1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.674 OF 2007 IN SUIT NO.3429 OF 1991 1. Oshiwara Land Development Company Pvt. Ltd. A Company registered under the Companies Act, 1956 and having its office at 71/73, Botawala Bldg., Apollo Street, Bombay – 400 001 2. Vinod Parshuram Mahajan, Chief Promoter, Shree Swami Samartha Co-operative Housing Society (Proposed) having its office at 11-A, Syuash Gokhale Road, (North) Dadar, Bombay – 400 028 3a. Vasant Mahadev Tikekar 3b. Ashok Dattatraya Kulkarni, Chief Promoters of Apna Ghar, Co-operative Housing Society (Proposed) having his office at 11-A, Suyash, Gokhale Road, (North), Dadar, Bombay 400 028 .. Appellants. Versus 1. State of Maharashtra, Mantralaya, Mumbai – 400 020 2. Colletor, Bombay Suburban District, BMRDA Complex, 2nd Floor, Bandra (West), Bombay – 400 050. 3. Officer on Special Duty, 2 Mantralaya, Bombay – 400 032. 4. Minister of Revenue, Government of Maharashtra, Mantralaya, Bombay – 32. 5. Maharashtra Housing & Area Development Authority, having office at Griha Nirman Bhavan, Bandra (E), Bombay – 51. .. Respondents. And Shailendra Eknath Kamble, C/12, Apli Ekta Sahakari Grih Nirman Sanstha Naupada, Mumbai – 400 069 .. Intervenor. Mr.Aspi Chinoy, Senior Advocate with Mr.Janak Dwarkadas, senior advocate with Mr.Sharam Jagtiani & Mr.Vishal V. Kamade i/by M/s.Mahimtura & Co. for the appellants. Mr.G.W. Mattos, AGP for respondents No.1 to 5. Mr.Sunip Sen i/by M/s.Sanjay Udeshi & Co. for Intervenors. CORAM : SWATANTERKUMAR, C.J. & J.P. DEVADHAR, J. RESERVED ON : 18TH DECEMBER, 2007. PRONOUNCED ON : 17TH JANUARY, 2008. ORAL JUDGMENT (Per J.P. Devadhar, J.) : This appeal is directed against the Judgment of the learned Single Judge dated 29-6-2007. By the said Judgment, the learned Single Judge held that the consent terms tendered by the parties for compromising Suit No.3429 of 1991 cannot be 3 accepted at this stage and granted liberty to the parties to move the consent terms at the time of final hearing of the suit. The grievance of the Appellants is that, where the parties to the suit have sought a decree in terms of the consent terms, the Court cannot refuse to pass a decree in terms of the consent terms on the ground that unless the disputed questions raised in the suit are decided finally, the consent terms cannot be accepted at this stage and direct the parties to move the said consent terms at the final hearing of the suit. 2. The dispute in this case relates to 86 Acres and 32 Gunthas of land (`disputed land' for short) in Survey No.120, situated at Village Versova. 3. The appellants (`plaintiffs' for short) had filed Suit No.3429 of 1991 in the High Court inter alia seeking a declaration that the order dated 17th August 1984 passed by the Additional Collector and also the order in Revision passed by the Officer on Special Duty on 3rd January, 1986 holding that the disputed land belongs to the Government are illegal and bad in law and that the disputed land belongs to the plaintiffs. 4 4. The contention of the plaintiffs in brief are that, survey No.41 of Village Oshiwara originally ad measured 1270 acres and 20 gunthas and by virtue of the kaul or grant dated 18-10-1820, the entire land in Survey No.41 vested in Byramji Jeejeebhoy Private Limited. On the western side of the village Oshiwara is the village Versova and in between the two villages, there was creek admeasuring 28 acres and 20 gunthas. 5. In the year 1906, an area admeasuring 362 acres and 10 gunthas was carved out from the western portion of Survey No.41 to form part of village Versova and was designated as Survey No.120. As a result, the creek which was treated as the boundary between the two villages, became part of village Versova. 6. According to the plaintiffs, on 25th January 1964, Byramji Jeejeebhoy entered into an agreement with New Swastik Land Development Corporation (`Swastik' for short) for sale of the entire land remaining in Survey No.41 on the terms and conditions as more particularly set out therein. Though the agreement for sale provides for Joint Survey and measurement by the Architects of the Vendors and the purchaser Swastik, by consent of the 5 parties, the said clause was waived and the correspondence shows that it was agreed that the area of the land in Survey No.41 to be sold shall be taken at 723 acres. Even the order dated 9-1- 1965 passed by the Enquiry Officer, under the Salsette Estate (land emeption Abolition) Act, 1951 shows that the Survey No.41 admeasured 723 Acre and 30 gunthas. However, it is contended by the plaintiffs that the said order was passed without any survey or verification. 