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S.S. Nirmalchand S/O. S.S. Ratanchand and anr. Vs. Smt. Parmeshwari Devi W/O. Shamsunder Bhargav and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMadhya Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 36 of 1953
Judge
Reported inAIR1958MP333
ActsConstitution of India - Articles 366, 372 and 395; Code of Civil Procedure (CPC) , 1908 - Sections 2(2), 11 and 47 - Order 32, Rule 7; Contract Act, 1872 - Sections 74; Evidence Act, 1872 - Sections 115
AppellantS.S. Nirmalchand S/O. S.S. Ratanchand and anr.
RespondentSmt. Parmeshwari Devi W/O. Shamsunder Bhargav and ors.
Appellant AdvocateM.R. Bobde, Adv.
Respondent AdvocateA.P. Sen, Adv.
DispositionAppeal dismissed
Cases ReferredIn Venkatarayudu v. Rama Krishnayya
Excerpt:
.....government of india act is no longer operative would be well-founded if the repealing statute had not any saving clause ;craies on statute law, 5th ed. debi singh, air 1937 oudh 298 (n). the point under consideration by the learned single judge in this case was whether the decree was satisfied in terms of the agreement between the parties. on the recording of such an adjustment, the decree becomes fully satisfied and the decree-holder can enforce the fulfilment of the judgment-debtor's promise only by a separate suit; but there was a provision that the decree would be held to be fully satisfied, if the judgment-debtors paid into court rs. 1500/- by the end of 1931; and if this were done, the decree was to be considered fully satisfied as before. 20. there is yet another reason why the..........of the debt, and to extend the time of its payment, did not amount to an adjustment of the suit or the decree and as such could not be recorded or acted upon; and 2. that the agreement to pay the full amount on default was not of a penal character and as such the time for payment could not be extended. these contentions were repelled by the respondents who further contended that as the appellants had withdrawn the amount in deposit with the court they could not dis-affirm the adjustment and satisfaction of the decree. 12. the 'validity of the first compromise which resulted in the consent decree nisi for sale was not challenged before us except to the extent by which the amount due on the decree was reduced. a perusal of the pleadings on record reveals that there were.....
Judgment:

1. This is a Letters Patent Appeal by appellant No. 1, Nirmalchand, and is directed against the order of Mudholkar, J. in Miscellaneous Appeal No. 89 of 1949. His grand-mother Mst. Rajrani has formally joined as appellant No. 2. The Miscellaneous Appeal was filed against the final decree of satisfaction passed by the 1st Additional District Judge, Jabalpur, in Civil Suit No. 3-A of 1934.

2. The suit, out of which this appeal arises, was filed on 10-2-1934 for recovery of Rs. 2,79,596/- and odd due on a simple mortgage bond, dated 13-8-1921. The sum advanced was Rs. 2,00,000/- which carried interest at 11 annas per cent, per mensem, with half yearly rests, the interest to be added to the principal on default and liable itself to carry interest at the same rate. The respondents paid Rs. 1,37,121/- towards the debt before the institution of the suit.

As there was some dispute about calculation of interest, a round sum of Rs. 2,61,000/-, which roughly included interest at the agreed rate, was settled as the amount due on the date of the suit, towards which Rs. 1000/- were paid during the pendency of the suit. On making accounts with interest at 3 per cent, per annum from the date of the suit, a sum of Rs. 3,71,800/- was found due on 9-4-1941. Towards this amount, two sums of Rs. 1,28,000/- and Rs. 200/- were paid by transfer of property.

On adjustment of the repayments a sum of Rs. 2,53,216/- was found due which was made payable on or before 9-4-1942 with costs, and future interest at 6 per cent, per annum till realisation on Rs. 2,43,600/- which was the net amount due on' 9-4-1941. The parties agreed that the decree would stand satisfied if the respondents paid Rs. 1,62,000/- either in cash or by transfer of property within a period of 12 months.

As Nirmalchand and three of the respondents were minors, an application for grant of sanction to enter into the compromise and for recording the terms thereof was made by the parties on 16-4-1941. By an order passed on that date, the Court found the terms to be beneficial to both the parties and granted sanction to the proposed compromise. A preliminary decree for sale in terms of the compromise was accordingly passed on 18-4-1941.

