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CASE NO.: Appeal (civil)  2896 of 2006

PETITIONER: Pushpa Devi Bhagat (D) Th. LR.Smt. Sadhna Rai

RESPONDENT: Rajinder Singh & Ors.

DATE OF JUDGMENT: 11/07/2006

BENCH: B P Singh & R V Raveendran

JUDGMENT: J U D G M E N T (Arising out of S.L.P. (C) No. 13894/2004)

R. V. Raveendran, J.

       Leave granted.         This appeal is directed against the judgment dated 3.3.2004  passed by learned Single Judge of Delhi High Court in FA No.247 of  2003.  

2.      Respondents 1 & 2 are the landlords of the suit property (front  portion of residential premises no. C-25, Friends Colony, New Delhi).  Respondents 1 & 2 and their father Late Brig. S. Rameshwar let out  the suit property with the fittings and fixtures to M/s Usha Fisheries  Agriculture and Dairy Farm, a partnership firm (third respondent  herein) for a period of three years under a registered lease deed dated  6.6.1979, the purpose being the residential use of a partner of the  firm. Pushpa Devi (mother of the appellant) and respondents 4, 5 & 6  were its partners. The suit property was being used by Pushpa Devi   for her residential use. The tenancy was continued after the lease term  of three years.

3.     The landlords (Respondents 1 & 2 and their father) terminated  the said tenancy as at the end of 31.3.1989 by notice dated 9.2.1989  and filed a suit against the firm and Pushpa Devi in the court of the  District Judge, Delhi on 10.4.1989 for recovery of the possession of  the suit property. It was originally numbered as RC Suit No. 265 of  1989 and later, transferred to the court of the Sub-Judge, New Delhi  (later, Civil Judge, Delhi) and renumbered as Suit No. 52 of 1993.  Pushpa Devi, second defendant, resisted the suit inter alia on the  ground that the first defendant firm had been dissolved and as a  consequence all its partners including herself became the co-tenants  and the suit was not maintainable without impleading the other  partners. Subsequently, M.L. Wadhwa, S. K. Mittal and Badan Singh  (the other three partners of the firm), were impleaded as defendants 3  to 5. During the pendency of the suit, the first plaintiff S. Rameshwar  died, and the suit was continued by showing his two sons (original  plaintiffs 2 & 3) as plaintiffs 1 & 2. The fifth defendant also died and  his son Chaman Lal Gahlot was brought on record in his place as the  fifth defendant.  

4.     Two witnesses were examined on behalf of the plaintiffs and their  evidence was closed on 16.9.1998. Thereafter, the case was adjourned  a number of times for defendants’ evidence. Shri Dinesh Garg, counsel  for defendants stated that as the first defendant firm was dissolved, he  will not appear for the firm. In view of it, after issuing court notice, the  first defendant was placed ex parte on 24.4.2000. The order-sheet  dated 7.7.2000 shows that as defendants 2 & 3 did not let in any

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evidence, their evidence was closed and the matter was listed for  evidence of defendants 4 & 5. On 19.5.2001, the court made the  following order :-  

"The case was filed in the year 1989. Keeping in view the fact  that it has already been delayed, defendant no. 4 and newly  added defendant no.5 are given only one (more) opportunity to  lead their evidence otherwise the same will be closed on the  next date of hearing i.e. 23.5.1991."

On 23.5.1991, the two plaintiffs and their counsel and Shri Dinesh  Garg, counsel for the Defendants were present. On the basis of the  submissions made, the court recorded the following submissions in the  order sheet :  "It is stated that the matter has been compromised between the  parties. The defendants undertakes to vacate the suit premises  by 22.1.2002 and will keep on paying the rent/damages of the  suit premises @ Rs.4800/- with effect from 1.5.2001, till the  time of vacation of the suit premises. Let the statement of  both the parties be recorded." (emphasis supplied)

Thereafter, the following statement of Shri Dinesh Garg, counsel for  defendants was recorded by the court :  "Statement of Shri Dinesh Garg, Adv. for the defendants.  W. O.  I have instructions on behalf of the defendants to make the  present statement that the defendants undertake to vacate the  suit premises by 22.1.2002 and will keep on paying the  rent/damages @ Rs.4800/- w.e.f. 1.5.2001, till the vacation of  the suit premises. The rent upto 30.4.2001 already stands paid.  

