Consent Decree Cannot Be Modified/Altered Unless The Mistake Is A Patent Or Obvious One: Supreme Court

The Supreme Court has held that a consent decree cannot be modified/ altered unless the mistake is a patent or obvious mistake. 

Or else, there is a danger of every consent decree being sought to be altered on the ground of mistake/ misunderstanding by a party to the consent decree, the bench comprising Justices L. Nageswara Rao and BR Gavai observed.

The court observed thus while disposing an appeal against a High Court order by which it dismissed an application under Sections 152 and 153 read with Section 151 of the Code of Civil Procedure, 1908 seeking modification of the judgment dated 03.07.2019.

The High Court had earlier decreed the suit in terms of the Settlement Agreement. Subsequently, an Application was filed by the Appellant under Sections 152 and 153 read with Section 151 of the CPC for correction/ rectification/ amendment of the judgment. The Appellant stated in the said Application that the Settlement Agreement pertains only to trademark "FX-991ES PLUS'/ 'FX-991". However, there was an inadvertent typographical error of the trademark in the Settlement Agreement as "FX-991ES PLUS/ FX/ 991". The High Court dismissed the application on the ground that it was filed under Section

The Apex Court bench considered the submissions of the parties to examine whether the Appellant has made out a case for modification of the decree by treating the Application as one under the proviso to Order 23 Rule 3 read with Section 151 of the CPC? The bench observed:

"A judgment by consent is intended to stop litigation between the parties just as much as a judgment resulting from a decision of the Court at the end of a long drawnout fight. A compromise decree creates an estoppel by judgment. A consent decree would not serve as an estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. The Court in exercise of its inherent power may rectify the consent decree to ensure that it is free from clerical or arithmetical errors so as to bring it in conformity with the terms of the compromise"

The court noted that there is no allegation either of fraud or misrepresentation on the part of the Respondent.  

"We are unable to agree with the Appellant that there was a mistake committed while entering into a settlement agreement due to misunderstanding. Correspondence between the advocates for the parties who are experts in law would show that there is no ambiguity or lack of clarity giving rise to any misunderstanding. Even assuming there is a mistake, a consent decree cannot be modified/ altered unless the mistake is a patent or obvious mistake. Or else, there is a danger of every consent decree being sought to be altered on the ground of mistake/ misunderstanding by a party to the consent decree."

Dismissing the appeal, the Supreme Court upheld the High Court judgment.

Case name: Ajanta LLP vs Casio Keisanki Kabushiki Kaisha d/b/a Casio Computer Co. Ltd

Citation: 2022 LiveLaw (SC) 127

Case no.: CA 1052 of 2022 | 4 Feb 2022

Coram: Justices L. Nageswara Rao and BR Gavai

Counsel: Sr. Adv K.V. Viswanathan,appearing for the Appellant and Sr. Adv Dr. Abhishek Manu Singhvi and Sr.Adv. Chander Lal, appearing for the Respondents.

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