Thursday, 13 August 2020

Whether Judgment debtor can resist the execution of decree if it fails to challenge compromise decree?

True, the trial Court has simply recorded the terms of the compromise. But this compromise carries with it all the elements highlighted in Roshan Lal, a judgment of the Supreme Court's three-Judge Bench: "The compromise must indicate either on its face or in the background of other materials in the case that the tenant expressly or impliedly is agreeing to suffer a decree for eviction because the landlord in the circumstances, is entitled to have such a decree under the law."

33. About the plea of collusion, I must note that the Society has already raised that issue in an independent suit but did not pursue it. It has not even arrayed, in these proceedings, the President eo nominee. Besides, the courts below have, on facts, rejected the Society's plea of collusion. First, the court that passed the decree has inherent jurisdiction. Second, the procedural lapses, if any, have not gone to the root of the matter to nullify that decree. Third, the Society filed a suit on the same cause but later abandoned it. Fourth, in a revision, this Court will not upset findings of fact.

34. In the above context, so long as the decree has remained unchallenged, the Society or its members cannot be heard saying that despite their earlier failed attempt, they still can obstruct the decree. Such an approach, if approved, falls foul of the Rule of Law.

IN THE HIGH COURT OF BOMBAY

Civil Revision Application No. 296 of 2008

Decided On: 11.09.2019

 Nira and Palm Product Producers Co-op. Society's Ltd. and Ors.
Vs. Nirmala Yeshwant Pethe and Ors.

Hon'ble Judges/Coram:
Dama Seshadri Naidu, J.

Citation: MANU/MH/3150/2019


Parties to the Proceedings:

1. The 1st applicant is a Co-operative Society, represented by its Secretary; the 2nd applicant is the Secretary, who brought himself on record eo nominee. The 3rd applicant is the Director of the Society's Executing Committee, and the 4th applicant a member. They have filed this Civil Revision Application against a few respondents. With the first respondent's death, his legal representatives were brought on record. The 2nd respondent, too, is one of the legal representatives of the deceased 1st respondent. But from the beginning, he has been on record as a party on his own. The 3rd respondent is again the Society represented by the Chairman. Curiously, the same Society is the petitioner, too.

2. I understand the Society has accused the Chairman of acting without authority and compromising the suit against the Society's interest. Then, the Chairman ought to have been brought on record eo nominee, for he faces the allegations of mala fides or breach of trust. But the applicants, who include the Society, have once again showed the Society as the 3rd respondent. The only difference is that among the petitioners, the Society is represented by the Secretary; among the respondents, it is represented by the Chairman. Thus, technically, the Chairman is not a party to the proceedings--either ex officio or eo nominee.

Facts:

3. If we touch on the facts briefly, the original owner sold the property in 1988 to the deceased 1st respondent and the 2nd respondent. As they both are mother and son, they purchased the property together for the family. In the legal proceedings, after the 1st respondent's death, all other legal heirs, including the co-purchaser, were brought on record as respondent Nos. 1(a) to 1(f). When the mother and son purchased the property, the applicant-Society had been a tenant in the leased property.

4. In 1998, the 1st respondent filed Regular Civil Suit No. 746 of 1988 against the Society represented by its President/Chairman. Eventually, the plaintiff and the Society, represented by the Chairman, filed a compromise purshis. As per that compromise, in October 1998, the trial Court decreed the suit. As the Society did not abide by the consent terms, the plaintiffs, that is the 1st and the 2nd respondents, filed Execution Application No. 147 of 2000. They wanted to possess the leased property.

5. But the Society, represented by the Secretary, and its members filed Exh. 12 Obstruction Application. The Society examined about six witnesses. It contested that the Chairman had no authority to compromise the suit. The Society and its office bearers also raised other technical pleas, such as want of notice under Section 164 of the Maharashtra Co-operative Society Act. Eventually, the Executing Court dismissed the Obstruction Application, through its order, dated 27th February 2006.

6. Aggrieved, the Society and its members filed Appeal No. 54 of 2006 before the Appellate Bench of the Small Cause Court, Bombay. Even that was dismissed. Then, they have filed Writ Petition No. 4824 of 2007 in the High Court. In July 2007, this Court remanded the matter. It has held that the Executing Court ought to have considered the Obstruction Application as a regular appeal and adjudicated the matter under Section 47, read with Order 21 Rule 97, of CPC. Then, the trial Court renumbered the Obstruction Application as Regular Civil Appeal No. 172 of 2007. In February 2008, it dismissed the appeal on the merits, though.

