People Charity Fund and Others vs K. Raghava Reddy and Associates

K.L. Manjunath, J.—This is a defendant''s appeal challenging the judgment and decree dated 21-2-2007 in O.S. No. 2495 of 1987 passed by the XVIII Additional City Civil Judge, Bangalore.

The aforesaid suit was instituted by the respondent herein to enforce the agreement of sale dated 13-6-1984. The suit filed by the plaintiff came to be decreed. Challenging the judgment and decree, the present appeal is filed.

For the sake of convenience, the parties would be referred to as per their status before the Trial Court.

According to the plaint averments, the plaintiff is a registered partnership firm and is represented by its partner, Sri K. Raghava Reddy. The 1st defendant is a charitable trust. The defendants 2 to 4 are the trustees. The suit scheduled property was owned by one B. Ramalingam, who was the creator and author of the 1st defendant-trust, which was created for the benefit of general public. The suit property consists of a residential house and a vacant site bearing Municipal Nos. 27, 27-B, 27-C, 27-D and 27/1, situated at Dickenson Road, Civil Station, Bangalore, bounded on the east by, cross road, west by, private property, north by, Shivagami Ammal''s property and South by, Dickenson Main Road. According to the plaintiff, the defendants under an agreement of sale dated 13-6-1984 agreed to sell the same in favour of the plaintiff for a sale consideration of Rs. 10,00,000/- and the plaintiff paid an advance sale consideration a sum of Rs. 2,00,000/- on the date of agreement. The balance sale consideration was to be paid at the time of registration of the sale deed. The property was in occupation of two tenants by name C.R. Sukumar and Sannathkumar. The defendants agreed to obtain permission from the Urban Land Ceiling Authority and from the Income Tax Authority u/s 230-A of the Income Tax Act, 1961. Contending that the defendants failed to execute the sale deed in terms of the agreement of sale, even though the plaintiff was ready and willing to perform his part of contract, the suit was instituted to enforce the agreement of sale dated 13-6-1984.

The defendants contested the suit. They admit the execution of the agreement of sale, but however, contended that they had not agreed to deliver title deeds in respect of the properties in question. They also denied that they had agreed to sell all the properties mentioned in the agreement of sale. It was contended that the plaintiff was not a registered partnership firm and the suit filed by the plaintiff was not maintainable. Based on the above pleadings, the following issues were framed:

Does the plaintiff proves that he was already ready and willing to perform his part of the contract within the stipulated time under the terms of the suit agreement?

Whether defendants 2 to 4 agreed to deliver the title deeds relating to the properties covered by the suit schedule property?

Whether all the plaint schedule properties are covered by the suit agreement and whether the correct description of the properties agreed to be sold is given in the plaint?

Whether the Court fee paid is not sufficient?

Whether the plaintiff is entitled to a decree for specific performance?

Whether it would be inequitable to grant the relief of specific performance for any of the grounds urged by the defendants in para 6 of their written statement?

To what decree?

Sri K. Raghava Reddy, partner of the plaintiff was examined as P. W. 1. He relied upon Exs. P. 1 to P. 63. Once Sri K.A. Ramalingam was examined as D.W. 1 on behalf of the defendants. Through him, Exs. D. 1 to D. 14 were marked. The Trial Court after considering the evidence let in by the parties held issues 1 to 3 and 5 in affirmative, issue 4 as does not arise for consideration and issue 6 in negative and decreed the suit of the plaintiff directing the defendants to execute the sale deed in favour of the plaintiff within a period of three months by receiving the balance consideration. Liberty was also given to the plaintiff to get the sale deed executed through the Court in execution, on failure of the defendants to execute the sale deed in favour of the plaintiff. This judgment and decree is called in question in this appeal.

A Division Bench of this Court after hearing the learned Counsel appearing for both the parties on I.As. IV, V, VI, VIII and IX by order dated 27-9-2001, allowed the applications filed by the defendants for amendment of written statement and also to amend the grounds of appeal and thereafter framed the following two additional issues:

(1) Whether the plaintiff is a firm registered under the Partnership Act, 1932?

(2) Whether the suit is barred by Section 69(2) of the Partnership Act, 1932?

The Division Bench further held that in view of framing of additional issues, the Court had to secure a finding on the aforesaid issues by referring the matter to the Trial Court under Order 41, Rule 25 of the CPC. Accordingly the matter was sent to the Trial Court to secure its findings on the two additional issues framed by this Court.

As per the directions of this Court, the Trial Court after giving reasonable opportunity for both the parties and hearing the learned Counsel for the parties, sent its finding by its order dated 9-12-2002 answering additional issue 1 in negative and additional issue 2 in affirmative and further held that the suit by the firm was not maintainable u/s 69 of the Indian Partnership Act, 1932 since the firm was not a registered one. Against the findings of the Trial Court on these two additional issues, the plaintiff has not filed any appeal or cross-objection.

After the receipt of the finding from the Trial Court on the additional issues, the matter was taken up for final hearing by a Division Bench of this Court and thereafter I.A. No. X was filed under Order 22, Rule 10 of the Civil Procedure Code, 1908 by the appellant seeking permission of the Court to grant leave to the present trustees mentioned in the application to pursue the appeal considering the devolution of interest of the 1st appellant-Trust i.e., in favour of Sri A. Ramalingam and Sri Abudu K. Rajarathnam. Objections are also filed by the respondent to the said application. Thereafter, an application is filed by the respondent u/s 151 of the CPC to dismiss the appeal as not maintainable.

