Kerala High Court · 2007

CRP.933/02R1 BY GOVT.PLEADER MR.SHYSON P.MANGUZHA R3 BY ADV. SRI.V.K.ISSAC SRI.ISAC SANJAY R4 BY ADV. SRI.M.S.NARAYANAN THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 7.9.2007, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ORDER ON CMP.NOS.2428/02, 144/06 & 1624/06 CLOSED7.9.2007SD/-PIUS C.KURIAKOSE, JUDGE/TRUE COPY/ PIUS C. KURIAKOSE, J...........................................................C.R.P.No.933 OF 2002...........................................................DATED THIS THE 7TH SEPTEMBER, 2007O R D E RThis Civil Revision Petition is also directed against the commonorder which is impugned in C.R.P.No.948 of 2002. I have today, by aseparate detailed order, disposed of C.R.P.No.948 of 2002. That orderanswers the grounds raised in this revision petition also. In view ofthe order in C.R.P.No.948 of 2002, this Civil Revision Petition isdisposed of without any order as to costs.(PIUS C.KURIAKOSE, JUDGE)tgl PIUS C.KURIAKOSE, J...........................................C.R.P.NO.933 OF 2002O R D E R7TH SEPTEMBER, 2007...........................................

2. After evaluating the evidence, the execution court found thatExt.B2 agreement executed by late Dr.Babu in favour ofAyyappankutty was an equitable assignment of Dr.Babu's right toexecute the award of the land acquisition court and on that findingheld that neither Dr.Babu nor his legal heirs are entitled to execute thedecree and accordingly dismissed E.P.238 of 1998. The contentionadvanced by the legal heirs of Dr.Babu that E.A.605 of 1998 hadabated due to deliberate non-impleadment of them was ignored by thecourt below which went on to allow E.A.No.605 of 1998 therebydirecting release of the entire amount under deposit toSri.Ayyappankutty.3. I have heard the submissions of Mr.Ranjith Thampan, learnedcounsel for the petitioners in C.R.P.No.948 of 2002,Sri.N.Subramaniam, counsel for Joy Kuriakose who was the petitionerin C.R.P.No.836 of 2002 and 874 of 2002 and also Sri.V.K.Isaac,learned counsel for Ayyappankutty. I have also heard thesubmissions of Sri.Shyson P.Manguzha, learned Government Pleaderon behalf of the State.4. Sri.Ranjith Thampan would submit that E.A.605 of 1998 filedby Ayyappankutty arraying late Dr.Babu as the party-respondent had become abated as against the legal heirs of Dr.Babu due to deliberatenon-impleadment of them. Yet the execution court has proceeded toallow E.A.605 of 1998 with Dr.Babu on the array of parties, acircumstance which vitiates the order in that E.A. The learnedcounsel submitted that Ayyappankutty did not have a plea of equitableassignment of all the rights of Dr.Babu in the decree to him.Nevertheless, the execution court went beyond the scope of itsjurisdiction to uphold such a plea on the basis of certain inappositejudicial precedents which were cited before him on behalf ofAyyappankutty. The power of attorney Ext.B1 was revoked byDr.Babu himself during his lifetime and at any rate the power ofattorney could not survive Dr.Babu who passed away during thependency of the E.P. filed by him. No agency can survive the principal,submitted the learned counsel. Description of a power of attorney asirrevocable will not render the power of attorney irrevocable unless thepower conferred is coupled with any interest which the agent had inthe subject-matter. The entire transaction between the parties is voidbeing violative of Section 6(e) of the Transfer of Property Act and alsoSection 53 of the Contract Act. The total compensation is more thanRs.53 lakhs and the transaction discernible from Exts.B1 and B2 relied on by Ayyappan is an agreement to share the compensation in theratio Rs.9 lakhs: the entire balance, between the decree-holderDr.Babu and Ayyappankutty, the agent. The agreement ischampertous and hence illegal. The agreement at any rate isunconscionable and unenforceable due to that reason. Ext.B1 powerof attorney and Ext.B2 agreement relied on by Ayyappankutty andapproved by the court are not admissible in evidence in view of Section17 of the Registration Act read with Section 49 of the same Act. Evenaccording to the testimony of Ayyappankutty, he was a proxi for thePresiding Officer concerned. His testimony was that he does not knowEnglish, that he and the Presiding Officer concerned are fellow-villagers, that the Presiding Officer concerned was instrumental forexecution of Exts.B1 and B2 in his favour and that corrections havebeen