HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO. 431 OF 2008 IN FIRST APPEAL NO. 2648 OF 2006 1 Vijay Timber Mart & Saw Mills Represented by: a) Hiralal K. Patel, b) Girish Devji Patel, c) Dhiren M. Lathiya, d) Sanjay M. Lathiya, e) Paresh M. Lathiya, carrying on the business at Near Moti Nagar, Opp. Our Lady of Nazareth Church Ground, Bhayender (W), Tal. & Dist. Thane. Appellants... V/s 1 Vrajlal Manekchand Shah (deceased) through his legal heirs. a) Smt. Sushila Vrajlal Shah, b) Smt. Charu Pravin Mehta, c) Smt. Asha Jayantilal Kothari, d) Smt. Veena Kirit Saria, All residing at Borivali, Mumbai, through their constituted Attorney ShriManmohan Kyal, adult, Occ.Business, residing at 303, Navkar,Dr. Babsaheb Ambedkar Cross Road, Bhayender (W), Tq. & Dist. Thane. Applicants.... 2 M/s N.S. Associates, through its Partner, Shri Steven John Mendonsa a having office at Shop No. 4, Gokul Teresa, Lapora Street, Bhayender (W) Tal. & Dist. Thane. 3 M/s Reap Agrotech Pvt. Ltd., A Private Limited Company Incorporate under Companies Act having office at 303, Navkar, Dr. Ambedkar Cross Road, Bhayender (W), Tal. & Dist. Thane. Respondents: Mr. P.S. Dani i/b Nandu Pawar for the Applicants Mr. R.N. Kachare i/b A Bharat & Co. for the Appellants. Mr. A.J. Almeida for the Respondent No.3. CORAM: J.N. PATEL & A.A. SAYED, JJ. Reserved on 13.02.2009 Pronounced on 04.04.2009 P.C. :- (PER A.A. SAYED, J.) 1. The above Civil Application has been filed by the Applicants who are the respondent Nos. 1 (b ) to 1(d) in the Appeal and the plaintiffs No. 1 (b) to 1 (d) in the suit. By the Civil Application, the Applicants have prayed that the order dated 19.07.2007 passed by this court along-with consent terms dated 19.07.2007 be set aside and appeal be heard on merits. 2. The Applicants' case is that they along-with their sister Smt. Vilas Rasiklal Rathod are the owners of the piece of land bearing Plot No. 1 out of Survey No. 3 (New Survey No. 368) bearing C.S. No. 1109 and 1110, ad- measuring 2000 square-yards situated at Bhayender (West), District Thane, which is the 'suit property'. The Applicants are the heirs of one Vrajlal Manekchand Shah who was the sole owner of the suit property. The said Vrajlal died on 30.12.1973, leaving behind him his widow Smt. Sushila and his married daughters viz. the Applicants and Smt. Vilas Rasiklal Rathod, as his legal heirs and representatives. The said Smt. Sushila also died on 29.03.2006. Thus, according to the Applicants, they along-with the said Smt.Vilas Rasiklal Rathod are now the owners of the said suit property. 3. The said suit property was leased out to the appellants. It is the case of the Applicants that the lease expired sometime on 30.11.1990 by efflux of time. Smt. Sushila Vrajlal Shah (now deceased), the Applicants and Smt. Vilas Rasiklal Rathod, who were the heirs of late Vrajlal Manekchand Shah had agreed to sell the suit property by an agreement dated 26.06.1994 to the respondent No.2 - M/s N.S. Associates, who in turn agreed to sell the suit property to the respondent No. 3 - Reap Agrotech Private Ltd. by an agreement dated 08.10.1995. The Applicants and Smt.Vilas Rasiklal Rathod had by a power of attorney dated 22.06.1994 granted powers in favour of one Mr. Mendonsa, who is the partner of respondent No.2 to do several acts and deeds in respect of the suit property, as contained in the power of attorney. 4. The said heirs (except Smt. Vilas Rasiklal Rathod) also executed a power of attorney dated 14.10.2002 in favour of one Mr. Kyal, Director of Respondent No.2, granting such powers as set out in the said power of attorney. 5. On the basis of the power of attorney dated 14.10.2002, for and on behalf of the Applicants and their mother Smt. Sushila (now deceased), Mr. Kyal filed Special Civil Suit No. 476 of 2002 in the Court of Joint Civil Judge, Senior Division at Thane, against the Appellants who were the lessees, for eviction and recovery of possession of the suit property. The said suit was decreed in favour of the Applicants by judgement/decree dated 28.04.2006. 6. It is common ground that under the agreement dated 26.06.1994 executed between the heirs of Late Vrajlal Manekchand Shah and the respondent No.2 M/s N.S. Associates, a sum of Rs.3,75,000/- out of the total consideration of Rs. 12,75,000/- was the balance amount, which remained due and payable by the respondent No. 2 to the Applicants. Since the said amount of Rs. 3,75,000/- was not paid, Smt. Sushila (now deceased) and the Applicants herein through their advocate's letter dated 11.02.2004 addressed to respondents No. 2 and 3 called upon them to make payment of the said balance consideration within 15 days. It is averred in the above Civil Application that since the balance consideration was not paid, the Agreement dated 26.06.1994 stood terminated. 