7. As the sale was not completed within the stipulated time, the said Byramji Jeejeebhoy filed a Suit bearing No.660 of 1968 against the purchaser Swastik for specific performance of the agreement for sale dated 25-1-1964 as modified from time-to- time. The said suit was decreed on 15th October 1969 in terms of the consent terms arrived at between the parties to the suit. On 9- 11-1979, the said decree was marked satisfied by recording that on the plaintiff No.1 paying the balance decretal amount to Heritage Estate Pvt. Ltd. for and on behalf of the decree-holder- Byramjee Jeejeebhoy, the consent decree dated 15-10-1969 shall operate as a conveyance in favour of plaintiff No.1. Accordingly, the plaintiff No.1 has paid the balance decretal amount to Heritage Estate Private Limited and became absolute owner of the entire 6 land under Survey No.41 of village Oshiwara. 8. Thereafter, on 18-2-1981, the plaintiff No.1 entered into an agreement for sale with plaintiff No.2 and 3 who were the Chief promoters of two proposed co-operative Housing Societies. On an application made by the Plaintiff No.1 for an inquiry under Section 20(2) of the Maharashtra Land Revenue Code (`MLRC' for short), the Additional Collector by his order dated on 20th February 1982 sanctioned inquiry. Accordingly, the Sub- Divisional Officer conducted an enquiry and passed an order on 11th March 1983, holding that in addition to the land in Survey No.41, the plaintiff No.1 was entitled to 86 Acres and 32 gunthas (disputed land) from Survey No.120 of Village Versova, on the ground that the disputed land was wrongly shown as transferred to village Versova. 9. The Additional Collector, Bombay, on suo motto enquiry found that the order passed by the S.D.O. was erroneous and after initiating proceedings under Section 257 of the M.L.R.C. and after hearing the parties passed an order on 17-08-1984, thereby setting aside the order of S.D.O. Dated 11-3-1983 and restored the position prior to the date of the order of the S.D.O. The 7 plaintiff No.1 preferred a revision application against the said order of the Additional Collector dated 17-8-1984, but the same was dismissed by the Officer on Special Duty, Revenue & Forest Department on 3rd January 1986. Plaintiff No.1 filed further review which was also dismissed on 18th February 1991. Challenging the aforesaid orders, the Plaintiffs filed the above suit in this Court on 18th October 1991. 10. During the pendency of the Suit, the parties arrived at a compromise and the consent terms duly signed by the parties in November 1997 was filed before the Trial Court seeking decree in terms of the consent terms. Challenging the said consent terms, the intervenor filed Writ Petition No.1898 of 1999 in the High Court, inter alia on the ground that the consent terms were unlawful and not in the public interest. The said writ petition was disposed of by an order dated 16-11-2006 by permitting the petitioners therein to intervene in the pending Suit No.3429 of 1991. Accordingly, an application for intervention in the Suit was made and by an order dated 11-12-2006, the intervention application was allowed. In the meantime, the parties sought to withdraw the consent terms arrived at in November, 1997 and by an order dated 5-5-2004 this Court permitted the parties to 8 withdraw the consent terms arrived at in November, 1997 and directed that the suit be posted for trial. 11. Before the commencement of the Trial, the parties to the suit once again claim to have arrived at a compromise which was reduced to writing in the form of consent terms and the same were duly signed by both the parties on 19/12/2006. The said consent terms were tendered in Court seeking decree in terms of the consent terms. 12. The intervenors opposed passing of a decree in terms of the consent terms, inter alia on the ground that the consent terms were unlawful and opposed to public interest. Whereas, the parties to the Suit contended that the consent terms were lawful and sought decree in terms of the consent terms. 13. By the impugned Judgment and order dated 29th June 2007, the learned Single Judge held that the consent terms cannot be said to be genuine and lawful at this stage and that the parties are at liberty to file or move such consent terms at the time of final hearing of the suit. The learned Single Judge held that in the absence of reasons for withdrawing the earlier consent terms 9 and in the absence of the circumstances under which the present consent terms have been arrived at, the decree in terms of the consent terms cannot be passed. The learned Single Judge further held that there are various disputed facts which definitely need detailed evidence and material even for the Court to come to the conclusion that the disputed lands were part and parcel of Survey No.41 and unless a finding is recorded and the Government record is corrected to that effect, the consent to grant ownership of a portion of Government land to the Plaintiff cannot be accepted. Challenging said order, the present appeal is filed. 