Order XXIII Rule 3 and Order III Rule 1 of Civil Procedure Code- Arbitration proceedings - Arbitrator passed awards - challenged in District court - Compromise signed by Govt. Pleader on behalf of Govt. - Compromise decree was challenged by Govt. as Govt. Pleader is not authorised - High court set aside the decrees - Apex court held that Order XXIII Rule 3 and Order III Rule 1 of Civil Procedure Code as held in Jineshwardas (D) through L.R.s and Ors. v. Smt. Jagrani and Anr., (2003) 11 SCC 372, has held as under:
“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.”
We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid.=
the compromise talks took place
between the parties at the instance of the respondents themselves
expressing their intention to explore the possibility of settlement as per
its letter dated 02.12.2008.
Certain meetings were held for this purpose.
The appellant had agreed to forgo substantial part of interest and also 5%
of the principal amount.
The Superintending Engineer, however, wanted 10%
reduction in the principal sums awarded in favour of the appellant.
It is
because of this difference the settlement talks failed at that time and the
Government decided to pursue the applications under Section 34 of the Act
on merits.
However, when the matter came up before the District Judge on
9.4.2011, the appellant agreed to forgo the entire interest accrued after
09.01.2009 as well, in addition to the concessions which were already given
by the appellant and recorded above.
When the Government Pleader was
confronted with this offer given by the appellant, he took a view that it
was a very fair offer and made an endorsement on the offer itself, to the
effect that the Government had no objection for accepting the same.
This
resulted in modifying the award by the District Judge in terms of agreed
conditions, vide his orders dated 28.04.2011 in all the three petitions.
8. The respondents, however, challenged the orders of the learned
District Judge by filing appeals under Section 37 of the Act in the High
Court, primarily on the ground that the Government had never agreed to the
terms as endorsed by the Government Pleader, in as much as, he was never
authorised for this purpose.
It was argued that in the absence of any
authorisation in favour of the Government Pleader, endorsement of the
compromise given by him was not binding on the Government.=
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.7164-7166 OF 2014
(arising out of SLP (C) Nos. 23016-23018 of 2012)
|Y. SLEEBACHEN ETC. |…..APPELLANT(S) |
| | |
|VERSUS | |
|SUPERINTENDING ENGINEER |…..RESPONDENT(S) |
|WRO/ PWD & ANR. | |
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
2. By the common judgment dated 29.02.2012, the Madras High Court has
decided three Civil Miscellaneous Appeals filed under Section 37 (1) (b) of
the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the
Act'). Those three appeals were filed by the respondents herein
challenging the orders dated 28.04.2011 which were passed by the Principal
District Judge, Tirunelveli, Tamil Nadu. The reasons for disposing of the
appeals by one single order was the commonality of the parties as well as
the issue involved in the said three appeals.
3. It so happened that the appellant, who is an Engineering Contractor,
was awarded three contracts by the respondents herein particulars whereof
are as under:
(i) For the rehabilitation and modernization of Gundar Reservoir
system in Tirunelveli District the bids were called and in which the
Petitioner became the successful bidder to execute the work for a contract
price of Rs.80,14,605/- under registered Agreement dated 02.04.1998 within
a period of 15 months to complete the contract work.
(ii) For the rehabilitation and modernization of Karuppanadhi
Reservoir system in Tirunelveli District the bids were called and in which
the Petitioner became the successful bidder to execute the work for a
contract price of Rs.55,82,633/- under the Registered Agreement dated
20.07.1998 within a period of 18 months to complete the contracts work.
(iii) For the rehabilitation and modernization of Kannadian Anicut
and Channel Reach – 1 in Tirunelveli District the bids were called and in
which the Petitioner became the successful bidder to execute the work for a
contract price of Rs.69,24,038/- under registered agreement 28.07.1998
within a period of 26 months to complete the contract work.
4. Certain disputes and differences arose between the parties relating
to all these contracts. According to the appellant, delays were caused by
the Department in handing over the sites where the works were to be
undertaken by the appellant and in addition, various other breaches were
committed by the Department in not fulfilling its obligations under the
three contracts. The appellant raised his claims in respect of all the
three contracts. The Department appointed Mr. Velu as the Arbitrator in
one case and Mr. S. Krishnamurthy was appointed as Arbitrator in other two
cases. After adjudication of the disputes, awards were passed in all the
three cases to the following effect:-
(i) Award dated 09.06.2006 by Mr. Velu in favour of the appellant in the
sum of Rs.52,90,776/- together with interest at the rate of 18% p.a. from
09.06.2006 until payment or realisation.
(ii) Award dated 25.04.2006 vide which appellant was awarded a sum of
Rs.39,74,964/- together with interest at the rate of 18% p.a. from the date
of award until payment or realisation.
(iii) Award dated 25.04.2006 in favour of the appellant whereby respondent
No.1 was directed to pay an amount of Rs.42,56,419/- together with interest
at the rate of 18% p.a. from the date of the award until payment or
realisation.
5. The respondent No.1 challenged all the awards by filing three
petitions under Section 34 of the Act, seeking to set aside these awards.
The appellant filed his replies contesting those petitions. All these
petitions were listed before the Principal District Judge, Tirunelveli.
While these proceedings were pending before the Principal District Judge,
the Government Public Works Department issued letter dated 02.12.2008
whereby it directed its officers to negotiate with the appellant for
settlement of arbitration awards amount. Accordingly, there were meetings
between the parties on 19.12.2008 and 09.01.2009 to negotiate out of court
settlement. Officials, including the Superintending Engineer, had
discussions with the appellant, wherein the appellant was requested to
reduce 40% of the principal awarded amount for all the three works covered
under the independent arbitration Awards. The contractor instead, came
forward to reduce 40% of the interest accrued on the total awarded amount
for all the three works, particularly with reference to interest in respect
of the three works, which worked out to 12.81% towards the principal award
amount covered under the three Awards. However, the Superintending
Engineer insisted for further reduction of the principal amount.
Ultimately in the meeting held in the Chamber of the Superintending
Engineer on 9.1.2009, the contractor was asked to offer 10% reduction in
the principal award amount, besides 40% offer made on the interest amount
accrued. The appellant, however, agreed to only 5% reduction in the
principal amount, in addition to 40% reduction in the interest amount.
Because of the aforesaid position taken by the parties, the negotiation
could not be fructified and fell through. The Principal Secretary to the
Government wrote a letter dated 9.1.2009 to the officials concerned,
directing them to pursue the applications under Section 34 of the Act in
respect of the three awards pending before the Court.
6. The matters, however, lingered on in the Courts for some reason or
the other. When they were listed in the Court on 09.04.2011, the appellant
came forward with a memorandum to the effect that, apart from the offer
made during the negotiations on 09.01.2009 for foregoing the interest at
40%, he was also willing to forgo further accrued interest on the award
amount after 09.01.2009. This offer appeared to be fair to the Government
Pleader. He made a written endorsement on the said memorandum, on behalf of
the Government that it had no objection for this memo. As a result
thereof, acting on this compromise, the petitions were partly allowed and
the awards of the Arbitrators were modified whereby from the award amount,
5% reduction on the principal amount was ordered. Further apart from 40%
reduction on the interest awarded till 09.01.2009; total interest accruing
beyond that period, was also waived. However, from the date of award i.e.
