Order XXIII Rule 3A CPC: Bar To File Separate Suit Challenging Compromise Decree Applies To Stranger Also: SC [Read Judgment]

The Supreme Court has held 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.

In this case, the plaintiff 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 between the parties to the proceedings.

The issue before the Apex Court in this appeal was whether the decree passed on a compromise can be challenged by the stranger to the proceedings in a separate suit. The contention of the appellant was that 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.

The court noted that, in view of the the bar contained in Rule 3­A, no independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful. The bench comprising of Justices AM Khanwilkar and Ajay Rastogi examined the intent behind amending Order 23 CPC and observed:

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. 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 party to 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.

Dismissing the appeal, the Court further observed:

"Merely because the appellant was not 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 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 specific bar under Rule 3A of Order 23 CPC as held in the impugned judgment." 

Case no.: CIVIL APPEAL NO(S). 3961 OF 2010
Case name: TRILOKI NATH SINGH vs ANIRUDH SINGH(D) THR. LRS & ORS.
Coram: Justices AM Khanwilkar and Ajay Rastogi 

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