Order 23 Rule 3 CPC | Only Remedy Against Compromise Decree Is Recall Application Before Court Which Recorded Compromise : Supreme Court

The Supreme Court ruled that if the compromise entered between the parties was not adhered to, there is no bar to filing a recall application seeking restoration of the proceedings under Order 23 Rule 3 of the Code of Civil Procedure, 1908 (“CPC”). The Court emphasized that the validity and legality of a compromise agreement can be challenged even after a decree is passed.

The Court rejected the argument that recording the compromise does not grant liberty to restore the appeal. Instead, it said that the right to file a restoration application is a statutory right under the CPC which cannot be curtailed merely because the compromise doesn't grant liberty to restore the appeal.

The bench comprising Justices PS Narasimha and Manoj Misra heard the appeal filed against the Rajasthan High Court's decision wherein the recall application seeking restoration of the compromise proceedings challenging the compromise recorded between the parties in terms of Order 23 Rule 3 of CPC was dismissed by the High Court noting that recording the compromise does not grant liberty to restore the appeal.

The appellant sought to file a recall application seeking restoration of compromise proceedings alleging that the respondents failed to comply with the compromise terms.

Setting aside the High Court's decision, the judgment authored by Justice Narasimha emphasized that the court that originally recorded the compromise between the parties is the proper Court to consider the restoration of compromise proceedings. The Court further clarified that restoration is the sole remedy available to the aggrieved party, as the CPC explicitly prohibits filing an appeal or a fresh suit to challenge a compromise decree.

“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.”, the court observed.

The Court added that as a matter of public policy, the Courts shall exercise restraint in curtailing the statutory remedies available to the parties.

"In fact, when there is a statutory remedy available to a litigant, there is no question of a court granting liberty to avail of such remedy as it remains open to the party to work out his. remedies in accordance with law. Therefore, there was no occasion for the court to deny liberty to file for restoration by its order dated 14.07.2022 and the consequent dismissal of the recall application by the impugned order on this ground alone does not arise. Further, as a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties.", the court said.

Accordingly, the appeal was allowed, and the matter was remanded back to the High Court for reconsideration of the restoration application on its merits.

Appearance:

For Petitioner(s) Mr. Varinder Kumar Sharma, AOR

For Respondent(s) Ms. Surabhi Guleria, AOR Ms. Megha Karnwal, AOR

Case Title: NAVRATAN LAL SHARMA VERSUS RADHA MOHAN SHARMA & ORS.

Citation : 2024 LiveLaw (SC) 985

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