One B obtained a decree for money against the appellant and his father. The appellant was a minor and was represented by his maternal grandfather as his guardian. In execution certain properties were sold and the appellant filed an application for setting aside the sale through his guardian. The guardian entered into a compromise with the decree hold- er and the auction purchaser under which the application was withdrawn. Subsequently the sale was confirmed. After at- taining majority the appellant filed a suit for setting aside the order for withdrawal of the application for setting aside the sale and for a rehearing of that application on the ground that the guardian bad not obtained the leave of the court as required by O.32, r : 7 Code of Civil Procedure before entering into the compromise. Held, (per Suhba Rao and Mudholkar, jj., Sarkar, J. contra) the O.32, r.7 was not applicable to the withdrawal of the application for setting aside the sale and the order for withdrawal of that application was binding on the appellant, Order 32, r. 7 is applicable only to "an agreement or compromise with reference to the suit", and there are the following limitations to its applicability: (i) it is applicable only where the rights put in issue in the suit are involved and not to mere procedural steps; (ii) it is applicable only during the pendency of the suit which includes execution proceedings; and (iii) the agreement or compromise must be with a party to the suit. Though the application for setting aside the sale was an application in execution of the decree, the agreement or compromise entered into by the guardian with the auction purchaser to withdraw the application did not affect the rights and liabilities declared by the decree and therefore leave of the court under O.32, r.7 was not necessary. Section 141 of the Code 500
could not be utilised to, make O.32, r.7 applicable to the agreement in question. as s. 141 was applicable to original proceedings and not to proceedings in execution.
Supreme Court of India
Dokku Bhushayya vs Katragadda Ramakrishnayya on 27 April, 1962
Equivalent citations: 1962 AIR 1886, 1963 SCR (2) 499
BENCH:
SARKAR, A.K.
BENCH:
SARKAR, A.K.
SUBBARAO, K.
MUDHOLKAR, J.R.
Civil Procedure-Decree against minor-Execution and sale- Application for setting aside sale-Compromise by guardian- Leave of Court not obtained-Whether binding on minor-Code of Civil Procedure, 1908 (Act V of 1908), s. 14, O. 32, r. 7.
HEADNOTE:
One B obtained a decree for money against the appellant and his father. The appellant was a minor and was represented by his maternal grandfather as his guardian. In execution certain properties were sold and the appellant filed an application for setting aside the sale through his guardian. The guardian entered into a compromise with the decree hold- er and the auction purchaser under which the application was withdrawn. Subsequently the sale was confirmed. After at- taining majority the appellant filed a suit for setting aside the order for withdrawal of the application for setting aside the sale and for a rehearing of that application on the ground that the guardian bad not obtained the leave of the court as required by O.32, r : 7 Code of Civil Procedure before entering into the compromise. Held, (per Suhba Rao and Mudholkar, jj., Sarkar, J. contra) the O.32, r.7 was not applicable to the withdrawal of the application for setting aside the sale and the order for withdrawal of that application was binding on the appellant, Order 32, r. 7 is applicable only to "an agreement or compromise with reference to the suit", and there are the following limitations to its applicability: (i) it is applicable only where the rights put in issue in the suit are involved and not to mere procedural steps; (ii) it is applicable only during the pendency of the suit which includes execution proceedings; and (iii) the agreement or compromise must be with a party to the suit. Though the application for setting aside the sale was an application in execution of the decree, the agreement or compromise entered into by the guardian with the auction purchaser to withdraw the application did not affect the rights and liabilities declared by the decree and therefore leave of the court under O.32, r.7 was not necessary. Section 141 of the Code 500
could not be utilised to, make O.32, r.7 applicable to the agreement in question. as s. 141 was applicable to original proceedings and not to proceedings in execution. Virupakshappa v.Shidappa and basappa. (1901) I.L.R. 26 Bom. 110, Arunachellam Chetty v. Ramanadhan Chetty, (1906) I.L.R 29 Mad. 309 Muthalakkammal v. Narappa Reddier, (1933) I.L.R. 56 Mad. 430, Jitendra Nath Roy v. Samarendra Nath Mitter (1943) L.R. 70 I.A. 68, Katneni Venkatakrishnayya v. Garapati China Kanakayya, I.L.R. (1938) Mad. 819 and Thakur Prasad v. Sheikh Fakir Ullah, (1894) L.R. 22 I.A. 44, referred to.
