* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision : October 31. 2011 + RFA(OS) 111/2011 BHAGWAN MAHAVEER EDUCATIONAL SOCIETY & ORS. Appellants Through: Mr.T.K.Tanju, Sr.Advocate with Mr.Neeraj Grover and Mr.Sayad Aqui Ali, Advocates versus W RAJESHJINDAL &ORS. ....Respondents Through: Nenno CORAM: HON'BLE MR. JUSTICE PRADEEP NANDRAJOG HON'BLE MR. JUSTICE S.P.GARG 1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to Reporter or not? 3. Whether the judgment should be reported in the Digest? PRADEEP NANDRAIOG. I. . > For orders, see FAO (OS) 518/2011. (PRADEEP NANDKAJOG) JUDGE October 31, 2011 rk .P.GARG) JUDGE Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified V. 'J V * IN TME M^H COURT OF DELHI AT NEW DELHI % ' Date of Decision : October 31, 2011 + FA0(05) 518/2011 ^HAGWAN MAHAVEER EDUCATIONAL, • . SOCIETY^ ORS. • Appellants Through: Mr.T.KTanju, SrAdvocate-with Mr.Neeraj Groyer and Mr.Sayad Aqui All, Advocates versus RAJ.ESHJINDAL&'ORS. Through: Nemo RFA(OS) 111/2011 ....Respondents BHAGWAN MAHAVEER EDUCATIONAL SOCIETY &ORS. .....Appellants Through: |vir.T.K.Tanju, Sr.Advocate with MriNeeraj Grover and Mr.Sayad Aqui All, Advocates versus RAJESH J.INDAL & ORS. ; Through: Nemo ....Respondents CORAM: HON'BLE MR. JUSTICE PRADEEP NANDRAJOG HON'BLE MR. JUSTICE S.P.GARG 1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to Reporter or not? 3. Whether the judgment should be reported in the Digest? PRADEEP NANDRAIOG. I. FAO(OS)518/2011 & RFA(OS) 111/2011 ' •. ; Page i of 22 •J, .•1 r- ..1. r { . /- 1. FAO(OS)No.518/2011lays a challengeto the orderdated . 3.2.2011 dismissing . RA.No.9418/2010 as also, two accompanying Civil , .Miscellaneous Applications being lA.No.9419/2010 and lA.No.9.420/2010. '• ,2. RFA(OS)No.111/2011 challenges: the. order dateiEl 19.5.2010 disposing of the suit by recording a compromise between the parties. 3. • Both appealsare being.decided.bya commonjudgment inasmuch as, a common .question of law on the same fact?, between the same parties, arise,for consideration in both .appeals.' . 4. Vide RA.No.9418/2010it was prayed before the learned Single Judge that order dated 19.5.2010 i.e. the order challengedin RFA(OS)No.111/2.011be reviewedand recalled. 5. Sushil KumarJain, SubhashChandJain and Jog! Ram Jain joined as plaintiffsNo.2, 3 and 4 respectively,and under the banner of Bhagwan Mahavir Educational Society (Regd.) w.hich was plaintiffNo.l, filed a suit,seeking declarationthat membership of defendants No.2) 3 and. 4 i.e..Kanak Mb\ Saklecha,Rekha Jindal and MahenderPal jajn respectivelybe'.- declarednull and void. Adeclarationwas soughtthat election! held on 2.4.2007 be declared null and void and the election held on 30.3.2007be declaredas genuineand legal. Further prayer made Was to restrain said defendants as'also other • defendantsfrom interfering in the administrationof plaintiff No.l by the office bearers elected, on 303.200,7 and to ' restrainthe defendantsfrom preventingplaintiffsNo.2 to 4 to enterthe officepremises of plaintiffNo.l. ' FAO(OS)518/2011&RFA(OS)111/2011 Page 2 of 22 i.,.. 6. As CS(OS)No.2366/2007, filed by the: plaintiffs> , proceeded and as tinne lapsed, fresh elections became due when the suit was listed before the learned Single Judge on • 19.5.2010 inasmuch as the terhn of the existing, governing . body, be it ps per the elections held on 30.3.2007 or 2.4.2007 would end Ipy Aprir2010. . , 7. Application seeking interirh injunction, pending disposal of the suit, was listed before the learned jingle Judge. Pleadings had been completecl. Probably, stage of framing jssues had reached. It was thus the date of the first hearing, of the suit as conventionally understood. 8.. The plaintiffs were represented by Mr.Shiv Charan Garg Advocate and the defendants were represented by Mr.Ravi , Gupta Senior Advocate with Mr.Laliet KUmar ^Advocate assisting him. It is not in dispute that Mr.Shiv Charan Garg Advocate had filed a vakalatnama executed by the plaintiffs in his name, authorizing him to act and plead on. behalf of the plaintiffs. Likewise, Mr.Laliet Kumar Advocate had the requisite authority, to act and plead, on behalf of . the defendants. 9. Orderdated 19.5.2010 recordsa,compromiseand hdnce a consent decree being passed. The'order reads as under:- "Present : . Mr.Shiv Charan Garg, Advocate . • for the Plaintiffs"' Mr.Ravi Gupta, Sr.Advocate with Mr.Laliet Kumar, Advocate for , the Defendant Nos.1,3,6,7 & 8 CS(OS) 2366/2007 & lA Nos. 14578/2007 (under 0.39 R.l & 2 CPC). 