JUDGMENT

1. The Application is filed by the defendants seeking to record the Joint Memo of Compromise dated 14.10.2007

2. The applicants/defendants have contended in the Application as follows:

The second applicant is the President of the first applicant-Charitable Trust. Settlement talks were initiated by Mr. Rajendran, Secretary of the first applicant-Trust with the plaintiff. It was agreed that a total sum of Rs. 15,00,000/- shall be given to the plaintiff in full and complete settlement of all his claims. A due resolution was passed by the Board of Trustees accepting the terms of compromise. The plaintiff attended the meeting with his son Mr. L. Balakumar, an Advocate by profession. The Joint Memo of compromise containing the agreed terms was prepared in Triplicate. At the meeting, the typed copy of the Joint Memo of Compromise was read over by way of information to all present by the Secretary-Mr. Rajendran. After Mr. Balakumar scrutinized the Joint Memo of Compromise, he explained the contents to his father. The second applicant, on behalf of the Trust and the respondents, signed in all the three copies of the written Memo of Compromise in the presence of all persons present. Mr. D.S Shanmugam, Vice President and M. Sivagnanam of Salem signed the three copies of the Joint Memo of Compromise as witnesses. A cheque for Rs. 3,12,500/- drawn in favour of the respondent by the first applicant was given to Shri R.M Veerappan, who, in turn, gave the cheque to the respondent through his son Mr. L. Balakumar. The entire proceedings were photographed by Vel Photo Services. The respondent encashed the cheque for Rs. 3,12,500/- on 30.10.2007 The Suit claim stands adjusted wholly by the lawful agreement of Joint Memo of Compromise in writing and signed by the parties voluntarily in full and complete settlement of all claims made in the Plaint. The respondent evaded to co-operate the applicants to file the Joint Memo of Compromise before the Court. Thereafter, the respondent addressed a letter to the Secretary of the first applicant and sent it along with a cheque for Rs. 3,12,500/- in favour of the first applicant. It has been contended in the letter that some of the terms originally agreed orally does not form part of the compromise and therefore, the respondent was not agreeable to the terms of compromise. There was no oral agreement except the terms clearly set out in the Joint Memo of Compromise. Therefore, the applicants seek for recording the Joint Memo of Compromise signed by both the parties.

3. The respondent, in his counter has stated as follows:

No one can be compelled to sign a Compromise Memo or forced to accept certain terms contained therein contrary to his wishes. Mr. V. Rajendran, the General Secretary of the first applicant Sangam contacted the respondent and requested him to settle the issue amicably. He assured the respondent that he would fulfil all his demands. The demands are enclosed as annexure A to the affidavit filed by the respondent. He informed the respondent that he would take steps to remove Mr. K.S Subbiah from the post of the President of the first applicant-Sangam. There was a meeting at the first applicant-Sangam premises on 14.10.2007 The President and General Secretary of Sangam obtained his signature in the purported Joint Memorandum of Compromise by making misrepresentation of the terms of compromise. The respondent was not permitted to talk and discuss the terms of compromise. The respondent was not well versed in legal matters. The respondent was thrust upon a cheque dated 14.10.2007 for a sum of Rs. 3,12,500/-. The originally agreed upon terms do not form part of the compromise proposal and consequently, the respondent decided to rescind the compromise. The cheque was handed over with a promise that a further sum of Rs. 15,00,000/- shall be paid as cash proceeds agreeing to fulfil fifteen items of demands made by the respondent. The son of the respondent, though a Law Graduate, has never practised as Advocate. He did not have legal acumen and knowledge. A perusal of the compromise would manifest the fraudulent intention of the Applicant. The signature of the respondent was obtained by force without reading and explaining the contents of the compromise to the respondent. The compromise is vitiated by misrepresentation of facts, fraud and undue influence. Unless all the fifteen demands are fulfilled, the above compromise is incomplete and the same cannot be executed. Therefore, the respondent prayed for dismissal of the Application seeking to record the Joint Memorandum of Compromise.

