Holding

A compromise decree reduced to writing and signed by counsel, not the parties personally, is valid, executable and binding as res judicata under the amended Order XXIII Rule 3.

Summary

The appellant, Gariwala, challenged a decree passed on a compromise that was reduced to writing and signed only by his counsel, arguing that the 1976 amendment to Order XXIII Rule 3 of the CPC required the parties themselves to sign. The respondents contended that the expression "parties" includes a recognised agent or pleader unless expressly limited, and that the decree was valid and executable. The Supreme Court examined the legislative intent behind the amendment, the traditional role and implied authority of counsel, and the effect of the decree under res judicata and estoppel. It held that the amendment did not curtail counsel’s authority and that a compromise decree signed by counsel is valid, binding and executable. The Court also noted that the decree had remained unchallenged for six years, making the late challenge untenable. Consequently, the appeal was dismissed.

Issues considered

Whether Order XXIII Rule 3, as amended in 1976, requires the parties themselves to sign a compromise agreement for the decree to be valid.
Whether a compromise decree signed only by counsel is a nullity and incapable of execution.
Whether the amendment intended to limit the traditional implied authority of counsel to settle matters, including collateral matters.
Whether a decree based on such a compromise can be challenged after a lapse of time, invoking delay, estoppel or res judicata.

Legislation cited

Code of Civil Procedure, 1908s. Order III Rule 1, s. Order XXIII Rule 3, s. Order XXI Rule 22, s. Order XXI Rule 23
Indian Contract Act, 1872

Subjects

compromise decreeCPC amendment 1976counsel authorityres judicataestoppelexecution of decreecivil procedureparty signature

Judgment

BYRAM PESTONfl GARIWALA A
v.
UNION BANK OF INDIA AND ORS.
~·
SEPTEMBER 20, 1991
[T.K. THOMMEN AND R.M. SAHAI, JJ.] B
Code of Civil Procedure, 1908--0rder XXlll, Rule 3-Compromise
-counsel's rol~ and Post 1976 CPC Amendment-Object of amend-
ment-Legislative intention indicated.

Code of Civil Procedure,1908-0rder XX/II read with Order XX/, Rule
c
22--Compromise entered into by the Counsel of defendant in High. Court--
Compromise decree on 18.6.1984-Ex.ecution-Notice under Order XX!,
Rule 22 to defendant made absolute on 23.1.199o-Questioning the com-
promise after six years by chamber summon-- Effect of.
Before this Court, the appellant-defendant challenged the judgment D
_of the High Court which held that the decree made against the defendant
in terms of a compromise in writing and signed by the counsel
~
representing the parties was valid and binding on the parties, arid that in
the absence of any challenge against the order made under Order XX.I,
rule 23, Civil Procedure Code, allowing execution of the decree, the E
defendant was no longer entitled to resist executio~ by recourse to
Chamber Summons.

The appellant contended that the High Court was wrong in holding
"""' ..(
that, notwithstanding the amendment of 1976 inserting the words 'in
writing and signed by the parties', it was still sufficient if the terms of F
compromise were reduced to writing and signed by counsel representing
the parties, and not necessarily by the parties in person, and that a decree
based on a compromise not signed by the parties in person was a nullity
and was incapable of execution.

The respondents submitted that it was always understood that the G
expression 'party' included his pleader in matters relating to appearance in
' ..(- court, and his counsel in the cause, therefore, had express or implied
authority, unless specifically withdrawn or limited by the party, to represent
him in court and do whatever was necessary in connection with the conduct of
bis suit including adjustment of the suit by agreement or compromises. H
187-
188 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A Dismissing the appeal, this Court,

HELD: 1. Counsel's role in entering into a compromise has been
traditionally understood to be confined to matters within the scope of the
suit. H~ver, a compromise decree may incorporate not only matters
falling within the subject matter of the suit, but also other matters which
B are collateral to it. The position before the amendment in 1976 was that, in
respect of the former, the decree was executable, but in respect of the
latter, it was not executable, though admissible as judicial evidence of its·
contents. (199 C-D]

C 2. After the amendment or 1976, a consent decree, is executable in
terms thereof, even if it comprehends matters falling outside the
subject-matter of the suit, but concerning the parties. [201 E]

3. The object or the amendment of Order XXIII, Rule 3, C.P.C. was
to provide an appropriate remedy to expedite proceedings in Court. That
D object must be borne in mind by adopting a purposive construction or the
amended provisions. The legislative intention being the speedy disposal or
. cases with a view to relieving the litigants and the Courts alike of the
burden of mounting anears, the word 'parties' must be so construed as to
yield a beneficent result, so as to eliminate the mischief the legislature had
E in mind. [202 D-EJ
4. 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 or the suit. The relationship of counsel and
F his party or the recognised agent and his principal is a matter of contract; and
with the freedom or 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 or policy 0r indication of intent
in the present case. The legislature has not evinced any intention to change the
G well recognised and universally acclaimed common law tradition of an ever
alert, independent and active Bar with freedom to manoeuvre with fon:e and
drive for quick action in a battle or wits typical or the adversarial system of
oral hearing which is in sharp contrast to the inquisitorial traditions of the
'civil law'or France and other European and Latin American countries where
H written submissions have the pride of place and oral arguments are
GARIWAl.A v. UNION BANK • 189

considered relatively insignificant. [202 E-H] A
5. 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 B
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 tile 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 C
object of attaining quick reduction of arrears in Court by elimination of
uncertainties and enlargement of the scope of compromise. [205 F -HJ

6. A judgment by consent is intended· to stop litigation between the
parties just as much as a judgment resulting from a decision of the court
at the end of a long drawn out fight. A compromise decree. creates an D
estoppel by judgment. [207 BJ

