Delhi High Court
Vipin Wadhwa vs Prashant Enterprises & Ors on 2 July, 2025
Author: Purushaindra Kumar Kaurav
Bench: Purushaindra Kumar Kaurav
$-
* IN THE HIGH COURT OF DELHI AT NEW DELHI
BEFORE
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
+ CS(OS) 244/2021, CC 4/2022, I.A. 7367/2021, I.A. 22171/2022,
I.A.22176/2022, I.A. 18405/2023, and I.A. 21242/2023
Between: -
SH. VIPIN WADHWA
S/O SH. H.C. WADHWA
R/O H. No 58, FD BLOCK, PITAMPURA,
DELHI 110034
....PLAINTIFF
(Through: Mr. Rajesh Yadav, Sr. Adv. with Mr. Neeraj Yadav, Adv..)
AND
1. M/S PRASHANT ENTERPRISES
(PARTNERSHIP FIRM) HAVING OFFICE AT
C-38, RAJOURI GARDEN, DELHI
2. SH. JASBEER SINGH
S/O LATE SH. MAHINDER SINGH
R/O C-38, RAJOURI GARDEN, DELHI
3. SH. HARJEET SINGH
S/O LATE SH. MAHINDER SINGH
R/O C-38, RAJOURI GARDEN, DELHI
4. SH. BALBIR SINGH
S/O SH. GURBACHAN SINGH
R/O E-61, MANSAROVER GARDEN, DELHI-110015
Signature Not Verified Signature Not Verified
Signed By:AMIT KUMAR Signed
SHARMA
Signing Date:03.07.2025 By:PURUSHAINDRA
17:45:18 1 KUMAR KAURAV
5. SH. INDER PAL SINGH
S/O SH. GURBACHAN SINGH
R/O E-61, MANSAROVER GARDEN, DELHI-110015
6. SH. RAVINDER BHATIA
S/O SH. SATPAL BHATIA
R/O D-8/12, MODEL TOWN, DELHI-110009
7. DELHI DEVELOPMENT AUTHORITY (DDA)
THROUGH ITS VICE CHAIRMAN
VIKAS SADAN, INA, NEW DELHI-110023
8. SH. A.K. JAIN
S/O SH. C.L. JAIN
RIO 181, VAISHALI, PITAMPURA,
NEW DELHI - 110088
MOB. NO. 9811057984
....DEFENDANTS
(Through: Mr. Rajesh Kumar Luthra, Advocate for D-2 & 3.
Mr. Rajesh Mishra, Ms. Pooja Jha, Mr. Sahil Sharma and Ms. Geeta Rani,
Advs. for D-5 & 6.
Ms. Prabhsahay Kaur, SC with Ms. Aditya Verma, Mr. Bir Inder Guram and
Mr. Shubham, Advs. for D-7.
Mr. Darpan Wadhwa, Sr. Adv. With Ms. Pritha Sukumar, Mr. Sulabh
Rewari, Mr. Amer Vaid and Ms. Saumya Sinha, Advs. for D-8)
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% Reserved on: 02.05.2025
Pronounced on: 02.07.2025
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JUDGMENT
I.A.22171/2022 and I.A.22176/2022
The instant applications have been filed on behalf of the defendant no.
8. I.A. 22171/2022 is an application filed under Order VII Rule 11 read with
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Section 151 of the Code of Civil Procedure, 1908 (CPC) and I.A.
22176/2022 is an application under Order XII Rule 6 CPC read with Section
151 CPC.
2. Mr. Darpan Wadhwa, learned senior counsel for defendant no.8
contends that in the present case, the suit is liable to be dismissed in limine
as the plaint does not disclose any cause of action and is barred by law in
terms of Order XXIII Rule 3A of CPC.
3. He further contends that the suit is also barred as per the first part of
Article 54 of the Limitation Act, 1963 which postulates that for specific
performance of a contract, the period of limitation is three years from the
date fixed for the performance, or, if no such date is fixed, from the date the
plaintiff has notice that performance is refused. Under the first part of
Article 54, once the date for performance of the contract has been fixed by
the parties, the limitation begins to run from that date and specific
performance of the contract could be within three years from that date unless
the parties, by an agreement, extend the fixed time.
4. He points out that in the present case, as per the agreement, the last
date of payment was 23.10.1999; therefore, the institution of the present suit
in the year 2021 is ex-facie barred by limitation.
5. He has referred to the stand taken by defendant Nos. 2 and 3 in their
Written Statement dated 16.07.2010 filed in CS(OS) 2310/2009 and has
contended that even assuming the date of knowledge of refusal to be
16.07.2010, the suit is still barred by limitation. In support of his submission
that the suit is barred by limitation, learned senior counsel has placed
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reliance on the decisions in A. Valliammai v. K.P. Murali1 and Fatehji and
Company v. L.M. Nagpal and others2.
6. The second prong of his submission rests on the bar prescribed under
Order XXIII Rule 3A of CPC. He submits that the consent decree dated
03.02.2020 passed in CS(OS) 2310/2009 cannot be challenged in a separate
suit as the plaintiff was a party to the said suit. He submits that Rule 3A of
Order XXIII bars a suit to set aside a decree on the ground that the
compromise on which the decree was passed was not lawful and the Court
would be justified in rejecting the plaint under Order VII Rule 11 CPC on
the said ground.
7. He contends that if the plaintiff has any grievance qua consent decree,
he should have approached the same Court, as there is no remedy against the
consent decree by way of a separate suit. He argued that while passing the
consent decree, the Court had considered the objections of the plaintiff,
therefore, at this belated stage, he cannot file a substantive suit to set aside
the decree. He further submits that a consent decree cannot be challenged
even by a person who was not a party to the compromise decree in light of
the judgment of the Supreme Court in Triloki Nath Singh v. Anirudh
Singh3.
8. With respect to his application under Order XII Rule 6 of CPC, he has
placed reliance on the decision in Karam Kapahi v. Lal Chand Public
Charitable Trust4.
9. Per contra, Mr. Rajesh Yadav, learned senior counsel appearing on
1
2023 SCC OnLine SC 1150.
2
(2015) 8 SCC 390.
3
(2020) 6 SCC 629.
4
(2010) 4 SCC 753.
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behalf of the plaintiff, controverts the submissions made on behalf of
defendant no.8 and submits that the instant applications are misconceived
and merit dismissal at the threshold.
10. On I.A. 22171/2022, learned senior counsel submits that Order XXIII
Rule 3A of CPC is not applicable to the judgment and decree dated
03.02.2020 passed by this Court in CS(OS) 2310/2009, as the plaintiff was
not a party to the said decree. Consequently, the application is liable to be
dismissed. He further contends that in deciding an application under Order
VII Rule 11 CPC, the contents of the plaint must be taken as gospel truth,
and the defence set up by the defendants cannot be considered at this stage.
On the issue of limitation, he argues that it is a mixed question of fact and
law, which cannot be determined through an application under Order VII
Rule 11 CPC.
