M/S. CHITRALEKHA BUILDERS & ANR. THROUGH ANIL G. SHAH POWER OF ATTORNEY & HUSBAND OF THE PARTNER versus EMPLOYEES SONAL VIHAR CO-OP. HOUSING SOCIETY LTD. & ANR. on 1 March 2021

1. The present Civil Appeal has been filed assailing the Judgmentand Order dated 22.07.2014 passed by the Bombay High Court in AppealNo. 558 / 2007 dismissed the appeal filed by the appellants against theConsent Order dated 16.02.2005 in Suit No. 1335 / 1988 to which theappellants are not the signatory to the proceedings

2. The lis pertains to land admeasuring 5082 square yards bearingSurvey No. 218, CTS No. 727 situated in Village Mulund, Greater

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ABombay. The background facts of this litigation are briefly stated asfollows :

(i) An Agreement to Sell dated 28.04.1980 was executedbetween Defendant Nos. 1 to 52-Vaity family and thePlaintiff-M/s. Chitralekha Builders (then comprising of oneBKusum Gorule and Tukaram Baliram Nalwade), wherebythe Vaity family undertook to execute a Deed ofConveyance in favour of Chitralekha Builders, or itsnominees, on receipt of Rs.35,00,000 towards the balanceconsideration.

C(ii)On 09.05.1980, M/s. Chitralekha Builders entered into anAgreement with a Society viz. G.I.C. SonalVihar Co-operative Housing Society Ltd.-Respondent No.1 herein,whereby it was agreed that Chitralekha Builders woulddevelop the suit property, and the constructed area wouldbe given to the Society after development.

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(iii) On 01.07.1980, the Partnership between Kusum GoruleandTukaram Baliram Nalawade stood dissolved vide aDissolution Deed.

3. Suit No. 1335 / 1988

E3.1. On the failure of the Vaity family to handover possession ofthe suit property, and execute the Sale Deed as per the Agreement dated28.04.1980, Respondent No. 1-Society and Respondent No.2-KusumGorule filed Suit No. 1335 / 1988 before the Bombay High Court againstthe Vaity family seeking specific performance of the said agreement.

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F3.2. During the pendency of the suit, M/s. Chitralekha Builderswas re-constituted, and a Partnership Deed dated 08.04.1989 wasexecuted between Respondent No.2-Kusum Gorule, Appellant No.2-Nina Anil Shah and two other partners viz.S.J.Pakhare and S.N.Gadekar.Pursuant to the Partnership Deed, the Appellant No. 2 was made apartner of M/s. Chitralekha Builders to the extent of 50%.G

3.3. Subsequently, a Supplementary Deed dated 26.01.1996 wasexecuted between Respondent No.2-Kusum Gorule, Appellant No.2-Nina Anil Shah and the two other partners, whereby S.J.Pakharerelinquished his entire share in the partnership in favour of AppellantNo.2; and S.N.Gadekar relinquished his share equally between AppellantHNo.2 and Respondent No.2.

3.4. The Bombay High Court appointed a Court Receiver of theproperty by Order dated 31.08.1991 passed in Notice of Motion No.1311 / 1988 filed in Suit No. 1335 / 1988. It was noted that RespondentNo.2 had taken possession of the suit property, and constructed aboundary wall around the property.

3.5. The Appellants filed Chamber Summons No. 1334 / 2004 forimpleadment as co-plaintiffs in Suit No. 1335 / 1988. The Respondentsfiled Chamber Summons to transpose themselves as Defendants.

The Chamber Summons filed by the parties were disposed of bya common order dated 26.10.2004 passed by the learned single judge ofthe High Court. The Chamber Summons filed by the appellants forimpleadment as co-plaintiffs was dismissed as not maintainable, since aparty could not force himself to be a co-plaintiff in the Suit. R.1-Societywas transposed as Defendant No. 54.

3.6. The Appellants filed Appeal No. 598 / 2005 against the Orderdated 26.10.2004 rejecting their Chamber Summons for impleadmentbefore the division bench of the High Court.

3.7. First consent decree dated 16.02.2005

During the pendency of the aforesaid Appeal, the RespondentNo. 2 entered into a compromise with the Vaity family on 16.02.2005,and drew up Consent terms, whereby the Vaity family agreed to executethe Conveyance Deed in favour of Respondent No.2 / nominees onreceipt of the balance consideration of Rs.35 Lacs. The agreement dated28.04.1980 between the Vaity family and M/s. Chitralekha Builders stoodcancelled. It is relevant to note at this stage that the appellants had notbeen impleaded as parties to the suit.

