1. These petitions are by the plaintiff-appellant in A.S No. 571/69. The former one is to record the award made by the arbitrators and filed into Court on 8-3-72 in the form of a memorandum and pass a decree in terms thereof. The latter is an application to record compromise according to the terms and conditions mentioned in the said memorandum of compromise.
2. The material facts leading to these applications may briefly be stated; The petitioner appellant instituted a suit, O.S No. 42/63 against his wife, the 1st respondent and the 2nd respondent, her sister and four others in the Court of the Subordinate judge, Ongole for declaration of his right to enjoy the plaint schedule properties during his life time and for delivery of their possession and for future profits. The basis for his claim was a registered settlement deed Ex. A. 1 executed on 7-2-1960 by his father-in-law, Bandaru Seshaiah whereunder life estate was given to him and to remainder to his son K. Anjaneyulu and other male children that would be born to him. The suit was resisted by the respondents 1 and 2 contending Inter alia that the settlement deed was executed by their father, Bandaru Seshaiah nominally and it was vitiated by misrepresentation made to him and fraud played on him by the plaintiff and it was revoked by a deed dated 9-8-1960 and another settlement deed was executed by their father on 7-8-1960 gifting the suit properties to them and the defendants 3 to 6 are their lessees and the plaintiff had no manner of right.
3. The suit was dismissed by the trial Court holding that the settlement deed Ex. A.I executed by late Bandaru Seshaiah was invalid and it was validly revoked and the subsequent settlement deed executed in favour of his daughters, respondents 1 and 2 is valid and binding on the plaintiff.
4. Aggrieved by the decision of the trial Court, the plaintiff preferred A.S No. 571/69 to this Court.
5. When the appeal was listed before us, the appellant and respondents 1 and 2 have executed an arbitration agreement in favour of Annu Venkateswarlu and Kankanala Venkata Subbaiah, son of Ramayya empowering them to settle the matter. The agreement was signed by respondents 1 and 2 in the presence of Puvvada Venkata Subbaiah, husband of the 2nd respondent. The appellant, the arbitrators and Puvvada Venkata Subbaiah, husband of the 2nd respondent came to Hyderabad on the 6th or 7th March, 1972. They brought with them the arbitration agreement signed by all the parties. The appeal reached before us on the 6th afternoon and it became part heard. On the 7th morning, the arguments in the appeal were continued by Mr. B.V Subrahmanayam, learned counsel for the appellant till lunch. When we resumed after lunch, Mr. B.V Subrahmanyam, learned counsel for the appellant and Mr. A.S Prakasam learned counsel for the respondents represented to us that the matter was being settled by the arbitrators and prayed for adjourning the case to the next day. We accordingly adjourned the matter to 8th March, 1972. When the case was called on the 8th of March, 1972, both the counsel represented to us that the matter was settled by the parties and filed into Court the memorandum of compromise signed by the appellant the two arbitrators, both counsel Puvvada Venkata Subbaiah the husband of the 2nd respondent, and one Seshayya. They also requested for some time to file a regular compromise memo signed by all the parties. Ten days' time was granted. On the day when it was called, it was represented by Mr. A.S Prakasam that his clients were not willing for a compromise. Hence these applications by the appellant.
6. In support of the applications, the affidavit of the applicant as well as that of Kankanala Venkata Subbayya, son of Ramayya, one of the arbitrators, detailing the facts and circumstances in which the parties arrived at the settlement and filed the memorandum of compromise into this Court on 8-3-1972, have been filed. At that stage, Mr. As.S Prakasam who was appearing in the appeal till then for both the respondents 1 and 2, gave consent to Sri M. Suryanarayana Murthy, advocate, to appear for the respondent No. 1. The respondents 1 and 2 filed counter-affidavits along with the affidavit of Annu Venkateswarlu, the other arbitrator. Thereafter, Sri C. Poornaiah and Sri M. Venkateswarlu, advocates appearing for the appellant have filed their affidavits stating the facts and circumstances which led to the filing of the memorandum of compromise on 8.3.72 On 12.7.74 when the case was called, the counter affidavit of Puvvada Venkata Subbaiah stated to have been sworn to on 28-4-74 filed into Court. The sum and substance of the several allegations in the affidavits and counter affidavits filed by the parties in support of their respective contentions would be considered by us later when we deal with the contentions of the parties.
