NAGALINGAJI J.—KandiahpiUai v. Vythialingam.
1948Present: Soertsz S. P. J. and Nagallngam J.
KANDIAHPILLAI et al., Appellants, and VYTHIALINGAM e< al.,
S. C. 94—1). C. Jaffna 14,151.
Trn.il—Declaration that Kovil is charitable trust—Claim to be hereditary managers—
Compromise—Validity of compromise—Public rights involved—Civil Procedure
Code, section 408—Trusts Ordinance, sections 102, 106.
Under section 102 of the Trusts Ordinance plaintiffs brought this action for adeclaration that the Nagapushani Ammal Kovil was a public charitable trust.Defendants contended that it constituted a private trust. A compromise wasreached whereby the Kovil was to be declared a public trust and a boardof nine trustees were to be appointed of whom four of the defendants were tobo regarded as hereditary trustees. Plaintiffs sought to have this compromiseset aside on the ground that the action did not relate to private rights butbad reference to the rights of the public represented by the plaintiffs andthat the plaintiffs could not become parties to a settlement without the priorassent of those whom they represented.
Held, that a compromise entered into bona fide in such an action was bindingon the parties.
There is nothing in section 408 of the Civil Procedure Code or in any otherprovision of the law which carries such an action beyond the field of compromise.
PEAL from a judgment of the District Judge of Jaffna.
H. V. Perera, K.C., with H. W. Tambiah and S. Sharoananda, for theplaintiffs, appellants.
A. Hayley, K.C.. with P. Navaralnarajah, for the defendants,respondents.
Cur. adv. vuU.
January 27, 1948. Nag AUNG am J.—
The plaintiffs appeal from an order of the District Judge of Jaffnarefusing to set aside the terms of a compromise entered into betweenthem and the defendants to the action.
The action was one instituted under section 102 of the Trusts Ordinancefor a declaration that the Nagapushani Ammal Kovil of Nainativu isa charitable trust within the meaning of the said Ordinance and forcertain ancillary reliefs. The defendants contended that the templeconstituted a private trust. On November 7, 1942, the case was com-promised, and on that date it was agreed between the parties that thetemple should be declared a charitable trust within the meaning ofsection 99 of the Trusts Ordinance and, inter alia, that a vesting order inrespect of the temple and its temporalities should be made in favourof trustees to be appointed by Court. The Court thereupon directedthat a scheme of management consented to by the parties should besubmitted for its consideration. On March 18, 1943, the proctor forthe plaintiffs filed a scheme to which the proctors for the defendantwould not assent, and when the matter was taken up for consideration
NAQALINGAM J.—Kandiahpillai v. Vythialingam.
the defendants objected to the scheme in so far as it did not recognizethe rights of the defendants as hereditary managers of the temple—rightswhich had been put in issue between the parties by issue 9 framed at thecommencement of the trial. The Court thereupon made ordersetting down for trial that issue. The trial of that issue was taken upon August 4, 1944, when a compromise was again reached whereby itwas agreed that there should be a board of nine trustees of whom fourof the defendants were to be regarded as hereditary trustees, and theother five were to be elected by the congregation according to a schemeto be settled thereafter. It is this second compromise that the plaintiffsseek to have set aside.
Two grounds have been urged in support. The first is that by theterms of settlement reached on November 7, 1942, whereunder it wasagreed that trustees were to be appointed by Court, any claim on thepart of the defendants to be declared hereditary trustees was, to saythe least, not accepted by them, and that in fact it was rejected by Court.The second ground is that in any event a compromise whereby the heredi-tary rights of certain parties were given recognition to was one whichit was not competent or lawful for the plaintiffs to have entered intoand much less for the Court to have given legal sanction to without theCourt itself having independently arrived at an adjudication upon thehereditary rights claimed.
