Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2342 OF 2008

Muni Reddy &  Anr.                    …..Appellant(s)

VERSUS

C. Nagaraju & Ors.   …..Respondent(s)

                 J U D G M E N T

Abhay Manohar Sapre, J.

1.   This appeal is directed against the final

judgment and order dated 02.01.2008 of the High

Court of Karnataka at Bangalore in Regular Second

Appeal No.804 of 2001 whereby the Single Judge of

the  High Court  dismissed  the  appeal filed  by the

appellants  herein  and  affirmed  the judgment  and

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decree dated 02.08.2001 passed by the District &

Sessions Judge, Bangalore Rural Dist., Bangalore.  

2. In order to appreciate the short issue involved

in the appeal, it is  necessary to set out  few facts

infra.

3. The appellants are the plaintiffs  whereas the

respondents are the defendants in the civil suit out

of which this appeal arises.

4. The appellants (plaintiffs) filed a civil suit (O.S.

No.3/90) against the respondents (defendants) in

the Court of 2nd Additional Civil Judge (Sr.

Division), Bangalore for cancellation of sale deed

dated  24.08.1989.  The respondents contested the

suit. By judgment/decree dated 16.09.1997, the

Trial Court dismissed the suit.  

5. The appellants (plaintiffs) felt aggrieved and

filed  first  appeal  (R.A. No. 18/97)  in the Court of

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District and Sessions Judge, Bangalore Rural

District.  By judgment  dated  02.08.2001, the first

Appellate  Court  dismissed  the  appeal  and upheld

the judgment/decree of the Trial Court.  

6. The appellants pursued the matter further and

filed second appeal in the High Court being

R.S.A.No.804/2001. Subsequently, the parties

compromised the  matter  and, therefore, the  High

Court (Single Judge) by order dated 10.04.2002

disposed of the appeal in terms of compromise

arrived at between the parties.

7. Thereafter, defendant No. 2 (C Naga Raju),

respondent No. 1 herein, filed an application in the

disposed of appeal (RSA No. 804/2001) and

complained therein that the compromise arrived at

between the parties, which resulted in disposal of

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the second appeal, is not binding on him and

prayed for recalling of the order dated 10.04.2002.  

8. The  High  Court, by order dated 23.07.2002

dismissed the application filed by defendant No. 2

(respondent No.  1 herein).  Aggrieved by  the said

order, defendant No.2 filed appeals by way of special

leave in this Court.   By order dated 04.08.2003,

this  Court  allowed  the  appeals (Civil  Appeal  Nos.

5531­32/2003 etc.etc.) and while setting aside the

order dated 23.07.2002 remitted the matter to the

High  Court for fresh consideration in accordance

with law including to decide the question of

consideration of the compromise petition. The order

reads as under:  

“Leave granted.

 When a Second appeal came up for consideration before the High Court, it disposed of the same in the following terms:  

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"Mr. Siddappa, learned counsel files power for respondent  No.2. Both the sides have filed the compromise petition. All the parties are present.  Advocate for both  sides  are  also  present.  The compromise petition is allowed. In view of the compromise petition, the appeal stands disposed of. Draw the decree accordingly."  

Whether the compromise had really been entered into between the parties or not was not inquired into by the High Court in terms of Order XXIII Civil Procedure Code.  

Further, it is not clear as to the impact of the  Memo filed before  the  Court  on  the appeal as a whole. The same should have been examined by the High Court and a decision should have been taken by it.  

Therefore, we set aside the order made by the High Court and remit the matter to the High Court for fresh consideration in accordance with  law  including the question of consideration of the compromise petition.

 The appeals are allowed accordingly.”

9. After the remand, the High Court took up the

matter and on few dates fixed the case for recording

evidence of the  parties to decide the question of

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genuineness of the compromise as is clear from the

order sheets dated 26.07.2006, 03.09.2007,

26.10.2007, 12.11.2007, 18.12.2007 (Annexures P­

8/9).  

