Jethalal C. Thakkar & others v. Lalbhai Hiralal Shah
1983-10-04
B.LENTIN
body1983
DigiLaw.ai
JUDGMENT - LENTIN B., J.: - The learned Chief Justice directs me to dispose of the prayer for interim relief contained in prayer (c) of Misc. Application No. 568 of 1980 (in R.A.R. Suit No. 1247/4477 of 1978) ordered to be treated as a Notice of Motion by my learned brother Sawant. 2. The undisputed albeit vertiginous, sequence of events are as under:- (A) On 4th September, 1978, R.A.R. Suit No. 1247/4477 of 1978 was filed by L.H. Shah against J.C. Thakkar and his 2 sons in the Court of Small Causes for recovery of a loan against construction amounting to Rs. 2,60,500/- inclusive of interest. On 13th September, 1978, consent terms were filed by the parties wherein it was provided inter alia that a certain property at Hughes Road belonging to J.C. Thakkar was to be conveyed to L.H. Shah (except the ground floor) for Rs. 15 lacs payable in the manner stated in the consent terms. The decree was to operate as a conveyance. (B) On 24th April, 1980, J.C. Thakkar filed Miscellaneous Application No. 568 of 1980 in the Court of Small Causes in R.A.R. Suit No. 1247/4477 of 1978 for (a) setting aside the consent decree passed on 13th September, 1978, (b) condonation of delay and (c) an interim injunction restraining L.H. Shah from selling, alienating, disposing of or parting with possession of the Hughes Road Property. (C) On 16th June, 1980, L.H. Shah filed an application under section 34 of the Arbitration Act in Miscellaneous Application No. 568 of 1980. On 8th July, 1980, he filed his affidavit-in-rejoinder objecting to the jurisdiction of the Court of Small Causes to set aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978. (D) On 8th July, 1980, an ad interim injunction order operative till 22nd July, 1980 was passed by the Court of Small Causes against L.H. Shah in terms of prayer (c) of Miscellaneous Application No. 568 of 1980. On 12th August, 1980, the ad interim injunction was extended until further orders.
(D) On 8th July, 1980, an ad interim injunction order operative till 22nd July, 1980 was passed by the Court of Small Causes against L.H. Shah in terms of prayer (c) of Miscellaneous Application No. 568 of 1980. On 12th August, 1980, the ad interim injunction was extended until further orders. (E) On the 10th September, 1981, J.C. Thakkar and his 2 sons filed Suit No. 1660 of 1981 in this Court against L.H. Shah and the purchasers of flats in the Hughes Road property, for setting aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978, possession, accounts and alternatively for damages in the sum of Rs. 33,95,000/-. On 11th September, 1981, J.C. Thakkar also filed Suit No. 4096 of 1981 in the Court of Small Causes for setting aside the consent decree passed on 13th September, 1978 in R.A.R. Suit No. 1247/4477 of 1978. (F) On 5th October, 1981, J.C. Thakkar took out a Notice of Motion against L.H. Shah and the other defendants in High Court Suit No. 1660 of 1981 for Receiver of the Hughes Road property and injunction. A limited ad interim injunction was granted restraining L.H. Shah (viz. the 1st defendant) from parting with possession of flat on the 3rd, 2nd and 6th floors to defendants 2, 3 and 4 respectively and also restraining the latter from disposing of the said flats. (G) Lengthy affidavits were thereafter filed by the warring parties in that Motion which was finally disposed of by my learned brother Pendse, who on 10th February, 1983 dismissed it with costs. J.C. Thakkar's appeal was summarily dismissed by the Division Bench on 3rd March, 1983. His Special Leave Petition to the Supreme Court was also dismissed on 22nd March, 1983. The Supreme Court however directed that the hearing of High Court Suit No. 1660 of 1981 be expedited. (H) On 31st March, 1983, L.H. Shah filed Miscellaneous Petition No. 1243 of 1983 in this Court against J.C. Thakkar and others (i) calling for the proceedings in Miscellaneous Application No. 568 of 1980 (referred to in sub-para (B) above) and quashing the orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980 (referred to in sub-para (D) above) and (ii) for stay of operation of those orders pending the disposal of Miscellaneous Petition No. 1243 of 1983.