7. In the present case, the notice issued under Order XXI rule 22
was personally served on the defendant, but he did not appear or show
cause why the decree should not be executed. The notice was accordingly E
made absolute by order dated 23.1.1990 and leave was granted to the
plaintiff to execute the decree. The decree passed by the High Court on
18.6.1984 in terms of the com promise was a valid decree and it constituted
resjudicata. (206 F-GJ

8. The consent decree made on 18.6.1984 remained unchallenged. F
None questioned it. The appellant never raised any doubt as to its validity
or genuineness. He had no case that the decree was vitiated by fraud or
misrepresentation or his counsel lacked authority to enter into a
compromise on his behalf. Nevertheless, after six years he questioned its
validity !>y means of chamber summons. This was an unsuccessful
challenge by reason of delay, estoppel or res judicata. (207 E-FJ
G

Halsbury's Laws of England, 4th Ed. Vol.3, Paras 1181 & 1183; Fran-
cis Bennion's Statutory Imerpretation, Butterworths, 1984, para 133;
Crawford's Statutory Constmctio11, Para 254; Rene David, English Law and
French Law-Tagore Law Lectures, 1980; Spencer-Bower to Turner in Res
H
190 SUPREME COURT REPORTS (1991) SUPP. 1 S. C. ll.

A Judicata, Second Edition, Page 37; The Common Law in India 1960-The
Hamlyn Lectures, Twelfth Series. pp 1-4, referred to.

Patience Swinfen v. Lord Chelmsford, (1860)5 H & N 890 at. 922;
S.C.(Ex.) 382; Mathews v. Munster, (1887) 20 Q.B. 14.l at 144; Ronde/ v.
Worsley,J1965] 1 Q.B. 443, 502; (Babu) Sheonandan Prasad Singh&: Ors.v.
B Hakim Abdul Fateh Mohammed Reza & Anr., AIR 1935 P.C. 119,121;
Sourendera Nath Mitra & Ors. v. Taruba/a Dasi, AIR 1930 P.C. 158;
Hemanta Kumari Debi v. Midnapur Zamindari Co., AIR 1919 PC 79;
Jami/abai Abdul Kadar v. Shanker/a/ Gu/abchand & Ors., (1975) Supp.
SCR 336; Monoharbahal Colliery, Calcutta v. KN.Mishra&: Ors., AIR 1975
SC 163.2; National Assistance Board v. Wilkinson, [1952) 2 Q.B. 648;
C Sailendra Narayan Bhania Deo v. The State of Orissa, AIR 1956 SC 346;
Mohan/a/ Goenka v. Benoy Kishna Mukherjee & Ors., AIR 1953 SC 65,
Shankar Sitaram Sontakke & Anr. v. Ba/krishna Sitaram Sontakke & Ors.
AIR 1954 SC 352, referred to.

Ram Juwan v. Devendra Nath Gupta, AIR 1960 MP. 28o; Vishnu
D Sitaram Auchat v. Ramchandra Govind Joshi, AIR 193.2 Bombay 466;
Jasimuddin Biswas v. Bhuban Je/ini, ILR 34 Calcutta 456; Ganganand 'r
Singh & Ors. v. Rameshwar Singh Bahadur & Anr, AIR 1927 Patna 271;
Chengan Souri, Nayakam v. A.N. Menon, AIR 1968 Kerala 213; Jiwibai v.
Ramkumar Shriniwas .Murarka Agarwala, AIR 1947 Nagpur 17; Govindam-
ma/ v. Marimuthu Maistry & Ors., AIR 1959 Mad 7; Lax:midas Ranchhoddas
E & Ors. v. Savitabai Ha.rgovindas Shah, AIR 1956 Bombay 54; Mohan Bai v.
Jai Kishan, AIR 1983 Rajasthan 240; Smt.Mohan Bai v. Smt. Jai Kishan &
Ors., AIR 1988 Rajasthan 22, Nadirs/ta Hirji Baria & Ors. v Niranjankumar
alias Nireshkumar Dharamchand Shah & Ors., 1983 (1) G.LR. 174, ap-
proved.

p Kesarla Raghuram v • Dr.Narsipa/le Vasundara, A.I.R. 198.1 A .P. 32,
disapproved.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3698 of
1991. .

G From the Judgment and Order dated 1.11.1990 of the Bombay High
Court in Chamber Summons No. 838 of 1990 in Execution Application No. · ).c
242 of ~989 in Suit No. 309 of 1972.

Arun Jaitley, R.F. Nariman, R. Karanjawala, Mrs. M. Karanjawala,
Ms. N andini Gore and Ms. Aditi Choudhary for the appellant.
H
GARIWAIA v. UNIONBANK (1HOMMEN, J.) 191

