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B.D Mohan Rao v. Co-Operative Industries Estates (Ltd.) .
Structured Summary of the Opinion — Civil Revision Petition
Factual and Procedural Background
The suit in O.S. No. 14 of 1971 was instituted by the petitioner against the Co-operative Industrial Estates Limited (the respondent) for a declaration of title and for injunctive relief (including a mandatory injunction for removal of a structure) in respect of a 400 sq. yard site at Sanathnagar (Balanagar), Hyderabad West. A temporary injunction in I.A. No. 133/71 was granted in April 1973 to restrain the respondent from further construction on the suit land. During the court vacation, on 10-5-1973, the advocates for the parties filed I.A. No. 890/73 under Order 39, Rule 4 CPC seeking modification of the temporary injunction order. The terms in I.A. No. 890/73, signed only by the advocates and not by the parties, purported to permit the respondent to complete construction and provided that, if a declaration were granted to the plaintiff, he would be entitled only to compensation and not possession.
After the vacation the petitioner filed I.A. No. 254/73 seeking to set aside the order made pursuant to I.A. No. 890/73 on the ground that his counsel had no authority or instruction to agree to the terms and that the compromise was entered into without his consent. The lower court dismissed I.A. 254/73, holding that the petitioner had an alternative remedy by way of appeal and relying on the decision in Paran Kuer v. Manni Lal (AIR 1929 Oudh 211) to the effect that the court is entitled to assume a pleader has authority unless positive evidence to the contrary is produced. The petitioner then filed the present revision petition challenging the dismissal of I.A. 254/73.
Legal Issues Presented
- Whether an agreement recorded and an order made in I.A. No. 890/73 (purporting to modify and, in substance, to compromise the subject-matter of the suit) was valid where the compromise petition was signed only by the parties' advocates and not by the parties themselves, and no special vakalat authorising compromise was filed.
- Whether the lower court ought to have proceeded under Order 23, Rule 3 CPC to record the compromise and examine the terms and the parties' understanding before passing a consent decree.
- Whether the form of ordinary vakalat (Form No. 12) and the general authorization in Rule 19 of the Civil Rules of Practice are sufficient to authorise a pleader to enter into a compromise of the subject-matter of the litigation, or whether a special vakalat or court order is required.
- Whether the revisional forum can set aside the consent order by invoking the court's inherent powers under Section 151 CPC where procedural irregularity occurred in passing a consent order without proper recording and without special authority from the party.
Arguments of the Parties
Petitioner's Arguments
- The petitioner alleged that he neither instructed nor authorised his counsel to sign or present the compromise application (I.A. No. 890/73) and that it was filed and acted upon without his consent ("secretly and behind his back").
- The petitioner contended he did not sign the compromise petition and was not asked or called upon by the court to indicate his consent to the compromise terms; consequently the compromise proceedings were illegal, irregular and against principles of natural justice.
- By the terms of the compromise, the petitioner effectively surrendered his claim to possession and permitted the respondent to complete construction and erect machinery on the suit land; these were substantive concessions going to the subject-matter of the suit and therefore required proper recording as a compromise under Order 23, Rule 3 CPC.
Lower Court's Position (as recorded in the opinion)
- The lower court dismissed the petitioner's application to set aside I.A. No. 890/73 on the ground that the petitioner had an available remedy of appeal against the consent order but had instead sought relief under Section 151 CPC.
