Compromise Challenge by a 3rd party

2020 SCeJ 1971

 SUPREME COURT E JOURNAL

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Civil Procedure Code, 1908 (V of 1908) Order 23, Rule 3A - Challenge to a compromise decree by a third party  -  Merely because the appellant was not party to the compromise decree, will be of no avail, much less give him a cause of action to question the validity of the compromise decree passed by the High Court by way of a substantive suit before the civil Court to declare it as fraudulent, illegal and not binding on him - Decree passed on a compromise can not be challenged by a stranger to the proceedings in a separate suit. (2020-4)200 PLR 705 (SC) , 2020 SCeJ 1971

 

 

See also CPC Order 23

 

Civil Procedure Code, 1908 (V of 1908) Order 23, Rule 3A   - Suit for declaration against the decree of compromise to which appellant is a third party  - Decree passed on a compromise can not be challenged by a stranger to the proceedings in a separate suit - Case of appellant that the said compromise decree was obtained by fraud and misrepresentation –  High Court, accepted compromise and passed decree – Appellant  third party to the same  - (Assuming) Appellant could agitate about the validity of the compromise entered into by the parties to the suit, to which he was a third party - It is only the High Court, who had accepted the compromise and passed decree on that basis, which could examine the same and no other Court under proviso to Rule 3 of Order 23 CPC -  Suit instituted before the civil Court by the appellant was not maintainable in view of specific bar under Rule 3A of Order 23 CPC as held in the impugned judgment. (2020-4)200 PLR 705 (SC) , 2020 SCeJ 1971

 

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Civil Procedure Code, 1908 (V of 1908) Order 23, Rule 3A - Civil Procedure Code, 1908 (V of 1908)   Order 43, Rule 1A   - Civil Procedure Code, 1908 (V of 1908), Section 96(3) - No appeal is maintainable against an order recording or refusing to record an agreement or compromise under Rule 3 of Order 23 - Neither any appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3A of Order 23 CPC -  A right has been given under Rule 1A(2) of Order 43 to a party, who denies the compromise and invites order of the Court in that regard in terms of proviso to Rule 3 of Order 23 CPC while preferring an appeal against the decree - Section 96(3) CPC shall not be a bar to such an appeal, because it is applicable where the factum of compromise or agreement is not in dispute. (2020-4)200 PLR 705 (SC) , 2020 SCeJ 1971

 

Held,

 

 By introducing the amendment to the Civil Procedure Code (Amendment) 1976 w.e.f. 1st February, 1977, the legislature has brought into force Rule 3A to Order 23, which create bar to institute the suit to set aside a decree on the ground that the compromise on which decree is based was not lawful. The purpose of effecting a compromise between the parties is to put an end to the various disputes pending before the Court of competent jurisdiction once and for all. [Para 16] Finality of decisions is an underlying principle of all adjudicating forums. Thus, creation of further litigation should never be the basis of a compromise between the parties. Rule 3A of Order 23 CPC put a specific bar that no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. [Para 17]

 

 

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Civil Procedure Code, 1908 (V of 1908) Order 23, Rule 3A   - Third party  - Decree passed on a compromise can not be challenged by a stranger to the proceedings in a separate suit – Rights of a third party  - Appellant  third party to a Compromise  decree passed wrt a property purchased by him during the pendency of a partition proceedings in respect of the said property  - Partition suit filed in 1978 in which appellant was not a party -   During the pendency of first appeal being continuation of the suit, one of the parties (S) allegedly entered into a sale deed with the appellant in 1984 - Indubitably the issue regarding right, title and interest in respect of the land which was the subject matter of sale deed dated 1984, was still inchoate and not finally decided -  Compromise by S in Second Appeal - It must follow that the alleged transaction effected in favour of the appellant by the  sale deed of 1984 ought to abide by the outcome of the proceedings in the partition suit which culminated with the compromise decree passed by the High Court in Second Appeal – Compromise decree passed by the High Court in the second appeal would relate back to the date of institution of the suit - In the suit now instituted by the appellant, at the best, he could seek relief against S , but cannot be allowed to question the compromise decree passed by the High Court in the partition suit - Appellant could file a suit for protection of his right, title or interest devolved on the basis of the stated sale deed of 1984, allegedly executed by one of the party (S) to the proceedings in the partition suit, which could be examined independently by the Court on its own merits in accordance with law - Trial Court would not be competent to adjudicate the grievance of the appellant herein in respect of the validity of compromise decree of 1994 passed by the High Court in the partition suit - Appellant can only claim through his predecessor- S, to the extent of rights and remedies available to S in reference to the compromise decree.

 

 (2020-4)200 PLR 705 (SC) , 2020 SCeJ 1971