made in Ext.B1 power of attorney by the Presiding Officer underhis own handwriting. These admissions coming from the mouth ofAyyappankutty himself and the circumstance noticeable from theamterials available in the records relating to the previous executionpetitions as well as the originals of the records of the land acquisitionreference case will establish to the very hilt that Exts.B1 and B2 were byproducts of sheer abuse of legal process and perpetration offraud not only on the petitioner but also on the judicial system itself.Any claim based on Exts.B1 and B2 was to be repelled on the shortscore that out of the per se illegal transaction, legitimate claims cannever originate. Sri.Renjith in his submissions drew my attention toSection 6(e) of the Transfer of Property Act, 1882 and 201 of theIndian Contract Act, 1872 as well as to Sections 17 and 49 of theRegistration Act, 1908. The learned counsel would endeavour todistinguish the decisions relied on by the court below on the factswhich obtain in this case and would refer to all those decisions,referring in particular to Joseph George v. Cochin Sanitary Wares(1991 (2) KLT 447). Mr.Ranjith also referred to the judgment of theBombay High Court in In re K.L.Gauba (AIR 1954 Bombay 478) andthe judgments in Kamrunnisa v. Pramod Kumar Gupta (AIR 1997Madhya Pradesh 106) and N.Venkataswami v. K.Nagi Reddy (AIR1962 Andhra Pradesh 457). Though English Law of Champerty andMaintenance may not as such be applicable in India, the present onebeing a case involving an advocate and a judicial officer, Ext.B2agreement has to be found illegal and hence liable to be ignored,submitted counsel.

5. Sri.N.Subramaniam, learned counsel for Mr.Joy Kuriakosewas permitted to address arguments in support of the grounds raisedin C.R.P.Nos.836 and 874 of 2002. The learned counsel submittedthat the court below had declined any relief to Joy Kuriakose on thereason that he did not adduce any evidence in support of his claimbased on his subsequent agreement with Ayyappankutty. Theagreement between Ayyappankutty and Joy Kuriakose has beenproduced in the execution proceedings. E.P.108 of 1999 had beenfiled by Joy Kuriakose on the basis of that agreement. The stampedreceipt issued by Ayyappankutty for receiving Rs.One lakh from JoyKuriakose had also been produced. Ayyappankutty denied executionof these documents and his signature in both. The original of theagreement between Dr.Babu and Ayyappankutty, the receipt dated24.7.1995 from Dr.Babu to Ayyappankutty, the further power ofattorney executed by Dr.Babu in favour of Ayyappankutty dated24.7.1995 regarding payment of tax due on the compensation amountwere all produced by Joy Kuriakose only. The receipt for Rs.One lakhwas issued by Ayyappankutty in his own handwriting. E.P.108 of1999 was not enquired into since the same was not pressed ontechnical reasons. Thereafter, Joy Kuriakose filed E.P.199 of 1999. To that E.P. also Ayyappankutty filed detailed objections reiterating hisearlier contentions. The word “champerty” has its origin in the French word “champsparti” meaning “split field”. Black's Law Dictionary would definechamperty as an agreement between an officious inter-meddler in alaw suit and a litigant by which the intermeddler helps pursue thelitigant's claim as consideration for receiving part of any judgmentproceeds. To be more specific, champerty and maintenance meansan agreement between the claimant in a litigation and a partyunrelated to the litigation under which the unrelated party agrees tomaintain and support the litigation on condition that the fruits of thelitigation will be shared between them. In England, champerty andchampertous agreement are illegal. But in India, an agreementbetween a party to the litigation and between another person who isnot a party to the litigation to share fruits of the litigation does notbecome illegal for the sole reason that the agreement is champertous.At the same time, if it is revealed that the object of the agreement isillegal or if the conditions of the agreement are violative of theprinciples of equity, justice and good conscience or the agreementdiscloses an unconscionable bargain, then, the courts in India willcertainly find the champertous agreement to be illegal and refuse toenforce the same. A Division Bench of this Court consisting of M.S.Menon, J. (as HisLordship then was) and T.K.Joseph, J. considered the question as towhether Champerty