On 5th April, 1983, my learned brother Shah directed the Court of Small Causes to place Miscellaneous Application No. 568 of 1980 on Board for hearing on 18th April 1983 and to bear the same the from day-to-day. (I) L.H. Shah made a grievance that the Court of Small Causes was not effectually complying with the order passed by my learned brother Shah on 5th April, 1983. L.H. Shah thereupon filed Miscellaneous Petition No. 6 of 1983 in this Court on 19th May, 1983 against J.C. Thakkar and others for transfer of the proceedings from the Court of Small Causes to the High Court and for vacating the ad interim orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980. The matter proceeded before my learned brother Pratap, who for reasons not germane to the present hearing, disassociated himself from the case: The matter then came up before my learned brother Sawant who by his order dated 5th September, 1983 directed by consent of parties that Miscellaneous Application No. 568 of 1980 filed by J.C. Thakkar and his sons be heard along with High Court Suit No. 1660 of 1981 and that prayer (c) of the former be treated as a Notice of Motion and heard as such. That I hereby do as directed by the learned Chief Justice. With this background, I shall now refer to J.C. Thakkar and his sons as the applicants and L.H. Shah as the respondent. 3. At the outset, I shall deal with a preliminary contention urged by Mr. Chagla, the learned Counsel appearing on behalf of the respondent. Mr. Chagla invited me to vacate the orders passed by the Court of Small Causes on the ground that Misc. Application No. 568 of 1980 itself is not maintainable. Relying on (Fatmabai v. Soabai)1, 13 Bom.L.R. 573, (Yusuf I.A.Lalji v. Abdullabhoy Lalji)2, 32 Bom.L.R. 667 and (Yusuf Ismailbhai Abdullabhai Lalji v. Abdullabahoy Lalji)3, 34 Bom.L.R. 880, Mr. Chagla urged that the applicants' remedy was to file a substantive suit for setting aside the consent decree, which they have done in the High Court as also in the Court of Small Causes. On the other hand, supporting the maintainability of Misc. Application No. 568 of 1980, Mr.
Chagla urged that the applicants' remedy was to file a substantive suit for setting aside the consent decree, which they have done in the High Court as also in the Court of Small Causes. On the other hand, supporting the maintainability of Misc. Application No. 568 of 1980, Mr. Modi, the learned Counsel appearing on behalf of the applicants, urged that under the amended Rule 3-A of Order XXIII of the Code of Civil Procedure a substantive suit to set said a consent decree was not called for and that the proper remedy was the one which the applicants had adopted, namely, filing Miscellaneous Application No. 568 of 1980, to set aside the consent decree, which was not lawful as it was obtained by fraud and/or misrepresentation practised by the respondent on the applicants. 4. I do not agree with the construction placed by Mr. Modi on Rule 3-A. It reads thus: “No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.” 5. I am not inclined to give to the words “not lawful”, the unrestricted connotation which Mr. Modi invites me to do. To my mind, Rule 3-A bars a substantive suit not in all imaginable cases but in cases where the compromise was “not lawful”, where for instance in passing the consent decree the Court had on the face of it no jurisdiction to do so or where fraud or misrepresentation was perpetrated on the Court (as distinct as in the present case, from fraud, coercion or misrepresentation said to have been perpetrated by one party on the other), or where on the face of it the consent decree suffers from some palpable defect or error which the Court must correct, where for instance it contains a term or clause opposed to law, morality or public policy or where the Court was misled into passing the consent decree, say by reason of lack of authority or limited authority of the consenting advocate or advocates not brought to the Court's notice at the time as in (Basangouda Hanmentgouda v. Churchigirigouda Yogangouda)4, 1910(12) Bom.L.R. 223, relied on by Mr. Modi, and so forth.