7. Mr. M. Chandrasekhara Rao, learned counsel for the applicant contended that the compromise memo signed by the appellant, Puvvada Venkata Subbaiah—the husband of the 2nd respondent, the arbitrators and the advocates for the appellant and the respondents is valid binding on the parties and it must be recorded by this court as it is in accordance with law and binding on the parties. In support of his plea, he submitted that the respondents advocate Mr. A.S Prakasam had inherent and implied authority to enter into compromise on behalf of his clients and in any event, he was, in fact authorised by his clients through Puvvada Venkata Subbaiah to enter into compromise. He further maintained that the respondents had, in fact, given their consent for the terms of the compromise settled by the arbitrators in whose favour they executed an agreement on 5-3-72 in the presence of Puvvada Venkata Subbaiah.
8. This claim of the appellant—applicant is resisted by Mr. A.S Prakasam, the learned counsel for the 1st respondent and Mr. M. Suryanarayana Moorthy, the learned counsel for the 2nd respondent, contending inter alia that Mr. A.S Prakasam was not specifically authorised by his clients to enter into the compromise but he has signed the memorandum of compromise at the request of Puvvada Venkata Subbaiah who assured the counsel that he would bring the consent and signatures of respondents 1 and 2 on the memo of compromise, that there is no inherent or implied authority for an advocate to enter into a compromise on behalf of his client that the respondents 1 and 2 did not give their consent to the decision of the arbitrators, that Puvvada Venkata Subbaiah was not the agent of respondents 1 and 2 and that these applications merit dismissal.
9. Upon the respective contentions of the parties, the following questions arise for our decision:
1. Whether, on the facts and in the circumstances, Sri A.S Prakasam, Advocate appearing for the respondents 1 and 2, had the authority to enter into compromise and sign the compromise memo which was filed into this Court on 8-3-72?
2. Whether Puvvada Venkata Subbaiah, the husband of the 2nd respondent, acted as an Agent of the respondents 1 and 2 and the consent given by him to the terms of the compromise memo is sufficient to record compromise?
3. Whether the respondents 1 and 2 have in fact given their consent for the terms of the compromise settled by the arbitrators?
10. Before examining the facts and circumstances for the purpose of determining whether Sri A.S Prakasam was competent to enter into compromise and sign the compromise memo, it is not only desirable but necessary to advert to the law relating to the authority of an Advocate to enter into a compromise on behalf of his client.
11. Order III. Rule I.C.P.C permits a party to a proceeding in a Court to appear normally either in person, by a recognised Agent or by a pleader. A pleader is prohibited under Rule 4 of Order III from acting for any person except by a specific appointment under a document for the purpose by such person. In other words, a pleader must be appointed under a document popularly known as ‘Vakalatnama’ to appear and fact on behalf of his client in a given case. The term ‘act’ is not defined. It is of wide Import so as to take in all kinds of ‘act’. The framers of the Code in their wisdom, did not think it necessary to limit the authority of a pleader to do certain acts. When the sovereign legislature did not restrict the scope o. ‘acting,’ it is not the province of the Courts to delimit the scope of the meaning of the word ‘act’ Such authority is also needed for the effective functioning of a legal practitioner.
12. We shall now advert to the decisions cited across the Bar. In Sarat Kumari v. Amulyadhan (1) A.I.R 1923 P.C 13 the Privy Council held that a Vakil appointed under a usual power of attorney by a Pardanashin lady, and who never saw his client, never spoke to her in reference to any compromise nor had any communication with her touching any compromise was not empowered to compromise the suit and he had failed in his duty to his client when without arguing the cases, he had entered into a compromise.
13. The next decision is that of judicial Committee in Surendra Nath v. Tarlbala Dasi (2) A.I.R 1930 P.C 158 at 161. Therein, an Advocate of High Court was appointed by a solicitor to conduct a suit in the mofussil Court and he entered into a compromise. The validity of his authority to enter into the compromise fell for decision. He was a member of the English Bar, admitted as an Advocate of the High Court at Calcutta. He was found to be a Gentleman of the highest reputation who subsequently occupied the position of Advocate General of Bengal, Lord Atkin observed thus:
“Their Lordships regard the power to compromise a suit as inherent in the position of an Advocate in India. The considerations which led to this implied power being established in the Advocates of England, Scotland and Ireland, apply in equal measure to India. It is a power deemed to exist because its existence is necessary to effectuate the relations between Advocate and client, to make possible the duties Imposed upon the Advocate by his acceptance of the cause of his client,”
14. The learned Law Lord proceeded to state thus:
“…the implied authority of counsel is not an appandage, a dignity added by the Court to the status of barrister ??? Advocate at law. It is implied in the interests of the client to give the fullest beneficial effect to his employment of the Advocate. Secondly, the implied authority can always be countermanded by the express directions of the client. No Advocate has actual authority to settle a case against the express instructions of his client. If he considers such express instructions contrary to the interests of his client, his remedy is to return his brief.”