3. The respondents paid only Rs. 60,238/-within the agreed period and as default was made in the payment of the balance, a final decree for sale for the full amount due, was passed on 5-2-1945. This decree was sought to be executed on 12-9-1946, but the application was dismissed as infructuous. Another execution application was thereafter filed on 1-11-1947. During its pendency the respondents paid further sums of Rs. 17,635/-, Rs. 28,000/- and Rs. 30,000/- towards the debts. Thus a sum of Rs. 1,35,873/- was paid by the respondents since the preliminary decree was passed.

On 5-3-1948, the parties again came to terms and made an application for the Court's permission to enter into the compromise and for recording its terms. Under the compromise, the amount due was maintained at Rs. 1,62,000/-, and after adjusting Rs. 1,35,873/- towards it, time till 3-11-1948 was granted to the respondents for payment of the balance of Rs. 26,127/- in full satisfaction of the decree. After hearing the parties, the Court sanctioned the proposed compromise by an order dated 9-3-1948 and recorded the terms thereof.

4. Nirmalchand was represented in the proceedings by his mother and guardian Mst, Indrani Bahu and the minor respondents, by their mother Mst. Parmeshwari Devi.

5. The amount of Rs. 26,127/- was deposited by the respondents in Court on 20/21-10-1948 20/21-10-1948 . Simultaneously they made an application for recording full satisfaction of the decree. Thereupon Mst. Rajrani, grand-mother of Nirmalchad, put in a demurrer on his behalf. She contended that the compromise was not in the interest of the minor, that his mother acted with gross neglect in entering into it, and that she was prevailed upon by her munims and made to accept a 'stupid settlement'.

She also alleged that undue influence was brought to bear upon the minor's mother and that the Court did not apply its mind to the compromise when it accorded sanction thereto. The lower Court negatived these contentions and passed a final decree of satisfaction by an order, dated 5-2-1949. It was not disputed before us that the amount of Rs. 26,127/-, in deposit with the Court,, was withdrawn by Nirmalchand in the year 1952 after attaining majority in March, 1951. In appeal, the learned Single Judge upheld the finding that Mst. Indrani Bahu was not subjected to any undue influence and holding that the order dated 9-3-1948 recording adjustment was not appealed against and, therefore, had become final, confirmed the decision of the lower Court.

6. A preliminary objection was taken by the learned counsel for the respondents that the present appeal is not maintainable in view of the fact that the Letters Patent has been abrogated by virtue of Article 395 of the Constitution. Under this Article, the Indian Independence Act, 1947, and the Government of India Act, 1935, together with all the enactments, amending or supplementing the latter Act, but not including the Abolition of Privy Council Jurisdiction Act, 1949, have been repealed. The contention appears to be that the Letters Patent having its authority under the Government of India Act, stands abrogated under the Article as the parent Act itself has been repealed.

7. The Letters Patent is not an enactment which amends or supplements the Government of India Act. Therefore, it does not stand repealed under the express terms of Article 395. The contention that it should be deemed to be repealed because the Government of India Act is no longer operative would be well-founded if the repealing statute had not any saving clause ; Craies on Statute Law, 5th Ed., page 382, under the heading 'Repeal o Statute repeals by laws made under it'.

In the instant case, however, the saving clause. is found in Article 372 of the Constitution. The Letters Patent falls under the definition of 'existing law' in Article 366(10) of the Constitution as it i,s an order made under statutory authority : National Sewing Thread Co. Ltd. v. James Chadwick & Bros. Ltd., AIR 1953 SC 357, Pr. 9, p. 360 Col. 2 (A). An 'existing law', as held in Edward Mills Co. Ltd. v. State of Ajmer, 1955 SCA 24 at p. 33: ((S) AIR 1955 SC 25 at p. 31) (B), is not materially different from the 'law in force', which are the words used in Article 395, except that emphasis in one is on the existence and in the other on the enforceability of the law. Thecontention that the Letters Patent is no longer operative has, therefore, no force.

8. Clause 10 of the Letters Patent permits an appeal to be filed from the judgment of a Single Judge of the High Court. Such appeal has, under Rule 6, Part I, Chapter 1, of the High Court Rules, to be heard by a Bench consisting of two Judges other than the Judge from whose judgment the appeal is preferred. The rule-making power of the High Court under Section 108 of the Government of India Act, 1915, which is referred to in Clause 10 of the Letters Patent, has continued unimpaired, as held in the case of N. S. Thread Co. (A) (supra).