Per Sarkar, J.-The leave of the court under O.32, r. 7 was necessary before the guardian could enter into the agree ment or compromise to withdraw the application for setting aside the sale. There was no justification for limiting the operation of the rule in its application to execution proceedings only to compromises which directly affected the rights and liabilities under the decree; it was applicable to all compromises which brought a proceeding to an end thereby affecting the rights and liabilities of the minor, The compromise in the present case was not merely concerned with the conduct of proceedings but it seriously affected the liability of the appellant under the decree. Virupakshappa v. Shidappa, (1901)1.L.R. 26 Bom. 109 Rhodes v. Swithenbank, (1889) L. R. 22 Q. B. D. 577, Gurmallappa v. Mallappa, (1920) I. L.R. 44 Bom. 574 and Katneni Venkatakrishnayya v. Ganapati China Kanakayya, (1938) I.L.R. Mad. 819, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal 483 of 1957. Appeal from the judgment and decree dated November 25, 1949, of the Madras High Court in Appeal No. 66 of 1946. A. V. Viswanatha Sastri and T.V.R. Patachar for the appellant.
Bhimsenakarama and B K.B. Naidu, for respondents Nos. 1 and
2.
T. Satyanarayan, for respondents Nos. 7 and 8. 1962. April 27. Sarkar, J., delivered a separate Judgment. The Judgment of Subba Rao and Mudholkar, JJ., was delivered by Subba Rao, J.
501
SARKAR, J.-In 1929, one Bapiah filed a suit against the appellant, then a minor, his father and another person on a promissory Dote executed by the two last mentioned persons, The appellant was represented in that suit by his maternal grandfather as his guardian ad litem. 'A decree was passed in that suit. The decree holder put the decree in execution and obtained an order for the sale of certain properties in which the appellant was interested. The properties were sold in due course in favour, it is said., of a clerk of the decree holder. Thereafter, the appellant's guardian ad litem made an application under O. 21 r. 90 of the Code of Civil Procedure for setting aside the sale. Later, however, the guardian ad litem came to a settlement with the decree holder and the auction purchaser that the guardian ad litem would give up the contention regarding the invalidity of the sale and withdraw the petition to set it aside and also give up possession of the properties sold to the auction purchaser and decree holder and the auction purchaser in their turn would give up their claim for costs of the petition. In pursuance of this agreement the petition was withdrawn and dismissed by order made on August 12, 1932. After attaining majority, the appellant filed a suit in 1944 to set aside the order of August 12, 1932, and for a re- hearing of the petition which was dismissed by the order of that date. It is from this ,suit that the present appeal arises. The suit was decreed by the trial Court but on appeal the decision of the trial Court was reversed by the High Court at Madras and the suit was ordered to be dis- missed. There is no dispute that the suit was competent and within time.
The only question in this appeal is whether the order of August 12, 1932 is voidable under O. 32 r. 7 of the Code of Civil Procedure, 1908, at the instance of the appellant. That rule forbids the
502
guardian for the suit to "enter into any agreement or compromise on behalf of a minor with reference to the suit" without the leave of the court and provides that the any such agreement or compromise entered into without the leave of the court shall be voidable against all parties other than minor.
Order 32, r. 7 of the present Code corresponds to s. 462 of the Code of 1882. It has been settled since the Code of 1882 was in force that the provision under the consideration applies to proceedings in execution though it only mentions agreement or Compromise with reference to the suit. As long ago as 1901, Jenkins C.J. said in Virupakshappa v. Shidappa, (1) "I will first deal with the question whether section 462 applies to a compromise of execution proceedings. On the words of the section I think it does; applications in execution are proceedings in the suit, so that a compromise of such a proceeding would be a compromise with reference to the suit. This view has been followed ever since.
The High Court took the view that a compromise of an execution proceeding would be within O. 32, r. 7 only when it affected directly the rights and liabilities created by the decree. It observed that the compromise in the present case was not affected by the rule as it concerned only the rights and liabilities under the auction sale and not those arising under the decree.
I am unable to agree with this view. The High Court rested itself on the fact that all the reported decisions dealt with cases in which the agreements had directly affected the rights and liabilities under the decree. This does not to my mind furnish sufficient justification for the High Court's view. No decision has been brought to our notice in which it has been held that O. 32, r. 7 does not apply to a compromise of execution proceedings
(1) (1901) I.R.L. 26 Bom. 109, 114.
503
which does not directly affect the rights and liabilities created by the decree. It does not seem to me that on principle the High Court's view can be justified. It is true that O. 32, r. 7 does not apply to all agreements. In Bhodes v. Swithenbank (1) it was observed, "This is an action by an infant by means of her next friend, who undoubtedly has the conduct of the action in his hands. If, however, the next friend does anything in the action beyond the mere conduct of it, whatever is so done must be for the benefit of the infant, and if, in the opinion of the Court it is not so, the infant is not bound". It may therefore be said that an agreement concerning the conduct of the proceeding does not require the sanction of the Court.