agreements are illegal in India and also whetherrules of English law against Champerty and maintenance apply inIndia in considerable detail. Following the judgment of the SupremeCourt in AIR 1954 S.C. 557 their Lordships held that if no Advocatesare involved in the agreement, the agreement does not become illegalor enforcible in India for the only reason that the same is Champerty.The agreement which was considered by the Supreme Court in AIR1954 S.C. 557 was an agreement between an Advocate and a litigatingclaimant under which it was agreed that the entire litigation will befinanced and conducted by the Advocate without claiming any chargesin advance but once the fruits of the litigation are realised, theAdvocate will be given 50% of the same. The Supreme Court did notenforce the agreement noticing that an advocate was involved. Whilerefusing to enforce that agreement that the agreement was betweenthe claimant and the somebody who was not an Advocate, then theagreement would have been upheld and enforced. The Champertyagreement which was considered by the Division Bench consisting ofM.S.Menon and T.K.Moseph, JJ. (Damodar Kilikar & Others v. Oosman Abdul Gani [1961 KLJ 356] ) did not have the junction of anyAdvocate. Noticing that fact and finding that the agreement was notimmoral or opposed to public policy and that the terms of theagreement are not unjust or shocking to the conscience, the DivisionBench upheld the agreement. But the distinction between the law inEngland and the Indian law regarding Champerty agreements is thatwhile in England Champerty agreements, whoever the parties to thesame are, are per se illegal in India such agreements become per seillegal only if Advocates are involved. It was submitted incidentallybefore me by all the counsel appearing in this case that a practice ofclaimants and Advocates entering into agreements of Champerty andmaintenance is invoked in several parts of the State regarding conductof compensation claims such as M.A.C.T.Compensation, LandAcquisition Compensation and Workmen's Compensation. However,having regard to the law in India relating to the Champertyagreements, any agreement between a lawyer and a client forpayment of the fruits of an award or decree or payment of a portion ofthe fruits of an award or a decree as consideration for the lawyersfinancing the litigation or conducting the litigation by way of Advocatefees or other charges will be found illegal and will not be enforced in any court. At the same time it should be pointed out that there isnothing illegal in an Advocate entering into an agreement with theclient for payment of Advocate fees which is not dependent orcontingent on the result of the litigation, even if the fees so agreedupon is in excess of the fees prescribed under the Rules relating topayment of Advocate Fees. In other words, there is no illegality in theAdvocate and the party agreeing to pay or receive a fees higher orlesser than the fees prescribed by the Advocate Fees Rules. Therelevance of Advocate Fees Rules, 1969 is only that the sameprovides the maximum fee recoverable from the opposite side as partof the case in the event of the claim being upheld. I am obliged to refer now to a very serious argument which wasaddressed before me by Adv.Mr.Ranjith Thampan. Mr.Ranjith Thampansubmitted that Ext.B2 is per se a Champerty agreement and thatthough it does not have the junction or involvement of an Advocate,the same is vitiated due to involvement of a judicial official. Mr.RanjithThampan would highlight before me various aspects which according tothe learned counsel establishes the involvement of the officer whopresided over the land acquisition reference court at the time when thedecree was passed by this court. It is not necessary for me to find out one way or other as to whether Exts.B1 and B2 has involvement ofany judicial officer since I have already found Exts.B1 and B2 to beillegal on other reasons.Section 6 of the Advocates Act, 1961 lays down the functions of the State Bar Councils which includes entertainment and determinationof cases of misconduct against advocates on its roll—the judgment ofthe Supreme Court in C.Ravichandran Iyer v. A.M.Bhattacharjee[(1995) 5 SCC 457] lays down that the Bar Council is duty bound tomaintain ethical and professional standards among lawyers.By virtue of its rule-making powers conferred under theAdvocates Act, 1961 the Bar Council of India Rules, 1975 