Constitution of India – Art.341 – Scheduled Castes list – Merging of caste “Tanti” with the caste ‘Pan/Sawasi’ in the list of Scheduled Castes – Entitlement of employee’s claim to the benefit of Scheduled Caste category – Appointment of the respondent-employee under the Other Backward Classes category on the basis of ‘Tanti’ caste certificate – State Government vide notification deleted ‘Tanti’ caste from the list of OBCs and merged it with ‘Pan/Swasi’ caste in the list of Scheduled Castes – Respondent obtained Scheduled Caste Certificate as a member of ‘Pan/Swasi’ caste and necessary changes made in the Service Record – Meanwhile, the respondent applied for promotion as a Scheduled Caste candidate, however, his name not approved since he was held not entitled to claim benefit of Scheduled Caste category – Tribunal dismissed the respondent’s application, however, the High Court allowed the writ petition – Correctness:

[2024] 12 S.C.R. 617 : 2024 INSC 984

Union of India & Ors. v. Rohit Nandan

Civil Appeal No(s). 14394 of 2024

13 December 2024

[Pamidighantam Sri Narasimha* and Manoj Misra, JJ.]

Issue for Consideration

Issue arose as regards entitlement of respondent-employee’s claim to the benefit of Scheduled Caste category, when the respondent appointed on the basis of his ‘Tanti’ Caste Certificate, the ‘Tanti’ caste was deleted from the list of OBCs and merged with Pan/Swasi caste in the list of Scheduled Castes.

Headnotes

Constitution of India – Art.341 – Scheduled Castes list – Merging of caste “Tanti” with the caste ‘Pan/Sawasi’ in the list of Scheduled Castes – Entitlement of employee’s claim to the benefit of Scheduled Caste category – Appointment of the respondent-employee under the Other Backward Classes category on the basis of ‘Tanti’ caste certificate – State Government vide notification deleted ‘Tanti’ caste from the list of OBCs and merged it with ‘Pan/Swasi’ caste in the list of Scheduled Castes – Respondent obtained Scheduled Caste Certificate as a member of ‘Pan/Swasi’ caste and necessary changes made in the Service Record – Meanwhile, the respondent applied for promotion as a Scheduled Caste candidate, however, his name not approved since he was held not entitled to claim benefit of Scheduled Caste category – Tribunal dismissed the respondent’s application, however, the High Court allowed the writ petition – Correctness:

Held: During pendency of this appeal, the same issue was decided by this Court in Dr. Bhim Rao Ambedkar’s case holding that the exercise of taking out ‘Tanti’ from Extremely Backward Classes list issued and its merger with the Scheduled Caste list is bad, illegal and unsustainable – In view thereof, the respondent cannot claim the benefits of the Scheduled Caste category – After the decision of this Court in the case of Dr. Bhim Rao Ambedkar, the issue as regards the claim of reservation as Scheduled Caste candidate does not subsist – Furthermore, the earlier decisions stand on different footing wherein long standing appointments continued over a period of time, because of which court felt, on equitable considerations, not to disturb their employment – On facts, the respondent was appointed to said promotional post in December 2023 – Benefit of his illegal categorisation as a Scheduled Caste candidate, accrued to him was for a short period of less than a year and that too during the pendency of the said appeal – No equities in favour of the respondent like that of the candidates in earlier cases – Order cannot be passed directing continuation of the respondent on the basis of the illegal certification as Scheduled Caste – Judgment of the High Court set aside and that of the tribunal restored. [Paras 8, 9, 12, 13, 15, 16]

Case Law Cited

Dr. Bhim Rao Ambedkar Vichar Manch Bihar v. State of Bihar [2024] 7 SCR 796 : 2024 INSC 528; K. Nirmala v. Canara Bank [2024] 8 SCR 868 : 2024 INSC 634 – Distinguished.

State of Maharashtra v. Milind & Ors [2000] Supp. 5 SCR 65 : (2001) 1 SCC 4 – referred to.

List of Acts

Bihar Reservation of Vacancies in Posts and Services (For Scheduled Castes, Scheduled Tribes and Other Backward Classes) Act, 1991.

List of Keywords

Art.341 Constitution of India; List of Scheduled Castes; Tanti caste; Pan/Swasi caste; Equity jurisdiction; Benefit of Scheduled Caste category; ‘Tanti’ Caste Certificate; Merging of caste “Tanti” with the caste ‘Pan/Sawasi’ in list of Scheduled Castes; Extremely Backward Classes; Bhim Rao Ambedkar’s case; Equitable considerations; Illegal categorisation as Scheduled Caste candidate; Illegal certification as Scheduled Caste.

Case Arising From

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 14394 of 2024

From the Judgment and Order dated 19-01-2023 of the High Court of Judicature at Patna in CWJC No. 12096 of 2022

Appearances for Parties

K.M. Nataraj, A.S.G., Ms. R. Bala, Sr. Adv., Amrish Kumar, Ms. Shradha Deshmukh, Ms. Aakanksha Kaul, Sarthak Karol, Rohit Khare, Piyush Beriwal, Advs. for the Appellants.

Anilendra Pandey, Rajeev Kumar Ranjan, Ms. Priya Kashyap, Nadeem Hussain, M/s. Ranjan and Company, Advs. for the Respondent.

Judgment / Order of the Supreme Court

Judgment

Pamidighantam Sri Narasimha, J.

1.Leave granted.

2.The Union of India is in appeal against the judgment of the Division Bench of the High Court of Judicature at Patna1 allowing the writ petition filed by the respondent challenging the order of the Central Administrative Tribunal dismissing his Original Application filed against the decision of the Government disentitling his claim under the Scheduled Caste category. Following the recent decision of this Court in Dr. Bhim Rao Ambedkar Vichar Manch Bihar v. State of Bihar,2 we have allowed the appeal and directed that the respondent will continue to be of the OBC Category, belonging to Tanti caste and shall not to be treated as Scheduled Caste as per the notification of State Government dated 02.07.2015.

3.The short facts are that the respondent was appointed as a Postal Assistant in the year 1997 under the Other Backward Caste (OBC) Category on the basis of his ‘Tanti’ Caste Certificate.

4.The State Government vide Gazette Notification dated 02.07.2015 deleted ‘Tanti’ caste from the list of OBCs to enable members of the said community to avail benefits of Scheduled Caste (SC) category by merging it with Pan/Swasi caste which figures in the list of Scheduled Castes.

5.Following the gazette notification, the respondent obtained a Scheduled Caste certificate as member of the Pan/Swasi caste from the office of District Magistrate, Patna on 29.09.2015 and requested the Chief Post Master General, Patna on 23.06.2016 for change of his category from OBC to Scheduled Caste in his Service Book in terms of the new caste certificate and the aforesaid Gazette notification. In the meanwhile, the respondent applied for promotion to the Postal Service Group ‘B’ through Limited Departmental Competitive Examination (LDCE) as notified on 07.10.2016, as a Scheduled Caste candidate and appeared in the examination held on 18.12.2016. Though he was declared successful in the examination vide communication dated 16.04.2018, his name was not approved for promotion and his result was put on hold for further consideration vide notification dated 06.09.2018. Meanwhile, the office of the Postmaster General, East Region, Bihar, ordered on 17.08.2018 to change the category of respondent to Scheduled Caste in his Service Book.

6.Finally, the Department of Posts, after consulting the Department of Social Justice and Empowerment, ordered vide communication dated 14.02.2019 that the respondent was not entitled to the benefit of Scheduled Caste category as he does not belong to scheduled caste and deleted his name from the list of candidates successful in the examination. Being aggrieved by the aforesaid order dated 14.02.2019, the respondent filed OA/050/00289/2019 before the Central Administrative Tribunal, which was dismissed on 01.04.2022.

7.The decision of the Tribunal was challenged before the High Court in a Writ Petition and the High Court allowed the same on 19.01.2023 by the order impugned before us. The High Court proceeded on the following premise:

“9. It is not a case that the State Government has amended the Presidential order without any authority of law and has included a particular caste in the category of Scheduled Caste or Scheduled Tribe, but the State Government has only deleted one of the most backward castes from the State list on account of the fact that it is a Scheduled Caste already notified in the Presidential order and, therefore, to enable them to take the benefit of the Presidential order the circular has been issued as a clarification .

10. Moreover, the petitioner has been issued a caste certificate of SC category by a competent authority and the same has not been challenged or cancelled. Hence, for all practical purposes, the petitioner is a person belonging to the SC category.

11. In the light of discussion made hereinabove and under the facts and circumstances of the case, the present writ petition deserves to be allowed and is accordingly allowed. The order of learned CAT dated 01.04.2022 and the order dated 14.02.2019 issued by the respondent no.3 are quashed and set aside.”

8.During the pendency of the appeal before us and after notice was issued by this Court on 25.08.2023, an important development occurred. The very same question was taken up and decided by this Court on 15.07.2024 in Dr. Bhim Rao Ambedkar (supra). Therein, it has been held that the exercise of taking out ‘Tanti’ from the EBC (‘Extremely Backward Classes’) list issued under the Bihar Reservation of Vacancies in Posts and Services (For Scheduled Castes, Scheduled Tribes and Other Backward Classes) Act, 1991 and its merger with the Scheduled Caste list is bad, illegal and unsustainable. The relevant portions of the decision are as follows:

“36. Having considered the submissions advanced, we have no hesitation in holding that the Resolution dated 01.07.2015 was patently illegal, erroneous as the State Government had no competence/ authority/power to tinker with the lists of Scheduled Castes published under Article 341 of the Constitution. The submission of the respondent-State that Resolution dated 01.07.2015 was only clarificatory is not worth considering for a moment and deserves outright rejection. Whether or not it was synonymous or integral part of the Entry-20 of the lists of Schedule Castes, it could not have been added without any law being made by the Parliament. The State knew very well that it had no authority and had accordingly forwarded its request to the Union of India in the year 2011. The said request was not accepted and returned for further comments/justification/review. Ignoring the same, the State proceeded to issue the Circular dated 01.07.2015. The State may be justified in deleting “Tanti-Tantwa” from the Extremely Backward Classes list on the recommendation of the State Backward Commission, but beyond that to merge “Tanti-Tantwa” with ‘Pan, Sawasi, Panr’ under Entry 20 of the list of Scheduled Castes was nothing short of mala fide exercise for whatever good, bad or indifferent reasons, the State may have thought at that moment. Whether synonymous or not, any inclusion or exclusion of any caste, race or tribe or part of or group within the castes, races or tribes has to be, by law made by the Parliament, and not by any other mode or manner.

37. The submission that the recommendation of the Commission for Extremely Backward Classes was binding on the State, is not a question to be determined here, inasmuch as, even if we accept the submission, such recommendation could relate only to the Extremely Backward Classes. Whether or not to include or exclude any caste in the list of Extremely Backward Class would be within the domain of the Commission. The Commission would have no jurisdiction to make recommendation with respect to any caste being included in the Scheduled Castes lists and, even if it makes such a recommendation, right or wrong, the State has no authority to proceed to implement the same when it was fully aware that the Constitution does not permit it to do so. The Provisions of Article 341 sub-clause 1 and sub-Clause 2 are very clear and discrete. There is no ambiguity or vagueness otherwise requiring any interpretation other than what is mentioned therein. The State of Bihar has tried to read something in order to suit its own ends for whatever reason, we are not commenting on the same.