- The lower court relied on the decision in Paran Kuer v. Manni Lal (AIR 1929 Oudh 211) to hold that when a consent decree is passed on confession by a party's pleader, it must be presumed the pleader had authority unless the challenger proved otherwise by positive evidence; applying that principle, the court concluded the proceedings leading to the consent order were regular and that the pleader had authority.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Paran Kuer v. Manni Lal, AIR 1929 Oudh 211 | Where a consent decree is passed by a court on confession of judgment by a party's pleader, the court may presume the pleader had authority to act on behalf of the party; a person challenging that authority must prove the contrary by positive evidence. | The lower court relied on this precedent to conclude that the consent order in I.A. No. 890/73 was based on proceedings properly and regularly held and that the pleader had authority. The revising court recorded that the lower court applied this principle but proceeded to examine procedural requirements (Order 23, Rule 3; Rule 19; Form No. 12) and found the consent order irregular because no special vakalat had been produced and the compromise was not recorded as required; consequently the revising court set the consent order aside. |
Court's Reasoning and Analysis
The revising court undertook a textual and procedural analysis of the documents and the law invoked. The key steps in the court's reasoning were:
- Examination of the terms of I.A. No. 890/73 showed that the application was not a mere modification of a temporary injunction but, in substance, effected a compromise as to the subject-matter of the suit: it permitted the defendant to complete construction and to retain ownership or possession by providing that the plaintiff, if ultimately entitled, would be restricted to compensation only. Thus the document operated to alter substantive rights in respect of the suit land.
- Because the compromise affected the subject-matter of the litigation, the court held that the lower court should have proceeded under Order 23, Rule 3 CPC to record the compromise. The court emphasised that recording a compromise under Order 23, Rule 3 is not a mere formality but a substantive judicial act requiring the court to examine the terms carefully, ensure the parties understand them and guard against fraud or misrepresentation.
- The court then analysed the authority of an advocate to enter into compromise. It considered Rule 19 of the Civil Rules of Practice and Form No. 12 (the ordinary vakalat). From the text of Form No. 12 the court concluded that an ordinary vakalat (Form No. 12) does not, by itself, authorise a pleader to enter into a compromise with respect to the subject-matter of the litigation.
- The court explained that where a party wishes to authorise counsel to admit or enter into a compromise, a special vakalat specifically empowering the counsel to do so is the appropriate mechanism, and the court must be satisfied about that authorisation before recording the compromise. The phrase "unless otherwise ordered by the Court" in Rule 19 contemplates such a specific judicial order or a special vakalat authorising compromise.
- The facts showed no such special vakalat or judicial order had been produced: I.A. No. 890/73 was signed only by the advocates and contained no endorsement indicating the advocate was acting on special authority from his client to effect compromise. Thus, procedural safeguards required for a valid compromise were not observed.
- Because the consent order was passed without following the proper procedure and without the compromise petition being signed by the petitioner or accompanied by any special vakalat authorising the counsel to enter into such a compromise, the revising court held that the order was irregular and could be set aside by the revisional court exercising inherent powers under Section 151 CPC to secure the ends of justice and prevent abuse of the court's process.
Holding and Implications
Holding: Revision allowed; the consent order passed by the lower court in I.A. No. 890/73 is set aside and the revision petition is allowed with costs.
Implications:
- The direct effect of the decision is that the consent order made pursuant to I.A. No. 890/73 is vacated and the petitioner’s challenge succeeds; the revising court granted costs in favour of the petitioner.
- The court's decision emphasises that compromises affecting the subject-matter of litigation must be recorded in accordance with Order 23, Rule 3 CPC and that an ordinary vakalat (Form No. 12) does not, by itself, suffice to authorise a counsel to enter into a substantive compromise; a special vakalat or court order is required to authorise counsel to admit or accept such a compromise on a party's behalf.
- The opinion does not purport to create or announce a new broad precedent beyond its reasoning; its operative effect is the setting aside of the irregular consent order and the vindication of procedural safeguards before a court records a compromise affecting substantive rights.
End of summary. This summary is confined to the content and reasoning set out in the provided opinion and does not include external material or inferred facts.
1. This C.R.P arises out of suit O.S No. 14 of 1971 on the file of the Court of Munsif Magistrate, Hyderabad (West). The revision is directed against an order refusing to set aside the order passed in I.A No. 890 of 1973 filed in I.A 133/71. The petitioner herein filed the suit against the respondent which is the Co-operative Industrial Estates Limited, Sanathnagar (Balanagar), Hyderabad West, represented by its Chairman, for a declaration that the suit scheduled property, which is a site of an extent of 400 sq. yards at Sanathnagar (Balanagar), Hyderabad West, in his property and to restrain the respondent permanently from interfering with his right, title and possession of the site and also to restrain the respondent from making any further construction of any structure thereon and also for a mandatory injunction to pull down and remove the structure already constructed by him thereon. Along with the suit, the petitioner filed the I.A No. 133/71 and a temporary injunction against the respondent was granted in April, 1973. Thereafter, the suit was posted for trial after summer vacation. During the vacation, before the vacation Court, on 10-5-1973, I.A No. 890/73 was filed, signed by the Advocates of the two parties under Order 39, Rule 4 of the CPC to amend the temporary injunction order passed in I.A No. 133/71. After the vacation, the plaintiff filed the present I.A No. 254/73 against the order in which the C.R.P is directed to set aside the order in I.A No. 890/73. As it was refused by the lower court, the petitioner has come forward with this revision petition.
