Case: MUNI REDDY Vs. C.NAGARAJU

2. In order to appreciate the short issue involved in the appeal, it is necessary to set out few facts infra.The appellants are the plaintiffs whereas the respondents are the defendants in the civil suit out of which this appeal arises.The appellants (plaintiffs) filed a civil suit (O.S. No.3/90) against the respondents (defendants) in the Court of 2nd Additional Civil Judge (Sr. Division), Bangalore for cancellation of sale deed dated 24.08.1989. The respondents contested the suit. By judgment/decree dated 16.09.1997, the Trial Court dismissed the suit.The appellants (plaintiffs)felt aggrieved and filed first appeal (R.A. No. 18/97) in the Court of Districtand Sessions Judge, Bangalore Rural District. By judgment dated 02.08.2001, the first Appellate Court dismissed the appeal and upheld the judgment/decree of the Trial Court.The appellants pursued the matter further and filed second appeal in the High Court being R.S.A.No.804/2001. Subsequently, the parties compromised the matter and, therefore, the High Court (Single Judge) by order dated 10.04.2002 disposed of the appeal in terms of compromise arrived at between the parties.Thereafter, defendant No. 2 (C Naga Raju), respondent No. 1 herein, filed an application in the disposed of appeal (RSA No. 804/2001) and complained therein that the compromise arrived at between the parties, which resulted in disposal of the second appeal, is not binding on him and prayed for recalling of the order dated 10.04.2002.The High Court,by order dated23.07.2002 dismissed the application filed by defendant No. 2 (respondent No. 1 herein). Aggrieved by the said order, defendant No.2 filed appeals by way of special leave in this Court. By order dated 04.08.2003, this Court allowed the appeals (Civil Appeal Nos. 5531-32/2003 etc.etc.) and while setting aside the order dated 23.07.2002 remitted the matter to the High Court for fresh consideration in accordance withlaw including to decide the question of consideration of the compromise petition. The order reads asa Second appeal cameup for consideration beforethe High Court, it disposed of the same in the following terms: "Mr.Siddappa, learned counsel files power for respondent No.2. Both the sideshave filed the compromise petition. All the parties are present. Advocate for both sides are also present. The compromisepetition is allowed. In view of the compromise petition, the appeal stands disposed of. Draw the decree accordingly." Whetherthe compromise had really been entered into between the parties or not was not inquired into by the High Court in terms of Order XXIII Civil Procedure Code. Further, it is not clear as to the impact of the Memo filed before the Court on the appealas a whole. The same should have been examined by the High Court and a decision should have been taken by it. Therefore, we set aside the order made by the High Court and remit the matter to the High Court for fresh considerationin accordance with law including the question of consideration of the compromise petition. The appeals are allowed accordingly.After the remand, the High Court took up the matter and on few dates fixed the case for recording evidence of the parties to decide the question of genuineness of the compromise as is clear from the order sheets dated 26.07.2006, 03.09.2007, 26.10.2007, 12.11.2007, 18.12.2007 (Annexures P- 8/9).However, the High Court then did not pursue the proceedings in relation to the genuineness of the compromise and went on to observe that in terms of this Courts order dated 04.8.2003, once the matter is examined on merits, there is no need to go into the genuineness of the compromise petition. This is what the High Courtdo not findany need to adjourn the matter to some other date for crossexamination of respondent No.2 who has filed his affidavit purporting to be by way of evidence in support of his application for setting aside the compromise petition for two reasons.Firstly, the Supreme Court has itself set aside the judgment/compromise decree passed by this Court on 10.04.2002. Secondly, the Supreme Court has also observed that the matter has to be examined on merits and including the genuineness of the compromise or otherwise.It is obvious that if the matter is to be examinedon merits, there is no need for going intothe genuineness of the compromise petition or otherwiseand therefore I do not propose to look into the contents of the affidavit itself which if at all looked into and is to be accepted requires the necessity for cross examination.Instead, I propose toto judgment on merits of the appeal and, therefore, there is no requirement of cross examination of respondent No.2 as the very affidavit is not looked into.Having thus observed, the High Court did not consider it necessary to examine the genuineness of the compromise petition impugned by defendant No. 2in his application dated 23.07.2002 and proceeded to decide the second appeal on merits and by impugned order 02.01.2008 dismissed the second appeal.It is against this order of the High Court, the plaintiffs have felt aggrieved and filed the present appeal by way of special leave in this Court.

Reasoning:
15. In our considered opinion, the High Court erred in interpreting the order of this Court dated 04.08.2003 quoted supra. On mere reading of the order dated 03.08.2003, it is clear that this Court remanded the matter to the High Court with a request to decide it afresh in accordance with law including the question of consideration of the compromise petition. This implied that the question ofconsideration of compromise petition was required to be decided first. It is for the simple reason that if the compromise was held to be legal and proper, there was no need to decide the second appeal on merits. In other words, the need to decide the second appeal on merits would have arisen only if the compromise would have been held illegal and not binding on the parties concerned.The High Court,in not considering the question of genuineness and legality of the compromise as complained by defendant No. 2 and straightaway proceeded to decide the second appeal on merits. In this process undertaken by the High Court, the question as to whether the compromise was legal or not could not be gone into on its merits, which it ought to have been gone into in the first instance.n the light ofthe foregoing discussion, the impugnedorder of the High Court is not legally sustainable as the same was passed without properly appreciating the purport of the directions of this Court contained in the order dated 04.08.2003. It, therefore, caused prejudice to the rights of the parties.