High Court of KeralaSingle Judge2018-03-07Original Petition dismissed.

Varghese @ Kunju v. Tony Zacharia

Case / Petition Number:OP(C).No. 3694 of 2017

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Alexander Thomas, J.
Judgment Date: 2018-03-07
Court Decision / Holding: So, the Original Petition is bereft of any merit, the same will stand dismissed. The interim stay passed by this Court will also stand vacated.
Final Disposition: Original Petition dismissed.

Parties to the Case

Appellants / Petitioners

Varghese @ Kunju

Respondents

Tony Zacharia

Legal Representation & Advocates

Counsels for Petitioners

• Sri. G. Bhagavat Singh

Counsels for Respondents

• Sri. S. Manu

Case Synopsis & Summary

This is an Article 227 petition filed in the High Court of Kerala by Varghese @ Kunju, the judgment debtor in EP No. 41/2015 in OS No. 399 of 2013 before the Sub Court, Kottayam. The respondent/plaintiff, Tony Zacharia, sought realization of Rs. 19.08 lakh with interest on Rs. 18 lakh alleged to have been paid as advance for a sale of plaint schedule property. The suit record shows that the petitioner and respondent entered into a sale agreement dated 6.6.2013, under which Rs. 18 lakh was paid as advance and the sale deed was to be executed within six months, but the petitioner did not perform. It later emerged that the petitioner allegedly sold part of the property. The case was referred to Lok Adalat, which produced Ext. P-3 compromise petition dated 19.12.2014 and Ext. P-4 Lok Adalat award. The compromise provided for a total settlement of Rs. 8.2 lakh, of which Rs. 7 lakh was paid on 19.12.2014 and the balance Rs. 1.2 lakh was to be paid within two months. Clause 3 of Ext. P-3 provides that if the balance is not paid, the respondent may realize the original amount (Rs. 18 lakh) less Rs. 7 lakh already paid, with interest. The petitioner argued that this penalty-like clause is unenforceable and that the compromise could not bind him as a decree. The court upheld the Lok Adalat award as a deemed civil court decree under Sec. 21 of the Legal Services Authorities Act and held that the clause is enforceable. It rejected the petition and dismissed it, vacating any interim stay. The decision relied on a Supreme Court rendering in K.N. Govindan Kutty Menon v. C. D. Shaji to affirm the decree status of the award. The petition was accordingly dismissed.

Provisions of Law Cited

Article 227 of the Constitution of IndiaSec. 21 of the Legal Services Authorities Act, 1987

Legal Doctrines & Maxims

Deemed civil court decree under Sec. 21 LSA Act
Freedom of contract (liberty to settle)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that Ext.P-3 clause 3 is a penalty clause and not a binding condition enforceable as part of a compromise; the Lok Adalat award (Ext. P-4) does not automatically create a civil-decree enforceable against the judgment debtor, and the overall settlement is not to be treated as a valid decree. He argues that the original claim of Rs. 18 lakhs is excessive and the condition to pay Rs. 1.2 lakh within two months is unenforceable; he also submits that impleading the additional decree holder, who allegedly received the decree, was unnecessary. The petitioner asserts potential fraud or coercion is absent, but maintains the agreement and its terms should not be binding if procured improperly. He seeks to set aside Ext. P-8 proclamation and to call for records to challenge the proceedings below. respondents:The respondent contends that Ext. P-3 compromise, incorporated into Ext. P-4 Lok Adalat award, is binding and enforceable as the decree of a civil court under Sec. 21 LSA Act; the balance of Rs. 1.2 lakh due within two months was a condition to be complied with, failing which the respondent could realise the original amount less Rs. 7 lakh already paid, with interest. He argues that the parties voluntarily entered into the compromise with informed consent and that the Lok Adalat award is valid and capable of execution; the petition has no merit and is to be dismissed.

