Order 23 Rule 3A | Bar To Suit Challenging Compromise Decree Not Attracted When Compromise Recorded But Suit Not Disposed: Bombay HC

The Bombay High Court recently observed that bar under Order 23 Rule 3A of the CPC on a suit against a compromise decree is not attracted when a compromise is merely recorded in the earlier suit but the suit is not yet disposed.

A division bench of Justice AS Chandurkar and Justice Jitendra Jain allowed an appeal against a trial court order declaring a suit non-maintainable observing that while the compromise had been recorded in the earlier suit, it had not yet been decreed.

“It is thus clear from the record that there was no decree passed on 4th July, 1995 based on compromise as stated to be recorded below Exhibit-53 in SCS No.268/1978, when the Trial Court proceeded to hold that the subsequent suit was not maintainable in view of the provisions of Order XXIII Rule 3A of the Code. If the earlier suit itself was pending and no decree therein had been passed, there would be no question of the provisions of Rule 3A of Order XXIII of the Code being attracted”, the court held.

Firoz Aspandiar Irani and Dinshaw Khikhushroo Irani filed a special civil suit in 1978 against Shankar Ganpat Pingle and Krishnarao Rambhau Pingle claiming ownership of the suit property through various sale deeds and seeking possession from the defendants. Applications for partition and compromise were made in the suit, culminating in an order on July 3, 1986, recording the compromise.

During the pendency of the suit, original plaintiff Dinshaw Khikhushroo Irani passed away. His legal heirs were added to the suit, and they filed an application challenging the compromise recorded in the suit, alleging it to be illegal and void. This application was rejected.

The special civil suit was disposed of in December 1996 in terms of the compromise. The decree is under challenge in a Civil Appeal filed in 2000, pending before the District Court at Pune.

On April 26, 1994, the legal heirs of Dinshaw Irani filed another special civil suit (1994 suit) seeking to declare the alleged partition recorded in the first suit as illegal and void. The Trial Court, on July 4, 1995, held that the suit was not maintainable as per Order 23 Rule 3A of the CPC. This order was challenged in the present appeal.

Order 23 Rule 3A of the CPC bars suits to set aside a compromise decree on the ground that the decree is based on an unlawful compromise.

The court noted that on July 4, 1995, when the Trial Court held the suit not maintainable, the 1978 suit was pending and had not been disposed. The court further noted that the earlier suit of 1978 was decided much after the Trial Court held the subsequent of 1994 not maintainable under Order 23 Rule 3A.

The court pointed out that the plaintiffs did not seek to set aside any decree in the 1994 suit; instead, they challenged the alleged partition effected on the basis of the compromise.

The court clarified that Rule 3A bars suits to set aside a decree on the ground of compromise being unlawful. Since the suit of 1978 was still pending and no decree had been drawn based on the compromise, Rule 3A was not applicable, the court said. The court concluded that, at the time of filing, there was no jurisdictional bar to the suit of 1994.

The court held that the Trial Court erred in holding the 1994 suit not maintainable under Order 23 Rule 3A of the CPC. The court quashed the order dated July 4, 1995, and reinstated the suit of 1994 for adjudication on merits.

Case no. – First Appeal No. 92 of 1996

Case Title – Moti Dinshaw Irani and Anr. v. Phiroze Aspandiar Irani and Ors.

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