11. Without prejudice to the aforesaid contention, he submits that the suit
has been instituted within the prescribed limitation period, as the challenge
to the judgment and decree dated 03.02.2020 has been filed within three
years of its passing. Regarding the relief of specific performance of the
agreement to sell, he contends that the claim is also within limitation since
no communication was ever addressed to the plaintiff by defendant nos.2
and 3, or any other defendant, denying the execution of the agreement or
cancelling it, and thus, the same is a continuing cause of action.
12. Learned counsel further submits that the application is not
maintainable as it is a settled principle of law that a suit cannot be dismissed
in part. He contends that prayers (c) to (f) are, in any case, independently
maintainable, as the possession of the property is protected under Section
53A of the Transfer of Property Act, 1882. With respect to the compromise
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decree, he argues that merely because a Court has found the decree to be
lawful, such an observation cannot preclude a third party from challenging
it. He further contends that the mere fact that the plaintiff was afforded a
hearing at the time of passing the decree does not divest him of his right to
challenge its validity.
13. Learned senior counsel for the plaintiff submits that the application
being I.A. 22171/2022 under Order XII Rule 6 CPC is misconceived as the
plaintiff has not made any unequivocal admission that would warrant the
invocation of the said provision. He contends that defendant no. 8 has failed
to establish that the suit is liable to be dismissed on the ground of any
categorical admission by the plaintiff.
14. He further submits that the argument of the defendant that the plaintiff
did not take legal action against defendants no. 2 and 3 to seek specific
performance of the agreement dated 30.06.1999 is untenable. The plaintiff
has consistently asserted his rights over the suit property, which he has been
in possession of since the execution of the agreements dated 30.06.1999 and
20.01.2000.
15. He further contended that the plaintiff was not a party to the
application seeking withdrawal of CS(OS) 2310/2009, which resulted in the
consent decree dated 03.02.2020. Consequently, he submits that the plaintiff
retains his right to challenge the said decree and seek specific performance
of the agreement. The plaintiff has neither made any admission in the suit to
this effect nor in the documents filed therein that could justify the dismissal
of the suit under Order XII Rule 6 CPC.
16. With respect to the written statement filed by defendants no. 2 and 3
in CS(OS) 2310/2009, learned counsel submits that the plaintiff disputes and
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denies the averments made therein. He denies that the plaintiff ever admitted
to refraining from taking legal action to enforce the agreement dated
30.06.1999. He further submits that no communication was issued by
defendants no. 2 and 3 or any other defendants cancelling the said
agreement. The plaintiff had already paid 96% of the total sale consideration
and was put in possession of the suit property in furtherance of the
agreement, thereby entitling him to protection under Section 53A of the
Transfer of Property Act, 1882.
17. It is also contended that the mere filing of a written statement by
defendants no. 2 and 3 in a separate suit does not preclude the plaintiff from
challenging the judgment and decree dated 03.02.2020 or from seeking
specific performance of the agreement. The plaintiff was under no legal
obligation to issue any written request for performance of the agreement, as
he was unaware of its cancellation. He further denies the contention that he
has failed to assert his rights over the suit property proactively.
18. Regarding the contention that prayers (a) and (b) of the suit are not
maintainable and the suit should be dismissed in part, learned counsel
submits that such an argument is legally untenable. He contends that it is a
settled principle that a suit cannot be dismissed in part, and in any case,
prayers (c) to (f) are independently maintainable, as the plaintiff’s
possession is protected under Section 53A of the Transfer of Property Act,
1882. The defendant’s argument that these prayers are merely consequential
to prayers (a) and (b) is unfounded. Accordingly, he prays for the dismissal
of the instant application.
19. I have considered the submissions advanced by learned senior counsel
for the parties and have perused the record.
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20. The facts of the case indicate that the present suit is one for
declaration and specific performance of the Agreement to Sell dated
30.06.1999, executed by defendant nos. 1 to 6 in favour of the plaintiff. The
suit also seeks permanent and mandatory injunctions in respect of the suit
property. Additionally, the plaintiff has also sought, inter alia, relief for
setting aside the judgment and decree dated 03.02.2020 as null and void.
21. The relief clause, as prayed for by the plaintiff, is as follows:-
“a) Pass a Decree of Declaration in favour of the Plaintiff and against
the Defendants thereby declaring the Judgment and Decree dated
03.02.2020 passed in CS(OS) 2310/ 2009 titled “A.K. Jain Vs. Vipin
Wadhwa & Ors as null and void nor binding upon the Plaintiff and not
affecting the suit property;
b) Pass a Decree of Specific Performance in respect of the Agreement
dated 30.06.2019 in favour ofthe Plaintiff and against Defendants No. 2
to 6 thereby directing the Defendants No.I to 6 to execute the sale deed
in respect of the Suit property i.e property bearing No. A-1/15,
Prashant Vihar, Delhi-85 admeasuring 387 sq. yards more specifically
shown in site plan Annexed with the Plaint in favour ofthe Plaintiff;
c) Pass a Decree of Permanent Injunction in favour of the Plaintiff and
against the Defendants, their agents, assignees, representatives etc.,
thereby restraining them from, in any manner, alienating, creating
third party interest, in respect of Suit property i.e Property Bearing No.
A-1/15, Prashant Vihar, Delhi 85 admeasuring 387 sq. yards more
specifically shown in site plan Annexed with the Plaint;
d) Pass a Decree of Permanent Injunction in favour of the Plaintiff and
against the Defendants their agents, assignees, representatives etc.,
thereby restraining them from, in any manner interfering with the
possession of the Plaintiff or dispossessing the Plaintiff from the Suit
Property i.e Property bearing No. A-1/15, Prashant Vihar, Delhi-85
more specifically shown in Site Plan Annexed with the Plaint;
e) Pass a Decree of Permanent Injunction in favour of the Plaintiff and
against the Defendants their agents, assignees, representatives etc.,
thereby restraining them from disconnecting electricity and water
connection ofthe Suit property i.e Property bearingNo. A- 1/15,
Prashant Vihar, Delhi-85 more specifically shown in Site Plan Annexed
with the Plaint;
f) Pass a Decree of Mandatory Injunction in favour of the Plaintiff and
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against the Defendants, thereby directing Defendant No. 7 to transfer
the Title Documents of the Suit Property in the name of the Plaintiff, in
their record for all purposes;”
22. The facts, as borne out in the plaint, reveal that on 30.06.1999,
defendant nos. 1 to 6 executed an Agreement to Sell in favour of the plaintiff
with respect to the suit property. The total sale consideration was agreed to
be Rs.2,21,00,000/- (Rupees Two Crores Twenty-One Lakhs). Out of total
consideration, the plaintiff claims to have paid Rs.2,13,46,600/- to defendant
nos. 2 to 6, leaving only a balance of Rs.7,53,400/-, which was to be paid at
the time of the execution of the sale deed.
23. Subsequently, on 11.01.2000, another agreement was executed
concerning the same property between A.K. Jain (defendant no. 8), the
plaintiff, for a consideration of Rs.2,73,00,000/-. Under this agreement, a
sum of Rs.55,00,000/- was received by the plaintiff and Rs 10,00,000/- was
received by defendant nos. 2 and 3. However, as the Agreement to Sell
dated 11.01.2000 was allegedly not performed by the plaintiff, along with
defendant nos. 2, 3, and 7, the defendant no. 8 instituted CS(OS) 2310/2009.
