Rajamannar, C.J. and Mack J.
1. We consider that this appeal should be heard by a Full Bench as it raises a question of some importance relating to the application of Order 32, Rule 7, Civil P. C.
2. The plaintiff and defendants 5 and 6 are the sons of defendant 4. Defendant 1 obtained a decree in O. S. No. 88 of 1929 on the file of the Court of the Subordinate Judge of Bapatla, for the amount due under a promissory note executed by defendants 3 and 4. In execution of that decree, the properties in suit which were the ancestral properties of defendant 4's family were attached and brought to sale subject to a mortgage which had been executed by defendant 4 in favour of defendant 1. In the court auction, the properties were purchased by one Vajja Bapiraju, the brother of defendant 2. He is alleged to be the clerk of defendant 1. The properties were sold for a sum of Rs. 205/- subject to the mortgage in favour of defendant 1, on 29th February 1932. On 29th March 1932 an application was filed by the maternal grandfather of the plaintiff as his guardian (the plaintiff being then a minor) to set aside the sale under Order 21, Rule 90 (E. A. No. 136 of 1932) on the ground that the sale was vitiated by material irregularities and fraud in publishing and conducting it. This application, after notice to the respondent, was posted for hearing on 6th August 1932. Moan-while, on 28th July 1982, a memorandum, marked EX. D-4 in the case, was filed into Court with the thumb impression of the guardian of the plain-tiff and the initials of his pleader and of the pleader for the court auction-purchaser. On 6th August 1932, the Court made the following note 'Matter is said to have been adjusted and a week wanted. Call on 12th August.' On 12th August 1932, the pleader for the plaintiff's guardian made the following endorsement 'Adjusted. May be dismissed as not pressed.' Thereupon the Court passed an order dismissing the application. Following the dismissal, the sale was duly confirmed under the provisions of Order 21, Rule 92.
3. The plaintiff attained majority on 8th October 1941. On 9th October 1944, he filed the suit out of which this appeal arises to set aside the order dated 12th August 1932 in E. A. No. 136 of 1932 and to try the same on the merits. Two main grounds were alleged in support of his case : (1) the said order 'dismissing the application was made in pursuance of an agreement between his guardian and the purchaser, but the agreement did not receive the sanction of the Court; (2) the guardian acted with gross negligence and to his prejudice in abandoning the petition filed by him to set aside the sale. Defendant 1 to the suit was the decree-holder. Defendant 2 is the brother of the auction-purchaser of the suit properties. Defendants 3 to 15 were added as subsequent alienees in possession of some of the items of property.
4. Several pleas were raised in defence in-eluding the plea that the suit was not maintainable. The learned Subordinate Judge of Tenali held that the order of dismissal was void because sanction of the Court had not been obtained for the agreement in pursuance of which the application was withdrawn by the plaintiff's guardian and set aside the order passed on the application and directed it to be resorted to file. He held that the suit was maintainable. In this view, he did not give his findings on the other issues raised in the case. Defendant 1 is the appellant.
5. Several questions of law were raised by Mr. P. Somasundaram, learned advocate for the appellant. But as we have decided to refer the case to a Full Bench, it is not necessary to mention all of them. It is sufficient to mention what we consider is the main question, namely, whether Order 32, Rule 7 will apply to this case. Assuming that the application under Order 21, Rule 90 was withdrawn in pursuance of an agreement between the guardian and the auction purchaser the question is whether the provisions of Order 32, Rule 7 would apply in the circumstances.
