Tuesday, 1 November 2016

Whether court can permit withdrawal of suit at appellate stage which will have effect of divesting of rights under decree?

In the case of R. Rathnivel (supra), this Court has considered
the question as to whether at a stage where the rights of the parties
are crystallized can be divested of the rights under the decree simply
because of withdrawal of the suit at the appellate stage or not. This
Court has held as follows:-
“12. What is essential is that the matter must have been finally
decided so that it becomes conclusive as between the parties to the
suit in respect of the subject-matter of the suit with reference to
which relief is sought. It is at this stage that the rights of the parties
are crystallised and unless the decree is reversed, recalled, modified
or set aside, the parties cannot be divested of their rights under the
decree. Now, the decree can be recalled, reversed or set aside either
by the court which had passed it as in review, or by the appellate or
revisional court. Since withdrawal of suit at the appellate stage, if
allowed, would have the effect of destroying or nullifying the decree
affecting thereby rights of the parties which came to be vested under
the decree, it cannot be allowed as a matter of course but has to be
allowed rarely only when a strong case is made out. It is for this
reason that the proceedings either in appeal or in revision have to be
allowed to have a full trial on merits.”
This Court after referring to the various decisions of the High Courts
have come to the conclusion that where a decree passed by the trial
Court is challenged in appeal, it would not be open to the plaintiff, at
that stage, to withdraw the suit so as to destroy that decree. In para

22, this court held as under:-
“22. In view of the above discussion, it comes out that where a
decree passed by the trial court is challenged in appeal, it would not
be open to the plaintiff, at that stage, to withdraw the suit so as to
destroy that decree. The rights which have come to be vested in the
parties to the suit under the decree cannot be taken away by
withdrawal of the suit at that stage unless very strong reasons are
shown that the withdrawal would not affect or prejudice anybody’s
vested rights. The impugned judgment of the High Court in which a
contrary view has been expressed cannot be sustained.”
15) In Janatha Textiles (supra), this Court has held that it is an
established principle of law that in a third party auction-purchaser’s
interest in the auctioned property continues to be protected
notwithstanding that the underlying decree is subsequently set aside
or otherwise.
16) In Sneh Gupta (supra), this Court has held that a right to
withdraw a suit in the suitor would be unqualified, if no right has
been vested in any other party.
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8397 OF 2015
(Arising out of Special Leave Petition (C) NO. 10721 OF 2012)
Avenue Supermarts Pvt. Ltd. 
V
Mrs. Nischint Bhalla & Ors. .
Dated:OCTOBER 8, 2015.
Citation: 2015 SCCONLINESC 915


2) The present appeal has been filed against the judgment and
order dated 01.03.2012 passed by the Division Bench of the High
Court of Bombay in Appeal No. 271 of 2009 in Notice of Motion No. 21
of 2006 in Suit No. 3706 of 1995. Before the High Court, an appeal
was filed against the order dated 10.02.2009 passed by the learned
single Judge of the High Court on a Notice of Motion taken by
Defendant Nos. 4A, 4B and 5 respectively in the aforementioned suit
for enforcement and implementation of certain orders passed by the
Court on consent of the parties to the suit.

3) However, before the Division Bench, the original Defendant Nos.
4A, 4B and 5 sought withdrawal of the Notice of Motion No. 21 of
2006 filed by them in the Suit No. 3706 of 1995. The Division Bench
of the High Court opined that as the Notice of Motion taken out by
Defendant Nos. 4A, 4B and 5 seeking interim reliefs and now they
seek withdrawal of that motion, they cannot be prevented from
withdrawing the same with the liberty to seek appropriate relief to
which they may be entitled in the changed circumstances. It had
further held that as a result of the withdrawal of the motion, the order
of the learned single Judge passed on the motion dated 10.02.2009
does not survive for consideration rendering this appeal infructuous.
4) Brief facts:
(a) One Smt Durga Devi Hitkari was owner of various properties at
Mumbai. She died in the year 1991. It appears that there was some
dispute between her heirs regarding the estate left by her. The
plaintiffs therein filed the present suit for administration of estate of
the deceased. The Notice of Motion being No. 3441 of 1995 in the suit
was taken by the plaintiffs therein praying for appointment of a
receiver on the properties left by Late Smt Durga Devi and for
temporary injunction restraining the defendants therein from
disposing or selling or creating any third party rights or interest in the

