Delhi High Court Upholds Settlement Agreement at Reduced Interest Rate, Safeguarding Appellant’s Legal Rights

Case Name: Anil Sharma & Ors v. Genesis Finance Co. Ltd. & Ors 

Case No.: RFA(OS)(COMM) 39/2019 

Dated: May 08, 2024 

Quorum: Justice Vibhu Bakhru and Justice Tara Vitasta Ganju 



In this intra-court appeal, the appellants have challenged a judgement and decree dated 27.03.2019 (referred to as the challenged order) issued by the learned Single Judge in CS(COMM) 307/2016, which is captioned Genesis Finance Company Ltd. v. Anil Sharma & Others. 

By the contested order, the learned single judge granted respondent no. 1’s application under Order XIIIA of the Code of Civil Procedure and issued a preliminary decree in accordance with Order XXXIV Rule 4 of the CPC, stating that the plaintiff was entitled to recover ₹2,03,00,000/-as a joint and several recovery from the appellants and respondent nos. 2 and 3 (defendants in the suit), together with interest at the rate of 18% annually from the date of the lawsuit’s institution until its realisation and 24% annually from the Settlement Deed dated 20.01.2014 until the date of the suit’s institution, or 31.03.2016.  

Furthermore, the educated Single Judge had also ordered costs to be measured at ₹2.5 lacs. The learned Single Judge gave the respondent nos. 2 and 3 and the appellants six months to pay the plaintiff’s debt; if they fail to do so, the plaintiff may seek a final decree for the sale of the mortgaged properties, or a portion of them, to recoup the outstanding amounts.  

The defendant had filed the aforementioned suit in order to recover ₹4,15,14,023.76/- (Rupees Four Crores Fifteen lakhs Fourteen thousand Twenty-Three and Seventy-Six paise only) as well as pendente lite and future interest at the rate of 36% per annum (reducing). The plaintiff also requested a decree for the sale of mortgaged properties as stated in Paragraph 4 of the complaint. 

The appellants have based their defence on the claim that they were misled into signing a Loan Agreement with the plaintiff on May 19, 2011 (henceforth referred to as the Loan Agreement) on the false impression that the loan came with a simple interest rate of 17.67% annually.  

On the other hand, the loan was structured with an interest rate of 17.67% (flat), which, when calculated using the decreasing balance approach, amounted to about 30.08%. This assumption was made when the documentation was created. 

The experienced single judge concluded that the appellants had no chance of winning their defence. Based on the appellants’ admission of the payment schedule that was a component of the loan agreement, the aforementioned conclusion was reached. Furthermore, there was no disagreement about the parties’ agreement to settle their differences over the outstanding liability and interest that was due on it when they signed the Settlement Agreement. 



  • Section 138 of the Negotiable Instruments Act, 1881. Penalises the dishonouring of any cheque written for “any debt or other liability” that has been partially or fully paid. Furthermore, there is coextensive accountability between the major debtor and the guarantor. So, in accordance with section 138, N.I., the guarantor cannot avoid liability. 



According to the appellants’ learned counsel, they were under the false impression that the equivalent monthly installment for loan facility repayment was ₹11,68,735/-. Nevertheless, they had paid back ₹2,61,98,620/- against a loan of ₹2,75,00,000/-, or 22.4 equal monthly installments. The plaintiff argued that the EMIs were based on a 30.08% annual interest rate, but that the plaintiff had deceitfully convinced appellant nos. 1 through 3 to agree to pay interest at the rate of 17.67%. 

According to his submission, if the annual percentage rate for the EMIs was 17.67%, the corresponding monthly installment would be ₹9,89,644. He presented evidence that the appellants signed the Settlement Agreement at the time the mother of appellants nos. 1 and 3 was brought into the intensive care unit. The appellants acknowledged that ₹2,03,00,000 was still owed as of January 20, 2014, but they had signed the Settlement Agreement in error because they had put their trust in the plaintiff.  

Additionally, he argued that the plaintiff had taken advantage of the appellants’ pressing need for money to force them to sign on the dotted line. He argued that the Settlement Agreement was unenforceable because it was signed while the appellants were extremely agitated and not in a normal mental state due to the mother of appellants nos. 1 and 3 being critically ill and admitted to the intensive care unit due to multiple organ failure. 

The court determined that the parties in question in the debt Agreement, the defendants committed to repaying the debt over the course of 36 monthly installments. The fixed amount for the monthly installment was ₹11,68,735/-. Consequently, there could be no misinterpretation of the payable interest. 



