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Smart Summary

Factual and Procedural Background

The revision petition was filed by Sh. Dev Pal Kashyap under Section 15 of the East Punjab Urban Rent Restriction Act, 1949, challenging the judgment dated 14 June 1982 of the Appellate Authority, Faridkot. That judgment had allowed the appeal of M/s Sant Ram Narinder Mohan (respondent) and set aside the Rent Controller's order dated 19 October 1979 which had granted ejectment of the respondent.

The Rent Controller's ejectment application had been instituted by the petitioner under Section 13 of the Act on multiple grounds: the firm M/s Sant Ram Narinder Mohan was the tenant, it was in arrears of rent, it had sublet the premises to respondent No. 2, had committed acts likely to impair the material value and utility of the premises, had not occupied the shop for over a year, and the premises were unsafe and unfit for human habitation. The tenant contested the application, both sides led evidence, and during final arguments the parties reached a compromise recorded by the Rent Controller.

The Rent Controller allowed the application subject to specific conditions: the tenant was to vacate when the landlord could provide an alternative shop (marked 'X' on plan Exhibit C1) and put the tenant into possession as a tenant at Rs. 100 per month from actual occupation; if the landlord could not deliver possession within one year, the ejectment application would stand dismissed; if the tenant failed to take possession within 15 days of notice, the landlord could execute the ejectment order through Court.

The tenant (M/s Sant Ram Narinder Mohan) appealed. The Appellate Authority overruled the preliminary objection that the appeal was incompetent because the Rent Controller's order was by consent, but found that Shri Kulbhushan Beri (the tenant's counsel) lacked authority to enter into the compromise; the Appellate Authority allowed the appeal, set aside the Rent Controller's order and remanded the matter for fresh decision. The petitioner then filed the present revision petition.

Legal Issues Presented

  1. Whether an appeal under Section 15 of the East Punjab Urban Rent Restriction Act, 1949 is competent where the impugned order was passed with the consent of the parties.
  2. Whether an advocate acting as counsel (here, Shri Kulbhushan Beri) has authority—actual or implied—to enter into a compromise on behalf of his client in the proceedings before the Rent Controller, and whether such authority was present in the facts of this case.
  3. Whether the Appellate Authority had power to remand the case for a fresh trial after setting aside the Rent Controller's order.

Arguments of the Parties

Petitioner's Arguments (as advanced by Mr. R.L. Sarin, Advocate)

  • The ejectment order was passed by the Rent Controller with the consent of the parties; therefore the tenant (respondent) cannot be regarded as a person aggrieved and could not file a competent appeal under Section 15.
  • Relied on Kanagarathnammal v. H. Soma Rao (1955 II M.L.J 433) in support of the proposition that an appeal should not lie from an order passed with the consent of the parties.
  • Argued that Shri Kulbhushan Beri had been the tenant's counsel throughout and impliedly had not been authorised to surrender the possession of a larger shop in exchange for a smaller one at enhanced rent.

Respondent's Position (as recorded in the proceedings)

