O. 23 R. 3 CPC | Compromise Must Be Reduced To Writing & Signed By Parties, Mere Statements Before Court Not Enough : Supreme Court

The Supreme Court held that a compromise deed cannot be recognized unless it is reduced to writing and signed by the parties.

The Court said that the settlement or compromise cannot be said to arrive on mere recording of statements before the Court.

“for a valid compromise in a suit there has to be a lawful agreement or compromise in writing and signed by the parties which would then require it to be proved to the satisfaction of the Court.”, the Court said.

“In the present case, neither the compromise deed has been reduced to writing, nor it is recorded by the court. Mere statements of the parties before court about such said compromise, cannot satisfy the requirements of Order XXIII Rule 3 of the CPC. Therefore, the compromise decree is not valid.”, the court added.

As per Order 23 Rule 3 of the Code of Civil Procedure, 1908, a compromise decree may be passed by the Court upon the parties to the suit arriving on a lawful agreement or compromising in writing. The Rule also states that the compromise cannot be recognized unless it was signed by the parties to the suit.

In other words, the compromise cannot be recorded if the mandatory conditions stipulated under Order 23 Rule 3 CPC weren't followed.

“When a compromise is to be recorded and a decree is to be passed, Rule 3 of Order XXIII of the Code requires that the terms of compromise should be reduced to writing and signed by the parties.”, the bench comprising Justices Vikram Nath and Prashant Kumar Mishra said.

In the present case, the Respondents/Plaintiff based on an earlier compromise recorded between the parties before the Court, filed a fresh suit for possession and temporary injunction against the Appellants/Defendant. The Plaintiff contended that they were the owners in possession of half share in the suit land as per the compromise arrived between parties to the previous suit.

However, the Appellant/Defendant countered the Plaintiff's contention and argued that the compromise made between the parties in an earlier suit cannot be recognized as there was no compromise decree passed by the Court because of non-compliance with Order 23 Rule 3 of CPC.

The trial court rejected the suit in the absence of the existence and production of a written compromise between the parties duly signed by them. The Trial Court also held that statements before the District Court cannot be treated as agreement or compromise.

The First Appellate Court, however, reversed the trial court's findings which was later approved by the High Court.

Following this, the Appellant/Defendant approached the Supreme Court.

Restoring the findings made by the trial court, the Judgment authored by Justice Vikram Nath observed that it is impermissible under the law to arrive at a compromise without the existence and production of a written compromise duly signed by the parties of the suit.

“In the present case there is no document in writing containing the terms of the agreement or compromise. In the absence of any document in writing, the question of the parties signing it does not arise. Even the question of proving such document to the satisfaction of the Court to be lawful, also did not arise. Thus, it cannot be said that the order dated 20.08.1984 (earlier suit) was an order under Order XXIII Rule 3 CPC.”, the court said.

Accordingly, the Appeal was allowed, and the impugned decision was set aside.

Counsels For Petitioner(s) Mr. M. C. Dhingra, AOR Mr. Gaurav Dhingra, Adv. Mr. Shashank Singh, Adv. Mr. Piyush Kant Roy, Adv. Mr. Abhishek Lakra, Adv. Mr. Rishabh Kumar Singh, Adv. Mr. Arvind Kumar Singh, Adv. Mr. Mahendra Ram, Adv. Mr. Dipanker Pokhriyal, Adv.

Counsels For Respondent(s) Mr. Anil Nag, AOR

Case Details: AMRO DEVI & ORS. Versus JULFI RAM (DECEASED) THR.LRS. & ORS.

Citation : 2024 LiveLaw (SC) 482

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