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CASE NO.:

Appeal (civil) 2896 of 2006

PETITIONER:

Pushpa Devi Bhagat (D) Th. LR.Smt. Sadhna Rai

RESPONDENT:

Rajinder Singh & Ors.

DATE OF JUDGMENT: 11/07/2006

BENCH:

B P Singh & R V Raveendran

JUDGMENT:

J U D G M E N T

(Arising out of S.L.P. (C) No. 13894/2004)

R. V. Raveendran, J.

Leave granted.

This appeal is directed against the judgment dated 3.3.2004

passed by learned Single Judge of Delhi High Court in FA No.247 of

2003.

2. Respondents 1 & 2 are the landlords of the suit property (front

portion of residential premises no. C-25, Friends Colony, New Delhi).

Respondents 1 & 2 and their father Late Brig. S. Rameshwar let out

the suit property with the fittings and fixtures to M/s Usha Fisheries

Agriculture and Dairy Farm, a partnership firm (third respondent

herein) for a period of three years under a registered lease deed dated

6.6.1979, the purpose being the residential use of a partner of the

firm. Pushpa Devi (mother of the appellant) and respondents 4, 5 & 6

were its partners. The suit property was being used by Pushpa Devi

for her residential use. The tenancy was continued after the lease term

of three years.

3. The landlords (Respondents 1 & 2 and their father) terminated

the said tenancy as at the end of 31.3.1989 by notice dated 9.2.1989

and filed a suit against the firm and Pushpa Devi in the court of the

District Judge, Delhi on 10.4.1989 for recovery of the possession of

the suit property. It was originally numbered as RC Suit No. 265 of

1989 and later, transferred to the court of the Sub-Judge, New Delhi

(later, Civil Judge, Delhi) and renumbered as Suit No. 52 of 1993.

Pushpa Devi, second defendant, resisted the suit inter alia on the

ground that the first defendant firm had been dissolved and as a

consequence all its partners including herself became the co-tenants

and the suit was not maintainable without impleading the other

partners. Subsequently, M.L. Wadhwa, S. K. Mittal and Badan Singh

(the other three partners of the firm), were impleaded as defendants 3

to 5. During the pendency of the suit, the first plaintiff S. Rameshwar

died, and the suit was continued by showing his two sons (original

plaintiffs 2 & 3) as plaintiffs 1 & 2. The fifth defendant also died and

his son Chaman Lal Gahlot was brought on record in his place as the

fifth defendant.

4. Two witnesses were examined on behalf of the plaintiffs and their

evidence was closed on 16.9.1998. Thereafter, the case was adjourned

a number of times for defendants' evidence. Shri Dinesh Garg, counsel

for defendants stated that as the first defendant firm was dissolved, he

will not appear for the firm. In view of it, after issuing court notice, the

first defendant was placed ex parte on 24.4.2000. The order-sheet

dated 7.7.2000 shows that as defendants 2 & 3 did not let in any

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evidence, their evidence was closed and the matter was listed for

evidence of defendants 4 & 5. On 19.5.2001, the court made the

following order :-

"The case was filed in the year 1989. Keeping in view the fact

that it has already been delayed, defendant no. 4 and newly

added defendant no.5 are given only one (more) opportunity to

lead their evidence otherwise the same will be closed on the

next date of hearing i.e. 23.5.1991."

On 23.5.1991, the two plaintiffs and their counsel and Shri Dinesh

Garg, counsel for the Defendants were present. On the basis of the

submissions made, the court recorded the following submissions in the

order sheet :

"It is stated that the matter has been compromised between the

parties. The defendants undertakes to vacate the suit premises

by 22.1.2002 and will keep on paying the rent/damages of the

suit premises @ Rs.4800/- with effect from 1.5.2001, till the

time of vacation of the suit premises. Let the statement of

both the parties be recorded." (emphasis supplied)

Thereafter, the following statement of Shri Dinesh Garg, counsel for

defendants was recorded by the court :

"Statement of Shri Dinesh Garg, Adv. for the defendants.

W. O.

I have instructions on behalf of the defendants to make the

present statement that the defendants undertake to vacate the

suit premises by 22.1.2002 and will keep on paying the

rent/damages @ Rs.4800/- w.e.f. 1.5.2001, till the vacation of

the suit premises. The rent upto 30.4.2001 already stands paid.

Sd/- Dinesh Garg, Adv. R.O.A.C.

(Sd. Civil Judge)

Thereafter, the following statement of Shri B. Khan, counsel for the

plaintiffs was recorded :

"Statement of Shri B. Khan, Counsel for both the plaintiffs.

W.O.

