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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 946 OF 2016
M/S. CHITRALEKHA BUILDERS &
ANR. THROUGH ANIL G. SHAH
POWER OF ATTORNEY & HUSBAND
OF THE PARTNER …APPELLANTS
Versus
G.I.C. EMPLOYEES SONAL VIHAR
CO-OP. HOUSING SOCIETY LTD. & ANR. …RESPONDENTS
J U D G M E N T
INDU MALHOTRA, J.
1. The present Civil Appeal has been filed assailing the Judgment and Order
dated 22.07.2014 passed by the Bombay High Court in Appeal No. 558 / 2007
dismissed the appeal filed by the appellants against the Consent Order dated
16.02.2005 in Suit No. 1335 / 1988 to which the appellants are not the signatory
to the proceedings.
2. The lis pertains to land admeasuring 5082 square yards bearing Survey No.
218, CTS No. 727 situated in Village Mulund, Greater Bombay. The background
facts of this litigation are briefly stated as follows :
(i) An Agreement to Sell dated 28.04.1980 was executed between
Defendant Nos. 1 to 52-Vaity family and the Plaintiff-M/s. Chitralekha
Builders (then comprising of one Kusum Gorule and Tukaram Baliram
Nalwade), whereby the Vaity family undertook to execute a Deed of
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Conveyance in favour of Chitralekha Builders, or its nominees, on receipt
of Rs.35,00,000 towards the balance consideration.
(ii) On 09.05.1980, M/s. Chitralekha Builders entered into an Agreement
with a Society viz. G.I.C. Sonal Vihar Co-operative Housing Society Ltd.-
Respondent No.1 herein, whereby it was agreed that Chitralekha Builders
would develop the suit property, and the constructed area would be given
to the Society after development.
(iii) On 01.07.1980, the Partnership between Kusum Gorule and Tukaram
Baliram Nalawade stood dissolved vide a Dissolution Deed.
3. Suit No. 1335 / 1988
3.1. On the failure of the Vaity family to handover possession of the suit
property, and execute the Sale Deed as per the Agreement dated
28.04.1980, Respondent No. 1-Society and Respondent No.2-Kusum
Gorule filed Suit No. 1335 / 1988 before the Bombay High Court against the
Vaity family seeking specific performance of the said agreement.
3.2. During the pendency of the suit, M/s. Chitralekha Builders was reconstituted, and a Partnership Deed dated 08.04.1989 was executed
between Respondent No.2-Kusum Gorule, Appellant No.2-Nina Anil Shah
and two other partners viz. S.J.Pakhare and S.N.Gadekar. Pursuant to the
Partnership Deed, the Appellant No. 2 was made a partner of M/s.
Chitralekha Builders to the extent of 50%.
3.3. Subsequently, a Supplementary Deed dated 26.01.1996 was
executed between Respondent No.2-Kusum Gorule, Appellant No.2-Nina
Anil Shah and the two other partners, whereby S.J.Pakhare relinquished his
entire share in the partnership in favour of Appellant No.2; and S.N.Gadekar
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relinquished his share equally between Appellant No.2 and Respondent
No.2.
3.4. The Bombay High Court appointed a Court Receiver of the property
by Order dated 31.08.1991 passed in Notice of Motion No. 1311 / 1988 filed
in Suit No. 1335 / 1988. It was noted that Respondent No.2 had taken
possession of the suit property, and constructed a boundary wall around the
property.
3.5. The Appellants filed Chamber Summons No. 1334 / 2004 for
impleadment as co-plaintiffs in Suit No. 1335 / 1988. The Respondents filed
Chamber Summons to transpose themselves as Defendants.
The Chamber Summons filed by the parties were disposed of by a
common order dated 26.10.2004 passed by the learned single judge of the
High Court. The Chamber Summons filed by the appellants for impleadment
as co-plaintiffs was dismissed as not maintainable, since a party could not
force himself to be a co-plaintiff in the Suit. R.1-Society was transposed as
Defendant No. 54.
3.6. The Appellants filed Appeal No. 598 / 2005 against the Order dated
26.10.2004 rejecting their Chamber Summons for impleadment before the
division bench of the High Court.
3.7. First consent decree dated 16.02.2005
During the pendency of the aforesaid Appeal, the Respondent No. 2
entered into a compromise with the Vaity family on 16.02.2005, and drew
up Consent terms, whereby the Vaity family agreed to execute the
Conveyance Deed in favour of Respondent No.2 / nominees on receipt of
the balance consideration of Rs.35 Lacs. The agreement dated 28.04.1980
between the Vaity family and M/s. Chitralekha Builders stood cancelled. It
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is relevant to note at this stage that the appellants had not been impleaded
as parties to the suit.