Sd/-  Dinesh Garg, Adv.                          R.O.A.C.                                                                           (Sd. Civil Judge)

Thereafter, the following statement of Shri B. Khan, counsel for the  plaintiffs was recorded :

       "Statement of Shri B. Khan, Counsel for both the plaintiffs.  W.O. I have instructions on behalf of plaintiffs to make the present  statement that in view of the statement made by the counsel for  the defendants, on behalf of the defendants, the suit may kindly  be disposed of accordingly. I accept the terms of the statement  of counsel for defendants. The plaintiffs are also present today  in the court and will countersign this statement.

Sd/-  B. Khan, Adv.                                   R.O.A.C.                                                                   (Sd/- Civil Judge)  

In addition to the learned counsel for plaintiffs and defendants signing  the order sheet, plaintiffs 1 & 2 who were present in court, also signed  the order sheet. Thereafter, the court made the following order :-  

"ORDER In view of the statement made by the counsel for parties in the  presence of both the plaintiffs, the suit stands disposed off as  settled. Parties to be bound by their statements made today.  

File be consigned to R/R. Decree sheet in terms of said  compromise be prepared.  

23.5.2001                                                     Sd/Savita Rao Civil Judge, Delhi"         

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5.      It was subsequently found that Shri Dinesh Garg though  appearing for all defendants, had not filed Vakalatnama for defendants  3 & 4 and one Shayam Kishore had entered appearance for them.  Therefore, an application under sections 151 and 152 CPC was moved.  Shri Dinesh Garg filed the Vakalatnama on behalf of the defendants 3  & 4 on 18.7.2001. In view of it, the trial court made the following  order on 18.7.2001 :  

"Reply to application under section 151 and 152 filed. Copies  given.  As stated Vakalatnama on behalf of the defendants 1, 2, & 5 is  already on record  but inadvertently, the Vakalatnama on behalf  of the defendants 3 & 4 was not filed which the counsel Shri  Dinesh Garg is filing today. It be taken on record. Counsel for  defendant states that when he gave the statement, he was duly  authorized on behalf of the defendants for making statement.  He further states that defendant no. 1 is a partnership firm  which has now been dissolved and is not in existence and even  if the decree is passed against defendant no.1 then also it will  be executable against defendents 2 to 5 only. However, I pass a  decree against all the defendants. Let the decree be modified  and a fresh decree sheet be prepared mentioning therein that  the defendants will vacate the suit premises by 22.1.2002 and  will keep on paying the rent/damages @ Rs.4800/- with effect  from 1.5.2001 till the vacation of the suit premises, i.e., front  portion forming part of premises No.C-25, Friends Colony, New  Delhi as shown red in the site plan annexed with the plaint. File  be sent to RR.

Sd/Civil Judge"

Accordingly,  a fresh decree was drawn on 18.7.2001 in terms of  the final order dated 23.5.2001.  

6.     On 21.8.2001, second defendant (Pushpa Devi) filed an  application under section 151 CPC for setting aside the decree  dated 18.7.2001 alleging that she had not instructed her counsel  Shri Dinesh Garg to enter into any compromise on her behalf  that there was no "written compromise between the parties duly  signed by the parties", and therefore, there was no lawful  agreement or compromise. The court issued notice of the said  application to Shri Dinesh Garg, counsel for the defendants as  also the plaintiffs. Shri Dinesh Garg filed a detailed statement  dated 7.12.2001. We extract below the relevant portions of the  said statement :

"The counsel had represented the defendant no. 2  for about 12 years in the aforesaid matter. The  counsel was getting the instructions from the  defendant no. 2 most of times through her daughter  Ms. Sadhna Rai or her son in law, Shri Vinay Rai or  through Group Head of Law Department Dr. M.C.  Gupta. All the proceedings were always  communicated to the defendant no.2.  