24. From a perusal of the plaint, it is seen that the plaintiff has alleged
that defendant no. 8, in collusion with defendant nos. 2 to 6, conspired to
resell the suit property and defraud the plaintiff. It is claimed that despite the
plaintiff having paid nearly 96% of the total sale consideration to defendant
nos. 2 to 5 under the Agreement to Sell dated 30.06.1999 and being in
possession of the entire suit property, the defendants engaged in a fraudulent
transaction to deprive him of his rights. It is further alleged that, in
furtherance of this collusion, an application under Order XXIII Rules 1, 3,
and 3A CPC, bearing I.A. No. 1478/2020, was filed in CS(OS) 2310/2009
on the basis of an alleged compromise between defendant no. 8 and
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defendant nos. 2 and 3. By order dated 03.02.2020, the Court accepted the
compromise between the parties in the said application, which the plaintiff
seeks to assail in the present suit.
25. It is further pleaded that, following the order dated 03.02.2020, the
plaintiff made several attempts to amicably resolve the dispute with
defendant nos. 2 to 6, but the same remained unsuccessful. The plaintiff
states that he continues to be willing to perform his obligations under the
Agreement to Sell dated 30.06.1999 and, accordingly, seeks a decree in his
favour
26. Before proceeding to decide the application under Order XII Rule 6
CPC, the Court shall first analyse the contentions raised in the Order VII
Rule 11 CPC application.
27. The entire rationale of Order VII Rule 11 CPC application rests on
two fundamental premises firstly, order dated 03.02.2020 being a consent
decree ought to have been challenged in the same Court as per the bar
prescribed under Order XXIII Rule 3A CPC and secondly, the suit is barred
by the limitation.
28. In order to rule on the first ground of Order VII Rule 11 CPC
application, it is pertinent to peruse the consent decree dated 03.02.2020.
The relevant extracts of the said decree read as under:-
“15. The counsel for the defendant No.1 has drawn attention to
paragraph 11 of the reply on merits in the amended written statement on
behalf of the defendant no.1 dated 6th April, 2013 where the defendant No.1
has denied that the possession of the entire first floor along with basement of
the property was handed over by the defendant No.1 to the plaintiff and has
pleaded that the entire first floor with basement was in possession of the
defendant No.1 and the plaintiff had nothing to do with the possession.
16. The counsel for the defendant No.1 has next drawn attention to affidavit by
way of examination-in-chief Ex.D1W1/A dated 21st November, 2017 of theSignature Not Verified Signature Not Verified
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defendant No.1, where the defendant No.1 has deposed as under:
“12. I state that the possession of the entire first floor and the basement
is with me and the plaintiff has nothing to do with the possession. I state
that the defendant No.1 has put his guards in the property. I state that
when the plaintiff is not in the possession of the basement and the first
floor, the question of obstructing the entry of the plaintiff by me does not
arise. I state that the plaintiff in connivance with the property dealers
fraudulently got the possession letter signed at the time of execution of the
agreement only as a security though actual vacant physical possession of
the entire property continued to be with me.”
and has contended that the defendant No.1 was not cross-examined on the
aspect.
17. In the compromise application between the plaintiff and defendants
No.2&3, it is inter alia recorded in paragraphs 8(iv), 9(vi), (vii) & 9(viii) as
under:
“8. iv) the Defendant Nos.2 and 3 had also agreed and admitted to
hand over vacant possession of portion of the property in their
occupation i.e. Second Floor & Terrace to the Plaintiff.
9. vi) The Defendants No.2 & 3 shall forthwith handover the vacant
physical peaceful possession of entire Second Floor and entire
Terrace thereupon of the suit property to the Plaintiff;
vii) Simultaneously to taking over of possession of Second Floor
and terrace, the Plaintiff shall pay a sum of Rs.50,00,000/- to the
Defendants No.2 & 3 in equal proportion in full and final settlement;
viii) This is to record that the possession of entire Basement and
entire First Floor of the suit property is already with the Plaintiff. The
Ground Floor is presently in an unauthorized occupation. The
plaintiff, hereinafter, shall be entitled to recover possession of the
Ground Floor from the occupant either through negotiations or
through Court at his own costs.”
18. The counsel for the defendant No.1 has also contended that the defendant
No.1 has a substantial right to be decided in this suit. It is also argued that the
defendant No.1 was not given any opportunity to file pleadings in response to
the pleadings of defendants No.2&3. However, on enquiry, whether the
defendant No.1 at any time sought an opportunity therefor, the answer is in
the negative.
19. It is also contended by counsel for defendant no.1, that it was the plea of
the defendants No.2&3 that they had no privity with the plaintiff.
20. The counsel for the plaintiff states that as per the written documents and in
fact, the possession of the basement and first floor is with the plaintiff and the
counsel for the defendants No.2&3 states that possession of the second floor
and terrace above is with the defendants No.2&3 and both state that they want
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the suit, insofar as by the plaintiff against the defendants No.2&3, to be
disposed of in terms of the compromise.
21. I have perused the compromise arrived at between the plaintiff and the
defendants No.2&3 and find the same to be lawful and do not deem any need
for an opportunity to file reply to be given to the defendant No.1, inasmuch as
the rights of the defendant No.1, even if any for adjudication in this suit, were
at the instance of the plaintiff and not at the instance of the defendant No.1
and the defendant No.1 cannot come in the way of the plaintiff withdrawing
the suit insofar as against the defendant No.1 and if the defendant No.1 has
any entitlement in law to agitate any right, would have to institute independent
action therefor and cannot stop this suit from being withdrawn qua him. All
that needs to be observed is that nothing contained in the compromise arrived
at between the plaintiff and the defendants No.2&3 shall bind or affect the
defendants No.1&4.
22. IA No.1478/2020 is thus allowed.
23. A consent decree is passed, in favour of the plaintiff and against the
defendants No.2&3, on the terms contained in IA No.1478/2020, which shall
form part of the decree sheet, leaving the parties to bear their own costs.
24. The suit, insofar as against the defendants No.1&4, is dismissed as
withdrawn, leaving the parties to bear their own costs.
Decree sheet be drawn up.”
29. On the first blush, it appears that the plaintiff was a party to the suit in
the CS(OS) 2310/2009 as defendant no. 1 therein. However, till the point the
consent decree was passed, the said suit was withdrawn qua the plaintiff.
The Court noted that as per the compromise arrived at between the
defendant no. 8 and the defendants No.2 and 3, there was no need for an
opportunity to the plaintiff to file a reply. The rights of the plaintiff, even if
any, were at the instance of the defendant No. 8. The Court also observed
that nothing contained in the compromise arrived at between the defendant
No. 8 and the defendants No.2 and 3 shall bind or affect the plaintiff and
defendant No. 7 i.e., DDA.