In regard to the first ground, it is not without interest to observe thatit was the Judge before whom the compromise was entered into onNovember 7, 1942, who made order thereafter directing that the issueof hereditary right should be tried before the final scheme could be settled.What is more, when the defendants asked that that issue should bedecided by Court, Counsel for plaintiffs, who was the Counsel who hadappeared for them at the date of the settlement, did not object or contendthat that was an issue that did not arise at that stage, as he might verywell have urged if the parties had contemplated that the terms of thesettlement had the effect of concluding the issue as to hereditary rights.One would have expected at least that an appeal would have been preferredfrom the order setting down for trial that issue if the plaintiffs thoughtthat that issue did not arise for determination by the Court after theterms of settlement that had been reached on November 7, 1942. Onthe contrary, the plaintiffs in fact appeared at the trial of the issue withoutdemur. Besides, on the date the terms of the first settlement wererecorded, Counsel appearing for the fifth defendant made it abundantlyclear that while his client consented to a declaration that the templewas a charitable trust and that a scheme of management should beformulated in respect of it, his client claimed to be appointed a trusteein any scheme framed by Court on the ground that his right to be appoin-ted trustee was recognized in a previous case, namely, Case No. 24,476of the District Court of Jaffna. No order was made by the Judge inregard to this claim put forward on behalf of the fifth defendant, nor,in fact, did the plaintiffs deny or controvert in any manner this claim.It is therefore manifest that the right, at least of the fourth defendantto be appointed trustee was one regarded as yet outstanding betweenthe parties when the terms of settlement were recorded. In fact the
N A G AUNG AM J.—Kandiahpiilai v. Vythialingam.
language of the terms of settlement too does not constrain one to holdthat the right of the defendants to be appointed trustees had been dis-posed of by that order, for the settlement only provided for the appoint-ment of trustees by Court. Under section 106 of the Trusts Ordinance,express provision is made for the Court, in determining any questionrelating to the devolution of the trusteeship, to have regard to the in-strument of trust, if any, and to the practice with reference to the partic-ular trust concerned. In this case the defendants had relied uponthe proceedings had in the previous action referred to above and to thedecree entered therein. Apart from that they also claimed to behereditary managers. Both these factors the Court was bound to takeinto consideration before appointing trustees. In these circumstancesit cannot be said that the terms of settlement of November 7, 1942,precluded the defendants from raising the question of hereditary rightto which they rightly or wrongly laid claim. That the plaintiffs them-selves did not even at the date they filed the petition of appeal regardthe question in any other light is borne out by the fact that in theirpetition of appeal they only claim to have the second compromise setaside and pray for an order directing the retrial of issue 9 ; the questionwhether the terms of settlement of November 7, 1942,, barred thedefendants from raising the question, was not even made the subject of aground of appeal.—This first contention, therefore fails.
The next point for consideration is whether the compromise enteredinto on August 4, 1944, could form the basis for a legitimate settlementof the disputes arising on the trial of the question whether the defendantswere hereditary managers of the temple. It was urged that as the actiondid not relate to private rights but had reference to the rights of the publicor of a section of the public whom the plaintiffs represented, the plaintiffscould not become parties to any settlement of the disputes involvedwithout the prior assent of those whom they represented.
The cases of Abdul Karim Abu Ahamed Khan v. Abduls SobhanChoudhury1 and I. E. Seedat v. Mariam Bi Bi2 were relied upon by theappellants. In the former case it is true that Coxe J. who deliveredthe judgment of the Court said :—
“ It appears to me quite clear that if this be a public endowmentthe suit cannot be compromised by this petition. The case of GyanandaAsram v. Kristo Chandra3 is, in my opinion, an authority for this viewand it appears to me to be in accordance with common sense.”
