Gauhati High Court
M/S Vodafone Spacetel Ltd. & Anr vs Hazi Abdur Rafuque Bepari on 21 June, 2017
1
IN THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)
CRP NO.214 OF 2014
1. M/S VODAFONE SPACETEL LTD.
(FORMERLY KNOWN AS VODAFONE ESSAR SPACETEL LTD.)
RED DEN, NH-37, KATABARI, GORCHUK,
GUWAHATI - 35, DISTRICT: KAMRUP, ASSAM,
REPRESENTED BY ITS AUTHORIZED SIGNATORY,
SHRI BEDADYUTI CHOUDHURY.
2. THE CHIEF COMMERCIAL MANAGER
VODAFONE ESSAR SPACETEL LTD.)
RED DEN, NH-37, KATABARI, GORCHUK,
GUWAHATI - 35, DISTRICT: KAMRUP, ASSAM,
-Versus-
........petitioners
HAZI ABDUR RAFIQUE BEPARI
S/O LATE AKBAR ALI BEPARI
R/O VILL. NORTH RAIPUR PT-1
P.O. GOLAKGANJ, DISTRICT: DHUBRI,
ASSAM, PIN: 783301
.....opposite parties/ respondent
B E F O R E HON'BLE MR. JUSTICE MIR ALFAZ ALI For the petitioner : Mr. M Sarma For respondents : Mr. DK Sarma Date of hearing & Judgment & Order : 21-06-2017 CRP No.214 of 2014 2 JUDGMENT & ORDER This revision petition is directed against the order dated 29-04-2014 passed by the learned Munsiff No.2, Dhubri in Title Execution Case No.11/2009, whereby the petition filed by the Judgment debtor/revision petitioner (herein after referred to as petitioner), under Section 47 of CPC, challenging the executability of a compromise decree was rejected.
[2] The brief facts necessary for disposal of this revision petition are that the plaintiff/respondent (herein after referred to as the respondent) filed a suit being Title Suit No.23/2008 and during the continuance of the suit, the petitioner and the respondent arrived at a settlement that the petitioner company would appoint the respondent as distributor of the petitioner company and the respondent would withdraw the suits. During the communication between the parties, a draft agreement was prepared either the word "sole" and the same was sent to the petitioner through their agent. The petitioner objected to use of the word "sole" and a revised draft was sent by e-mail, deleting the word "sole" and the revised draft did not contain either the word "sole" or exclusive". However, in the final agreement of settlement filed before the Court for recording compromise decree, the word "exclusively" was inserted and due to oversight, the counsel for the petitioner did not notice the same and ultimately the compromise decree was recorded on 10-09-2008, on the basis of the said terms of agreement. For the sake of convenience, the terms of agreement which was made a part of the decree is reproduced below:
TERMS AND CONDITIONS i. That, to compensate the loss suffered by the plaintiff for the above noted case it has been mutually decided and in pursuance of the letter dated 02-08-2008 issued by the Vodafone Essar Spacetel Ltd., the defendants Nos.1, 2, 3 shall appoint the plaintiff along with his son named Abdul Khaleque Bepari, residence of village: North Raipur, Pt-I, P.S : Golakganj, Dist : Dhubri (Assam) as a partner, as the distributor for the Dhubri Civil district by entering into business relations with him like CRP No.214 of 2014 3 Prepaid distributorship, Postpaid distributorship and VMS, etc., for the entire district of Dhubri Assam exclusively, by executing a formal agreement in that regard with him as and when the services of the company is launched in the Dhubri district.
ii. That, the terms of the compromise shall be binding upon the parties. iii. That, none of the parties shall claim any cost and compensation in the present suit against opposite party.
[3] After the consent decree was recorded, it came to the notice of the petitioner that though in course of previous communication, the word 'exclusively' or 'sole' was deleted, inadvertently or due to oversight, the word "exclusive" remained in the terms of agreement, which was in contravention of Sections 3 of the Com petition Act, 2003 . The respondent immediately filed a petition before the Court, recording the consent decree, for modification of the terms of settlement under Order 23 Rule 3 CPC, which was rejected by the learned Trial Court. Thereafter, the respondent put the decree in execution. The petitioner filed an application under Section 47 of the CPC challenging the executability of the decree and the learned Trial Court by the impugned order rejected the petition.