30. Thus, a bare perusal of the consent decree would indicate that firstly,
the plaintiff herein was not a party to the compromise decree and secondly,
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the Court gave him the liberty to agitate his rights in accordance with law by
way of an independent action.
31. Therefore, the question that now arises before this Court is whether a
stranger to the compromise decree is susceptible to the bar prescribed under
Order XXIII Rule 3A of the CPC so as to deprive such third party from
instituting an independent suit for the vindication of his rights.
32. We may first consider the nature and scope of the bar contemplated
under Order XXIII Rule 3A of CPC, before proceeding to answer whether
the bar extends to the parties to the compromise or strangers too. In this
regard, reference can be made to the decision of the Supreme Court in the
case of R. Janakiammal v. S.K. Kumarasamy5, wherein the Court held that
Rule 3A of Order XXIII bars the suit to set aside the decree on the ground
that the compromise on which the decree was passed was not lawful.
Expanding upon what could constitute an unlawful compromise, the Court
observed and held that an agreement or compromise which is clearly void or
voidable shall not be deemed to be lawful and the bar under Rule 3A shall
be attracted if the compromise on the basis of which the decree was passed
was void or voidable. Furthermore, it was held that a party to a consent
decree based on a compromise, intending to challenge the said consent
decree on the ground that the decree was not lawful i.e., it was void or
voidable, has to approach the same Court, which recorded the compromise
and a separate suit challenging the consent decree has been held to be not
maintainable. The relevant extracts of the said decision read as under:-
“53. Order 23 Rule 3 as well as Rule 3-A came for consideration before this
Court in large number of cases and we need to refer to a few of them to find
out the ratio of judgments of this Court in context of Rule 3 and Rule 3-A.5
(2021) 9 SCC 114.
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In Banwari Lal v. Chando Devi [Banwari Lal v. Chando Devi, (1993) 1 SCC
581] , this Court considered Rule 3 as well as Rule 3-A of the Order 23. This
Court held that the object of the Amendment Act, 1976 is to compel the party
challenging the compromise to question the court which has recorded the
compromise. In paras 6 and 7, the following was laid down : (SCC pp. 584-
85)
„6. The experience of the courts has been that on many occasions
parties having filed petitions of compromise on basis of which decrees
are prepared, later for one reason or other challenge the validity of
such compromise. For setting aside such decrees suits used to be filed
which dragged on for years including appeals to different courts.
Keeping in view the predicament of the courts and the public, several
amendments have been introduced in Order 23 of the Code which
contain provisions relating to withdrawal and adjustment of suit by
the Civil Procedure Code (Amendment) Act, 1976. Rule 1 Order 23 of
the Code prescribes that at any time after the institution of the suit,
the plaintiff may abandon his suit or abandon a part of his claim. Rule
1(3) provides that where the Court is satisfied : (a) that a suit must
fail by reason of some formal defect, or (b) that there are sufficient
grounds for allowing the plaintiff to institute a fresh suit for the
subject-matter of a suit or part of a claim, it may, on such terms as it
thinks fit, grant the plaintiff permission to withdraw such suit with
liberty to institute a fresh suit. In view of Rule 1(4) if the plaintiff
abandons his suit or withdraws such suit without permission referred
to above, he shall be precluded from instituting any such suit in
respect of such subject-matter. Rule 3 Order 23 which contained the
procedure regarding compromise of the suit was also amended to
curtail vexatious and tiring litigation while challenging a compromise
decree. Not only in Rule 3 some special requirements were introduced
before a compromise is recorded by the court including that the
lawful agreement or a compromise must be in writing and signed by
the parties, a proviso with an Explanation was also added which is as
follows:
“Provided that where it is alleged by one party and denied by the
other that an adjustment or satisfaction has been arrived at, the Court
shall decide the question; but no adjournment shall be granted for the
purpose of deciding the question, unless the Court, for reasons to be
recorded, thinks fit to grant such adjournment.
Explanation.–An agreement or compromise which is void or voidable
under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed
to be lawful within the meaning of this Rule.”
7. By adding the proviso along with an Explanation the purpose and
the object of the amending Act appears to be to compel the party
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challenging the compromise to question the same before the court
which had recorded the compromise in question. That court was
enjoined to decide the controversy whether the parties have arrived at
an adjustment in a lawful manner. The Explanation made it clear that
an agreement or a compromise which is void or voidable under the
Contract Act shall not be deemed to be lawful within the meaning of
the said Rule. Having introduced the proviso along with the
Explanation in Rule 3 in order to avoid multiplicity of suit and
prolonged litigation, a specific bar was prescribed by Rule 3-A in
respect of institution of a separate suit for setting aside a decree on
the basis of a compromise saying:
“3-A. Bar to suit.–No suit shall lie to set aside a decree on the
ground that the compromise on which the decree is based was not
lawful.” ‟
54. The next judgment to be noted is Pushpa Devi Bhagat v. Rajinder
Singh [Pushpa Devi Bhagat v. Rajinder Singh, (2006) 5 SCC 566] , R.V.
Raveendran, J. speaking for the Court noted the provisions of Order 23 Rule
3 and Rule 3-A and recorded his conclusions in para 17 in the following
words : (SCC p. 576)
„17. The position that emerges from the amended provisions of Order
23 can be summed up thus:
(i) No appeal is maintainable against a consent decree having regard
to the specific bar contained in Section 96(3)CPC.
(ii) No appeal is maintainable against the order of the court recording
the compromise (or refusing to record a compromise) in view of the
deletion of clause (m) of Rule 1 Order 43.
(iii) No independent suit can be filed for setting aside a compromise
decree on the ground that the compromise was not lawful in view of
the bar contained in Rule 3-A.
(iv) A consent decree operates as an estoppel and is valid and binding
unless it is set aside by the court which passed the consent decree, by
an order on an application under the proviso to Rule 3 Order 23.
Therefore, the only remedy available to a party to a consent decree to
avoid such consent decree, is to approach the court which recorded
the compromise and made a decree in terms of it, and establish that
there was no compromise. In that event, the court which recorded the
compromise will itself consider and decide the question as to whether
there was a valid compromise or not. This is so because a consent
decree is nothing but contract between parties superimposed with the
seal of approval of the court. The validity of a consent decree depends
wholly on the validity of the agreement or compromise on which it is
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made. The second defendant, who challenged the consent compromise
decree was fully aware of this position as she filed an application for
setting aside the consent decree on 21-8-2001 by alleging that there
was no valid compromise in accordance with law. Significantly, none
of the other defendants challenged the consent decree. For reasons
best known to herself, the second defendant within a few days
thereafter (that is on 27-8-2001) filed an appeal and chose not to
pursue the application filed before the court which passed the consent
decree. Such an appeal by the second defendant was not
maintainable, having regard to the express bar contained in Section
96(3) of the Code.‟
55. The next judgment is R. Rajanna v. S.R. Venkataswamy [R.
Rajanna v. S.R. Venkataswamy, (2014) 15 SCC 471 : (2015) 4 SCC (Civ)
238] in which the provisions of Order 23 Rule 3 and Rule 3-A were again
considered. After extracting the aforesaid provisions, the following was held
by this Court in para 11 : (SCC p. 474)
„11. It is manifest from a plain reading of the above that in terms of
the proviso to Order 23 Rule 3 where one party alleges and the other
denies adjustment or satisfaction of any suit by a lawful agreement or
compromise in writing and signed by the parties, the Court before
whom such question is raised, shall decide the same. What is
important is that in terms of Explanation to Order 23 Rule 3, the
agreement or compromise shall not be deemed to be lawful within the
meaning of the said Rule if the same is void or voidable under the
Contract Act, 1872. It follows that in every case where the question
arises whether or not there has been a lawful agreement or
compromise in writing and signed by the parties, the question whether
the agreement or compromise is lawful has to be determined by the
court concerned. What is lawful will in turn depend upon whether the
allegations suggest any infirmity in the compromise and the decree
that would make the same void or voidable under the Contract Act.