7. Questioning the Appellate Bench's order, the Society and its Members have filed this Civil Revision Application.

8. The dispute has parallel developments. When the Society suffered a compromise decree, it has, along with its members, filed Regular Civil Suit No. 847 of 1998, questing that decree. Then, the Society was represented by its Secretary. Initially, it wanted the trial Court to suspend the operation of the decree. The trial Court refused. Then, the Society took out a Civil Miscellaneous Appeal, but could not succeed. Eventually, the Society abandoned the suit. As a result, the trial Court dismissed Civil Suit No. 847 of 1998 for non-prosecution. It seems, after failing to have the decree stayed in a suit for declaration, the Society and its members obstructed the execution and, then, have carried on those obstruction proceedings until now.

9. On the other hand, the Chairman who was accused of betraying the Society's interest also filed Regular Civil Suit No. 1000 of 1988 with an identical relief: that the Compromise decree, dated 30th September 1998, be set aside. That suit is said to be pending, still.

Submissions:

Applicants:

10. In the above factual background, Shri Suhas Inamdar, the learned counsel for the applicants, has submitted that the Society and its members have still been in possession of the property. As the Society has never permitted the Chairman to compromise the matter, that compromise and the very decree have become a nullity. To support his contention, he relies on Alka Toraskar v. Vaishya Urban Co-op. Credit Society Ltd, MANU/MH/1097/2006 : 2006(2) Bombay 717. Shri Inamdar has also submitted that once a property has been protected under the Rent Control legislation, mere compromise between the parties does not absolve the trial Court of its legal obligation to examine whether the plaintiffs have made out a ground for eviction in tune with the statutory mandate. On that count, he has relied on Smt. Nai Bahu v. Lala Ramnarayan. MANU/SC/0367/1977 : (1978) 1 SCC 58. In this context, Shri Inamdas has also relied on Roshan Lal v. Madan Lal. MANU/SC/0513/1975 : AIR 1975 SC 2130: 1975(2) SCC 785.

11. Shri Inamdar has also strenuously contended that the trial Court has not applied its mind. It has merely recorded the compromise. This approach, according to him, falls short of the judicial mandate in Nai Bahu. He has, however, fairly submitted that the Society has not filed its bye-laws before the executing Court, for it to ascertain the role of the Chairman. But it is indisputable, according to him, that the bye-laws do mandate that unless the management Committee authorises, the Chairman cannot, for example, compromise legal proceedings, especially, adverse to the Society's interest.

12. Then, Shri Inamdar has drawn my attention to Section 164 of the Maharashtra Co-operative Societies Act, 1960. In its wake, he contends that before any person sues a society, he must notify the Registrar. According to him, admittedly, the plaintiffs issued no notice under Section 164 of the Act.

13. Eventually, Shri Inamdar has contended that plaintiffs secured the decree behind the Society's back, the Chairman colluding with the plaintiffs. In this context, Shri Inamdar submits that a decree can be questioned even collaterally in execution proceedings if it is a nullity or a product of fraud. So he stresses that the Obstruction Application by the Society and its members is eminently sustainable. Yet the trial Court and the Appellate Bench of the Small Cause Court have concurrently erred on material aspects of the case. Thus, he urges this Court to allow the Civil Revision Application.

Respondents:

14. Shri Niranjan Shimpi, the learned counsel for the respondents, has submitted that the Society had already been liquidated or dissolved. In this context, he has drawn my attention to the reply the respondent's filed in the Society's Obstruction Application. He has further submitted that the decree has become final because the Society initially challenged the decree through a separate suit but later abandoned it. The suit stood dismissed for non-prosecution. So long as the decree remains, its consequences must follow.

15. Shri Shimpi has further submitted that the sheer procedural irregularities and shortcomings, if any, in the trial will not nullify a decree. If the trial Court has the inherent jurisdiction, and if its decree has attained finality, minor technical lapses, he contends, will not nullify a validly passed decree. To support his contentions, he has relied on Brakewel Automotive Components (India) Vs. P.R. Selvam Alagappan MANU/SC/0282/2017 : (2017) 5 SCC 371.

