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1946 (7) TMI 1 - Privy Council

1946 (7) TMI 1 - Privy Council - TMI - Dated:- 31-7-1946 - JUDGEMENT - ( 1. ) The questions referred concern the powers of an agent and counsel respectively to refer a dispute pending in a Court to arbitration without express authority from the principal. ( 2. ) The facts briefly are that the appellant sued for possession and certain other reliefs. The trial proceeded at some length (evidence was recorded, there was an appeal, a remand and so forth) and eventually an application was made to the .....

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eference. It was signed by one Mohanlal on behalf of the plaintiff and by the plaintiff's counsel (an advocate), and on the other side by one Chunilal and the defendant's counsel. Mohanlal held a special power of attorney (a khas mukhtyarnama) and his counsel also had a vakalatnama. Neither of these documents confers express authority to refer the dispute to arbitration. The plaintiff challenges their respective powers to make the reference on his behalf. In the two lower Courts the auth .....

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o refer is included not only in the words to compromise and to sign compromise petitions," but also in the more general clause, and whatever would be required to be done in the conduct of this suit would be done by the agent and the same would be binding on me as if I had done the same. ( 3. ) As against this, the other side contended that a power to refer is not included in the power to compromise and that the general clause is restricted to matters done in the conduct of the suit, and tha .....

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term has acquired a technical or secondary significance in the English Courts which cannot be extended to a vernacular term literally restricted to a giving and taking "between ourselves," especially as there is no case law on the point in India and accordingly it cannot be contended that these vernacular expressions have acquired an extended significance beyond their literal meaning because of time-honoured practice or custom. ( 4. ) This raises the question whether we can go behind .....

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s one of the meanings of the English word "compromise" as used in Courts of law. See as to this Chanbasappa v. Basalingayya A.I.R. 1927 Bom. 565 and the observations of the Pull Bench in Ramdayal v. Sheodayal A.I.R. 1939 Nag. 186 ; also Subbaraju v. Venkat Ramaraju A.I.R. 1928 Mad. 1025 , Basaoo v. Jagan Nath A.I.R. 1931 Oudh 127 and Laljee Serang v. Chanderbhan A.I.R. 1931 Rang. 58. But we do not intend to decide that here, so far as the agent, as opposed to counsel, is concerned, bec .....

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is a convenient though loose, but nevertheless accurate translation of longer phrases used in another language. ( 5. ) Now the power of attorney confers express authority on the agent to settle the dispute between themselves by "give and take." But it does not stop there. It goes on, and whatever would be required to be done in the conduct of this suit would he done by the agent and the same would be binding on me as if I had done the same. We think this second phrase must be read in .....

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itration. That is one of the recognised methods of settling disputes which come before the Courts. It is therefore one of the matters required or necessary to be done, as necessary as to decide whether to compromise, using the term in its more restricted sense as meaning to adjust the differences by mutual agreement. In our opinion, the English word "compromise" embraces both methods of settlement. The document in this case does not use the English term but sets out its two shades of m .....

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rticular power of attorney used in this case and express no opinion regarding other powers which use only one term or restrict themselves to one phrase. Pollock and Mulla point out at p. 539 of Edn. 7 of their Indian Contract and Specific Relief Acts that though a power of attorney must be construed strictly, and though, where special powers are followed by general words the general words are to be construed as limited to what is necessary for the proper exercise of the special powers and as enl .....

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tition against a debtor of the principal. If a bankruptcy petition, then why not a reference to arbitration during the pendency of a suit? ( 7. ) We answer the first question as follows. The express authority given to the agent in this case to "compromise" includes the power to refer the suit to arbitration because the document sets out in separate phrases the two aspects of "compromise" which the single English word normally connotes. We express no opinion as to what should .....

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, or plead without filing a memorandum of appearance. Our answer is yes, they can. We will consider the power to compromise first. The Judicial Committee of the Privy Council decided in Sourendranath v. Tarubala Dasi that the power to compromise a suit without reference to the client is inherent in the position of an Advocate in India. It is implied in the authority conferred on him by the client to conduct the suit on his behalf in the best way possible, unless the implied authority is expressl .....

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(p. 538): Such an instrument is construed strictly, and confers only such authority as is given expressly or by necessary implication. But the whole point is, what are the necessary implications when counsel is appointed? ( 10. ) Now as to this, their Lordships of the Privy Council have laid down the general rules which govern counsel in England, in Scotland, in Ireland and in India; also, we would add, in the United States of America. (See Story on Agency, Section 24). Their Lordships point out .....

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he must make the final decision, whether evidence is to be given or not on any question of fact; skill in advocacy is largely the result of discrimination. These powers in themselves almost amount to powers of compromise: one point is given up that another may prevail. (p. 1317). Consider the impracticability of any other rule. It would be next to impossible for a power of attorney to envisage every contingency and to embody every act and duty which it may be necessary for counsel to perform in .....

