Case: K. SRINIVASAPPA &amp; ORS Vs. M. MALLAMMA &amp; ORS

2. For the sake of convenience, the parties shall be referred to in terms of their rank and status in O.S. No. 876 of 2004.3. Briefly stated, the facts giving rise to the present appeal are that plaintiff nos. 1, 4, 5, 6 and defendant nos. 2 to 5 are children of M. Krishnappa and M. Mallamma, defendant no. 1. Plaintiff nos. 2 and 3 are the sons of plaintiff no. 1, namely, K. Devraj. The Plaintiffs filed a suit for partition and separate possession, being O.S. 876 of 2004 on the file of the Court of the Civil Judge, Junior Division, Rural District Bangalore stating that the suit schedule properties were acquired by M. Krishnappa and were in joint possession and enjoyment of the plaintiffs and defendants, until the demise of M. Krishnappa. That following the death of M. Krishnappa, defendant no. 1 was in possession of the suit schedule properties and was acting in a manner detrimental to the interests of the plaintiffs and had attempted to alienate the properties without effecting a partition so as to crystallise the rights of each of the parties to the suit. That requests of the plaintiffs to effect a partition of the property, were met with threats by the defendants to alienate the same.With the aforesaid averments the plaintiffs had sought partition and separate possession of their shares in the suit schedule properties.4. During the pendency of the suit, on 30th June, 2012, a compromise petition was filed jointly by the plaintiffs and the defendants under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (hereinafter CPC, for short), before the Trial Court stating therein that the parties to the suit had, on intervention of relatives and well-wishers there was a mediation of their disputes as to partition and settled their disputes inter-se, in the following manner:i. That the plaintiffs would relinquish their right, title, interest and claim in respect of the suit schedule properties, and in consideration for the same, the defendants had paid to the plaintiffs the following amounts:a) Rs. 1,10,00,000/- (rupees one crore, ten lakhs) paid in favour of K. Devaraj, plaintiff no. 1.b) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K. Sugunamma, plaintiff no. 4, by way of two cheques for amounts of Rs. 2,50,000/- (rupees two lakhs and fifty thousands) and Rs. 27,50,000/- (rupees twenty seven lakhs and fifty thousands), respectively.c) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K. Shanthamma, plaintiff no. 5 by way of two cheques for amounts of Rs. 2,50,000/- (rupees two lakhs and fifty thousands) and Rs. 27,50,000/- (rupees twenty seven lakhs and fifty thousands), respectively.d) Rs. 30,00,000/- (rupees thirty lakhs) paid in favour of K. Geetha, plaintiff no. 6, by way of two cheques for amounts of Rs. 2,50,000/- (rupees two lakhs and fifty thousands) and Rs. 27,50,000/- (rupees twenty seven lakhs and fifty thousands), respectively.e) Rs. 4,00,000/- (rupees four lakhs) paid in favour of Mallamma, defendant no. 1.ii. That the defendants would be entitled, jointly and severally, to enjoy absolute right, title and interest over the suit schedule properties.iii. That defendant nos. 2 to 5 would be entitled to get the khata, mutation and record of rights transferred in their names, in respect of the suit schedule properties.iv. That the suit schedule properties would be retained by defendant nos. 2 to 5, who shall hold the same as joint owners thereof, until a division is effected inter-se between the said defendants. That the said property would not be available for partition, so far as the plaintiffs were concerned as their right over the suit property was conveyed in favour of defendant nos. 2 to 5, for consideration.v. That the plaintiffs undertake not to initiate any action or proceedings by themselves or through their successors-in- interest or heirs, as regards their right, title and interest over the suit schedule properties.vi. That the compromise was entered into by plaintiff no. 1, on behalf of, and for the benefit of his two minor children, in order to protect their shares.5. On 26th June, 2012, plaintiff no. 4 encashed two cheques received by her as a part of the compromise entered into between the plaintiffs and the defendants, as detailed above.6. In view of the inter-se compromise between the parties, the matter was referred by the Trial Court to the Lok Adalat. After hearing the parties, the Lok Adalat passed an order dated 07th July, 2012, decreeing the suit for partition and separate possession, in terms of the memo of compromise presented before it. The Lok Adalat recorded the following findings:i. That all the parties to the dispute had agreed to amicably settle