It is a settled position of law that where an allegation of fraud is made against a party to an agreement, the said allegation would have to be proved strictly, in order to avoid the agreement on the ground that fraud was practiced on a party in order to induce such party to enter into the agreement. Similarly, the terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved. In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree in the instant case. {Para 35}
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3486-3488 OF 2022
K. SRINIVASAPPA & ORS. VS. M. MALLAMMA & ORS.
Author: NAGARATHNA J.
These appeals assail the judgment and order dated 17th April,
2015, passed by the High Court of Karnataka at Bengaluru in Writ
Petition nos.20607, 20608 and 20609 of 2013, whereby the High
Court disposed of the Writ Petitions filed by plaintiff nos. 4 to 6 and
has recalled order dated 7th July, 2012 by which the compromise had
been recorded by the Lok Adalat, between the parties to Original
Suit No. 876 of 2004, being a suit for partition and separate
possession instituted by plaintiff nos. 1 to 6 on the file of the Court
of the Civil Judge (Junior Division), Rural District, Bangalore.
2. For the sake of convenience, the parties shall be referred to in
terms of their rank and status in O.S. No. 876 of 2004.
3. Briefly stated, the facts giving rise to the present appeal are
that plaintiff nos. 1, 4, 5, 6 and defendant nos. 2 to 5 are children of
M. Krishnappa and M. Mallamma, defendant no. 1. Plaintiff nos. 2
and 3 are the sons of plaintiff no. 1, namely, K. Devraj. The Plaintiffs
filed a suit for partition and separate possession, being O.S. 876 of
2004 on the file of the Court of the Civil Judge, Junior Division, Rural
District Bangalore stating that the suit schedule properties were
acquired by M. Krishnappa and were in joint possession and
enjoyment of the plaintiffs and defendants, until the demise of M.
Krishnappa. That following the death of M. Krishnappa, defendant
no. 1 was in possession of the suit schedule properties and was
acting in a manner detrimental to the interests of the plaintiffs and
had attempted to alienate the properties without effecting a
partition so as to crystallise the rights of each of the parties to the
suit. That requests of the plaintiffs to effect a partition of the
property, were met with threats by the defendants to alienate the
same.
With the aforesaid averments the plaintiffs had sought partition
and separate possession of their shares in the suit schedule
properties.
4. During the pendency of the suit, on 30th June, 2012, a
compromise petition was filed jointly by the plaintiffs and the
defendants under Order XXIII Rule 3 of the Code of Civil Procedure,
1908 (hereinafter “CPC”, for short), before the Trial Court stating
therein that the parties to the suit had, on intervention of relatives
and well-wishers there was a mediation of their disputes as to
partition and settled their disputes inter-se, in the following manner:
i. That the plaintiffs would relinquish their right, title, interest and
claim in respect of the suit schedule properties, and in
consideration for the same, the defendants had paid to the
plaintiffs the following amounts:
a) Rs. 1,10,00,000/- (rupees one crore, ten lakhs) paid in
favour of K. Devaraj, plaintiff no. 1.
b) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K.
Sugunamma, plaintiff no. 4, by way of two cheques for
amounts of Rs. 2,50,000/- (rupees two lakhs and fifty
thousands) and Rs. 27,50,000/- (rupees twenty seven lakhs
and fifty thousands), respectively.
c) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K.
Shanthamma, plaintiff no. 5 by way of two cheques for
amounts of Rs. 2,50,000/- (rupees two lakhs and fifty
thousands) and Rs. 27,50,000/- (rupees twenty seven lakhs
and fifty thousands), respectively.
d) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K.