property.
(b) A learned single Judge of the High Court, vide order dated
04.08.1998 disposed of the Notice of Motion by restraining the
defendants, their agents and servants from creating any third party
interest in or encumbering or selling or transferring or alienating in
any manner whatsoever the immovable properties bearing Survey No.
97 of Mandavi Division, admeasuring 202 sq. yards, Plot No. 66 at
Chembur, Ghatkopar, Mahul Road, admeasuring 502 sq. yards and
ground Ist, 6th and 7th floor of Sky Lark Building known as Hitkari
House along with certain other directions.
(c) On 01.12.1999, the said Award was made rule of the court by
the High Court and a decree in terms of the said Award was passed in
Arbitration Petition No. 148 of 1997.
(d) Being aggrieved, defendants therein moved this Court by filing
special leave petition being No. 9168 of 2000. Before this Court,
learned counsel for the parties filed consent terms of compromise
duly signed by the parties. Vide order dated 11.12.2000, the special
leave petition got disposed of in terms of the consent terms dated
11.12.2000. However, the said order was passed without prejudice to
the parties to move the High Court of Bombay for probate
proceedings. The High Court, vide order dated 15.04.2004, disposed

of the Notice of Motion No. 2998 of 2001 filed in Suit No. 3706 of
1995 in terms of the minutes of the order.
(e) In the minutes, the earlier order of the learned single Judge
dated 04.08.1998 restraining the defendants from transferring
immovable property situated at Chembur was modified and
Defendant Nos. 1, 4 and 6 were permitted to take all necessary steps
to sell the said property on the terms and conditions mentioned in the
minutes.
(f) Bids were invited for the sale of the property at Chembur and
the appellant herein gave bid of Rs. 20,15,00,000/- which was found
to be highest and accepted by the parties also. No challenge was
made to the sale contemplated under the provisions of the Code of
Civil Procedure, 1908 (in short ‘the Code’). As there was delay in
execution of the agreement, Defendant Nos. 4A, 4B and 5 made an
application by way of Notice of Motion being No. 21 of 2006 to the
court for completion and confirmation of the sale process. The
learned single Judge of the High Court, vide order dated 10.02.2009
confirmed the sale process and directed execution of the documents
in favour of the appellant.
(g) The original Defendant Nos. 2, 6 and 7 challenged the order
dated 10.02.2009 by way of Letters Patent Appeal being No. 271 of

2009 before the Division Bench of the High Court. The original
Defendant Nos. 4A, 4B and 5 did not challenge the order dated
10.02.2009.
(h) At the appellate stage, original Defendant Nos. 4A, 4B and 5
made an oral application for withdrawal of the notice of motion filed
by them. The Division Bench of the High Court, vide order dated
01.03.2012, allowed the withdrawal of the Motion while holding that
the order of the learned single Judge dated 10.02.2009 does not
survive for consideration rendering the appeal infructuous. Against
the said order, the appellant has preferred this appeal by way of
special leave.
5) Heard learned senior counsel for the parties.
Rival submissions:
6) Learned senior counsel for the appellant submitted that when
the rights of the parties had been crystallized and findings have been
rendered in favour of the appellant herein and against the
respondents and the same have been confirmed, the Division Bench
of the High Court, without considering the effect thereon on the rights
already accrued to the parties, could not have permitted withdrawal
of the Notice of Motion at the instance of the original Defendant Nos.
4A, 4B and 5. In the alternative, it is submitted that even if the

