Madras High Court
Society Of The Sisters Of The Blessed ... vs Madras -E- Bakiyanthus Salihath on 18 November, 1989
Equivalent citations: (1990)1MLJ70
JUDGMENT K.M. Natarajan, J.
1. This appeal is directed by unsuccessful defendant. The facts which are necessary for the disposal of this appeal can be briefly stated as follows: The respondent plaintiff filed the suit O.S. No. 3529 of 1988 before the VIII Assistant Judge, City, Civil Court, Madras, for recovery of possession of the premises bearing door No. 59, Harris Road, Egmore, Pudupet, Madras 2 and also for recovery of mesne profits. He further prayed for the relief of mandatory injunction to remove the wall and restore the gate and payment of arrears of rent upto January, 1988 amounting to Rs. 11,160. The defendant, who is the appellant herein, entered appearance through counsel. The suit was posted to 27.9.1989 for filing written statement and on that date, a memo of compromise signed by the plaintiff and the defendant was filed. The VIII Assistant Judge, City Civil Court, Madras, directed the matter to be called on 29.9.1988 and the parties were also directed to appear before court on 29.9.1988. Accordingly on 29.9.1988 the parties were present. They were heard. Since they had no objection for recording the compromise, the compromise was recorded and the suit was decreed in terms of the compromise on 29.9.1988. Challenging the said judgment and decree, the defendant preferred an appeal, A.S. No. 207 of 1989 before the Principal Judge, City Civil Court, Madras.
2. According to the appellant, the trial court ought not to have recorded the memo of compromise since the Sister Superior representing the appellant has no express or implied authority under the constitution and directives of the Union of Sisters of the Presentation of the Blessed Virgin Mary, to settle an action by compromise without the prior consent of the Major Superior and her counsel. Further, as per constitution C.119, an act of extraordinary Administration of the affairs of the Society in the administration of temporal goods requires the authorisation of the Major Superior with the consent of her counsel. As per directive D. 82, the congregation, an act of yielding a contesting law suit or settling an action by compromise, is considered to be an act of extraordinary Administration. Hence, Sister Superior who signed the memo of compromise has no authority to enter into the compromise of the suit claim with the plaintiff. The decree passed in terms of the compromise has no force in law. One of the contracting party, namely, Sister Superior, has no authority to bind the appellant Society into such a compromise and as such the Society cannot be, held liable for the mistaken act. Further, the Court ought to have conducted an enquiry under Order 23, Rule 3, C.P.C. before recording the compromise. But it has failed to do so. It was also submitted on behalf of the appellant that in view of Order 43, Rules 1-A(2)C.P.C. the only remedy available is to prefer an appeal and no second suit shall lie and as such the appeal is maintainable.
3. On the other hand, it was urged on behalf of the respondent that the appeal is not maintainable in view of Section 96(3), C.P.C. since the decree under appeal was passed with the consent of the parties. It was further submitted that Order 43, Rule 1-A, C.P.C. contemplates a contest in the trial Court with regard to the compromise and only thereafter if a decree is passed, it is appealable. According to the respondent, the bar contemplated under Order 23, Rule 3-A, C.P.C. only reiterates the bar under Section 96(3).
4. The lower appellate judge framed two points for determination, and on point No. 1, the lower appellate judge held that the appeal is not maintainable and on point No. 2, it was held that the judgment and decree of the trial court were passed in terms of the compromise recorded on 29.9.1988 and hence they are not liable to be set aside. Consequently, the lower appellate judge dismissed the appeal. Aggrieved by the same, this second appeal is filed. The second appeal is admitted on the following substantial questions of law:
1. Whether the suit as framed is maintainable in view of Section 20 of Tamil Nadu Societies Registration Act, 1975.
2. Whether the authority to compromise can be assumed merely because Sister Superior had entered appearance on the basis of summons served on her?
3. Whether or not there is a binding duty on the appellate court to go into the factum of the case and decide the validity of the compromise, rather than presume that there has been a valid compromise as between the parties?
