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Case Number

Appeal No. 724 of 1951

Attorney(S)

For the Appellant: D. Narasaraju, Advocate General, P. Subba Rao, B.V. Subrahmanyam, Advocates.
For the Respondent: K.V. Rangacharim, M.V.V.K. Rangachari, Advocates.

Judges

Chandra Reddy
Srinivasachari, JJ.

Acts

Indian Registration Act (III of 1877)

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Smart Summary

Judgement Summary — CHANDRA REDDY, J.

Factual and Procedural Background

The plaintiff appealed from a decree of the Subordinate Judge, Kakinada, which dismissed Original Suit No. 51 of 1948. The original suit sought partition and separate possession of half the share of casurina plantations grown on land belonging to the 1st defendant (the defendant's father) and recovery of Rs. 4,000 for trees allegedly cut and removed by the defendants. The plaint alleged an agreement under which the plaintiff planted and watered casurina for two years at his expense, taxes were to be shared, and on maturity the yield would be equally divided.

While that suit was pending, the defendant (father) died; his widow and son (the present defendant, a minor) were brought on record. The trial court dismissed the suit, holding inter alia that the agreement required registration and was inadmissible and expressing doubt about the genuineness of the contract. On 20-1-1950 the guardian and next friend of the minor executed a promissory note (Ex. A-7) in favour of the plaintiff for Rs. 5,000 as part of an alleged compromise, the stated consideration being that the plaintiff would refrain from appealing to the High Court. The present suit sued on that promissory note for recovery of Rs. 5,070-13-3; the trial court dismissed the suit on multiple grounds, and the plaintiff appealed.

Legal Issues Presented

Whether the original agreement (to plant, nurture and divide the casurina trees) created an interest in immovable property requiring registration and thereby rendered the agreement inadmissible in evidence.
Whether the settlement evidenced by Ex. A-7 (promissory note executed by the guardian and next friend of the minor) was a bona fide compromise binding on the minor, or was voidable/unenforceable for want of the court's leave under Order XXXII, Rule 7, Civil Procedure Code.
Whether a promissory note executed by a guardian who expressly excluded personal liability can support a decree against the minor when the guardian is not made a party to the suit.
Whether the plaintiff could alternatively obtain relief on the basis of the original debt (separate from the promissory note) despite the suit being founded on the promissory note.

Arguments of the Parties

Appellant's Arguments (Plaintiff / Mr. B. V. Subrahmanyam)

The compromise evidenced by Ex. A-7 was entered into in good faith because the parties, on legal advice (P.W.1), entertained doubt about the ultimate result of the litigation and thought it advisable to settle.
Reliance on the evidence of P.W.1 (the defendants' pleader) that he was uncertain about the legal position regarding registration and therefore advised settlement.
The guardian of the minor was justified in executing Ex. A-7 and could bind the minor's estate by that document in view of the circumstances and certain reported decisions.
It was contended that the Full Bench decision in Venugopala Pillai v. Thirunavukkarasu (61 Mad LW 514 : AIR 1949 Mad 148) did not apply because the present case did not affect immovable property and that other decisions such as Natesa v. Tangavelu (ILR 38 Mad 883) and Mammikkutti v. Puzhakkal Edom (ILR 29 Mad 353) were more apposite.
On the point under Order XXXII, Rule 7, Civil Procedure Code, it was contended that that rule does not extend to compromises entered into after the decree was passed; reliance was placed on the Full Bench judgment in Bapayya v. Bhushayya (1950-1 Mad LJ 196 : AIR 1950 Mad 397).
Alternatively, the appellant argued that even if the promissory note could not be the basis of a suit, the plaintiff was entitled to a decree on the basis of the original debt.

