Punjab-Haryana High Court
Gurdev Kaur And Anr. vs Mehar Singh And Ors. on 28 July, 1988
Equivalent citations: AIR1989P&H324, (1990)97PLR334, AIR 1989 PUNJAB AND HARYANA 324, (1990) 1 PUN LR 334, 1989 PUNJ LJ 182, (1990) 1 LANDLR 549
JUDGMENT Gokal Chand Mital, J.
1. Twin questions of law, namely, whether a compromise or consent decree regarding immoveable property of the value of Rs. 100/- or more, which is subject matter of the suit, would require registration or not; and whether such a decree can be reopened in a subsequent suit by going behind the decree, reopening all the facts even if it is proved that the decree was not obtained by fraud, coercion or misrepresentation, that is, the grounds on which a contract can he avoided, arise in this appeal, which has been admitted to Division Bench for determination in view of the conflict of opinion between the single Bench decisions of this Court.
2. In order to appreciate the two legal points, the facts may be briefly stated;
On 19th October, 1967, Bur Singh and Kapur Singh obtained a compromise decree against their brother Bur Singh for possession of 110 Kanals 14 Marias of land. In the plaint filed by Bur Singh and Kapur Singh, it was pleaded that Bur Singh had gifted the land to them 10/12 years ago and a week before the filing of the suit illegally took back the possession; hence the suit for possession was filed. A written compromise deed was filed before the Court in which Bur Singh agreed that the land belonged to the plaintiffs and the suit be decreed.
3. Bur Singh died on 8-7-1982 and on 26th Aug. 1982 his two daughters Gurdev Kaur and Mehar Kaur filed a suit to avoid the compromise decree dt. 19-10-1967 on the plea that it was obtained by undue influence; their father had not made any gift as was pleaded in the earlier suit; and they were the next heirs to succeed to their father.
4. The suit was contested and it was pleaded that Bur Singh had signed compromise deed and had made statement in the Court duly signed by him, wherein he admitted their claim and prayed that the suit be decreed. On the basis of the written compromise and the statement made by Bur Singh, the suit for possession was decreed and they became owners of the suit land.
5. The trial Court decreed the suit after observing that the consent decree was suspicious as gift pleaded was not proved and the plea of gift was a fraud played on the Court.
6. On defendants' appeal, the learned Additional District Judge relied upon the compromise deed, Exhibit D3 and the judgment based on the compromise Exhibit D4 and keeping in view the decision in Shankar Sitaram Sontakke v. Balkrishna Sitaram Sontakke, AIR 1954 SC 362, Bishun Deo Narain v. Seogeni Rai, AIR 1951 SC 280, and my judgment in Harpal Singh v. Ram Piari, 1981 Pun LJ 492 : (AIR 1981 NOC 210) came to the conclusion that since no fraud, misrepresentation or coercion was proved, the compromise decree was binding on Bur Singh and his daughters and it could not be reopened in the suit. It was also concluded that the compromise was effected in Oct. 1967 and Bur Singh died in July, 1982, and during this long period of 14/15 years, he did not challenge the compromise decree; thus it was binding on his daughters and in any event the title of the defendants matured in ownership by adverse possession. As a result, the appeal was allowed arid the suit was dismissed, which led to the filing of the second appeal.
7. Shri K. C. Puri, Advocate, appearing for the appellants, has fairly admitted on the basis of pleadings and evidence on record that fraud, misrepresentation or coercion in obtaining the consent decree is not established. All the same, he has argued both the points, as noticed in the opening part of the judgment. We advert to these points one by one.
8. Shri K. C. Puri, Advocate, has argued that even if the consent decree was not obtained by fraud, misrepresentation or coercion, since it was not registered, it could not be received in evidence. If it is not received in evidence, the defendants had no title in the property and the suit is to be decreed. Therefore, it has to be seen as to whether the compromise or consent decree requires registration.