After the closing of evidence by the plaintiff, the case  was listed for the defendant’s evidence time and  again and under instructions of the defendant no. 2,  the counsel took adjournments for evidence for  several years. The adjournment were taken on  4.12.1998, 5.4.1999 and 21.5.1999. When the case  fixed for 12.7.1999 for evidence of defendant no. 2,  she again did not come and sent her medical

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certificate which was placed on record and case was  adjourned to 8.9.1999. Again adjournment  was  sought and the case was adjourned to 22.10.1999 as  last and final opportunity for her evidence. A written  communication dated 20.9.1999 was sent by  registered post to defendant no. 2, but she did not  appear. Again adjournment was sought as per her  instructions and this time the case was adjourned for  30.11.1999 for her evidence subject to cost of  Rs.500/- which was paid by her but still she did not  appear in witness box. Even thereafter case was  adjourned on 13.1.2000, 24.4.2000, 7.7.2000,  4.9.2000, 16.10.2000, 20.12.2000 and 26.4.2001  for evidence of remaining defendants but none  appeared in witness box.  

After contesting the matter for about 10 years when  it was not possible to take any further date for  recording of the evidence of the defendants, the  counsel advised the defendant no. 2 to lead evidence  and made it clear that it will not be possible the  counsel to meet any further adjournment.  

However, she requested for getting her some time to  enable her to find an alternative accommodation.  The counsel took her oral instructions under good  faith and because of level of confidence developed  after representing Usha Group for about 18 years,  started negotiations with the plaintiff which went on  for several months, during which period there were  several offers and counter offers duly communicated  to the defendants. Ultimately when plaintiff came out  with plea to first clear the arrears of rent with effect  from 01.10.1999, the counsel asked defendant no. 2  to clear the arrears which were sent to counsel vide  communication of their Law Officer dated 9.4.2001   through the Head of Law Department Dr. M.C.  Gupta.  

After that, the term are negotiated and ultimately,  with prior approval of defendant no. 2 a statement  was made on behalf of the defendant no. 2 as well  on behalf of the other defendants and the decree  was obtained based on admission. Pursuant to  request of the counsel, the plaintiff as well as this  Hon’ble Court was pleased to allow time upto  22.1.2002 to the defendants to vacate the premises.  Immediately after recording of the statement, a  written communication dated 24.5.2001 was sent to  the defendant no. 2 as well as to Dr. M.C. Gupta,  Head of the Law Department of Usha Group of  Companies was sent by Registered A.D. post clearly  indicating therein that a statement has been made  as per the instructions and that the decree has been  passed. This communication was duly received by  the defendant no. 2 as well as Dr. M.C. Gupta. The  copy of the letter, postal receipts and the AD card   duly signed by the defendant as received are  annexed."  

7.      The second defendant did not, however, pursue her  application dated 21.8.2001 for setting aside the consent decree.  On 27.8.2001, within six days of filing the application dated  21.8.2001 before the trial court for setting aside the decree, the

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second defendant filed an appeal against the said consent decree  before the District Judge, Delhi. The appellate court by judgment  dated 21.12.2002 set aside the consent decree on the ground  that there was no agreement or compromise reduced to writing  and signed by the parties. The matter was remanded to the trial  court with a direction to proceed with the trial of the suit in  accordance with the law by ignoring the statement of the counsel  made on 23.5.2001.  

8.     The said judgment of the Appellate Court was challenged  by the landlords in FAO No. 247 of 2003 on the file of the Delhi  High Court, under Order 43 Rule (1)(u) of CPC. During the  pendency of the said appeal before the High Court, Pushpa Devi  died, and her daughter (the Appellant) came on record and  pursued the appeal. The High Court allowed the landlords’ appeal  by judgment dated 3.3.2004. The High Court held that the  consent decree in question did not fall under the first part of  Rule 3 of Order 23 (requiring an agreement or compromise  between the parties to be in writing and signed by the parties),  but fell under the second part of Rule 3 of Order 23 (relating to  satisfaction of the claim of the plaintiff, which did not require any  document in writing signed by the parties), and that there was a  valid compromise under Order 23 Rule 3 CPC and the second  defendant "could not repudiate the consensus by attempting to  challenge their satisfaction". From the fact that the second  defendant did not pursue the application dated 21.8.2001 filed  before the trial court, and from the fact that she did not  challenge the integrity of her counsel (who entered into the  compromise) either before the appellate court or before it, the  High Court drew an inference that second defendant’s counsel  Sri Dinesh Garg, had the authority on her behalf to make the  statement leading to the consent decree.  