7. It is the case of Applicants that it is only on 02.10.2007, the Applicants came to know for the first time about the filing of the above First Appeal when one Mr. Yogesh claiming to be representative of the respondent No. 2 attended the office of Mr. Pravin Mehta, the husband of Mrs. Charu Pravin Mehta, the Applicant No.1 (b) and handed over to him a copy of the draft consent terms informing him that the same was required to be filed in the above Appeal after the same was approved by the Applicants. According to the Applicants they were shocked and surprised to receive the copy of the draft consent terms and which was signed by Mr. Kyal, the Director of the respondent No.3 for and on behalf of the Applicants. According to the Applicants even Advocate Mr.A.J. Almeida could not have represented them and done any act on the basis of Vakalatnama signed by Mr. Kyal and that Mr. Kyal had not been given any power to settle the dispute with the Appellants and/or sign Consent Terms in respect of the suit property. The Applicants, therefore, through their advocate’s letter dated 17-10-2002 cancelled the Agreement dated 26.06.1994, the Deed of Confirmation dated 17.10.2002 (confirming the Agreement dated 08.10.1995 between the respondent No. 2 and 3 and the Applicants) and revoked the power of attorney dated 22.06.1994 granted in favour of Mr. Mendonsa, partner of respondent No.2 and called upon respondent No. 2 and 3 to handover vacant and peaceful possession of the suit property and not to act upon the said power of attorney. Similar letters were also sent to Mr. Kyal and Mr. A. J. Almeida, Advocate. In the said letters it was pointed out that Mr. Kyal was never authorized to settle the dispute with the Appellants and sign the consent terms on behalf of the owners in respect of the suit property. 8. By reply dated 16.10.2007 it was recorded by Mr.Kyal that Mr.Mendonsa had executed a power of attorney dated 13.10.1995 in favour of Mr.Kyal in relation to all matters and things in respect of the suit property and that the power of attorney dated 22.06.1994 executed by the Applicants in favour of Mr.Mendonsa empowered him to grant further power of attorney in favour of Mr. Kyal and that under that authority he has signed the Vakalatnama and consent terms. Similar reply was also sent by the Advocates of the respondent No. 2 and 3 to the Applicants. 9. According to the Applicants the consent terms are illegal and liable to be set aside as the consent terms are not signed by them and/or signed by the Constituted Attorney of the Applicants who was not authorized to sign the consent terms or vakalatnama in the matter on their behalf. It is further stated that the consent terms are illegal because they have been signed on behalf of Smt. Sushila Vrajlal Shah, who expired much prior to the execution of vakalatnama and the consent terms. Moreover, according to the Applicants, Smt. Vilas Rasiklal Rathod, one of the daughter of Late Vrajlal Manekchand Shah was not a party to the consent terms, therefore, the rights of Smt. Vilas Rasiklal Rathod cannot be said to be affected by the consent terms. 10. The learned counsel for the Applicants drew our attention to the power of attorney dated 22.06.1994 given by the heirs of Vrajlal Manekchand Shah to Mr. Mendonsa, partner of Respondent No.2 and submitted that the said power of attorney was limited and under the said power of attorney, the power to file proceedings was given to Mr.Mendonsa, however, there was no power given for signing consent terms or for power of substitution to appoint further attorney. 11.The learned counsel contended that the consent terms which were signed by Mr.Kyal, Director of Respondent No.3 on behalf of the legal heirs of Vrajlal Manekchand Shah was without any authority. According to learned counsel when there was no power to sign consent terms given to Mr.Mendonsa, Mr.Mendonsa could not have given a further power by way of substitution to Mr. Kyal to sign consent terms in the First Appeal No. 2648 of 2006. The learned counsel also drew our attention to the power of attorney dated 14.10.1995, whereby the heirs of the deceased Vrajlal Manekchand Shah (except Smt. Vilas Rasiklal Rathod) had given power of attorney to Mr. Kyal for the limited purpose of filing eviction suit against the Appellants - M/s Vijay Timber Mart and Saw Mill. He submitted that this power of attorney was only limited to the extent of filing legal proceedings against the said Appellants and nothing more and therefore, even on the basis of this power of attorney the said Mr. Kyal did not have authority to sign