Defendants' / Respondents' Arguments and Defences

There was no agreement between the parties as alleged in the plaint; the plaintiff did not raise the casurina plantation on the land; the defendant's father himself grew trees at his own expense.
There was no consideration for the promissory note because there was no enforceable agreement against the defendant's father or the estate, and therefore the promissory note was not binding on the defendants' estate.
The trial court also relied on the contention that a promissory note executed by the guardian excluding personal liability was unenforceable against the minor's estate and that the compromise offended Order XXXII, Rule 7, Civil Procedure Code.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Venugopala Pillai v. Thirunavukkarasu, 61 Mad LW 514 : (AIR 1949 Mad 148) (A)	Applied the doctrine that certain agreements to grow trees and divide the produce create an interest in land and require registration; used as authority that such agreements affect immovable property.	The court held the present case falls within the ruling of this decision and that the agreement in question created an interest in immovable property requiring registration; accordingly the agreement was inadmissible in evidence.
Natesa v. Tangavelu, ILR 38 Mad 883 : (AIR 1914 Mad 362) (B)	Relied upon earlier for distinction: based on the Registration Act's definition including "fruit upon and juice in trees" and concerned leases for enjoyment (toddy, palmyra), where the instrument was not treated as a lease of immovable property.	The court distinguished it: held that ILR 38 Mad 883 (B) was inapplicable because the present case concerned growing trees to derive benefit from growth and thus created an interest in land.
Mammikkutti v. Puzhakkal Edom, ILR 29 Mad 353 (C)	Concerned rights to cut trees already standing; held such rights might be a mere licence not requiring registration.	The court distinguished this precedent: in the present case there were no trees at the time of agreement and the parties agreed to raise and nurture trees, so the precedent did not apply.
Seeni Chettiar v. Santhanathan Chettiar and Co., ILR 20 Mad 58 (D)	Established that an agreement to cut and enjoy trees over a period (affecting future growth) conveyed an interest in land and required registration; agreement held inadmissible when not registered.	The court cited this Full Bench decision as stating the principle succinctly and applied the doctrine to conclude the present agreement affected immovable property and required registration.
Marshal v. Green, (1875) 1 CPD 35 (E)	Principle that purchaser of growing things derives benefit from further growth and nutriment afforded by the land, supporting view such transactions affect land.	The court quoted this passage with approval (as extracted in Seeni Chettiar) to support the conclusion that the agreement to grow trees created an interest in land.
Sriramnlu v. Pundarikashayya, 1950-1 Mad LJ 586 (AIR 1949 FC 218) (F)	Principles concerning guardian/manager of an infant's estate: (1) manager can deal by way of mortgage in case of need/benefit; (2) cannot bind minor by contract and transfer obligations to the estate; (3) in certain cases estate may bear burden if necessary/beneficial. Also that a guardian excluding personal liability cannot support suit against minor.	The court relied on these principles to hold that a promissory note in which the guardian excluded personal liability could not support a decree against the minor where the guardian was not a party, and that the compromise was not a bona fide settlement binding on the minor.
Bapayya v. Bhushayya, 1950-1 Mad LJ 196 : (AIR 1950 Mad 397) (G)	Considered scope of Order XXXII, Rule 7 and whether certain compromises fell within "with reference to the suit"; held compromises outside R.7 when not relating to rights claimed in the suit.	The court considered the Full Bench decision and rejected the appellant's reliance on it as excluding post-decree compromises; instead the court read it as consistent with holding that O.32 R.7 covers agreements relating to matters in dispute, whether entered into before or after decree.
Venkata Krishnayya v. China Kanakayya, 1938-1 Mad LJ 775 : (AIR 1938 Mad 539) (FB) (H)	Dictum that the real distinction is between matters in dispute (within the suit) and matters outside the suit; used to interpret the scope of compromises under O.32 R.7.	The court relied on this reasoning to conclude that Order XXXII, Rule 7 applies to compromises made after decree if they relate to rights and liabilities ascertained by the decree (i.e., matters "with reference to the suit").
Sethurama v. Chotta Raja, AIR 1918 Mad 751 (I)	Authority supporting the proposition that O.32 R.7 may apply to compromises made in execution proceedings where they directly deal with the rights and liabilities under the decree.	The court cited this case among other authorities to support the conclusion that O.32 R.7 applies to compromises after decree when they relate to matters in dispute and to accept the rule protecting minors.

Court's Reasoning and Analysis

The court proceeded through a sequence of legal determinations, each grounded in authority and the text of relevant rules:

Nature of the original agreement: The court examined the terms of the original agreement (set out in Ex. A-3) and concluded that it contemplated planting and nurturing casurina seedlings, deriving benefit from their growth, and ultimately dividing the trees or proceeds. Relying on Seeni Chettiar (ILR 20 Mad 58), Marshal v. Green and the Full Bench decision in Venugopala Pillai, the court applied the principle that an agreement to grow and later divide trees derives benefit from the land and therefore creates an interest in immovable property which requires registration. The court rejected the appellant’s attempt to treat the agreement as merely dividing sale proceeds and distinguished earlier decisions (ILR 38 Mad 883 and ILR 29 Mad 353) as inapposite because they concerned different factual patterns (leases for enjoyment or rights to cut existing trees rather than agreements to grow trees).
Consequence of non-registration: Because the agreement created an interest in immovable property and was not registered, it was inadmissible in evidence and no relief could be granted on its basis. The court held the judgment in the earlier suit (O.S. No. 51 of 1948) dismissing that suit on the ground of non-registration was unassailable.
Validity of the compromise (Ex. A-7) and guardian’s capacity: The court scrutinised Ex. A-7 and found the compromise not to be a bona fide settlement binding on the minor. It also observed Ex. A-7 expressly excluded the guardian's personal liability. Applying the principles from Sriramnlu v. Pundarikashayya (Federal Court), the court held that a guardian who excludes personal liability cannot bind the minor so as to permit a decree against the minor where the guardian is not impleaded. The court stressed that a decree could be obtained against the minor in such circumstances only where the guardian has been made a party and the equities between guardian and minor are adjusted (principle of subrogation), or where the debt relates to necessaries supplied to the infant — none of which arose here.
Order XXXII, Rule 7, C.P.C.: The court analysed O. 32 R. 7, which prevents a guardian or next friend from entering into compromises "with reference to the suit" without leave of the court, and held that the rule applies not only to compromises entered into during the pendency of the suit but also to compromises made after decree if they relate to matters in dispute under the suit (i.e., rights and liabilities ascertained by the decree). The court rejected the appellant’s narrower reading (that the rule applies only to compromises prior to decree) and relied upon authorities (including Bapayya, Venkata Krishnayya, and Sethurama) to construe the provision as protective of minors and applicable where the compromise concerns matters "with reference to the suit."
Alternative plea on original debt: The court considered and rejected the appellant's submission that relief could be granted on the original debt independently of the promissory note. It found the suit to be founded exclusively on the promissory note, that the plaint contained no pleadings asserting a separate claim on the original debt, and that the compromise which created the debt was evidenced only by the promissory note with no interval; hence the plaintiff could not seek relief on any separate original debt.
Conclusion of combined grounds: For these reasons — (i) the underlying agreement required registration and was inadmissible, (ii) the compromise was voidable/unenforceable under O.32 R.7 for want of court sanction, and (iii) the promissory note could not support a decree against the minor because the guardian excluded personal liability and was not impleaded — the court found the trial judge's conclusions unimpeachable.

Holding and Implications

Holding: The appeal is dismissed. The court affirmed the decree of the Subordinate Judge dismissing the plaintiff's suit.

Final Disposition: APPEAL DISMISSED (with costs).

Implications

Direct effect on the parties: The plaintiff's suit on Ex. A-7 (promissory note) for recovery of Rs. 5,070-13-3 is dismissed; the promissory note is unenforceable against the minor under the circumstances described (guardian excluded personal liability and was not a party), and the supposed compromise is voidable for want of court leave under O.32 R.7.
On registration and admissibility: The court reaffirmed that agreements to grow trees and to derive future benefit from land create an interest in immovable property and therefore require registration; failure to register renders such instruments inadmissible in evidence for the purposes of obtaining relief.
On guardian's authority: A guardian who excludes personal liability cannot bind the minor's estate so as to enable a decree against the minor without the guardian being impleaded and the equities being adjusted; the doctrine of subrogation and the limited circumstances (necessity or benefit to the estate) in which a guardian may bind the estate were applied.
On Order XXXII, Rule 7, C.P.C.: The court construed the rule broadly to protect minors by making compromises "with reference to the suit" voidable unless the leave of the court is recorded, and held that this protection extends to compromises made after decree where they relate to rights and liabilities arising out of the suit.
Precedential effect: The court applied existing principles and authorities to the facts; the opinion affirms and applies settled doctrines rather than purporting to create a novel legal principle.

Appeal dismissed — costs awarded to the respondents.

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Palakurthi Appalaraju And Others v. Tyla Yedukondalu And Others

Judgement

CHANDRA REDDY, J. : -

This appeal is brought by the plaintiff against the judgment of the Subordinate Judge of Kakinada dismissing his suit for recovery of Rs. 5,070-13-3 from the property of the minor defendant. The suit was based on a promissory note executed by the guardian and next friend of the minor on 20-1-1950 marked as Ex. A-7 in favour of the plaintiff. The promissory note came to be executed under the following circumstances.

