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Whether party can deny contents of compromise recorded by court?

IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH.

CR-6310-2019 (O M)
Date of decision : 06.10.2020

Lachhman Dass

Vs

Amarjit Singh Sahni

CORAM : Hon’ble Mr. Justice Gurvinder Singh Gill

1. The petitioner assails order dated 9.9.2019 passed by Appellate Authority under the Haryana Urban (Control of Rent Eviction) Act 1973, Yamuna Nagar at Jagadhri, whereby an application filed by the petitioner seeking disposal of his appeal on merits has been dismissed.

2. A few facts, necessary to notice for disposal of this petition are that respondents/landlords filed an application under Section 13 of the Haryana Urban (Control of Rent Eviction) Act 1973, seeking ejectment of the petitioner/tenant from residential premises situated in Yamuna Nagar on grounds of non-payment of rent and personal necessity. The Rent Controller, Jagadhri passed an order dated 8.8.2018 assessing the provisional rent and directed the petitioner/tenant to pay the arrears of rent. The petitioner/tenant, however, preferred an appeal against the aforesaid order dated 8.8.2018 of Rent Controller, Jagadhri before the Appellate Authority (Additional District Judge). During the pendency of the aforesaid appeal before the Appellate Authority, the parties settled the matter amongst themselves and got their statements recorded before the Appellate Authority on 25.3.2019 leading the Appellate Authority to pass the following order on 25.3.2019:

” Both the parties have settled the matter as per their
statements recorded separately. Now, the case is
adjourned to 20.4.2019 for further proceedings.

Sd/-

Date : 25.3.2019 ADJ/ Jagadhri”

3. After the aforesaid settlement, the matter was adjourned to 20.4.2019 by the Appellate Authority for further proceedings. However, on the next date, the petitioner/tenant instead of taking any step for honouring the statement made by him earlier towards compromise, moved an application seeking disposal of his appeal on merits while taking a plea that he was allured into making a statement qua compromise by the landlords and his counsel in collusion with petitioner/tenant’s counsel whereas he never intended to make any such statement. The averments to this effect made in paras 2 to 4 of the application (Annexure P-3) read as follows:

“2. That previously on 25.03.2019, the appellant was allured
by the respondents for making some statement in the
Court and the previous counsel of the appellant got
obtained the signature of the appellant on statement in the
Court on 25.3.2019.

3. That thereafter the respondents started harassing the
appellant and threatened him without any reason or rhyme
and stated that he has got made his statement regarding
ejectment of the appellant from the premises.

4. That then the appellant engaged another counsel and
inquired about the proceedings and came to know that the
respondents in collusion with their counsel have got
recorded the statement of appellant to the effect that the
matter has been compromised and the appellant will
vacate the premises upto 20.4.2019 after receipt of
Rs. 50,000/- from the respondents whereas the appellant
had never intended to make such statement and his
statement has been got recorded under influence and
allurement.”

4. The aforesaid application was, however, dismissed by the Appellate Authority vide order dated 9.9.2019 which has been impugned by way of filing the instant revision petition.

5. The learned counsel for the petitioner submits that although the respondents claim that the matter stood compromised but infact there was no written instrument regarding compromise brought on record and that it is a case where at some stage the petitioner had been tricked into making such a statement on 25.3.2019 by way of allurement and collusion of counsel but the said statement was withdrawn on the very next date of hearing before the same could be acted upon i.e. on 20.4.2019 and that in these circumstances it cannot be said that there was any valid compromise amongst the parties. The learned counsel submits that Order 23, Rule 3 of the Civil Procedure Code [hereinafter referred to as the ‘CPC’] has been interpreted by Hon’ble Supreme Court in 1988(1) SCC 270 Gurpreet Singh vs. Chatur Bhuj Goel, so as to hold that the requirement of a written compromise is mandatory.

6. Opposing the petition, the learned counsel for respondents/landlords submits that a statement made by a party or by his counsel in a Court of law cannot be brushed aside lightly and that any such statement made by a party towards compromise in the Court cannot be said to be having lesser sanctity than the compromise entered into outside the Court before some Oath Commissioner/Notary Public or before any other authority. It has been submitted that Hon’ble Supreme Court in judgements delivered subsequent to Gurpreet’ Singh’s case (supra) has clarified that not only a statement made by the party towards compromise can be accepted but even a statement made by counsel on behalf of his client is to be duly honoured and accepted.