15. The same view has been reiterated by the Privy Council in Sheonandan Prasad v. Hekim Abdul (3) A.I.R 1935 P.C 119. Therein it was observed that in England and India, the counsel do not take upon themselves to compromise a case without receiving express authority from their clients for the particular terms.
16. In Muthiah Chettiar v. Karuppan Chettiar (4) AIR 1927 Mad. 852, a Division Bench of the Madras High Court held that whether the counsel acts under instructions when he compromises or refers to arbitration matters not involved in the suit is a question of fact and that the counsel has no power to make an admission in or compromise or refer to arbitration a suit if he is instructed not to do so, without express authority from his client.
17. A full bench of the Nagpur High Court in Jiwibai v. Ramkumar (5) AIR 1947 Nag 17, expressed the view that “counsel in India, whether Barristers. Advocates or pleaders, have inherent powers, both to compromise claims, and also to refer disputes in Court to arbitration, without the authority or consent of the client, unless their powers in this behalf have been expressly countermanded, and this, whether the law requires a written authority to ‘act’ or ‘plead’ or not. This view of the Nagpur High Court has been followed by the Bombay High Court in S.S Walkar v. L.S Waikar (6) AIR 1960 Bom. 20. The leared Judge, Mudholkar J. (as he then was) was of the view that the authority of an Advocate to compromise is implicit in the appointment of the Advocate but the implied authority of an Advocate to enter into a compromise is limited to the action in which he has been engaged but does not extend to matters which are extraneous to the action or which are merely collateral to it. The majority view in a Full Bench decision of the Kerala High Court in C.S Nayakam v. A.N Menon (7) A.I.R 1968. Kerela 213, 215 is to the same effect. The majority was of the opinion that when a written authority of appointment is given to the counsel, he would be free to act and such appointment draws no distinction between various kinds of acting and the omission in the vakalat to specifically empower the counsel to compromise the suit or confess Judgment would not take away the implied power of counsel to compromise. In this connection, the learned Judge, Mathew, J. (as he then was), who spoke for the majority view, observed thus:—
“Order III Rule 4 (C.P.C) requires the appointment of a counsel to act in Court by a document in writing. The word ‘act’ is not anywhere defined… The provision which requires the existence of a power in writing to ‘act’ draws no distinction between the various kinds of acting………..Order III, Rule 4 makes no difference. The only requisite it lays down is a written authority of appointment. When that is given it leaves counsel so appointed free to ‘act’ and draws no distinction between various kinds of acting. If the legislature draws no distinction there is no justification for the Court to make one.
18. The Vakalat in the case did not give express authority to counsel to compromise the suit or confess judgment, but we are not satisfied that there was any express limitation on the implied power of counsel to compromise the suitor confess judgment. We do not think that when counsel is appointed under a document the enumeration of certain powers in it would exclude the implied powers necessarily inherent in the appointment.
19. The construction of a document appointing an agent is different from the construction of a vakalat appointing counsel’.
20. It was held by a Division Bench of the Madras High Court in Ramappayya v. Subbamma (8) AIR 1949 Mad 98 that in a case where Vakalatnama giving a power to the advocate to appear for party and to conduct and defend a suit without the express power to compromise the suit was executed, no implied authority must be held to have been conferred upon the advocate to make compromise binding on his client. Distinction was made between a case where a document such as Vakalatnama giving express written authority to the advocate or legal practitioner was executed by the client and a case of barrister or advocate who derived his authority for being retained by being briefed by a solicitor who appeared on behalf of his client.
21. In ??? v. Marimuthu Maistry (9) AIR 1959 Mad. 7 at 12, Ramaswami, J. after reviewing the entire case law on the subject summed up the legal position thus:
“The decisions appear to be fairly clear that even in cases where there is no express authorization to enter into a compromise, under the inherent authority impliedly given to the Vakil he has power to enter into the compromise on behalf of his client. But in the present state of the clientele world and the position in which the Bar now finds itself and in the face of divided judicial authority and absence of statutory backing, prudence dictates that unless express power is given in the Vakalat itself to enter into compromise, in accordance with the general practice obtaining, a special vakalat should be filed or the specific consent of the party to enter into the compromise should be obtained”.
