Bar under rule 3A attracted if compromise on basis of which decree was passed was void or voidable

Whether the bar under Rule 3A of Order XXIII shall be attracted in the facts of the present case as held by the Courts below is the question to be answered by us. Rule 3A bars the suit to set aside the decree on the ground that compromise on which decree was passed was not lawful. As noted above, the word “lawful” has been used in Rule 3 and in the Explanation of Rule 3 states that “an agreement or compromise which is void or voidable under the Indian Contract Act,1872 (9 of 1872), shall not be deemed to be lawful..;” (Para 48)

R. JANAKIAMMAL V. S.K. KUMARASAMY (DECEASED) & ORS.

CIVIL APPEAL NO.1537 OF 2016

WITH

S.R. SOMASUNDARAM & ORS. V. S.K. KUMARASAMY (DECEASED) & ORS.

CIVIL APPEAL NO.1538 OF 2016

June 30, 2021

The Divisional Bench of Supreme Court consisting of Justice Ashok Bhushan and Justice R. Subhash Reddy allowed the Civil Appeal No.1537 of 2016 and Civil Appeal No.1538 of 2016 partly.

These two appeals have been filed challenging the Division Bench judgment dated 23.11.2011 of Madras High Court dismissing the A.S. No.281 of 2000 and A.S. No.332 of 1999 filed by the appellants respectively. The parties shall be referred to as described in O.S.No.1101 of 1987 (S.R. Somasundaram vs. S.K. Kumarasamy). The 2 appellant, R. Janakiammal in C.A.No.1537 of 2016 was defendant No.7 in O.S.No.1101 of 1987 whereas S.R. Somasundaram, appellant in C.A.No.1538 of 2016 was the plaintiff in O.S.No.1101 of 1987. Janakiammal is the mother of Somasundaram.

On 19.01.1984, C. Senthil Kumaravel, defendant No.6 and son of S.K. Chinnasami, defendant No.4 filed O.S. No.37 of 1984 praying, inter alia, for partition and allotment of 1/6th share to him. In O.S.No.37 of 1984 Senthil Kumaravel, the plaintiff came with the case that the plaintiff and defendant Nos.1, 3,4, 8,9 and 10 were members of joint family. In O.S.No.37 of 1984, Janakiammal was impleaded as defendant No.8, Shanmugavelayuthamas defendant No.9, Somasundaram as defendant No.10 and Saraswathi as defendant No.11. In the plaint case, it was stated that even after registered partition deed dated 07.11.1960 between three branches, defendant Nos.1, 4 and the deceased K. Rangasami continued to live jointly and did business jointly. All the three branches lived jointly. In the plaint, it was further stated that from the savings of the income and by mortgaging ancestral property, the capital necessary for the business was found and the business was expanded from time to time. It was further pleaded that plaintiff, Senthil Kumaravel was entitled to 1/6th share. Defendant Nos.8 to 11, representing the branch of deceased K. Rangasami, were entitled jointly 1/3rd share in all suit properties.

The plaintiff in suit had prayed following reliefs:

a) to divide the immovable suit properties described in the schedule’s 'B', 'D' and 'E' and items 1 to 9 in Schedule 'C' hereunder into six equal shares by metes and bounds with reference to good and bad soil and allot one such share to him with separate possession.

b) to allot 1/6th share in the shares mentioned in item 10 and 11 of Schedule 'C' and item 2 of Schedule 'D' described hereunder.

c) directing the defendants to pay cost of the suit;” (Para 7)

In O.S.No.37 of 1984, an application under Order XXIII Rule 3 was filed on 06.08.1984 by the plaintiff containing signatures of plaintiff and defendants. In the application under Order XXIII Rule 3 in Schedule 'A' to Schedule 'J', various items of properties were listed and allocated to different members of the family. On the basis of application under Order XXIII Rule 3, Sub­ordinate Judge, Coimbatore passed an order dated 6.8.1984 and directed for preparation of decree on the basis of compromise petition.

Minor children of defendant No.10 filed O.S.No. 827 of 1987 through their mother challenging the compromise decree dated 06.08.1984 on the ground that they were not parties thereto. On 03.08.1987 O.S. No.1101 of 1987 was filed by both the sons of Rangasamy, i.e., S.R. Shanmugnavelayutham and S.R. Somasundaram.

The trial court framed five issues and six additional issues. One of the additional issues was that whether the suit is not maintainable under Order XXIII Rule 3A of the CPC. The trial court vide its judgment dated 30.09.1997 dismissed the suit. The trial court upheld the plea of defendant Nos.1 to 3 that O.S.No.1101 of 1987 was barred by Order XXIII Rule 3A CPC. The trial court also upheld the partition deed dated 07.11.1960 and the agreement dated 08.03.1981. The trial court held that after the year 1960 the entire family was not living as joint family and all the three branches are co­owners as far as properties are concerned and were running partnership businesses. Challenging the judgment of the trial court dismissing the suit two appeals were filed in the High Court.

The High Court after considering the submissions of the respective counsel concluded that compromise decree dated 06.08.1984 in Suit No.37 of 1984 was valid, the plaintiff failed to prove that any fraud was played. The plaintiff, further, failed to prove that they gave any guarantee in the year 1984 for taking loan from Punjab National Bank. The High Court further held that suit was barred by Order XXIII Rule 3A CPC and only remedy available was to question the compromise decree in the same suit. The High Court dismissed both the appeals. Aggrieved by the judgment of the High Court, these two appeals have been filed.

