HC Karnataka (2024.12.16) in Raghavendra Reddy Vs. Channareddy and Ors. [Writ Petition No. 200680 Of 2024 (GM-CPC) held that;
A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.
Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise.
This is so because a consent decree is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made…”
When the court disposes of a proceeding pursuant to a compromise under Order 23, Rule 3, it bears the duty to examine this issue and be satisfied that the agreement or compromise is lawful. The proviso explicitly obligates the court that entertains the petition of compromise to determine this issue, and as per the law laid down by this Court in Banwari Lal (supra), this issue can be agitated by way of a recall application even after the compromise decree has been passed.
By the impugned order, the High Court dismissed the application solely on the ground that the order dated 14.07.2022 recording the compromise does not grant liberty to restore the appeal. We are of the opinion that this is not the correct approach, as it defeats the statutory right and remedy available to the appellant under the CPC.
That only the court that entertains the petition of compromise can determine its legality, at the time of recording the compromise or when it is questioned by way of a recall application. No other remedy is available to the party who is aggrieved by the compromise decree as an appeal and fresh suit are not maintainable under the CPC.
Excerpts of the Order;
This petition is directed against the impugned order dated 21.04.2023 passed in Misc.No.5/2015, whereby the said petition filed by the petitioner under Order 23 Rule 3 CPC was rejected by the trial court.
2. Heard learned counsel for the parties and perused the material on record.
3. A perusal of the material on record will indicate that the petitioner is the son of one Smt.Shakuntala and late Mahadeva Reddy Patil. During the life time of said Smt.Shakuntala, the 1st respondent herein who was the son of late Mahadeva Reddy Patil and Smt.Shivakantamma wife of late Mahadeva Reddy – 2nd respondent herein, instituted a suit in O.S.No.122/1996 against the petitioner and other respondents for partition and separate possession of their alleged share in the suit schedule immovable property. The said suit ended in a compromise decree dated 05.12.1998 passed by the trial court. Subsequently, upon demise of Smt.Shakuntala, the petitioner herein instituted a suit in O.S.No.364/2004 seeking setting aside / recalling of the said compromise decree. The said suit having been contested by the respondents – defendants, came to be dismissed by the trial court vide judgment and decree dated 05.01.2008, wherein, interalia held that in view of the specific bat contained in Order 23 Rule 3A CPC, a separate suit challenging the compromise decree was not maintainable.
4. Aggrieved by the said judgment and decree dated 05.01.2008 passed in O.S.No.324/2004, petitioner preferred an appeal in R.F.A.No.454/2008 before this Court, which was disposed of vide final order dated 18.12.2014, which reads as under:-
“Lone plaintiff in an original suit case in O.S.364/04 which was pending on the file of Civil Judge (Senior Divn.), Shorapur of erstwhile Gulbarga District and presently in Yadgir District, is before this court challenging dismissal of the suit filed for the relief of partition and separate possession. The suit was dismissed on 5.1.2008 by a considered judgment holding that the compromise decree entered into between the parties cannot be questioned by filing a separate suit. The suit is dismissed on merits also.
2. Several grounds have been urged in the appeal memo filed under Section 96, C.P.C. The respondents herein are defendants in the said suit.
3. The facts leading to the filing of O.S.364/04 by Raghavendra Reddy are as follows: a) One person by name Madhava Reddy died intestate on 27.9.1996. He has two wives, namely Shivakantamma and Shakuntala. Plaintiff and defendants 6 to 9 are born to Shakuntala and defendants 2 to 4 are born to Shivakantamma.
b) Defendant No.2 herein filed a suit for partition and separate possession against the present plaintiff and defendants 1, 3, 4,5, 7 to 9 in O.S.122/96 on the file of Civil Judge (Junior Divn.), Shahpur. At the time of filing the suit, defendants 7 to 9 being minors were represented by their mother and natural guardian-Smt. Shakuntala. She entered appearance on 2.9.1997 but did not contest the matter.
c) In the meanwhile, on 14.10.1997, i.e. within one month of the appearance of 5th defendant- Shakuntala, and other parties filed a compromise petition and the suit was decreed in terms of the compromise by order dated 12.1.1998.
d) According to the learned counsel for the appellant, defendant no.1 was negligent in protecting the interest of her children and defendants 7 to 9. Therefore plaintiff, being one of the children born to 5th defendant Shakuntala, chose to file a suit in O.S.364/04 challenging the said compromise petition. The said suit was filed after he attained majority claiming 1/9th share in the schedule properties and for a declaration that the judgment and decree passed in O.S.122/96 is null and void and not binding on him and for separate possession of the property by metes and bounds.
e) O.S.364/04 was contested by the 2nd defendant on various grounds contending inter alia that a fresh suit was not maintainable, more particularly in the light of challenging the compromise petition. It is further averred that as per Rule 3A of Order XXIII, C.P.C., no separate suit is maintainable for challenging a consent decree. Accepting the said submission, the suit in O.S.364/04 was dismissed by order dated 5.1.2008 by a considered judgment. It is this judgment which is called in question on various grounds as set out I the appeal memo.