the dispute as regards the partition of the suit schedule property, in terms of the memo of compromise;ii. That the terms of compromise had been read over and explained to the parties in a language known and understood by them, in the presence of their Advocates and the parties had admitted the same to be true and correct;iii. That since the compromise was in favour of the minor children of plaintiff no. 1, he was permitted to enter into the compromise on their behalf.In view of the aforestated findings, the application filed by the parties under Order XXXII Rule 3 of the CPC, was allowed and accepted.7. Two days later, on 09th July, 2012, only plaintiff nos.4-6 filed an affidavit before the Lok Adalat stating that the defendants had played fraud on them and misled them in order to obtain their consent to the terms of compromise.8. The Lok Adalat considered the affidavit submitted by plaintiff nos.4-6 and by an order dated 13th July, 2012, rejected the prayer made therein, to set aside the order recording compromise of the parties. The Lok Adalat noted that the order recording compromise was passed after duly recording the consent of all parties to the compromise and therefore, the prayer to set aside the compromise could not be entertained.9. Aggrieved by the order of the Lok Adalat dated 13th July, 2012, plaintiff no. 4 filed a Writ Petition, being W.P. No. 25989 of 2012, before the High Court of Karnataka, praying, inter-alia, that the order of the Lok Adalat dated 07th July, 2012 whereby compromise of the parties was recorded, be set aside. Plaintiff no. 4 submitted before the learned Single Judge of the High Court that although she had signed the compromise petition presented before the Trial Court and thereafter referred to referred to the Lok Adalat, the order sheet dated 07th July, 2012, which was drawn up in terms of the compromise petition was not signed by her. That the compromise petition was signed by plaintiff no. 4 as a result of fraud practiced by the defendants.10. In light of the allegation of fraud on the part of the defendants, the High Court, by an order dated 24th January, 2013 disposed of W.P. No. 25989 of 2012, by remanding the matter to the Civil Judge (Junior Division), Bangalore, to refer the matter to the Lok Adalat to hold an enquiry and record a finding on the allegation of fraud levelled against the defendants. The High Court directed that such an exercise ought to be completed by the Lok Adalat within a period of three months.11. In accordance with the directions issued by the High Court vide order dated 24th January, 2013, the matter was referred by the Trial Court to the Lok Adalat, Rural District, Bangalore. Plaintiff nos. 4-6 filed their objections to the compromise stating that their signatures on the compromise petition were obtained by fraud on the part of the defendants. It was stated that during the pendency of O.S. No. 876 of 2004, one property included in the schedule of properties to be partitioned, was sold in favour of M/s. Trishul Buildtech and Infrastructure Pvt. Ltd., by way of a registered sale deed dated 23rd June, 2012 for a consideration of Rs. 2,70,00,000/- (rupees two crores and seventy lakhs. That the amount of Rs. 30,00,000/- (rupees thirty lakhs), paid to plaintiff nos. 4-6, was their share of consideration for the said sale. That on the date of sale of the said property, several papers were signed by plaintiff nos. 4-6, at the behest of the defendants, under the guise that the same were required to be submitted to the tax authorities. That plaintiff no. 1 and the defendants had conspired together and engaged the services of advocates to represent plaintiff nos. 4-6, without their knowledge. It was further alleged that the defendants had caused plaintiff nos.4-6 to believe that they were appearing before the tax authorities, in relation to the sale carried out on 23rd June, 2012, when in fact, they were appearing before the Lok Adalat in connection with the compromise petition. Plaintiff no. 4 stated that on realising before the Lok Adalat that the proceedings related to a compromise petition, she refused to sign the order sheet dated 07th July, 2012, wherein the terms of compromise had been recorded by the Lok Adalat. Plaintiff nos.5 and 6 stated that they were misled into signing both, the compromise petition, as well as the order sheet dated 07th July, 2012.12. On hearing the parties, the Lok Adalat, by an order date 27th April, 2013, rejected the objections filed by plaintiff nos.4-6 and the order of the Lok Adalat dated 07th July, 2012, wherein the terms of compromise had been recorded, was confirmed.13. Aggrieved by the order of the Lok Adalat dated 27th April, 2013, plaintiff nos. 