7. I have considered rival submissions addressed before this Court. Before proceeding further it is apposite to bear in mind the provisions of Order 23 Rule 3 CPC, as amended, which read as under: ORDER 23 – RULE 3 of CPC

3. Compromise of Suit –

“Where it is proved to the satisfaction of the Court that a suit
has been adjusted wholly or in part 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 the
subject-matter of the suit.

Provided that where it is alleged by one party and denied by the
other that an adjustment or satisfaction has been arrived at, the
Court shall decide the question; but no adjournment shall be
granted for the purpose of deciding the question, unless the
Court, for reasons to be recorded, thinks fit to grant such
adjournment.

Explanation- An agreement or compromise which is void or
voidable under the Indian Contract Act, 1972, (9 of 1972), shall
not be deemed to be lawful within the meaning of this rule.”
( emphasis supplied )

8. It is worthwhile to notice that prior to 1976 there was no specific requirement of a compromise to be taken down in writing and it was by way of amendment in the year 1976 that the said requirement was incorporated by way of insertion of words “in writing and signed by the parties” in Rule 3 of Order 23 CPC. The relevant portion of the Statement of Objects and Reasons for the 1976 amendment states that : “It is provided that an agreement or compromise under Rule 3 should be in writing and signed by the parties. This is with a view to avoiding the setting up of oral agreements or compromises to delay the progress of the suit.”

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9. The question posed before this Court is as to whether in a case which is stated to have been compromised, it is mandatory, in all circumstances, that such compromise should be taken down in writing by way of an instrument and as to whether in the absence of a written instrument the compromise cannot be enforced or acted upon. 10. A reading of amended provisions of Order 23 Rule 3 CPC, as reproduced above, does suggest that a compromise should be in writing. Hon’ble Supreme Court in Gurpreet Singh’s case (supra), where a statement towards compromise had been made by a counsel held as follows:

“10. Under Rule 3 as it now stands, when a claim in suit has been
adjusted wholly or in part by any lawful agreement or
compromise, the compromise must be in writing and signed
by the parties there must be a complete agreement between
them. To constitute an adjustment, the agreement or
compromise must itself be capable of being embodied in a
decree. When the parties enter into a compromise during the
hearing of a suit of appeal, there is no reason why the
requirement that the compromise should be reduced in
writing in the form of an instrument signed by the parties
should be dispensed with. The Court must, therefore, insist
upon the parties to reduce the terms into writing.”

11. However, the Supreme Court, in a subsequent case in 2003(11) SCC 372 Jineshwardas (D) through L.Rs. and others Vs. Smt. Jagrani and another, observed in categoric terms that if the counsel representing a party makes a statement towards compromise, then the party would be equally bound by it. In the said case, the parties were litigating in respect of a suit for specific performance, wherein during the pendency of appeal (RSA) before High Court, the respective counsel made statements expressing that the matter had been settled amongst the parties. The order recorded by the High Court on 9.5.2002 in Jineshwardas’s case (supra) reads as follows: “Both the counsel are in agreement to settle the matter. The learned counsel for the respondents submits that respondents will pay an amount of Rs. 25,000/- to the appellant within a period of one month, otherwise it will carry interest at the rate of 12% per annum from the date of today. On this agreed submission, this appeal is decided and judgment and decree passed by the Court below is modified to this extent.ÿ1. The respondents will pay Rs. 25,000/- (Rupees twenty five thousand) to the appellants within a period of one month. 2. If this amount is not deposited in the court on or before 10th June, 2002, the above amount will carry interest @ 12% per annum till its realization.ÿ3. Cost of the litigation will be borne by both the parties. The appeal is disposed of in view of the above said agreed submissions.”

