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Krishnan Nair Vs. Rayarappan Nair and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKerala High Court
Decided On
Case NumberA.S. No. 1152 of 1953 (M) and C.M.P. 9037 of 1956 (M)
Judge
Reported inAIR1959Ker130
ActsCode of Civil Procedure (CPC) , 1908 - Order 23, Rule 3; Contract Act - Sections 19
AppellantKrishnan Nair
RespondentRayarappan Nair and ors.
Appellant Advocate K. Kuttikrishna Menon and; V. Balakrishna Eradi, Advs.
Respondent Advocate V.P. Gopalan Nambiar,; K. Sreedhara Menon and; P. Naraya
Cases ReferredMt. Shujarat v. Mohammad Raza
Excerpt:
.....of partition obtained in pursuance of viodable agreements not valid as such agreement amount to unlawful agreement - party whose consent so obtained entitled to challenge such decree. - - ) it was held :there is good authority for the view that a compromise cannot be attacked in proceedings under order 23 by allegations that it is a voidable compromise brought about by fraud, undue influence or duress. a court, therefore, cannot enforce a compromise unless it is satisfied that the agreement or compromise relied upon at the time when it was sought to enforce it was 'an agreement enforceable by law,'for which, purpose the court can look beyond the terms of the document or hold any inquiry where the validity of the compromise is disputed. why should the law permit a decree to he..........is proved to the satisfaction of the court that a suit has been adjusted wholly or in. part by any lawful agreement or compromise, 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 suit.'the contention of the 3rd respondent (3rd plaintiff) is that the compromise is vitiated by fraud, that it cannot he considered a 'lawful agreement or compromise' and consequently c. m. p. 9037 of 1956 (m) should be dismissed.5. in qadri jahan begam v. fazal ahmad, air 1928 all 494 (sulaiman and kendall, jj.) the court said:'a contract which is brought about either by undue influence,.....
Judgment:

M.S. Menon, J.

1. O. S. No. 2 of 1950 of the Court of the Subordinate Judge of Tellicherry from which A. S. No. 1152 of 1953 (M) arises was a suit for partition of the plaint B and C Schedule properties into four equal shares among the three plaintiffs and the 1st defendant and for the recovery of possession of the three shares of the three plaintiffs with future mense profits and costs. The lower court gave a preliminary decree for partition on the lines indicated in the judgment with future mesne profits at a rate to be decided at the time of the final decree and directed the costs to come out of the estate. From the said decision defendants 1 and 2 appealed to the High Court of Madras, impleading the three plaintiffs and defendants 3 to 7 as the respondents in the appeal.

2. On 28-9-1956 the appellants filed C. M. P. No. 9037 of 1956 (M) before the High Court of Madras and prayed that the court:

'be pleased to record that the suit O. S. No. 2 of 1950, Sub Court, Tellicherry has been compromised as between the Plaintiffs 1 to 3 and 1st Defendant (Respondents 1 to 3 and 1st appellant in the appeal) and to dismiss the appeal as withdrawn as against the other respondents and in so far as the 2nd petitioner (2nd appellant) is concerned.'

In the affidavit filed by the 1st appellant before the High Court of Madras in support of the petition he stated as follows:

'The above appeal is against the preliminary decree for partition passed by the Subordinate Judge of Tellicherry in O. S. No. 2 of 1950. Pend-ing the above appeal all the members of the family-plaintiffs 1 to 3 and the 1st defendant entered into a compromise and had the properties of the family partitioned. The terms agreed upon between the parties were duly incorporated in a partition deed dated 8-11-1955 and it was registered on 29-2-1956. The said deed is filed herewith marked Ext. A. In pursuance of the said deed properties have been partitioned and given possession to the respective parties and the plaintiffs filed a petition in the lower court to discharge the Receiver appointed in the suit and the receiver was accordingly discharged on 3-3-1956.'

The 1st respondent (1st plaintiff) and the 2nd respondent (2nd plaintiff) also filed affidavits before the High Court of Madras in support of C. M. P. No. 9037 of 1956 (M) on 21-3-1957.

3. The 3rd respondent (3rd plaintiff) has raised objections to the recording of the compromise in pursuance of C. M. P. No. 9037 of 1956 (M). According to him he signed the partition deed, Ext. A, as the result of a fraud practised upon him by the 1st appellant (1st defendant) and respondents 1 and 2 (plaintiffs 1 and 2). In his affidavit filed in this court on 18-12-1957 he says:

'After the preliminary decree was passed by the lower court, at the instigation of the 1st defendant, plaintiffs 1 and 2, in whom I had implicit confidence at that time, prevailed upon me to agree to a division of the properties out of court, representing to me that unnecessary expenses could be avoided thereby. At that time, I had no knowledge of the particulars regarding the properties. I agreed to the suggestion made by them of dividing the properties through competent persons provided they were properly valued and my proper share was allotted to me. Accordingly, believing the representations made by plaintiffs 1 and 2 that adequate share was allotted to me, I signed the partition deed produced along with this petition.