Pursuant to the consent terms arrived between R.2-Kusum Gorule
and the Vaity family, the learned Single Judge passed a Consent Decree
dated 16.02.2005, whereby Suit No. 1335 / 1988 was partly decreed as per
the Consent Terms (First Consent Decree). It was however observed that
the Suit would continue with respect to Defendant No.54-Society, which was
now re-transposed as the Plaintiff.
3.8. On 26.07.2005, the Respondent No. 2-Kusum Gorule sold the suit
property to M/s. Oswal Enterprises / Builders, who were subsequently
impleaded as Defendant No. 57 in Suit No. 1335 / 1988.
3.9. The appellants filed Chamber Summons No. 961 / 2005 in Appeal
No. 598 / 2005 seeking amendment to the original Chamber Summons No.
1334/2004, praying that the appellants be impleaded as Defendants instead
of co-plaintiffs. A division bench of the High Court by Order dated
19.08.2005 allowed the Appeal alongwith the Chamber Summons No. 961
/ 2005, and directed that the appellants be added as Defendants in the Suit.
It was held that the appellants were necessary parties to effectuate the final
adjudication of disputes.
3.10. Appeal against the first consent decree
Upon being impleaded as Defendants in Suit No. 1335 /1988, the
appellants filed Appeal No. 558 / 2007 to challenge the consent decree
dated 16.02.2005. The High Court by the impugned order dated 22.07.2014
dismissed the Appeal, and held that the appellants were not parties to the
Consent Terms dated 16.02.2005, and would not be bound by the same.
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The rights of the appellants were not affected by the Consent terms, and
therefore, the order dated 16.02.2005 did not warrant interference.
The present Civil Appeal has been filed to challenge the Order dated
22.07.2014.
3.11. Second Consent decree dated 03.10.2005
On 03.10.2005, the Respondent Nos. 1 and 2 entered into a
compromise with Oswal Enterprises, wherein it was agreed that
Respondent No. 1 would transfer the suit property to Oswal Enterprises on
receipt of Rs.50 Lacs, and would make no claim on the suit property. The
learned single judge took the draft amendment on record, and impleaded
Oswal Builders as Defendant No. 57. The Suit No. 1335 / 1998 was decreed
as per the Consent Terms (Second Consent Decree). On an objection
being raised by the appellants, the High Court granted 4 weeks to initiate
appropriate proceedings to challenge the Consent decree, and directed the
Court Receiver not to handover possession of the suit property for 4 weeks.
The Suit was accordingly disposed of.
4. Suit No. 3162 / 2005
Pursuant to the Order dated 03.10.2005, the Appellant No.2 filed Suit
No. 3162 / 2005 before the Bombay High Court for a declaration that the 1st
and 2nd Consent decrees dated 16.02.2005 and 03.10.2005, were illegal
and void.
M/s. Chitralekha Builders was impleaded as Defendant No.1, Kusum
Gorule was impleaded as Defendant No.2, and M/s. Oswal Enterprises was
impleaded as Defendant No.3.
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It was prayed that :
“(a)this Hon’ble Court be pleased to declare that the partnership firm M/s Chitralekha
Builders stands dissolved on 15.07.2004 or from such other date as this Hon’ble Court
may deem fit and proper;
(b) this Hon’ble Court be pleased to order for dissolution and winding up of affairs of
the partnership firm M/s Chitralekha Builders under the order and directions of this
Hon’ble Court.
(c) this Hon’ble Court be pleased to order for taking accounts of the partnership firm
M/s Chitralekha Builders from the date of dissolution or from such other date as this
Hon’ble Court may deem fit and proper and the shares of the plaintiff and the defendant
no. 2 be ascertained and ordered to be paid over.
(d) for the purposes aforesaid, necessary directions be given and orders be passed;
(e) this Hon’ble Court be pleased to declare that consent decree dated 16.02.2005
passed in suit No. 1335 of 1998 is bad in law, illegal and void and not binding upon
the suit property;
(f) this Hon’ble Court be pleased to further declare that the consent decree dated
03.10.2005 passed in suit no. 1335 of 1998 is bad in law, illegal and void and not
binding upon the suit property;
(g) this Hon’ble Court be pleased to declare that the purported conveyance dated
25.07.2005 executed in favour of the defendant no. 3 of the suit property is bad in law,
void, inoperative and not enforceable against the suit property.