By an order dated 28-11-2003, a Co-ordinate Bench of this Court passed an order to consider these applications along with main appeal. When the matter was posted before the Court for hearing on 30-1-2006, the respondent''s Counsel took time to find out whether there would be any possibility for settling the matter. Accordingly the matter was adjourned. The case was time and again adjourned to explore the possibility of settlement. On 17-3-2006, it was reported to the Court that, the parties have settled the matter amicably and in terms of the settlement, they agreed to demarcate the properties agreed to be sold in favour of the respondent. A sketch produced to the Court was taken on record. The matter was adjourned to 24-3-2006 to report final terms of settlement. On 21-4-2006, the Counsel for the parties filed the terms of settlement and the same was taken on record. The matter was adjourned to 10-6-2006 for final disposal in terms of the compromise arrived at. On 6-9-2006, it was submitted that an application is filed by the appellant to recall the earlier order reporting settlement. Therefore, a week''s time was granted for the respondent to file objection, if any, to the said application. Thereafter the matter was posted before the Court on 12-10-2007 on which date, after hearing the matter for some time, the Court adjourned the matter for further hearing on 2-11-2007. From 2-11-2006 the matter was adjourned to 30-11-2007 and on which date, the Bench which had heard the matter in part, directed to post the matter before the regular Bench after obtaining necessary orders from the Hon''ble Chief Justice. In these circumstances, the matter is now listed before this Court.

We have heard the learned Senior Counsel appearing for both the parties.

The main contention of the appellant''s Counsel is that, in view of the findings of the Trial Court on additional issues 1 and 2, the appeal has to be allowed in limine and the suit filed by the respondent before the Court below has to be dismissed since it is not a registered partnership firm. According to him, after the order was passed by this Court directing the Trial Court to give its findings on two additional issues, appellant produced the voluminous records to show that the plaintiff-firm, M/s. K. Raghava Reddy and Associates was not a registered firm and was not in existence on the date of the suit. He further submits that the plaintiff-firm was not registered at the time of filing the suit and the said firm was registered only on 6-8-1991 subsequent to the filing of the suit and therefore, the suit was not maintainable.

Learned Counsel for the respondent submits that in view of registration of firm by name M/s. Raghava Reddy and Associates on 6-8-1991, the suit filed by the plaintiff was maintainable and the finding of the Trial Court is liable to be set aside. Before the Trial Court, the plaintiff did not choose to examine any witnesses in order to prove the additional issues framed by this Court and there is no explanation offered by the Counsel for the respondent as to why the plaintiff did not step into the witness-box and lead any evidence that the suit agreement is on behalf of the registered firm by name "M/s. K. Raghava Reddy and Associates". When the plaintiff-firm is not registered, the plaintiff cannot rely upon the name of another firm in order to maintain the suit. It is not in dispute that the firm M/s. Raghava Reddy and Associates is registered on 6-8-1991 subsequent to institution of the suit. The present suit was instituted on 12-6-1987. There is no evidence before us to show that these two firms i.e., plaintiff M/s. K. Raghava Reddy and Associates and the firm registered on 6-8-1991 i.e., M/s. Raghavareddy and Associates are one and the same. In these circumstances, we have to affirm the findings of the Trial Court on the additional issues 1 and 2 and allow the appeal in toto as the suit filed by the respondent before the Trial Court was not maintainable. We propose to deal this issue in detail along with the other issues which would arise for our consideration.

At this stage, learned Senior Counsel appearing for the respondent by raising two technical objections requests us to dismiss the appeal. They are as hereunder:

(1) The appeal filed by the appellants is not maintainable in view of Section 48 of the Indian Trusts Act, 1882 as all the trustees to the suit, who were defendants, have not filed the present appeal and that A. Ramalingam, who has signed the vakalath on behalf of all the appellants, had no power to sign the vakalath. Therefore, the manner in which the appeal is filed is fatal to the appellants and only on this ground, the appeal has to be dismissed.

(2) Alternatively, he contends that in view of compromise entered into between the parties, the Court has to accept the compromise filed by the parties and modify the decree of the Trial Court in terms of the settlement. Therefore, he requests not to allow the appeal, even if the Court comes to the conclusion that the defects pointed out by him in filing the appeal by the appellants are curable and to modify the decree in terms of the settlement/compromise.

According to the learned Counsel for the appellants, both the contentions are untenable. According to him, the defects notified by the respondent in filing the appeal is curable and the respondent cannot be permitted to raise an objection eleven years after filing the appeal. According to him, such an objection could have been raised by the respondent at the initial stage. Even the registry had not raised any objection. When a Co-ordinate Bench of this Court after hearing the parties had framed two additional issues and directed the Trial Court to give its findings on the additional issues, the respondent cannot be permitted to raise the question of maintainability and to contend that the defects notified are incurable and according to him, the defects notified by the other side are curable.

He further contends that no compromise petition is filed by the parties. It is only a proposal suggested by the parties for settlement of the dispute, subject to certain conditions and such proposal or terms of settlement cannot be treated as compromise in toto and cannot be considered as lawful compromise filed before the Court. According to him, in terms of the settlement produced before the Court, A Ramalingam was required to obtain consent of the other trustees and join in execution of the sale deed in terms of the settlement. The terms agreed upon between A. Ramalingam and the respondent was not lawful and not beneficial to the trust and that the other trustees did not agree for the proposed settlement, therefore, a regular and a final compromise could not be filed. He alternatively contends that no Court can force the parties to enter into a compromise. Particularly when the appellant is a public charitable trust, a compromise, which is not for the benefit of the trust, could not be entered into. Therefore, he requests the Court to overrule the objections of the respondent.