  • The tenant-respondent contended before the Appellate Authority that Shri Kulbhushan Beri had no authority to enter into the compromise which led to the order of ejectment.
  • Another contention raised (referred to at the hearing) was that Shri Beri had no authority to compromise matters extraneous or collateral to the action.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kanagarathnammal v. H. Soma Rao, 1955 II M.L.J 433 Shows that an appeal against an order passed with the consent of the parties is not wholly barred; such appeal is competent if the appellant establishes fraud, undue influence or other vitiating circumstances. Cited by petitioner; court relied on the principle to note that consent orders are not immune from appeal where vitiating circumstances (e.g., lack of authority) are alleged.
Ram Dass v. Smt. Sukhdev Kaur, 1981 83 PLR 440 Contextual citation regarding the limited application of Civil Procedure Code provisions to proceedings before the Rent Controller, and execution of orders under Section 17 of the Act. Used to support the proposition that the Civil Procedure Code applies only to the limited extent provided by the Act (Sections 16 and 17).
Jagdish Narain v. Rasul Ahmad, AIR 1952 All 29 When consent is challenged on the ground that the agent who consented was not duly authorised, the appellate court must decide that question; a purported consent decree is not immune from appeal where agent's authority is contested. Relied upon to support the view that an appeal is competent where the appellant alleges the person who consented lacked authority.
Shtonendan Prasad Singh v. Hakim Abdul Fateh Mohammad Reza, AIR 1935 PC 119 Principle that counsel in India have an implied authority to compromise actions in which they act as counsel; the authority is actual though implied from employment as counsel. Invoked to show that an advocate has implied authority to compromise, subject to examination of circumstances.
Smt. Jamilabai Abdul Kadar v. Shakarlal Gulab Chand, 1975 2 SCC 609 A pleader has implied authority to compromise a case in which he is engaged, subject to (i) acting in good faith and for the client's benefit, and (ii) prudence in consulting the client when possible; authority falls if contrary instructions given. Applied to hold that Shri Beri had implied authority to compromise, subject to the two overriding considerations; no allegation of bad faith or contrary instructions existed.
Employers in relation to Manoharbahal Colliery Calcutta v. K.N. Mishra, 1975 2 SCC 244 A compromise signed by counsel duly authorised to appear is binding on the client. Used to reinforce the binding nature of a memorandum of compromise signed by counsel authorised to represent the respondent.
Surendra Shankar Waikar v. Laxman Shanker Waikar, AIR 1960 Bom 20 The advocate's implied authority to compromise is limited to the action in which he is engaged and does not extend to matters extraneous or merely collateral to it. Quoted in relation to the respondent's argument that Shri Beri lacked authority to compromise extraneous matters; court found the compromise here was within the scope of the action.
Raghu Nath Jalota v. Ramesh Duggal, 1980 1 R.C.J 404 Holds that an Appellate Authority has no power to remand the case for a fresh trial (as cited by the court). Relied upon by the court to conclude that the Appellate Authority erred in remanding the matter for fresh decision.

Court's Reasoning and Analysis

The court addressed the petitioner's contentions in a structured manner.

  1. On the competence of the appeal where the impugned order was passed with consent:
    • The court observed that the Civil Procedure Code (CPC) does not apply to proceedings before the Rent Controller except to the limited extent provided by Sections 16 and 17 of the Act. Section 15 (b) of the Act expressly grants the right of appeal without incorporating the CPC's Section 96(3) rule that bars appeals from consent decrees.
    • The court reasoned that the technical bar in CPC Section 96(3) was not imported into Section 15 of the Act; consequently, an appeal under Section 15(b) cannot be summarily held incompetent because the impugned order was reached by consent.
    • The court relied on Kanagarathnammal to acknowledge that consent orders may be appealed where fraud, undue influence or other vitiating circumstances are shown. It further relied on Jagdish Narain to hold that where the authority of the agent who consented is challenged, the appellate court must decide that question rather than treat the decree as a consent decree immune from appeal.
    • Because the tenant alleged before the Appellate Authority that Shri Kulbhushan Beri lacked authority to consent to the compromise, the court held the appeal was competent.
  2. On the authority of the advocate (Shri Kulbhushan Beri) to enter into compromise:
    • The court accepted established precedents that an advocate has implied authority to compromise actions in which he is engaged (citing Shtonendan Prasad Singh and Smt. Jamilabai Abdul Kadar).
    • The court emphasised the limitations on that authority: the advocate must act in good faith and for the benefit of the client; it is prudent to consult the client where possible; and any express contrary instruction withdraws the authority.
    • Applying these principles to the facts, the court noted there was no allegation of bad faith, mala fide conduct, or express contrary instructions by the tenant. The compromise was entered into after evidence had been led and during the later stages of the hearing; it provided alternative accommodation (albeit smaller) to the tenant rather than leaving the tenant without a shop.
    • The court held that the compromise did not concern matters extraneous or collateral to the action; rather, it was within the scope of the ejectment proceedings. Accordingly, Shri Beri was legally competent to consent to the compromise on behalf of his client, and the tenant could not successfully repudiate the compromise in the absence of any allegation of impropriety or countermanding instruction.
  3. On the Appellate Authority's remand:
    • The court held that the Appellate Authority had no power to remand the case for a fresh trial, relying on Raghu Nath Jalota v. Ramesh Duggal.
  4. Conclusion of the reasoning:
    • Because the appeal was competent and the counsel had implied authority to compromise (with no allegation of mala fide or withdrawal of authority), and because the Appellate Authority lacked power to remand for a fresh trial, the Appellate Authority's judgment was erroneous and liable to be set aside.

