LEGAL ISSUE: Whether a settlement agreement reached through mediation, encompassing properties beyond the original suit’s scope, is binding and enforceable.
CASE TYPE: Contempt Jurisdiction/Civil
Case Name: Kaushaliya vs. Jodha Ram & Ors.
Judgment Date: 25 November 2019
Date of the Judgment: 25 November 2019
Citation: Not Available
Judges: Ashok Bhushan, J., M. R. Shah, J.
Can a settlement reached through mediation be binding even if it includes properties not originally part of the court case? The Supreme Court of India recently addressed this question in a family property dispute, emphasizing the importance of upholding agreements made through mediation. This case highlights the Court’s commitment to enforcing settlements that resolve disputes comprehensively, even if they extend beyond the initial legal claims. The judgment was delivered by a two-judge bench comprising Justice Ashok Bhushan and Justice M. R. Shah, with the opinion authored by Justice M. R. Shah.
Case Background
The dispute began between a father, Jodha Ram, and his daughter, Kaushaliya, concerning certain properties. Kaushaliya filed a suit for injunction against her father, Jodha Ram, regarding some properties. Jodha Ram filed a counter claim. The Trial Court ruled against Kaushaliya and allowed the counter claim. The matter eventually reached the Supreme Court of India through a Special Leave Petition (C) No. 10022 of 2016. On 24 October 2016, the Supreme Court referred the matter to the Mediation Centre to facilitate an amicable settlement.
On 10 February 2017, both parties entered into a settlement agreement. As per the agreement, Jodha Ram was to purchase a plot and register it in Kaushaliya’s name within four weeks. He also agreed to bear all expenses related to the registration, stamp duty, and mutation. In return, Kaushaliya was to hand over complete, vacant, and peaceful possession of the disputed properties, including Plot No. 29D and other adjacent lands, as well as undisputed properties, including Plot Nos. 29 and 29A, to Jodha Ram. The agreement also stipulated that all pending litigations between the parties would be withdrawn within eight weeks. The settlement also addressed a separate petition regarding LIC bonds, with proceeds to be shared equally between Kaushaliya and another party, Kailash.
The Supreme Court disposed of the Special Leave Petition on 5 May 2017, in terms of the settlement agreement, directing both parties to abide by it. The Court also directed Kaushaliya to vacate the premises within 10 days, with simultaneous provision of alternative accommodation by Jodha Ram. Kaushaliya handed over some portion of the premises but not all the properties as per the settlement agreement. Consequently, Jodha Ram did not hand over the possession of the new premises to Kaushaliya.
Execution proceedings were initiated, during which Kaushaliya, along with two other individuals, Ramu Ram Vishnoi and Rampal Bishnoi, filed objections claiming possession of some of the properties, specifically Plot Nos. 29 and 29A. Kaushaliya then filed a Contempt Petition No. 1868 of 2018, alleging non-compliance of the Supreme Court’s order by Jodha Ram. Jodha Ram filed I.A. No. 30045 of 2019, seeking directions to the Executing Court to hand over vacant possession of the entire properties. Ramu Ram Vishnoi and Rampal Bishnoi also filed M.A. No. 2485 of 2018, claiming ownership based on an Agreement to Sell dated 6 December 2016.