The facts of the case, however, show that the terms of the compromisewere that the suit should be withdrawn for “ample consideration”to he paid to the plaintiffs. Quite clearly, therefore, the attack onthe compromise was on the ground of lack of bona fides and that theplaintiffs were acting collusively in compromising the suit with a viewto their own personal gain. Having regard to this aspect of the matter,the proposition laid down by the learned Judge would be unexceptional.In fact Counsel for the appellants himself was not prepared to go tothe fall length implied by the language used by Coxe J., for if he did,even the compromise entered into on November 7, 1942, declaring,1 A. I. R. (1915) Cal. 193.® A. I. R. (1939) Rangoon 108
8 (1904) 8 O. W. N. 404.
NAGALINGAM J.—KandiahpiUai v. Vythialingam.
the temple » charitable trust, would have to be regarded as of no effect.Counsel therefore argued that the terms of a compromise relating to acharitable trust must be severed into two parts, those which are to thebenefit or to the advantage of the <rust and those which are not, theformer being regarded as valid and binding upon the parties, the latteras invalid and inoperative. But I think it will be more true to say thatthe principle to be deduced from this case and the second of the casescited, where the finding was that the compromise was a collusive one.is that where in an action under section 92 of the Indian Civil ProcedureCode, which corresponds to section 102 of our Trusts Ordinance, a compro-mise bearing a taint of collusion or lack of bona, fides is presented tocourt, it would not be given effect to.
That this view is the correct view is borne out by the case of SyedAbu Mohamed Barakat Ali v. Abdur Rahim1 where in reference to thetwo cases above cited the Judges expressed themselves thus :—
: These cases only show that in a suit brought under section 92,Civil Procedure Code, when a petition of compromise is filed, it isopen to the Judge to say that the compromise is not lawful and hecould then refuse to pass an order on the basis of the compromise.But it is another thing to say that a Judge .has no jurisdiction to passa decree on the basis of compromise in a suit brought under section 92,Civil Procedure Code. Order 23 of the Code of Civil Procedure dealingwith adjustment of suits makes no such distinction.”
Order 23 referred to corresponds to Chapter 26 of our Civil ProcedureCode. Section 408 of the Code expressly permits of an action beingadjusted wholly or in part by any lawful agreement or compromise,and there is no exception in that section excluding actions relating tocharitable trusts from its scope, nor, in fact, is there any other provisionof the law which carries such an action beyond the field of compromise.A contrast is provided by actions relating to minors, for section 500 ofthe Civil Procedure Code expressly enacts that no compromise on behalfof a minor should be entered into without the express leave of Court.No such provision exists in relation to charitable trusts.
An argument based on section 106 of the Trusts Ordinance was alsoadvanced. It was said that as that section provides that in settlingany scheme for the mangement of any trust under section 102 or indetermining any question relating to the devolution of the trusteeshipthe Court shall have regard to the practice with reference to the partic-ular trust concerned and therefore it was incumbent upon the Courtto investigate and ascertain whether there was in fact any practice withregard to the particular trust; and therefore, where a claim to hereditarytrusteeship is made, the Court would not recognize such a claim unleesproof to the satisfaction of the Court was adduced. In other wordsthe Court could not act upon the bare consent of parties. I do not thinkthis contention is entitled to prevail. For one thing, the section onlyemphasises the fact that the Court should not ignore the existence of anyparticular practice in regard to, for instance, the devolution of the trus-teeship of the temple, that is to say, that where the parties are agreed
» A. 1. R. (1925) Cal. 187.
NAGAUNGAM J.—BLandiahpiUai v. Vythudingam.
that there has been a particular method of devolution appertaining tothe office of trustee of a temple, the Court cannot refuse to consider theexistence of the accepted method of filling the office of trustee in makingan appointment. By acting upon the consent of parties and givingrecognition to the existence of the particular mode of filling the officethe Court would not be ignoring the practice in regard to devolutionof the trusteeship but would be having in the fullest sense regard to theaccepted practice. The language of the section cannot be interpreted tomean that there is a duty cast upon the Court to pursue the matter ofthe existence of any particular practice on its own, though the partiesthemselves are agreed upon the existence of such a practice. In thiscase, therefore, it would be quite proper to say that.the Court, in givingeffect to the compromise suggested by the parties whereby four of thedefendants were appointed hereditary trustees, had in terms of the sectionregard to the practice that had been prevalent in filling the office oftrustee.
