30 Jun 2121

Order XXIII Rule 3A of the Code of Civil Procedure, 1908 bars the suit to set aside the decree on the ground that compromise on which decree was passed was not lawful - Supreme Court of India

Case : R. Janakiammal and S.R. Somasundaram and Anr. v. S.K. Kumarasamy (Deceased) Through Legal Representatives and Ors. Civil Appeal No. 1537 of 2016 with Civil Appeal No. 1538 of 2016

Court : Supreme Court of India

Bench : Justice Ashok Bhushan and Justice R. Subhash Reddy

Decided on : 30 Jun 2121

Relevant Statues

Order XXIII Rule 3A of the Code of Civil Procedure, 1908

Sections 10, 13, 14 of the Indian Contract Act, 1872

Section 3(34), 5 of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961

Brief Facts & Procedure History

1. Three brothers with their father A.V. Kandasamy Gounder were residing as a joint family in an ancestral house at Sadapalayam Hemlet, Karumathampatti Village, Coimbatore. On 7.11.1960 a partition deed was registered between three brothers with respect to the properties allotted to them as per the registered partition deed dated 27.09.1953 along with the properties purchased by three brothers in the ratio of 1/3rd each.

2. In 1963 they purchased a housing site by sale deed dated 16.10.1963 in Somanur Hemlet, Village Karumathampatti and constructed a house where all the three brothers started living in Somanur house from 1964 and carried on their different joint businesses establishing firms and companies which was carried by joint family in the partnership or by a private company. It was only the members of the family, who were shareholders and directors.

3. After the death of Rangasamy in 1967, it was S.K. Kumarasamy, defendant No.1, took the reins of the family being the eldest. The family also purchased in 1972 Tea Estate known as High Field Estate in the name of defendant Nos.1, 4, 10 and plaintiff. A Private Limited Company known as Swamy and Swamy Plantations (P) Ltd. was also promoted with family members being shareholders and Directors.

4. In 1978, a palatial Bungalow was purchased in Tatabad, Coimbatore. In Coimbatore one Vasudeva Industries Ltd., which was in liquidation since 1967 was taken on lease from the official liquidator of Madras High Court, who along with defendant No.4, S.K. Chinnasamy formed a partnership firm to run Vasudeva Industries Ltd. An application was filed in 1981 in Company Petition No.39 of 1956. Defendant No.1 filed an affidavit in support of Company Application No.320 of 1981 praying that liquidation proceedings be closed. Madras High Court passed an order on 22.01.1982 allowed the application and permanently stayed the liquidation proceedings and permitted running of Vasudeva Industries Ltd. by the Board of Directors.

5. In 1983, Vasudeva Textiles Mills obtained a loan from Punjab National Bank in which a personal guarantee was also given by the plaintiff and defendant No.10, who were Directors. On 19.1.1984, C. Senthil Kumaravel, defendant No.6 and son of S. K. Chinnasami, defendant No.4 filed O.S. No.37 of 1984 praying, inter alia, for partition and allotment of 1/6th share to him. In O.S.No.37 of 1984 Senthil Kumaravel, the plaintiff came with the case that the plaintiff and defendant Nos.1, 3, 4, 8, 9 and 10 were members of a joint family. In O.S.No.37 of 1984, Janakiammal was impleaded as defendant No.8, Shanmugavelayutham as defendant No.9, Somasundaram as defendant No.10 and Saraswathi as defendant No.11.

6. In O.S.No.37 of 1984, an application under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 was filed on 6.8.1984 by the plaintiff. Based on the application, Sub­ordinate Judge, Coimbatore passed an order dated 6.8.1984 and directed for preparation of decree on the basis of compromise petition. In the compromise decree although various agricultural properties, house properties and shares were allotted to two other branches, i.e., branches of S.K. Kumarasamy and S.K. Chinnasamy but the branch of Rangasamy was allocated only shares in Vasudeva Industries which was under liquidation and taken under the orders of Madras High Court dated 21.1.1982 to be run by the Board of Directors.

7. Minor children of defendant No.10 filed O.S.No. 827 of 1987 through their mother challenging the compromise decree dated 6.8.1984 on the ground that they were not parties. On 3.8.1987 O.S. No.1101 of 1987 was filed by both the sons of Rangasamy, i.e., S.R. Shanmugnavelayutham and S.R. Somasundaram. In O.S. No.1101 of 1987 defendant Nos. 1, 2 and 3 filed their written statements where it was pleaded that there was an agreement on 8.3.1981 between the three branches where defendant No.1 was to pay Rs. 4 lakhs to defendant No. 4 and plaintiff was to pay Rs. 7 lakhs to defendant No. 4 and since payment was not made to defendant No.4 suit was filed through his son.