The present plaintiff filed Original Suit No. 51 of 1948 on the file of the Subordinate Judge, Kakinada for partition and for separate possession of half a share of the casurina plantations raised on a land belonging to the 1st defendant therein i.e., the father of the present defendant and for recovery of Rs. 4000/- being the value of the half share of the trees which the defendant had cut and carried away. That plaint was founded on the allegation that there was an agreement between the plaintiff and the defendant whereunder the plaintiff was to plant casurina and water them for two years at his expense, that the taxes for the lands were to be paid in equal halves by the parties, that after the expiry of two years the defendant should himself look after the casurina bees, that when the trees grew up they should be cut and each of the parties should take one half of the yield.

In pursuance of the aforesaid agreement the plaintiff planted the trees and after they grew up, the defendants without the knowledge of the plaintiff and unauthorisedly cut and carried away a large number of trees worth about Rs. 7,000/-.

2. Pending the suit the defendant died and his widow and the son the present defendant were brought on record as his legal representatives. The suit was posted for further hearing on 16-1-1950. On that date an adjournment was asked for on the ground that the matter was compromised between the parties. It was accordingly adjourned to 18-1-1950, but no compromise petition was filed. The learned Subordinate Judge thereupon delivered the judgment dismissing the suit with costs and upholding the contention of the defendant that the suit could not be based upon an agreement which was inadmissible in evidence for want of registration.

The learned Subordinate Judge also expressed a doubt in the course of the judgment as to the genuineness of the contract said to have been executed by the defendant therein. On 20-1-1950 the guardian of the minor entered into a compromise with the plaintiff agreeing to pay him a sum of Rs. 5,000/-, the consideration therefore being the plaintiff refraining from carrying the matter in appeal to the High Court. For payment of this money a promissory note was executed by the guardian, which is marked as Ex. A-7 in the case.

3. Having regard to the importance of this document in the context of this present enquiry, it is useful to set out the contents of the document in extenso.

"The suit O. S. No. 51 of 1948 on the file of the Sub Court, Kakinada was decided in favour of the minors. However you are trying to take the matter in appeal to the High Court. As the pleader gave us the advice that it is not possible to say as to how the final result would turn on the point of law, we have in the presence of Sri Venpatti Ramabrahman Garu effected a settlement with the terms that a sum of Rs. 5,000/- (rupees five thousand) should be given to you in cash towards the value of your share in the casurina grove covered by the said suit, that you should give up the entire rights to your share as also the right to prefer the appeal etc., against the said decree and that you should receive the bid amount of Rs. 250/- deposited by you into Court.

Having felt that it is beneficial to the interest of the minors, I have agreed to the said terms. 1 shall on demand pay in cash to you or to your order the said sum of rupees five thousand together with interest accruing due thereon at the rate of Re. 0-8-0 per cent per mensem and take a return of this pro-note after getting the endrosement of payment made thereon. To this effect is the promissory note executed and delivered by me with consent."

The reference in Ex. A-7 to Rs. 250/- is this. During the pendency of the earlier suit, 100 casurina tress that fell down were auctioned and they were purchased by the plaintiff therein for Rs. 250/-. This money was deposited into the Court. It is said that one of the terms of the compromise was that the 100 casurina trees purchased by the plaintiff should be returned to the defendant and the former should be entitled to withdraw Rs. 250/- deposited by him in court by way of purchase price. As the plaintiff was not paid the sum of Rs. 5000/-, the suit was laid on the foot of this promissory note.

4. The suit was resisted on various defences : such as (1) that there was no agreement between the parties as set up in the plaint, that the plaintiff did not raise any casurina plantation on the land that the defendants father himself grew trees on his land at his own expense and that at any rate there was no consideration for the promissory note, there being no enforceable agreement against the defendants father or himself and as such it was not binding on the defendants estate.

5. The trial Court dismissed the suit being of the opinion drat a promissory note executed by the guardian of a minor in which she excluded her personal liability was unenforceable against the minors estate, that there was no consideration for the suit promissory note, that the suit agreement which required registration was inadmissible in evidence for want of registration and that the compromise offended the provisions of O. XXXII R. 7 of the Civil Procedure Code. It is this judgment and decree that are under appeal now.