Modi, and so forth. It is in such context thus illustrated that the words “not lawful” must be construed in reference to a compromise envisaged by Rule 3-A and not in each and every case where a party seeks to set aside a compromise on the ground of fraud, coercion or misrepresentation practised upon him by the other party as alleged in the present case. In such a case resort to Rule 3-A would be impermissible. I do not see anything in Rule 3-A as stultifying the ratio of the decisions relied on by Mr. Chagla. If such had been the intention of the legislature, nothing could have been simpler than to have enacted that no suit shall be filed to set aside a compromise decree, rather than enacting Rule 3-A in the phraseology it has been done. 6. It is however, not because prima facie. I disagree with the construction placed by Mr. Modi on Rule 3-A, that I propose vacating the ad interim orders but for reasons appearing hereafter in this Judgment. 7. Coming to the merits, it was urged by Mr. Modi that High Court Suit No. 1660 of 1981 filed by the applicants having been expedited by the Supreme Court and as Application No. 568 of 1980 has been pending since 1980 and as the affidavit-in-reply had not been filed by the respondent till 8th April 1983, there was no compelling necessity to vacate the ad interim orders passed by Small Cause on 8th July, 1980 and 12th August, 1980 which, according to Mr. Modi, in the fitness of things should be perpetuated until the disposal of High Court Suit No. 1660 of 1981. Mr. Modi also urged that by not filing the affidavit-in-reply for nearly 3 years, the respondent had acquiesced in the orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980. Mr. Modi also accused the respondent of adopting dilatory tactics in delaying the hearing of High Court Suit No. 1660 of 1981 and yet seeking to have the injunction orders vacated. 8. In advancing these submissions, perhaps certain basic aspects seem to have momentarily escaped learned Counsel's attention.
Mr. Modi also accused the respondent of adopting dilatory tactics in delaying the hearing of High Court Suit No. 1660 of 1981 and yet seeking to have the injunction orders vacated. 8. In advancing these submissions, perhaps certain basic aspects seem to have momentarily escaped learned Counsel's attention. To attribute dilatory tactics to the respondent is obscure and does not cater to the indisputable fact that though High Court Suit No. 1660 of 1981 was filed by the applicants over 2 years ago, to this day even service of the writ of summons has not been effected on defendants 2 to 6 are evading service. Even as late as last week on 27th September, 1983, on the application of the applicants' advocate, the suit had to be adjourned for 8 weeks for effecting service. Thus far from the respondent attempting to delay the hearing of that suit, even the basic step for prosecuting the suit has not been taken by Mr. Modi's clients for which no explanation was vouchsafed. Beyond harping on the Supreme Court's direction for expediting that suit, Mr. Modi was unable to state whether it had even been brought to the notice of the Supreme Court by his clients that even service of the writ of summons had still not been effected on defendants 2 to 6, even though the suit had been filed over 2 years ago. Assuming that this was brought to the notice of the Supreme Court, no explanation was forthcoming why no steps have been taken to effect service on defendants 2 to 6 though the order for expedition was passed by the Supreme Courts far back as 22nd March, 1983. The acquiescence sought to be imputed by Mr. Modi to the respondent has nothing to commend itself. The stand taken by the respondent at the earliest opportunity in the Court of Small Causes was that it had no jurisdiction to set aside the consent decree merely on such an application and that a substantive suit was required for the purpose. 9. Mr.
