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2014 DIGILAW 794 (MAD)

S. Kandasamy v. Subramani

2014-03-28

R.S.RAMANATHAN

body2014
ORDER 1. The respondent in A.S.No.1008 of 2003 is the petitioner in this CMP. 2. The petitioner herein filed a suit in O.S. No. 455 of 1997 on the file of the Sub Court, Salem (O.S. No. 118 of 2002 on the file of the Additional District Court/Fast Track Court No.1, Salem) against the respondents herein, for specific performance of agreement of sale, dated 28.08.1996 and the suit was decreed as prayed for. As per the decree, the petitioner/plaintiff is liable to pay the balance sale consideration, after deducting Rs. 52,000/- as advance and get the sale deed executed by the respondents. The judgment and decree made in O.S. No. 118 of 2002 was challenged in A.S.No.1008 of 2003 before this court by the respondents. By judgment, dated 02.08.2011, the said appeal was disposed of, on the basis of the compromise entered into between the parties, as evident by the endorsement made in the bundle by the respective counsel appearing for both sides and the following is the terms of the comprise arrived at between the parties: “(1) Plaintiff and the defendants agree for decree for Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand only) payable by the defendants to plaintiff within three months from this date for which there will be a charge on suit schedule property. However, the defendants are permitted to mortgage the suit scheduled property for raising loan so as to discharge this decree amount. (2) There will not be any other claim against each other.: 3. Later, the petitioner herein filed the above Civil Miscellaneous Petition to set aside the judgment and decree passed on 02.08.2011 in A.S. No. 1008 of 2003 on the basis of the compromise memo, endorsed in the grounds of appeal by the learned counsels and to restore the Appeal Suit for hearing stating that he never agreed to receive a sum of Rs. 2,50,000/- payable by the respondents to him and the endorsement was made by his counsel without his knowledge and consent and therefore, the judgment and decree made on 02.08.2011, on the basis of the above endorsement has to be set aside. 4. It is submitted by Mr. 2,50,000/- payable by the respondents to him and the endorsement was made by his counsel without his knowledge and consent and therefore, the judgment and decree made on 02.08.2011, on the basis of the above endorsement has to be set aside. 4. It is submitted by Mr. S. Parthasarathy, the learned Senior counsel appearing for the petitioner that though the learned counsel on record is an Agent of the party, having regard to the specific provisions under Rule 23 Order 3 CPC, without getting the signature of the party in writing to the alleged compromise arrived at between the parties, the learned counsel should not have made the endorsement and the endorsement has no legal force and the endorsement is not binding on the parties and the endorsement is also contrary to Order 23 Rule 3 CPC and therefore, the decree passed in Appeal Suit has to be set aside. 5. Mr. S. Parthasarathy, the learned Senior counsel appearing for the petitioner further submitted that at this point of time, he does not want to blame, either the counsel appearing for the petitioner before this court as well as the learned counsel, who appeared in the trial court and considering the overall circumstances, namely the case was pending for eight years and the arguments were partly heard, the petitioner could not have agreed for receiving Rs. 2,50,000/- in full quit against the judgment obtained in his favour and the learned counsel appearing for the petitioner before this court ought to have been vigilant and ought to have obtained the signature of the parties and having regard to the stand taken by the petitioner that he never agreed for compromise and also the conduct of the petitioner in coming to this court immediately on coming to know of the order passed in A.S. No. 1008 of 2003 on the basis of the compromise, this CMP has to be allowed and the judgment and decree passed in A.S. No. 1008 of 2003 has to be set aside. 6. On the other hand, Mr. S. Ramanarayanan, the learned counsel appearing for the respondents submitted that the respondents herein offered to pay Rs. 6. On the other hand, Mr. S. Ramanarayanan, the learned counsel appearing for the respondents submitted that the respondents herein offered to pay Rs. 2,50,000/- to the petitioner herein for allowing the Appeal Suit and that was conveyed to the respondents counsel, who appeared before this court and he in turn conveyed the massage to the learned counsel, who appeared for the petitioner in the trial court and after getting necessary confirmation from the counsel appeared in the trial court that the plaintiff agreed to receive Rs. 2,50,000/- in full quit toward decree in his favour and therefore, it cannot be contended now that the parties have not signed and therefore, the compromise was not valid and on that ground, the compromise decree is liable to be set aside. 