2018 (2) TMI 1418 - HC - Indian Laws

Whether the compromise recorded by the Single Judge in orders dated 17th March, 2017, 24th March, 2017 and 26th April, 2017, is valid and legal as per the provisions of Order XXIII Rule 3 of the Code of Civil Procedure, 1908 ( CPC , for short), and whether the same was entered into with the consent of the parties? Held that - On the day when the consent terms were recorded, i.e. 17th March 2017, the appellants were duly represented by their counsel who had filed the petition challenging the award. A perusal of the said order clearly reveals that the 18% interest was to apply with monthly rest till the date of award and thereafter, simple interest of 18% per annum was payable till the date of payment. This order precedes the date when the computation chart was filed i.e. 24th March, 2017 - It is not the case of the appellants that as per order dated 17th March 2017, 18% simple interest was payable. This was not so recorded. The order is categorical and brooks no confusion. Pre-award interest as agreed was 18%, with monthly rests. The stand of the appellant in IA No.5078/2017 is that the terms recorded in the order dated 17th March, 2017 are not in line with the instructions given by the petitioner to its erstwhile counsel, is obviously wrong and unacceptable . It is not for this Court, in an appeal, to go behind the terms duly recorded by the Single Judge. A perusal of the order sheets in the OMP 530/2016 clearly reveals that the appellants were always represented by their counsel and in fact a Senior Advocate on most occasions. Order sheets also reveal that the discussions were continuously taking place during the hearings of the OMP 530/2016. After due consideration and deliberations, the respondent had agreed to terms which were less favourable to it. The award was to be modified. It is now not open to the appellant to resile from the terms as recorded by the Single Judge. This would be unjust and unfair. Order dated 17th March, 2017 is lawful and no reason exists for setting aside the same - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Validity and legality of the compromise recorded by the Single Judge as per Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (CPC).
2. Whether the compromise was entered into with the consent of the parties.

Detailed Analysis:

1. Validity and Legality of the Compromise:

The primary issue in the appeals was whether the compromise recorded by the Single Judge in orders dated 17th March 2017, 24th March 2017, and 26th April 2017, was valid and legal under Order XXIII Rule 3 of the CPC. The appellants argued that the settlement terms were erroneously recorded and not in writing or signed by the parties, thus not meeting the requirements of Order XXIII Rule 3. They cited precedents like Jagdish Manohar Singh v. South Delhi Builders Pvt. Ltd. and Gurpreet Singh v. Chatur Bhuj Goel to support their contention that a valid compromise must be in writing and signed by the parties.

The court, however, held that the legal position on Order XXIII Rule 3 is well settled, and the provision has two parts: the first part requires an agreement in writing and signed by the parties, while the second part relates to the satisfaction of the claim, which need not be in writing. The court referred to the Supreme Court's judgment in Gurpreet Singh, which clarified that satisfaction of the claim could be established through evidence or affidavits, and it is for the court to decide upon taking evidence.

The court also cited Jineshwardas v. Jagrani, which upheld that a judgment or decree passed as a result of consensus arrived at before the court could be considered a judgment on admission. The court concluded that the terms agreed upon during court proceedings, in the presence of counsels and on instructions of the parties, are as valid as settlements reduced to writing and signed by the parties.

2. Consent of the Parties:

The appellants contended that there was no agreement between the parties as they understood the interest to be 18% simple interest, not compounded. They argued that the consent order was not binding as it was not signed by the parties. The court, however, found that the appellants were represented by their counsel during the hearings, and the terms of the settlement were informed to and accepted by the representatives of the appellants. The Single Judge had recorded that the settlement was reached after much discussion and at the instance of the appellants.

The court observed that the appellants had benefited from the consent order as it resulted in more favorable terms than the arbitration award. The respondent had agreed to accept reduced interest and forego penal interest, which was advantageous to the appellants. The court noted that after the consent orders were passed, the appellants sought modification of the settlement, which was seen as an attempt to resile from the agreed terms.

The court emphasized that the order dated 17th March 2017 was passed solely on the basis of the consent of the parties, and the authorized signatory of the first appellant was present during the hearings. The court held that the terms recorded during the court proceedings fall within the second part of Order XXIII Rule 3 of the CPC, which does not require the terms to be in writing and signed to be effective and binding.

Conclusion:

The court concluded that the consent order dated 17th March 2017 was lawful and there was no reason to set it aside. The appeals were dismissed, and no order as to costs was made. All pending applications were also disposed of.