This is a suit for accounts. The two plaintiffs in the suit are the sole legal heirs of Abdul Waheed deceased (hereafter called the deceased) and the first plaintiff is his widow, whilst the second plaintiff is his minor child. The defendants have not yet filed their written statement, but instead they have filed an application under Order XXIII, rule 3, C. P. C. that the above noted suit may very kindly be deemed to have been adjusted wholly by lawful agreement/compromise dated 29-5- 1969 (Annexure "Z") which has been duly executed, accepted and acted upon by the parties and a decree be passed in terms of the said compromise with costs to the defendants. This application has now come up for hearing.
2. The facts material to this application are as follows: The deceased was the son of Ch. Ghulam Nabi and by a partnership deed dated the 1st April 1964, the said Ch. Ghulam Nabi and his two sons, namely the deceased and the second defendant in this suit, had entered into a partnership under the name and style of Eastern Traders Registered. The deceased died on 4th May 1967, and by a deed of dissolution dated the 8th May 1967, which is Annexure X to the second defendant's counter-affidavit, this firm of Eastern Traders Registered was dissolved by the surviving partners, namely, Ch. Ghulam Nabi, the father of the deceased and the second defendant. However, two days later, another firm by the same name was constituted, which is the first defendant in this suit, and its partners are the three other defendants in the suit. It is material to observe here that the third defendant is the second defendant's brother, whilst the 4th defendant is a stranger. Hardly two months later, on 31st July 1967, Ch. Ghulam Nabi, the father of the deceased, also died.
Thereafter the first plaintiff, who is the widow of the deceased, filed two suits and a guardianship application. First of all she filed in a Court in Lahore a money suit against the defendants for the recovery of her dower. She also filed an application to be appointed as the guardian of the second plaintiff who is her own child by the deceased. Finally, she filed a suit for accounts against the defendants, being suit No, 1826 of 1968, in the Court of the 7th Civil Judge, First Class, Karachi. This Suit was filed by her on 31st August 1968 both on her own behalf and as the natural guardian of her minor son, and according to the plaint, the plaintiffs were the sole heirs of the deceased, and the suit was filed because they had neither been paid the share of the deceased in the firm Eastern Traders Registered nor had they been given any accounts. Further, according to para. 8 of the plaint, the share of the deceased in the firm exceeded Rs, one lakh, yet the suit was filed in the Court of a Civil Judge with limited pecuniary jurisdiction, therefore by his order dated 16-11-1968 the learned Civil Judge directed that it should be presented in the proper Court. In pursuance of this order, this suit was presented in this Court on 22-1-1969 and has been numbered as Suit No, 163 of 1969. But before further proceedings could be taken by this Court, on 30th May 1969, the first plaintiff entered into a written agreement with Mst. Janat Bibi, widow of Ch. Ghulam Nabi, and three brothers of the deceased, namely, defendants Nos, 2 and 3 in this suit, and one Mr. Abdul Hamid. It is admitted before me that Annex ure Z to the second defendant's counter-affidavit is a true copy of this agreement, 1 shall refer to it as the said agreement and according to it, the share of the deceased in the original firm of Eastern Traders was held by the deceased as a benamidar for his father, and the said share, on the death of the deceased, amounted Rs, 99,488-14. Further, according to the said agreement the deceased's father "had intended to give an amount of Rs, 1,00,512-80 to the deceased Abdul Waheed . . . . . which amount also stood in the name of the deceased Abdul Waheed in account books of the Eastern Traders, Bunder Road, Karachi," and as the other parties to the agreement were willing to pay this amount to the plaintiffs, the first plaintiff agreed to receive this amount in full satisfaction of her claim, and the claim of the second plaintiff (namely her minor son), and she further undertook to withdraw the money suit filed by her in Lahore for the recovery of her dower, the guardianship suit filed by her in Lahore as well as this suit.
Thereafter, according to the defendants, although they had made payments to the plaintiffs or deposited some payments on their behalf in pursuance of the said agreement, the plaintiffs had not withdrawn this suit, hence this application under Order XXIII, rule 3, C. P. C. which has new come up for hearing before me.
3. Mr. Kidwai, who appeared on behalf of the plaintiffs, admitted the execution of the said agreement by the first plaintiffs, but he submitted that her signature bad been obtained under fraud and coercion, therefore the application was not fit to be granted under Order XXIII, rule 3, C. P.