More importantly, Order 23 Rule 3-A clearly bars a suit to set aside a
decree on the ground that the compromise on which the decree is
based was not lawful. This implies that no sooner a question relating
to lawfulness of the agreement or compromise is raised before the
court that passed the decree on the basis of any such agreement or
compromise, it is that court and that court alone who can examine
and determine that question. The court cannot direct the parties to file
a separate suit on the subject for no such suit will lie in view of the
provisions of Order 23 Rule 3-ACPC. That is precisely what has
happened in the case at hand. When the appellant filed OS No. 5326
of 2005 to challenge the validity of the compromise decree, the court
before whom the suit came up rejected the plaint under Order 7 Rule
11CPC on the application made by the respondents holding that such
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a suit was barred by the provisions of Order 23 Rule 3-ACPC. Having
thus got the plaint rejected, the defendants (the respondents herein)
could hardly be heard to argue that the plaintiff (the appellant herein)
ought to pursue his remedy against the compromise decree in
pursuance of OS No. 5326 of 2005 and if the plaint in the suit has
been rejected to pursue his remedy against such rejection before a
higher court.‟
56. The judgments of Pushpa Devi [Pushpa Devi Bhagat v. Rajinder Singh,
(2006) 5 SCC 566] as well as Banwari Lal [Banwari Lal v. Chando Devi,
(1993) 1 SCC 581] were referred to and relied on by this Court. This Court
held that no sooner a question relating to lawfulness of the agreement or
compromise is raised before the court that passed the decree on the basis of
any such agreement or compromise, it is that court and that court alone
which can examine and determine that question.
57. In subsequent judgment, Triloki Nath Singh v. Anirudh Singh [Triloki
Nath Singh v. Anirudh Singh, (2020) 6 SCC 629 : (2020) 3 SCC (Civ) 732] ,
this Court again referring to earlier judgments reiterated the same
proposition i.e. the only remedy available to a party to a consent decree to
avoid such consent decree is to approach the court which recorded the
compromise and separate suit is not maintainable. In paras 17 and 18, the
following has been laid down : (SCC p. 638)
„17. By introducing the amendment to the Civil Procedure Code
(Amendment) Act, 1976 w.e.f. 1-2-1977, the legislature has brought
into force Order 23 Rule 3-A, which creates bar to institute the suit to
set aside a decree on the ground that the compromise on which decree
is based was not lawful. The purpose of effecting a compromise
between the parties is to put an end to the various disputes pending
before the court of competent jurisdiction once and for all.
18. Finality of decisions is an underlying principle of all adjudicating
forums. Thus, creation of further litigation should never be the basis
of a compromise between the parties. Rule 3-A of the Order 23CPC
put a specific bar that no suit shall lie to set aside a decree on the
ground that the compromise on which the decree is based was not
lawful. The scheme of Order 23 Rule 3CPC is to avoid multiplicity of
litigation and permit parties to amicably come to a settlement which is
lawful, is in writing and a voluntary act on the part of the parties. The
court can be instrumental in having an agreed compromise effected
and finality attached to the same. The court should never be party to
imposition of a compromise upon an unwilling party, still open to be
questioned on an application under the proviso to Order 23 Rule
3CPC before the court.‟ ”
33. This position has been reiterated by the Supreme Court in the case of
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Sree Surya Developers & Promoters v. N. Sailesh Prasad6 and Navratan
Lal Sharma v. Radha Mohan Sharma & Ors. 7
34. Now coming to the bar prescribed under Order XXIII Rule 3A CPC,
which reads as under:-
“3-A. Bar to suit.–No suit shall lie to set aside a decree on the ground that
the compromise on which the decree is based was not lawful.” ‟
35. As per the said Rule, no suit shall lie to set aside a decree on the
ground that the compromise on which the decree is based was not lawful. It
has been held, as noted already, that the test of lawfulness of the
compromise would essentially take into consideration the factors of voidness
and voidability under the law of contract. A compromise or consent between
the parties is essentially a contract between the parties wherein they
determine their mutually respective rights and liabilities and thus, it must be
ensured that the same is not void or voidable. If the challenge against a
consent decree is based on the premise that it is void or voidable, on any of
the parameters envisaged under the law of contract, it could be said that the
challenge is against the lawfulness of the compromise and thus, the bar
under Order XXIII Rule 3A of CPC would be attracted.
36. Now, coming to the moot question in the present dispute i.e. whether
the aforesaid bar would be applicable to a stranger to the suit, it could safely
be observed that it is no longer res integra.
37. The Supreme Court, in the case of Trilokhi Nath, wherein a similar
contention was raised, held that even assuming that a stranger could assail
the validity of the compromise entered into by the parties to the partition6
(2022) 5 SCC 736.
7
2024 INSC 970.
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suit, only the Court, which had accepted the compromise and passed decree
on that basis, could examine the same and no other Court could entertain an
independent suit for the said purpose as contemplated under proviso to Rule
3 of Order XXIII CPC. The relevant extract of the said decision reads as
under:-
22. In other words, the appellant can only claim through his predecessor
Sampatiya, to the extent of rights and remedies available to Sampatiya in
reference to the compromise decree. Merely because the appellant was not
party to the compromise decree in the facts of the present case, will be of no
avail to the appellant, much less give him a cause of action to question the
validity of the compromise decree passed by the High Court by way of a
substantive suit before the civil Court to declare it as fraudulent, illegal and
not binding on him. Assuming, he could agitate about the validity of the
compromise entered into by the parties to the partition suit, it is only the
High Court, who had accepted the compromise and passed decree on that
basis, could examine the same and no other Court under proviso to Rule 3
of Order 23 CPC. It must, therefore, follow that the suit instituted before the
civil Court by the appellant was not maintainable in view of specific bar
under Rule 3A of Order 23 CPC as held in the impugned judgment.
38. This position of law has been reiterated by the Supreme Court in the
case Mukund Bhavan Trust v. Shrimant Chhatrapati Udayan Raje8,
wherein the Court, while relying upon the Trilokhi Nath, held that the bar
under Order XXIII Rule 3A of CPC is applicable to third parties as well and
the only remedy available to them would be to approach the same Court.