According to the court’s ruling, interest is computed over the whole loan duration. Thus, in this instance, the appellant would be required to pay a total of 53.01% in interest over the course of three years, or 17.67% annual interest. The appellants would be required to return ₹4,20,74,460/-, with the aforementioned interest being payable on the whole ₹2,75,00,000/-loan principal. Because the repayment schedule was attached to the loan paperwork and stated that the total amount above was due, the appellants could not have been misled about the method used to calculate the interest.  

The court determined that the plaintiff had filed complaints under Section 138 of the NI Act, which were pending in the Dwarka courts, because the appellants’ checks had been returned unpaid. Therefore, there could not have been any doubt at that point regarding the appellants’ knowledge of the conditions of the Loan Agreement. The parties to mediation were referred to by the court, and as a result, the appellants entered into a Settlement Agreement that was included in the mediation proceedings. 

The appellants had complete knowledge of the plaintiff’s allegation, the court further noted. It is evidently an afterthought to argue that the appellants were not in a proper state of mind since their mother was in the intensive care unit (ICU) at the relevant period. The appellants did not make any such claim in their written declaration. Furthermore unsubstantial is the claim that the appellants were not given access to the whole Settlement Agreement. Moreover, the written declaration that the defendants filed makes no mention of this kind. As said earlier, there is no disagreement regarding the implementation of the Settlement Agreement.  

Additionally, take note of the fact that even though the Settlement Agreement is clear and stipulates that interest will be paid at a rate of 36% annually on a decreasing balance basis, the learned Single Judge had lowered the pre-suit interest rate to 24% annually. The plaintiff has agreed to the impugned order’s reduction in interest rates from 36% to 24% annually, even though it is not discussed in it. We see no need to investigate this further as a result. 


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Judgment reviewed by Riddhi S Bhora. 

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If a party fails to comply with the deadline of the agreement it is not entitled to the extension of limitations – High court of MP


Case No: ARBITRATION REVISION No. 47 of 2022

Decided on:16th April, 2024


Facts of the case

The facts of the present case show that the termination occurred on June 25, 2004. While the petitioner filed a claim against termination on September 16, 2004, well past the 30-day window specified in condition 29 for bringing up a disagreement with the Authority’s Chief Executive Officer. As a result, the petitioner is not eligible to benefit from the extended three-year statute of limitations granted by Section 7-B (2-A) since they did not follow the schedule stipulated in clause 29 of the agreement.

Petitioner’s Contentions

The petitioner disputed the validity of an award made by the M.P. Arbitration Tribunal, claiming that the reference petition was rejected because it failed to comply with the agreement’s mandatory elements within the allotted time . The reference petition was dismissed by the Tribunal after it was determined that the petitioner had not used the internal remedy within the allotted time . The argument that Clause 29’s time limit is not required was denied, highlighting the significance of timely submissions to avoid evidence loss . The petitioner was not entitled to the extended three-year statute of limitations since they did not follow the deadline stipulated in Clause 29 of the agreement . The Tribunal denied the revision petition after finding no anomalies in the award.

Respondent’s Contentions

Rejecting the idea that the time restriction in Clause 29 is not required, the respondent contended that timely claims are essential to prevent loss of evidence . They stressed that in order to invoke the jurisdiction of the Tribunal, a reference petition must first be filed with the authority in accordance with the conditions of the work contract . Furthermore, the respondent argued that the contractor was still required to adhere to the administrative authority’s timeframe in accordance with the internal remedy outlined in Clause 29 , despite the additional three-year limitation period.

Court Analysis and Judgement

The ruling underlined how crucial it is to abide by the conditions of the work contract before utilizing the Tribunal’s jurisdiction and how the disagreement must be submitted to the final authority first . It was emphasized that an aggrieved party may file a complaint with the Tribunal within three years after the date of the cause of action in situations where the works contract does not contain a dispute resolution clause such as Clause 29 . The ruling further said that a party may not be eligible to receive the extended three-year statute of limitations if they do not comply with the deadline stipulated in Clause 29 of the agreement .