7. He also submitted that as per the agreement of sale, a sum of Rs. 52,000/- was paid as advance against the total consideration of Rs. 3,01,000/- and the suit was filed in the year 1997 and considering the fact that 14 years have passed, the respondents offered to pay the substantial amount to the advance paid and that was also accepted by the petitioner and he conveyed his consent through his trial court lawyer to the counsel appearing for the petitioner in the Appeal Suit and on that basis, endorsement was made and the compromise decree was passed and if such conduct of the petitioner is allowed, there would not be an end to the litigation and such conduct must be deprecated. 8. The learned counsel for the respondents also relied upon the following judgments in support of his contention. 1. In the case of Gemini Pictures Circuit P. Ltd., rep. by its Chief Manager and Authorized Signatory, A. Sriramulu, No.2 Vembuli AmmanKoil Street, Virugambakkam, Chennai-600 092 v. M.Ramaswamy and Another, 2002 (2) CTC 646. 2. In the case of Archies Greetings and Gifts Ltd. v. Garg Plastic,AIR 2003 DELHI 468. 3. In the case of Tirupurasundari (died) v. C. Nagarajan, 2010 (4) CTC 427 : (2011) 3 MLJ 819 9. Having regard to the allegations made in the petition by the petitioner, I directed the learned counsel, who appeared for the petitioner during the hearing of the Appeal Suit, Mr. 3. In the case of Tirupurasundari (died) v. C. Nagarajan, 2010 (4) CTC 427 : (2011) 3 MLJ 819 9. Having regard to the allegations made in the petition by the petitioner, I directed the learned counsel, who appeared for the petitioner during the hearing of the Appeal Suit, Mr. P. Jagadeesan, to find out from the counsel, who appeared for the petitioner before the trial court, whether the counsel would file an affidavit about the incident, that had taken place at his office. The reason for asking the learned counsel for the petitioner appearing in the High Court is that the learned counsel appearing for the petitioner in the Appeal Suit relied upon the information, he got from the learned counsel, who appeared for the petitioner in the trial court and on that basis, he made an endorsement. The learned counsel, who appeared for the petitioner in the trial court Mr. P. Paramasivam also filed an affidavit stating that he was informed by the learned counsel Mr. P. Jagadeesan that the appellants, namely the respondents herein, were ready to pay Rs. 2,50,000/- as against the advance of Rs. 52,000/- paid by the petitioner herein, for settling the matter and he called the petitioner herein to his office and explained about the merits and demerits of the case and also put him on notice of the proposal by the respondents herein, namely appellants offering to pay a sum of Rs. 2,50,000/- was a fair one and the petitioner agreed for the same and agreed to receive Rs. 2,50,000/- in settlement of his claim and in his presence, he called Mr. P. Jagadeesan, the learned counsel appearing for the petitioner in the Appeal Suit and informed about the agreement, endorsed by the petitioner and on that basis, Mr. P. Jagadeesan has made the endorsement in the grounds of appeal. He also stated that after the settlement, the party, namely the petitioner herein did not turn up to him. 10. The first respondent also filed an affidavit to the effect that on the basis of the settlement, he deposited a sum of Rs. 2,50,000/- into the trial court and also informed the petitioner herein about the deposit made by him, by his letter, dated 27.10.2011, which was duly acknowledged by the petitioner on 12.11.2011. 10. The first respondent also filed an affidavit to the effect that on the basis of the settlement, he deposited a sum of Rs. 2,50,000/- into the trial court and also informed the petitioner herein about the deposit made by him, by his letter, dated 27.10.2011, which was duly acknowledged by the petitioner on 12.11.2011. He, therefore, stated that the petitioner was aware of the compromise and deliberately, he tried to wriggle out of the consent given by him to his counsel. He also stated that the petitioner did not state the truth and according to the affidavit filed by the petitioner, he met his counsel in the High Court and he told that the Appeal Suit was disposed of, as settled out of court and directed him to get further details from the trial court counsel and within a week thereafter, the trial court counsel called him over phone and furnished the copy of the order and he got the entire case bundle from the trial court counsel two days latter. He, therefore, stated that as per the affidavit, the petitioner would have got the copy of the order before 28.08.2011, whereas as per the endorsement made, the certified copies were made ready on 05.09.2011 and therefore, the story of the petitioner for setting aside the compromise decree cannot be accepted. 11. The petitioner herein also filed counter affidavit to the affidavit filed by the learned counsel, who appeared for him in the trial court and in that counter affidavit, he denied the allegation that he was called by his lower court counsel and was explained about the merits and demerits of the case and also the proposal by the respondents herein, offering to pay Rs. 2,50,000/- in full quit of his claim and also denied the allegation that he agreed to accept the proposal and take Rs. 2,50,000/- in full quit of the claim and in his presence, the trial court counsel called Mr. P. Jagadeesan, Advocate, Chennai over phone and and informed about the consent given by him. He denied the meeting as well as conversation and agreement. In such circumstances, we will have to consider whether the compromise was in-fact known to the petitioner and whether he agreed for such compromise. 