9. In order to decide this matter and to resolve difference of opinion between the single Benches of this Court, we will have to trace the history. Section 17 of the Registration Act, 1908 (for short 'the Act'), as it stood at that time, came up for consideration before the Privy Council in (1919) 46 Ind App 240 : (AIR 1919 PC 79), in Rani Hemanta Kumari Debi v. Midanpur Zamindari Company, Ltd. Section 17(2)(vi) which came up for consideration before the Privy Council was as follows :
"17(2) Nothing in Clauses (b) and (c) Sub-section (1) applies to : --
17(2)(i) : Any decree or order of a Court and any award."
The compromise decree, which was subject matter of consideration before the Privy Council, included the properties which were subject matter of the suit as also the properties which were beyond the suit. The question arose, whether the compromise in regard to the properties which were beyond the scope of the suit, required registration or not. Privy Council answered the question in the following terms :
"Turning now to the Indian Registration Act of 1908, and considering the meaning of the word "decree" in Section 17, Sub-section (2)(vi), this must be read in connection with the purpose of the statute, which is to provide a method of public registration of documents, and there is, therefore, no reason why a limit should be imposed upon the meaning of the word so as to confine it to the operative portion only of the decree."
After the aforesaid decision in Rani Hemanta Kumari Debi's case (supra), by Transfer of Property (Amendment) Supplementary Act, 1929 (for short '1929 Act'), amendment was made in Section 17(2)(vi) of the Registration Act, and the result of the amendment was while the consent or compromise decrees, which related to the subject matter of the suit remained immune from registration, the compromise decrees, which incorporated matters beyond the scope of the suit, required "registration. This would be clear from the provision, as it stands today :
"17(2)(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immoveable property other than that which is the subject-matter of the suit or proceeding."
By amendment, the effect of the Privy Council judgment in regard to the properties beyond the scope of the suit not requiring registration was taken away.
10. The aforesaid provision shows that the consent or compromise decrees, which related to the subject matter of the suit never required registration. Shri K. C. Puri, Advocate, was fair enough to concede this proposition of law, although other lawyers appearing in the other connected cases challenged the proposition in view of the decision of S. P. Goyal, J. in Ranbir Singh v. Shri Chand, 1984 Pun LJ 562 and J. V. Gupta, J. in Nachhittar Singh v. Smt. Jagir Kaur, AIR 1986 Punj & Har 197, and Sumintabai Ramkrishna Jadhav v. Rakhmabai Ramkrishna Jadha v. AIR 1981 Bom52, which supported them. Section 17(2)(vi) of the Act provides for exception from registration of the compromise decrees or orders, comprising immoveable property, 'which is subject matter of the suit or proceedings and no argument by any other counsel was raised for taking a contrary view on a reading of the Statute.
11. Now we advert to the precedents. In the following judgments of different High Courts, it has been held that the compromise decrees relating to the property which is subject matter of the suit does not require registration : --
(1) Laxmi Narain Kapoor v. Radhey Mohan Kapoor, AIR 1986 All 244; (2) Surjya Kumar Das v. Sm. Maya Dutta, AIR 1982 Cal 222; (3) C. Muthuvel Pillai v. Hazarath Syed Shah Mian Sakkab Sahib Kadhiri Thaikal, AIR 1974 Mad 199; (4) Rautmal Baid Oswal v. Rameshwar Lal Soni AIR 1953 Pat 340; (5) Sudhir Chandra Gaha v. Jogesh Chandra Das, AIR 1970 Assam 102 and (6) Fazal Kasul Khan v. Mohd-ul-Nisa, AIR 1944 Lah 394.
12. Similar view was taken by J.V. Gupta, J. of this Court in Khushal Singh v. Devinder Nath,(1983) 85 Pun LR 711 : (AIR 1983 Punj & Har 151) R. N. Mittal, J. in Bawa Singh v. Babu Singh, 1978 Rev LR 534 and by me in Balbir Singh v. Salwani Singh, 1987 Har Rent Rule 127 and Harpal v. Smt. Ram Piari, 1981 Pun LJ 492 : (AIR 1981 NOC 210).
