Suit – Ex-parte decree – Agreement based on ex-parte decree – Ex-parte decree having been set aside, parties if could rely upon the agreement – Suit property owned by the State, however, defendant No.1 perfected his rights by adverse possession and transferred all his rights in favour of the plaintiff as also handed over possession – Defendant No.1 allegedly likely to transfer the said land again in favour of the third party and that some officers of the State tried to remove the fencing put up by the plaintiff on the suit land – Suit for declaration, permanent injunction and mandatory injunction by plaintiff, against defendant no. 1 and the State – Suit decreed ex-parte – Appellate court set aside the same and remanded the matter to the trial court – Suit pending before the trial court – Meanwhile agreement between the State Municipal Corporation and the plaintiff that the plaintiff would vacate the suit land, allowing the Corporation to construct the bus stand, in lieu of separate plots – Plots allotted but some were cancelled later – Thereafter arbitral award passed whereby plaintiff would pay the stipulated amount to the Corporation and in turn the Corporation would fulfil its obligation of allotment of land – Objections by the State to the award, allowed by the trial court – In revision filed by the plaintiff, the High Court set aside the order of the trial court – Correctness: Held: Ex-parte decree having been set aside, there was no occasion for the plaintiff to further act upon the agreement since no rights had crystallized to the parties – Basis of that agreement was the ex-parte decree of declaration and injunction in favour of the plaintiff – Once the ex-parte decree has itself been set aside and the suit was to proceed further from the stage of filing of written statement by the State, the agreement would lose all its credibility assuming there was any semblance of any right to enter into the agreement – Agreement would not have any sanctity in the eye of law even inter se parties – Right created in the plaintiff under the ex-parte decree stood extinguished and, thus, the Corporation ought to have been careful enough of not placing any reliance any further on the said agreement – Application filed by the Corporation u/s 89 CPC was also not maintainable based on the agreement – There appears to be some kind of collusion between the Corporation and the plaintiff – Whether or not there was any condition in the agreement for appointment of Arbitrator, the very basis of entering into the agreement having been set aside, the agreement itself could not have been relied upon by any of the parties – Suit land admittedly was owned by the State – Even if the State had allotted it to the Corporation for constructing a bus stand, the Corporation could not have dealt with it and treated it to be in the ownership or possession of the plaintiff by entering into the agreement – Corporation would be bound as an allottee of the State to utilise the said land for the purpose for which it was given – It ought to have taken appropriate steps for removal of possession of the plaintiff – Thus, the trial court justified in allowing the application by setting aside the award – High Court erred in not considering the relevant aspects and in placing reliance on the statement made by the State before the trial court that the State had no interest inasmuch as it had allotted the land to the Corporation to set up a bus stand – Impugned order passed by the High Court set aside. [Paras 4-7]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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