DELHI HIGH COURT
Sanjeev Narula, J.
Sukruti Dugal – Plaintiff
versus
Jahnavi Dugal and Ors. – Defendants
CS(OS) 649 of 2018, I.A. 17522 of 2018 and I.A. 17523 of 2018
Decided on 23.9.2019

IMPORTANT POINT
(1) Filing of application for amendment, subsequent to filing of application for rejection of plaint is immaterial and cannot be a ground to reject application.
(2) Compromise between parties cannot affect rights of a third party who is not a party to compromise.
(3) Vague averments without specifying necessary details cannot be said to have met standard required to prove character of property to be that of an HUF.

Headnote:

(A) Civil Procedure Code, 1908 – Order 6 Rule 17 read with Section 151 – Amendment of plaint – Once application for amendment of plaint has been filed even if, after filing of application under Order 7 Rule 11 CPC, ordinarily, application for amendment is to be considered first and only thereafter, if amendments were to be refused, application for rejection of plaint as originally filed is to be considered – If amendment is allowed, then it has to be seen whether grounds urged in application seeking to reject plaint would still survive – Filing of application for amendment, subsequent to filing of application for rejection of plaint is immaterial and cannot be a ground to reject application.

Held: The ratio of the aforesaid decision is clear that once an application for amendment of the plaint has been filed even if, after the filing of an application under order 7 Rule 11 CPC, ordinarily the application for amendment is to be considered first and only thereafter, if the amendments were to be refused, the application for rejection of the plaint as originally filed is to be considered. If the amendment is allowed, then it has to be seen whether the grounds urged in the application seeking to reject the plaint would still survive. Thus, the filing of the application for amendment, subsequent to the filing of the application for rejection of plaint is immaterial and cannot be a ground to reject the application.

(Para 8)

(B) Civil Procedure Code, 1908 – Order 23 Rule 3A – Bar to suit – Compromise between parties cannot affect rights of a third party who is not a party to compromise – Such aggrieved party can file a suit for appropriate relief disregarding compromise decree and same would not be barred by principles of res judicata or estoppel – If Plaintiff has independent right over suit properties on the basis of averments stated in plaint, Court would have to necessarily examine the same irrespective of compromise – No legal bar regarding maintainability of suit seeking relief as sought in proposed amended suit.

Held: A reference to the Order 23 Rule 3A CPC is necessary:

“3. Compromise of suit – 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] or where the defendant satisfied the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise satisfaction to be recorded, and shall pass a decree is accordance therewith [so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit:]

[Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but not adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.]

[Explanation – An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule;]

3A. Bar to suit – No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.”

The aforesaid provision bars a challenge to the consent decree passed under Order 23 Rule 3 CPC. Admittedly, in the present case, the Plaintiff was neither party to the suit bearing CS (OS) 1175/2010, nor a party to the compromise/settlement that has been arrived at between Defendant No. 1 and Defendant No. 3. The proposed amendments seek a declaration that the compromise between Defendant No. 1 and Defendant No. 3 does not affect the rights of the Plaintiff. To my mind, the reliefs sought to that extent, are superfluous. A compromise between parties cannot affect the rights of a third party, who is not a party to the compromise. Such an aggrieved party can file a suit for appropriate relief disregarding the compromise decree and the same would not be barred by principles of res judicata or estoppel. The Allahabad High Court in the case of Smt Suraj Kumari v. District Judge Mirzapur and Ors, 1990 SCC OnLine All 459 held as under:-

“22. The petitioner’s second submission regarding the applicability of O.23, R. 3-A of the Code of Civil Procedure is misconceived the provision is confined only to the parties to the suit. The said provision is not applicable to a stranger to the said compromise decree. A suit by stranger to set aside the compromise decree, which affects his rights is not barred by the said provision. Order 23, Rule 3-A of the Code of Civil Procedure cannot be read dehors its earlier provision of the same chapter. The said provision is only a part of the entire Chapter of Order 23 of the Code of Civil Procedure which prescribes provisions for withdrawl and adjustment of the suit. Order 23, Rule 3 of the Code of Civil Procedure provides for a situation where the parties have arrived at a compromise. Order 23, Rule 3 and Rule 3-A of the Code of Civil Procedure as added by Amending Act No. 104 of 1976 read together, makes it clear that a party to the suit is debarred from filing suit for setting aside compromise decree on the ground of being unlawful. Such a party has remedy by moving appropriate application before the Court concerned which has passed the compromise decree.

