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CASE NO.: Appeal (civil)  729 of 2004

PETITIONER: Ravi Constructions Co.

RESPONDENT: Somvanshi Arya Kshatriya Samaj & Ors.

DATE OF JUDGMENT: 13/09/2006

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.

Appellant calls in question legality of the judgment  rendered by a learned Single Judge of the Bombay High Court  in Second Appeal filed by the respondents.   

Background facts, as projected by appellant in a nutshell  are as follows:

An agreement was entered into between Viraj  Construction-respondent No.9 in this appeal and respondent  No.1 Somavanshi Arya Kshatriya Samaj (hereinafter referred  to as the ’Trust") on 7.7.1985 on for construction of a multi- purpose Community hall free of charges. Trust agreed  simultaneously to surrender certain portions of the Trust land  to respondent No.9 for development. On 3.7.1987, an  agreement was entered into between appellant and respondent  No.9 in respect of the right to develop the plot of the trust in  terms of the agreement dated 7.7.1985.  It was agreed that the  appellant will be the sub developers of the plot and would  construct the community hall.  A sum of Rs.3,00,000/- was   payable as consideration to respondent No.9. On 26.4.1988  the respondent No.1-trust filed a civil suit (Civil Suit No.190 of  1988) for declaration and injunction in the Court of Civil  Judge, junior division, Kalyan praying inter-alia for the  following reliefs:

A.      Declaration that the defendants cannot  commit breach of the agreement dated  7th July, 1985; B.      Permanent injunction restraining the  defendants from carrying out any  construction on the suit land in breach  of the agreement.          The said suit was filed by respondent No.2, Nilkanth  Mahadeo Kamble as the chief trustee of the trust.  

On 10.6.1988 the aforesaid Civil Suit was compromised  between the parties and a compromise pursis was filed by  them along with the map which highlighted the compromise  agreed between the parties.  A sum of Rs.1,10,000/- was also  paid to the trust as consideration for the compromise  which  was accepted by the trust. It is to be noted here that by a

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resolution of respondent No.1, chief trustee i.e respondent No.  2 was authorized to compromise the suit in any one of the  three alternatives indicated. All the other trustees were  signatories to the resolution. According to appellant, one of  the alternatives was adopted.  On 26.2.1990 another Civil Suit  (Civil Suit No.101 of 1990) was filed by the respondent No.1- Trust for setting aside the consent decree passed on  10.6.1988.  The primary stand was that the earlier suit could  not have been filed by the chief trustee-respondent No.2 on  behalf of the Trust (Respondent No.1) without joining the  other trustees as plaintiffs. It was further stated that  respondent No.2 had no authority to compromise the suit.  On  5.4.1990 appellant and respondent No.9 filed written  statement taking the stand inter-alia that respondent No.2-  the Chief Trustee was authorized by the other trustees by a  resolution to compromise the Civil Suit No.190 of 1988.  In  fact the resolution authorized respondent No.2 to enter into  the compromise and the same was produced in Court before  the final order was passed and reference was made to the  resolution in the order regarding compromise. The suit was  not really filed by respondent No.2 in his personal capacity,  but as the chief trustee representing the trust.  On 11.1.1991,  the Civil Suit was dismissed by judgment and order of learned  Civil Judge, Junior Division, Kalyan. It was held that the  respondents had not proved that respondent No.2 was not  authorized to enter into the compromise which culminated  into a consent decree. Further it was held that it could not  shown by the respondents 1 to 8 that respondent No.2 was  not authorized to file a suit on behalf of the Trust.  Reference  was made to Order XXIII Rule 3A of the Code of Civil  Procedure, 1908 (in short the ’CPC’) to hold that the challenge  to the consent decree was barred. Appeal filed by respondent  Nos.1 to 8 (Appeal No. 59 of 1991) was dismissed by order  dated 11.12.1992 passed by Additional District Judge, Thane.   It was held that the respondents had filed a copy of the  resolution authorizing respondent No.2 to compromise the  suit.  Compromise was entered into between the appellant and  respondent No.2 representing the Trust and respondent No.9  in conformity with the resolution and with full knowledge and  consent of the other trustees. Therefore, the Civil Suit was not  maintainable. Second Appeal No.289 of 1994 in terms of  Section 100 CPC was filed before the Bombay High Court by  respondents Nos.1 to 8. By the impugned judgment the  Second Appeal was allowed even without framing a  substantial question of law. The High Court held that the  earlier suit was not maintainable in law in the absence of all  the trustees being made parties. Therefore, Order XXIII Rule  3A of the CPC has application and the suit was maintainable.  Conclusions recorded by the courts below were set aside.

In support of the appeal learned counsel for the  appellant submitted that the High Court lost sight of the fact  that the earlier suit was compromised by the chief trustee in  terms of the resolution to which all the trustees were  signatories. Filing of the earlier suit was within knowledge of  all the trustees. They had in fact authorized the chief trustee  to enter into a compromise in any of the three alternative  modes indicated.  The factual finding recorded that the earlier  suit was filed with their knowledge and consent and was  compromised was not challenged before the High Court and in  any event the High Court has not recorded finding on that  factual aspect.  Therefore, the High Court was not justified in  allowing the second appeal. In any event the second appeal  could not have been dealt with without framing a substantial  question of law.

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In response, learned counsel for the respondents 1 to 8  submitted that the High Court’s judgment is in order. The  earlier suit was non-est in the eye of law. Therefore, any  compromise recorded therein had no legal effect.

At the outset it is to be indicated that the second appeal  was allowed without framing a question of law which is clearly  contrary to the mandate of Section 100. This position has  been highlighted in several decisions. (See Gian Dass v.  Panchayat, Village Sunner Kalan & Ors. (JT 2006 (7) SC 102),  Joseph Severane and Ors. v. Benny Mathew and Ors. (JT  2005 (8) SC 509), Sasikumar and Ors. v Kunnath Chellappan  Nair and Ors. (JT 2005 (9) SC 171), Chadat Singh v. Bahadur  Ram and Ors. (JT 2004 (6) SC 296), Kanhaiyalal v.  Anupkumar (JT 2002 (10) SC 98), Roop Singh v. Ram Singh  (JT 2000 (3) SC 474) and Ishwar Dass Jain v. Sohan Lal (JT  1999 (9) SC 613).                              Further both the trial court and the first appellate court  categorically observed that the resolution adopted by all the  trustees including the chief trustee and the advocate for the  trust who was himself a trustee clearly established that the  earlier suit was filed with the knowledge and consent of all the  trustees and on behalf of all the trustees. Significantly the  trust deed was not produced.  It could have shown, as rightly  contended by learned counsel for the appellant, that the trust  could be sued or can sue in the name of chief trustee.  In any  event the categorical factual finding recorded that the suit was  filed with the knowledge and consent of all the trustees has  not been disturbed and in fact no reference has been made in  the impugned judgment to this aspect.  If the trustees had no  knowledge of the suit they could not have adopted a resolution  for compromise in a particular mode indicating three  alternatives. They specifically authorized the chief trustee and  the advocate who was also a trustee to enter into a  compromise.  In that view of the matter the High Court was  not justified in holding that the suit was maintainable.   

Looked at from any angle the High Court’s judgment is  indefensible and is set aside. Learned counsel for the  appellant during course of hearing had stated that as a matter  of genuine gesture, the appellant shall pay to the respondent  no.1-trust a sum of Rs.3,00,000/-. Notwithstanding the fact  that the appeal has been allowed, let the statement made by  learned counsel for the appellant be translated into reality and  the amount be paid within three months.                           Appeal is allowed.  No orders as to costs.