Pursuant to the consent terms arrived between R.2-Kusum Goruleand the Vaity family, the learned Single Judge passed a Consent Decreedated 16.02.2005, whereby Suit No. 1335 / 1988 was partly decreed asper the Consent Terms (First Consent Decree). It was howeverobserved that the Suit would continue with respect to Defendant No.54-Society, which was now re-transposed as the Plaintiff.

3.8. On 26.07.2005, the Respondent No. 2-Kusum Gorule soldthe suit property to M/s. Oswal Enterprises / Builders, who weresubsequently impleaded as Defendant No. 57 in Suit No. 1335 / 1988.

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A3.9. The appellants filed Chamber Summons No. 961 / 2005 inAppeal No. 598 / 2005 seeking amendment to the original ChamberSummons No. 1334/2004, praying that the appellants be impleaded asDefendants instead of co-plaintiffs. A division bench of the High Courtby Order dated 19.08.2005 allowed the Appeal alongwith the ChamberSummons No. 961 / 2005, and directed that the appellants be added asBDefendants in the Suit. It was held that the appellants were necessaryparties to effectuate the final adjudication of disputes.

3.10. Appeal against the first consent decree Upon being impleaded as Defendants in Suit No. 1335 /1988, theCappellants filed Appeal No. 558 / 2007 to challenge the consent decreedated 16.02.2005. The High Court by the impugned order dated22.07.2014 dismissed the Appeal, and held that the appellants were notparties to the Consent Terms dated 16.02.2005, and would not be boundby the same. The rights of the appellants were not affected by theConsent terms, and therefore, the order dated 16.02.2005 did not warrantDinterference.

The present Civil Appeal has been filed to challenge the Orderdated 22.07.2014.

3.11. Second Consent decree dated 03.10.2005E

EOn 03.10.2005, the Respondent Nos. 1 and 2 entered into acompromise with Oswal Enterprises, wherein it was agreed thatRespondent No. 1 would transfer the suit property to Oswal Enterpriseson receipt of Rs.50 Lacs, and would make no claim on the suit property.The learned single judge took the draft amendment on record, andFimpleaded Oswal Builders as Defendant No. 57. The Suit No. 1335 /1998 was decreed as per the Consent Terms (Second Consent Decree).On an objection being raised by the appellants, the High Court granted 4weeks to initiate appropriate proceedings to challenge the Consent decree,and directed the Court Receiver not to handover possession of the suitproperty for 4 weeks. The Suit was accordingly disposed of.G

4. Suit No. 3162 / 2005

Pursuant to the Order dated 03.10.2005, the Appellant No.2 filedSuit No. 3162 / 2005 before the Bombay High Court for a declarationthat the 1st and 2nd Consent decrees dated 16.02.2005 and 03.10.2005,were illegal and void.H

M/S. CHITRALEKHA BUILDERS & ANR. v. G.I.C. EMPLOYEES SONALVIHAR CO-OP. HOUSING SOCIETY LTD. [INDU MALHOTRA, J.]

M/s. Chitralekha Builders was impleaded as Defendant No.1,Kusum Gorule was impleaded as Defendant No.2, and M/s. OswalEnterprises was impleaded as Defendant No.3.

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“(a)this Hon’ble Court be pleased to declare that the partnershipfirm M/s Chitralekha Builders stands dissolved on15.07.2004 or from such other date as this Hon’ble Courtmay deem fit and proper; B

(b) this Hon’ble Court be pleased to order for dissolution andwinding up of affairs of the partnership firm M/s ChitralekhaCBuilders under the order and directions of this Hon’ble Court.

(c) this Hon’ble Court be pleased to order for taking accountsof the partnership firm M/s Chitralekha Builders from thedate of dissolution or from such other date as this Hon’bleCourt may deem fit and proper and the shares of the plaintiffand the defendant no. 2 be ascertained and ordered to bepaid over.

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(d) for the purposes aforesaid, necessary directions be givenand orders be passed; (e)this Hon’ble Court be pleased to declare that consent decreedated 16.02.2005 passed in suit No. 1335 of 1998 is bad inlaw, illegal and void and not binding upon the suit property; E

(f) this Hon’ble Court be pleased to further declare that theconsent decree dated 03.10.2005 passed in suit no. 1335 of1998 is bad in law, illegal and void and not binding upon thesuit property; F

(g) this Hon’ble Court be pleased to declare that the purportedconveyance dated 25.07.2005 executed in favour of thedefendant no. 3 of the suit property is bad in law, void,inoperative and not enforceable against the suit property.

