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1995 DIGILAW 241 (KER)

Narayanan v. Rajamany

1995-07-28

K.S.RADHAKRISHNAN, K.T.THOMAS

body1995
Judgment :- Thomas, J. The focus of appellant's attack in the suit is on a previous decree which 1st respondent has obtained from this court. According to the plaintiff, the said decree is void as it was based on an illegal compromise made between the parties in that case. Appellant prayed for a perpetual injunction to restrain the said decree holders from proceeding against the suit property in execution thereof. But plaintiff lost the case in the two courts below. Hence this second appeal by him. 2. The background of the present suit is the following: The suit property and some other properties belonged to one Nanu (who was the brother of first respondent's husband), Nanu sold those properties to different persons. Suit property was sold to one Mohammed Haneefa from whom the plaintiff purchased it on 25-7-1964 as per Ext. Al sale deed But prior to the said sale a suit was filed by the first respondent as O.S. No. 12/63 against Nanu for a decree in a sum of Rs. 79,000/- on the allegation that Nanu had borrowed the said sum from 1st respondent's husband. After filing the suit, properties of Nanu were attached before judgment in that case. Nanu contested the suit vehemently and the suit was practically dismissed by the trial court except decreeing a very small portion of the claim (Rs. 3,000/- which Nanu admitted having received from his brother). Then the first respondent filed an appeal before this court as A.S. No. 281/65. Nanu contested the appeal and also filed a memorandum of cross-objections on the ground that he was not liable to return even the amount of Rs. 3,000/- decreed by the first court. While the appeal was pending Nanu died and his legal representatives were impleaded in the appeal. Thereafter the compromise (Ext. A5) was filed in this court signed by both parties in the appeal. As per the said compromise legal representatives of Nanu had conceded that a decree for Rs. 79,000/- might be passed against them. Pursuant to the said compromise Ext. A5(a) decree was passed thereon. Later the decree holders resorted to execution proceedings and the attached properties were brought to sale, plaintiff tiled the present suit contending that Ext. A5(a) decree has been procured in collusion between the parties thereto, as he failed to save his property from such execution proceedings through a claim petition. 3. A5(a) decree was passed thereon. Later the decree holders resorted to execution proceedings and the attached properties were brought to sale, plaintiff tiled the present suit contending that Ext. A5(a) decree has been procured in collusion between the parties thereto, as he failed to save his property from such execution proceedings through a claim petition. 3. Both the courts below declined to consider the question whether Ext. A5(a) decree is invalid, since plaintiff did not pray for a relief to set aside the decree. 4. Shri C.S. Ananthakrishna Iyer, learned senior counsel for the appellant/ plaintiff, contended that the two courts below have erred in by-passing the main issue on a mere technical ground that there was no prayer to set aside the decree. According to the senior counsel, when the suit is for permanent injunction restraining the respondents from proceeding against the suit properties on the ground that the decree (Ext. A5(a)) is invalid an issue should necessarily have been formulated "whether Ext. A5(a)) decree is void or not". A finding on such an issue is indispensable for proceeding to decide whether the injunction prayed for could be granted. 5. There is force in the said contention. According to us, the court was bound to enter a finding whether Ext. A5(a) decree is invalid as contended by the plaintiff because such a finding is sine qua non for deciding whether the injunction prayed for could be granted or not! A plaintiff may or may not incorporate in his plaint a prayer to set. aside the decree. Here, the plaintiff took the stand mat the decree is void and on the assumption prayed for the relief of injunction. Absence of a prayer for setting aside the decree is not enough to oust the jurisdiction of the court from considering the crucial issue involved in me suit. 6. As the suit is a very old one having been instituted in 1979, we are not disposed to remit the case to the trial court to determine the aforesaid question. We choose to decide the question here itself. 7. Section 23 of the Contract Act contemplates that the object of an agreement is unlawful if it "involves or implies injury to the person or property of another", Section then declares that every agreement of which the object is unlawful is void.. We choose to decide the question here itself. 7. Section 23 of the Contract Act contemplates that the object of an agreement is unlawful if it "involves or implies injury to the person or property of another", Section then declares that every agreement of which the object is unlawful is void.. The section does not require that injury to third person must necessarily be expressed in the agreement. The use of the word "implies" in the section affords enough weight to hold that if the object can be discerned from the agreement or from other materials even by implication that injury to a third party was intended, then the agreement is vitiated. The word "injury" in the Section is not confined to physiological or psychological harm to third persons. It includes harm to the property also. In legal parlance "injury" includes "any wrong or damage done to another, either to-his person or rights or reputation or property", (vide Balck's Law Dictionary 4th Edition at page 924). In the context, the word "injury" in S.23 can be understood as including that which is harmful to the property right or interest of a third party. 