4. Heard the learned counsel for the parties. Perused the entire records. The following points arise for consideration in this appeal:
a) Whether a separate suit is maintainable challenging the compromise petition in a case where the present appellant was also a party, though a minor?
b) Whether any interference is called for, and if so to what extent?
R E A S O N S
5. Shakuntala was 5th defendant in the suit filed by Channa Reddy. She had appeared before the trial court, being the mother and natural guardian of defendants 4 to 7 in the earlier suit. Since she did not contest the matter, the trial court appointed an advocate as court guardian and compromise was entered into only on the said court guardian certifying that the proposed terms of compromise were in the best interest of the minor defendants. A certificate to that effect was also appended by the concerned advocate, as contemplated under Order XXXII Rule
7, C.P.C. Therefore the court chose to accept the terms of compromise and decreed the suit in O.S.122/96.
6. Admittedly the minors had been represented by their guardian appointed by the court and necessary certificate had also been filed. What is argued before this court is that the share so allotted in favour of this appellant is unequal and unjust and therefore he is entitled to question the same at any point of time. Reliance is placed on the decision in the case of RATNAM CHETTIAR & OTHERS .v. KUPPUSWAMI CHETTIARAND OTHERS reported in AIR 1976 SC 1 wherein it is held that ‘if a partition takes place during the minority of the sharers, and it is detrimental to the interest 8 of the sharers/coparceners, the partition can certainly be revoked, whatever may be the length of time when the partition took place. This court does not like to enter into any discussion about the merits or otherwise of the case except to the extent of maintainability of the suit in O.S.364/04.
7. In the case of R.RAJANNA .v. S.R.VENKATASWAMY (2014(13) SCALE 19), Hon’ble Apex Court has specifically held that a separate suit challenging the compromise petition is not maintainable under Order XXIII Rule 3A, C.P.C. The only remedy available to the aggrieved party would be to approach the court which has passed the compromise decree. With the above observation the suit was sent back to the trial court. In this view of the matter, dismissal of the suit on the question of maintainability is perfectly justified. Hence an appeal arising out of such finding is also to be dismissed as not maintainable.
8. In the result, I pass the following order:
O R D E R
The appeal is dismissed only on the question of maintainability. Notwithstanding dismissal of the appeal, the appellant is at liberty to urge all contentions before the court which accepted the compromise, especially in the light of the decision of the Hon’ble Apex Court in the case of RATNAM CHETTIAR (supra). In view of the facts and circumstances of the case, there is no order as to costs”.
5. As can be seen from the aforesaid order passed by this Court in R.F.A.No.454/2008 dated 18.12.2014, this Court has dismissed the appeal as not maintainable and left open all contentions relating to challenge to the compromise decree to be urged before the trial court. In view of the final order passed by this Court in the aforesaid appeal, the petitioner filed the instant Misc.petition in Misc.No.5/2015 invoking the Order 23 Rule 3 r/w Section 151 CPC. The said petition having been opposed by the respondents – defendants, the trial court proceeded to pass the impugned order rejecting the petition, aggrieved by which, the petitioner is before this Court by way of the present petition.
6. A perusal of the impugned order will indicate that the trial court has come to the conclusion that the present petition was not maintainable in view of the provisions contained in Order 23 Rule 3 CPC, and in the light of the well settled position of law as held by the Apex Court in the cases of Pushpa Devi Bhagat vs. Rajinder Singh – (2006) 5 SCC 566, Triloki Nath Singh vs. Anirudh Singh – (2020) 6 SCC 629 and Navratan Lal Sharma vs. Radha Mohan Sharma – 2024 INS 970. In the aforesaid recent judgment in Navratan’s case supra, the Apex Court held as under:-
10. The relevant provisions under the CPC that govern compromise decrees are contained in Order 23, Rules 3 and 3A, which are extracted hereunder:
“3. Compromise of suit.—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 in writing and signed by the parties or where the defendant satisfied the plaintiff in respect to 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 parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit:
Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but not adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation.— An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule.
