Dokku Bhushayya v. Katragadda Ramakrishnayya

Satkor J. 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 sinoe the Code of 1882 was in foroe that the provi· sion under the consideration applies to prooeedings in execution though it only mentions agreement or compromise with reference to the suit. As long ago as 1901, Jenkins C.J. said in Virupakahappa v. Shidappa, (') "I will first deal with the question whether section 462 applies to a compromise of exe-cution proceedings. On the words of the section I think it does; a.pplica.tions in execution a.re proceed-ings in the suit, so that a compromise of such a pro-ceeding would be a. compromise with reference to ·the suit. This view has been followed ever sinoe. The High Court took the view that a compro-mise of a.n execution proceeding would be within O. 32, r. 7 only when it a.Jfected directly the rights and liabilities created by the decree. It observed that the compromise in the present case was not. affected by the rule 11.8 it concerned only the rights and liabi-lities under the auction sale and not those arising under the decroe.

I a.m unable to agree with this view. The High Court rested itself on the fa.ct that all the reported decieioDB dealt with oases in which the agreements ha.d directly affected the rights and lir,. bilitiee under the decree. Thie does not to my mind furnish sufficient justification for the High Court's view. No decision has been bronght to our notice in which it ha.a been held that O. 32, r. 7 does not apply to a. compromise of execution proceedings (I) (1901) I.R.L. 26 Dom. 109, llf.

S.O.R. SUPREME OOURT REPORTS 503

which does not directly affect the rights and liabili-JIU ties created by the decree~ It does not seem to me Dokku Bh11JA•y1• that on principle the High Court's view can be justi-y, Katr~g,i4• fied. R411m11iri1/tn8yyQ

It is true that O. 32, r. 7 does not apply to all Sarka,. J. agreements. In Bhodes v. Swithenbank (1) it was obilerved, "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 exe-cution prooeedings". 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 cif them, and this whether the compromise directly affects the rights or liabilities under the decree or not. I think the principle of the rule Will!

correctly stated by Heaton J. when dealing with s. 462 of the Code of 1882 he observed in Gurmallapa · v. MalT,appa ('),"That section, l: 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 pro-ceeding . ,\'hleh concerns the dispute involved in it

II) (1889) LR. 22. 1l4 Q.B.D. S77, S78.

\2) ~1920) LL.It. llanl-57f, '11i

. 604 SUPREME OOURT REPORTS [1963]

.,,.,, lHll would require the sanction of the Court. I should

~ ..,,.._,,_,. alao point out that sub-r. (5) of r. 3 of 0. 32 pro·

v • Yides that a person appointed guardian for the suit /r.UJfll/U for a minor shall unless his appointment is termi-11-.krUAoo»"

nated, continue as such throughout all the proceed-Sarita J, ings 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 proceed-ing, he should have a guardian a.esigued 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 t-0 affect the rightB and lia.bilities of the infant, the subject matter of the proceeding, by a eompromise which the Court has not approved as Gne for the benefit of the infant. If this is the prin-eiple, as I think it is, there would be no juetifica-tion for limiting the operation of the rule in itB application to execution proceedings, only t-0 com-promises which directly affect the rights and liabi-lities under the decree, The rule, in my view, would apply, among otheni, to compromises which bring a proceeding to an end a.nd there by affect the rightB or liabilities of the infant involved in it. I think this view receives support frGm the obser-vations ofVaradacharia.r J. in Katneni Venlcatakri· /J1mayya v. Ganapati China Kanakayya(') that, "Rule 7 deals with the conaluct of a 'next friend' as such who, as pointed out in Bhodes v. Swithenbank(') is an officer of the Court to conduct the suit; and the prin-ciple 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 obser-vation 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 (I) (1938) I.LR. M&d. 819, 828.

(ll (1889) LR. 22 Q.B.D. 577, 5111, use the word "directly"; they said the agreement or 195Z compromise in the present case did "not directly Dokka Bl.usM~J• deal with or regulate the extent and nature of the v. rights and liabilities under the decree, which otand Ketr.,.ida lt•md:rl.rhu,Ja intact and unaffected as before." This seems to me to indicate that the learned Judges were cons· Sarkar J. cious 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 a.f-f ects 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 delibera-tely ma.de 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 goTern-ed by 0. 32, r. 7 under the rule laid down in Virupakshappa's CMe(l).

It also seems to me clear that the comproinise 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 vali-dity 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 proceed· ing 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 price and thereby diminished the liability

(I) (11111) LL.R. 26 Bom. IOll. lit.