4. Learned counsel appearing for the applicants would contend that the entire money claim was settled as per the Joint Memorandum of Compromise. The compromise was written and signed by both the parties. The respondent has come out with a totally inconsistent stand. The encashment of the cheque given by the applicants to the respondent pursuant to the compromise entered into between the parties was not denied by the respondent. Though the cheque amount was with the respondent for about 2-1/2 months, never had the respondent raised his little finger against the terms of compromise. The photographs filed by the applicants would establish that the respondent signed the Memorandum of Compromise only after the contents thereof were read over to him and that there was no undue influence or misrepresentation as alleged by the respondent. The very fact that his Advocate son guided him during the course of entering into the Joint Memorandum of Compromise would go to show that the respondent was properly guided in the matter of clinching the compromise. It is strange to say that there had been oral terms apart from the terms reduced into writing for the purpose of putting an end to the long drawn out litigation between the parties. Therefore, the learned Counsel appearing for the applicants would submit that the Court will have to record the Joint Memorandum of Compromise rejecting the objections raised by the respondent and decree the Suit in terms of the compromise.

5. Learned counsel appearing for the respondent would contend that the 80 year-old respondent was not permitted to exercise his free will and volition to clinch the compromise deal proposed by the Applicant. Quite unfortunately, the counsel who prosecuted the case for so long a time on behalf of the respondent had not signed in the Compromise Memorandum. A sum of Rs. 15,00,000/- agreed to be paid by the applicants to the respondent was not received by the respondent. The respondent is before the Court beforeever the damage is done, seeking to brush aside the alleged compromise which is vitiated by misrepresentation and undue influence. The entire text of the Joint Memorandum of Compromise is in English. There was no jurat portion found in the Memorandum of Compromise. The persons who had sworn to an affidavit will have to be examined before the Court to test their versions found in the affidavit. The respondent has every right to back out from the alleged compromise deal in which he was not a willing party. It is his further submission that evidence was already recorded in the main Suit for recovery of money. The Court can as well take up the main Suit itself and dispose of the same instead of labouring much on the Application filed on the strength of the alleged memorandum of compromise.

Salient features of Order 23, Rule 3 C.P.C:

6. Order 23, Rule 3 of the Code of Civil Procedure reads as follows:

“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 matter of the agreement, compromise or satisfaction is the same as this subject-matter of the Suit.”

7. The first and foremost thing is that there should be a lawful agreement or compromise between the parties. Secondly, it shall be in writing and signed by the parties. No oral agreement or compromise can be entertained by the Court for recording compromise under the aforesaid provision of law. It is left to the parties to compromise a part of the Suit or the entire claim in the Suit. Thirdly, it will have to be established to the satisfaction of the Court that there exists a written compromise signed by both the parties. Under such circumstances, the Court has been left with no option except to record the compromise clinched by the parties. The function of the Court has been made mandatory under the aforesaid provision of law. The Court has got ample power to decide when a challenge is made to the written compromise entered into between the parties. It has been made clear by the Code of Civil Procedure Amendment Act 101/76 that a compromise which is void or voidable under the Indian Contract Act, 1872 shall not be deemed to be lawful within the meaning of the above provision.

The authorities ruling the field:

8. A Bench of this Court in Xs Financial Services Ltd. v. N. Devendran, AIR 2003 Mad. 369, has held as follows:

“Courts are bound to give effect to the real meaning of the terms of the compromise as the terms and conditions expressed therein reflect the intentions of the parties. The intention of the parties is to be judged by various clauses in the agreement. When the parties have specifically expressed their intention while settling the dispute to place the Memorandum of Compromise into Court in order to get a compromise decree, it would be only proper to hold that the parties have understood that the compromise memo could be filed before the Court for passing a decree in terms of the compromise. Therefore, it is beyond acceptance that respondents 1 and 2 though signed the compromise memo, did not agree for the same being filed into the Court.”

9. The intention of the parties to the compromise can be gathered from the terms and conditions expressed therein. If the Court is satisfied that the parties have intended to settle amicably a part of the claim or the whole claim made in the plaint as reflected in the Memorandum of Compromise, there is no option for the Court but to hold that the parties have entered into the compromise for the purpose of filing it before the Court for passing a decree in terms thereof.

10. It is useful to refer to the decision rendered in Kailash Narain v. Mahila Manbhota, AIR 1996 MP 194, by the Gwalior Bench. It has been held therein as follows:

“In such circumstances, the Court is required to see whether the compromise in question was lawful and was not void or voidable under the Indian Contract Act. If the compromise itself is fraudulent, then it shall be deemed to be void within the meaning of the explanation to the proviso of Rule 3, and as such, not lawful. But in the instant case, as discussed above, as no circumstances had appeared nor the requisite particulars, were given, of any fraud, the bare allegation of the plaintiff in view of the deed of compromise, was rightly rejected. Rule 3 of Order 23 of C.P.C Does not make it obligatory on the Court to hold enquiry and if the Court is satisfied about the existence of lawful compromise, which is signed by both the parties, the Court can proceed with and act upon such compromise.”

