T.S. Misra, J.
1. This is an application under Rule 3 of Order 23 of the Code of Civil Procedure for recording the compromise and deciding the second appeal as well as the cross-objection in terms of the conditions of the compromise. This application has been signed by Shobha Ram, the appellant, as well as his counsel. It has also been signed by one Safaruddin, special attorney of Inamul Haq, and by the counsel for the respondent. The application was sent to thecourt below for verification. There an objection was filed that Safaruddin had no authority to compromise the matter on behalf of Inamul Haq. It appears that an application for amendment of the compromise petition was also filed. Consequently the Additional Civil Judge sent back the whole record to this Court. The said application for amendment was dismissed by this Court on 6th April 1973. On that date Sri Faujdar Rai, learned Counsel for the respondent, stated that the alleged compromise is not lawful. He prayed for and was allowed one month's time to file objections and affidavit. On 7th May, 1973, a counter-affidavit of Shidulnnisa, the wife of the respondent, was filed. The appellant has filed a rejoinder affidavit. Thereafter supplementary counter-affidavit and rejoinder affidavit were also filed.
2. The respondent is residing in Brunei, beyond Singapur, to earn his livelihood. He is the owner of the shop in dispute. The defendant appellant was the tenant in that shop. The suit, which has given rise to this appeal, was filed by the respondent for the ejectment of the appellant from that shop. That suit was decreed by the trial court. On appeal the decree for ejectment of the defendant from the shop in suit was maintained. The decree with regard to other matters was partly modified. Against that decision the defendant preferred this second appeal and the plaintiff filed a cross abjection. During the pendency of the appeal and the cross objection the aforesaid compromise petition was filed on 29th August 1972.
3. It is not disputed that the respondent had executed a power of attorney in favour of his son-in-law, Safaruddin. In para 7 of the counter affidavit it is stated that Safaruddin by a letter threatened the respondent that he would join the appellant if he was not paid immediately by the respondent. However, the respondent did not pay any heed to the illegal demand of Safaruddin. In para 8 of the counter-affidavit it is stated that the said Safaruddin in collusion with the appellant and against the interest of the respondent and without his consent filed a compromise application in the second appeal through another counsel appointed by Safaruddin. In para 9 of the counter-affidavit it is stated that neither the respondent nor his wife knew about the aforesaid compromise when it was filed in the Court. Again, in para 11 of the counter-affidavit it is stated that the compromise filed by Safaruddin is against the interest of respondent and has been filed by him in collusion with the appellant and that Safaruddin did not consult the respondent or his wife for filing the compromise. Paragraph 7 of the rejoinder-affidavit is in reply to paragraph No. 8 of the counter-affidavit. In this paragraph of the rejoinder-affidavit the allegation regarding collusion is not repudiated. Similarly in para 10 of the rejoinder-affidavit, which is in reply to paragraph No. 11 of the counter-affidavit, the allegation regarding collusion is not repudiated. What the appellant alleges is that the compromise in question is a lawful compromise and if the respondent is aggrieved by it his remedy is only by way of a separate suit.
4. Inamul Haq has also filed his affidavit in the case annexing thereto the original letter dated 1st July, 1972, received by him in Bruinei whereby Safaruddin had demanded money from him. In that letter a reference was made to his pitiable financial condition. He had stated that in case the money was not sent to him he should not be blamed for his treachery. He also referred to the fact of Shobha Teli meeting him in connection with the suit and that Shobha Teli having come to know that Safaruddin was in possession of a blank paper bearing the signatures of the plaintiff respondent was persuading Safaruddin to part with that paper against payment of certain money. This disclosed the intention of Safaruddin. The plaintiff had stated that he did not accede to the request of Safaruddin. Safaruddin, therefore, without consulting the plaintiff entered into compromise with the defendant with a view to. benefit himself and to cause loss to the plaintiff. The said action is said to be collusive. It is also stated that Safaruddin did not inform the plaintiff that he was entering into a compromise.
5. From the facts stated above it is quite plain that the terms of the compromise were not settled between the appellant and the plaintiff respondent. In fact the plaintiff respondent was at the relevant time far away in a foreign country. The compromise is said to have been made between the appellant and Safaruddin, who was the special attorney of the respondent. The power of attorney, whereby Safaruddin was appointed the special attorney, is on the record. The defendant appellant relies on this power of attorney to contend that Safaruddin had the authority to enter into a compromise on behalf of the plaintiff respondent. The plaintiff respondent, however, as indicated above, disputes the very factum of the compromise and imputes collusion between the defendant and Safaruddin. Secondly, the allegations of collusion is not repudiated by the appellant in his counter-affidavit, referred to above. It is not the case of the defendant that the terms of the compromise were brought to the knowledge of the plaintiff. The act of an agent would bind the principal if it is done within the scope of his authority and in good faith. The principal would, however, not be bound by the fraudulent act of the agent when a third party who relied upon that act was himself a party to the fraud. A third person cannot take advantage of his own fraud nor can he seek enforcement of a transaction against the Principal which was brought about by collusion between him (i.e., the third party) and the agent. A compromise made between the agent and the third party as a result of collusion between them cannot be deemed in law to have been madebetween the principal (in the instant case the plaintiff) and the third party and it would be open to the court to go into the matter before recording the compromise. It is a settled law that where both the fac-tum and the validity of the compromise are not in dispute the court has to record the compromise under Rule 3 of Order 23 of the Code of Civil Procedure, the provisions whereof are mandatory. Once a dispute is validly settled out of court a party to the suit (which expression includes an appeal) may move the court to pass a decree in terms of the compromise. If the other party disputes the factum of compromise the court has to decide as to whether there had or had not been a compromise between the parties and whether the compromise was lawful. In the instant case the very factum of the compromise, is challenged by the plaintiff respondent. No terms of the compromise were in fact settled with him. The fact of collusion between the attorney and the appellant has been alleged and made out.
6. In the circumstances the compromise cannot be recorded. The application is accordingly dismissed.