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.=
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.”=
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.
advocatemmmohan 
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