9.     The judgment of the High Court is challenged by the  appellant (second defendant’s legal representative) in this  appeal. Learned counsel for the appellant contended that the  High Court having held that the case did not fall under the first  part of Rule 3 of Order 23, committed a serious error in holding  that the case fell under the second part of the said Rule. It is  contended that the second part applies only where the defendant  satisfies the plaintiff in regard to the whole or part of the subject  matter of the suit. It is pointed out that the second part refers to  completed acts, that is acts which have been already executed  or performed, where nothing more remains to be done in future  by a defendant. He submitted that in this case when the counsel  for the defendants agreed to vacate the suit premises on a  future date,  that is on or before 22.1.2002, it was  a promise or  an agreement to do an act in future to satisfy the suit claim, and  not a case where "defendant satisfies the plaintiff in respect of  the subject matter of the suit". He pointed out that if the  defendants had vacated and delivered the premises to the  plaintiffs and thereafter the counsel for the defendants had  confirmed the same and the suit had been disposed of recording  the said submission, then it would fall under the second part.  The appellant contends that the High Court having held that the  case did not fall under the first part of Rule 3, and the case  demonstrably not falling under the second part of Rule 3, it has  to be held that there was no lawful agreement or compromise. It  is submitted that the first appellate court was justified in setting  aside the consent decree and remanding the matter to the trial  court. On the other hand, the learned counsel for the landlords  contended that the District Court had no jurisdiction to entertain  the appeal against a consent decree. It is also contended that  there was a compromise by admitting the claim of the plaintiffs,  and, therefore, the consequential decree is valid and binding. On

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the contentions raised, the following two questions arise for  consideration :  

(i)     Whether the appeal filed by Pushpa Devi under  section 96 of the Code of Civil Procedure, against the  consent decree was maintainable.  (ii)    Whether the compromise on 23.5.2001 resulting in a  consent decree dated 18.7.2001 was not a valid  compromise under Order 23 Rule 3 CPC.  

Re : Point No. (i)  

10.     It is no doubt true that the landlords did not contend  either before the first appellate court or before the High Court  that the appeal against the consent decree was not  maintainable. This contention is urged for the first time in this  Court. The contention relates to jurisdiction of the appellate  court and is evident from the record. Such a plea does not  require any evidence. Further, being a contention relating to the  jurisdiction of the appellate court, it does not require any  ’pleading’. Though this Court will not normally permit a new plea  to be raised at the hearing of the special leave petition or an  appeal under Article 136, where such plea does not involve any  question of fact or amendment of pleading and is purely one of  law, particularly relating to jurisdiction of the appellate court, it  can be entertained by this Court. (See Shanti Devi vs. Bimla  Devi - AIR 1988 SC 2141 and Zahoor vs. State of U.P - AIR 1991  SC 41). In Hiralal vs. Kasturi Devi [AIR 1967 SC 1853], this  Court observed :  

"\005\005\005\005\005. though the question of jurisdiction had not  been urged before the High Court, it stares one in the  face of the judgment of the appellate court. We are  satisfied that the appellate court had no jurisdiction  \005\005\005\005\005 though this point was not raised in the High  Court, it is so obvious that we have permitted the plea to  be raised before us."  

In this case, the contention raised being one relating to  jurisdiction of the appellate court, we have permitted the said  contention and heard both sides thereon.  

11.     Section 96 provides for appeals from original decrees.  Sub-section (3) of section 96, however, provided that no appeal  shall lie from a decree passed by the court with the consent of  the parties. We may notice here that Order 43 Rule 1 (m) of CPC  had earlier provided for an appeal against the order under Rule 3  Order 23 recording or refusing to record an agreement,  compromise or satisfaction. But clause (m) of Rule 1 Order 43  was omitted by Act 104 of 1976 with effect from 1.2.1977.  Simultaneously, a proviso was added to Rule 3 Order 23 with  effect from 1.2.1977. We extract below the relevant portion of  the said proviso :  

"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\005"

Rule 3A was also added in Order 23 with effect from 1.2.1977  barring any suit to set aside a decree on the ground that the  compromise on which the decree is based was not lawful.

