P L D 1956 Lahore 12 (PLP)

Representation

• ADVOCATE‑GENERAL PUNJAB‑Petitioner
• The Advocate‑General filed a suit under section 92 C. P. C. against the Trustees of a trust called the Dyal Singh College Trust alleging misappropriation and misuse of trust funds and asking for the removal of trustees. Subsequently the Government appeared to have come to terms with the defen dants and the plaintiff put in an application that the suit be allowed to be compromised. The case at that stage was before the District judge but was transferred by the High Court to itself at the instance of a former Principal of the College.
• Held, a compromise in a suit under section 92 of the Code of Civil Procedure by the Advocate‑General cannot be deemed to be lawful if it is against the interests of the Trust.
• A. R. Changez with Mian Muhammad Shafi for Petitioner.
• Sh. Abdul Haq with Inayat Ullah Khan and Mahbub Ilahi, for Respondents Nos. 4, 5, 7 and 8 and Munsr Hussain.
• C. M SHARIF, J.‑ Mr. A. R. Changez, Advocate‑General, Punjab, instituted a suit under section 92 of the Code of Civil Procedure against Sheikh Abdul Haque and others. Trustees of the Dyal Singh College Trust, for their removal, and in the plaint, dated 14th of June 1955, alleged, inter alia, that there had been misappropriation and misuse of the funds of the Trust‑by the Trustees. Subsequently, an application was put in by the plaintiff that the suit be allowed to be compromised. At that time the suit was pending in the Court of the District Judge, Lahore, but was transferred to this Court on the application of Sayyed Abid Ali Abid, the former Principal of Dyal Singh College. The question for consideration is whether or not the compromise stated to have been entered into by the parties falls witin order XXIII, rule 3 of the Code of Civil Procedure, because if it does a decree will have to be passed in its terms,
• In order to determine whether or not there has been a lawful compromise between the parties, the statements of Mr. A. R. Changez and Sheikh Abdul Haque, one of the Trustees, were recorded on the 12th of September 1955. Before I deal with the legal aspect of the case, I would like to reproduce the statement of Mr. A. R. Chanez, Advocate‑General, recorded in this Court as it gives an idea of the allegations against
• From the above statement, it is clear that the Advocate General was satisfied that the funds of the Trust had been misappropriated, misused and wasted as alleged by him in sub‑para. (v) of paragraph 14 of the plaint. According to his enquiries, no less than Rs. 20,000 had been misappropriated. This amount was alleged to have `been spent by Sheikh Abdul Haq on the house, 1‑Langlay Road, Lahore, which was being occupied by him as a tenant of the Trust. The Advocate General further averred that the Trust property was not being looked after properly and no proper accounts of the income and expenditure of the Trust were being maintained. He added that no account of the Trust was opened in any bank and the money belonging to the Trust was kept in the name of Sheikh Abdul Haq. When asked why he entered into a compromise with the defendants in face of such serious allegations, the Advocate‑General replied that Sheikh Abdul Haq had made a representation to the Government that the allegations in the plaint were untrue at which the Government thought that the future of the Trust could be secured if ex‑Justice Din Muhammad, Mian Afzal Hussain, Vice‑Chancellor, Dr. Jahangir Khan, Deputy Director of Public Instruction, and Mr. Ramzan Ali were added as Trustees. From this statement, it is quite clear that it was under the orders of the ‑ Government that the Advocate‑General was compromising the suit though he was satisfied that the allegations made by him against the Trustees were not without basis. It is surprising that the Punjab Government asked the Advocate‑General to compromise the suit without allowing the Court to go into the matter and give a decision on the allegations made against the Trustees. It is also difficult to understand why Sheikh Abdul Haque was again included in the list of the proposed Trustees mentioned in the deed of compromise. It is hardly open to question that it is in the interest both of the Trust and of the Trustees that a proper enquiry should be held into the allegations and a decision arrived at by the Court on the allegations made in the plaint by the Advocate‑General, who cannot be even sus pected of having an ulterior motive.
• Compromises in suits under section 92 of the Code of Civil Procedure are different from compromise between private persons in suits relating to private rights. There is no doubt that suits under section 92 Civil P. C. are covered by the provisions of Order XXIII, rule 3, but before compromise is acted upon by the Court, it must determine whether the compromise is lawful or not. The word "lawful" occurring in Order XXIII, rule 3, should not be interpreted too narrowly, but it is not to be overlooked that the legislature made it incumbent on the Courts to pass a decree in terms of a compromise only if the compromise is "lawful . The agreement arrived at as a result of the compromise between the parties in the present case will result in stiffing an inquiry into the allegations of misappropriation of the Trust funds etc. I have no doubt that a compromise in a suit under section 92 of the Code of Civil Procedure by the Advocate General cannot be deemed to be lawful if it is against the A interests of the Trust. In the case of private individuals the Court has only to consider whether there has been in fact a compromise, and, if so, is the adjustment a lawful one. Even if it sees reason to think that one of the parties was foolish in agreeing to certain terms, it has no option but to recog nise the compromise voluntarily made if it is lawful. There is nothing to prevent cases regarding public and charitable trusts from being compromised like the other cases, but it is perfectly clear that in such cases the Court has plenary power to subject the terms to scrutiny and reject the compromise for valid reasons. In the case of a public trust, no compromise can be said to be lawful which sacrifices