14. Mr.Chinoy, learned Senior Advocate appearing on behalf of the Appellants submitted that under Order 23 Rule 3 of the Code of Civil Procedure, the parties to the suit are entitled to compromise the suit by filing consent terms and it is the duty of the Court to record the agreement and pass a decree in accordance therewith. He submitted that the object of a compromise and settlement is to resolve the dispute without any trial and, therefore, the finding given by the learned Single Judge that before accepting the consent terms, the parties must prove their case during the trial is totally erroneous. By relying on the decision of the Apex Court in the case of K. Venkata Seshiah V/s. 10 K. Ramasubbamma reported in (1991) 3 SCC 338 and a decision of the Privy Council in the case of Sourendra Nath V/s. Tarubala Dasi reported in AIR 1930 PC 158, Mr.Chinoy submitted that once the parties to a dispute satisfy the Court that the compromise arrived at is lawful, the Court has no option but to pass a decree. He submitted that to avoid protracted litigation, the State Government at the highest level after negotiations has taken a decision to compromise the suit. He submitted that in the absence of any finding that the consent terms are not lawful or opposed to public interest, the learned Single Judge ought not to have declined to accept the compromise. 15. Mr.Chinoy further submitted that the fact that the parties to the suit had sought to tender consent terms in the past, but withdrew the same, would not preclude the parties to renegotiate and tender fresh consent terms. Relying on a decision of the Apex Court in the case of Raunaq International Limited V/s. I.V.R. Construction Limited reported in (1999) 1 SCC 492, Mr.Chinoy submitted that the consent terms were bona fide and the interest of public at large were not jeopardised and, therefore, the judgment of the learned Judge ought to be set aside and decree be passed in terms of the consent terms. 11 16. Mr.Sen, learned counsel for the intervenor, on the other hand, submitted that the consent terms were not bona fide and not in public interest because once the revenue authorities under M.L.R.C. have decided title in respect of the disputed land in favour of the revenue, the State Government could not have surrendered the land belonging to the Government. Moreover, the suit filed by the plaintiffs beyond the period of limitation was ex- facie barred by limitation and in such a case agreeing to hand over to the plaintiffs huge lands worth several hundreds of crores of rupees for a paltry sum was wholly unjustified. According to Mr.Sen, the plaintiff No.1 has already appropriated 806 acres and 32 gunthas which was far in excess of the land the petitioner No.1 was entitled to under the consent decree passed in Suit No.3429 of 1991. He submitted that the erroneous order passed by the S.D.O on 11th March 1983 holding that 86 acres and 38 gunthas of kharaba land in S. No.120, forms part of Survey No.41 has been held by the Additional Collector to be fraudulent and the same has been upheld by the O.S.D. in Revision Application on 3rd January 1986. All these orders are perfectly legal and valid. In these circumstances, learned counsel for the intervenor submitted that the consent terms sought to be tendered being fraudulent, 12 unlawful and opposed to public interest, the learned Single Judge was justified in rejecting the consent terms. 17. We have carefully considered the rival submissions. Where the parties to a suit enter into a compromise and reduce the terms in writing in the form of the consent terms and present it to the Court after duly signing and seek decree in terms of the consent terms, then under rule 3 of Order 23 of C.P.C., the Court after satisfying itself that the consent terms are lawful and not opposed to public interest is bound to pass a decree in terms of the consent terms. While considering the scope and object of Rule 3 of Order 23, the Apex Court in the case of Banwarilal V/s. Chando Devi reported in (1993) 1 SCC 581 held thus : “11. ------------ It need not be impressed that Rule 3 of Order 23 does not require just a seal of approval from the Court to an alleged agreement or compromise said to have been entered into between the parties. The statute requires the Court to be first satisfied that the agreement or compromise which has been entered into between the parties is lawful, before accepting the same. Court is expected to apply its judicial mind while examining the terms of the settlement before the suit is disposed of in terms of the agreement arrived at between the parties. It need not be pointed out that once such a petition of compromise is accepted, it becomes the order of the Court and acquires the sanctity of a judicial order.” 