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1935 Supreme(SC) 23
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKIN, SIR JOHN WALLIS, AND SIR SHADI LAL.
SHEONANDAN PRASAD SINGH - Appellant
Versus
HAKIM ABDUL FATEH MOHAMMAD REZA (DEFENDANTS) - Respondents
On Appeal from the High Court at Patna.
Decided On : May 21. 1935.
Solicitors for appellants : Nehra & Co.
Implied authority of counsel to compromise a suit is limited to matters directly involved in the action and does not extend to collateral matters. Where counsel acts as a messenger for direct client communication, express authority is required for a binding compromise.
Headnote:(A) Civil Procedure - Order xxiii - Compromise of suit - Implied authority of advocates - Counsel have implied authority to compromise an action, but such authority is limited to issues in the action and matters involved in the suit and does not extend to collateral matters. If authority is withdrawn or restricted by the client, the court will not enforce a compromise made contrary to such restriction, even if the other party is unaware of the limitation. (Paras 10-11)
(B) Agency - Express vs. Implied Authority - Where communication between principals is direct or through representatives and counsel acts merely as a messenger to convey offers and acceptances, the parties are relying on express authority given ad hoc rather than the implied authority of counsel. In such instances, a compromise fails if the express authority of the representative is not established. (Para 13)
(C) Collateral Matters - An agreement to part with rights in property over which a mortgage is claimed, in a suit seeking to invalidate said mortgage, is collateral to the suit. Counsel has no implied authority to agree to such a surrender of property rights without express consent. (Paras 14-16)
(D) Procedural Compliance - Under Order xxiii, a compromise must be recorded and a decree made in accordance with its provisions. A decree that does not recite the fact of a compromise and its terms may be found non-compliant with statutory requirements. (Para 9)
Facts of the case:
Plaintiffs sought a declaration that a mortgage executed by a vendor in favor of a third party was fraudulent and invalid, thereby protecting their title to the purchased property. During an appeal, a compromise was reached where the plaintiffs' representative agreed to relinquish claims to the property in exchange for a monetary payment. The plaintiffs subsequently applied for a review to set aside the decree, contending that the representative lacked authority and the advocates had no implied authority to bind the plaintiffs to such terms.
Findings of Court:
The court found that the advocates acted as messengers between the clients and did not exercise implied authority. Since the actual authority of the representative to agree to the specific terms was not established, the compromise was invalid. Additionally, the agreement to surrender property rights was deemed collateral to the suit and beyond the scope of any implied authority of counsel.
Issues: Whether a compromise is binding based on the implied authority of advocates when the representative of the party lacked actual authority, and whether the subject matter of the compromise was collateral to the suit.
Ratio Decidendi: The implied authority of counsel is restricted to the management and conduct of the trial and does not extend to collateral matters such as the surrender of property rights. When counsel functions as a messenger for direct client negotiations, express authority is required. A compromise involving collateral matters is void if entered into without express authority.
Result: Order made in review reversed and the decree set aside.
Legal Category Hierarchy
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practice and procedure
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civil procedure
- compromise of suits
- authority of advocates
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civil procedure
Judgement
Appeal (No. 86 of 1933) from decrees of the High Court (March 8 and November 28, 1932).
The facts appear from the judgment of the Judicial Committee.
1935. May 2. De Gruyther K.C. and Krishna Menon for the appellants. The matter compromised was collateral to the suit. Advocates of High Courts have the same authority to compromise a suit as counsel in England Sourendra Nath Mitra v. Tarubala Dasi . (( 1930) L. R. 57 I. A. 133.) The authority is limited to issues in the action and matters involved in the suit and does not extend to collateral matters Swinfen v. Lord Chelmsford . (( 1860) 5 H. & N. 890 ; 29 L. J. Ex. 382.)
[Reference was also made to Shepherd v. Robinson ([ 1919] 1 K. B. 474.), Neale v. Gordon Lennox ([ 1902] A. C. 465.), Thomas v. Hewes ((1834) 2 Cr. & M. 519 ; 149 E.
R. 866.), Prestwich v. Poley (( 1865) 18 C. B. (N. S.) 806; 144 E. R. 662.), and Johurmull Bhutra v. Kedarnath Bhutra . (( 1927) I. L. R. 55 Cal. 113, 121.)] The respondents did not appear.
8 Law Rep. 62 Ind. App. 196 ( 1934- 1935) Sheonandan Prasad Singh V. Hakim Abdul Fateh Mohammad Reza 79
May 21. The judgment of their Lordships was delivered by
LORD ATKIN. This is an appeal from the High Court of Patna and raises a question as to the validity of an alleged compromise on appeal of a suit in which the present appellants were plaintiffs and the respondents, who were not represented before the Board, were defendants. It is unnecessary to go into the details of the case. The relevant facts appear to be that before the transaction in question the appellants were owners of an 8 annas share in the mauza Alapur and the second defendant Imdad Ali owned a 2 annas share in the same mauza. By registered deeds dated July 12 and October 27, 1921, the second defendant conveyed a 2 annas share in the mauza to the plaintiffs for a total consideration of Rs. 10,896. The plaintiffs subsequently discovered that on June 25, 1921, the second defendant had executed a mortgage in favour of defendant No. 1 of the whole of his interest for a loan of Rs. 2500. There was some dispute as to the registration of this mortgage but it was finally registered on July 29, 1922. On October 2, 1926, the plaintiffs commenced the present suit against the two defendants, alleging that the mortgage was collusive and fraudulent and its registration invalid and asking for a declaration that their interests in the property were not affected by the mortgage. The first defendant traversed the allegations against the mortgage and set up that the sales to the plaintiffs were collusive and fraudulent ; the second defendant alleged that the mortgage was obtained by fraud of the first defendant and also alleged that the sales to the plaintiffs were collusive and fraudulent.
The trial judge, the Subordinate Judge at Monghyr, decided both issues in favour of the plaintiffs, i.e., that the sale deeds were good and the mortgage was bad. Both defendants appealed to the High Court at Patna. Though the notice of appeal challenges the findings of the judge on both points it would appear that there was no substantial attack in the High Court on the plaintiffs’ title. As far as the first defendant was concerned it was obvious that his mortgage if good was prior in date to the sale to the plaintiffs ; as to the second defendant the judges of the High Court had no difficulty in affirming the decision of the trial judge as to the plaintiffs title, saying that counsel had adduced no reason for differing from it.
The question in the present appeal arises as between the plaintiffs and the first defendant the mortgagee. It appears that at the trial the mortgagee had offered to buy the plaintiffs interest in the mortgaged property for Rs. 20,000, but this had been refused by the plaintiffs. On the appeal, the plaintiffs had sent their karpardaz as their representative to attend the appeal. Their counsel were Mr. Mullick and Mr. Roy. The mortgagee was himself present at the hearing; his leading counse