I have instructions on behalf of plaintiffs to make the present

statement that in view of the statement made by the counsel for

the defendants, on behalf of the defendants, the suit may kindly

be disposed of accordingly. I accept the terms of the statement

of counsel for defendants. The plaintiffs are also present today

in the court and will countersign this statement.

Sd/- B. Khan, Adv. R.O.A.C.

(Sd/- Civil Judge)

In addition to the learned counsel for plaintiffs and defendants signing

the order sheet, plaintiffs 1 & 2 who were present in court, also signed

the order sheet. Thereafter, the court made the following order :-

"ORDER

In view of the statement made by the counsel for parties in the

presence of both the plaintiffs, the suit stands disposed off as

settled. Parties to be bound by their statements made today.

File be consigned to R/R. Decree sheet in terms of said

compromise be prepared.

23.5.2001 Sd/Savita Rao

Civil Judge, Delhi"

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5. It was subsequently found that Shri Dinesh Garg though

appearing for all defendants, had not filed Vakalatnama for defendants

3 & 4 and one Shayam Kishore had entered appearance for them.

Therefore, an application under sections 151 and 152 CPC was moved.

Shri Dinesh Garg filed the Vakalatnama on behalf of the defendants 3

& 4 on 18.7.2001. In view of it, the trial court made the following

order on 18.7.2001 :

"Reply to application under section 151 and 152 filed. Copies

given.

As stated Vakalatnama on behalf of the defendants 1, 2, & 5 is

already on record but inadvertently, the Vakalatnama on behalf

of the defendants 3 & 4 was not filed which the counsel Shri

Dinesh Garg is filing today. It be taken on record. Counsel for

defendant states that when he gave the statement, he was duly

authorized on behalf of the defendants for making statement.

He further states that defendant no. 1 is a partnership firm

which has now been dissolved and is not in existence and even

if the decree is passed against defendant no.1 then also it will

be executable against defendents 2 to 5 only. However, I pass a

decree against all the defendants. Let the decree be modified

and a fresh decree sheet be prepared mentioning therein that

the defendants will vacate the suit premises by 22.1.2002 and

will keep on paying the rent/damages @ Rs.4800/- with effect

from 1.5.2001 till the vacation of the suit premises, i.e., front

portion forming part of premises No.C-25, Friends Colony, New

Delhi as shown red in the site plan annexed with the plaint. File

be sent to RR.

Sd/Civil Judge"

Accordingly, a fresh decree was drawn on 18.7.2001 in terms of

the final order dated 23.5.2001.

6. On 21.8.2001, second defendant (Pushpa Devi) filed an

application under section 151 CPC for setting aside the decree

dated 18.7.2001 alleging that she had not instructed her counsel

Shri Dinesh Garg to enter into any compromise on her behalf

that there was no "written compromise between the parties duly

signed by the parties", and therefore, there was no lawful

agreement or compromise. The court issued notice of the said

application to Shri Dinesh Garg, counsel for the defendants as

also the plaintiffs. Shri Dinesh Garg filed a detailed statement

dated 7.12.2001. We extract below the relevant portions of the

said statement :

"The counsel had represented the defendant no. 2

for about 12 years in the aforesaid matter. The

counsel was getting the instructions from the

defendant no. 2 most of times through her daughter

Ms. Sadhna Rai or her son in law, Shri Vinay Rai or

through Group Head of Law Department Dr. M.C.

Gupta. All the proceedings were always

communicated to the defendant no.2.

After the closing of evidence by the plaintiff, the case

was listed for the defendant's evidence time and

again and under instructions of the defendant no. 2,

the counsel took adjournments for evidence for

several years. The adjournment were taken on

4.12.1998, 5.4.1999 and 21.5.1999. When the case

fixed for 12.7.1999 for evidence of defendant no. 2,

she again did not come and sent her medical

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certificate which was placed on record and case was

adjourned to 8.9.1999. Again adjournment was

sought and the case was adjourned to 22.10.1999 as

last and final opportunity for her evidence. A written

communication dated 20.9.1999 was sent by

registered post to defendant no. 2, but she did not

appear. Again adjournment was sought as per her

instructions and this time the case was adjourned for

30.11.1999 for her evidence subject to cost of

Rs.500/- which was paid by her but still she did not

appear in witness box. Even thereafter case was

adjourned on 13.1.2000, 24.4.2000, 7.7.2000,

4.9.2000, 16.10.2000, 20.12.2000 and 26.4.2001

for evidence of remaining defendants but none

appeared in witness box.

After contesting the matter for about 10 years when

it was not possible to take any further date for

recording of the evidence of the defendants, the

counsel advised the defendant no. 2 to lead evidence

and made it clear that it will not be possible the

counsel to meet any further adjournment.

However, she requested for getting her some time to

enable her to find an alternative accommodation.