11. The lawful nature of the agreement will have to be decided on the touchstone of the provisions under the Indian Contract Act relating to void or voidable nature of agreements. It is left to the party who challenges the Memorandum of Compromise to satisfy the Court that it was a fraudulent agreement. But, mere allegation not substantiated will not establish that there was a fraudulent agreement between the parties. No roving enquiry is required under Order 23, Rule 3 of the Code of Civil Procedure. Once it is established that the agreement is a lawful one and the same was signed by both the parties out of their own volition, the Court is obligated to record such a compromise.

12. The Supreme Court in Silver S. Enterprises v. Devki Nandan, AIR 1970 SC 669, has held as follows:

“Once a dispute is validly settled out of Court, it is open to a party to a litigation to move the Court to pass a decree in accordance with the compromise. Rule 3 of Order 23 of Code of Civil Procedure provides that where it is proved to the satisfaction of the Court that a Suit (which expression includes an Appeal) has been settled wholly or in part by any lawful agreement, 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 that Suit. This is a mandatory provision.”

13. The provision under Order 23, Rule 3 of the Code of Civil Procedure mandates the Court to pass a decree in terms of the compromise once it is satisfied that there has been a valid settlement of the dispute partly or wholly out of Court. The mandatory nature of the aforesaid provision has been underscored in the aforesaid ratio laid down by the Supreme Court.

14. In K. Venkataseshiah v. Kanduru Ramasubbamma, 1991 (3) SCC 338, it has been held as follows:

“… Relying upon several authorities of different High Courts and one of the Privy Council referred to in the decision, the High Court held that once the Court was satisfied that there was a compromise it was for the Court to record the same and no option lay before the Court to act otherwise.

9. We are in accord with the principle indicated in the said decision and are of the view that as the compromise Petition is genuine and lawful the same has to be acted upon. We direct that the compromise Petition shall be accepted and in terms thereof the Suit shall be disposed of and the terms of the compromise shall form part of the order to be drawn up in this Court for disposing of the Special Leave Petition.”

15. The Supreme Court in Afsar Sheikh v. Soleman Bibi, 1976 (2) SCC 142, has held as follows:

“While it is true that ‘undue influence’, ‘fraud’, ‘misrepresentation’ are cognate vices and may, in part, overlap in some cases, they are in law distinct categories, and are, in view of Order 6, Rule 4, read with Order 6, Rule 2 of the Code of Civil Procedure, required to be separately pleaded, with specificity, particularity and precision.”

16. Whenever a party to the litigation sets up a legal plea of undue influence, fraud, misrepresentation, coercion, such serious allegations should be made precisely and specifically sans any ambiguity. Simple allegation of such vices without the required details will definitely doubt the very stand of the party litigant. Firstly, the particulars regarding such serious vices in the pleadings will unfold an opportunity to the opponent litigant to come out with his version with regard to such allegation. Secondly, such bald allegation sans particulars will pose a challenge to the very veracity of such allegations.

17. Quite unfortunately, in the instant case, the respondent has simply made certain bald allegations that there was undue influence, misrepresentation and duress without substantial particulars required to be stated precisely in the counter. The opponent litigant is entitled to know on what basis such wild allegations are made as against him so that he would come out with a counter version to blast such allegations. Further, such an allegation was not substantiated by the respondent.

18. The fate of the memorandum of compromise sans the signature of the counsel on record:

Order 3, Rule 1 of the Code of Civil Procedure reads as follows:

“All the acts required to be done before the Court of law by a litigant can be performed by the party litigant himself or by his recognised agent or by a pleader appearing on his behalf.”

Either the party in person himself or the Pleader appointed by him can very well enter into the compromise. Of course, the Pleader appearing for the party litigant shall enter into a compromise only when such instruction has been given by the party litigant. Beyond the scope of the instruction given by the party litigant and against the wish of the party litigant, a Pleader is not supposed to act on behalf of him. But, there is no bar for the party litigant to clinch a compromise deal independently of the advice of the counsel engaged by him to appear and prosecute or defend on his behalf a lis.