V .A. Bobde, U.A. Rao and B.R. AgarwaJa for the respondents. A
The Judgment of the Court was delivered by
THOMMEN, J. Leave granted.
The appellant who is the defendant in Suit No. 309 of 1972 challen- B
ges the judgment of the Bombay High Court in Chamber Summons No. 838
of 1990 in Execution Application No. 242 of 1989 whereby the High Court
held that the decree made against the defendant in terms of a compromise
in writing and signed by counsel representing the parties, but not signed by
the pa,rties in person, was valid and binding on the parties, and in the
absence of any chaJlenge against the order made under Order XXI rule 23,
Civil Procedure Code aJlowing execution of the decree, the defendant was C
no longer entitled to resist execution by recourse to Chamber Summons.
The High Court found that the decree was valid and in accordance with the
provisions of Order XXIII rule 3, as amended by the C.P.C. (Amendment)
ACt, 1976.
The onJy question which arises for consideration is as regards the D
construction of Order XXIII rule 3, C.P.C. We shall read this provision, as
amended by the C.P.C. (Amendment Act, 1976, bracketing the newly
added words:
"O. 23., R. 3 - Compromise of suit where it is proved to the
satisfaction of the court that a suit has been adjusted wholly or E
in p~ by any lawful agreement or compromise, (in writing and
signed by the parties) or where the defendant satisfied the
plaintiff in respect of the whole or any part of the subject
matter of the suit, the Court shaJI order such agreement, com-
promise or satisfaction to be recorded, and shall pass a decree F
in accordance therewith [so far as it relates to the parties to the
suit, whether or not the subject matter of the agreement, com-
promise 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 had been arrived G
at, the court shall decide the question; but no adjournment
shaJI be granted for the purpose of deciding the question, un-
less 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, 1872, shall not be H
192 SUPREME COURT REPORTS (1991) SUPP. 1 S. C. L

A deemed to be lawful within the meaning of this rule.)"
Mr. Arun Jaitley, appearing for the appellant, says that the High
Court was wrong in holding that, notwithstanding the amendment of 1976
inserting the words 'in writing and signed by the parties', it was still suffi-
cient if the terms of compromise were reduced to writing and signed by
B counsel representing the parties, and not n~y by the parties in per-
son. Any such construction would do violence to the provision as amended
in 1976. He says.that the object of the amendment was to provide that no
agreement or compromise adjusting wholly or in part a pending suit was
valid unless such compromise was evidenced in writing and signed by the
parties in person. The expression 'parties', he contends, means only parties
C and none else. To read 'counsel' into that expression, as done by the High
Court, is to presume that the legislature failed to say what it intended to say
and to attempt to supply the omission by correcting the deficiency. This
cannot be done. The legislature, on the other hand, made its intention
explicit by providing that an agreement or compromise woutd form the
basis of a decree only if the consensus was reduced to writing and signed by
D the parties. Neither an agent nor a pleader could act as a substitute for a
party to sign the agreement or compromise. A decree base'1 on a com- }--
(
promise not signed by the parties in person is a nullity and is incapable of
execution.

Mr. Jaitley submits that if the legislature had intended to authorise
E counsel independently to sign the memorandum containing the terms of
settlement, and allow a decree to be passed in terms thereof, the legislature
would have said so by further adding the words 'or their counsel'. In the
absence of any such expression, it cannot be presumed that the legislature
intended more than what it said and that 'party' ·included counsel. This
argument, Mr. J aitley says, is fortified by the fact that for the fit'st time the
F legislature has allowed a decree to be passed on the basis of compromise
relating to matters concerning the parties, but extending beyond the sub-
ject matter of the suit. Such a wide P.Ower to compromise was most unlike-
ly to be left in the hands of counsel, and it is, therefore, necessary to read
the provision narrowly so as to read it as it now stands by adopting a strictly
literal construction.
G
· Mr. V.A. Bobde appearing for the respondents, on the other hand,
submits that it was always understood that the expression 'party' included
his-pleader in matters relating to appearance in court, and his counsef in
the cause, therefore, has express or implied authority, unless specifically
withdrawn or limited by the party, to represent him in court and do
H
OARIWALA v. UNIONBANK (1HOMMEN, J.) 193.
whatever is aecessary in conbection with the conduct of his suit including A
adjustment of the suit by agreement or compromise. In the absence of any
suc:h limitation or restriction of his authority, counsel appearing for a party
is fully competent to put his signature to the terms of any compromise
upon which a decree can be passed in proper compliance with the
provisions of Order XXllI rule 3 as it now stands. Any such decree, be
says, is perfectly valid. · B
Mr. Bobde subinits that in the absence of express words to the con-
trary, 'party', in the context of proceedings in court, must necessarily in-
>. clude his recognised agent or pleader. This construction is warranted by
the provisions of Order Ill, C.P.C. That this has been the consistent view ·
adopted by courts in the construction of the expression 'party' in the con· C
text of proceedings in court is clear from the decisions of courts, and it is
most unlikely that the legislature would have, by the amendment of 1976,
limited the scope of 'party' so as to exclude the traditional role of the
recognised agent or counsel. The legislative draftsmen are presumed to
know the law of the land as it stood then, and, if they had intended to
deviate therefrom, they Would have explicitly stated so rather than leave it D
to future judicial construction. The Statement of Objects and Reasons for
.the amendment, he says, does not support the view canvassed by the appel-
lant.·

Sub-clause (iii) of clause 77 of the Statement of Objects and Reasons
concerning the C.P.C~ (Amen_dment) Act, 1976 states:- E
"Itis 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 com·
--~ promises to delay the progress of the suit.
............................................................................................................. F
In view of the words 'so far as it relates to the suit' in rule 3, a
question arises whether a decree which refers to the terms of a
compromise in respect of matters beyond the scope of the suit
is executable or whether the. terms of the decree relating to the
matters outside the suit can be enforced only by a separate
suit. The amendment seeks to clarify the position." G
* The Statement of Objects and Reasons indicates that the amendment
is intended to clarify that a compromise has to be in writing signed by the
parties to avoid delay which might arise from the uncertainties of oral
agreements. The amendment has also clarified that the terms of com-
promise are permitted to include all matters relating to the parties to the H
194 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A suit even if such matters fall outside the subject matter of the suit. The
legislature has thus sought to attain certainty and clarity and widen the
scope of compromise. The fundamental question is, in the absence of any
contrary indication in the Statement of Objects and Reasons, can it be
stated that the legislature has intended to exclude a pleader or a recog-
nised agent from the expression 'party' when it has always been under-
B stood, as explicitly stated in Order III rule 1, that appearance of a party in
court may be in person or by his recognised agent or pleader. In the
absence of any provision to the contrary, can it be stated that the legisla-
ture, when using the expression 'parties' in rule 3 of Order XXIII, limited it
to parties in person and excluded their duly recognised agents or counsel ?