13. As against the above, the counsel, who appeared and argued for the proposition that the compromise decree required registration have relied upon the judgments of single Benches of Bombay High Court in Rakhmabai Ramkrishna Jadhav's case (AIR 1981 Bom 52) ( supra), S. P. Goyal, J. in Ranbir Singh's case (1984 Pun LJ 562) (supra) and J. V. Gupta, J. in Nachhittar Singh's case (AIR 1986 Punj & Har 197) (supra).
14. In Rakhmabai Ramkrishna Jadhav's case (AIR 1981 Bom 52) (supra) in middle of para 19 of the judgment, the following observations have been made. :
"Such a compromise cannot be described, except as a sham compromise brought about for the purposes of practising fraud upon the law relating to stamp duly and law relating to registration."
In middle of para 21 after noticing the meaningful observations made in Hari Shankar v. Durga Devi, AIR 1977 All 455, which have been followed in Luxmi Narain Kapoor's case (AIR 1986 All 244) (supra), the learned Judge observed as follows (at p. 57 of AIR 1981 Bom.) :
"The Allahabad High Court was not called upon to consider as to whether the compromise which is not a bona fide compromise or a compromise which does not aim to resolve a bona fide dispute. "
Then in para 22 of the judgment, it was observed as follows :
"In the instant ease before me if the compromise was a bona fide one or if in fact there was any compromise as such at all of a real bona fide dispute between the relevant parties, the compromise decree would not have required registration, because the property in question was the subject matter of the dispute. If it was contended that even such a compromise required registration, the Allahabad ruling would have no doubt been an answer to such a plea. But what I am inquired to decide is an entirely different question."
15. If all the observations are read together, the impression left is that the learned Judge did not hold any definite view. If a compromise is lawfully arrived at between the parties to it relating to properly, which is owned by one of them, the question of want of bona fide does not arise. Assuming for the sake of arguments, as is stated in para 22 of the reported judgment in Rakhmabai Ramkrishna Jadhav's case (AIR 1981 Bom 52) (supra) if the compromise was bona fide and it was held that it did not require registration then the observations made in para 18 run counter to it. In para 18 of the judgment, a compromise has been considered to be sham because it practices fraud on the law relating to stamp duty and registration. If decree does not require registration, where is the question of any fraud upon the law relating to stamp duty and registration. We dissent from the aforesaid decision.
16. Adverting to Ranbir Singh's ease (1984 Pun LJ 562) (supra), this judgment fully supports the stand of Shri K. C. Puri, Advocate, that a compromise decree requires registration, and in the absence of it no valid title passes in favour of the decree-holder. Shankar Sitaram Sontakke's case (AIR 1954 SC 352) (supra) was cited before the learned Judge for the proposition that if a party is bound by the terms of compromise contained in a consent decree, that party is barred by the principles of res judicata from re-agitating the question. In spite of that it was held that such a decree does not operate by way of res judicata, although it may operate as estoppel. Since the matter of res judicata is not being agitated in this ease we refrain from deciding it. The learned Judge then proceeded to observe in para No. 4 of the judgment as follows :
"It is well established that a decree passed on compromise remains essentially a contract between the parties with seal of the Court superimposed thereon and is open to challenge on all grounds on which a contract can he vitiated. Consequently, the consent decree can be challenged not only on the grounds available under the Contract Act such as fraud, mistake or misrepresentation but also on any of the grounds available under any other law which prohibits such a contract or declares it to be ineffective so far as the transfer of any rights in immoveable property are concerned."