6. In support of this appeal it is urged by Mr. B. V. Subrahmanyam that the conclusions of the learned Judge on all the three points are erroneous. It is contended on behalf of the appellant that as the parties entertained a doubt as to the ultimate result of the litigation they thought it advisable to enter into a compromise at the instance of the defendants lawyer, who is examined as P.W. 1. Reliance is placed in support of this proposition on the evidence of P.W. 1, who deposed that he was not certain about the legal position in regard to the requirement of registration of the document which was the foundation of the suit in that case and that he therefore advised the parties to settle the matter.

It was in pursuance of his advice that Ex. A-7 was executed by the guardian and next friend of the minor. It is urged that in view of this evidence and also having regard to some of the reported decisions, the guardian of the minor was justified in executing Ex. A-7 and could thus bind the minors estate by this document.

7. An argument was pressed upon us by Mr. Subrahmanyam that the judgment of the Full Bench*in Venugopala Pillai v. Thirunavukkarasu, 61 Mad LW 514 : (AIR 1949 Mad 148) (A), which was the basis of the suit in O. S. No. 51 of 1948 could not govern the instant case for the reason that the latter does not in any way affect immovable property and comes more within the rulings in Natesa v. Tangavelu, ILR 38 Mad 883 : (AIR 1914 Mad 362) (B), and Mammikkutti v. Puzhakkal Edom, ILR 29 Mad 353 (C). We feel that this contention cannot prevail. There is little scope for argument in this case that the agreement did not create any interest in immovable property. The case on hand falls surely within the ruling of 61 Mad LW 514 : (AIR 1949 Mad 148) (A).

*This is a Division Bench case and not a Full Bench case-Ed.

8. It is convenient here to refer to the relevant terms of Ex. A-3 :

"It has been settled that from this day till the month of November, 1941 casurina seedlings shall be raised in the said land, that (the plants) shall be watered, that a watch shall be kept over the plants to guard them carefully, that thereafter the plants shall be grown and water poured to them till the month of November, 1943, that the damaged plants shall be replaced by new ones and that you yourself shall without reference to me bear all the expenses necessary for making the said plants grown till the aforesaid date, that as regards all the taxes .........that after the said trees become fully grown, both of us shall enjoy in equal shares in respect of the trees in the said garden having regard to good and bad qualities and enjoy the same or keep the same jointly and enjoy in equal halves the usufruct of the said trees after they are cut, that if the said trees are to be cut you shall bear the entire expenses required therefor and deduct the same from the income derived from the said goods and both of us shall enjoy the balance of the amount in equal halves."

On this agreement it is difficult to hold that this agreement is not in relation to immoveable property but only one to divide the sale proceeds of casurina as urged by the counsel for the appellant.

9. The principle applicable to cases of this type was succinctly laid down by a Full Bench of the Madras High Court in Seeni Chettiar v. Santhanathan Chettiar and Co., ILR 20 Mad 58 (D). There, a right to cut and enjoy trees was assigned to a person for a period of four years for an adequate consideration. This document was not registered. In a suit on the basis of this document it was held that the plaintiff was not entitled to any relief, as the document which purported to convey an interest in immoveable property was not registered and was consequently inadmissible in evidence. It was observed by Collins, C. J., at page 64 thus :

"It has long been settled that an agreement for the sale and purchase of growing grass, growing timber or underwood, or growing fruit, not made with a view to their immediate severance and removal from the soil and delivery as chattels to the purchaser, is a contract for the sale of an interest in land."

In the judgment of Subramania Ayyar, J., the following passage from Marshal v. Green, (1875) 1 CPD 35 (E), was extracted with approval.

"It was contemplated that the purchaser should derive a benefit from the further growth of the thing sold, from further vegetation and from the nutriment to be afforded by the land."

The learned Judge was also of the opinion that the fact that the comparatively long period of a title for more than four years was granted for cutting and removing the trees was in favour of the view that it affected immovable property. It is this doctrine that was applied in 61 Mad LW 514 : ( AIR 1949 Mad 148) (A).

10. ILR 38 Mad 883 : (AIR 1914 Mad 362) (B), was based mainly on the definition of moveable property as given in the Indian Registration Act (III of 1877) which included "fruit upon and juice in trees". That dealt with a lease for enjoyment for toddy, palmyra fruit etc. It was held that though in a sense the instrument created an interest in land it was not a lease of immoveable property having regard to the definition referred to above. Hence that decision can have no application to the case on hand. Nor does the present case fall within the scope of ILR 29 Mad 353 (C).