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(h) this Hon’ble Court be pleased to pass the decree revokingand cancelling the purported conveyance dated 26.07.2005executed in favour of the defendant no. 3 in respect of thesuit property.

130SUPREME COURT REPORTS

A(i)Pending the hearing and final disposal of the suit courtreceiver, High Court, Bombay or any other any fit and properperson be appointed as the receiver in respect of the suitproperty more particularly described in Schedule annexedto the plaint and marked Exhibit-B with all powers underOrder 40 of the Code of Civil Procedure, 1908;B

(j) pending the hearing and final disposable of the suit thedefendants no. 2 and 3, their agents, servants and/or anyperson acting or claiming through them be restrained by aninterim order and injunction of this Hon’ble Court fromdealing with, disposing of or creating any third party interestCor carrying out development works of any naturewhatsoever in the suit property more particularly describedin the Scheduled annexed to the plaint and marked Exhibit-B.

(k) ad-interim reliefs in terms of prayers (i) and (j) above beDgranted;

(l) Cost of the suit be awarded to the plaintiff; (m)Such other and further reliefs as the nature andcircumstances of the case may require be granted.”

EDuring the course of hearing, we were informed that the SuitNo.3162/2005 is pending at the stage of recording of evidence.

5. Arbitration proceedings

5.1. The inter se disputes between Appellant No.2-Nina Anil Shahand Respondent No.2-Kusum Gorule led to the invocation of arbitrationFproceedings. The Bombay Court by Order dated 22.07.2005 appointedJustice A.C. Agarwal, retired Chief Justice of the Madras High Courtas the sole arbitrator.

5.2. The sole arbitrator passed an Award on 01.08.2006 holdingthat the partnership firm-Chitralekha Builders was dissolved onG15.07.2004. The suit property was not an asset of the partnership firm.The Appellant No. 2 was directed to pay Rs.62,18,324 i.e. 50% of theexpenses of the partnership firm with interest @ 12 % p.a.

5.3. The appellants filed Objections to set aside the award u/s. 34,which were dismissed byOrder dated 03.10.2006.H

The appellants filed Appeal No. 813 / 2006 u/S. 37 of the 1996Act, wherein by Order dated 21.07.2014, the division bench of the HighCourt remanded the application u/S. 34 for fresh consideration.

5.4. A single judge of the High Court by Order dated 05.06.2017partly allowed the application u/S. 34, and set aside the claim for expensesof the partnership firm.

5.5. The appellant No. 2 filed Appeal No. 266-268 / 2017 underSection 37 of the 1996 Act before the High Court, which is currentlypending consideration before the division bench.

6. Proceedings before the Supreme Court

The challenge in the present Civil Appeal is limited to the Orderdated 22.07.2014 passed by a division bench of the High Court dismissingthe appeal being Appeal No. 558 / 2017 filed by the appellants to challengethe 1st Consent Decree dated 16.02.2005.

6.1. This Court by Order dated 19.11.2014 issued Notice only forexploring the possibility of a settlement between the appellants andRespondent No.2-Kusum Gorule (originally Respondent No.55).

6.2. The appellants filed I.A. No. 9 / 2016 to delete the originalRespondent Nos. 2 to 54 (members of the Vaity family) from the arrayof parties. Mr.Anil G. Shah-the husband and Power of Attorney holderof Appellant No.2-Nina Anil Shah appeared before the Chamber Judgeof this Court, when I.A. No. 9 / 2016 filed by the said Appellant wasallowed vide Order dated 28.11.2016 at the risk of the Appellants.

6.3. On 27.03.2018, the appellants filed I.A. No. 48308 / 2018 toimplead Oswal Enterprises as a party to the present proceedings.

6.4. This Court by Order dated 12.12.2019 appointed Mr. NikhilNayyar, learned Senior Counsel as Amicus Curiae to assist the Courton behalf of the Appellant.

6.5. On 17.03.2020, the appellants filed I.A. No. 73241 / 2020 tore-implead Respondent Nos. 2 to 54 i.e. members of the Vaity family[who had been deleted vide Order dated 28.11.2016] as parties to thepresent Civil Appeal.

7. We have heard the learned Amicus Curiae, Mr. Nikhil Nayyar,Senior Advocate, Mr. Jay Savla, Senior Advocate on behalf of the A

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ARespondents, and Mr. Anil G. Shah in-person, as the Power of Attorneyholder of Appellant No.2.