38. The High Court fell in serious error in upholding the said Notification on a completely wrong premise without referring to Article 341 of the Constitution.”

9.While the present case deals with the removal of the Tanti caste from the OBC list instead of the EBC List, the decision of this Court in Bhim Rao Ambedkar (supra) covers the issue and the notification of the State Government adding to the list of Scheduled Class is illegal and unlawful. The respondent cannot claim the benefits of the Scheduled Caste Category since the merger of the Tanti caste with the Scheduled Caste list is bad in law in light of Bhim Rao Ambedkar (supra). The learned counsel for the respondent has not even argued this point.

10.However, the learned counsel submitted that despite illegality in the notification, this Court in Bhim Rao Ambedkar (supra) had protected those who had come to occupy the posts. The relevant portion is also reproduced for convenience:

“39. Now comes the question with regard to protecting those Members of “Tanti-Tantwa” community who were extended benefit of Scheduled Castes pursuant to the Resolution dated 01.07.2015. In the present case, the action of the State is found to be mala fide and de hors the constitutional provisions. The State cannot be pardoned for the mischief done by it. Depriving the members of the Scheduled Castes covered by the lists under Article 341 of the Constitution is a serious issue. Any person not deserving and not covered by such list if extended such benefit for deliberate and mischievous reasons by the State, cannot take away the benefit of the members of the Scheduled Castes. Such appointments would under law on the findings recorded would be liable to be set aside. However, as we have found fault with the conduct of the State and not of any individual member of the “Tanti- Tantwa” community, we do not wish to direct that their services may be terminated or that recovery may be made for illegal appointments or withdrawal of other benefits which may have been extended. We are of the view that all such posts of the Scheduled Castes reserved quota which have been extended to the members of the “Tanti-Tantwa” community appointed subsequent to the Resolution dated 01.07.2015 be returned to the Scheduled Castes Quota and all such members of the “Tanti-Tantwa” community, who have been extended such benefit may be accommodated under their original category of Extremely Backward Classes, for which the State may take appropriate measures.

[…]

42. It is further directed that such posts of the Scheduled Castes Quota which had been filled up by members of “Tanti-Tantwa” community availing benefit on the basis of Resolution dated 01.07.2015 may be returned to the Scheduled Castes category and such candidates of “Tanti-Tantwa” community be accommodated by the State in their original category of Extremely Backward Classes by taking appropriate measures.”

11.Learned counsel has also relied on the decision of this Court in K. Nirmala v. Canara Bank3 wherein the appellants were granted protection despite the State Government notification treating them as members belonging to Scheduled Caste and Scheduled Tribe was withdrawn by the State Government after the decision of the Supreme Court in a case of State of Maharashtra v. Milind & Ors.4 The relevant portion of the said order is as under:

“35. In wake of the discussion made above, we conclude that the appellants are entitled to protection of their services by virtue of the Government circular dated 29th March, 2003 issued by the Government of Karnataka as ratified by communication dated 17th August, 2005 issued by the Ministry of Finance. The circular dated 29th March, 2003 issued by the Government of Karnataka specifically extended protection to various castes, including those which were excluded in the earlier Government circular dated 11th March, 2002. This subsequent circular covered the castes such as Kotegara, Kotekshathriya, Koteyava, Koteyar, Ramakshathriya, Sherugara and Sarvegara, thus, ensuring that individuals of these castes, holding Scheduled Castes certificates issued prior to de-scheduling, would be entitled to claim protection of their services albeit as unreserved candidates for all future purposes. Additionally, the communication issued by the Ministry of Finance dated 17th August, 2005 reinforced the protective umbrella to the concerned bank employees and also saved them from departmental and criminal action.”

12.Having considered the matter in detail, we are of the opinion that after the decision of this Court in the case of Bhim Rao Ambedkar (supra), the issue of the appellant claiming reservation as Scheduled Caste candidate does not subsist. As indicated earlier, it is not even the argument of the respondent that the said judgment will not apply.

13.The decisions of this Court in Bhim Rao Ambedkar (supra) and in K. Nirmala (supra) exercising equity jurisdiction stand on a different footing and they can be distinguished on facts. Those judgments dealt with long standing appointments, continued over a period of time, because of which court felt, on equitable considerations, not to disturb the employment of the appellants therein. The facts in this case are completely different and the following will clarify the position.

14.The respondent was in service of the Union on the basis of reservation claimed by him as an OBC candidate. It was only on 02.07.2015 that the State Government issued a notification shifting the caste Tanti from the OBC to that of Scheduled Caste and the necessary change in the service record was brought only on 17.08.2018. In the meanwhile, an advertisement was issued on 07.10.2016 for a Limited Departmental Competitive Examination, and the respondent applied as a Scheduled Caste candidate.

15.When the Government refused appointment to the respondent to the post as he does not belong to Scheduled Caste, he approached the Tribunal and filed an Original Application which came to be dismissed on 01.04.2022. However, the respondent’s writ petition was allowed by the High Court only on 19.01.2023. We are informed that during the pendency of the matter before this Court, the respondent was appointed to the said promotional post only on 14.12.2023. Even assuming that the respondent was given benefit of his illegal categorisation as a Scheduled Caste candidate, the benefit that accrued to him was for a short period of less than a year and that too during the pendency of this appeal. Therefore, there are no equities in favour of the respondent like that of the candidates in the case of Bhim Rao Ambedkar or K. Nirmala (supra). In view of the clear position of law, coupled with lack of equities based on the facts and circumstances of the case, we cannot direct continuation of the respondent on the basis of the illegal certification as Scheduled Caste.

16.In view of the above, we allow the appeal, set aside the judgment of the High Court in CWJC No. 12096 of 2022 dated 19.01.2023 and restore the judgment and order of the Central Administrative Tribunal dated 01.04.2022 dismissing the Original Application filed by the respondent. There shall be no order as to costs.

Result of the case: Appeal allowed.

1 In CWJC No. 12096 of 2022 dated 19.01.2023.

2 [2024] 7 SCR 796 : 2024 INSC 528.

3 2024 INSC 634 : [2024] 8 SCR 868

4 [2000] Supp. 5 SCR 65 : (2001) 1 SCC 4

©2024 Supreme Court of India. All Rights Reserved.

Payment of Wages Act, 1936 – ss.15(2), 22 – Industrial Disputes Act, 1947 – s.2(A) – Disputes relating to non-payment of wages and the legality and validity of the termination order, if arbitrable: Held: No – Disputes related to non-payment of wages and legality and propriety of termination which are non-arbitrable and the appellant approached the statutory authorities under the PW Act and the ID Act much prior to the filing of petition under Section 11(6) by the respondent and thus, the disputes were anyway pending before the statutory authorities which would exercise their jurisdiction to the exclusion of civil courts – Further, the alleged violation of clause 19 of the appointment order relating to non-disclosure obligation was only an afterthought as it was not raised in the show cause notice, inquiry report, chargesheet and termination order and as such is non-existent – Section 11(6) petition filed by the respondent was an abuse of process intended to threaten the appellant for having approached the statutory authorities under the PW Act and the ID Act – Judgment of High Court set aside – Petition filed by the respondent under Section 11(6) under the Arbitration and Conciliation Act dismissed with cost – Arbitration and Conciliation Act, 1996. [Paras 17, 12, 14, 18]

[2024] 12 S.C.R. 492 : 2024 INSC 966

Dushyant Janbandhu v. M/s Hyundai Autoever India Pvt. Ltd.

(Civil Appeal No. 14299 of 2024)

11 December 2024

[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]

Issue for Consideration

High Court allowing the petition filed by the respondent under Section 11(6) under the Arbitration and Conciliation Act, 1996 appointed an arbitrator. Whether the disputes relating to non-payment of wages and the legality and validity of the termination order were arbitrable.

Headnotes

Payment of Wages Act, 1936 – ss.15(2), 22 – Industrial Disputes Act, 1947 – s.2(A) – Disputes relating to non-payment of wages and the legality and validity of the termination order, if arbitrable:

Held: No – Disputes related to non-payment of wages and legality and propriety of termination which are non-arbitrable and the appellant approached the statutory authorities under the PW Act and the ID Act much prior to the filing of petition under Section 11(6) by the respondent and thus, the disputes were anyway pending before the statutory authorities which would exercise their jurisdiction to the exclusion of civil courts – Further, the alleged violation of clause 19 of the appointment order relating to non-disclosure obligation was only an afterthought as it was not raised in the show cause notice, inquiry report, chargesheet and termination order and as such is non-existent – Section 11(6) petition filed by the respondent was an abuse of process intended to threaten the appellant for having approached the statutory authorities under the PW Act and the ID Act – Judgment of High Court set aside – Petition filed by the respondent under Section 11(6) under the Arbitration and Conciliation Act dismissed with cost – Arbitration and Conciliation Act, 1996. [Paras 17, 12, 14, 18]

Case Law Cited

Vidya Drolia v. Durga Trading Corporation [2020] 11 SCR 1001 : (2021) 2 SCC 1 – relied on.

Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. [2019] 17 SCR 275 : (2020) 20 SCC 760 – referred to.

List of Acts

Payment of Wages Act, 1936; Industrial Disputes Act, 1947; Arbitration and Conciliation Act, 1996.

List of Keywords

Non-payment of wages; Termination order; Legality and validity of the termination order; Disputes whether arbitrable; Disputes non-arbitrable; Authority under the Payment of Wages Act, 1936; Industrial Court; Charge memo; Non-cooperation; Absenteeism; Disciplinary action; Jurisdiction to the exclusion of the civil courts; Arbitration agreement; Arbitrator unilaterally appointed; Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996; Alleged violation of non-disclosure obligation; Appointment order; Bar of Suits; Statutory authorities; Abuse of process; Show cause notice; Inquiry report, Chargesheet; Compensation.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14299 of 2024

From the Judgment and Order dated 20.12.2022 of the High Court of Judicature at Madras in Arb O.P No. 31 of 2022

Appearances for Parties

Anurag Ojha, Kamlesh K Mishra, Dipak Raj, Advs. for the Appellant.

Ms. Jaikriti S. Jadeja, Shivang Goel, Ishaan Aggarwal, Advs. for the Respondent.

Judgment / Order of the Supreme Court

Judgment

Pamidighantam Sri Narasimha, J.

1.Delay condoned. Leave Granted.

2.Questioning the appointment of an arbitrator by the High Court of Madras under Section 11(6) of the Arbitration and Conciliation Act, 1996,1 by the order impugned before us,2 the appellant has filed this appeal on the ground that the dispute with the respondent-employer, M/S Hyundai AutoEver India Pvt. Ltd. is governed by statute under the Payment of Wages Act, 19363 and the Industrial Disputes Act, 1947.4 In the normal course and in recognition of judicial restraint, as incorporated in Section 5 of the Act, we would have asked the appellant to raise these objections before the Arbitral Tribunal itself. However, as the following narration of facts speaks for itself, we have found that the application under Section 11 of the Act is a clear abuse of the remedial process. We have therefore allowed the appeal and dismissed the Section 11(6) petition with cost.