22. There is divergence of opinion between the Madras High Court of the one hand and the High Courts of Calcutta, Allahabad, Bombay and Kerala on the other about the existence or otherwise of the Implied authority of a counsel to compromise in a cause where no specific power to compromise is given in the Vakalatnama executed by the client According to the High Courts other than Madras, the counsel has Inherent power or implied authority to compromise on behalf of his client who had executed a vakalat or document authorising him to appear and represent his case whereas the Madras High Court took the contrary view that specific power to compromise should be given in the vakalatnama executed by the client, but however, in the case of a barrister or advocate who is appointed and briefed by a solicitor he possesses the inherent power of the implied authority to compromise. On a consideration of the provisions of Or. IV, R. III C.P.C and the decided cases, we are of the view that the counsel in India has inherent power or implied authority to compromise in a cause in respect of which he has been appointed by his client to act on his behalf, but it is prudent that he should have specific and express authority of his client to compromise, taking into consideration the divided judicial opinion and the present state of the Bar and the paramount interests of the clientele into account.
23. The legal position may be summed up thus: “A legal practitioner or counsel appointed under a document to act on behalf of his client is empowered to do all acts for the furtherance of the interests of his client and to give the fullest beneficial effect to his employment. He has the inherent power or implied authority to compromise in all matters connected with the action and not merely collateral to it, as in the case of the barristers and advocates of England, Scotland and Ireland. It is really necessary for a barrister or advocate or a counsel to have the inherent power or implied authority to appear, ague and do what all is necessary for the purpose of safeguarding the Interest of his client and to enable him to discharge his duties to the best of his ability. Further such implied authority must be deemed to exist in the legal practitioners as it is essentially needed to effectuate the relations between them and their clientele. The implied authority of a counsel is not absolute. No advocate can exercise such power contrary to the express instructions of his client who is always entitled to countermand the inherent power or implied authority of his counsel by giving specific and express instructions not to compromise or compromise only as per the terms dictated by him. Where the counsel bonafide and honestly feels and considers that such express instructions are adverse to the interests of his client, the only honorable course open to him is to return the brief but not to go ahead with the compromise proposals which he deems fit and proper. Such implied power or inherent authority of counsel to compromise is not an appendage of office but a dignity added to the status of legal practitioner for the purpose of giving the fullest beneficial effect to his employment.
24. The status of an advocate or a legal practitioner is higher than that of an agent who is bound by the law of agency. An agent has a duty to abide by the directions or instructions given by his principal. He has no authority under any circumstances to act beyond the limits of the instructions, directions or authorisation given to him by his principal. He owes his duty solely to his principal. His acts do not bind his principal unless he has got specific authority from the latter for such acts. But sometimes the acts done by him under any implied authority of the agent also bind the principal. The agent's authority may be oral or in writing and express or implied and it can be inferred in the circumstances of each case. Whether the agent has authority from his principal to do any act in a given case is a question of fact or in any event a mixed question of fact and law. In the case of an advocate or a legal practitioner, he owes a duty to the Court and the public in addition to his client. This unique tripartite feature is a special circumstance obtaining in the case of a legal practitioner. Normally the professions or callings other than the legal profession may have only one or two of the three relationships referred to above the position of a barrister, advocate or a counsel, and particularly, a legal practitioner in High Court, is not and cannot be equated to that of an agent. Therefore, we are of the view that an advocate has an implied or inherent authority to act on behalf of his client and even to enter into a compromise. This implied or inherent power should not be misused or abused by the advocates and members of the legal profession. The inherent or implied power vested in the counsel must be exercised fairly, reasonable and with due diligence and in the best interests of his client. Normally, an advocate or member of the legal profession would not directly initiate compromise talks with the opposite party and enter in to a compromise, without obtaining the actual consent of his client. The members of the legal profession would, in the interests of the profession as well as themselves, obtain, as a precaution the actual consent of their clients before entering into any compromise or signing any memorandum of compromise on their behalf. There is no statutory recognition of the inherent or implied authority of a legal practitioner to enter into compromise on behalf of his client the judicial authority on this aspect is not unanimous but divided the general principles that should govern the relationship of the lawyer and his client must be in accord with the dignity of the legal profession and at the same time they should safeguard the interests of the clientele world. Taking into consideration the present state of the parties and the members of the legal profession, it is not only desirable but just, proper and prudent for the advocate or counsel to obtain a special vakalat from his client specifically empowering him to enter into compromise and file compromise memo into Court to show that he was authorised to enter into the compromise. The aforesaid rule of prudence would be conducive to the interests of the parties as well as the members of the legal profession. Though it is not a pure legal principle, it would be a safeguard to the members of the legal profession and a sufficient safeguard to the clientele and there would be no scope for any member of the legal profession to misuse or abuse such inherent power or implied authority and give room for or provide an occasion to disturb or spoil the good relations between the members of the legal profession and their clientele.