the consent terms as there was no such clause in the power of attorney giving authority to Mr. Kyal to settle the matter and sign the consent terms on their behalf. The learned counsel submitted that it is only on 02.10.2007 that the Applicants learnt about the filing of the appeal and above consent terms, draft copy of which was handed over to Mr. Pravin Mehta, the husband of Applicant No. 1 (b) by one Mr. Yogesh who claimed to be representative of the respondent No.2 and it is in these circumstances, the above Civil Application is filed in November, 2007 to set aside the consent terms and the order, both dated 19.07.2007. The learned counsel submitted that since there was no authority to settle the matter and sign consent terms on behalf of the Applicants, the consent terms dated 19.07.2007 is illegal and the Consent Terms and the order dated 19.07.2007 are required to be set aside. 12. The learned counsel for the Applicants relied upon the case of Banwari Lal Vs. Smt. Chando Devi, AIR 1993 S.C. 1139, to submit that a Civil Application was maintainable to challenge the validity of the compromise and that there was no requirement for filing any separate appeal or suit to question the compromise/consent terms. It is his contention that the consent terms is fraudulent and therefore “not lawful” within the meaning of Order 23 rule 3 and the consent terms can be set aside by the same Court in which consent terms were filed and it is not required for the party to approach the Apex Court to file an appeal or file a separate suit in the matter. The learned counsel also placed reliance upon the case A.V. Papayya Sastry and Others Vs. Government of A.P. and Others, (2007) 4 Supreme Court Cases 221 to contend that the judgment, decree, order obtained by fraud is to be treated as non est and nullity and that it can be challenged in any court, at any time and even in collateral proceedings. He therefore, urged that in the facts and circumstances of the case, the rights of the Applicants are required to be protected and consent terms are required to be set aside and the order dated 19.07.2007 is required to be recalled. 13.The Application has been opposed and an affidavit of Mr.Kyal, Director of respondent No.3 is filed resisting the reliefs sought by the Applicants. It is stated in the reply that the Civil Application is not maintainable and the only course available to the Applicants was either to file separate suit or file an appeal. According to the respondent No.3, the Civil Application is filed malafidely merely to extort money from them. According to the respondent No.3, the Applicants have no right, title and interest in the suit land except to receive the balance consideration of Rs.3,75,000/- and therefore, the Applicants have no locus and are estopped from challenging the consent decree. According to the respondent No.3, the Applicants have deliberately not annexed the Deed of Confirmation which is a vital document executed between the Applicants and respondent No.2 and 3 which will clearly show that the Applicants have no title, interest or claim in the suit property except receiving the balance payment. According to Respondent No.3, the Applicants have also deliberately not annexed copy of the Agreement of Sale to the Civil Application, which agreement spells out the terms and conditions between the parties. 14. It is further averred in the reply of Respondent No.3 that the Agreement of Sale dated 26th June, 1994 executed by the Applicants with the respondent No.2 and the power of attorney executed by them in favour of Mr. Mendonsa on 22nd June, 1994, read together, clearly empowers Mr. Mendonsa to deal with the suit land as the owner. It is further stated that Mr. Mendonsa, partner of respondent No.2 had executed a power of attorney in favour of the respondent No.3 and that the agreements as well as power of attorney would unequivocally show that the respondent No.3 can deal with the suit property as they think fit and proper. It is averred in the reply that since the respondent No. 2 and 3 were desirous of developing the property, they approached the Appellants for vacating the suit land. However, the Appellants refused to vacate the suit land and therefore, respondent No. 2 and 3 decided to file suit for eviction against the Appellants from the suit land and accordingly the Suit No. 476 of 2002 came to be filed in the court of Civil Judge, Senior Division, Thane, on the basis of the aforesaid power of attorney. By way of abandon caution, additional power of attorney was obtained from the Applicants and accordingly power of attorney dated 14th October, 2002 came to be executed by the Applicants and their mother Smt. Sushila (now