Tuesday, February 27, 2024

𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹𝗗𝗿𝗲𝗮𝗺™

𝙰𝙵𝙵𝙾𝚁𝙳𝙰𝙱𝙻𝙴 & 𝙰𝙲𝙲𝙴𝚂𝚂𝙸𝙱𝙻𝙴

CASE LAWSCPCLEGAL AFFAIRS

O XIII R 3 CPC

COMPACK ENTERPRISES INDIA (P) LTD. vs. BEANT SINGH, SC 2021

FACTS – A suit for possession and mesne profits filed by the Respondent/plaintiff against the Petitioner/ defendant, with respect to the ground floor of the property. The Respondent, Beant Singh, is the owner of the suit property. He, through M/s Channa Auto Agencies (P) Ltd. (of which he is a Director), executed a license agreement dated 1.11.2000 in respect of a portion of the suit property in favour of M/s Compack Enterprises (the Petitioner’s predecessor), for a period of 30 months in consideration for a monthly license fee of Rs. 28,000/­(hereinafter, ‘2000 Agreement’). On 1.04.2003, Compack Enterprises merged with Compack Enterprises India (P) Ltd. (i.e.,the Petitioner herein), and the 2000 Agreement continued with mutual consent of parties. The license arrangement was renewed on 1.07.2003 for another 30 months, with a 10% increase in monthly license fee to Rs.30,800/­ (hereinafter, ‘2003 Agreement’). The 2003 Agreement was renewed for the last time effective from 1.04.2006 and expiring on 30.09.2008, with a further 10% increase in monthly license fee to Rs.33,900/­ (hereinafter, ‘2006 Agreement’). 4. However, even after the expiry of the 2006 Agreement on 30.9.2008, and non­renewal of the same, the Petitioner continued to occupy the suit property. Consequently, the Respondent brought O.S. No. 58395/2016 against the Petitioner on 13.02.2009 for recovering possession of the entire suit property and mesne profits thereon from 1.10.2008 till the vacation of the suit property. On the question of mesne profits,the Trial Court held that the issue had already been decided by the High Court in C.M.(M) No. 193/2013 by judgment dated 12.11.2014, and could not be re­opened.On the question of mesne profits, the Trial Court noted that it is an admitted fact between the parties that the possession of the suit property has still not been handed over to the Respondent despite the High Court’s order dated 12.11.2014. Instead, the Petitioner claimed to have handed over possession to Mr. Gosain in July, 2015. Aggrieved by the decision on mesne profits, both the Petitioner and Respondent filed cross­appeals before the High Court against the judgment of the Trial Court dated 23.09.2017, seeking, respectively, reduction and enhancement in the quantum of mesne profits. In the first Impugned Judgment of the High Court in the above cross ­appeals. The High Court passed a consent decree, directing that the Petitioner shall pay to the Respondent, by way of mesne profits, an enhanced sum of Rs.1,00,000/­ p.m., with a 10% increase “after every 12 months, i.e. from 1.10.2009, 1.10.2011 etc etc” w.e.f. 1.10.2008 (i.e., the date on which the 2006 Agreement expired) till the date the Petitioner hands over actual possession of the suit property measuring 5,472 sq. ft. to the Respondent. In the second Impugned Judgment of the High Court in the review petition dated 25.07.2019 the Petitioner contended that the High Court in the first appeal had erred in recording the terms of the consent decree agreed to by the Petitioner. First, the judgment records that the mesne profits be increased by 10% every 12 months, instead of recording a 10% increase every 24 months. Second, the judgment erroneously records that the Petitioner will hand over possession of the entire suit property measuring 5,472 sq. ft., when the documents on record would show that the Petitioner was only ever in possession of 2,200 sq. ft.The High Court, rejecting the Petitioner’s contentions, held that there was no error apparent on the face of the record to justify its review jurisdiction, and that the Petitioner was dishonestly trying to wriggle out of the consent decree by attempting to overreach the Court. The review petition was dismissed with exemplary costs of Rs.1,00,000/­ payable by the Petitioner to the Respondent.

CAUSE – The High Court passed a consent decree, directing that the Petitioner shall pay to the Respondent, by way of mesne profits, an enhanced sum of Rs.1,00,000/­ p.m., with a 10% increase “after every 12 months, i.e. from 1.10.2009, 1.10.2011 etc etc” w.e.f. 1.10.2008 (i.e., the date on which the 2006 Agreement expired) till the date the Petitioner hands over actual possession of the suit property measuring 5,472 sq. ft. to the Respondent.

