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Judgment
Kumaraswami Sastri, J.—This is an application to revise the order of the District Munsif of Ramnad directing the Secretary of State for
India in Council to be made a party to the suit which was filed by the Raja of Ramnad against the Union Board of Ramnad for a declaration that
certain streets around his palace belong to him and are not vested in the Union Board. Trouble seems to have arisen from the fact that during the
survey under the Survey Act, these roads were classified as public streets The suit, however, as appears from the note of the District Munsif was
not a suit under the Survey Act but was a suit by the plaintiff to establish his title to the roads. There was a compromise entered into between the
Raja of Ramnad and the Union Board and this compromise was entered into after a resolution of the Union Board. A joint petition was put in
under Order XXIII, Rule 3 of the C.P.C on the 26th of April 1924 where it was stated that the parties had come to an agreement and that a
decree should be passed in terms of the razinamah. By that razinamah the defendant Board recognised the ownership of the plaintiff over the lanes
A, B and C mentioned in the Commissioner''s plan; the plaintiff was to allow the public free use of the lanes from 5 A.M. till 9 P.M. for ever; and
the plaintiff was given the right to close the lanes except during the hours when the public were allowed access; each party was to bear its own
costs. It was prayed that a decree be passed in terms of this razinamah. This petition was put in on the 26th of April but no order was passed on it.
It appears from the affidavit filed on behalf of the Secretary of State for India in Council that the Government on the 4th of July 1924, long after
this petition was presented, and purporting to act u/s 30 of the Local Boards Act rescinded the resolution of the Union Board to enter into a
compromise. On the date the petition to record the compromise came on for hearing, the Secretary of State for India in Council put in a petition to
be made a party to the suit and the District Munsif without deciding the petition already filed to record the compromise passed an order making the
Secretary of State for India in Council a party to the suit. The present revision petition is filed against that order.
The contention of Mr. Krishnaswamy Iyer for the petitioner is that, under Order XXIII, Rule 3, C.P.C., the Court was bound to pass a decree
in terms of the compromise, such compromise being legal and valid and that it was not competent to the Court to add a party to the proceedings
where the original parties terminated the suit by a lawful compromise. Order XXIII, Rule 3 runs as follows:-- ""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, or where the defendant satisfies the plaintiff in
respect of the whole or any part of the subject matter of the suit the Court shall order such agreement, compromise or satisfaction to be recorded,
and shall pass a decree in accordance therewith so far as it relates to the suit."" It seems to me to be clear that if this compromise between the
Union Board and the plaintiff was a lawful and valid one, the District Munsif had no power to add any party but he had only power to pass a
decree in terms of the compromise.
Sankaralinga Nadan v. Rajeswara Dorai 351 A. 176 (P.C.) has no application. In that case the defendants who were Shanars were sued as
representing their community. The High Court found that the compromise after decree passed in favour of the trustee by the Subordinate Judge
was a breach of trust on the part of the trustee and that third parties interested were entitled to intervene. Their Lordships of the Privy Council
upheld the order of the High Court In the present case there is no such charge and the suit is not filed by or against either party in a representative
character.
The fact that the petitioner claims a right or interest in the matter cannot, if the suit was terminated lawfully by the original parties thereto, allow
third parties to agitate their rights in the suit. If third persons have, any interest in the matter, their remedy is to file a separate suit. The District
Munsif has passed no orders on the validity of the compromise and I think that the order which he has passed making the Secretary of State for
India in Council a party is clearly premature. The first question to be determined was whether the compromise was legal. On this part of the case I
have heard the arguments both of Mr. Krishnaswami Iyer for the petitioner and of Mr. Anantakrishna Iyer for the Secretary of State. Mr.
Krishnaswami Iyer argues that the Local Boards Act constitutes the defendant, the Union Board of Ramnad as a Corporation with all rights of
suing or being sued, or acquiring, holding or transferring property moveable or immovable, or to contract and do all other things which it considers
proper or expedient for the purposes for which it was constituted. The streets vested in the Board under the Act and that Board was, having
regard to the allegations in the plaint, the proper party to be impleaded. The contract, therefore, which resulted in the razinamah was a contract
entered into by a body which had authority to enter into the contract. Such being the case, there could be no question of the contract not being
enforceable. It is contended by him that the provisions of Section 38 of the Act, which gives the Government the power to suspend or cancel any
resolution of the Local Board, can only be exercised so long as the matter rests in the stage of a mere resolution which as between the Board and
the Government the Government can interfere with, and that so long as the rights of third parties are validly created under a contract which cannot
be impeached on the ground of fraud or misrepresentation or ultra vires, the contract is enforceable irrespective of what the Government may do
u/s 38. Reference has been made to the decisions in Allen v. Gold Reefs of West Africa 16 T.L.R. 213, 7 Man 417; British Murac Syndicate v.
Alperton Rubber Company 31 T.L.R. 391 and Baily v. British Equitable Assurance Company (1904) 1 Ch. 374 : 73 L.J. Ch. 240 : 90 L.T. 335,
52 W.R. 549 : 20 T.L.R. 242 and to Vol. VIII of Halsbury''s Laws of England p. 384. It is argued by Mr. Anantakrishna Iyer that Section 38 by
necessary implication renders all contracts invalid where such contracts are based upon the resolution which has been set aside by the Government
in other words, that all contracts which are entered into by Local Boards will by virtue of Section 38 be of no effect if the Government later on
rescind the resolution by virtue of the powers vested in them under that section which gives no time within which the contract may be rescinded.
This would really mean that all contracts are liable to the risk of being cancelled at any period irrespective of the rights of the parties. As at present
advised, I am not prepared to concede so wide a proposition, but it is unnecessary for me to give any decision on the point at this stage of the
proceedings especially as any decision passed by me on this point would not be subject to an appeal. If the case goes to the District Munsif for
adjudication as to the validity of the compromise and should he pass any order one way or the other, it would be subject to an appeal. As it is, it is
difficult to uphold the order of the District Munsif who adds a party without determining whether the compromise has put an end to the suit. There
is no question about the effective addition of parties. I also refrain from saying whether, should he hold that the compromise is invalid, this is a case
in which the Secretary of Slate for India in Council should be made a party.
The result is that the order of the District Munsifis set aside and the case, remanded for disposal in the light of the observations made above.
Costs will abide and. follow the result.