Advocate Cannot Compromise Without Client's Authorisation

Source: Supreme Court  

Why in News? 

A Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh of the Supreme Court, in Krishna Kumar Ojha & Ors. v. Jitendra Chaudhary & Ors. (2026), upheld the setting aside of a 28-year-old compromise decree in a partition suit, holding that a compromise entered into by an advocate without his client's express authorisation is contrary to law under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (CPC). 

What was the Background of Krishna Kumar Ojha & Ors. v. Jitendra Chaudhary & Ors. (2026) Case? 

• The dispute arose out of a partition suit instituted in 1989 relating to ancestral property. 
• In February 1994, the trial court passed a compromise decree based on a compromise petition purportedly filed jointly by the parties. 
• A final decree followed in 1997. 
• Nearly 28 years later, the legal heirs of one of the defendants challenged the compromise decree, alleging that their predecessor had never signed the compromise petition, had not authorised any advocate to enter into a compromise on his behalf, and that the vakalatnama and written statement relied upon were forged. 
• The trial court accepted these allegations at the preliminary stage and set aside the compromise decree. 
• The Patna High Court affirmed the order, leading the appellants to approach the Supreme Court.

What were the Court's Observations? 

• On the requirement of express authorisation: The Court observed that lawyers are expected to act strictly in accordance with their clients' instructions and cannot substitute their own judgment when entering into compromises affecting valuable civil rights. Since there was no material showing that the concerned defendant had expressly authorised his counsel to enter into the compromise, the compromise decree suffered from a fundamental legal defect. 
• On the absence of authorisation or exigent circumstances: The Court noted that there was no express authorisation by defendant no. 5 allowing his counsel to sign the compromise on his behalf, nor was there anything on record demonstrating exigent circumstances that could have prompted the counsel to act without seeking clear approval. In the absence of either, the "voluntary" element mandated by Order XXIII Rule 3 CPC could not be established, and the resulting compromise was held contrary to law. 
• On concurrent findings: The Court declined to interfere with the concurrent findings of the Patna High Court and the trial court, both of which had declared the compromise entered into by the advocate on behalf of defendant no. 5 to be contrary to law. 
• On the consequence for the suit: While dismissing the appeal, the Court directed that the issues in the partition suit be adjudicated in a full trial, acknowledging the difficulty of taking a 1989 suit to trial 37 years later, but holding that the rights of the parties could not be decided without due process of collection and weighing of evidence. 

What is the Law on Compromise Decrees under CPC? 

Order XXIII Rule 3, CPC – Compromise of Suit: 

• Where the Court is satisfied that a suit has been adjusted wholly or in part by a lawful agreement or compromise in writing and signed by the parties, or where the defendant has satisfied the plaintiff in respect of the whole or part of the subject-matter of the suit, the Court shall:  
  • Order such agreement, compromise, or satisfaction to be recorded; and 
  • Pass a decree in accordance with it, so far as it relates to the parties to the suit — irrespective of whether the subject-matter of the agreement/compromise is the same as the subject-matter of the suit. 
• Proviso: Where one party alleges and the other denies that an adjustment or satisfaction has been arrived at, the Court must decide the question itself.  
  • No adjournment shall be granted for deciding this question, unless the Court records reasons justifying such adjournment. 
• Explanation: An agreement or compromise that is void or voidable under the Indian Contract Act, 1872, shall not be deemed "lawful" for the purposes of this rule.

Order XXIII Rule 3A, CPC – Bar to Suit: 

• No separate suit shall lie to set aside a decree on the ground that the compromise on which it is based was not lawful.  
  • The remedy lies before the same Court that passed the compromise decree, not through a fresh suit.