Geetha, plaintiff no. 6, by way of two cheques for amounts
of Rs. 2,50,000/- (rupees two lakhs and fifty thousands) and
Rs. 27,50,000/- (rupees twenty seven lakhs and fifty
thousands), respectively.
e) Rs. 4,00,000/- (rupees four lakhs) paid in favour of
Mallamma, defendant no. 1.
ii. That the defendants would be entitled, jointly and severally, to
enjoy absolute right, title and interest over the suit schedule
properties.
iii. That defendant nos. 2 to 5 would be entitled to get the khata,
mutation and record of rights transferred in their names, in
respect of the suit schedule properties.
iv. That the suit schedule properties would be retained by
defendant nos. 2 to 5, who shall hold the same as joint owners
thereof, until a division is effected inter-se between the said
defendants. That the said property would not be available for
partition, so far as the plaintiffs were concerned as their right
over the suit property was conveyed in favour of defendant
nos. 2 to 5, for consideration.
v. That the plaintiffs undertake not to initiate any action or
proceedings by themselves or through their successors-ininterest
or heirs, as regards their right, title and interest over
the suit schedule properties.
vi. That the compromise was entered into by plaintiff no. 1, on
behalf of, and for the benefit of his two minor children, in order
to protect their shares.
5. On 26th June, 2012, plaintiff no. 4 encashed two cheques
received by her as a part of the compromise entered into between
the plaintiffs and the defendants, as detailed above.
6. In view of the inter-se compromise between the parties, the
matter was referred by the Trial Court to the Lok Adalat. After
hearing the parties, the Lok Adalat passed an order dated 07th July,
2012, decreeing the suit for partition and separate possession, in
terms of the memo of compromise presented before it. The Lok
Adalat recorded the following findings:
i. That all the parties to the dispute had agreed to amicably
settle the dispute as regards the partition of the suit schedule
property, in terms of the memo of compromise;
ii. That the terms of compromise had been read over and
explained to the parties in a language known and understood
by them, in the presence of their Advocates and the parties
had admitted the same to be true and correct;
iii. That since the compromise was in favour of the minor children
of plaintiff no. 1, he was permitted to enter into the
compromise on their behalf.
In view of the aforestated findings, the application filed by the
parties under Order XXXII Rule 3 of the CPC, was allowed and
accepted.
7. Two days later, on 09th July, 2012, only plaintiff nos.4-6 filed an
affidavit before the Lok Adalat stating that the defendants had
played fraud on them and misled them in order to obtain their
consent to the terms of compromise.
8. The Lok Adalat considered the affidavit submitted by plaintiff
nos.4-6 and by an order dated 13th July, 2012, rejected the prayer
made therein, to set aside the order recording compromise of the
parties. The Lok Adalat noted that the order recording compromise
was passed after duly recording the consent of all parties to the
compromise and therefore, the prayer to set aside the compromise
could not be entertained.
9. Aggrieved by the order of the Lok Adalat dated 13th July, 2012,
plaintiff no. 4 filed a Writ Petition, being W.P. No. 25989 of 2012,
before the High Court of Karnataka, praying, inter-alia, that the order
of the Lok Adalat dated 07th July, 2012 whereby compromise of the
parties was recorded, be set aside. Plaintiff no. 4 submitted before
the learned Single Judge of the High Court that although she had
signed the compromise petition presented before the Trial Court and
thereafter referred to referred to the Lok Adalat, the order sheet
dated 07th July, 2012, which was drawn up in terms of the
compromise petition was not signed by her. That the compromise
6
petition was signed by plaintiff no. 4 as a result of fraud practiced by
the defendants.
10. In light of the allegation of fraud on the part of the defendants,
the High Court, by an order dated 24th January, 2013 disposed of
W.P. No. 25989 of 2012, by remanding the matter to the Civil Judge
(Junior Division), Bangalore, to refer the matter to the Lok Adalat to
hold an enquiry and record a finding on the allegation of fraud
levelled against the defendants. The High Court directed that such
an exercise ought to be completed by the Lok Adalat within a period
of three months.
11. In accordance with the directions issued by the High Court vide
order dated 24th January, 2013, the matter was referred by the Trial
Court to the Lok Adalat, Rural District, Bangalore. Plaintiff nos. 4-6
filed their objections to the compromise stating that their signatures
on the compromise petition were obtained by fraud on the part of
the defendants. It was stated that during the pendency of O.S. No.