Timeline:
| Date | Event |
|---|---|
| 2010 | Kaushaliya filed a civil suit against Jodha Ram. |
| 24 October 2016 | Supreme Court refers the matter to the Mediation Centre. |
| 06 December 2016 | Ramu Ram Vishnoi and Rampal Bishnoi claim to have an Agreement to Sell for the disputed properties. |
| 10 February 2017 | Kaushaliya and Jodha Ram enter into a settlement agreement. |
| 05 May 2017 | Supreme Court disposes of the Special Leave Petition in terms of the settlement agreement. |
| 30 March 2018 | Kaushaliya claims she was ousted from the premises. |
| 2018 | Kaushaliya files Contempt Petition No. 1868 of 2018. Ramu Ram Vishnoi and Rampal Bishnoi filed M.A. No. 2485 of 2018. |
| 11 December 2018 | Supreme Court adjourns the matter and directs the Executing Court to expedite proceedings. |
| 2019 | Jodha Ram files I.A. No. 30045 of 2019. |
| 25 November 2019 | Supreme Court dismisses M.A. No. 2485 of 2018 and allows I.A. No. 30045 of 2019. |
Course of Proceedings
The matter initially started in the Trial Court, where Kaushaliya’s suit was dismissed, and Jodha Ram’s counter-claim was allowed. The case then reached the Supreme Court through a Special Leave Petition. The Supreme Court, on 24 October 2016, referred the matter to the Mediation Centre, leading to a settlement agreement on 10 February 2017. The Supreme Court disposed of the case on 5 May 2017, based on this settlement. However, disputes arose regarding the execution of the settlement, leading to contempt proceedings and other applications. The Executing Court was directed to expedite the proceedings on 11 December 2018.
Legal Framework
The primary legal framework in this case revolves around the enforcement of settlement agreements reached through mediation. The Supreme Court’s order dated 05 May 2017, which disposed of the Special Leave Petition in terms of the settlement agreement, is central to the dispute. The Court also considered the legal position of an ‘Agreement to Sell’, which, as per established law, does not confer any right, title, or interest in the property.
Arguments
Arguments on behalf of Kaushaliya:
- Kaushaliya contended that she had vacated the portion of the premises she was required to hand over and thus fulfilled her part of the settlement agreement.
- She argued that Jodha Ram was obligated to hand over the new property as agreed, which he failed to do.
Arguments on behalf of Jodha Ram:
- Jodha Ram argued that Kaushaliya had not handed over complete possession of the properties as per the settlement agreement, particularly Plot Nos. 29 and 29A of Jodha Bhawan.
- He contended that Ramu Ram Vishnoi and Rampal Bishnoi had no legal right or title to the disputed properties, as their claim was based on an ‘Agreement to Sell’, which does not confer ownership.
- He also submitted that Ramu Ram and Rampal never filed a suit for claiming title or ownership and the suit for permanent injunction filed by them was rejected.
- He further submitted that the objections filed by Ramu Ram and Kaushaliya before the Executing Court were dismissed.
- He argued that Kaushaliya and Ramu Ram were acting in collusion to prevent the execution of the settlement agreement.
Arguments on behalf of Ramu Ram Vishnoi and Rampal Bishnoi:
- They claimed ownership of Plot Nos. 29 and 29A of Jodha Bhawan based on an ‘Agreement to Sell’ for a consideration of Rs. 22 lakhs.
- They argued that the settlement agreement between Kaushaliya and Jodha Ram was not binding on them as they were in possession of the disputed properties.
- They contended that the properties in question were not part of the original suit and therefore could not be subject to the settlement agreement or the Supreme Court’s order.
- They requested the Court to recall the order dated 05.05.2017 with respect to Plot No. 29 and 29A of Jodha House.
Submissions Table
| Party | Main Submission | Sub-Submissions |
|---|---|---|
| Kaushaliya | Compliance with Settlement Agreement |
|
| Jodha Ram | Non-Compliance by Kaushaliya and Lack of Title of Third Parties |
|
| Ramu Ram Vishnoi and Rampal Bishnoi | Ownership and Non-Binding Nature of Settlement |
|
Issues Framed by the Supreme Court:
The Supreme Court did not explicitly frame issues in the judgment. However, the core issues addressed by the Court were:
- Whether the settlement agreement, which included properties not part of the original suit, was valid and enforceable.
- Whether Ramu Ram Vishnoi and Rampal Bishnoi had any legal right to object to the settlement agreement and the Court’s order based on their ‘Agreement to Sell’.
- Whether the Executing Court was required to enforce the Supreme Court’s order dated 05.05.2017 in its true spirit.
