Mere Non Drawing Of Formal Decree Not Ground For Court To Dismiss Execution Of Compromise Deed: Delhi High Court

The Delhi High Court has held that the mere non-drawing of a formal decree, and objections which are raised later by the party to the compromise in order to resile from it, are no grounds which can be taken by the Executing Court to dismiss the execution of a Compromise Deed.

Justice Pratibha M Singh also added that the mere act of not drawing a formal decree in respect of the settlement would not deprive the parties of the benefits of the settlement entered into before a court of law.

The Court was dealing with a revision petition challenging an order passed by a Civil Judge of the Tis Hazari Courts by which the execution petition filed by the Petitioner was dismissed.

The facts of the matter are that a Collaboration Agreement, dated 30th August 2018, was entered into between the Petitioner one Salahuddin Mirza and five other individuals, in relation to the property bearing situated at Gali Masjid Wali, Shah Ganj Chowk, Ajmeri Gate.

It was thus the case of the plaintiff that even though a formal decree was not drawn up by the Trial Court, the Execution Petition could not have been dismissed merely on the ground of no such formal decree having been drawn by the Trial Court.

On the other hand, it was the stand of the defendants that since the construction itself had not begun, no execution could have been entertained by the executing court, and hence the impugned order was liable to be upheld.

"…the MoU/Compromise Deed has been exhibited as Ex. P1, however, the suit has been disposed of as dismissed as withdrawn as settled. This is not the correct course of action that is required to be followed by the Trial Courts under Order XXIII Rule 3 of CPC," the Court noted.

The Court was of the view that the Trial Court was mandated to pass a decree recording the agreement or compromise, and its satisfaction.

"Accordingly, whenever a settlement is presented before a court, the court, after satisfying itself as to the legality and validity of the said settlement and after recording the statements of parties identified by their respective Counsels, has to take on record the compromise or the settlement and pass a decree in terms thereof. This course of action has clearly not been followed by the Trial Court in this case. The said error can at best be attributed to the Court itself and not to the parties to the proceedings," the Court added.

The Court thus stated that in the present time when Courts are repeatedly emphasizing on the importance of Alternate Dispute Resolution, parties which are permitted to resile from an MoU or a Compromise Deed cannot be condoned by any Court of law.

"In the present case, the MoU/Compromise Deed entered into by the parties, imputes certain obligations upon the Defendants, which according to the Plaintiff are not being adhered to. In such circumstances, the Executing Court cannot be helpless for the Plaintiff. The Executing court is duty-bound to take all steps required in accordance with law to give effect to the settlement, irrespective of whether a formal decree was drawn or not. Accordingly, the impugned order is not sustainable and is set aside," the Court directed.

With this, the Court also directed the Executing Court to execute the MoU or Compromise Deed and take necessary steps of appointing a Local Commissioner or Court Receiver to ensure that the same gets implemented between the parties.

The Court also imposed a cost of Rs. 25,000 on the defendants for their "dishonest conduct" of challenging the settlement as being not specifically enforceable, after having entered into the Compromise Deed and assumed possession of the property.

The said cost is directed to be deposited with the High Court of Delhi (Middle Income Group) Legal Aid Society within a period of two weeks.

"The present petition is allowed in the above terms. In the meantime, till the execution petition is restored and the Executing Court is seized of the same, status quo shall be maintained and no third party interest shall be created in respect of the title or possession of the property by the Defendants," the Court added.

The petitioner was represented by Advocate Isha Aggarwal whereas the respondents were represented by Advocate Rashil Gandhi.

Case Title: SALAHUDDIN MIRZA v. MOHD QAMAR THROUGH: LRS AND ORS

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