension of time. No prejudice whatsoever will be caused to the defendants by grant of such extension of time. Further, the defendants are unauthorisedly not handing over possession of the property belonging to the plaintiffs.

5.The relevant clauses of the consent terms which require consideration are Clauses 2(a) and 6, which read as under:--

Clause 2(a)---The parties agree that Jolly Steel Industries Pvt. Ltd. and Jolly Tor Steel Pvt. Ltd., the respondents herein and the original plaintiffs in Suit No. 446 of 1987 and Suit No. 447 of 1987, respectively, shall between them deposit in the trial Court, a sum of Rs. 15,00,000/- (Rupees fifteen lakhs only) in the aggregate on or before 31st May, 1991 and a further sum of Rs. 10,40,000/- (Rupees Ten lakhs and forty thousand only) on or before 29th June, 1991;

Clause 6---In case the respondents/plaintiffs commit any default in pay

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