As a matter of fact, at one point of time, during the course of argument, Sri Gopalan, learned Senior Counsel for the appellant submitted that he would not press the application filed by him for recalling the order regarding compromise. But Sri Naganand states that when once Senior Counsel for the appellant has made such a submission, he cannot be permitted to address argument or permitted to withdraw the statement made in the Court.

Learned Senior Counsel for the appellants contends that even if such an application is not withdrawn, this Court cannot direct the appellants to execute the sale deed in terms of the settlement since the other trustee is not willing to join in the said act. According to him, when no compromise petition filed under Order 23, Rule 3 of the CPC, no Court can compel a party to agree for compromise. He alternatively contends no application is filed by the respondent requesting the Court to compel the appellants to agree for settlement and execute the sale deed in terms of the proposal.

In this background, we have to examine the following questions which arise for our consideration:

(a) Whether the defects in filing the appeal are curable?

(b) Whether the Court can compel the appellant to execute the compromise petition and execute a sale deed in terms of the compromise?

(c) Whether this Court can allow the appeal in view of Section 69 of the Indian Partnership Act, 1932?

It is also relevant to consider the application filed by the appellants under Order 22, Rule 10 of the CPC seeking permission by the present trustees to prosecute the appeal.

Question No. 1.-When the suit was instituted by the respondent, there were three trustees in the 1st defendant-Trust, namely, Sri Justice N. Krishnaswamy Reddiar, Sri V. Sundara Murthy Mudaliar and Sri B. Ramalingam. The suit was decreed on 21-2-1997 and the present appeal was filed by the appellants on 5-5-1997. In the present appeal, the cause title reads that the 1st appellant is People Charity Fund represented by its trustee, Justice N. Krishnaswamy Reddiar, and the other appellants as (2) Justice N. Krishnaswamy Reddiar; (3) V. Sundara Murthy Mudaliar; and (4) B. Ramalingam since deceased represented by Sri A. Ramalingam, the vakalath is singed only by Sri A. Ramalingam as a trustee of People Charity Fund for himself and on behalf of other appellants. From a perusal of the vakalath, it is clear to us that neither Justice N. Krishnaswamy Reddiar nor Sri V. Sundara Murthy Mudaliar signed the vakalath. It is also not in dispute that B. Ramalingam, who is represented as 4th appellant, was no more and in his place, Sri A. Ramalingam was appointed as a trustee when the matter was pending before the Trial Court and he has signed the vakalath. In other words, it is clear that though there are four appellants viz., the People Charity Fund and three trustees, it is signed by only one trustee and on behalf of Justice N. Krishnaswamy Reddiar and Sri V. Sundara Murthy Mudaliar, no vakalath is filed.

Pointing out this discrepancy, learned Senior Counsel, Sri Naganand submits that in view of Section 48 of the Indian Trusts Act, 1882 the appeal filed by the appellants is not maintainable. It would be useful to refer Section 48 of the Indian Trusts Act, which reads as under:

Section 48. Co-trustees cannot act singly.-When there are more trustees than one, all must join in the execution of the trust, except where the instrument of trust otherwise provides.

Relying upon the above provision of law, Sri Naganand contends that the other trustees could not have assigned their power to file the appeal in favour of Sri A. Ramalingam. To support his case, he has placed reliance on the following citations.

(1) L. Janakirama Iyer and Others Vs. P.M. Nilakanta Iyer and Others, ; (2) Atmaram Ranchhodbhai v. Gulamhusein Gulam Mohiyaddin and Anr. AIR 1973 Guj. 113; (3) Duli Chand v. Mahabir Pershad Trilok Chand Charitable Trust, Delhi AIR 1984 Delhi 145; (4) Fatima Fauzia and Another Vs. Syed UI-Mulk and Others, ; (5) Shanti Vijay and Company v. Princes Fatima Fouzia and Ors. AIR 1980 SC 17 : In Re: H.E.H. The Nizam''s Jewellery Trust, ; and (6) Shivalingaiah Vs. Ananda Social and Educational Trust, .

Relying upon the aforesaid judgments, he submits that the very institution of the appeal by the appellants represented by Sri A. Ramalingam is not maintainable.

Learned Counsel for the appellants, Sri Gopalan, on other hand submits that Section 48 of the Indian Trusts Act would be applicable when the trust is required to institute a suit and not to defend the same. He further submits that the appeal can be filed only by the parties to the suit and the present appeal is filed by the appellants, who were the defendants in the Trial Court. The decree passed by the Trial Court can be challenged by any one of the defendants to the suit and not necessarily by all the defendants together. Therefore, he contends that the judgments relied upon by the learned Counsel for the respondent are not applicable to the facts and circumstances of the case. Taking us through the evidence of D.W. 1-Sri A. Ramalingam, he brought to our notice that two trustees viz., V. Sundaramurthy Mudaliar and B. Ramalingam died during the pendency of the suit. It was also known to the plaintiff/respondent that out of three trustees, two trustees were not alive and in the place of B. Ramalingam, Sri A. Ramalingam had been appointed by the Trust as trustee. He further submits that a resolution was also passed by the Trust authorising Sri A. Ramalingam to look after all the cases pending in various Courts at Bangalore. A copy of the resolution was produced before the Trial Court. He further contends that when the appeal was filed, it was for the Registry to point out the defects in the appeal memo; and it was also the duty of the Court to find out whether all the parties to the appeal are properly represented or not. If such mistake had been pointed out, the appellant could have rectify such mistake as it is a curable defect and such a defect can be cured at any point of time. Therefore, he contends that there is no substance in the argument advanced by the Counsel for the respondent. He further contends that in view of the death of V. Sundara Murthy Mudaliar and B. Ramalingam during the pendency of the suit, the appeal filed by the appellants is maintainable; even if Sri N. Krishnaswamy Reddiar had not signed the vakalath this Court has to consider as to what would be the effect of non-filing of vakalath by one of the parties to the appeal. In the circumstances, he contends that the judgments relied upon by the learned Senior Counsel for the respondent in regard to Section 48 of the Indian Trusts Act need not be considered by this Court. He requests the Court to consider the effect of non-filing of vakalath by justice N. Krishnaswamy Reddiar and non-notifying the defects by the Registry. To support his contentions, he has relied upon the following judgments.:

(1) Bihar State Electricity Board and Others Vs. Bhowra Kankanee Collieries Ltd. and Another, ; (2) Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh and Another, ; and (3) 2007 4 L.W. 1.

