The Supreme Court allowed the appeal filed by the State of Madhya Pradesh, challenging the Madhya Pradesh High Court's order allowing Civil Revision No. 201 of 2005. The High Court had set aside the trial court's order that rejected the report of an arbitrator and directed the trial court to implement the arbitrator's award. The Supreme Court restored the trial court’s order, holding that the agreement between Bhopal Municipal Corporation (BMC) and the plaintiff (Satish Jain) was unenforceable due to the ex-parte decree being set aside, and that the ownership of the land remained with the State of Madhya Pradesh.

Facts:

1. Original Suit Filed:
   Satish Jain filed a civil suit in 1990, claiming rights over Khasra Nos. 48 & 49 (3.53 acres of land in Bhopal) based on adverse possession transferred by Rama (Defendant No.1). The land was owned by the State of Madhya Pradesh (Defendant No.2).

2. Ex-Parte Decree and Appeals:
   The trial court decreed the suit ex-parte in favor of Satish Jain on 22.06.1990. The State's appeal was dismissed due to an 8-day delay, which was later condoned by the High Court, and the case was remanded for re-hearing. The State was allowed to file its written statement, and the suit is still pending.

3. Agreement Between BMC and Plaintiff:
   The land was allotted to Bhopal Municipal Corporation (BMC) for constructing a bus stand. An agreement dated 30.07.1991 was made between BMC and the plaintiff, where Jain agreed to vacate the land in exchange for alternative plots. However, some allotments were canceled later.

4. Arbitration and Objections:
   BMC requested arbitration under Section 89 CPC to settle the dispute. The arbitrator’s report on 14.10.2004 required the plaintiff to pay ₹30 lakhs to BMC, but the State of Madhya Pradesh objected to the award, arguing that BMC had no right to deal with the land.

5. Trial Court and High Court Orders:
   The trial court rejected the arbitrator’s report and upheld the State’s objections on 22.12.2004. However, the High Court, in 2005, set aside the trial court's order and directed the implementation of the arbitrator’s award.

6. Supreme Court Decision:
   The Supreme Court set aside the High Court's decision, emphasizing that the ex-parte decree favoring Satish Jain had been vacated, rendering the agreement with BMC legally ineffective. The ownership of the land remained with the State, and BMC had no right to negotiate with the plaintiff.

Key Legal Points:

• Acts and Sections Discussed:

  • Code of Civil Procedure (CPC), 1908
    • Section 96: Appeal from original decree.
    • Section 89: Settlement of disputes outside the court.
    • Order VII Rule 11: Rejection of plaint.
    • Order VI Rule 17: Amendment of pleadings.
    • Limitation Act, 1963 - Section 5: Condonation of delay.

• Ratio Decidendi:
  The Supreme Court held that the ex-parte decree, which initially granted rights to the plaintiff, was set aside, nullifying the subsequent agreement between BMC and Satish Jain. The High Court’s reliance on the agreement was misplaced since the rights over the land remained with the State of Madhya Pradesh, and BMC’s actions were unauthorized. Hence, the trial court's order rejecting the arbitrator's award was valid.

Subjects:

#Arbitration #CivilAppeal #PropertyLaw #Arbitration #StateOfMadhyaPradesh #BhopalMunicipalCorporation #ExParteDecree #AdversePossession