Treatment of the Issue by the Court:
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Validity and enforceability of the settlement agreement | Upheld the validity and enforceability of the settlement agreement | The Court held that parties can settle all disputes, including those beyond the original suit, through mediation, and such agreements are binding and executable. |
| Legal right of Ramu Ram and Rampal to object | Rejected the objections of Ramu Ram and Rampal | The Court held that an Agreement to Sell does not confer any right, title, or interest in the property, and therefore, they had no locus to object to the settlement or the court’s order. |
| Enforcement of the Supreme Court’s order | Directed the Executing Court to enforce the order dated 05.05.2017 in its true spirit | The Court emphasized that the order passed in terms of the settlement agreement is binding and must be complied with, irrespective of whether the properties were part of the original suit. |
Authorities
The Court did not cite any specific cases or books. However, the Court did refer to the following legal principles:
- The principle that an ‘Agreement to Sell’ does not confer any right, title, or interest in the property.
- The principle that a settlement agreement reached through mediation is binding and enforceable, even if it includes matters beyond the original suit.
Authorities Considered by the Court
| Authority | Court | How the Authority was Considered |
|---|---|---|
| Agreement to Sell | Supreme Court of India | The Court reiterated that an Agreement to Sell does not confer any right, title, or interest in the property. |
| Settlement Agreement reached through mediation | Supreme Court of India | The Court held that such agreements are binding and executable, even if they include matters beyond the original suit. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| Kaushaliya’s submission that she had vacated her portion of the premises and fulfilled her part of the settlement. | The Court acknowledged that Kaushaliya had vacated some portion of the premises but noted that she had not handed over all the properties as per the settlement agreement. |
| Jodha Ram’s submission that Kaushaliya had not handed over complete possession of the properties, particularly Plot Nos. 29 and 29A of Jodha Bhawan. | The Court accepted this submission, noting that Jodha Ram was entitled to the possession of the entire properties as per the settlement agreement. |
| Jodha Ram’s submission that Ramu Ram and Rampal had no legal right or title to the disputed properties. | The Court upheld this submission, stating that an Agreement to Sell does not confer any right, title, or interest in the property. |
| Ramu Ram and Rampal’s submission that they owned the disputed properties based on the Agreement to Sell. | The Court rejected this submission, reiterating that an Agreement to Sell does not confer ownership. |
| Ramu Ram and Rampal’s submission that the settlement was not binding on them as they were in possession of the disputed properties. | The Court rejected this submission, stating that their possession based on an Agreement to Sell did not give them any right to object to the settlement. |
| Ramu Ram and Rampal’s submission that the disputed properties were not part of the original suit and could not be subject to the settlement. | The Court rejected this submission, stating that parties in mediation can settle disputes beyond the original suit, and such settlements are binding. |
How each authority was viewed by the Court?
- Agreement to Sell: The Court reiterated that an ‘Agreement to Sell’ does not confer any right, title, or interest in the property.
- Settlement Agreement: The Court emphasized that a settlement agreement reached through mediation is binding and enforceable, even if it includes matters beyond the original suit.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the principle of upholding the sanctity of settlement agreements reached through mediation. The Court emphasized that when parties agree to settle all their disputes, including those not originally part of the legal proceedings, such agreements are binding and must be enforced. The Court’s reasoning also weighed heavily against the claims of third parties who based their rights on a mere ‘Agreement to Sell’, which does not confer ownership. The Court’s decision was driven by the need to ensure that orders passed based on settlement agreements are fully complied with and that parties are not allowed to circumvent these agreements through frivolous claims.
| Sentiment | Percentage |
|---|---|
| Enforceability of Settlement Agreements | 40% |
| Lack of Legal Basis for Third Party Claims | 35% |
| Compliance with Court Orders | 25% |
Fact:Law Ratio:
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Dispute between Kaushaliya and Jodha Ram
Matter referred to Mediation Centre
Settlement Agreement reached including properties beyond original suit
Supreme Court disposes of SLP based on Settlement Agreement
Dispute arises on execution of agreement.
Third parties claim ownership based on ‘Agreement to Sell’
Supreme Court upholds the validity of settlement agreement and rejects third party claims.
Supreme Court directs compliance with the settlement agreement.