3.The appellant was appointed as an Assistant Manager on 15.03.2019. Within a year, due to Covid-19 pandemic, the appellant was asked to work from home from 22.03.2020 to 06.01.2021. However, the respondent called upon the appellant to resume physical attendance of office from August 2020. As the appellant refused to comply, a show cause notice was issued on 04.09.2020, followed by an inquiry, report of which is in the following terms;

“Conclusion

•There has been prima facie evidence against Dushyant for his purposeful absenteeism to work and its impact on Company’s business and Customer relations.

•Possibility of too due to his absenteeism. A detailed Charge sheet can be issued to Mr. Dushyant and refer to Disciplinary committee to take final decision.

•Till the final decision, he should attend office regularly as per the roster.

•If he is having access from remote, those days should be recorded separately by his HOS.

•Based on the final decision of the disciplinary committee further action can be taken.”

4.The inquiry led to issuance of a charge memo on 25.11.2020 for violating certain contractual clauses and these related to non-cooperation and absenteeism. It is necessary to mention here itself that there is no reference to Clause 195 of the appointment conditions relating to violation of the non-disclosure obligation. Ultimately, an order of termination was passed on 21.01.2021, the relevant portion of the said order of termination is important for our consideration and it is extracted hereinbelow for ready reference.

“Please refer our Show Cause Notices dated 4th Sep 2020, Emails dated (05th Aug, 03rd Sep, 07 Sep 2020 & 07 Jan 2021) and the charge sheet dated (26 Nov 2020). You have continued to remain absent at work premises without authorisation and also you did not present yourself for our enquiry meetings called for as per our disciplinary Policy. Considering all the above, as per your agreed employment terms Clause 11, 12(V), 17, 24 & 25, your employment has been terminated with effective from the closing hours of 06 Jan 2021. […]”

5.It is evident from the above that there is no allegation whatsoever that the appellant has violated clause 19 of the appointment order leading to the order of termination.

6.During the pendency of disciplinary action, as the appellant was not paid his salary, he issued a legal notice for payment of wages on 29.05.2021 and filed a petition under Section 15(2) of the PW Act before the authority under the PW Act. As a counterblast, the respondent issued a notice alleging that the disputes must be settled through arbitration and proceeded to unilaterally appoint an arbitrator. We may mention here itself that even in the said reply notice dated 22.06.2021 issued by the respondent, there is no specific allegation of violation of the non-disclosure obligations by the appellant herein. The claim for arbitration naturally related to stoppage of payment of wages, which according to the appellant was within the jurisdiction of the Authority under the PW Act as per its statutory provisions.

7.Before we deal with the facts relating to the proceedings before the Authority under the PW Act, it is necessary to mention that as the unilaterally appointed arbitrator commenced the arbitral proceedings, the appellant filed an application under Section 16 of the Act calling upon the arbitrator to rule on his competence. It is interesting to note that the arbitrator himself passed an order on 01.05.2022 taking into account the decision of this Court in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.6 and closing the arbitral proceedings. The relevant portion is reproduced here as follows:

“[…] In the present case, as detailed herein above, the appointment of the undersigned as the Arbitrator and the Constitution of the Arbitral Tribunal thereof are without the consent or the participation of the Respondent. Once the jurisdiction of this Arbitral Tribunal has been put into question on that ground, this Tribunal ceases to have the power or authority to proceed with the matter in any manner.

I therefore have no hesitation in holding that the constitution of this Arbitral Tribunal is not in accordance with or in consonance with the provisions of Section 11 of the Arbitration and Conciliation Act as amended, particularly in the light of the ratio set out by the Hon’ble Supreme Court in Perkins Eastman Architects DPC & another V/s HSCC (India) Ltd.

In the light of the same, the arbitral proceedings between the parties above-named before this Tribunal is closed forthwith with liberty being granted to both the parties to work out their respective remedies in accordance with law.”

8.Returning to the proceedings commenced before the Authority, we note that the respondent moved an application under Section 8 of the Act seeking reference of the dispute involved in the petition under Section 15(2) of the PW Act to arbitration. The Authority under PW Act dismissed the said application on 03.03.2022 holding that; “In view of Section 23 of the Payment of Wages Act, arbitration agreement cannot stand in the way of the claimant in respect of illegally deducted wages under Payment of Wages Act.”

9.There is yet another development. Questioning the order of termination dated 21.01.2021, the appellant approached the Industrial Tribunal by filing a petition under Section 2(A) of the ID Act and the same is pending adjudication and determination by the Industrial Tribunal.

10.It is in the above referred background that the respondent approached the High Court by filing a petition under Section 11(6) of the Act in August 2022 seeking appointment of an arbitrator. The disputes between the appellant and the respondent, as indicated in the arbitration petition relate to non-payment of wages and also the legality and validity of termination order dated 21.01.2021. Over and above these disputes, for the first time the respondent sought to give a new angle to the dispute by stating that the appellant has also violated the non-disclosure obligations under clause 19 of the appointment order.

11.In the order impugned before us, the High Court has proceeded to note an arbitration agreement and therefore, appointed an advocate as the arbitrator.

12.The issue relating to violation of the non-disclosure obligation under clause 19 is only an afterthought. This was evidently not the ground when the respondent issued the show cause notice on 04.09.2020, nor was it a part of the inquiry report, the relevant portion of which we have extracted in the para 3 above. This is also not a part of the charge memo dated 25.11.2020.

13.Crucially, the termination was not based on any such allegation as is evident from the termination order dated 21.01.2021 that we have extracted earlier. Under these circumstances, we can conclude that there is no dispute about violation of non-disclosure obligations and Section 11(6) petition, to this extent is non-existent.

14.Insofar as other disputes are concerned, they relate to non-payment of wages and the legality and validity of the order of termination dated 21.01.2021. The appellant approached the Authority under the PW Act much before the order of termination and the said authority would exercise jurisdiction under Section 15(2) of the PW Act to the exclusion of civil courts and these disputes are non-arbitrable. Section 22 of the PW Act reads as under:

“22. Bar of Suits.—No Court shall entertain any suit for the recovery of wages or of any deduction from wages in so far as the sum so claimed—

(a) forms the subject of an application under section 15 which has been presented by the plaintiff and which is pending before the authority appointed under that section or of an appeal under section 17; or

(b) has formed the subject of a direction under section 15 in favour of the plaintiff; or

(c) has been adjudged, in any proceeding under section 15, not to be owed to the plaintiff; or

(d) could have been recovered by an application under section 15.”

15.Equally, legality of the order of termination dated 21.01.2021 is within the jurisdiction of Industrial Tribunal under Section 2(A) of the ID Act and it is important to mention that the jurisdiction of the Industrial Court is also to the exclusion of the civil courts and is not arbitrable. It is also important to note that remedies under these statutes were invoked much prior to the filing of petition under Section 11(6) by the respondent. In Vidya Drolia v. Durga Trading Corporation,7 the principle of subject-matter arbitrability is enunciated as follows:

“76. In view of the above discussion, we would like to propound a fourfold test for determining when the subject-matter of a dispute in an arbitration agreement is not arbitrable:

76.1 (1) When cause of action and subject-matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.

76.2 (2) When cause of action and subject-matter of the dispute affects third-party rights; have erga omnes effect; require centralised adjudication, and mutual adjudication would not be appropriate and enforceable.

76.3 (3) When cause of action and subject-matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable.

76.4 (4) When the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).”

(emphasis supplied)

16.Having considered the factual background in which the Section 11(6) petition has been filed, we are of the opinion that it is an abuse of process. It was clearly intended to threaten the appellant for having approached the statutory authorities under the PW Act and the ID Act. There is no basis for invoking clause 19 of the agreement and demanding compensation of Rs. 14,02,822/- when that fact situation did not arise.

17.The Section 11(6) petition has two facets. The first relates to disputes that were anyway pending before the statutory authorities, and they related to non-payment of wages and legality and propriety of termination which are non-arbitrable. The second facet relates to the alleged violation of clause 19 relating to non-disclosure obligation, which was not raised in the show cause notice, inquiry report, chargesheet and termination order and as such is non-existent.

18.In view of the above, we allow the Civil Appeal and set-aside the judgment and the order passed by the High Court and dismiss the petition under Section 11(6) filed by the respondent under the Arbitration and Conciliation Act.

19.The appellant will also be entitled to cost quantified at Rs. 5 lakhs payable within a period of 3 months from today.

Result of the case: Civil Appeal allowed.

1 Hereinafter referred to as the ‘Act’.

2 Order passed by the High Court of Judicature at Madras in Arb O.P. No. 31 of 2022 dated 20.12.2022.

3 Hereinafter referred to as the ‘PW Act’.

4 Hereinafter referred to as the ‘ID Act’.

5 “You will not give out to any one, by word of mouth or otherwise, particulars of HAEI’s business or an administrative or organizational matter of a confidential nature which may be your privilege to know by virtue of you being HAEI’’s employee.”

6 [2019] 17 SCR 275 : (2020) 20 SCC 760

7 [2020] 11 SCR 1001 : (2021) 2 SCC 1

©2024 Supreme Court of India. All Rights Reserved.

Specific Relief Act, 1963 – s.22 – Executing court declined to handover the possession of the suit property to the respondents-plaintiffs (decree holders) holding that though there was a decree for specific performance no relief as regards putting the plaintiffs in possession of the suit property was granted – Order set aside by High Court – Challenged by subsequent purchasers:

[2024] 12 S.C.R. 484 : 2024 INSC 949

Birma Devi & Ors. v. Subhash & Anr.

(Special Leave Petition (Civil) No. 29397 of 2024)

06 December 2024

[J.B. Pardiwala and R. Mahadevan, JJ.]

Issue for Consideration

Whether the relief of possession may be granted by the executing court in a case where the suit has been decreed for specific performance simpliciter and no express relief for the transfer of possession of the suit property has been granted.

Headnotes

Specific Relief Act, 1963 – s.22 – Executing court declined to handover the possession of the suit property to the respondents-plaintiffs (decree holders) holding that though there was a decree for specific performance no relief as regards putting the plaintiffs in possession of the suit property was granted – Order set aside by High Court – Challenged by subsequent purchasers:

Held: In cases where the possession of the suit property is exclusively with the contracting party, then a decree for specific performance simpliciter, without specifically providing for delivery of possession, may give complete relief to the decree holder – However, in cases where the relief of possession cannot be effectively granted to the decree-holder without specifically claiming relief for possession, for example, in cases where the property agreed to be conveyed is jointly held by the defendant with other persons, or cases where after the contract the property has passed in possession of a third person, then the plaintiff, in order to obtain complete and effective relief, must claim the relief of transfer of possession over the property – Section 22 allows the plaintiff to amend the plaint to include a claim for the relief of possession, partition, etc. at “any stage of the proceeding” including the stage of execution of the decree by the executing court – Special Leave Petition dismissed – Transfer of Property Act, 1882 – s.55. [Paras 13, 16]

Case Law Cited

Babu Lal v. Hazari Lal Kishori Lal [1982] 3 SCR 94 : (1982) 1 SCC 525; Rohit Kochhar v. Vipul Infrastructure Developers Ltd. & Ors., 2024 INSC 920 – relied on.