[4] Aggrieved, the petitioner has filed the instant revision petition.
[5] The question arises in this revision petition is that whether a compromise or a consent decree recorded by the Court, in violation of any statutory provision is illegal and not enforceable.
[6] The learned counsel for the petitioner referring to provisions of Section 3 of the Competition Act submitted, that any anti-competitive agreement in contravention of sub-section (1) of Section 3 of the Competition Act shall be a void contract and therefore, the compromise decree recorded on the basis of such void contract cannot be enforced.
[7] The learned counsel further submitted that the terms of agreement, on the basis of which compromise decree was passed in the present case, was in contravention of the provisions of Section 3 of the Competition Act, and CRP No.214 of 2014 4 therefore, such agreement for compromise was unlawful as per the explanation to Rule 3 of Order 23 CPC. In support of the submissions, the learned counsel has placed reliance on the following decisions:
1. Arjan Singh Vs. P unit Alhuw alia and Others (2008) 8 SCC 348
2. M alikarjunappa Basavalingappa M am le Desai Vs. Siddalingappa and Ors and Sm ti Gangabai Vs. Siddalingappa and Ors (1973) 3 SCC 180
3. Bahadur Singh and Anr Vs. M uni Subrat Dass and Anr (1969) 2 SCR 432 .
4. Sushil K um ar M ehta Vs. Gobind Ram Bohra (1990) 1 SCC 193.
[8] Refuting the submission of the learned counsel for the petitioner, learned counsel for the respondent contended that the agreement for compromise was arrived at, with the consent of both the parties and both the parties have signed the compromise petition and therefore, the petitioner cannot retrack from such agreement and say, that the agreement was illegal. The learned counsel also submitted that the party cannot take the benefit of his own mistake. Further contention of the learned counsel was that the Executing Court cannot go behind the decree and, therefore, cannot refuse to execute the decree.
[9] In support of his submission, the learned counsel has placed reliance on the following judgments of the Apex Court :
1. P ushpa Devi Bhagat (D) Vs. Rajinder Singh and Ors AI R (2006) SC 2628 ,
2. Oil and Natural Gas Corporation Lim ited Vs. M odern Construction and Com pany (2014) 1 SCC 648 ,
3. Bhartiya Seva Sam aj Trust and Anr Vs. Y ogeshbhai Am balal P atel (2012) 9 SCC 310 .
[10] Order 23 Rule 3 CPC reads as under:CRP No.214 of 2014 5
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 the 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 alleged by one party and denied by the other that 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.] [11] It appears from the above provision, that Rule 3 of Order 23 CPC contains two parts. The first part refers to a situation, where an agreement of compromise is entered into in writing by the parties, which is placed before the Court. When the Court is satisfied that the parties have entered into the agreement for compromise and the terms of agreement is lawful, a decree follows in terms of the agreement arrived between the parties. Such agreement is enforceable by execution of the decree to be passed in terms of the compromise. Second part refers to a situation where the claim of the plaintiff is satisfied and no further action is left out. Therefore, when an agreement is filed before the Court for recording a compromise decree on the basis of such agreement, it falls under the first part of Rule 3, and in such cases, the Court has to satisfy itself, before passing a decree on the basis of such agreement, that the agreement of compromise is lawful. If the agreement of compromise is unlawful or against any provisions of law, the Court is not expected to put its stamp on such compromise.
[12] Section 3 (1) of the Competition Act provides that " No enterprise or association of enterprise or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provisions of services, which causes or is likely to cause an appreciable adverse effect on competition within India."CRP No.214 of 2014 6
[13] Sub-section (2) of Section 3 of Competition Act provides that any agreement entered into in contravention of the provisions contained in sub- section (1) shall be void.
[14] Sub-Section (4) of Section 3 provides that any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provisions of services, including-
a. tie-in arrangement b. exclusive supply agreement c. exclusive distribution agreement d. refusal to deal e. resale price maintenance shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
[15] It is thus, amply clear from the provisions of Section 3 of the Competition Act that contract entered into in contravention of provisions of Sub- section (1) of Section 3 shall be void and as per sub-section (4), any exclusive distribution agreement shall be in contravention of sub-section(1) of Section 3 of the Act.
[16] The explanation to Rule 3 of Order 23 CPC provides that an agreement of compromise which is void or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful within the meaning of this Rule.