25.04.2006 to 09.01.2009, interest was calculated at 18% p.a. from where
the reduction of 40 % in interest amount was granted.
7. To recapitulate the salient facts, the compromise talks took place
between the parties at the instance of the respondents themselves
expressing their intention to explore the possibility of settlement as per
its letter dated 02.12.2008. Certain meetings were held for this purpose.
The appellant had agreed to forgo substantial part of interest and also 5%
of the principal amount. The Superintending Engineer, however, wanted 10%
reduction in the principal sums awarded in favour of the appellant. It is
because of this difference the settlement talks failed at that time and the
Government decided to pursue the applications under Section 34 of the Act
on merits. However, when the matter came up before the District Judge on
9.4.2011, the appellant agreed to forgo the entire interest accrued after
09.01.2009 as well, in addition to the concessions which were already given
by the appellant and recorded above. When the Government Pleader was
confronted with this offer given by the appellant, he took a view that it
was a very fair offer and made an endorsement on the offer itself, to the
effect that the Government had no objection for accepting the same. This
resulted in modifying the award by the District Judge in terms of agreed
conditions, vide his orders dated 28.04.2011 in all the three petitions.
8. The respondents, however, challenged the orders of the learned
District Judge by filing appeals under Section 37 of the Act in the High
Court, primarily on the ground that the Government had never agreed to the
terms as endorsed by the Government Pleader, in as much as, he was never
authorised for this purpose. It was argued that in the absence of any
authorisation in favour of the Government Pleader, endorsement of the
compromise given by him was not binding on the Government.
9. When the matter was heard by the High Court, even the High Court
suggested that the State should once again consider the possibility of
compromise and the matter was adjourned for this purpose. However, on the
next date of hearing, the counsel for the respondents made a statement that
Government was not interested in the settlement and wanted the matter to be
heard on merits. The High Court, accordingly, heard the matter and vide
impugned judgment, set aside the orders of the Principal District Judge
passed in the three petitions, directing it to decide on merits the
applications filed by the respondents under Section 34 of the Act. From
the perusal of the order of the High Court, it is clear that the High Court
has accepted the plea of the respondents that in the absence of any
material to show that Government Pleader was authorised to record the
compromise, such a compromise was not binding on the respondents. It is in
this backdrop, the appellant has preferred these appeals questioning the
validity of the judgment of the High Court.
10. It was argued by the learned counsel for the appellant that he was in
acute financial crisis and needed to satisfy the creditors including his
bankers and in view of the said circumstances, he filed separate memos
dated 06.04.2011 before the learned District Judge stating that he was
ready to forgo further interest accrued on the awarded amounts after
09.01.2009 apart from the earlier offer made during the negotiations on
09.01.2009 provided that the amount so arrived at be paid in lump sum i.e.
in one single installment and the said payment should be made within 3
months. In the said memo the appellant made it clear that the said offer
is made without prejudice to the rights of the appellant to contest the
petition on merit. In response to such offer to forgo further interest
from 10.01.2009 for the three award amounts, on 09.04.2011, the Government
Pleader, on behalf of the respondent, made a written endorsement that the
offer under the above said memos are in accordance with the negotiations
made on 09.01.2009 and offer to forgo entire interest amount from
09.01.2009 was beneficial to the Government. He also affirmed that the
Government has no objection for these memos. It was thus argued that when
the Government Pleader made the aforesaid endorsement in the manner stated
above, and it resulted into passing in agreed order on the basis of
settlement arrived between the parties, it was not open to the respondents
to back out therefrom. It was further submitted that the respondents were
stopped from contending that the Government Pleader was not authorised to
make such a statement. It was also argued that admittedly no action was
taken by the respondents against the Advocate who had appeared on its
behalf who continued as the Government Pleader.
11. Learned counsel for the respondents, on the other hand, justified the
impugned orders passed by the High Court submitting that it was not open to
the Government Pleader to accept the offer of the appellant without any
authorisation, more particularly, when it had already been decided by the
Government, vide letter dated 09.01.2009, to contest the cases on merits.
Therefore, such an endorsement made by the Government Pleader on behalf of
the respondents was not binding upon the respondents.
12. We have bestowed our careful consideration to the respective
arguments advanced by the counsel for the parties. The appellant has
produced on record the copies of the 3 memos dated 06.04.2011 which were
filed by the appellant before the Principal District Court on which
endorsement was made by the Government Advocate as well. All these memos
filed by the appellant are identically worded and the relevant extract
thereof makes the following reading:
“Now in consideration of the exigencies and in deference to the
suggestion by this Hon'ble Court apart from the above offer made during
negotiations on 09.01.2009 this respondent is offering to forgo further
interest accrued on the award after 09.01.2009, provided the petitioner
observes the following and acts accordingly:
1. The payment is made in lump sum and in one single installment.
2. The payment is made within three months from today.
It is humbly submitted that the respondent is making the above offer
due to his acute financial crisis and need for satisfying his creditors
including his bankers. Therefore the above offer is without prejudice to
the right of the 1st respondent to contest the petition pending before this
Court completely on merit. It is submitted accordingly.
Dated this 6th day of April 2011.”
13. The endorsement of the Government Pleader on these 3 memos, which is
also identically worded, reads as under:
“Received Copy. This Memo Offer is in accordance with
09.01.2009 negotiation. Moreover interest benefit for the Government from
09.01.2009. Hence no objection for this memo.
09-04-2011
Government Pleader”
14. It is clear from the above that the Government advocate who appeared
for the respondents, had not only found the offer of the appellant to be in
the interest of the Government and beneficial to the Government, but the
same was also in accordance with the negotiations held earlier between the
parties on 09.01.2009. As noted above, the parties had on an earlier
occasion entered into negotiations to find an amicable, out of Court,
resolution of the disputes. At that stage, the petitioner had agreed to
forgo substantial part of the benefit which had accrued to him under the
awards. However, the respondents/Government wanted more concessions which
was not agreed to by the appellant at that time. This resulted in impasse'
and the respondents decided to press its objections under Section 34 of the
Act, on merits. No doubt about this. However, when the matter came up
before the Court on 09.04.2011 and the appellant gave an offer to even
forgo further interest accrued under the award after 09.01.2009, and the
same was discussed in the Court, this offer was found to be attractive to
the Government pleader who was of the view that such an offer was in the
interest of the respondents and was also in accordance with negotiations
held earlier on 09.01.2009. He accepted the same and the Court passed
orders in terms of the settlement between the parties.
15. The only ground which has prevailed with the High Court in accepting
the appeals of the respondents against the aforesaid orders are that the
Government pleader was not authorised by the respondents to enter into such
a settlement. It is difficult to accept this reasoning, in the scenario
which prevails on the record. In the first instance, it is to be kept in
mind that nothing has been brought out by the respondents which would show
that advocate was not authorised to enter into such a settlement. On the
perusal of the grounds of appeal submitted before the High Court by the
respondents and even in the counter affidavit filed in this appeal, there
is no allegation of any sort against the Government pleader. On the
contrary, a categorical statement has been made that “the action of the
respondent was fair and just in this regard as the respondent has not
initiated any proceeding against the District Government Pleader.”