List of Acts

Specific Relief Act, 1963; Transfer of Property Act, 1882.

List of Keywords

Agreement of sale; Decree for specific performance; Executing court; Relief of possession; Suit decreed for specific performance simpliciter; No express relief for the transfer of possession of the suit property; Possession of the suit property not handed over; Delivery of possession; Contracting party; Complete relief to the decree holder; Relief of possession; Property passed in possession of a third person; Subsequent purchasers; Stage of execution of the decree; Amend the plaint; “any stage of the proceeding”.

Case Arising From

EXTRAORDINARY APPELLATE JURISDICTION: Special Leave Petition (Civil) No. 29397 of 2024

From the Judgment and Order dated 11.07.2023 of the High Court of Judicature for Rajasthan at Jaipur in SBCWP No. 4982 of 2020

Appearances for Parties

Jasbir Singh Malik, Ms. Rhythm Bharadwaj, Narender Kumar Sharma, Ms. Suman Sharma, Varun Punia, Advs. for the Petitioners.

Ashish Kumar Upadhyay, Ms. Chavi Kalla, Ms. Maitri Goal, V. Sibi Kargil, Advs. for the Respondents.

Judgment / Order of the Supreme Court

Order

1.Application seeking permission to file the Special Leave Petition is granted.

2.Delay condoned.

3.This petition arises from the order passed by the High Court of Judicature for Rajasthan, Bench at Jaipur in SB Civil Writ Petition No.4982/2020, by which the High Court allowed the petition filed by the respondents – herein (original plaintiffs and decree holders) and set aside the order passed by the Additional District Judge, Bansur, District Alwar (Rajasthan) in Execution No.06/2018.

4.The facts of this case in brief are that the petitioners– herein claim to be the subsequent purchasers of the suit property. The plaintiffs instituted a suit for specific performance of contract based on an agreement of sale with the original defendants. The plaintiffs have succeeded in the suit. The Trial Court passed a decree for specific performance in favour of the plaintiffs.

5.It appears that since the original defendant who had executed the agreement of sale is no longer interested in the matter as he seems to have sold the suit property to the petitioners – herein, there has been no further challenge to the judgment and decree passed by the Trial Court.

6.However, in the execution proceedings, the executing court took the view that although there is a decree for specific performance yet the decree does not say anything as regards putting the plaintiffs in possession of the suit property.

7.In such circumstances, the executing court declined to handover the possession of the suit property to the respondents – herein.

8.The order passed by the executing court came to be challenged by the respondents – herein - decree holder.

9.The High Court vide order dated 11-7-2023 allowed the petition in the following terms:-

“14. Considering the view of the Hon'ble Courts in the cases referred to above, it is very safe to say that in the case of suit for specific performance even no decree for possession has been sought and the suit for specific performance is decreed, the Executing Court is under an obligation to see that the possession of the suit property as decreed is handed over to the decree-holder.

15. Taking into consideration the facts and the circumstances of the case and the view of the Hon'ble Courts in the cases referred to above, this Court is of the view that the decree of specific performance and the resultant execution and registration of the sale deed at the instance of the Executing court in favour of the plaintiff-decree holder entailed an implied right of the plaintiff-decree holder to be in possession of the property so conveyed. Since such a right has been denied by the impugned order by the Executing Court failing to exercise its jurisdiction, this Court set asides the impugned order dated 12.03.2019 passed by the Executing court.

16. Resultantly, the writ petition is allowed. The order dated 12.03.2019 passed by the Executing Court is set aside and the Executing court is directed to issue a warrant of possession of the suit property in favour of plaintiff - decree holder.

17. In view of the order passed in the main petition, the stay application and pending application/s, if any, also stand disposed of.”

10.The petitioners – herein who claim to be the subsequent purchasers of the suit property seek to challenge the order of the High Court in this petition.

11.We have heard Mr. Jasbir Singh, the learned counsel appearing for the petitioners and Mr. Ashish Kumar Upadhyay, the learned counsel appearing for the respondents.

12.The short question that falls for our consideration is whether the relief of possession may be granted by the executing court in a case where the suit has been decreed for specific performance simpliciter and no express relief for the transfer of possession of the suit property has been granted.

13.The position of law on the issue has been settled by this Court in the case of Babu Lal v. Hazari Lal Kishori Lal reported in (1982) 1 SCC 525 wherein the Court while elaborating on Section 22 of the Specific Relief Act, 1963 laid down the law for the following two situations that may arise:

a.First, in cases where the possession of the suit property is exclusively with the contracting party, then a decree for specific performance simpliciter, without specifically providing for delivery of possession, may give complete relief to the decree holder. This, the Court held, was in consonance with Section 55(1) of the Transfer of Property Act, 1882, which binds the seller, on being so required, to transfer to the buyer or such other person as he directs, such possession of the property as its nature admits.

b.Secondly, in cases where the relief of possession cannot be effectively granted to the decree-holder without specifically claiming relief for possession, for instance, in cases where the property agreed to be conveyed is jointly held by the defendant with other persons, or cases where after the contract the property has passed in possession of a third person, then the plaintiff, in order to obtain complete and effective relief, must claim the relief of transfer of possession over the property defendant along with the relief of partition, etc., if required.

14.For the second category of cases, the Court observed that Section 22, which was introduced by the legislature to avoid multiplicity of proceedings, allows the plaintiff to amend the plaint to include a claim for the relief of possession, partition, etc. at any stage of the proceeding. The Court further held that the expression “any stage of the proceeding” includes the stage of execution of the decree by the executing court. The relevant paragraphs from the said decision are reproduced hereinbelow:

“13. The expression in sub-section (1) of Section 22 “in an appropriate case” is very significant. The plaintiff may ask for the relief of possession or partition or separate possession “in an appropriate case”. As pointed out earlier, in view of Order 2 Rule 2 of the Code of Civil Procedure, some doubt was entertained whether the relief for specific performance and partition and possession could be combined in one suit; one view being that the cause of action for claiming relief for partition and possession could accrue to the plaintiff only after he acquired title to the property on the execution of a sale deed in his favour and since the relief for specific performance of the contract for sale was not based on the same cause of action as the relief for partition and possession, the two reliefs could not be combined in one suit. Similarly, a case may be visualised where after the contract between the plaintiff and the defendant the property passed in possession of a third person. A mere relief for specific performance of the contract of sale may not entitle the plaintiff to obtain possession as against the party in actual possession of the property. As against him, a decree for possession must be specifically claimed or such a person is not bound by the contract sought to be enforced. In a case where exclusive possession is with the contracting party, a decree for specific performance of the contract of sale simpliciter, without specifically providing for delivery of possession, may give complete relief to the decree-holder. In order to satisfy the decree against him completely he is bound not only to execute the sale deed but also to put the property in possession of the decree-holder. This is in consonance with the provisions of Section 55(1) of the Transfer of Property Act which provides that the seller is bound to give, on being so required, the buyer or such person as he directs, such possession of the property as its nature admits.

14. There may be circumstances in which a relief for possession cannot be effectively granted to the decree-holder without specifically claiming relief for possession viz. where the property agreed to be conveyed is jointly held by the defendant with other persons. In such a case the plaintiff in order to obtain complete and effective relief must claim partition of the property and possession over the share of the defendant. It is in such cases that a relief for possession must be specifically pleaded.

xxx xxx xxx

17. The word “proceeding” is not defined in the Act. Shorter Oxford Dictionary defines it as “carrying on of an action at law, a legal action or process, any act done by authority of a court of law; any step taken in a cause by either party”. The term “proceeding” is a very comprehensive term and generally speaking means a prescribed course of action for enforcing a legal right. It is not a technical expression with a definite meaning attached to it, but one the ambit of whose meaning will be governed by the statute. It indicates a prescribed mode in which judicial business is conducted. The word ‘proceeding’ in Section 22 includes execution proceedings also. In Rameshwar Nath v. U.P. Union Bank Ltd. [AIR 1956 All 586 : 1956 All LJ 470 : 1956 All WR HC 450] such a view was taken. It is a term giving the widest freedom to a court of law so that it may do justice to the parties in the case. Execution is a stage in the legal proceedings. It is a step in the judicial process. It marks a stage in litigation. It is a step in the ladder. In the journey of litigation there are various stages. One of them is execution.

xxx xxx xxx

20. It is thus clear that the legislature has given ample power to the court to allow amendment of the plaint at any stage, including the execution proceedings. In the instant case the High Court granted the relief of possession and the objection raised on behalf of the petitioner is that this was not possible at the execution stage and in any case the court should have allowed first an amendment in the plaint and then an opportunity should have been afforded to the petitioner to file an objection.”

15.The aforesaid position of law has been recently reiterated by us in a recent order passed in the case of Rohit Kochhar v. Vipul Infrastructure Developers Ltd. & Ors. reported in 2024 INSC 920 wherein we have observed thus:

“23. This Court in Babu Lal (supra), upon a combined reading of Sections 22 and 28(3) of the Specific Relief Act respectively and Section 55 of the Transfer of Property Act, observed that the it was only “in an appropriate case” that the plaintiff was required to separately seek the relief of possession, partition, or separate possession, as the case may be, along with the relief of specific performance. The Court observed that in other cases, say for example a case where the exclusive possession of the suit property is with the contracting party, a decree for specific performance of the contract of sale simpliciter, without specifically providing for delivery of possession, may give complete relief to the decree-holder. This, the Court observed, was the mandate flowing from Section 55 of the Transfer of Property Act.”

16.The Special Leave Petition is, accordingly, dismissed.

17.Pending applications, if any, also stand disposed of.

Result of the case: Special Leave Petition dismissed.

©2024 Supreme Court of India. All Rights Reserved.

Hindu Marriage Act, 1955 – Quantum of maintenance – Permanent alimony – The respondent’s application for enhanced interim maintenance rested on her assertion of significant changes in circumstances since the last maintenance order, including the increased financial requirements of herself and the son:

[2024] 12 S.C.R. 543 : 2024 INSC 961

Parvin Kumar Jain v. Anju Jain

(Civil Appeal No(s). 14277-14278 of 2024)

10 December 2024

[Vikram Nath* and Prasanna B. Varale, JJ.]

Issue for Consideration

In the instant case, the parties were married and have a son born from their wedlock, however, the realtionship soured and they have been living separately for more than two decades. The main issue between the parties all these years, since separation, is the quantum of maintenance to be paid by the appellant-husband to the respondent-wife.