1549/2010 (under Section 151 CPC bv plaintiff). 1550/2010 (under •FAO(OS) 518/2011 & RFA(OS) 111/2011 Page 3 of 22 . .1 ;•» . • • 3 r*' j < • - ;> - V Section 151 CPC bv plaintiff). 2372/2010,(under Section 15l CPC bv defendant nos 1. 3 & 6) • It is an admitted fact that plaintiff no.l which is an educational society has, at ..the moment, 11 members. The list of members is indicated at Page 51 of the documents filed by the plaintiffs. The objection of the plaintiffs is to the persons whose names appear at Serial nos.9, 10 and 11 in the list set out'at Page 51 (i.e., defendant nos.2 to 4)., It is alsb not disputed by both counsels that elections to the society i.e., plaintiff no.l are; now overdue since the term of the Governing Body ended in April, 2010. The peculiarity of this case is that the members of the society whether they are 8' or 11 are also, the persons who get .appointed to<various posts in the society. The warring groups, i.e., the plaintiffs as well as' the defendants are willing to amicably settle the disputes on the following term's.:- (i) Fresh elections will be, called within 15 days from today. The elections will be held within 15 days thereafter. 4ii) , Since there is no; dispute as regards, membership of plaintiff nos. 2 to 4, it is agreed that after the elections are held, plaintiff no.2 will be offered the post of vice-president while plaintiff no.4 shall continue as member of the governing body. (iii) The elections shall proceed on the basis of the list of eleven (11) members as set oyt at Page 51 of the documents. (iv) The defendants shall give inspectioifi of all documents and books of plaintiff no.l on demand by plaintiff nos. 2 to 4. FAO(OS)518/2011 & RFA(OS) 111/2011 Page 4 of 22 • j; r ! -v ;'•/, . 'ni .. ? I " - . - • • I. . • !'. L j'. . r--' • '-i 1 ' I . 9, ! - 'If. V-'J ^ jjr y. (v) Mr.Garg, the, learned counsel for ,the • • plaintiffs says that plaintiff nos.2 to 4 shall stand for the post(s)' which are. being offered under this agreement. The' entire process shall be. completed within six weeks from" , today. . ; ' • . (vi) Mr.Garg says that in view of the terms of settlement as indicated hereinabove, he does ..not wish to press the suit any further, the • suit is disposed of accordingly on the terms, indicated- hereinabove. All the pending applications are also stand dispose.d of." 10. It needs to.be highlighted that no written compromise •> between the parties was filed and from the order it is apparent that a settlement took place in the court itself when ^ the matter was listed before the,learned Single Judge. The settlement appears to have been motivated on the, reason that.in any case elections had become due, to be held in April 2010, and the warring groups were advised by the court to settle the matter. The settlement recorded is that elections would be held within 15 days and, defendants No.2,, 3 and 4 would be treated as members of the plaintiff No-.l society. The settlement also envisages, probably by way of goodwill, that after election would be held, plaintiff No.2 .would, be offered the post of Vice-President and plaintiff No.4 would be treated as .a member of the'governing body of .the plaintiff No.l society. , ' - 11.~ Election -process cohimenced after order" dated 19.5.2010 was passed and in terms thereof the'suit stood decreed as settled. The Election Officer invited nominatipns to be filed and pertaining to the nomination filed by'Rekha FAO(OS)518/2011 & RFA(OS) 111/2011 v.-Page 5 of .22 f' I ' :-v-; : r/ ' Jindal defendant No.3,' whose membership,, was disputed by plaintiffs No.2 to 4, plaintiff No.2 Sushil Kumar Jain filed an objection on 4.6.2010 qua the authenticity of Rekha jindal's signatures on the nomination form. He never questioned the right of Rel<ha Jindal to contest the election by alleging that she was not a member of the plaintiff No.l society. 12. Highlighting that from the aforesaid, it is apparent that plaintiff No.2 was aware that Rekha Jindal could contest, election as a member of plaintiff No.l society and from which it could safely be inferred that the source had tc be th'e ,- consent order dated 19.5.2010, RFA(OS)No.58/2010 was filed challenging the consent order dated 19.5.2010, which had , disposed of the suit, on' the ground that .the counsel concerned was never authorized to have the suit decided on a consent; stand taken was that by way of an interim solution counsel had agreed that election may be held to the officer bearers of plaintiff No.l society and for which defendants No.2, 3 and 4 be treated as members of the plaintiff No.l society. Stand taken was that in spite of consent being by way of an interim arrangement, the suit itself was decreed. 