Furthermore, and most importantly, there is not even an iota of a pleading
explaining as to how the Government Pleader was not authorised to record
consent or that he in any manner lacked authority. It is not even remotely
suggested in any of these grounds that the Government Pleader he acted
improperly. On the contrary, what is sought to be suggested is that there
was a failure of compromise, or that no compromise was recorded or agreed
upon before the Court, which is contrary to the record of the Court and the
statements recorded in the judgment of the District Court, and therefore
impermissible as a ground of challenge. In this behalf, we would like to
reproduce the following discussion in the judgment of this Court in the
case of State of Maharashtra v. Ramdas Nayak, (1982) 2 SCC 463.
“4. When we drew the attention of the learned Attorney General to the
concession made before the High Court, Shri A.K. Sen, who appeared for the
State of Maharashtra before the High Court and led the arguments for the
respondents there and who appeared for Shri Antulay before us intervened
and protested that he never made any such concession and invited us to
peruse the written submissions made by him in the High Court. We are afraid
that we cannot launch into an inquiry as to what transpired in the High
Court. It is simply not done. Public Policy bars us. Judicial decorum
restrains us. Matters of judicial record are unquestionable. They are not
open to doubt. Judges cannot be dragged into the arena. "Judgments cannot
be treated as mere counters in the game of litigation". Per Lord Atkinson
in Somasundaran v. Subramanian We are bound to accept the statement of the
Judges recorded in their judgment, as to what transpired in court. We
cannot allow the statement of the judges to be contradicted by statements
at the Bar or by affidavit and other evidence. If the judges say in their
judgment that something was done, said or admitted before them, that has to
be the last word on the subject. The principle is well settled that
statements of fact as to what transpired at the hearing, recorded in the
judgment of the court, are conclusive of the facts so stated and no one can
contradict such statements by affidavit or other evidence. If a party
thinks that the happenings in court have been wrongly recorded in a
judgment, it is' incumbent, upon the party, while the matter is still fresh
in the minds of the judges, to call attention of the very judges who have
made the record to the fact that the statement made with regard to his
conduct was a statement that had been made in error. Per Lord Buckmaster in
Madhusudan v. Chanderwati That is the only way to have the record
corrected. If no such step is taken, the matter must necessarily end there.
Of course a party may resile and an Appellate Court may permit him in rare
and appropriate cases to resile from a concession on the ground that the
concession was made on a wrong appreciation of the law and had led to gross
injustice; but, he may not call in question the very fact of making the
concession as recorded in the judgment.”
16. It is also pertinent to point out that here also, no application was
filed by the respondents before the District Court immediately after the
passing of decrees in compromise terms, or even thereafter, for recall of
the compromise order with the plea that such a compromise was unacceptable
as the Government Pleader was not authorised to enter into any such
settlement. Instead appeals were filed before the High Court. We are of
the opinion that respondents should have approached the trial court in the
first instance as it is the trial judge before whom the compromise was
recorded and as he was privy to events that led to the compromise order, he
was in a better position to deal with this aspect.
17. That apart, we find that as per the provisions of Order III Rule 4,
once the counsel gets power of attorney/authorisation by his client to
appear in a matter, he gets a right to represent his client in the Court
and conduct the case. Further, in the case of Bakshi Dev Raj v. Sudhir
Kumar, (2011) 8 SCC 679, this Court held that though Order XXIII Rule 3 of
the CPC requires a compromise to be in writing and signed by parties, the
signature of the advocate/counsel is valid for the said purposes. Detailed
discussion on this aspect which ensues in the said judgment and is relevant
for our purpose, reads as under:
“25. Now, we have to consider the role of the counsel reporting to
the Court about the settlement arrived at. We have already noted that in
terms of Order 23 Rule 3 CPC, agreement or compromise is to be in writing
and signed by the parties. The impact of the above provision and the role
of the counsel has been elaborately dealt with by this Court in Byram
Pestonji Gariwala v. Union Bank of India and observed that courts in India
have consistently recognised the traditional role of lawyers and the extent
and nature of implied authority to act on behalf of their clients. Mr
Ranjit Kumar, has drawn our attention to the copy of the vakalatnama
(Annexure R-3) and the contents therein. The terms appended in the
vakalatnama enable the counsel to perform several acts on behalf of his
client including withdraw or compromise suit or matter pending before the
court. The various clauses in the vakalatnama undoubtedly gives power to
the counsel to act with utmost interest which includes to enter into a
compromise or settlement.
26. The following observations and conclusions in paras 37, 38 and 39 are
relevant:
“37. We may, however, hasten to add that it will be prudent for counsel not
to act on implied authority except when warranted by the exigency of
circumstances demanding immediate adjustment of suit by agreement or
compromise and the signature of the party cannot be obtained without undue
delay. In these days of easier and quicker [pic]communication, such
contingency may seldom arise. A wise and careful counsel will no doubt arm
himself in advance with the necessary authority expressed in writing to
meet all such contingencies in order that neither his authority nor
integrity is ever doubted. This essential precaution will safeguard the
personal reputation of the counsel as well as uphold the prestige and
dignity of the legal profession.
38. Considering the traditionally recognised role of counsel in the common
law system, and the evil sought to be remedied by Parliament by the CPC
(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 the counsel in their cause or by their duly authorised
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 in the case of non-resident persons. It has always been
universally understood that a party can always act by his duly authorised
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 authorisation by vakalatnama, act on behalf of his client. Not to
recognise 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.”
27. In Jineshwardas v. Jagrani this Court, by approving the decision taken
in Byram Pestonji case held:
“8. … that a judgment or decree passed as a result of consensus arrived at
before court, cannot always be said to be one passed on compromise or
settlement and adjustment. It may, at times, be also a judgment on
admission….”
28. In Jagtar Singh v. Pargat Singh it was held that the counsel for the
appellant has power to make a statement on instructions from the party to
withdraw the appeal. In that case, Respondent 1 therein, elder brother of
the petitioner filed a suit for declaration against the petitioner and
three brothers that the decree dated 4-5-1990 was null and void which was
decreed by the [pic]Subordinate Judge, Hoshiarpur on 29-9-1993. The
petitioner therein filed an appeal in the Court of the Additional District
Judge, Hoshiarpur. The counsel made a statement on 15-9-1995 that the
petitioner did not intend to proceed with the appeal. On the basis thereof,
the appeal was dismissed as withdrawn. The petitioner challenged the order
of the appellate court in the revision. The High Court confirmed the same
which necessitated the filing of SLP before this Court.
29. The learned counsel for the petitioner in Jagtar Singh case contended
that the petitioner had not authorised the counsel to withdraw the appeal.