10. However, the High Court then did not pursue

the proceedings in relation to the genuineness of the

compromise and went on to observe that in terms of

this Court's order dated 04.8.2003, once the matter

is examined on merits, there is no need to go into

the genuineness of the compromise petition. This is

what the High Court observed:

“8…………..I do not find any need to adjourn the  matter to some other  date for cross examination of respondent No.2  who has filed his affidavit purporting to be by way of evidence in support of his application for setting aside the compromise petition for two reasons.   Firstly, the Supreme Court has itself set aside the judgment/compromise decree passed by this Court on 10.04.2002. Secondly, the Supreme Court has also observed that the matter has to be examined on merits and including the genuineness of the compromise or otherwise.

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9. It is obvious that if the matter is to be examined on  merits, there is no need for going into the genuineness of the compromise petition or otherwise and therefore I do not propose to  look into the contents of the affidavit itself which if at all looked into and is to be accepted requires the necessity for cross examination.  Instead,  I propose to proceed to judgment on merits of the appeal and, therefore, there is no requirement of cross examination of respondent No.2 as the very affidavit is not looked into.”

11. Having thus observed, the High Court did not

consider it necessary to examine the genuineness of

the compromise petition impugned by defendant No.

2 in his application dated 23.07.2002 and

proceeded to  decide the second  appeal on  merits

and by impugned order 02.01.2008 dismissed the

second appeal.  

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12. It is against this order of the High Court, the

plaintiffs  have  felt  aggrieved and filed  the present

appeal by way of special leave in this Court.   

13. Mr. Trideep Pais, learned counsel appeared for

the appellants and Mr. K. Radhakrishnan, learned

senior counsel for the respondents.

14. Having heard the learned counsel for the

parties and on perusal of the record of the case, we

are  inclined to allow the appeal and while setting

aside the impugned order remand the case to the

High Court for deciding the matter afresh as

directed hereinbelow.  

15. In our considered opinion, the High Court

erred in interpreting the order of this Court dated

04.08.2003 quoted supra. On mere reading of the

order dated 03.08.2003, it is clear that this Court

remanded the  matter to the High Court with a

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request to decide it afresh in accordance with law

including the question of consideration of the

compromise petition. This implied that the question

of consideration of compromise petition was

required to be decided first. It is for the simple

reason that if the compromise was held to be legal

and proper, there was no need to decide the second

appeal on merits. In other words, the need to decide

the second appeal on merits would have arisen only

if the compromise would have been held illegal and

not binding on the parties concerned.

16. The High Court, therefore, erred in not

considering the question of genuineness and legality

of the compromise as complained by defendant No.

2 and straightaway proceeded to decide the second

appeal on merits. In this process undertaken by the

High Court, the question as to whether the

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compromise was legal or not could not be gone into

on its merits, which it ought to have been gone into

in the first instance.

17. In the light of the foregoing discussion, the

impugned order of the  High  Court is not legally

sustainable as the same was passed without

properly appreciating the purport of the directions

of this Court contained in the order dated

04.08.2003.   It, therefore, caused prejudice to the

rights of the parties.

18. In view of the foregoing discussion, the appeal

succeeds and is allowed. Impugned order is set

aside. The case is remanded to the High Court for

deciding the matter afresh as directed above.  

19. The High Court while deciding the question of

genuineness of the compromise application, as

directed by this Court’s order dated 04.08.2003,

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may consider  it  proper to remit the matter to the

Trial Court for the purpose of recording evidence of

the parties in time bound period. On receiving the

evidence from the Trial Court, the High Court would

proceed to decide the question in the light of

evidence adduced by the parties.

20. In case the compromise is held legal and

proper, there will be no need to decide the second

appeal on merits. It is for the reason that in such

eventuality, the order dated 10.04.2002 disposing of

the  second appeal in terms of  compromise  would

continue to hold the field as being legal and proper.  

21. However, if the compromise is held illegal, the

order dated 10.04.2002 will stand set aside.   As a

consequence thereof, the second appeal will  revive

for being heard on merits. The High Court  will then

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proceed to decide the second appeal on merits  in

accordance with law.

22. The High Court is requested to dispose of the

matter, as observed supra, as expeditiously as

possible preferably within 6 months.

                                    .……...................................J.                     [ABHAY MANOHAR SAPRE]

                                    .……...................................J.                     [S. ABDUL NAZEER]

New Delhi, September 20, 2018.

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