12.     The position that emerges from the amended provisions of

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Order 23, can be summed up thus :  

(i)     No appeal is maintainable against a consent decree  having regard to the specific bar contained in section  96(3) CPC.  (ii)    No appeal is maintainable against the order of the  court recording the compromise (or refusing to  record a compromise) in view of the deletion of  clause (m) Rule 1 Order 43.  (iii)   No independent suit can be filed for setting aside a  compromise decree on the ground that the  compromise was not lawful in view of the bar  contained in Rule 3A.  (iv)    A consent decree operates as an estoppel and is  valid and binding unless it is set aside by the court  which passed the consent decree, by an order on an  application under the proviso to Rule 3 of Order 23.  

Therefore, the only remedy available to a party to a consent  decree to avoid such consent decree, is to approach the court  which recorded the compromise and made a decree in terms  of it, and establish that there was no compromise. In that  event, the court which recorded the compromise will itself  consider and decide the question as to whether there was a  valid compromise or not. This is so because a consent decree,  is nothing but contract between parties superimposed with  the seal of approval of the court. The validity of a consent  decree depends wholly on the validity of the agreement or  compromise on which it is made. The second defendant, who  challenged the consent compromise decree was fully aware of  this position as she filed an application for setting aside the  consent decree on 21.8.2001 by alleging that there was no  valid compromise in accordance with law. Significantly, none  of the other defendants challenged the consent decree. For  reasons best known to herself, the second defendant within a  few days thereafter (that is on 27.8.2001), filed an appeal  and chose not to pursue the application filed before the court  which passed the consent decree. Such an appeal by second  defendant was not maintainable, having regard to the express  bar contained in section 96 (3) of the Code.  

Re : Point No. (ii)  

13.     Order XXIII deals with withdrawal and adjustment of  suits. Rule 3 relates to compromise of suits, relevant portion of  which is extracted below :

"3. Compromise of suit.\027Where it is proved to the  satisfaction of the Court that a suit has been  adjusted wholly or in part by any lawful agreement  or compromise in writing and signed by the parties,  or where the defendant satisfies the plaintiff in  respect of the whole or any part of the subject- matter of the suit, the Court shall order such  agreement, compromise or satisfaction to be  recorded, and shall pass a decree in accordance  therewith so far as it relates to the parties to the  suit, whether or not the subject-matter of the  agreement, compromise or satisfaction is the same  as the subject-matter of the suit."

The said Rule consists of two parts. The first part provides that

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where it is proved to the satisfaction of the court that a suit has  been adjusted wholly or in part by any lawful agreement or  compromise in writing and signed by the parties, the court shall  order such agreement or compromise to be recorded and shall  pass a decree in accordance therewith. The second part provides  that where a defendant satisfies the plaintiff in respect of the  whole or any part of the subject matter of the suit, the court  shall order such satisfaction to be recorded and shall pass a  decree in accordance therewith. The Rule also makes it clear that  the compromise or agreement may relate to issues or disputes  which are not the subject-matter of the suit and that such  compromise or agreement may be entered not only among the  parties to the suit, but others also, but the decree to be passed  shall be confined 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. We are not, however,  concerned with this aspect of the Rule in this appeal.

14.     What is the difference between the first part and the  second part of Rule 3 ? The first part refers to situations where   an agreement or compromise is entered into in writing and  signed by the parties. The said agreement or compromise is  placed before the court. When the court is satisfied that the suit  has been adjusted either wholly or in part by such agreement or  compromise in writing and signed by the parties and that it is  lawful, a decree follows in terms of what is agreed between the  parties. The agreement/compromise spells out the agreed terms   by which the claim is admitted or adjusted by mutual  concessions or promises, so that the parties thereto can be held  to their promise/s in future and performance can be enforced by  the execution of the decree to be passed in terms of it. On the  other hand, the second part refers to cases where the defendant  has satisfied the plaintiff about the claim. This may be by  satisfying the plaintiff that his claim cannot be or need not be  met or performed. It can also be by discharging or performing  the required obligation. Where the defendant so ’satisfies’ the  plaintiff in respect of the subject-matter of the suit, nothing  further remains to be done or enforced and there is no question  of any ’enforcement’ or ’execution’ of the decree to be passed in  terms of it. Let us illustrate with reference to a money-suit filed  for recovery of say a sum of Rupees one lakh. Parties may enter  into a lawful agreement or compromise in writing and signed by  them, agreeing that the defendant will pay the sum of Rupees  one lakh within a specified period or specified manner or may  agree that only a sum of Rs.75,000 shall be paid by the  defendant in full and final settlement of the claim. Such  agreement or compromise will fall under the first Part and if  defendant does not fulfil the promise, the plaintiff can enforce it  by levying execution. On the other hand, the parties may submit  to the court that defendant has already paid a sum of Rupees  one lakh or Rs.75,000/- in full and final satisfaction or that the  suit claim has been fully settled by the defendant out of court  (either by mentioning the amount paid or not mentioning it) or  that plaintiff will not press the claim. Here the obligation is  already performed by the defendant or plaintiff agrees that he  will not enforce performance  and nothing remains to be  performed by the defendant. As the order that follows merely  records the extinguishment or satisfaction of the claim or non- existence of the claim, it is not capable of being ’enforced’ by  levy of execution, as there is no obligation to be performed by  the defendant in pursuance of the decree. Such ’satisfaction’  need not be expressed by an agreement or compromise in  writing and signed by the parties. It can be by a unilateral  submission by the plaintiff or his counsel. Such satisfaction will