In this background, we now consider the various judgments relied upon by both the parties.

In I.L. Jankirama Iyer''s case, their Lordships while considering the effect of Section 48 of the Indian Trusts Act in regard to the execution of sale of a immovable property of the trust, have taken a view that when there are more trustees than one all must join in the execution of the trust, except where the instrument of trust otherwise provides. But in the instant case, Section 48 of the Trusts Act cannot be pressed into service; since the Trust has not filed the suit, but on the contrary the suit was filed by the respondent against the Trust and the present appeal is filed by the Trust. There were no trustees other than Justice N. Krishnaswamy Reddiar and Sri A. Ramalingam the 1st appellant-Trust, at the time of filing the appeal. Therefore, there is no dispute in regard to the right of Justice N. Krishnaswamy Reddiar and Sri A. Ramalingam in filing the present appeal. But the only defect in this appeal is that the vakalath of Justice N. Krishnaswamy Reddiar has not been filed along with the appeal memo. However, the respondent has not produced any material to show that there was no consent or consensus between Justice N. Krishnaswamy Reddiar and Sri A. Ramalingam in filing this appeal. A mere non-filing of vakalath cannot in our view mean that the present appeal is barred u/s 48 of the Trusts Act. We have also seen that an application is filed under Order 41, Rule 5 along with the appeal memo seeking stay of the operation of the judgment and decree of the Trial Court in support of which a sworn affidavit of Justice N. Krishnaswamy Reddiar is filed. When Justice N. Krishnaswamy Reddiar has filed an application along with the appeal memo, it is clear that Justice Krishnaswamy Reddiar has also joined with Sri A. Ramalingam in filing the appeal. What is to be observed here is that only vakalath was not filed by Justice N. Krishnaswamy Reddiar. In the circumstances, by no stretch of imagination, we can come to the conclusion that Justice N. Krishnaswamy Reddiar is not a party to the appeal. We have also seen another application filed u/s 151 of the CPC along with the appeal memo to appoint a receiver during the pendency of this appeal. This application is also supported by an affidavit of Justice N. Krishnaswamy Reddiar. After perusing these two applications and affidavits of Justice N. Krishnaswamy Reddiar, we cannot hold that Justice N. Krishnaswamy Reddiar was not aware of the appeal filed by Sri A. Ramalingam on behalf of the trust. In view of the aforesaid circumstances, we have to reject the contention urged by the Counsel for the respondent. In the circumstances, we are of the opinion that the above judgments relied upon by the learned Senior Counsel for the respondent do not come to the aid of the respondent.

In Atmaram Ranchhodbhai''s case, their Lordships while considering the provision of Section 48 of the Indian Trusts Act held that while taking a decision, all the trustees must join. The said judgment is not applicable considering the facts of this case since both the trustees viz., Justice N. Krishnaswamy Reddiar and Sri A. Ramalingam have filed this appeal.

In Fatima Fauzia''s case, their Lordships while considering the provision of Sections 46 to 48 have held that when there are more than one trustee, all of them should collectively exercise their duties, power and functions of the office. In M/s. Shanti Vijay and Company''s case, their Lordships while considering Sections 47 and 48, have held that all of them should join while exercising their power and duties as trustees. In Duli Chand''s case, their Lordships while considering Sections 47 and 48 have ruled that a suit filed by one of the trustees on the basis of a resolution passed by other trustees authorising to file the suit is not maintainable. However, in the instant case, there were only two trustees to file this appeal and along with the application in support of sworn affidavit of justice N. Krishnaswamy Reddiar was filed which discloses that he is also party to the appeal. We are therefore, of the opinion that this judgment is also of no assistance to the respondents.

In L. Shivalingaiah''s case, this Court has taken a similar view in regard to permissibility of one or two trustees to represent trust and to bring action on behalf of the trust.

While considering the judgments relied upon by the learned Senior Counsel for the respondents, we have to consider whether the non-filing of vakalath by one of the appellants is fatal to the appeal or not, which would be considered hereinafter.

In Bihar State Electricity Board''s case, the Hon''ble Supreme Court while considering the provision of Order 3, Rules 4 and 6 has ruled that even if there is failure to produce vakalath despite Court''s peremptory order to remove the defect the appeal shall not be dismissed on such technical ground of non-compliance with procedural requirement and further ruled that in order to repair the inconvenience caused to the other party being negligent the appellant should pay costs to the respondent. In para 7, their Lordships have also held that if vakalath is not filed inspite of directing the party to produce the same, the Court shall not dismiss the appeal.

In Uday Shankar Triyar''s case, their Lordships have held that non-compliance of any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. The procedural defects and irregularities, which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure being a handmade to justice, should never be made a tool to deny justice or perpetuate injustice by any oppressive or punitive use. The well-recognized exceptions to this principle are stated as follows.:

(i) where the statute prescribing the procedure, also prescribes specifically the consequence of non-compliance;

(ii) where the procedural defect is not rectified, even after it is pointed out and due opportunity is given for rectifying it;

(iii) where the non-compliance or violation is proved to be deliberate or mischievous;

(iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the Court; and

(v) in case of memorandum of appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant.

