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P.S.S. Somasundaram Chettiar Vs. R. Sathappan and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberAppln. Nos. 4390 of 1982 and No. 118 of 1983 in C.S. No. 188 of 1972
Judge
Reported inAIR1983Mad372
ActsCode of Civil Procedure (CPC), 1908 - Order 23, Rule 3
AppellantP.S.S. Somasundaram Chettiar
RespondentR. Sathappan and ors.
Appellant AdvocateN.S. Sivam, ;V.T. Arasu and ;Sriram Panchu, Advs.
Respondent AdvocateS. Subbiah, Adv.
Cases ReferredSumitra v. Sulekha
Excerpt:
civil - alienations - order 23 rule 3 of code of civil procedure, 1908 - alienations by father challenged by minor son - father contented that matter was previously settled by compromise and plaintiffs bound by it - father sought record of compromise - validity of compromise disputed - court can investigate into allegations with regard to validity of compromise deed for its satisfaction - held, enquiry be conducted to find whether compromise was obtained by fraud, coercion or undue influence. - - - the amendment, as well as substitution, made in order xxiii of the first schedule, as substituted by section 74 of this act shall not apply to any suit or proceeding pending before the commencement of the said section 74.'11. when the learned counsel for the applicant pointed out these.....fakkir mohammed, j. 1. these applications, have come by way of reference made by the learned single judge, singaravelu, j., under the following circumstances.2. the first plaintiff, one sathappan, the quandom minor represented by his mother meenakshi achi as next friend, filed c.s. no. 188 of 1972 on the file of this court for partition and separate possession of his half share, for a declaration that the alienations made by the first defendant, who is the father of the first plaintiff, are void and not binding on the first plaintiff and for certain other consequentional reliefs as against 72 defendants. large items of properties described in eight schedules are the subject matter of the suit. pending suit, the quandom minor first plaintiff attained majority. the father, first defendant,.....
Judgment:

Fakkir Mohammed, J.

1. These applications, have come by way of reference made by the learned single Judge, Singaravelu, J., under the following circumstances.

2. The first plaintiff, one Sathappan, the quandom minor represented by his mother Meenakshi Achi as next friend, filed C.S. No. 188 of 1972 on the file of this Court for partition and separate possession of his half share, for a declaration that the alienations made by the first defendant, who is the father of the first plaintiff, are void and not binding on the first plaintiff and for certain other consequentional reliefs as against 72 defendants. Large items of properties described in eight schedules are the subject matter of the suit. Pending suit, the quandom minor first plaintiff attained majority. The father, first defendant, filed Application No. 4390 of 1982 in Nov., 1982 for passing a decree in terms of the compromise dated 30-8-1981. It was state in the affidavit in support of that application that the first defendant had executed a partial partition deed of his own volition in 1972 in which he had settled all valuable immovable properties in favour of the first plaintiff, that since the plaintiffs instituted the suit in spite of the said fact, he had to revoke the partial partition on 9-6-1976, that the plaintiffs filed an application in 1978 praying that a decree might be passed in terms of the partial declaration deed dated 15-3-1971 suppressing the revocation dated 9-6-1976, and that at the instance of the important members of the Nagarathar community, who were interested in the welfare of the family, negotiations went on between the parties at Madras in June, July and Aug., 1981, by which the terms of the agreement were finalised and the impugned agreement was signed by the plaintiffs, first plaintiff's wife and the first defendant on 30-8-1981.

3. The first plaintiff filed a counter saying that the said compromise is vitiated by fraud, undue influence and misrepresentation and suppression of facts, that it is not a lawful agreement of compromise and that the Court should not record the compromise. Along with the counter, the first plaintiff also filed Application No. 118 of 1983 seeking directions to the first defendant father for submitting himself for cross examination with reference to the affidavit filed in support of the main Application No. 4390 of 1982, if the first defendant did not choose to examine himself as a witness.

4. In the course of enquiry into these applications, it was contended on behalf of the first defendant, that since the execution of the compromise deed is admitted by the first plaintiff and the same has also been attested by the mother, who is the second plaintiff, along with the wife of the first plaintiff, the Court is bound to record the compromise without going into the further question as to whether the compromise is lawful or voidable. In support of such contention, the judicial decisions reported in Kuppuswamy Reddi v. Pavanambal, : AIR1950Mad728 ; Silver S. Enterprises v. Devki Nandan, : AIR1970SC669 ; Jadu Gopal v. Pannalal, : [1978]3SCR855 and Govindarajan v. K. A. N. Srinivasan Chetty, : AIR1977Mad402 has been cited before the learned single Judge by the first defendant father.