12. However, subsequently, the appellants therein in Jineshwardas’s case (supra) filed an application for review of order 9.5.2002 on the ground that since the appeal had primarily been disposed of on the basis of compromise, the compromise was required to be taken down in writing in terms of provisions of Order 23 Rule 3, Civil Procedure Code, and the same not having been done in writing and signed by the parties, such compromise could not be made a basis for disposal of the appeal. It was also contended therein that submission, if any, made in this regard by the counsel appearing for the appellants in the High Court was without any instructions of the appellants. It was, thus, submitted before the High Court that the order dated 9.5.2002 disposing off the appeal ought to be reviewed. However, the review application was rejected vide order dated 15.7.2002 leading to filing of SLP in Supreme Court wherein strong reliance was placed upon Gurpreet Singh’s case(supra) to contend that in the absence of compliance with the provisions contained in Order 23 Rule 3, Civil Procedure Code, regarding a written compromise, the judgment of the High Court could not sustain.

13. Hon’ble Supreme Court, however, dismissed the appeal while relying upon its earlier judgment i.e. 199 2(1) SCC 31 Byram Peston j i Gariwal vs. Union Bank of India. The relevant extract from the judgement rendered in Jineshwardas’s case(supra) reads as follows:

“ 7. We have carefully considered the submissions of the learned
counsel appearing on either side. Though, in Gurpreet Singh’s
case (supra) this Court explained the object and purport of Rule
3 Order 23 Civil Procedure Code, by laying emphasis on the
words, “in writing and signed by parties”, to be necessitated in
order to prevent false and frivolous pleas that a suit had been
adjusted wholly or in part by any lawful agreement or
compromise with a view to protract or delay the proceedings in
the suit itself. It was also observed therein that as per Rule 3
Order 23 Civil Procedure Code, when a claim in the suit has
been adjusted wholly or in part by any lawful agreement or
compromise, such compromise, must be in writing and signed by
the parties and there must be complete agreement between them
and that to constitute an adjustment the agreement or
compromise must itself be capable of being embodied in a
decree. The fact that the parties entered into a compromise
during the hearing of the suit or appeal was considered not to be
sufficient, to do away with the requirement of the said rule and
that courts were expected to insist upon the parties to reduce the
terms into writing. In Byram Pestonji Gariwala v. Union Bank of
India Others [(1992) 1 SCC 31), this Court while adverting to
the very amendment in 1976 to Rule 3 Order 23 Civil Procedure
Code, noticed also the effect necessarily to be given to Rule 1
Order 3, Civil Procedure Code, as well and on an extensive
review of the case law on the subject of the right of the counsel
engaged to act on behalf of the client observed as follows:
‘ 37.We may, however, hasten to add that it will be
prudent for counsel not act on implied authority
except when warranted by the exigency of
circumstances demanding immediate adjustment of
suit by agreement or compromise and the signature
of the party cannot be obtained without undue delay.
In these days of easier and quicker communication,
such contingency may seldom arise. A wise and
careful counsel will no doubt arm himself in advance
with the necessary authority expressed in writing to
meet all such contingencies in order that neither his
authority nor integrity is ever doubted. This essential
precaution will safeguard the personal reputation of
counsel as well as uphold the prestige and dignity of
the legal profession.

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38. 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
enlargement of the scope of compromise.

39. 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 duty authorised representative. If a power-ofattorney
holder can enter into an agreement or
compromise on behalf of his principal, so can
counsel possessed 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.

40. Accordingly, we are of the view that the words ‘in
writing and signed by the parties’, inserted by the
C.P.C. (Amendment) Act, 1976, must necessarily
mean, to borrow the language of Order 3 Rule 1
Civil Procedure Code.

“any appearance, application or act in or to
any court, required or authorised by law to
be made or done by a party in such court,
may except where otherwise expressly
provided by any law for the time being in
force, be made or done by the party in
person, or by his recognised agent, or by a
pleader, appearing, applying or acting as the
case may be, on his behalf.
Provided that any such appearance shall, if
the court so directs, be made by the party in
person.’
(emphasis supplied)

8. We are in respectful agreement with the above statement of law.
Consequently it is not permissible for the appellant, to contend to
the contrary. That apart we are also of the view that a judgment or
decree passed as result of consensus arrived at before court,
cannot always be said to be one passed on compromise or
settlement and adjustment. It may, at times, be also a judgment on
admission, as in this case.”