Part of the observations in the aforesaid quotation seems to have been obtained from para 9 of the reported judgment in Shankar Sitaram Sonetekke's case (supra). To that extent the observations are all right. The learned Judge then proceeded to observe in para 5 of the judgment that if a compromise decree operates as an instrument of gift of immoveable property, it would not be exempt from registration because the learned Judge was of the view that exemption contained in Section 17(2)(vi) of the Act was applicable to Clauses (b) and (c) of Sub-section (1) thereof and not to Clause (a), in which instrument of gift of immoveable property fell. It is not disputed that for the first lime title can be created under a consent or compromise decree. For example, title is created in plaintiffs favour under a compromise decree which before the elate of compromise decree vested in defendant and no consideration is mentioned for passing the title in compromise. This would be nothing but creation of a title for the first time in the plaintiff but this would be wrong to say that consent decree is an instrument of gift. Such a decree would not be an instrument of gift of immoveable property within the meaning of Section 17(1)(a) of the Act. There is no dispute that the moment title is being conveyed under instrument of gift of immoveable property of the value of Rs. 100/-or more, such an instrument would require registration. The question is whether the consent decree can be called an instrument of gift. The title in the immoveable property can be created by a non-testamentary instrument also and that would be covered by Clause (b) of Section 17(1) of the Act and since the applicability of Clause (b) has been excluded in regard to certain documents enumerated in Clauses (i) to (xii) of Section 17(2) of the Act, by virtue of Clause (vi), a compromise decree comprising of immoveable property, which is subject matter of the suit stands exempted from registration, whereas a compromise decree relating to immoveable properly other than which is subject matter of the suit is not exempted from registration. The observations of S. P. Goyal, J. on the aforesaid basis that a compromise decree in such a situation would be treated as an instrument of gift and would require registration is contrary to law.
17. For the other observations of the learned Judge that since a consent decree requires compulsory registration and in the absence of registration no title could pass, reliance was placed on the judgment of the Supreme Court in State of Punjab (now Haryana) v. Amar Singh, 1974 Pun LJ 74 : (AIR 1974 SC 994), and the observations contained in para 36 were taken as concluding the question of law. With respect to the learned Judge, the reference to Amar Singh's case (supra) was misplaced. The Supreme Court was dealing with a case of declaration of surplus area under the Punjab Security of Land Tenures Act, 1953. Section 10A(c) of the Act which fell for consideration was in the following terms (at p. 1000 of AIR) :
" 10-A(c) For the purposes of determining the surplus area of any person under this section, any judgment, decree or order of a Court or other authority, obtained after the commencement of this Act and having the effect of diminishing the area of such person which could have been declared as his surplus area shall be ignored." If the scheme of the aforesaid Act is seen, in 1955 by virtue of Section 10-A(b), prohibition was imposed on the alienation of land with retrospective effect from 15th April, 1953 and in the year 1962 Section 10A (c) was inserted to ignore judgment, decree or order of a Court or other authority obtained after the commencement of the Act, and having the effect of diminishing the area of a person, which could be declared surplus area. In that context the consent decrees suffered by land-owners in favour of their wives and children or near relations were ignored by saying that these consent decrees were against the statutory provision.
18. The facts on which we are considering the case, there is no prohibition in suffering the consent decree. Rather Section 17(i)(b) of the Registration Act clearly envisages other instruments by which title can be created and by virtue of Section 17(2)(vi) if title is created by consent decree, which forms subject matter of dispute in the suit, such a consent decree is saved from registration. Hence, we conclude that reference to Amar Singh's case (AIR 1974 SC 994) (supra) was not called for. We are left with no option but to overrule the decision in Ranbir Singh's case (1984 Pun LJ 562) (supra).