C The role of counsel in Court in England is described in Halsbury's
Laws ofE11gla11d, 4th Ed. Vol.3, paras 1181 & 1183, as follows: -
"1181. Counsel's authority. At the trial of an action, counsel's
authority extends, when it is not expressly limited, to the action
and all matters incidental to it and to the conduct of the trial,
D such as withdrawing the record, challenging a juror, calling or
not calling witnesses, cross-examining or not cross-examining
witnesses, consenting to a reference to arbitration, a com-
promise, or a verdict, U!!,dertaking to appear, or, on the hearing
of a motion for a new trial, conseqting to a reduction of
·damages.
E
The client's consent is not needed for a matter which is within
the ordinary authority of counsel: thus if, in court, in the ab·.
sence of the client, a compromise or settlement is entered into
by counsel whose authority has not been expressly limited, the
client is bound. If an action is settled in court in the presence
F of the client, his consent will be inferred, and he will not be
heard to say that he did not understand what was going on ......."

The implied authority of counsel in England is, however, confmed to
matters falling within the subject matter of the suit. In . the absence of
express authority, counsel cannot enter into compromise on collateral mat-
G ters.
"The authority of counsel to compromise is limited to the is·
sues in the action: a compromise by counsel affecting collate,ral
matters will not bind the client, unless he expressly assents; and
it may be that a barrister has ·~o autliofity'to r'e'ach ·~'binding
H settlement or compromise out of court. "(Halsbury ibid)
OARIWAlA v. UNIONBANK [THOMMEN, J.) 195

A compromise is, how..;ver, not binding and is liable to be set aside ~n A
circumst~ces which would.invalidate agree~ents between the parties.

"A comp~omis~ by counsel will not bind the client, if counsel is
not apprised of facts the knowledge of which is essential in
+ . . .r~ference' to the question on which he has to exercise his dis-
.· . ··. ' cretfo~ foi example that the terms accepted had already been B
- .. by
r~j¢~ed t~e client. Where counsel enters into a compromise
~~ . .: ",iri intended ·pursuance of terms .agreed upon between the
• . • i;_ ';~-clients; and; owing to a misunderstanding, the compromise

; _ -~- 1~ _, fails to car~ out the intentions of one side, the compromise
.. . -~ 'does not bind the client, and the court will allow the consentto
be withdrawn. Where, acting upon instructions to com- C
-~ __ ., ·,;_ "pfomise, counsel consents under a misunderstanding to certain
terms which do not carry into effect the intentions of counsel ·
and the terms are thought by one party to the more extensive.
,. .,. ·. ·.' . :, than the other· party intends them to be, there is no agreement
- . on the subject-matter of the compromise, and the court will set
it aside. But a person who has consented to a compromise will L
. not be allowed to withdraw his consent because he sub-
. sequently ,discovers that he has a good ground of defence."
(Halsbury, ibid, para 1183);. ,,· · ,_
,. • .. ' ·'.• . :'. .~f . . ' - ,; - J • -