The counsel took her oral instructions under good

faith and because of level of confidence developed

after representing Usha Group for about 18 years,

started negotiations with the plaintiff which went on

for several months, during which period there were

several offers and counter offers duly communicated

to the defendants. Ultimately when plaintiff came out

with plea to first clear the arrears of rent with effect

from 01.10.1999, the counsel asked defendant no. 2

to clear the arrears which were sent to counsel vide

communication of their Law Officer dated 9.4.2001

through the Head of Law Department Dr. M.C.

Gupta.

After that, the term are negotiated and ultimately,

with prior approval of defendant no. 2 a statement

was made on behalf of the defendant no. 2 as well

on behalf of the other defendants and the decree

was obtained based on admission. Pursuant to

request of the counsel, the plaintiff as well as this

Hon'ble Court was pleased to allow time upto

22.1.2002 to the defendants to vacate the premises.

Immediately after recording of the statement, a

written communication dated 24.5.2001 was sent to

the defendant no. 2 as well as to Dr. M.C. Gupta,

Head of the Law Department of Usha Group of

Companies was sent by Registered A.D. post clearly

indicating therein that a statement has been made

as per the instructions and that the decree has been

passed. This communication was duly received by

the defendant no. 2 as well as Dr. M.C. Gupta. The

copy of the letter, postal receipts and the AD card

duly signed by the defendant as received are

annexed."

7. The second defendant did not, however, pursue her

application dated 21.8.2001 for setting aside the consent decree.

On 27.8.2001, within six days of filing the application dated

21.8.2001 before the trial court for setting aside the decree, the

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second defendant filed an appeal against the said consent decree

before the District Judge, Delhi. The appellate court by judgment

dated 21.12.2002 set aside the consent decree on the ground

that there was no agreement or compromise reduced to writing

and signed by the parties. The matter was remanded to the trial

court with a direction to proceed with the trial of the suit in

accordance with the law by ignoring the statement of the counsel

made on 23.5.2001.

8. The said judgment of the Appellate Court was challenged

by the landlords in FAO No. 247 of 2003 on the file of the Delhi

High Court, under Order 43 Rule (1)(u) of CPC. During the

pendency of the said appeal before the High Court, Pushpa Devi

died, and her daughter (the Appellant) came on record and

pursued the appeal. The High Court allowed the landlords' appeal

by judgment dated 3.3.2004. The High Court held that the

consent decree in question did not fall under the first part of

Rule 3 of Order 23 (requiring an agreement or compromise

between the parties to be in writing and signed by the parties),

but fell under the second part of Rule 3 of Order 23 (relating to

satisfaction of the claim of the plaintiff, which did not require any

document in writing signed by the parties), and that there was a

valid compromise under Order 23 Rule 3 CPC and the second

defendant "could not repudiate the consensus by attempting to

challenge their satisfaction". From the fact that the second

defendant did not pursue the application dated 21.8.2001 filed

before the trial court, and from the fact that she did not

challenge the integrity of her counsel (who entered into the

compromise) either before the appellate court or before it, the

High Court drew an inference that second defendant's counsel

Sri Dinesh Garg, had the authority on her behalf to make the

statement leading to the consent decree.

9. The judgment of the High Court is challenged by the

appellant (second defendant's legal representative) in this

appeal. Learned counsel for the appellant contended that the

High Court having held that the case did not fall under the first

part of Rule 3 of Order 23, committed a serious error in holding

that the case fell under the second part of the said Rule. It is

contended that the second part applies only where the defendant

satisfies the plaintiff in regard to the whole or part of the subject

matter of the suit. It is pointed out that the second part refers to

completed acts, that is acts which have been already executed

or performed, where nothing more remains to be done in future

by a defendant. He submitted that in this case when the counsel

for the defendants agreed to vacate the suit premises on a

future date, that is on or before 22.1.2002, it was a promise or

an agreement to do an act in future to satisfy the suit claim, and

not a case where "defendant satisfies the plaintiff in respect of

the subject matter of the suit". He pointed out that if the

defendants had vacated and delivered the premises to the

plaintiffs and thereafter the counsel for the defendants had

confirmed the same and the suit had been disposed of recording

the said submission, then it would fall under the second part.

The appellant contends that the High Court having held that the

case did not fall under the first part of Rule 3, and the case

demonstrably not falling under the second part of Rule 3, it has

to be held that there was no lawful agreement or compromise. It

is submitted that the first appellate court was justified in setting

aside the consent decree and remanding the matter to the trial

court. On the other hand, the learned counsel for the landlords

contended that the District Court had no jurisdiction to entertain

the appeal against a consent decree. It is also contended that

there was a compromise by admitting the claim of the plaintiffs,

and, therefore, the consequential decree is valid and binding. On

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the contentions raised, the following two questions arise for

consideration :

(i) Whether the appeal filed by Pushpa Devi under

section 96 of the Code of Civil Procedure, against the

consent decree was maintainable.