25. In the light of the foregoing discussion, we shall now proceed to examine whether the respondents' counsel Mr. A.S Prakasam who has signed the memorandum of compromise filed into Court on 8-3-72 has authority to so act on behalf of his clients. The authority may be express or implied. It may be in writing or oral. Mr. Prakasam, a senior advocate of this Court having sufficient standing, would not have signed the memorandum of compromise unless he has some authority, be it express or implied oral or in writing of his client's, to do so. As pointed out earlier, in law he has inherent or implied authority to act under Order 3. Rule 4 of the Code of Civil Procedure on behalf of his clients which would take in his power to enter into the compromise on behalf of his clients, in the circumstances, he must have also been satisfied that he was acting in his clients' interest when he signed the memorandum of compromise. The appellant is no other than the husband of the 1st respondent. They have a son who is living with the 1st respondent, Admittedly, Puvvada Venkata Subbaiah, the husband of the 2nd respondent, who is in charge of the litigation from the beginning is the person who came to Mr. Prakasam and engaged him on behalf of the respondents 1 and 2. He was acting throughout the period for and on behalf of the respondents 1 and 2. It was in his presence only that the agreement empowering the arbitrators to arbitrate and settle the disputes between the respondents and the appellant was written and the thumb impressions were put on 5-3-1972 in their village by the respondents 1 and 2, Annu Venkateswarlu, one of the two arbitrators, who has filed an affidavit in support of the respondents, plea, has not stated that Puvvada Venkata Subbaiah had no authority to act for and on behalf of the respondents 1 and 2. According to him, he wanted to as certain the view of the respondents but he was prevailed upon by the other arbitrator to finalise the matter at Hyderabad itself in the presence of Puvvada Venkata Subhaiah and he was finally compelled to join in the arbitration and some terms were agreed. He had Informed the junior counsel of the appellant that before they would give their decision, they had to ascertain the views of the respondents and hence a week's time might be taken from the Court the other arbitrator insisted that as Puvvada Venkata Subbaiah was there, it was not necessary that they should ascertain the views of the respondents and that no adjournment would be given as the appeal became part-heard. In those circumstances he had requested the junior counsel of the petitioner to draft the terms of the compromise the draft compromise was typed and taken to the house of Sri A.S Prakasam by the arbitrators and Puvvada Venkata Subbaiah. Kankanala Venkata Subbaiah did not show the agreement of reference to the Advocate when asked by him, stating that he had left the same with the junior counsel of the petitioner. Thereafter, he stated thus:
“Afterwords the same was typed and we were also asked to sign and when the advocate for the respondents expressed to us that he would not sign without the consent of the parties, we stated that the 2nd respondent's husband Puvvada Venkata Subbaiah was signing as representative of respondents 1 and 2 and as this is only a draft to show the bonafides that the parties are willing to enter into a compromise and the same is being filed into the Court, we requested him to sign and accordingly he signed. We were also asked to sign by the Advocate and we also signed and filed it in Court before the Judges and took time for filing compromise duly signed by the parties and then we left Hyderabad on 8-3-1972.”
26. He further says that himself, the respondents and Puvvada Venkata Subbaiah went to Ongole on 10-3-72, that they did not inform the terms of the compromise to respondents 1 and 2 thinking that the terms would be explained by their advocate at Ongole. On hearing the terms from the advocate at Ongole, the respondents refused to sign the compromise as it is contrary to the terms of reference and further, the terms explained to him by the other arbitrator are different from the terms incorporated in the petition.
