2005 (10) TMI 568 - SC - Indian Laws

Suit for Partition of property - family settlements - rearrangement of antecedent interests - whether the two agreements between the appellants and VMS were conditional - Whether the disputes between the parties were set at rest by a valid consent decree dated 25th August 1993 disposing of Suit No.63 of 1975 and Suit No.1495 of 1989 - HELD THAT - As we have said each of the first two agreements recorded the relinquishment of rights by AA KK and Guneeta in the suit properties and assignment of such rights to VMS. This was recorded in the agreements as already having taken place. As far as the first agreement was concerned the relinquishment of VMS rights in the Bhopal house was effected by clause (e). Clause (d) of the second agreement recorded that AA had already received the consideration in respect of the properties mentioned from VMS. The further payments to be made by VMS to the three appellants were on the other hand to be made in future. The phrase subject to the payments being made in clause (d) of the first agreement and clause (f) of the second agreement does not operate as a precondition to the relinquishment of the rights of KK Guneeta and AA in the suit properties. According to these clauses of the agreements vesting had already taken place or was to take place with the execution of the agreements. In this context to construe the phrase subject to as amounting to a pre-condition would be contrary to the body of the clauses in which the phrase appears. The only meaning we can give to the phrase consistently with the other terms of the agreement is that it imposed a personal obligation on VMS to make the payments . By the agreement as has been rightly held by the courts below the parties had finally resolved disputes with regard to their shares in the suit properties. Therefore even if VMS had defaulted in making payment to the appellants of the amounts as specified in the agreements that would not give the appellants a ground to rescind the agreements. The Composition Deed in this case was a transaction between the members of the same family for the mutual benefit of such members. It is not the appellants case that the agreements required registration under any other Act. Apart from this there is the principle that Courts lean in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds particularly when the parties have mutually received benefits under the arrangement . Both the courts below had concurrently found that the parties had enjoyed material benefits under the agreements. We have ourselves also re-scrutinized the evidence on record on this aspect and have found nothing to persuade us to take a contrary view. Furthermore in this case the agreements had merged in the decree of the Court which is also excepted under Sub section 2(vi) of Section 17 of the Registration Act 1908 . The appellants then contended that the exception created in respect of decrees and orders of a Court would not apply in this case because Clause (e) of the second agreement related to immoveable properties other than those which were the subject matter of the pending suits. The submission is misconceived. The only property which did not form part of the suit properties were the forty four acres of land at Raisen belonging to AA s son. Clause (e) in the second agreement did not seek to either create declare assign limit or extinguish either in present or in future any right title or interest in the property within the meaning of Section 17 (1)(b) of the Registration Act. All that Clause (e) of the second Agreement expressly did was to clarify a previous deal. It did not affect any change to any legal rights in the property and merely recited what the existing rights were. This clause would not therefore serve to take the consent decree dated 25th August 1993 outside the scope of the exception in Section 17(2)(vi) of the Registration Act 1908. The disputes in the two suits between all the parties were resolved by the three agreements. But in concluding the three agreements care was taken to see that the terms and conditions of one agreement did not conflict with the terms and conditions of another. Parties had separately signed their agreements and approached the Court (albeit at different points of time) seeking to get a decree passed in terms of their agreements. As such it was not necessary for the parties to one agreement to sign the other two agreements. It was thus also not necessary for any of the appellants to have signed the third agreement entered. The final decree dated 25th August 1993 was on the basis of all three agreements each of which had been signed by the concerned parties and their statements in support thereof were on record in compliance with Order XXIII Rule 3 of the Code. The appellants who were the assignors in this case were aware that they had assigned their rights and liabilities in the suit properties to VMS. They did not choose to bring the fact of such assignment on record in the pending suits. Furthermore the suits were not being continued but were being brought to an end as far as the appellants were concerned. For both these reasons VMS choice not to apply for leave under Order 22 Rule 10 cannot be construed as having been made with any ulterior motive to defraud the appellants. The pleadings of fraud in both the applications of the appellants were in any event grossly inadequate. Both the Trial Court and the Division Bench have correctly held so. In fact the basic cause for which the appellants initially came to the Court was a non payment of amounts as specified under the agreements by VMS. We concur with the finding of the learned Single Judge that the appellants could execute the decree for the monies due under compromise decree dated 25th August 1993. Mere non-payment was certainly not supportive of a ground for setting aside the decree on the basis of an allegation of fraud. The final submission of the appellants was that time for payments under the agreements was of the essence. But the appellants themselves had never understood the agreements in that manner. They had asked for payment much after the dates had expired. As far as KK and Guneeta were concerned in their application made in 1995 what they had asked for was for payments due in 1993. It was only as alternative that they had pleaded for the decree to be set aside that too on the ground of alleged contempt having been committed by VMS. For the reasons stated we are of the view that these appeals must be and they are hereby dismissed with costs.