In para 15, their Lordships further held that it is now well-settled that any defect in signing the memorandum of appeal or any defect in the authority of the person signing the memorandum of appeal, or the omission to file the vakalath executed by the appellant along with the appeal, will not invalidate the memorandum of appeal, if such omission or defect is not deliberate and the signing of the memorandum of appeal or the presentation thereof before the Appellate Court was with the knowledge and authority of the appellant. Such omission or defect being one relatable to procedure can subsequently be corrected. It is the duty of the office to verify whether the memorandum of appeal was signed by the appellant or his authorised agent or pleader holding appropriate vakalath. If the office does not point out such defect and the appeal is accepted and proceeded with it cannot be rejected at the hearing of the appeal merely by reason of such defect without giving an opportunity to the appellant to rectify it. The requirement that the appeal should be signed by the appellant or his pleader (duly authorised by a vakalath executed by the appellant) is, no doubt, mandatory. But it does not mean that non-compliance should result in automatic rejection of the appeal without giving an opportunity to the appellant to rectify the defect. If and when the defect is noticed or pointed out, the Court should, either on an application by the appellant or suo motu permit the appellant to rectify the defect by either signing the memorandum of appeal or by furnishing the vakalath.

From the above decisions, it is clear to us that non-filing of vakalath by one of the trustees cannot be fatal and the same is curable one. Such mistake should have been notified by the registry at the time of filing the appeal. Unfortunately the registry has not notified the non-filing of vakalath by Justice N. Krishnaswamy Reddiar. Such objection has not been brought to the notice of the appellant either by the Court or by the respondents. According to us, at any time, the appellants can make an application seeking permission of the Court to file vakalath on behalf of Justice N. Krishnaswamy Reddiar and the Court can also suo motu direct him to file vakalath. But unfortunately this Court cannot direct Justice N. Krishnaswamy Reddiar since he died during the pendency of this appeal. In his place, another trustee has been appointed and on whose behalf, an application has been filed under Order 22, Rule 10 of the CPC by Sri Abudu K. Rajarathnam. In the circumstances, point No. (i) in regard to the maintainability of the appeal has to be rejected. Accordingly, we reject the contention so far as it relates to maintainability of the appeal.

Question No. 2.-Now we have to consider the application filed under Order 22, Rule 10 of the CPC. Without considering the application filed under Order 22, Rule 10 of the CPC, this Court cannot consider the request of the respondent to direct the applicant-Abudu K. Rajarathnam him to sign the compromise petition and to execute the sale deed in terms of the compromise.

It is not in dispute that during the pendency of this appeal, Justice N. Krishnaswamy Reddiar died on 6-12-2002 and in his place Sri A. Rajarathnam has been appointed as trustee. Accordingly, a resolution has been passed in this regard. When Sri A. Rajarathnam has been appointed as trustee in the place of Justice N. Krishnaswamy Reddiar, we are of the opinion that such an application has to be allowed. As on date, there are only two trustees viz., Sri A. Ramalingam, who has filed vakalath along with the appeal memo and Sri A. Rajarathnam, who has been appointed as trustee in place of Justice N. Krishnaswamy Reddiar. In view of Order 22, Rule 10 of the CPC, we have no hesitation to allow the application permitting Sri A. Rajarathnam to come on record in place of Justice N. Krishnaswamy Reddiar. I.A. No. X is hereby allowed. He is permitted to file vakalath. Sri Sundaramurthy, learned Counsel has filed power on behalf of Sri A. Rajarathnam. The appellant''s Counsel is permitted to amend the cause title of the appeal memo.

Then the last question to be considered by us is whether this Court can direct the appellants to execute the sale deed in terms of the compromise filed in the Court on 21-4-2006.

As discussed above, an application was filed by the appellants to recall the order passed by the Court on 17-3-2006 and 21-4-2006.

This Court has to consider the effect of the two orders passed on 17-3-2006 and 21-4-2006. The order dated 17-3-2006 reads as hereunder:

After prolong negotiations, both sides have settled the matter. In this regard, they have reported that the parties have agreed to demarcate the properties to be assigned to them. A sketch has been produced in this behalf, the same is taken on record. Both the parties seek time to report final terms of settlement, hence call on 24-3-2006.

It is clear from the order dated 17-3-2006 that the parties have filed a sketch denoting the area to be assigned to each of them, however, they took time to report the final terms of settlement which would only mean that settlement was not effected in full and final.

The order sheet of 21-4-2006 reads as hereunder:

After hearing the matter for some time, both sides expressed their desire to settle the matter and today the appellants and the respondent along with their Advocates have filed the terms of the settlement. The same is taken on record. Call on 10-6-2006 for final disposal in terms of the compromise now arrived at.

From this, it is clear that in view of the settlement arrived at on 21-4-2006, the earlier sketch filed on 17-3-2006 was not be considered as the parties had submitted the terms of settlement on 21-4-2006.

