2000 (12) TMI 840 - SC - Companies Law

What are the legal consequences flowing from the consent order of the Special Court dated 5-7-1995 and the affidavit filed by Mr. Milan Dalal on 28-7-1995 as the Chairman of the appellant-company? Held that - Appeal dismissed. On a careful consideration of the events which occurred before the Special Court which made the said Court to believe the existence of certain facts on the representations made before it, the orders passed and the affidavits found and noticed to have been filed from time to time before the Special Court, the Special Court could not be either faulted for its conclu-sions or that the specific findings arrived at that the consent order dated 5-7-1995 taken together with the affidavit of undertaking dated 28-7-1995 covered within its fold the property of the appellant-company in question for being proceeded against in execution of the decree passed for recovering the amount due as declared in the consent order dated 5-7-1995, could not be said to be vitiated in any manner warranting our interference. Consequently, it would be permissible for the custodian to proceed against the property comprised in Units 3 and 4 belonging to the appellant-company also by means of an appropriate execution application as and when he choose to do so. So far as the challenge based on the want of registration under section 17(1)(b) is concerned the same is neither genuine nor has any merit whatsoever or capable of being countenanced at our hands.

Summary

Issues Involved:
1. Ownership and rights over the disputed property.
2. Validity and enforceability of the consent order dated 5-7-1995.
3. Authority of the appellant's chairman to give undertakings.
4. Requirement of registration under Section 17(1)(b) of the Registration Act.
5. Applicability of Section 145 CPC to enforce undertakings.

Detailed Analysis:

1. Ownership and Rights Over the Disputed Property:
The appellant claimed absolute ownership of the disputed property and argued that they had not created any interest in favor of the third respondent. The Special Court held that the property belonging to the appellant constituted an integral part of the compromise and could be proceeded against in execution of the decree. The court found that the undertaking given by the appellant's chairman was binding and that the appellant could not disown responsibility by claiming lack of authority or mistake of fact.

2. Validity and Enforceability of the Consent Order Dated 5-7-1995:
The consent order dated 5-7-1995 decreed the recovery of Rs. 11,82,81,316 with interest and included undertakings by the appellant not to alienate or encumber the property. The court held that the consent order and the affidavit of undertaking filed by the appellant's chairman were binding and enforceable. The court emphasized that parties who consented to the order and obtained benefits could not later disown responsibility based on technicalities or claims of unauthorized undertakings.

3. Authority of the Appellant's Chairman to Give Undertakings:
The appellant contested the authority of their chairman, Mr. Milan Dalal, to give undertakings on behalf of the company. The court rejected this contention, noting that the directors of the appellant-company had allowed Mr. Dalal a free hand to deal with the matter. The court observed that the directors could not blow hot and cold as it suited them and that the plea of lack of authority was a self-serving attempt to retrace their commitments.

4. Requirement of Registration Under Section 17(1)(b) of the Registration Act:
The appellant argued that the consent order and the undertaking required registration under Section 17(1)(b) of the Registration Act. The court rejected this argument, stating that the consent order and the undertaking did not create, declare, assign, limit, or extinguish any right, title, or interest in immovable property. The court held that the documents fell within the exempted category of "any decree or order of the Court" under Section 17(2)(vi) and did not require registration.

5. Applicability of Section 145 CPC to Enforce Undertakings:
The court noted that the provisions of Section 145 CPC would allow the court and the custodian to proceed against the appellant in enforcement of the undertaking given to the court. The court found no merit in the appellant's contentions to the contrary.

Conclusion:
The Supreme Court dismissed the appeal, upholding the Special Court's order that the appellant's property could be proceeded against in execution of the decree. The court found that the consent order and the affidavit of undertaking were binding and enforceable, and that the appellant's claims of unauthorized undertakings and lack of registration were without merit. The court also held that the provisions of Section 145 CPC applied to enforce the undertakings given to the court. The appeal was dismissed with costs of Rs. 25,000 to be paid to the custodian.