10 June 2024


Supreme Court

The State of Madhya Pradesh Vs. Satish Jain (Dead) by L.Rs. and Ors. (Neutral Citation: 2024 INSC 315)




When the very basis of entering into the agreement have been set aside, agreement itself can’t be relied upon by any of the parties

The Appellant-State of Madhya Pradesh-Defendant in the Original Suit filed by Satish Jain (Respondent No. 1), since deceased, represented by his legal heirs, is in appeal assailing the correctness of the judgment and order passed by the High Court allowing Civil Revision, whereby the High Court set aside the order of the Trial Court, and further directed the Trial Court to proceed in accordance with law to implement the award of the Arbitrator. It also rejected the objections of the Appellant, and further the order rejecting the report of the Arbitrator was also set aside.

It is an admitted position that, the suit is still pending before the Trial Court. The Plaintiff has not been granted any declaration as such till date. The ex-parte decree having been set aside, there was no occasion for the Plaintiff to further act upon the agreement dated 30th July, 1991 since no rights had crystallized to the parties. The basis of that agreement was the ex-parte decree of declaration and injunction in favour of the Plaintiff. Once the ex-parte decree has itself been set aside and the suit was to proceed further from the stage of filing of written statement by the Appellant- State, the agreement dated 30th July, 1991 would lose all its credibility assuming there was any semblance of any right to enter into the agreement.

The application filed by BMC under Section 89 of Code of Civil Procedure, 1908 (CPC) was also not maintainable based on the agreement of 30th July, 1991. There appears to be some kind of collusion between BMC and the Plaintiff. Whether or not there was any condition in the agreement dated 30th July, 1991 for appointment of Arbitrator, the very basis of entering into the agreement having been set aside, the agreement itself could not have been relied upon by any of the parties.

A perusal of the agreement dated 30th July, 1991 clearly mentions that the Plaintiff was claiming right under the ex-parte decree dated 22nd June, 1990 and the dismissal of the First Appeal on 11th May, 1991. Later on, when both the orders had been set aside and the suit itself was to proceed from the stage of the Appellant-State filing its written statement, the agreement itself would not have any sanctity in the eye of law even inter se parties. The right created in the Plaintiff under the ex-parte decree stood extinguished and, therefore, BMC ought to have been careful enough of not placing any reliance any further on the said agreement. The Trial Court was justified in allowing the application by setting aside the award.

The High Court committed a grave error in not considering the relevant aspects and in placing reliance on the statement made by the Appellant-State before the Trial Court that the State had no interest as it had allotted the land to BMC to set up a bus stand. The impugned order passed by the High Court is set aside. Appeal allowed.

Tags : Award Implementation Legality

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