It was further contended that the court after admitting the appeal has no
power to dismiss the same as withdrawn except to decide the matter on
merits considering the legality of the reasoning of the trial court and the
conclusions either agreeing or disagreeing with it. Rejecting the said
contention, the Court held as under:
“3. The learned counsel for the petitioner has contended that the
petitioner had not authorised the counsel to withdraw the appeal. The court
after admitting the appeal has no power to dismiss the same as withdrawn
except to decide the matter on merits considering the legality of the
reasoning of the trial court and the conclusions either agreeing or
disagreeing with it. We find no force in the contention. Order 3 Rule 4 CPC
empowers the counsel to continue on record until the proceedings in the
suit are duly terminated. The counsel, therefore, has power to make a
statement on instructions from the party to withdraw the appeal. The
question then is whether the court is required to pass a reasoned order on
merits against the decree appealed from the decision of the Court of the
Subordinate Judge? Order 23 Rules 1(1) and (4) give power to the party to
abandon the claim filed in the suit wholly or in part. By operation of
Section 107(2) CPC, it equally applies to the appeal and the appellate
court has coextensive power to permit the appellant to give up his appeal
against the respondent either as a whole or part of the relief. As a
consequence, though the appeal was admitted under Order 41 Rule 9,
necessarily the court has the power to dismiss the appeal as withdrawn
without going into the merits of the matter and deciding it under Rule 11
thereof.
4. Accordingly, we hold that the action taken by the counsel is consistent
with the power he had under Order 3 Rule 4 CPC. If really the counsel has
not acted in the interest of the party or against the instructions of the
party, the necessary remedy is elsewhere and the procedure adopted by the
court below is consistent with the provisions of CPC. We do not find any
illegality in the order passed by the Additional District Judge as
confirmed by the High Court in the revision.”
30. The analysis of the above decisions make it clear that the counsel who
was duly authorised by a party to appear by executing the vakalatnama
[pic]and in terms of Order 3 Rule 4, empowers the counsel to continue on
record until the proceedings in the suit are duly terminated. The counsel,
therefore, has the power to make a statement on instructions from the party
to withdraw the appeal. In such a circumstance, the counsel making a
statement on instructions either for withdrawal of appeal or for
modification of the decree is well within his competence and if really the
counsel has not acted in the interest of the party or against the
instructions of the party, the necessary remedy is elsewhere.”
18. Likewise in 2011, this Court in Jineshwardas (D) through L.R.s and
Ors. v. Smt. Jagrani and Anr., (2003) 11 SCC 372, has held as under:
“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.”
19. We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid. The authority of a
Counsel to act on behalf of a party is expressly given in Order III Rule 1
of Civil Procedure Code which is extracted hereunder;
“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.”
20. There is another very important aspect in this case which cannot be
sidetracked and needs to be highlighted by us At the time of arguments, on
a pertinent query from the learned counsel for the respondents as to
whether any action was taken against the Government Pleader, the learned
counsel was candid in accepting that not only no action was taken, the said
counsel continued to be on the panel of the Government and was entrusted in
with further briefs of Court cases. This itself shows that the respondents
have tried to wriggle out of a valid compromise by taking such spacious
plea which cannot be countenanced.
21. Here is a case where arbitral awards were given in favour of the
appellant way back in April and June, 2006. However, the appellant is yet
to reap the benefits thereof. Respondent No.1 challenged these awards by
filing applications under Section 34 of the Act. When these proceedings
were pending, the respondents themselves came out with the proposal to
negotiate and try to amicably settle the matters, keeping in view the
otherwise laudable decision taken by PWD to settle such disputes as is
clear from the letter dated 02.08.2008. Negotiations took place thereafter.
Though the appellant had agreed to forgo substantial part of the award in
terms of interest etc., the talks failed at that time as the respondents
wanted 10% reduction in the principal amount as well, whereas the appellant
was conceding to give up only 5% of the principal amount. Be, as it may,
the appellant agreed to give further concessions in the Court when the
matter came on 09.04.2011 vide his 3 memos dated 6.4.2011 filed on that
date. These memos show that the appellant had given the said offer due to
the acute financial crisis he was suffering from as he wanted to satisfy
his creditors including his bankers to whom he owed substantial amounts.
Alas, even after the settlement was fructified, resulting into passing of
agreed orders, it has resulted into legal tangle even thereafter, and the
appellant has not been able to get even the said agreed amount. We are,
therefore, of the opinion that the High Court was not justified in setting
aside the consent decree passed by the learned District Judge. Such a
consent decree operates as an estoppel and was binding on the parties from
which the respondents could not wriggle out by taking an after thought plea
that its lawyer was not authorised to enter into such a settlement.
22. These appeals are accordingly allowed. The impugned judgment of the
High Court is set aside and the consent decrees dated 28.04.2011 passed by
the trial court are restored. The appellant shall also be entitled to
costs which is quantified at Rs.25,000/- in each of these appeals.
…......................................J.
(J. Chelameswar)
…......................................J.
(A.K. Sikri)
New Delhi;
August 4, 2014.
“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.”
We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid.=
the compromise talks took place
between the parties at the instance of the respondents themselves
expressing their intention to explore the possibility of settlement as per
its letter dated 02.12.2008.
Certain meetings were held for this purpose.
The appellant had agreed to forgo substantial part of interest and also 5%
of the principal amount.
The Superintending Engineer, however, wanted 10%
reduction in the principal sums awarded in favour of the appellant.
It is
because of this difference the settlement talks failed at that time and the
Government decided to pursue the applications under Section 34 of the Act
on merits.
However, when the matter came up before the District Judge on
9.4.2011, the appellant agreed to forgo the entire interest accrued after
09.01.2009 as well, in addition to the concessions which were already given
by the appellant and recorded above.
When the Government Pleader was
confronted with this offer given by the appellant, he took a view that it
was a very fair offer and made an endorsement on the offer itself, to the
effect that the Government had no objection for accepting the same.
This
resulted in modifying the award by the District Judge in terms of agreed
conditions, vide his orders dated 28.04.2011 in all the three petitions.
8. The respondents, however, challenged the orders of the learned
District Judge by filing appeals under Section 37 of the Act in the High
Court, primarily on the ground that the Government had never agreed to the
terms as endorsed by the Government Pleader, in as much as, he was never
authorised for this purpose.
It was argued that in the absence of any
authorisation in favour of the Government Pleader, endorsement of the
compromise given by him was not binding on the Government.=
The High Court,
accordingly, heard the matter and vide
impugned judgment, set aside the orders of the Principal District Judge
passed in the three petitions, directing it to decide on merits the
applications filed by the respondents under Section 34 of the Act. From
the perusal of the order of the High Court, it is clear that the High Court
has accepted the plea of the respondents that in the absence of any
material to show that Government Pleader was authorised to record the
compromise, such a compromise was not binding on the respondents. It is in
this backdrop, the appellant has preferred these appeals questioning the
validity of the judgment of the High Court.
Apex court held
in Jineshwardas (D) through L.R.s and
Ors. v. Smt. Jagrani and Anr., (2003) 11 SCC 372, has held as under:
“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.”