4. Whether the consent given by a person who cannot represent the defendant, can bind the defendant.
5. Is it not the duty of the Court under Order 43, Rule 1-A (2), C.P.C. to adjudicate, whether the compromise based on which the consent decree is passed, should not be recorded.
Substantial Questions 1 to 5:- Learned Counsel for the appellant addressed common arguments on all these points. The defendant described in para. 2 of the plaint that the defendant is a Society registered under the Societies Registration Act, having their office at Marshalls Road, Egmore, Madras - 8 and represented herein by their Superior Sr. Augustine. According to the plaint allegations, the learned Counsel for the appellant submitted that admittedly the appellant-defendant is a registered society registered under the Societies Registration Act. He further submitted that the Tamil Nadu Societies Registration Act, 1975 is comprehensive and under Section 18 of the said Act, all property movable and immovable belonging to a registered Society shall vest in the committee and any such property may in any legal proceedings be referred to as the property of the committee. It is clear from the above provision that the property shall vest in the committee and not in any individual. "Committee" is defined in Section 2(a) of the said Act and it means the governing body of a registered society to whom the management of its affairs is entrusted. Under Section 20 of the Act the committee or any officer of the registered society authorised in this behalf by its by-laws may bring or defend or cause to be brought or defended any action or other legal proceeding touching or concerning any property, right or claim of the registered society and may sue or be used in respect of any such property, right or claim. According to the Learned Counsel, the said provision is mandatory and in the instant case, the suit is filed against the appellant-Society represented by Superior Sr. Augustine and that she is not the one who has been empowered by the by-law of the Society. The learned Counsel drew the attention of this Court to the rules and regulations of the appellant-Society and under Rule VII the governing body shall have the entire control and management of the business and affairs of the Society, the administration of all properties, movable and immovable, and do all such things generally to carry out the objects of the Society. The governing body is also empowered to do, execute and perform all acts, deeds and things as are set out in the Memorandum of the Society. Under Rule XVI, all the properties of the Society, movable and immovable and all assets shall vest in the governing body and all documents affecting or relating to such property shall stand in the name of the Society. Under Rule XVII it is stated that all writings, deeds and documents are to be executed for and on behalf of the Society by the President or such member of the governing body who may have been authorised in writing to do SO by the President or Vice-President or by a meeting of the Governing body. The learned Counsel for the appellant submitted that in view of Sections 18 and 20 of the Tamil Nadu Societies Registration Act, the properties of the appellant-Society shall vest in the governing body and the proceedings should have been instituted only against the governing body and not against Superior Sr. Augustine who is only a member of the Committee. As the suit is filed against the society represented by Superior Sr. Augustine, she entered appearance and also entered into the comprise in respect of the suit claim. According to the learned Counsel, the suit compromise is not valid and lawful as it was not entered into by one who is empowered to do so. According to the learned Counsel for the appellant, the lower appellate judge without going through the relevant provisions of the Tamil Nadu Societies Registration Act and the by-laws, gave the finding that the facts of the case would go to show that the appellant-defendant has been properly sued, the Society has been properly represented and Superior Sr. Augustine has engaged a lawyer, she entered appearance, the compromise has been signed by her and she appeared and had no objection for the comprise. In this connection, the learned Counsel for the appellant drew the attention of this Court to the decision of the Division Bench reported in Chinraj Ramchand v. V.S. Narayanaswamy for the proposition that unless there is an express authority given to a partner by all the partners, that partner cannot compromise or relinquish any claim by the firm and merely because one party had been conducting the suit filed by the firm or had been claiming the suit amount from the defendants even before the filing of the suit, an authority express or implied on the part of a partner to compromise the suit claim cannot be assumed.