It was exercisable under the corresponding provision of the Government of India Act, 1935, namely S. 224 after the repeal of the Act of 1915, and is now referable to Article 225 of the Constitution after the repeal of the Act of 1935. The validity of Clause 10 of the Letters Patent, or of Rule 6 of the High Court Rules, is not, therefore, open to question. The impugned order is not covered by any of the enumerated exceptions and, therefore, would be appealable if it is a 'judgment' within the meaning of the clause.

9. The term 'judgment' in CI. 10 of the Letters Patent was consistently held by this Court to mean a decree in civil cases. This view was for the first time doubted in Dr. Govind Waman Pandit v. Dr. Purushottam Vithal Pandit, ILR 1952 Nag 352: (AIR 1952 Nag 283) (C). and was finally repelled by the majority of the Judges of the Full Bench in Manohar Damodar v. Baliram Ganpat, ILR 1952 Nag 471: (AIR 1952 Nag 357) (D). In the extended view of the term that is now taken, the order in question is a judgment as it finally decided the matter in controversy between the parties so far as this Court was concerned. It also appears to us that it satisfies even the stricter test.

10. In the Oudh Commercial Bank Ltd. v. Bind Basni Kuer, ILR 14 Luck 192: (AIR 1939 PC 80) (E), their Lordships of the Privy Council held that the Code of Civil Procedure contains no general restriction on the parties' liberty of contract with reference to their rights and obligations under a decree, and if the terms of compromise or adjustment affect the execution, discharge or satisfaction of the decree, the questions relating thereto would fall to be determined under S, 47 of the Code : See. also Pmsunno Kumar Sanyal v. Kali Das Sanyal, ILR 19 Cal 683 (PC) (F); Mahendrai Rao v. Bisharnbhar Nath, AIR 1940 All 270 (FB) (G); Lal Babu v. Rang Bahadur Singh, AIR 1930 Pat 506 (H): Maghraj v. Kesarimal, ILR (1947) Nag 197: (AIR 1948 Nag 35) (I); Muhammad Kazim v. Mt. Rukia Begam, ILK 41 All 443 : (AIR 1919 All 303) (J) and Satyabadi Sahu v. Mani Sahu, ILR 15 Pat 390: (AIR 1936 Pat 619) (K).

In Manorath v. Atmaram Kheduram, AIR 1943 Nag 335 (L), it was held that an application by a decree-holder to get an order set aside, recording satisfaction of a decree on the ground of mistake of his agent and the judgment-debtor falls under Section 47 : See also Sheodashin v. Ramjanam. AIR 1934 Pat 202 (M) and Gajraj Singh v. Debi Singh, AIR 1937 Oudh 298 (N). The point under consideration by the learned Single Judge in this case was whether the decree was satisfied in terms of the agreement between the parties.

This question related to the satisfaction or discharge of the decree and accordingly fell within the terms of Section 47. The order, therefore, amounted to a decree as defined in Section 2(2) of the Code and as such was appealable under Clause 10 of the Letters Patent. Even on the strict view of the term 'judgment* which prevailed so long in this Court, the objection to the maintainability of the appeal, therefore, fails and is disallowed.

11. The finding of the Court below that no undue pressure was brought to bear upon Mst. Indrani Bahu, and that she had not acted negligently and was not misled by any wrong advice of her munims, were not contested before us. Nor 'was it urged that the Court had not applied proper judicial mind before according sanction to the compromise. The only points on which the appeal, was supported were the following :

1. That the agreement to pay Rs. 1,62,000/-in full satisfaction of the debt, and to extend the time of its payment, did not amount to an adjustment of the suit or the decree and as such could not be recorded or acted upon; and

2. That the agreement to pay the full amount on default was not of a penal character and as such the time for payment could not be extended. These contentions were repelled by the respondents who further contended that as the appellants had withdrawn the amount in deposit with the Court they could not dis-affirm the adjustment and satisfaction of the decree.