Beyond this, I find no justification for limiting the operation of the rule. I observe that Jenkins C.J. in what I have earlier read from his judgment, said that the rule "applies to a compromise of execution proceedings". Therefore, it seems to me that according to the learned Chief Justice it applies to all compromises of execution proceedings, excepting, of course, compromises concerning the conduct of them, and this whether the compromise directly affects the rights or liabilities under the decree or not. I think the principle of the rule was correctly stated by Heaton J. when dealing with s. 462 of the Code of 1882 he observed in Gurmallapa v. Mallappa (2), "That section, I think, necessarily implies that during the continuance of proceedings in Court, the dispute between the minor and another party which the Court had to decide could not be compromised except by the guardian ad litem of the minor, and by him only with the leave of the Court." I think that any compromise of a proceeding which concerns the dispute involved in it
(1) (1889) L.R. 22. Q.B.D. 577,578.
(2) (1920)I.L.R.44 Bom.574,581.
504
would require the sanction of the Court. I should also point out that sub-r. (6) of r. 3 of O. 32 provides that a person appointed guardian for the suit for a minor shall unless his appointment is terminated, continue as such throughout all the proceedings arising out of the suit including the proceedings in execution of a decree. The object behind O. 32 seems to me to be that when an infant is involved in a legal proceeding, he should have a guardian assigned to him and that guardian should be under the control of the Court before which the proceeding is pending so as not to be able to affect the rights and liabilities of the infant, the subject matter of the proceeding, by a compromise which the Court has not approved as one for the benefit of the infant. If this is the prin- ciple, as I think it is, there would be no justification for limiting the operation of the rule in its application to execution proceedings, only to compromises which directly affect the rights and liabilities under the decree. The rule, in my view, would apply, among others, to compromises which bring a proceeding to an end and thereby affect the rights or liabilities of the infant involved in it. I think this view receives support from the observations of Varadachariar J. in Katneni Venkatakrishnayya v. Ganapati China Kanakayya(1) that, "Rule 7 deals with the conduct of a next friend' as such who, as pointed out in Bhodes v. Swithenbank(2) is an officer of the Court to conduct the suit; and the principle underlying are 7 is that whenever he proposes to do anything beyond the normal conduct of the suit, he has to obtain the leave of the Court to do so.", Quite obviously the word "suit" in this observation would include a proceeding in execution.
It is of some interest to point out that the learned Judges of the High Court were careful to
(1) (1938) I.I.R. Mad. 819,828.
(2) (1889) L.R. 22 Q.B.D. 577,578
505
use the word "directly"; they said the agreement or compromise in the present case did "not directly deal with or regulate the extent and nature of the rights and liabilities under the decree, which stand intact and unaffected as before." This seems to me to indicate that the learned Judges were conscious that the compromise in this case affected the rights and liabilities of the appellant under the decree at least indirectly. It seems to me that if the rule prohibits an agreement which directly affects the rights and liabilities of an infant under a decree, there would be no reason to think that it would not similarly prohibit an agreement deliberately made to affect the same rights and liabilities indirectly. The agreement challenged in this' case, is, as I shall endeavour to show, of this kind.
Turning now to the facts of this case I think the proceeding in which the compromise was arrived at was in the course of execution of the decree. It was a proceeding to challenge the validity of an execution sale. It was therefore a proceeding, a compromise in reference to which would be governed by O. 32, r. 7 under the rule laid down in Virupakshappa's case(1).
It also seems to me clear that the compromise was not concerning the conduct of the proceeding. It brought the proceeding to an end and its result was that the appellant's right to question the validity of the sale was lost. He because bound by the sale, good or bad. His liability under the decree was reduced only by the amount of the proceeds of the sale, however inadequate a price might have been fetched in it., It may be that if the proceeding to set aside the sale had been continued and not abandoned, the sale might have been set aside and a fresh sale, if one took place, might have fetched a larger prim and thereby diminished the liability
(1) (1901) I.L.R 26 am. 109. ;I.
506
under the decree to a greater extent. Such a compromise cannot be said to be one relating to the conduct of the proceeding. It seems to me also to be one affecting seriously the liability of the appellant under the decree since it deprived him of his right to have that liability reduced by a larger amount by a sale properly held. It is a compromise which from all points of view, should have been made with the sanction of the Court.
