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Sakamma v. Divisional Controller

Karnataka High Court

Apr 15, 1993

Judgment

Subsequent
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Factual and Procedural Background

On 10-1-1989 a KSRTC bus (No. MEF. 1572) proceeding from Mangalore to Kundapur struck the Pangala bridge in Udupi taluk and fell into the river. One person, Raju, was killed and Smt. Sakamma was injured. The mother of the deceased filed MVC. 1145 of 1989 before the Accidents Claims Tribunal, Mangalore, claiming Rs. 3,00,000 for death. Smt. Sakamma filed MVC. 1146 of 1989 claiming Rs. 1,00,000 for injuries. Both petitions were filed after six months from the date of the accident, and applications for condonation of delay were made.

Both matters were taken to a Janatha Nyayalaya (Lok Adalath) in Mangalore where they were settled by compromise. In MVC. 1145/89 the compromise stated the claimant would be entitled to Rs. 29,000 in full satisfaction; the Tribunal passed an award on 18-8-1990 recording the compromise and awarding Rs. 29,000. In MVC. 1146/89 the compromise stated entitlement to Rs. 10,500 and the Tribunal passed an award on 18-8-1990 awarding Rs. 10,500 in full settlement including costs and interest.

The claimants appealed: M.F.A. 951/92 (challenging MVC. 1145/89 award) and M.F.A. 964/92 (challenging MVC. 1146/89 award). The appeals challenge the validity of the awards passed by the Tribunal on the basis of the compromise petitions.

Legal Issues Presented

Whether compromises recorded and presented to the Tribunal from a Lok Adalat, signed by counsel but not signed by the parties personally, are valid and may form the basis of an award after the 1976 amendment to Order 23, Rule 3 of the Code of Civil Procedure (C.P.C.).
Whether the appellants' counsel had authority to enter into the compromise on behalf of the appellants, and if not, whether the awards based on those compromises are invalid.
Whether a Claims Tribunal under Section 168 of the Motor Vehicles Act can pass an award on the basis of a compromise without independently applying its mind to what would be a "just compensation" in the case.

Arguments of the Parties

Appellants' Arguments

The appellants contended their Advocate had not been authorised to enter into the compromise.
Relying on Order 23 Rule 3 C.P.C. as amended in 1976, they argued the compromise must be "in writing and signed by the parties" and, as the Compromise Petitions were not signed by the appellants personally, the Tribunal could not have passed awards on the basis of those petitions.
Under Chapters 10 to 12 of the Motor Vehicles Act and Section 168 specifically, the Tribunal was required to hold an enquiry and award compensation it considered "just"; therefore, the Tribunal could not simply pass awards based on compromises without applying its mind to the justness of the agreed amounts.

Respondents' Arguments

This information was not available in the provided opinion.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jamila Bai v. Shankar Lal, 1975 2 SCC 609	Held that an Advocate's authority to enter into a compromise is subject to bona fides; prudent for counsel to consult client when time permits; not laid down that failure to consult makes the compromise illegal or not binding.	Cited to show that an advocate can bind a client by compromise provided the exercise of authority is bona fide and that lack of personal consultation does not automatically invalidate the compromise.
Byram Pestonji Gariwala v. Union Bank of India, 1992 1 SCC 31	Interpreted the phrase "in writing and signed by the parties" in Order 23 Rule 3 C.P.C. (as amended 1976) to include duly authorised representatives and counsel; a compromise in writing signed by counsel is valid and binding even if not signed by the parties in person.	Relied upon as controlling authority to hold that the compromises signed by counsel (but not by the parties) are valid and executable; supports the proposition that counsel/vakalatnama authorization suffices.
Deputy General Manager v. Kamappa, ILR 1993 KAR 584	Recognized as following the Supreme Court's decision in Byram Pestonji Gariwala.	Noted as a decision of this Court following the cited Supreme Court authority, supporting the view that counsel-signed compromises are valid.
Shekapur Transport Company v. N.I.T. Insurance Company, AIR 1971 SC 1625	On a comparable statutory provision, observed that pecuniary loss must often be estimated, some guesswork is inevitable; compensation should not be punitive or a windfall; if both parties accept an amount as proper, it is likely to be just; Tribunal must be alert to fraud/collusion but otherwise can accept agreed sums.	Applied to show that where parties accept a compromise amount, the Tribunal can act on such compromise unless there is material indicating fraud or collusion; supports acceptance of agreed sums as "just" where appropriate.