5. As regards the maintainability of the appeal, it is submitted by the learned Counsel for the appellant that Section 96(3), C.P.C. refers only to a decree passed by Court with the consent of parties. The word 'consent' is different from 'compromise'. Consent may be unilateral. Where extraneous matter is brought, it is not a consent decree. Order 23, Rule 3, C.P.C contemplates compromise of suit between the parties, and it contemplates only if it is satisfied that the suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, the Court shall order such agreement, compromise or satisfaction to be recorded. Further, there is a proviso, under which it is provided that where it is alleged by one party and denied by the other, the court shall decide the question. According to the learned Counsel for the appellant, as the capacity of the person who entered into the compromise is disputed, it is the duty of the court to decide the same. It is also submitted by the learned Counsel that under Rule 3-A of Order 23, C.P.C. no suit to set aside a decree on the ground that the compromise on which the decree is based is not lawful, shall lie. By virtue of Act 104 of 1976, Rule 1(m) of Order 43, C.P.C. which provided that an appeal shall lie from an order under Rule 3 of Order 23 recording or refusing to record an agreement, compromise or satisfaction, has been deleted, and instead, Order 43, Rule 1-A, Sub-rule (2), C.P.C. is inserted and as per the said provision, in an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it is open to the appellant to contest the decree on the ground that the compromise should or should not have been recorded. In the instant case, the defendant challenged the very decree on the ground that the compromise should not have been recorded and as such the appeal is maintainable under Order 43, Rule 1-A, C.P.C. According to the learned Counsel, the lower appellate court having held that if the contention that the agreement or compromise is not lawful as Sister Superior has no authority is correct the appeal is maintainable, erred in holding ultimately that the appeal is not maintainable. The reason given by the lower appellate court is that it is an internal administration for Sister Superior to get approval of the Major Superior on her counsel. Further, she had the advice of her counsel and as such, it is not possible to accept the contention that she has no authority. According to the learned Counsel for the appellant, the said reasoning are not tenable in view of the provisions of the Tamil Nadu Societies Registration Act. The learned Counsel drew the attention of this Court to Various decisions for the proposition that the proper remedy in such circumstances is only to prefer an appeal and that appeal is maintainable.
6. On the other hand, the learned Counsel for the respondent Mr. M.R. Narayanaswamy, submitted that the suit was filed in March, 1988. An interim injunction application was filed for grant of interim injunction to remove the newly put up wall and to restore the gate, in I A. No. 6560 of 1988. The appellant herein filed a counter-affidavit in the said application and she has stated that she is the respondent in the above application and she is fully conversant with the facts of the case. It is also submitted by the learned Counsel that the appellant had also filed a petition under Tamil Nadu Buildings (Lease and Rent Control) Act, on behalf of the Society. The Memorandum of compromise was filed on 26-9-1988 and she appeared subsequently on 29.9.1988 and the decree is passed only in respect of delivery of possession and mesne profit and the compromise so far as delivery of possession and mesne profits have been incorporated in the decree. It was also pointed out that even in C.M.P. No. 5806 of 1989 Sister Superior filed the petition and affidavit under Section 30 of the Civil Court Act to receive the Memorandum of grounds and to transmit the same of the Principal Judge, City Civil Court. She has also filed the petition C.M.P. No. 5807 of 1989 for stay of operation of the decree of the trial Court. There, the Sister Superior has filed an affidavit. She has stated that she has been duly empowered to represent the society in any legal proceedings. Accordingly, she has sworn to the affidavit in the said stay petition also. However in the said stay petition she would state that under a bonafide mistaken belief, even before the written statement could be filed, by virtue of an out of court settlement, compromised the suit and she signed the memorandum of compromise and that subsequently it was pointed out that major Superior and her council alone are competent to compromise a suit as it is an act of extraordinary administration. It is also alleged in para 6 of the affidavit that by reason of her total failure and neglect and want of authority, the appellant - Society is put to suffering and serious prejudice. The learned Counsel also drew the attention of this Court to the provision of Section 96(3), Order 23, Rule 3-A and Clause (m) of Order 43, Rule 1, C.P.C. prior to the amendment, and submitted that only where there is a contest in respect of compromise itself in the trial court regarding the factum of compromise and the trial court, decided the same in one way or the other, the right of appeal is available under Order 43, Rule 1-A, C.P.C. and not against the decree passed in pursuance pf a compromise. Section 96(3), C.P.C. is unaltered by Order 43, Rule 1-A and that it is not permissible to get over Section 96(3) and Order 43, Rule 1-A. Lastly it was submitted by the learned Counsel for the respondent that the very Sister Augustine has signed various proceedings and she represented the Society by filing vakalat in court proceedings, and in the instant case, time has been given till 31.5.1989 to deliver possession and the respondent gave up the claim for mesne profits and the criminal proceedings, and even on merits, the appellant has no case.