19. We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid. The authority of a
Counsel to act on behalf of a party is expressly given in Order III Rule 1
of Civil Procedure Code which is extracted hereunder;
“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.”=
accordingly, heard the matter and vide
impugned judgment, set aside the orders of the Principal District Judge
passed in the three petitions, directing it to decide on merits the
applications filed by the respondents under Section 34 of the Act. From
the perusal of the order of the High Court, it is clear that the High Court
has accepted the plea of the respondents that in the absence of any
material to show that Government Pleader was authorised to record the
compromise, such a compromise was not binding on the respondents. It is in
this backdrop, the appellant has preferred these appeals questioning the
validity of the judgment of the High Court.
Apex court held
in Jineshwardas (D) through L.R.s and
Ors. v. Smt. Jagrani and Anr., (2003) 11 SCC 372, has held as under:
“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.”
19. We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid. The authority of a
Counsel to act on behalf of a party is expressly given in Order III Rule 1
of Civil Procedure Code which is extracted hereunder;
“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.”=
where arbitral awards were given in favour of the
appellant way back in April and June, 2006. However, the appellant is yet
to reap the benefits thereof. Respondent No.1 challenged these awards by
filing applications under Section 34 of the Act. When these proceedings
were pending, the respondents themselves came out with the proposal to
negotiate and try to amicably settle the matters, keeping in view the
otherwise laudable decision taken by PWD to settle such disputes as is
clear from the letter dated 02.08.2008. Negotiations took place thereafter.
Though the appellant had agreed to forgo substantial part of the award in
terms of interest etc., the talks failed at that time as the respondents
wanted 10% reduction in the principal amount as well, whereas the appellant
was conceding to give up only 5% of the principal amount. Be, as it may,
the appellant agreed to give further concessions in the Court when the
matter came on 09.04.2011 vide his 3 memos dated 6.4.2011 filed on that
date. These memos show that the appellant had given the said offer due to
the acute financial crisis he was suffering from as he wanted to satisfy
his creditors including his bankers to whom he owed substantial amounts.
Alas, even after the settlement was fructified, resulting into passing of
agreed orders, it has resulted into legal tangle even thereafter, and the
appellant has not been able to get even the said agreed amount. We are,
therefore, of the opinion that the High Court was not justified in setting
aside the consent decree passed by the learned District Judge. Such a
consent decree operates as an estoppel and was binding on the parties from
which the respondents could not wriggle out by taking an after thought plea
that its lawyer was not authorised to enter into such a settlement.
22. These appeals are accordingly allowed. The impugned judgment of the
High Court is set aside and the consent decrees dated 28.04.2011 passed by
the trial court are restored. The appellant shall also be entitled to
costs which is quantified at Rs.25,000/- in each of these appeals.
appellant way back in April and June, 2006. However, the appellant is yet
to reap the benefits thereof. Respondent No.1 challenged these awards by
filing applications under Section 34 of the Act. When these proceedings
were pending, the respondents themselves came out with the proposal to
negotiate and try to amicably settle the matters, keeping in view the
otherwise laudable decision taken by PWD to settle such disputes as is
clear from the letter dated 02.08.2008. Negotiations took place thereafter.
Though the appellant had agreed to forgo substantial part of the award in
terms of interest etc., the talks failed at that time as the respondents
wanted 10% reduction in the principal amount as well, whereas the appellant
was conceding to give up only 5% of the principal amount. Be, as it may,
the appellant agreed to give further concessions in the Court when the
matter came on 09.04.2011 vide his 3 memos dated 6.4.2011 filed on that
date. These memos show that the appellant had given the said offer due to
the acute financial crisis he was suffering from as he wanted to satisfy
his creditors including his bankers to whom he owed substantial amounts.
Alas, even after the settlement was fructified, resulting into passing of
agreed orders, it has resulted into legal tangle even thereafter, and the
appellant has not been able to get even the said agreed amount. We are,
therefore, of the opinion that the High Court was not justified in setting
aside the consent decree passed by the learned District Judge. Such a
consent decree operates as an estoppel and was binding on the parties from
which the respondents could not wriggle out by taking an after thought plea
that its lawyer was not authorised to enter into such a settlement.
22. These appeals are accordingly allowed. The impugned judgment of the
High Court is set aside and the consent decrees dated 28.04.2011 passed by
the trial court are restored. The appellant shall also be entitled to
costs which is quantified at Rs.25,000/- in each of these appeals.
2014 -Aug.part – http://judis.nic.in/supremecourt/filename=41803
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.7164-7166 OF 2014
(arising out of SLP (C) Nos. 23016-23018 of 2012)
|Y. SLEEBACHEN ETC. |…..APPELLANT(S) |
| | |
|VERSUS | |
|SUPERINTENDING ENGINEER |…..RESPONDENT(S) |
|WRO/ PWD & ANR. | |
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
2. By the common judgment dated 29.02.2012, the Madras High Court has
decided three Civil Miscellaneous Appeals filed under Section 37 (1) (b) of
the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the
Act'). Those three appeals were filed by the respondents herein
challenging the orders dated 28.04.2011 which were passed by the Principal
District Judge, Tirunelveli, Tamil Nadu. The reasons for disposing of the
appeals by one single order was the commonality of the parties as well as
the issue involved in the said three appeals.
3. It so happened that the appellant, who is an Engineering Contractor,
was awarded three contracts by the respondents herein particulars whereof
are as under:
(i) For the rehabilitation and modernization of Gundar Reservoir
system in Tirunelveli District the bids were called and in which the
Petitioner became the successful bidder to execute the work for a contract
price of Rs.80,14,605/- under registered Agreement dated 02.04.1998 within
a period of 15 months to complete the contract work.
(ii) For the rehabilitation and modernization of Karuppanadhi
Reservoir system in Tirunelveli District the bids were called and in which
the Petitioner became the successful bidder to execute the work for a
contract price of Rs.55,82,633/- under the Registered Agreement dated
20.07.1998 within a period of 18 months to complete the contracts work.
(iii) For the rehabilitation and modernization of Kannadian Anicut
and Channel Reach – 1 in Tirunelveli District the bids were called and in
which the Petitioner became the successful bidder to execute the work for a
contract price of Rs.69,24,038/- under registered agreement 28.07.1998
within a period of 26 months to complete the contract work.
4. Certain disputes and differences arose between the parties relating
to all these contracts. According to the appellant, delays were caused by
the Department in handing over the sites where the works were to be
undertaken by the appellant and in addition, various other breaches were
committed by the Department in not fulfilling its obligations under the
three contracts. The appellant raised his claims in respect of all the
three contracts. The Department appointed Mr. Velu as the Arbitrator in
one case and Mr. S. Krishnamurthy was appointed as Arbitrator in other two
cases. After adjudication of the disputes, awards were passed in all the
three cases to the following effect:-
(i) Award dated 09.06.2006 by Mr. Velu in favour of the appellant in the
sum of Rs.52,90,776/- together with interest at the rate of 18% p.a. from
09.06.2006 until payment or realisation.
(ii) Award dated 25.04.2006 vide which appellant was awarded a sum of
Rs.39,74,964/- together with interest at the rate of 18% p.a. from the date
of award until payment or realisation.
(iii) Award dated 25.04.2006 in favour of the appellant whereby respondent
No.1 was directed to pay an amount of Rs.42,56,419/- together with interest
at the rate of 18% p.a. from the date of the award until payment or
realisation.