12. The 'validity of the first compromise which resulted in the consent decree nisi for sale was not challenged before us except to the extent by which the amount due on the decree was reduced. A perusal of the pleadings on record reveals that there were substantial points of defence which made the result of the suit a matter of doubt. The challenge inter alia was to the binding character of the debt on the interest of the minors and the saving of limitation in respect of the personal liability under the mortgage as also to the equitable character of the transaction.

Under the compromise, Nirmalchand obtained a decree without having to traverse these points. He also realised property worth Rs. 1,28,200/-without the normal delay and expense incidental to a contested litigation. These benefits evidently formed the consideration for the reduction of the amount due under the decree. It was also possible for the Court to reopen the transaction either under the Usurious Loans Act 1918, or under the C, P. Money Lenders Act, 1934.

Looking to the value of the mortgaged property, the surrounding circumstances of the transaction and the large amount of repayments exceeding Rs. 4,00,000/- if the Court considered it just and proper to reopen the accounts and reduce the amount of interest, the debt might have been scaled down substantially, possibly even below the agreed limit. It cannot, therefore, be said that the agreement to reduce the amount of the decree was gratuitous and was not binding on the minor either because it was not supported by consideration or was not to his interest.

13. Whether or not the agreement to reduce the amount of the debt was an adjustment of the suit is really not necessary for decision, If itamounted to an adjustment, the Court was bound to record it under Order 23, Rule 3, Civil Procedure Code. However, the scope of an agreement or compromise by which a suit may be lawfully compounded is larger and falls to be dealt with under Order 32, Rule 7, ibid in the case of a minor. The agreement to settle the amount of the debt was a matter relating to an agreement or compromise with reference to the suit and was, therefore, liable to be adjudged and given effect to under Order 32, Rule 7.

And as no attempt was made to get the consequential consent decree set aside in any proceeding duly constituted for the purpose, it became final and binding on the parties : See Charles Hubert Kinch v. Edward Keith Walcott, AIR 1929 PC 289, (O); Motilal Shivnarayan v. Santaram Bala, AIR 1954 Bom 273 (P), which deals with the finality of an agreement under Order 21, Rule 2, Civil Procedure Code, and Ramrao v. Dattadayal, ILR (1947) Nag 889: (AIR 1948 Nag 304) (Q), in which the words 'proceeding duly constituted for the purpose', used by the Judicial Committee of the Privy Council, in the case of C. H. Kinch (O) (supra), are explained.

14. The contest was really against the second compromise by which time for payment of the amount that was settled was extended upto 3-11-1948. As would appear from the first compromise, the reduction of the amount due was part of the adjustment of the decree for which giving up of the defence and repayment of a part of the debt formed the consideration, and was not purely an act of grace on the part of the decree-holder. The circumstances, therefore, indicate that the parties really intended to reduce the amount of the liability and the time that was granted for payment was not of the essence of the contract.

This appears to be confirmed by the fact that it was not expressly stipulated that on default of payment a .final decree for the original amount would be passed. On the other hand, in the subsequent application dated 5-3-1948, it was explained that the parties never intended to apply the condition rigidly and that the liability to pay on default the amount due under the decree was only meant to secure the performance of the agreement. The condition was, therefore, in the nature of a penalty and could be relieved against under Section 74 of the Indian Contract Act : Hiralal Hariram v. Mt. Durga Bai, AIR 1937 Nag 413 (R).

15. The mother of Nirmalchand as his natural guardian and next friend had the power to compromise the suit : See Nirvanaya v. Nirvanaya, ILR 9 Bom 365 (S). The law only prohibits a guardian to impose on the minor any personal liability or to waste his estate : See Waghela Rajsanji v. Masludin, ILR 11 Bom 551 (PC) (T); Krishna Chandra v. Rishabha Kumar, ILR (1940) Nag 55; (AIR 1939 Nag 2.65} (U) and Shriniwasrao v. Baba Ram, AIR 1933 Nag 285 (V).

In Seth Jiwandas v. Mt. Janki, 18 Nag LR 145: (AIR 1922 Nag 98) (W), it was held that there was nothing to prevent the guardian continuing an already existing liability by acknowledging it and extending the period of limitation in respect of it, by execution of a simple money bond or otherwise. So also in Seth Ghasiram v. Mt. Binia, 1 Nag LR 66 (X), it was observed that a minor is bound by the act of his guardian done bona fide and for his benefit in the management of his estate.