Headnotes

Hindu Marriage Act, 1955 – Quantum of maintenance – Permanent alimony – The respondent’s application for enhanced interim maintenance rested on her assertion of significant changes in circumstances since the last maintenance order, including the increased financial requirements of herself and the son:

Held: It is evident from the records that the relationship between the parties appears to be strained from the beginning and only further soured over the years – Reconciliation proceedings during the pendency of the divorce petition also failed – The parties have been litigating maintenance proceedings for a prolonged period, and there appears to be no cogent reason to only deal with the issue of interim maintenance after twenty years of strained relationship and separation – These facts are admitted by the parties, and they have also mutually agreed for the dissolution of their marriage – Therefore, the marriage between the parties is dissolved while exercising the discretionary power u/Art. 142 of the Constitution of India – Now, the issue of maintenance pendente lite is infructuous with the dissolution of marriage, but the financial interest of the wife still needs to be protected through grant of permanent alimony – There cannot be strict guidelines or a fixed formula for fixing the amount of permanent maintenance – The quantum of maintenance is subjective to each case and is dependent on various circumstances and factors – In the instant case, it is a matter of record and an admitted fact that the respondent is unemployed while the appellant is a well accomplished banker who has worked in multiple senior roles at various banks over the years – The appellant is currently working as the Chief Executive Officer of Vision Bank in Dubai and his estimated salary is about AED 50,000 per month which means that he is earning around Rs. 10 to 12 Lakhs per month – His DEMAT account details from 2010 reveal investment of Rs. 5 crores – Further, he has three properties – For the respondent, considering the standard of living enjoyed by her during subsistence of the marriage, the prolonged period of separation, and the appellant’s financial capacity, a one-time settlement amount of Rs. 5 crores (Rupees five crores only), appears to be just, fair and reasonable amount for the respondent to be paid by the appellant towards settlement of all pending claims also – Since, the appellant herein has sufficient means to support his child, and thus provision should also be made for his maintenance and financial security as well – An amount of Rs. 1 crore (Rupees one crore only) towards the maintenance and care of the son appears to be fair, which he can utilize for his higher education and as security till he becomes financially independent. [Paras 27, 31, 34, 36, 40, 41]

Case Law Cited

Ajay Mohan and Ors. v. H.N, Rai and Ors. [2007] 13 SCR 298 : (2008) 2 SCC 507; Rajnesh v. Neha and Another [2020] 13 SCR 1093 : (2021) 2 SCC 32; Shilpa Sailesh v. Varun Sreenivasan [2023] 5 SCR 165 : (2022) 15 SCC 754; Kiran Jyot Maini v. Anish Pramod Patel [2024] 7 SCR 942 : (2024) SCC OnLine SC 1724; Ashok Hurra v. Rupa Bipin Zaveri [1997] 2 SCR 875 : (1997) 4 SCC 226; Hitesh Bhatnagar v. Deepa Bhatnagar [2011] 6 SCR 118 : (2011) 5 SCC 234; Vinny Paramvir Parmar v. Paramvir Parmar [2011] 9 SCR 371 : (2011) 13 SCC 112; Vishwanath Agrawal v. Sarla Vishwanath Agrawal [2012] 7 SCR 607 : (2012) 7 SCC 288 – referred to.

List of Acts

Hindu Marriage Act, 1955.

List of Keywords

Quantum of maintenance; Permanent alimony; Pendente lite maintenance; Divorce; One-time settlement amount; Maintenance and financial security; Increased financial requirements; Article 142 of the Constitution.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 14277-14278 of 2024

From the Judgment and Order dated 01.08.2024 of the High Court of Delhi at New Delhi in MATAPP (FC) Nos. 226 of 2018 and 120 of 2019

Appearances for Parties

Ms. Mukta Gupta, Sr. Adv., Viresh B. Saharya, Ujas Kumar, Ms. Tara Narula, Ms. Nitya Gupta, Ms. Aditi Gupta, Akshat Agarwal, Rishabh Mathur, Advs. for the Appellant.

Sanjay Jain, Sr. Adv., Ms. Anu Narula, Sarfaraz Ahmad, Ms. Harshita Sukhija, Nishank Tripathi, Ms. Palak Jain, Rishi Raj Sharma, Advs. for the Respondent.

Judgment / Order of the Supreme Court

Judgment

Vikram Nath, J.

1.Leave granted.

2.The present appeals arise out of the impugned order dated 01.08.2024 passed by the Delhi High Court in MAT. APP.(F.C.) 226/2018 & CM APPL. 36723/2018. CM APPL. 4245/2021. CM APPL. 51379/2022, CM APPL. 52044/2022 and MAT.APP. (F.C.) 120/2019. Vide the impugned order, the High Court dismissed MAT. APP. (F.C.) 226/2018 filed by the Husband against the order of the Family Court, in an application for maintenance pendente lite under section 24 of the Hindu Marriage Act, 19551 along with all pending applications, with costs of Rs. 1,00,000/- (Rupees one lakh only). By the same common order, the MAT.APP. (F.C) 120/2019 filed by the Wife is allowed to the extent that the interim maintenance granted to the Wife under Section 24 of the HMA is enhanced from Rs.1,15,000/-(Rupees one lakh fifteen thousand only) to Rs.1,45,000/- (Rupees one lakh forty five thousand only) per month from the date of filing of enhancement application.

3.The parties were married as per Hindu rites and ceremonies on 13.12.1998 and have one son born from their wedlock on 28.05.2001. However, the marital relationship soured and the parties began living separately from January, 2004. Since the date of separation, the son has been residing with the respondent–wife. Subsequently, on 11.05.2004, the appellant–husband filed a petition under Section 13(1) (ia) of the HMA, before the Family Court seeking divorce on the ground of cruelty. During the pendency of the divorce petition, the respondent, on 27.05.2004, filed an application under Section 24 of the HMA seeking pendente lite maintenance for herself and the son. This application was disposed of by the Family Court vide order dated 20.09.2004, directing the appellant to pay a cumulative sum of ₹18,000/- (Rupees eighteen thousand only) per month, comprising ₹15,000/- (Rupees fifteen thousand only) to the respondent and ₹3,000/- to the son.

4.Both parties challenged the Family Court’s order through separate appeals before the High Court. Consequently, vide order dated 21.11.2005, the High Court enhanced the maintenance amount to ₹20,000/- (Rupees twenty thousand only) per month, allocating ₹15,000/- (Rupees fifteen thousand only) to the respondent and ₹5,000/- (Rupees five thousand only) to the son. Subsequently, the respondent filed an application under Sections 24 and 26 of the HMA, seeking further enhancement of interim maintenance. In her application, she claimed an enhanced amount of ₹1,45,000/- (Rupees one lakh forty five thousand only) per month, contending that the appellant’s income had increased significantly, exceeding ₹4,00,000/- (Rupees four lakhs only) per month, inclusive of salary, perks, allowances, and bonuses. She further argued that the financial needs of both, her and the son, had increased manifold since the prior determination of maintenance.

5.During the pendency of the application, the appellant, in July 2015, voluntarily increased the interim maintenance to ₹65,000/- (Rupees sixty five thousand only) per month. He agreed to pay ₹50,000/- (Rupees fifty thousand only) to the respondent, effective from the date of filing the enhancement application on 28.02.2009, and ₹15,000/- (Rupees fifteen thousand only) to the son, effective from July 2015. However, the appellant contended that following the dismissal of his divorce petition on 14.07.2016 upon being withdrawn by him, the Family Court had become functus officio, rendering it incapable of granting any further relief under Sections 24 and 26 of the HMA. He also submitted that the provisions of Section 26 of the HMA do not permit granting of maintenance to an adult male child.

6.The respondent’s application for enhanced interim maintenance rested on her assertion of significant changes in circumstances since the last maintenance order, including the increased financial requirements of herself and the son. On the other hand, the appellant’s position focused on the legal implications of the withdrawal of his divorce petition and the applicability of Section 26 of the HMA concerning the maintenance of an adult male child.

7.The Family Court, in its order dated 16.08.2018, allowed the respondent’s application for enhancement of maintenance and held that the relief in an application filed under Section 24 of the HMA can only be granted from the date of filing of the application, i.e., 28.02.2009, until the date the main divorce petition was dismissed as withdrawn, i.e., 14.07.2016. Proceedings under Section 26 of the HMA are independent of the main divorce proceedings, and relief under this section can be granted for a period beyond the dismissal of the main divorce petition. The Court therein observed that the appellant had adopted delaying tactics, which prevented the timely resolution of the respondent’s enhancement application. The appellant had been evasive in disclosing his actual income and assets, concealing his true financial status, including his movable and immovable properties. Therefore, he failed to discharge his moral and legal obligations to provide reasonable and just maintenance to his wife and son, commensurate with their social and economic standing.

8.The Family Court held that the respondent and her son are entitled to enhanced maintenance considering the increased expenditures for a growing child and the respondent’s requirements aligned with her social status. Accordingly, the Family Court directed the appellant to pay the following amounts:

i.₹1,15,000/- (Rupees one lakh fifteen thousand only) per month as pendente lite maintenance to the wife and the son from 28.02.2009 to 14.07.2016, when the divorce petition was withdrawn.

ii.₹35,000/- (Rupees thirty five thousand only) per month to the son from 15.07.2016, until he attains the age of 26 years or becomes financially independent, whichever is earlier. This amount shall be subject to a 10% increase every two years starting 28.05.2019.

iii.Litigation costs of ₹2,00,000/- (Rupees two lakhs only).

9.Both the parties challenged the above order of the Family Court vide two separate appeals before the High Court. It is the judgment passed in these appeals by the High Court, which is challenged before us by the appellant.

10.The High Court considered whether the Family Court loses its jurisdiction to decide pending applications under Sections 24 and 26 of the HMA, upon withdrawal of the main divorce petition. The appellant argued that the Family Court becomes functus officio upon such withdrawal, and therefore, proceedings for interim maintenance and child-related relief under Sections 24 and 26 of the HMA, respectively, could not be adjudicated. This contention was based on the assumption that the statutory jurisdiction under Sections 24 and 26 of the HMA is ancillary to the divorce proceedings and cannot survive withdrawal of the main case. The High Court rejected this argument, holding that both provisions are independent in nature and continue to operate despite the withdrawal of the divorce petition. The High Court observed that the legislature’s intent behind Section 24 of the HMA is to ensure that a financially dependent spouse is not left without resources during the pendency of matrimonial disputes, and this obligation cannot be unilaterally nullified by withdrawal of the petition. It emphasized that allowing withdrawal of the main petition to terminate Section 24 of the HMA proceedings would render the dependent spouse financially vulnerable and create a procedural loophole for evasion of legal obligations. The High Court concluded that interim maintenance proceedings have an independent existence and are not strictly ancillary to the main proceedings. It held that the Family Court’s jurisdiction to adjudicate interim maintenance under Section 24 of the HMA extends until the date of withdrawal of the main petition, thereby ensuring that the dependent spouse’s financial security is not abruptly disrupted by procedural tactics.

11.With respect to Section 26 of the HMA, which pertains to custody, maintenance, and education of minor children, the High Court provided a detailed analysis of the statutory language and intention. It held that the provision explicitly permits Courts to make orders “from time to time,” granting or modifying reliefs related to children, irrespective of the pendency or withdrawal of the main matrimonial proceedings. The High Court reasoned that matters concerning the welfare of children are not merely incidental to the matrimonial dispute but are of paramount and enduring importance. Recognizing that the interests of the children are paramount, the High Court clarified that the Family Court retains jurisdiction under Section 26 of the HMA even after withdrawal of the main petition, ensuring that children’s needs are addressed in an ongoing and dynamic manner.