its interests. Cases of collusion between the relaters filing the suit and the defaulting trustees are not infrequent. I am unable to accept the contention of the learned counsel for the Trustees that the Court is helpless in the matter and must give effect to a compromise entered into between the Trustees and the Advocate‑General or members of the public who may have filed a suit with the permission of the Advocate‑General. I also cannot accept the argument that compromises in such suits should be placed on the same level as those between private parties. In the case of a public trust, any compromises entered into without due regard to the trust is, under Order XXIII, rule 3, an unlawful agreement. This seems to rest on principle and reason. The Court itself has certain duties in connection with a case in which a judgment in rem has to be pronounced, or in a case, which involves the right of the public or the right to a religious and charitable office, or the right of a minor or other incapacitated person. If a compromise is found to affect prejudicially the interests of the trust, it must, in my opinion, be disallowed.
• In Indrishaidar v. Hemayat Husain (I L R 26 Pat. 83) the learned Judges held that although there was nothing in Order XXIII, rule 3, of the Code, which suggests that any particular suit is outside its scope, the question what is a lawful agreement or compromise will vary with the varying character of different suits. In Qadri Jahan Begum v. Fazal Ahmad (I L R 50 All. 784) a suit by a wife against her husband for recovery of her dower‑debt was dismissed, and the plaintiff appealed to the High Court. Pending the appeal, the parties entered into an agreement in pursuance of which a joint application was made to the trial Court stating that the parties had agreed that the suit should be dismissed and requested that the application for compro mise should, after due verification, be forwarded to the High Court, so that the appeal might be dismissed in terms of it. The application, after verification by the plaintiff through the munsarim of the Court, was sent to the High Court, but before any decree could be passed the plaintiff appellant died, and her heirs were brought upon, the record. The meaning of the word "lawful" in Order XXIII, rule 3, was considered by the learned judges who held that the word "lawful" does not merely mean binding or enforceable and sought to define the word "lawful" in the terms of sections 19, A and 23 of the Indian Contract Act, adding that indepen dently of Order XXIII, rule 3, the Court has inherent jurisdic tion under section 151 of the Code to refuse to record a compromise which has been brought about by undue influence or which was opposed to public policy. The question regarding a compromise between the Advocate‑General in a suit under section 92 of the Code of Civil Procedure and the trustees of a public trust was not considered in the case because this was also a case between private parties. The word "lawful" was again considered in Hussain Yar Beg v. Radha Kishan (I L R 57 All. 426) and the same meaning was adopted as that in Qadri Jahan Begum v. Fazal Ahmad. This was also a case between private parties and the question involved was whether the respondent's averment of fraud should be enquired into before the compromise was given effect to under Order XXIII, rule 3, of the Code of Civil Procedure, and the learned judges held that Order XXIII, rule 3, does not provide for an enquiry into disputed facts collateral to the terms of the compromise. They further held that an enquiry into an allegation by one party that an agreement, admittedly executed by him, was brought about by fraud of the other party is not within the purview of Order XXIII, rule 3, and the party alleging fraud cannot be allowed to avoid the compromise, because it was open to the party to institute a regular suit for setting aside the compromise and the decree passed thereon. In Motiram Balkrishna Rajmane v. Yesu and others (I L R 22 Bom. 238) the plaintiff had sued to recover possession of certain land which the defendant claimed to be his, alleging that the plaintiff had purchased the property benami for him (the defendant). This was again a case between two private parties and has no bearing on the point in issue. In Sourendra Nath Mitra and others v Tarubala Dasi (57 1 A 133) the Privy Council was dealing with a compromise which was made in a partition suit. The question at issue was whether an agreement of compromise between the plaintiffs and counsel for the defendant bound the defen dant. The central point involved in the case was whether compromise of suit by an advocate in India was binding on his client and it was held that an advocate briefed in a suit had the implied authority of his client to settle the suit by a compromise. They further held that implied authority is not an appendage of office arising from the status of the advocate but was implied in the interest of the client, to give the fullest beneficial effect to his employment of the advocate. Srimati Sabitri Thakurain v. Mrs. F. A. Savi (1 L R 12 Pat. 359) was a case where the plaintiff had filed an appeal against the order of the Subordinate judge passed under Order XXIII, rule 3, of the Code of Civil Procedure, directing that a compromise in a pending suit said to have been arrived at between the plaintiff on the one hand and defendant No. 1 (Mr. Savi, who had died before the appeal was decided and defendant No. 2 (Suraj Mohan Thakur) on the other ‑be recorded. The meaning of the word "lawful" in reference to a suit under section 92 was never considered in this case at all.
• For the above reasons, I am of the opinion that the Court should refuse to record the compromise arrived at between the Advocate‑General and the Trustees of the Dyal Singh College Trust, because it would be against the interest of the Trust if a compromise is allowed without an investigation being held by the trial Court into the allegation made by the Advocate‑General. I will, therefore, reject the application of a compromise and send the case back to the District judge for decision on merits.

Headnotes / Summary

Judgment & Decree