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BMC should have been cautious relying on the agreement- SC


Case No: 6884 OF 2012

Decided on:18th April, 2024

Quorum: Honourable Justice VIKRAM NATH

Facts of the case

A civil claim was filed by Satish Jain, the son of Dayanand Jain, naming one Rama, the son of Parasram, as defendant No. 1 a mandatory injunction, and a permanent injunction through Collector, Bhopal, as respondent No. 2. Defendant No. 1 has, however, been enjoying calm and continuous adverse possession over the suit land for the past 50–60 years, and as a result, he has perfected his rights through adverse possession and has turned the land into his own. Additionally, it was claimed that defendant No. 1 had given the plaintiff all of his rights, title, and interest over the suit land. The plaintiff installed wired fencing and began to enjoy possession of the suit land. The plaint also alleges that defendant No. 1 learned that some State agents and workers had visited the suit land and attempted to remove the fencing, and that he was likely to transfer the aforementioned land once more in favor of the third party. Under these conditions, the plaintiff was obliged to file a lawsuit seeking a declaration, a mandatory injunction, and a permanent injunction. BMC filed an application under Section 89 of the CPC, requesting that the plaintiff be ordered to pay Rs. 30,00,000 (Rupees Thirty Lakhs only) in accordance with the terms of the agreement of July 30, 1991, against the value of the granted land. It was also mentioned that BMC is prepared to fulfill its responsibilities should the entire sum be deposited. The objections made it clear that BMC did not have the authority or business to deal with the land without the State’s express approval or agreement, and that the State of Madhya Pradesh still retains title of the site.


The plaintiff has not received any such declaration. Since the ex-parte decree was overturned, the plaintiff had no opportunity to take further action regarding the agreement because no rights had become clear to the parties. The plaintiff’s ex-parte decree of declaration and injunction served as the foundation for that arrangement. This is assuming that the agreement ever had any validity in the first place. There seems to be evidence of BMC and the plaintiff working together in some way. The entire foundation for entering into the agreement was thrown aside, therefore regardless of whether the agreement contained a provision for the appointment of an arbitrator, none of the parties could have relied on the agreement itself. BMC could not have handled it or treated it as being in the plaintiff’s ownership or possession, even if the State had given it to them to build a bus station. BMC would be required to use the aforementioned land for the reason it was given as an allottee of the State. It was legally required to take the necessary actions to remove the plaintiff’s possession, which was completely unauthorized and unlawful.

Court Analysis and Judgement

The agreement itself would not have any legal validity, even between the parties, after both orders were overturned and the lawsuit moved forward from the point where the appellant-state filed its written declaration. Because the plaintiff’s entitlement established by the ex-parte order was extinguished, BMC should have been cautious to avoid depending on the agreement going forward. By reversing the award, the Trial Court was justified in granting the application. The High Court made an error in grave error in failing to take into account pertinent factors and relying solely on the appellant-state’s declaration made in front of the trial court that the state had no interest because it had given BMC the land for a bus stand and, as a result, should be removed from the list of parties as defendant no. 2. In any event, unless the State has already disposed of or withdrew all of the applications, they are all still pending before the Trial Court. Considering the aforementioned, the appeal is justified and granted as a result. The High Court’s contested order is overturned. The lawsuit will be heard by the Trial Court, which will make a merits decision based on the evidence .

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An addition merely on the basis of photocopy of alleged agreement to sell is completely unwarranted and unjustified:- Delhi High Court


Case No:-ITA 984/2019

Decided on:-04-03-2024


Facts of the case:-

The instant appeals concern Assessment Year [“AY”] 2010–11. The case began when the Assessing Officer [“AO”] received information in the form of a photocopy of an alleged a sale agreement dated March 5, 2010. According to the aforementioned hardcopy of the sale agreement, the assesse would be considered a co-purchaser and the land in Ghittorni, Delhi, would be acquired for a total value of Rs. 11,00,00,000/-. According to the allegations, the assesse paid an advance of Rs. 2,75,00,000, or 25% of the total cost for the purchase of the aforementioned land. A check for Rs. 1,38,00,000 was claimed to have been made out of the total amount specified and the  remaining sum or Rs. 1,37,00,000/- was purportedly paid in cash at the time the aforementioned sale agreement was executed. In light of the aforementioned, the assesse received a notice on September 26, 2014, in accordance with Section 148 of the Income Tax Act, 1961 [the “Act”]. It appears that on November 07, 2014, the assesse filed the Income Tax Return [“ITR”], stating that their total income for the academic year 2010–11 was Rs. 44,676. As a result, the assesse was the subject of legal action brought under Section 143(3) read with Section 147 of the Act. The Assessing Officer (AO), utilizing the photocopy of the aforementioned sale agreement and the assessment order dated March 28, 2016 among other things added Rs. 9,00,00,000/-to the revenue of the assesse due to the acquisition of the aforementioned land from unidentified sources. The assesse filed an appeal with the Commissioner of Income Tax (Appeals) in opposition to the decision made by the AO. [“CIT(A)”]. By order dated December 15, 2017, the CIT(A) limited the addition of Rs. 9,00,00,000/-to Rs. 1,37,00,000/-on the grounds that only the aforementioned amount can be linked to the assesses income for the applicable AY. The CIT(A) did not however, question the authenticity of the photocopy of the purported agreement to sell. The Revenue and the assesse both filed cross appeals with the ITAT as a result of the CIT(A)’s order. The assesses appeal to the ITAT, ITA No. 3643/Del/2018, was against the removal of Rs. 7,63,00,000/- whereas the Revenue’s appeal, ITA No. 4398/Del/2018, was against the Consistent increase of INR 1,37,000,000. By common order issued May 28, 2019 the ITAT dismissed the Revenue’s appeal while allowing the assesses appeal.