5. On the said of the first plaintiff a decision of the Division Bench of this Court reported in Nallathambi v. Raghavan, : AIR1973Mad25 appears to have been cited for the proposition that the compromise effected by the managing member, in order to be binding on the junior members must be bona fide and for the benefit of the family as a whole. It was further submitted on behalf of the first plaintiff that in view of the explanation to O. XXIII, R. 3 of the Civil P.C., introduced by the Amending Act, 104 of 1976, the compromise which is voidable under the Contract Act is not lawful and as such it cannot be recorded. It was argued on behalf of the first plaintiff that his Application No.118 of 1983 should be ordered to give him an opportunity to prove that the compromise is vitiated by fraud, misrepresentation, under influence, etc. The first plaintiff's application No.118 of 1983 was resisted by the first defendant on the ground that when once the compromise is admitted to have been executed and the Court has no other option but to record the same and that it is not open to the first plaintiff to request for permission to cross-examine the first defendant-father.

6. After hearing the rival contentions of the parties, the learned single Judge took the view that the decisions cited on the side of the first defendant have been rendered before the Amending Act, 104 of 1976, that the explanation, which has been subsequently introduced by Amending Act 104 of 1976 has introduced a deeming provision, that an agreement or compromise which is voidable under the Contract Act, 1872, shall not be deemed to be lawful within the meaning of Order XXIII, Rule 3, C.P.C., and that therefore, the citations did not afford any guidance in disposing of the applications. The learned Judge is also of the view that under Order XXIII, Rule 3, C.P.C., the petitioner, who wants the compromise to be recorded, must prove to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, that the Rule directs that where one party denies the adjustment or satisfaction of the suit, it is the duty of the Court to decide the question whether the suit has been adjusted in whole or in part and that, therefore, some evidence will have to be recorded and the Court cannot summarily accept the compromise, which is attacked as voidable under the Contract Act.

7. After expressing such a view, the learned Judge has quoted the decisions rendered in Nallathambi v. Raghavan, : AIR1973Mad25 and Silver S. Enterprises v. Devki Nandan, : AIR1970SC669 which have laid down that the agreement must prove to the satisfaction of the Court that there was a lawful agreement or compromise. After discussing the pleadings, the learned Judge has referred to the decision of Ramaswamy J. reported in Govindarajan v. K. A. N. Srinivasa Chetty, : AIR1977Mad402 , in which it was held that the only ground on which the court could not refuse to record the compromise is that the compromise is opposed to public policy and that the party could not be permitted to question the compromise on the ground of fraud or undue influence. Since the learned single Judge, Singaravelu, J. did not agree with the opinion expressed by V. Ramaswamy, J., which was rendered after the Amending Act 104 of 197 6, he has referred the matter for the decision of a Division Bench to avoid any conflict of decisions.

8. The following questions arise for consideration in this reference:-

(1) Whether the explanation to O. XXIII, Rule 3, C. P. C., is applicable at all to the present application?

(2) If not whether, the application for recording the compromise requires to be recorded as prayed for without investigating into the allegation of fraud, undue influence and misrepresentation, though the signatures in the compromise agreement are admitted?

9. So far as the first question is concerned, we are of the opinion that the explanation to the Order XXIII, Rule 3, C. P. C. which has been introduced by the Central Amending Act, 104 of 1976, is not applicable to the present application. Section 74 of Act 104 of 1976 deals with the amendment and substitution to Order 23, C. P. C.

10. Section 74 (5) (v) of Act 104 of 1976 runs as follows-

In Rule 3, the following explanation shall be inserted at the end, namely:-

'Explanation- An agreement or compromise which is void or voidable under the contract Act 1872 shall not be deemed to be lawful within the meaning of this rule.' The application of the above explanation which has been newly introduced into Order XXIII, Rule 3 is controlled by Section 97(2) (s) in Chapter V under Repeal and Savings in Act No. 104 of 1976, which reads as follows:-

'the amendment, as well as substitution, made in Order XXIII of the first schedule, as substituted by Section 74 of this Act shall not apply to any suit or proceeding pending before the commencement of the said Section 74.'