12.The High Court also dismissed the appellant’s appeal placing reliance on the this Court’s decision in Ajay Mohan and Ors. v. H.N, Rai and Ors.,2 observing that the judgment was delivered in a different context and was not applicable to matrimonial proceedings under the HMA. It noted that this Court in Ajay Mohan (Supra), did not address the specific statutory framework or the unique considerations governing Sections 24 and 26 of the HMA. Reaffirming its position, the High Court underscored that the provisions under Sections 24 and 26 of the HMA serve distinct and independent purposes—one ensuring financial support for the dependent spouse and the other protecting the welfare of minor children. It concluded that the Family Court’s jurisdiction to adjudicate these matters persists independent of the status of the primary matrimonial dispute, thereby reinforcing the legislative objective of ensuring fairness and equity in matrimonial proceedings.

13.The High Court, while deciding the correctness of interim maintenance provided by the Family Court, heavily relied on the judgment of this Court in Rajnesh v. Neha and Another.3 This Court, in this judgment laid down the principles to ensure equitable determination of financial support for the wife and dependent child. It reiterated that maintenance should be determined after considering the status and lifestyle of the parties, reasonable needs of the wife and children, the wife’s educational qualifications, professional skills, and earning capacity, as well as the appellant’s financial standing and obligations. It must also address the rising cost of living and inflation to ensure a standard of living that is proportionate to the appellant’s financial capacity and consistent with the standard of living the wife and children were accustomed to prior to separation. This Court highlighted that a husband cannot evade his duty of disclosure by concealing assets, as financial transparency is critical to the fair adjudication of maintenance claims.

14.In this case, the High Court observed that the appellant’s income, primarily from employment and investments, demonstrated his ability to provide for the wife and child’s maintenance adequately. The evidence revealed that the appellant earned over ₹4,00,000 (Rupees four lakhs only) per month between 2007 and 2016. Although he claimed higher living expenses due to his residence in Mauritius, the High Court found his arguments to be unsubstantiated, as his financial resources allowed him to meet maintenance obligations without undue hardship. The High Court further noted several instances of the appellant’s deliberate attempts to mislead the judicial process. He withheld critical financial documents and selectively disclosed information to conceal the full extent of his wealth. The inquiry into the statutory forms of the appellant revealed that he had investments in mutual funds valued at ₹5.10 crores as early as 2009-2010, significant sums deposited in bank accounts, and other financial transactions that were not initially disclosed.

15.The High Court also identified false representations by the appellant regarding his property and income. He denied ownership of a property located at F-146, Richmond Park, Gurgaon, despite evidence of its ownership and rental income accruing to him. Additionally, the appellant misrepresented his association with Prasham Consultants LLP, wherein he continued to receive financial benefits until his father replaced him in 2016. These findings demonstrated a pattern of deliberate suppression of material facts and assets by the appellant, aimed at minimizing his maintenance liability. Such conduct warranted judicial intervention to ensure justice and provide adequate financial support to the wife and child, reflecting principles of fairness, transparency, and equity. Consequently, the High Court directed the appellant to pay interim maintenance that adequately addressed the needs of the wife and child, proportionate to his financial capacity and consistent with the obligations of a responsible spouse and parent.

16.Consequently, the High Court dismissed the appellant’s appeal challenging the order of interim maintenance granted by the Family Court, and, while allowing the respondent’s appeal, granted the following relief:

i.MAT.APP. (F.C) 120/2019 filed by the wife is allowed to the extent that the interim maintenance granted to the wife under Section 24 of the HMA is enhanced from Rs. 1,15,000/- (Rupees one lakh fifteen thousand only) to Rs. 1,45,000/- (Rupees on lakh forty five thousand only) per month from the date of filing of enhancement application i.e. 28.02.2009 till the date of withdrawal of divorce petition by the appellant i.e. 14.07.2016.

ii.All amounts paid by the appellant to the wife and the son till date shall be duly adjusted.

iii.The appellant shall also be liable to pay interest at the rate of 12% per annum towards the shortfall in the maintenance amount for the concerned period. The interest shall be calculated on the amount of deficit from the time it became due in a particular month and till the time it is paid.

iv.Based on the aforesaid, the arrears of maintenance to both the wife and the son, along with the interest, shall be paid within a period of eight (8) weeks from today.

17.The appellant is before us challenging the above judgment of the High Court on the grounds that the respondent has played a fraud on the Courts by concealing material/relevant documents and by filing false affidavits in support of her enhancement application, and that the son could not be granted maintenance till the age of twenty-six years as per the law. The interest @ 12% per annum in punitive in nature even though he had never defaulted in payment of interim maintenance.

18.We heard the parties in camera to discuss the possibility of an amicable solution but during the proceedings both the parties submitted that they are willing to have the marriage annulled by mutual consent as there remains no possibility of a reunion between them.

19.During the interaction before this Court, we found both the parties to be fair and reasonable in their approach, demeanor and conduct. They have shown an honest intention to amicably settle their disputes instead of maligning each other and unnecessarily delaying the proceedings.

20.Learned senior counsels for the respective parties have made their submissions at length. The parties have also filed their affidavits of assets as directed by this Court.

21.Before we proceed further, it is relevant to note that the parties stayed together only for around five years of the marriage, and even though they have a son out of the wedlock, they have been staying separately for almost over two decades now. They have made multiple serious allegations against each other and have been conducting litigations. They have no intention of reconciling, their marriage exists only for namesake, and there has been no cohabitation between the parties since 2004. Though the petition for dissolution of marriage has been withdrawn by the appellant, the interim maintenance proceedings have been going on between the parties since 2004.

22.The admitted long-standing separation, nature of differences, prolonged litigations pending adjudication, and the unwillingness of the parties to reconcile, are evidence enough to show that the marriage between the parties has completely broken down irretrievably.

23.A Constitution Bench of this Court in its judgment in the case of Shilpa Sailesh v. Varun Sreenivasan,4 laid down that it has the discretionary power to dissolve a marriage which in its opinion and on the evidence has broken down irretrievably. The Court is required to exercise this discretion cautiously while analyzing the facts and evidence of each case. In order to arrive at the decision regarding whether the marriage has irretrievably broken down, the Court needs to factually examine and firmly establish the same, after careful consideration.

24.In Shilpa Sailesh (Supra), this Court further laid down the factors to be considered for such examination, and the same were reiterated in the case of Kiran Jyot Maini v. Anish Pramod Patel.5 This Court in both these judgments opined that the factors to be examined include the period of cohabitation between the parties, the period of separation, the attempts made for reconciliation, nature and gravity of allegations made between the parties, and such other similar factors.

25.This Court in plethora of judgments, such as Shilpa Sailesh (Supra) and Kiran Jyot Maini (Supra), Ashok Hurra v. Rupa Bipin Zaveri6 and Hitesh Bhatnagar v. Deepa Bhatnagar,7 has laid down the clear position that a marriage can be dissolved by this Court on the ground of irretrievable breakdown when the relationship is so strained that the marriage has succumbed to the long standing differences between the parties and it has become impossible to save such a relationship. When the Court is convinced that there is no scope for the marriage to survive and no useful purpose, emotional or practical, would be served by continuing the soured relationship, and it finds that the marriage is completely dead, then it can exercise its inherent power under Article 142 of the Constitution of India to dissolve the marriage.

26.In the present case, even though the parties cohabited for about five to six years after marriage, but they have been living separately for more than two decades now. From the material on record, it also appears that even during the period of cohabitation the relationship between the parties was strained. The parties have made multiple serious allegations against each other. The appellant has contended that the respondent was short-tempered, hostile and behaved inappropriately with him and his parents, which led him into depression. The respondent has alleged that the appellant’s family was indifferent towards her from the beginning, they had created an uncomfortable environment for her, and the appellant showed no concern or care towards her. She further alleged that in the five years of cohabitation, the appellant was hostile towards her, she was treated like a domestic help, was never taken care of, and she was never treated as a wife by him. She finally left her matrimonial house fearing threat to her life, after hearing conversations between the appellant and his mother.

27.It is evident that the relationship between the parties appears to be strained from the beginning and only further soured over the years. Reconciliation proceedings during the pendency of the divorce petition also failed. The parties have been litigating maintenance proceedings for a prolonged period, and there appears to be no cogent reason to only deal with the issue of interim maintenance after twenty years of strained relationship and separation. These facts are admitted by the parties before us, and they have also mutually agreed for the dissolution of their marriage. Therefore, we believe that the marriage between the parties should be dissolved by this Court while exercising the discretionary power under Article 142 of the Constitution of India.

28.Thus, considering the facts of this case, all the material on record, submissions of the parties and analyzing the same in light of the factors stated above, the marriage between the appellant and the respondent is ordered to be dissolved.

29.The main issue between the parties all these years, since separation, is the quantum of maintenance to be paid by the appellant to the respondent. The issue of maintenance pendente lite is now infructuous with the dissolution of marriage, but the financial interest of the wife still needs to be protected through grant of permanent alimony. The learned senior counsels for the parties have made submissions at length regarding the financial condition of both the parties. In order to establish the correct financial position of both the parties, they have filed their respective affidavits of income and assets as ordered by this Court.

30.Before going into the details of the financial position of the parties, it is imperative that we highlight the position of law with regard to determination of permanent alimony. This Court, in a catena of judgments, has laid down the factors that needs to be considered in order to arrive at a just, fair and reasonable amount of permanent alimony.

31.There cannot be strict guidelines or a fixed formula for fixing the amount of permanent maintenance. The quantum of maintenance is subjective to each case and is dependent on various circumstances and factors. The Court needs to look into factors such as income of both the parties; conduct during the subsistence of marriage; their individual social and financial status; personal expenses of each of the parties; their individual capacities and duties to maintain their dependents; the quality of life enjoyed by the wife during the subsistence of the marriage; and such other similar factors. This position was laid down by this Court in Vinny Paramvir Parmar v. Paramvir Parmar,8 and Vishwanath Agrawal v. Sarla Vishwanath Agrawal.9

32.This Court in the case of Rajnesh v. Neha (Supra), provided a comprehensive criterion and a list of factors to be looked into while deciding the question of permanent alimony. This judgment lays down an elaborate and comprehensive framework necessary for deciding the amount of maintenance in all matrimonial proceedings, with specific emphasis on permanent alimony. The same has been reiterated by this Court in Kiran Jyot Maini v. Anish Pramod Patel (Supra). The primary objective of granting permanent alimony is to ensure that the dependent spouse is not left without any support and means after the dissolution of the marriage. It aims at protecting the interests of the dependent spouse and does not provide for penalizing the other spouse in the process. The Court in these two judgments laid down the following factors to be looked into:

i.Status of the parties, social and financial.

ii.Reasonable needs of the wife and the dependent children.

iii.Parties’ individual qualifications and employment statuses.

iv.Independent income or assets owned by the applicant.

v.Standard of life enjoyed by the wife in the matrimonial home.

vi.Any employment sacrifices made for the family responsibilities.

vii.Reasonable litigation costs for a non-working wife.

viii.Financial capacity of the husband, his income, maintenance obligations, and liabilities.

These are only guidelines and not a straitjacket rubric. These among such other similar factors become relevant.