(ii) Whether the compromise on 23.5.2001 resulting in a

consent decree dated 18.7.2001 was not a valid

compromise under Order 23 Rule 3 CPC.

Re : Point No. (i)

10. It is no doubt true that the landlords did not contend

either before the first appellate court or before the High Court

that the appeal against the consent decree was not

maintainable. This contention is urged for the first time in this

Court. The contention relates to jurisdiction of the appellate

court and is evident from the record. Such a plea does not

require any evidence. Further, being a contention relating to the

jurisdiction of the appellate court, it does not require any

'pleading'. Though this Court will not normally permit a new plea

to be raised at the hearing of the special leave petition or an

appeal under Article 136, where such plea does not involve any

question of fact or amendment of pleading and is purely one of

law, particularly relating to jurisdiction of the appellate court, it

can be entertained by this Court. (See Shanti Devi vs. Bimla

Devi - AIR 1988 SC 2141 and Zahoor vs. State of U.P - AIR 1991

SC 41). In Hiralal vs. Kasturi Devi [AIR 1967 SC 1853], this

Court observed :

"\005\005\005\005\005. though the question of jurisdiction had not

been urged before the High Court, it stares one in the

face of the judgment of the appellate court. We are

satisfied that the appellate court had no jurisdiction

\005\005\005\005\005 though this point was not raised in the High

Court, it is so obvious that we have permitted the plea to

be raised before us."

In this case, the contention raised being one relating to

jurisdiction of the appellate court, we have permitted the said

contention and heard both sides thereon.

11. Section 96 provides for appeals from original decrees.

Sub-section (3) of section 96, however, provided that no appeal

shall lie from a decree passed by the court with the consent of

the parties. We may notice here that Order 43 Rule 1 (m) of CPC

had earlier provided for an appeal against the order under Rule 3

Order 23 recording or refusing to record an agreement,

compromise or satisfaction. But clause (m) of Rule 1 Order 43

was omitted by Act 104 of 1976 with effect from 1.2.1977.

Simultaneously, a proviso was added to Rule 3 Order 23 with

effect from 1.2.1977. We extract below the relevant portion of

the said proviso :

"Provided that where it is alleged by one party and

denied by the other that an adjustment or

satisfaction has been arrived at, the court shall

decide the question\005"

Rule 3A was also added in Order 23 with effect from 1.2.1977

barring any suit to set aside a decree on the ground that the

compromise on which the decree is based was not lawful.

12. The position that emerges from the amended provisions of

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Order 23, can be summed up thus :

(i) No appeal is maintainable against a consent decree

having regard to the specific bar contained in section

96(3) CPC.

(ii) No appeal is maintainable against the order of the

court recording the compromise (or refusing to

record a compromise) in view of the deletion of

clause (m) Rule 1 Order 43.

(iii) No independent suit can be filed for setting aside a

compromise decree on the ground that the

compromise was not lawful in view of the bar

contained in Rule 3A.

(iv) A consent decree operates as an estoppel and is

valid and binding unless it is set aside by the court

which passed the consent decree, by an order on an

application under the proviso to Rule 3 of Order 23.

Therefore, the only remedy available to a party to a consent

decree to avoid such consent decree, is to approach the court

which recorded the compromise and made a decree in terms

of it, and establish that there was no compromise. In that

event, the court which recorded the compromise will itself

consider and decide the question as to whether there was a

valid compromise or not. This is so because a consent decree,

is nothing but contract between parties superimposed with

the seal of approval of the court. The validity of a consent

decree depends wholly on the validity of the agreement or

compromise on which it is made. The second defendant, who

challenged the consent compromise decree was fully aware of

this position as she filed an application for setting aside the

consent decree on 21.8.2001 by alleging that there was no

valid compromise in accordance with law. Significantly, none

of the other defendants challenged the consent decree. For

reasons best known to herself, the second defendant within a

few days thereafter (that is on 27.8.2001), filed an appeal

and chose not to pursue the application filed before the court

which passed the consent decree. Such an appeal by second

defendant was not maintainable, having regard to the express

bar contained in section 96 (3) of the Code.

Re : Point No. (ii)

13. Order XXIII deals with withdrawal and adjustment of

suits. Rule 3 relates to compromise of suits, relevant portion of

which is extracted below :

"3. Compromise of suit.\027Where it is proved to the

satisfaction of the Court that a suit has been

adjusted wholly or in part by any lawful agreement

or compromise in writing and signed by the parties,

or where the defendant satisfies the plaintiff in

respect of the whole or any part of the subject-

matter of the suit, the Court shall order such

agreement, compromise or satisfaction to be

recorded, and shall pass a decree in accordance

therewith so far as it relates to the parties to the

suit, whether or not the subject-matter of the

agreement, compromise or satisfaction is the same

as the subject-matter of the suit."