19. The learned counsel appearing for the respondent cited the decision in Jamilabai v. Shankarlal, AIR 1975 SC 2202, wherein it has been held that a Junior, who was not even enrolled as an Advocate, cannot perform an adventurist act exposing himself to great risk of reporting a compromise without even consulting his Senior Advocate on record on the plea that the party was not available for getting instructions. Firstly, it is found that in the said case, the counsel on record had not reported compromise before the Court. Secondly, the Junior, who reported the compromise to the Court, did not consult his Senior beforeever reporting compromise in the Court. But, in the instant case, the party litigant, who is competent to enter into compromise with the opponent party, has entered into compromise. Therefore, the question of associating the counsel on record when the party litigant chose to avoid his association does not arise in the matter of clinching a compromise.

20. In Byram Pestonji Gariwala v. Union Bank of India, 1992 (1) SCC 31: AIR 1991 SC 2234, it has been held that a compromise in writing signed by a counsel representing a party to the suit but not signed by the party to the suit is very much valid and binding on the parties and is executable. The legal right accrued to the counsel on record to clinch a compromise on behalf of his party on instructions as adumbrated under Order 23, Rule 3 of the Code of Civil Procedure has been underlined in the aforesaid judgment. The above two authorities cited by the learned counsel appearing for the respondent have no bearing on the case on hand. It is held that the respondent need not associate his counsel in the matter of clinching a compromise deal with the applicants. If the Court is satisfied that the respondent, having understood the terms of the compromise, affixed his signature voluntarily, such a compromise can be definitely acted upon by the Court invoking the provision under Order 23, Rule 3 of the Code of Civil Procedure for the purpose of recording compromise and passing a consent decree.

Is the compromise vitiated by fraud, misrepresentation and undue influence ?

21. The applicants have produced the minutes of the meeting of the Trustees, the attendance register maintained by the first applicant and the minutes of the Executive Committee Meeting to establish the participation of the respondent in the presence of Mr. R.M Veerappan, the former Minister of the State, the attendance of the special invitees to the compromise deal and the resolution passed to accept the compromise formula mooted and accepted by both the parties. The photographs taken at the time of signing the Joint Memorandum of Compromise loudly speak to the exchange of pleasantries between the parties before the Joint Memorandum of Compromise was recorded, the reading of terms of Joint Memorandum of Compromise by the General Secretary to the respondent herein in the presence of the son of the respondent, who is an Advocate by profession and virtual signing of the Joint Memorandum of Compromise by the respondent in the presence of the aforesaid former Minister and the office bearers of the first applicant-Sangam and the special invitees, handing over of the cheque by the former Minister to the son of the respondent, receipt of such cheque by himself and presentation of the shawl to the respondent by the second applicant. The above photographs, which were not seriously disputed by the respondent, would clinchingly establish that the Joint Memorandum of Compromise was signed by him out of his free will and volition assisted by his Advocate son in a cordial atmosphere.

22. The cheque issued by the first applicant on 14.10.2007 was encashed by the respondent as on 30.10.2007 as found from the account status of the first applicant produced on their side. Only after two and half months i.e, on 25.1.2008, the respondent chose to send a cheque for a sum of Rs. 3,12,500/- contending that he was not agreeable to the terms of compromise dated 14.10.2007 since some of the terms originally agreed orally do not form part of the compromise.

23. As rightly pointed out by the learned counsel appearing for the applicants, the respondent has not disputed the fact that he entered into a compromise on 14.10.2007 with the applicants, but, his plea was that he was not agreeable for such terms of compromise as some of the terms orally agreed did not form part of the compromise. It is pertinent to note at this juncture that the respondent never raised the plea as on 25.1.2008 about 2-1/2 months from the date of clinching the compromise with the applicants that there was a fraud committed, misrepresentation made and undue influence exerted by the applicants in clinching the compromise deal on 14.10.2007

