Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
PETITIONER:
DAMODAR ROPEWAYS & CONSTRUCTION CO. (P) LTD.
Vs.
RESPONDENT:
CHRISTOPHER MARTIN DASGRANGES MARTIN & ORS.
DATE OF JUDGMENT06/10/1989
BENCH:
MISRA RANGNATH
BENCH:
MISRA RANGNATH
VENKATACHALLIAH, M.N. (J)
CITATION:
1989 SCR Supl. (1) 445 1989 SCC Supl. (2) 477
JT 1989 (4) 53 1989 SCALE (2)808
ACT:
Code of Civil Procedure 1908: Order XXIII--Rule 3 Com-
promise--Acceptance of by Court--Question for consideration.
Delay in filing compromise--Effect of.
HEADNOTE:
The Board of Governors of the respondent school entered
into a contract for the grant of permanent lease of immova-
ble property of the school to the petitioner-builder. An
association of the old students of the school resisted the
agreement before the High Court but a learned Single Judge
accorded sanction which was later stayed. The petitioner
preferred an appeal before the Division Bench of the High
Court which made certain interim directions while disposing
the appeal. Hence this appeal by the petitioner.
During the pendency of the appeal, the parties entered
into a compromise which was signed on behalf of all the
parties, but the compromise deed was filed in this Court
after a lapse of three years. The Association of the old
students resisted the compromise on the ground: (i) that
there was a lapse of three years between the date of signing
the compromise and its filing in the court; (ii) the Presi-
dent of the Old Association of students had no authority to
enter the compromise.
Disposing the appeal, this Court;
HELD: (1) If the compromise is genuine and lawful, the
delay in presentation in court could at the most be in the
realm of equity and would not be otherwise material.. In the
instant case the resolution of the Board of the Association
clarifies the position that all parties had agreed to the
compromise and it was intended to be presented before this
Court for permission to enter into compromise. The President
of the Old Association of Students had been authorised to
associate himself for the purpose. The agreement has been
signed by the parties and is not unlawful. The compromise
is, therefore, in accordance with the provisions of Order
XXIII, rule 3 of the Code of Civil Procedure and can be
acted upon. [448F-H]
446
2. Before the compromise is accepted it is for the court
to be satisfied that the terms are in the interests of the
Trust. [449A]
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
2.1 In the instant case, under the agreement forming the
subject matter of compromise the school would have space
available for expansion in the near future. It is not in the
interest of the school to reject the agreement on the ground
that there was scope of receiving better offers if adver-
tisement was made. [449E-C]
2.2 It is appropriate that the compromise should be
accepted with certain variations viz. availability of extra
area to the school, escalation of the ground rent and provi-
sion for automatic escalation of ground rent of 10% once in
every 10 years. The permission is accordingly accorded to
the Board of Governors to enter into compromise on behalf of
the school. [449E & 449H; 450A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: I.A. No. 1 of 1989.
IN
Civil Appeal No. 3334 of 1982.
From the Judgment and Order dated 16.9.1982 of the
Calcutta High Court in Appeal No. nil.
Kapil Sibal, R.F. Nariman and Vineet Kumar for the Petition-
er.
Dr. Shankar Ghose, H.N. Salve, G. Joshi, A.K. Sil, Ms.
Urmil Narang (N.P.), C.S. Vaidyanathan, Vivek Gambhir (N.P.)
and Praveen Kumar for the Respondents.
The following Order of the Court was delivered by
MISRA, J. This civil appeal by special leave is at the
instance of a builder who had entered into a contract with
the Board of Governors of the La Martiniere School at Cal-
cutta in respect of certain immovable property of the School
to be taken by the builder on permanent lease.
Christopher Martin Desgranges Martin left behind a will
which stipulated the setting up of a school for the benefit
of the city of Calcutta and upon his death the will was
probated and the executors
447
set up the school. The Board of Governors of the School
(hereinafter ’Board’) among others has the reverend Bishop
of the city of Calcutta as its Chairman and a retired
Major-General of the Indian Army as a member. The Old Mar-
tinians Association (hereinafter ’Association’) being a body
of the old students of the School resisted the request of
the School before the High Court when it applied for accept-
ance of the agreement of lease of 1981. A learned Single
Judge while agreeing on principle to accord sanction asked
for further details. The Division Bench made certain direc-
tions in an appeal taken to it by the builder and the inter-
im directions form the basis of subject-matter of this
appeal.
During the pendency of the appeal in this Court the
builder and the School entered into a fresh agreement on
12.9.1986 to which the Association is also a party. Under
the agreement more favourable terms for the School were
stipulated, such as--(1) annual payment of ground rent of
Rs.22,000 during the period of lease; (2) as against a one-
time payment of Rs.31 lakhs in the 1981 agreement, a recur-
ring annual payment of about Rs.50 lakhs; and (3) built-in
area of 60,000 square feet to enable extension of the School
and earning of rental income. Apart from these, it is stated
that under the 1981 agreement the School had entered into
arrangements with prospective lessees and had received a
substantial sum of money by way of advance from them in
respect of approximately 53,000 square feet to be construct-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
ed. The builder under the 1986 agreement took the responsi-
bility of dealing with the prospective lessees--either by
refunding the money or providing leasehold area from out of
its share.
It is not disputed that a total area of about 1,80,000
square feet would be available as a result of the construc-
tion agreed to be raised by the builder under the 1986
agreement. Parties decided to file an application for com-
promise before this Court in the pending appeal and the
petition was duly drawn up on 12.9.1986. It was signed on
behalf of the Board by the Chairman and Major General B.M.
Bhattacharya’, Anjan Dey in his personal capacity and as
President of the Association and the builder. Mr. Anjan
Dey’s signature in his personal capacity was duly attested
by Mr. P.L. Agarwal, his Advocate and his signature as
President of the Association was duly witnessed by Mr.