The said Rule consists of two parts. The first part provides that

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where it is proved to the satisfaction of the court that a suit has

been adjusted wholly or in part by any lawful agreement or

compromise in writing and signed by the parties, the court shall

order such agreement or compromise to be recorded and shall

pass a decree in accordance therewith. The second part provides

that where a defendant satisfies the plaintiff in respect of the

whole or any part of the subject matter of the suit, the court

shall order such satisfaction to be recorded and shall pass a

decree in accordance therewith. The Rule also makes it clear that

the compromise or agreement may relate to issues or disputes

which are not the subject-matter of the suit and that such

compromise or agreement may be entered not only among the

parties to the suit, but others also, but the decree to be passed

shall be confined to the parties to the suit whether or not the

subject matter of the agreement, compromise or satisfaction is

the same as the subject matter of the suit. We are not, however,

concerned with this aspect of the Rule in this appeal.

14. What is the difference between the first part and the

second part of Rule 3 ? The first part refers to situations where

an agreement or compromise is entered into in writing and

signed by the parties. The said agreement or compromise is

placed before the court. When the court is satisfied that the suit

has been adjusted either wholly or in part by such agreement or

compromise in writing and signed by the parties and that it is

lawful, a decree follows in terms of what is agreed between the

parties. The agreement/compromise spells out the agreed terms

by which the claim is admitted or adjusted by mutual

concessions or promises, so that the parties thereto can be held

to their promise/s in future and performance can be enforced by

the execution of the decree to be passed in terms of it. On the

other hand, the second part refers to cases where the defendant

has satisfied the plaintiff about the claim. This may be by

satisfying the plaintiff that his claim cannot be or need not be

met or performed. It can also be by discharging or performing

the required obligation. Where the defendant so 'satisfies' the

plaintiff in respect of the subject-matter of the suit, nothing

further remains to be done or enforced and there is no question

of any 'enforcement' or 'execution' of the decree to be passed in

terms of it. Let us illustrate with reference to a money-suit filed

for recovery of say a sum of Rupees one lakh. Parties may enter

into a lawful agreement or compromise in writing and signed by

them, agreeing that the defendant will pay the sum of Rupees

one lakh within a specified period or specified manner or may

agree that only a sum of Rs.75,000 shall be paid by the

defendant in full and final settlement of the claim. Such

agreement or compromise will fall under the first Part and if

defendant does not fulfil the promise, the plaintiff can enforce it

by levying execution. On the other hand, the parties may submit

to the court that defendant has already paid a sum of Rupees

one lakh or Rs.75,000/- in full and final satisfaction or that the

suit claim has been fully settled by the defendant out of court

(either by mentioning the amount paid or not mentioning it) or

that plaintiff will not press the claim. Here the obligation is

already performed by the defendant or plaintiff agrees that he

will not enforce performance and nothing remains to be

performed by the defendant. As the order that follows merely

records the extinguishment or satisfaction of the claim or non-

existence of the claim, it is not capable of being 'enforced' by

levy of execution, as there is no obligation to be performed by

the defendant in pursuance of the decree. Such 'satisfaction'

need not be expressed by an agreement or compromise in

writing and signed by the parties. It can be by a unilateral

submission by the plaintiff or his counsel. Such satisfaction will

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fall under the second part. Of course even when there is such

satisfaction of the claim or subject matter of the suit by

defendant and the matter falls under the second part, nothing

prevents the parties from reducing such satisfaction of the

claim/subject matter, into writing and signing the same. The

difference between the two parts is this : Where the matter falls

under the second part, what is reported is a completed action or

settlement out of court putting an end to the dispute, and the

resultant decree recording the satisfaction, is not capable of

being enforced by levying execution. Where the matter falls

under the first part, there is a promise or promises agreed to be

performed or executed, and that can be enforced by levying

execution. While agreements or compromises falling under the

first part, can only be by an instrument or other form of writing

signed by the parties, there is no such requirement in regard to

settlements or satisfaction falling under the second part. Where

the matter falls under second part, it is sufficient if the plaintiff

or plaintiff's counsel appears before the court and informs the

court that the subject matter of the suit has already been settled

or satisfied.