24. A very feeble submission was made on the side of the respondent that the respondent was not even permitted to consult his lawyer, who all along prosecuted the Suit for recovery of money from the applicants. Firstly, the respondent would not have chosen to encash the cheque given by the applicants in the aftermath of the compromise deal clinched by the parties if at all there was any fraud perpetrated, misrepresentation made and undue influence exerted by the applicants. Secondly, he had sufficient time to consult his lawyer immediately after he signed the Joint Memorandum of Compromise dated 14.10.2007 No explanation was offered by him as to why he had not consulted his lawyer after he went away armed with the cheque given by the applicants. Thirdly, the respondent would have definitely referred to the perpetration of fraud and exertion of undue influence and misrepresentation in the first communication dated 25.1.2008 emanated from him. Fourthly, it is found that the cheque which was given by the applicants was encashed and the respondent sent a fresh cheque to the applicants on 25.1.2008 Even in the counter filed first in point of time by the respondent, he has not stated that there was fraud committed and undue influence exerted by the applicants. Only the misrepresentation alleged to have been made by the applicants was projected in the counter. The respondent has chosen to file additional affidavit wherein he comes out with some unbelievable versions which are nothing but the figment of his imagination. Therefore, the Court is not inclined to accept the cock and bull story of the respondent against the telling materials available on the side of the applicants that the compromise was vitiated by fraud, misrepresentation and undue influence.

25. The Joint Memorandum of Ccompromise would read that the respondent had already received Rs. 5,66,500/- from the first applicant. His entitlement to receive the deposit of Rs. 6,21,000/- including interest available in the Nationalised Bank to the credit of the Suit has been referred to therein. The respondent also received a cheque for Rs. 3,12,500/- from the first applicant on 14.10.2007 and encashed the same on 30.10.2007 It is very much important to refer to sub-clauses (iv), (v) and (vi) of clause 4 of the Joint Memorandum of compromise which reads as follows:

“(iv) The plaintiff hereby assures that he has no further claims against the defendants and that there are no pending litigations or any outstanding in any dispute in any Court involving the defendants.

(v) It is also agreed that the defendants have also no claims against the plaintiff.

(vi) Both parties agree that a decree may be passed in terms of this memo of compromise and the Suit may be disposed of.”

26. The above terms and conditions found in the Joint Memorandum of Compromise would clearly establish that the respondent agreed not to make any further claim against the applicants beyond the scope of the terms of the compromise and that both of them agreed to have a decree passed by the Court in terms of the Joint Memorandum of Compromise. Firstly, the nature of terms alleged to have been orally agreed did not find a place in the letter dated 25.1.2008 sent by the respondent to the applicants. Secondly, the respondent cannot travel beyond the scope of the terms and conditions incorporated in the written Joint Memorandum of Compromise to show that there were also certain oral terms to be performed by the applicants, more especially when he had assertively stated in the Joint Memorandum of Compromise dated 14.10.2007 that he had no further claim as against the applicants except the claims referred to in the said Compromise Memo.

27. Affidavits of one of the witnesses to the Compromise Memorandum and the other special invitees to the meeting for clinching the compromise with the respondent would go to establish that there was really a deliberation which preceded the execution of the Joint Memorandum of Compromise and the respondent, having thoroughly understood the terms and conditions of the Joint Memorandum of Compromise, voluntarily and willingly affixed his signature and received the cheque towards the balance amount payable by the applicants, with respect to the claim the respondent has made against them, in the very presence of his son who is none other than an Advocate by profession.

28. It is submitted that the Advocate son of the respondent is not a legal luminary inasmuch as he had no practice in the Court of law. Firstly, it is found that the presence of the said Advocate son of the respondent was not disputed by the respondent. The photograph would show that he actively participated in the process of compromise and having read over the terms of the compromise, passed on the same to his father, the respondent herein. No legal acumen is required to understand the simple terms and conditions adumbrated in the Joint Memorandum of Compromise. Secondly, if the respondent had felt that he had been defrauded, he would have definitely placed the terms of the compromise, a copy of which was admittedly with him, to the scrutiny of his lawyer and protested the terms and conditions of the same at the earliest point of time. He need not have waited for 2-1/2 months to come out with his own imaginative version about the compromise deal.

29. Lastly, it is found that it is not a litigation faced by a private individual. The lis laid by the respondent is countered by a Trust and its office bearers and therefore, there is no chance for a Trust to clinch an underhand deal fraudulently with a person who has not voluntarily consented to the terms of the compromise.

30. In view of the above facts and circumstances, the Court finds that the applicants have established to the satisfaction of the Court that the Suit laid by the respondent was wholly adjusted by the lawful Joint Memorandum of Compromise entered into between the parties. The Court has no other option except to record the same. Therefore, the Joint Memorandum of Compromise dated 14.10.2007, though objected to by the respondent, stands recorded. Consequently, the Application stands allowed. Necessary orders passing a decree in terms of the compromise will be passed in the main Suit.