506 SUPREME OOURT REPORTS [1963]

196f under the decree to a greater 'extent. Suoh a com-

promise cannot be said to be one relating to the Doih •hwA•.·y• conduct of the proceeding. It seems t., me A.lso to be

Y.

K•Mja/"4 one affecting seriously the liability of the appellant R~• under th~ 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 oompromiee which from all points of view, should have boon made with the sanction of the Court.

Before concluding I think it right to say that the decreeholder and auction purch11.ser can derive no aPsistance from .fitendra Nutli Rao v. Samaran-tlra Nath Jfitter(I), In that oase the .Judicial Com-mittee held that the agreement contemplated by 0. 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 ma.de with the de-creeholder and the auction purchaser both of whom were parties to it, tho former having been a party to the suit itself out of which the execution proceed-ing arose.

I think this appeal should be allowed.

Subba Raa J. SUBllA RAO, J.-This appmil raises the question

of the construction of the provisions of Order XXXII, r. 7 of the Code of Civil Procedure.

Bhush~yya, the appellant, and respondents 7 and 8 herein are the sons of one Dokka Adeyya (since died). On the basis of a 1>ro 'Dissory note ex-ecuted 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 thr.rein. In that euit, tho appellant, who was then a minur, was a defen-dent and Wall represented by his maternal grand-father as hie guardian. In execution of the said decree, properties of Do kku Adeyya we1e brought. to sale and were purchased by the decree-holder's 1962 clerk; Bapiraju, subject to the mortgage in favour Do ku BAuslKly:µi I of the decree-holder. Before the sale was confirm-v. I ed, on March.29, 1932, the appellant, represented by Kstragtdda' Rama.b-ishnay)a hi9 maternal grandfather, filed E.A. No. 136 of 1932 to set aside the sale under Order XXI, r. 90 of the Subba Rao J. 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 agjusted and that the petition should be dismissed as having been withdrawn. No sanc-tion of the court was obtained by the guardian for withdrawing the petition. On the said day, the court passed an order dismissing the application.

SubsequJntly, the sale was confirmed. On October 9, 1944, the appellant, who had then attained majority, filed a suit, 0.8. No. 80of1944, 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 with· drew 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 alienoes, 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 Subordi-nate Judge held that the withdrawal of the Sa.id petition and thtJ 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 Cturt came to the conclusion that Order XXXII, r. 7 of the Code had not releva-nce to an application for setting aside the aale in the ciroomat61lces of t1ie case,· ~- the a~

508 SUPREME OOURT REPORTS [1963]

1962 The only question that arises in this appeal is DoAh BAusAa.uo •• whether the withdrawal of the said }M'tition by

the guardian was in contravention of Order XXXll, Kalr.ga4da r. 7 of the Code. Before construing the provisions RamoAri,hnaJJa

of the said Order, it would ba convenient to notice SuNHBooJ. 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·a<l-litem should give up the contentions regard-ing the invalidity of the auction sale and should withdraw the petition to set aside the sale and also deliver up poBSeBBion of the pro-pertie-s puro~sed, to the auction-purchaser and that the decroe-holdor and auction-pur-chaser should give up their claim for costs of the said petition. It was in pursuance of this agreement that the petition was withdrawn and dismiBSed (no costs being given)".

This is the correct petition, and we need not elabo-rate furthtJr on it. Order XXXII, r. 7, clauses (I) and (2) read aa 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 com· promise ent.ired 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 elaust>, viz., d. (I-A) introduced by an amendment made in l!llO and it reads:

"Where an application is made to tbl'! Court for leave to enter into an agreement or

2 S.C,R. SUPREME OOURT REPORTS 509

compromise or for withdrawal of a suit in 1962 pursuance of a compromise or for taking any other action on behalf of a minor or other Do/;ku Blnu~ay,. v. person under disability and such minor or Jfr,lratodda. other person under disability is represented RamakrialmaJJO by counsel o~eader, tho counsel or pleader Subba Rao .I. shall file in Court with the application a certi-ficate to the effect that the agreement or compromise or action proposed is in his opi-nion for the benefit of the minor or other per-son 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:

D to this schedule."

Under this Order, no guardian shall enter into an agreement or compromise on beha If 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 ex:e-cu ti on proceedings are proceedings with reference to the suit and therefore any compromise or agree-ment 11ntered 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, 0. 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-ing without the leave of the Court, the aaid CQm•

510 SUPREME OOURT REPORTS [1963)

promise a.a well ae the order made pursuant thereto was void. I Dokku Bh'41h.1.10

v. On the other hand, Mr. Bhimasa.nkaram, Kotra1<Jdda learned counsel for the respondents, while support-R<Ju.ahisltnrv.Ja

ing the teat laid down by the High Court, namely, Subba Rao J, that an agreement to fall withiI1 the mischief of the

said 01der 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 bet-ween an agreement relating to rights conferred by the decreo and th~t only relating to liabilities im-posed thereunder.