15. In a suit against the tenant for possession, if the

settlement is that the tenant will vacate the premises within a

specified time, it means that the possession could be recovered

in execution of such decree in the event of the defendant failing

to vacate the premises within the time agreed. Therefore, such

settlement would fall under the first part. On the other hand, if

both parties or the plaintiff submit to the court that the tenant

has already vacated the premises and thus the claim for

possession has been satisfied or if the plaintiff submits that he

will not press the prayer for delivery of possession, the suit will

be disposed of recording the same, under the second part. In

such an event, there will be disposal of the suit, but no

'executable' decree.

16. In this case, under the settlement, the tenant undertook

to vacate the suit property on a future date (that is 22.1.2002)

and pay the agreed rent till then. The decree in pursuance of

such settlement was an 'executable' decree. Therefore the

settlement did not fall under the second part, but under the first

part of Rule 3. The High Court obviously committed an error in

holding that the case fell under the second part of Rule 3.

17. The next question is where an agreement or compromise

falls under the first part, what is the meaning and significance of

the words 'in writing' and 'signed by the parties' occurring in

Rule 3 ? The appellant contends that the words 'in writing' and

'signed by the parties' would contemplate drawing up of a

document or instrument or a compromise petition containing

the terms of the settlement in writing and signed by the parties.

The appellant points out that in this case, there is no such

instrument, document or petition in writing and signed by the

parties.

18. We will first consider the meaning of the words "signed by

parties". Order 3 Rule 1 of CPC provides that any appearance,

application or act in or to any Court, required or authorized by

law to be made or done by a party in such Court, may, except

where otherwise expressly provided by any law for the time

being in force, be made or done by the party in person, or by his

recognized agent, or by a pleader appearing, applying or acting,

as the case may be, on his behalf. The proviso thereto makes it

clear that the Court can, if it so desires, direct that such

appearance shall be made by the party in person. Rule 4

provides that no pleader shall act for any person in any Court,

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unless he has been appointed for the purpose by such person by

a document in writing signed by such person or by his

recognized agent or by some other person duly authorized by or

under a power-of-attorney to make such appointment. Sub-rule

(2) of Rule 4 provides that every such appointment shall be filed

in Court and shall, for the purposes of sub-rule (1), be deemed

to be in force until determined with the leave of the Court by a

writing signed by the client or the pleader, as the case may be,

and filed in Court, or until the client or the pleader dies, or until

all proceedings in the suit are ended so far as regards the client.

The question whether 'signed by parties' would include signing

by the pleader was considered by this Court in Byram Pestonji

Gariwala v. Union Bank of India [1992 (1) SCC 31] with

reference to Order 3 of CPC :

"30. There is no reason to assume that the legislature

intended to curtail the implied authority of counsel,

engaged in the thick of proceedings in court, to

compromise or agree on matters relating to the parties,

even if such matters exceed the subject matter of the

suit. The relationship of counsel and his party or the

recognized agent and his principal is a matter of contract;

and with the freedom of contract generally, the legislature

does not interfere except when warranted by public

policy, and the legislative intent is expressly made

manifest. There is no such declaration of policy or

indication of intent in the present case. The legislature

has not evinced any intention to change the well

recognized and universally acclaimed common law

tradition \005

x x x x x

35. So long as the system of judicial administration in

India continues unaltered, and so long as Parliament has

not evinced an intention to change its basic character,

there is no reason to assume that Parliament has, though

not expressly, but impliedly reduced counsel's role or

capacity to represent his client as effectively as in the

past\005

x x x x x

37. We may, however, hasten to add that it will be

prudent for counsel not to act on implied authority except

when warranted by the exigency of circumstances

demanding immediate adjustment of suit by agreement of

compromise and the signature of the party cannot be

obtained without undue delay. In these days of easier and

quicker communication, such contingency may seldom

arise. A wise and careful counsel will no doubt arm

himself in advance with the necessary authority

expressed in writing to meet all such contingencies in

order that neither his authority nor integrity is ever

doubted\005

38. Considering the traditionally recognized role of

counsel in the common law system, and the evil sought to

be remedied by Parliament by the C.P.C. (Amendment)

Act, 1976, namely, attainment of certainty and

expeditious disposal of cases by reducing the terms of

compromise to writing signed by the parties, and allowing

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the compromise decree to comprehend even matters

falling outside the subject matter of the suit, but relating

to the parties, the legislature cannot, in the absence of

express words to such effect, be presumed to have

disallowed the parties to enter into a compromise by

counsel in their cause or by their duly authorized agents.

39. To insist upon the party himself personally signing

the agreement or compromise would often cause undue

delay, loss and inconvenience, especially in the case of

non-resident persons. It has always been universally

understood that a party can always act by his duly

authorized representative. If a power-of-attorney holder

can enter into an agreement or compromise on behalf of

his principal, so can counsel, possessed of the requisite

authorization by vakalatnama, act on behalf of his

client\005.. If the legislature had intended to make such a

fundamental change, even at the risk of delay,

inconvenience and needless expenditure, it would have

expressly so stated."