19. Now adverting to the decision of J. V. Gupta, J. in Nachhittar Singh's case (AIR 1986 Punj & Har 197) (supra), at the outset it may be observed that in Khushal Singh's case AIR 1983 Punj and Har 151) (supra) the same learned Judge decided that the consent decree does not require registration but while deciding Nachhittar Singh's case (supra), the learned Judge referred to Sections 54 and 2(d) of the Registration Act as also to Sections 40, 41, 42 and 44 of the Evidence Act, 1872. For the purposes of decision of the matter as to whether a consent or compromise decree requires registration or not, reference to the Sections of the Evidence Act is not relevant. Sometimes collusion is misunderstood in contra-distinction to consent or compromise. If the rights of a third person is not involved, the contract, compromise or compromise decree between the parties would be binding. If rights of third party are involved in such a matter then the third party can always come forward to show that his title or interest has been affected in collusion with other persons. For illustration, we may quote an example. If ABC have interest in a property or a matter, B. and A entered into contract about it or got involved in a consent decree between themselves to the exclusion of A. A can always come forward to say that the contract or the compromise decree was collusive so far as he is concerned and would not bind him qua his share and interest, but that would bind B and C, all right." The learned Judge while deciding the aforesaid proposition in Nachhittar Singh's (AIR 1986 Punj & Har 197) (supra), re opened the facts of the compromise decree on the basis of collusion and yet in the last paragraph came to the conclusion which is as follows (at p. 200 of AIR) :
"...In the absence of any transfer as such, the plaintiff could not get the declaration of his being the owner of the suit land on the strength of the decree unless it was duly registered as provided Under Section 17 of the Registration Act. In that situation, the said decree violated the provisions of the T.P. Act and the defendant Nachhittar Singh could not claim himself to be the owner of the suit land on the basis of that decree alone or fraud as such alleged or proved by the plaintiff....."
If transfer was to be made by a written instrument, then, of course, the same has to be stamped and got registered, but if transfer is made by a compromise decree, there is a specific exception contained in Section 17(2)(vi) which was not kept in view by the learned Judge while deciding the ease and that is how the error has crept in. It is beyond pale of controversy that under a consent or compromise decree title can be created for the first time and the decree would not require registration provided it is subject matter of the suit. Hence, we are constrained to overrule Nachhittar Singh's case (supra) as well.
20. For the reasons recorded above, by agreeing with the view taken in the judgments cited above that a compromise decree does not require registration, provided the immoveable property is subject matter of the suit, we hold that a compromise decree regarding immoveable property which is subject matter of the dispute in the suit, does not require registration, even if title is created in favour of the decree-holder for the first time under the decree, whether with consideration or without consideration.
21. The deck having been cleared that a compromise decree regarding immoveable property, which is subject matter of the suit, does not require registration, the next question arises on what ground a compromise decree can be interfered with in a subsequent suit.
22. In Bishundeo Narain v. Scogeni Rai, AIR 1951 SC 280, the Supreme Court in para 20 has observed as follows :
" It does not matter whether the decree was by consent or otherwise, for a decree, unless and until it is set aside or avoided in one or other of the ways in which alone a decree may be attacked, holds its force and binds all concerned."
Again in Shankar Sitaram Sonlakke's case (AIR 1954 SC 352) (supra)., the following observations were made in para 9.
" It is well settled that a consent decree is as binding upon the parties thereto as a decree passed by invitum. The compromise having been found not to be vitiated by fraud, misrepresentation, misunderstanding or mistake, the decree passed thereon has the binding force of res judicata."
The observations made in the aforesaid two decisions of the Supreme Court show that a compromise decree would bind the parties and their privies unless it can be avoided in one of the ways in which a contract can be avoided, that is, by showing that the decree was obtained by fraud, misrepresentation, misunderstanding or mistake and otherwise the decree would be binding on them, and would not be challengele in a subsequent suit except on the aforesaid grounds.
23. The salutary rule of settling dispute by compromise in pending litigation is contained in Order 23 Rule 3 of the Civil P.C., (for short the Code). With the insertion of Rule 3A by the Central Act No. 104 of 1976, a bar has been created in filing of a suit to challenge a decree based on compromise on the ground that the compromise was not lawful. There was conflict of view in this behalf, which was sought to be set at rest by the insertion of the aforesaid proviso.