23. The said provision does not bar the present petitioner who was not a party to the said compromise decree to file a suit. As such there is no force in the petitioner’s contention that a suit for setting aside the compromise decree entered into between Sri Nagarmal and Smt. Paradevi was barred by O.23, R. 3-A of the Code of Civil Procedure. The suit at the instance of present petitioner for setting aside compromise decree entered into between Smt. Paradevi and Sri Nagarmal is maintainable in law. In support of this contention the petitioner has placed reliance on AIR 1985 Karnataka 270, Smt. Tarabai v. Krishnaswamy Rao. Since the said provision does not bar the petitioner from filing the suit the decision is of no help to the petitioner.” (Emphasis supplied)

The amendments sought, to my mind, state the obvious. If the Plaintiff has independent right over the suit properties on the basis of the averments stated in the plaint, the Court would have to necessarily examine the same irrespective of the compromise. Therefore, I do not find any legal bar regarding the maintainability of the suit seeking the relief as sought in the proposed amended suit. It is also settled law that a liberal approach has to be adopted by the Courts while dealing with the application seeking amendment. Moreover, at this stage, I am not inclined to evaluate the merits of proposed amendments or the reliefs sought in the present application. That would have to be necessarily examined at the appropriate stage. Accordingly, I allow the application and take the proposed amended plaint on record. (Paras 10 and 12)

(C) Civil Procedure Code, 1908 – Order 7 Rule 11(a) read with Section 151 – Rejection of plaint – In order to examine whether a plaint is liable to be rejected under any of provisions enumerated therein, averments in plaint alone are to be examined and they have to be assumed to be correct – It is not permissible to look into pleadings raised in written statement or any piece of evidence. (Para 14)

(D) Hindu Law – HUF – Ingredients – There are certain requirements under law to establish case of HUF – Vague averments without specifying necessary details cannot be said to have met standard required to prove character of property to be that of an HUF – Detailed facts are required to be stated under Order 6 Rule 4 CPC explaining as to how properties have become HUF properties; date when each of property was thrown in common hotchpotch; details showing that properties are purchased from HUF Funds; details of fact that HUF existed prior to 1956 – This has to be clearly and categorically averred with factual references qua each property that is claimed to be an HUF.

Held: The reading of the aforesaid judgments leaves no room for doubt that there are certain requirements under law to establish the case of HUF. The vague averments without specifying the necessary details cannot be said to have met the standard required to prove the character of the property to be that of an HUF. Let us first examine what are the averments made in the amended plaint, with respect to the creation of HUF.

Detailed facts are required to be stated under Order 6 Rule 4 CPC explaining as to how the properties have become HUF properties; the date when each of the property was thrown in the common hotchpotch; details showing that the properties are purchased from HUF Funds; details of the fact that the HUF existed prior to 1956. This has to be clearly and categorically averred with factual references qua each property that is claimed to be an HUF. A perusal of the averments in the amended plaint shows that the same are completely unspecific and vague. The Plaintiff has merely stated that the HUF existed prior to coming into force of the Hindu Succession Act, 1956 and the same has been continuing till date. However, the said averment remains unsubstantiated by any material placed on record. There are some photocopies of Income Tax and Wealth Tax Returns, filed by the Plaintiff and the same are relied upon to expound the existence of HUF. The computation of income annexed thereto is unsigned. The returns use the expression “specified HUF”. This specified HUF and its member are not described. This also contradicts the plea of the Plaintiff that the HUF existed prior to 1956 and the suit properties are purchased from the funds of the HUF. These documents do not in any way show that the properties were put in the family hotchpotch. The acquisition in the name of HUF and its existence prior to 1956 and continuation thereafter is also not established by these documents. The title of the properties continued to be that of self acquired. The necessary factual details are missing and thus the plaint does not plead a cause of action of existence of HUF and its properties. It is not enough for the Plaintiff to merely state in a plaint that an HUF came into existence pre 1956 and that the same has continued post 1956. The plaint also does not give any details regarding the acquisition of the property, the manner in which it was created, who were members of the HUF, or any other such factual details which are required under law to give rise to a cause of action of an HUF. (Paras 19 and 20)

Result: Application allowed and suit dismissed.