Holding and Implications

Holding: For the reasons stated, the Court allowed the revision petition, set aside the Appellate Authority's judgment dated 14 June 1982, and restored the order of the Rent Controller dated 19 October 1979. The court made no order as to costs.

Implications:

  • The direct effect is that the Rent Controller's ejectment order (conditional upon delivery of an alternative shop as recorded in the compromise) stands restored and the Appellate Authority's order allowing the tenant's appeal and remanding the case is quashed.
  • The Court applied established principles regarding (a) the non-incorporation of CPC Section 96(3) into Section 15 of the Rent Act (meaning consent orders are not automatically immune from appeal under the Act), (b) the implied authority of an advocate to compromise within the scope of the action (subject to good faith and instructions), and (c) the limitation on an Appellate Authority's power to remand for a fresh trial. The opinion does not state that it sets a novel precedent beyond applying these authorities to the facts before it.

H.L.S
Petition allowed.

    Dev Pal Kashyap, Advocate v. Sant Ram Narinder Mohan, Cloth Merchants, And Another

    Sukhdev Singh Kang, J.:— Sh. Dev Pal Kashyap has filed this revision petition under Section 15 of the East Punjab Urban Rent Restriction Act, 1949 (for short ‘the Act’) against the judgment dated 14th June, 1982, passed by the Appellate Authority, Faridkot, allowing the appeal of M/s. Sant Ram Narinder Mohan respondent and setting aside the order of eviction passed by the Rent Controller, Faridkot, vide order dated 19th October, 1979. The facts are brief and lie in a narrow compass.

    2. Sh. Dev Pal Kashyap petitioner filed an application under Section 13 of the Act for ejectment of M/s. Sant Ram Narinder Mohan and another, on the ground that firm M/s. Sant Ram Narinder Mohan (respondent No. 1) was his tenant; it was in arrears of rent and had sublet the premises in dispute to respondent No. 2. It was also averred that respondent No. 1 had committed such acts as were likely to impair the material value and utility of the premises in dispute and that the tenant had not occupied the shop for a period of over one year. The premises were unsafe and unfit for human habitation. The ejectment application was contested by respondent No. 1. In its written statement it denied the material allegations. The case was hotly contested. Both the parties led evidence. During final hearing of arguments the parties came to terms and entered into a compromise. The learned Rent Controller recorded the statements of the learned counsel for respondents Nos. 1 and 2, Sh. Kulbhushan Beri and the applicant which was countersigned by his counsel Sh. Hans Raj Bansal, Advocate. After going through the evidence on the record and the statements of Sh. Kulbhushan Beri, Advocate, and the applicant Sh. Dev Pal Kashyap, the learned Rent Controller allowed the application and passed an order of ejectment of respondent No. 1 from the shop in dispute subject, however, to the condition that respondent No. 1 shall vacate the shop as and when the applicant gels another shop, denoted by mark ‘X’ on plan Exhibit C1 on the file of the Rent Controller, vacated from its present occupants and puts respondent No. 1 into its possession as a tenant. The rent of the new shop will be Rs. 100/- per month from the date of actual occupation. If the applicant was unable to deliver possession of shop marked ‘X’ to the respondent, as per the agreed terms, within one year from the date of the passing of the order, the application shall stand dismissed. If on the other hand the respondent fails or refuses to take possession or occupies the shop within 15 days of the service of the registered notice on him to this effect, the applicant will be entitled to get execution of the ejectment order through Court.

    3. M/s. Sant Ram Narinder Mohan filed an appeal against this order of the learned Rent Controller. It came up for heating before Shri Dev Bhushan Gupta, Appellate Authority, Faridkot. A preliminary objection was raised on behalf of the landlord that the appeal was not competent because the Rent Controller had passed the order of ejectment with the consent of the parties. This objection was over-ruled by the learned Appellate Authority. The plea of the appellant that Shri Kulbhushan Beri, Advocate, had no authority to enter into a compromise, found favour with the learned Appellate Authority. He held that Shri Kulbhushan Beri was not authorised to compromise the case. He had no authority to surrender the possession of a bigger shop in exchange for a smaller one at an enhanced rent. The learned Appellate Authority allowed the appeal and set aside the order of the learned Rent Controller and remanded the case to him for deciding it afresh in accordance with law. Aggrieved by this order, the petitioner has preferred the present revision petition.