There, what was granted was a right to cut trees already standing and had no reference to the trees that had to grow on the land. It was such a right that was held to be a mere license and therefore did not require registration. In the present case, the position is altogether different. The parties had agreed that trees should be grown on the land, nurtured and after they were fully ripe should be divided into two equal shares. Thus, the parties were to derive a benefit from the growth of the trees and from the nutriment afforded by the land.

Unlike in ILR 29 Mad 353 (C), in the instant case, there were no trees at all at the time of the agreement which could be sold or which could form the basis of the agreement. By and under the terms of that agreement plants were to be raised, nurtured and then it is only after they were fit for cutting they had to be divided between the parties.

11.We are clear that an agreement to grow trees on land belonging to one of the parties, and after the trees fully grew up they should be divided into two equal halves or that they should be cut and the sale proceeds be divided into two halves creates an interest in land so as to require registration and failure to do so will render the document inadmissible in evidence and no relief could be granted on the basis of such a document. The contrary proposition in our opinion is unarguable. That being the case the judgment in O. S. No. 51 of 1948 was unassailable.

12. Consequently the settlement which led to the execution of Ex. A-7 was not a bona fide one which would bind the minor. On this ground alone the suit was liable to be dismissed. Even otherwise no decree could be passed against the minor on a promissory note executed by the guardian. In this case Ex. A-7 makes it abundantly clear that the guardian had excluded her personal liability. In fact she was not even made a party to the present action. In these circumstances can there be a decree against the minor on this promissory note? We feel that the conclusion of the learned Subordinate Judge even in this regard is unimpeachable.

We think it is firmly established that no decree could be passed against a minor on an instrument in which the guardian had excluded her personal liability and the guardian is not a party to the suit. The principles governing such cases are laid down by the Supreme Court* in Sriramnlu v. Pundarikashayya, 1950-1 Mad LJ 586 at page 595 : (AIR 1949 FC 218 at p. 226) (F), they are stated thus :

*By the Federal Court - Ed.

"(1) The manager of an infants estate can deal with the minors estate by way of mortgage, in ease of need or for the benefit of the estate.

(2) He cannot bind the minor by contract or under obligations and then transfer them to the minors estate so as to enable the creditor to establish a direct relation between himself and the estate.

(3) In certain cases (which must presumably be cases of necessity or benefit to the minor), he might be able to show that the estate ought to bear the burden which he had taken upon himself."

The learned Judge also observed at page 597 (of Mad LJ) : (at p. 227 of AIR) :

"To give an undertaking on behalf of the minor that a certain sum will be paid on demand and that, in default of such payment, compensation will be payable is a somewhat onerous transaction, and, in my opinion, any contract which exposes the minor and his estate to the risks involved in such a transaction cannot be countenanced in law."

Another passage in the same judgment which is very illuminating is contained at page 610 (of Mad LJ) : (at p. 238 of AIR) : -

"When the guardian is the maker of the note and he excludes his personal liability, no suit, in my opinion, could be instituted either against the guardian or the infant as explained above; whether a suit would lie on the original consideration is another matter, and if it could be brought the same principles would apply. The position therefore is that in case of contractual debts borrowed either on simple bonds or promissory notes the creditor can have recourse to the minors estate indirectly on the principle of subrogation when the guardian has the right of indemnity against the estate of the ward; and he would have the right of direct re-imbursement out of the properties of the infant, only when the debt is for necessaries supplied to the infant.

In this way effect can be given to the personal law of the Hindus in respect of the liability of a minors estate for debts contracted by the guardian for legal necessity without infringing in any way the basic principles of the law of contract, and in this way alone, the different pronouncements of the Judicial Committee mentioned above can be consistently explained."

It is thus manifest that it is only in a case where the guardian has been made a party to the suit and the equities between the guardian and the minor could be worked out by applying the principle of subrogation that a decree could be passed against the minor on a promissory note and could not extend to a case where the guardian has excluded his or her personal liability. As already noticed, the minors guardian has not even been impleaded as a party to the suit and in this situation there can be no occasion to invoke the doctrine of subrogation and pass a decree in favour of the plaintiff.

13. Mr. Subrahmanyam fell back upon the theory that even if the promissory note could not be the basis of a suit his client was entitled to a decree on the basis of the original debt. This submission is unsustainable for the reason that the suit is based only upon the promissory note and no claim is put forward in relation to the original debt. We have gone through the plaint carefully and there is no scope for interpreting it as one containing a letter on an alternative basis viz., of the original debt.