2. The two advocates filed the I.A No. 890/73 in the following terms:—
“The parties agree that this Hon'ble Court may be pleased to modify the order passed in I.A No. 133/71 on the following terms and conditions:—
(1) That the defendant or any constiuent member of it is permitted to complete the construction of the building, erect machinery, to do other ancillary acts on the said land, plot No. 76, Survey No. 123.B, admeasuring 400 square yards at Balanagar (Sanathnagar, Hyderabad).
(2) On declaration being granted by the Court the plaintiff will be entitled for adequate compensation only and not for possession of the said land.
(3) That the compensation can be recovered from the party who will be found liable to pay ultimately.”
3. This was signed only by the Advocates of the petitioner and the respondent, and the petitioner and the respondent did not sign on it. As per the above terms, the lower court changed the temporary injunction order passed on 19-4-1973 in the I.A No. 133/71, which was a simple one, namely, that a temporary injunction was granted in respect of the relief prayed for by the petitioner in the suit.
4. The petitioner filed the application I.A 254/73 alleging that he did not instruct or authorise his counsel to the agreed order, as mentioned in I.A No. 890/73. It was done without his consent, secretly and behind his back. He did not sign on the compromise petition. The entire compromise proceedings are illegal, highly irregular and against all principles of natural justice and that he was neither called upon nor was asked whether he agreed to the compromise terms. The lower court dismissed the application of the petitioner on the ground that the petitioner has got a remedy to prefer an appeal against the order passed in I.A No. 890/73 but, without exercising that option, he has chosen the remedy by filing a petition under Section 151 of the CPC which can be exercised only to undo the effect of fraud practised on Court, and according to the allegation made by the petitioner, the fraud that was practised was on the petitioner by his counsel for which there are different remedies open to the petitioner. Following the decision of the Oudh High Court in Paran Kuer v. Manni Lal, AIR 1929 Oudh 211, wherein it was held that where a consent decree is passed by a court on confession of judgment by a party's pleader, it must be assumed that the court must have satisfied itself before passing of the consent decree that the pleader confessing judgment had authority on behalf of the party to act in the manner in which he did and that the person, challenging the authority, must prove to the contrary by positive evidence, the lower court came to the conclusion that the order dated 10-5-73 in I.A No. 890/73 is based on proceedings properly and regularly held and that the court has satisfied itself, before passing of the consent order, that the counsel for the petitioner-plaintiff had authority on his client's behalf to act in the manner in which he did. Accordingly, the lower court dismissed the application of the petitioner. It is this dismissal order which is assailed in this revision petition.
5. By a reading of the terms of the application in I.A No. 890/73, signed only by the counsel of the respective parties without obtaining the signatures of the parties, which was filed for obtaining the consent order, it appears clear that it was not filed merely for obtaining a change in the terms of the temporary injunction order only. As a matter of fact the temporary injunction order was obtained in order to prevent the defendant from making further construction on the suit land during the pendency of the suit. By means of the consent order that temporary injunction order is completely vacated and the defendant is allowed to proceed with further construction of the buildings and erection of the machinery. Besides that the right of the petitioner to get possession of the land was given up. In the suit, the petitioner claimed title to the suit land and also for a mandatory injunction for removal of the construction already made on it by the respondent. By reason of the terms of the compromise filed in I.A No. 890/73, the petitioner gave up his right to the land and agreed to take compensation only in lieu of it, in case he is found to be entitled to the land in the suit. By means of the compromise, ownership of the land was conferred on the defendant and he was allowed to continue the construction and complete it and also to erect the machinery and to do other ancillary acts. Therefore, in substance, that is a compromise with regard to the subject-matter of the suit itself to some extent, though the right to receive compensation was reserved to the petitioner, in case his title to the land is to be found.