Order :X:XXII, r. 7, iM one of the provisions deBigned to aafegu&rd the interests of a minor dur-ing the pendency of a suit against hostile, negliitent or collusive acts of a guardian. rhe scope of the provisions is implicit in the phraseology uaod there-in. The crucial words are "any agreement or com-promise ... with reference to the suit". The words "with refer<>nce", if taken out of tho context, are of the widest import. They may take in every pro-cedural step in thti condunt of a suit, buch as adjourn-ment, admission of documents, interlocutoriea; ins-poction 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 dis-posing of suits in which a minor is ranged as party on one side or the other. So consistent with the pur-pose 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 pende11oy of the 1uit. When don • euit come to N e11d f lt iiaa been held Uiat for "1o purpose of the said rule an execution proceeding is a 1902 continuation of a suit: see Virupakshappa v. Shidappa Dokku JhwllaJJ• and Basappa('), Arnnachellam Ghetty v. Rarrumadhan v. Ghetty('), and Muthalakkamrnal Ghetty v. Narappa K alrspdda RamMrls6""yJa Reddiar('). If it was a continuation, the rule would also apply to an agreement or compromise with Sub•i ·Rao J, 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 ascertain· ed or declared by the decree put in execution. As in the case of a suit, so also in the case of an exe-cution of a decree, mere procedural steps not affect-ing 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 haTe been the intention of the Legislature that every time such a step is taken, the procedure la.id 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 a.rose in a case which went up to the Privy Connail, viz., in Jitendra Nath Roy v. Samarandra Nath Mitter(').

There, a decree obtained in favour of a minor, represented by his guardian, was assigned by the guardian for consideration to another without ob· tained 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 ll) (1901) 1.L.R. 26 Bom. llO. (2J (1906) I.L.R. 29 Mad. 309, ----:;.. '

512 SUPRBillE COlJ.R'f .REPOR'l'S (1963]

1"~1 .. . to . the suit" the words mean agreement with Dollu BhiuhaJY• a party to the suit and do not cover a transfer of a decree· to someone then unconnected with Katragadda :'.:fc Ramakrishnay}O the suit, even assuming that such transfer. could properly be described as an agreement. Subi<> Rao J, They expressed their agreement on this point. with a decision of the Full Bench of the Mad-i:as . High Court in· Katneni Venkatakrishnayya · Garapati China Kanakayya(I), which is preci-sely iri point, It appears to . their Lordships that· it cannot have been intended to require · ! the leave of the court to an agreement, for I example, made with a non-party to finance a j 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." -i_ We agree with·. these observations. The re:mlt is that Ord.er XXXII, r .. 7, ·of the Code will apply to _ ~:1 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 execution proceedings.

The next question is whether ·the-application for setting aside a sale ia a proceeding in execution of a decree. Order XXI · pf the Code prescribes, among others, the different modes of execution, one · of them being execution against the property of a judgment-debtor. The Order also prescribes a procedure for sale of the said property and for sett· J ing aside a sale obtained by fraud or material l irregularity. Under Order XXI, r •. 92,- where no application is made under r. 89, r. 90, or r. 91 to set aside a sale or where the application is made and· disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become abso- · . (I} l.L.R. 1938 Mad. 81~.

lute; under sub-r. (3) of r. 92 of the said Order, "No 196B suit to set aside an order made under this rule shall be brought by any person against whom such order D1k~u BhtuhqyJa •• made." It is, therefore, clear that Order XXI Ealrazadda provides a self-contaiued machinery for executing a Ram1kr1shnavyo decree and for deciding disputes that may arise in Su!Jk Rao J. connection with the execution. The execution is not closed till the decree is discharged or barred by limitation. In this view, we must hold that an application filed by a judgment-debtor to set aside a sale is an application in execution of a decree.