Division Bench could have allowed withdrawal of the original
application, it had no occasion or cause to observe that on withdrawal
of the original application, the order of the learned single Judge dated
10.02.2009 could not survive for consideration which in effect
amounts to allowing the appeal without making any comments on the
merits or otherwise on the order dated 10.02.2009.
7) He further submitted that the Division Bench was not justified
in granting liberty to the parties to the suit to apply for appointment
of receiver in respect of subject property for sale thereon as the sale in
favour of the appellant herein had been in execution of the First and
the Second decree which can only be set aside on an appropriate
application being made in accordance with the provisions of Order
XXI of the Code and not otherwise. Even if the suit was to be
withdrawn that would not lead to setting aside of the sale in favour of
the appellant herein unless recourse to appropriate proceedings in
accordance with the provisions of Order XXI of the Code is made.
8) Learned senior counsel for the appellant relied upon the
following decisions in support of his contention viz., R. Rathinavel
Chettiar and Another vs. V. Sivaraman and Others (1999) 4 SCC
89, Sneh Gupta vs. Devi Sarup and Others (2009) 6 SCC 194 and
Janatha Textiles and Others vs. Tax Recovery Officer and

Another (2008) 12 SCC 582.
9) Learned senior counsel for the respondents, however, submitted
that as the order dated 10.02.2009 passed by the learned single
Judge was on a Notice of Motion filed by Defendant Nos. 4A, 4B and
5, it was always open for the said defendants to withdraw the Notice
of Motion in the appeal itself and once the court has permitted the
withdrawal of Notice of Motion, the order, if any, passed on the said
Notice of Motion, does not survive.
Discussion:
10) We have given our anxious consideration to the various pleas
raised by learned senior counsel for the parties. It is not in dispute
that vide order dated 04.08.1998 in Administration Suit No. 3706 of
1995, the learned single Judge had restrained the defendants, their
agents and servants therein from creating any third party interest in
or encumbering or selling or transferring or alienating in any manner
whatsoever amongst other properties the immovable property situated
at Chembur, Ghatkoper, Mahul Road bearing Plot No. 66
admeasuring 502 sq. yards also. When the matter was taken up by
way of special leave petition being No. 9168 of 2000 before this Court,
the parties had signed the consent terms and vide order dated
11.12.2000, this Court had disposed of the special leave petition in

terms of the consent terms dated 11.12.2000. However, the said
order was passed without prejudice to the parties to move the High
Court for probate proceedings.
11) The learned single Judge of the High Court, vide order dated
15.04.2004, had taken on record the minutes of the order and the
Notice of Motion was disposed of in terms of the minutes of the order.
In the minutes of the order, the order of injunction in respect of
immovable property at Chembur was varied to the limited extent so as
to enable Defendant Nos. 1, 4 and 6 to take all necessary steps to sell
the said property on the terms and conditions mentioned in the
minutes. It is not necessary to reproduce the minutes of the order.
Suffice it to mention that in terms of the minutes, the appellant
herein submitted its bid of Rs. 20,15,00,000/- which was found to be
the highest and was accepted by the parties. In the Notice of Motion
being No. 21 of 2006 filed by Defendant Nos. 4A, 4B and 5, the
learned single Judge, vide order dated 10.02.2009, had held that the
offer made by the respondent therein who is the appellant before us
stood accepted by all the parties to the suit. While allowing the Notice
of Motion, the learned single Judge gave certain directions in the
operative part of the order dated 10.02.2009. For ready reference, the
directions given in the order dated 10.02.2009 passed by the learned

