Case Note & Summary
The dispute arose from a compromise decree passed by the Division Bench of the High Court of Bombay on 12.4.1991 in pending first appeals between Gupta Steel Industries and M/s. Jolly Steel Industries Pvt. Ltd. & Anr. Under the compromise, the respondents were required to deposit Rs.15,00,000 by 31st May 1991 and Rs.10,40,000 by 29th June 1991 in the trial court, while the appellants were to hand over possession of disputed land and machinery to a receiver by 31st March 1992. The respondents deposited Rs.12 lakhs after the expiry of the last date, leading to an application for extension of time, which the trial court dismissed for lack of jurisdiction. The High Court later accepted the delayed payment and directed the appellants to pay damages for use and occupation as determined by the civil court. The appellants filed appeals by special leave, contending that the High Court had no power to extend time and that the consent decree could not be modified without agreement. The Supreme Court observed that as a principle of law, the High Court was obviously incorrect in interfering with and modifying the consent decree unless parties agreed. However, due to the distance of time, it declined to interfere with the order accepting delayed payment. Regarding damages, the Court directed the trial court to conduct an enquiry whether the appellant was prevented by the acts of the respondents from remaining in possession and working the factory. If so prevented, the appellant would not be liable to pay damages; otherwise, the appellant would be liable at Rs.2,500 per month. The Court further directed the trial court to verify whether the Rs.12,00,000 deposit was subsisting till the date of the High Court order and whether it was invested in interest-earning security. If not invested, the respondents were directed to pay interest at the commercial rate from the date of deposit till the date of the High Court judgment. If the appellant had withdrawn the amount, no interest would be payable. The Court declined to direct withdrawal of Rs.20,00,000 standing to the credit of the suit, stating that after the enquiry into mesne profits, any amount due to either party should be worked out by adjustment. The appeals were disposed of accordingly, with no order as to costs.
Headnote
A) Civil Procedure - Consent Decree - Modification - No specific statute cited - The Supreme Court held that the High Court was obviously incorrect in interfering with and modifying the consent decree unless parties agree for the same. However, due to the distance of time, the Court declined to interfere with the High Court's order accepting delayed payment. (Paras 1-3) B) Civil Procedure - Extension of Time - Deposit Under Compromise Decree - No specific statute cited - The question whether High Court had power to extend time for compliance after expiry of the period was raised, but the Supreme Court did not decide it owing to the passage of time. (Paras 1-3) C) Damages - Mesne Profits - Enquiry into Prevention of Possession - No specific statute cited - The Supreme Court directed the trial court to conduct an enquiry whether the appellant was prevented by the acts of the respondents from remaining in possession and working the factory. If prevented, appellant would not be liable to pay damages; otherwise, liability fixed at Rs.2,500 per month. (Paras 1-3) D) Civil Procedure - Deposit Verification - Interest on Delayed Deposit - No specific statute cited - The trial court was directed to verify whether the Rs.12,00,000 deposit was subsisting till the date of the High Court order and whether invested in interest-earning security. If not invested, respondents directed to pay commercial rate interest from deposit till High Court judgment; if withdrawn by appellant, no interest payable. (Paras 1-3) E) Civil Procedure - Adjustment of Amounts - Withdrawal of Rs.20,00,000 - No specific statute cited - The Supreme Court declined to direct withdrawal of Rs.20,00,000 standing to the credit of the suit; after enquiry into mesne profits, any amount due to either party to be worked out by adjustment. (Paras 1-3)
Issue of Consideration
Whether High Court could modify consent decree and extend time for deposit; whether appellant liable to pay damages/mesne profits; whether deposit of Rs.12 lakhs valid and interest payable; whether Rs.20 lakhs standing to credit of suit should be withdrawn.
Final Decision
Appeals disposed of; High Court's order accepting delayed deposit not interfered due to delay; trial court directed to conduct enquiry whether appellant was prevented from possession and working of factory; if prevented, no damages payable; if appellant worked factory due to status quo order, liable at Rs.2,500 per month; trial court to verify deposit and whether invested in interest-earning security; if not invested, respondents to pay commercial rate interest till High Court judgment; if appellant withdrew deposit, no interest; no direction to withdraw Rs.20,00,000; after mesne profits enquiry, amounts to be adjusted; no order as to costs.
Law Points
- Consent decree cannot be modified unless parties agree
- High Court cannot extend time for compliance after expiry absent statutory power
- mesne profits liability depends on actual possession and use
- deposit verification and interest on delayed payment
- adjustment of amounts after enquiry
