WESTERN ELECTRIC COMPANY LIMITED Vs. KAILAS CHAND

JUDGEMENT

(1.) THIS is a motion for recording a compromise. The terms of the compromise, which are reduced to writing, are not disputed. They are found in two letters which are annexed to the affidavit filed in support of the motion. On behalf of the plaintiffs, who oppose this application, it is urged that their consent was obtained on a representation that the Northern India Development Corporation Ltd. , who were to pass a writing under the agreed terms promising to pay Rs, 6,500 to the plaintiffs by monthly instalments of Rs. 200 and Rs. 300, was in a sound financial condition. It is alleged that that representation was false to the knowledge of the agent of the defendants who came to effect the compromise. It is alleged that the corporation held a meeting in the middle of April, 1939, and passed a resolution to go into voluntary liquidation. The company later on has been ordered to be wound up subject to the supervision of the Court. Having regard to the short period within which the company went into liquidation it is contended that the representation was false to the knowledge of the agent and therefore the compromise is voidable at the instance of the plaintiffs. The alleged representation is denied. The dispute is whether on this application the plaintiffs should be allowed to go into that question at all.

(2.) THE notice of motion to record the compromise is taken out under Order XXIII, Rule 3, of the Civil Procedure Code, which (omitting the words which are inapplicable) states that where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, the Court shall order such agreement or compromise to be recorded and shall pass a decree in accordance therewith so far as it relates to the suit. THE words of that rule show that the Court has to be satisfied on two points : first, that there was an agreement between the parties, and, secondly, that it was lawful. THE document put forward in the present case is not disputed and the agreement is thus proved. THE other question is whether it is lawful. On behalf of the defendants it is urged that "lawful" means "according to law. " THE learned Advocate General for the defendants in the course of the argument drew my attention to Qadri Jahan Begam v. Fazal Ahmad (1928) I. L. R. 50 All. 748 and Husain Yar Bag v. Radha Kishem (1934) I. L. R. 57 All. 426. In those cases proceedings were adopted under Order XXIII, Rule 3, and the contention of the opponents was that the agreements were voidable by reason of facts extraneous to the terms of the agreements themselves. THE observations of the learned Judges in those cases show that an enquiry showing that the agreements were voidable is not within the purview of Order XXIII, Rule 3.In the former case it was observed as follows (pp. 751-52): . . the word 'lawful' in Order XXIII, Rule 3, does not merely mean binding or enforceablethethe word 'lawful'. . . refers to agreements which in their very terms or nature are not 'unlawful,' and may therefore include agreements which are voidable at the option of one of the parties thereto because they have been brought about by undue influence, coercion or fraud.

(3.) THE agreement which is contained in the letters of March 10 and 12, 1939, which are put in and marked No, 1 is recorded, and a decree is passed in accordance therewith. Plaintiffs to pay the costs of this motion and decree. .