11. When the learned counsel for the applicant pointed out these provisions in Act 104 of 1976, the learned counsel for the contesting respondents, viz. the first plaintiff proceeded to argue that even under the amended provisions of Order XXIII, Rule 3, Civil P.C. the alleged compromise agreement cannot be straightway recorded and a decree be granted, even though the newly introduced explanation to Rule 3 is not applicable to this application. It appears that under the mistaken impression that the newly introduced explanation is applicable to the present application, arguments appear to have been advanced before the single Judge and that is why the learned single Judge has made a distinction that the several rulings relied on by the learned counsel for the applicant had been rendered before the introduction of Explanation to Rule 3. In addition, it is observed that under the unamended rule 3, the Court has to be satisfied that the suit has been adjusted wholly or in part by a lawful agreement or compromise. Now that the position has been made clear. We are disposing of the first question that the deeming provision introduced by way of Explanation to Order XXIII, Rule 3, C.P.C. is not applicable to the present application, since the suit has been filed in 1972 and S. 94 (2) (s) of Act 104 of 1976 has introduced a bar to the application of the substituted provision under the said Act to suits, which were filed before the date of introduction of the said Act viz, 1-2-1976.

12. The second question, relates to the scope and ambit of the unamended O. XXIII, Rule 3, I reads as follows:-

'Where it is proved to the satisfaction of the Court that a suit had been adjusted wholly or in part by any lawful agreement or compromise, or where the defendant satisfied 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 underlinings are by us)

The amended Rule 3 also requires to be stated in this connection since it is argued that several items of properties, which are not the subject matter of the suit, are covered by the alleged agreement or compromise, which is sought to be recorded in this application. The amended Rule 3 in Order XXIII reads 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, in writing and signed by the parties, or where the defendant satisfied 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 parties of the suit, whether or not the object matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit.'

Where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.

From the amended Rule 3, it is clear that the original words, 'so far as it relates to the suit', has been deleted and in its place the words, so far as it relates to the parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit had been introduced. Since the amended provision of Rule 3 is not applicable to the present suit, which was filed as early as in 1972, the question has to be decided under the old provision.

13. The learned counsel for the respondent has argued that in the alleged agreement or compromise numerous items of properties, which are not the subject-matter of the suit are introduced , ignoring the plaint eight schedules, that the partial partition, which had already been revoked by the applicant is sought to be revived and that, therefore, the question whether such an agreement or compromise can be recorded by the Court requires to be decided under the old provision of Order XXIII, Rule 3 of the Civil P.C. which necessitates the investigation into the agreement or compromise before it is recorded. Of course, the said argument is in addition to the argument that even under the old provision of Rule 3 of Order XXIII, C. P. C. of the applicant has to satisfy the conscience of the Court that the suit has been adjusted in whole or in part. It is not disputed on the side of the applicant that several items of properties, which are not subject-matter of the suit, are included in the agreement or compromise. In listing out such of those properties, the learned counsel for the respondent has pointed out that Items 7, 13 to 15 of Clause 1 of the agreement, the whole of Clause 2 and Clause 5 and Items (a), (b), (c), e (i) to e (v), (g) and (h) are not subject matter of the suit. This is not disputed by the learned counsel for the applicant. Evidently, the Court has to refuse to record the agreement or compromise in so far as those properties which are not subject-matter of the suit are concerned as the old provisions that existed before 1-2-1976 are alone applicable.

14. The argument of the learned counsel for the respondent that the agreement or compromise seeks to revive the partial partition dated 15-3-1971, which was revoked by means of a document dated 9-6-1976 by the applicant, that such a provision in the agreement or compromise is void in law, and that therefore, the agreement or compromise cannot be recorded even under the old provision of Order XXIII, Rule 3, C. P. C. has to be gone into. The above fact mentioned by the learned counsel for the respondent is not disputed. In fact, in the affidavit filed in support of the present application, the first defendant applicant has stated that the first defendant had executed a partial partition deed of his own volition in 1972 allotting all valuable immovable properties in favour of the first plaintiff; that he had revoked the partial partition deed dated 15-3-1971 by means of a revocation deed on 9-6-1976, that the first plaintiff filed an application in 1976 praying that a decree might be passed in terms of the partial partition deed dated 15-3-1971, suppressing the revocation deed dated 9-6-1976 and that because the first plaintiff did not withdraw the present suit in terms of the agreement or compromise, the present application has been filed.