Thus, a stranger or third party to the compromise, which has been accepted
by the seal of the Court and has assumed the force of a decree, is on a
similar pedestal as a party to such compromise insofar as the remedy to
assail such compromise on the ground of its lawfulness is concerned. No
distinction is traceable from Order XXIII Rule 3A of CPC.
39. The underlying essence in this legal position is quite understandable,
8
2024 SCC OnLine SC 3844.
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as eloquently expressed by the Supreme Court in R. Janakiammal. Since,
the intent of the legislature is to prevent multiplicity of proceedings qua the
same subject matter and to ensure that compromises recorded before the
Court are not reopened in a routine manner, it is nothing but necessary that
any such challenge lies before the same Court. It is also because of the fact
that when a compromise is accepted by a Court of law, it involves an
element of judicial satisfaction qua the lawfulness of such compromise of
such Court and in an extraordinary scenario, if such lawfulness is to be
questioned, it must be questioned before the same forum. To permit
otherwise would also go in the teeth of the principle of judicial consistency
and discipline, and may result into absurd consequences including
conflicting outcomes by Courts of equivalent or varying jurisdictions.
40. Therefore, the prayer (a) to the suit, which essentially relates to
seeking a declaration that the consent decree dated 03.02.2020 is null and
void is barred by law under Order XXIII Rule 3A of CPC.
41. Now, the question which arises for the Court’s consideration is
whether the suit for specific performance is barred by the limitation.
42. In a suit for specific performance of the Agreement, the limitation is
prescribed under Article 54 of the Limitation Act, 1963, which reads as
under:-
54. For specific Three The date fixed for the
performance years performance, or, if no
of a contract such date is fixed, when
the plaintiff has notice
that performance is
refused.
43. The essential aspect that needs to be considered is whether the suit for
specific performance is within the limitation prescribed under Article 54 of
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the Limitation Act, 1963. The limitation period for such a suit is three years,
which begins from either:
a. The date fixed for performance in the agreement; or
b. If no such date is fixed, from the date when the plaintiff has
noticed that performance has been refused.
44. The key question for determination is whether any action or conduct
by the defendant or the plaintiff extended or revived the limitation period,
thereby keeping the right of the plaintiff to seek specific performance alive.
Mere silence or inaction on the part of the defendant does not extend the
limitation period unless there is a clear acknowledgement of liability within
the meaning of Section 18 of the Limitation Act, 1963.
45. It is settled law that as per Section 9 of the Limitation Act, 1963, once
the period of limitation starts running, it continues to run irrespective of any
subsequent disability or inability to institute a suit or make an application.
46. On the interpretation of Article 54, the Supreme Court in Pachanan
Dhara v. Monmatha Nath Maity9, has held that for determining
applicability of the first or the second part, the Court will have to see
whether any time was fixed for performance of the agreement to sell and if
so fixed, whether the suit was filed beyond the prescribed period, unless a
case for extension of time or performance was pleaded or established.
However, when no time is fixed for performance, the Court will have to
determine the date on which the plaintiff had notice of refusal on the part of
the defendant to perform the contract.
47. Furthermore, in Fatehji & Co. v. L.M. Nagpal10, the Supreme Court
9
(2006) 5 SCC 340.
10
(2015) 8 SCC 390.
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clarified that a plaintiff seeking specific performance must act with due
diligence and cannot allow limitation to lapse while relying on alleged
assurances or informal negotiations unless those assurances are unequivocal
and legally sustainable. The relevant portion of the said decision reads as
under:-
“5. We considered the rival submissions. The specific performance is claimed
of a written agreement of sale dated 2-7-1973 and as per the terms the
performance of the contract was fixed till 2-12-1973. The defendants by
subsequent letters dated 7-4-1975, 1-10-1975 and 1-8-1976 sought for
extension of time to enable them to obtain permission of the lessor and the last
extension of six months expired on 1-2-1977. In view of Order 7 Rules 11(a)
and 11(d) CPC the Court has to satisfy that the plaint discloses a cause of
action and does not appear to be barred by any law. Article 54 of the
Limitation Act stipulates that the limitation for filing the suit for specific
performance of the contract is three years from the date fixed for the
performance or if no such date is fixed, when the plaintiff has notice that
performance is refused.
6. The fact that the plaintiffs were put in possession of the property agreed to
be sold on the date of agreement itself would not make any difference with
regard to the limitation of filing the suit for specific performance. In fact both
the courts below have rightly held that Article 54 of the Limitation Act does
not make any difference between a case where possession of the property has
been delivered in part-performance of the agreement or otherwise. In the
same way the courts below have also concurrently held even if any permission
is to be obtained prior to the performance/completion of the contract, the
mere fact that the defendants have not obtained the said permission would not
lead to inference that no cause of action for filing the suit for specific
performance would arise. Further it is also not the case for postponing the
performance to a future date without fixing any further date for performance.
The last extension for a period of six months w.e.f. 1-8-1976 sought for by the
defendants expired on 1-2-1977. The present suit seeking for specific
performance was filed by the plaintiffs on 29-4-1994, much beyond the period
of three years.
7. Yet another circumstance was pointed out to prove the laches on the part of
the plaintiffs. The sons of the second defendant filed a suit in July 1985
against Defendants 2, 3 and the plaintiffs seeking for declaration that the
present suit property is their ancestral joint family property and the sale made
by the defendants in favour of the plaintiffs be declared as null and void. The
plaintiffs herein contested the said suit and it came to be dismissed on 5-4-
1989. The suit for specific performance was not filed within three years from
the said date also.
8. The plaintiffs averred in the plaint that the last and final cause of action
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in hiding themselves and started avoiding the plaintiffs and the cause of
action being recurring and continuous one, they filed the suit on 29-4-1994.
As already seen the original cause of action became available to the plaintiffs
on 2-12-1973, the date fixed for the performance of the contract and
thereafter the same stood extended till 1-2-1977 as requested by the
defendants. Though the plaintiffs claimed that oral extension of time was
given, no particulars as to when and how long, were not mentioned in the
plaint. On the other hand even after knowing the dishonest intention of the
sons of the second defendant with regard to the suit property in the year 1985,
the plaintiffs did not file the suit immediately. The suit having been filed in the
year 1994 is barred by limitation under Article 54 of the Limitation Act.”
48. In the present case, if the agreement fixed a date for performance, the
plaintiff was required to initiate legal proceedings within three years from
that date. If no date was fixed, the limitation would begin from the point at
which the plaintiff became aware of the refusal of performance by the
defendant.
49. Thus, the onus lies upon the plaintiff to demonstrate, through cogent
evidence, that the limitation period has been effectively kept alive by an
acknowledgement under Section 18 of the Limitation Act, 1963 or any
legally recognised extension. In the absence of such an extension, the suit, if
filed beyond three years, would be time-barred.
