[Order 23 Rule 3] Statements Recorded Before Court Hold Equal Sanctity As A Written Instrument Of Compromise: P&H HC [Read Order]

The observation was made by Justice Gurvinder Singh Gill while dismissing a Revision Petition filed by a tenant, against the order of compromise passed by the Appellate Authority under the Haryana Urban (Control of Rent & Eviction) Act 1973.

The ruling reaffirms the legal position that if a counsel representing a party makes a statement towards compromise, then the party would be equally bound by it.

Background

The case pertains to suit against eviction proceedings initiated by the Respondent-landlord.

In the proceedings for eviction before the Rent Controller, the Petitioner (tenant) was directed to clear rent arrears. This order was assailed by the Petitioner before the Appellate Authority which ultimately recorded a compromise between the parties.

Significantly however, the Petitioner redacted from his statements the very next date and moved an application seeking disposal of his appeal on merits. He submitted that he was "allured" into making a statement qua compromise by his counsel and the landlord.

The aforesaid application was, however, dismissed by the Appellate Authority, and the present proceedings were commenced against such dismissal order.

Arguments

The Petitioner-tenant submitted that although the Respondents claim that the matter stood compromised but in fact there was no "written instrument" regarding compromise brought on record.

He also submitted that he was tricked into making a statement of compromise by way of allurement and collusion of counsel but the said statement was withdrawn on the very next date of hearing before the same could be acted upon and that in these circumstances it cannot be said that there was any valid compromise amongst the parties.

Reliance was placed on Gurpreet Singh v. Chatur Bhuj Goel, 1988(1) SCC 270, where by the Supreme Court interpreted Order 23, Rule 3 (Compromise of Suit) of CPC and held that the requirement of a written compromise is mandatory.

The Respondents-landlords on the other hand submitted that a statement made by a party or by his counsel in a Court of law "cannot be brushed aside lightly".

It was argued that in judgements delivered by the Supreme Court subsequent to Gurpreet' Singh's case (supra), it is held that not only a statement made by the party towards compromise can be accepted but even a statement made by counsel on behalf of his client is to be duly honoured and accepted.

Findings

The Court found merit in the Respondent's submission that a statement made by a party towards compromise in the Court cannot be said to be having lesser sanctity than the compromise entered into outside the Court before some Oath Commissioner/Notary Public or before any other authority.

It held,

"A certain sanctity is attached to a statement made by a party in the Court and it has to be presumed that the same was recorded voluntarily. In case a party is permitted to wriggle out of such statements by conveniently raising some frivolous allegations against his counsel or against opposing counsel, then it will virtually lead to mockery of the Court."

In fact, the Bench took note of the Apex Court's decisions subsequent to the Gurpreet Singh's case, where it was held that a judgment or decree passed as result of consensus arrived at before court can also be also a "judgment on admission".

In Jineshwardas (D) through LRs & Ors. v. Jagrani & Anr., 2003(11) SCC 372, the Top Court had held that a counsel could compromise a dispute on behalf of his client and that the decree that followed could be the result of a consensus arrived at before the Court and that consensus may not necessarily be a compromise or settlement and adjustment and the same, in a given case, could be a judgement on admission.

In yet another case i.e. Pushpa Devi Bhagat (D) through LR v. Rajinder Singh & Ors., 2006(5) SCC 566, where a tenant during the course of ejectment application agreed to vacate the premises by a certain date and the trial Court recorded statements of both the counsel and thereafter passed a consent decree which was later challenged by the tenant, the Supreme Court held that statements recorded by the Court will amount to a compromise in writing.

The High Court observed,

"The position of law, as discerned from the above referred judgments of Hon'ble Supreme Court, leaves no manner of doubt that a statement made by a party or by his counsel towards compromise which is taken down in writing is as good as a written compromise and would satisfy the requirements of Order 23 Rule 3 CPC, particularly as regards the provision in Rule 3 which was inserted by way of amendment in the year 1976 i.e. "in writing and signed by the parties"."

It clarified,

"Perhaps the only exceptional circumstance under which a party may be able to wriggle out from a statement made by him in the Court or by his counsel could be wherein he is able to establish that such statement was made by way of fraud or deception. Even in such a case he would ideally be required to file a suit for getting such order/judgement/decree set aside on the basis of alleged fraud by specifically pleading as well as by leading cogent and convincing evidence to establish such fraud."

In the case at and even though the Petitioner had alleged his counsel of collusion with the opposite party, the Bench observed that there was nothing on record to suggest the same.

"Had the petitioner really been sanguine about his stand regarding collusion of his counsel, then it remains unexplained as to why he did not take any other action against his counsel. There is nothing to show that the petitioner had ever filed any complaint in the Bar Council regarding the alleged fraud and collusion by his counsel. It is very convenient for any party to level such kind of allegations against his counsel when he wishes to wriggle out of any such situation which does not suit him," the Court remarked sternly.

Case Title: Lachhman Dass v. Amarjit Singh Sahni & Anr.

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