In a recent ruling, the Delhi High Court reinforced the enforceability of settlement agreements reached through court-directed mediation, declaring them binding and executable as court orders. The judgment, delivered by Hon’ble Justice C. Hari Shankar, addresses crucial legal questions regarding the enforcement of such agreements, the jurisdiction of courts, and the applicability of the Civil Procedure Code (CPC). The case involved multiple parties seeking execution of a settlement agreement finalized under the aegis of the Delhi High Court Mediation and Conciliation Centre.
Background of the Case:
The Delhi High Court recently delivered a significant judgment in the case of Anand Gupta & Anr. Vs M/S Almond Infrabuild Private Limited & Anr. [OMP (ENF.) (COMM.) 148/2021 and related matters], involving a dispute over the enforcement of a mediated settlement agreement. The case was presided over by Hon’ble Mr. Justice C. Hari Shankar and involved multiple parties and connected matters, each seeking execution of a Settlement Agreement reached through the Delhi High Court Mediation and Conciliation Centre.
The primary petitioners, Anand Gupta and Anuradha Vinod Gupta, represented by a team of lawyers including Mr. Saif Khan, Mr. Swastik Bisarya, and others, initiated the proceedings for the enforcement of a Settlement Agreement. The judgment debtors, M/S Almond Infrabuild Private Limited and Anand Divine Developers Pvt. Ltd., were represented by Mr. Kartik Nayar, Mr. Krish Kalra, and Mr. Divyansh Rai.
Case Background:
The disputes arose from a Group Housing Residential Project launched in 2014 by the respondents, named “ATS Tourmaline.” The project included a guaranteed buyback and subvention scheme, which allowed investors to exit the project within a stipulated period by selling their residential units back to the developer at a premium price. The petitioners, who had invested in this scheme, sought to exercise the buyback option under the terms agreed in their Memorandum of Understanding (MOU) dated March 26, 2014.
Following the respondents’ failure to honor the buyback terms, which included defaulting on agreed payments and the failure to make timely repayments to the bank, the petitioners approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief. The matter was subsequently referred to mediation, resulting in a Settlement Agreement dated October 14, 2020.
Important Legal Issues:
1. Enforceability of Mediated Settlement Agreements:
A critical issue before the Court was whether a Settlement Agreement reached through mediation under the Delhi High Court Mediation and Conciliation Centre could be enforced as a court order, especially when the order disposing of the Section 9 petition based on the settlement is neither an arbitral award nor a decree.
2. Territorial Jurisdiction:
The judgment debtors contended that since their assets were located outside Delhi, the Delhi High Court lacked territorial jurisdiction to entertain the execution petitions.
3. Execution Under the Civil Procedure Code (CPC):
The Court examined whether the order dated November 18, 2020, disposing of the Section 9 petition based on the Settlement Agreement, could be executed under Order XXI Rule 10 of the CPC, despite not being an arbitral award or a decree.
Court’s Decision on Key Issues:
1. Enforceability of Mediated Settlement Agreements:
The Court ruled that while the order dated November 18, 2020, is neither an award nor a decree, it is nonetheless enforceable in the same manner as a decree under Section 36 of the CPC. Citing the judgment in Angle Infrastructure Pvt. Ltd. v. Ashok Manchanda (2016), the Court observed that an order passed in terms of a mediated settlement agreement is executable as a decree, and parties remain bound by its terms.
2. Territorial Jurisdiction:
The Court rejected the contention that it lacked jurisdiction, emphasizing that the execution petition could be filed before the Court that passed the order. The Court clarified that, if required, precepts could be issued to courts within whose jurisdiction the judgment debtors’ properties are located.
3. Execution under CPC:
The Court affirmed that the order dated November 18, 2020, was executable under the provisions of the CPC. The Court stated, “An order passed in terms of a mediated settlement agreement is executable under Section 36 of the Code of Civil Procedure in the same manner as a decree,” thereby validating the petitioners’ application for execution.
The Court noted, “The words ‘irrespective of the sale of the Apartment,’ contained in Clause 2 of the Settlement Agreement, indicate that the monetary obligations of the respondents towards the petitioners were not contingent on the sale of the property.”
Case Title: Anand Gupta & Anr. Vs M/S Almond Infrabuild Private Limited & Anr.
Case No.: OMP (ENF.) (COMM.) 148/2021 and connected matters.
Bench: Justice C. Hari Shankar