Modi to the respondent has nothing to commend itself. The stand taken by the respondent at the earliest opportunity in the Court of Small Causes was that it had no jurisdiction to set aside the consent decree merely on such an application and that a substantive suit was required for the purpose. 9. Mr. Modi next invited me to perpetuate the Small Cause Court Orders on the ground that as under section 34 of the Bombay Stamp Act, the unstamped consent terms could not be admitted in evidence or acted upon, the respondent cannot succeed in getting the ad interim injunction vacated without asking the Court to uphold his contention which is based, on the consent terms-cum-conveyance. On the other hand, relying, on the decision of the Special Bench of this Court in (Sharanbasappa v. Sanganbasappa)5, A.I.R. 1935 Bom. 256, where it was held that a consent decree creating a charge on immovable property which is not the subject matter of the suit does not require to be stamped, it was urged by Mr. Chagla that as the decree was to operate as a conveyance, no stamp was necessary. Both learned Counsel inform me that an enquiry is pending before the Collector. 10. The somewhat involved submission advanced by Mr. Modi which I noted and have reproduced in his own words, is at best a non-sequitur. Section 34 provides that no instrument chargeable with duty shall be submitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer unless such instrument is duly stamped. Prima facie it appears doubtful on the law as it stands, that where a decree is to operate as a conveyance it must be stamped. However, even assuming that the consent terms required to be stamped, at best they would not be admissible in evidence. But then the respondent is not tendering the consent terms as evidence. It is on the contrary, the applicants who seek to have them set aside, which cannot be the automatic result from their not being stamped.
However, even assuming that the consent terms required to be stamped, at best they would not be admissible in evidence. But then the respondent is not tendering the consent terms as evidence. It is on the contrary, the applicants who seek to have them set aside, which cannot be the automatic result from their not being stamped. Section 34 does not invalidate the document if not duly stamped, any defect regarding its admission in evidence can be cured by payment of penalty as is manifest from the proviso to that section and that would be the only sequitur should the Collector decide that the consent terms should have been stamped. 11. Here it may also be mentioned that this aspect had also been canvassed by the applicants before my learned brother Pendse at the hearing of the Notice of Motion. For that matter, without actually mentioning section 34 (and that makes no difference), in the plaint in High Court Suit No. 1660 of 1981. It is averred in terms: “.... In order to save stamp, the first defendant managed to have a clause in the consent terms that the decree to operate as conveyance.” Even in the Memo of Appeal a ground was taken by the applicants that- “The learned Judge (namely Pendse, J.) failed to appreciate that on this account the Collector of Bombay has started investigation under section 62 and section 27 of the Indian Stamp Act and Notice to that effect was issued to the first respondent.” A similar ground was also taken in the Special Leave Petition filed by the applicants in the Supreme Court. All the 3 Courts, starting with the trial Court and ending with the Supreme Court, found no merit in this contention, which Mr. Modi now once again seeks to rake up before me. 12. On this ground, the applicants have also taken out another Notice of Motion in High Court Suit No. 1660 of 1981 for an injunction against defendants 2 to 4 identical terms refused by my learned brother Pendse. That fresh Notice of Motion is pending before the learned Chamber Judge. Mr. Modi, however, informed me that he had obtained instructions from his clients that the other Notice of Motion would not be proceeded with as the aspect of section 34 had been canvassed before me. Mr.
That fresh Notice of Motion is pending before the learned Chamber Judge. Mr. Modi, however, informed me that he had obtained instructions from his clients that the other Notice of Motion would not be proceeded with as the aspect of section 34 had been canvassed before me. Mr. Modi, however, clarified that it would be open to the applicants to urge this point at the hearing of the suit. 13. It was next urged by Mr. Modi (a) that the consent terms dated 13th September, 1978 did not embody the true agreement between the parties and were obtained under coercion and/or misrepresentation; (b) that the true agreement was embodied in a contemporaneous Memo of Understanding; (c) in the alternative, that the Memo or understanding supplemented the consent terms; an (d) that the totality of facts and balance of convenience dictates that if the ad interim orders are not continued, 3 flats will be disposed of by the respondent at an undervalue to his son and relatives. 14. Mr. Modi's contention in (a) and (b) above have prima facie not found favour with 3 Courts, viz. the learned Single Judge, the Division Bench and the Supreme Court. Mr. Modi's contentions in (b) and (c) above are contrary to the 1st applicant's own admission in para 26 of his Application No. 568 of 1980, that the Memo of Understanding (under which the respondent agreed to pay to the applicants 50% of over-flow) was subsequent to the consent terms which modified the later. According to Mr. Chagla, inter alia vast monetary benefits of not less than Rs. 7,71,840/- have already been received by the applicants from the respondent, which is neither denied on affidavit nor any offer made for restitution. Be that as it may, what must clinch the matter as far as the present hearing is concerned, is that, as conceded by Mr. Modi, all these contentions again raked up before me, were in fact canvassed not once but thrice earlier, starting with the Notice of Motion before my learned brother Pendse, continuing in Appellate Court before the Division Bench, and finally culminating in the Special Leave Petition before the the Supreme Court, each time with disastrous results. Yet Mr. Modi invites me to reopen the same controversies on the same old grounds canvassed in all the 3 courts and found favour with none.