deceased) in favour of Mr.Kyal, Director of respondent No.3. It is the case of the respondent No. 3 that, the Applicants agreed to execute the said power of attorney on the condition that the respondent No. 2 and 3 should agree and undertake to execute a deed of indemnity in favour of the Applicants for any loss, damage that may be caused to the Applicants by virtue of respondent Nos.2 and 3 acting on such power of attorney and accordingly, a deed of indemnity dated 17.10.2002, which was termed as confirmation deed, came to be executed. According to the respondent No. 3 they have acted on power of attorney executed by the Applicants in favour of Mr. Mendonsa, a partner of Respondent No.2 and the power of attorney executed by Mr. Mendonsa in their favour on 13th December, 1995. 15. It is the case of the Respondent No. 3 that, the two powers of attorney were produced before the trial court and copies of the powers of attorney are also produced in this court at the time of the filing of the consent terms. It is their case that, they have spent large sum of money on the suit land and because of their efforts and by filing the suit, they have been able to obtain a decree of eviction against the Appellants and thereafter the consent terms were filed. The Ld. counsel for the respondent No.3 and the Ld. Counsel for the Appellant have drawn our attention to the clauses in the agreement for sale dated 26.06.1994 between the heirs of Vrajlal Manekchand Shah and respondent No.2, the Confirmation Deed dated 17th October, 2002 between the respondent No.2, the respondent No.3 and the heirs of Vrajlal Manekchand Shah and also the powers of attorney dated 26.06.1994, 13.12.1995 and 14.10.2002. Both the Ld. Counsel asserted that the said agreement of sale, confirmation deed and the powers of attorney read together coupled with the conduct of the parties clearly reveals that the Applicants have no interest in the suit land except receiving the balance consideration and they are estopped from questioning the consent terms and that in any event, the Respondent No. 2 and 3 were authorised to engage Advocate and sign Vakalatnama and consent terms. 16. The learned counsel submitted that Mr. Yogesh, the representative of Respondent No.2 has always been in contact with Mr.Pravin Mehta, the husband of applicant No.1 (b), who has been advising the Applicants in the matter and was informed about all the events what were happening and Applicants were aware about the talks of settlement, which ultimately resulted in the filing of the consent terms. It is denied that the rights of Smt. Vilas Rasiklal Rathod are affected in any manner. The learned counsel further submitted that the competent authority under U.L.C. Act had acquired part of the suit land alleged to be surplus vacant land and notices to that effect were sent to the Applicants and the Applicants have not take any steps to release the said land which shows that the Applicants have no interest left in the suit land and that necessary steps are taken by the respondent No.3 to set aside the acquisition proceedings. 17. The learned counsel for Respondent No. 3 submitted that the Applicants were unable to evict the Appellants from the suit land and now that the decree of eviction has been passed against the Appellants and that settlement has been arrived at with the Appellants because of the efforts and costs incurred by Respondent No.3, it is only in order to extract money, that the Applicants have filed the present Application. The learned counsel submitted that at the highest the Applicants are concerned with their balance amount of consideration of Rs.3,75,000/- and the said amount alongwith further sum of Rs.1,00,000/- towards interest has been already deposited in this Court. The learned Counsel further submitted that the power of attorney was coupled with interest and the same cannot be questioned or revoked and that the Applicants were estopped from asserting their title against respondent No.3. The learned counsel relied upon the case of Pradip Kumar Das Vs. Smt. Abanti Das, AIR 1998 Orissa 26 to contend that against the decree of compromise only an appeal was maintainable. The learned counsel for the respondent No.3 has also relied upon cases of, Seth Loon Karan Sethiya Vs. Ivan E. John, AIR 1969 SUPREME COURT 73 and Li Tse Shi Vs. Pong Tsoi Ching, AIR 1935 Privy Council 208. The learned counsel submitted that there is no illegality as alleged by the Applicants and therefore, the Civil Application is required to be dismissed with costs. 18.We have heard the learned Counsel for the parties and perused the material on record. 