1. BASHARAT AHMAD SHAIKH, J.---Leave in this case was granted only to consider as to whether compromise affected by Muhammad Habib, respondent No.2, is lawful and a decree is 'permissible, in accordance with the compromise, to the extent of his share. Leave on other points raised at the hearing of the petition for leave to appeal was refused. This judgment will, therefore, be confined to this point.
2. ' On 24th of December, 1969, one Noora executed a gift-deed by which he transferred the ownership of his total holding in favour of Abdul Aziz his son and Muhammad Habib his grandson by a predeceased son. Abdul Razzaq another son of Noora filed a suit on 28th of September, 1972 at Rawalakot in which he challenged the aforesaid gift-deed. While the suit was being tried Muhammad Habib filed a compromise on 13th of January, 1970, in which it was stated that defendant Muhammad Habib accepted the claim of plaintiff Abdul Razzaq in toto and it had been agreed between the parties that the gift-deed executed by Noora would stand cancelled to the extent that the total holding of Noora would be distributed in equal shares between plaintiff Abdul Razzaq, defendant Abdul Aziz and defendant Muhammad Habib. It was prayed that the Court may pass a decree to the effect that property mentioned in the gift-deed would be equally owned by plaintiff Abdul Razzaq, Muhammad Habib and Abdul Aziz. This compromise-deed was signed by Abdul Razzaq and Muhammad Habib as well as by two witnesses but was not signed by Abdul Aziz.
3. Muhammad Habib also got his statement recorded in support of the compromise and thereby re- affirmed the contents of the written compromise filed in the Court. However, he later on resiled from the compromise and took the position that a fraud had been practised on him by the plaintiff in order to secure the compromise. His plea was that he was promised Rs,1,000 but the amount was not paid to him. The learned Sub-Judge while framing issues in the case framed an issue on this point. The onus to proving the issue was placed on Muhammad Habib, defendant. In the light of the evidence on this issue the learned Sub-Judge decided it against Muhammad Habib holding that he had not been able to produce any evidence to prove fraud. The learned Sub-Judge on the question of compromise held that the compromise was ndt authorised by Abdul Aziz and could not affect his rights but so far as Habib himself was concerned it was binding on him to the extent of this share.
4. ' On appeal the learned District Judge took the view that the compromise had been entered into without consent of Abdul Aziz, therefore, it was unlawful and could not be acted upon even to the extent of Muhammad Habib's share. A second appeal taken to the High Court by Abdul Razzaq also failed. In respect of the point relating to the compromise the High Court held that compromise is to be accepted or rejected as a whole and since Muhammad Habib was not competent to enter into compromise on behalf of Abdul Aziz the compormise was to be rejected as a whole. The learned Judge in the High Court also observed that the learned counsel for appellant Abdul Razzaq accepted this legal proposition.
5. ' The learned counsel for Abdul Razzaq appellant, Mr. Abdul Rashid Abbasi contended that the mere fact that compromise filed in the Court by Muhammad Habib had not been authorised by Abdul Aziz did not make it illegal or unenforceable. He submitted that having been filed without an authority on behalf of Abdul Aziz the compromise was not binding on Abdul Aziz but so far as Muhammad Habib was concerned he was bound by it. The learned counsel relied on Nalina Kanta San v. Babu Monarajan Parasad Barman (PLD 1967 Dacca 155), Sashibala Dasi and others v.
6. Kamiksha Nath Dutt and others (AIR 1920 Cal. 269), Muhammad Mazhar-ud-Din Hasan v. Zahur- ud-Din and others (AIR 1926 Oudh 131) and Baiju Lal Marwari v. Narayan Hemram and others (AIR 1928 Pat. 495).
7. ' Dealing with the point of admission by the counsel, Mr. Abdul Rashid Abbasi submitted that admission made by the counsel who appeared for Abdul Razzaq in the High Court was not binding because it did not correctly reflect the law. He relied on a judgment of this Court Bahadon v. Phatti (1980 CLC 1533) laying down that a party cannot be bound by admission of its counsel which had not been made with due diligence and care.
8. ' Mr. MA. Farooq, the learned counsel for Muhammad Habib and Abdul Aziz, contended that the compromise filed by Muhammad Habib was unauthorised and was, therefore, void as a whole and there was thus no question that it may be acted upon in part. He submitted that there was nothing before the Court to hold that the admission made by the learned counsel for Abdul Razzaq had not been made with due diligence.
9. ' Before examining the legal point involved in the case we would like to dispose of the matter regarding the so-called admission made in the High Court by the learned counsel for Abdul Razzaq. The judgment of this Court cited by the learned counsel for the appellant Bandan v. Phatti relates to an admission on a factual matter which is not the case before us. We are dealing with a pure question of law. It is well-settled that there is no estoppel against law. It is equally well-settled that if a party or its counsel accepts a proposition which is legal in nature it is not binding. In fact the High Court in its order under appeal also did not act upon the 'tatement made by the counsel but only mentioned that the learned counsel had accepted the proposition.