5. The respondent No.1 challenged all the awards by filing three
petitions under Section 34 of the Act, seeking to set aside these awards.
The appellant filed his replies contesting those petitions. All these
petitions were listed before the Principal District Judge, Tirunelveli.
While these proceedings were pending before the Principal District Judge,
the Government Public Works Department issued letter dated 02.12.2008
whereby it directed its officers to negotiate with the appellant for
settlement of arbitration awards amount. Accordingly, there were meetings
between the parties on 19.12.2008 and 09.01.2009 to negotiate out of court
settlement. Officials, including the Superintending Engineer, had
discussions with the appellant, wherein the appellant was requested to
reduce 40% of the principal awarded amount for all the three works covered
under the independent arbitration Awards. The contractor instead, came
forward to reduce 40% of the interest accrued on the total awarded amount
for all the three works, particularly with reference to interest in respect
of the three works, which worked out to 12.81% towards the principal award
amount covered under the three Awards. However, the Superintending
Engineer insisted for further reduction of the principal amount.
Ultimately in the meeting held in the Chamber of the Superintending
Engineer on 9.1.2009, the contractor was asked to offer 10% reduction in
the principal award amount, besides 40% offer made on the interest amount
accrued. The appellant, however, agreed to only 5% reduction in the
principal amount, in addition to 40% reduction in the interest amount.
Because of the aforesaid position taken by the parties, the negotiation
could not be fructified and fell through. The Principal Secretary to the
Government wrote a letter dated 9.1.2009 to the officials concerned,
directing them to pursue the applications under Section 34 of the Act in
respect of the three awards pending before the Court.
6. The matters, however, lingered on in the Courts for some reason or
the other. When they were listed in the Court on 09.04.2011, the appellant
came forward with a memorandum to the effect that, apart from the offer
made during the negotiations on 09.01.2009 for foregoing the interest at
40%, he was also willing to forgo further accrued interest on the award
amount after 09.01.2009. This offer appeared to be fair to the Government
Pleader. He made a written endorsement on the said memorandum, on behalf of
the Government that it had no objection for this memo. As a result
thereof, acting on this compromise, the petitions were partly allowed and
the awards of the Arbitrators were modified whereby from the award amount,
5% reduction on the principal amount was ordered. Further apart from 40%
reduction on the interest awarded till 09.01.2009; total interest accruing
beyond that period, was also waived. However, from the date of award i.e.
25.04.2006 to 09.01.2009, interest was calculated at 18% p.a. from where
the reduction of 40 % in interest amount was granted.
7. To recapitulate the salient facts, the compromise talks took place
between the parties at the instance of the respondents themselves
expressing their intention to explore the possibility of settlement as per
its letter dated 02.12.2008. Certain meetings were held for this purpose.
The appellant had agreed to forgo substantial part of interest and also 5%
of the principal amount. The Superintending Engineer, however, wanted 10%
reduction in the principal sums awarded in favour of the appellant. It is
because of this difference the settlement talks failed at that time and the
Government decided to pursue the applications under Section 34 of the Act
on merits. However, when the matter came up before the District Judge on
9.4.2011, the appellant agreed to forgo the entire interest accrued after
09.01.2009 as well, in addition to the concessions which were already given
by the appellant and recorded above. When the Government Pleader was
confronted with this offer given by the appellant, he took a view that it
was a very fair offer and made an endorsement on the offer itself, to the
effect that the Government had no objection for accepting the same. This
resulted in modifying the award by the District Judge in terms of agreed
conditions, vide his orders dated 28.04.2011 in all the three petitions.
8. The respondents, however, challenged the orders of the learned
District Judge by filing appeals under Section 37 of the Act in the High
Court, primarily on the ground that the Government had never agreed to the
terms as endorsed by the Government Pleader, in as much as, he was never
authorised for this purpose. It was argued that in the absence of any
authorisation in favour of the Government Pleader, endorsement of the
compromise given by him was not binding on the Government.
9. When the matter was heard by the High Court, even the High Court
suggested that the State should once again consider the possibility of
compromise and the matter was adjourned for this purpose. However, on the
next date of hearing, the counsel for the respondents made a statement that
Government was not interested in the settlement and wanted the matter to be
heard on merits. The High Court, accordingly, heard the matter and vide
impugned judgment, set aside the orders of the Principal District Judge
passed in the three petitions, directing it to decide on merits the
applications filed by the respondents under Section 34 of the Act. From
the perusal of the order of the High Court, it is clear that the High Court
has accepted the plea of the respondents that in the absence of any
material to show that Government Pleader was authorised to record the
compromise, such a compromise was not binding on the respondents. It is in
this backdrop, the appellant has preferred these appeals questioning the
validity of the judgment of the High Court.
10. It was argued by the learned counsel for the appellant that he was in
acute financial crisis and needed to satisfy the creditors including his
bankers and in view of the said circumstances, he filed separate memos
dated 06.04.2011 before the learned District Judge stating that he was
ready to forgo further interest accrued on the awarded amounts after
09.01.2009 apart from the earlier offer made during the negotiations on
09.01.2009 provided that the amount so arrived at be paid in lump sum i.e.
in one single installment and the said payment should be made within 3
months. In the said memo the appellant made it clear that the said offer
is made without prejudice to the rights of the appellant to contest the
petition on merit. In response to such offer to forgo further interest
from 10.01.2009 for the three award amounts, on 09.04.2011, the Government
Pleader, on behalf of the respondent, made a written endorsement that the
offer under the above said memos are in accordance with the negotiations
made on 09.01.2009 and offer to forgo entire interest amount from
09.01.2009 was beneficial to the Government. He also affirmed that the
Government has no objection for these memos. It was thus argued that when
the Government Pleader made the aforesaid endorsement in the manner stated
above, and it resulted into passing in agreed order on the basis of
settlement arrived between the parties, it was not open to the respondents
to back out therefrom. It was further submitted that the respondents were
stopped from contending that the Government Pleader was not authorised to
make such a statement. It was also argued that admittedly no action was
taken by the respondents against the Advocate who had appeared on its
behalf who continued as the Government Pleader.
11. Learned counsel for the respondents, on the other hand, justified the
impugned orders passed by the High Court submitting that it was not open to
the Government Pleader to accept the offer of the appellant without any
authorisation, more particularly, when it had already been decided by the
Government, vide letter dated 09.01.2009, to contest the cases on merits.
Therefore, such an endorsement made by the Government Pleader on behalf of
the respondents was not binding upon the respondents.
12. We have bestowed our careful consideration to the respective
arguments advanced by the counsel for the parties. The appellant has
produced on record the copies of the 3 memos dated 06.04.2011 which were
filed by the appellant before the Principal District Court on which
endorsement was made by the Government Advocate as well. All these memos
filed by the appellant are identically worded and the relevant extract
thereof makes the following reading:
“Now in consideration of the exigencies and in deference to the
suggestion by this Hon'ble Court apart from the above offer made during
negotiations on 09.01.2009 this respondent is offering to forgo further
interest accrued on the award after 09.01.2009, provided the petitioner
observes the following and acts accordingly:
1. The payment is made in lump sum and in one single installment.
2. The payment is made within three months from today.
It is humbly submitted that the respondent is making the above offer
due to his acute financial crisis and need for satisfying his creditors
including his bankers. Therefore the above offer is without prejudice to
the right of the 1st respondent to contest the petition pending before this
Court completely on merit. It is submitted accordingly.