15. The learned counsel for the respondent drew our attention to the following terms under which Party II has agreed to comply with certain undertakings viz.,

Clause 1 : Party II craves reference to the Schedule II of the partial partition deed dated 15-3-1971, mentioning immovable properties Items 1 to 15 valued at Rs. 7,51,500/-

Clause 4 : .... Hence its position only will be in accordance with the partial partition deed dated 15-3-1971 namely Party No. I and his wife will have right to reside in that property as long as they are alive, and

Clause 6 : Party II agree to execute a release deed duly registered for all the properties belonging to the family that were not taken up for consideration in the family partial partition deed dated 15-3-1971. and also to the following term No 1 under which Party I has agreed to comply with the following undertaking viz.,

1. Party I agree that the partial partition deed dated 15-3-1971 as genuine and shall stand by it and will not be challenged by him.

In the above undertaking, party I refers to the first defendant and party II refers to the first plaintiff. The above facts are not disputed by the learned counsel for the applicant. The learned counsel for the respondents further submitted that only the properties covered by Clauses 4,6 (d), 6(e)(vi), 6(i) in the undertakings by party II and Clause 2 in the undertakings by party I represent the subject-matter of the suit. Of course, under the amended provisions of Order XXIII, Rule 3, C.P.C., the properties, which are not the subject matter of the suit mentioned in the agreement can be included in the compromise and the Court can record the compromise subject to the provisions contained in the rules. Therefore, such important and legal questions have to be investigated and decided in the legal background under the unamended provision of O. XXIII, R. 3, C.P.C. before proceeding to record or refuse to record the agreement or compromise.

16. On the side of the applicant, the following judicial decisions have been cited in support of the contention that once the signatures of the parties are admitted in the agreement or compromise which has been put into Court for being recorded under Order XXIII, Rule 3, C.P.C., the agreement should be recorded and a decree passed in terms of the agreement.

17. In Kuppuswami Reddi v. Pavanambal, : AIR1950Mad728 , the Division Bench has held that where a compromise is not contrary to law the Court is bound to record it and the mere fact that it may be a voidable compromise brought about by fraud, undue influence and duress is no reason for a Court refusing to record it. The said decision was rendered on the basis that the objections raised in the counter-affidavit alleging that the compromise was brought about by fraud and coercion under the guardianship of the minor, will only amount to voidability of the compromise and it was not suggested that any terms of the compromise was unlawful and that the mere fact that it may be voidable is not a reason for a Court refusing to record it. In the said decision the earlier provision in Rule 3, where the question of proof to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, was not considered.

18. In Govindarajan v. K. A. N. Srinivasa Chetty, : AIR1977Mad402 , a single Judge of this Court has held that if a compromise was in fact arrived at though it may be voidable at the instance of one of the parties on the ground of fraud or misrepresentation, when the compromise (is) filed under O. 23, R. 3. with a request to record the same, the Court could not go into the question of fraud or undue influence, since the only ground on which the Court could refuse to record the compromise is that the compromise itself is opposed to public policy and that the party, therefore could not be permitted to question the compromise on the ground of fraud or undue influence. In the above decision also the earlier provision in O. 23, R. 3, as stated above. has not been considered at all. It cannot at all be said by any stretch of imagination that the party, who moves the Court for recording an agreement or compromise under Order 23, Rule 3, need not prove to the satisfaction of the Court that the suit has been adjusted wholly or in part by any lawful agreement or compromise. Therefore, the above mandatory provision that the conscience of the Court has to be satisfied in the first instance by necessary proof by a party, who wants to record the agreement or compromise that the suit has been adjusted wholly or in part by any lawful agreement or compromise has not been considered in this decision also.