C. In support of this submission he relied on the income-tax assessment order of the old firm of Eastern Traders for the year ending on 31st March 1966. According to this order, the share of the deceased in the books of firm was Rs, 1,16,433.55 on 31st March 1966. As this amount exceeds the amount fixed under the said agreement as the share of the deceased Mr. Kidwai submitted that the first plaintiff, who was a pardahnashin lady, had been deceived into signing it. The failure of the defendants to produce evidence in rebuttal lends support to Mr. Kidwai's argument, but I do not think, the defendant's application can be refused merely on the allegation that the first plaintiff was deceived, though it might be open to file a suit to enforce her rights.
4. Mr. Kid wai then argued that the said agreement was not a lawful agreement within the meaning of Order XXIII, rule 3, C. P. C. because the first plaintiff had not obtained the leave of the Court under Order XXXII, rule 7, C. P. C. before signing the said agreement, and in support of this argument he referred me a judgment of Muhammad Bakhsh, J. in Mst. Zarel Bibi and others v. Shamsuldin Khan and others . In that judgment Muhammad Bakhsh, J. has observed that an agreement hit by Order X X A II, rule 7 is void and not voidable. As it is admitted before me that prior leave of the Court had not been obtained before the execution of the said agreement, the view taken by Muhammad1 Bakhsh, J. supports learned Counsel's argument. However, the observation of the learned single Judge that an agreement hit by Order XXXII, rule 7 was void, and not voidable was not necessary for the decision of the case. Further in making this observation, the learned judge relied on a judgment of the Privy Council in Chhabba Lal v. Kallu Lal and others , and two foreign judgments reported Johara Bibi and others v. Muhammad Saddak Thambi Marakayar and others , and in Kaluram Ramchandra v. Nandlal Gulabchand and others. I have examined the judgment of the judicial Committee and I do not think that the view of the judicial Committee supports the view of the learned Single Judge. I am fortified in my opinion by a full Division Bench of the Allahabad High Court in Birhan v. Harmukh Rai . As to the judgments of Madras and Nagpur High Courts, on which the learned Single Judge relied, they have been overruled by the Indian Supreme Court AIR 1951 SC 280. It is therefore not necessary to consider them. I may also add that it has been the consistent view of the High Courts of the sub-continent that an agreement hit by Order XXXII, rule 7 is only voidable and not void. See Virupakshappa v. Shidappa and another , Sita Singh v. Main Singh and , Ishan Kundu v. Adikari and another . With great respect, I am therefore not able to agree with the view of Muhammad Bakhsh, J. and the point for determination is whether an agreement voidable under Order XXXII, rule 7 can be decreed under Order XXIII, rule 3, C. P. C.
5. Order XXIII, rule 3, C. P. C. runs as follows :- "Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by a lawful agreement or compromise the Court shall order such agreement compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit."
The question is of the meaning of the words "lawful agree ment" in this rule Mr. Akhtar Mahmood submitted that asthe first plaintiff had admitted the execution of the said agreement, it had to be decreed by the Court because of voidable agreement was a lawful agreement within the meaning of this rule. If the learned counsel's argument is accepted it seems to me that it would completely nullify the provisions of Order XXXII, rule 7, C. P. C. and in the absence of authority binding on me I would not accept such a construction of Order XXIII, rule 3. However, in support of his submission Mr. Akhtar Mahmood referred me a judgment of Kania, J. in Western Electric Co. Ltd. v. Kailas Chand , and two judgments of Allahabad High Court relied upon by Kania, J. in his judgment, I shall now consider these judgments and it will be convenient to consider first the judgments of Allahabad High Court.
6. In Qadri Man Begam v. Fazal Ahmed , a Division Bench of the Allahabad High Court, which included Dr. Shah Muhammad Sulaiman held that:-- "the word "lawful" in 0. XXIII, r. 3, does not merely mean binding or enforceable. A contract which is brought about either by undue influence, misrepresentation or fraud is under section 19 (a), Contract Act, merely voidable and not absolutely illegal or unlawful. Section 23 of the Act indicates- when the consideration or object of an agreement is unlawful. These are cases where it is forbidden by law or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent, or involves or implies injury to any person or property, or where the Court regards it as immoral or opposed to public policy. We think that the word "lawful" in 0. XXIII, r. 3 refers to agreements which in their very terms or nature are not "unlawful" and may therefore include agreements which are voidable at the option of one of the parties thereto, because they have been brought about by undue influence, coercion or fraud."