Contentions of Respondents

The respondent contends that Ext. P-3 compromise, incorporated into Ext. P-4 Lok Adalat award, is binding and enforceable as the decree of a civil court under Sec. 21 LSA Act; the balance of Rs. 1.2 lakh due within two months was a condition to be complied with, failing which the respondent could realise the original amount less Rs. 7 lakh already paid, with interest. He argues that the parties voluntarily entered into the compromise with informed consent and that the Lok Adalat award is valid and capable of execution; the petition has no merit and is to be dismissed.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
K.N. Govindan Kutty Menon v. C. D. Shaji	(2012) 2 SCC 51	Positive	Cited to support that Lok Adalat awards under Sec. 21 LSA Act are deemed decrees of a civil court; the court relies on this proposition to treat Ext. P-4 as a decree.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against Varghese @ Kunju v. Tony Zacharia and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS WEDNESDAY, THE 7TH DAY OF MARCH 2018 / 16TH PHALGUNA, 1939** **OP(C).No. 3694 of 2017** **E.P.NO. 41/2015 IN O.S.NO. 399 OF 2013 OF THE SUB COURT, KOTTAYAM** ## **PETITIONER/JUDGMENT DEBTOR/DEFENDANT:** **VARGHESE @ KUNJU, AGED 73, S/O. THADATHIMAKKAL VARGHESE, VARANGANAKUNNU PURAYIDOM, FROM CHIRAKKATTU HOUSE, MANARCADU PO., KUZHIPURAYIDAM KARA, MANARCADU VILLAGE, KOTTAYAM TALUK, KOTTAYAM PIN-686019** **BY ADV.SRI.G.BHAGAVAT SINGH** **RESPONDENT(S)/DECREE HOLDER/PLAINTIFF:** **TONY ZACHARIA, AGED 38, S/O. ZACHERIA, RESIDING AT MOONGAMAKKAL HOUSE, ANIKADKARA, ANIKAD VILLAGE, KOTTAYAM TALUK, KOTTAYAM PIN-686503** ## **BY ADV. SRI.S.MANU** **THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 07-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **PBS** ## **OP(C).No. 3694 of 2017 (O)** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** |**EXHIBIT P1:**|**PHOTOCOPY OF THE PLAINT IN OS NO.399/2013 FILED BY**| |---|---| ||**THE RESPONDENT BEFORE THE COURT BELOW DATED**| ||**9.12.2013**| |**EXHIBIT P2:**|**PHOTOCOPY OF THE WRITTEN STATEMENT FILED BY**| ||**THE PETITIONER BEFORE THE COURT BELOW DT**| ||**3.3.2014**| |**EXHIBIT P3:**|**PHOTOCOPY OF THE COMPROMISE PETITION FILED BY**| ||**THE RESPONDENT AND PETITIONER BEFORE THE**| ||**COURT BELOW DATED 19.12.2014**| |**EXHIBIT P4:**|**PHOTOCOPY OF THE AWARD OF THE LOK ADALATH**| ||**DATED 23.01.2015**| |**EXHIBIT P5:**|**COPY OF THE E.P.NO.41 OF 2015 IN OS NO.399 OF 2013**| ||**FILED BY THE RESPONDENT BEFORE THE COURT**| ||**BELOW**| |**EXHIBIT P6:**|**COPY OF THE OBJECTION FILED BY THE PETITIONER**| ||**BEFORE THE COURT BELOW**| |**EXHIBIT P7:**|**COPY OF THE E.A.FILED BY THE PETITIOENR BEFORE**| ||**THE COURT BELOW IN EP NO.41 OF 2015**| |**EXHIBIT P8:**|**COPY OF THE PROCLAMATION NOTICE ISSUED BY THE**| ||**COURT BELOW ON 17.10.2017**| |**EXHIBIT P9:**|**COPY OF THE E.A.NO. 423 OF 2016 FILED BY THE**| ||**TRANSFEREE OF THE DECREE BEFORE THE COURT BELOW.**| **RESPONDENT'S EXHIBIT NIL /TRUE COPY/** **PA TO JUDGES** **PBS 5/4/2018** ## ALEXANDER THOMAS, J. ----------------------------O.P(C).No.3694 Of 2017 --------------------------------Dated this the 7th day of March, 2018. ## J U D G M E N T The main prayer in this Original Petition (Civil) filed under the enabling provisions contained in Article 227 of the Constitution of India is as follows : “(a) Call for the entire records from the court below and set aside Ext.P8 proclamation.” 2. Heard Sri.G.Bhagavat Singh, learned counsel appearing for the petitioner/judgment debtor and Sri.S.Manu, learned counsel appearing for the respondent/decree holder. 