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fall under the second part. Of course even when there is such  satisfaction of the claim or subject matter of the suit by  defendant and the matter falls under the second part, nothing  prevents the parties from reducing such satisfaction of the  claim/subject matter, into writing and signing the same. The  difference between the two parts is this : Where the matter falls  under the second part, what is reported is a completed action or  settlement out of court putting an end to the dispute, and the  resultant decree recording the satisfaction, is not capable of  being enforced by levying execution. Where the matter falls  under the first part, there is a promise or promises agreed to be  performed or executed, and that can be enforced by levying  execution. While agreements or compromises falling under the  first part, can only be by an instrument or other form of writing  signed by the parties, there is no such requirement in regard to  settlements or satisfaction falling under the second part. Where  the matter falls under second part, it is sufficient if the plaintiff  or plaintiff’s counsel appears before the court and informs the  court that the subject matter of the suit has already been settled  or satisfied.  

15.     In a suit against the tenant for possession, if the  settlement is that the tenant will vacate the premises within a  specified time, it means that the possession could be recovered  in execution of such decree in the event of the defendant failing  to vacate the premises within the time agreed. Therefore, such  settlement would fall under the first part. On the other hand, if  both parties or the plaintiff submit to the court that the tenant  has already vacated the premises and thus the claim for  possession has been satisfied or if the plaintiff submits that he  will not press the prayer for delivery of possession, the suit will  be disposed of recording the same, under the second part. In  such an event, there will be disposal of the suit, but no  ’executable’ decree.

16.     In this case, under the settlement, the tenant  undertook  to vacate the suit property on a future date (that is 22.1.2002)  and pay the agreed rent till then. The decree in pursuance of  such settlement was an ’executable’ decree. Therefore the  settlement did not fall under the second part, but under the first  part of Rule 3. The High Court obviously committed an error in  holding that the case fell under the second part of Rule 3.

17.     The next question is where an agreement or compromise  falls under the first part, what is the meaning and significance of  the words ’in writing’ and ’signed by the parties’ occurring in  Rule 3 ? The appellant contends that the words ’in writing’ and  ’signed by the parties’ would contemplate drawing up of a  document or instrument or a compromise petition  containing  the terms of the settlement in writing and signed by the parties.  The appellant points out that in this case, there is no such  instrument, document or petition in writing and signed by the  parties.  

18.     We will first consider the meaning of the words "signed by  parties". Order 3 Rule 1 of CPC provides that any appearance,  application or act in or to any Court, required or authorized 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  recognized agent, or by a pleader appearing, applying or acting,  as the case may be, on his behalf. The proviso thereto makes it  clear that the Court can, if it so desires, direct that such  appearance shall be made by the party in person. Rule 4  provides that no pleader shall act for any person in any Court,

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unless he has been appointed for the purpose by such person by  a document in writing signed by such person or by his  recognized agent or by some other person duly authorized by or  under a power-of-attorney to make such appointment. Sub-rule  (2) of Rule 4 provides that every such appointment shall be filed  in Court and shall, for the purposes of sub-rule (1), be deemed  to be in force until determined with the leave of the Court by a  writing signed by the client or the pleader, as the case may be,  and filed in Court, or until the client or the pleader dies, or until  all proceedings in the suit are ended so far as regards the client.  The question whether ’signed by parties’ would include signing  by the pleader was considered by this Court in Byram Pestonji  Gariwala v. Union Bank of India [1992 (1) SCC 31] with  reference to Order 3 of CPC :