Court's Reasoning and Analysis

The Court examined the appellants' contentions in light of the record and relevant authorities:

Authority to Compromise: The lower-court records contained vakalaths (powers of attorney) given to the appellants' Advocate (Sri K.T. Shetty) which included an express clause authorising the Advocate to compromise the "matter." On that factual basis the Court rejected the appellants' contention that their Advocate was not authorised to enter into the compromise.
Effect of Order 23 Rule 3 C.P.C. (1976 amendment): The Court analysed the legislative amendment and relevant case law. It discussed Jamila Bai (1975) and relied heavily on the later Supreme Court decision in Byram Pestonji Gariwala (1992), which held that the words "in writing and signed by the parties" include duly authorised representatives and counsel. The Court treated that precedent as dispositive: a compromise in writing signed by counsel is valid and binding even if not signed personally by the parties.
Application to the Present Cases: Given the vakalaths authorising compromise and the binding precedents, the Court concluded that the absence of the parties' personal signatures on the compromise petitions did not render the awards illegal.
Section 168 of the Motor Vehicles Act and "just compensation": The Court acknowledged that Section 168 requires the Tribunal to make an award of compensation which appears to it to be just. Referring to Shekapur Transport Co. (1971), the Court noted that determination of pecuniary loss often involves estimates and that a compromise accepted by both parties will ordinarily be treated as just unless there is evident fraud or collusion or other compelling material on the face of the record.
Lok Adalat Context and Application of Mind: The Court observed that the compromises were arrived at in a Janatha Nyayalaya (Lok Adalat), where conciliators with expertise in motor accident norms assist parties. Given that setting, the Court found that the risk of fraud or collusion is generally low and that the Tribunal may safely rely on such compromises. The Tribunal's short orders recorded that the compromise was read/recorded and the award passed; in the absence of any material on record demonstrating non-application of mind or that the agreed amounts were not just, the Court was prepared to presume the Tribunal was satisfied.
Additional Practical Considerations: The Court noted practical benefits—immediate receipt of compensation and avoidance of lengthy litigation—and observed that claimants sometimes accept lesser sums for these reasons. Both claims were time-barred and the compromises also operated to remove that bar.

Holding and Implications

DISMISSED. The two appeals (M.F.A. 951/92 and M.F.A. 964/92) fail and are dismissed.

Implications:

The direct effect is that the Awards passed by the Claims Tribunal in MVC. 1145/89 (Rs. 29,000) and MVC. 1146/89 (Rs. 10,500) are upheld and remain enforceable.
The Court applied existing Supreme Court authority to confirm that compromises signed by counsel pursuant to a valid vakalatnama are valid under Order 23 Rule 3 C.P.C. (as amended in 1976); the decision follows established precedent rather than creating a new legal principle.
No broader or novel precedent was announced by this opinion; the Court rested its conclusion on prior authorities and the specific factual record (vakalaths and Lok Adalat settlements) showing no material indicating fraud, collusion, or non-application of mind by the Tribunal.

Show all summary ...

Venkataraman, J.:— On 10-1-1989 a K.S.R.T.C bus bearing No. MEF. 1572 which was proceeding from Mangalore to Kundapur dashed against the bridge known as Pangala bridge in Udupi taluk and thereafter the bus fell into the river. In that accident one Raju was killed and Smt. Sakamma sustained injuries. The mother of deceased Raju filed a petition in MVC. 1145 of 1989 before the Accidents Claims Tribunal, Mangalore, claiming compensation of Rs. 3 lakhs for the death of her son. Smt. Sakamma filed a claim petition in MVC. 1146 of 1989 claiming a compensation of Rs. 1,00,000/- for the injuries sustained by her. As both the Claim Petitions had been filed beyond 6 months from the date of the accident, an application for condonation of delay had been filed by the respective claimants.

2. In the Janatha Nyayalaya (Lok Adalath) held in Mangalore both the above cases were settled and Compromise Petitions signed by the Advocates of the respective parties were filed before the Tribunal. In MVC. 1145/89 the Compromise Petition mentioned that the claimant shall be entitled to a total sum of Rs. 29,000/- in full satisfaction of the claim and the Tribunal was requested to pass the Award for that amount. In MVC. 1146/89 the Compromise Petition stated that the petitioner was entitled to a sum of Rs. 10,500/- in full settlement of the claim and a request was made to pass an award for that amount.