(h) this Hon’ble Court be pleased to pass the decree revoking and cancelling the
purported conveyance dated 26.07.2005 executed in favour of the defendant no. 3 in
respect of the suit property.
(i) Pending the hearing and final disposal of the suit court receiver, High Court,
Bombay or any other any fit and proper person be appointed as the receiver in respect
of the suit property more particularly described in Schedule annexed to the plaint and
marked Exhibit-B with all powers under Order 40 of the Code of Civil Procedure, 1908;
(j) pending the hearing and final disposable of the suit the defendants no. 2 and 3,
their agents, servants and/or any person acting or claiming through them be restrained
by an interim order and injunction of this Hon’ble Court from dealing with, disposing of
or creating any third party interest or carrying out development works of any nature
whatsoever in the suit property more particularly described in the Scheduled annexed
to the plaint and marked Exhibit-B.
(k) ad-interim reliefs in terms of prayers (i) and (j) above be granted;
(l) Cost of the suit be awarded to the plaintiff;
(m) Such other and further reliefs as the nature and circumstances of the case may
require be granted.”
During the course of hearing, we were informed that the Suit No.3162
/ 2005 is pending at the stage of recording of evidence.
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5. Arbitration proceedings
5.1. The inter se disputes between Appellant No.2-Nina Anil Shah and
Respondent No.2-Kusum Gorule led to the invocation of arbitration
proceedings. The Bombay Court by Order dated 22.07.2005 appointed
Justice A.C. Agarwal, retired Chief Justice of the Madras High Court as the
sole arbitrator.
5.2. The sole arbitrator passed an Award on 01.08.2006 holding that the
partnership firm-Chitralekha Builders was dissolved on 15.07.2004. The suit
property was not an asset of the partnership firm. The Appellant No. 2 was
directed to pay Rs.62,18,324 i.e. 50% of the expenses of the partnership
firm with interest @ 12 % p.a.
5.3. The appellants filed Objections to set aside the award u/S. 34, which
were dismissed by Order dated 03.10.2006.
The appellants filed Appeal No. 813 / 2006 u/S. 37 of the 1996 Act,
wherein by Order dated 21.07.2014, the division bench of the High Court
remanded the application u/S. 34 for fresh consideration.
5.4. A single judge of the High Court by Order dated 05.06.2017 partly
allowed the application u/S. 34, and set aside the claim for expenses of the
partnership firm.
5.5. The appellant No. 2 filed Appeal No. 266-268 / 2017 under Section
37 of the 1996 Act before the High Court, which is currently pending
consideration before the division bench.
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6. Proceedings before the Supreme Court
The challenge in the present Civil Appeal is limited to the Order dated
22.07.2014 passed by a division bench of the High Court dismissing the
appeal being Appeal No. 558 / 2017 filed by the appellants to challenge the
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st Consent Decree dated 16.02.2005.
6.1. This Court by Order dated 19.11.2014 issued Notice only for
exploring the possibility of a settlement between the appellants and
Respondent No.2-Kusum Gorule (originally Respondent No.55).
6.2. The appellants filed I.A. No. 9 / 2016 to delete the original
Respondent Nos. 2 to 54 (members of the Vaity family) from the array of
parties. Mr.Anil G.Shah-the husband and Power of Attorney holder of
Appellant No.2-Nina Anil Shah appeared before the Chamber Judge of this
Court, when I.A. No. 9 / 2016 filed by the said Appellant was allowed vide
Order dated 28.11.2016 at the risk of the Appellants.
6.3. On 27.03.2018, the appellants filed I.A. No. 48308 / 2018 to implead
Oswal Enterprises as a party to the present proceedings.
6.4. This Court by Order dated 12.12.2019 appointed Mr. Nikhil Nayyar,
learned Senior Counsel as Amicus Curiae to assist the Court on behalf of
the Appellant.
6.5. On 17.03.2020, the appellants filed I.A. No. 73241 / 2020 to reimplead Respondent Nos. 2 to 54 i.e. members of the Vaity family [who had
been deleted vide Order dated 28.11.2016] as parties to the present Civil
Appeal.
7. We have heard the learned Amicus Curiae, Mr. Nikhil Nayyar, Senior
Advocate, Mr. Jay Savla, Senior Advocate on behalf of the Respondents,
and Mr. Anil G. Shah in-person, as the Power of Attorney holder of Appellant
No.2.
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8. We will first deal with the 2 pending I.As.