"30. There is no reason to assume that the legislature  intended to curtail the implied authority of counsel,  engaged in the thick of proceedings in court, to  compromise or agree on matters relating to the parties,  even if such matters exceed the subject matter of the  suit. The relationship of counsel and his party or the  recognized agent and his principal is a matter of contract;  and with the freedom of contract generally, the legislature  does not interfere except when warranted by public  policy, and the legislative intent is expressly made  manifest. There is no such declaration of policy or  indication of intent in the present case. The legislature  has not evinced any intention to change the well  recognized and universally acclaimed common law  tradition \005

       x x x x x

35. So long as the system of judicial administration in  India continues unaltered, and so long as Parliament has  not evinced an intention to change its basic character,  there is no reason to assume that Parliament has, though  not expressly, but impliedly reduced counsel’s role or  capacity to represent his client as effectively as in the  past\005   

       x x x x x  

37.     We may, however, hasten to add that it will be  prudent for counsel not to act on implied authority except  when warranted by the exigency of circumstances  demanding immediate adjustment of suit by agreement of  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\005  

38.     Considering the traditionally recognized 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

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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 authorized agents.

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 duly  authorized representative. If a power-of-attorney holder  can enter into an agreement or compromise on behalf of  his principal, so can counsel, possessed of the requisite  authorization by vakalatnama, act on behalf of his  client\005.. 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."

[Emphasis supplied]

The above view was reiterated in Jineshwardas v. Jagrani [2003  (11) SCC 372]. Therefore, the words ’by parties’ refer not only  to parties in person, but their attorney holders or duly authorized  pleaders.  

19.     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.  

20.     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  authorized 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

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first part of Rule 3 of Order XXIII are fully satisfied in this case.

21.     The matter can be viewed from a different angle also. After  the issues were framed by the trial court, the plaintiffs had  examined two witnesses and closed their evidence and  thereafter the matter was set down for the evidence of  defendants. The first defendant was treated as ex parte. As  defendants 2 and 3 did not lead any evidence in spite of  numerous opportunities, their evidence was treated as closed.  On 17.5.2001, the matter was finally adjourned to 23.5.2001 for  the evidence of defendants 4 and 5 with a condition that if they  do not lead evidence on that date there evidence will be closed.  On 23.5.2001, defendants 4 and 5 did not lead any evidence. On  the other hand, the counsel for defendants made a statement on  oath that the premises will be vacated on 22.1.2002. Thereafter,  counsel for the plaintiff also made a statement agreeing to grant  of time till 21.1.2002. There was also agreement that the  plaintiffs will be entitled to the payment of only Rs.4,800/- per  month (equivalent to the rent) and nothing more up to  22.1.2002. The effect of it is that the parties have gone to trial  on the issues and the only evidence led by defendants is that  they will vacate the premises on 22.1.2002. No other evidence  being led, the necessary conclusion is that the defendants  admitted the plaintiffs’ claim and merely sought time to vacate.  Therefore, the suit can be said to have been decreed on the  basis of evidence and the admissions made by the defendants.  In  Jineshwardas (supra), such a situation was noticed. In that  case,  the High Court made an order on a consensus expressed  by both the learned counsel at the time of hearing of the second  appeal, that the respondents will pay Rs.25,000/- within a period  of one month with interest in the manner stipulated. The  appellant subsequently filed an application for review,  contending that the said order disposing of the appeal was a  compromise decree, and as it was not in writing and signed by  the parties, the appeal could not have been disposed of on the  basis of the submissions. The High Court, however, refused to  entertain such objections. This Court while upholding the  decision of the High Court and holding that there was a valid  compromise, also observed :  

"That apart, we are also of the view that a judgment or  decree passed as a 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."

22.     Strong reliance was placed by the appellant on the  following observations of this Court in Gurpreet Singh v. Chatur  Bhuj Goel [1988 (1) SCC 270] to contend that a compromise  should be reduced into writing in the form of an ’instrument’ and  signed by the parties to be valid under Order 23 Rule 3.  He  submitted that recording of the statements of the parties or their  counsel, would not be an instrument of compromise. An  ’instrument’, according to him, connotes a regular document  drawn up in the form of an agreement. We extract below the  observations relied on by the appellant :  

"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 and there must be a  completed agreement between them. To constitute an

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adjustment, an 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 or  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."