16. At any rate, Shri Shimpi has submitted that it is too late in the day for the respondents to contend that the Society's interest has remained intact and that the Judgment suffered serious statutory lapses. Therefore, he urges this Court to dismiss the Civil Revision Application, especially keeping in view the concurrent findings of fact by the courts below.

Reply:

17. In reply, Shri Inamdar has submitted that though initially there was an order liquidating the Society, in Appeal it was set aside by the Competent Authority, that is the Divisional Joint Registrar, Cooperative Society, Pune, Division Pune. Thus, he reiterates that the Society has been very much existing.

18. Heard Shri Suhas Inamdar for the applicants and Shri Niranjan Shimpi for respondent no. 1A.

Discussion:

19. Indeed, the Society suffered a decree, and it was a decree on compromise. Then, the Chairman represented the Society.

20. The Society's Secretary and other members maintained that the Chairman lacked the power to compromise the Suit, especially adverse to the Society's interest. So contending, they filed Regular Civil Suit No. 847 of 1998. They wanted the decree set aside. In that Suit, initially, they wanted an injunction as well as an interim suspension of the decree. But they could not succeed. When the trial Court dismissed the interim application, the applicants filed a Civil Miscellaneous Appeal before the District Court, Solapur. But again, they could not succeed. Eventually, they abandoned the Suit. As a result, the trial Court was constrained to dismiss the suit for non-prosecution.

21. In the meanwhile, the successful plaintiffs initiated the execution proceedings. Confronted by a warrant of eviction, the Society, through its Secretary, and a couple of its office bearers filed an Obstruction Application. They led evidence, too. But the trial Court remained unconvinced, and dismissed the application, and ordered their eviction. Aggrieved, the applicants filed Regular Civil Appeal No. 172 of 2007 before the District Court. But even that Regular Civil Appeal, too, was dismissed on 8th February 2008.

22. If we consider the applicants' contentions, their principal objection is that a decree can be challenged even collaterally in execution proceedings--if it is a nullity. Well-accepted is this legal proposition. But the question is, is this decree a nullity? If it is so, have the applicants taken recourse to a right remedy against that decree?

23. To challenge the decree as fraudulent and, thus, not binding on it, the Society has filed a Suit; but it did not prosecute it. The Suit was dismissed for non-prosecution. Thus, having challenged the decree, and having failed in their attempts, can the applicants turn around and say that they could as well maintain another round of the challenge, collaterally? In this context, I reckon Order 23 Rules 1 and 2 of CPC come in the way. Essentially, the applicants have espoused the same cause both in the suit and in the obstruction Application. The Suit having been rejected, say, for non-prosecution, the applicants cannot have a fresh cause of action in the name of obstruction. I, therefore, hold that their challenge in the obstruction application suffers the statutory bar set up in Order 23 Rule 1 of CPC.

24. Shri Inamdar frontally stresses one aspect: mere compromise in protected tenancy would not absolve the trial Court from its statutory burden of recording the reasons for the decree--that is, about the plaintiffs' establishing the ground of eviction as the statute permits. Here, the trial Court, according to him, has mechanically recorded the terms of the compromise without applying its mind. Indeed, a two-Judge Bench of the Supreme Court in Smt. Nai Bahu has held as well-settled "that where the Rent Control and Restrictions Acts are in operation, a landlord cannot obtain eviction of the tenant unless he can satisfy the requirements of the provisions in those Acts." It is also well-settled, according to Smt. Nai Bahu, that if the court does not find the permissible grounds for eviction disclosed in the pleadings and other materials on the record, no consent or compromise will give jurisdiction to the court to pass a valid decree of eviction.

25. In other words, a decree for eviction of a tenant cannot be passed solely based on a compromise between the parties. The Court must be satisfied with whether a statutory ground for eviction exists and whether the tenant has admitted that ground in the compromise. In this context, Smt. Nai Bahu has held that when a compromise decree is challenged as a nullity, in the course of its execution the executing Court can examine the relevant materials to find out whether the statutory grounds for eviction existed in law. On facts, Smt. Nai Bahu has accepted the compromise decree in that case as lawful, founded on permissible statutory grounds for eviction.