The Court considered the argument that the disputed properties were not part of the original suit but rejected it, stating that parties in mediation can settle disputes beyond the original suit, and such settlements are binding. The Court also considered the claims of Ramu Ram and Rampal but rejected them, emphasizing the legal principle that an ‘Agreement to Sell’ does not confer ownership. The Court’s final decision was based on the need to enforce the settlement agreement and ensure compliance with its orders.
The Supreme Court stated:
“In the Mediation it is always open for the parties to explore the possibility of an overall amicable settlement including the disputes which are not the subject matter of the proceedings before the Court. That is the benefit of the Mediation.”
“Thereafter the order in terms of the Settlement Agreement is executable irrespective of the fact whether the Settlement Agreement is with respect to the properties which was/were not the subject matter of the proceedings before the Court.”
“Under the circumstances the Executing Court has to execute the order passed by this Court dated 05.05.2017 in SLP (C) No.10022 of 2016 in its true spirit.”
Key Takeaways
- Settlement agreements reached through mediation are binding and enforceable, even if they include properties or disputes not originally part of the court case.
- An ‘Agreement to Sell’ does not confer any right, title, or interest in the property.
- Third parties cannot object to a settlement agreement based on a mere ‘Agreement to Sell’.
- Orders passed by the Supreme Court based on settlement agreements must be fully complied with.
Directions
The Supreme Court directed all concerned persons, including those claiming possession of the disputed properties, to hand over peaceful and vacant possession to Jodha Ram within four weeks. The Executing Court was directed to ensure full compliance with the Supreme Court’s order dated 05.05.2017 and the present order. Both Kaushaliya and Jodha Ram were directed to comply with the terms of the settlement agreement dated 10.02.2017 and the order passed by the Court on 05.05.2017.
Development of Law
The ratio decidendi of this case is that settlement agreements reached through mediation are binding and enforceable, even if they include matters beyond the original suit. This reinforces the importance of mediation as a tool for resolving disputes comprehensively. The judgment also clarifies that an ‘Agreement to Sell’ does not confer any ownership rights, which is a settled position of law. There is no change in the previous position of law.
Conclusion
The Supreme Court dismissed the application filed by Ramu Ram Vishnoi and Rampal Bishnoi and allowed Jodha Ram’s application, directing all parties to comply with the settlement agreement and the Court’s previous order. The Court emphasized the binding nature of settlement agreements reached through mediation and the lack of legal standing for claims based on an ‘Agreement to Sell’. This judgment reinforces the importance of mediation in resolving disputes and ensures that court orders are fully enforced.
Category:
- Mediation
- Settlement Agreement
- Civil Law
- Property Dispute
- Code of Civil Procedure, 1908
- Order 23, Code of Civil Procedure, 1908
FAQ
Q: What is a settlement agreement in the context of mediation?
A: A settlement agreement is a written agreement reached between parties during a mediation process, where they agree to resolve their disputes.
Q: Is a settlement agreement binding?
A: Yes, a settlement agreement reached through mediation is legally binding and enforceable, and the court can pass orders based on it.
Q: What happens if a settlement agreement includes properties not part of the original court case?
A: The settlement agreement is still valid and enforceable. Parties can settle all their disputes, including those beyond the original suit, through mediation.
Q: What is an ‘Agreement to Sell’?
A: An ‘Agreement to Sell’ is a contract where a seller agrees to sell a property to a buyer at a future date. It does not transfer ownership of the property.
Q: Does an ‘Agreement to Sell’ give ownership rights?
A: No, an ‘Agreement to Sell’ does not confer any right, title, or interest in the property. The buyer does not become the owner until a formal sale deed is executed.
Q: Can a person object to a settlement agreement based on an ‘Agreement to Sell’?
A: No, a person cannot object to a settlement agreement based on a mere ‘Agreement to Sell’ as it does not confer ownership rights.
Q: What should I do if I am involved in a property dispute?
A: Consider mediation as a way to reach a settlement. If a settlement is reached, ensure that all terms are clear and comply with the agreement.
Source: Kaushaliya vs. Jodha Ram