We have already referred to the definition of the term document.  The term instrument used in Gurpreet Singh (supra) refers to a  writing of a formal nature and nothing more. Further, we will  have to understand the observations in the context in which they  were made. In that case when the hearing of a Letters Patent  Appeal commenced before the High Court, the parties took time  to explore the possibility of a settlement. When the hearing was  resumed the appellant’s father made an offer for settlement  which was endorsed by counsel for the appellant also. The  respondent who was present also made a statement accepting  the offer. Evidently, the said offer and acceptance were not  treated as final as the appeal was not disposed of by recording  those terms. On the other hand, the said ’proposals’ were  recorded and the matter adjourned for payment in terms of the  offer. When the matter was taken up on the next date of  hearing, the respondent stated that he was not agreeable. The  High Court directed that the appeal will have to be heard on  merits as the respondent was not prepared to abide by the  proposed compromise. That order was challenged by the  appellant by contending that the matter was settled by a lawful  compromise by recording the statements of the appellant’s  counsel and respondent’s counsel, and the respondent could not  resile from such compromise and therefore, the High Court  ought to have disposed of the appeal in terms of the  compromise. It is in this factual background, that is, where there  was no consent decree, the question was considered by this  Court. The distinguishing feature in that case is that though the  submissions made were recorded, they were not signed by the  parties or their counsel. Nor did the court treat the submissions  as a compromise. In this case, the court not only recorded the  terms of settlement but thereafter directed that the statements  of the counsel be recorded. Thereafter, the statements of  counsel were recorded on oath, read over and accepted by the  counsel to be correct and then signed by both counsel. Therefore  in this case, there is a valid compromise in writing and signed by  the parties (represented counsel). The decision in Gurpreet  Singh (supra) is therefore of no assistance to the appellant.

23.     At the cost of repetition, we may recapitulate the facts of  this case. The suit was a simple suit for possession by a landlord  against a tenant filed in the year 1993. Plaintiff’s evidence was  closed in 1998. The contesting defendant (defendant No.2) did  not lead any evidence, and her evidence was treated as closed.  The matter was dragged on for 3 years for defendant’s evidence  after the conclusion of plaintiff’s evidence. It was noted on  19.5.2001 that no further adjournment will be granted for the  evidence of defendants 4 and 5 (who are not contesting the  matter), on the next date of hearing (23.5.2001). When the  matter finally came up on 23.5.2001, no evidence was tendered.  On the other hand, a statement was made agreeing to vacate  the premises by 22.1.2002. The trial court took care to ensure  that the statements of both counsel were recorded on oath and  signed. Thereafter, it passed a consent decree. The attempts of

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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. In this context, we may refer to the  observation made by this Court a similar situation in Smt.  Jamilabai Abdul Kadar v. Shankarlal Gulabchand [AIR 1975 SC  2202] :

        "23. On the facts of the present case we have little doubt  the pleader has acted substantially with the knowledge of  and encouraged by his client.  

       x x  x x x  

24. We feel no doubt that the broad sanction for the  compromise came from the tenant., that no shady action  is imputable to respondent 4 and that his conduct has  been motivated by the good of his client.

25. The last posting was for reporting the compromise.  But, on that date, the Court declined further adjournment  and the party being absent and away, the pleader for the  appellant had no alternative but to suffer an eviction  decree or settle it to the maximum advantage of his  party. \005"                    

Similar are the facts here. Neither the second defendant nor her  legal representative has attributed any improper motive to   second defendant’s counsel. The facts go to show nothing further  could have been done for the defendants-tenants. All that the  counsel for defendants had done was to get the maximum  advantage to his clients in the circumstances after dragging on  the matter to the extent possible.  

24.     This appeal  is, therefore, liable to be dismissed as being  devoid of merit. The consent decree is upheld, though for  reasons different from those which weighed with the High Court.  The landlords (respondents) will be entitled to seek mesne  profits for the period from 22.1.2002 to date of delivery of  possession in accordance with law. The appeal is accordingly  dismissed with costs. The costs payable by the appellant  are  quantified at Rs.25,000/-.