Moreover there is no scope for drawing any such distinction. The debt had no independent existence apart from the promissory note. In the present case, the compromise which created a debt is evidenced by the suit promissory note. There was no interval of time between the two. So even this plea is not available to the appellant. Hence this contention fails and is rejected.

14. Coming now to the last point, viz., whether the suit is hit at by O. 32 R. 7, Civil Procedure Code, the contention urged by Mr. Subrahmanyam is that that provision is inapplicable to compromises entered into after the decree was passed. To appreciate this point, it is necessary to refer to the terms of O. 32 R. 7. It recites :

"No next friend or guardian for the suit shall, without the leave of the Court, expressly recorded in the proceedings, enter into any agreement or compromise on behalf of a minor with reference to the suit in which he acts as next friend or guardian.

Any such agreement or compromise entered into without the leave of the Court so recorded shall be voidable against all parties other than the minor."

Mr. Subrahmanyam argues that this rule could not be extended to settlements arrived at after the decree was passed and that it contemplates only compromises entered into during the pendency of the suit and he seeks to substantiate this submission by citing a judgment of the Full Bench in Bapayya v. Bhushayya 1950-1 Mad LJ 196 : (AIR 1950 Mad 397) (G). There the agreement was that the guardian ad litem should give up the contentions regarding the invalidity of the auction sale and should withdraw the petition and also deliver up possession of the properties purchased to the auction purchaser in consideration of the auction purchaser giving up his claim for costs of the said petition.

The leave of the Court was not obtained for this compromise. It was held that this compromise fell outside O. 32 R. 7 as it did not relate to the rights of the parties as claimed in the suit. Thus there is nothing in the Full Bench judgment which would have the effect that a compromise entered into between the parties after a decree is passed would not come within the purview of O. 32 R. 7. On the other hand, the observations of the learned Judges are to the opposite effect. At page 199 (of Mad LJ) : (at p. 400 of AIR), the following passage occurs :

"An examination of the decisions which have held that O. 32 R. 7 may take in agreements in the course of execution proceedings reveals that in all of them the rights and liabilities of the minor under the decree were directly dealt with by the terms of the agreement and adjusted in one way or another. Such agreements are agreements "with reference to the suit." Before decree, the agreement or compromise may be with reference to the claims asserted and denied in the suit and after decree they may be with reference to the rights and liabilities as ascertained, declared and decreed by the decree itself."

15. Thus, this judgment contemplates compromise agreements being made after the decree, coming within the scope of O. 32 R. 7. In fact, the learned Judges referred to the dictum of Varadachari J., in Venkata Krishnayya v. China Kanakayya, 1938-1 Mad LJ 775 : (AIR 1938 Mad 539) (FB) (H), where the learned Judge pointed out that the real distinction is between matters in dispute between the parties and matters outside the scope of the suit. So the real distinction made in this case as well as in the other Full Bench cases was not based on whether the agreement was prior to or after the decree, but whether it related to matters in dispute in the suit i.e., whether it has reference to the suit.

There are also cases to the same effect. Sethurama v. Chotta Raja, AIR 1918 Mad 751 (I). It is unnecessary to multiply authorities on this topic. We are firmly of the opinion that O. 32 R. 7 applies to compromises or agreements entered into not only prior to the decree but also subsequent to the decree, if it covers matters relating to the suit. This is made clear by the language "with reference to the suit in which he acts as next friend or guardian". To hold otherwise would be to defeat the provisions of R. 7 which was enacted to protect the interests of the minor.

If this enactment was inapplicable to compromises entered into after the passing of a decree, minors next friend could easily evade the provisions of the rule by entering into agreements after the decree. It follows that any agreement reached between the parties by the next friend or the guardian in a suit hearing on the subject matter of the suit without the leave of the court is voidable at the instance of the minor and could not be enforced. The promissory note in this case was executed in pursuance of the compromise and consequently is unenforceable against the minor.

So the provisions of O. 32 R. 7 are also a bar to the maintenance of this suit in that the sanction of the Court was not obtained for the compromise.

On this ground also, the appeal is liable to be dismissed. In the result, the appeal fails and is dismissed with costs.

Appeal dismissed.

Palakurthi Appalaraju And Others v. Tyla Yedukondalu And Others

Judgement Summary — CHANDRA REDDY, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments (Plaintiff / Mr. B. V. Subrahmanyam)

Defendants' / Respondents' Arguments and Defences

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Implications

Palakurthi Appalaraju And Others v. Tyla Yedukondalu And Others

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