Andhra HC (Pre-Telangana)
Dr. Sunil Kumar vs Amolaksingh (Died Per Lrs.) on 24 February, 2000
Equivalent citations: 2000(3)ALD657, 2000(3)ALT390
JUDGMENT
1. The revision petition and the appeal arise out of the order and decree dated 3-3-1988 passed in IA No.514of 1985 in OS No.244 of 1982 and the eventual judgment and decree dated 28-3-1988 passed in OS No.244 of 1982 respectively by the Additional Chief Judge, City Civil Court, Hyderabad. As the parties are same and common questions of law and fact are involved in both the proceedings, both can be disposed of together.
2. For the sake of convenience and to avoid any confusion, it is expedient to refer the parties as arrayed in the suit. The1st plaintiff filed the suit in OS No.244 of 1982 for specific performance of the agreement of sale dated 30-7-1977 and for directing the defendant to execute a registered sale deed in favour of the plaintiff conveying the property namely the land and building Bearing Municipal No.3-6-364/1 to 364/6 and the land in an extent of 269-1 sq. meters. It is the case of the plaintiff inter alia in the plaint that the defendant is the owner of the property and entered into an agreement to sell on 30-7-1977, agreeing inter alia to sell the property described in the schedule annexed therewith, for a consideration of Rs.1,00,000/-. Pursuant to the terms of the agreement and in part performance thereof, an amount of Rs.25,000/- was paid under a cheque Bearing No.C/17021851 dated 30-7-1977 by the 1st plaintiff to the defendant, which was enhanced by the defendant later. The balance amount of Rs.75,000/- was agreed to be paid on the date of registration of the sale deed before the registering authority. As the defendant or his father representing the defendant under a power of attorney failed to honour the terms of the agreement, the 1st plaintiff got a notice dated 30-9-1977 issued to the defendant calling him upon to comply with the terms of the agreement. In turn, the defendant got reply notices dated 20-10-1977 and 2-11-1977 issued to the plaintiff. The plaintiff got another notice dated 8-3-1978 issued to the defendant and thereupon laid the suit. The defendant resisted the suit by filing a written statement, mentioning inter alia that there was an agreement to sell the property for a consideration of Rs.2,25,000/- with a specific understanding that the sale deed would be executed for Rs.1,00,000/- after the plaintiff paying a sum of Rs.1,00,000/-, which was a condition precedent and as the 1st plaintiff failed to fulfil the said condition, the suit for specific performance must be dismissed.
3. While the matter stood thus, the 1st plaintiff died and plaintiff Nos.2 to 7 the legal representatives of the 1st plaintiff were brought on record. On account of the intervention of the elders and well-wishers of both the parties, the parties had agreed to compromise the suit and the terms of the compromise were reduced into writing on 7-7-1985. Pursuant to the said compromise, the plaintiffs filed IA No.514 of 1985 under Order 23, Rule 3 of Civil Procedure Code (in short 'the Code'), seeking permission of the Court to record the agreement/ compromise dated 7-7-1985, said to have been entered into by the parties and to dispose of the suit in terms thereof. The memorandum of compromise dated 7-7-1985 was annexed therewith. That application was resisted by the respondent-defendant by filing a counter mentioning inter alia that there was no complete and concluded compromise inter se between the parties and the memorandum of compromise dated 7-7-1985 was not signed by all the parties and that the plaintiffs should necessarily obtain the sanction for the construction of a multistoried complex and that while the matter stood thus, the Municipal Corporation of Hyderabad put forward a claim for widening the road by taking the huge portion of the suit property, thereby making it impossible for performance of the contract and, therefore, the contract was frustrated etc., were among the other pleas taken in the counter. No oral evidence had been adduced on either side, but Exs.A1 and B1 were got marked on either side. Upon hearing both the sides and after considering both the documents, the trial Court allowed the application in IA No.514 of 1985 by its order dated 3-3-1988 and in sequel thereto, decreed the suit by its judgment dated 28-3-1988 passed in terms of the compromise. Challenging the same as aforesaid, the revision as well as the appeal have been filed.
4. Now in the above matter, Sri S. Venkat Reddy, the learned senior Counsel appearing for the defendant-respondent contends that the agreement of compromise is not a complete agreement and what is available on record is a draft of the agreement. The learned Counsel further contends that the agreement has become totally infructuous in view of the proposal to acquire the majority portion of the suit property by the Municipal Corporation of Hyderabad under the road widening scheme.