Counsel's consent in certain circumstances such as duress or mistake
~~~~~~- E
"If counsel's consent is given under duress, the client will not
be bound, as when counsel, acting for a client alleged to be of
unsound mind but believing him to be of sound mind, con-
sented to certain terms for the withdrawal of Court of Protec-
tion proceedings against the client because of his fear of the F
. inconvenience and ill-health likely to arise to the client from
confmement. ·' · ' , ·

A compromise or order made by consent by counsel for a
minor or other person under disability is not binding on the
client, ·unless it is sanctioned by the court as being for the G
; benefit of the client The court cannot, however, enforce a
compromise on a ~inor against the opinion of his counsel."
(Halsbury, ibid) .

One of the early English authorities on this point is Patie11ce Swinfen
H
196 SUPREME COURT REPORTS [1991) SUPP. 1 S. C.R..

A v. Lord Chelmsford, (1860) S H & N 890 at 922; S.C. 29 U.(Ex.) 382.
Delivering the judgment of the Court, Pollock, C.B., stated:

"....We are of opinion, that although a counsel bas complete
authority over the suit, the mode of conducting it, and all that
is incident to it - such as withdrawing the record, withdraw-
B ing a juror, calling no witnesses, or selecting such as,. in his
discretion, he thinks ought to be called, and other matters
which properly belong to the suit and the management and
_,.J..._
conduct of the trial - we think he has not, by virtue of his
retainer in the suit, any power over matters that are collateral
to it.......".
c In Matthews v. Munster, (1887) 20 Q.B. 141 at 144, Lord Esher M.R.
stated:
The instances that are gi\ren shew that one of the things
fl .....

that counsel may do, so long as the request of the client to him
D to act as advocate is in force, is to assent to a verdict for a
particular amount and upon certain conditions and terms; and ~
the consent of the advocate to a verdict against his client and
the withdrawing of imputations is a matter within the expres·
sion 'conduct of the cause and all that is incidental to it.' If the
client is in Court and desires that the case should go on and
E counsel refuses, if after that he does not withdraw his authority
to counsel to act for him, and acquaint the other side with this,
.he must be taken to have agreed to the course proposed. This
case is a still stronger one, for the client was not present, and it )>: •
is not pretended that he ever withdrew his authority to counse~
but he now comes forward and asks that because he does not
F like what has been done it should be set aside as between
himself and his opponent. This the Court will not do, and this
appeal must be dismissed."
See also Ronde/ v. Worsley, (1965] 1 Q.B. 443, 502, Per Lord Denning
M.R.
G ~
If this is the position of counsel in England, Scotland and Ireland, is
his position the same in India in the conduct of cases in Court ? That the
answer is affirmative, there is high judicial authority.
In (Babu) Slieonandan Prasad Singh & Ors. v. Hakim Abdul Fateh
H Mohammad Reza & Anr., AIR 1935 PC 119, 121, Lord Atkin, speaking for
GARIWAl.A i•. UNION BANK (IBOMMEN, J.] 197

the Board, states: A
"......As was laid down by this Board in 57IA133 (AIR 1930 PC
158) counsel in India have the same implied authority to com-
promise an action as have counsel in the English Courts. But if
such authority is invoked to support an agreement of com-
promise the circumstances must be carefully examined. In the B
first instance the ::1uthority is an actual authority implied from
the employment as counsel. It may however be withdrawn or
limited by the client: in such a case the actual authority is
destroyed or restricted; and the other party if in ignorance of
the limitation could only rely upon ostensible authority. In this
particular class of contract however the possibility of success- C
fully alleging ostensible authority has been much restricted by
the authorities such as (1902) AC 465 and ( 1919) 1 KB 474
which make it plain that if in fact counsel has had his authority
withdrawn or restricted the Courts will not feel bound to en-
force a compromise made by him contrary to the restriction
even though the lack of actual authority is not known to the D
other party." ·

Lord Atkin emphasises the need to rely on express authority, rather
· than implied authority, particularly because of easier and quicker com-
munication with the client. He says :
E
".... In their Lordships' experience both in this country and in
India it constantly happens, indeed it may be said that it more
often happens, that counsel do not take upon themselves to
compromise a case without receiving express authority from
their clients for the particular terms; and that this position in
each particular case is mutually known between the parties. F
In such ~ses the parties are relying not on implied but on an
express authority given adhoc by the client ......... ". (ibid, page
121)

However, collateral matters were understood to be beyond the scope G
-=+- of compromise. Lord Atkin says : ·

"If the facts are as their Lordships assume, the matter com-
promised was in their opinion collateral to the suit and not
only would it not be binding on the parties, but it would in any
case be a matter in respect of which the Court in pursuance of H
198 SUPREME COURT REPORTS [1991) SUPP. 1 S. C. R.
'v

A 0. 23, R. 3, should not make a decree." (Page 122) ·

· Referring t~ the role of counsel in India and comparing him with his
counterpart in .Britain, Lord Atkin in Sourendra Nath' Mitra & Ors. v.
Tarnbala Das~ AIR 1~ PC 158, says: '

' "..... Their Lordships regard _the power to compr~mise a suit as
B inliererit in the position of 3.n advocate m· India. The con-
siderations which have led to this implied power being estab-
lished in the advocates of England, Scotland and ireland, apply
in equal measure to India. It is a "power deem~ to exist be-
cause its existence is neeessary to effectuate the relations
c between advocate and client, to make possible the duties
imposed upon the advocate by his acceptance of the cause of
.his Client." - · · '· ·' ·.:'

Counsel's power tO compromise is vital to the defence of his party
while engaged on his behalf in the thick of a legal battle in Court. Lord
D Atkin observes: ,.

"The advocate is to conduct the cause of his client to the ut-
most of his skill and understanding. He must in the interests of
his· client be in the position, hour by hour; almost minute by
minute, to advance this argument, to withdraw that; he- must
make the final decision whether evidence is to be given or not
E on any question of fact; skill in advocacy is largely the result of
1
discrimination. These powers in'themselves almost amount to
·powers of compromise: one p0mt is given up that another may
prevail. But in addition to thesli duties, there js from time to
time thrown upon the advocate, the responsible task of decid-
F ing whether in the course ·of 'a ease he shall accept an offer
made to him, or on his part shall make an offer on his client's
behalf to receive or pay something less than the full claim or