19. In Silver S. Enterprises v. Devki Nandan, : AIR1970SC669 the Division Bench of the Supreme Court in a case where an agreement or compromise was entered into settling all the pending disputes excepting one Regular First Appeal pending in the High Court of Punjab and Haryana and in accordance with that agreement the appellant had withdrawn the fair-rent petition filed by him in the Rent Controller's Court and the respondent had not withdrawn his appeal as per Clause 12 of the agreement, has observed that both the factum and validity of the compromise are not in dispute and hence the High Court was in error in interfering with the decision of the appellate Court, in having dismissed the appeal in terms of the agreement or compromise under Rule 3 of Order XXIII of the Civil P.C. It is seen from para 2 at page 670 of the judgment that the High Court did not hold against the correctness of the compromise put forward or as to its validity and that the only ground on which the appeal was allowed was that the appellate Court was incompetent to compel the appellant to withdraw his appeal. At the end of para 3 at page 670 the following observations have been made:

'Both the factum and the validity of the compromise are not in dispute. Hence the appellate Court was bound to accept the same. That Court acted in accordance with law in dismissing the appeal. Hence the High Court was clearly wrong in interfering with the judgment of the appellate Court.'

But in the present application the truth and validity of the compromise is attacked on several grounds. There was no occasion in the case before the Supreme Court to consider the two questions, viz., whether it had been proved to the satisfaction of the Court that a suit has been adjusted wholly or in part?, and whether such adjustment was by any lawful agreement in view of the fact that the factum and the validity of the compromise were not in dispute? Therefore, the above decision is also not applicable to the present applications.

20. The next decision referred to us is the case reported in Jadu Gopal v. Pannalal, : [1978]3SCR855 wherein also the observations of the Supreme Court with reference to the principle set down in Kuppuswami Reddy v. Pavanambal, : AIR1950Mad728 and Govindarajan v. K. A. N. Srinivasa Chetty, : AIR1977Mad402 under O. XXIII, R. 3, C. P. C. had been relied on, on the side of the applicant. One important and singular aspect, as already referred to, is that in all the above decisions, which had been rendered with reference to the unamended Order 23, Rule 3, C. P. C. the first question, whether it has been proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by the agreement or compromise, did not arise for consideration. It has to be seen whether it is not the duty of the Court before which an application for recording the compromise and passing a decree in terms thereof has been filed to see whether it has been proved to its satisfaction that the suit has been adjusted wholly or in part by any lawful agreement or compromise.

21. Admittedly, under the unamended Order 23, Rule 3, the impugned agreement cannot be recorded with respect to the most of the items of properties mentioned therein as they are not subject matter of the suit. The applicant wants the entire agreement to be recorded and a decree to be passed under the amended and substituted Order 23, Rule 3, C. P. C. which alone will enable the Court to grant a decree with reference to the properties, which are not the subject matter of the suit.

22. Another impediment is that some of the terms of the agreement proposed to revive the partial partition deed dated 15-3-1971, which was revoked by the applicant by a subsequent deed dated 9-6-1976. Therefore, the Court has to be satisfied that such revival of a revoked partial partition deed is lawful. One more important fact is the fiduciary relationship between the applicant and the quandom minor, viz., the first respondent.

23. Sections 16(1) and 16(2)(a) of the contract Act read as follows:-

'16 (1) A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another-

(a) Where he holds a real or apparent authority over the other or where he stands in a fiduciary relation to the other.'

Of course, in this proceeding we are not going to consider the merits of the application and the above legal provision in relation to Order 23, Rule 3, C. P. C. has to be discussed and decided by the Court before which the agreement has been put for obtaining the seal of the Court. Section 16(3) of the Contract is as under:-

'Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.'

Nothing in this sub-section shall affect the provisions of Section 111 of the Evidence Act 1872. Section 111 and Illustration (b) to Section 111 are as under:

'Where there is a question as to the good faith of a transaction between parties, one of whom stands to the other in a position of active confidence, the burden of proving the good faith of the transaction is on the party who is in a position of active confidence.

Illustrations

(a) ....................

(b) The good faith of a sale by a son just come of age to a father is in question in a suit brought by the son. The burden of proving the good faith of the transaction is on the father.'

The above provision in Section 111 of the Evidence Act does not run counter to section 16 of the Contract Act so far as this case is concerned. In the illustration (b) to Section 111, it was a sale deed that was executed by a quandom minor son in favour of his father was cited as an example for placing the burden of proving the good faith of the transaction on the father. But in this case, it is an agreement which is signed by the quandom minor son that is attacked by the son . These are all the relevant legal factors that go in deciding the question, whether the Court has been satisfied about the adjustment of the suit in whole or in part by the impugned agreement.