(i) I.A. No. 48308 / 2018 was filed to implead Oswal Builders as a party
respondent to the present Civil Appeal. We find that the said I.A.
deserves to be dismissed, since Oswal Builders has already been
impleaded as Defendant No.3 in the substantive Suit No. 3162/ 2005
filed by the Appellant before the Bombay High Court.
(ii) I.A. No. 73241 / 2020 has been filed by the appellants to re-implead
Respondent Nos. 2 to 54, who were deleted vide Order dated
28.11.2016 at the risk of the appellants. We are of the view that the said
I.A. cannot be allowed at this stage. The said I.A. is accordingly
dismissed.
9. Mr. Nikhil Nayyar, learned senior counsel appearing as Amicus
Curiae, Mr. Anil G. Shah in-person, as the Power of Attorney Holder of
appellant no. 2, and also learned counsel for the respondents have
extensively made their submissions on merits. What transpires from the
record is that both the consent decrees dated 16.02.2005 and 03.10.2005
have been challenged at the behest of the appellants in the substantive Suit
No. 3162 / 2005 filed at their instance, which is pending adjudication before
the Bombay High Court.
10. The submission of the learned counsel for the appellants is that the
appellants are not a signatory to the consent orders dated 16.02.2005 and
03.10.2005 passed in Suit No. 1335 / 1988 which are detrimental to the
interest of the appellants, and have been challenged by them in an Appeal
invoking Section 96 of the Code of Civil Procedure, 1908. The High Court
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failed to examine the dispute raised by the appellants on merits, and the
filing of a substantive suit by them cannot be a ground to reject their Appeal,
particularly since there is a patent error committed while passing of the
consent decree dated 16.02.2005 behind the back of the Appellants.
11. It was further submitted that even though the Appellants were
impleaded in Suit No. 1335/1998 at a later stage, it should in no manner
deprive their right to assail the Order dated 16.02.2005, which was passed
behind their back, and is a nullity in the eyes of law. In the given
circumstances, the order dated 16.02.2005 ought to have been recalled for
the very reason that it was passed in their absence, to their detriment.
12. It was further submitted that pursuant to the compromise decree on
consent terms dated 16.02.2005, a conveyance deed dated 22.07.2005 was
executed alienating the suit property in favour of a third party i.e. Oswal
Enterprises, in disregard to the rights of the Appellants, and possession of
the suit property was parted with without affording an opportunity of hearing
to the Appellants. Consequently, their rights have been seriously
jeopardized.
13. The Appellant appeared in person, and placed reliance on certain
judgments of this Court regarding the scope of the appeal preferred under
Section 96 of the Code.
14. On the other hand, learned counsel for the Respondents, while
supporting the judgment impugned passed by the High Court submitted that
the rights of the Appellants have been protected by the High Court under
the impugned judgment, and what is being prayed for by the appellants in
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the instant appeal is the subject matter of challenge in Suit No. 3162/2005
filed at their instance. It was open for the Appellants to pursue their remedy
in the substantive Suit. In the given circumstances, no error has been
committed by the High Court in the impugned judgment which calls for
interference by this Court.
15. The substantive Suit No.1335 / 1988 was originally filed at the
instance of Kusum Gorule (i.e. Geetanjali G. Sohani) [original plaintiff no. 2
in Suit No. 1335 / 1988] and the Vaity family and the decree on the consent
terms was passed vide Order dated 16.02.2005, and the subsequent
consent order dated 03.10.2005, came to be passed between the parties,
viz. GIC Employees’ Sonal Vihar Co-operative Housing Society (original
plaintiff no. 1 in Suit No. 1355/1988) and Oswal Enterprises (Defendant No.
57 in Suit No. 1355 / 1988). Undisputedly, Suit No. 1335/1988 had not been
examined by the Court on merits, since the parties to the proceedings
entered into a compromise, and a consent order came to be passed by the
Court vide Order dated 16.02.2005 followed with Order dated 03.10.2005.
Consequently, the suit was disposed of on the consent terms arrived
between the parties.
16. The present appellants were not a party to the proceedings at the
stage when the consent order came to be passed on 16.02.2005, or the
subsequent order dated 03.10.2005 in Suit No. 1335 / 1988. Both the
consent orders dated 16.02.2005 and 03.10.2005 would consequently not
have a binding effect on the present Appellants. The consent orders dated
16.02.2005 and 03.10.2005 challenged in the substantive Suit No. 3162 /
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2005 would require to be examined by the Court independently on its own
merits in accordance with law, without being influenced by the observations
made in the impugned judgment dated 22.07.2014.