the full possible liability. Often the decision must be made at
once......."(ibid, page 161) ·,

G Emphasising the apparent authority of counsel, and the roiS()ll d'etre
of such authority being the paramount interest of his client, and not an
appandage of office, Lord Atkin states:

."The .apparent authority is.derived from 'tlie'kno~n existence of
the implied authority.......... · '
H
GARIWAl.A v. UNIONBANK (TIIOMMEN, J.] 199

..........First, the implied authority of counsel is not an ap- A
pandage of office, a dignity added by the Courts to the status
of barrister or advocate at law. It is implied in the interests of
the client, to give the fullest beneficial effect to his employment
of the advocate. Secondly, the implied authority can always be
countermanded by the express directions of the client. No ad-
vocate has actual authority to settle a. case against the express B
instructions of his client. If he considers such express instruc-
tions, contrary to the interests of his client, his remedy is to
return his brief.

Their Lordships are unable to see why the above considera-
tions should not apply to an advocate in India, whose duties to C
his client in the conduct of a suit in no wise differ from those of
advocates in England, Scotland and Ireland .......... ". (Page 161)

Counsel's role in entering into a compromise has been traditionally
understood to be confined to matters within the scope of the suit. How-
ever, a compromise decree may incorporate not only matters falling within D
the subject matter of the suit, but also other matters which are collateral to
it. The position before the amendment in 1976 was that, in respect of the
former, the decree was executable, but in respect of the latter, it was not
executable, though admissible as judicial evidence of its contents.

Referring to section 375 of the Code of Civil Procedure (Act XIV of E
1882), (similar to Order XXIII rule 3 CPC as it stood prior to the amend-
ment of 1976), Lord Buckmaster, in Hemanta Kumari Debi v. Midnapur
Zamindari Co., AIR 1919 PC 79, states:

"........In the first place, it is plain that the agreement or com-
promi!>e, in whole and not in part, is to be recorded, and the F
decree is then to confine its operation to so much of the sub-
ject-matter of the suit as is dealt with by the agree-
ment ............ although the operative part of the decree would be
properly confined to the actual subject-malter o(the then ex-
isting litigation the decree taken as a whole would include the
agreement. This in fact is what the decree did in the present G
case. It may be that as a decree it was incapable of being
executed. outside the lands of the suit, but that does not
prevent its being received in evidence of its contents". (Page
81)

In Ram Juwan v. Devendra Nath Gupta, AIR 1960 Madhya Pradesh H
200 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A 280,. the High Court states:
"Where a consent decree contains terms that do not relate to
the suit. ....such terms cannot be enforced in execution of the
decree but they may be enforced as a contract by a separate
suit". (Page 282)
B See also Vishnu Sitaram Auchat v. Ramachandra Govind Joshi, AIR
1932 Bombay 466 andJasimuddin Biswas v. Bltuban Jeli11i, ILR 34 Calcutta
456.

In Ga11ga11and Singh & Ors. v. Ramesltwar Si11gh Bahadur & Anr.,
C AIR 1927 Patna 271, the High Court points out that a consent decree does
not stand on a higher footing than a contract between the parties. The
Court always has the jurisdiction to set aside a consent decree upon any
ground which will invalidate an agreement between the parties. In the
absence of any such ground, the consent decree is binding on the parties.

Courts in India have consistently recognised the traditional role of ~
D lawyers and the extent and nature of their implied authority . to act on r
behalf of their clients. Speaking for a Full Bench of the Kerala High Court
in Clrengan Souri Nayakom v. A.N.Me11011, AIR 1968 Kerala 213, K.K.
Mathew, J. (as he then was) observed:

"The construction of a document appointing an agent is dif-
E ferent from the construction of a vakalat appointing counsel.
In the case of an agent the document would be construed
strictly and the agent would have only such powers as are con-
ferred expressly or by necessary implication. In the case of
counsel the rule is otherwise because there we are dealing with
a profession where well-kriown rules have crystallised through
F usage. It is on a par with a trade where the usage becomes an
additional term of the contract, if not contrary to the general
law or excluded by express agreement." (p.215).

About the special position of the advocate, the learned Judge stated:
G "........ Counsel has a tripartite relationship; one with the public,
another with the court, and the third with his client. That is a
uriique feature. Other professions or callings may include one
or two of these relationships but no other has the triple duty.
Counsel's duty to the public is unique in that he has to accept
all work from all clients in courts in which he holds himself out
GARIWAI.A v. UNION BANK [TIIOl,\fMEN, J.] 201
as practicing, however, unattractive the case or the client." (p. A
216)

See also Jiwibai v. Ramkumar Shriniwas Murarka Agarwala, AIR 1947
Nagpur 17 ; Govindammal v. Marimuthu Maistry & Ors., AIR 1959 Mad. 7
and Laxmidas Ranchhoddas & Ors. v. Savitabai Hmgovindas Shah, AIR
1956 Bom. 54. .B
These principles were affirmed by this Court in Jamilabai Abdul
Kadar v. Shanker/al Gulabchand & Ors. [1975) Supp. SCR 336. Referring
to a number of decisions on the point, V.R. Krishna Iyer, J. observes:

"..........Those who know how courts and counsel function will C
need no education on the jurisprudence of lawyer's position
and powers. Of course, we hasten to enter a caveat. It is
perfectly open to a party, like any other principal, to mark out
in the vakalat or by particular instructions forbidden areas or
expressly withhold the right to act in sensitive matters, the
choice being his, as the master. .If the lawyer regards these D
fetters as inconsistent with his position, he may refuse or return
the brief. But absent speaking instructions to the contrary, the
power to act takes in its wings the right and duty to save a
client by settling the suit if and only if he does so bona fide in
the interests and for the advantage of his client ......."(Page 346)
E
See also Monoharbahal Colliery Calcutta v. K.N. Mishra & Ors., AIR
1975 SC 1632.

After the amendment of 1976, a consent· decree, as seen above, is
executable in terms thereof even if it comprehends matters falling outside
the subject-matter of the suit, but concerning the parties. The argument of F
the appellant's counsel is that the legislature has intended that the agree-
ment or comproinise should be signed by the parties in person, because the
responsibility for compromising the suit, including matters falling outside
its subject-matter, should be borne by none but the parties themselves. If
this contention is valid, the question arises why the legislature has,
