MUNI REDDY & ANR. versus C. NAGARAJU & ORS. on 20 September 2018

[2018] 11 S.C.R. 745

MUNI REDDY & ANR.

v.

C. NAGARAJU & ORS.

(Civil Appeal No. 2342 of 2008)

SEPTEMBER 20, 2018

[ABHAY MANOHAR SAPRE AND S. ABDUL NAZEER, JJ.]

Suit – Appellants-plaintiff filed civil suit against therespondents-defendants for cancellation of sale deed – Suit wasdismissed by the trial Court and the first Appellate Court –Partiescompromised the matter – Pursuant thereto, High Court by orderdated 10.04.2002 disposed of the appeal in terms of compromisearrived between the parties –Thereafter, defendant no.2 filedapplication in the disposed of appeal to recall the order dated10.04.2002 – Application was dismissed by the High Court throughorder dated 23.07.2002 – However, Supreme Court set aside theorder dated 23.07.2002 and remitted the matter back to the HighCourt for fresh consideration including consideration of thecompromise petition – High Court did not pursue the proceedingsin relation to the genuineness of the compromise petition and decidedthe appeal on merits – Held: High Court erred in interpreting theorder of the Supreme Court – High Court was required to decidethe compromise petition first because if the compromise was held tobe legal and proper, there was no need to decide the appeal onmerits – Order of the High Court was passed without properlyappreciating the purport of the directions of the Supreme Court –Case remanded back to the High Court for deciding the matter afresh.

Allowing the appeal, the Court

Held: 1. The High Court erred in interpreting the order ofthis Court. On mere reading of the order, it is clear that thisCourt remanded the matter to the High Court with a request todecide it afresh in accordance with law including the question ofconsideration of the compromise petition. This implied that thequestion of consideration of compromise petition was required

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Ato be decided first. It is for the simple reason that if thecompromise was held to be legal and proper, there was no needto decide the second appeal on merits. In other words, the needto decide the second appeal on merits would have arisen only ifthe compromise would have been held illegal and not binding onthe parties concerned. [Para 15] [750-A-C]B

2. The High Court, therefore, erred in not considering thequestion of genuineness and legality of the compromise ascomplained by defendant No. 2 and straightaway proceeded todecide the second appeal on merits. In this process undertakenby the High Court, the question as to whether the compromiseCwas legal or not could not be gone into on its merits, which itought to have been gone into in the first instance. [Para 16] [750-C-D]

3. Therefore, the impugned order of the High Court is notlegally sustainable as the same was passed without properlyDappreciating the purport of the directions of this Court containedin its earlier order. It, therefore, caused prejudice to the rightsof the parties. [Para 17] [750-D-E]

4. Thus, case is remanded to the High Court for decidingthe matter afresh as directed above. The High Court whileEdeciding the question of genuineness of the compromiseapplication, as directed by this Court’s earlier order, may considerit proper to remit the matter to the Trial Court for the purpose ofrecording evidence of the parties in time bound period. Onreceiving the evidence from the Trial Court, the High Court wouldFproceed to decide the question in the light of evidence adducedby the parties. [Paras 18, 19] [750-E-G]CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2342of 2008.

From the Judgment and Order dated 02.01.2008 of the High CourtGof Karnataka at Bangalore in Regular Second Appeal No. 804 of 2001.

K. Radhakrishnan, Sr. Adv., Trideep Pais, Pranav Jain, Ms. SanyaKumar, N. K. Verma, Ms. Anjana Chandrashekar, S. Thananjayan,Ms. Promila, Advs. with him for the appearing parties.

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The Judgment of the Court was delivered by

ABHAY MANOHAR SAPRE, J. 1. This appeal is directedagainst the final judgment and order dated 02.01.2008 of the High Courtof Karnataka at Bangalore in Regular Second Appeal No.804 of 2001whereby the Single Judge of the High Court dismissed the appeal filedby the appellants herein and affirmed the judgment and decree dated02.08.2001 passed by the District & Sessions Judge, Bangalore RuralDist., Bangalore.

2. In order to appreciate the short issue involved in the appeal, itis necessary to set out few facts infra.

3. The appellants are the plaintiffs whereas the respondents arethe defendants in the civil suit out of which this appeal arises.

4. The appellants (plaintiffs) filed a civil suit (O.S. No.3/90) againstthe respondents (defendants) in the Court of 2nd Additional Civil Judge(Sr. Division), Bangalore for cancellation of sale deed dated 24.08.1989.The respondents contested the suit. By judgment/decree dated 16.09.1997,the Trial Court dismissed the suit.

5. The appellants (plaintiffs) felt aggrieved and filed first appeal(R.A. No. 18/97) in the Court of District and Sessions Judge, BangaloreRural District. By judgment dated 02.08.2001, the first Appellate Courtdismissed the appeal and upheld the judgment/decree of the Trial Court.

6. The appellants pursued the matter further and filed secondappeal in the High Court being R.S.A.No.804/2001. Subsequently, theparties compromised the matter and, therefore, the High Court (SingleJudge) by order dated 10.04.2002 disposed of the appeal in terms ofcompromise arrived at between the parties.

7. Thereafter, defendant No. 2 (C Naga Raju), respondent No. 1herein, filed an application in the disposed of appeal (RSA No. 804/2001) and complained therein that the compromise arrived at betweenthe parties, which resulted in disposal of the second appeal, is not bindingon him and prayed for recalling of the order dated 10.04.2002.