50. In the present case, the entire controversy revolves around the
Agreement to Sell dated 30.06.1999, which reads as under:-
“AGREEMENT TO SELL
This agreement to sell is made at Delhi, on this 30th day of June 1999
between:-
Prashant Enterprises a partnership firm having its office at A1/15,
Prashant Vihar, Rohini, Delhi-110085 (which expression unless repugnant
to the context or meaning thereof mean and include the partners for the
time being of the said firm, their survivor or survivors and their legal
heirs, legal representatives, successors, executors, nominees and
assignees and administrators of last survivor) through its present partners
namely:
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1. S. Jasbeer Singh S/o Late S. Mahinder Singh r/o 177, Anand
Vihar, Pitampura, Delhi-110034.
2. S. Harjeet Singh S/o Late S. Mahinder Singh r/o 177, Anand
Vihar, Pitampura, Delhi-110034
3. S. Balbir Singh S/o S. Gurbachan Singh r/o E-61, Mansarover
Garden, New Delhi-110015.
4. S. Inder Pal Singh S/o S. Gurbachan Singh r/o E-61,
Mansarover Garden, New Delhi-110015.
5. Sh. Ravinder Bhatia s/o Sh. Satpal Bhatia r/o D-8/12, Model
Town, Delhi-110009.
Hereinafter collectively called “THE FIRST PARTY”;
AND
Sh. Vipin Wadhwa s/o H.C.Wadhwa r/o 8, Kapil Vihar, Pitampura, Delhi-
110034 hereby which expression shall mean and include his legal heirs,
legal representatives, successors, administrators, executors, nominee and
assignees hereinafter called as “THE SECOND PART”.
WHEREAS the first party is the absolute, sole and complete owner of the
built up property A1/15, Prashant vihar, Rohini, Delhi-110085 measuring
about 389 sq. yards situated at Prashant Vihar, Rohini, Delhi within the
limits of Delhi Municipal Corporation in the Revenue Estate of DELHI.
The property consists build up basement, ground floor, first floor and
second floor.
AND WHEREAS Delhi Development Authority has allotted the plot A1/15,
Prashant vihar, Rohini, Delhi-110085 through its lease deed in favour of
S. Jasbeer Singh s/o late S. Mahinder Singh and S. Harjeet Singh s/o late
S. Mahinder Singh the partners 1 & 2 of the first party mentioned above.
AND WHEREAS S. Jasbeer Singh S/o Late S. Mahinder Singh and S.
Harjeet Singh S/o Late S. Mahinder Singh entered into a partnership to
build and run a banquet hall and restaurant under the name & style of “24
CARATS” Wherein the name of the firm was “PRASHANT
ENTERPRISES” and both S. Jasbeer Singh S/o Late S. Mahinder Singh
and S. Harjeet Singh s/o late S. Mahinder Singh agreed to transfer the
said plot of A1/15, Prashant vihar, Rohini, Delhi-110085 as the share of
their capital in the firm.
AND WHEREAS the partnership firm “PRASHANT ENTERPRISES” had
undergone a change in the year 1994 by the retirement of one of the
partner and consequent admission of two new partners hereby the firm has
presently the above mentioned five partners.
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AND WHEREAS as the first party has agreed to sell the said property and
the second party have agreed to purchase the same for a total sum of Rs
2,21,00,000/- (Rupees two crore twenty one lacs only)
NOW THIS AGREEMENT TO SELL WITNESSES AS
UNDER
1) That in pursuance of the said agreement and in consideration of
Rs. 2,21,00,000/- (Rupees Two Crore Twenty One Lacs only)
which sum will be received/has been received by first party from
the second party in the following manners:-
i. Rs 10,00,000/- (Rupees Ten Lacs only) received as token
earnest money on the 23rd day of June, 1999.
ii. Rs 30,00,000/- (Rupees Thirty Lacs only) received on the
day of June, 1999.
iii. Rs 3,50,000/- (Rupees Three Lac Fifty Thousand only)
to be received on demand by the first party but before the
23rd day of July, 1999.
iv. Rs 31,50,000/- (Rupees Thirty One Lacs Fifty Thousand
only) to be received on or before the 23rd day of July, 1999.
v. The balancing to the paid at the time of registration of
transfer documents but not latter than the 23rd day of
October, 1999.
2) That the first party do hereby agree to sell, convey, transfer and
assign all the rights, title and interest in the aforesaid property
alongwith the land rights, super-structure built therein fixture
fittings, electric fittings, and other assets etc. unto the second party
absolutely and forever.
3) That the first party will hand over the physical vacant
possession of the said property to the second party on the date of
the receipt of the complete consideration as mentioned in point no.
“1” above.
4) That the first party and the second party have mutually agree
the a sum of Rs 3,50,000/- maximum will be paid to Punjab and
Sind bank which the first party owes to the set down. The first party
has assured to the second party that except the claim of Rs
3,50,000/- in the name of the first party in the account of Punjab
and Sind Bank, the property hereby agreed to be sold is free from
all kinds of encumbrances, such as sale, gift, mortgage, charge,
lien.
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5) That the first party assured the second party that they will get
the original lease deed release from Punjab and Sind Bank on the
date of receipt of Rs 75.00 lacs as mentioned in point no. “iv” of
the point no. “1” above.
6) That the first party shall bring NOC from the Punjab & Sind
Bank for executing a valid title deed between the parties a view to
convey an absolute title free from all charges and encumbrances.
7) That all the statutory dues like electricity bill payable to DVB,
House Tax, Water Bill, ground rents payable to DDA etc. payable
in respect of the said property shall be paid by the first party upto
the date of execution of the transfer of the said property and
thereafter the same shall be paid by the second party.
8) That the first party will hand over the original documents of the
lease deed in respect of the said property to the second party on
the date of receipt of Rs 75.00 lacs as mentioned in point no. “iv”
of the point no. “1” above and the same will be sealed and kept in
the possession of the second party.
9) That the second party shall pay the stamp duty, unearned
increase of DDA transfer duty and registration fee at the time of
registration of the sale-deed.
10) That the first party will apply and obtain income tax clearance
certificate accordingly as applicable.
11) That the second party will pay all the sums to the following
three partners of the first party jointly towards the consideration of
the sale proceeds of the said property:-
i. S. Jasbeer Singh S/o Late S. Mahinder Singh.
ii. S. Inder Pal Singh s/o S. Gurbachan Singh.
iii. Sh. Ravinder Bhatia s/o Sh. Satpal Bhatia.
12) That the first party shall give a list of the assets lying in the
building of the said property duly signed by the three partners
mentioned in point no. “11” above alongwith this agreement.
13) That the first party shall pay all the liabilities whether secured
or unsecured of the firm except the liabilities if any, as may be
agreed by both the parties mutually through any supplementary
agreement. Further the second party will not be liable to pay any
such liabilities and the first party shall keep the second party in
indemnify for all the losses and damages for the non-payment of
such liabilities or otherwise agreed upon mutually by both the
parties.
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In witness whereof the first and second party have executed this
agreement to sell at the place, day, month and year as first above
written in the presence of the following witnesses.