[Emphasis supplied]

The above view was reiterated in Jineshwardas v. Jagrani [2003

(11) SCC 372]. Therefore, the words 'by parties' refer not only

to parties in person, but their attorney holders or duly authorized

pleaders.

19. Let us now turn to the requirement of 'in writing' in Rule

3. In this case as noticed above, the respective statements of

plaintiffs' counsel and defendants' counsel were recorded on oath

by the trial court in regard to the terms of the compromise and

those statements after being read over and accepted to be

correct, were signed by the said counsel. If the terms of a

compromise written on a paper in the form of an application or

petition is considered as a compromise in writing, can it be said

that the specific and categorical statements on oath recorded in

writing by the court and duly read over and accepted to be

correct by the person making the statement and signed by him,

can be said to be not in writing? Obviously, no. We may also in

this behalf refer to Section 3 of the Evidence Act which defines a

document as any matter expressed or described upon any

substance by means of letters, figures or marks or by more than

one of those means intended to be used or which may be used

for the purpose of recording the matter. The statements

recorded by the court will, therefore, amount to a compromise in

writing.

20. Consequently, the statements of the parties or their

counsel, recorded by the court and duly signed by the persons

making the statements, would be 'statement in writing signed by

the parties'. The court, however, has to satisfy itself that the

terms of the compromise are lawful. In this case we find from

the trial court records that the second defendant had executed a

vakalatnama empowering her counsel Sri Dinesh Garg to act for

her in respect of the suit and also to enter into any compromise.

Hence there can be no doubt that Sri Dinesh Garg was

authorized by the second defendant to enter into a compromise.

We also find that the counsel for the plaintiffs and counsel for

the defendants made solemn statements on oath before the trial

court specifying the terms of compromise, which were duly

recorded in writing and signed by them. The requirements of the

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first part of Rule 3 of Order XXIII are fully satisfied in this case.

21. The matter can be viewed from a different angle also. After

the issues were framed by the trial court, the plaintiffs had

examined two witnesses and closed their evidence and

thereafter the matter was set down for the evidence of

defendants. The first defendant was treated as ex parte. As

defendants 2 and 3 did not lead any evidence in spite of

numerous opportunities, their evidence was treated as closed.

On 17.5.2001, the matter was finally adjourned to 23.5.2001 for

the evidence of defendants 4 and 5 with a condition that if they

do not lead evidence on that date there evidence will be closed.

On 23.5.2001, defendants 4 and 5 did not lead any evidence. On

the other hand, the counsel for defendants made a statement on

oath that the premises will be vacated on 22.1.2002. Thereafter,

counsel for the plaintiff also made a statement agreeing to grant

of time till 21.1.2002. There was also agreement that the

plaintiffs will be entitled to the payment of only Rs.4,800/- per

month (equivalent to the rent) and nothing more up to

22.1.2002. The effect of it is that the parties have gone to trial

on the issues and the only evidence led by defendants is that

they will vacate the premises on 22.1.2002. No other evidence

being led, the necessary conclusion is that the defendants

admitted the plaintiffs' claim and merely sought time to vacate.

Therefore, the suit can be said to have been decreed on the

basis of evidence and the admissions made by the defendants.

In Jineshwardas (supra), such a situation was noticed. In that

case, the High Court made an order on a consensus expressed

by both the learned counsel at the time of hearing of the second

appeal, that the respondents will pay Rs.25,000/- within a period

of one month with interest in the manner stipulated. The

appellant subsequently filed an application for review,

contending that the said order disposing of the appeal was a

compromise decree, and as it was not in writing and signed by

the parties, the appeal could not have been disposed of on the

basis of the submissions. The High Court, however, refused to

entertain such objections. This Court while upholding the

decision of the High Court and holding that there was a valid

compromise, also observed :

"That apart, we are also of the view that a judgment or

decree passed as a result of consensus arrived at before

court, cannot always be said to be one passed on

compromise or settlement and adjustment. It may, at

times, be also a judgment on admission, as in this case."

22. Strong reliance was placed by the appellant on the

following observations of this Court in Gurpreet Singh v. Chatur

Bhuj Goel [1988 (1) SCC 270] to contend that a compromise

should be reduced into writing in the form of an 'instrument' and

signed by the parties to be valid under Order 23 Rule 3. He

submitted that recording of the statements of the parties or their

counsel, would not be an instrument of compromise. An

'instrument', according to him, connotes a regular document

drawn up in the form of an agreement. We extract below the

observations relied on by the appellant :

"10. Under Rule 3 as it now stands, when a claim in suit

has been adjusted wholly or in part by any lawful

agreement or compromise, the compromise must be in

writing and signed by the parties and there must be a

completed agreement between them. To constitute an

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adjustment, an agreement or compromise must itself be

capable of being embodied in a decree. When the parties

enter into a compromise during the hearing of a suit or

appeal, there is no reason why the requirement that the

compromise should be reduced in writing in the form of

an instrument signed by the parties should be dispensed

with. The court must therefore insist upon the parties to

reduce the terms into writing."