The learned Counsel also contends that the compromise petition ought not to have been allowed, since all the parties to the agreement have not signed. Sri Vilas Afzal Purkar, the learned Counsel appearing for the plaintiffs on the other hand contends that the present appeal is not maintainable since the decree passed in the suit is a consent decree. The learned Counsel further contends that inasmuch as the execution of the agreement of compromise is not in dispute and in the absence of any allegation of fraud or misrepresentation, the Court below is perfectly justified in recording the compromise. It is his further contention that the party who has not signed the compromise is the daughter of the deceased 1st plaintiff and even though permission to record compromise has not been obtained in accordance with the provisions of Order 32, Rule 7 of the Code from the Court below, the compromise cannot be avoided by the other parties who signed, since it is an unavoidable contract at the instance of the parties who have signed. In view of the above contentions, the points that arise for my determination in these matters are :
1. Whether there has been a lawful compromise between the parties in writing and signed by the parties?
2. What is the effect of not signing of the compromise by some of the parties to the suit?
3. what is the effect of not obtaining permission of the Court on behalf of the minor plaintiffs for entering into the compromise in accordance with Order 32, Rule 7 of the Code? and
4. Whether the appeal is maintainable against the consent decree?
5. The main document upon which the entire case revolves around has been marked in this case as Ex.A1. Ex.A1 is the original agreement of compromise dated 7-7-1985. The execution thereof is not in dispute. What has been contended before this Court by the defendant is that Ex.A1 is nothing but a draft and it has not been signed by all the parties to the suit. Much emphasis has been laid on the expression "all the parties". Therefore, there is nothing much to appreciate any evidence in this case. A glance at Ex.A1 reveals that out of the six parties of the first part, parties 4 to 6 are the minor daughters. The third party of the first part is a major daughter and the document has been signed by 1 and 2 parties on the side of the first part and the father of the defendant one Sri C.L. Modi and his mother Pramila signed on the side of the second part on each page of the agreement. While, the whole of the document has been got typed, clause 12 of the agreement has been written with hand subsequently in the margin at page No.4 of Ex.Al. But that clause has also been signed separately at the relevant places by both the parties. Even the interpolations made in the schedule of property annexed to the document have been signed separately by the parties. That part of the document meant to write the boundaries of the property of the defendant, is left vacant. No witnesses have signed and the points 1 and 2 underneath the caption "witnesses" have been left vacant. What is conspicuous from the above document is that the major daughter of the deceased plaintiff who has been arrayed as party No.3 has not signed. There has been no separate signature by the first party of the first part on behalf of the three minor daughters in the capacity of the guardian of the minors. No separte petition under Order 32, Rule 7 of the Code has been filed seeking permission of the Court to enter into compromise on behalf of the minors. It is, therefore, to be seen whether these defects pointed out by the learned Counsel for the defendant would vitiate the compromise as contended or not.
For brevity and better understanding of the matter, it is apposite here to consider Rule 3 of Order 23 of the Code. The relevant part of the said rule insofar as is necessary may be extracted hereunder:
"Compromise of suit .--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 of the agreement, compromise or satisfaction is the same as the subject matter of the suit:) (provided 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; 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.) Explanation :--An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule)".
6. The explanation to the rule has been inserted by means of an amendment under the Act 104 of 1976. This explanation elucidates the expression "lawful agreement". What is required, therefore, is that there shall be proof to the satisfaction of the Court that the suit has been adjusted by a lawful agreement or compromise in writing and the same shall be signed by the parties. The words "all parties" have not been specifically mentioned in the rule. But much emphasis has been laid by the learned Counsel for the defendant that the compromise shall be signed by all the parties to the suit. What is not there in the rule cannot now be sought to be read into the rule, if the circumstances do not warrant such an interpretation. Admittedly, parties 4 to 6 of the first part are the minors. The mother and the natural guardian of the minors has not signed the compromise separately representing as guardian of the minors, although she has signed on the agreement in the capacity of a party to the agreement. It is needless to mention that the persons who are minors and who are of sound mind and are not disqualified from contracting by any law, are alone competent to contract in accordance with Section 11 of the Indian Contract Act and obviously the minors are not competent to enter into a contract. Such a contract is not a void contract, but is avoidable contract at the instance of the affected parties. It is apposite here to consider Rule 7 of Order 32 of the Code, yet another provision for consideration in the context. Rule 7 reads as under:--
"Agreement or compromise by next friend or guardian for the suit.
1. (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 he acts as next friend or guardian.