3. In MVC 1145/89 the Tribunal has passed the following order on 18.8.1990:

“Power for respondent filed. I.A.I allowed by consent. Compromise read and recorded. Award passed for Rs. 29.,000/- in full settlement of claim of the petitioner.”

4. In MVC. 1146/89 the Tribunal has passed the following order on 18.8.1990:

“Case taken up to-day. Advocates present. Compromise admitted. Award passed in terms of the compromise. Respondent shall pay the petitioner Rs. 10,500/- in full settlement of the claim including costs and interest.”

5. M.F.A 951/92 is filed by the claimant in MVC. 1145/89 while M.F.A 964/92 is filed by the claimant in MVC. 1146/89. Both the Appeals are filed challenging the validity of the awards passed by the Tribunal.

6. The main contention of the learned Counsel for the appellants is that the appellants had not authorised their Advocate to enter into the compromise and that as the Compromise Petitions are not signed by the appellants as required by Order 23 Rule 3 C.P.C the Tribunal could not have passed Awards on the basis of the Compromise Petitions.

7. The Vakalaths given by the appellants to their Advocate Sri K.T Shetty are available in the lower-Court records. It is seen that there is a clear clause in the Vakalath authorising the Advocate to compromise the ‘matter’. As such the contention that appellants had not authorised their Advocate to enter into a compromise cannot be accepted.

8. The learned Counsel Sri Vishwanatha Shetty, strenuously contended that by the 1976 Amendment to the C.P.C a provision has been introduced in Order 23 Rule 3 C.P.C stipulating that the compromise should be in writing and signed by the parties and that as in these Cases the Compromise Petitions are not signed by the appellants the Tribunal could not have acted on them. The learned Counsel relied upon the Decision in Jamila Bai v. Shankar Lal . 1975 2 SCC 609, in support of his contention. He especially drew our attention to Para 22 in that Judgment.

9. In the above Decision the Supreme Court has held the authority of an Advocate to enter into a compromise subject to the condition that the exercise of that authority is bona fide. It is further observed that it is prudent and proper for the Advocate to consult his client and take his consent if there is time and opportunity. It is not laid down therein that if the Advocate does not consult his client, even though there was time and opportunity to do so, the compromise entered into by the Advocate would be either illegal or not binding on the party.

10. The expression ‘in writing and signed by the parties’ appearing in Order 23 Rule 3 C.P.C came up for consideration before the Supreme Court in Byram Pestonji Gariwala v. Union Bank of India . 1992 1 SCC 31, after referring to various authorities on the power of the Counsel to enter into a compromise on behalf of the party including the decision in Jamila Bai's case, the Supreme Court held as under:

“The words ‘in writing and signed by the parties’, inserted in Order 23, Rule 3, C.P.C by the C.P.C (Amendment) Act, 1976 necessarily mean and include duly authorised representative and Counsel. Thus a compromise in writing and signed by counsel representing the parties, but not signed by the parties in person, is valid and binding on the parties and is executable even if the compromise relates to matters concerning the parties, but extending beyond the subject matter of the suit…..”

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Considering the traditionally recognised role of counsel in the common law system, and the evil sought to be remedied by Parliament by the C.P.C (Amendment) Act, 1976, namely, attainment of certainty and expeditious disposal of cases by reducing the terms of compromise to writing signed by the parties, and allowing the compromise decree to comprehend even matters falling outside the subject-matter of the suit, but relating to the parties, the Legislature cannot, in the absence of express words to such effect, be presumed to have disallowed the parties to enter into a compromise by counsel in their cause or by their duly authorised agents. Any such presumption would be inconsistent with the legislative object of attaining quick reduction of arrears in Court by elimination of uncertainties and enlargment of the scope of compromise.

To insist upon the party himself personally signing the agreement or compromise would often cause undue delay, loss and inconvenience, especially in the case of non-resident persons. It has always been universally understood that a party can always act by his duly authorised representative. If a power-of-attorney holder can enter into an agreement or compromise on behalf of his principal, so can counsel possesed of the requisite authorisation by vakalatnama, act on behalf of his client. Not to recognise such capacity is not only to cause much inconvenience and loss to the parties personally, but also to delay the progress of proceedings in Court. If the legislature had intended to make such a fundamental change, even at the risk of delay, inconvenience and needless expenditure, it would have expressly so stated.”

The above Decision of the Supreme Court has been followed by this Court in Deputy General Manager v. Kamappa* . ILR 1993 KAR 584..