single Judge are reproduced below:-
 “Order
(1). The respondents shall deposit a sum of Rs. 2,28,15000/- with
the Prothonotary & Senior Master, High Court, Bombay within one
week from the date of signature on the detail order, who should
forthwith invest the said amount in any nationalized Bank as fixed
deposit.
(2). The Advocate for the defendant Nos. 4A, 4B and 5 shall return
the Pay Order dated 5-8-2005 for the amount of R.2,28,15,000/-
back to the respondents against the aforesaid deposit to be made by
the respondents for cancellation of the same.
(3). Within one week therefrom, the defendant Nos. 2, 4A, 4B, 5
and 6 shall handover the original title deeds of the Chembur property
to the Prothonotary and Senior Master, who shall keep the same in
safe custody. Within one week therefrom, the Court Receiver shall
take formal possession of the Chembur property and get it vacated
from the defendants and any party claiming through them. The
Receiver shall then intimate to the respondents about the vacant
possession being available and within one week therefrom the
respondents shall deposit the remaining consideration of Rs.
17,86,85,000/- with the court receiver High Court, Bombay. In case
the amount is not deposited within one week as directed, then the
deposit amount of Rs. 2,28,15,000/- shall stand forfeited and shall
be handed over to the credit of the suit.
(4). In case the amount is deposited as directed above, the
defendant Nos. 2, 4A, 4B, 5 and 6 and Shri Sanjay Sawhney (the heir
of the defendant No. 8) shall execute register and duly admit the
execution before the Sub-Registrar of an irrevocable Power of
Attorney in the format annexed at Exhibit-12 to the affidavit in reply
of the respondents dated 18-10-2007, at the cost and expenses of the
respondents. The Court Receiver shall then handover the possession
of the Chembur property to the respondents and shall also handover
the original title deeds and thereafter the Prothonotary & Senior
Master shall handover the original title deeds to the respondents.
(5). In case the defendants above-mentioned fail to execute the Power
of Attorney, as aforesaid, then the Court Receiver shall execute the
same and register it at the costs and expenses of the respondents
and further if the respondents want, they shall also execute the deed
of conveyance at the costs of the respondents.
(6). The respondents to indemnify and keep indemnified the
defendants against all actions, demands, claims, costs, charges and
expenses by reason of any claim on account of any act or omission of
the Attorneys under the Power of Attorney to be executed in their
favour.
(7) After the completion of the aforesaid sale in favour of the
respondents, the parties shall be entitled to distribution of the
amount and any one of them may apply to the Court for distribution
of the same in terms of the order of the Supreme Court dated 11-12-

2000 and the order of this Court dated 15-4-2004.
(8). The respondents shall pay to the Court Receiver the costs,
charges and expenses of the Receiver to be worked out on the basis
of actuals incurred and estimated by the Court Receiver and not on
the basis of commission and the Court Receiver shall stand
discharged without any further order of this Court.
(9). In case of any difficulty, liberty to the party to approach the
Court. At this stage, the learned senior counsel appearing for the
defendant Nos. 6 and 7 makes oral request for stay of operation of
this order for a period of six weeks. Request granted. The effect and
operation of this order is stayed for a period of six weeks from the
date of signature on the detail order”.
12) From a reading of the directions given by the learned single
Judge in the operative portion of the order dated 10.02.2009
reproduced above, we find that the learned single Judge had directed
the appellant herein who was the respondent before learned single
Judge to deposit a sum of Rs. 2,28,15,000/- with the Prothonotary &
Senior Master, High Court of Bombay within one week and the
advocate for the Defendant Nos. 4A, 4B and 5 was directed to return
the pay order dated 05.08.2005 for the amount of Rs. 2,28,15,000/-
back to the respondents therein against the aforesaid deposit. The
Defendant Nos. 2, 4A, 4B, 5 and 6 were further directed to handover
the original title deeds of Chembur property to the Prothonotary &
Senior Master, High Court of Bombay to be kept in safe custody and
the court receiver to take formal possession of the Chembur property
within one week and get it vacated from the defendants therein and
any party claiming through them. After intimation to the respondents
about the vacant possession being available, the respondent
10Page 11
(appellant herein), was required to deposit the remaining
consideration of Rs. 17,86,85,000/- with the court receiver. In case
the amount is not deposited within one week as directed, the deposit
of Rs. 2,28,15,000/- would stand forfeited and was to be handed over
to the credit of the suit. It was further directed that in case the
amount is deposited as directed, the Defendant Nos. 2, 4A, 4B, 5 and
6 and heir of Defendant No. 8 shall allow the execution of an
irrevocable Power of Attorney in the prescribed format before the subRegistrar.
The court receiver was then directed to hand over the
possession of the Chembur property to the respondent and was also
directed to handover the original title deeds to the respondent. The
conveyance deed was also directed to be executed at the cost of the
respondent.
13) The order dated 10.02.2009, in fact, gave certain directions
regarding the sale of the immovable property at Chembur in favour of
the respondent therein who is the appellant before us. The order
dated 10.02.2009 was brought up in appeal by some of the
defendants. Those defendants, who were appellants in Appeal No.
271 of 2009, had not sought for any withdrawal of appeal. The
question is as to whether Defendant Nos. 4A, 4B and 5, on whose
Notice of Motion No. 21 of 2006, the order dated 10.02.2009 has been

