With inherent powers, Court can unilaterally rectify consent decree having apparent error: SC

Compack Enterprises India (P) Ltd. v. Beant Singh

Special Leave Petition (Civil) Nos. 2224-2225 of 2021 (Arising out of SLP(C) Diary No. 38441 of 2019)

Decided on February 17,2021

Counsel for Petitioner- Shri Mukul Rohatgi

Counsel for Respondent- Shri Basava Prabhu S. Patil

The present case presided by a division bench of the Supreme Court consisting of Justice Mohan M Shantanagoudar and Justice Vineet Saran is in relation to property possession and mesne profit. The petition was dismissed in favour of the Respondent.

The Respondent Beant Singh owned a 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 proportion of the suit property in favour of M/s Compack Enterprises (the Petitioner's predecessors), for a period of 30 months in return for a monthly license of Rs. 28,000 (hereinafter “2000 Agreement”). On 1.04.2003, M/s Compack Enterprises merged with Compack Enterprises India (P) Ltd (Petitioner) and the agreement continued with consent of all parties. The license agreement was renewed twice in the following year, first on 1.07.2003 for a period of 30 years, with 10% increase in license fee to Rs.30,800/- (hereinafter “2003 Agreement”), the second renewal was on 1.04.2006, valid until 30.09.2008 with a further increase of 10% amounting to 33,900 (hereinafter “2006 Agreement”).

Despite expiry of the 2006 agreement the Petitioner continued to occupy the suit property. 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 vacating possession, the Petitioner admitted to possession of only a portion of the property measuring 2,200 sq. ft. and not the entire suit property measuring 5,427 sq. ft. that was licensed to them by the Respondent. The Petitioner urged that the possession was lawful since the Respondent had failed to disclose facts of having entered into an agreement dated 11.6.2008 to sell the property to Mr. Ajay Gosain for Rs. 4 crores of which 65 lakhs was already received by the Respondent.

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. Aggrieved by the decision of the Trial Court, both the Petitioner and Respondent filed cross­ appeals before the High Court. After a series of review petitions, the High Court dismissed the petition with exemplary cost of Rs.100000/- payable to the Respondent.

Shri Mukul Rohatgi, representing the Petitioner, contended that the HC should have recorded the terms of the consent decree and should have stated a 10% increase in mesne profit every 24 months instead of 12 months. He submits that 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. He contended that the first impugned judgment dated 14.02.2019 erred 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.

These submissions were opposed by the Respondent’s Counsel ,Shri Basava Prabhu S Patil.

The Court summarized the law governing consent decrees that would inform their conclusions on the present matter. It stated:

It is relevant at this juncture to note that the first impugned judgment of the High Court dated 14.2.2019 recorded the terms of the compromise that the Petitioner had agreed to; and that the same Court has subsequently upheld the validity of that consent decree in the second impugned judgment dated 25.07.2019. 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. (Para 20)

With respect to the question on area of possession, the Court observed:

It is evident that, unlike the 2000 Agreement and 2003 Agreement, the 2006 Agreement, which is the relevant agreement for the present purposes, pertains to the entire suit property, and does not delimit the licensed area to a 2,200 sq. ft. portion. Thus, the 2006 Agreement effective from 1.04.2006 to 30.09.2008, licensed the total area of 5,472 sq. ft. to Petitioner. Hence, the material on record discloses that the Petitioner is presently in illegal possession of the entire suit property admeasuring 5,472 sq. ft. (Para 21)

The Court held that 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.

With respect to the question of mesne profits, the Court stated:

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. (Para 27)

Given this background, and looking at the preponderance of probabilities, we are inclined to give benefit of doubt to the Petitioner. Therefore, we hold that the intention of the compromise between the parties was that there should be a 10% increase in mesne profits every alternate year. The recording of a 10% increase after every 12 months in the consent decree was an inadvertent error, which we have now rectified. (Para 28)

The Court dismissed the petition.

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Shreya Shetty