After I obtained a registration copy of the partition deed on 20-3-1956, I made enquiries regarding the properties and discovered that the 1st defendant had won over plaintiffs 1 and 2 and they fraudulently allotted to themselves much more valuable properties than would fall to their share if properly valued and allotted to me a much smaller share than I am legitimately entitled to.' and: 'It is, therefore, just and necessary that this Hon'ble High Court may be pleased to dismiss the above petition with my costs.'

4. Order 23 Rule 3 of the Code of Civil Procedure, 1908, provides that:

'Whore 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, 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 suit.'

The contention of the 3rd respondent (3rd plaintiff) is that the compromise is vitiated by fraud, that it cannot he considered a 'lawful agreement or compromise' and consequently C. M. P. 9037 of 1956 (M) should be dismissed.

5. In Qadri Jahan Begam v. Fazal Ahmad, AIR 1928 All 494 (Sulaiman and Kendall, JJ.) the court said:

'A contract which is brought about either by undue influence, misrepresentation or fraud isunder Section 19(a), Contract Act merely voidable and not absolutely illegal or unlawful.

We think that the word 'lawful' in Order 23, Rule 3 refers to agreements which in their very terms or nature are not 'unlawful' and may therefore include agreements which are voidable at the option of one of the parties thereto, because they have been brought about by undue influence, coercion or fraud;'

and in Husain Yar Beg v. Radha Kishan, AIR 1935 All 137 (Niamatullah and Collister, JJ.):

'We are in entire agreement with the views expressed in the passages quoted above. A contract which has been induced by fraudulent conduct is between the parties, not void but only voidable at the option o the party defrauded. Such contract is valid until it is set aside at the instance of the party at whose option it is voidable. A contract vitiated by fraud can be set aside by a decree obtained in a regular suit instituted for that purpose. A mere repudiation by one of the parties, not acquiesced in by the other is not avoidance of such contract. A Judicial determination of facts on which the right to avoid rests is a necessary preliminary to the contract being set aside.'

6. The same view was adontcd in Suraparaju v. Venkatarathnam, AIR 1936 Mad 347; Kuppuswami Reddi v. Pavauambal, AIR 1950 Mad 728, Western Electric Co. Ltd. v. Kailash Chand, AIR 1940 Bom 60 and Harbans Singh v. Bawa Singh, AIR 1952 Cal 73.

7. In AIR 1936 Mad 347 (Wadsworth J.) it was held :

'There is good authority for the view that a compromise cannot be attacked in proceedings under Order 23 by allegations that it is a voidable compromise brought about by fraud, undue influence or duress. Provided the compromise is lawful, that is to say not contrary to law, the Court is obliged to record it, unless there are special circumstances arising through one of the parties being under a disability.'

In AIR 1950 Mad 728 (Rajamannar, C. J. and Soma-sundaram, J.)

It has been held that under Order 23, Rule 3, Civil P. C. a compromise cannot be attacked by allegations that it is a voidable compromise brought about by fraud, undue influence and duress. Provided the compromise is lawful, that is, not contrary to law, the Court is obliged to record it. The mere fact that it may be voidable is no reason for a Court refusing to record it. In this case all that is alleged by the respondent is that the compromise is voidable. It is not suggested that any term of the compromise is unlawful. We therefore record the compromise and direct a decree to be passed in terms thereof.'

In AIR 1940 Bom. 60 (Kania, J.),

'I am unable to construe the word 'lawful' as wide enough to include an inquiry whether the agreement is voidable at the instance of one party. In my opinion, it includes only two classes of agreements; those which are unlawful and those which on their face are void and therefore not capabls of being enforced. Under the circumstances the opposition fails;'

and in AIR 1952 Cal 73 (Sinha, J.),

'I fully agree with the statement of law as stated by Kania, J.'

8. A different note has been struck in AIR 1927 Lah 546 (2), Nand Lal v. Ram Samp; Sadajiwatlal v. Sm. Chandrani, AIR 1946 Sind 81 and Misrilal Talan Chand v. Sobhachand Jamal Chand, AIR 1956 Bom 5.69.