have beenframed by the Bar Council of India (General power of the Bar Councilof India to make Rules under Section 49 – Section 49(1)(c) deals withpower to make rules regarding the standards of professional conductand etiquette to be observed by advocates). Part VI of Bar Council ofIndia Rules, 1975 contains rules governing advocates and Chapter IIprovides for standards of professional conduct and etiquette. SectionI of this Chapter lays down the duty to the Court. Clause 3 thereinprovides that an advocate shall not influence the decision of a Court byany illegal or improper means. Private communications with a Judgerelating to a pending case are forbidden. Clause 4 provides that anadvocate shall use his best efforts to restrain and prevent his clientfrom resorting to sharp or unfair practices or from doing anything inrelation to the Court, opposing counsel or parties which the advocate himself ought not to do. Section II provides for the duty to client andClause 20 therein is as follows:-“An advocate shall not stipulate for a fee contingent on theresults of litigation or agree to share the proceeds thereof.”The oath which is sworn to by a judicial officer when he assumesreads as follows:-“ I ................ do swear that I will be faithful and bear trueallegiance to India and to the Constitution of India as by lawestablished, that I will uphold the sovereignty and integrity of India,and that I will carry out the duties of my office loyally, honestly andwith impartiality.”Whether a transaction is unconscionable or not will depend onthe facts of each case. A transaction may be unconscionable in manyways and the court should see in each case according to its sense ofjustice if it is really so. Section 19 of the Contract Act deals withvoidable agreements and the same provides that when consent to anagreement is caused by coercion, fraud or misrepresentation, theagreement is a contract voidable at the option of the party whoseconsent was so caused. Section 24 of the Contract Act says:“Agreements void, if considerations and objects unlawful in part—If any part of a single consideration for one or more objects, or any oneor any part of any one of several considerations for a single object, isunlawful, the agreement is void.” Section 25 provides that agreementwithout consideration is void unless it is in writing and registered, or isa promise to compensate for something done, or is a promise to pay adebt barred by limitation law. Section 26 says that agreement inrestraint of marriage is void and Section 27 says that agreement inrestraint of trade is void. Section 28 provides that agreement inrestraint of legal proceedings is void. Section 29 provides foragreements void for uncertainty (agreements, the meaning of which isnot certain, or capable of being made certain are void). Section 30provides that the agreements by way of wager are void. The mostimportant Section is perhaps Section 23 which reads as follows:-“23. What considerations and objects are lawful and what not.--The consideration or object of an agreement is lawful, unless--it is forbidden by law; oris of such a nature that, if permitted, it would defeat theprovisions of any law; or is fraudulent; or involves or implies injury to the person or property of another, orthe Court regards it as immoral, or opposed to public policy.In each of these cases, the consideration or object of anagreement is said to be unlawful. Every agreement of which theobject or consideration is unlawful is void.”An agreement between two persons to commit fraud on a third party isvoid.Public PolicyRules of public policy do not belong to a fixed or customary law.They are capable on proper occasions of expansion and modification.The question whether a contract is opposed to public policy or not is tobe decided on general principles only and not by consideration of theterms of a particular contract. The doctrine of public policy should beinvoked only in clear and uncontestable cases of harm to publicinterest (1976 KLT 448). The term “public policy' does not admit of any definition. It isequivalent to the policy of law. Whatever tends to injustice ofoperation, restraint of liberty, commerce and natrual or legal right;whatever tends to the obstruction of justice or to the violation of astatute and whatever is against the good morals when made the object of a contract is against a public policy and therefore void (AIR 1964 AP465)AIR 1959 SC 781