ARGUMENTS – Petitioner admitted to having been in possession of only a portion of the suit property measuring 2,200 sq. ft., averring that it was only this portion, not the entire suit property that was licensed to them by the Respondent. Petitioner further contended that its continued possession of this portion of the suit property was lawful, since the Respondent had concealed the material fact of having entered into an agreement dated 11.6.2008 to sell the suit property to one Mr. Ajay Gosain for a sum of Rs. 4 crores, of which the Respondent had already received a sum of Rs. 65 lakhs. Petitioner contended that it had been in possession of only 2,200 sq. ft. of the suit property and had been paying license fee for it till July, 2015 as per the interim order passed by the Trial Court; and that they vacated the premises in July, 2015 and handed over possession to Mr. Gosain, to whom the Respondent had allegedly transferred possession of the suit property pursuant to the agreement to sell. Thus, the Petitioner claims that it is not liable to pay any further sum to the Respondent. Shri Mukul Rohatgi, learned senior counsel for the Petitioner,contends that the High Court ought to have, while recording the terms of the consent decree, recorded a 10% increase in mesne profits every 24 months, instead of 12 months. As per him, this typographical error is borne out by the fact that a 10% increase every 24 months closely mirrors the terms of the license agreements where the license fee was increased by 10% every 30 months. The reference to a 10% increase “after every 12 months, i.e. from1.10.2009, 1.10.2011 etc etc” in the first impugned judgment of the High Court dated 14.02.2019 (supra) also corroborates this. The learned senior counsel for the Petitioner has also contended that the first impugned judgment dated 14.02.2019erred in recording that the Petitioner has consented to handing over possession of the entire suit property area of 5,472 sq.ft., when the Petitioner has consistently maintained that only 2,200 sq.ft. was licensed to him and in his possession. Both these submissions are vehemently opposed by Shri Basava Prabhu S. Patil, learned senior counsel for respondent.

ISSUE – Whether the High Court was correct in upholding the terms of the consent decree directing Petitioner to hand over possession of the entire suit property of 5,472 sq. ft. to the Respondent? Whether there is is an error apparent on the face of the record with respect to the question of mesne profits?

DECISION – It is well­ settled that consent decrees are intended to create estoppels by judgment against the parties, thereby putting an end to further litigation between the parties. Resultantly, this Court has held that it would be slow to unilaterally interfere in, modify, substitute or modulate the terms of a consent decree, unless it is done with the revised consent of all the parties thereto. This Court, in Byram Pestonji Gariwala v. Union Bank of India & ors., (1992) 1 SCC 31, has held that a consent decree would not serve as an estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. Further, this Court in the exercise of its inherent powers may also unilaterally rectify a consent decree suffering from clerical or arithmetical errors, so as to make it conform with the terms of the compromise.Thus, keeping in line with this Court’s jurisprudence, we would be cautious in exercising our inherent power to interfere in this consent decree, except where there is any exceptional or glaring error apparent on the face of the record. On the question of area of possession, having undertaken a close perusal of the License Agreements executed between the Petitioner and Respondent, we reject learned senior counsel Mr. Rohatgi’s contention that the Petitioner was only in possession of and licensee to a 2,200 sq.ft. portion of the suit property. The material on record discloses that the Petitioner is presently in illegal possession of the entire suit property admeasuring 5,472 sq. ft. On the question of mesne profits, the learned Single Judge, in noting that “this figure of mesne profits of Rs.1 lakh will be increased by 10% after every 12 months, i.e from 1.10.2009, 1.10.2011 etc etc” (emphasis supplied), has confused not only himself, but also the parties to the litigation. There is an inconsistency in so far there is a gap of every alternate year, i.e. from 2009 to 2011, in the example used by the learned Single Judge even though the decree notes an increase of 10% in mesne profits after every 12 months. The aforementioned inconsistency in the underlined extract of the consent decree is an error apparent on the face of the record. Hence we find that this is a fit case to exercise inherent the jurisdiction to correct the terms of the consent decree, to bring it in conformity with the intended compromise.To this limited extent, the second impugned judgment dated 25.07.2019 is overturned, and the consent decree recorded by the learned Single Judge’s judgment dated 14.02.2019 stands modified.Hence the present petitions are disposed of, with direction to the Petitioner to take steps for handing over possession of the suit property measuring 5,472 sq. ft. to the Respondent within eight weeks from today, without fail.

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