However, after making these observations the learned judges made the following observations which are very relevant:-- "It is, however, possible to take the view that independently of O. XXIII, r. 3, the Court has inherent jurisdiction under section 151 of the Code to refuse to record a compromise which has been brought about by undue influence; Sabitri Thakurain v. F. A. Savi. The majority of the judges in2 3 4 5 6 7 8 9 10 Gagendra Singh v. Durga Kumari invoked their inherent jurisdiction for recording a compromise, independently of 0. XXIII, r.
3. But where the person, who is said to have been subjected to undue influence, did not repudiate the compromise-in her lifetime and is now dead, and the question of the alleged undue influence will involve an elaborate and lengthy enquiry which cannot be satisfactorily made in a summary proceeding, we are not bound to exercise any extraordinary discretionary powers, assuming that such powers exist. This matter can best be re-agitated in a separate suit."
These observations are very important. In the first place they show that the judgment of the Court was based on the peculiar facts of the case. Secondly, if the Courts have inherent powers under section 151 to reject an application for compromise, this means that they may in a proper case refuse to decree under Order XXIII, rule 3 an agreement that is voidable.
7. This judgment was followed by another Division Bench of the Allahabad High Court in Mirza Husain Yar Beg v. Radha Kishan and others . After quoting with approval the view of the earlier Division Bench, Niamatullah, J. who delivered the judgment of the Division Bench further observed:-- "A contract vitiated by fraud can be set aside by a decree obtained in a regular suit instituted for that purpose. A mere repudiation by one of the parties, not acquiesced in by the other is not avoidance of such contract. A judicial determination of facts on which the right to avoid rests is a necessary preliminary to the contract being set aside. 0. XXIII, r. 3 does not provide for any inquiry into disputed facts collateral to the terms of the compromise. It is highly inexpedient that questions of the character raised in the present case should be enquired into a miscellaneous proceeding started by an application under 0. XXIII, Civil P. C. If such enquiry is allowed, all the various stages of a regular suit will have to be gone though in disposing of that application."
With great respect, the view taken in these observations that an enquiry about disputed facts should not be permitted under Order XXIII, rule 3 because of any delay this might entail appears to be too sweeping and would restrict the Court's power to do justice. Further in making these observations Niamatullah, J. perhaps over looked the peculiar facts of the case before the earlier Division Bench and also the observations of that Bench about the powers of the Court under section 151, C. P. C. which I have quoted. Finally, as I have observed, both these judgments were relied upon by Kania, J. in Western Electric Co. Ltd. v. Kailas Chand and according to Kania, J. unless a compromise was unlawful on the face of it, it had to be decreed by the Court under Order XXIII, rule 3. Mr. Akhtar Mahmood referred me to the observations at the end of the judgment about:-- "An application under 0. XXIII, r. 3, is in the nature of an interlocutory proceeding, and normally, it will certainly be inconvenient to treat it as if it were a suit where all evidence which will make the agreement voidable by reason of the provisions of the Contract Act will be led. But that will not be a sufficient answer to refuse to take into consideration the plea whether an agreement is voidable or not. That contention must stand or fall by reason of the wording of 0. XXIII, r.
3. I am unable to construe the word "lawful" as wide enough to include an inquiry whether the agreement is voidable at the instance of one party. In my opinion, it includes only two classes of agreements; those which are unlawful and those which on their face are void and therefore not capable of being enforced."
As in the judgment of Niamatullah, J. which I have quoted in para. 7, this judgment also ingores the observations in Qadri Jahan Begum's case about the inherent power of the Court under section 151, and with great respect I am unable to agree with the view of Kania, J. in the judgment cited. In my humble opinion, as the provisions of Order XXXII, rule 7 reflect the paramount policy of the law, the provisions of Order XXIII, rule 3 have to be read C subject to these provisions, and an agreement which is voidable under Order XXXII, rule 7 is not, in my opinion fit to be treated as a lawful agreement under Order XXIII, rule 3, C. P. C.
