Holding

A settlement reached by duly authorized counsel satisfies the requirement of “in writing and signed by the parties” under Order 23 Rule 3 when read with Order 3 Rule 1, and the High Court’s order was a judgment on admission, not a compromise decree, leading to dismissal of the appeal.

Summary

The plaintiff Jineshwardas sued for specific performance of an alleged sale deed; the trial court and first appellate court dismissed the suit, holding the deed was merely an agreement to repay. In the second appeal before the Madhya Pradesh High Court, the parties' counsel reached a settlement whereby the respondents would pay Rs. 25,000, and the High Court disposed of the appeal on that basis. The appellants contended that the settlement amounted to a compromise decree that was invalid because it was not in writing and signed by the parties as required by Order 23 Rule 3 of the CPC. The Supreme Court held that the phrase “in writing and signed by the parties” must be read in conjunction with Order 3 Rule 1, allowing a duly authorized pleader to settle on behalf of the parties, and that the High Court’s order was a judgment on admission, not a compromise decree. It further found no substantial questions of law under Section 100 CPC and dismissed the appeal.

Issues considered

Whether a settlement or compromise decree under Order 23 Rule 3 CPC must be in writing and signed by the parties, or can be effected by an authorized pleader.
Whether the High Court's order in the second appeal constituted a compromise decree or a judgment on admission.
Whether the appeal raised substantial questions of law as required under Section 100 CPC.

Legislation cited

Code of Civil Procedure, 1908s. Order 23 Rule 3, s. Order 3 Rule 1, s. Section 100

Subjects

specific performancecompromise decreesettlementCPC Order 23 Rule 3admission judgmentsecond appealauthority of counselcivil procedure

Judgment

JINESHWARDAS (D) THROUGH LRS. AND ORS. A
v.
SMT. JAGRANI. AND ANR.

SEPTEMBER 26, ~~03

[DORAISWAMY RAJU AND ARIJIT PASAYAT, JJ.]
B

Code of Civil Procedure, 1908 :

Order XXlll, Rule 3 read with Order 111 Rule I-Compromise ofsuit-
Dispute settled in second appeal on basis of admission made by counsel C
for parties-Held, while construing the words "in writing and signed by
the parties" as inserted in Rule 3 of Order XXJJI by CPC (Amendment)
Act, 1976, effect necessarily has to be given to Rule 1 of Order lll-
Besides, a judgment or decree passed as a result of consensus arrived at
before court cannot always be said to he one passed on compromise-It D
may at times be a judgment on admission, as in the instant case.

Words and Phrases:

Words "in writing and signed by the parties"-Occurring in r.3 of
Order XXIJJ, CPC-Connotation oj E
Predecessor-in-interest of the appellants filed a suit against the
respondents for specific performance and recovery of possession on the
basis of an alleged agreement of sale of immoveable property. The
defendants' stand was that the said document constituted no agreement F
of sale. The trial court dismissed the suit. The first appellate court
affirming the decision, held that there was no agreement of sale and
it was only an agreement to repay. However, in se~ond appeal though
questions of law were framed, counsel for the parties agreed to
amicably settled the matter and in view of the admission made by
counsel for the respondents, that respondent would pay a certain G
amount to the appellants, the High Court disposed of the matter
accordingly. The appellants filed a review petition contending that the
decision in the second appeal was a compromise decree, but the
compromise was not entered into "in writing and signed by the parties"
in terms of order XXI~I, Rule 3 CPC. The High Court rejected the H
179
180 SUPREME COURT REPORTS [2003] SUP.P. 4 S.C.R. ..
A review.
In the present appeal filed by the appellants, it was contended for
the respondents that before the High Court the counsel appearing for
the parties were duly authorized to argue the second appeal on merit
B and, if necessary, compromise the same.

