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B. Raja Rajeswara Muthuramalinga Sethupathi Avergal, Rajah of Ramnad Vs. the Secretary of State for India in Council, Represented by the Collector of Ramnad and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1926Mad341; (1926)50MLJ59
AppellantB. Raja Rajeswara Muthuramalinga Sethupathi Avergal, Rajah of Ramnad
RespondentThe Secretary of State for India in Council, Represented by the Collector of Ramnad and anr.
Cases Referred and Baily v. British Equitable Assurance Company
Excerpt:
- - if third persons have any interest in the matter, their remedy is to file a separate suit the district munsif has passed no orders on the validity of the compromise and i think that the order which he has passed making the secretary of state for india in council a party is clearly premature......in the suit. if third persons have any interest in the matter, their remedy is to file a separate suit the district munsif has passed no orders on the validity of the compromise and i think that the order which he has passed making the secretary of state for india in council a party is clearly premature. the first question to be determined was whether the compromise was legal. on this part of the case i have heard the arguments both of mr. krishnaswami aiyar for the petitioner and of mr. anantakrishna aiyar for the secretary of state. mr. krishnaswami aiyar argues that the local boards act constitutes the defendant, the union board of ramnad, as a corporation with all rights of suing or being sued, or acquiring, holding or transferring property, moveable or immoveable, or to contract.....
Judgment:

Kumaraswami Sastri, J.

1. This is an application to revise the order of the District Munsif of Ramnad directing the Secretary of State for India in Council to be made a party to the suit which was filed by the Rajah of Ramnad against the Union Board of Ramnad for a declaration that certain streets around his palace belong to him and are not vested in the Union Board Trouble seems to have arisen from the fact that during the survey under the Survey Act these roads were classified as public streets. The suit, however, as appears from the note of the District Munsif, was not a suit under the Survey Act but was a suit by the plaintiff to establish his title to the roads. There was a compromise entered into between the Rajah of Ramnad and the Union Board and this compromise was entered into after a resolution of the Union Board. A joint petition was put in under Order 23, Rule 3 of the Civil Procedure Code on the 26th of April, 1924, where it was stated that the parties had come to an agreement and that a decree should be passed 111 terms of the razinamah. By that razinamah the defendant Board recognised the ownership of the plaintiff over the lanes A, B and C mentioned in the Commissioner's plan; the plaintiff Avas to allow the public free use of the lanes from 5 A.M. till 9 P.M. for ever; and the plaintiff was given the right to close the lanes except during the hours when the public were allowed access; each party was to bear its own costs. It was prayed that a decree be passed in terms of this razinamah. This petition was put in on the 26th of April but no order was passed on it. It appears from the affidavit filed on behalf of the Secretary of State for India in Council that the Government on the 4th of July, 1924, long after this petition was presented, and purporting to act under Section 38 of the Local Boards Act rescinded the resolution of the Union Board to enter into a compromise. On the date the petition to record the compromise came on for hearing, the Secretary of State for India in Council put in a petition to be made a party to the suit and the District Munsif without deciding the petition already filed to record the compromise passed an order making the Secretary of State for India in Council a party to the suit. The present revision petition is filed against that order.

2. The contention of Mr. Krishnaswami Aiyar for the petitioner is that, under Order 23, Rule 3, Civil Procedure Code, the Court was bound to pass a decree in terms of the compromise, such compromise being legal and valid and that it was not competent to the Court to add a party to the proceedings where the original parties terminated the suit by a lawful compromise. Order 23, Rule 3 runs as follows:

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, 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.

3. It seems to me to be clear that if this compromise between the Union Board and the plaintiff was a lawful and valid one, the District Munsif had no power to add any party but he had. only power to pass a decree in terms of the compromise.

4. Sankaralinga Nadan v. Raja Rajeswara Dorai ILR (1908) M 236 has no application. In that case the defendants, who were Shanars, were sued as representing their community. The High Court found that the compromise after decree passed in favour of the trustee by the Subordinate Judge was a breach of trust on the part of the trustee and that third parties interested were entitled to intervene. Their Lordships of the Privy Council upheld the order of the High Court. In the present case there is no such charge and the suit is not filed by or against either party in a representative character.

5. The fact that the petitioner claims a right or interest in the matter cannot, if the suit was terminated lawfully by the original parties thereto, allow third parties to agitate their rights in the suit. If third persons have any interest in the matter, their remedy is to file a separate suit The District Munsif has passed no orders on the validity of the compromise and I think that the order which he has passed making the Secretary of State for India in Council a party is clearly premature. The first question to be determined was whether the compromise was legal. On this part of the case I have heard the arguments both of Mr. Krishnaswami Aiyar for the petitioner and of Mr. Anantakrishna Aiyar for the Secretary of State. Mr. Krishnaswami Aiyar argues that the Local Boards Act constitutes the defendant, the Union Board of Ramnad, as a corporation with all rights of suing or being sued, or acquiring, holding or transferring property, moveable or immoveable, or to contract and do all other things which it considers proper or expedient for the purposes for which it was constituted. The streets vested in the Board under the Act and that Board was, having regard to the allegations in the plaint, the proper party to be impleaded. The contract therefore which resulted in the razinamah was a contract entered into by a body which had authority to enter into the contract. Such being the case there could be no question of the contract not being enforceable. It is contended by him that the provisions of Section 38 of the Act, which gives the Government the power to suspend or cancel any resolution of the Local Board, can only be exercised so long as the matter rests in the stage of a mere resolution which as between the Board and the Government the Government can interfere with, and that so long as the rights of third parties are validly created under a contract which cannot be impeached on the ground of fraud or misrepresentation or ultra vires, the contract is enforceable irrespective of what the Government may do under Section 38. Reference has been made to the decisions in Allen v. Gold Reefs of West Africa (1900) 1 Ch D 656, British Murac Syndicate, Lid. v. Alperton Rubber Company, Ltd. (1915) 2 Ch D 186 and Baily v. British Equitable Assurance Company (1904) 1 Ch 374 and to Vol. VIII of Hals-bury's Laws of England, p. 384. It is argued by Mr. Anantakrishna Aiyar that Section 38 by necessary implication renders all contracts invalid where such contracts are based upon the resolution which has been set aside by the Government; in other words, that all contracts which are entered into by Local Boards will, by virtue of Section 38, be of no effect if the Government later on rescind the resolution by virtue of the powers vested in them under that section which gives no time within which the contract may be rescinded. This would really mean that all contracts are liable to the risk of being cancelled at any period irrespective of the rights of the parties. As at present advised, I am not prepared to concede so wide a proposition, but it is unnecessary for me to give any decision on the point at this stage of the proceedings especially as any decision passed by me on this point would not be subject to an appeal. If the case goes to the District Munsif for adjudication as to the validity of the compromise and should he pass any order one way or the other, it would be subject to an appeal. As it is, it is difficult to uphold the order of the District Munsif who adds a party without determining whether the compromise has put an end to the suit. There is no question about the effective addition of parties. I also refrain from saying whether should he hold that the compromise is invalid, this is a case in which the Secretary of State for India in Council should be made a party.

6. The result is that the order of the District Munsif is set aside and the case remanded for disposal in the light of the observations made above. Costs will abide and follow the result.


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