THE STATE OF MADHYA PRADESH versus SATISH JAIN (DEAD) BY LRS & ORS.

Citation: [2024] 4 S.C.R. 598 · Decided: 18-04-2024 · Supreme Court of India · Bench: VIKRAM NATH · Disposal: Appeal(s) allowed

Judgment (excerpt)

* Author
[2024] 4 S.C.R. 598 : 2024 INSC 315
The State of Madhya Pradesh 
v. 
Satish Jain (Dead) by Lrs & Ors.
(Civil Appeal No. 6884 of 2012)
18 April 2024
[Vikram Nath* and K.V. Viswanathan, JJ.]
Issue for Consideration
Issue arose that when there is an agreement based on ex-parte 
decree, and the ex-parte decree having been set aside, parties if 
could rely upon the agreement.
Headnotes
Suit – Ex-parte decree – Agreement based on ex-parte decree 
– Ex-parte decree having been set aside, parties if could 
rely upon the agreement – Suit property owned by the State, 
however, defendant No.1 perfected his rights by adverse 
possession and transferred all his rights in favour of the 
plaintiff as also handed over possession – Defendant No.1 
allegedly likely to transfer the said land again in favour of the 
third party and that some officers of the State tried to remove 
the fencing put up by the plaintiff on the suit land – Suit for 
declaration, permanent injunction and mandatory injunction by 
plaintiff, against defendant no. 1 and the State – Suit decreed 
ex-parte – Appellate court set aside the same and remanded 
the matter to the trial court – Suit pending before the trial 
court – Meanwhile agreement  between the State Municipal 
Corporation and the plaintiff that the plaintiff would vacate 
the suit land, allowing the Corporation to construct the bus 
stand, in lieu of separate plots – Plots allotted but some were 
cancelled later – Thereafter arbitral award passed whereby 
plaintiff would pay the stipulated amount to the Corporation 
and in turn the Corporation would fulfil its obligation of 
allotment of land – Objections by the State to the award, 
allowed by the trial court – In revision filed by the plaintiff, the 
High Court set aside the order of the trial court – Correctness:
Held: Ex-parte decree having been set aside, there was no 
occasion for the plaintiff to further act upon the agreement since 
[2024] 4 S.C.R. 
599
The State of Madhya Pradesh v. Satish Jain (Dead) by Lrs & Ors.
no rights had crystallized to the parties – 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 State, the agreement would lose all 
its credibility assuming there was any semblance of any right 
to enter into the agreement – Agreement would not have any 
sanctity in the eye of law even inter se parties – Right created 
in the plaintiff under the ex-parte decree stood extinguished 
and, thus, the Corporation ought to have been careful enough 
of not placing any reliance any further on the said agreement 
– Application filed by the Corporation u/s 89 CPC was also not 
maintainable based on the agreement – There appears to be 
some kind of collusion between the Corporation and the plaintiff 
– Whether or not there was any condition in the agreement 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 – Suit land admittedly 
was owned by the State – Even if the State had allotted it to 
the Corporation for constructing a bus stand, the Corporation 
could not have dealt with it and treated it to be in the ownership 
or possession of the plaintiff by entering into the agreement – 
Corporation would be bound as an allottee of the State to utilise 
the said land for the purpose for which it was given – It ought to 
have taken appropriate steps for removal of possession of the 
plaintiff – Thus, the trial court justified in allowing the application 
by setting aside the award – High Court erred in not considering 
the relevant aspects and in placing reliance on the statement 
made by the State before the trial court that the State had no 
interest inasmuch as it had allotted the land to the Corporation 
to set up a bus stand – Impugned order passed by the High 
Court set aside. [Paras 4-7]
List of Acts
Code of Civil Procedure, 1908.
List of Keywords
Suit; Ex-parte decree; Agreement; Adverse possession; Suit 
for declaration, permanent injunction and mandatory injunction; 
Arbitration award; Appointment of Arbitrator.
600
[2024] 4 S.C.R.
Digital Supreme Court Reports
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6884 of 2012
From the Judgment and Order dated 14.11.2005 of the High Court of 
M

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