Dated this 6th day of April 2011.”
13. The endorsement of the Government Pleader on these 3 memos, which is
also identically worded, reads as under:
“Received Copy. This Memo Offer is in accordance with
09.01.2009 negotiation. Moreover interest benefit for the Government from
09.01.2009. Hence no objection for this memo.
09-04-2011
Government Pleader”
14. It is clear from the above that the Government advocate who appeared
for the respondents, had not only found the offer of the appellant to be in
the interest of the Government and beneficial to the Government, but the
same was also in accordance with the negotiations held earlier between the
parties on 09.01.2009. As noted above, the parties had on an earlier
occasion entered into negotiations to find an amicable, out of Court,
resolution of the disputes. At that stage, the petitioner had agreed to
forgo substantial part of the benefit which had accrued to him under the
awards. However, the respondents/Government wanted more concessions which
was not agreed to by the appellant at that time. This resulted in impasse'
and the respondents decided to press its objections under Section 34 of the
Act, on merits. No doubt about this. However, when the matter came up
before the Court on 09.04.2011 and the appellant gave an offer to even
forgo further interest accrued under the award after 09.01.2009, and the
same was discussed in the Court, this offer was found to be attractive to
the Government pleader who was of the view that such an offer was in the
interest of the respondents and was also in accordance with negotiations
held earlier on 09.01.2009. He accepted the same and the Court passed
orders in terms of the settlement between the parties.
15. The only ground which has prevailed with the High Court in accepting
the appeals of the respondents against the aforesaid orders are that the
Government pleader was not authorised by the respondents to enter into such
a settlement. It is difficult to accept this reasoning, in the scenario
which prevails on the record. In the first instance, it is to be kept in
mind that nothing has been brought out by the respondents which would show
that advocate was not authorised to enter into such a settlement. On the
perusal of the grounds of appeal submitted before the High Court by the
respondents and even in the counter affidavit filed in this appeal, there
is no allegation of any sort against the Government pleader. On the
contrary, a categorical statement has been made that “the action of the
respondent was fair and just in this regard as the respondent has not
initiated any proceeding against the District Government Pleader.”
Furthermore, and most importantly, there is not even an iota of a pleading
explaining as to how the Government Pleader was not authorised to record
consent or that he in any manner lacked authority. It is not even remotely
suggested in any of these grounds that the Government Pleader he acted
improperly. On the contrary, what is sought to be suggested is that there
was a failure of compromise, or that no compromise was recorded or agreed
upon before the Court, which is contrary to the record of the Court and the
statements recorded in the judgment of the District Court, and therefore
impermissible as a ground of challenge. In this behalf, we would like to
reproduce the following discussion in the judgment of this Court in the
case of State of Maharashtra v. Ramdas Nayak, (1982) 2 SCC 463.
“4. When we drew the attention of the learned Attorney General to the
concession made before the High Court, Shri A.K. Sen, who appeared for the
State of Maharashtra before the High Court and led the arguments for the
respondents there and who appeared for Shri Antulay before us intervened
and protested that he never made any such concession and invited us to
peruse the written submissions made by him in the High Court. We are afraid
that we cannot launch into an inquiry as to what transpired in the High
Court. It is simply not done. Public Policy bars us. Judicial decorum
restrains us. Matters of judicial record are unquestionable. They are not
open to doubt. Judges cannot be dragged into the arena. "Judgments cannot
be treated as mere counters in the game of litigation". Per Lord Atkinson
in Somasundaran v. Subramanian We are bound to accept the statement of the
Judges recorded in their judgment, as to what transpired in court. We
cannot allow the statement of the judges to be contradicted by statements
at the Bar or by affidavit and other evidence. If the judges say in their
judgment that something was done, said or admitted before them, that has to
be the last word on the subject. The principle is well settled that
statements of fact as to what transpired at the hearing, recorded in the
judgment of the court, are conclusive of the facts so stated and no one can
contradict such statements by affidavit or other evidence. If a party
thinks that the happenings in court have been wrongly recorded in a
judgment, it is' incumbent, upon the party, while the matter is still fresh
in the minds of the judges, to call attention of the very judges who have
made the record to the fact that the statement made with regard to his
conduct was a statement that had been made in error. Per Lord Buckmaster in
Madhusudan v. Chanderwati That is the only way to have the record
corrected. If no such step is taken, the matter must necessarily end there.
Of course a party may resile and an Appellate Court may permit him in rare
and appropriate cases to resile from a concession on the ground that the
concession was made on a wrong appreciation of the law and had led to gross
injustice; but, he may not call in question the very fact of making the
concession as recorded in the judgment.”
16. It is also pertinent to point out that here also, no application was
filed by the respondents before the District Court immediately after the
passing of decrees in compromise terms, or even thereafter, for recall of
the compromise order with the plea that such a compromise was unacceptable
as the Government Pleader was not authorised to enter into any such
settlement. Instead appeals were filed before the High Court. We are of
the opinion that respondents should have approached the trial court in the
first instance as it is the trial judge before whom the compromise was
recorded and as he was privy to events that led to the compromise order, he
was in a better position to deal with this aspect.
17. That apart, we find that as per the provisions of Order III Rule 4,
once the counsel gets power of attorney/authorisation by his client to
appear in a matter, he gets a right to represent his client in the Court
and conduct the case. Further, in the case of Bakshi Dev Raj v. Sudhir
Kumar, (2011) 8 SCC 679, this Court held that though Order XXIII Rule 3 of
the CPC requires a compromise to be in writing and signed by parties, the
signature of the advocate/counsel is valid for the said purposes. Detailed
discussion on this aspect which ensues in the said judgment and is relevant
for our purpose, reads as under:
“25. Now, we have to consider the role of the counsel reporting to
the Court about the settlement arrived at. We have already noted that in
terms of Order 23 Rule 3 CPC, agreement or compromise is to be in writing
and signed by the parties. The impact of the above provision and the role
of the counsel has been elaborately dealt with by this Court in Byram
Pestonji Gariwala v. Union Bank of India and observed that courts in India
have consistently recognised the traditional role of lawyers and the extent
and nature of implied authority to act on behalf of their clients. Mr
Ranjit Kumar, has drawn our attention to the copy of the vakalatnama
(Annexure R-3) and the contents therein. The terms appended in the
vakalatnama enable the counsel to perform several acts on behalf of his
client including withdraw or compromise suit or matter pending before the
court. The various clauses in the vakalatnama undoubtedly gives power to
the counsel to act with utmost interest which includes to enter into a
compromise or settlement.
26. The following observations and conclusions in paras 37, 38 and 39 are
relevant:
“37. We may, however, hasten to add that it will be prudent for counsel not
to act on implied authority except when warranted by the exigency of
circumstances demanding immediate adjustment of suit by agreement or
compromise and the signature of the party cannot be obtained without undue
delay. In these days of easier and quicker [pic]communication, such
contingency may seldom arise. A wise and careful counsel will no doubt arm
himself in advance with the necessary authority expressed in writing to
meet all such contingencies in order that neither his authority nor
integrity is ever doubted. This essential precaution will safeguard the
personal reputation of the counsel as well as uphold the prestige and
dignity of the legal profession.