The learned counsel of the petitioner states that the AO, on the other hand, while relying on the photocopy of the alleged agreement to sell, proceeded to make an Addition treating the consideration to be Rs.11,00,00,000/-. The AO Held that the genuineness of the said document cannot be denied as the signatures of the relevant parties in the aforesaid agreement resembles with the signatures of the assesse and therefore, it has been presumed that the assesse had no explanation to offer in that regard. The learned counsel of the respondent states that the assesses stand was to the effect that the said land was purchased against a consideration of Rs.2,00,00,000/-

Court Analysis and Judgement:-

Court states that the entire foundation is laid on the basis of the photocopy of the alleged agreement to sell dated 5 March 2010. The original copy of the said document has not seen the light of the day. Further, there is no other evidence to support the veracity of the recitals made in the aforesaid alleged agreement. Therefore, under the facts of the present case, the same cannot be construed to be a sustainable ground for making addition to the income of the assesse. We thus, find that these appeals do not raise any substantial question of law. The ITAT has rightly opined that under the facts of the present cases sustaining an addition on the basis of photocopy of alleged agreement to sell would be completely unwarranted and unjustifiable. The appeals are therefore, dismissed. Pending Application(s), if any, are also disposed of, accordingly.

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The Counsels reached an amicable resolution to the issue at hand through mutual agreement among the parties in the Supreme Court.

In the case of K. Balasubramani vs. The Tamil Nadu Government (Special Leave Petition(C)Nos.8251-8252/2022), the petitioners are tenants in various shops owned by the respondents, who are landlords. The respondents oversee the affairs of a Hindu temple under the Hindu Religious and Charitable Endowments Act of 1959.

Section 78 of the Act declares the tenants to be encroachers after the lease period has expired. The High Court affirmed the impugned action and directed the tenants to give the landlord peaceful, vacant possession of the premises, which each tenant has individually occupied, in accordance with the impugned judgement and order dated, which was passed in a batch of writ petitions filed by the tenants.

As a result, the counsels for both parties reached an amicable resolution to the issue at hand on mutually acceptable terms and on the basis of the instructions given to the learned counsel for each party.

The following are the agreed terms:

  1. The authorities’ ejectment order, issued in accordance with the Act’s provisions, is upheld.
  2. With respect to 19 tenants, the landlord may initiate legal proceedings for possession immediately. Despite the opportunities provided thus far, they have yet to pay rent/occupation charges.
  3. Regarding the remaining 51 tenants: The eviction decree for each of these 51 tenants is upheld. They may, however, continue to use the area for an additional six months, as both parties have mutually agreed. The occupants of the demised premises have agreed, via their respective lawyers, to give the landlord peaceful and vacant possession of the properties by July 31, 2024. It is the revised rent from 2015 that these tenants are responsible for paying, not the rent from 2018. As such, they will continue to pay the rent at the rates changed in 2015 for as long as they are able to remain in the premises, in addition to paying off any outstanding arrears of rent, damages, or mesne profit, if any, within four months of today.

The court ruled that it is clear among the parties that the landlords intend to develop the property and provide better facilities to pilgrims. However, if the landlord ever develops by constructing shops, these 51 tenants will be given preferential treatment, subject to their participation in the allotment process and matching the highest bidder’s price.

With great endeavour both the parties reached an agreement to resolve this issue, bringing the protracted litigation to an end. Thus, the court disposed the petition.


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Written by – Surya Venkata Sujith

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