6. It has no doubt been held that if the nest friend or the guardian of a minor plaintiff with, draws from the suit and such withdrawal is in pursuance of an agreement or a compromise entered into with the defendant, such withdrawal must be with the sanction of the Court and if the sanction of the Court is not obtained, the order of withdrawal may be set aside at the instance of the minor. It has also been held that execution proceedings are a continuation of the suit and a next friend or guardian cannot after decree enter into a compromise or an adjustment of the decree without the sanction of the Court. In Muthalakkammal v. Narappa, Reddi, 56 Mad. 430 : A. I. R. 1933 Mad. 456 a Pull Bench of this Court held that Order 82, Rule 1 would apply to an adjustment of the decree which had to be certified under Order 21, Rule 2, Civil P. C. We have examined the several reported decisions in which the provisions of Order 32, Rule 7 have been applied to proceedings in execution after decree, but in every one of these cases, there was a compromise or adjustment in respect of the suit claim which had ripened into a. decree and the compromise or adjustment was between the next friend or guardian of the minor on the one hand and the opposite party on the other.
7. No reported decision was, however, brought to our notice in which the provisions of Order 32, Rule 7 were held to be applicable to the withdrawal of an application under Order 21, Rule 90, in pursuance of an agreement between the guardian of the minor and the auction-purchaser. But we were referred to an unreported decision of a Bench of this Court (Mockett and Bell JJ.) in App. No. 240 of 1943 in which the learned Judges assume that the provisions of Order 32, Rule 7 would apply to an application to set aside an execution sale. The decree-holder was himself the auction-purchaser in that case.
8. If we bear in mind the principle underlying the provisions of Order 32, Rule 7, it becomes difficult to uphold the position that the withdrawal of any interlocutory application by the guardian of a minor either before decree or after decree, if it be in pursuance of an agreement with the other side, would require the sanction of the Court and that in the absence of such a sanction the minor can, within such time as is allowed to him in law, seek to set aside the dismissal of the petition consequent on a withdrawal and have the application reheard, notwithstanding that farther proceedings have been taken and rights of third parties have intervened. To take an obvious instance, suppose while a suit is pending an interlocutory application is made by the guardian for production of certain documents and that application is withdrawn in pursuance of an agreement between the guardian's advocate and the advocate for the other side and the suit ends in a decree against the minor, can it be held that long after the decree, though within time, the minor can have the order of dismissal on the interlocutory application vacated and have the application heard on the merits Would such a course affect the validity of the decree? Will the decree be automatically vacated ?
8a. In the present case, after the withdrawal and dismissal of the application to set aside the Bale, the sale was duly confirmed and became absolute under Order 21, Rule 92, Civil P. C. Thereafter bona fide purchasers for value have acquired portions of the property. What is the effect of reopening the application now ?
9. We consider that the observations of the Judicial Committee in Jitendranath v. Samarendra Nath (1943) 2 M. L. J. 78 : A. I. R. 1948 P. C. 96, throw some light on the matter. No doubt, in that case, there was a transfer of a decree obtained on behalf of a minor by the guardian. The question was whether leave of Court was necessary under Order 32, Rule 7. Their Lordships agreed with the Courts below that the transfer in question was not within the meaning of the words 'an agreement or compromise with reference to the suit.' This is what their Lord-ships say :
'The learned Judges were of the same opinion as the Subordinate Judge on Rule 7 : and their Lordships agree with them. They took the view that in the rule in the phrase 'agreement or compromise with reference to the suit' the words mean agreement with a party to the suit : and do not cover a transfer of a decree to some one then unconnected with the suit even assuming that such transfer could properly be described as an agreement. They expressed their agreement on this point with a decision of the Full Bench of the Madras High Court in Venkatakrishnayya v. Kanakayga, I. L. R. (1938) Mad. 819: A. I. R. 1933 Mad. 539, which is precisely in point. It appears to their Lordships that it cannot have been intended to require the leave of the Court to an agreement, for example, made with a non-party to finance a suit, whether with a stipulation to receive part of the proceeds or not. The conjunction of the word 'agreement' with the word 'compromise' appears to indicate the kind of agreement intended.'