8. I think I am supported in my view by a judgment of the Privy Council in Sankaralinga Nadan and others v. Rajeswa ra Dorai and others . The facts of that case were complicated, but for the11 12 purpose of this application. I need only state that a suit had been filed against the trustees of a public trust. At the appellate stage, the trustees entered into an agreement with the plaintiff to settle the suit and sought to record the compromise thus made under Order XXIII, rule 3. Members of the public, who were allowed to be impleaded as parties in the suit, opposed this application, and the Madras High Court refused to decree it under Order XXIII, rule 3 on the ground that it would lead to a breach of trust. In upholding the judgment of the Madras High Court, the Privy Council stated at page 250:-- "The principles applicable to the case of a trustee who thus betrays his trust by surrending a decree have been well stated and applied by the High Court."
It is true that their Lordships have not directly referred to the provisions of Order XXIII, rule 3 and I am also aware that the facts in the case before them were different from those in the instant case.
But as a Court will be as vigilant to protect the interests of minors as those of public trusts, it seems to me that the view of the Privy Council helps the case of the minor plaintiff at least by the way of analogy and I am of opinion that the said agreement cannot be decreed against him under Order XXIII, rule 3.
9. The question which then arises for determination is whether the said agreement can be decreed against the first plaintiff. As she had taken advantages under the said agreement, at the time of arguments I was inclined to the view that application of the defendants should be allowed against her. However, on examining the law I find that in Chhabba Lal v. Kallu Lal, in holding that a reference to arbitration on behalf of a minor had to be set aside, because the prior leave of the Court had not been obtained under Order XXXII, rule 7, the Privy Council stated as follows:-- "The rule is imperative and in their Lordships view its terms must be strictly complied with. The interest of minors, might well be sacrificed by an improper reference to arbitration and it is necessary that their interest be protected by the Court. If minors successfully challenge an agreement to refer as not made in compliance with sub-rule (i) of rule 7, it is avoided against all parties under sub-rule (2)."
In view of these observations, as the said agreement has to be set aside against the 2nd plaintiff, the first plaintiff is also entitled to avoid it.
10.Finally, Mr. Akhtar Mahmood submitted that the said agreement had been decreed by the Court of the Guardian Judge, Lahore on 3rd July 1969, and in support of this submission he produced a certified copy of that order which refers to an agreement between the parties before me. As Mr. Kidwai admitted that the plaintiffs had not taken proceedings to challenge this order of 3rd July 1969, at the time of argument I was impressed by this submission of Mr. Akhtar Mahmood.
However, I find that this order merely states :- "Application regarding appointment of Guardian for the property of minor Noman Waheed: Order.--Applicant's counsel Mr. Asghar All present. Mr. Mushtaq Hussain counsel for the respondent present. Dr. Abdul Majid one of the respondents present. Fazal Qader, father of the applicant present. Parties state that the amount has been deposited in the National Bank of Pakistan as fixed deposit in the name of the minor. Its receipt was seen and returned. The compromise seems to be in the interest of the minor. Therefore permission for compromise is hereby granted and withdrawal application is dismissed. Order pronounced. File be consigned to record after compliance, 3-7-69."
It is very clear from this order that an agreement with the first plaintiff was made the rule of the Court. But unfortunately the order does not state what that agreement was. It is true that there is no denial in this respect by the plaintiff in her counter-affidavit to the application by the defendants. But, as the second defendant has not pleaded in his counter-affidavit that it was this agreement of 30th May 1969, that had been decreed by the Guardian Judge, the question of a denial by the plaintiff did not arise. Additionally, a Court will always be vigilant in protecting the interest of minors. Bearing in mind this principle. It is clear that the defendants have failed to prove that the said agreement was made a rule of the Court by the Guardian Judge, therefore as it is hit by Order XXXII, rule 7, it is not fit to be decreed under Order XXIII, rule 3 as a lawful agreement even though it has been signed by the first plaintiff, and even though benefits have been received under it by the plaintiff. That however will not create any injustice because the amounts received by the plaintiff will be adjusted against their claim in the suit.
11.In the result the defendants' application is without merit, but as it raised question on which the law was not clear it is dismissed without costs. The plaintiffs' application under Order XL, rule 1, C. P.
C. should now be put up for hearing. PLD 1956 Kar. 150 AIR 1946 P C 72 AIR 1951 Mad. 997 AIR 1949 Nag. 298 AIR 1952 All. 240 I L R 26 Born. 105 AIR 1922 Lah. 166 AIR 1923 Pat. 375 AIR 1940 Bom. 60 AIR 1928 All. 494 AIR 1935 All. 137 I L R 31 Mad. 236