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cessity, leaves matters which are to be implied. Such contracts must therefore, be construed with reference to the surrounding circumstances and the parties who made them. Section 9, Indian Contract Act provides for this. As Pollock and Mulla observe at p. 58 of their work: The language of the section appears to assume that the terms of a contract may be (as undoubtedly they may, by familiar law and practice) partly express and partly implied.... There is a class of cases, of considerable import .....

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action in like circumstances. ( 11. ) What is the engagement of counsel but a special kind of contract? It is true, Barristers cannot sue for their fees in England because of a fictitious supposition that they are acting not for reward but for an honorarium. But the essentials of contract are there. They must be engaged (retained as it is termed). That must be done by an agent of the client (his solicitor). It must be on behalf of the client. Counsel must agree to act (accept the brief, it is ca .....

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ent in writing." Say, a power were to say quite simply, I hereby appoint to act for me in such and such a case or, as the power in the present case says: to conduct this suit. would that be an invalid power? Would it be void for uncertainty? Of course it would not. It would be in exact compliance with the provisions of the statute and the Court would read into the document all those terms which the law implies when counsel are engaged, terms which the Privy Council tell us are implicit in t .....

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oment the general clause and assume that a pleader was appointed. Formidable as this array of powers looks it is yet incomplete. The man is empowered to produce documents, but not to produce witnesses. He is not empowered to crossexamine. He cannot administer or answer interrogatories, for ins strictness, these are not "applications." He can "plead", but not file a plaint because he has not been empowered to "act" generally, but only to do the specified things set o .....

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and whatever would be required to be done in the conduct of this suit. Where do we get now? Apply the ejusdem generis rule and even then it is necessary to construe it with relation to the usual powers of a pleader. View the matter how you will, it is impossible to escape the conclusion that the conduct of cases in Indian Courts would become unworkable unless powers are construed in the light of their Lordships' observations. 21. Now we have referred here to the power given to the agent and .....

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sed through usage. It is on a par with a trade where the usage becomes an additional term of the contract, "if not contrary to the general law or excluded by express agreement." Compare the rule given by Pollock and Mulla at p. 58 with what their Lordships say at p. 1818: First, the implied authority of counsel is not an appanage of office, a dignity added by the Courts to the status of barrister or advocate at law. It is implied in the interests of the client, to give the fullest bene .....

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ary because of Order III, Rule 4, and the case their Lordships decided, lies in the necessity of obtaining a writing as a condition precedent to the appointment. 23. Once this is accepted then, because of what their Lordships say, the authority to compromise is implicit in the appointment unless it is expressly countermanded, and that, whether there is authority expressly conferred by the power or not. We answer this part of the question accordingly. 24. The Calcutta High Court held in Askaran C .....

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ot so limited. It is general and can only be qualified by express prohibition; not necessarily however in writing, or in the power, provided of course the compromise relates to matters in the suit and not outside it. We also recognise that our view is contrary to the one expressed in Jagapati v. Ekambera (98) 21 Mad 274 where a distinction is drawn between a pleader and other advocates; also to the view in some other cases. With the utmost respect we differ from them. 25. We think it right to ad .....

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y referred to the cases which hold that one of the meanings of compromise is arbitration, indeed, that, according to some authorities, was its original meaning, and it is still its primary meaning in the dictionaries. We are referred to an impressive list: Murray's Dictionary: Ainsworth's Latin English Dictionary: Wharton's Law Lexicon: The Oxford English Dictionary: and Story's Equity Jurisprudence. To this we add Sir Dinshah Mulla's opinion at p. 15, Edn. 11, of his Civil P .....

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a and agree with the opinion of Pollock and Mulla. 27. The Privy Council tell us that there is inherent in the position of counsel an implicit authority to do all that is expedient, proper and necessary for the conduct of the suit and the settlement of the dispute. One method of settlement is compromise as ordinarily understood. Another is compromise by arbitration. There can be no question that a reference is right and proper because the law contemplates it. The Indian Arbitration Act, and befo .....

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mise applies equally to the power to refer. In the circumstances it would be illogical to concede the one and withhold the other, and this, quite apart from the dictionary meaning of the word 'compromise', 28. Turning next to Order 3, Rule 4, consider again the case in which a pleader is appointed simply to "act" without any attempt to set forth the scope of his acting. (That incidentally is in substance the power given to the plaintiff's counsel in this case). Is compromis .....

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s no distinction between the various lands of acting, and consequently we are relegated to the general powers of counsel as envisaged by the Privy Council. As we have shown, there is in their Lordships' opinion no distinction between the power of counsel in England, Scotland and Ireland and advocates in India who are not required to file a power. 29. Had it not been for Order III, Rule 4 there would have been no distinction at all. Order III, Rule 4 therefore makes the difference. But the on .....

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