Before concluding I think it right to say that the decree holder and auction purchaser can derive no assistance from Jitendra Nath Rao v. Samarandra Nath Mitter(1). In that case the Judicial Committee held that the agreement contemplated by O. 32, r. 7 is one which is made with a party to the suit or proceeding. Here the agreement was in the execution proceeding and it was made with the decree holder and the auction purchaser both of whom were parties to it, the former having been a party to the suit itself out of which the execution proceeding arose.
I think this appeal should be allowed.
J.SUBBA 'RAO, J. This appeal raises the question of the construction of the provisions of Order XXXII, r. 7 of the Code of Civil Procedure.
Bhushayya, the appellant, and respondents 7 and 8 herein are the sons of one Dokka Adeyya (since died). On the basis of a promissory note executed by Dokku Adeyya and respondent 5 in favour of one Bapayya, the latter filed C.S. No. 88 of 1929 in the Court of the Subordinate Judge, Bapatla, and obtained a decree therein. In that suit, the appellant, who was then a minor, was a defendent and was represented by his maternal grandfather' as his guardian. In execution of the said decree, properties of Dokku Adeyya were brought (1) (1943) L.R. 70 I.A. 68.
507
to sale and were purchased by the decree-holder's clerk, Bapiraju, subject to the mortgage in favour of the decree- holder. Before the sale was confirmed, on March 29, 1932, the appellant, represented by his maternal grandfather, filed E.A. No. 136 of 1932 to set aside the sale under Order XXI, r. 90 of the Code of Civil Procedure. The said petition was posted for inquiry to August 12, 1932. On that day, a memorandum was filed in the court by the guardian of the appellant to the effect that the matter was adjusted and that the petition should be dismissed as having been withdrawn. No sanction of the court was obtained by the guardian for withdrawing the petition. On the said day, the court passed an order dismissing the application. Subsequently, the sale was confirmed. On October 9, 1944, the appellant, who bad then attained majority, filed a suit, O.S. No. 80 of 1944, on the file of the Subordinate Judge, Tenali, for setting aside the order dated August 12, 1932 and to try the application for setting aside the sale on market. It was, inter alia pleaded that the said order was void in as much as the guardian of the appellant withdrew the application without the sanction of the court as he should do under Order XXXII, r. 7 of the Code of Civil Procedure, hereinafter referred to as the Code. The contesting defendants, some of them being the subsequent aliences, filed written statements seeking to sustain the validity of the said order. For the purpose of this appeal we need not notice any other point. The learned Subordinate Judge held that the withdrawal of the said petition and the consequent dismissal thereof was void, as the guardian did not obtain the sanction of the Court under Order XXXII, r. 7 of the Code. On appeal, the High Court came to the conclusion that Order XXXII, r. 7 of the Code had not relevance to an application for setting aside the sale in the circumstances of the cam. Hence the appear. 508
The only question that arises in this appeal is whether the withdrawal of the said petition by the guardian was in contravention of Order XXXII, r. 7 of the Code. Before construing the provisions of the said Order, it would be convenient to notice what exactly were the terms of the agreement. The High Court in its judgment summarised the factual position on that date thus:
"The agreement is that the guardian-adlitem should give up the contentions regarding the invalidity of the auction sale and should withdraw the petition to set aside the sale and also deliver up possession of the pro- perties purchased, to the auction-purchaser and that the decree-holder and auction-pur- chaser should give up their claim for costs o f
the said petition. It was in pursuant of this agreement that the petition was withdrawn and dismissed (no costs being given)".
This is the correct petition, and we need not elaborate further on it. Order XXXII, r. 7, clauses (1) and (2) read as follow:
Clause (1) "No next friend or guardian for the suit shall, without the leave of the Court expressly recorded in the proceedings, enter into any agreement or compromise on behalf of a minor with reference to the suit in which he acts as next friend or guardian.
Clause (2). "Any such agreement or compromise entered into without the leave of the Court so recorded shall be voidable against all parties other than the minor."
In Madras, there is also another clause, viz., cl. (1-A) introduced by an amendment made in 1910 and it reads- "Where an application is made to the Court for leave to enter into an agreement or
509
compromise or for withdrawal of a suit in pursuance of a compromise or for taking any other action on behalf of a minor or other person under disability and such minor or other person under disability is represented by counsel or pleader, the counsel or pleader shall file in Court with the application a certificate to the effect that the agreement or compromise or action proposed is in his opinion for the benefit of the minor or other person under disability. A decree of other for the compromise of a suit, appeal or matter to which a minor or other person under disability is a party shall recite the sanction of the Court thereto and 'shall set out the terms of the compromise as in Form No. 24 in Appendix to this schedule."