7. As regards substantial question of law No. I it is seen from the plaint allegations that the defendant is a registered society registered under the Tamil Nadu Societies Registration Act, 1975. Under Section 20 of the said Act, the committee or any officer of the registered society authorised in this behalf by its by-laws may be sued in respect of a legal proceeding touching or concerning any property, right or claim, of the registered society. The by-laws produced in the instant case does not authorise Superior Sister Augustine to sue or to be sued on behalf of the Society. It is not in dispute that as per the provision of the said Act, the property of the defendant society shall vest in the committee. The learned Counsel for the appellant relied on the decision of this Court reported in Chainraj Ramchand v. V.S. Narayanaswamy wherein it was held:
Section 19(2) of the Partnership Act makes it clear that unless there is an express authority gives to a partner by all the partners, that partner cannot compromise or relinquish any claim by the firm. An authority express or implied on the part of a partner to compromise suit claim cannot be assumed merely because he had been conducting the suit filed by the firm or had been claiming the suit amount from defendants even before filing of suit. Held on the facts and circumstances of the case that the petition filed by defendants under Order 23, Rule 3, Civil P.C. is liable to be dismissed.
That was a case which arose under the Partnership Act.
But, the ratio laid down in the above decision is equally applicable to the facts of the case of an agent on behalf of a society.
8. In the instant case, it is the contention of the appellant that since summons were received by Superior Sister Augustine, she entered appearance through Counsel. But from the mere fact that she appeared in the case, it cannot be said that she is empowered to defend the Society under the By-laws of the Society or the Act. Prima facie, the said contention has to be accepted. No doubt, in the instant case, written statement was not filed and it is the contention of the respondent that the very same Superior Sister Augustine filed rent control proceedings and that it is a matter to be ultimately decided in the suit on evidence. But prima facie, on the materials now available before this Court, it has to be held that the suit as framed against the defendant-Society represented by Superior Sister Augustine is not maintainable in view of Section 20 of the Tamil Nadu Societies Registration Act, 1975.
9. As regards the question whether Superior Sister Augustine has any power or authority to enter into compromise, it is to be noted that as per Section 18 of the Tamil Nadu Societies Registration Act, all the properties, movable or immovable, belonging to a registered society, shall vest in the committee; and any such property may in any legal proceedings, be referred to as the property of the committee. Thus, it is clear that the property, subject matter of the suit, is one which is vested with the committee, and not with an individual, as rightly contended by the learned Counsel for the appellant. 'Committee' is defined under Section 2(a) of the said Act which means the governing body of a registered society to whom the management of its affairs is entrusted. As already found, under Section 20 it is only the Committee or any officer of the registered society authorised in this behalf by its by-laws may sue or be sued in respect of any property, right or claim. On a perusal of the by-laws produced it is seen that Superior Sister Augustine has not been empowered to represent the defendant-Society. But, on the other hand, as per by-law VI, the governing body shall consist of not less than five and not more than ten members inclusive of the President and Vice President for the time being. Under by-law VII, it is only the governing body which shall have the entire control and management of the business and affairs of the Society, the administration of all properties, movable and immovable, all its institutions and assets and shall have all such powers of the Society and do all such things generally to carry out the objects of the Society as are by the Act not required to be exercised or done by the Society in general meeting. Under by-Law XVI, all the properties of the Society, movable and immovable and all assets shall vest in the governing body and all documents affecting or relating to such property shall stand in the name of the society. Under by-law XVII, all writings, deeds and documents which are to be executed for and on behalf of the society shall be executed for and on behalf of the Society by the President or such member of the Governing Body who may have been authorised