876 of 2004, one property included in the schedule of properties to
be partitioned, was sold in favour of M/s. Trishul Buildtech and
Infrastructure Pvt. Ltd., by way of a registered sale deed dated 23rd
June, 2012 for a consideration of Rs. 2,70,00,000/- (rupees two
crores and seventy lakhs. That the amount of Rs. 30,00,000/-
(rupees thirty lakhs), paid to plaintiff nos. 4-6, was their share of
7
consideration for the said sale. That on the date of sale of the said
property, several papers were signed by plaintiff nos. 4-6, at the
behest of the defendants, under the guise that the same were
required to be submitted to the tax authorities. That plaintiff no. 1
and the defendants had conspired together and engaged the
services of advocates to represent plaintiff nos. 4-6, without their
knowledge. It was further alleged that the defendants had caused
plaintiff nos.4-6 to believe that they were appearing before the
tax authorities, in relation to the sale carried out on 23rd June, 2012,
when in fact, they were appearing before the Lok Adalat in
connection with the compromise petition. Plaintiff no. 4 stated that
on realising before the Lok Adalat that the proceedings related to a
compromise petition, she refused to sign the order sheet dated 07th
July, 2012, wherein the terms of compromise had been recorded by
the Lok Adalat. Plaintiff nos.5 and 6 stated that they were misled
into signing both, the compromise petition, as well as the order
sheet dated 07th July, 2012.
12. On hearing the parties, the Lok Adalat, by an order date 27th
April, 2013, rejected the objections filed by plaintiff nos.4-6 and the
order of the Lok Adalat dated 07th July, 2012, wherein the terms of
compromise had been recorded, was confirmed.
8
13. Aggrieved by the order of the Lok Adalat dated 27th April, 2013,
plaintiff nos. 4-6 filed Writ Petitions, being W.P. Nos. 20607-20609 of
2013, before the High Court of Karnataka, praying, inter-alia, that
the entire records pertaining to O.S. No. 876 of 2004 be called for
and the orders of the Lok Adalat dated 07th July, 2012 and 27th April,
2013, be quashed.
14. By the impugned judgment dated 17th April, 2015, the learned
Single Judge of the High Court of Karnataka, Bengaluru disposed of
the Writ Petition filed by plaintiff nos.4-6 by recalling the order of
compromise passed by the Lok Adalat on 07th July, 2012. The High
Court remanded the matter to the Civil Judge (Junior Division),
Bengaluru, to dispose of the matter in accordance with law, as if no
compromise was entered into between the parties. Aggrieved by the
judgment of the High Court whereby the order of the Lok Adalat
recording compromise, was set aside, defendant nos. 2-5 have
preferred the present appeals.
15. We have heard Mr. Anirudh Gotety, learned counsel for the
appellants and Ms. Manju Jetly, learned counsel for the respondents,
and perused the material on record.
16. Learned counsel for the appellants at the outset contended
that the High Court was not right in setting aside the order of the
Lok Adalat dated 07th July, 2012, whereby the compromise of the
9
parties was recorded. Elaborating the said contention, it was
submitted that the Lok Adalat had, in its order dated 07th July, 2012
noted that every party to the compromise had consented to the
terms thereof, and had admitted that the contents of the
compromise petition were true and correct, when the same had
been read over and explained to them in Kannada language. That
the Lok Adalat in its order dated 27th April, 2013 had upheld the
validity of the compromise between the parties, after considering, in
detail the objections raised by plaintiff nos. 4-6 and rejecting the
same. It was urged that the Lok Adalat’s order dated 27th April,
2013 had been passed after detailed examination of the contentions
of the parties and the Lok Adalat had rightly rejected the objections
raised by plaintiff nos. 4-6. However, the learned Single Judge of the
High Court, in the absence of any reasoning, and in a casual and
cryptic manner, had reversed the order of the Lok Adalat wherein
the compromise of the parties was recorded.
17. It was next contended that every award of a Lok Adalat is
deemed to be a decree of a Civil Court as provided under Section 21
of the Legal Services Authorities Act, 1987 and cannot therefore be
set aside by a cryptic order of the High Court sans reasons. Learned
counsel for the appellants relied on Smt. Sawarni vs. Smt. Inder
Kaur and Ors. – [1996 (6) SCC 223] to contend that when a Civil
Court had come to a conclusion after elaborate discussion of the
10
evidence on record, an Appellate Court could not set aside the
decree of the Civil Court without a reasoned decision to reverse the
findings of the Civil Court. In that context, it was further submitted
that the award of the Lok Adalat, dated 07th July, 2012, being in the
nature of a decree of the Civil Court, could not have been set aside
by the High Court, without a reasoned decision to reverse the
findings of the Lok Adalat.