33.This Court in Kiran Jyot Maini (Supra), while discussing the husband’s obligation to maintain the wife and the importance of his financial capacity in deciding the quantum, observed that:

“26. Furthermore, the financial capacity of the husband is a critical factor in determining permanent alimony. The Court shall examine the husband›s actual income, reasonable expenses for his own maintenance, and any dependents he is legally obligated to support. His liabilities and financial commitments are also to be considered to ensure a balanced and fair maintenance award. The court must consider the husband’s standard of living and the impact of inflation and high living costs. Even if the husband claims to have no source of income, his ability to earn, given his education and qualifications, is to be taken into account. The courts shall ensure that the relief granted is fair, reasonable, and consistent with the standard of living to which the aggrieved party was accustomed. The court’s approach should be to balance all relevant factors to avoid maintenance amounts that are either excessively high or unduly low, ensuring that the dependent spouse can live with reasonable comfort post-separation.”

34.In the present case, it is a matter of record and an admitted fact that the respondent is unemployed while the appellant is a well accomplished banker who has worked in multiple senior roles at various banks over the years. We have perused the records of finances produced before us. Even though the records of the DEMAT accounts and the employment letters produced by the appellant are almost ten years ago or earlier, his financial position can be suitably ascertained from them.

35.It is admitted on record that the respondent is a home maker and has not been working in all these years, the son lives with her, who has now completed his B. Tech. course, and they reside in a house owned by the respondent’s mother. The appellant has paid for the son’s education as well as paid the interim maintenance as ordered by the Family Court. The son is now major and has also completed his graduation.

36.The appellant is currently working as the Chief Executive Officer of Vision Bank in Dubai and his estimated salary is about AED 50,000 per month which means that he is earning around Rs. 10 to 12 Lakhs per month. Though he has filed details of his DEMAT accounts from 2010, it is revealed that he had investments of around Rs.5 crores at that time. Further, he has three properties worth approximately Rs.2 crores, Rs.5 crores and Rs.10 crores, respectively.

37.During the period of cohabitation, the parties were initially residing in Mumbai when the appellant was working as a Foreign Exchange Executive with Global Trust Bank and subsequently in Chennai when the appellant changed his job. The appellant has worked at multiple positions in prestigious Banks and stayed in metropolitan cities with the respondent during the subsistence of the marriage.

38.In compliance of this Court’s order dated 23.09.2024, the appellant has also paid Rs. 72 Lakhs as arrears of maintenance in addition to the maintenance already paid by him.

39.It is not disputed that the appellant has the legal obligation as well as the financial capacity to maintain the respondent after dissolution of the marriage. As held by us in Kiran Jyot Maine (Supra), it is also necessary to ensure that the amount of permanent alimony should not penalize the husband but should be made with the aim of ensuring a decent standard of living for the wife.

40.Considering the material on record, the totality of the circumstances and the facts of this case, a one-time settlement amount with provision for the respondent as well as the son, would be a fair arrangement. For the respondent, considering the standard of living enjoyed by her during subsistence of the marriage, the prolonged period of separation, and the appellant’s financial capacity, a one-time settlement amount of Rs. 5 crores (Rupees five crores only), appears to be just, fair and reasonable amount for the respondent to be paid by the appellant towards settlement of all pending claims also.

41.It is also equitable and only obligatory for a father to provide for his children, especially when they have the means and the capacity to do the same. Even though the son is now major and has just finished his engineering degree, the High Court has rightly observed that it is only after completion of a college/ university degree and in some cases, completing a post-graduation/ professional degree, would the child be able to secure employment. In fact, it can safely be concluded that, in today’s competitive world, gainful employment may be feasible only after the child has pursued education beyond 18 years of age. Mere completion of his engineering degree does not guarantee a gainful employment, in these competitive times. The appellant herein has sufficient means to support his child, and thus provision should also be made for his maintenance and financial security as well. An amount of Rs. 1 crore (Rupees one crore only) towards the maintenance and care of the son appears to be fair, which he can utilize for his higher education and as security till he becomes financially independent.

42.Therefore, we fix the above mentioned amount as one-time settlement amount to be paid by the appellant to the respondent and his son within a period of four months from the date of this judgment.

43.Consequently, the appeals are disposed of with the above observations and directions to the parties. Accordingly, decree of divorce be granted in exercise of this Court’s power under Article 142 of the Constitution of India. Further, the appellant shall pay the amount provided above towards permanent alimony to the respondent and his son within the time stipulated above. The Registry to draw a decree accordingly.

Result of the case: Appeals disposed of.

1 HMA

2 [2007] 13 SCR 298 : (2008) 2 SCC 507

3 [2020] 13 SCR 1093 : (2021) 2 SCC 32

4 [2023] 5 SCR 165 : (2022) 15 SCC 754

5 [2024] 7 SCR 942 : (2024) SCC OnLine SC 1724

6 [1997] 2 SCR 875 : (1997) 4 SCC 226

7 [2011] 6 SCR 118 : (2011) 5 SCC 234

8 [2011] 9 SCR 371 : (2011) 13 SCC 112

9 [2012] 7 SCR 607 : (2012) 7 SCC 288

©2024 Supreme Court of India. All Rights Reserved.

Code of Civil Procedure, 1908 – Ord.23 r.3 – Compromise of suit – Suit for declaration and injunction by the appellant – Dismissed by trial court – Appellant filed first appeal – During pendency, compromise reached between parties and in terms thereof, the High Court disposed the first appeal – However, failure of the respondent to comply with compromise terms – Application to restore the appeal filed by the appellant alleging fraud – High Court dismissed the same on the ground that parties not given liberty to restore the appeal while recording compromise – Correctness: Held: Explanation to Ord.23 r.3 clearly states that void and voidable agreements under the Contract Act shall not be deemed to be lawful – By alleging fraud in his recall application, the appellant is effectively impugning the legality of the compromise as proving the same would render the agreement voidable under the Contract Act – When the court disposes of a proceeding pursuant to a compromise u/Ord.23, r.3, it bears the duty to examine this issue and be satisfied that the agreement or compromise is lawful – Said issue can be agitated by way of a recall application even after the compromise decree has been passed – High Court dismissed the application solely on the ground that the order recording the compromise does not grant liberty to restore the appeal – This is not the correct approach, as it defeats the statutory right and remedy available to the appellant under the CPC – Only the court that entertains the petition of compromise can determine its legality, at the time of recording the compromise or when it is questioned by way of a recall application – No other remedy is available to the party who is aggrieved by the compromise decree as appeal or fresh suit not maintainable – High Court not correct in curtailing the statutory remedy available to the appellant – When there is a statutory remedy available to a litigant, no question of a court granting liberty to avail of such remedy – No occasion for the court to deny liberty to file for restoration and the consequent dismissal of the recall application by the impugned order on this ground alone does not arise – As a matter of public policy courts must not curtail statutorily provisioned remedial mechanisms available to parties – Compromise deed itself recognises the parties’ right to approach the court to question its validity – Order of the High Court set aside – Matter remanded to High Court for deciding application for recall. [Paras 13-17]

[2024] 12 S.C.R. 453 : 2024 INSC 970

Navratan Lal Sharma v. Radha Mohan Sharma & Ors.

(Civil Appeal No. 14328 of 2024)

12 December 2024

[Pamidighantam Sri Narasimha* and Manoj Misra, JJ.]

Issue for Consideration

Issue arose as regards the right of a party to get the first appeal restored if compromise decree specifically does not give such liberty.

Headnotes†

Code of Civil Procedure, 1908 – Ord.23 r.3 – Compromise of suit – Suit for declaration and injunction by the appellant – Dismissed by trial court – Appellant filed first appeal – During pendency, compromise reached between parties and in terms thereof, the High Court disposed the first appeal – However, failure of the respondent to comply with compromise terms – Application to restore the appeal filed by the appellant alleging fraud – High Court dismissed the same on the ground that parties not given liberty to restore the appeal while recording compromise – Correctness:

Held: Explanation to Ord.23 r.3 clearly states that void and voidable agreements under the Contract Act shall not be deemed to be lawful – By alleging fraud in his recall application, the appellant is effectively impugning the legality of the compromise as proving the same would render the agreement voidable under the Contract Act – When the court disposes of a proceeding pursuant to a compromise u/Ord.23, r.3, it bears the duty to examine this issue and be satisfied that the agreement or compromise is lawful – Said issue can be agitated by way of a recall application even after the compromise decree has been passed – High Court dismissed the application solely on the ground that the order recording the compromise does not grant liberty to restore the appeal – This is not the correct approach, as it defeats the statutory right and remedy available to the appellant under the CPC – Only the court that entertains the petition of compromise can determine its legality, at the time of recording the compromise or when it is questioned by way of a recall application – No other remedy is available to the party who is aggrieved by the compromise decree as appeal or fresh suit not maintainable – High Court not correct in curtailing the statutory remedy available to the appellant – When there is a statutory remedy available to a litigant, no question of a court granting liberty to avail of such remedy – No occasion for the court to deny liberty to file for restoration and the consequent dismissal of the recall application by the impugned order on this ground alone does not arise – As a matter of public policy courts must not curtail statutorily provisioned remedial mechanisms available to parties – Compromise deed itself recognises the parties’ right to approach the court to question its validity – Order of the High Court set aside – Matter remanded to High Court for deciding application for recall. [Paras 13-17]

Case Law Cited

Banwari Lal v. Chando Devi [1992] Supp. 3 SCR 524 : (1993) 1 SCC 581; Pushpa Devi v. Rajinder Singh [2006] Supp. 3 SCR 370 : (2006) 5 SCC 566 – relied on.

Bhanu Kumar Jain v. Archana Kumar [2004] Supp. 6 SCR 1104 : (2005) 1 SCC 787; Shiv Shakti Coop. Housing Society, Nagpur v. Swaraj Developers [2003] 3 SCR 762 : (2003) 6 SCC 659; R. Rajanna v. S.R. Venkataswamy [2014] 14 SCR 535 : (2014) 15 SCC 471; Triloki Nath Singh v. Anirudh Singh [2020] 4 SCR 650 : (2020) 6 SCC 629; R. Janakiammal v. S.K. Kumaraswamy [2021] 6 SCR 333 : (2021) 9 SCC 114; Sree Surya Developers & Promoters v. N. Sailesh Prasad [2022] 3 SCR 1081 : (2022) 5 SCC 736; Basavaraj v. Indira [2024] 2 SCR 935 : (2024) 3 SCC 705 – referred to.

List of Acts

Contract Act, 1872; Code of Civil Procedure, 1908.

List of Keywords

Right of party to get the first appeal restored; Compromise decree; Compromise of suit; Void and voidable agreements; Fraud in recall application; Statutory right and remedy; Restoration; Remedial mechanisms; Compromise deed.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 14328 of 2024

From the Judgment and Order dated 19.10.2023 of the High Court of Judicature for Rajasthan at Jaipur in SBCMA No. 162 of 2022

Appearances for Parties

Varinder Kumar Sharma, Adv. for the Appellant.

Ms. Surabhi Guleria, Ms. Megha Karnwal, Advs. for the Respondents.

Judgment / Order of the Supreme Court

Judgment

Pamidighantam Sri Narasimha, J.

1.Leave granted.