    4. Mr. R.L Sarin, Advocate, learned counsel for the petitioner, has argued that since the ejectment order had been passed by the learned Rent Controller with the consent of the parties, M/s. Sant Ram Narinder Mohan-respondent cannot be termed to be the person aggrieved by that order. So it could not file an appeal against the impugned order. In support of this contention Mr. Sarin has relied upon a decision of a Division Bench of the Madras High Court in Kanagarathnammal v. H. Soma Rao . 1955 II M.L.J 433..

    5. This argument of Mr. Sarin is inherently fallacious. It is well settled that the provisions of the Civil Procedure Code are not applicable to the proceedings before the Rent Controller except to the limited extent provided for under Sections 16 and 17 of the Act. Section 16 provides that an Appellate Authority or a Rent Controller shall have the same powers of summoning and enforcing the attendance of witnesses and compelling the production of evidence as are vested in a Court under the Code of Civil Procedure. Orders passed by a Rent Controller or an Appellate Authority shall be executed, in view of the provisions of Section 17 of the Act, by a Civil Court as if they were decrees of that Court (See in this connection Ram Dass v. Smt. Sukhde v. Kaur . 1981 83 PLR 440. Right of appeal has been provided by Section 15(b) of the Act which reads:—

    “Any person aggrieved by an order passed by the Controller may within fifteen days from the date of such order of such longer period as the appellate Authority may allow for reasons to be recorded in writing, prefer an appeal in writing to the appellate authority having jurisdiction. In computing the period of fifteen days the time taken to obtain a certified copy of the order appealed against shall be excluded.”

    6. It is manifest from the language employed in Section 15 that the principle of law enshrined in sub-section (3) of Section 96 of the Civil Procedure Code that no appeal shall lie from a decree passed by the Court with the consent of the parties has not been incorporated in Section 15. The technical rules of procedure contained in sub-section (3) of Section 96 of Civil Procedure Code will not be applicable to the appeal filed under section 15(b) of the Act. In Kanagarathnammal's case (supra) an appeal against an order passed with the consent of the parties has not been altogether barred. Even in that case it has been observed that such an appeal shall be competent if the appellant was able to establish fraud, undue influence or such other vitiating circumstances. In that case no attempt was made to establish any of the circumstances enumerated above. However, in the present case the tenant-firm had taken the stand before the learned Appellate Authority that the person who gave consent for passing the ejectment order had no authority to do so. This assertion will surely fall within all comprehensive phrase ‘other vitiating circumstances’. A division bench of the Allahabad High Court in Jagdish Narain v. Rasul Ahmad . AIR 1952 39 All 29. had occasion to examine the provisions of Section 96 and Order 23 Rule 3 of the Civil Procedure Code. It was observed:—

    “When the consent upon the basis of which a decree has been passed by the Court is itself challenged in the Court of appeal, it cannot be taken for granted that the decree was a consent decree. A consent decree must mean a decree validly consented to either by the party himself or by his duly authorised agent. If the question raised is that the agent who consented to the decree was not duly authorised, the question has to be decided and it cannot be prejudged by holding that because on the face of it there was a consent decree, no appeal lies to the appellate Court.”

    7. This is a complete answer to the contention of Mr. Sarin. Since in the present case the appellant had alleged in the grounds of appeal that Shri Kulbhushan Beri had no authority to suffer the impugned order, the appeal was competent.

    8. It was then contended by Mr. Sarin that Shri Kulbhushan Beri had been appointed by the tenant as its counsel to conduct the case. Shri Beri had conducted the case throughout. The tenant had not indicated any dissatisfaction with the conduct of Shri Beri. Shri Dev Pal Kashyap is also a practising lawyer at Moga. It seems that Shri Kulbushan Beri had no hesitation in accepting a brief against a practising Advocate of the same place. It was during the course of arguments that a compromise was reached. May be that the tenant and Shri Beri were convinced that they will lose the case and therefore agreed to vacate the shop in dispute and take on rent a smaller shop. No allegations of misconduct or mala fide have been levelled against Shri Beri.