presumably being well aware of the consistently followed practice of the G
British and Indian Courts, suddenly interfered with the time-honoured role
of lawyers in the conduct of cases without specifically so stating, but by
· implication? Can the legislature be presumed to have fundamentally al-
tered the position of counsel or a recognised agent, as traditionally under-
stood in the system of law and practice followed in India and other
'common law countries' without expressly and directly so stating? There is H
202 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A no indication in preparatory work such as the 54th Report of the Law
Commission dated 6.2.1973 or in the Statement of Objects and Reasons or
in the words employed by the legislature that the concept of 'agents and
pleaders'. of Order III, C.P.C. was in any manner altered. There is no
warrant for any such presumption. ·

B It is a rule of legal policy that law should be altered deliberately
rather than casually. Legislature does riot make radical changes in law 'by
a sidewind, but only by measured and considered provisions'. (Francis
Bennion's Statutory /11terpretation, Butterworth, 1984, para 133). As stated
by Lord Devlin in National Assistance Board v. Wilkinson, [1952) 2 Q.B.
648:-
c "It is a well-established principle of construction that a statute
is not to be taken as effecting a fundamental alteration in the
general law unless it uses words that point unmistakably to that
conclusion."

·D Statutes ·relating to ·remedies and procedure must receive a liberal
construction 'especially so as to secure a more effective, a speedier, a
simpler, and a less expensive administration of law'. See Crawford's
Statutory Co11stmction, para 254. The object of the amendment was to
provide ari appropriate remedy to expedite proceedings in Court. That
· object·must be borne in mind by adopting a purposive construction of the
E amended provisions. The legislative intention being the speedy disposal of
cases with a view to relieving the litigants and the Courts alike of the
burden of mounting arrears, the word 'parties' must be so construed as to
yield a beneficent result, so as to eliminate the mischief the legislature had
, in mind.

p 1' • ,.There is no reason to assume that the legislature intended to curtail
the implied authority of counse~ 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 recognised agent and his principal is a matter
of contract; and with the freedom of contract generally,.the legislature does
1
G 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 recognised and universally acclaimed common
law tradition of an ever alert, independent and active. Bar with freedom to
manoeuvre with force and drive for quick action in a battle of wits typical
H of the adversarial system of oral hearing which is in sharp contrast to the
GARIWALA v. UNION BANK (THOMMEN, J.] 203

inquisitoriaftraditions of the 'civil law' of France and other European and A
~· Latin American countries where written submissions have the pride of
place and oral arguments are considered relatively insignificant. (See
Rene David, English Law and French Law - Tagore Law Lectures, 1980). ·
'The civil law' is indeed equally efficacious and even older, but it is the
product· of a different tradition, culture and language and there is no in-
dication,. whatever, that Parliament was addressing itself to the task .of B
assimilating or incorporating the rules and practices of that system into our
own system of judicial administration.

·The Indian legal ·system is the product of history. It is rooted in our
soil; nurtured and nourished by our culture, languages and traditions ;
fostered and ·sharpened by our genius and quest for social justice; rein- C
forced by history and heritage: it is not a mere copy of the English common
law; though inspired and strengthened, 'guided. and enriched by concepts
and precepts of justice, enquiry and good conscience which are indeed the
hallmark of the common law. In the words of M.C. Setalvad:

"........the common law of England with its statutory modifica- D
tions and the doctrines of the English courts of ·equity has
deeply coloured and influenced the laws and the system of
judicial administration of a whole sub-continent inhabited by
nearly four hundred million people. The law' and juris-
prudence of this vast community and its pattern of judicial
administration are in many matte~s different from those of E
Engl~nd in ~hich they had: their. roots and from which they
were nurtured. Yet they bear the unmistakable impress of
their origin. The massi~e .structure of Indian law and
jurisprudence resembles the height; the symmetry and the
. grandeur of the common and statute law of England. In it one
sees English law in the distant perspective of a new atmos- F
phere and a strange clime."
l
Speaking of the common law in the wider sense, the learned author
continues: - '""

"....But the English brought into India not only the mass of legal G
rules strictly known as the common law but also their tradi-
tions, outlook and techniques in establishing, maintaining and
developing the judicial system. When, therefore, I speak of the
common law in India I have in view comprehensively all that is
of English origin in our system of law. In that wide meaning
H
204 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.
#

A the expression will include not only what in England is known
strictly as the common law but also its traditions, some of the
principles underlying the English statute law, the equitable
principles developed in England ·in order to mitigate the
rigours of the common law and even the attitudes and methods
pervading the British system of the administration of justice."
B
The Common Law in India, 1960 - The Hamlyn Lectures,
Twelfth Series, pp.1-4.

After the attainment of independence and the adoption of the Con~·
stitution of India, judicial administration and the constitution of the law
C courts remained fundamentally unchanged, except in matters such as the
abolition of appeals to the Privy Counci~ the constitution of the Supreme
Court of India as the apex court, the conferment of writ jurisdiction on
all the High Courts, etc. The concept, structure and organisation of
Courts, the substantive and procedural laws, the adversarial system of trial
and other proceedings and the fu.1ction of judges and lawyers remained
D basically unaltered and rooted in the common law traditions in contra-dis-
tinction to those prevailing in the civil law or other systems of law.

ln our own system of judicial administration, if strains have
developed and cracks have appeared by the stresses and pressures of the
time; if abe.rrations have become too obvious to be ignored or too deep-
E rooted to be corrected by an internal mechanism; if the traditional role of
the legal profession requires urgent legislative scrutiny with a view to
remedying the defects and strengthening and safeguarding the system; it is
a matter exclusively for Parliament to consider; but the amendment in
question is not addressed to thitt purpose.

Aberrations there always have been in every system of administra-