Can it be said that there is in this case any agreement or compromise with reference to the suit claim Can an agreement to withdraw an application filed under Order 21, Rule 90 be said to fall within the class of agreements to which Order 32, Rule 7 would apply Can a stranger auction-purchaser be said to be a party to the suit for this purpose? This question has not been discussed in any of the reported decisions, but there is a decision of a Bench of this Court which assumes that it would. We are satisfied that this matter requires fuller consideration, and having regard to the unreported decision of the-Bench it is desirable that the consideration of the question should be by a Full Bench.
10. It was further argued by Mr. Somasundaram that there was no agreement at all between the guardian and the auction purchaser in this case. We refrain from dealing with it as the whole case will be before the Pull Bench.
Judgment of Full Bench
11. The facts are fully set out in the Order of Reference and need not be repeated.
12. The appellant's advocate raised two contentions: (1) the withdrawal by the guardian-ad-litem of the minor, of the petition to set aside the sale, was not in pursuance of any agreement with the decree-holder or the auction purchaser; (2) even if it was in pursuance of any such agreement, such an agreement does not fall under Order 32, Rule 7, Civil P. C., and no leave of Court is necessary and the order is not bad for want of Court's sanction. He also submitted that if sanction is required, the Court should now be asked to grant it.
13. On the first question we agree with the finding of the lower Court that the withdrawal was only in pursuance of an agreement between the parties. The endorsement on the petition itself by the pleader for the petitioners was to the effect 'Adjusted. May be dismissed as not pressed,' On an earlier date, the Court had made the note 'Matter is said to have been adjusted and a week wanted.' The matter is placed beyond doubt by the recitals in Ex. D-4, a memo filed on behalf of the minor by the guardian and the recitals in Ex. D- 2, the delivery receipt executed by the guardian in favour of the auction purchaser. These recitals show that an agreement had been reached between the guardian-ad-litem on the one hand and the decree-holder and the auction purchaser on the other hand. We have no hesitation in rejecting the first contention on behalf of the appellant.
14. The second and more important contention and the one which has led to this reference is whether this agreement falls under Order 82, Rule 7, Civil P. C. It is necessary and desirable to set out what precisely is the agreement, which we hold, is made out. The agreement is that the guardian-ad-litem should give up the contentions regarding the invalidity of the auction sale and should withdraw the petition to set aside the sale and also deliver up possession of the properties purchased to the auction purchaser and that the decree-holder and auction purchaser should give up their claim for costs of the said petition. It was in pursuance of this agreement that the petition was withdrawn and dismissed (no costs being given).
15. Order 32, Rule 7, Clause (1) and (2) read as follows:
'Clause (1): No next friend or guardian for the suit shall, without the leave of the Court, expressly recorded in the proceedings, enter into any agreement or compromise on behalf of a minor with reference to the suit in which be acts as next friend or guardian.
Clause (2) : Any such agreement or compromise entered into without the leave of the Court so recorded shall be voidable against all parties other than the minor.'
In Madras there is also another clause (1-A) introduced by an amendment made in 1910.
'(1-A) Where an application Is made to the Court for leave to enter into an agreement or compromise or for withdrawal of a suit in pursuance of a compromise or for taking any other action on behalf of a minor or other person under disability and such minor or other person under disability is represented by counsel or pleader, the counsel or pleader shall file in Court with the application a certificate to the effect that the agreement or compromise of action proposed is in his opinion for the benefit of the minor or other person under disability. A decree or order for the compromise of a suit, appeal or matter to which a minor or other person under disability is a party shall recite the sanction of the Court thereto and shall set out the terms of the compromise as in Form No. 24 in Appendix D to this schedule.'
It will be noted that Clause (1) speaks only of 'an agreement or compromise with reference to the suit.' These words are wide enough to include agreements in the course of execution proceedings. A Fall Bench of this Court has held in Mutha-lakka Ammal v. Narappa Reddiar, 56 Mad. 430 : A. I. R. 1933 Mad. 456 that Order 32, Rule 7 would apply to an agreement by a guardian on behalf of a minor, whereby the rights of a minor decree-holder were adjusted under Order 21, Rule 2. The agreement in that case was one whereby a decree in favour of the minor for mesne profits and costs were agreed to be set off against a claim for maintenance by the judgment-debtors against the minor's estate which was the subject matter of another suit. The subject-matter of the agreement related directly to the claim of the minor in the suit which had ripened into a decree in his favour for mesne profits and costs.