18. Learned counsel for the appellants submitted that plaintiff
nos.4-6 having taken advantage of the terms of the compromise by
accepting a sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as
consideration for relinquishing all their rights of title and interest in
the suit schedule properties in favour of the defendants, could not,
at a later juncture rescind from the terms of the compromise, after
encashing the cheques issued to them. That these objectors could
not approbate and reprobate at the same time. That the High Court
had erred in setting aside the compromise, without issuing any
direction requiring plaintiff nos.4-6 to return the amounts paid to
them in terms of the compromise.
19. It was averred that the Lok Adalat, had, in its orders dated 07th
July, 2012 and 27th April, 2013 recorded several findings of fact
which ought not to have been interfered with by the High Court in
11
exercise of its writ jurisdiction under Article 227 of the Constitution
of India.
20. That plaintiff nos. 4-6 had not made any effort to explain why
they did not state before the Lok Adalat on 07th July, 2012 that their
signatures were obtained by fraud. That this aspect of the matter
was rightly recognised by the Lok Adalat in rejecting the allegations
of fraud raised against the defendants. However, the High Court,
made no reference to any of the findings of the Lok Adalat, in
passing the impugned judgment.
With the aforesaid contentions, it was prayed that the
impugned judgment of the High Court may be set aside and the
order of the Lok Adalat, dated 07th July, 2012, whereby the
compromise between the parties was recorded, be restored.
21. Per contra, Ms. Manju Jetly, learned counsel for the
respondents submitted that the impugned judgment of the High
Court does not suffer from any infirmity warranting interference by
this Court. That the High Court rightly set aside the Order dated 07th
July, 2012, passed by the Lok Adalat, after appreciating that the
consent of plaintiff nos.4-6 to the terms of compromise had been
obtained by practicing fraud.
12
22. It was submitted that the High Court passed the impugned
judgment after taking note of the fact that plaintiff no. 4 had not
signed the order sheet dated 07th July, 2012, wherein the Lok Adalat
had recorded the compromise of the parties, although she had
signed the compromise petition presented before the Lok Adalat.
23. It was next contended by learned counsel for the respondents
that the amount of Rs.30,00,000/- (rupees thirty lakhs), paid to
plaintiff nos. 4-6, was their share of consideration for the sale of one
property which was included in the schedule of the properties to be
divided between the parties. That such amount was not received in
relation to the compromise between the parties and therefore, could
not form the basis for rejecting their objections to the order
recording comprise.
24. Ms. Manju Jetly further submitted that the fact that plaintiff
no.4 had refused to sign the order sheet dated 07th July, 2012,
having signed the compromise petition, would establish that she
realised at that juncture that the defendants had fraudulently
obtained her signature on the compromise petition, under the guise
that such signatures were being taken on documents to be
submitted to the tax authorities.
13
As regards plaintiff nos.5 and 6, it was submitted that they
were misled into signing both, the compromise petition, as well as
the order sheet dated 07th July, 2012.
25. It was averred that plaintiff nos.4-6, on 09th July, 2012 had
submitted an affidavit before the Lok Adalat, stating therein that the
defendants had played fraud on them and misled them in order to
obtain their consent to the terms of compromise. The fact that such
an affidavit was submitted within a short span of two days after the
order of the Lok Adalat dated 07th July, 2012 would establish that
plaintiff nos. 4-6 took immediate steps to bring to the notice of the
Lok Adalat, the fraud on the part of the defendants. Therefore, the
fact that plaintiff nos. 4-6 did not state before the Lok Adalat on 07th
July, 2012 that their signatures were obtained by fraud, could not
form the basis for rejecting their allegations of fraud on the part of
the defendants.
With the aforesaid contentions, it was submitted that the
impugned order of the High Court, whereby the order of the Lok
Adalat dated 07th July, 2012 was set aside, did not call for
interference by this Court.