3A. Bar to suit.—No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.”
11. This Court in Banwari Lal v. Chando Devi – (1993) 1 SCC 581, has laid down the law on the disposal of a proceeding in accordance with a compromise between the parties and on recall of a compromise decree. It held that under Order 23, Rule 3, the Court must be satisfied upon applying judicial mind that the agreement between the parties is lawful before accepting the same and disposing the suit. Further, the proviso and the Explanation to Order 23, Rule 3 mandate that the court must “decide the question” of whether an adjustment or satisfaction has been arrived at, and it is clarified that void and voidable agreements under the Indian Contract Act, 1872 (Hereinafter “the Contract Act”) shall be deemed to be not lawful [Banwar Lal (Supra) Paras 11-13]. Upon such reading of the provision, it held that the court recording the compromise can examine the legality of the agreement, in accordance with the provisions of the Contract Act, even after the compromise decree is passed and when a party moves an application for recall (ibid para- 14).
12. The law on the issue is summarised in Pushpa Devi Bhagat v. Rajinder Singh – (2006) 5 SCC 566 . In this case, the Court also took note of Section 96(3) of the CPC7 and the deletion of Order 43, Rule 1(m) of the CPC by way of an amendment in 1976, as well as Order 23, Rule 3A. The consequence of these is that an appeal against a consent decree and an order recording (or refusing to record) a compromise is not maintainable, nor can a fresh suit be filed for setting aside such decree. Hence, the only remedy available to the aggrieved party is to approach the court that recorded the compromise under the proviso to Order 23, Rule 3. The Court held:
“17. The position that emerges from the amended provisions of Order 23 can be summed up thus:
(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.
(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) of Rule 1 Order 43.
(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3-A.
(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.
Section 96(3) of the CPC reads:
“96. Appeal from original decree.— (3) No appeal shall lie from a decree passed by the Court with the consent of parties.”
Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made…” (emphasis supplied)
13. In the present case, the appellant has alleged fraud by 13. In the present case, the appellant has alleged fraud by the respondents in his recall application, which he bears the burden to prove (Shanti Budhiya Vesta Patel v. Niramala Jayprakash Tiwari, (2010) 5 SCC 104; K.Srinivasappa v. M.Mallamma (2022) 17 SCC 460.. The Explanation to Order 23, Rule 3 clearly states that void and voidable agreements under the Contract Act shall not be deemed to be lawful. By alleging fraud in his recall application, the appellant is effectively impugning the legality of the compromise as proving the same would render the agreement voidable under the Contract Act (Section 19 of the Contract Act provides that when consent to an agreement is caused by fraud, it is voidable at the opinion of the party whose consent was so caused). When the court disposes of a proceeding pursuant to a compromise under Order 23, Rule 3, it bears the duty to examine this issue and be satisfied that the agreement or compromise is lawful. The proviso explicitly obligates the court that entertains the petition of compromise to determine this issue, and as per the law laid down by this Court in Banwari Lal (supra), this issue can be agitated by way of a recall application even after the compromise decree has been passed.
14. By the impugned order, the High Court dismissed the application solely on the ground that the order dated 14.07.2022 recording the compromise does not grant liberty to restore the appeal. We are of the opinion that this is not the correct approach, as it defeats the statutory right and remedy available to the appellant under the CPC. This Court in Pushpa Devi Bhagat (supra), as well as several other cases, has held that only the court that entertains the petition of compromise can determine its legality, at the time of recording the compromise or when it is questioned by way of a recall application. No other remedy is available to the party who is aggrieved by the compromise decree as an appeal and fresh suit are not maintainable under the CPC.
7. In view of the aforesaid facts and circumstances, I am of the view that the impugned order passed by the trial court deserves to be set aside and the matter be remitted back to the trial court for reconsideration afresh of the petition filed by the petitioner on merits in accordance with law.
8. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
(ii) The impugned order at Annexure-E dated 21.04.2024 passed by the trial court in Misc.No.5/2015 is hereby set aside.
(iii) The matter is remitted back to the trial court for reconsideration afresh bearing in mind the judgments of the Apex Court in the cases of Pushpa Devi Bhagat vs. Rajinder Singh – (2006) 5 SCC 566, Triloki Nath Singh vs. Anirudh Singh – (2020) 6 SCC 629 and Navratan Lal Sharma vs. Radha Mohan Sharma – 2024 INSC 970 in accordance with law.
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