MUNI REDDY & ANR. versus C. NAGARAJU & ORS.
[2018] 11 S.C.R. 745, Supreme Court of India, 2018
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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MUNI REDDY & ANR.
v.
C. NAGARAJU & ORS.
(Civil Appeal No. 2342 of 2008)
SEPTEMBER 20, 2018
[ABHAY MANOHAR SAPRE AND S. ABDUL NAZEER, JJ.]
Suit – Appellants-plaintiff filed civil suit against the
respondents-defendants for cancellation of sale deed – Suit was
dismissed by the trial Court and the first Appellate Court –Parties
compromised the matter – Pursuant thereto, High Court by order
dated 10.04.2002 disposed of the appeal in terms of compromise
arrived between the parties –Thereafter, defendant no.2 filed
application in the disposed of appeal to recall the order dated
10.04.2002 – Application was dismissed by the High Court through
order dated 23.07.2002 – However, Supreme Court set aside the
order dated 23.07.2002 and remitted the matter back to the High
Court for fresh consideration including consideration of the
compromise petition – High Court did not pursue the proceedings
in relation to the genuineness of the compromise petition and decided
the appeal on merits – Held: High Court erred in interpreting the
order of the Supreme Court – High Court was required to decide
the compromise petition first because if the compromise was held to
be legal and proper, there was no need to decide the appeal on
merits – Order of the High Court was passed without properly
appreciating the purport of the directions of the Supreme Court –
Case remanded back to the High Court for deciding the matter afresh.
Allowing the appeal, the Court
Held: 1. The High Court
erred in interpreting the order of
this Court. On mere reading of the order, 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 of consideration of compromise petition was required
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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.  [Para 15] [750-A-C]
2. The High Court, therefore, erred 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. [Para 16] [750-
C-D]
3. Therefore, the impugned order 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 its earlier order.  It, therefore, caused prejudice to the rights
of the parties. [Para 17] [750-D-E]
4. Thus, case is remanded to the High Court for deciding
the matter afresh as directed above.   The High Court while
deciding the question of genuineness of the compromise
application, as directed by this Court’s earlier order, may consider
it proper to remit the matter to the Trial Court for the purpose of
recording evidence of the parties in time
bound period. On
receiving the evidence from the Trial Court, the High Court would
proceed to decide the question in the light of evidence adduced
by the parties. [Paras 18, 19] [750-E-G]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2342
of 2008.
From the Judgment and Order dated 02.01.2008 of the High Court
of Karnataka at Bangalore in Regular Second Appeal No. 804 of 2001.
K. Radhakrishnan, Sr. Adv., Trideep Pais, Pranav Jain, Ms. Sanya
Kumar, N. K. Verma, Ms. Anjana Chandrashekar, S. Thananjayan,
Ms. Promila, Advs. with him for the appearing parties.
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The Judgment of the Court was delivered by
ABHAY MANOHAR SAPRE, J. 1. This appeal is directed
against the final judgment and order dated 02.01.2008 of the High Court
of Karnataka at Bangalore in Regular Second Appeal No.804 of 2001
whereby the Single Judge of the High Court dismissed the appeal filed
by the appellants herein and affirmed the judgment and decree dated
02.08.2001 passed by the District & Sessions Judge, Bangalore Rural
Dist., Bangalore.
2. In order to appreciate the short issue involved in the appeal, it
is necessary to set out few facts infra.
3. The appellants are the plaintiffs whereas the respondents are
the defendants in the civil suit out of which this appeal arises.
4. 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.
5. The appellants (plaintiffs) felt aggrieved and filed first appeal
(R.A. No. 18/97) in the Court of District and 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.
6. 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.
7. 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.
8. The High Court, by order dated 23.07.2002 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
MUNI REDDY & ANR. v. C. NAGARAJU & ORS.
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(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 with law including to decide the question of
consideration of the compromise petition. The order reads as under:
“Leave granted.
      When a Second appeal came up for consideration before
the High Court, it disposed of the same in the following
terms:
“Mr. Siddappa, learned counsel files power for
respondent No.2. Both the sides have filed the
compromise petition. All the parties are present.
Advocate for both sides are also present. The
compromise petition is allowed. In view of the
compromise petition, the appeal stands disposed of. Draw
the decree accordingly.”
     Whether the 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 appeal as 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
consideration in accordance with law including the question
of consideration of the compromise petition.
     The appeals are allowed accordingly.”
9. 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).
10. However, the High Court then did not pursue the proceedings
in relation to the genuineness of the compromise and went on to observe
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that in terms of this Court’s 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 Court observed:
“8…………..I do not find any need to adjourn the matter to
some other date for cross examination 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.
9. It is obvious that if the matter is to be examined on merits,
there is no need for going into the genuineness of the
compromise petition or otherwise and 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 to
proceed to 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.”
11. Having thus observed, the High Court did not consider it
necessary to examine the genuineness of the compromise petition
impugned by defendant No. 2 in 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.
12. 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.
13. Mr. Trideep Pais, learned counsel appeared for the appellants
and Mr. K. Radhakrishnan, learned senior counsel for the respondents.
14. Having heard the learned counsel for the parties and on perusal
of the record of the case, we are inclined to allow the appeal and while
setting aside the impugned order remand the case to the High Court for
deciding the matter afresh as directed hereinbelow.
MUNI REDDY & ANR. v. C. NAGARAJU & ORS.
[ABHAY MANOHAR SAPRE, J.]
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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 of consideration 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.
16. The High Court, therefore, erred 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.
17. In the light of the foregoing discussion, the impugned order 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.
18. In view of the foregoing discussion, the appeal succeeds and
is allowed. Impugned order is set aside. The case is remanded to the
High Court for deciding the matter afresh as directed above.
19. The High Court while deciding the question of genuineness of
the compromise application, as directed by this Court’s order dated
04.08.2003, may consider it proper to remit the matter to the Trial Court
for the purpose of recording evidence of the parties in time bound period.
On receiving the evidence from the Trial Court, the High Court would
proceed to decide the question in the light of evidence adduced by the
parties.
20. In case the compromise is held legal and proper, there will be
no need to decide the second appeal on merits. It is for the reason that in
such eventuality, the order dated 10.04.2002 disposing of the second
appeal in terms of compromise would continue to hold the field as being
legal and proper.
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21. However, if the compromise is held illegal, the order dated
10.04.2002 will stand set aside.  As a consequence thereof, the second
appeal will revive for being heard on merits. The High Court  will then
proceed to decide the second appeal on merits in accordance with law.
22. The High Court is requested to dispose of the matter, as
observed supra, as expeditiously as possible preferably within 6 months.
Ankit Gyan
  Appeal allowed.
MUNI REDDY & ANR. v. C. NAGARAJU & ORS.
[ABHAY MANOHAR SAPRE, J.]