[Order 23 Rule 3A CPC] Is Stranger Barred from Filing a Separate Suit Challenging Compromise Decree?

[Order 23 Rule 3A CPC]   Is stranger barred from filing a separate suit challenging compromise Decree?

Order 23 Rule 3A CPC provides compromise of suit

It states that 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 of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise satisfaction to be recorded, and shall pass a decree is 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. 

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.

Is stranger barred from filing a separate suit challenging compromise Decree?

The Supreme Court in the case of Triloki Nath Singh v. Anirudh Singh (D) THR. LRS & Ors. has ruled that the bar under Order 23 Rule 3A CPC to challenge a decree passed on a compromise in a separate suit applies also to the stranger to the proceedings.

Facts of the Case

The plaintiff in the present case had filed a suit alleging that a compromise decree was obtained by the defendants by fraud and misrepresentation concealing the salient fact from the High Court that the sale deed was executed much prior to the compromise being executed.

Issue before the Supreme Court

Whether the decree passed on a compromise can be challenged by the stranger to the proceedings in a separate suit?

Argument of the appellant

The appellant contended that the provision of Order 23 Rule 3A CPC is applicable only to the parties to the suit and the said provision does not apply to a stranger to the compromise decree, therefore, the remedy is always open to a stranger to the compromise decree to file a separate suit to ventilate his grievance in the appropriate proceedings.

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Findings and Observations of the Court

The bench scrutinized the intent behind amending Order 23 CPC and thus ruled that:

The finality of decisions is an underlying principle of all adjudicating forums. Thus, the 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. The scheme of Order 23 Rule 3 CPC is to avoid multiplicity of litigation and permit parties to amicably come to a settlement which is lawful, is in writing and a voluntary act on the part of the parties. The Court can be instrumental in having an agreed compromise effected and finality attached to the same. The Court should never be a party to the imposition of a compromise upon an unwilling party, still open to be questioned on an application under the proviso to Rule 3 of Order 23 CPC before the Court.

The Court further observed that:

“Merely because the appellant was not a party to the compromise decree in the facts of the present case, will be of no avail to the appellant, 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. Assuming, he could agitate about the validity of the compromise entered into by the parties to the partition suit, it is only the High Court, who had accepted the compromise and passed the decree on that basis, could examine the same and no other Court under proviso to Rule 3 of Order 23 CPC. It must, therefore, follow that the suit instituted before the civil court by the appellant was not maintainable in view 18 of the specific bar under Rule 3A of Order 23 CPC as held in the impugned judgment.”

Hence, dismissed the appeal petition.

Citation: CIVIL APPEAL NO(S). 3961 OF 2010

Coram: Justices AM Khanwilkar and Ajay Rastogi

Is stranger barred from filing a separate suit challenging compromise Decree?

Also Read: [Ashok Arora Vs SCBA] Delhi HC Dismisses Ashok Arora’s Appeal Against An Order Refusing To Stay His Suspension From SCBA

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