16. An examination of the decisions which have held that Order 32, Rule 7 may take in agreements in the course of execution proceedings reveals that in all of them the rights and liabilities of the minor under the decree were directly dealt with by the terms of the agreement and adjusted in one way or another. Such agreements are agreement 'with reference to the suit.' Before decree, the agreement or compromise may be with reference to the claims asserted and denied in the suit and after decree they may be with reference to the rights and liabilities as ascertained, declared and decreed by the decree itself. Apart from agreements relating to these substantive rights and liabilities, there may be agreements in the course of the trial and in the course of the execution proceedings, relating to either processual steps or to rights which came into existence in consequence of the proceedings in execution. A next friend or guardian-ad-litem must have the right to enter into agreements in relation to such matters without the necessity of obtaining leave of Court, as such leave is not really required for the protection and safeguarding of the minor's rights involved in the suit, which is the policy behind the rule. It is not as if every matter arising in the course of the trial or execution proceedings affecting procedure are substantive rights arising out of such procedure, would by its very nature require that the agreement with reference to it should be placed before the Court for sanction. Such a wide construction of the term 'agreement with reference to a suit' is not one which is required as obviously necessary in the interests of a minor who is a party to a litigation. A next friend or guardian may agree, for instance, to an examination of certain witnesses on commission, reception of documents at a later stage, secondary evidence being let in, adjournment of sale proceedings, waiver of fresh proclamation, permission for private sale, reduction of upset prices etc., and withdraw his previous objections thereto. It cannot have been intended that the leave of Court expressly recorded is necessary for the next friend or guardian, ad-litem agreeing to such matters during the progress of the suit and execution proceedings. No decision has ever gone to there extent. No principle or policy requires such a restriction on the guardian's powers even in the interests of the minor. Some restriction must therefore be imposed with reference to the scope of the agreements that should be construed to fall within Order 32, Rule 7.
17. What then is the limitation to be placed upon the wide words 'agreement with reference to suit?' In this context, the observation of the Judicial Committee in their judgment in Jitendranath v. Samarendra Nath , may well be borne in mind. Their Lordships say 'the conjunction of the word 'agreement' with the word 'compromise' appears to indicate the kind of agreement intended.' In that case, it was held that a transfer of a decree by the guardian to a stranger was not an agreement which required leave of Court under Order 82, Rule 7. In the first place, if there were an agreement involved in the transfer, it was not with a party to a suit or execution proceeding and, secondly, it was not one adjusting the rights and liabilities created by the decree into which the suit claim had ripened. The decretal rights and liabilities are left intact as they were before; only such rights and liabilities are conveyed to another person who becomes entitled thereto thereafter. As a 'compromise' operates with reference to and by way of the settlement of the rights and liabilities claimed in the suit or ascertained by the decree, the word 'agreement' also must be limited to refer to agreements which deal with and directly regulate such matters only. As pointed out by Yaradachariar J., in Venkatakrishnayya v. Ka-nakayya, I L. R. (1938) Mad. 819 : A. I. R. 1938 Mad. 539 the real distinction is not between agreements prior to decree and agreements after decree but agreements relating to 'matters in dispute between the parties and matters outside the scope of the suit.' The learned Judge made that observation in that form in relation to the question whether an assignment of the decree required leave of Court. Later on, he observed that
'the natural construction of the words used, namely, agreement or compromise, appears to be that the agreement or compromise is one between the parties to the suit as contemplated between by Order 23, Rule 3 and Order 21, Rule 2, Civil P. C.'