We have already referred to the definition of the term document.

The term instrument used in Gurpreet Singh (supra) refers to a

writing of a formal nature and nothing more. Further, we will

have to understand the observations in the context in which they

were made. In that case when the hearing of a Letters Patent

Appeal commenced before the High Court, the parties took time

to explore the possibility of a settlement. When the hearing was

resumed the appellant's father made an offer for settlement

which was endorsed by counsel for the appellant also. The

respondent who was present also made a statement accepting

the offer. Evidently, the said offer and acceptance were not

treated as final as the appeal was not disposed of by recording

those terms. On the other hand, the said 'proposals' were

recorded and the matter adjourned for payment in terms of the

offer. When the matter was taken up on the next date of

hearing, the respondent stated that he was not agreeable. The

High Court directed that the appeal will have to be heard on

merits as the respondent was not prepared to abide by the

proposed compromise. That order was challenged by the

appellant by contending that the matter was settled by a lawful

compromise by recording the statements of the appellant's

counsel and respondent's counsel, and the respondent could not

resile from such compromise and therefore, the High Court

ought to have disposed of the appeal in terms of the

compromise. It is in this factual background, that is, where there

was no consent decree, the question was considered by this

Court. The distinguishing feature in that case is that though the

submissions made were recorded, they were not signed by the

parties or their counsel. Nor did the court treat the submissions

as a compromise. In this case, the court not only recorded the

terms of settlement but thereafter directed that the statements

of the counsel be recorded. Thereafter, the statements of

counsel were recorded on oath, read over and accepted by the

counsel to be correct and then signed by both counsel. Therefore

in this case, there is a valid compromise in writing and signed by

the parties (represented counsel). The decision in Gurpreet

Singh (supra) is therefore of no assistance to the appellant.

23. At the cost of repetition, we may recapitulate the facts of

this case. The suit was a simple suit for possession by a landlord

against a tenant filed in the year 1993. Plaintiff's evidence was

closed in 1998. The contesting defendant (defendant No.2) did

not lead any evidence, and her evidence was treated as closed.

The matter was dragged on for 3 years for defendant's evidence

after the conclusion of plaintiff's evidence. It was noted on

19.5.2001 that no further adjournment will be granted for the

evidence of defendants 4 and 5 (who are not contesting the

matter), on the next date of hearing (23.5.2001). When the

matter finally came up on 23.5.2001, no evidence was tendered.

On the other hand, a statement was made agreeing to vacate

the premises by 22.1.2002. The trial court took care to ensure

that the statements of both counsel were recorded on oath and

signed. Thereafter, it passed a consent decree. The attempts of

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tenants in such matters to protract the litigation indefinitely by

raising frivolous and vexatious contentions regarding the

compromise and going back on the solemn undertaking given to

court, should be deprecated. In this context, we may refer to the

observation made by this Court a similar situation in Smt.

Jamilabai Abdul Kadar v. Shankarlal Gulabchand [AIR 1975 SC

2202] :

"23. On the facts of the present case we have little doubt

the pleader has acted substantially with the knowledge of

and encouraged by his client.

x x x x x

24. We feel no doubt that the broad sanction for the

compromise came from the tenant., that no shady action

is imputable to respondent 4 and that his conduct has

been motivated by the good of his client.

25. The last posting was for reporting the compromise.

But, on that date, the Court declined further adjournment

and the party being absent and away, the pleader for the

appellant had no alternative but to suffer an eviction

decree or settle it to the maximum advantage of his

party. \005"

Similar are the facts here. Neither the second defendant nor her

legal representative has attributed any improper motive to

second defendant's counsel. The facts go to show nothing further

could have been done for the defendants-tenants. All that the

counsel for defendants had done was to get the maximum

advantage to his clients in the circumstances after dragging on

the matter to the extent possible.

24. This appeal is, therefore, liable to be dismissed as being

devoid of merit. The consent decree is upheld, though for

reasons different from those which weighed with the High Court.

The landlords (respondents) will be entitled to seek mesne

profits for the period from 22.1.2002 to date of delivery of

possession in accordance with law. The appeal is accordingly

dismissed with costs. The costs payable by the appellant are

quantified at Rs.25,000/-.