6. Therefore, when the application I.A 890/73 was filed, the lower court should have proceeded to record the compromise in the manner provided under Order 23, Rule 3 of the CPC. A compromise decree under Order 23, Rule 3 can be passed only after there has been an order recording the compromise. The recording of compromise is not purely a formal matter, but a question of substance. Under Order 23, Rule 3 the court has to find out if there is any agreement between the parties for compromise. The terms of settlement must be examined with care and caution and see that the parties understood the terms of the compromise and there is no fraud or misrepresentation. A court making a decree by consent would be performing a judicial and not a ministerial act.
7. In this connection, it is necessary to consider the authority of an Advocate to enter into compromise. It is provided under Rule 19 of the Civil Rules of Practice that “every Vakalat shall unless otherwise ordered by the Court, be in form No. 12 and shall authorise the pleader to appear in all execution and miscellaneous proceedings in the suit or matter subsequent to the final decree or order passed therein.”
8. Form No. 12 is as follows:—
“I do hereby appoint and retain…… to appear for me in the above…………… and to conduct and prosecute or defend the same and all proceedings that may be taken in respect of any application for execution of any decree or order passed therein. I empower my vakil to appear in all miscellaneous proceedings in the above suit or matter till all decrees or orders are fully satisfied or adjusted and to obtain the return of documents and draw any moneys that might be payable to me in the said suit or matter and I do further empower my vakil to accept on my behalf, service of notice of all or any appeals or petitions filed in any court of Appeal. Reference or Revision with regard to the said suit or matter before the disposal of the same in this Honourable Court.”
“‘Accepted’ The address for service of the said pleader is………”
9. On a perusal of the terms given in the above form, it is immediately clear that it does not authorise to enter into a compromise with regard to the subject-matter of the litigation for conducting which vakalat is to be given. That is why, normally, in all compromise petitions, besides their counsel, the parties also would sign and the parties also would appear in Court and express their consent to the compromise to the Court directly. It is then, the court records the compromise as provided under Order 23, Rule 3 of the CPC. If, for any reason, the party cannot appear before the Court or sign in the compromise petition, the Court can give permission to the counsel to admit the compromise in Court on behalf of the party, by filing a separate vakalat (which is usually called a special vakalat) from his party, sepecifically authorising him either to enter into compromise or admit compromise on his behalf in Court or both. Then, after the court is satisfied about the authorisation given to the counsel under the special Vakalat, when the compromise petition is signed by the counsel mentioning the special power given to him, it records the compromise. That is what is meant by ‘otherwise ordered by the Court’ as mentioned in Rule 19 of the Civil Rules of Practice, mentioned above. It is true that in the vakalat originally given by the petitioner to his counsel, there is a term authorising him to enter into compromise. But, that is not enough. Special vakalat is necessary and there should be an order of the Court with regard to it empowering the counsel to act as per the special vakalat.
10. Admittedly, no special vakalat from the petitioner was filed by his counsel at the time I.A No. 890/73 was filed. The counsel for the petitioner merely signed in the application as filing the petition. There is nothing on it by way of any endorsement made by him to indicate that he signed it on behalf of his client in exercise of the authority given to him to compound.
11. Therefore, if there be anything more or not by way of fraud, the consent order was passed by the lower court in I.A No. 890/73, without following the proper procedure and without the compromise petition being signed by the petitioner or there being any special vakalat from the petitioner authorising the counsel to enter into the compromise on his behalf.
12. If that order was passed irregularly by the lower court, by some mistake, without following the proper procedure, certainly it can be set aside by it, exercising the inherent powers given under Section 151 of the CPC for the ends of justice and to prevent abuse of the process of the Court.
13. Accordingly, the Civil Revision Petition is allowed with costs and the consent order passed by the Lower Court in I.A No. 890/73 is set aside.
14. Revision allowed.
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