In this background, it is necessary to look into the terms of settlement filed on 21-4-2006 before the Court. As per this document, the appellants had agreed to convey an area of 8366 sq. ft. of land in favour of the respondent or its nominees by executing a deed of sale, a copy of which was also enclosed to the terms of settlement as Annexure-A and the areas agreed to be sold in favour of the respondent was marked as AEFLA and CDHIJKC in the sketch which was enclosed to the terms of settlement as Annexure-B. The respondent agreed to pay registration fees in respect of the area to be conveyed in its favour. The respondent had agreed to pay a sum of Rs. 3,00,000/- to appellant 1-Trust through Banker''s cheque in terms of the agreement dated 13-6-1984 which had to be paid at the time of registration of the sale deed. The respondent had filed a suit in O.S. No. 4812 of 1998 against A. Ramalingam for recovery in a sum of Rs. 16,00,000/- together with interest thereon at 24% p.a. from the date of suit till the date of realisation and that appellant 1-Trust was to pay a sum of Rs. 16,00,000/- through Banker''s cheque to the respondent and the interest thereon at the rate of 12% p.a. in full and final settlement of the claim of the respondent against A. Ramalingam and that the respondent had agreed to withdraw the suit filed by him against A. Ramalingam. It was also agreed that the respondent had spent a sum of Rs. 14,00,000/- to obtain vacant possession of the schedule property from two tenants who were in occupation of the property and which amount has to be paid to the respondent through Banker''s cheque and the area marked as ABCDA measuring 8000 sq. ft. has to be handed over to the appellants by the respondent and the remaining area was to be with the respondent. The area marked in red colour in the sketch Annexure-B is the absolute property of the respondent which was purchased by it from one Shivagami Ammal under a sale deed dated 10-3-1995 and the respondent was to give a right of access to the appellants through a portion of the same. The sale deed was to be executed by the appellants in favour of Raghava Reddy and Associates and not in favour of the plaintiff-K. Raghava Reddy and Associates. As per Clause 9 of the terms of settlement, a compromise petition confirming the terms of settlement contained herein was to be filed by the parties before this Court on or before June 10, 2006 and the sale deed as per Annexure-A was to be executed on the same day. All the trustees of appellant 1-Trust were to execute the deed of sale and the compromise petition. Lastly, it was agreed that both the parties were to bear their own costs and further they had to admit that they had no further claim whatsoever against each other upon filing of the compromise petition.

(emphasis supplied)

The terms of settlement filed on 21-4-2006 is signed by A. Ramalingam as Managing Trustee of appellant 1 and also as a trustee. It is signed by the learned Advocate for the appellant. It is also signed by K. Raghava Reddy as Managing Partner of the respondent along with his Advocate.

Thereafter, the appellants filed an application u/s 151 of the CPC to recall the order, passed by the Court on 17-3-2006 and 21-4-2006 on the ground that the terms of settlement filed on 21-4-2006 was only a tentative proposal for settlement and it was signed by A. Ramalingam to facilitate further discussions and to arrive at a final compromise and that no compromise petition as contemplated under Order 23, Rule 3 of the CPC was signed and filed before the Court by all the parties on 21-4-2006 as the other trustee had to agree for the compromise and also to execute the sale deed in terms of the draft sale deed enclosed with the terms of settlement. The co-trustee, after obtaining a legal opinion, was of the opinion that such settlement was not at all beneficial and was adverse to the interest of the public trust and such compromise should not be given effect and that if the above legal position was known to Ramalingam, he would not have subscribed to the tentative proposals to facilitate further discussions. It is also stated that when the plaintiff-firm is not a registered firm and that no suit can be settled between the parties agreeing for a decree to be passed in favour of an unregistered partnership firm. It is also contended that when the compromise is contrary to the provisions of law of Partnership Act and contrary to the interest of a charitable trust, no such compromise can be accepted by this Court, even if it is filed by both the parties as the same is null and void. On these grounds, the above application was filed.

The respondent has filed objections to the aforesaid LA. on the ground that the compromise has been acted upon and it was entered into between the parties knowing the terms of compromise and in the best interest of the trust. It is further stated that draft terms were exchanged between the parties and a joint survey was conducted to demarcate the property to be given to the appellants and the same was informed to the other trustee and the father of co-trustee Justice Kumar Rajarathnam (Retired) was also informed of the developments in the matter by the Counsel for the appellants as well as the respondent. Therefore, he requests the Court to reject the application.

As we referred to earlier, at the first instance, Mr. Gopalan requested us not to consider this application and that the application may be dismissed as not pressed. However, he contends that the application need not be rejected and even without dismissing the application as withdrawn, this Court has to examine the effect of the order dated 17-3-2006 and 21-4-2006. According to him, the aforesaid compromise is only a draft terms of settlement and not a settlement in full and final. The compromise was filed before the Court subject to certain conditions viz., that an amount of Rs. 16,00,000/- had to be paid by the Trust on behalf of A. Ramalingam in order to satisfy the suit filed by the respondent against A. Ramalingam in City Civil Court in O.S. No. 4812 of 1998 and that the sale deed had to be executed with the consent of other co-trustee and the other co-trustee is also required to join in execution of the sale deed and also in filing the final compromise petition. Based on these terms, he contends that the compromise was not full and final and it was only in the stage of negotiation subject to the Trust paying a sum of Rs. 16,00,000/- to the plaintiff from the trust amount in order to discharge the loan borrowed by a trustee for his personal benefit and the other co-trustee agreeing for execution of the compromise petition and the sale deed. Therefore, Mr. Gopalan submits that when a co-trustee is not willing to execute a sale deed and is not willing to pay Rs. 16,00,000/- from out of the funds of the Trust to discharge the personal loan of a trustee, no Court can compel the trustees to accept the terms of such settlement and he further submits that the funds of a public charitable trust cannot be made use of by the Trust to discharge the personal liability of a trustee and when the compromise is not in the interest of a Trust, Court cannot compel a co-trustee to execute a sale deed since the suit filed by an unregistered partnership firm is not maintainable. Therefore, he requests the Court to allow the appeal in view of the findings on additional issues 1 and 2. He alternatively contends that when no final compromise is filed and when no application is filed by the other side requesting the Court to decree the suit in terms of the compromise, this Court cannot, on its own, pass a decree accepting the draft compromise filed on 21-4-2006. In the circumstances, he requests the Court to reject the contention advanced by Mr. Naganand, the learned Counsel for the respondent.