Therefore, the act of Mst. Indrani Bahu in reducing the amount of the debt, supported as it was by legal necessity and conferring sufficient benefit on the minor, is not open to challenge. And because time was not of the essence of the contract, she was also competent to extend it. In this connection, what she did was, as already observed, only what the Court could have done and as her action did not throw any personal burden on the minor, he cannot be relieved from it.

16. On this point also, it appears to us that the question whether the agreement to extend the time for payment was an adjustment is really not material for the decision of the appeal. It is only when a decree is adjusted in whole or in part that Order 21, Rule 2, of the Code of Civil Procedure intervenes and directs an executing Court to record it. If the adjustment is not recorded, the only result is that the executing Court cannot take notice of it.

But this is a disability attaching only to the executing Court : See Raghoji Paikaji v. Vithoba, AIR 1937 Nag 217 (Y). To such an adjustment, Order 32, Rule 7, would be applicable if a minor is involved, on the ground that execution proceedings are a continuation of the suit : See Tulsiram v. Kevalram, AIR 1943 Nag 231 (2); Muthalakkammal v. Narappa Reddiar, ILR 56 Mad 430: (AIR 1933 Mad 465 (FB) (Z1) and Virupax v. Shidappa, ILK 26 Bom 109 (Z2).

Order 21, Rule 2, however, only applies to adjustment of a decree, not to any other contract which affects its terms. As already observed, the Code of Civil Procedure puts no restriction on the parties' liberty of contract with reference to their! rights and obligations under the decree. Even if, therefore, an agreement may not involve an adjustment of a decree but if it affects the question of execution, discharge or satisfaction thereof, it will be required to be investigated and adjudged in proceedings under Section 47.

17. In the Oudh Commercial Bank Ltd. v. Bind Basni Kuer (E) (supra), their Lordships of the Privy Council were dealing with a case where in consideration of a reasonable rate of interest time for payment was extended. This matter was held to fall under Section 47, as the agreement was intended to govern the liability of the debtor under the decree and to have effect upon the time and manner of the enforcement thereof : See also Harbans Narayan v. Uma Shankar, AIR 1942 Pat 68 (Z3), in which it was held that the matter fell under Order 21, Rule 2, read with Section 47 of the Code. In Ahmed Rehman v. A. L. A. R. Chettiar Firm, AIR 1928 Rang 194 (Z4), extension of the time fixed in a preliminary mortgage decree for payment was held to amount to an adjustment, and in Shankar Atmaram v. Keshav Govind, ILR 60 Bom 729: (AIR 1936 Bom 277) (Z5), it was held that actual payment is not necessary for a valid adjustment.

18. The question whether a decree may be lawfully adjusted by a contract even though executory, has been exhaustively dealt with by this Court in Meghraj v. Kesharimal (I) (supra), inwhich the agreements affecting the decrees were classified as below :

1. Agreements in which a decree-holder agrees to give up all his rights under the decree on the judgment-debtor doing something or the other, and there is no adjustment until the judgment-debtor has done whatever lie promised;

2. Agreements in which the decree-holder agrees to give up all his rights under the decree it return for a promise by the judgment-debtor to do something or the other; on the recording of such an adjustment, the decree becomes fully satisfied and the decree-holder can enforce the fulfilment of the judgment-debtor's promise only by a separate suit; and

3. Agreements in which the parties agree that the decree shall be modified in some way or other and the decree-holder shall be entitled to execute the decree as modified but not the original decree. As regards the second category of agreements, it was held that even though they may be termed as executory agreements, they would amount to adjustment of the decree. Reliance was placed upon Ramanarasu v. Venkata Reddi, ILR 56 Mad 198: (AIR 1933 Mad 28) (Z6); Udham Singh v. Atma Singh, ILR (1941) Lah 383: (AIR. 1941 Lah 149) (FB) (Z7); Kalyanji v. Dharamsi, AIR L935 Bom 303 (Z8) and the Oudh Commercial Bank Ltd. v. Bind Basni Kuer (E) (supra). Whether or not there is an adjustment of the decree depends upon whether the decree-holder has agreed to give up his rights under the decree : See also Raja of Kalahasti v. Venkatadri Rao, ILR 50 Mad 897: (AIR 1927 Mad 911) (Z9).

