SUPREME COURT OF INDIA
Ravi Constructions Company
Vs
Somvanshi Arya Kshatriya Samaj and Others
Appeal (Civil) 729 of 2004
(Arijit Pasayat and S. H. Kapadia, JJ)
13.09.2006
ARIJIT PASAYAT, J.
Appellant calls in question legality of the judgment rendered by a learned
Single Judge of the Bombay High Court in Second Appeal filed by the
respondents.
Background facts, as projected by appellant in a nutshell are as follows:
An agreement was entered into between Viraj Construction-respondent No.9 in
this appeal and respondent No.1 Somavanshi Arya Kshatriya Samaj (hereinafter
referred to as the 'Trust") on 7.7.1985 on for construction of a multi-
purpose Community hall free of charges. Trust agreed simultaneously to
surrender certain portions of the Trust land to respondent No.9 for
development. On 3.7.1987, an agreement was entered into between appellant and
respondent No.9 in respect of the right to develop the plot of the trust in
terms of the agreement dated 7.7.1985. It was agreed that the appellant will be
the sub developers of the plot and would construct the community hall. A sum of
Rs.3, 00, 000/- was payable as consideration to respondent No.9. On 26.4.1988
the respondent No.1-trust filed a civil suit (Civil Suit No.190 of 1988) for
declaration and injunction in the Court of Civil Judge, junior division, Kalyan
praying inter-alia for the following reliefs:
A. Declaration that the defendants cannot commit breach of the agreement dated
7th July, 1985;
B. Permanent injunction restraining the defendants from carrying out any
construction on the suit land in breach of the agreement.
The said suit was filed by respondent No.2, Nilkanth Mahadeo Kamble as the
chief trustee of the trust.
On 10.6.1988 the aforesaid Civil Suit was compromised between the parties and a
compromise pursis was filed by them along with the map which highlighted the
compromise agreed between the parties. A sum of Rs.1, 10, 000/- was also paid
to the trust as consideration for the compromise which was accepted by the
trust. It is to be noted here that by a resolution of respondent No.1, chief
trustee i.e respondent No. 2 was authorized to compromise the suit in any one
of the three alternatives indicated. All the other trustees were signatories to
the resolution. According to appellant, one of the alternatives was adopted. On
26.2.1990 another Civil Suit (Civil Suit No.101 of 1990) was filed by the
respondent No.1- Trust for setting aside the consent decree passed on 10.6.1988.
The primary stand was that the earlier suit could not have been filed by the
chief trustee-respondent No.2 on behalf of the Trust (Respondent No.1) without
joining the other trustees as plaintiffs. It was further stated that respondent
No.2 had no authority to compromise the suit. On 5.4.1990 appellant and
respondent No.9 filed written statement taking the stand inter-alia that
respondent No.2- the Chief Trustee was authorized by the other trustees by a
resolution to compromise the Civil Suit No.190 of 1988. In fact the resolution
authorized respondent No.2 to enter into the compromise and the same was
produced in Court before the final order was passed and reference was made to
the resolution in the order regarding compromise. The suit was not really filed
by respondent No.2 in his personal capacity, but as the chief trustee
representing the trust. On 11.1.1991, the Civil Suit was dismissed by judgment
and order of learned Civil Judge, Junior Division, Kalyan. It was held that the
respondents had not proved that respondent No.2 was not authorized to enter
into the compromise which culminated into a consent decree. Further it was held
that it could not shown by the respondents 1 to 8 that respondent No.2 was not
authorized to file a suit on behalf of the Trust. Reference was made to Order
XXIII Rule 3A of the Code of Civil Procedure, 1908 (in
short the 'CPC') to hold that the challenge to the consent decree was barred.
Appeal filed by respondent Nos.1 to 8 (Appeal No. 59 of 1991) was dismissed by
order dated 11.12.1992 passed by Additional District Judge, Thane. It was held
that the respondents had filed a copy of the resolution authorizing respondent
No.2 to compromise the suit. Compromise was entered into between the appellant
and respondent No.2 representing the Trust and respondent No.9 in conformity
with the resolution and with full knowledge and consent of the other trustees.
Therefore, the Civil Suit was not maintainable. Second Appeal No.289 of 1994 in
terms of Section 100 CPC was filed before the Bombay High Court by respondents
Nos.1 to 8. By the impugned judgment the Second Appeal was allowed even without
framing a substantial question of law. The High Court held that the earlier
suit was not maintainable in law in the absence of all the trustees being made
parties. Therefore, Order XXIII Rule 3A of the CPC has application and the suit
was maintainable. Conclusions recorded by the courts below were set aside.
In support of the appeal learned counsel for the appellant submitted that the
High Court lost sight of the fact that the earlier suit was compromised by the
chief trustee in terms of the resolution to which all the trustees were
signatories. Filing of the earlier suit was within knowledge of all the
trustees. They had in fact authorized the chief trustee to enter into a
compromise in any of the three alternative modes indicated. The factual finding
recorded that the earlier suit was filed with their knowledge and consent and
was compromised was not challenged before the High Court and in any event the
High Court has not recorded finding on that factual aspect. Therefore, the High
Court was not justified in allowing the second appeal. In any event the second
appeal could not have been dealt with without framing a substantial question of
law.
In response, learned counsel for the respondents 1 to 8 submitted that the High
Court's judgment is in order. The earlier suit was non-est in the eye of law.
At the outset it is to be indicated that the second appeal was allowed without
framing a question of law which is clearly contrary to the mandate of Section
100. This position has been highlighted in several decisions. (See Gian Dass v.
Panchayat, Village Sunner Kalan & Ors. 2006 (7) JT 102, Joseph
Severane and Ors. v. Benny Mathew and Ors. 2005 (8) JT 509, Sasikumar and
Ors. v Kunnath Chellappan Nair and Ors. 2005 (9) JT 171, Chadat Singh v.
Bahadur Ram and Ors. 2004 (6) JT 296, Kanhaiyalal v. Anupkumar 6, Roop Singh v. Ram Singh and Ishwar Dass Jain v.
Sohan Lal .
Further both the trial court and the first appellate court categorically
observed that the resolution adopted by all the trustees including the chief
trustee and the advocate for the trust who was himself a trustee clearly
established that the earlier suit was filed with the knowledge and consent of
all the trustees and on behalf of all the trustees. Significantly the trust
deed was not produced. It could have shown, as rightly contended by learned
counsel for the appellant, that the trust could be sued or can sue in the name
of chief trustee. In any event the categorical factual finding recorded that
the suit was filed with the knowledge and consent of all the trustees has not
been disturbed and in fact no reference has been made in the impugned judgment
to this aspect. If the trustees had no knowledge of the suit they could not
have adopted a resolution for compromise in a particular mode indicating three
alternatives. They specifically authorized the chief trustee and the advocate
who was also a trustee to enter into a compromise. In that view of the matter
the High Court was not justified in holding that the suit was maintainable.
Looked at from any angle the High Court's judgment is indefensible and is set
aside. Learned counsel for the appellant during course of hearing had stated
that as a matter of genuine gesture, the appellant shall pay to the respondent
no.1-trust a sum of Rs.3, 00, 000/-. Notwithstanding the fact that the appeal
has been allowed, let the statement made by learned counsel for the appellant
be translated into reality and the amount be paid within three months.
Appeal is allowed. No orders as to costs.