Summary

Issues Involved:
1. Validity of the consent decree dated 25th August 1993.
2. Compliance with Order XXIII Rule 3 of the Code of Civil Procedure.
3. Conditional nature of the agreements.
4. Requirement of registration for the agreements.
5. Allegations of fraud.
6. Time being of the essence for payments under the agreements.

Detailed Analysis:

1. Validity of the Consent Decree Dated 25th August 1993:
The primary issue was whether the disputes among the heirs of DS were resolved by a valid consent decree dated 25th August 1993. The decree was based on three agreements:
- The first agreement (18th March 1993) between VMS, KK, and Guneeta.
- The second agreement (21st April 1993) between AA and VMS.
- The third agreement (28th May 1993) among the heirs of Maninder and Mahinder, with VMS acting as the assignee of AA, KK, and Guneeta.

The High Court passed the decree in terms of these agreements, which were intended to settle the partition of DS's properties.

2. Compliance with Order XXIII Rule 3 of the Code of Civil Procedure:
The appellants argued that the procedure under Order XXIII Rule 3 was not followed. However, the Court found that:
- The applications for the first two agreements were supported by affidavits affirming the facts.
- The High Court recorded the agreements and passed the decree after ensuring that the suits were adjusted by lawful agreements.
- The appellants' statements were not required to be recorded again after the third agreement as their rights had been assigned to VMS.

3. Conditional Nature of the Agreements:
The appellants contended that the agreements were conditional upon payments by VMS, which were not made. The Court held that:
- The agreements recorded the relinquishment of rights by AA, KK, and Guneeta in the suit properties and the assignment of these rights to VMS.
- The phrase "subject to the payments being made" imposed a personal obligation on VMS but did not make the relinquishment conditional.
- Even if VMS defaulted in payments, it did not provide grounds to rescind the agreements.

4. Requirement of Registration for the Agreements:
The appellants argued that the agreements required registration under Section 17(1) of the Registration Act, 1908. The Court found that:
- The agreements were family settlements, which are exempt from registration under Section 17(2)(i) of the Registration Act.
- The agreements had merged into the decree of the Court, which is also exempt from registration under Section 17(2)(vi).

5. Allegations of Fraud:
The appellants alleged fraud by VMS, claiming that he misrepresented facts and failed to make payments. The Court held that:
- The pleadings of fraud were grossly inadequate.
- The appellants initially sought payments under the agreements, not the setting aside of the decree.
- The appellants could execute the decree for the monies due under the compromise decree dated 25th August 1993.

6. Time Being of the Essence for Payments Under the Agreements:
The appellants argued that time was of the essence for the payments. The Court found that:
- The appellants did not treat time as of the essence, as they sought payments much after the due dates.
- KK and Guneeta, in their 1995 application, primarily sought payments, with setting aside the decree as an alternative.

Conclusion:
The Supreme Court upheld the findings of the lower courts, concluding that the agreements were valid, the consent decree was lawful, and the appellants' claims were without merit. The appeals were dismissed with costs. The Court provided further directions for the execution of necessary documents and payments to resolve the disputes comprehensively.