Dismissing the appeal, the Court

HELD : 1. While construing the words "in writing and signed by
parties" as inserted in Rule 3 of Order XXIII of the Code of Civil
C Procedure, 1908 by C.P.C. (Amendment) Act of 1976, effect necessarily
has to be given to Rule l of Order Ill of the Code. That apart, a
judgment or decree passed 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
D admission, as in this case. [185-F-H, 186-A-B)

Byram Pestonji Gariwala v. Union Bank of India & Ors., (1992) l
sec 31, relied on.
'
Gurpreet Singh v. Chatur Bhuj Goel, (1988) l SCC 270, relied on~
E
2. Considering the fact and circumstances
. of the
.
case,
-
there
,... . -are ~

no adequate reasons on merits also to call for interference in a second
appeal. The so-called questions formula~ed cannot be c~nsider~d to-.be
even questions of law and, at any rate, not substantial questions o~ law,
F as required under Section 100, CPC. The courts below have concu~rently
rejected the claim of the plaintiff/appellants on_ pure findings of fact
based upon relevant evidence and nothing survived for consideration
at all in such an appeal. Furthf?r, respondents side alone appear~ to
have been saddled with additional liabilities under the decision of. the
High Court, though on the basis of admission made by. cou1.1sel
G appearing for the parties. There is nothing said against the counsel,
who appeared for parties; nor allegations have been made a~tributing
any impropriety to their action. (186-C-E]
'
CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 8104-
-.. '~

H s1os of 2003.
JINESHWARDAS V. SMT. JAGRANI [RAJU. J.] 181

From the judgment and Order dated 9.5.2002 of the Madhya Pradesh A
High Court in S.A. No. 693/96 and M.C.C. No. 622 of 2002.

Prakash Shrivastava for the Appellants.

A.K. Sanghi for the Respondents.
B
The Judgment of the' ·Court was delivered by

D. RAJU, J. : Special leave granted.

The appellant before this Court was the appellant in Second Appeal
No. 693of1996 on the file of the Madhya Pradesh High Court at Jabalpur. C
The original plaintiff Jineshwardas, whose legal representatives are the
appellants in this Court, filed the Civil Suit No. I 02-A of 1980 before the
Court of IV Civil Judge Class-I, Jabalpur, seeking for a decree for specific
perfonnance and recovery of the possession of the suit land or in the
alternative, damages at market value as may be proved for non-perfonnance D
of the ~ontract and for recovery of Rs. 2500 paid by the plaintiff as deposit.
The defendants disputed the suit claim by attributing fraud and undue
influence as vitiating the agreement stating that it was opposed to public
policy as well and really constituted no agreement of sale of immovable
property. After trial and on consideration of the materials on record, the E
suit filed was dismissed. The matter was pursued on appeal before the Vlth
Additional District Judge, Jabalpur, and the learned First Appellate Judge
also, after an elaborate consideration of the evidence on record, affinned
the findings of the learned Trial Judge by holding that the suit agreement
cannot be considered as an agreement for sale of the land. The First F
Appellate Judge also noticed the specific fact that the father of the plaintiff
was a practicing Advocate and it is in respect of certain amounts spent for
the litigation only, the agreement came to be executed and that it was
merely an· agreement to repay and not to convey the property itself. On
that ~dew of the matter, while partly allowing the appeal and affirming the
judgment of the Trial Judge denying specific performance and recovery G
of possession, decreed the claim of the plaintiff to receive the sum of
Rs. 2,500 with interest from 18.8.1963 till the date of filing of the suit,
namely, 28.8.1975, at Re. I per month and thereafter interest at the rate of
paise 50 per month. Aggrieved, the matter appears to have been pursued
further before the High Court by means of a Second Appeal. From the copy H
182 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A ·of the order-sheet filed relating to the order made at the time of entertaining
the appeal when it came up for admission, it is seen that the Second Appeal
was admitted on 27.2.1998 on the following questions of law:-

1) Whether the courts below were in error in holding that the
agreement dated 23.4.63 (Ex. P.2) was not a genuine agreement
B to sell the property in suit and the same is not enforceable?

2) Whether the Court below was right in non-suiting the
plaintiff also on the ground of limitation?"