4-6 filed Writ Petitions, being W.P. Nos. 20607-20609 of 2013, before the High Court of Karnataka, praying, inter-alia, that the entire records pertaining to O.S. No. 876 of 2004 be called for and the orders of the Lok Adalat dated 07th July, 2012 and 27th April, 2013, be quashed.14. By the impugned judgment dated 17th April, 2015, the learned Single Judge of the High Court of Karnataka, Bengaluru disposed of the Writ Petition filed by plaintiff nos.4-6 by recalling the order of compromise passed by the Lok Adalat on 07th July, 2012. The High Court remanded the matter to the Civil Judge (Junior Division), Bengaluru, to dispose of the matter in accordance with law, as if no compromise was entered into between the parties. Aggrieved by the judgment of the High Court whereby the order of the Lok Adalat recording compromise, was set aside, defendant nos. 2-5 have preferred the present appeals.

Reasoning: 27. At the outset, we observe that we do not find any reason forthcoming from the judgment of the High court while setting aside the order of the Lok Adalat dated 07th July, 2012 whereby the terms of the compromise were recorded. To recall a compromise that has been recorded would call for strong reasons. This is because a compromise would result ultimately into a decree of a Court which can be enforced just as a decree passed on an adjudication of a case. This is also true in the case of a compromise recorded before a Lok Adalat.31. On the aspect of the duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasi-judicial authority, it would be useful to refer to a judgment of this Court in Kranti Associates Private Limited & Anr. Vs. Masood Ahmed Khan & Ors. – (2010) 9 SCC 496,  wherein after referring to a number of judgments, this Court summarised at paragraph 47 of the judgment the law on the point. The relevant principles for the purpose of this case are extracted as under:(a) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.(b) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi- judicial or even administrative power.(c) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations.(d) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.(e) Reasons facilitate the process of judicial review by superior courts.(f) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice.(g) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants faith in the justice delivery system.(h) Insistence on reason is a requirement for both judicial accountability and transparency.(i) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.(j) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or rubber-stamp reasons is not to be equated with a valid decision- making process.(k) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [(1987) 100 Harvard Law Review 731-37)(l) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of due process.(m) The requirement to record reasons emanates from the broad doctrine of fairness in decision-making i.e. adequate and intelligible reasons must be given for judicial decisions.Though the aforesaid judgment was rendered in the context of a dismissal of a revision petition by a cryptic order by the National Consumer Disputes Redressal Commission, reliance could be placed on the said judgment on the need to give reasons while deciding a matter particularly as it arises in the instant case.32. In view of the aforesaid discussion, we shall now consider the facts of the present case. The details as to the terms of the compromise as well as the contentions raised at the Bar have been narrated above. On a consideration of the same, the following aspects would emerge:(a) The Lok Adalat, in its award dated 07th July, 2012 recorded that the parties had admitted that the contents of the compromise petition were true and correct, after the terms thereof had been read over and explained to them in Kannada language. Further, it was also noted that the compromise was entered into by plaintiff no. 1, on behalf of, and for the benefit of his two minor children, in order to protect their shares. The same was allowed by the Lok Adalat on recognising the terms of the compromise, would protect the interests plaintiff no. 1s minor children. There is no objection raised on behalf of plaintiff no. 1 in the instant case.(b) The Lok Adalat, in its order dated 27th April, 2013, rejected the allegations of fraud raised by plaintiff nos. 4-6, against the defendants and recorded that plaintiff nos. 4-6 had offered no explanation as to why no objection was raised by any of them on 07th July, 2012 before the Lok Adalat. It was further observed that plaintiff nos. 4-6, could not, after having accepted huge sums of money in terms of the compromise, rescind from the terms thereof.