26. Having regard to the contention of the learned counsel for
appellant that the impugned judgment of the High Court set aside
the order of the Lok Adalat dated 07th July, 2012, in a very cursory
14
and cryptic manner, without assigning any reasons for doing so, the
impugned judgment dated 17th April, 2015 in its entirety has been
extracted hereinunder:
“O R D E R
In these writ petitions, petitioners have challenged the
order sheet of the Lok Adalath, dated 7.7.2012. Being aggrieved
by the rejection of the objections to the compromise petition
raised by the petitioners and orders passed by the Learned
Judicial and non Judicial Members of the Lok Adalath, Bangalore
Rural, Bangalore on 27.04.2013 passed in O.S. No. 876/2004,
petitioners are before this Court. The learned counsel requests
the court, under the facts and circumstances of the case, order
of compromise passed is to be set aside.
2. As against this, learned counsel appearing for the
respondents support the order passed by the Lok Adalat and
prays to dismiss these writ petitions.
Petitioners are the defendants no. 6 to 9 and it is
submitted by the learned counsel for the petitioners that by
playing fraud compromise petition was filed. Petitioner No. 1
submits that she has not at all signed the compromise petition
entered into between the parties.
3. Under the facts and circumstances of the case, I deem it
proper to recall the order of the compromise. Order dated
7.7.2012 passed by the Lok Adalat is set aside. The matter is
referred to the learned Civil Judge (Jr.Dn.) Bengaluru and is
hereby directed to dispose of the matter in accordance with law,
as if no compromise is entered into between the parties.
Accordingly, these petitions are disposed of.”
27. At the outset, we observe that we do not find any reason
forthcoming from the judgment of the High court while setting aside
the order of the Lok Adalat dated 07th July, 2012 whereby the terms
of the compromise were recorded. To recall a compromise that has
been recorded would call for strong reasons. This is because a
15
compromise would result ultimately into a decree of a Court which
can be enforced just as a decree passed on an adjudication of a
case. This is also true in the case of a compromise recorded before a
Lok Adalat. In this regard, it may be apposite to refer to Section 21
of the Legal Services Authorities Act, 1987, which is extracted as
under:
“21. Award of Lok Adalat.— (1) Every award of the Lok
Adalat shall be deemed to be a decree of a civil court or, as the
case may be, an order of any other court and where a
compromise or settlement has been arrived at, by a Lok Adalat
in a case referred to it under sub-section (1) of section 20, the
court-fee paid in such case shall be refunded in the manner
provided under the Court-fees Act, 1870 (7 of 1870).
(2) Every award made by a Lok Adalat shall be final and binding
on all the parties to the dispute, and no appeal shall lie to any
court against the award.”
28. Section 21 of the Legal Services Authorities Act, 1987 equates
an award of the Lok Adalat, to a decree of a Civil Court and imputes
an element of finality to an award of compromise passed by the Lok
Adalat. When the Lok Adalat disposes cases in terms of a
compromise arrived at between the parties to a suit, after following
principles of equity and natural justice, every such award of the Lok
Adalat shall be deemed to be a decree of a Civil Court and such
decree shall be final and binding upon the parties. Given the element
of finality attached to an award of the Lok Adalat, it also follows that
no appeal would lie, under Section 96 of the CPC against such award,
vide P.T. Thomas vs. Thomas Job - [(2005) 6 SCC 478].
16
29. While we recognise that a Writ Petition would be maintainable
against an award of the Lok Adalat, especially when such writ
petition has been filed alleging fraud in the manner of obtaining the
award of compromise, a writ court cannot, in a casual manner, de
hors any reasoning, set aside the order of the Lok Adalat. The award
of a Lok Adalat cannot be reversed or set aside without setting aside
the facts recorded in such award as being fraudulent arrived at.
30. The Latin maxim “cessante ratione legis cessat ipsa lex ”
meaning “reason is the soul of the law, and when the reason of any
particular law ceases, so does the law itself” vide H H Sri Swamiji
of Sri Admar Mutt vs. the Commissioner, Hindu Religious and
Charitable Endowments Dept.– [(1979) 4 SCC 642], is also
apposite.
31. On the aspect of the duty to accord reasons for a decision
arrived at by a court, or for that matter, even a quasi-judicial
authority, it would be useful to refer to a judgment of this Court in
Kranti Associates Private Limited & Anr. Vs. Masood Ahmed
Khan & Ors. – (2010) 9 SCC 496, wherein after referring to a
number of judgments, this Court summarised at paragraph 47 of the
judgment the law on the point. The relevant principles for the
purpose of this case are extracted as under:
17
(a) Insistence on recording of reasons is meant to serve the
wider principle of justice that justice must not only be
done it must also appear to be done as well.
