Damodar
Ropeways & Construction Co. (P) Ltd. Vs. Christopher Martin Dasgranges
Martin & Ors [1989] INSC 306 (6 October 1989)
Misra
Rangnath Misra Rangnath Venkatachalliah, M.N. (J)
CITATION:
1989 SCR Supl. (1) 445 1989 SCC Supl. (2) 477 JT 1989 (4) 53 1989 SCALE (2)808
ACT:
Code
of Civil Procedure 1908: Order XXIII--Rule 3 Compromise--Acceptance of by
Court--Question for consideration.
Delay
in filing compromise--Effect of.
HEAD NOTE:
The
Board of Governors of the respondent school entered into a contract for the
grant of permanent lease of immovable property of the school to the
petitioner-builder. An association of the old students of the school resisted
the agreement before the High Court but a learned Single Judge accorded
sanction which was later stayed. The petitioner preferred an appeal before the
Division Bench of the High Court which made certain interim directions while
disposing the appeal. Hence this appeal by the petitioner.
During
the pendency of the appeal, the parties entered into a compromise which was
signed on behalf of all the parties, but the compromise deed was filed in this
Court after a lapse of three years. The Association of the old students
resisted the compromise on the ground: (i) that there was a lapse of three
years between the date of signing the compromise and its filing in the court;
(ii) the President of the Old Association of students had no authority to enter
the compromise.
Disposing
the appeal, this Court;
HELD:
(1) If the compromise is genuine and lawful, the delay in presentation in court
could at the most be in the realm of equity and would not be otherwise material..
In the instant case the resolution of the Board of the Association clarifies
the position that all parties had agreed to the compromise and it was intended
to be presented before this Court for permission to enter into compromise. The
President of the Old Association of Students had been authorised to associate
himself for the purpose. The agreement has been signed by the parties and is
not unlawful. The compromise is, therefore, in accordance with the provisions
of Order XXIII, rule 3 of the Code of Civil Procedure and can be acted upon.
[448F-H] 446
2.
Before the compromise is accepted it is for the court to be satisfied that the
terms are in the interests of the Trust. [449A]
2.1 In
the instant case, under the agreement forming the subject matter of compromise
the school would have space available for expansion in the near future. It is
not in the interest of the school to reject the agreement on the ground that
there was scope of receiving better offers if advertisement was made. [449E-C]
2.2 It
is appropriate that the compromise should be accepted with certain variations
viz. availability of extra area to the school, escalation of the ground rent
and provision for automatic escalation of ground rent of 10% once in every 10
years. The permission is accordingly accorded to the Board of Governors to
enter into compromise on behalf of the school. [449E & 449H; 450A-B]
CIVIL
APPELLATE JURISDICTION: I.A. No. 1 of 1989.
IN
Civil Appeal No. 3334 of 1982.
From
the Judgment and Order dated 16.9.1982 of the Calcutta High Court in Appeal No.
nil.
Kapil Sibal,
R.F. Nariman and Vineet Kumar for the Petitioner.
Dr. Shankar
Ghose, H.N. Salve, G. Joshi, A.K. Sil, Ms. Urmil Narang (N.P.), C.S. Vaidyanathan,
Vivek Gambhir (N.P.) and Praveen Kumar for the Respondents.
The
following Order of the Court was delivered by MISRA, J. This civil appeal by
special leave is at the instance of a builder who had entered into a contract
with the Board of Governors of the La Martiniere School at Calcutta in respect of certain immovable
property of the School to be taken by the builder on permanent lease.
Christopher
Martin Desgranges Martin left behind a will which stipulated the setting up of
a school for the benefit of the city of Calcutta and upon his death the will was probated and the executors 447 set up
the school. The Board of Governors of the School (hereinafter 'Board') among
others has the reverend Bishop of the city of Calcutta as its Chairman and a retired Major-General of the Indian
Army as a member. The Old Martinians Association (hereinafter 'Association')
being a body of the old students of the School resisted the request of the
School before the High Court when it applied for acceptance of the agreement of
lease of 1981. A learned Single Judge while agreeing on principle to accord
sanction asked for further details. The Division Bench made certain directions
in an appeal taken to it by the builder and the interim directions form the
basis of subject-matter of this appeal.
During
the pendency of the appeal in this Court the builder and the School entered
into a fresh agreement on 12.9.1986 to which the Association is also a party.
Under the agreement more favourable terms for the School were stipulated, such
as--(1) annual payment of ground rent of Rs.22,000 during the period of lease;
(2) as against a onetime payment of Rs.31 lakhs in the 1981 agreement, a
recurring annual payment of about Rs.50 lakhs; and (3) built-in area of 60,000
square feet to enable extension of the School and earning of rental income.
Apart from these, it is stated that under the 1981 agreement the School had
entered into arrangements with prospective lessees and had received a substantial
sum of money by way of advance from them in respect of approximately 53,000
square feet to be constructed. The builder under the 1986 agreement took the
responsibility of dealing with the prospective lessees--either by refunding the
money or providing leasehold area from out of its share.
It is
not disputed that a total area of about 1,80,000 square feet would be available
as a result of the construction agreed to be raised by the builder under the
1986 agreement. Parties decided to file an application for compromise before
this Court in the pending appeal and the petition was duly drawn up on
12.9.1986. It was signed on behalf of the Board by the Chairman and Major
General B.M. Bhattacharya', Anjan Dey in his personal capacity and as President
of the Association and the builder. Mr. Anjan Dey's signature in his personal
capacity was duly attested by Mr. P.L. Agarwal, his Advocate and his signature
as President of the Association was duly witnessed by Mr. Bhankar Kar,
Secretary of the Association. This application was, however, not presented in
this Court until some time in May, 1989, for difficulties which have been
attempted to be explained by the School. After this application was made the
Association represented by Mr. Amit Bikram Roy resisted it.