27. The sum and substance of the counter-affidavits filed on behalf of the respondents is that the agreement of arbitration was signed by them on 5-3-72 in the presence of Puvvada Venkata Subbaiah, that the appellant, Puvvada Venkata Subbaiah and the other mediators went to Hyderabad and to their advocates and Puvvada Venkata Subbaiah had signed the compromise at the instance of the arbitrators and against their wish, that they have no authority to sign the compromise memo on their (respondents 1 and 2) behalf without their express consent and that the compromise petition must therefore be rejected. Though they exhibit ignorance of the terms of the compromise petition, they admit that Puvvada Venkata Subbaiah had informed them what transpired at Hyderabad. It was highly improbable and, in our view, untrue that either Puvvada Venkata Subbaiah who is in complete charge of the litigation on behalf the respondents 1 and 2, or Annu Venkateswarlu, the arbitrator, who have gone to the village and met the respondents and asked them to accompany them to Ongole for signing tine memorandum of compromise, would not have informed the respondents what all transpired at Hyderabad including the terms of the memorandum of compromise. The present stand taken by the respondents that the decision given by the arbitrators without ascertaining their views is not in accordance with the agreement of arbitration to which they are parties and therefore, it is not binding on them, could have been indicated to Puvvada Venkata Subbaiah and Annu Venkateswarlu, the moment they went to the village with the copy of the memorandum of compromise. According to them, their views were not ascertained by the arbitrators. Hence there was no necessity for them to go to Ongole and consult their lawyer. They could have as well informed Annu Venkateswarlu and Puvvada Venkata Subbaiah that the present decision of theirs would not be acceptable to them as their views were not ascertained. On a consideration of the entire facts, we are of the view that the respondents must have been informed by Puvvada Venkata Subbaiah as well as Annu Venkateswarlu about the terms of the memorandum of compromise filed into the Court and for which their thumb impressions or signatures were sought at Ongole. The fact that the respondents went to Ongole makes us believe that they were aware of and agreed to the terms of the compromise at their village and with the intention of affixing their thumb-Impressions they had gone to Ongole and subsequently changed their minds for reasons best known to them. May be as alleged by the petitioner that Puvvada Venkata Subbaiah might have given an impression that they would win the case, if the compromise was not accepted.
28. The contention of the respondents that their counsel Sri A.S Prakasam as well as Puvvada Venkata Subbaiah had neither authority to act nor acted for and on their behalf in settling the compromise and filing it into the Court, cannot be acceded to. The respondents as well as Annu Venkateswarlu admit the decision being made by the arbitrators on the 7th evening at Hyderabad. According to the applicant (appellant). Puvvada Venkata Subbaiah has acted as the authorised agent of his wife, the 2nd respondent and his sister-in-law, the respondent and negotiated with the appellant and the arbitrators and finally agreed on their behalf for the terms decided by the arbitrators. According to the respondents, Puvvada Venkata Subbaiah did not have their authority to act for them but he succumbed to the persuasion of the other arbitrator Kankanala Venkata Subbaiah and signed the compromise memo against his wish. But the applicant's stand is that Puvvada Venkaa Subbaiah had oral authority of the respondents to act and to enter into a compromise and sign on their behalf and that he had accented the decision of the arbitrators on their behalf. The short question that requires decision is whether Puvvada Venkata Subbaiah had authority-express or implied, oral or in writing, of the respondents to act and enter into compromise on their behalf. On this aspect, it is profitable to refer to the version given by Mr. C. Poornaiah and Mr. M. Venkateswarlu, the Junior advocates who appeared along with their senior Sri B.V Subrahmanyam. Mr. Poornaiah swears that on the afternoon of 7th March, 1972 the appellant, the arbitrators and Puvvada Venkata Subbaiah came to Court and informed them that the matter was almost settled by the arbitrators, and that the parties went on negotiating with the arbitrators in the High Court itself till 4-00 p.m and about 5 p.m they came to his house. They discussed the matter further sitting in his compound and at about 7-00 p.m entered his office and told him that they decided what should be done and asked him to reduce their decision into writing in English. As the terms agreed to were being given by the arbitrators, the 2nd respondents husband and the appellant had agreed to them at every stage. He dictated each of the terms to Sri M. Venkateswarlu in English as desired by the arbitrators, the appellant and Puvvada Venkata Subbaiah. The manuscript draft was signed by Sri M. Venkateswarlu, Advocate who wrote it, the appellant, Puvvada Venkata Subbaiah both the arbitrators and one Kovi Seshaiah in token of their having agreed to all the terms and in token or his having reduced them into writing as desired by them. Informing them that they would meet Sri A.S Prakasam, have the manuscript typed and get it filed into Court in the morning, they went away. The draft memo prepared by him was typed including another clause, viz. clause 8 introduced by Sri A.S Prakasam. He swears further as follows:
“When the matter came up on the 8th before the court, it was signed by the counsel on both the sides on behalf of their clients and by the appellant, the husband of the 2nd respondent and the arbitrators and also Kovi Seshaiah, the brother-in-law of the appellant, in fact, while deleting clause 8 of the terms and in commenting about the clause 6 giving the property to the 2nd respondent with absolute rights, both the counsel told the court that the arbitrators have decided the matter and the parties have agreed and therefore it was not necessary to go Into it.
