IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA R.S.A. No. 250 of 1996 and F.A.O. No. 149 of 1999 Judgment reserved on: 4.3.2008 Date of decision: 10.4.2008 1. R.S.A. No. 250 of 1996 Bishan Lal and another Appellants Versus Sarita and others Respondents For the Appellants: Mr.Ajay Kumar, Advocate For the Respondents: Mr. Ajay Sharma, Advocate 2. F.A.O. No. 149 of 1999 Suresh Chand and another Appellants Versus Khem Chand Respondent For the Appellants: Mr. K.D.Sood, Advocate For the Respondent: Mr. Ajay Sharma, Advocate Coram The Hon’ble Mr. Justice Deepak Gupta, Judge. The Hon’ble Mr.Justice Rajiv Sharma, Judge. Whether approved for reporting? _______________________________________________________ 2 Per Deepak Gupta, J. Both the aforesaid appeals are being disposed of by a common judgment since similar questions of law are involved in the case. A learned Single Judge of this court vide his order dated May 28, 2002 in RSA No. 250 of 1996has referred the following questions for consideration by a larger Bench:- 1. Whether an appeal would lie against a decree passed on the basis of a compromise between the parties by a court exercising the appellate jurisdiction and, if so, whether such an appeal would be a first appeal against the decree within the meaning of Section 96(1), Code of Civil Procedure or an appeal against an order within the meaning of Order 43, Rule 1-A, Code of Civil Procedure or a second appeal under Section 100, Code of Civil Procedure? 2. Whether a decree passed by a court on the basis of statement of the parties and/or their counsel would constitute a lawful compromise within the ambit of rule 3 of Order 23, Code of Civil Procedure? The first question stands answered by the Apex Court in Civil Appeal No. 13092/96. The order of the Supreme Court arises out of proceedings arising from FAO No. 149 of 1999 itself. A suit was filed by Khem 3 Chand, respondent herein, against the present appellants. This suit was compromised and both the parties arrived at a settlement and their statements and the statements of their counsel were recorded on 26th April, 1994. The court disposed of the suit in terms of the compromise. The defendants filed an application to set aside the compromise decree on the ground that undue influence was exercised upon them and, therefore, the compromise was vitiated by law. This application was rejected. Thereafter an appeal was filed before the learned Additional District Judge who held that the appeal is not maintainable under Section 96(3) CPC. A Civil Revision was filed before this court which was dismissed. Thereafter the plaintiffs filed an appeal before the Apex Court. The Apex Court held as follows:- “The controversy raised in this appeal is no longer res integra. This court in Banwari Lal Vs. Chando Devi [(1993) 1 SCC 581] had held that by CPC Amendment Act, 1976, a right has been given under Rule 1-A(2) of Order 23 to a party to challenge the recording of the compromise or by preferring an appeal against the decree. Section 96(3) of CPC shall not be a bar to such an appeal because Section 96(3) is applicable to cases where the factum of compromise or agreement is not in dispute. As such a party challenging a compromise can file a petition under proviso to Rule 3 4 of Order 23, or an appeal under Section 96(1) of CPC, whichever is found to be feasible. Accordingly, we hold that the appeal under Section 96, CPC or application under proviso to Order 23 Rule 3 proviso to CPC, would lie in either of the forums.” It is thus apparent that a person aggrieved of an order of compromise can either file an appeal under Section 96 CPC or even an application under the proviso to Order 22 Rule 3 CPC. The first question is answered accordingly. As far as the second question is concerned, the same is also no longer res integra in view of the judgment of the Apex Court reported in Jineshwardas (D) by LRs. and others Vs. Smt. Jagrani and another AIR 2003 SC 4596. The provisions of Order 23 Rule 3 CPC relating to compromise read as follows:- “3. Compromise of suit.- Whether 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 5 agreement, compromise or satisfaction is the same as the subject-matter of the suit]: [Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.] In Byram Pestonji Gariwala Vs. Union Bank of India and others (1992) 1 SCC 31 the Apex Court held as follows:- “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 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. Any such presumption would be inconsistent with the legislative object of attaining quick reduction of arrears in court by elimination of uncertainties and enlargement of the scope of compromise. 39. To insist upon the party himself personally signing the agreement or compromise would often cause undue delay, loss and inconvenience, especially 6 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. Not to recognize such capacity is not only to cause much inconvenience and loss to the parties personally, but also to delay the progress of proceedings in court. If the legislature had intended to make such a fundamental change, even at the risk of delay, inconvenience and needless expenditure, it would have expressly so stated. 40. Accordingly, we are of the view that the words `in writing and signed by the parties’, inserted by the C.P.C. (Amendment) Act, 1976, must necessarily mean, to borrow the language of Order 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 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: Provided that any such appearance shall, if the court so directs, be made by the party in person.” The Apex Court in Jineshwardas’s case, supra, expressed its agreement with the aforesaid proposition laid down in Byram Pestonji Gariwala’s case and held as follows:- 7 “8. We are in respectful agreement with the above statement of law. Consequently, it is not permissible for the appellant, to contend to the contrary. That apart we are also of the view that a judgment or decree passed as result of consensus arrived at before Court, cannot always be said to be one passed on compromise or settlement and adjustment. It may, at times, be also a judgment on admission, as in this case.” It is, therefore, obvious that the second question is totally covered by the judgment of the Apex Court and it is, therefore, answered by holding that a decree passed by a court on the basis of the statements of the parties or their counsel constitutes a lawful compromise within the meaning of Order 23 Rule 3 CPC. We now take up both the cases separately to deal with the factual matrix. RSA No. 250 of 1996 In this case the plaintiffs, i.e. the respondents herein filed a suit for specific performance and for possession