26. Indeed, a compromise decree can be challenged as a nullity in the execution proceedings. But that is not the only mode of challenge. The challenge can be by way of an independent suit. And the Society did that; it filed a suit challenging the decree. Later, it abandoned that suit. Obstruction proceedings, too, are original proceedings akin to a civil suit, and a decree in those proceedings is a deemed decree, amenable to appeal.

27. As Order 23, Rule (1) mandates, "at any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim." Then, sub-rule (4) describes the consequences. If the plaintiff abandons any suit or part of a claim under sub-rule (1), without the court's permission referred to in sub-rule (3), he "shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim."

28. So the Society's second challenge qua the obstruction proceedings, I am afraid, fall foul of Order 23, Rule 1 of CPC. Besides, the Society, albeit through the Chairman, did admit the defendants' claim in the suit.

29. In Roshan Lal, too, a three-Judge Bench of the Supreme Court has similar observations made: that, to get a decree or order for eviction against a tenant whose tenancy is governed by any Rent Restriction or Eviction Control Act, the suitor must make out a case for eviction in accordance with the provisions of the Act. That is, the court should pass a decree for eviction only if it is satisfied on evidence that a ground for passing such a decree in accordance with the requirement of the Statute has been established. Even when the trial proceeds ex parte, this is so. Then, it has observed that the compromise must indicate either on its face or in the background of other material that the tenant has to suffer a decree for eviction because the landlord may otherwise secure a decree under the law. The material part of the judgment reads:

"[i]f however parties choose to enter into a compromise due to any reason such as to avoid the risk of protracted litigating expenses, it is open to them to do so. The Court can pass a decree on the basis of the compromise. In such a situation the only thing to be seen is whether the compromise is in violation of the requirement of the law in other words, parties cannot be permitted to have a tenant's eviction merely by agreement without anything more. The compromise must indicate either on its face or in the background of other materials in the case that the tenant expressly or impliedly is agreeing to suffer a decree for eviction because the landlord in the circumstances, is entitled to have such a decree under the law."

30. Of course, in Brakewel Automotive Components the Supreme Court has reiterated that an executing court can neither travel behind the decree nor sit in appeal over the same or pass any order jeopardising the rights of the parties. It is only in the limited cases "where the decree is by a court lacking inherent jurisdiction or is a nullity that the same is rendered non est and is thus inexecutable." An erroneous decree, according to it, cannot be equaled with one which is nullity.

31. Reverting to the facts of this case, let us examine the compromise pursis dated 30th September 1988. Among other things, it reads:

"1] The plaintiff has filed this suit for possession against the defendant. The suit premises is honestly required to the plaintiff for self use. So also the defendant society has alternate accommodation at Vijapur Road. As the defendant has made change of user, and therefore, the plaintiff is claiming possession. The compromised reached between the plaintiff and defendant out of court is an under;"

(italian supplied)

32. True, the trial Court has simply recorded the terms of the compromise. But this compromise carries with it all the elements highlighted in Roshan Lal, a judgment of the Supreme Court's three-Judge Bench: "The compromise must indicate either on its face or in the background of other materials in the case that the tenant expressly or impliedly is agreeing to suffer a decree for eviction because the landlord in the circumstances, is entitled to have such a decree under the law."

33. About the plea of collusion, I must note that the Society has already raised that issue in an independent suit but did not pursue it. It has not even arrayed, in these proceedings, the President eo nominee. Besides, the courts below have, on facts, rejected the Society's plea of collusion. First, the court that passed the decree has inherent jurisdiction. Second, the procedural lapses, if any, have not gone to the root of the matter to nullify that decree. Third, the Society filed a suit on the same cause but later abandoned it. Fourth, in a revision, this Court will not upset findings of fact.

34. In the above context, so long as the decree has remained unchallenged, the Society or its members cannot be heard saying that despite their earlier failed attempt, they still can obstruct the decree. Such an approach, if approved, falls foul of the Rule of Law.

Under these circumstances, I find no merits in the Civil Revision Application, I accordingly dismiss it.

35. Now, the applicants' counsel wants the Court to suspend the operation of this Judgment for atleast 12 weeks. According to him, the applicants want to take the matter to the Supreme Court. Of course, the respondents' counsel has objected to it.

36. At any rate, subject to the applicants' usual undertaking before the Registry, I suspend the operation of this Judgment for 12 weeks from the date the Judgment is uploaded.




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