38. Considering the traditionally recognised role of counsel in the common
law system, and the evil sought to be remedied by Parliament by the CPC
(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 the counsel in their cause or by their duly authorised
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 in the case of non-resident persons. It has always been
universally understood that a party can always act by his duly authorised
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 authorisation by vakalatnama, act on behalf of his client. Not to
recognise 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.”
27. In Jineshwardas v. Jagrani this Court, by approving the decision taken
in Byram Pestonji case held:
“8. … that a judgment or decree passed as a result of consensus arrived at
before court, cannot always be said to be one passed on compromise or
settlement and adjustment. It may, at times, be also a judgment on
admission….”
28. In Jagtar Singh v. Pargat Singh it was held that the counsel for the
appellant has power to make a statement on instructions from the party to
withdraw the appeal. In that case, Respondent 1 therein, elder brother of
the petitioner filed a suit for declaration against the petitioner and
three brothers that the decree dated 4-5-1990 was null and void which was
decreed by the [pic]Subordinate Judge, Hoshiarpur on 29-9-1993. The
petitioner therein filed an appeal in the Court of the Additional District
Judge, Hoshiarpur. The counsel made a statement on 15-9-1995 that the
petitioner did not intend to proceed with the appeal. On the basis thereof,
the appeal was dismissed as withdrawn. The petitioner challenged the order
of the appellate court in the revision. The High Court confirmed the same
which necessitated the filing of SLP before this Court.
29. The learned counsel for the petitioner in Jagtar Singh case contended
that the petitioner had not authorised the counsel to withdraw the appeal.
It was further contended that the court after admitting the appeal has no
power to dismiss the same as withdrawn except to decide the matter on
merits considering the legality of the reasoning of the trial court and the
conclusions either agreeing or disagreeing with it. Rejecting the said
contention, the Court held as under:
“3. The learned counsel for the petitioner has contended that the
petitioner had not authorised the counsel to withdraw the appeal. The court
after admitting the appeal has no power to dismiss the same as withdrawn
except to decide the matter on merits considering the legality of the
reasoning of the trial court and the conclusions either agreeing or
disagreeing with it. We find no force in the contention. Order 3 Rule 4 CPC
empowers the counsel to continue on record until the proceedings in the
suit are duly terminated. The counsel, therefore, has power to make a
statement on instructions from the party to withdraw the appeal. The
question then is whether the court is required to pass a reasoned order on
merits against the decree appealed from the decision of the Court of the
Subordinate Judge? Order 23 Rules 1(1) and (4) give power to the party to
abandon the claim filed in the suit wholly or in part. By operation of
Section 107(2) CPC, it equally applies to the appeal and the appellate
court has coextensive power to permit the appellant to give up his appeal
against the respondent either as a whole or part of the relief. As a
consequence, though the appeal was admitted under Order 41 Rule 9,
necessarily the court has the power to dismiss the appeal as withdrawn
without going into the merits of the matter and deciding it under Rule 11
thereof.
4. Accordingly, we hold that the action taken by the counsel is consistent
with the power he had under Order 3 Rule 4 CPC. If really the counsel has
not acted in the interest of the party or against the instructions of the
party, the necessary remedy is elsewhere and the procedure adopted by the
court below is consistent with the provisions of CPC. We do not find any
illegality in the order passed by the Additional District Judge as
confirmed by the High Court in the revision.”
30. The analysis of the above decisions make it clear that the counsel who
was duly authorised by a party to appear by executing the vakalatnama
[pic]and in terms of Order 3 Rule 4, empowers the counsel to continue on
record until the proceedings in the suit are duly terminated. The counsel,
therefore, has the power to make a statement on instructions from the party
to withdraw the appeal. In such a circumstance, the counsel making a
statement on instructions either for withdrawal of appeal or for
modification of the decree is well within his competence and if really the
counsel has not acted in the interest of the party or against the
instructions of the party, the necessary remedy is elsewhere.”
18. Likewise in 2011, this Court in Jineshwardas (D) through L.R.s and
Ors. v. Smt. Jagrani and Anr., (2003) 11 SCC 372, has held as under:
“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.”
19. We find that in the present case the Government Pleader was legally
entitled to enter into a compromise with the appellant and his written
endorsement on the Memo filed by the appellant can be deemed as a valid
consent of the Respondent itself. Hence the 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 XXIII Rule 3 and such decree is perfectly valid. The authority of a
Counsel to act on behalf of a party is expressly given in Order III Rule 1
of Civil Procedure Code which is extracted hereunder;
“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.”
20. There is another very important aspect in this case which cannot be
sidetracked and needs to be highlighted by us At the time of arguments, on
a pertinent query from the learned counsel for the respondents as to
whether any action was taken against the Government Pleader, the learned
counsel was candid in accepting that not only no action was taken, the said
counsel continued to be on the panel of the Government and was entrusted in
with further briefs of Court cases. This itself shows that the respondents
have tried to wriggle out of a valid compromise by taking such spacious
plea which cannot be countenanced.
21. Here is a case where arbitral awards were given in favour of the
appellant way back in April and June, 2006. However, the appellant is yet
to reap the benefits thereof. Respondent No.1 challenged these awards by
filing applications under Section 34 of the Act. When these proceedings
were pending, the respondents themselves came out with the proposal to
negotiate and try to amicably settle the matters, keeping in view the
otherwise laudable decision taken by PWD to settle such disputes as is
clear from the letter dated 02.08.2008. Negotiations took place thereafter.
Though the appellant had agreed to forgo substantial part of the award in
terms of interest etc., the talks failed at that time as the respondents
wanted 10% reduction in the principal amount as well, whereas the appellant
was conceding to give up only 5% of the principal amount. Be, as it may,
the appellant agreed to give further concessions in the Court when the
matter came on 09.04.2011 vide his 3 memos dated 6.4.2011 filed on that
date. These memos show that the appellant had given the said offer due to
the acute financial crisis he was suffering from as he wanted to satisfy
his creditors including his bankers to whom he owed substantial amounts.
Alas, even after the settlement was fructified, resulting into passing of
agreed orders, it has resulted into legal tangle even thereafter, and the
appellant has not been able to get even the said agreed amount. We are,
therefore, of the opinion that the High Court was not justified in setting
aside the consent decree passed by the learned District Judge. Such a
consent decree operates as an estoppel and was binding on the parties from
which the respondents could not wriggle out by taking an after thought plea
that its lawyer was not authorised to enter into such a settlement.
22. These appeals are accordingly allowed. The impugned judgment of the
High Court is set aside and the consent decrees dated 28.04.2011 passed by
the trial court are restored. The appellant shall also be entitled to
costs which is quantified at Rs.25,000/- in each of these appeals.
…......................................J.
(J. Chelameswar)
…......................................J.
(A.K. Sikri)
New Delhi;
August 4, 2014.
