Safiya Malik

A recent judgement of the Bomaby High Court has addressed the prolonged delay in seeking a recall of a withdrawal order in a civil dispute concerning real estate development rights. The court held that the condonation of delay, exceeding nine years, lacked sufficient justification and thus could not be sustained.

The case revolves around a development agreement executed on May 31, 2008, between the petitioner, M/s. Vaishnavi Engineers and Developers Private Limited, a real estate development company, and the respondents. The petitioner asserted that it had paid Rs. 47 lakhs as consideration and was in possession of the suit properties. The agreement granted development rights to the petitioner for constructing residential and commercial buildings on the said property.

Disputes arose when the respondents allegedly obstructed the possession and development activities of the petitioner. The respondents, claiming termination of the development agreement, issued a notice dated May 18, 2012, declaring the agreement void. In response, the petitioner filed R.C.S. No. 782 of 2012 before the Civil Judge, Kalyan, seeking a declaration that the agreement remained valid and binding on the defendants. The petitioner also sought an injunction restraining the respondents from interfering with possession and development rights.

On October 31, 2012, the trial court passed an order of status quo, which was later modified on April 17, 2013, allowing the petitioner to utilize the FSI potential of the land. Shortly thereafter, on April 20, 2013, the petitioner unconditionally withdrew the suit, leading to its disposal.

On October 4, 2023, over nine years later, the respondents filed Civil Misc. Application No. 308 of 2023, seeking condonation of delay in filing an application to recall the withdrawal order. The respondents contended that the suit was withdrawn fraudulently, without informing them, and that it caused prejudice by vacating the status quo order. They claimed that the petitioner had misrepresented that an amicable settlement had been reached, which was untrue.

The trial court condoned the delay, accepting the respondents' argument that they were unaware of the withdrawal and had acted promptly upon learning about the petitioner’s submission of a building proposal on January 19, 2023. The petitioner then challenged the order in the present writ petition.

The court examined the provisions of Order XXIII, Rule 1 of the Civil Procedure Code (CPC), which distinguishes between unconditional withdrawal and withdrawal with liberty to institute a fresh suit. It observed that under sub-rule (1), a plaintiff has an absolute right to withdraw a suit unless restricted by counterclaims or procedural requirements.

In the present case, the withdrawal was unconditional, without any liberty to refile. The court found that there was no procedural defect in the withdrawal as contemplated under Order XXIII, Rule 1(3), which applies to cases where a fresh suit may be filed. The court noted that since the suit was withdrawn unconditionally, it could not be revived at the instance of the respondents after nearly a decade.

The respondents argued that the withdrawal was fraudulent and invoked Section 151 of CPC, which grants inherent powers to courts to recall fraudulent orders. They relied on K.S. Bhoopathy and Ors. v. Kokila and Ors. and Mathuralal and Ors. v. Chiranji Lal and Ors., asserting that courts must examine whether withdrawal of a suit adversely affects vested rights of the opposing party.

The court, however, observed that fraud must be clearly established, and mere allegations are insufficient. The court stated that the respondents were aware of the withdrawal in 2013, as they had sought a similar relief in R.C.S. No. 249 of 2013, requesting continuation of the status quo order. Their application was rejected on May 21, 2013. The court found that this crucial fact was omitted from the delay condonation application, undermining the respondents' claim of ignorance.

The court also relied on N. Balakrishnan v. M. Krishnamurthy, where it was held that condonation of delay is a discretionary power but must be exercised with caution. The absence of any explanation for the delay of over nine years made the respondents’ application untenable.

Further, the court examined Esha Bhattacharjee v. Raghunathpur Nafar Academy and Ors., which laid down principles governing delay condonation. The court observed that procedural relaxations should not be granted in cases where a party has exhibited negligence or lack of bona fides. The respondents’ failure to act diligently over a prolonged period indicated inaction rather than an unavoidable delay.

The court noted that allowing condonation of such an inordinate delay would set an undesirable precedent, permitting litigants to seek recall of final orders after an indefinite period without reasonable justification. The necessity of timely litigation and adherence to procedural discipline was reaffirmed.

The court quashed the order granting condonation of delay and rejected Civil Misc. Application No. 308 of 2023. The respondents’ plea for recall of the withdrawal order was dismissed.

Case Title: M/s. Vaishnavi Engineers and Developers Private Limited vs. Navnath Ramkrishna Mhatre and Others

Case Number: WP No. 5611 of 2024

Bench: Justice Jamadar Nijamoddin Jahiroddin

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