19.Insofar as the issue of maintainability of the above Civil Application is concerned, we find that the Ld. Counsel for the Applicants is justified in contending that Civil Application is maintainable. The Hon’ble Apex Court has in the case of Banwari Lal vs. Smt. Chando Devi (supra) relied upon by the Applicants, clearly lays down that such an Application would be maintainable where it is alleged that the compromise was not lawful within the meaning of Order 23 Rule 3 and such Application can be entertained for recall of the order recording compromise. Considering the aforesaid decision, we hold that the present Civil Application is maintainable. 20.Coming to the merits of the Application, it is to be noted that two documents viz: (1) Agreement for Sale dated 26-06-1994 between the heirs of Vrajal Manekhchand Shah i.e the Applicants, Smt. Vilas Rasiklal Rathod, and their mother Smt. Sushila (since deceased) as Vendors and Respondent No. 2 as Purchasers, and (2) Deed of Confirmation dated 17-10-2002 between the heirs of Vrajal Manekhchand Shah i.e the Applicants, Smt. Vilas Rasiklal Rathod, and their mother Smt. Sushila (since deceased), Respondent No. 2-M/s N.S. Associates and Respondent No. 3-Reap Agro-tech Pvt. Ltd. are not annexed to the Civil Application. The aforesaid documents are crucial and important documents between the parties, which would clearly bring out the true nature of the transaction between the parties relating the suit property. 21. Under the aforesaid Agreement for Sale dated 26-06-1994 between the heirs of Vrajal Manekhchand Shah i.e the Applicants, Smt. Vilas Rasiklal Rathod, and their mother Smt. Sushila (since deceased) as Vendors and Respondent No. 2 as Purchasers, it is stated that the suit property was being sold on as is where is, as far as the claim of the said Lessees was concerned and claim of Estate Investment Private Ltd. It is mentioned in the preamble of the agreement itself that the purchasers were at liberty to negotiate and settle the matter for getting vacant and peaceful possession of the plot and to initiate legal proceedings in Court of law. 22.Clause 3 of the said agreement provides that “This agreement is an Agreement for Sale cum Grant of Development rights in respect of the said property and shall be developed by the Purchasers or his nominees in the name of the Vendors in accordance with the provisions of the Urban Land (Ceiling & Regulation) Act, 1976 (hereinafter referred to as the “ULC Act”). 23.Clause 6 of the agreement provides that, “The Vendors shall grant a license to the Purchasers to enter into the said property and to construct a building as and when required.” 24. Clause 7 provides as follows - “It is agreed that the Purchasers shall not settle the matter, with the said Lessee which would reduce, release, extinguish, diminish or prejudice the Vendors' right in the said property and in no circumstances the Lease shall be renewed and any settlement as may be arrived shall be subject to the Vendors' rights and claim under this agreement and upon the Purchasers making the full payment to the Vendors such settlement with the Lessees shall come into force.” 25. Clause 12 provides that, “The Purchasers shall be entitled to avail of, utilize for floating F.S.I. T.D.R. or any other F.S.I. arising from any other properties on the property described in the schedule hereunder written or any part thereof. “ 26.Clause 14 provides that, “The purchasers shall be entitled to get the lay-out building plans of the said property sanctioned from the Municipal Corporation and/or amalgamate the said property with any other property and for the purpose, the Purchasers shall be entitled to authorize to sign necessary papers.” 27.Clause 15 provides that, “All the costs, charges and expenses of submitting lay-out building plans and getting the same duly sanctioned will be borne and paid by the Purchaser and the Purchaser shall make scrutiny etc. the Purchaser shall indemnify and keep indemnified the Vendors against any breach of or non-compliance of the terms and conditions of the Municipal Authority or the Competent Authority under the ULC Act. 28.Clause 18 provides that, “The Purchaser shall at his own costs construct building or buildings on the said property and he shall be entitled to entrust the building construction work to such person/s as he may think fit and proper and all the payments and expenditure in respect thereof shall be made and provided by the Purchaser and the Purchaser shall indemnify and keep indemnified the Vendors against all such payments. The Purchaser shall be responsible for the fulfillment of the observance and performance of such building contract. The Purchaser shall be at liberty to allot the dwelling units and the flats/shops/garages/units in the building