[17] Coming to the factual matrix of the instant case, the agreement for compromise between the parties as reproduced herein before, shows that the terms of agreement included an 'exclusive distribution' agreement, which is in contravention of the provisions of Section 3 of the Competition Act and therefore, the agreement arrived at between the parties for the purpose of CRP No.214 of 2014 7 compromise decree was void. As envisaged by the explanation to Order 23 Rule 3 CPC, a contract which is void or voidable shall be deemed to be an unlawful agreement for purpose of Rule 3 of Order 23 CPC.
[18] What therefore follows is that the agreement of compromise, on the basis of which the compromise decree was recorded in the present case, was apparently unlawful for being, in violation of the provisions of Section 3 of the Competition Act. When the agreement of compromise is void and unlawful, any compromise decree recorded on such void agreement will necessarily be illegal or unlawful. Therefore, while recording the compromise decree, the Court is obliged to see that agreement is lawful. Even if the Court, without being satisfied as to whether the agreement of compromise is lawful, passes a decree or puts its stamp on the agreement of the parties, which is void, such compromise decree cannot be held to be legal and valid. It has to be borne in mind, that there is a distinction between an adjudicatory decree and a compromise or consent decree. In a compromise decree the Court does not adjudicate anything. The Court only put its seal as approval of the contract arrived at between the parties. This is the reason, for which a compromise decree does not operate as resjudicata, though it may operate as an estoppel. As held by Hon'ble Gauhati High Court in Uphras Lapasam and Anr Vs. K a Esiboll Lyngdoh and Ors reported in AI R 1986 Gau 55, a compromise decree is merely the record of a contract between the parties, to which a Court's seal is superadded and Court does not adjudicate or decide anything.
[19] The Hon'ble Supreme Court in the case of Bahadur Singh and Anr Vs. M uni Subrat Dass and Anr reported in (1969) 2 SCR 432 while dealing with the decree passed in contravention of Section 13 (1) of Delhi and Ajmer Rent Control Act, 1940 observed as under:
6. The conclusion that a decree passed in contravention of Section 13(1) is a nullity is supported by the decision in Peachey Property Corpn. V. Robinson [1966] 2 All E.R.981. In that case the landlords issued a writ to recover possession of flat let to tenants who resided there for non-payment of rent. No appearance was entered and judgment was signed in default of appearance. On CRP No.214 of 2014 8 an application for leave to issue a writ for possession, the Court held that the judgment was a nullity as it was given without any determination that it was reasonable to do so in contravention of Section 3(1) of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933. As the decree was a nullity, the Court refused to issue a writ for possession. Winn, L.J said:
"Accordingly, the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933, Section 3(1) was made to apply to these premises and that sub- section provided:
"No order or judgment for the recovery of possession of any dwelling house to which the principal Acts apply or for the ejection of a tenant therefrom shall be made or given unless the Court considers it reasonable to make such an order or give such a judgment." and
8. As the decree for the delivery of possession of the premises to the landlord is a nullity it cannot be enforced or executed either by the landlord or by the landlord's son Muni Subrat. The decree in so far as it directs the removal of the machinery from the premises is clearly valid and separable from the rest of the decree and may be executed by Muni Subrat.
[20] In Arjan Singh Vs. P unit Ahluw alia and Ors reported in (2008) 8 SCC 348, the Apex Court held that "when a compromise is entered into, the Court has a duty to see as to whether the same meets the requirements of law. A compromise decree which does not satisfy the requirements of law is not legal. It would be unlawful. It, therefore, cannot be recorded."
[21] The Apex Court in Sushil K um ar M ehta Vs. Gobind Ram Bohra reported in (1990) 1 SCC 193 held as under:
16. "In Ledgard V. Bull the Privy Council laid down that where the Original Court in a suit was inherently lacking jurisdiction, and was incompetent to try the same, on its transfer by consent of parties, to a Court with jurisdiction such consent did not operate as a waiver of the plea of want of jurisdiction."
17. In Barton v. Fincham it was held that:CRP No.214 of 2014 9
"Parties cannot by agreement give the Courts jurisdiction which the legislature has enacted they are not to have.
..... the Court cannot give effect to an agreement whether by way of compromise or otherwise, inconsistent with the provisions of the Act."