C Thereupon, when the Second Appeal came up before the Court for
final hearing, before another learned Single Judge, the following order
came to be passed on a consensus expressed by both the learned counsel
before the High Court at the time of hearing. It would be useful and
necessary to set out the said order:-
D
"Both the counsel are in agreement to settle the matter; The
teamed counsel for the respondents submits that respondents will
pay an amount of Rs. 25,000 to the appellant within a period of
one month, otherwise it will carry interest at the rate of 12% per
annum from the date of today. On this agreed submission, this
E appeal is decided and judgment and decree passed by, the court
below is modified to this extent.

I. The respondents will pay Rs. 25,000 (Rupees twenty five
thousand) to the appellants within a period of one month.
F
2. If this amount is not deposited in the Court on or before 10th
June, 2002, the above amount will carry interest @ 12% per
annum till its realization.

3. Cost of the litigation will be borne by both the parties.
G
The appeal is disposed of in view of the above said agreed
submissions."

Thereupon, the appellants seem to have filed an application for
H review contending that the order passed on 9.5.2002 disposing of the
JINESHWARDAS v. SMT. JAGRANI [RAJU . .I.] 183

- appeal is nothing but a compromise decree and since the compromise A
could, if at all, had been entered into only under Order 23 Rule 3, CPC,
and the one in this case has not been so entered into in writing and signed
by the parties, the same is not to be made the basis for disposal of the appeal
and submissions, if any, made in this regard by the counsel appearing for
the appellants in the High Court was without any instructions of the B
appellants. The learned Judge by an order dated 15.7.2002 rej>!cted
the review application observing that the aforesaid settlement was arrived
at between the parties in the Court at the time of hearing and if the
applicants are aggrieved, they may take appropriate action under law but
no case for review has been made out. At this stage, the above appeal has C
been filed.

Pursuant to the notice ordered, the respondents entered appearance
and have filed their counter affidavit contending that in the teeth of the
factual findings made by both the courts below that the transaction was not
one for sale of any property, there was no merit in the claim to be D
effectively adjudicated in the appeal before the High Court, that the counsel
appearing were duly authorized by their respective parties to argue the
Second Appeal on merits and, if necessary, compromise the same and the
counsel on either side, who have expressed such a desire to settle, being
Advocates of repute with a long standing of more than 35 years at the bar, E
could not be attributed with any motive and in the absence of any concrete
material to show that something illegal has been done, the appellants
cannot take advantage of hyper-technicalities to avoid the decree in the
Second Appeal, which, if at all, is really more in favour of the appellants
in the teeth of the concurrent findings recorded by the courts_ below.
F·
The learned counsel for the appellants strongly placed reliance upon
the decision of this Court reported in Gurpreet Singh v. Chatur Bhuj Goel,
[1988] I SCC 270, to contend that in the absence of compliance with the
provisions contained in Order 23 Rule 3, CPC, the judgment of the High
Court could not be sustained. The learned counsel for the respondent 0
reiterated the stand taken in the counter1 noticed supra.

We have carefully considered the submissions of the learned counsel
appearing on either side. Though, in Gurpreet Singh 's case (supra) this
Court explained the object and purport of Rule 3 of Order 23 CPC, by H
184 · · SUPREME:C:::OURT: RE.PORTS [2003);SUPP. 4 S.C.R.