Even so, as we have already indicated, to attract Order XXXII, r. 7, of the Code t.he agree-ment or compromise entered into between the guardian and the auction-purchaser shall be an agreement or a compromise affecting the rights or , liabilities declared by the decree. Can it be said that in the present case the agreement affected any such right or liability ? The suit was on the basis of a promissory note executed by the father and the brother of the appellant. The appellant was also a party to the suit. The decree was for recovery of the amount covered by the promissory note with interest. It did not in any way affect the title of the appellant to the entire or to any part of the property of the family sold in execution of the decree. The appellant, by his guardian, filed an application to set aside the sale on the· ground of fraud and material irregularity in the conduct of the sale. 'fhe guardian agreed to withdraw the said application on certain conditions. The agree-ment also did not in any way affect the rights or liabilities declared under the decree. Notwithstand-ing the agreement, the decree was left intact. It is said that if the sale was set aside, the decree would have to be executed afresh, but as it was not &side on the basis of the said agreement, the sale prioo in disoharge of the decree; therefore, the argu-ment proceeds, the agreement affected the discharge

of the decree. The father of appellant could have sold the family property out of court and could have Doklru 8/Mlsliqyo • out of the salo proceeds, discharged the decree. In

KatrGgutida that event it could not be said that the sale affect-Baw.nltruhr.5_7)"<l ed the rights or liabilities decree. If so, the sale Srtbbo Rao J, of property through court cannot equally affect any

euoh rights or liabilities declared by the decree. We, therefore, hold that the agreement or· compromise entered into by the guardian in respect of such a sale did not affect the rights ascertained and declared by the decree, and, therefore, the leave of court under Order XXXII, r. 7, of the Code was not necessary.

Before l~aving this pa.rt of the case, we should make it clear that .it is not our intention to Jay down that under no circumstances &n agre~ment or compromise enter~d into by a guardian to withdraw an application filed for setting aside a sale would be governed by Order XXXII, r. 7, of the Code. There may be arrangements or compromises in respect of such a petition wbercunder the right.a declared by decrees are affected. We also as~umed for the purpose of this case that tho auction-purchaser was a party to the suit, as there was some controversy on the question whether he was a benamidar for the decree-holder.

Lastly it was contendPd that by reason of s. 141 of xxxn, the Code, the procedure provided undn Order r. 7, should be extended to an agreement or a compromise entered into by a guardian in respect of an application to set aside a sale under Order XXI, r. 90, of tho Code. The argument is that an application under Order XXI, r. 90, is an independent proceeding, and 116 the agreement for withdrawing the said proceeding affect.a the right created by the ea.le, it falls within the meaning of the said rule. Section 141 of the Code reads :

"The procedure provided in this Code in regard to suite shall be followed, as far ae it

. can be made applicable, in all proceedings in any Court of civil jurisdiction. Doilru Bhwh9ya 'Ihe corresponding s. 646 of the Code of 1882 read v. as follows: Katragatitla RtDnOkrishnoyya «The procedure herein prescribed shall Subbo R,o J, be followed, as far as it can be made applic-able, in all proceedings in any Court of civil jurisdiction other than suits and appeals".

There was a conflict on the question whether the said section applied to proceedings in execution.

To steer clear of the conflict the following Explana-tion was added to the section by the Civil Procedure Code Amendment Act 6 of 1892 :

"Explanation:-This section does not apply to applications for the execution of decrees which are proceedings in suits": But the section was construed by the Privy Council even without the said of the Explanation in Thakur Prasad v. Sheikh Fakir-Ullah ('), wherein it observed :

"It is not suggested that s. 373 of the Civil Procedure Oode (Order XXIII, r. 1 of the present Code) would of its own force apply to execution proceedings. The suggestion is that it is applied by force of s. 647 (s. 141 of the present Code). But the whole of Chapter XIX of the Code, consisting of 121 sections, is I devoted to the procedure in executions, and

it would be surprising if the framers of the Code had intended to apply another procedure,· mostly unsuitable, by saying in general terms that procedure for suits should be followed as far as applicable. Their Lordships think that the proceedings spoken of in a. 64 7 include ·~--~, original matters in the nature of suits such as

(I) [1894] L.R. 22, J. A. 44, 49.

516 SUPRE~IE COUI~T REPORTS (196SJ

lllU proceedings in probates, guardianshijlll, and so Dokk11 Bhushuy;1a forth, and do not include executions."

v.

Kal1aguJda This view ha.s ever since been followed. We have Ra-.lril"""'-7• already held that the application by the judgment-Biib&o Raa J. debtor to set a.side the sale is a proceeding in ex11cu-tion and, therefore, s. 141 of the Code will not apply for two reasons, namely, (I) as execution proceedings were continuation of suit within the meaning of Order XXXI!, r. 7 of the Code, and as the Code provided specifically for suits, s. 141 could not be invoked; and ;2) as wo have held, an application by a judgment-debtor to set aside a sale is a pro-ceeding in execution and therefore s ar, which applies only to original proceedings, does not apply to such procooding1.

In the result, the appeal fails and is dismiBB<ld with costR of the contesting respondent.

BY CoUR'r. In accordance with the opinion of the majority the appeal is dismiBBed with costs of the contesting respondents.