in writing to do so by the President or Vice-President or by a meeting of the governing body. Major Superior is the President. In view of Sections 18 and 20 of the Tamil Nadu Societies Registration Act, 1975, read with the By-laws of the Society, Sister Augustine has no authority to enter into the compromise in respect of the property of the Society. Though such a contention was raised before the court below, it was not considered with reference to the provisions of the Societies Registration Act or the By-laws. The mere fact that she represented the Society in other proceedings would not mean that she is clothed with the authority to enter into such compromise unless she is empowered to do so by virtue of the provisions of the Act and the By-laws of the Society framed thereunder. The mere fact that superior Sister Augustine represented the society would not also clothe her with the extraordinary power of entering into compromise in view of the ratio in the decision reported in Chainraj Ramchand v. V.S. Narayanaswamy already quoted. When once it is found that she is not competent to enter into the compromise, it cannot be circumvented by observing that it is the duty of the sister to obtain necessary sanction or authority from the Council. The Appellant-Society is not bound by the compromise if it is held that Superior Sister Augustine was not empowered to enter into compromise. When once it is held that the compromise was not entered into by a competent authority, it cannot be said that the compromise is lawful and binding on the appellant - Society. Thus, substantial questions 1 and 2 are answered only in favour of the appellant.
10. The next question to be considered is whether the appeal against such judgment and decree is maintainable, in view of Section 96(3), C.P.C. As per Section 96(3), C.P.C. no appeal shall lie from a decree passed by the court with the consent of parties. As rightly contended by the learned Counsel for the appellant, the decree in question is one passed in pursuance of a compromise entered into between the parties, and in view of Order 23, Rule 3, C.P.C. the learned Counsel for the appellant rightly distinguished the word 'consent' from 'compromise' 'Consent' may be unilateral and need not be by both. Further when extraneous matter was brought by virtue of the agreement, it cannot be said to be a consent decree. In the instant case, provision was made in respect of criminal proceedings which is not the subject matter of the suit and further delivery has to be effected to a third party who is not a party to the proceedings. Under Order 23, Rule 3, C.P.C. it is provided 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 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 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.
It is clear from the said provision that the court is to be satisfied and then the court has to pass an order. Under the proviso to that order, it is stated that 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. Further, for recording a compromise, there should be a lawful compromise between the parties. Under Rule 3-A it is provided that if the decree is passed on a compromise no suit shall lie to set aside the decree, on the ground that the compromise was not lawful. On the other hand, under Order 43, Rule 1-A(2), C.P.C. which is now added by Act 104 of 1976 in an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded. It is the contention of the learned Counsel for the appellant that under this provision, the appellant is entitled to challenge the decree which was passed in the suit after recording compromise. It is worthwhile to consider the object and reasons for such an amendment for introducing Rule 14 by the Law Commission.
New Rule 1-A is being inserted to provide that certain orders which are not appealable may be challenged in an appeal against the decree.
It is clear from the objects and reasons that the scope of the said new provision is an enabling provision to entitle the appellant to dispute or challenge the orders in suits which are not otherwise appealable under Order 43, Rule 1, C.P.C. and an appeal lies under Section 96 read with Order 43, Rule 1-A, C.P.C. against the order recording compromise. The observations of the Law Commission in its 54th report, while recommending the omission of Clause (m) are significant as they are the foundation for the deletion of the said Clause (m). The Law Commission observed.
Rule 1(m) provides for appeal against an order under Order 23, Rule 3 recording or refusing to record an agreement, compromise or satisfaction. Our views on this rule are as follows:
(1) No appeal should be allowed against an order recording or refusing to record a compromise. The Trial should go on.