(c) It is not the case of plaintiff nos. 4-6 that they had not received an amount of Rs. 30,00,000/- (rupees thirty lakhs) each, in terms of the compromise. Further, it is not their case that such sum has been returned, in whole or in part, to the defendants.(d) That although plaintiff no. 4, stated that on learning that the proceedings conducted on 07th July, 2012 before the Lok Adalat were in relation to a compromise, she had not signed the order sheet, she failed to provide any explanation as to why she did not inform the Lok Adalat on the said date that her signature on the compromise petition was obtained by fraud.(e) That plaintiff nos. 4-6 had admitted before the Lok Adalat on 07th July, 2012 that the contents of the compromise petition were true and correct, when the same had been read over and explained to them in Kannada.(f) That plaintiff nos. 4-6 specifically admitted that they had received a sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as mentioned in the compromise petition in lieu of relinquishing their rights, title and interest in the other suit schedule properties.(g) That if, in fact, the signatures of plaintiff nos. 4-6 had been obtained by fraud, they ought to have returned the amount of Rs. 30,00,000/- (rupees thirty lakhs) each, paid to them in accordance with the terms of the compromise. Having not done so, plaintiff nos. 4-6 had failed to establish that any fraud was practiced upon them, by the defendants, with a view to obtain their signatures on the compromise petition.(h) On a perusal of the plaint, it is noted that there were 13 items of the suit schedule property having different valuation and therefore, the plaintiffs would have had their respective shares in the suit schedule properties taken together. However, plaintiff nos.4-6 accepted a sum of Rs.30 lakhs each by relinquishing their right, title and interest in all the suit schedule properties. Having received a monetary share in respect of the suit items, the plaintiffs had decided to relinquish their right, title and interest in respect of all the suit items.The learned Single Judge of the High Court in the impugned judgment has not considered the aforesaid facts of the case in the context of setting aside the award of the Lok Adalat dated 07th July, 2012. Learned Single Judge has also not considered the reasoning given in the order dated 27th April, 2013 by which the objections raised by plaintiff nos.4-6 to the decree of the Lok Adalat had been rejected.33. This Court in Ruby Sales and Services Pvt. Ltd. vs. State of Maharashtra- [(1994) 1 SCC 531]  observed that a consent decree is a creature of an agreement and is liable to be set aside on any of the grounds which will invalidate an agreement. Therefore, it would follow that the level of circumspection, which a Court of law ought to exercise while setting aside a consent decree or a decree based on a memo of compromise, would be atleast of the same degree, which is to be observed while declaring an agreement as invalid.34. In Pushpa Devi Bhagat (dead) through LR. Sadhna Rai vs. Rajinder Singh and Ors. – [(2006) 5 SCC 566] , this Court held that since no appeal would lie against a compromise decree, the only option available to a party seeking to avoid such a decree would be to challenge the consent decree before the Court that passed the same and to prove that the agreement forming the basis for the decree was invalid. It is therefore imperative that a party seeking to avoid the terms of a consent decree has to establish, before the Court that passed the same, that the agreement on which the consent decree is based, is invalid or illegal.35. It is a settled position of law that where an allegation of fraud is made against a party to an agreement, the said allegation would have to be proved strictly, in order to avoid the agreement on the ground that fraud was practiced on a party in order to induce such party to enter into the agreement. Similarly, the terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved. In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree in the instant case.36. Having considered the aforesaid facts of the present case, we are of the view that no ground was made out warranting the decision of the High Court to set aside the order of the Lok Adalat dated 07th July, 2012, wherein compromise was recorded between the parties. The High Courts decision to set aside the order of the Lok Adalat, without entering into a discussion as to the findings in such order, cannot be sustained. Such decision of the High Court runs contrary to established principles of law which seek to protect the sanctity and finality of orders based on a compromise or consent between parties.