24. The learned counsel for the respondents has cited the case reported in K. C. Shetty v. J. Sasani, AIR 1970 Mys. 209. In that case, the exact provision that was taken up for consideration in Order XXIII, Rule 3 is, 'proved to the satisfaction of the Court' meaning of - Compromise out of Court - Party alleging agreement to be vitiated by fraud, misrepresentation etc. Court has power to go into merits of allegations (though by way of obiter). At the end of para 5 of page 211, the following observations have been made :

'I am in respectful agreement with the observation found at page 1295 of Mulla's Commentary on the Civil P.C., Vol II., Thirteenth Edition-

'The words 'where it was proved to the satisfaction of the Court that a suit has been adjusted wholly or in part' clearly show that the Court has power under this rule, where an agreement or compromise is denied, to decide whether, as a fact, the alleged agreement or compromise was made and if it is satisfied that it was made, to record it.' If it decides that the agreement or compromise is vitiated, it can reject it, and proceed to dispose of the suit on merits.'

In the above case the trial Judge decided on evidence that the agreement or compromise was brought about under suspicious circumstances and such finding was confirmed by the Mysore High Court.

25. In Sourendranath Mitra v. Tarubala Dasi it was held by the privy council that under Order XXIII, Rule 3, C. P. C. the Court has a duty, not a discretion, to record a lawful compromise, subject possibly to an inherent power of refusal, where a substantial injustice would be worked. The question that arose in the case before the Privy Council was whether the objection of the respondent for recording the compromise on the ground that the counsel had no authority to enter into the compromise on her behalf, is sufficient to refuse to record the compromise. The Subordinate Judge recorded the component and granted a decree. The decree of the Subordinate Judge was set aside by the Division Bench of the High Court on the ground that the respondent had not given authority to compromise as the respondent was a pardanashin lady. It is with reference to the above facts, the following observations have been made at p.1320 (of ILR 57 Cal) : (at p.162 of AIR) of the judgment:

'In the present instance, their Lordships are satisfied that the lady was kept fully informed throughout of all the various stages of the negotiations, and was fully and intelligently aware that Mr. Sircar was clothed with authority to compromise the suit on he behalf, and was n fact exercising his authority in the manner now complained of. Their Lordships, therefore, cannot agree with the view which found in favour with the learned Judges on appeal that the lady had not been proved to have authorised the agreement.'

Thus the truth and validity of the agreement was not in dispute in the case before the Privy Council and it was only the authority of the advocate, who signed on behalf of the lady, that was questioned with a view to avoid the agreement that had been admitted. It is in such a case the Privy Council has propounded relying upon the case of Neale. v. Gordon Lennox, 1902 AC 465 as follows:-

'The words of the rule do not in terms appear to confer a discretion on the Court, but their Lordships desire to say nothing to prejudge a contention that the courts retain an inherent power not to allow their proceedings to be used to work a substantial injustice, such as emerged in the case of Neale v. Gordan Lennox, 1902 AC 465. In the present case no injustice of any kind was established, and, as it was established that the suit had been adjusted either wholly or in part by a lawful compromise, it was the duty of the Court to record the agreement and pass a decree in accordance therewith.'

26. After making reference to the above Privy Council decisions, it has been held by the Bombay High Court in Misrilal v. Sobhach and, : AIR1956Bom569 that the Court has power under Rule 3, where an agreement or compromise is denied, to decide whether as a fact, the alleged agreement or compromise was made, and if it is satisfied that it was made to record it, and after such satisfaction the court is further required to satisfy itself that there is a lawful agreement adjusting the suit, especially where a plea of undue influence is raised. In para 5 at page 571, the two questions enunciated by us under Order XXIII, Rule 3 have been stated as follows :-

'The Court has in recording a compromise to consider two questions: (i) whether there has been an agreement adjusting the dispute in suit and (ii) whether the agreement is lawful agreement.'

