Delhi High Court
Iqbal Krishan vs Maharaj Krishan on 7 July, 1997
Equivalent citations: 1997IVAD(DELHI)590, 4(1997)CLT66, 68(1997)DLT318, 1997(42)DRJ527
Author: R.C. Lahoti
Bench: R.C. Lahoti, S.N. Kapoor
JUDGMENT R.C. Lahoti, J.
(1) The defendant has come up in appeal feeling aggrieved by the impugned order passed by a learned Single Judge of this Court sitting on the original side refusing to record a compromise under Order 23 Rule 3 of the CPC.
(2) The parties are brothers. The suit property is H.No.B-6, Jangpura Extn., New Delhi. The plaintiff claiming himself to be the owner, has filed a suit for possession also for charges for use and occupation of a portion of the house. The case was posted for trial on 4th and 5th November 1993 when it was got adjourned. The parties were negotiating for mutual settlement.
(3) On 25.2.94, the defendant moved an application bearing Ia No.2207/94 alleging that the suit stood adjusted by lawful agreement/compromise as evidenced by the Memorandum of Understanding dated 3.11.93. However, the said application was got dismissed as not pressed. On 4.5.95, Ia 4053/95 was moved for the recording of the same compromise as evidenced by the Mou dated 3rd November, 1993. The prayer was opposed by the plaintiff submitting that the Mou did not adjust the suit; the consideration for the Mou was executory which has stood frustrated; the agreement between the parties has fallen to the ground and hence it cannot be recorded as an adjustment of the suit.
(4) Let the Mou be reproduced fully so as to appreciate its contents and implications. It is as under :-
Memorandum of UNDERSTANDING THIS Memorandum of Undertaking is entered into on this 3rd day of November 1993 between Mr. Maharaj Kishan S/o. Late Dr. Ram Kishan, R/o.B-6, Jangpura Extension, New Delhi-14 on the one hand and Mr. Iqbal Kishan, S/o. Late Dr. Ram Kishan, R/o.B-6, Jangpura Extension, New Delhi-14 on the other.
1.The above parties are currently parties in Suit No.954/89 (Maharaj Kishan Versus Iqbal Kishan) pending in the High Court of Delhi and correctly scheduled to be listed for trial on 4th November, 1993. The said suit is a suit for possession of property No.B-6, Jangpura Extension, New Delhi filed by Mr. Maharaj Kishan claiming to be the owner of the entire property.
2.The parties are urged that the difference between them is reflected in the record of the said suit can be mutually and amicably resolved and accordingly and accordingly they are agreed that subject to the said property being sold in the open market to a mutually acceptable buyer at a mutually acceptable price, then the sale consideration received therefore shall be apportioned in the following manner :-
(A)Sh.Maharaj Kishan - 64% (B)Sh.Iqbal Kishan - 36% THE parties are agreed that once a mutually acceptable buyer is located and mutually acceptable sale consideration is fixed with the said buyer, besides other formalities to be entered into with the buyer, the parties will move jointly an application in the above suit and obtain an order of Court regarding the respective shares in order that the sale transaction can be conveniently completed.
(5) Sale of the property at the mutually acceptable market price. That this understanding is operative only till 30th of January, 1994. Only 2 copies of this Memorandum are being signed and will be retained by the respective advocates. If no settlement is (sic-as) contemplated herein takes place on or before the aforesaid date, the advocates shall destroy the copy retained by them. However, it will be open to both the parties to mutually and in writing instruct their advocates to extend the understanding for appropriate periods.
(6) The learned counsel for the defendant-appellant has submitted that the controversy between the parties had stood resolved by the Mou having been struck-down between the parties. The time was not of essence of the contract, as the ordinary rule is that in a contract for sale of immovable property time is not of essence of contract. Finding a suitable buyer is not an impossibility; if it could not be found earlier it can now be found out. Merely because the sale contemplated by the Mou could not be finalised by 30th January, 1994, the Mou was not frustrated. It should have been recorded as an adjustment of the suit.
(7) Order 23 Rule 3 of the Civil Procedure Code provides as under :-
3.Compromise of suit.
WHERE it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise [in writing and signed by parties], or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith [so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit:] PROVIDED that where it is alleged by one party and denied by the other than an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.] [EXPLANATION: 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 within the meaning of this rule.] (8) The ingredients of the above said provision relevant for the purpose of the case in hand are that the adjustment must be by any lawful agreement or compromise; that the adjustment must have been in presenting and must precede the date on which the Court is called upon to exercise its jurisdiction under Order 23 Rule 3 of the Cpc, as the use of the phrase "has been adjusted" clearly suggests.
(9) We may now analyse the contents of the Mou to the extent relevant for our purpose.
(10) The dispute between the parties was as to title of the property. It was not settled by the MOU. The opening Clause of para 2 records the expectation of the parties that the suit was capable of being mutually and amicably resolved subject to happening of certain events. The settlement was dependent on the availability of a buyer and a price - both being mutually acceptable to two parties. If that would happen then the property would be sold and sale proceeds divided between the parties. It is pertinent to note that the parties have nowhere admitted or acknowledged each other's title to the property and the proportion in which they hold the title. If only the property was sold then alone a proportion for division of the sale proceeds was agreed upon. The proportion of 64:36 has nothing to do with the proportion of titles of the parties.
