Courts will be cautious in exercising inherent powers to interfere with a consent decree except when an exceptional or glaring error is recorded apparently: Supreme Court of India

Consent decrees are intended to create estoppels by judgment against the parties, thereby putting an end to further litigation between the parties. The court would be slow to unilaterally interfere in, modify, substitute or modulate the terms of a consent decree unless it is done with the revised consent of all the parties thereto. However, this formulation is far from absolute and does not apply as a blanket rule in all cases.

This auspicious judgment was recently passed by the Supreme Court of India in the matter of COMPACK ENTERPRISES INDIA (P) LTD. V BEANT SINGH [Special Leave Petition (Civil) No. 2224­2225 of 2021] by Honourable Justice Mohan M. Shantanagoudar.

These petitions arise out of judgments of the High Court dated 14.02.2019 and 25.07.2019 wherein by the first impugned judgment the High Court disposed of regular first appeal against the judgment and order of the Additional District Court Delhi whereas in the second impugned judgment the HC disposed of a Review Petition concerning the first judgment.

The facts of the case are, the case was filed for possession of a ground floor property in G.T. Karnal Road, Industrial Area, Delhi. Beant Singh is the owner of the suit property and he through M/s Channa Auto Agencies Ltd., of which he is a Director, executed a license agreement in favour of M/s Compack Enterprises for a period of 30 months in consideration for a monthly license fee of Rs. 28,000/ (hereinafter, 2000 Agreement’). Later, Compack Enterprises merged with Compack Enterprises India (P) Ltd. and the agreement continued with mutual consent of the parties and was later renewed in 2006. However, after the expiry of this renewed agreement, the possession of the property was not relinquished and hence a suit was filed for recovery of possession and mesne profits.

The HC held that the admission made by the parties justify decreeing the suit for possession and directed that the possession of the entire suit property is to be handed over to the respondent. However, in the review petition, it was contended that HC erred in recording terms of the consent decree since, the judgment recorded that the mesne profits be increased by 10% every 12 months, instead of 10% increase every 24 months and that the possession of the entire suit property measuring 5,472 sq. ft. will be handed over when the documents on record showed that only 2,200 sq. ft was in possession.

The Court relied on Gariwala v. Union Bank of India (1992) 1 SCC 31 to state that, “A consent decree would not serve as estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. Further, this Court in the exercise of its inherent powers may also unilaterally rectify a consent decree suffering from clerical or arithmetical errors, so as to make it conform with the terms of the compromise.

Thus, the Court stated, “It is high time that the Petitioner stops making efforts to circumvent delivering possession of the suit property to the Respondent. The High Court was correct in upholding the terms of the consent decree directing Petitioner to hand over possession of the entire suit property of 5.472 sq. ft. to the Respondent, and we see no reason to interfere with this part of the consent decree.

However, on the issue of mesne profits, the Court observed that “The learned Single Judge’s order has given rise to a lot of confusion. Given this background, and looking at the preponderance of probabilities, we are inclined to give the benefit of doubt to the Petitioner. Therefore, we hold that the intention of the compromise between the parties was that there should be a 10% increase in mesne profits every alternate year. The recording of a 10% increase after every 12 months in the consent decree was an inadvertent error, which we have now rectified.

Thus, the Apex Court overturned the second judgment related to mesne profits and also disposed of the petition with an order of handing over the possession of the suit property immediately since the petitioner’s conduct was a blatant disregard for the Court order.

Click here for judgment

Leave a Reply

Your email address will not be published. Required fields are marked *