    9. It is well settled that an Advocate has an implied authority I to compromise any action in which he is acting as a counsel, even without the express authority of the client. In Shtonendan Prasad Singh v. Hakim Abdul Fateh Mohammad Reza . AIR 1935 PC 119. it was observed:—

    “Counsel in India have the same implied authority to compromise an action as have counsel in the English Courts. But if such authority is invoked to support an agreement of compromise the circumstances must be carefully examined. In the first instance the authority is an actual authority implied from the employment as counsel.”

    10. This view was reiterated by the highest Court in Smt. Jamilabai Abdul Kadar v. Shakarlal Gulab Chand . 1975 2 SCC 609, wherein it was observed:—

    “A pleader (which includes all legal practitioners as indicated in Section 2 (15) Civil P.C) has the actual, though implied, authority of a pleader to act by way of compromising a case in which he is engaged even without specific consent from his client, subject undoubtedly to two over-riding considerations; (i) He must act in good faith and for the benefit of his client: otherwise the power fails; (ii) It is prudent and proper to consult his client and take his consent if there is time and opportunity. In any case, if there is any instruction to the contrary or withdrawal of authority, the implicit power to compromise in the pleader will fall to the ground.”

    11. In Employers in relation to Manoharbahal Colliery Calcutta v. K.N Mishra . 1975 2 SCC 244, it was observed that since the memorandum of compromise on the basis of which the appeal was disposed of was signed by the counsel of respondent, duly authorised to appear on his behalf, this compromise was binding on the respondent. Faced with this situation, Mr. D.V Sehgal, learned counsel for the respondents, argued that Sh. Beri had no authority to compromise matters which were extraneous to the proceedings or which were merely collateral to it. In support of this contention he drew my attention to a passage in the decision of Surendra Shankar Waikar v. Laxman Shanker Waikar . AIR 1960 Bom 20. which is in the following terms:—

    “The authority of an advocate to compromise is implicit in the appointment of the advocate unless it is expressly countermanded by the client. It must, however, be borne in mind that the implied authority of an advocate to enter into a compromise is limited to the action in which he has been engaged and does not extend to matters which are extraneous to the action or which are merely collateral to it.”

    12. In the present case it has not been alleged that Mr. Beri did not act in good faith or for the benefit of his client. No such allegations have been made in the grounds of appeal, nor any such allegation was made before the learned Appellate Authority or even before me. Sh. Beri, in the case in hand, has not entered into a compromise regarding the matters which are extraneous to the action. After evidence of the parties had been led and the arguments had been partly addressed, Mr. Beri had consented to the compromise. It can be safely assumed that Mr. Beri might have come to the conclusion that the ejectment application will be allowed by the learned Rent Controller and his client will be ejected. He accepted a proposal which was to a great extent beneficial to his client. Instead of being evicted and thrown out from the premises in dispute, the tenant was offered an alternative accommodation. It may not be so good as the shop in dispute but it was better to have it than to be left without a shop. Mr. Beri did not agree to something which may prejudicially affect the interests of his client. He has not agreed to surrender the rights of his client in any property which was not the subject matter of the ejectment proceedings nor has he committed himself to a position which may be deterimental to the interests of his client as was the case in Surendra Shankar Waikar's case (supra). Mr. Beri acting bonafide and in the interest of his client had given consent to the compromise. He was legally competent to do so. The consent has not been given to any matter alien to the proceedings in which he was engaged. The tenant-respondent cannot successfully denounce the compromise entered into by his counsel Sh. Beri, more especially so when it has not been averred that the tenant had expressly directed Sh. Beri not to enter into a compromise.

    13. The revision petition must succeed in another ground also. The Appellate Authority had no power to remand the case for a fresh trial. It has been so held in Raghu Nath Jalota v. Ramesh Duggal . 1980 1 R.C.J 404..

    14. For the foregoing reasons I allow this revision petition and set aside the judgment dated 14th June, 1982 of the learned Appellate Authority and restore that of the learned Rent Controller without any order as to costs.

    H.L.S
    Petition allowed.

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    Dev Pal Kashyap, Advocate v. Sant Ram Narinder Mohan, Cloth Merchants, And Another
    (May 13, 1983)