(b) Recording of reasons also operates as a valid restraint
on any possible arbitrary exercise of judicial and quasijudicial
or even administrative power.
(c) Reasons reassure that discretion has been exercised by
the decision-maker on relevant grounds and by
disregarding extraneous considerations.
(d) Reasons have virtually become as indispensable a
component of a decision-making process as observing
principles of natural justice by judicial, quasi-judicial and
even by administrative bodies.
(e) Reasons facilitate the process of judicial review by
superior courts.
(f) The ongoing judicial trend in all countries committed to
rule of law and constitutional governance is in favour of
reasoned decisions based on relevant facts. This is
virtually the lifeblood of judicial decision-making
justifying the principle that reason is the soul of justice.
(g) Judicial or even quasi-judicial opinions these days can be
as different as the judges and authorities who deliver
them. All these decisions serve one common purpose
which is to demonstrate by reason that the relevant
factors have been objectively considered. This is
important for sustaining the litigants' faith in the justice
delivery system.
(h) Insistence on reason is a requirement for both judicial
accountability and transparency.
(i) If a judge or a quasi-judicial authority is not candid
enough about his/her decision-making process then it is
impossible to know whether the person deciding is
faithful to the doctrine of precedent or to principles of
incrementalism.
(j) Reasons in support of decisions must be cogent, clear
and succinct. A pretence of reasons or “rubber-stamp
18
reasons” is not to be equated with a valid decisionmaking
process.
(k) It cannot be doubted that transparency is the sine qua
non of restraint on abuse of judicial powers.
Transparency in decision-making not only makes the
judges and decision-makers less prone to errors but also
makes them subject to broader scrutiny. (See David
Shapiro in Defence of Judicial Candor [(1987) 100
Harvard Law Review 731-37)
(l) In all common law jurisdictions judgments play a vital
role in setting up precedents for the future. Therefore,
for development of law, requirement of giving reasons
for the decision is of the essence and is virtually a part
of “due process”.
(m) The requirement to record reasons emanates from the
broad doctrine of fairness in decision-making i.e.
adequate and intelligible reasons must be given for
judicial decisions
Though the aforesaid judgment was rendered in the context of
a dismissal of a revision petition by a cryptic order by the National
Consumer Disputes Redressal Commission, reliance could be placed
on the said judgment on the need to give reasons while deciding a
matter particularly as it arises in the instant case.
32. In view of the aforesaid discussion, we shall now consider the
facts of the present case. The details as to the terms of the
compromise as well as the contentions raised at the Bar have been
narrated above. On a consideration of the same, the following
aspects would emerge:
19
(a) The Lok Adalat, in its award dated 07th July, 2012 recorded that
the parties had admitted that the contents of the compromise
petition were true and correct, after the terms thereof had been read
over and explained to them in Kannada language. Further, it was
also noted that the compromise was entered into by plaintiff no. 1,
on behalf of, and for the benefit of his two minor children, in order to
protect their shares. The same was allowed by the Lok Adalat on
recognising the terms of the compromise, would protect the
interests plaintiff no. 1’s minor children. There is no objection raised
on behalf of plaintiff no. 1 in the instant case.
(b) The Lok Adalat, in its order dated 27th April, 2013, rejected the
allegations of fraud raised by plaintiff nos. 4-6, against the
defendants and recorded that plaintiff nos. 4-6 had offered no
explanation as to why no objection was raised by any of them on 07th
July, 2012 before the Lok Adalat. It was further observed that plaintiff
nos. 4-6, could not, after having accepted huge sums of money in
terms of the compromise, rescind from the terms thereof.
(c) It is not the case of plaintiff nos. 4-6 that they had not received
an amount of Rs. 30,00,000/- (rupees thirty lakhs) each, in terms of
the compromise. Further, it is not their case that such sum has been
returned, in whole or in part, to the defendants.
