Report No. 69
9.75. Admission in civil cases, when relevant.-
Section 23 provides that in civil cases, no admission is relevant, if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given. Under the Explanation to the section, nothing in this section shall be taken to except any barrister, pleader, attorney or vakil from giving evidence of any matter of which he may be compelled to give evidence under section 126.
9.76. Principle as to offers without prejudice.-
One of the most important applications of the section is in relation to offers made "without prejudice". It should, of course, be pointed out that the section is not confined to cases of offers "without prejudice". The section comes into play whenever there is an express condition or implication that evidence of the matter stated is not to be given.
9.77. Principle as to offer without prejudice.-
In regard to an offer without prejudice, the principle of the section may be thus stated1: "Confidential overtures of pacification and any other offer or proposition between litigating parties, expressly or impliedly made without prejudice,2 are excluded on ground of public policy. Now, if a man says his letter is without prejudice, that is tantamount to saying, "I make you an offer which you may accept or not, as you like; but if you do not accept it, the having made it is to have no effect at all". As has been said do not 'without prejudice' mean, 'I make you an offer; if you do not accept it, this letter is not to be used against me'.
1 Taylor, Evidence, p. 795, cited in Woodroffe.
2. River Steamer Co. (in re:), 1871 LR 6 Ch 822 (831, 833).
9.78. Rule narrow in the present section.-
The section is sound enough so far as it goes. We would, however, like to point out that the rule in the section is narrow in one respect. It requires-(i) an express agreement prohibiting the giving of evidence, or (ii) circumstances from which such an agreement can be implied. This requirement may not cover all statements made for negotiations. It would, we think, be fair to provide that statements made with a view to, or in the course of, negotiations for a settlement should always fall within this section. At present, in the absence of any express or strongly implied restriction as to confidence, an offer of compromise is admissible.
But it should be noted that the essence of compromise is that the party making it is willing to submit to a sacrifice, or to make a concession, though nothing at the time was expressly said respecting its confidential character. The offer might have been made for the sake of purchasing peace, and without any intention to admit liability as to the extent of the claim.
9.79. Old law wider.-
It may also be noted that the old law in India was, to some extent, wider than the present section. In the observations of Mr. Justice Phear in the case of Mohabeer Singh v. Dhujjoo Singh, (1873) 20 WR 172 (Cal), the following statement will be found: "It is a rule which all Courts of Justice find it right to observe that nothing that passes between the parties to a suit in any attempt at arbitration or compromise,1 should be allowed to effect the slightest prejudice to the merits of their case as it eventually comes to be tried before the Court; unless this were so, the only thing which could be prudently recommended to suitors would be never to listen for one moment to any proposal to settle the matter or to compromise it, after it had come into Civil Court".
1. Emphasis added.
9.80. Question to be considered.-
This proposition was enunciated in respect of a case not governed by the provisions of the Indian Evidence Act, 1872. The question now to be considered is not whether the above statement was a correct enunciation of the law, but whether that ought not to be the law.
9.81. Views expressed by Denning L.J.-
In order to appreciate the need for a change in the law, it is first desirable to consider the rationale underlying the legal provisions. Denning L.J. (as he then was) said in an English case1 relating to matrimonial relief:
"The rule as to 'without prejudice' communications applies with special force to negotiations for reconciliation. It applies whenever the dispute has got to such dimensions that litigation is imminent. In all cases where the entrancement has reached the point where the parties consult a probation officer, litigation is imminent. It is clear that there is a dispute which may end either in the Magistrates' court or the divorce court. The probation officer has no privilege of his own from disclosure."
1. McTaggart v. McTaggart, (1948) 2 All ER 754.
9.82. English case.-
In a later English case,1 the principle stated in McTaggart's case2was applied to proceedings before a probation officer in connection with matrimonial relief. It was observed: "It is essential, if a reconciliation is to be attempted, with the probation officer as intermediary, that statements made by either party, as soon as the probation officer is asked to act in that capacity, should be treated as privileged. Counsel for the wife suggested that if one applies that principle at such an early stage as in the present case, it tends to bona fide attempt to be taken back, and he argued that if such a bona fide attempt is made through a probation officer, it ought to be taken into account.
There is some force in that argument, but one must bear in mind that, in matrimonial disputes, the State is also an interested party and is more interested in reconciliation than in divorce, and if the rule as to privilege tends to promote the prospects of reconciliation, I think it ought to be applied, although prejudice the working of another principle, viz., that a spouse is no longer in desertion if he or she has made a it may make it difficult for the spouse in some ways to prove a bona fide attempt to return home. That difficulty can always be got over by the deserting spouse writing a suitable and bona fide letter and sending it by registered post to the deserted one."
1. Mole v. Mole, (1950) 2 All ER 328 (329).
2. McTaggart's case, supra.
9.83. The observations were made in the context of matrimonial relief; but there is, in our opinion, justification for adapting the same approach in other fields also.
9.84. Amendment why needed.-
There is, in our view, a fundamental aspect of social policy which should justify the exclusion of any admission made during negotiations for settlement. The general policy of the law is to favour and encourage the amicable settlement of disputes out of court. For that reason, it should not allow, in evidence, as admissions of liability, settlements or offers for settlement. Many such offers would never be made if they were to be treated as admissions of liability.
The present narrow provision in section 23 is, as a matter of social policy, somewhat inadequate. One who makes an offer for settlement should at least have an assurance that the offer which he makes will not prejudice his case later, if a settlement is not reached. Without such a protective rule, it would often be difficult to take any effective steps toward an amicable compromise or adjustment.
Men should be permitted to buy their peace without prejudice to them, should the offer not succeed. It is most important that the door should not be shut against compromises. When a man offers to compromise a claim, he does not thereby necessarily admit it, but simply agrees to pay so much so as to be rid of the impending proceeding. There is, therefore, a justification for making a specific provision in regard to settlement or offers for settlement.
For the reasons stated above, we recommend that the following Explanation should be inserted1 as Explanation 2, below section 23:-
"Explanation 2.-Where an admission is made for the purposes of or in the course of negotiation of a settlement of compromise of a disputed claim, the parties shall be deemed to have agreed together that evidence of that admission shall not be given."
We may note that this does not affect the operation of Order 23, rule 3, Code of Civil Procedure, 1908 (as recently amended)2 since the compromise in writing can be proved.
1. Existing Explanation may be re-numbered as Explanation 1.
2. Act 106 of 1976.