Yet Mr. Modi invites me to reopen the same controversies on the same old grounds canvassed in all the 3 courts and found favour with none. To invite me virtually to sit in appeal over the Division Bench and the Supreme Court is a presumption I find no difficulty in resisting. 15. To make assurance doubly sure and in order to leave no scope for grievance or room for misunderstanding, I specifically and pointedly enquired of Mr. Modi whether any new circumstances had arisen between the dismissal of the Notice of Motion by my learned brother Pendse and now. Mr. Modi asked me to wait a few minutes in order to enable him to obtain instructions from his instructing advocate by his side and his clients behind him. After obtaining instructions Mr. Modi replied to my query in the negative, with a rider that the only new circumstances was that the Supreme Court and had directed expedition of the suit. This cannot be categorised as a new circumstance and cannot be misused by the applicants (who have not even effected service of the writ of summons for over 2 years in High Court Suit No. 1660 of 1981 as stated earlier), as an invitation to rake up controversies regarding which 3 courts have found against them. But then Mr. Modi says, the longer and ad interim injunction continues the greater is the balance of convenience in perpetuating it, adding that “where intricacy, complexity or questions uncovered by authority or range of points to be covered” are such that the status quo should be preserved, it should not be disturbed until the disposal of the suit, as “there is an air of plausibility” in the applicants' case. As profundities these sentiments are admirable, except that it is difficult to see their application in the present set of circumstances and in the teeth of the applicants' unaccountable failure even to serve the writ of summons on defendants 2 to 6 in Suit No. 1660 of 1981 for over 2 years. The “Air of plausibility” has already been negatived by not less then 3 courts, albeit prima facie.
The “Air of plausibility” has already been negatived by not less then 3 courts, albeit prima facie. The deviousness is transparent: lay the red horring of expedition, yet take not even the elementary step in prosecuting the suit, prevent it from ripening to a hearing and under its shadow plead willy-nilly for perpetuation of the ad interim injunction and thereby stultify the orders passed by not less than 3 courts against the applicants. Perhaps Mr. Modi's clients may care to draw consolation that in the event of their succeeding in the suit, a windfall of nearly Rs. 34 Lacs awaits them being the damages claimed in the alternative. 16. Mr. Modi says that the orders passed by the 3 courts are not speaking orders hence it is impossible to know what weighed in the minds of the learned Single Judge, the Divisions Bench and the Supreme Court in refusing relief to the applicants. Surely, this must be the thin end of the wedge. Even if one point then canvassed was found sufficient to deny relief to the applicants, that is the end of the matter there being no change of circumstance as fairly conceded by Mr. Modi. Repeated applications on the same grounds without change of circumstance, is a practice repeatedly deprecated. 17. In the result, I vacate the ad interim orders passed by the Court of Small Causes on 8th July, 1980 and 12th August, 1980 in Misc. Application No. 568 of 1980. The applicants shall pay to respondent the costs of the hearing fixed at Rs. 750/-. A copy of this order is handed over to Mr. Modi and its operation is stayed for a period of one week from today. Application allowed. -----