(2) But, in the appeal against the decree, the fact that a compromise ought to have been recorded or ought not to have been recorded, should be permitted to be taken as a ground of appeal.
(3) The object behind the above amendment is to avoid successive appeals concerning the same suit.
and it recommended, Accordingly, we recommend that the following rule should be added as Order 43, Rule 1-D: "I-D(1) In an appeal against the decree in a suit passed after recording a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise ought not to have been recorded in the suit.
(2) In appeal against the decree passed in suit in which the Court has refused to record a compromise, it shall be open to the appellant to contest the decree on the ground that a compromise ought to have been recorded.
It is clear that the Clause (m) which provides an appeal against an order under Rule 3 of Order 23 recording or refusing to record an agreement, compromise or satisfaction, is omitted by virtue of the amendment Act and Order 43, Rule 1A is inserted because in an appeal against the decree, the aggrieved party can take the point that the compromise ought not to have been recorded or ought to have been recorded as the case may be. In the instant case, the appeal is against the judgment and decree passed in the said suit. In Anant v. Achut A.I.R. 1981 Bom. 357 it was held.
A party to a suit, which was decreed after accepting the compromise, is only relegated to the remedy of questioning the same in an appeal under Rule 1A of Order 43 and a second suit based on the cause of action that the compromise itself was not lawful is clearly barred.
The grievance of the present kind of the appellant clearly falls within the bar enacted by Rule 3A of Order 23, for, as is already set out, the entire cause of action in the suit is that of want of authority in favour of the advocate to enter into the compromise. That is another way of ascertaining the cause or raising a grievance that the compromise was not backed with necessary consent and as such was not lawful. Such a challenge by a party to the suit can only be agitated in an appeal and not by filling a second suit.
For the reasons stated above, I have no hesitation in holding that the appeal is competent. The contention of the learned Counsel for the respondent that only when there is a contest before the lower court with regard to the validity of the compromise, Order 43, Rule 1-A, C.P.C. is attracted is not supported by the relevant provision of Order 43, Rule 1A, C.P.C. and the objects and reasons for enacting the said provision, since the second suit is barred on the ground that the compromise is not lawful, and it is provided that the remedy of the party aggrieved is to challenge the same by way of appeal and that there is no remedy for filing an appeal against the very order refusing to record a compromise. The contention that the appellant cannot have any valid defence for recovery of possession without the tenancy being terminated is not relevant in deciding the issue in this appeal. The question to be considered is whether it is a lawful and valid compromise. When once it is held that the compromise is not lawful as it was not done by a person who has authority to enter into such a compromise, certainly the same can be challenged by way of appeal. Even according to the learned Counsel for the respondent, Superior Sister 'Augustine, who entered into the compromise, has stated in her affidavit filed in C.M.P. No. 5807 of 1989 that she had done it under a bonafide belief that she has authority to do so and that it is a mistaken act. Even the lower appellate court has stated that if the contention of the appellant that the agreement or compromise is not lawful as Sister Superior has no authority is correct, the appeal is maintainable. But the lower appellate court came to the conclusion that the Superior Sister Augustine had legal advice and that it is for Superior Sister Augustine get approval of Major Superior of the Council. Both the reasons are not tenable. The mere fact that she had legal advice and she did not get approval from Council would not clothe her with the authority to enter into the compromise and the compromise entered into by her cannot be validated on that ground. For all these reasons, points 3 to 5 are answered in favour of the appellants. In view of my findings on substantial questions 1 to 5 the appeal is to be allowed.
11. In the result, the appeal is allowed and the judgment and decree passed by the lower appellate Court set aside and consequently the decree and judgment passed by the trial court are also set aside. The trial court is directed to proceed with the suit after giving opportunity to the appellant to file written statement and dispose of the same on merits according to law. However, in the circumstances of the case, there will be no order as to costs.
12. In view of the request made by both the parties, the Trial Court is directed to dispose of the suit expeditiously, and in any event, before the end of January, 1990 positively. This representation is made by the respondent without prejudice to his contentions.