13. The said appeal'was' withdrawn with liberty to seek review of the consent orcjer dated 19.5.2010 and as a consequence thereof, RA.No.9418/20ld was filed. 14. Not disputing that counsel for the plaintiffs had given . consent for elections to be held, with defendants ,No..2 to 4 being treated as members of the plaintiff No.l society, it was pleaded, in the review application that when order was dictated, learned counsel remained under an impression that FAO(OS)518/2011 & RFA(OS) 111/2011 ' Page-6 of.22 X'!.i.aSir V ^ n the .court was recording a proposal pertaining to an interim arrangement and when language of the order showed the suit to be disposed of, counsel protested but the protest was ignored. In para 5 it was pleaded:- t "That it was also informed that during the aforesaid process of recording the broad proposals in.the order, as soon as the Ld. Counsel for the plaintiffs realized that, -this Hdn'ble Court had proceeded to. dispose off the entire suit proceedings, he objected to the sqme but his objections were not taken note off by this Hon'ble Court and he was advised . to take appropriate legal remedies as may be available under the law as the other (sic) had already been dictated." 15.- The Review Application was filed under the signature of, Shri Neeraj Grover Advocate, inasmuch as plaintiffs withdrew the vakalatnama in favour of Shri Shiv Charan Garg Advocate, who had appeared on 19.5.2010. .It may be noted that plaintiff No.3, Sh.Subhash Chand Jain did not seek review and as a co-plaintiffabides by the consent order, meahihg thereby plaintiff No.3 stands by the correctness of what was recorded . in the order dated 19.5.2010. 16. It is asserted in the Review Application that Order XXlll Rule 3 CPC envisages a suit to be disposed of on a written agreement, under the signatures of the parties, and since no such written agreement under the signatures of the plaintiffs was filed, order dated ,19.5.2010 was contrary to law. It was jiighlighted that consent given by the counsel was for an interim arrangement and not for the suit to be disposed of. It was pleaded, as noted hereinabove in para 5 of the FAO(OS)518/2011 &RFA(OS)111/2011 , Page'7 of 22 I '• ii, 'h. <1 > application,that the, learned Single Judge forced down the throat of the plaintiffs,a compromisewhich was not agreed to. • 17. It was also pleaded that the plaintiffs had .never given any'authorityto their counseland in fact, had not consented to any compromise, which we presume would mean that according to the plaintiffsthey never consented^even to ah ' interim arrangement being worked out. 18. Dismissing RA.No.9418/2010,the learned Single Judge has held that the vakalatnamaexecuted by plaintiffsNo.2'to. 4 in favour of Shri Shiv Charan Garg Advocateauthorizedhim to act and plead and thus the counsel was fully competentto enter into a compromiseon behalfof the plaintiffs. 19. Learned SingleJudge has noted various decisionswhich relateto the authorityof a counsel to enter into a settlement on behalf of his client. . • , . 2,0. We need not note the said authorities,inasmuchas Shri T.K.Ganju, learned Senior Counsel, who appeared for the appellantsconceded to the said position i.e. that given the languageof a vakalatnamaexecuted by a client in favour of the counsel,the counselconcernedmay have the authorityto bind his clients by way of a settlement, but sought to urge that the settlement had to be in writing and signed by or on behalf of the parties. 