(d) That although plaintiff no. 4, stated that on learning that the
proceedings conducted on 07th July, 2012 before the Lok Adalat were
20
in relation to a compromise, she had not signed the order sheet, she
failed to provide any explanation as to why she did not inform the
Lok Adalat on the said date that her signature on the compromise
petition was obtained by fraud.
(e) That plaintiff nos. 4-6 had admitted before the Lok Adalat on
07th July, 2012 that the contents of the compromise petition were
true and correct, when the same had been read over and explained
to them in Kannada.
(f) That plaintiff nos. 4-6 specifically admitted that they had
received a sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as
mentioned in the compromise petition in lieu of relinquishing their
rights, title and interest in the other suit schedule properties.
(g) That if, in fact, the signatures of plaintiff nos. 4-6 had been
obtained by fraud, they ought to have returned the amount of Rs.
30,00,000/- (rupees thirty lakhs) each, paid to them in accordance
with the terms of the compromise. Having not done so, plaintiff nos.
4-6 had failed to establish that any fraud was practiced upon them,
by the defendants, with a view to obtain their signatures on the
compromise petition.
(h) On a perusal of the plaint, it is noted that there were 13 items
of the suit schedule property having different valuation and
therefore, the plaintiffs would have had their respective shares in the
suit schedule properties taken together. However, plaintiff nos.4-6
21
accepted a sum of Rs.30 lakhs each by relinquishing their right, title
and interest in all the suit schedule properties. Having received a
monetary share in respect of the suit items, the plaintiffs had
decided to relinquish their right, title and interest in respect of all the
suit items.
The learned Single Judge of the High Court in the impugned
judgment has not considered the aforesaid facts of the case in the
context of setting aside the award of the Lok Adalat dated 07th July,
2012. Learned Single Judge has also not considered the reasoning
given in the order dated 27th April, 2013 by which the objections
raised by plaintiff nos.4-6 to the decree of the Lok Adalat had been
rejected.
33. This Court in Ruby Sales and Services Pvt. Ltd. vs. State of
Maharashtra- [(1994) 1 SCC 531] observed that a consent
decree is a creature of an agreement and is liable to be set aside on
any of the grounds which will invalidate an agreement. Therefore, it
would follow that the level of circumspection, which a Court of law
ought to exercise while setting aside a consent decree or a decree
based on a memo of compromise, would be atleast of the same
degree, which is to be observed while declaring an agreement as
invalid.
22
34. In Pushpa Devi Bhagat (dead) through LR. Sadhna Rai
vs. Rajinder Singh and Ors. – [(2006) 5 SCC 566], this Court
held that since no appeal would lie against a compromise decree,
the only option available to a party seeking to avoid such a decree
would be to challenge the consent decree before the Court that
passed the same and to prove that the agreement forming the basis
for the decree was invalid. It is therefore imperative that a party
seeking to avoid the terms of a consent decree has to establish,
before the Court that passed the same, that the agreement on which
the consent decree is based, is invalid or illegal.
35. It is a settled position of law that where an allegation of fraud
is made against a party to an agreement, the said allegation would have to be proved strictly, in order to avoid the agreement on the ground that fraud was practiced on a party in order to induce such party to enter into the agreement. Similarly, the terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved. In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree in the instant case.
36. Having considered the aforesaid facts of the present case, we
are of the view that no ground was made out warranting the decision
of the High Court to set aside the order of the Lok Adalat dated 07th
July, 2012, wherein compromise was recorded between the parties.
The High Court’s decision to set aside the order of the Lok Adalat,
without entering into a discussion as to the findings in such order,
cannot be sustained. Such decision of the High Court runs contrary
to established principles of law which seek to protect the sanctity
and finality of orders based on a compromise or consent between
parties.
37. Hence the impugned judgment of the High Court of Karnataka,
dated 17th April, 2015 is set aside and the order of the Lok Adalat,
dated 07th July, 2012 whereby the compromise between the parties
to O.S. No. 876 of 2004 was recorded, is restored. The appeals are
allowed.
38. Having regard to the relationship between the parties, the
parties are directed to bear their respective costs.
………………………………J.
(M.R. SHAH)
….…………………….…..J.
(B.V. NAGARATHNA)
NEW DELHI;
18th MAY, 2022.
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