((1A) An application for leave under sub-rule (1) shall be accompanied by an affidavit of the next friend or the guardian for the suit, as the case may be, and also, if the minor is represented by a pleader, by the certificate of the pleader, to the effect that the agreement or compromise proposed, is, in his opinion, for the benefit of the minor:
Provided that the opinion so expressed, whether in the affidavit or in the certificate shall not preclude the Court from examining whether the agreement or compromise proposed is for the benefit of the minor.) (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."
7. A perusal of the said provision shows that no guardian or next friend of the minor shall enter into an agreement or compromise on behalf of the minor, without the leave of the Court and without the same expressly recorded in the proceedings. Obviously, the bar is against the guardian or the next friend. The Court should satisfy further under sub-rule 1(A) on such an application filed seeking permission by the guardian to enter into such an agreement that the said agreement or compromise proposed is for the benefit of the minor. Non-compliance of the said provision has been dealt with under sub-rule (2) and what it contemplates is that such an agreement or compromise entered into without the leave of the Court is voidable against all the parties other than the minor. In fact, this rule has been the subject matter of interpretation by the Apex Court in the decision reported in Kaushalya Devi v. Baijnath, . In Paragraph No.6 of the said judgment, the Apex Court held as under:--
"The effect of the failure to comply with Order 32, Rule 7(1) is specifically provided by Order 32, Rule 7(2) which says that 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. Mr. Jha reads this provision as meaning that the impugned agreement is voidable against the parties to it who are majors and is void in respect of the minor; in other words, he contends that the effect of this provision is that the major parties to it can avoid it and the minor need not avoid it at all because it is a nullity so far as he is concerned. In our opinion this contention is clearly inconsistent with the plain meaning of the rule. What the rule really means is that the impugned agreement can be avoided by the minor against the parties who are major and that it cannot be avoided by the parties who are majors against the minor. It is voidable and not void. It is voidable at the instance of the minor and not at the instance of any other party. It is voidable against the parties that are majors but not against a minor. This provision has been made for the protection of minors, and it means nothing more than this that the failure to comply with the requirements of Order 32, Rule 7(1) will entitle a minor to avoid the agreement and its consequences. If he avoids the said agreement it would be set aside but in no case can the infirmity in the agreement be used by other-parties for the purpose of avoiding it in their own interest. The protection of the minor's interest requires that he should be given liberty to avoid it. No such consideration arises in respect of the other parties to the agreement and they can make no grievance or complaint against the agreement on the ground that it has not complied with Order 32, Rule (1). The non-observance of the condition laid down by Rule 1 does not make the agreement or decree void for it does not affect the jurisdiction of the Court at all. The non-observance of the said condition makes the agreement or decree only voidable at the instance of the minor. That, in our opinion, is the effect of the provision of Order 32, Rule 7(1) and (2)".
8. In fact both the learned Counsel appearing for the parties in this case sought to place reliance upon the said judgment, so as to buttress their respective contentions raised in this case. This judgment, therefore, leaves no doubt that the compromise or agreement which has been entered into by the parties without complying with the condition of Rule 7 of Order 32 of the Code is only a voidable agreement or compromise, and it can be avoided at the instance of the minors after attaining the majority. But on the premise that there is no compliance of the mandatory provisions of Order 32, Rule 7 of the Code, the other parties to the compromise who are majors, cannot seek to avoid the agreement. In view of this authoritative pronouncement of the Apex Court, it is not now open to contend by the defendant in the suit that on account of non-compliance of Order 32, Rule 7 of Code, Ex.A1 agreement is not a valid agreement and is voidable at the instance of other major parties thereto.
9. Apropos the other defect pointed out by the learned Counsel for the defendant that Ex.A1 agreement has not been signed by the mother separately representing herself as the guardian of the minors, is no doubt a defect, but certainly not a defect that goes to the root of the matter, vitiating the document itself. One shall not be oblivious of the fact that ultimately she is the mother and natural guardian of the minors and arrayed as such in the suit. In my considered view, therefore, it is a mere technical defect and it will not affect the transaction on that ground, provided the transaction is otherwise valid.