21. Thus, we highlightthat the issue debated at the hearing of the two appeals was: Whether law mandates-that every compromisebetweenthe partiesto a suit has to be.in writing and signed by or on behalfof the litigatingparties? FAO(OS)518/2011&RFA(OS) 111/2011 Page 8 of 22 -l' - V' 0 i:. -1 22. Before answering the aforesaid' question, we need to highlight that all the plaintiffs have not sought review, Plaintiff No.3' Shri Subhash ' Chand Jain abides by the settlement arrived at. It is only Sushil Kumar Ja.'in' and Jogi Ram Jain who challenge the compromise recorded as per order dated l9.5.2010. • . - 23. That . both of them claim ho , knowledge of the cohipromise as they had never instructed the counsel to so, compromise needs an explanation from Shri Sushil Kumar Jain, who on 4.6.2010 i.e. after 15 days of the order dated 19.5.2010, With reference to the nomination filed by Rekha Jindal had questioned the genuineness of her signatures on the nomination papers. He never took the stand'that Rekha Jindal could not contestthe election'asshe was not a member of plaintiffNo.1 society. That plaintiffNo.4 Shri Jogi" Ram Jain was present in court on 19.5.2010 is^evidenced by. the fact that a gate pass stahds.issued in his name by the Registry of this Court to enable him to enter the precincts of the Delhi High Court. 24. Indeed, learned counsel for the appellants/conceded that Shri Jogi Ram jain had entered the court premises on 19.5.2010, but claims he having left due tb^ urgent work by the time the suit reached for hearing. 25,. A plausible explanation does exist vis-a-vis Jogi Ram Jain to disclaim knowledge of-any settlement, •but as regards Sushil Kumar Jain, in the teeth of his having filed an objection on 4.6.2010 to the nomination by Smt. Rekha Jindai, we find no explanation given, by him as to why did he not question the •FAO(OS)518/2011 & RFA(OS)'111/2011 Page 9 of 22 •' • '• , f • V r- v/ election process being initiated. in which Rekh,a.:.Jindal was permitted to. contest the election, if he knew nothing of the order dated 19.5.2010. . 26. Before, dealing , with the legal issue raised, as afore- noted, i.e. whether every compronnise pertaining to a suit needs to ,be in writing and under' the signatures, of the litigating parties, or a person authorized on their behalf, we need to note an undisputed fact. • 27. Plaintiff No;l society had needed money to purchase land. It was in touch with a public sector bank for loan to be advanced. The loan was advanced and at'that stage, second defendant, along, with defendant No.l stood guarantee. Defendant No.3 Rekha Jindal, is the wife of defendant No.l, and thus there are traces of said two persons being inducted' as members of plaintiff No.l society, inasmuch as guarantors, they had a stake to ensure correct utilization of the funds by plaintiff No.l. ... 28. But, this is just an ancillary fact noted by us to highlight the' backdrop in which the dispute pertaining to the membership of defendants No.2 to 4.needs to be considered.. 29. It is obvious that when the suit was listed, the.aforesaid., facts were noted by. the learned Single Judge, and probably . there was an expression of anguish by the,court that a cause unworthy of consuming precious judicial time w,as being . unnecessarily litigated for 3 years. Probably, sanity dawned , upon the parties when order dated 19.5.2010, recording the compromise was passed. FA0(0&)518/2011 & RFA(OS) ill/2011 T V' f •• • I -i't- , • '•'••'•in V- '-i /; v; VM ' 1 , •• Page 10 of 22 Ev:-?- V /^/ 30., We now deal with the issue, which - ;arise for . consideration and as noted hereinabove in para 21. 31. We need not, bother ourselves with various judgments cited by learned counsel for the appellants; being. AIR 1993 SC 1139 Banwari La! Vs. Smt.Chando Devi (through LR.) & Ann, 1997 RLR 199 (DB) Kamla Pevi Vs. Prabhat Chand. AIR 2002 DELHI 223 S.P.Minocha 1/5. Liia /?^/77. 105 (2003) DLT '806'Archies Greetings &GiftsLtd. Vs. Gara Plastic an6 (2005) 4 see 117 K. Venl<atachaia Bhat & Ann Vs. Krishna Navak (D) by LRs. & Ors. in view of the fact, we have before us ah authoritative pronouncement on the issue, by the Supreme Court. It-is the decision reported as 2006 (5) SCC 566 Pushpa •Devi Bhagat Vs. RaienderSingh & Ors. 32. In Pushpa Devis case (supra) the landlords were in litigation With a tenant, which was a partnership firm, partners whereof were also, impleaded as co-defendants. Claiming to have terminated the • tenancy on .31.3.1989, plaintiffs/landlords sought ejectment of the defendants'from ' the .tenanted premises, and also clairried meshe profits^ ' When evidence was being recorded, counsel for the parties made statements to the effect that a compromise had been arrived at between the parties and as per the.compromise the defendants would vacate the subject premises latest b,y 22.1.2002 and tjll then would pay damages @ ^4,800/- per month. Statements of counsei for.the parties were thereafter recorded. Counsel signed the' same. Suit was decreed in terms of the connpromise which required a decree to be passed that the defendants would vacate the