24. Even to settlements made before the LOKADALATs, binding force has been given by virtue of Section 21(2) contained in Chap. VI of the Legal Services Authorities Act, 1987. In spite of the enactment, so far this law has not been enforced, but we do get the guidance that the law framers always intended that the settlements arrived at between the parties in Court are good and binding and have the legal force, and the matter can be reopened only on the grounds on which a contract can be reopened and not otherwise. The addition of Rule 3A to Order 23 of the Code has further added that even if it were to he shown that the compromise was unlawful, the suit would not lie. Therefore, unless a ground is established on which compromise or a contract can be avoided, the Courts will have no jurisdiction to reopen or go behind the compromise decrees merely on the basis that whether the facts stated in the plaint, which ultimately concluded by a compromise decree, were correct or not. This is more so because the facts stated in the plaint are admitted in the written statement. The defendant and his heirs would be bound by the admission and would be debarred from going back. Sometimes claim is admitted by the defendant by making a statement on oath before Court. He cannot be allowed to go back from his statement. Some other times, written compromise duly signed by the parties is filed in Court in which claim of the plaintiff is admitted. Sometimes the written compromise provides that the plaintiff is the owner and the defendant has no right, title or interest therein. So under all the eventualities either the claim of the plaintiff stands admitted or title is created in him for the first time under the decree. Under these circumstances, Court will have no jurisdiction to reopen the consent or compromise decree except when fraud, coercion or misrepresentation in obtaining the consent or compromise, which resulted in the passing of the decree is pleaded and proved.
25. Apart from the above, there is an additional ground in favour of minors or persons of unsound mind, if they are able to prove that the next friend or the guardian who acted on their behalf was, negligent in conducting the proceedings.
26. Now we advert to the facts of the case. In the earlier suit, which culminated in a compromise decree, the plea taken up by the plaintiff of that suit was that the defendant had gifted the land to them 10/12 years ago and a week before the filing of the suit illegally took possession. The plaintiff claimed decree of possession as owners. Instead of contesting the suit, the defendant put in a written compromise before the Court in which he agreed that the plaintiffs are the owners and also agreed that a decree for possession be passed. The effort of the heirs of the previous defendant in the subsequent suit was to show that the previous defendant had not made any gift 10/12 years prior to the filing of the earlier suit. Such a matter will not fall within the meaning of 'fraud', 'misrepresentation'. 'misunderstanding' or 'mistake'. The defendant of the previous suit fully knew the facts of the case and the effect of the compromise decree. If with open eyes and after fully understanding the pros and cons of the facts of the case, he enters into compromise with the plaintiffs either to accept that they are owners for the last 10/12 years or creates title for the first time, such a decree would bind the parties and their privies, and it will not be open to the heirs of such a defendant in the subsequent litigation to challenge the facts contained in the plaint, by saying that they were wrong because the basis of the challenge can only be if in obtaining the consent decree there was fraud, misrepresentation, misunderstanding or mistake. If basis for reopening the decree is not made out, by merely saying that no gift was made 10/12 years before the earlier litigation it will not give a cause for filing of second suit and reopening of the consent decree. Assuming for the sake of arguments, that no gift was made by the defendants of the previous suit in favour of the plaintiffs of the previous suit 10/12 years prior to that suit, but the defendant willingly and voluntarily considered the claim of the plaintiff by filing a written compromise, that decree will bind the heirs of that defendant and second suit would not be competent. On this process of reasoning we hold that the consent decree cannot be sought to be reopened and the Courts will have no jurisdiction to go behind the consent decree to find out whether the facts contained in the plaint, which ultimately culminated in the decree, were right or wrong.
27. For the reasons recorded above, we hold :
i) that a compromise or consent decree does not require registration, even if it creates title in respect of immoveable property of the value of Rs. 100/- or more, provided it is subject matter of suit.
ii) that a compromise or consent decree can be got set aside on one of the grounds on which a contract can be set aside, namely, if obtained by 'fraud; 'misrepresentation', or 'coercion', with an additional ground in favour of the minors or persons of unsound mind, if they are able to prove that the next friend or the guardian, who acted on their behalf, was negligent in concluding the proceedings. If none of these grounds is established, the Courts in a subsequent suit will have no jurisdiction to go behind the consent decree to find out whether the facts stated in the plaint, which culminated into compromise decree were right or wrong.
28. In view of the above, we find no merit in the appeal and the same is dismissed leaving the parties to hear their own costs.