To support his views, Mr. Gopalan has relied upon two judgments of the Hon''ble Supreme Court viz.:

P. Nallammal Etc. Vs. State Rep. by Inspector of Police, .

We will refer to these two decisions later after considering the arguments advanced by Sri Naganand in support of his submission.

The learned Counsel for the respondent Mr. Naganand submits that when the compromise petition is filed before the Court and when the same is acted upon by the parties, the Court has no other option than to dispose of the appeal in terms of the compromise. According to him, the terms were known to the father of the co-trustee that the draft was prepared after exchanging his views. Therefore, now the appellants cannot go back from the compromise. According to him, the appellants are estopped from going back from the compromise. It is further submitted by him that the grounds stated in the application are all raised to defeat the just claim of the respondent-plaintiff who has spent Rs. 14,00,000/- to evict the tenants. He further submits that even if this Court is of the opinion that the money of a public charitable trust cannot be spent to discharge the personal debt of a trustee in a sum of Rs. 16,00,000/-, he requests the Court to accept the terms of compromise in part and direct the appellants to execute the sale deed in respect of the area demarcated in the sketch annexed as Annexure-B to the terms of settlement dated 21-4-2006 and to execute the sale deed in terms of Annexure-A. To support his views, he has cited the following judgments before us:

(1) M/s. Damodar Ropeways and Construction Co. (P) Ltd. Vs. Christopher Martin Desgranges Martin and Others, ; (2) K. Venkata Seshiah Vs. Kanduru Ramasubbamma (Dead) by Lrs., ; (3) Sukhdeo Missir and Others Vs. Kamleshwari Prasad Singh, ; (4) Bhaja Govinda Maikap and Another Vs. Janaki Dei and Others, ; (5) AIR 1930 158 (Privy Council) and Kollipara Sriramulu Vs. T. Aswathanarayana and Others, .

In Damodar Ropeways and Construction Company (Private) Limited''s case, their lordships, while considering the scope of Order 23, Rule 3 of the CPC, have ruled that if the compromise is in accordance with Order 23, Rule 3, the same could be acted upon. So a resolution of the Board of Association authorising a person to act on behalf of the association for compromise was passed declaring that all the parties had agreed to the compromise and such compromise was intended to be present before the Court for permission. In such circumstances, the Supreme Court ruled that before accepting the terms of compromise, the Court has to be satisfied that the terms are in the interest of the Trust and the Court can also accept the compromise by modification and grant permission.

In the aforesaid case, a compromise was arrived at three years prior to the presentation of the petition. It was signed by all the parties and based on the same, a building was also constructed in an area 1,80,000 sq. ft. Taking into consideration the building constructed thereon and the parties acting upon the compromise, the Hon''ble Supreme Court held that in view of the conduct of the parties, the terms of compromise has to be accepted even though the same was not presented by all the parties before the Court. Accordingly such compromise petition was accepted.

In K. Venkata Seshiah''s case, was a case where the terms of compromise between father and his two sons stipulated payment of Rs. 1,00,000/- by father to each of his sons in lieu of relinquishment of their interest in the property, the Court found that the compromise was genuine and therefore, directed that the compromise petition should be accepted and in terms thereof, the suit was disposed of.

In the case of Sukhdeo Missir''s case, in a suit on mortgage, defendant alleging compromise by which plaintiff had agreed to take sale of half of mortgaged property in satisfaction of whole mortgage debt, requested the Court to accept the compromise and the Court directed to conduct an enquiry on the compromise.

In the case of Bhaja Govinda Maikap, the Court had to consider the effect of denying execution of the compromise petition by one of the parties to the litigation. In the aforesaid case, the Orissa High Court has ruled that it is for the Court to conduct an enquiry and thereafter, to consider the compromise petition.

In the case of Sourendra Nath Mitra, while considering the compromise petition filed under Order 23, Rule 3 of the CPC, the Privy Council held that if no injustice is established, the Court must record the compromise and pass a decree accordingly.

In Kollipara Sriramulu''s case, which was a case of an oral agreement with regard to a future formal contract, their Lordships held that the fact of a subsequent agreement being prepared may be an evidence that the previous negotiation did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement.

On a consideration of these judgments, it is clear that even if the compromise petition was not filed before the Court but it is signed and admitted by the parties and if the same is acted upon even if there is a delay, the Court, in the interest of parties, can record the compromise and grant relief to the parties as laid down in the case of M/s. Damodar Ropeways and Construction Company (Private) Limited. In the said case, as pointed out earlier, by virtue of the compromise, a builder was permitted to construct a building and based on the same, he had put up a construction and in the said circumstances their Lordships have held that the Court could record the compromise and dispose of the suit.

