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Can Validity Of A Compromise Decree Which Has Been Acted Upon Be Rescinded/Agitated At A Later Stage On Technical Grounds

The Allahabad High Court recently in Writ - A No. 71464 of 2010 & 52191 of 2011 in the case of Km. Anshu Jain And Others Vs. Suresh Prakash Garg And Others decided the issue whether validity of a compromise decree which has been acted upon can be rescinded/agitated subsequently after a considerable lapse of time of 20 years.

The brief facts of the case are that the petitioners are the tenants of a shop at Chowk Bazar, Bulandshahar which was in the tenancy of grandfather of petitioners late Jugmandar Das Jain. After his death, as per family settlement the shop in question was given to Sri Raj Bahadur Jain by means of inheritance from his father.

The respondents-landlords initiated the proceedings under Section 21(1)A of the Act No. 13 of 1972 against Sri Raj Bahadur Jain for release of the tenanted shop for personal need of his family. On 1.11.1994, a compromise application was filed before the prescribed authority and a compromise decree was passed by the prescribed authority.

The tenants-petitioners filed a suit being Original Suit No. 380 of 2004, which was decreed vide judgement and order dated 25.10.2008 wherein it was recorded that after the death of father of the petitioners Raj Bahadur Jain the tenancy right has been inherited by the petitioners and they are the tenants of the shop in question. Thereafter, the respondent-landlord filed an application under Section 23 of the Act No. 13 of 1972 for execution of the order dated 1.11.1994 against petitioners-tenants which was allowed by the prescribed authority.

On behalf of the tenants-petitioners it was pleaded that the impugned orders were illegal, perverse and suffer from manifest error of law as the prescribed Authority has failed to record its findings in respect of the bona fide need and comparative hardship.

On behalf of the respondent landlord it was submitted that the property was required for personal use of landlord and his family and the tenant Raj Bahadur Jain could not defend against the personal need of the landlord and admittedly entered into a compromise and accordingly the release application was allowed in part and out of the total area of shop being 7.9 ft x 23 ft a shop having 5.6 ft x 12 ft was repaired / constructed and was left in possession of the tenant on the condition that he will remain in possession till his lifetime and thereafter there will be no succession of any right devolving tenancy on legal heirs and it was decided that he shall continue to pay the earlier rent @ Rs. 18/- per month, which will not be increased during his lifetime. It was further provided that the legal heirs shall hand over the vacant possession of the shop after death of the original tenant, Raj Bahadur Jain.

The Court observed that the compromise was admittedly acted upon and the original tenant had taken benefit by remaining in possession of a part of the shop. The Court observed that the original tenant had admitted the bonafide need of the landlord and agreed to release part of the shop in terms of the mutual compromise and the petitioners cannot go back on the compromise entered into by the original tenant on technical grounds as the compromise was acted upon and they have enjoyed fruits of the compromise for such long years from 1994 to 2014. The Court also noted that the tenancy right stood extinguished in view of the compromise of the year 2004 and that the status of Raj Bahadur Jain was that of a licensee thereafter till his death, which stood terminated on his death.

The Court observed thus:
In the present case, from perusal of record it is clear that the original tenant Raj Bahadur Jain was in possession of a shop measuring 7.9 ft x 23 ft and in the release application filed on the ground of personal need of the family, he agreed to remain in possession of the shop 5.6 ft wide x 12 ft. deep only, which was to be handed over to him by the landlord after the order of the court within 15 days.

The compromise further reflects that the old rent @ Rs. 18/- per month was to continue. One cannot be oblivious of the fact that this release application was filed in the year 1992 and even on that point of time Raj Bahadur Jain was old tenant on a meagre rent (old rent) of Rs. 18/- per month, which was not to be increased till he was to remain in possession. The tenant Raj Bahadur Jain clearly stated that he has only daughters and no son, he, therefore, agreed in his wisdom that he will remain in possession of the shop till his lifetime and thereafter, the tenancy shall not devolve on his legal heirs.