14. In other words, the Hon’ble Supreme Court reiterated the position of law that a counsel could compromise a dispute on behalf of his client and that the decree that followed could be the result of a consensus arrived at before the Court and that consensus may not necessarily be a compromise or settlement and adjustment and the same, in a given case, could be a judgement on admission.

15. In yet another case i.e. 2006(5) SCC 566 Pushpa Devi Bhagat (D) through LR. Smt. Sadhna Rai Vs. Rajinder Singh others , where a tenant during the course of ejectment application agreed to vacate the premises by a certain date and the trial Court recorded statements of both the counsel and thereafter passed a consent decree which was later challenged by the tenant, the Hon’ble Supreme Court held that statements recorded by the Court will amount to a compromise in writing. The relevant extract reads as such:

“24. Let us now turn to the requirement of ‘in writing’ in Rule
3. In this case as noticed above, the respective statements
of plaintiffs’ counsel and defendants’ counsel were
recorded on oath by the trial court in regard to the terms of
the compromise and those statements after being read over
and accepted to be correct, were signed by the said
counsel. If the terms of a compromise written on a paper
in the form of an application or petition is considered as a
compromise in writing, can it be said that the specific and
categorical statements on oath recorded in writing by the
court and duly read over and accepted to be correct by the
person making the statement and signed by him, can be
said to be not in writing ? Obviously, No. We may also in
this behalf refer to Section 3 of the Evidence Act which
defines a document as any matter expressed or described
upon any substance by means of letters, figures or marks
or by more than one of those means intended to be used or
which may be used for the purpose of recording the
matter. The statements recorded by the court will,
therefore, amount to a compromise in writing.

25. Consequently, the statements of the parties or their
counsel, recorded by the court and duly signed by the
persons making the statements, would be ‘statement in
writing signed by the parties’. The court, however, has to
satisfy itself that the terms of the compromise are lawful.
In this case we find from the trial court records that the
second defendant had executed a vakalatnama
empowering her counsel Sri Dinesh Garg to act for her in
respect of the suit and also to enter into any compromise.
Hence there can be no doubt that Sri Dinesh Garg was
authorised by the second defendant to enter into a
compromise. We also find that the counsel for the
plaintiffs and counsel for the defendants made solemn
statements on oath before the trial court specifying the
terms of compromise, which were duly recorded in
writing and signed by them. The requirements of the first
part of Rule 3 Order 23 are fully satisfied in this case.”

16. Taking the aforesaid legal position a step further, Hon’ble Supreme Court in 2011(8) SCC 679 Bakshi Dev Raj and another Vs. Sudhir Kumar held that a counsel making a statement upon instructions from client either for withdrawal of appeal or for modification of the decree is well within his competence, though it hastened to add that it is desirable to get such instructions in writing from the client.

17. The position of law, as discerned from the above referred judgments of Hon’ble Supreme Court, leaves no manner of doubt that a statement made by a party or by his counsel towards compromise which is taken down in writing is as good as a written compromise and would satisfy the requirements of Order 23 Rule 3 CPC, particularly as regards the provision in Rule 3 which was inserted by way of amendment in the year 1976 i.e. “in writing and signed by the parties”. It will not be out of place to refer to a judgement of a Division Bench of our High Court also wherein the same issue has been discussed in context of the definition of the term ‘document’. The relevant extract from 1987 AIR(Pb. Hr.) 60 Smt. Raksha Rani vs. Ram Lal (DB) reads as under:

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“5…… …… ……. ……. Admittedly, statements of the parties
were recorded by the trial Court containing the terms of the
compromise which were duly signed by them. Can it then be said
that the compromise should not be considered to be in writing
and signed by the parties? Should terms of the compromise
scribed on a piece of paper and signed by them be given
preference to their categoric statements made in writing before
the Court which they duly signed? In our candid opinion, the
requirements of the first part of rule 3 are adequately satisfied
when the parties make statements before the Court in writing and
sign the same. Such signed statements are covered by the
definition of ”document” given in section 3 of the Indian
Evidence Act. Therein ”document” has been defined as under :-
”Document’ means any matter expressed or
described upon any substance by means of letters,
figures or marks, or by more than one of those
means, intended to be used, or which may be used,
for the purpose of recording that matter”.
A plain reading of the definition would show that any matter
expressed or described, upon any substance, by writing is a
document. The first illustration given under the definition of
”document” also clarified that ”a writing is a document”. Thus,
by no stretch of reasoning the statements of the parties recorded
by the trial Court and signed by them can be considered to be
violating the requirement of ”in writing and signed by the
parties” mentioned in the first part of rule 3.”