13 18. Thus, on presentation of the consent terms before the Trial, the Court was duty bound to find out as to whether the consent terms were lawful or not and if the consent terms were found to be lawful, then pass a decree in terms of the consent terms. 19. On perusal of the impugned order, it is seen that there is no specific finding recorded as to whether the consent terms are lawful or not. It is held that in view of the disputed questions raised in the suit and in view of the objections raised by the intervenor, at this stage of the suit it cannot be said that the consent terms are genuine or lawful and that the parties are at liberty to file or move such consent terms at the time of final hearing of the suit. This finding, in our opinion, cannot be sustained because, the object of Rule 3 of Order 23 of C.P.C. is to avoid protracted litigation and permit the Courts to pass decree without trial if the Courts are satisfied that the consent terms are lawful. To consider as to whether the consent terms are lawful or not after the trial would be meaningless and would be defeating the very object of rule 3 of Order 23. 20. Although in para 57 of the impugned Judgment, it is 14 stated that the consent terms cannot be said to be in the interest of public at large, in the final order contained in para 66 of the Judgment, it is stated that the consent terms are `not accepted at this stage'. Thus, it is apparent that there is no satisfaction recorded regarding the legality of the consent terms which is mandatory under rule 3 of Order 23 of the C.P.C. 21. Though there were conflicting decisions given by the Revenue authorities under the M.L.R.C. regarding the status of the disputed land, once the parties to the suit have tendered consent terms, what was required to be done under Rule 3 of Order 23 of C.P.C. was to record a finding on the basis of the material on record and if necessary by calling further particulars as to whether the consent terms are lawful or not and accordingly pass an order either accepting the consent terms or rejecting the consent terms as the case may be. No such findings have been recorded in the present case. Similarly, the fact that the parties to the suit on an earlier occasion had arrived at a compromise but withdrew the same, could not be a ground to reject the fresh consent terms, if they were lawful. Therefore, irrespective of the fact that the earlier consent terms were withdrawn, it was open to the parties to renegotiate and arrive at settlement and it was for 15 the Court to satisfy itself as to whether the consent terms were lawful or not, especially in the light of the objections raised by the intervenor and pass appropriate order. 22. It is pertinent to note that in the present case, the State Government initially in the year 1997 had entered into compromise thereby agreeing to surrender approximately 50% of the disputed land to the plaintiffs, however, subsequently; withdrew the same unconditionally. Thereafter, on renegotiation, the State Government by the consent terms in question, inter alia agreed to surrender approximately 25% of the disputed land, the market value of which runs into several hundreds of crores of rupees. In view of the serious objection raised by the intervenors, it was obligatory to record a finding as to whether the said consent terms are lawful or not and pass appropriate orders. 23. As the impugned Judgment does not contain satisfaction of the Court regarding the genuineness or lawfulness of the consent terms, we have no option but to set aside the impugned Judgment and restore the matter for fresh consideration in accordance with law. The argument of the Appellants that the Appeal Court should record a finding as to genuineness of 16 lawfulness of the consent terms cannot be accepted because, in law, it is the trial Court which is entrusted with the task of ascertaining the genuineness of the consent terms. It is only if the Appellate Court disagrees with the findings recorded by the Trial Court, the Appellate Court can substitute its findings. In the present case, no finding as to the legality of the consent terms is recorded by the Trial Court and, therefore, the question of the Appellate Court substituting its findings does not arise. 24. In this view of the matter, the Appeal succeeds. The impugned order is quashed and set aside and the matter is restored before the Trial Court for de-novo consideration in accordance with law. There shall be no order as to costs. CHIEF JUSTICE J.P. DEVADHAR, J.