A· laying ·e~phasis,on:,_the_ :words;i;'in .writi.ng,and signed by" parties1', to be
necessitated in order.to. prevent false'. and frivolous pleas. that atsuit had been
adjusted wholly or.fa; part,by !any,Jawfuhagreement:or compromise with
a ,view; to1protr~ct ·or <leiaydhe1prot:eedings ·fo ithe '~uit ·itself.iJL,yas also
observed \therein: that as ·per; Ruk.3 -0f Orden23 C~C;iwhen .a Claim in the
Br:su.iti.:hasi·beell~adjusted.~wholJy ;orlini.part hy !any;da}Vful agr.eeinent br
, com:promisei:sucn :compromi~e must :be .in:w[itihg and~s.igned by: the parties
andr.therenmUSt}fbe,ia~ CO!pplete;ragreementJtbet\Veen <,tnem't and I that tO
constitute:1an!'~djustnient, rthtHagreemei\t. or,Icompromise;must 1itself be
capable of being embodied in a decree. The,,foctith.at.the;.part.ies.,entered
. c)nto a compromise during the hearing of the suit or appeal was considered
not!to ;!le ~s~ffic~~ntir,to~dp ·away;i\vit~:;th~ requken;ient:bf1the;·said':iule and
that courts were expected to insist upon the parties to reduce the terms into
writing. In Byram Pestonji Gariwa/a v. Union Bank ofIndia &'OrS.; [ 1992)
I SCC 31, this Court while adverting to the very amend~ent in 1976 to
D Rule 3 of Order 23 CPC, noticed also the effect necessarily to be given
to Rule I of Order 3, CPC, as well and' on an exte~sive review of the case
law on the subject ·Of the right of the counsel. engaged to act on· behalf of
the client observed as follows:

"37. We may, however, hasten to add that it will be prudent for
E counsel not to act on implied authority except ~hen. ~arranted by
the exigency of circumstances demanding immediate adjustment
of suit by agreement or co~promise and the signature of the party
cannot be obtained w.ithout undue delay. In these days of eas!er
and quicker communication, such contingency may seldom arise.
F A wise and careful counsel will no doubt arm himself in advance
with the necessary authority expressed in wri.ting to meet all such
contingencies in order that neither his authority nor integrity is
ever doubted. This essential precautjon will safeguard the personal
reputation of counsel as well as uphold ~he ,prestige and dignity
G of the legal profession.

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,
H attainment of certainty and expeditious disposal .of cases by
JJNESHWARDAS''v.;SMT. JAGRANI [RAJU. J.] 185

.', ·. reducing the tenns of compromise to writing signed by the parties, A
.. ; . and allowing the comprornise•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
· · .. · 1such effect;· be presumed to have disallowed the parties to enter
• into a coin promise by counsel. in thein::ause. or by their duly l3' ,
. · authorized . agents. ·Any such pr-esumption•would ·be· inconsistent
. :•with the legisl~tive object of attaining quick reduction of arrears·
1 : "· ·in court by .elimination of uncertainties and ·enlargement of the

1 ' ·" .scope. of compromise. '

t."':l. .i' ;--,.:! ~·: ·. 1·:;,:rir,t:; , !l'f .... J
1 .' :·".Jd • C )
: -'
.n.~ .,39, .Todnsist·· upon ·the party1 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 D
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. Not to recognise such
capacity is not only to cause much inconvenience and loss to the
parities personally, but also to delay the progress of proceedings
in court. Ifthe legislature had intended to make such a fundamental E
change, even at the risk of delay, inconvenience and needless
expenditure, it would have expressly so stated.

40. Accordingly, we are of the view that the words 'in writing and
signed by the parties', inserted by the C.P.C. (Amendment) Act, F
176, must necessarily mean, to borrow the language of Order III
Rule 1 CPC.

"any appearance, application or act in or to any court,
required or authorized by law to be made or done by a party G
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: H
186 SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A Provided that any such·-appearance shall. if the court so
directs, be made by the party in person."
(emphasis supplied)

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

C Considering the fact and... circumstances ..of the case, we find that there
are no adequate reasons on merits also to call for interference_ in a second
appeal. The so-called questions formulated cannot be considered to be even
questions of law and, at any rate, not substant~al questions of law, as
required under Section 100, C.P.C. The courts below have concurrently
D rejected the claim of the plaintiff/appellants on pure findings of fact based
all
upon relevant evidence and nothing survi.ved for consideration at in such
an appeal. Further, respondent side alone appears to have been saddled with
additional liabilities under the decision of the High Court, though on the
basis of admission made by counsel appearing for parties. There is nothing
E said against the counsel, who appeared for parties, and no allegations have
been made also attributing any impropriety to their action. Therefore, we
are not persuaded to agree with the submissions made on behalf of the
appellants.

The appeals, therefore, fail and shall stand dismissed. No costs.
F
R.P. Appeals dismissed.