4. I may state that from the 7th afternoon till they left, all the persons were present and the counsel on both the sides add the arbitrators proceeded to discussions and recorded the decision of the arbitrators only on the basis that the authority was given by the respondents 1 and 2 and appellant to the arbitrators to decide. The matter was completed and in fact the 2nd defendant's husband throughout took active part on behalf respondents 1 and 2.
5. At no point of time was any doubt cast in my mind as to the authority of the arbitrators to decide or the 2nd respondent's husband to act on behalf of respondents 1 and 2. For that reason only every body signed on that Compromise.”
29. Sri M. Venkateswarlu, the junior Advocate on record for the appellant affirms the truth of the statements contained in the affidavit of Sri C. Poornaiah and further states that the memo of compromise itself recites that the parties referred the matter to arbitrators by a document dt. 5-7-72 and agreed to abide by their decision and accordingly the decision was given and that it was never suggested or even hinted by anyone that the further consent of the respondents 1 and 2 was necessary. We see no reason to disbelieve the statement of facts sworn to by Sri C. Poornaiah and Sri M. Venkateswarlu, advocates, pertaining to the procedure adopted by the arbitrators to make their decision and the way in which the matter was decided between the appellant and Puvvada Venkata Subbaiah representing the respondents 1 and 2, Puvvada Venkata Rubbaiah who did not choose to file a counter to the allegations made by the applicant and Kankanala Venkata Subbaiah the arbitrator his preferred to file an ‘affidavit before us on 12-7-74 when the matter was posted for further arguments, though it was purported to have been affirmed and sworn to at Ongole on 28-4-74. We are unable to understand the reason for not filing the same earlier or at least serving a copy of the same on the appellant's counsel till 12-7-74 when the case was actually called in the afternoon. This appears to have been antedated for the purposes of contest. We may now examine the contents of his affidavit. He admits that he is looking after the conduct of the litigation for the respondents 1 and 2, but states that he has no power whatsoever to compromise the matter on their behalf and without their consent. He never gave an impression to the appellant's counsel or his counsel at any time that he was authorised by the respondents to compromise the matter and any such impression, if given to the appellant's counsel, is baseless, Sri A.S Prakasam signed the tentative memo only on his instructions as he promised to get a regular compromise signed by his wife, the 1st respondent and he also signed on the memo of tentative compromise as the arbitrators insisted him to sign on behalf of his wife. It is pertinent to notice in this context the following sentence in paragraph 3 of his affidavit: “I submit that I never gave an Impression to the appellant's counsels or to my counsel at any time that I am authorised by respondents 1 and 2 to compromise the matter.” The use of the expression “to my counsel” referring to Sri A.S Prakasam would clearly indicate that it is he who is the defacto party and who is acting for and on behalf of the respondents 1 and 2. Nowhere in the affidavit, he states that he did not take part in the arbitration proceedings or represent the respondents 1 and 2, except stating that he did not give such an impression. We have no hesitation to disbelieve the averments of Puvvada Venkata Subbaiah who is responsible for all this muddle. If what the respondents 1 and 2 contend for was really true, Puvvada Venkata Subbaiah would have certainly informed the arbitrators and the advocates that there could be no compromise talks or compromise of any kind without the presence of the respondents 1 and 2 and without ascertaining their views. We may add that Sri A.S Prakasam and Sri B.V Subrahmanyam on 7th March, 1972 represented to us that the matter was being settled by the parties and requested for adjournment to the next day. On 8th March, 1972, we were informed by Sri A.S Prakasam as well as the counsel for the appellant that the matter was settled by the parties and a compromise memo with the signatures of the arbitrators, the appellant, the husband of the 2nd respondent and one Seshalah was filed into Court. Further time for filing a compromise memo with the signatures of all the parties was, no doubt, granted by us. We are definite that at no stage Sri A.S Prakasam represented to us that Puvvada Venkata Subbaiah had no authority to act on behalf of the respondents 1 and 2, but on the other hand, as sworn to by Sri C. Poornaiah, everyone proceeded on the footing that Puvvada Venkata Subbaiah had sufficent authority to negotiate on behalf of the respondents 1 and 2 and represented them and that the decision of the arbitrators was accepted by the parties. We are of the firm view that Sri A.S Prakasam was satisfied at that time that Puvvada Venkata Subbaiah had sufficient authority to represent the respondents 1 and 2 and accept the decision of the arbitrators on their behalf and he must also be deemed to have bonafide thought