17. The Division Bench of the High Court in the impugned judgment, after
taking note of the submissions made, has recorded a finding that since the
Appellants were not a party to the proceedings, and the Order dated
16.02.2005 has been passed on the terms agreeable to the parties to the
proceedings, it shall not be binding upon the Appellants, and their rights
could be examined independently in the substantive suit filed at their
instance. The relevant paras of the judgment impugned are as under:-
“13. It is an admitted position that the said Mrs. Kusum did not sign the consent terms
either on behalf of M/s. Chitralekha Builders, a partnership firm, or as a partner of the
said partnership firm. The settlement which is recorded in terms of the decree by way
of impugned order is between the parties to the consent terms. The present appellants
were admittedly not parties to the consent terms and in fact on the date on which the
impugned order was passed, they were not even impleaded as parties to the suit.
Therefore, it is obvious that the consent terms dated 16th February, 2005, on the basis
of which the impugned order dated 16th February, 2005 was passed, do not bind the
appellants.
14. Consequently, the consent decree passed on the basis of the said consent terms
dated 16th February, 2005 does not bind the appellants. As stated earlier, under the
impugned order, the suit was not disposed of. The suit has been disposed of by a
subsequent order, which is not the subject matter of challenge in the present Appeal.
Hence, in this Appeal, an order of restoration of the Suit cannot be passed.
15. Thus, the appellants are not affected by the impugned order in any manner.
Therefore, it is not necessary to interfere with the impugned order. We, however, make
it clear that we have made no adjudication on the rights claimed by the appellants in
respect of the property in question as well as the right claimed by the respondents as
a separate Civil Suit filed by the second appellant in relation to the same property is
pending.”
18. We are also of the considered view that since the Appellants were
not a party to the Consent Terms as is evident from the record, when the
Orders came to be passed on 16.02.2005 followed with 03.10.2005, it may
not bind the Appellants. Its legal effect is open to be examined in the
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substantive suit filed at their instance independently on its own merits in
accordance with law. We do not find any error having been committed by
the High Court, which may call for our interference.
19. The submission of the learned Amicus Curiae for the Appellants, and
of the Appellant-in-person is that apart from the substantive suit having been
preferred at their instance, the Consent Decree dated 16.02.2005, followed
with 03.10.2005, which have been challenged at their behest under Section
96 of the Code, ought to be examined by the Division Bench of the High
Court on merits, and their substantive right of appeal filed under Section 96
of the Code could not have been stultified merely on the premise that a
substantive Suit No. 3162/2005 had been preferred at their instance, is
pending adjudication. The submission is of no substance since in the first
instance, Suit No. 1335/1988 was disposed of by the Court on the consent
terms arrived between the parties to the proceedings vide Order dated
16.02.2005 followed by Order dated 03.10.2005. In the given
circumstances, even though the Appellants who were later impleaded, have
a right of appeal under Section 96 of the CPC. However, since the
Appellants were not a party to the Consent Orders, it was not open for the
Court to examine the legal effect of the Consent Orders dated 16.02.2005
and 03.10.2005 to which the Appellants were not a party. Once the
substantive suit has been filed at their instance questioning the Consent
Orders dated 16.02.2005 followed by 03.10.2005, the same is indeed open
to be examined independently on its own merits in the pending proceedings
initiated at their instance.
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20. So far as the rights of the Appellants are concerned, the same have
been duly protected by the High Court in the impugned judgment dated
22.07.2014. In furtherance thereof, we make it clear that the
observations/findings which have been recorded by the High Court in the
impugned judgment dated 22.07.2014, in no manner, prejudice the rights of
the Appellants, and the pending Suit No. 3162/2005 filed by the Appellant
may be examined by the Court independently on its own merits in
accordance with law without being influenced by the observations made by
the High Court in the impugned judgment dated 22.07.2014.
21. Since the suit was instituted in 2005, we consider it appropriate to
observe that the High Court may hear and dispose of Suit No. 3162/2005
as expeditiously as possible, preferably within a period of one year.
22. The Civil Appeal on the above terms stands disposed of with no order
as to costs.
23. Pending application(s), if any, stand disposed of.
24. We appreciate the effort and time spent by Mr. Nikhil Nayyar, learned
senior counsel for rendering his able assistance to this Court.
…………………………J.
(INDU MALHOTRA)
………………………….J.
(AJAY RASTOGI)
MARCH 1, 2021
NEW DELHI