suit prernisesby FAO(OS)518/2011 &RFA(OS) 111/2011 Page 11 of 22 'y0'. ./ ., 1.1,„LI,^<,', u,;.,, /j 22.1.2002 and till, then, would pay. damages for use and , occupation '@^4,800/- per nnorith. ' . It was realized that counsel for the defendants, Shri Dinesh, Garg, had not filed a vakalatnama on behalf .of defendants' No.3 and ,4. An application • was thereafter filed and along therewith , a vakalatnama was filed by Shri Dinesh Garg as per which defendants No.3 and 4 had also authorized him tp.appear on their behalf. Noting that the counsel, stood by the settlement between the parties, taking note of the fact that now Shri Dinesh' Garg Advocate had the^ necessary authority, fresh decree in the same terms came to be passed, as was passed in terms of the earlier order. On. 21.8.2001, defendant N0i2 filed an application stating that she had never instructed Shri Dinesh Garg Advocate to enter into any compromise and she . further pleaded that there was ho written .compromise between |;he parties duly signed by them and therefore there was no lawful compromise. Notice of the application being issued to the parties as also to Shri Dinesh Garg Advocate, learned Trial Judge .noted that Shri Dinesh Garg Advocate had been representing defendant No.2 for about 12 years and, he . made a statement in Court on 7.12.2001 that all throughout he had been receiving instructions on behalf of. the defendants either from Ms.Sadhna Rai, daughter of defendant: No.2 or her son-in-law, Vinay Rai or Dr.M.C.Gupta the Group Head of the law department of the companies :of the defendants. ' 33. Holding that the counsel could lawfully compromise the - dispute between the parties and belrevihg the counsel that he FAO(OS)518/20n & RFA(OS) 111/2011 Page 12 of 22 Vv was diily authorized on being instructed by Dr.M.C.Guptato enter into a settlement, the application filed by defendant No.2 to recall the consent decree was dismissed by the learned Trial Judge. 34. The Appellate Court set aside.the decision, holdingthat there being no written agreement duly signed by the parties, the compromise decree on the basis of the statement mads by counsel for the defendants could not bind defendant No.2. The consent decree was set aside in appeal. , 35. Further, challenge by way of appeal to this Court resulted in the appellate decision being set aside and consent decree being restored. 36. Matter ultimately reached the lap,of the Supreme Court, and we have before us the decision reported as 2006 (5) SCC 566 Pushoa DeviBhaaat Vs.'Raiender Sinah & Ors. 37. The Supreme Court noted Rule 3 of Order'XXIII of the Code of Civil Procedure, which reads as under:- "3. Compromise of suit. - 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 Jn 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' agreennent, compromise or satisfaction to be. recorded, •. and shall pass a decree in accordance therewith so far as it relates to compromise or satisfaction is the same as the subject-matter of the suit." 38. The Supreme Court noted the proviso to Rule 3 of Order XXIll, as per which the court concerned, where settlement or FAO(OS)518/2011&RFA(OS)111/2011 . Page 13of22 I -:;- ;v •• ^ !y.y.' ./ Ji adjustment had been arrived at as the one which had to decide all issues relatable thereto. In para 18 of the decision, the Supreme Court noted that Rule 3 of Order XXIII is clearly in two parts. The first part provides that 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. 39. The Supreme Court thereafter noted that the huie 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 amongst the parties to the s.uit, but also others.' 40. The Court then., posed a question; "What is the difference between first and the second, part of Ruie 37' 41. Answering the question in para 19, the Supreme Court held:- "xxxxx 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 agreernent or compromise in writing and signed by the parties and that it is lawful, a decree follows in terms of what is agreed FA0(OS)518/2011& RFA{0S) 111/2011 .'-t i. " t Page 14 of 22 •' v'l- • . . •.i ' ^ : h : i < between the parties. The agreement/compromisespells out the agreed terms by which the claim, is admitted, or adjusted by mutual concessions or promis'^s,. so that the parties thereto can be held to their promise(s) in future and perforrtiance 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 performingthe required obligation. Wherethe defendant so "satisfies" the