F tion; but whether they are merely peripheral or transient in character -
mere ripples on a placid pool - or symptomatic of deeper malady re-
quiring structural modification by prompt legislative intervention is a mat-
ter of grave significance. for the jurists, sociologists and political scientists
to ponder over. -·

G So long as the system of judicial administration in India continues
unaltered, and so long as Parliament has not evinced an intention to ~
~hange 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. On a matter of such
vital importance, it is most unlikely that Parliament would have resorted
H
OARIWALA, v. UNION BANK [ TilOMMEN, J ] 205

to implied legislative alteration of counsel's capacity or status or effective- A
. ness. In. this respect, the words of Lord Atkin in Sourendra (supra) coin-
paring the Indian advocate with the advocate in England, Scotland and
Ireland, are significant:
There are no local conditions which make it less desirable for
the client to have the full benefit of an advocate's experience B
and judgment. One reason, indeed, for refusing to imply such
a power would be a lack of confidence in the integrity or judg-
ment of the Indian advocate. No such considerations have
been or indeed could be advanced, and their Lordships men-
tion them but to .dismiss them........ (Page 161)
Similar is the view expressed by the Rajasthan High Court in Mohan .c
Bai v. Jai Kishan, AIR 1983 Rajasthan 240; Smt.Mohan Bai v. SmtJai
Kishan & Ors., AIR 1988 Rajasthan 22 and by the Gujarat High Court in
Nadirsha HiTji Baria & Ors. v. Niranjankumar alias Nireshkumar Dharam-
chand Shah & Ors., 1983 (1) G.L.R. 774. A contrary view has been ex-
pressed by t.he Andhra Pradesh High Court in Kesarla Raghuram v. Dr. D
Narsipalle Vasundara, AIR 1983 Andhra Pradesh 32, and it does not com-
mend itself to us.
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 or E
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 . doubfted. This essential precaution will safeguard the personal .F
reputation o counsel as well as uphold the prestige and dignity of the legal
profession. ·

Considering.the traditionally recognised role of counsel in the com-
mon law system, and the evil sought to be remedied by Parliament by the
C.P.C. (Amendment) Act, 1976, namely, attainment of certainty and ex- · G
peditious 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 com-
promise by counsel in their cause or by their duly authorised agents. Any H
206 SUPREME COURT REPORTS (1991] SUPP. 1 S. C.R.

A such·presumption.would be inconsistent with tliie legislative object of at-·
taining quick reduction of arrears in Court by elilmination of uncertainties
and enlargement of the scope of compromise. .,
v· J
To insist upon the party himself personally signing the agreement or
compromise· would often cailse undue delay, loss a.nd inconvenience, espe-
B cicilly·in the ease of non-resident persons. It has always been universally
understood that a party can always act by :his duly authorised repre-
sentative. If a power-of-attorney holder can enter into an agreement or
compromise on behalf of his principal, so can counse~ possessed of the
requisite authorisation by vaka1atnama, act on behalf of his client. Not to
recognise such capacityJs not only to r-ause much 1inconvenience and loss
C '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 arid needles.-s expenditure, it would·
have expressly so stated. .; J (' '. • •. .. , • -.. '
• \l '\ "'" ~.i.. ~ .. .,. 1 I.'" 111; I t I L,. oj ~Ill' - • '\- "' ....I \ f . - !.;. ~ I J")

. r:Accordingly, we are of the view that the words 'in writing and.signed
D bythe parties', inserted by the C.P.C. (Amendment)1Act, 1976, must neces-
sarily mean, to borrow the language of Order Ill rule 1 C.P.C.: .. ; ·
"any appearance application or act in or t~ any court, required
I_
· 'J';J -. •1 or authorized by law to be made or done by a party in such
~
, .. ~ court, may except where otherwise expressly provided by any
E '' ' , 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,
,I
, - · applying or acting as the case may be, on his behalf:
r
"' '•.j I -#

,. ,Provided that any such appearance shall, if the court so directs,
·. ·be made by the party in person". •
F ....J :

(emphasis supplied)
In the present case, the notice issued under Order XXI rule 22 was
personally served on the defendant, but he did not appear or show cause
why the decree should not be executed. The notice was accordingly made
G absolute. by Order dated 23.1.1990 and leave was granted to the plaintiff to
execute the decree. The decree passed by the High Court on 18.6.1984 in •~
terms ofahe compromise was a valid decree and it constituted res judicata.
As stated.by this Court in Sllankar Sitorom.Sontakke & Anr. v. Bolkrislmo
Sitorom Sontokke & Ors., AIR 1954 SC 352: -
, ";.; ... It is well settk-9 that a consent decree is as binding upon
H · ' the parties thereto as a decree passed by invitum. The com-
GARIWALA v. UNIONBANK (TIIOMMEN, J.) W7

promise having been found not to be vitiated by fraud, mis- A
representation, misunderstanding or mistake, the decree
passed thereon has the binding force of 'res judicata'." (Page .
355)
S.R. Das, CJ., in Sailendra Narayan Bhanja Deo v. The State of
Orissa, AIR 1956 SC 346, states :
B
".... a judgment by consent or default is as effective an estoppel
between the parties as a judgment whereby the court exercises
its mind on a contested case ......". (Page 351)
A judgment by consent is intended to stop litigation between the
parties just as much as a judgment resulting from a decision of the court at C
the end of a long drawn out fight. A compromise decree creates an estop-
pel by judgment. As stated by Spencer-Bower & Turner in Res Judicata,
Second Edition, page 37:
"Any judgment or order which in other respects answers to the
description of a res judicata is nonetheless so because it was
made in pursuance of the consent and agreement of the par- D
ties.. ;. Accordingly, judgments, orders, and awards by consent
have always been held no less efficacious as estoppels than
other judgments, orders or decisions, though doubts have been
occasionally expressed whether, strictly, the foundation ot' the
estoppel in such cases is not representation by conduct, rather
than res judicata......................". E
See also Mohan/al Goenka v. Benoy Kislina Mukherjee & Ors., AIR
1953SC65.
The consent decree made on 18.6.1984 remained unchallenged.
None questioned it. The appellant never raised any doubt as to its validty F
or genuineness. He had no case that the decree was vitiated by fraud or
misrepresentation or his counsel lacked authority to enter into a com-
promise on his behalf. Nevertheless, after six years he questioned its
validity by means of chamber summons. This was an unsuccessful chal-
lenge by reason of delay, estoppel or res judicata, 'and was rightly so held
by the High Court. · · '
G
Accordingly, we see no merit in this appeal. It is dismissed. How-
ever, in the circumstances of the case, we do not make any order as to
costs. ,.,,

V.P.R. Appeal dismissed.