[22] The Hon'ble Supreme Court in Dw arka P rasad Agarw al (D) Vs. B.D. Agarw al reported in AI R 2003 SC 2686 observed that where a purported settlement is not lawful, the Court's order recording the same would not be enforceable.
[23] The learned counsel for the respondent submitted that once the decree is passed, the executing Court is bound by the decree and it cannot go behind the decree. Legality of the decree cannot be questioned by the Executing Court. No doubt usually the executing Court is to give effect to the decree and it cannot go beyond the terms of decree. The executing Court cannot go behind the decree, cannot always be the rule, particularly, when the decree itself becomes a nullity because of illegality or the decree having been passed in violation of the provisions of statute.
[24] This High Court in Chandan M all Bapna Vs. Adul Gani M eah reported in AI R 1976 Gau 54 dealing with the compromise decree passed in contravention of the statute held as under:
"The general rule is that an executing Court cannot go behind the decree sought to be executed. But this is not the inflexible rule. Their lordships of the Privy Council and the Supreme Court themselves in the above decisions have pointed out when the executing Court can examine the decree. Their Lordships of the Supreme Court in MANU/SC/0005/1972 : 1973 (2) SCC 40 = (AIR 1972 SC 1371) have succinctly put the law:
But that does not mean that it (the executing Court) has no duty to find out the true effect of that decree. For construing a decree, it can and in appropriate cases, it ought to, take into consideration the pleadings as well as he proceedings leading upto the decree. In order to find out the meaning of the words employed in a decree the Court often has to ascertain the circumstances under which those words came to be used. That is the plain duty of the execution Court and if that Court fails to discharge that duty it has plainly failed CRP No.214 of 2014 10 to exercise the jurisdiction vested in it. The jurisdiction of executing Court does not begin and end with merely looking at the decree as it is finally drafted.
There may be other circumstances in which the executing Court can go behind the decree: for example (i) The Court can see whether or not the decree is a nullity and not executable, such as a decree by a Court without jurisdiction or a decree against a minor not properly represented in the suit Such decrees are null and void and not executable, and the Court cannot execute such decrees, (ii) There may be a third category of cases in which the decree sought to be executed is not in conformity with, or in violation of, certain mandatory provisions of law."
[25] What therefore, follows is that a compromise decree passed on the basis of a void or unlawful agreement is illegal and a nullity and such a decree cannot be enforced.
[26] Sub-section (1) of Section 47 CPC provides that all questions arising between the parties to the suit in which the decree was passed, or their representative, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
[27] When a question is raised before the Executing Court, by the judgment debtor or a party relating to the executability or non-executability of decree on the ground of illegality or nullity, the executing Court has to determine such question. The contention of the learned counsel is that since the parties have already agreed to the terms of settlement for the compromise, they cannot challenge the same or cannot take advantage of their own fault and in support placed reliance on the following decisions of the Apex Court in (1) Oil and Natural Gas Corporation Lim ited Vs. M odern Construction and Com pany reported in ( 2014) 1 SCC 648 (2) Bhartiya Seva Sam aj Trust and Anr. Vs. Yogeshbhai Am balal P atel and Anr reported in (2012) 9SCC 310 . This being not a case, where the judgment debtor or the petitioner is trying to take benefit of his/her own mistake, the above two decisions are of no help to the respondent. The decision of the Apex Court in P ushpa Devi Bhagat (D) Vs. Rajinder Singh and Ors AI R (2006) SC 2628 relied by the learned counsel for the respondent will also not come in aid of the respondent, as the ratio of the said decision was CRP No.214 of 2014 11 that no independent suit or appeal is maintainable for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar created by Rule 3A of Order 23CPC and in the present case we are not concerned with the appeal of suit for setting aside compromise decree.
[28] In view of what has been discussed herein before, it is held that the compromise decree recorded in the instant case on the basis of an unlawful and void agreement, was a nullity and the same cannot be enforced. Therefore, the Executing Court should refrain from executing such decree.
[291] In the light of the foregoing discussions, the impugned order passed by the learned Trial Court in Title Execution Case No.11/2009 is liable to be set- aside and accordingly, I do so. The revision petition is allowed and the impugned order stands set-aside, send down the LCR.
JUDGE Smita CRP No.214 of 2014