8. We will first deal with the 2 pending I.As.

(i) I.A. No. 48308 / 2018 was filed to implead Oswal Buildersas a party respondent to the present Civil Appeal.We findBthat the said I.A. deserves to be dismissed, since OswalBuilders has already been impleaded as Defendant No.3 inthe substantive Suit No. 3162/ 2005 filed by the Appellantbefore the Bombay High Court.

(ii) I.A. No. 73241 / 2020 has been filed by the appellants toCre-implead Respondent Nos. 2 to 54, who were deletedvide Order dated 28.11.2016 at the risk of the appellants.We are of the view that the said I.A. cannot be allowed atthis stage. The said I.A. is accordingly dismissed.

9. Mr. Nikhil Nayyar, learned senior counsel appearing as AmicusDCuriae, Mr. Anil G. Shah in-person, as the Power of Attorney Holder ofappellant no. 2, and also learned counsel for the respondents haveextensively made their submissions on merits. What transpires from therecord is that both the consent decrees dated 16.02.2005 and 03.10.2005have been challenged at the behest of the appellants in the substantiveESuit No. 3162/2005 filed at their instance,which is pending adjudicationbefore the Bombay High Court.

10. The submission of the learned counsel for the appellants isthat the appellants are not a signatory to the consent orders dated16.02.2005 and 03.10.2005 passed in Suit No. 1335/1988 which areFdetrimental to the interest of the appellants, and have been challengedby them in an Appeal invoking Section 96 of the Code of Civil Procedure,1908.The High Court failed to examine the dispute raised by the appellantson merits, and the filing of a substantive suit by them cannot be a groundto reject their Appeal, particularly since there is a patent error committedwhile passing of the consent decree dated 16.02.2005 behind the backGof the Appellants.

11. It was further submitted that even though the Appellants wereimpleaded in Suit No. 1335/1998 at a later stage, it shouldin no mannerdeprive their right to assail the Order dated 16.02.2005, which was passedbehind their back, andis a nullity in the eyes of law. In the givenH

circumstances, the order dated 16.02.2005 ought to have been recalledfor the very reason that it was passed in their absence, to their detriment.

12. It was further submitted that pursuant to the compromise decreeon consent terms dated 16.02.2005, aconveyance deed dated 22.07.2005was executed alienating the suit property in favour of a third party i.e.Oswal Enterprises, in disregard to the rights of the Appellants, andpossession of the suit property was parted with without affording anopportunity of hearing to the Appellants. Consequently, their rights havebeen seriously jeopardized.

13. The Appellant appeared in person, and placed reliance oncertain judgments of this Court regarding the scope of the appealpreferred under Section 96 of the Code.

14. On the other hand, learned counsel for the Respondents, whilesupporting the judgment impugned passed by the High Court submittedthat the rights of the Appellants have been protected by the High Courtunder the impugned judgment, and what is being prayed for by theappellants in the instant appeal is the subject matter of challenge in SuitNo. 3162/2005 filed at their instance. It was open for the Appellants topursue their remedy in the substantive Suit. In the given circumstances,no error has been committed by the High Court in the impugned judgmentwhich calls for interference by this Court.

15. The substantive Suit No.1335/1988 was originally filed at theinstance of Kusum Gorule(i.e. Geetanjali G. Sohani)[original plaintiff no.2 in Suit No. 1335/1988] and the Vaityfamily and the decree on theconsent terms was passed vide Order dated 16.02.2005, and thesubsequent consent order dated03.10.2005, came to be passed betweenthe parties, viz. GIC Employees’ SonalVihar Co-operative HousingSociety (original plaintiff no. 1 in Suit No. 1355/1988) and OswalEnterprises (Defendant No. 57 in Suit No. 1355/1988). Undisputedly,Suit No. 1335/1988 had not been examined by the Court on merits, sincethe parties to the proceedings entered into a compromise, and a consentorder came to be passed by the Court vide Order dated 16.02.2005followed with Order dated 03.10.2005. Consequently, the suit wasdisposed of on the consent terms arrived between the parties.