12. P. Jagadeesan, Advocate, Chennai over phone and and informed about the consent given by him. He denied the meeting as well as conversation and agreement. In such circumstances, we will have to consider whether the compromise was in-fact known to the petitioner and whether he agreed for such compromise. 12. Admittedly, the parties, both the appellants and the respondent in the Appeal Suit did not sign in the compromise and only on the basis of the endorsement made by the counsel as stated above, the Appeal Suit was disposed of. Therefore, we will have to see, whether such a course is acceptable and valid in law. 13. In the judgment reported Gurpreet Singh v. Chatur Bhuj Goel, (1988) 1 SCC 270 . the Hon’ble Supreme Court considered Order 23 prior to the amendment of 1976 and thereafter and also extracted the statement of objects and reasons for amending Order 23 Rule 3 CPC and held that 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. 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. 14. Later, in the judgment reported in Byram Pestonji Gariwala v. Union Bank of India and Others, (1992) 1 SCC 31 , the Hon’ble Supreme court held that when a compromise decree is not vitiated by fraud, misrepresentation, misunderstanding or mistake, it is binding and operates as res judicata and also as estoppel between the parties and the counsel representing the parties are competent to sign in the compromise, even on implied authority of the parties and the words “in writing and signed by the parties” inserted in Order 23 Rule 3 by the C.P.C. (Amendment) Act 1976, must be construed in consonance with the language of Order 3 Rule 1 and therefore, any compromise entered into by the learned counsel appearing for the parties is valid and the learned counsel has got implied authority to enter into the such contract. 15. The judgment reported in Byram Pestonji Gariwala v. Union Bank of India and Others (supra) was followed in the judgment reported in Jineshwardas (D) by Lrs. and Others v. Jagrani (Smt) and Another, (2003) 11 SCC 372 . 16. In the judgment reported in Pushpa Devi Bhagat (Dead) through LR. Sadhna Rai (Smt) v.Rajinder Singh and Others, AIR 2006 SC 2628 : (2006) 5 SCC 566 : (2006) 3 MLJ 258 the Hon’ble Supreme Court considered the judgments reported in Gurpreet Singh v. Chatur Bhuj Goel (supra), Jineshwardas v. Jagrani (supra), Byram Pestonji Gariwala v. Union Bank of India (supra) and other judgments on that aspect and divided Order 23 Rule 3 of CPC into two parts and held as follows: “18. 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. 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, 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 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 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. 19. 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. 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 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. 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.” 17. Further, the Hon’ble Supreme Court held that in respect of first part, the agreement of sale must be in writing, signed by the parties and in respect of the second part, the Advocate or Counsel for the parties, may enter into a compromise or agreement on behalf parties. However, having regard to facts of that case, the Hon’ble Supreme Court judges refused to set aside the compromise entered into by the learned counsel in the absence of any signature by the parties. 18. In the judgment reported inBakshi Devi Raj (2) and Another v. Sudheer Kumar, (2011) 8 SCC 679 : (2011) 7 MLJ 584 the Hon’ble Chief Justice of India as he then was along with Hon’ble Justice Mr. H.L. GOKHALE, considered the aforesaid four judgments and also other judgments and held that it cannot be construed that the counsel is debarred from making any statement on behalf of parties and the counsel who was duly authorized by a party to appear by executing the vakalatnama and Order 3 Rule 4, empowers the counsel to continue on record until the proceedings in the suit are duly terminated and the counsel, therefore, has power to make a statement on instructions from the party to withdraw the appeal and it is well within his competence and if really the counsel has not acted, in the interest of the party or against the instructions of the party, the necessary remedy is elsewhere. However, a rider was also placed relying upon the judgment reported in(1992) 1 SCC 377 that in order to safeguard the present reputation of the counsel and to uphold the prestige and dignity of the legal profession, it is always desirable to get instructions in writing. 