This fact was specifically mentioned in paragraph 3 of the terms of the compromise and there was a clear understanding that neither his daughters nor their husbands shall claim any tenancy over the shop left in possession of Raj Bahadur Jain and shall hand over the possession to the landlord and if they failed to do so, the landlord will be at liberty to take possession through court. Paragraph 4 of the terms clearly indicates that the expenses for repair of the shop (after making the shop smaller to be left in occupation of the tenant) was to be borne by the landlord. This compromise is not in dispute and is an admitted document. It is also not in dispute that this compromise was acted upon and the release application was decided accordingly.

The Court held in univocal terms that a party cannot challenge an award after enjoying the benefits of the same and observed thus:
11.There is no quarrel with the law that in cases where protection under a Rent Act is available, no eviction can be ordered unless ground seeking eviction is made out, even if parties had entered into a compromise and that the invalidity on that count can even be raised in execution.

However, whether petitioners can take shelter of such law in the facts and circumstances of the case? I am of the view that the law is also settled that a party cannot be permitted blow hot - blow cold, where he knowingly accepts the benefit of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself.

This rule is applied to ensure equity. A reference may be made in this regard to a judgment of Hon'ble Supreme Court in the case of Rajasthan State Industrial Development and Investment Corporation and another vs. Diamond & Gem Development Corporation Limited and another 2013 (5) SCC 470.

It would be trite to refer to the dictum of the aforesaid judgment of the Apex Court which held as under:
10. Thus, it is evident that the doctrine of election is based on the rule of estoppel- the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by election is one among the species of estoppels in pais (or equitable estoppel), which is a rule of equity. By this law, a person may be precluded, by way of his actions, or conduct, or silence when it is his duty to speak, from asserting a right which he would have otherwise had.

12. There can be no dispute to the settled legal proposition that matters/disputes relating to contract cannot be agitated nor terms of the contract can be enforced through writ jurisdiction under Article 226 of the Constitution. Thus, writ court cannot be a forum to seek any relief based on terms and conditions incorporated in the agreement by the parties. (Vide: Bareilly Development Authority & Anr. v. Ajay Pal Singh & Ors., AIR 1989 SC 1076; and State of U.P. & Ors. v. Bridge & Roof Co. (India) Ltd., AIR 1996 SC 3515).

The Court relied on the binding judgment of the Apex Court & held thus:
The net effect of judgment rendered in the case of Raghunath Prasad Pande vs. State of Karnataka and others 2018 (5) SCC 594 is that once the compromise decree has been acted upon, a party cannot be permitted to go back from the same and the same is not liable to be set aside.

It would be apposite to refer to Sailendra Narayan v. State of Orissa AIR 1956 S.C. 345 wherein the Apex Court held that a judgment by consent is as effective an estoppel between the parties as a judgment whereby the court exercises its mind in a contested case.

Further, in the case of Byram Pestonji Ganwala v. Union of India: 1991 AIR 2234, the Apex Court held that a judgment by consent is intended to stop litigation between the parties just as much as a judgment resulting from a decision of the Court at the end of a long drawn out fight. Thus, a compromise decree validly creates an estoppel.

The Constitution Bench of the Apex Court in Sailendra Narayan Bhanja Deo v. State of Orissa (1956) 1 SCR 72 held that a judgment by consent is effective as estoppel between the parties as a judgment whereby the Court exercises its mind on a contested case.

The Court, fortified by the dictum of the Apex Court, dismissed the Writ petitions and ordered for vacation of the tenanted shop. Thus, it is no longer 'Res Integra' that the validity of a compromise decree which has been acted upon cannot be rescinded/agitated at a later stage on technical grounds and the High Court in Writ jurisdiction under Article 226 cannot be entertained for implementation & interpretation of the terms of the Agreement/Contract.

The Compromise, in such a case, will act as an 'Estoppel' and would operate Res Judicata when the said Compromise has been acted upon and a considerable time gap of 20 years have elapsed since the said Compromise had been enforced verbatim in letter & spirit.

Written By: Inder Chand Jain
Ph no: 8279945021, Email: [email protected]

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