9. In AIR 1927 Lah 546 (2) (Addison and Agha Haidar, JJ.) it was held:

'The document was obtained by the exercise or undue influence, and it cannot be said, therefore, that Ram Sarup v. Sri Ram, Suit No. 274 of 1925 (All) had been adjusted wholly by a 'lawful agreement' or compromise' as required by the provisions of Order 23, Rule 3, Civil P. C. This being so, the Court below was right in refusing to record the compromise.'

In AIH 1946 Sind 81 (Tyabji, J.):

'The words 'lawful agreement' in Order 23, Rule 3 mean exactly the same thing as the words 'an agreement enforceable by law' in Section 2(h), Contract Act. A compromise alleged to be executed as a result of misrepresentation, undue influence, and coercion is voidable and becomes void, when the party entilled to avoid it, obstructs its enforcement. Application under this rule asking the Court to record a compromise and pass a decree in accordance with it is an application for enforcement of the compromise. A Court, therefore, cannot enforce a compromise unless it is satisfied that the agreement or compromise relied upon at the time when it was sought to enforce it was 'an agreement enforceable by law,' for which, purpose the Court can look beyond the terms of the document or hold any inquiry where the validity of the compromise is disputed.'

In AIR 1938 Bom 569 (Shah, J.):

'It is clear that when the Court is required to satisfy itself as to the existence of an agreement and is further required to satisfy itself that there is a lawful agreement adjusting the suit the Court must on an application to record compromise consider, especially where a plea of undue influence is raised, whether the agreement is not vitiated on any ground such as illegality, fraud, misrepresentation etc.'

10. In Union of India v. Raghubir Saran, AIR 1957 All 120 the Court (Kidwai and Agarwala, JJ.) said:

'If the matter had been res integra, we were inclined to take a different view.

When one party to a case alleges that an adjustment has taken place and the other denies the allegation the court has to go into the question whether the alleged adjustment has taken place. There is no sufficient reason why the Court should be debarred from going into the question whether the agreement is vitiated by fraud etc.

It was said tbat the word 'lawful' could havo referred merely to the nature of the agreement and not to facts which rendered it invalid. Even if this is accepted, the question remains whether it can be said an adjustment by an agreement which had been obtained by fraud or undue influence etc., is an adjustment at all which can be enforced against the party defrauded when if has been repudiated by that party, because after all the Court is enforcing the compromise by recording and passing a decree in terms of it, It is conceded that a compromise and the decree based upon it can be set aside in a separate suit if fraud or any other vitiating factor is proved. The tendency of the law is against multiplitity of proceedings. Why should the law allow the enquiry regarding fraud to be held in a separate suit and not in the very proceedings in which the question is raised? Why should the law permit a decree to he passed at all when the agreement is ultimately bound to fail if the allegations are true?

It is said that such questions are not fit for being enquired into in summary proceedings under Order 23 Rule 3. It does not appear to us that the proceedings under Order 23, Rule 3 are so summary that an allegation of fraud cannot be investigated. Itcan be investigated in the same manner as the denial of an adjustment can be investigated' ; and: 'But in view of the fact that all the Courts in India have consistently for the last 28 years taken one particular view we do not consider that we should depart from the established practice in the present case. Accordingly we dismiss the appeal with costs.' ,

11. The latest decision of the Allahabad High Court is Mt. Shujarat v. Mohammad Raza, AIR 1957 All 450 wherein Mukherji and Tandon, JJ. said :

'The rule requires a Court, when it is pointed out to it that the suit has in whole or in part been adjusted by a lawful agreement to record that agreement, and to pass a decree accordingly. The Court, before it will proceed to record the agreement, or pass a decree in accordance therewith will require to be satisfied that the agreement pleaded by any party has in fact been reached.

Whether the agreement so reached between the parties is voidable or can otherwise be avoided by any party thereto on any other ground, is a different matter than the fact whether the agreement itself has been reached between them.'

12. We consider that there is no adequate reason to depart from the view expressed in AIR 1928 All 494, a view in which so many eminent Judges have concurred and which has virtually held the field for a generation. It is not suggested that any of the terms of Ext. A are unlawful and in the light of what is stated above we must direct that the compromise be recorded, that C. M. P. No. 9037 of 1956 (M) be allowed and that A. S. No. 1152 of 1953 (M) be dismissed. Judgment accordingly.

13. In AIR 1940 Bom 60, Kania, J., took care to say:

'If the plaintiffs have any grievance in respect of the agreement their remedy is to file a suit to set aside the agreement and the decree. They are not prevented from doing so by this judgment.'

We also make it clear that nothing in this judgment will in any way preclude the 3rd respondent (3rd plaintiff) from agitating his contentions, if so advised, by a regular suit in a competent court.

14. There will be no order as to costs.


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