Constructions Co. Vs. Somvanshi Arya Kshatriya Samaj & Ors  Insc 583 (13 September 2006)
Pasayat & S.H. Kapadia Arijit Pasayat, J.
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.
facts, as projected by appellant in a nutshell are as follows:
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:
the defendants cannot commit breach of the agreement dated 7th July, 1985;
injunction restraining the defendants from carrying out any construction on the
suit land in breach of the agreement.
said suit was filed by respondent No.2, Nilkanth Mahadeo Kamble as the chief
trustee of the trust.
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.
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.
recorded by the courts below were set aside.
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.
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.
Therefore, any compromise recorded therein had no legal effect.
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. (JT 2006 (7) SC 102), Joseph Severane and Ors. v.
Benny Mathew and Ors. (JT 2005 (8) SC 509), Sasikumar and Ors. v Kunnath Chellappan
Nair and Ors. (JT 2005 (9) SC 171), Chadat Singh v. Bahadur Ram and Ors. (JT
2004 (6) SC 296), Kanhaiyalal v. Anupkumar (JT 2002 (10) SC 98), Roop Singh v.
Ram Singh (JT 2000 (3) SC 474) and Ishwar Dass Jain v. Sohan Lal (JT 1999 (9)
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.
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.
is allowed. No orders as to costs.