Shri V.Giri, learned senior counsel appearing for R. Janakiammal submits that the compromise decree dated 06.08.1984 in Suit No.37 of 1984 is unfair, inequitable and fraudulent. Shri Giri submits that Janakiammal who was defendant No.8 in Suit No.37 of 1984 was not aware of the compromise application or its terms. Janakiammal is a widow only knowing Tamil, she signed the English written papers which was brought to her by DW­2, wife of D­1. She never engaged any counsel. Shri P.R. Thirumalnesan, learned counsel, was never engaged by her. She never went into the Court nor appeared before the Court on 06.08.1984. The family possessed several hundreds acres of land, several houses and other numerous assets but in the compromise decree, she was allotted 200 shares which were in the name of Smt. Kamalam, DW­2 of a sick mill, i.e., Vasudev Mill.

The learned counsel submits that the family of three brothers lived jointly and continued to be joint family even after partition dated 07.11.1960 and acquired several properties in the name of three branches. The family possessed more than 260 acres of land at different places with several houses, but no immovable property was allocated to Janakiammal or her sons.

Shri Gaurav Agrawal, learned counsel appearing in Civil Appeal No. 1538 of 2016 on behalf of Somasundaram submits that plaintiff was deprived of his immovable properties including land and houses and was given only worthless shares in the Compromise decree dated 06.08.1984. He submits that the suit No.1101 of 1987 was filed by the plaintiff to declare the decree dated 06.08.1984 void, unenforceable and fraudulent.

It is submitted that the allocation of the properties in the compromise decree is unfair. A fraud was played on the plaintiff as well as on the court in obtaining the compromise decree. It is submitted that the Order XXIII Rule 3A shall not govern a case where a fraud is played on the Court. Suit No. 37 of 1984 was filed on illusory cause of action, bar under Order XXIII Rule 3A shall not apply. The High Court after having found that suit is barred under Order XXIII Rule 3A has not entered into other issues. The house property of Tatabad which was purchased in 1978 was not included in Schedule of O.S.NO.37 of 1984 which property was included in Suit No.1101 of 1987, hence, suit for share in house property at Tatabad was fully maintainable. The plaintiff has completed his graduation in Textile Engineering. Vasudeva Industries was not a family concern, which was under litigation and was not a profit making venture. The consent decree dated 06.08.1984 was never acted upon. The mill could not be revived and closed down in 1987. The defendant No.1 continued to manage the affairs of the mill till 1989 when he resigned.

Shri Kapil Sibal refuting the submissions of the appellants contends that partition dated 07.11.1960 between three branches was given effect to. Income Tax Returns were filed by three branches on the basis of 1960 partition. There was an arrangement made in 1981 under which the D­1 was to take properties at Coonoor, D­4 was to take properties at Somnur whereas plaintiff and defendant No.1 decided to take Vasudeva Textiles Mills. The Suit No.37 of 1984 was filed by the son of D­4 at his instance.

Shri Sibal submits that (i)the Suit No.37 of 1984 has been decided on compromise where all the defendants have signed the compromise application including Janakiammal as well as Somasundaram. The Vakalatnama on behalf of defendant Nos.7 to 11 was filed by Advocate Thirumalnesan who represented defendants 8 to 11. It is submitted that plaintiff and D­10 were all educated persons and having signed the compromise application, it is not open to them to contend that they signed the application under some misrepresentation or fraud(ii)none of the pleadings of the plaintiff falls in the definition of fraud. No fraud was committed on the plaintiff. Under Order XXIII Rule 3A CPC, no separate suit could have been filed to question the compromise decree.

Shri Nagamuthu, learned senior counsel appearing for the defendant No.11 has supported the judgment of the Courts below. He submits that from 1989, selling of shares of the mill started. The defendant No.1 purchased the shares of the mill. The Compromise decree dated 06.08.1984 was acted upon. In 1994, the complete shares of the mill were transferred. Shri Nagamuthu submits that the defendant No.11 and other defendants were transferee of the shares.

After referring various relevant judgments and provisions, the court reach to a conclusion that: From the above, it is clear that plaintiff pleaded that compromise recorded on 06.08.1984 was not lawful compromise having been obtained by fraud and misrepresentation. The plaintiff’s case was that they were represented by D1 that the compromise is being entered only to save the family property since the plaintiff has given personal guarantee to the Punjab National Bank for obtaining loan for Vasudeva Mills. Pleadings clearly make out the case of the plaintiff that the consent which he gave for compromise by signing the compromise was not free consent. The compromise, thus, become voidable at the instance of the plaintiff.

We are having found that Suit No.1101 of 1987 being barred under Order XXIII Rule 3A, it is not necessary for us to enter into correctness or otherwise of the grounds taken in the plaint for questioning the compromise decree dated 06.08.1984. The compromise decree dated 06.08.1984, thus, could not have been questioned in Suit No. 1101 of 1987. (Para 56)

We thus conclude that all three branches have equal share in the Tatabad residential property, i.e., Item No.X of Schedule 'B' of plaint in Original Suit No.1101 of 1987. This residential property being not a part of O.S.No.37 of 1984, there is no bar in seeking partition of the said property by the plaintiff. Accordingly we declare that plaintiff/defendant No.7, defendant No.1 and defendant No.4 are entitled to 1/3rd share jointly in the aforesaid Item No.X of Schedule 'B' of the suit property ( 1/3rd share each to K. Rangasamy branch, S.K. Kumarasamy branch and S.K. Chinnasamy branch). Accordingly, a preliminary decree for partition shall be drawn for the aforesaid property. (Para 100)

Consequently, the Original Suit No.1101 of 1987 stands decreed to the extent indicated above.

View/Download Judgment - R. JANAKIAMMAL V. S.K. KUMARASAMY (DECEASED) & ORS.

WITH

S.R. SOMASUNDARAM & ORS. V. S.K. KUMARASAMY (DECEASED) & ORS.

Swadheen Singh