19. Bearing in mind the above principles laid down by the Hon’ble Supreme court, we will have to see the facts of the case. As stated supra, the suit was filed by the petitioner to enforce the agreement of sale of the year 1997 and the suit was decreed and the defendants filed an appeal before this court in the year 2003 and the case was pending for eight years. It is also seen from the endorsement in the court records that the appeal was listed on 06.10.2010, 09.11.2010, 06.07.2011 and all those days, at the request of the appellants, the appeal was finally adjourned to 06.11.2011 and on 06.07.2011 as a last chance, the case was adjourned to 12.07.2011 and on 12.07.2011, the case was adjourned to 15.07.2011 under the caption ‘For Orders’. Thereafter, the appeal was listed on 26.07.2011 and at the request of the learned counsel for the appellants, the case was adjourned to 01.08.2011 and on 01.08.2011, the appeal was part heard and adjourned to 02.08.2011 and on 02.08.2011, both the counsel made an endorsement as stated above and on the basis of the said endorsement, the appeal was disposed of and it is recorded that the endorsement is recorded and the appeal stands dismissed as settled out of court and there will be a decree in terms of the endorsement. Without malice to any one and with due respect to the counsel appearing for the parties, having regard to the endorsement found in the case bundle, the case of the petitioner appears to be genuine. 20. In the affidavit filed by the learned counsel appearing for the petitioner herein before the trial court, he has not stated the probable date or month, in which the proposal was given to him by the learned counsel for the appellants/respondents herein agreeing to pay Rs. 2,50,000/- to the petitioner to satisfy the petitioner’s claim and in the affidavit filed by the first respondent/first appellant also, no details are given about the probable date on which the proposal was placed to the learned counsel appearing for the petitioner herein in this court. 2,50,000/- to the petitioner to satisfy the petitioner’s claim and in the affidavit filed by the first respondent/first appellant also, no details are given about the probable date on which the proposal was placed to the learned counsel appearing for the petitioner herein in this court. Similarly, the affidavit filed by the learned counsel for the petitioner herein before the trial court is also silent about the date on which he called the petitioner and informed him about the compromise and also informed about the proposal given by the appellants. 21. As state supra, on 01.08.2011, the appeal was part heard and on 02.08.2011, endorsement was made. Therefore, in the absence of any details about the date on which the proposal was given by the appellants through his counsel to the counsel appearing for the petitioner herein in the High Court and the feedback, they received, there is some doubt about the genuineness of the endorsement. I want to make it clear that I am not making any aspersion on the conduct of the learned counsel for the petitioner before the trial court and also before the High Court. But having regard to the occurrence that had taken place as state above and the stand taken by the petitioner and also the fact that the application was filed on 01.10.2011 would make it appear to consider that there must be some communication gap at some point of time or there may not be proper communication between the parties, which led to the present situation. 22. The Hon’ble Supreme court in the judgment reported in Byram Pestonji Gariwala v. Union Bank of India and Others (supra), after elaborately discussing the powers of the learned counsel, by referring to various judgments and the statement made by the legal luminary like LORD ATKIN and also observed as follows: “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 or 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. 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. This essential precaution will safeguard the personal reputation of counsel as well as uphold the prestige and dignity of the legal profession.” 23. According to me, the learned counsel for the petitioner in the trial court as well as the in the High Court could have been more prudent and more vigilant in obtaining the signature of the parties in the compromise, rather than making an endorsement on the basis of the alleged oral representation of the parties. 24. Further, as per the judgment reported in Pushpa Devi Bhagat (Dead) through LR. Sadhna Rai (Smt) v. Rajinder Singh and Others (supra), the compromise entered into by the learned counsel falls within Part I, as per Order 23 Rule 3 and as per the decree, it must be in writing signed by the parties, as the appellants agreed to pay a sum of Rs. 2,50,000/- within a period of three months and therefore, the decree became executable decree and therefore, without signature of the parties, the compromise cannot be termed as valid. Therefore, in the interest of justice and the keeping in mind the legal maxim, justice shall not only be done, but shall appear to be done, the compromise decree passed on the basis of the endorsement made by the counsels without signing of the parties is liable to be set aside and it is set aside. 25. In the result, this Civil Miscellaneous Petition is allowed. Petition allowed.