16. The present appellants were not a party to the proceedings atthe stage when the consent order came to be passed on 16.02.2005, orthe subsequent order dated 03.10.2005 in Suit No. 1335/1988. Both the AB

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Aconsent orders dated 16.02.2005 and 03.10.2005 would consequentlynot have a binding effect on the present Appellants.The consent ordersdated 16.02.2005 and 03.10.2005 challenged in the substantive Suit No.3162/2005 would require to be examined by the Court independently onits own merits in accordance with law, without being influenced by theobservations made in the impugned judgment dated 22.07.2014.B

17. The Division Bench of the High Court in the impugnedjudgment, after taking note of the submissions made, has recorded afinding that since the Appellants were not a party to the proceedings,and the Order dated 16.02.2005 has been passed on the terms agreeableto the parties to the proceedings,it shall not be binding upon the Appellants,Cand their rights could be examined independently in the substantive suitfiled at their instance.The relevant paras of the judgment impugned areas under:-

“13. It is an admitted position that the said Mrs. Kusum did notsign the consent terms either on behalf of M/s. ChitralekhaDBuilders, a partnership firm, or as a partner of the said partnershipfirm. The settlement which is recorded in terms of the decree byway of impugned order is between the parties to the consent terms.The present appellants were admittedly not parties to the consentterms and in fact on the date on which the impugned order wasEpassed, they were not even impleaded as parties to the suit.Therefore, it is obvious that the consent terms dated 16th February,2005, on the basis of which the impugned order dated 16thFebruary, 2005 was passed, do not bind the appellants.

14. Consequently, the consent decree passed on the basis of theFsaid consent terms dated 16th February, 2005 does not bind theappellants. As stated earlier, under the impugned order, the suitwas not disposed of. The suit has been disposed of by a subsequentorder, which is not the subject matter of challenge in the presentAppeal. Hence, in this Appeal, an order of restoration of the Suitcannot be passed.

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15. Thus, the appellants are not affected by the impugned order inany manner. Therefore, it is not necessary to interfere with theimpugned order. We, however, make it clear that we have madeno adjudication on the rights claimed by the appellants in respectof the property in question as well as the right claimed by the H

respondents as a separate Civil Suit filed by the second appellantin relation to the same property is pending.”

18. We are also of the considered view that since the Appellantswere not a party to the Consent Terms as is evident from the record,when the Orders came to be passed on 16.02.2005 followed with03.10.2005, it may not bind the Appellants. Its legal effect is open to beexamined in the substantive suit filed at their instance independently onits own merits in accordance with law. We do not find any error havingbeen committed by the High Court, which may call for our interference.

19. The submission of the learned Amicus Curiae for theAppellants, and of the Appellant-in-person is that apart from thesubstantive suit having been preferred at their instance, the ConsentDecree dated 16.02.2005, followed with 03.10.2005, which have beenchallenged at their behest under Section 96 of the Code,ought to beexamined by the Division Bench of the High Court on merits, and theirsubstantive right of appeal filed under Section 96 of the Code could nothave been stultified merely on the premise that a substantive Suit No.3162/2005 had been preferred at their instance,is pending adjudication.The submission is of no substance since in the first instance, Suit No.1335/1988 was disposed of by the Court on the consent terms arrivedbetween the parties to the proceedings vide Order dated 16.02.2005followed by Order dated 03.10.2005. In the given circumstances, eventhough the Appellants who were later impleaded, have a right of appealunder Section 96 of the CPC. However, since the Appellants were not aparty to the Consent Orders, it was not open for the Court to examinethe legal effect of the Consent Orders dated 16.02.2005 and 03.10.2005to which the Appellants were not a party. Once the substantive suit hasbeen filed at their instance questioning the Consent Orders dated16.02.2005 followed by 03.10.2005,the same is indeed open to beexamined independently on its own merits in the pending proceedingsinitiated at their instance.

20. So far as the rights of the Appellants are concerned, the samehave been duly protected by the High Court in the impugned judgmentdated 22.07.2014. In furtherance thereof, we make it clear that theobservations/findings which have been recorded by the High Court inthe impugned judgment dated 22.07.2014, in no manner, prejudice therights of the Appellants, and the pending Suit No. 3162/2005 filed by theAppellant may be examined by the Court independently on its own merits AB

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Ain accordance with law without being influenced by the observationsmade by the High Court in the impugned judgment dated 22.07.2014.

21. Since the suit was instituted in 2005, we consider it appropriateto observe that the High Court may hear and disposeof Suit No. 3162/2005 as expeditiously as possible, preferably within a period of one year.

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22. The Civil Appeal on the above terms stands disposed of withno order as to costs.

23. Pending application(s), if any, stand disposed of.

24. We appreciate the effort and time spent by Mr. Nikhil Nayyar,learned senior counsel for rendering his able assistance to this Court.

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Devika Gujral

Appeal disposed of

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