8. In this case, we have noticed certain broad features which would help us to decide whether the agreement which led to Ext. A5(a) decree has been motivated with the idea of involving the-, properties of others. One of them is that Nanu's legal representatives had nothing to loose by conceding to a decree in Ext. A5 suit because Nanu had already sold away all his assets and nothing was left to be devolved on his legal heirs when he died. Another is that as the suit was practically dismissed by the trial court since Nanu put up strong insistence to it there was no reason for his legal representatives to surrender to the other side at the appeal stage. The compromise was agreed upon since Nanu's legal representatives were certain that none of their assets would be affected by conceding in such a decree. They were quite aware men that, the decree amount would be realised from the properties which Nanu had already transferred to other for valuable consideration since such properties were under an order of attachment before judgment. They were quite aware men that, the decree amount would be realised from the properties which Nanu had already transferred to other for valuable consideration since such properties were under an order of attachment before judgment. The above broad features would strongly suggest that parties in A.S. No. 281 of 1965 (who are kith and kin as between each other) would have colluded together to make the compromise. 9. in this context, reference can be made to Ext. A4 which is a judgment of the District court in a similar suit filed by another purchaser of a portion of the property of Nanu which too was under attachment before judgment. Learned District Judge has found in that case that Ext. A5(a) decree was vitiated by fraud. The relevant portion of Ext. A4 judgment is this: "It must be noted that in the sale deed in favour of the plaintiff the attachment before judgment effected in O.S. No. 12 of 1963 was not revealed. The legal representatives of Nanu were not competent to enter into a contract with respect to the plaint schedule property since by that time the properties were already sold by Nanu. The High Court had not reversed the said decree of the trial court by means of an independent adjudication. It is slated that the claim as regards Rs. 3 ,000/ - decreed by the trial court was already satisfied. So the appellate decree is not enforceable against the plaint schedule property". It is admitted by both sides that Ext. A4 judgment has become final. 10. Learned counsel for the respondents contended Hit. Ext. A4 judgment cannot operate as res judicata in this suit and is therefore inadmissible in evidence. The impact of Ext. A4 is not that it operates as res judicata. but the finding therein has a binding effect Oil the respondents in this case particularly since that judgment concerns the same transaction between Nanu and the first respondent. Not withstanding S.43 of the Evidence Act Ext. A4 judgment can be used here as it would fall within the purview of S.13 of that Act. (Vide Sital Das v. Saul Rams (AIR 1954 SC 606). 11. Learned counsel for the respondents then contended that so long as Ext. A5(a) is a decree passed by a court of law a person who was not a party thereto is incompetent to assail the same. (Vide Sital Das v. Saul Rams (AIR 1954 SC 606). 11. Learned counsel for the respondents then contended that so long as Ext. A5(a) is a decree passed by a court of law a person who was not a party thereto is incompetent to assail the same. This contention cannot be accepted - We bear in mind that Ext. A5(a) is not a decree which had sprouted from any adjudicatary exercise of the court. It was, in reality, only an agreement made between two persons on which the imprimatur of the court was affixed. Such a decree cannot escape from scrutiny when it is attacked by another party who is affected by it. on the ground that the agreement itself was vitiated. 12. The above position has been considered by a Full Bench of the Allahabad High Court in Habib Mian v. M. Ahmad (AIR 1969 All 296): "A compromise decree is a creature of the agreement on which it is based and is subject to all the incidents of such agreement, that it is but a contract with the command of a judgment superadded to it and in construing its provisions the fundamental principles governing the construction of contracts are applicable". Instate of Punjab v. Amar Singh (AIR 1974 SC 994) at page 1007, para 33) Supreme Court: held that "parties cannot achieve what is contrary to law and a decree merely based on such agreement cannot furnish a judicial amulet against statutory violation." though in a different context a Constitution Bench of the Supreme Court has also adopted the same position in Union Carbide Corporation v. Union of India (AIR 1992 SC 248, vide paras.52 and 53). Their Lordships quoted the observations-of Vaughan Williams, J. in Huddersfield Banking Company Ltd. v. Herry Lister & Sons Ltd. (1895) 2 Ch. 273) with approval. 13. When Ext. AS compromise was made, the parties were certain about the possibility of realising the decree amount from the properties which Nanu had transferred. Parties would most certainly have been aware. of two things. (1) Nanu had not left behind him any asset to be devolved on his legal representatives. (2) The properties transferred by Nanu after the institution of O.S. No. 12 of 1963 were under attachment before judgment. Parties would most certainly have been aware. of two things. (1) Nanu had not left behind him any asset to be devolved on his legal representatives. (2) The properties transferred by Nanu after the institution of O.S. No. 12 of 1963 were under attachment before judgment. When they were aware of the above two things, a compromise to be converted into a money decree would only result in bringing such attached properties to sale for realisation of the decree debt. 14. The above discussion leads us to the irresistible conclusion that, the agreement (compromise) was reached with the idea of realising the decree amount only from the properties of third party purchasers. Such agreement falls within the ambit of S.23 of the Contract Act. and is, therefore, void. The corollary is that Ext. A5(a) decree is void as against the appellant and the same cannot be enforced against his properties. It further follows that the appellant is entitled to the injunction prayed for. 15. We, therefore, allow this appeal and set aside the judgment and decree passed by the courts below. We decree the suit and issue a perpetual injunction restraining the defendants (respondents) from proceeding against the plaint schedule property for realisation of Ext. A5(a) decree debt. However, we direct the parties to bear their respective costs throughout.