3. The petitioner herein is the judgment debtor in E.P.No.41/2015 and the defendant in O.S.No.399/2013 on the file of the Subordinate Judge's Court, Kottayam. The said Original Suit was filed by the respondent herein seeking a decree for realisation of Rs.19.08lakhs together with interest @12% per annum on the principal amount of Rs.18 lakhs from 6.12.2013 till realisation charged on the plaint schedule property. According to the respondent, he had entered into an agreement for sale of the plaint schedule property with the ::2:: O.P(C).No.3694 Of 2017 petitioner on 6.6.2013. It was agreed that the respondent will have to pay Rs.2 lakhs per cent to the extent measured and the execution of the sale deed was to be effected within six months. The petitioner herein had received Rs.18 lakhs on the date of agreement i.e., 6.6.2013, as advance towards the total sale consideration which was agreed to be fixed after measuring the property. However, the petitioner had failed to take any steps to discharge his obligations under the agreement and had not executed the sale deed in favour of the respondent even after repeated demands, etc. Later on enquiry, the respondent came to know that the petitioner had sold 2.94 Ares of the property proposed to be sold to the respondent, after sale agreement with the respondent was executed. Hence it is alleged in the suit that the petitioner herein had failed to perform his part of the agreement and had willfully committed breach of contract and that he ought to have executed the sale deed on or before 5.6.2013 and that the respondent was already willing and ready to perform his part to execute the sale deed, etc. The suit was filed for return of the purchase money advanced to the petitioner on the date of the execution of the agreement. The petitioner had entered appearance before the court below and had filed written statement. Later, the suit was referred to the Lok Adalath for settlement. Ext.P-3 ::3:: O.P(C).No.3694 Of 2017 compromise petition dated 19.12.2014 was entered into between the parties and Ext.P-4 award was duly rendered by the Lok Adalath, Kottayam, in terms of the provisions contained in the Legal Services Authorities Act, 1987. Ext.P-3 dated 19.12.2014 is the copy of the conditions of the said compromise reached between the parties, which read as follows : - “ 1. dÉÄß, ÕÞÆßAí æµÞ¿áçAIáK Äáµ 8,20,000/_ øâÉÏÞAß Èß¼æM¿áJßÏßGáUÄá¢ ¿ß ÄáµÏßW 7,00,000/_ (¯ÝáÜf¢ øâÉ) §çK ÆßÕØ¢ æøÞA¢ æµÞ¿áJßGáUÄáÎÞÃí. 2. ÌÞAß ÄáµÏÞÏ 1,20,000/_ (²øá ÜfJß §øáÉÄßÈÞÏßø¢) øâÉ ÕÞÆßAí §Ká ÎáÄW øIá ÎÞØJßÈµ¢ æµÞ¿áJí ÄàVJáæµÞUÞæÎKá¢ dÉÄß ØNÄßºîßøßAáKá. 3. §dÉµÞø¢ ÌÞAß ÄáµÏÞÏ 1,20,000/_ øâÉ øIí ÎÞØJßÈáUßW æµÞ¿áJí ÄàVAÞJ Éf¢ ¥ØW Ø¢¶cÏÞÏ 18,00,000/_ øâÉÏíAí dÉÄß ÌÞÇcÄæMGßGáUÄÞæÃKí ØNÄßºîßGáUÄá¢ ¿ß ÄáµÏßW §çK ÆßÕØ¢ æµÞ¿áJ Ø¢¶cÏÞÏ 7,00,000/_ øâÉ µáùºîí ÌÞAß ÄáµÏÞÏ 11,00,000/_ øâÉ ¥ÈcÞÏJàÏÄß ÎáÄW 12% ÉÜßÖ ØÙßÄ¢ ÕÞÆßÏíAí æµÞ¿áJáæµÞUÞæÎKá¢ dÉÄß ØNÄßºîßøßAáKá. ¿ß ÄáµÏíAí dÉÄßÏá¢ dÉÄßÏáæ¿ §Äø ÕØñáA{á¢ ÌÞÇcÄæMGßGáUÄÞæÃKá¢ ØNÄßºîßøáAáKá. 4. ¨ øÞ¼ß ÙV¼ßÏáæ¿ ¥¿ßØíÅÞÈJßW ¥ÈcÞÏçJÞæ¿ÞM¢ çÌÞÇßMßºî _I.A.No.3420/2013-_ Þ¢ 3420/2013_Þ¢ ÈOîV ÙV¼ßÏßæÜ ©JøÕí Õß¿áÄW æºÏîáKÄßÈí ÕÞÆßÏíAí ¦çfÉÎßÜïÞ ®Kí ØNÄßºîßøßAáKá. - 5.ÕÞÆß ÍÞ·Já ÈßKá¢ ÌÙá çµÞ¿ÄßÏßW ²¿áAßÏßGáU ÎáÝáÕX çµÞVGí ËàØá¢ ÕÞÆßÍÞ·çJÏíAí Äßøßæµ æµÞ¿áAáKÄßÈí §øáµâGøá¢ ØNÄßºîßøßAáKá” ## 4. Ext.P-4 is the award rendered by the Lok Adalath on ## 23.1.2015, which reads as follows : “Plaintiff and defendant present. A compromise petition filed. The suit is decreed in terms of the compromise petition and the compromise petition will became part of the award. Court fee will be refunded as per law.” ::4:: O.P(C).No.3694 Of 2017 5. As per the terms and conditions of Ext.P-3 compromise (which form part of Ext.P-4 award), the parties had agreed that the petitioner would pay a total amount of Rs.8.2 lakhs in the abovesaid transaction and that out of which, Rs.7 lakhs was paid by