10. ' Among the cases cited by the learned counsel for the appellant three cases, namely, Sashibala Dasi v. Kamiksha Nath Dutt, Muhammad Mazhar-ud-Din Hasan v. Zahur-ud-Din and Nalina Kanta San v. Babu Monaranjan Parasad Barman do not deal with the question before us and we find them inapplicable. However, the case from Patna jurisdiction Baiju Lal Marwari v. Narayan Hemram deals with this question in a broad sense. In that case the parties tendered a compromise by which defendants had agreed to settle the claim upon payment of certain sum in eight equal instalments of crops of certain value each year. The compromise further stated that in the event of the defendants faiting to pay instalments, the whole debt would become due and would be enforced by the sale of the holding of the defendants. The trial Court declined to give effect to the compromise holding it to be illegal in view of the law prevalent in that locality that no transfer by a `raiyat' of his right in his holding or any portion thereof by sale, gift or any other contract or agreement shall be valid unless the right to transfer has been recorded in the record of rights. A Single Judge of the Patna High Court set aside the order and held that the compromise was not illegal inasmuch as the substantial portion of the compromise that a certain sum shall be payable year to year for eight years was not against the local law which rendered part of agreement unlawful. As we read the judgment, the view formed in the case is that if the legal part of a compromise can be severed from the part which is illegal the compromise can be given effect to.
11. The reasoning adopted by the learned Judge may be reproduced as follows:-- "I cannot find anything in S.27 which renders the compromise under consideration unlawful. That part of the compromise which gives the plaintiffs permission to sue for their debt and execute their decree, if any, by the sale of the holding is inoperative and redundant. If the law of the locality is that no money-decree can be executed by the sale of the borrowers' raiyati holding, it is obvious that an admission by the debtor will not permit the creditor to do that is forbidden by law. The substantial portion of the compromise is that a sum of Rs,112-8-0 shall be payable year by year for eight years and as far as I can see, there is nothing in the law of the locality which renders such as agreement unlawful."
12. ' In our opinion the view taken by the learned Judge in the case under reference was correct. We may that the part which was unlawful in light of the local law was ignored but in doing so no prejudice was caused to any party to the compromise. The law applicable to the situation before us is contained in rule 3 of Order XXIII of the C.P.C. It runs as follows:-- "3. Compromise of suit.--Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit."
13. This rule is in two parts. First part deals with a lawful agreement or compromise by which the suit is adjusted wholly or in part and second part deals with a situation in which a defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit. When Muhammad Habib filed a compromise and made a statement in the Court that he had agreed that the land which was the subject-matter of the gift-deed challenged in the suit may be divided in three equal shares, he was clearly surrendering a part of the land gifted to him and it was satisfaction of part of the subject-matter of the suit. There is no question that his compromise or statement could bind the other donee but so far as Muhammad Habib himself was concerned he surrendered part of the land which was in excess of one third of the total land. That part of satisfaction of the subject- matter of the suit so far it related to Muhammad Habib did not in any way prejudice Abdul Aziz.
14. ' The issue relating to the plea of Muhammad Habib that a fraud had been practised on him was decided against Muhammad Habib. We have looked into the evidence on the point and are satisfied that the findings on this issue were correct.
15. ' No case decided by this Court was cited before us by the learned counsel for the parties, but when we were about to conclude this judgment our attention has been drawn to a case decided by this Court which is a direct authority on the point in issue. The case is Sarwar Khan v. Mir All and others (1980 CLC 110). At page 119 of the report the following observations decide the point in issue:-- "Moreover, a compromise decree passed in terms of Order XXIII, Rule 3 becomes final and conclusive only against the party to compromise deed and not against a plaintiff who is not a party to such compromise. It is the duty of the Court to examine the terms of settlement with care and caution and record the agreement and pass the decree in accordance therewith. The compromise decree in the instant case deprived Sarwar Khan appellant-plaintiff of his right to irrigate his land, under survey No.57, measuring 2 kanals, 11 marlas from the water of the spring 'Sae without his consent and without properly examining his claim. Therefore, it will not be binding on him, as a compromise or agreement cannot be held to be effective against a person not a party to the suit qua his rights and liabilities.
16. ' In PLD 1961 Azad J & K 8, referring to AIR 1923 Oudh 252 and AIR 1924 Cal. 150, it was observed:-- ' Before a decree is passed in accordance with a compromise it has to be established that the agreement of compromise was lawful. An agreement which involves injury to a third party or a compromise between the plaintiff and one defendant prejudicial to the other defendant is not lawful agreement. Where, by the compromise the right of a person who was interested in contesting the minor plaintiff's claim and who was a necessary party, had been ignored and prejudicially affected, the agreement was held to be an unlawful agreement.'
17. ' We are therefore of the considered view that the compromise, in the instant case, has resulted in substantial injustice against Sarwar Khan appellant and is, therefore, not binding on him. Hence we set aside the compromise decree to the extent it affects the right of Sarwar Khan plaintiff- appellant."
18. In view of the state of law reflected above, the conclusion which follows is that the view formed by the High Court in the judgment under appeal was not correct. That takes us to the question of relief.
19. It was submitted by the learned counsel for the appellant that the appellant may be held entitled to get 1/3rd share as agreed by Muhammad Habib and Muhammad Habib's share may be reduced by that extent. We do not find any legal justification for doing so. What Muhammad Habib agreed to was that he would get 1/3rd of the total land instead of one half. He cannot be legally bound by anything beyond it. His share would therefore stand reduced to 1/3rd and Abdul Razzaq appellant would be entitled to the ownership of the land thus reduced from Muhammad Habib's share. This works out to be 1/6th of the total land.
20. We consequently set aside the judgment and decree of the High Court as well as the learned District Judge and grant Abdul Razzaq a declaration that the gift-deed executed on 24-12-1969 by Noora was ineffective against the rights of Abdul Razzaq to the extent of 1/6th of the total land mentioned in the gift-deed. Consequently in the land mentioned in the gift-deed mentioned above the respective shares of the parties would be as follows: Abdul Razzaq 1/6th; Muhammad Habib 1/3; and Abdul Aziz 1/2. Parties would bear their own costs throughout.