8. The High Court, by order dated 23.07.2002 dismissed theapplication filed by defendant No. 2 (respondent No. 1 herein). Aggrievedby the said order, defendant No.2 filed appeals by way of special leavein this Court. By order dated 04.08.2003, this Court allowed the appeals A

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A(Civil Appeal Nos. 5531-32/2003 etc.etc.) and while setting aside theorder dated 23.07.2002 remitted the matter to the High Court for freshconsideration in accordance with law including to decide the question ofconsideration of the compromise petition. The order reads as under:

“Leave granted.

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When a Second appeal came up for consideration beforethe High Court, it disposed of the same in the followingterms:

“Mr. Siddappa, learned counsel files power forrespondent No.2. Both the sides have filed theCcompromise petition. All the parties are present.Advocate for both sides are also present. Thecompromise petition is allowed. In view of thecompromise petition, the appeal stands disposed of. Drawthe decree accordingly.”

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Whether the compromise had really been entered intobetween the parties or not was not inquired into by theHigh Court in terms of Order XXIII Civil Procedure Code.

Further, it is not clear as to the impact of the Memofiled before the Court on the appeal as a whole. The sameEshould have been examined by the High Court and adecision should have been taken by it.

Therefore, we set aside the order made by the HighCourt and remit the matter to the High Court for freshconsideration in accordance with law including the questionFof consideration of the compromise petition.

The appeals are allowed accordingly.”

9. After the remand, the High Court took up the matter and onfew dates fixed the case for recording evidence of the parties to decidethe question of genuineness of the compromise as is clear from theGorder sheets dated 26.07.2006, 03.09.2007, 26.10.2007, 12.11.2007,18.12.2007 (Annexures P-8/9).

10. However, the High Court then did not pursue the proceedingsin relation to the genuineness of the compromise and went on to observe H

that in terms of this Court’s order dated 04.8.2003, once the matter isexamined on merits, there is no need to go into the genuineness of thecompromise petition. This is what the High Court observed:

“8…………..I do not find any need to adjourn the matter tosome other date for cross examination of respondent No.2who has filed his affidavit purporting to be by way ofevidence in support of his application for setting aside thecompromise petition for two reasons. Firstly, the SupremeCourt has itself set aside the judgment/compromise decreepassed by this Court on 10.04.2002. Secondly, the SupremeCourt has also observed that the matter has to be examinedon merits and including the genuineness of the compromiseor otherwise.

9. It is obvious that if the matter is to be examined on merits,there is no need for going into the genuineness of thecompromise petition or otherwise and therefore I do notpropose to look into the contents of the affidavit itself whichif at all looked into and is to be accepted requires thenecessity for cross examination. Instead, I propose toproceed to judgment on merits of the appeal and, therefore,there is no requirement of cross examination of respondentNo.2 as the very affidavit is not looked into.”

11. Having thus observed, the High Court did not consider itnecessary to examine the genuineness of the compromise petitionimpugned by defendant No. 2 in his application dated 23.07.2002 andproceeded to decide the second appeal on merits and by impugned order02.01.2008 dismissed the second appeal.

12. It is against this order of the High Court, the plaintiffs havefelt aggrieved and filed the present appeal by way of special leave in thisCourt.

13. Mr. Trideep Pais, learned counsel appeared for the appellantsand Mr. K. Radhakrishnan, learned senior counsel for the respondents.

14. Having heard the learned counsel for the parties and on perusalof the record of the case, we are inclined to allow the appeal and whilesetting aside the impugned order remand the case to the High Court fordeciding the matter afresh as directed hereinbelow.

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A15. In our considered opinion, the High Court erred in interpretingthe order of this Court dated 04.08.2003 quoted supra. On mere readingof the order dated 03.08.2003, it is clear that this Court remanded thematter to the High Court with a request to decide it afresh in accordancewith law including the question of consideration of the compromise petition.This implied that the question of consideration of compromise petitionBwas required to be decided first. It is for the simple reason that if thecompromise was held to be legal and proper, there was no need to decidethe second appeal on merits. In other words, the need to decide thesecond appeal on merits would have arisen only if the compromise wouldhave been held illegal and not binding on the parties concerned.

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16. The High Court, therefore, erred in not considering the questionof genuineness and legality of the compromise as complained bydefendant No. 2 and straightaway proceeded to decide the second appealon merits. In this process undertaken by the High Court, the question asto whether the compromise was legal or not could not be gone into on itsDmerits, which it ought to have been gone into in the first instance.

17. In the light of the foregoing discussion, the impugned order ofthe High Court is not legally sustainable as the same was passed withoutproperly appreciating the purport of the directions of this Court containedin the order dated 04.08.2003. It, therefore, caused prejudice to theErights of the parties.

18. In view of the foregoing discussion, the appeal succeeds andis allowed. Impugned order is set aside. The case is remanded to theHigh Court for deciding the matter afresh as directed above.

19. The High Court while deciding the question of genuineness ofFthe compromise application, as directed by this Court’s order dated04.08.2003, may consider it proper to remit the matter to the Trial Courtfor the purpose of recording evidence of the parties in time bound period.On receiving the evidence from the Trial Court, the High Court wouldproceed to decide the question in the light of evidence adduced by theGparties.

20. In case the compromise is held legal and proper, there will beno need to decide the second appeal on merits. It is for the reason that insuch eventuality, the order dated 10.04.2002 disposing of the secondappeal in terms of compromise would continue to hold the field as beinglegal and proper.H

21. However, if the compromise is held illegal, the order dated10.04.2002 will stand set aside. As a consequence thereof, the secondappeal will revive for being heard on merits. The High Court will thenproceed to decide the second appeal on merits in accordance with law.

22. The High Court is requested to dispose of the matter, asobserved supra, as expeditiously as possible preferably within 6 months.

Ankit Gyan

Appeal allowed.

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