the petitioner to the respondent on the date of Ext.P-3 (viz.19.12.2014). These aspects are clear from Clause (1). As per clause (2), the balance Rs.1,20,000/(out of the total amount of Rs.8.2 lakhs) was undertaken to be paid by the petitioner within two months from 19.12.2014. As per clause (3) of Ext.P-3, it is agreed that in case the abovesaid balance amount of Rs.1,20,000/- is not paid within the said agreed time limit of two months, then the respondent will be at liberty to realise the entire original amount of Rs.18,00,000/-, after deducting the amount of Rs.7,00,000/- already paid on 19.12.2014, along with interest thereon @12% per annum. It is these vital conditions which form part of the award in Ext.P-4 which is deemed to be the decree of a civil court in view of the provisions contained in Sec.21 of the Legal Services Authorities Act. It is common ground that the petitioner have never paid the balance agreed amount of Rs.1,20,000/- within the agreed time limit of two months from 19.4.2014. Therefore, the respondent was constrained to proceed with the execution of Ext.P-4 award in ::5:: O.P(C).No.3694 Of 2017 terms of the mutually agreed terms and conditions by filing Ext.P-5 Execution Petition No.41 of 2015 in O.S.No.399 of 2013, wherein it is stated that the principal amount due is Rs.11 lakhs. In Ext.P-5 E.P. the respondent herein has claimed for an amount of Rs.11 lakhs along with interest thereon for the period from 9.12.2013 (from the date of suit) up to 28.2.2015 (date of E.P.) @12% (for the abovesaid 44 days). 6. The main contention of the petitioner is that the judgment debtor has not complied with condition No.3 in Ext.P-3 compromise agreement, which has been entered into in Ext.P-4, and it is only a penalty clause to ensure timely compliance of the settlement and it is not enforceable since the petitioner had agreed to incorporate the condition solely on the basis of assurance given by the respondent that it is a formal one. Further it is stated by the petitioner that the settlement as per the compromise petition reveals that the claim of the respondent in the suit is an excessive and imaginary one. There are some other subsequent developments in this case inasmuch as the decree holder transferred the decree in favour of another person, who is shown as additional decree holder in Ext.P-7(4) E.A filed by the petitioner herein (see page 28 of O.P.). The respondent herein has raised a contention that the petitioner was fully aware that the decree ::6:: O.P(C).No.3694 Of 2017 was made over by the decree holder to the said person, who has been arrayed as additional decree holder even as per Ext.P-7(4) E.A. The petitioner would submit that it was only due to inadvertence that he had omitted to implead the additional decree holder as a respondent in this O.P(C) and seeks permission of this Court to implead the said party as an additional respondent in this O.P(C). However, this Court is of the view that there is no necessity to implead the said additional decree holder as this Court is not convinced of the tenability of the very contention raised by the petitioner in this O.P(C). 7. The above said contention of the petitioner has been rebutted and denied by the respondent. On an anxious consideration of the rival pleas in this regard, this Court is of the view that the said contentions of the petitioner cannot be countenanced as the same are untenable and unsustainable. It is common ground that both the parties have with wide and open eyes have voluntarily entered into Ext.P-3 compromise. The principal amount that has been handed over by the plaintiff to the defendant as per the plaint averments is Rs.18 lakhs. Both parties have voluntarily agreed to settle the disputes by