In the present case, the execution and the filing of the draft compromise petition by one of the trustees of the appellants and of the respondent is not in dispute, but the terms of settlement filed before the Court on 21-4-2006 would reveal that the aforesaid terms of settlement would be subject to the approval and signing of the final compromise petition by the other co-trustee Abudu K. Rajarathnam. It is also not in dispute that the sale deed has to be executed by all the trustees. The terms of settlement dated 21-4-2006 does not show what would happen if the other trustee does not put his signature or refused to give his consent. It is also not in dispute that certain amount is payable by the 1st appellant-Trust to the respondent to satisfy the suit claim filed against A. Ramalingam which amount was borrowed by A. Ramalingam in his personal capacity and not on behalf of the Trust. If an amount of Rs. 16,00,000/- has to be paid by the 1st appellant-Trust to discharge the personal liability of a trustee and if the other trustee has not agreed to sign the compromise petition, no Court can compel a Trust to discharge the personal debt payable by a trustee. If such a compromise is accepted, the Court would be a party to promote an illegal act and would also be a party for misusing the Trust fund and property and if such payment is made, such trustee would be held liable not only for prosecution but also for recovery of trust amount and has to be removed from the trusteeship since the trustees cannot misuse or misapply the funds of the trust for their personal gain. The learned Senior Counsel, Sri Naganand does not dispute the amount agreed to be paid by the Trust in terms of the draft settlement dated 21-4-2006 was in order to discharge the personal liability of the trustee-A. Ramalingam. According to Mr. Naganand, the aforesaid amount may be given up and the terms of draft settlement may be modified by this Court and grant a decree for specific performance by which, he is also conceding that the agreement to pay the money of the Trust for discharging the personal debt of A. Ramalingam, would be contrary to the terms of Trust Deed or Trusts Act. If the terms of compromise is not in accordance with law, whether this Court can modify the terms of settlement to suit the convenience of the respondent and grant a partial decree. As we have pointed out earlier, there is no application filed by the respondent to enforce the draft settlement dated 21-4-2006. The appellants are going back from the terms of settlement on the ground that the other trustee has not agreed upon and the terms of settlement are not in the interest of the Trust. Similarly, the respondent is also admitting that part of the draft settlement would be against the interest of the Trust and requests us to modify the terms of settlement.

Even if we accept the arguments of Sri Naganand that before exchange of draft settlement, the parties had consulted the father of one of the trustees and obtained his opinion, the same cannot be a ground to accept such a compromise if the father of a trustee had been consulted and if the trustee who is an Advocate can always take an impartial view in the interest of the trust and if he has not agreed for the terms of settlement, no Court can compel such trustee to accept the terms of settlement. If this submission of Sri Naganand is accepted, then his submission would be contrary to the provisions of Section 48 of the Trusts Act on which a strong reliance is made which he arguing point No. 1. Therefore, we cannot accept the arguments advanced by the learned Senior Counsel for the respondent.

It is not in dispute that the suit filed by the respondent is for specific performance of contract and possession by an unregistered partnership firm and such suit is not maintainable. If the suit is not maintainable in law, in such a suit, Court cannot accept a compromise petition. In addition to that, Annexure-A, the draft settlement deed discloses that a sale deed has to be executed by the appellant-Trust in favour of a person who is not a party to the suit. Whether a trustee can be compelled to execute a sale deed in favour of a person who is not a party to the agreement of sale? If one of the co-trustees, for legal and valid reasons, is not willing to the compromise petition, the Court cannot compel such trustee to act contrary to the interest of a public charitable trust. Therefore, we are of the opinion, in the facts and circumstances of this case, the judgments cited by the learned Counsel for the respondent are not squarely applicable and we cannot compel a trustee to sign a document which is not in the interest of the Trust. If the compromise is not lawful and if it is only a draft settlement and not yet finalised, when all the trustees have not signed the document and when the other trustee has refused to sign the compromise in the best interest of the Trust, we cannot compel a trustee to accept the compromise and pass a decree in terms of the draft settlement dated 21-4-2006 or modify the terms of the same. Therefore, we do not see any merit in any of the contentions urged by the learned Counsel for the respondent.

Question No. 3.-As already stated earlier in this order, by an order dated 27-9-2001, a Co-ordinate Bench of this Court while allowing applications for amendment of the written statement and amendment of the grounds of appeal had formulated two additional issues extracted earlier in this order and directed the Trial Court under Order 41, Rule 25 of the CPC with a direction to record evidence on those issues and return the file together with the finding on the said issues to this Court within six months from the date of receipt of records.

On the directions of this Court, the Trial Court recorded evidence on these issues. The plaintiff did not lead any evidence, only one of the trustees of the defendant examined himself as D.W. 1 and got marked Ex. D. 15, Exs. P. 57 and P. 58. On a consideration of the evidence, the Trial Court concluded that the suit is filed by M/s. K. Raghava Reddy and Associates and that actually the defendant has entered into agreement with M/s. Raghava Reddy Associates and that as per Ex. P. 58 the names of the partners shown in the Constitution of the partnership firm M/s. Raghava Reddy Associates at Bellary are not the same partners who constitute the plaintiff-firm. Further, the plaintiff had not placed any material before the Court to show that it was a registered firm as on the date of the suit, the Trial Court has not held that it is a registered firm under the Partnership Act and further held that the suit instituted by the plaintiff as an unregistered firm on the date of the suit was hit by Section 69(2) of the Indian Partnership Act, 1932 and therefore, additional issue 1 was answered in the negative and issue 2 in the affirmative. There is no challenge to the finding of the Trial Court on the additional issues and therefore, the same has become final and we confirm the finding of the Trial Court that the suit filed by the plaintiff was not maintainable in view of Section 69 of the Indian Partnership Act, 1932.

In view of our finding on question No. 1, since the respondent is not a registered firm and taking into consideration the provisions of Section 69(2) of the Indian Partnership Act, we are of the opinion that the suit filed by respondent was not maintainable and the same is ought to be dismissed.

In the result, the above appeal is allowed. The judgment and decree passed by the XVIII Additional City Civil Judge, Bangalore in O.S. No. 2495 of 1997, dated 21-2-1997 are hereby set aside. The suit instituted by the respondent is hereby dismissed. Considering the peculiar facts and circumstances of the case, parties to bear their costs.