18. Perhaps the only exceptional circumstance under which a party may be able to wriggle out from a statement made by him in the Court or by his counsel could be wherein he is able to establish that such statement was made by way of fraud or deception. Even in such a case he would ideally be required to file a suit for getting such order/judgement/decree set aside on the basis of alleged fraud by specifically pleading as well as by leading cogent and convincing evidence to establish such fraud. No doubt in the present case the plaintiff in his application on which the impugned order was passed has pleaded therein that his statement came to be recorded on account of allurement and collusion of his counsel but there is nothing on record to establish the said assertions. Had the petitioner really been sanguine about his stand regarding collusion of his counsel, then it remains unexplained as to why he did not take any other action against his counsel. There is nothing to show that the petitioner had ever filed any complaint in the Bar Council regarding the alleged fraud and collusion by his counsel. It is very convenient for any party to level such kind of allegations against his counsel when he wishes to wriggle out of any such situation which does not suit him. The statement regarding compromise was made and signed by the petitioner/tenant in the Court of Law and in the presence of his counsel. The translated gist of the statement made by the tenant/petitioner Lakshman on 25.3.2019 before the Appellate Authority is to the following effect:

“I have compromised the matter with the respondent.
As per compromise, I will hand over the vacant
possession of the demised premises to the landlord by
20.4.2019 and the landlord would pay me an amount
of ? 50,000/-. I will be bound by my statement.”

19. The respondents/landlords also suffered a statement to the following
effect:

“ I have heard and understood the statement made by
the tenant and admit the same to be correct. I will be
bound by my statement.”

20. The aforesaid statements were recorded in a Court of law by a Judicial Officer who would have taken all care and caution before recording such statements. The statements were recorded in the presence of respective counsel of the parties and who had duly identified them in the Court. Such statements recorded before a Judicial Officer in a Court of law cannot be said to have lesser sanctity then an instrument of Compromise drawn outside the Court attested by some Oath Commissioner/Notary Public or any other authority. A certain sanctity is attached to a statement made by a party in the Court and it has to be presumed that the same was recorded voluntarily. In case a party is permitted to wriggle out of such statements by conveniently raising some frivolous allegations against his counsel or against opposing counsel, then it will virtually lead to mockery of the Court.

21. It is apparent that the very purpose of incorporating that a compromise should be in writing was to ensure that everything is there in black-andwhite and that there is no ambiguity in respect of the terms of compromise so that either of the party does not turn round at a later stage to back out on some terms or tries to misinterpret some terms and conditions of settlement, as is seen in the present case. The purpose was to avoid undue harassment and wastage of precious time of Court lest the parties would keep on agitating matter time and again. The Hon’ble Supreme Court in Pushpa Devi Bhagat’s case (supra), went further ahead to hold that attempts of tenants in such matters to protract the litigation indefinitely by raising frivolous and vexatious contentions regarding the compromise and going back on the solemn undertaking given to Court, should be deprecated.

22. Examining the aforesaid factual position in light of the legal position laid down on in Jineshwardas’s case (supra), Byram Peston j i Gariwa l ‘s case (supra), Pushpa Devi Bhagat’s case (supra) and Bakshi Dev Raj’s case (supra), as has been discussed above and upon finding that there is nothing to suggest that there was any collusion between the counsel of the petitioner and the opposite party, this Court does not find any ground to interfere with the impugned order. The petition is sans merit and is hereby dismissed. The Appellate Authority or the Executing Court, as the case may be, shall afford reasonable time to the parties, given the current situation of spread of pandemic, to comply with directions issued in order dated 9.9.2019 passed by the Appellate Authority.

( GURVINDER SINGH GILL)
06.10.2020

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