11. In view of the above authority it is no longer open to the appellants to contend that because they have not signed the Compromise Petition, the Awards passed by the Tribunal on the basis of those Compromise Petitions are illegal.

12. Sri Vishwanatha Shetty next contended that the provisions of the Motor Vehicles Act, (‘Act’ for short) in Chapters 10 to 12 are all meant to protect the interests of victims of motor vehicles accident; that Section 168 of the Act specifically lays down that the Tribunal should hold an enquiry and to make an Award of compensation which appears to it to be just and that as such the Tribunal cannot pass an award on the basis of a Compromise Petition, without applying its mind to the “just compensation” to be awarded in the Cases.

13. It is no doubt true that Section 168 of the Act enjoins the Claims Tribunal to make an Award determining the amount of compensation which appears to it to be just. Dealing with a similar provision in Section 110-B of Motor Vehicles Act, 1939, the Supreme Court in Shekapur Transport Company v. N.I.T Insurance Company . AIR 1971 SC 1625., has pointed out that the pecuniary loss to the aggrieved party would depend upon the data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture. Some guess work would necessarily be involved in fixing the compensation on the available material, which appears to the Tribunal to be just. The Compensation fixed should not be punitive so far as the parties against whom it is passed is concerned and it should not be a wind-fall for the claimants. The Award should be such that the claimant should not feel that it is ridiculously low and the respondents should not feel that it is enormously high. However, much care and caution is taken by the Tribunal in determining the just compensation, it is likely that it may not satisfy both the parties. If the amount of compensation to be awarded is accepted by both the parties to be proper, then it must necessarily follow that it is just. Thus if both the parties to a Claim Petition enter into a settlement and request the Tribunal to fix the agreed sum as the compensation payable in the case, the Tribunal can act on such a compromise and pass an Award fixing the agreed amount as compensation unless there is inherent material on the face of the record which would indicate that there has been some fraud or collusion. It is open to the Tribunal taking into consideration the facts and circumstances of the case and for valid reasons to hold that the agreed amount is not just and decline to Award the same as compensation and to independently determine the compensation which it considers as just, after necessary enquiry. The receipt of the compensation amount immediately and the avoidance of time consuming and expensive litigation may be factors which weigh with the claimants for accepting an amount lesser than that which may be awarded after a long drawn out litigation. As such the mere fact that the Tribunal after enquiry is likely to award a little more or less than the agreed amount cannot by itself be sufficient to hold that the agreed amount is not the just compensation. In the absence of compelling reasons to indicate that the agreed amount is not just compensation the Tribunal has to accept it and pass the Award. When a Compromise Petition is filed before the Tribunal, specifying the amount to be awarded as compensation, the Tribunal has to only satisfy itself that there is a lawful agreement and that there are no compelling reasons not to treat the agreed amount as just compensation.

14. Sri Vishwanatha Shetty, learned Counsel for the appellants contended that in the two Cases on hand, there is nothing in the order to indicate that the Tribunal applied its mind to find out whether the Award could be passed on the basis of the Compromise Petition and whether the amount which had been agreed was a just compensation. He therefore, contended that the Awards cannot be sustained. Even if the Tribunal has not expressly recorded that it is satisfied that the agreement is lawful and that there are no compelling reasons not to accept it, the fact that it has been so satisfied can be presumed, unless such non-application of mind by the Tribunal is apparent on the face of the record.

15. In the two Cases on hand, the compromise has been arrived at in Janatha Nyayalaya (Lok Adalat). In such Lok Adalats some experts having sufficient knowledge of the norms followed in awarding compensation in Motor Accidents Claim Cases act as Conciliators and it is with their assistance the amount of compensation to be awarded will be agreed to by the parties. The question of such compromise being tainted with fraud or collusion does not generally arise. The Tribunal can safely rely upon such compromise in passing the Award. In these two Cases the Tribunal after noting that the compromise had been recorded, has proceeded to pass the Award. The learned Counsel for the appellants in the two Cases has not been able to point out any material on record which patently indicates that the agreed amount is not just or that the Tribunal has not applied its mind to the facts of the Cases before accepting the compromise and passing the Award. It must be remembered that both the claims had been barred by time and applications filed by the appellants for condonation of delay were pending before the Tribunal. That bar has also been got over by the compromise. We do not find any compelling reasons to interfere with the Award passed on the basis of the Compromise Petition filed in these two Cases.

16. For the above reasons these two Appeals fail and the same are dismissed.