8. It was further pleaded that compromise dated 6.8.1984 was to give effect to an earlier agreement dated 8.3.1981. In the O.S. No.827 of 1987, an affidavit was filed by the mother of the minor stating that they had entered into the compromise with defendant No.1 hence seeking permission to withdraw the suit. On 10.2.1993, the O.S. No.827 of 1987 was withdrawn, on the same date, Shanmuga velayuthem who was the first plaintiff in O.S.No.1101 of 1987 withdrew himself from the suit and was transposed as defendant No.10 in the suit. The written statement was filed by Janakiammal, defendant No.8 supporting the plaintiff's case and also praying for partition of her share. Senthil Kumaravel, who was the plaintiff in Suit No.37 of 1984, filed a written statement in O.S.No.1101 of 1987 where he stated that he filed Suit No.37 of 1984 at the instance of S.K. Kumarasamy, defendant No.1 and decree dated 06.08.1984 was sham and nominal and was not to be given effect to.

9. The trial court vide its judgment dated 30.9.1997 dismissed the suit. The trial court upheld that the O.S.No.1101 of 1987 was barred by Order XXIII Rule 3A of the Code of Civil Procedure, 1908. It also upheld the partition deed dated 7.11.1960 and the agreement dated 8.3.1981. Challenging the judgment of the trial court dismissing the suit, two appeals were filed in the High Court. A.S.No.332 of 1999 was filed by Somasundaram, the plaintiff and A.S. No.281 of 2000 was filed by Janakiammal, defendant No.8. The High Court dismissed both appeals. Aggrieved by the judgment of the High Court, these two appeals have been filed.

10. Hence, these two appeals have been filed challenging the Division Bench judgment dated 23.11.2011 of Madras High Court dismissing the A.S. No.281 of 2000 and A.S. No.332 of 1999 filed by the appellants respectively.

The Issue of the Case

Whether O.S.No.1101 of 1987 is maintainable in the light of the provisions contained in Order XXIII Rule 3A of the Code of Civil Procedure, 1908?

The Observations of the Court

The Honourable Supreme Court observed the following:

1. Critically analyzed Order XXIII Rule 3A of the Code of Civil Procedure, 1908 where the said rule bars the suit to set aside the decree on the ground that compromise on which decree was passed was not lawful.

2. Observed the pleading of the plaintiff that the compromise recorded on 6.8.1984 was not a lawful compromise but obtained by fraud and misrepresentation.

3. Opined that an agreement or compromise which is clearly void or voidable shall not be deemed to be lawful and the bar under Order XXIII Rule 3A of the Code of Civil Procedure, 1908 shall be attracted if a compromise on the basis of which decree was passed was void or voidable.

4. Noted the grounds contained in the plaint to challenge the consent decree from which it is clear that the compromise which was recorded on 06.08.1984 was sought to be termed as not lawful, i.e., void or voidable.

5. Therefore, based on the grounds taken by the plaintiff in Suit No.1101 of 1987, the Court opined that the only remedy available to the plaintiff was to approach the court in the same case and satisfy the court that compromise was not lawful.

6. Concurred with the judgment of Honourable trial court and Honourable High Court holding that Suit No.1101 of 1987 was barred under Order XXIII Rule 3A of the Code of Civil Procedure, 1908

7. Reliance was placed on several precedents for the above observation such as Banwari Lal v. Chando Devi (Smt.) Though LRs. And Anr., (1993) 1 SCC 581; Pushpa Devi Bhagat (Dead) Through LR. Sadhna Rai (Smt.) v. Rajinder Singh and Ors., (2006) 5 SCC 566; R. Rajanna v. S.R. Venkataswamy and Ors., (2014) 15 SCC 471, Etc.

8. Regarding the entitlement of shares in the Tatabad residential building at Coimbatore by the Appellants, it was neither included in O.S. No. 37 of 1984 nor part of the compromise decree dated 6.8.1984.

9. Examined the evidence on record which indicated that the Tatabad residential property was purchased in the name of defendant No.1 and the consideration for the purchase was paid from Swamy and Swamy Plantations Co. having its Directors and shareholders only the family members of all the branches i.e. a joint family property.

10. With respect to the continuation of the joint family status even after the partition deed dated 7.11.1960, the concept of reunion in Hindu Law takes effect by referring to the cases of Palani Ammal v. Muthuvenkatacharla Moniagar and Ors., AIR 1925 PC 49; Mukku Venkataramayya v. Mukku Tatayya and Ors., AIR 1943 Mad. 538; Anil Kumar Mitra and Ors. v. Ganendra Nath Mitra and Ors., (1997) 9 SCC 725 Etc.

The Decision Held by the Court

1. The Honourable Supreme Court partly allowed Civil Appeal No.1537 of 2016 and Civil Appeal No.1538 of 2016 holding that all three branches have an equal share in the Tatabad residential property. It opined since the property is not a part of O.S.No.37 of 1984, there is no bar in seeking partition of the said property by the plaintiff.

2. It further held that the plaintiff/defendant No.7, defendant No.1 and defendant No.4 are entitled to 1/3rd share jointly in Item No. X of Schedule 'B' of the suit property

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