that the terms of the compromise were beneficial to the interests of his clients. In these cricum stances we hold that Sri A.S Prakasam had the actual consent of the 1st and 2nd respondents through their agent and representative Puvvada Venkata Subbaiah for the decision of the arbitrators and to sign the compromise memo, in addition to the inherent or implied authority vested in him by virtue of the provisions of Order 3, Rule 4 of the Code of Civil Procedure. Hence, his signing the compromise memo along with the other person is sufficient in the eye of law to make it valid and binding on his clients. That apart as pointed out earlier, Puvvada Venkata Subbahh had sufficient and express oral authority of the respondents 1 and 2 to act on their behalf and to enter into a compromise at Hyderabad and agree to the decision of the arbitrators. Hence, his acceptance of the decision of the arbitrators is binding on the respondents 1 and 2 and they cannot subsequently go back upon it. Whether there is authority-express or implied, oral or in writing of the party to his agent or to his lawyer is a question of fact depending upon the facts and circumstances of each case. There is admittedly no specific direction in the present case prohibiting the counsel or Puvvada Venkata Subbaiah from entering into a compromise. For all the reasons stated, we answer the question in the affirmative and in favour of the applicant and against the respondents.
30. True, as contended by the respondents' counsel the compromise memo filed on 8-3-72 was described to be tentative. The word “tentative” has been used by us at that time as the parties intended to file a compromise memo with the signatures of all the parties including the respondents 1 and 2. In the memo of compromise filed into the court, the advocate has signed for the respondents 1 and 2 in addition to Puvvada Venkata Subbaiah, the husband of the 2nd respondent as pointed out earlier, Annu Venkateswarlu himself stated that Puvvada Venkata Subbaiah signed the compromise memo on behalf of the respondents 1 and 2. The intendment of the parties to file another compromise memo with the signatures of all the parties at a later date would not in any way militate against the validity of the compromise memo filed on 8-3-72 if it is otherwise valid and is in accordance with law. Such compromise might have been intended by the parties by way of caution and to avoid any further litigation. In fact, the respondents tried to back out from the stand taken by them earlier taking advantage of the fact that they did not sign the compromise memo filed into Court on 8-3-72. To put it differently, if the compromise memo filed on 8-3-72 had been signed by all the parties Including the respondents 1 and 2, there would not have been any scope or ground for the present controversy. It would have been a fool-proof compromise the fact that the memo filed on 8-3-72 was described to be tentative and further time was granted to file a regular compromise would not in any way militate against the stand taken by the applicant, if the compromise memo filed on 8-3-72 before us was in fact, true, valid and in accordance with law and binding on the parties. We may also point out that the compromise memo filed into Court does not indicate that it was a tentative memorandum of compromise. It was described only as memorandum of compromise and nowhere in it, it was mentioned that. It was tentative compromise. It is also indicated that all the terms of the compromise are executable through Court. The respondents, after going to Ongole, have changed their mind for reasons best known to them and tried to give a go by to the compromise agreed upon at Hyderabad by their counsel and their representative and have given rise to the filing of these applications. On a consideration of the entire facts and circumstance, we are satisfied that there was a bonafide settlement of the dispute between the parties at Hyderabad, that the terms also are fair and reasonable and that the respondents are not entitled to avoid a decree in terms of the compromise. It is next submitted by the respondents' counsel that one of the terms of the compromise requires the appellant and his wife the 1st respondent to live together and this terms is outside the scope of the subject matter of the appeal and therefore, the arbitrators have no authority to decide the same. On this ground, they seek to set aside the decision of the arbitrators as it is beyond the scope of their reference. The agreement relating to the appellant and the 1st respondent, who are no other than husband and wife, living together as man and wife is in no way extraneous to the subject matter of the dispute. That decision has been given by the arbitrators taking into consideration the benefit of both the parties. There is no item of property in respect of which the mediators have decide and which is not the subject matter of the suit. Hence there is no merit in this submission.
31. In the result, C.M.P No. 9782/72 is ordered and a decree in terms of the compromise is passed in A.S No. 571/69, in this view, it is unnecessary for us to ??? the other application, ??? 9781/72.
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