agreeing that a total amount of Rs.8.2 lakhs will be paid by the petitioner/judgment debtor to the respondent-plaintiff, within the ::7:: O.P(C).No.3694 Of 2017 agreed time limit. Out of the said amount, the petitioner paid Rs.7 lakhs on 19.12.2014 and the balance amount of Rs.1.2 lakhs was agreed to be paid by him within two months from 19.12.2014 and this is evident from Ext.P-3. In clause (3) it is categorically agreed that in case the balance amount of Rs.1.2 lakhs is not paid by the petitioner within the said agreed time limit of 2 months from 19.12.2014, then the respondent/plaintiff will be at liberty to claim the original plaint claim less the amount of Rs.7 lakhs paid on 19.12.2014. The said condition in clause 3 entered into between the parties is certainly an enforceable condition. It is a part of Lok Adalath award and it deemed to be a civil court decree by virtue of the mandate under Sec.21 of the Legal Services Authorities Act, 1987 as held by the Apex Court in K.N.Govindan Kutty Menon v. C.D.Shaji , reported in (2012) 2 SCC 51. This Court is not in a position to fathom and understand as to the basis of the very contention of the petitioner that clause (3) of Ext.P-3 is not enforceable and it is only a directory clause, which is only liable to be ignored, etc. The very contention of the petitioner is that clause (3) of Ext.P-3 is not an enforceable clause and the only liability would now come to Rs.1.2 lakhs, etc., are untenable and are only to be rejected. The further contention of the petitioner is that the said condition in Ext.P-3 ::8:: O.P(C).No.3694 Of 2017 is excessive and imaginary is only to be rejected. From a mere perusal of Ext.P-1 plaint, it can be seen that the original plaint claim is Rs.18 lakhs inasmuch as the very case of the plaintiff was that he had handed over Rs.18 lakhs to the defendant at the time of initial transaction. The petitioner has no case that he has refunded any amount other than the amount of Rs.7 lakhs given on 19.12.2014. Parties have liberty to voluntarily enter into compromise agreement as in the nature of Ext.P-3 and the defendant cannot be faulted in having agreed to accept Rs.8.20 lakhs in full and final settlement of the liabilities, provided the said amount is within the agreed time limit of 2 months from 19.12.2014 (Ext.P-3). Further, such a party is also at liberty to insist that in case the said agreed amount is not paid within the said agreed time, then he should be entitled to claim the original amount less the amount already paid. Certainly a party like the petitioner is also at liberty to reject such offer and take a stand that he is not prepared to enter into such settlement and such freedom of contract is fully conferred on the parties concerned. After exercising their freedom and liberty, both sides have voluntarily entered into Ext.P-3 agreement. Having voluntarily entered into such agreement which has resulted in Ext.P-4 Lok Adalath award, the petitioner cannot resile therefrom. The petitioner has no case that ::9:: O.P(C).No.3694 Of 2017 the agreement was procured by fraud or coercion. Then both the parties are bound by the agreement, which has been fructified in Lok Adalat award and that has the statutory mandate and force of deemed civil court decree by virtue of the Sec.21 of the Legal Services Authority Act. Since the original plaint claim was Rs.18 lakhs, there is no scope for any argument that the clause (3) is excessive or unreasonable or imaginary. Therefore, the contentions of the petitioner are rejected. The interim stay passed by this Court will also stand vacated. So, the Original Petition is bereft of any merit, the same will stand dismissed. Sd/- ALEXANDER THOMAS, Judge. csl/bkn // True copy // P.A to Judge.