passed giving directions for confirmation of the sale and execution of
the conveyance deed etc., of the immovable property at Chembur in
favour of the present appellant, can be permitted to withdraw and the
order dated 10.02.2009 can be said to be not surviving for
consideration.
14) In the case of R. Rathnivel (supra), this Court has considered
the question as to whether at a stage where the rights of the parties
are crystallized can be divested of the rights under the decree simply
because of withdrawal of the suit at the appellate stage or not. This
Court has held as follows:-
“12. What is essential is that the matter must have been finally
decided so that it becomes conclusive as between the parties to the
suit in respect of the subject-matter of the suit with reference to
which relief is sought. It is at this stage that the rights of the parties
are crystallised and unless the decree is reversed, recalled, modified
or set aside, the parties cannot be divested of their rights under the
decree. Now, the decree can be recalled, reversed or set aside either
by the court which had passed it as in review, or by the appellate or
revisional court. Since withdrawal of suit at the appellate stage, if
allowed, would have the effect of destroying or nullifying the decree
affecting thereby rights of the parties which came to be vested under
the decree, it cannot be allowed as a matter of course but has to be
allowed rarely only when a strong case is made out. It is for this
reason that the proceedings either in appeal or in revision have to be
allowed to have a full trial on merits.”
This Court after referring to the various decisions of the High Courts
have come to the conclusion that where a decree passed by the trial
Court is challenged in appeal, it would not be open to the plaintiff, at
that stage, to withdraw the suit so as to destroy that decree. In para

22, this court held as under:-
“22. In view of the above discussion, it comes out that where a
decree passed by the trial court is challenged in appeal, it would not
be open to the plaintiff, at that stage, to withdraw the suit so as to
destroy that decree. The rights which have come to be vested in the
parties to the suit under the decree cannot be taken away by
withdrawal of the suit at that stage unless very strong reasons are
shown that the withdrawal would not affect or prejudice anybody’s
vested rights. The impugned judgment of the High Court in which a
contrary view has been expressed cannot be sustained.”
15) In Janatha Textiles (supra), this Court has held that it is an
established principle of law that in a third party auction-purchaser’s
interest in the auctioned property continues to be protected
notwithstanding that the underlying decree is subsequently set aside
or otherwise.
16) In Sneh Gupta (supra), this Court has held that a right to
withdraw a suit in the suitor would be unqualified, if no right has
been vested in any other party.
Conclusion:
17) Applying the principles given in the aforementioned decisions to
the facts of the present case, we find that in the order dated
10.02.2009, the learned single Judge while allowing the Notice of
Motion No. 21 of 2006 had held that the highest offer made by the
respondent therein (appellant before us) stood accepted by all the
parties to the suit and thereafter passed certain directions to deposit
the bid amount, execution of the conveyance deed etc. Thus a vested

right has been created in favour of the respondent therein, that is, the
present appellant and that cannot be set at naught simply by
permitting the Defendant Nos. 4A, 4B and 5 to withdraw the Notice of
Motion filed by them. It was for the Division Bench to decide the
appeal on merits instead of permitting the withdrawal of the Notice of
Motion and observing that the order of the learned single Judge
passed on that Motion dated 10.02.2009 does not survive for
consideration.
18) In view of the foregoing discussion, the order dated 01.03.2012
passed by the High Court of Bombay under appeal cannot be
sustained and is hereby set aside. The High Court is directed to
decide the appeal afresh on merits in accordance with law. The
appeal is hereby allowed.
...…………….………………………J.
 (RANJAN GOGOI)
.…....…………………………………J.
 (R.K. AGRAWAL)
NEW DELHI;
OCTOBER 8, 2015.

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