2.The appellant initially filed a suit for declaration and injunction, which was dismissed by the Trial Court. The appellant then filed a first appeal. During its pendency, the parties reached a compromise, agreeing to dispose of the appeal based on its terms. On 14.07.2022, the High Court decided the appellant’s application under Order 23, Rule 3 of the Code of Civil Procedure, 19081 and disposed of the first appeal in terms of the compromise. However, when the respondent failed to comply with the compromise terms, the appellant filed an application to restore the appeal. Unfortunately, this application was dismissed by the order impugned before us, citing that the High Court had not granted liberty for restoration of the appeal while recording the compromise.

3.After careful consideration of the statutory framework and Order 23, Rules 3 and 3A, as informed by relevant judicial precedents, we have allowed the appeal. We have directed that, in such circumstances, restoration is the sole remedy, which the aggrieved party may exercise as a statutory right.

4.The short facts are that the appellant is the owner of the suit property. He filed a suit against the respondents for cancellation of the power of attorney dated 19.07.2010 and 27.07.2010, sale deeds dated 31.08.2010 and 15.09.2010, and grant of permanent and mandatory injunction on the ground that respondent no. 1 forged the abovementioned power of attorney and subsequently entered into the abovementioned sale deeds for the suit property in favour of respondent no. 2. The Trial Court dismissed the suit on 17.02.2014, and the appellant preferred a first appeal before the Rajasthan High Court.

5.During the pendency of the first appeal, the appellant and respondent no. 2 entered into a compromise, recorded in deed dated 18.05.2022 and corrigendum compromise dated 08.07.2022. The compromise contemplated development of the suit property, as per which certain amounts were to be paid by respondent no. 2 to the appellant. Paras 4 and 7 of the compromise deed dated 18.05.2022 are relevant and extracted hereinbelow for ready reference:

“(4) That there is a first appeal no. between the parties in the Honourable State High Court. 210/2014 is pending. The said compromise will be presented in other cases and both the parties will be able to get them resolved on the basis of the compromise, but if the terms of the compromise are violated then the second party will have the right to get the said appeal number 210/2014 reinstated by submitting an application.

***

(7) That the first party issued a check dated 18/5/22 to the second party, check no. 160711 amount of Rs 11,00,000/- has been given today itself, payment can be taken by presenting the check in the bank on the date written in it. After giving the lease of the developed land, an amount equal to the value of the said amount will be transferred to Khasra No. Out of 11, the second party will give it to the first party. If any check is dishonoured, the agreement will be considered void.”

6.The parties filed an application under Order 23, Rule 3 of the CPC for disposal of the first appeal as per the compromise, wherein it was stated that respondent no. 1 does not have any objection to the compromise and that the appellant can file for restoration of the appeal if the agreed payment is not completed and the cheques are dishonoured.

7.By order dated 14.07.2022, the High Court disposed of the first appeal by taking the compromise dated 18.05.2022 and the corrigendum compromise dated 08.07.2022 on record and making them a part of its order. However, it also held that the parties do not have liberty to get the first appeal restored. The relevant portion of the order reads:

“5. This Court, without entering into the merits of appeal but without giving any liberty to get restored the first appeal, is of considered opinion that when both parties have entered into the terms of compromise and have agreed to abide by the terms of compromise, this appeal deserves to be disposed of accordingly.

6. Hence the compromise dated 18.05.2022 along with corrigendum compromise dated 08.07.2022 is taken on record and the first appeal is disposed of in terms of compromise.

7. The compromise dated 18.05.2022 along with corrigendum compromise dated 08.07.2022 shall be treated as part of this order.”

(emphasis supplied)

8.When the cheques issued by respondent no. 2, said to be in furtherance of the compromise were dishonoured, the appellant moved the High Court for restoration of the appeal alleging fraud and illegal interference with his possession and attempts to get the land converted without paying the agreed amounts. By the order impugned before us, the High Court dismissed the application on the only ground that in its order dated 14.07.2022, the Court clearly recorded that the parties were not given liberty to restore the appeal. The High Court observed that since the order dated 14.07.2022 was a consensual order and the parties were aware that there was no liberty to get the first appeal restored, the application for restoration was not entertainable even if the compromise is not acted upon. The short order of the High Court dated 19.10.2023 is extracted hereinbelow:

“1. Instant misc. application has been filed by the appellant-plaintiff seeking to restore S.B. Civil First Appeal NO.210/2014 by recalling the order dated 14.07.2022 whereby and whereunder the first appeal was disposed of in terms of compromise dated 18.05.2022 arrived at between parties.

2. It has been stated in the application that cheques issued by respondents in terms of the compromise have been dishonoured and respondents have not adhered to the terms of the compromise, hence the first appeal be restored to be heard on merits.

3. By perusal of the order dated 14.07.2022, more particularly para No.5, it stands clear that this Court while disposing of the first appeal in terms of the compromise has clearly observed that parties would be not at liberty to get restore this first appeal. The order dated 14.07.2022 is consensual order and both parties were well aware that no liberty to restore the first appeal is available, even though the compromise may or may not be acted upon. Therefore, the application for restoration of first appeal is not entertainable.

4. Thus, in view of above, the prayer for restoration of the first appeal is uncalled for. In case, the terms of the compromise dated 18.05.2022 have not been complied with, the applicant-plaintiff is at liberty to take appropriate steps in accordance with law.

5. With aforesaid observations, without recalling of the order dated 14.07.2022, the misc. application stands disposed of.

6. Stay application and any other pending application, if any, stand disposed of.”

9.We have heard the learned counsels for the parties.

10.The relevant provisions under the CPC that govern compromise decrees are contained in Order 23, Rules 3 and 3A, which are extracted hereunder:

“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 to the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in 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.”

11.This Court in Banwari Lal v. Chando Devi 2 has laid down the law on the disposal of a proceeding in accordance with a compromise between the parties and on recall of a compromise decree. It held that under Order 23, Rule 3, the Court must be satisfied upon applying judicial mind that the agreement between the parties is lawful before accepting the same and disposing the suit. Further, the proviso and the Explanation to Order 23, Rule 3 mandate that the court must “decide the question” of whether an adjustment or satisfaction has been arrived at, and it is clarified that void and voidable agreements under the Indian Contract Act, 1872 3 shall be deemed to be not lawful.4 Upon such reading of the provision, it held that the court recording the compromise can examine the legality of the agreement, in accordance with the provisions of the Contract Act, even after the compromise decree is passed and when a party moves an application for recall.5

12.The law on the issue is summarised in Pushpa Devi Bhagat v. Rajinder Singh.6 In this case, the Court also took note of Section 96(3) of the CPC7 and the deletion of Order 43, Rule 1(m) of the CPC by way of an amendment in 1976, as well as Order 23, Rule 3A. The consequence of these is that an appeal against a consent decree and an order recording (or refusing to record) a compromise is not maintainable, nor can a fresh suit be filed for setting aside such decree. Hence, the only remedy available to the aggrieved party is to approach the court that recorded the compromise under the proviso to Order 23, Rule 3. The Court held:

“17. The position that emerges from the amended provisions of Order 23 can be summed up thus:

(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.

(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) of Rule 1 Order 43.

(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3-A.

(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.

Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made…”

(emphasis supplied)

13.In the present case, the appellant has alleged fraud by the respondents in his recall application, which he bears the burden to prove.8 The Explanation to Order 23, Rule 3 clearly states that void and voidable agreements under the Contract Act shall not be deemed to be lawful. By alleging fraud in his recall application, the appellant is effectively impugning the legality of the compromise as proving the same would render the agreement voidable under the Contract Act.9 When the court disposes of a proceeding pursuant to a compromise under Order 23, Rule 3, it bears the duty to examine this issue and be satisfied that the agreement or compromise is lawful. The proviso explicitly obligates the court that entertains the petition of compromise to determine this issue, and as per the law laid down by this Court in Banwari Lal (supra), this issue can be agitated by way of a recall application even after the compromise decree has been passed.

14.By the impugned order, the High Court dismissed the application solely on the ground that the order dated 14.07.2022 recording the compromise does not grant liberty to restore the appeal. We are of the opinion that this is not the correct approach, as it defeats the statutory right and remedy available to the appellant under the CPC. This Court in Pushpa Devi Bhagat (supra), as well as several other cases,10 has held that only the court that entertains the petition of compromise can determine its legality, at the time of recording the compromise or when it is questioned by way of a recall application. No other remedy is available to the party who is aggrieved by the compromise decree as an appeal and fresh suit are not maintainable under the CPC.

15.In view of this legal position, the High Court was not correct in curtailing the statutory remedy available to the appellant in the first place.11 In fact, when there is a statutory remedy available to a litigant, there is no question of a court granting liberty to avail of such remedy as it remains open to the party to work out his remedies in accordance with law.12 Therefore, there was no occasion for the court to deny liberty to file for restoration by its order dated 14.07.2022 and the consequent dismissal of the recall application by the impugned order on this ground alone does not arise. Further, as a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties.

16.It is also relevant that para 4 of the compromise deed dated 18.05.2022 recognises the appellant’s right to file for restoration of appeal in case of non-compliance. Further, para 7 stipulates that the compromise will be considered void in case of non-payment. Reading these clauses together, it is clear that the compromise deed itself recognises the parties’ right to approach the court to question its validity in certain circumstances. These clauses are in line with the public policy consideration of access to justice reflected in Section 28 of the Contract Act that stipulates that agreements which restrain a party from enforcing his rights through legal remedies are void.

17.In this view of the matter, we allow the appeal, set aside the impugned order dated 19.10.2023, and remand the matter to the High Court to decide the application for recall on its own merits. Needless to say that we have not expressed any opinion on the merits of the matter.

18.No order as to costs. Pending applications, if any, stand disposed of.

Result of the case: Appeal allowed.

1 Hereinafter “CPC”.

2 [1992] Supp. 3 SCR 524 : (1993) 1 SCC 581

3 Hereinafter “the Contract Act”.

4 Banwari Lal (supra), paras 11-13.

5 ibid, para 14.

6 [2006] Supp. 3 SCR 370 : (2006) 5 SCC 566

7 Section 96(3) of the CPC reads:

“96. Appeal from original decree.—

(3) No appeal shall lie from a decree passed by the Court with the consent of parties.”

8 Shanti Budhiya Vesta Patel v. Nirmala Jayprakash Tiwari (2010) 5 SCC 104; K. Srinivasappa v. M. Mallamma (2022) 17 SCC 460.

9 Section 19 of the Contract Act provides that when consent to an agreement is caused by fraud, it is voidable at the option of the party whose consent was so caused.

10 R. Rajanna v. S.R. Venkataswamy (2014) 15 SCC 471, para 11; Triloki Nath Singh v. Anirudh Singh (2020) 6 SCC 629, paras 17 and 18; R. Janakiammal v. S.K. Kumaraswamy (2021) 9 SCC 114; Sree Surya Developers & Promoters v. N. Sailesh Prasad (2022) 5 SCC 736, para 9; Basavaraj v. Indira (2024) 3 SCC 705, para 9.

11 See Bhanu Kumar Jain v. Archana Kumar (2005) 1 SCC 787, paras 28 and 36.

12 See Shiv Shakti Coop. Housing Society, Nagpur v. Swaraj Developers (2003) 6 SCC 659, para 36.

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