Under this Order, no guardian shall enter into an agreement or compromise on behalf of a minor with reference to a suit in which he acts as next friend or guardian. The short question is, what is the meaning to be given to the words "an agreement or compromise with reference to the suit" ? Mr. Viswanath Sastri, learned counsel for the appellant, raised two contentions, namely : (1) That the execution proceedings are proceedings with reference to the suit and therefore any compromise or agreement entered into or effected by a guardian of a minor in execution proceedings affecting his rights procedural or substantive, whether in issue in the suit or declared by the decree or not would require the sanction of the court and an agreement entered into without that sanction would be void. (2) An application to set aside a sale is a proceeding with. in the meaning of s. 141 of the Code' and, therefore, O. XXXII, r. 7, as far as it can be made applicable, would apply to such proceeding; as the compromise was entered into by the guardian in such a proceed without the leave of the Court, the said com-
510
promise as well as the order made pursuant thereto was void. On the other hand, Mr. Bhimasankaram, learned counsel for the respondents, while supporting the test laid down by the High Court, namely, that an agreement to fall within the mischief of the said Order shall be such as deals directly with the rights and liabilities involved in the suit or defined by the decree, attempted to abridge the scope of the test further by trying to make a distinction between an agreement relating to rights conferred by the decree and th%t only relating to liabilities imposed thereunder. Order XXXII, r. 7, is one of the provisions designed to safeguard the interests of a minor during the pendency of a suit against hostile, negligent or collusive acts of a guardian. The scope of the provisions is implicit in the phraseology used therein. The crucial words are "any agreement or compromise ... with reference to the suit". The words "with reference", if taken out of the context, are of the widest import. They may take in' every procedural step in the conduct of a suit, such as adjournment, admission of documents, inter locutories, inspection etc.,, and obviously it could not have been the intention of the Legislature that agreements in respect of such procedural steps should conform to the requirements of the rule. If that be not so, the rule instead of protecting the interests of a minor would easily become a major obstacle in disposing of suits in which a minor is ranged as party on one side or the other. So consistent with the purpose of the rule the words "'with reference to the suit" must be limited to the rights put in issue in the suit.
The next limitation is that the. protection is only during the pendency of the suit. When does a Suit come to an end It has been held that for the
511
purpose of the said rule an execution proceeding is a continuation of a suit: see Virupakshappa v. Shidappa and Basappa(1), Arunachellam Chetty v. Ramanadhan Chetty(2), and Muthalakkammal Chetty v. Narappa Reddiar(3). If it was a continuation, the rule would also apply to an agreement or compromise with reference to the said execution proceeding. But, just like in the case of a suit, in the case of execu- tion proceedings also, the agreement or compromise shall be one affecting rights or liabilities ascertained or declared by the decree put in execution. As in the case of a suit, so also in the case of an execution of a decree, mere procedural steps not affecting the rights or liabilities so declared are not governed by the provision. The guardian may agree to an adjournment of a sale, to a waiver of a fresh proclamation, to a reduction of upset price etc. It could not have been the intention of the Legislature that every time such a step is taken, the procedure laid down in Order XXXIII, r. 7, of the Code should be complied with. The next limitation is that the agreement or compromise shall be entered into with a party to a suit or his legal representative. The rule does not provide for dealings of a guardian with persons not parties to a suit. The question directly arose in a case which went up to the Privy Council, viz., in Jitendra Nath Roy v. Samarandra Nath Mitter(4). There, a decree obtained in favour of a minor, represented by his guardian, was assigned by the guardian for consideration to another without obtained the leave of the court. Advertising to the question of validity of such an assignment, Lord Atkin observed
"They (the Judges of the High Court) took the view that, in the rule in the phrase, "agreement or compromise... with reference (1) (1901) I.L.R. 26 Bom. 110.(2) (1906) I.L.R. 29 Mad.
309.
(3) (1939) I.L.R. 56 Mad. 430.(4) (1949) L.R. 70 I.A. 68.
72.
512
to the suit" the words mean agreement with a party to the suit and do not cover a transfer of a decree to someone then unconnected with the suit, even assuming that such transfer could properly be described as an agreement. They expressed their agreement on this point with a decision of the Full Bench of the Mad- ras High Court in Katneni Venkatakrishnayya Garapati China Kanakayya(1), which is preci- sely in point. It appears to their Lordships that it cannot have been intended to require the leave of the court to an agreement, for example, made with a non-party.to finance a suit, whether with a stipulation to receive part of the proceeds or not. The Conjunction of the word "agreement" with the word "com- promise" appears to indicate the kind of agreement intended."
We agree with these observations. The result is that Order XXXII, r. 7, of the Code will apply to only to an agreement or compromise entered into by a guardian of a party to the suit, who is a minor with another party thereof during the pendency of the suit and the
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