The present case would appear to fall under this category in so far as the decree-holder had agreed to give up his rights under the decree in return for a promise of the judgment-debtor to pay a certain amount by a specified date. It is not necessary to determine for purposes of this appeal whether such an agreement could be enforced only by a separate suit, which appears to be the view held in Ramrao v. Dattadayal (Q) (supra), as the parties eventually treated the agreement as a modification of the decree which, as held in Meghraj v. Kesarimal (I) (supra), would be executable in place of the original decree and also because the proceeding, if necessary, could be treated as a suit under Sub-section (2) of Section 47 of the Code of Civil Procedure.

19. The facts of the present case are similar to those of Abdul Karim v. Hakam Mal Tani Mal, ILR 14 Lah 668: (AIR 1933 Lah 806) (Z10). In that ease the firm of Hakam Mal Tani Mal obtained a consent mortgage decree for Rs. 13,172/-against Abdul Karim and others; but there was a provision that the decree would be held to be fully satisfied, if the judgment-debtors paid into Court Rs. 2000/- by 31st March, 1930 and Rs. 4000/- by 31st March, 1931, find that in case of default in paying either of the instalments, the whole amount of the decree with costs and future interest would be payable.

Rs. 2000/- were paid before Gist March, 1930, but the sum of Rs. 4000/- was not paid by 31st March, 1931. Accordingly the decree-holder applied for execution of the whole decree by sale of of the mortgaged property. The judgment debtors.on 22nd July, 1932, put in a petition to the effect that, when the time came to pay the second instalment of Rs. 4000/- they could not do so and asked the decree-holder for extension of lime.

Accordingly, an agreement was arrived at, that the judgment-debtors should pay Rs. 3000/- by the end of April, 1931 and the sum of Rs. 1500/- by the end of 1931; and if this were done, the decree was to be considered fully satisfied as before. The judgment-debtors claimed that they made these payments in time and that, therefore, the decree was incapable of being further executed.

Following the decision in Hotchand Tolaram v. Prem Chand, AIR 1931 Sind 42 (Z11), to the effect that an oral agreement between the parties to a decree varying thy terms of the decree can be proved and the proof thereof is not barred by Section 92 of the Evidence Act, and that an oral agreement that an instalment of the decree is to be paid in Court, which is later on actually so paid, amounts to an adjustment of the decree within the meaning of Order 21, Rule 2 and is capable of proof, their Lordships held that the agreement pleaded' amounted to an adjustment of the decree it being alleged that the agreement was carried out and the instalments fixed paid.

The case went ultimately against the judgment-debtors on the ground that the agreement was not certified under Order 21, Rule 2, and could not, therefore, be acted upon by the executing Court, but that is a point which does not arise here. In Raja of Kalahasti v. Venkatadri Rao (Z9) (supra), on the other hand, it was held that an oral agreement varying or modifying the decree is hit by Section 92 of the Evidence Act; and that an agreement with one of the judgment-debtors not to execute the decree beyond his proportionate liability was not an agreement to adjust the decree.

The first point does not arise in the present case, as the decree was substituted by a written' instrument Also the agreement was fully carried' out and did not remain merely executory. There is, therefore, no reason why the view held in Abdul Karim v. Hakim Mal Tani Mal (Z10) (supra) should not be followed, when the agreement was actually earned out, although, as held by this Court in Meghraj' v. Kesarimal (I) (supra), a decree may be adjusted even by an executory agreement.

20. There is yet another reason why the appeal must fail. The doctrine of approbate and reprobate has been dealt with by the Supreme! Court in Nagubai v R Shama Rao, ATR 1956 SC 593 (Z12). As held by their Lordships, the doctrine is only one application of the doctrine of election and its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who arc parties thereto.

In the case before us, the agreement to pay Rs. 26,127/- on or before 3-11-1948 in full satisfaction of the decree was an integral part of the same transaction affecting the decree as a whole and not a separable agreement as was the case In Venkatarayudu v. Rama Krishnayya, AIR 1930 Mad 268 (Z13). Therefore, when Nirmalchand, on attaining; majority, accepted the amount, he must be deemed to have ratified the agreements. He is, therefore, precluded from contesting the satisfaction of the decree.

21. The result is that the appeal fails and isdismissed with costs.


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