10.1On the availability of the mutually acceptable buyer and similar price the parties were expected to move a joint application in the suit so as to obtain an order of the Court recording the agreed shares in order to conveniently complete the sale transaction and not because they did have those shares in the property.
10.2Para 4 of the Mou makes it very clear that whatever understanding was expressed in the memorandum its efficacy was made to depend upon accomplishment of the event of the sale of the property which must take place on or before 30th January, 1994. Time was of essence of the contract between the parties. Only two copies of the Mou were signed. The copies were not retained by the parties but were entrusted to the respective advocates. The consequences flowing from not happening of the event of sale by January 1994 were also specifically provided. It was stated that in the event of the sale not taking place on or before the appointed date the Mou was to be reduced to a waste piece of paper so much so that their perspective advocates were obliged to destroy the copies entrusted to them. The only exception was if the parties would by mutual agreement instruct their advocates in writing to extend the appointed time.
(11) An executory contract which is silent as to how the suit is to be settled and which merely puts off to a future date the compromise of the suit, cannot be recorded under Order 23 Rule 3 of the CPC. (See Adimali St.Paula Yakkobaya Surivani Church Vs. Ithappiri Paily, ).
(12) If claims were not adjusted and compromise was dependent on a third person's action not with in the control of the parties, it could not be called a compromise of the suit. {See Audh Behari Lal & Ors. Vs. Faqir Rai & Anr. Air (38) 1951 Allahabad 236.
(13) In Janimal Budharmal Vs. Girdharidas Pokhardas, Air 1957 Nagpur 47 the Division Bench has held :- "TO constitute an adjustment the agreement or the compromise must itself be capable of being embodied in a decree forthwith. An agreement merely providing for a decree one way or the other being passed in future on the happening or not happening of a certain contingency cannot be regarded as an adjustment."
(14) In the case at hand availability of a buyer prepared to offer a price which might be acceptable to the parties is something not within the control of the parties. It would have been different if parties would have agreed to the suit property being retained by one of the two at a price mutually agreed upon.
(15) The learned counsel for the defendant appellant submitted that the Mou had created an immediate and absolute obligation on the parties which was not wiped out by failure of the mode of performance and hence the Mou was liable to be recorded as an adjustment of the suit. Reliance was placed on Harnandrai Fulchand VS. Pragdas Budhsen, Air 1923 Pc 54(20); Jethalal C. Thakkar Vs. R.N.Kapur of Bombay and Harbaksh Singh Gill & Ors. Vs. Sh.Ram Rattan & Anr. 1987 (1) Plr 185. We do not agree. The contents of the Mou do not spell out in immediate and absolute obligation having been struck down between the parties.
(16) The learned counsel for the appellant cited M/s. Hind Construction Contractors by its Sole Proprietor Bhikam Chand Mulchand Jain (Dead) by LRs. Vs. State of Maharashtra, and Govind Prasad Chaturvedi Vs. Hari Dutt Shastri & Anr, in support of the submission that time is not of essence of the contract in contracts for sale of immovable properties. The contention has not appealed to us. Firstly, the Mou cannot be called a contract for sale of an immovable property; the contract for sale was yet to be entered into by the parties. The Mou was merely executory contract between the parties. Secondly, the principle propounded by the learned counsel for the defendant-appellant is a statement of an ordinary rule which is not without exceptions. Chitty on Contracts (26th Edition) states at para 1500 - "Time is of the essence :(1) where the parties have expressly stipulated in their contract that the time fixed for performance must be exactly complied with, or that time is to be of the essence. (2) Where the circumstances of the contract or the nature of the subject-matter indicate that the fixed date must be exactly complied with."
(17) The contents of the Mou itself disclose that time was of essence of the understanding between the parties. The two brothers litigating as opposite parties had without resolving the main dispute between them as to the title of the suit property. arrived at a mode and means of settlement between them. They had thought of selling out the property to a mutually acceptable buyer at a mutual acceptable price and see that they could without settling the dispute in the suit could yet by selling the property and sharing the sale proceeds enjoy peace and harmony. There is nothing in the Mou suggesting any adjustment and/or settlement of the controversy raised in the suit either in the plaint or in the written statement. The life of the understanding so arrived at between the parties was prefixed. The understanding was to die its death on 30th January, 1994 if it did not fructify by that date. The intention of the parties as called out by a bare reading of the Mou is clear and explicit that time was of essence of the understanding.
(18) There is yet another indication of the intention of the parties in-built in their conduct. The Mou is dated 3.11.93. If it was an adjustment of the suit nothing had prevented the parties from filing the same in the Court simultaneously with its execution or soon thereafter. The application was moved only after the expiry of 30th January, 1994. Admittedly the time appointed by the Mou was not extended in writing by the parties. If the parties to a deed have laid down a mutually acceptable course of conduct to be followed governing their relationship and rights/obligations flowing from the deed, a very valid reason must exist if they are not be held bound by it.
(19) We are clearly of the opinion that a mere executory contract dependent on certain events to happen which did not happen within the time appointed and which does not resolve the dispute between the parties in presenti is not an adjustment of the suit liable to be recorded under Order 23 Rule 3 of the CPC. The learned Single Judge was fully justified in rejecting the application. The appeal fails and is dismissed hereby.