In this case, there is not the slightest suggestion that the parties weremotivated by other than bona fide considerations of the strength andweakness of the ease of either party before they reached the settlement.In fact, where the parties themselves in these circumstances compromisea suit, such a compromise must be regarded as doing justice betweenthe parties in even a more ample measure than an adjudication by Court.Besides, section 102 of the Trusts Ordinance itself expressly recognizesthat a dispute or a threatened action in relation to charitable trustscould properly form the subject of a settlement. Upon the plaintiffsin an intended action under the section presenting a petition as providedtherein to the Government Agent, the Government Agent or a commis-sioner appointed by him has to proceed to inquire into the subject-matterof the plaint and has to report to Court, inter alia, that it has not provedpossible to bring about an amicable settlement of the question involvedor that the assistance of the Court is required for the purpose of givingeffect to any amicable settlement that has been arrived at. The Legis-lature, therefore, has expressly provided for the Government Agentor the Commissioner making efforts to settle the dispute, and wherein any case the dispute is settled and the assistance of Court is deemednecessary, to apply to the Court for such assistance, and the Court would,in such a case, grant its assistance and give effect to the settlement.Is there any reason why, if the Court could give judicial sanction to asettlement reached outside Court, it should be precluded or debarredfrom giving effect to terms of settlement reached by the parties afterthe dispute has been carried into Court after unsuccessful attempts hadbeen made to settle it outside Court ? I can see no principle upon whichany distinction could be made between the two classes of cases.
Leaving out of consideration the question of collusive or fraudulent com-promises or those tainted with mala fides, to which other principles wouldapply, no good reason exists for holding that where parties to an action re-lating to a charitable trust enter bona fide into a compromise, that compro-mise is to be deemed to be invalid or inoperative. I am therefore ofopinion that the terms of settlement reached on August 4, 1944 arevalid and binding on the parties.
Maruthappen v. Ashton.
The propriety of the appeal was also a question that was raised atthe argument. The order of August 4, 1944, which is sought to be setaside, is one, it will be remembered, which was made by consent ofparties. It is obvious that no right of appeal lay from such an order.A faint attempt was made to show that only one of the five plaintiffswas present in Court on that date and that the other four were absentowing to certain causes over which they had no control; but it is to benoted that all the plaintiffs were collectively represented by Counsel,who expressly agreed to the terms of settlement on behalf of the absentplaintiffs themselves, while the plaintiff who was present in Court himselfsigned the terms of settlement accepting them. The proposition iswell established that Counsel is entitled to compromise a suit actingin his discretion in the interests of his client and that even where theterms of settlement entered into by Counsel are contrary to the instruc-tions given to him by the client they nevertheless bind the client, unlessit can be shown that the opposite side had knowledge that Counsel wasacting contrary to authority. The terms of settlement, therefore,entered into in this case by Counsel bind all the plaintiffs, and the orderbeing one made by consent of parties is not one that was appealable.With a view to surmount this difficulty, what the plaintiffs have doneis to make an application to Court to have the consent order vacated andto appeal from the order refusing to set it aside. This does not givethe plaintiffs the right to canvass the validity of the compromise on thisappeal. The plaintiffs themselves, anticipating such an objection, filedpapers in revision, and all questions have been permitted to be argued.In view of the conclusions reached on the questions raised in appeal, whichare identically the same as those put forward in the revision papers,the application for revision also fails.
I would therefore dismiss the appeal and refuse the application forrevision with costs.
Soertsz S.P.J.—I agree.
KANDIAHPILLAI et al., Appellants, and VYTHIALINGAM et al., Respondents