10. Apropos the contention that Ex.A1 compromise has not been signed by the parties to the suit, the emphasis having been laid on the expression "all parties to the suit", as afore discussed, the word "all" is conspicuously absent in the rule. Certainly, the compromise must be between the parties to the litigation. A compromise to which some of the parties to the suit alone are parties, is not necessarily invalid. It is no doubt true that it can be shown to the Court the presence of the other parties to the suit, who are not parties to the compromise would make the compromise invalid and after having been satisfied, the Court can reject such a compromise. Here is a case where the plaintiffs are seeking the relief of specific performance of the contract of sale, whereunder the defendant to the suit agreed to execute a registered sale deed in favour of the late 1st plaintiff. Now the terms of the compromise, as can be seen from Ex.A1, reveal that the defendant ultimately agreed to execute the sale deed in favour of the plaintiffs upon other conditions to be satisfied as mentioned inter alia in the said agreement. Even in the absence of the major daughter of the deceased 1st plaintiff, the worst that happens is the execution of the sale deed in favour of all of them, including the absentee major daughter. Therefore, the defendant cannot be heard to say that on account of not signing of the compromise by one of the plaintiffs namely the major daughter of the deceased 1st plaintiff, the agreement is invalid. It is for the party who is not a party thereto, to ventilate the grievance rightly, but not for others. It is nobody's case that it is a partial compromise, nor it is anybody's case that this compromise would prejudicially affect the absentee party to the said document, nor it is the case that the interest of the other parties to the suit are inseparable and, therefore, it is not open to some of them alone to compromise the matter. In any view of the matter, the defendant cannot legitimately put forward the ground that major daughter of the deceased 1st plaintiff has not signed the compromise, as a tenable ground while asking the Court to not to record the compromise. Therefore, the said contention of the learned Counsel for the defendant merits no consideration.
11. As regards the contention that Ex.A1 is nothing but a draft and it is not a concluded agreement, nothing can be culled out from the said document explicitly that it is a case of draft. The circumstances pointed out by the learned Counsel that there are interpolations here and there; that the signatures of the parties have not been obtained at the relevant places; that the boundaries have not been mentioned in the schedule appended to the document; and that finally that clause 12 of the document has been mentioned in the margin, either individually or cumulatively would lead to an irresistible conclusion that Ex.A1 is nothing but a draft. If that were be the case, the parties would not have signed on each page of the document. Suffice if they have set their hands at the end, while mentioning specifically that it is case of draft. No other evidence has been adduced in this case in support of the contention that it is a case of draft, leaving thereby to draw the necessary inference regarding the veracity of the document itself and other attendant circumstances, if any, that can be gathered from out of the document. As discussed by me supra, the circumstances pointed out by the learned Counsel will not lead to such an irresistible conclusion that it is a case of draft. The signatures of the witnesses could be obtained in token of, parties to the document, having set their hands on the written compromise at the end after the necessary execution. The omission thereof will not lead to the conclusion that there has been no execution of the document, nor it would lead to the other conclusion invariably that it is a case of draft, being prepared with a specific understanding to have the fair agreement prepared subsequent thereto. For the foregoing reasons, I am afraid, I cannot accept the contention of the learned Counsel that it is squarely a case of draft and it is an inconclusive agreement or the compromise.
12. The thrust of the contention of the learned Counsel for the defendant seems to be that in view of the proposals of the Hyderabad Municipal Corporation to take over a major portion of the disputed property under the road widening scheme, the contract of sale becomes infructuous. I do not think that such a proposal on the part of the Municipal Corporation of Hyderabad would prevent the parties in any manner from entering into an agreement. It is not shown before this Court till this date that the said proposal of the Corporation has been translated into a deed. In the absence of this litigation, had the sale deed been executed in accordance with the terms of Ex.A1, by this date, the plaintiffs would have become the owners and perhaps might have constructed a multistoried complex as agreed upon. The subsequent acquisition of the property by the Corporation under the proposed road widening scheme would not have frustrated the agreement at all. The parties who might ultimately affect on account of such an action of the Municipal Corporation will be at liberty to seek the necessary redressal before the appropriate Forum or the authority. Such a proposal by the Corporation would not in my considered view create any embargo or legal impediment in this case for the parties to have entered into this compromise, nor it would frustrate the contract in any manner. Sri Vilas Afzal Purkar the learned Counsel appearing for the plaintiffs contends that the object behind the rule insisting upon written compromise signed by parties, as can be seen from the statement of objects and reasons for incorporating such a rule in the Code is to avoid any future setting up of oral agreements or compromises to delay the progress of the suit. In support of the said contention, the learned Counsel seeks to place reliance upon the judgment of the Apex Court in Gurpreet Singh v. Chatur Bhuj Gael, . At Paragraph No.8 of this judgment, it is held thus:--
"For a proper appreciation of the contentions advanced, it is necessary to set out the statement of objects and reasons which is in these terms:
Clause 77-Sub-cIause (iii) It is provided that an agreement or compromise under Rule 3 should be in writing and signed by the parties. This is with a view to avoiding the setting up of oral agreements or compromises to delay the progress of the suit".