27. For the above principle reliance has been placed also in a case reported in Rama Shanker v. 3rd Addl. Dist. Judge, Basti, AIR 1983 All 152 - One of the contentions raised before the Allahabad High Court was that once the compromise is repudiated by the other party the Court should have relegated the petitioner to a civil suit. Rejecting such contention it was held in para 26 at page 158 that simply because one of the parties to the compromise chooses to repudiate the compromise, it does not mean that the Court before which an application is made for recording a compromise under O.23, R. 3. C. P. C. must stay its hand and relegate the parties to a regular civil suit. In the case before the Allahabad High Court, the party who attacked the compromise was permitted to let in evidence in support of the plea that the compromise ought not to be recorded because it was obtained by fraud. The above view of the Allahabad High Court is clear that a party, who moves the Court to record a compromise, must satisfy the Court, when the same is repudiated by the other party.

28. In Pannalal v. Kisanlal, AIR 1952 Nag 84 also the view taken is that a compromise which is said to be fraudulent can be investigated by the Court under O. XXIII , R. 3, and if a compromise is induced by fraud or if its object or its consideration is to defraud somebody else then the Court would not record it. In para 11 at page 86, the very provision under Rule 3, viz., 'here it is proved to the satisfaction of the Court' was stated and found that the Court has power and must enquire into allegations of undue influence or fraud.

29. The Division Bench of the Calcutta High Court also has enunciated the principle in a case reported in Sumitra v. Sulekha, : AIR1976Cal196 that before the Court considers whether or not an agreement is lawful, it must be satisfied that there has been an agreement between the parties and when the consent of one is obtained by the other by some illegal means, viz., by fraud, coercion or under influence, it is difficult to hold that the person whose consent has been so obtained has agreed to the term. The Division Bench has also placed reliance upon the decision of the privy Council reported in seth Kevaldas v.Sakerlal. AIR 1923 PC 178:28 CWN 930 which has been referred as follows in the end of paragraph 8 at p.199:

'In this case, their Lordships of the Privy Council concurred with the views and accepted the finding of the High Court that the adjustment not being a real adjustment after an examination of accounts or ascertainment of facts, was not bona fide adjustment within the meaning of Order 23, Rule 3. This decision gives an indication that the Court has to consider whether there was a real and bona fide adjustment which may involve an enquiry into the allegation of fraud, undue influence or coercion.'

30. Our attention was drawn to the decision of a Division Bench of this Court reported in Narayanasami v Board of Religious Endowments, AIR 1930 Mad 629, which related to a compromise between individuals and a Trust. In the above case, the Division Bench has decided that in the case of a public trust, no compromise can be said to be lawful, which sacrifices its interests. Of course, there is an observation at page 630 that in the case of private individuals the only question the Court asks itself is, has there been in fact a compromise and if so, is the adjustment a lawful one? and the answer given is that even if the Court sees reason to think that one of the parties was foolish in agreeing to certain terms, it has no option but to recognize and give effect to the compromise voluntarily made. But the question here is, whether the compromise has been voluntarily made is itself is the subject matter in dispute.

31. Thus, after consideration of the provision of law and the views expressed in the above judicial decisions, we are of the view that for the purpose of answering the first question contained in the unamended O.XXIII. R. 3. C.P.C.- Whether it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part? - it is the foremost duty of the Court before which an application has been filed for recording a compromise to investigate the question whether it has been satisfied that the suit has been adjusted wholly or in part by the agreement, which is attacked as the result of fraud, under influence and coercion. Especially so, in this case, where the applicant, who stands in a fiduciary relationship as father has propounded the agreement, which is said to have been signed by the quondam minor, viz., the respondent, the respondent's wife and the applicant's own wife, viz., the second plaintiff, which are not the subject matter of the suit and the encumbrances over the few items of properties allotted to the quondam minor are said to be very heavy, which fact has not been disclosed in the agreement and the agreement having been propounded more than one year and two months after the date of the agreement.

32. Accordingly, we answer the reference that the first limb of Rule 3, Order 23 of the C.P.C. envisages an enquiry being made by the Court before recording any agreement or compromise on the application of one party for being satisfied itself whether the suit has been obtained by fraud, undue influence and coercion. Any observation made by us in the course of our judgment will not prejudice the parties in the disposal of the application on merits by the Court which will dispose of the same. With the above observation, we direct that the applications be enquired into and disposed of on merits. There will be no order as to costs.

33. Order accordingly.


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