Bhankar Kar, Secretary of the Association. This application
was, however, not presented in this Court until some time in
May, 1989, for difficulties which have been attempted to be
explained by the School. After this application was made the
Association represented by Mr. Amit Bikram Roy resisted it.
Rejoinders have been filed on behalf
448
of the School and the builder to the objection. The original
compromise petition has been produced. The builder has also
placed on record the proceedings of the Board of the Associ-
ation dated 11th September, 1986--a day before the compro-
mise was signed. The resolution of the Association’s Board
reads thus:
"RESOLVED that in view of finalisation of
pending case at Supreme Court of India regard-
ing dispute arising out of Property Develop-
ment at La Martinique for Boys, Calcutta as
petitioned by Developer/Contractor Damodar
Ropeways & Construction Co. Pvt. Ltd. with one
of the parties being Mr. Anjan Dey and Old
Martinians Association, Mr. Anjan Dey be and
is hereby authorised to act on behalf of the
Association for the compromise solution as
drawn up by the Association’s Solicitors M/s.
Khaitan & Co. and as already approved by all
parties concerned subject to permission by the
Hon’ble Supreme Court."
The proceedings were signed by Mr. Shankar Kar, General
Secretary, Ms. Joyita Sen, Treasurer, Messrs Amit Bikram
Roy, Vice-President, Ashoke Paul, Anjan Dey, President and
Ms. Raktima Dutt.
Objection of the Association to the petition of compro-
mise is mainly on two grounds (1) lapse of three years
between the date of signature of the petition by the parties
and its filing; and (2) want of authority of Mr. Anjan Dey
to enter into the compromise.
The delay in filing the compromise petition in Court has
been attempted to be explained on behalf of the School and
the builder. If the compromise is genuine and lawful, the
delay in presentation in Court could at the most, if at all,
be in the realm of equity and would not be otherwise materi-
al. The resolution of the Board of the Association of 11th
September, 1986, extracted above is a complete answer to the
second ground as it clarifies the position that all parties
had agreed to the compromise and it was intended to be
presented before this Court for permission to enter into
compromise. Mr. Anjan Dey had been authorised to associate
himself for the purpose. It is not the contention of the
Association that the whole or any part of the agreement is
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
unlawful; nor is it the contention of any of the parties
that the petition has not been signed by him or them. The
compromise is, therefore, in accordance with the provisions
of Order XXIII, rule 3 of he Code of Civil Procedure and can
be acted upon.
449
Before the compromise is accepted it is for the Court to
be satisfied that the terms are in the interests of the
Trust. Dr. Ghosh for the Association strenuously contended
that the property was very valuable even as vacant site in
view of the recent escalation of price of land in Calcutta
and if a genuine attempt is made there was possibility of a
higher offer being made and the interest of the School
should, therefore, not be sacrificed by allowing it to enter
into the compromise. When we suggested to Dr. Ghosh that the
Association could provide a guarantee to accept and work out
the ten, as in the compromise in the event of the response
to the advertisement not being as favourable, he was not
willing to do so. We do not think that it is in the interest
of the School to reject the agreement on the representation
of Dr. Ghosh that there was scope of receiving better offers
if advertisement was made. A solemn agreement has been
entered’ into. The builder has already spent substantial
sums of money on the property. The plan has been sanctioned
by the Corporation and we are told that under the changed
regulations it would be difficult for the School to obtain a
fresh sanction. Three years have now been lost on account of
the compromise not having been placed before the Court and
following the course suggested by Dr. Ghosh involves an
element of uncertainty to which the School should not be
exposed. Under the agreement forming the subject-matter of
compromise the School would ,have space available for expan-
sion in the near future. Keeping these aspects in view, we
have thought it appropriate that the compromise should be
accepted but with certain variations.
As we have already stated, built in area of 1,80,000
square feet would be available under the agreement and
excluding about 50,000 square feet of built in area which
may be set apart for the purpose of meeting the prospective
lessees (we express no opinion about the tenability of such
claim) who had entered into arrangements with the School,
1,30,000 square feet would be available. Out of it the
School has been given 60,000 square feet and the builder is
to take 70,000 square feet. We suggested to Mr. Nariman for
the builder that the constructed area of 1,30,000 square
feet should be equally divided between the School and the
builder and on instructions from his client (present in
Court) Mr. Nariman has fairly agreed to do so. Since the
annual ground rent had been fixed at Rs.22,000 three years
back, we indicated to Mr. Nariman that the sum should be
escalated and he has agreed to have it enhanced to Rs.40,000
per year after receiving consent of his client. We are of
the view that there should be an escalation clause in regard
to the ground rent and once in every ten years escalation of
ten per cent in the annual ground rent beginning from 1990
450
should be provided. These three terms in our view suffi-
ciently protect the interests of the School and the Trust.
We accordingly accord permission to the Board of Governors
to enter into compromise on behalf of the School. The civil
appeal is disposed of and the terms of compromise with the
three modifications indicated as to availability of extra
area of 5,000 square feet to the School, escalation of the
ground rent to Rs.40,000 from Rs.22,000 and provision for
automatic escalation of ten per cent once on very ten years
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
shall be incorporated in the decree while the other terms as
agreed to by the parties shall also form part of the decree
to be drawn up in the appeal.
We have not considered it in the interests of the par-
ties to transmit the matter to the Calcutta High Court as
that would protract the matter and the order of the Single
Judge might be challenged in appeal and ultimately the
dispute may again be brought before this Court. Another
round of such litigation would be time-consuming and would
not at all be in the interest of anyone.
T.N.A. Appeal disposed of.
451