18. In the light of the above observations, we are of opinion that the agreement in this case such as we have found already, not being one relating to the rights of parties as claimed in the suit or to their rights and liabilities ascertained and decreed, does not come under Order 32, Rule 7, Civil P. C. The subject-matter of the agreement was the right of the auction purchaser under the court sale and to its confirmation and his right to delivery of the properties purchased. These were rights which enured to him by virtue of the court sale which took place in the process of execution of the decree against the minor and his father. These were rights which came into existence for the first time during the execution proceedings and consequent upon the proceedings already taken. They were rights in favour of a stranger, not a party to the suit or to the execution proceeding at any anterior stage. The agreement or compromise of such rights as were involved in the petition to set aside the sale, viz., the right of the minor to object to the confirmation of the sale and the right of the auction purchaser to have the sale confirmed do not directly deal with or regulate the extent and nature of the rights and liabilities under the decree, which stand intact and unaffected as before. The fact that the result of the disposal of the petition to set aside the sale may indirectly affect the partial or entire satisfaction of the decree is not really a relevant or governing consideration. The agreement as such does not directly deal with the rights of parties as claimed in the suit or as defined by the decree. Judged by this test the agreement now in question falls outside Order 32, Rule 7, Civil P. C. We hold accordingly that no leave of Court was necessary and that the order of withdrawal is not voidable at the instance of the minor on the ground of want of sanction of Court. The question of a grant of subsequent sanction now even if sanction were originally required, does not arise.
19. We are not to be understood as laying .down that it is only agreements under Order 23, Rule 3 and Order 21, Rule 2 that come under Order 32, Rule 7. An agreement to refer a suit to arbitration will undoubtedly be an agreement with reference to a suit. It is not our intention to exhaustively define or enumerate the various kinds of agreements coming under Order 32, Rule 7. While we have tried to lay down what we consider is the test to be applied, we are only deciding that this particular agreement is outside Order 32, Rule 7. Indeed in this case even if the auction purchaser is the decree-holder and not a stranger, the agreement of the kind referred to will not come under Order 32, Rule 7, because in our opinion, it is only the rights under the auction sale that were the subject-matter of the agreement and not any rights and liabilities of the parties to the suit whether as claimed in the suit or as ascertained under the decree. With reference to the terms of the agreement as found in this case, a decree-holder-purchaser is in the same position as a stranger-auction-purchaser and his rights qua auction purchaser only, are covered by the agreement and accordingly there is no need for leave of Court under Order 32, Rule 7. It may, however, be pointed out that even with reference to a petition for setting aside a sale, there may be an agreement between the decree-holder-purchaser and the minor's guardian that may contain other terms amounting to an adjustment of rights and liabilities under the decree, in addition to the terms affecting the court sale, and in such cases the agreement may fall under Order 32, Rule 7 Civil P. C. For the above reasons we agree with the appellant's contention under the second head.
20. The respondent's advocate wanted to support the judgment of the Court below on a ground not decided by the lower Court. He urged that the order of withdrawal was liable to be set aside on the ground of gross negligence of the guardian. Even assuming that gross negligence, if made out, will be a ground for setting aside the order as against the auction purchaser and subsequent alienees from him--A position which is not by any means to be taken for granted as established--There is absolutely no evidence in this case of any negligence at all, much less of gross negligence, on the part of the guardian. No oral evidence at all was let in during trial and even a copy of the affidavit in support of the petition for setting aside the court sale was not filed. In these circumstances, we hold that no gross negligence is established. Nor is there any justification for remanding the suit for a fresh trial on this issue with an opportunity for fresh evidence, as requested by the respondent's advocate.
21. It follows from what is stated above that the decree of the trial Court is unsustainable. It is not necessary to deal with various other questions which were sought to be raised and partly discussed during arguments.
22. In the result, we reverse the decree of the trial Court, and dismiss the suit with costs throughout (payable by the plaintiff).