When Suit Was Dismissed As Barred By Limitation, Appellate Court Cannot Pass Compromise Decree Without Considering If Suit Was Filed In Time: Karnataka HC
The Karnataka High Court has observed that if a suit was dismissed by the Trial Court for being barred by limitation, the Appellate Court does not have the jurisdiction to pass a compromise decree without deciding whether the suit was filed within time and was maintainable.
In that context, the Bench of HT Narendra Prasad observed that, "When the suit is dismissed as barred by limitation, it touches on the jurisdiction of the court, the appellate court, without deciding the question as to whether the suit is filed within time and it is maintainable, has no jurisdiction to pass a compromise decree."
Senior Counsel KG Raghavan appeared for the petitioners, while Senior Counsel SS Nagananda and Senior Counsel Uday Holla appeared for the respondents.
The dispute involved a Trust created as per the order under the Probate, Will, and Testament of late V. Ramalingam Mudaliar. The first respondent, claiming an agreement of sale, filed a suit for specific performance, which was initially decreed but later overturned in a higher court.
Subsequently, a compromise petition was filed and accepted by the Court, leading to the review petition by the petitioners before the High Court, who alleged misappropriation of Trust funds and suppression of material facts by the respondents. The respondents argued that the compromise was in the interest of the Trust, and the petitioners lacked standing to challenge it.
While holding that the order needed to be recalled owing to jurisdictional disparities, the High Court also observed that any transfer of trust property should be only in the interest, benefit and protection of the trust.
In that context, the Court noted that "the compromise petition has been filed on 15.02.2023. It is mentioned that they have agreed to execute the sale deed in favour of the first respondent in respect of 6,000 sq. ft. and the remaining extent will be retained by the Trust. Now, it is brought to the notice of this Court that, on the very same day, the remaining extent of the property has been sold in favour of the third parties by the trustees. This was not brought to the notice of the court. Before passing the compromise decree, the trustees have already identified the buyers, but it was not forthcoming in the compromise petition."
With that background, it was observed that since the sale of the trust properties by private negotiation did not verify or disclose the market value, it was not in the interest of the trust.
In light of the same, it was held that the order needed to be recalled.
Appearances:
Petitioners: Senior Counsel KG Raghavan, Counsel SV Bhat
Respondents: Senior Counsels SS Nagananda, Uday Holla, Counsels Devaraj KS, MD Raghunath
Cause Title: Smt. Kausalya Thirupuvanam & Ors. vs K Raghava Reddy & Associates & Ors.
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