Compromise petition filed by the parties for settling dispute to be considered liberally.

D.MURUGESAN, J.

This Original Side Appeal is directed against the order of the learned single Judge dated 03.12.1997 made in Application No.2668 of 1997 in C.S.No.269 of 1996.

2. The appellants are the plaintiffs and the respondents are the defendants in the suit and the parties are referred to in the order as arrayed in the appeal. Few facts, which are relevant for the disposal of the appeal may be summarized as follows:-

The appellants filed the suit against the respondents for a judgment and decree, directing the respondents jointly and severally to pay the appellants a sum of Rs.71,80,888/- together with interest thereof at the rate of 28% p.a. on Rs.56,00,000/- from the date of the plaint till the date of payment and in default thereof to pass a charge decree and order for sale of the 8.84 lakh bonus shares of the third respondent company.

3. While the suit was pending, Application No.909 of 1997 was filed by the appellants to record the Memorandum of Compromise dated 30.04.1996 entered into between the first appellant and first and second respondents and for passing a compromise decree in the suit. In the said

memorandum of compromise, first and second respondents agreed to repay a sum of Rs.69,58,048/- to the first appellant in instalments towards full and final settlement of the claim. The learned Judge passed an order dated 10.03.1997, recording the Memorandum of compromise and consequently passed the compromise decree. After the said order was passed, the respondents, filed Application No.2668 of 1997 under Order XIV Rule VIII of the Original Side Rules and Section 151 of Civil Procedure Code to set aside the order made in Application No.909 of 1997, recording the memorandum of compromise and permit the respondents to file their written statements in the suit. The respondents also filed an Application No.2669 of 1997 for a direction to stay the execution proceedings in the suit. Both the applications were filed alleging that the appellants brought the said memorandum of compromise on 30.04.1996 and made the first and second respondents to sign on the understanding that only if first and second respondents agree for the terms and conditions of the compromise memo, they could file the same into the Court. The first and second respondents though signed the memorandum of compromise, did not agree for the proposals. The original copy of the memorandum of compromise signed by the parties was with the first respondent only. It was further alleged in the affidavit, that respondents did not agree for the proposal as they were not liable to pay the suit claim and the respondents also did not have the intention to act on the memorandum of compromise. Hence, the order, recording the memorandum of compromise was bad in law.

4. Both the applications were resisted by the appellants herein on the ground that the memorandum of compromise was signed with clear understanding that the matter would be reported to the Court for recording the same for a decree in terms of memorandum of compromise.

5. By a common order dated 03.12.1997, learned Judge allowed the Application No.2268 of 1997, by setting aside the order dated 10.03.1997 made in Application No.909 of 1997, recording the memorandum of compromise. In view of the said order, learned Judge dismissed the Application No.2669 of 1997 for stay of execution of the decree. Aggrieved by the said order, the appellants, who are the plaintiffs in the suit and the respondents in those applications have filed the present appeal.

6. Mr.A.L.Somayaji, learned Senior Counsel appearing for the appellants would contend that respondents 1 and 2 have signed the said memorandum of compromise only after knowing its contents fully well. Once the memorandum of compromise was signed, it must be presumed that there was clear understanding between the parties to file the memorandum of compromise before the Court for recording the same and for consequential compromise decree. Therefore, it does not