of the suit land. The suit was decreed by the trial court. Thereafter the defendants filed an appeal. During the course of appeal, a compromise was arrived at between the parties. A joint statement of the counsel for parties, as well as of Bishan Lal appellant and Prem 8 Chand, one of the respondent, was recorded in the following terms:- “Statement of ld. Counsel for the parties and Sh. Bishan Dass aged 64 years, appellant No.1 and Shri Prem Chand aged 74 years, respondent. ON S.A. 5.8.95 Stated that the land measuring 6 marlas comprising Khasra No. 723, 724, 725, 754, 756, 757 and 758 is in dispute. It has been agreed upon between the parties that the land referred to above will go in favour of the parties to which it will adjoins and the other party will have no claim over the same and in case, it adjoins the land of both parties, then this land will be shared in equal shares by both the parties. The appeal be decided accordingly.” Thereafter the statement of Patwari, Kishan Chand, was recorded on 26.8.1995 who stated that as per the revenue records, the suit land adjoins the land of respondent, Prem Chand. Thereafter appellant, Bishan Dass moved an application for setting aside the compromise. This application was rejected and the appeal was disposed of in terms of the compromise. In the present case the statements were made by counsel as well as their parties. They were fully aware of the statements they were making. They cannot be, therefore, permitted to withdraw from the compromise in view of the 9 law which we have laid down above. The compromise entered into was a legal and valid compromise and the decree passed on the basis of such compromise is binding on both the parties. No case is made out for interference. As such the appeal is dismissed with no order as to costs. FAO No. 149 of 1999 A suit was filed by Khem Chand, respondent herein, for possession of shop ABEF or EFCD by way of specific performance of agreement dated 2.2.1979 qua 1/ 2 share of shop complex marked as ABCD in the plan annexed to the plaint. The plaintiff also prayed for grant of decree for mandatory injunction directing the respondents to remove the newly raised construction and additions made after 16.1.1986. The suit was contested. On 26.4.1994 the suit was taken up at the request of both the parties. Statement of Khem Chand was recorded who stated that he had entered into a compromise with the defendants and that defendants No. 1 & 2 had agreed to hand over possession of the lintel on the first floor with all rights in his favour and he has taken over the possession of the said lintel. In lieu thereof the plaintiff agreed to 10 relinquish his rights on the land on which the defendant had raised construction. He further stated that he would have no right on the said land and the construction raised thereupon and he would also not claim any proprietary rights over the same. As far as the lintel of which he had been granted possession is concerned, the plaintiff would be entitled to raise construction as per his own wishes. The rear wall would be jointly used by both the parties. He also stated that if he wants to sell the constructed portion, he would make the first offer to the defendant. He further prayed that the suit be decreed in terms of the compromise. Statement of both the defendants was recorded. They both stated that they had entered into a compromise with the plaintiff, Khem Chand. They had heard and understood the statement of Khem Chand and agreed to be bound with the same. They further agreed that on the lintel, the plaintiff would be at liberty to raise construction as per his own desire except that the construction should be legal and according to the technical guidelines. Thereafter another statement of Khem Chand was recorded that he has heard the 11 statements of the defendants that he would withdraw the contempt proceedings pending in the High Court. The learned trial court disposed of the suit in terms of the compromise, but made certain observations which were not in the statements of the parties. The plaintiff filed an application for setting aside the compromise which was rejected. The appeal filed was also dismissed. Revision before this court was dismissed and thereafter, as stated hereinabove, an SLP was filed before the Supreme Court and thereafter the Apex Court held that the appeal was maintainable. The appeal was again heard by the appellate court who set aside the order of the trial court. The learned appellate court noted that no measurements of the lintel were given in the statements of the parties and that the plaintiff has nowhere stated that he has given up his rights in the vacant land. The appellate Court also came to the conclusion that the defendants in their statements stated that the construction would be raised keeping in view the legal and technical aspects which had not been stated by the plaintiff. He, therefore, came to the conclusion that the order of the trial 12 court had not been passed strictly in accordance with the statements of the parties and, therefore set aside the order. He also set aside the compromise on the ground that there was no compromise in writing between the parties. It is apparent in view of the legal position discussed above, that the compromise need not be in writing and compromise can be recorded on the basis of the statements made by the parties. Further more, we are of the view that in case the appellate court felt that the trial court had traveled beyond the terms of the agreement as reflected in the statements of the parties, he could have modified the decree. We are of the view that though the trial court may have erred while making certain observations in the order, the decree which has been passed is only to the effect that a compromise decree is passed in favour of both the parties in terms of their statements. It has further been ordered that the statements shall form part of decree sheet. It is apparent that the decree is only in terms of the statements of the parties. We may clarify that any observations of the trial court which are not in accordance with the statements 13 shall not be binding on the parties, but the parties are bound by the compromise entered into between them and are bound by the statements which form part of the decree sheet. In view of the above discussion, the appeal is allowed, order of the learned lower appellate court is set aside and it is ordered that the suit shall be deemed to be decreed in terms of the compromise entered into between the parties, as reflected in their statements which form part of the decree. Both the appeals are disposed of in the aforesaid terms. ( Deepak Gupta ), J. April 10, 2008(K) ( Rajiv Sharma ), J.