Rejoinders
have been filed on behalf 448 of the School and the builder to the objection.
The original compromise petition has been produced. The builder has also placed
on record the proceedings of the Board of the Association dated 11th September, 1986--a day before the compromise was
signed. The resolution of the Association's Board reads thus:
"RESOLVED
that in view of finalisation of pending case at Supreme Court of India
regarding dispute arising out of Property Development at La Martinique for
Boys, Calcutta as petitioned by Developer/Contractor Damodar Ropeways &
Construction Co. Pvt. Ltd. with one of the parties being Mr. Anjan Dey and Old Martinians
Association, Mr. Anjan Dey be and is hereby authorised to act on behalf of the
Association for the compromise solution as drawn up by the Association's
Solicitors M/s. Khaitan & Co. and as already approved by all parties
concerned subject to permission by the Hon'ble Supreme Court." The
proceedings were signed by Mr. Shankar Kar, General Secretary, Ms. Joyita Sen,
Treasurer, Messrs Amit Bikram Roy, Vice-President, Ashoke Paul, Anjan Dey,
President and Ms. Raktima Dutt.
Objection
of the Association to the petition of compromise is mainly on two grounds (1)
lapse of three years between the date of signature of the petition by the
parties and its filing; and (2) want of authority of Mr. Anjan Dey to enter
into the compromise.
The
delay in filing the compromise petition in Court has been attempted to be
explained on behalf of the School and the builder. If the compromise is genuine
and lawful, the delay in presentation in Court could at the most, if at all, be
in the realm of equity and would not be otherwise material. The resolution of
the Board of the Association of 11th September, 1986, extracted above is a complete answer to the second ground
as it clarifies the position that all parties had agreed to the compromise and
it was intended to be presented before this Court for permission to enter into
compromise. Mr. Anjan Dey had been authorised to associate himself for the
purpose. It is not the contention of the Association that the whole or any part
of the agreement is unlawful; nor is it the contention of any of the parties
that the petition has not been signed by him or them. The compromise is,
therefore, in accordance with the provisions of Order XXIII, rule 3 of he Code
of Civil Procedure and can be acted upon.
449
Before the compromise is accepted it is for the Court to be satisfied that the
terms are in the interests of the Trust. Dr. Ghosh for the Association
strenuously contended that the property was very valuable even as vacant site
in view of the recent escalation of price of land in Calcutta and if a genuine
attempt is made there was possibility of a higher offer being made and the
interest of the School should, therefore, not be sacrificed by allowing it to
enter into the compromise. When we suggested to Dr. Ghosh that the Association
could provide a guarantee to accept and work out the ten, as in the compromise
in the event of the response to the advertisement not being as favourable, he
was not willing to do so. We do not think that it is in the interest of the
School to reject the agreement on the representation of Dr. Ghosh that there
was scope of receiving better offers if advertisement was made. A solemn
agreement has been entered' into. The builder has already spent substantial
sums of money on the property. The plan has been sanctioned by the Corporation
and we are told that under the changed regulations it would be difficult for
the School to obtain a fresh sanction. Three years have now been lost on
account of the compromise not having been placed before the Court and following
the course suggested by Dr. Ghosh involves an element of uncertainty to which
the School should not be exposed. Under the agreement forming the
subject-matter of compromise the School would ,have space available for
expansion in the near future. Keeping these aspects in view, we have thought it
appropriate that the compromise should be accepted but with certain variations.
As we
have already stated, built in area of 1,80,000 square feet would be available
under the agreement and excluding about 50,000 square feet of built in area
which may be set apart for the purpose of meeting the prospective lessees (we
express no opinion about the tenability of such claim) who had entered into
arrangements with the School, 1,30,000 square feet would be available. Out of
it the School has been given 60,000 square feet and the builder is to take
70,000 square feet. We suggested to Mr. Nariman for the builder that the
constructed area of 1,30,000 square feet should be equally divided between the
School and the builder and on instructions from his client (present in Court)
Mr. Nariman has fairly agreed to do so. Since the annual ground rent had been
fixed at Rs.22,000 three years back, we indicated to Mr. Nariman that the sum
should be escalated and he has agreed to have it enhanced to Rs.40,000 per year
after receiving consent of his client. We are of the view that there should be
an escalation clause in regard to the ground rent and once in every ten years
escalation of ten per cent in the annual ground rent beginning from 1990 450
should be provided. These three terms in our view sufficiently protect the
interests of the School and the Trust.
We
accordingly accord permission to the Board of Governors to enter into
compromise on behalf of the School. The civil appeal is disposed of and the
terms of compromise with the three modifications indicated as to availability
of extra area of 5,000 square feet to the School, escalation of the ground rent
to Rs.40,000 from Rs.22,000 and provision for automatic escalation of ten per
cent once on very ten years shall be incorporated in the decree while the other
terms as agreed to by the parties shall also form part of the decree to be
drawn up in the appeal.
We
have not considered it in the interests of the parties to transmit the matter
to the Calcutta High Court as that would protract the matter and the order of
the Single Judge might be challenged in appeal and ultimately the dispute may
again be brought before this Court. Another round of such litigation would be
time-consuming and would not at all be in the interest of anyone.
T.N.A.
Appeal disposed of.
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