Decided on May 31,1935



Atkin, J. - (1.) THIS is sun appeal from the High Court of Patna and raises. i question as to the validity of an alleged compromise on appeal of a suit in which the present appellants were plaintiffs and the respondents, who were not represented before the Board, were defendants. It is unnecessary to go into the details of the case. THE relevant facts appear to be that before the transaction in question the appellants were owners of an eight annas share in the mauza Alapur and defendant No.2 Imdad Ali owned a two annas share n the same mauza. By registered deeds dated July 12 and October 27, 1921, defendant No.2 conveyed his two annas share in the mauza to the plaintiffs, 'or a total consideration of Rs. 10,896. The plaintiffs subsequently discovered, that on June 25, 1921, defendant No.2 had executed a mortgage in favour of defendant No.1 of the whole of his interest for a loan of Rs. 2,500. There was some dispute as to the registration of this mortgage, but it was finally registered on July 29, 1922. On October 2, 1926, the plaintiffs commenced the present suit against the two defendants alleging that the mortgage was, collusive and fraudulent and its registration invalid, and asking for a declaration that their interests in the property were not affected by the mortgage. Defendant No.1 traversed the allegations against the mortgage and set up that the sales to the plaintiffs were collusive and fraudulent : defendant No.2 alleged that the mortgage was obtained by fraud of defendant No.1 and also alleged that the sales to the plaintiffs were collusive and fraudulent.
(2.) THE trial Judge, the Subordinate Judge at Monghyr, decided both issues in favour of the plaintiffs, i. e. , that the sale-deeds were good and the mortgage was bad. Both defendants appealed to the High Court at Patna. Though the notice of appeal challenges the findings of the Judge on both points it would appear that there was no substantial attack in the High Court on the plaintiffs' title. As far as defendant No.1 was concerned it was obvious that his mortgage, if good, was prior in date to the sale to the plaintiffs ; as to defendant No.2 the Judges of the High Court had no difficulty in affirming the decision of the trial Judge as to the plaintiffs' title, saying that counsel had adduced no reason for differing from it. The question in the present appeal arises as between the plaintiffs and defendant No.1, the mortgagee. It appears that at the trial the mortgagee: had offered to buy the plaintiffs' interest in the mortgaged property for Rs. 20,000, but this had been refused by the plaintiffs. On the appeal the: plaintiffs had sent their karpardaz as their representative to attend the appeal. Their counsel were Mr. Mullick and Mr. Roy. The mortgagee Was himself present at the hearing, his leading counsel was Mr. Hussain. In the course of the argument Mr. Hussain offered on behalf of his client to pay Rs. 20,000 if the appellants gave up all claims to the property purchased by them. This offer was put before the karpardaz, who was at: first unwilling to accept it in the absence of his principal, but eventually accepted. This was communicated through Mr. Hussain to his client the mortgagee. A little later Mr. Hussain informed the Court that his client was no longer willing to pay Rs. 20,000. The argument then proceeded and Mr. Hussain made a second offer that his client would pay Rs. 10,860 if the plaintiffs gave up their claim. The karpardaz refused this offer. The Court appear to have favoured a compromise. The karpardaz was again approached, he again refused, but at last reluctantly consented, believing as it is said that the case was a weak one and that his master was going to lose. The above facts are taken from the statement of junior counsel, Mr. Roy. Accordingly a decree was drawn up, dated March 8, 1932. It is the only document in the record, and if it is in fact the only document brought into existence at the time, it seems clear that it does not comply with the provisions of Order XXIII, which require that the compromise shall be recorded, and that a decree shall be made in accordance with its provisions. If there is no separate record of the compromise, the decree ought to recite the fact of a compromise and its terms, and then proceed to set out the orders made by the Court to enforce the decree. Their Lordships, however, were not asked to treat this matter as one of the grounds of appeal. The appellants applied in review to set aside the decree on the ground that the compromise was made without their authority. At the hearing of this application it seems to have been agreed that the case should be determined by reference only to the implied authority of the advocates to make the compromise. In the petition for leave to appeal to His Majesty in Council it is stated that counsel for the mortgagee gave up the actual authority of the karpardaz to effect the compromise : but whether this is so or not, it seems plain that the case should proceed on the footing that no actual authority in the karpardaz was established. On this footing their Lordships have no difficulty in coming to the conclusion that the compromise cannot be supported by reference only to the implied authority of the advocates. As was laid down by this Board in Sourendra Nath Mitra v. Tarubala Dasi (1930) L. R. 57 I. A. 133 : S. C. 32 Bom. L. R. 645 counsel in India have the same implied authority to compromise an action as have counsel in the English Courts. But if such authority is invoked to support an agreement of compromise, the circumstances must be carefully examined. In the first instance the authority is an actual authority implied from the employment as counsel. It may, however, be withdrawn or limited by the client : in such a case the actual authority is destroyed or restricted : and the other party, if in ignorance of the limitation, could only rely upon ostensible authority. In this particular class of contract, however, the possibility of successfully alleging ostensible authority has been much restricted by the authorities such as Neale v. Gordon Lennox [1902] A. C. 465 and Shepherd v. Robinson [1919] 1 K. B. 474 which make it plain that if in fact counsel has had his authority withdrawn or restricted, the Courts will not feel bound to enforce a compromise made by him contrary to the restriction even though the lack of actual authority is not known to the other party.
(3.) BUT whatever may be the authority of counsel, whether actual or ostensible, it frequently happens that actions are compromised without reference to the implied authority of counsel at all. In these days communication with actual principals is much easier and quicker than in the days when the authority of counsel was first established. In their Lordships' experience both in this country and in India it constantly happens, indeed it may be said, that it more often happens that counsel do not take upon themselves to compromise a case without receiving express authority from their clients for the particular terms : and that this position in each particular case is mutually known between the parties. In such cases the parties are relying not on implied but on an express authority given ad hoc by the client. It appears to their Lordships plain that such was the position in the present case. Each offer emanated from the client: and was refused or accepted by the client or his lay representative. In the circumstances neither counsel was attempting to exercise any authority of his own, nor would he reasonably have been believed to be exercising his own authority. He was merely, as so often happens, a messenger between the two clients. As therefore the case has been rested on the implied authority of counsel alone, and the authority of the karpardaz to agree on behalf of the appellants to the particular agreement is not established, the compromise must fail.;

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