1972 Supreme(Mad) 201

Madras High Court
RAMAMURTI,MAHARAJAN
P.R.Nallathambi Goundan - Appellant
Versus
Vijaya Raghavan - Respondent
Decided On : 03/28/1972

Headnote:

COMPROMISE - Compromise decree - Validity - Compromise entered into by managing member of joint family - Binding nature - Conditions - Bona fides - Benefit to family - Prudence - Compromise not binding on junior members if vitiated by fraud and collusion or if not prudent for manager to have put an end to litigation - Compromise must be for benefit of family as a whole - Managing member cannot give up or relinquish substantial rights of members of family - Compromise must be prudent, and merits of rival claims of both parties should be such as to warrant a settlement to avoid risk of family or third party being prejudicially affected in event of litigation running its full course.

Fact of the Case:

Plaintiffs, minors represented by their mother, filed a suit for partition and separate possession of their 3/8th share in the suit properties with mesne profits and costs. The suit arose out of two suits instituted by plaintiffs' grandfather for specific performance of two agreements of sale in respect of the suit properties. The trial court dismissed both the suits. Plaintiffs' father preferred appeals to the High Court, which allowed the appeals and directed the second defendant to transfer, convey and assign the one half share of all the suit properties in favour of the plaintiffs' father on receipt of the sum of Rs. 1930 and Rs. 536-4-0 being half the consideration paid to Court for the purchase of the suit properties and to deliver possession of the said half share of the properties to the plaintiffs' father after partition and also to execute the necessary documents to effectuate the said transfer. The second defendant preferred appeals to the Supreme Court, which were dismissed. Meanwhile, plaintiffs' father applied for the grant of final decree after division of the suit properties into two equal moieties and allotment of one such moiety to him. A Commissioner was appointed by the Sub-Court, Salem, in these final decree applications. Before the final decree could be granted, the proceedings were stayed pending disposal of the appeals filed in the Supreme Court. After the dismissal of the appeals by the Supreme Court, plaintiffs' father received a sum of Rs. 5,000/- in cash and 10 acres of land, and relinquished his claim to the rest of the properties and to mesne profits and costs. The plaintiffs filed a suit for a declaration that the final decrees passed in the aforesaid suits and orders recording full satisfaction of the final decrees were fraudulent and collusive and void and not binding on the plaintiffs; for a decree setting aside the same; and for partition and separate possession of the plaintiffs' three-fourths share out of the half share in the family properties and for payment of interim mesne profits and future mesne profits.

Finding of the Court:

The compromise is invalid and would not be binding upon the plaintiffs because (a) defendants 1 and 2 colluded to defraud the sons of the first defendant or (b) the first defendant himself was not a free and voluntary party agent and his illiteracy and helplessness had been fully exploited by the second defendant and the second defendant was also guilty of fraud and misrepresentation or (c) the compromise, in any event, is not for the benefit of the family, but is prejudicial to the interests of the plaintiffs inasmuch as, under the compromise, the family had been deprived of their 4/5ths share in the properties, without being conferred any corresponding benefit.

Issues: None

Ratio Decidendi: 1. The mere right to sue for specific performance of an agreement of sale is not property, much less joint family property, in which the plaintiffs could have acquired any right by birth. 2. When once such property has descended from father to son, it becomes impressed with the character of ancestral property in which the son's sons are entitled under the Hindu Law to claim a share by birth. 3. If a decree is obtained against the managing member of the joint family, it would be binding upon all the junior members under Section 11, Explanation VI, Civil P. C. 4. A compromise decree does not operate as res judicata within the meaning of Section 11 C. P. Code, it is merely the record of a contract between the parties to a suit, to which is superadded the seal of the court and that the matter in contest may operate as res judicata only if there is an adjudication by the court on the merits, and that the terms of Section 11, C. P. Code leave no scope for a contrary view. 5. The managing member has not the same freedom in entering into a compromise as in a case in which he represents none but himself and deals with his own separate properties. 6. When he acts as the managing member of a joint family, he must enter into the compromise with bona fides and it must be for the benefit and advantage of the family as a whole. Both the conditions must be concurrently satisfied, i. e., the managing member must act with bona fides and, at the same time, the compromise must secure some demonstrable benefit and advantage to the family; under the compromise the managing member cannot give up or relinquish substantial rights of the members of the family. 7. The compromise must be prudent, and the merits of the rival claims of both the parties, the family on the one side, and the third party, on the other should be such as to warrant a settlement to avoid the risk of the family or the third party being prejudicially affected in the event of the litigation running its full course.

Final Decision: Appeal dismissed.