WITNESSES:-
-sd- Partner (1) Jasbeer Singh
(GURBHACHAN SINGH) Partner (2) Harjeet Singh
Partner (3) Balbir Singh
Partner (4) Inderpal Singh
Partner (5) Ravinder Bhatia
FIRST PARTY
Vipin Wadhwa
SECOND PARTY"
51. As per the said Agreement, what is discernible is that the total
consideration as envisaged in Clause 1 amounts to Rs 2,21,00,000/-. The
said Clause further delineates the schedule of payment and mandates that the
balance amount needs to be paid at the time of registration of documents but
not later than 23.10.1999. Furthermore, Clause 3 of the Agreement states
that the first party therein shall hand over the physical vacant possession to
the second party therein on the date of receipt of the complete consideration
as mentioned in Clause 1.
52. Thus, though the said agreement does not provide for any specific
date of performance of the Agreement, however, a holistic reading of the
same would indicate that it fixes the threshold for handing over the
possession of the property by 23.10.1999 i.e., the time fixed for the last
instalment of the consideration and quite evidently, the handing over of
possession has been linked with the payment of balance consideration which
is linked with the time of registration, as per Clause 3.
53. In view of the aforesaid, the limitation would start from 23.10.1999
and the plaintiff ought to have filed the suit for specific performance within
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three years from 1999 i.e., 2002.
54. Even assuming that the plaintiff genuinely believed that the
defendants would eventually obey the terms and conditions of the
Agreement, Article 54 would still have application in the present case. It is
the plaintiff’s own case that he got to know about the termination of the
Agreement to Sell when the defendants filed their written Statement dated
16.07.2010 in CS(OS) 2310/2009. Even assuming that to be true and
considering the date of 16.07.2010 as the date of knowledge of refusal,
which is undisputed by the plaintiff, still the three-year limitation would
have expired by 2013. Thus, the suit is barred by limitation on that count as
well.
55. The plaintiff’s contention that the consent decree dated 03.02.2020
revives the original cause of action is misconceived and legally untenable. It
is a settled principle of law that a consent decree is, in essence, a contract
between the parties, endorsed and formalised by the imprimatur of the
Court. The enforceability of such a decree is contingent upon the legality
and validity of the underlying compromise or agreement upon which it is
founded. Consequently, any challenge to the same must be pursued before
the very Court that recorded the compromise.
56. However, the mere existence or execution of a consent decree cannot
operate to resurrect a cause of action that had long since become extinct by
efflux of time. In the present case, the alleged cause of action emanated from
the Agreement to Sell dated 30.06.1999, and, even assuming its
enforceability, the limitation period for instituting a suit thereon expired on
23.10.2002, three years from the date of the alleged breach, i.e., 23.10.1999.
57. Once the statutory period of limitation has lapsed, the cause of action
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is extinguished in the eyes of the law. Neither the filing of a suit by
defendant No. 8 in CS(OS) 2310/2009, nor the judgment and decree
rendered therein, has the legal efficacy to breathe life into a claim that had
already become time-barred. The proceedings in CS(OS) 2310/2009 may, at
best, give rise to a fresh and distinct cause of action namely, for seeking the
setting aside of the said judgment and decree but they cannot resuscitate the
original claim based on the 1999 agreement, which had already perished due
to limitation. At this stage, it would also be apposite to note that even the
principle of acknowledgement of debt, which essentially extends the
limitation period, gives fresh life to it and prevents it from expiring, ceases
to apply once the prescribed period has already expired. It applies only
during the continuation of the prescribed period and not afterwards. Even
otherwise, the consent decree is in no way an acknowledgement of debt by
the defendants.
58. One of the contentions raised by the plaintiff was that the agreement
dated 11.01.2000 was in the nature of an assignment of the agreement dated
30.06.1999. On the force of the said contention, it is contended by the
plaintiff that the performance of the agreement dated 11.01.2000 is not
possible without the first agreement dated 30.06.1999.
59. Even assuming the said contention to be true, it still does not come to
his rescue because the assignment of rights and obligations to a third party
leads to novation of the contract. Reference can be made to the decision of
the Constitution Bench of the Supreme Court in the case of Khardah
Company Ltd v. Raymon & Co (India) Private Ltd.11 which held as under:-
11
AIR 1962 SC 1810.
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“…An assignment of a contract might result by transfer either of the rights or
of the obligations thereunder. But there is a well-recognised distinction
between these two classes of assignments. As a rule obligations under a
contract cannot be assigned except with the consent of the promisee, and
when such consent is given, it is really a novation resulting in substitution of
liabilities. On the other hand, rights under a contract are assignable unless
the contract is personal in its nature or the rights are incapable of
assignment either under the law or under an agreement between the parties.”
60. In the present case, since, it’s the plaintiff’s own submission that out
of the payment of Rs. 65,00,000/-, Rs. 10,00,000/- was paid to defendant
No. 2 and 3 by the defendant No. 8. Moreover, the agreement dated
11.01.2000 would clearly indicate that it imposes obligations on defendant
No. 2 and 3 also. Thus, even assuming the contention that the agreement
dated 11.01.2000 was in the nature of an assignment, it would amount to
novation of the contract and therefore, enforceability of the agreement dated
30.06.1999 shall not be contingent on the agreement dated 11.01.2000, as
the latter would operate as a standalone contract.
61. Moreover, the question of possession, whether with the plaintiff or
with defendant no. 8, is not germane to the adjudication of the present suit,
which is confined to the reliefs of declaration and specific performance of
the agreement to sell. The nature of reliefs sought neither encompasses a
determination of the right of possession, nor does it invoke the Court’s
jurisdiction to order eviction or recovery of possession.
62. Furthermore, the issue as to whether the possession of any party is
lawful or unauthorized would require independent adjudication based on
distinct pleadings, evidence, and legal considerations, none of which fall
within the present scope of the proceedings. So far as the question of
eviction of the plaintiff is concerned, there is nothing placed on record to
contend that the defendant has started the proceeding of eviction and even if
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the eviction proceeding has started, the plaintiff is well within his rights to
contest the same in accordance with law.
63. Similarly, the contention regarding any excess amount allegedly
received by defendants no.2 and 3 may give rise to a separate cause of action
in the nature of recovery of money or unjust enrichment. However, such
relief cannot be granted in the present suit in the absence of a specific prayer
to that effect and more importantly, in the absence of a foundational
pleading supporting a monetary claim. Thus, the said claim, if any, must be
agitated before an appropriate forum through properly instituted
proceedings.
64. In view of the aforesaid, since the plaintiff cannot challenge the
consent decree in a separate suit in view of the legal bar under Order XXIII
Rule 3A of CPC and the suit is barred by limitation as per Article 54 of the
Limitation Act, 1963, the present plaint is liable to be rejected under Order
VII Rule 11 of CPC.
65. Since the suit itself is barred by limitation on the basis of the
pleadings in the plaint, therefore, the Court restrains from rendering any
finding on the application under Order XII Rule 6 of CPC as the same is not
necessitated in light of the above determination.
66. Accordingly, the plaint stands rejected.
67. The suit stands disposed of along with all pending application(s), if
any.
(PURUSHAINDRA KUMAR KAURAV)
JUDGE
JULY 02, 2025
aks
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