In the result, I see no legal impediment or bar for the parties to have entered into Ex.A1 agreement/com prom i se.
13. As regards the maintainability of the appeal, Section 96 of the Code is an enabling provision, which confers the right of appeal and is apposite here to extract the relevant portion of Section 96 of the Code as under:--
"Appeal from original decree.
(1) ...........................
(2) ........................
(3) No appeal shall lie from a decree passed by the Court with the consent of parties."
As can be seen from sub-section (3) of Section 96, no appeal shall lie from a decree passed by the Court with the consent of parties. The decree passed by the Court in terms of the compromise as ordered to be recorded by it is undoubtedly a consent decree. Apparently, therefore, no appeal is maintainable as against the same. However, elsewhere in the Code, under Order 43, Rule 1(A) has been incorporated by means of an amendment to the Code under Act 104 of 1976. Rule 1(A) of Order 43 reads as under :--
"Right to challenge non-appealable orders in appeal against the decrees :
(1) Where any order is made under this Code against a party and thereupon any judgment is pronounced against such party and a decree is drawn up, such party may, in an appeal against the decree, contend that such order should not have been made and the judgment should not have been pronounced.
(2) 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".
A perusal of the said provision shows apparently that an appeal can be maintained against a decree drawn up in accordance with the judgment pronounced upon making an order under any other provision of the Code. Sub-rule (2) thereof is so explicit and obvious and it directly pertains to the problem on hand. An appeal, therefore, He against the decree passed in a suit after recording the compromise or refusing to record the compromise. Sri S. Venkat Reddy, the learned senior Counsel seeks to place reliance upon the judgment of the Apex Court in Banwari Lal v. Chando Devi, . In the said judgment, the Apex Court held as under:--
"A party challenging a compromise can file a petition under proviso-to Rule 3 of Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1(A) of Order 43 of the Code".
Sri Vilas Afzal Purkar, the learned Counsel appearing for the plaintiffs submitted that such a right to appeal is available under Rule 1 (A) of sub-rule (2) of Order 43 of the Code, when the factum of compromise or agreement is not in dispute. The learned Counsel relied upon the relevant observations of the Apex Court in the same judgment Banwari Lal v. Chando Devi (supra) at Paragraph No.9 and it reads as under:--
"Section 96(3) of the Code shall not be a bar to such an appeal because Section 96(3) is applicable to cases where the factum of compromise or agreement is not in dispute."
The learned Counsel further seeks to rely on another judgment of the Apex Court reported in K.C. Dora v. G. Annamanaidu, . At Paragraph No.56 of the judgment, the Apex Court held as under:--
"56. Order 23, Rule 3 of Code of Civil Procedure not only permits a partial compromise and adjustment of a suit by a lawful agreement, but further gives a mandate to the Court to record it and pass a decree in terms of such compromise or adjustment insofar as it relates to the suit. If the compromise agreement was lawful-and as we shall presently discuss it was so the decree to the extent it was a consent decree, was not appealable because of the express bar in Section 96(3) of the Code."
This judgment has no application, since that was a decision rendered prior to the amendment to the Code under Act 104 of 1976. It is, therefore, the contention of the learned Counsel that as the execution of compromise or agreement is not in dispute, therefore, the bar under Section 96(3) of the Code attracts. I am afraid I cannot accept such a contention. The Apex Court in an attempt to reconcile the provision of Section 96(3) and sub-rule (2) of Rule 1(A) of Order 43, has categorically held that inasmuch as the amended provisions of the Code took away the right of appeal and even the right to challenge the compromise decree and as the parties are left without any remedy to challenge the compromise decree, Rule 1(A)(2) of Order 43 has been incorporated, so as to enable the parties to question the validity of compromise by preferring an appeal against the decree. Now in the instant case, the validity of Ex.A1 is very much in question, therefore, the plaintiffs cannot take shelter under sub-section (3) of Section 96 of Code. For the foregoing reasons, I am of the considered view that the present appeal is maintainable.
14. In view of my findings on all other points, except the finding on the question of maintainability of the appeal, there is nothing to interfere with the judgment and decree passed by the trial Court in terms of the compromise and, therefore, the appeal as well as the revision petition must fail.
15. In the result, the appeal and the revision petition are dismissed, but in the circumstances, there shall be no order as to costs.