No Separate Suit Allowed For Seeking Cancellation Of Consent Decree Alleged To Be Based On Compromise Obtained By Fraud: Rajasthan HC

Rajasthan High Court has reiterated that despite Order 23, Rule 3A being a strong barrier to challenge the compromise decrees, if there was evidence of the compromise being obtained by deception or coercion, even though it cannot be pursued as an independent lawsuit, it could be brought within Section 151, CPC.

Order 23, Rule 3A, CPC, lays down that no suit shall set aside a decree on the ground that the compromise on which the decree was based was not lawful.

The bench of Justice Manoj Kumar Garg relied upon the Supreme Court case of Ajanta LLP vs. Casio Keisanki Kabushiki Kaisha d/b/a Casio Computer Co. Ltd. & another (“Ajanta LLP Case”) to observe that if the compromise decree was tainted with fraud, misrepresentation or mistake, the Court may use the inherent powers conferred under Section 151, CPC, to rectify the decree for alternations/modifications of the consent decree.

A compromise decree was passed in civil suit between the petitioner and the respondent. The respondent filed an application under Section 151, CPC, for cancellation of the compromise decree alleging that the decree was obtained based on fraud.

The petitioner filed an application with a prayer to reject the application filed by the respondent, however petitioner's application was rejected by the trial court. Against this decision of the trial court, the petitioner moved a revision petition before the Court.

It was argued by the counsel of the petitioner that the compromise decree could not be set aside based on an application filed under Section 151, CPC and the only remedy available was to file a civil suit for setting aside the decree.

This argument was rejected by the Court which referred to Order 23, Rule 3A and held that the primary aim of the provision was to enhance the finality of compromise decrees and prevent further litigations based on claims of unlawfulness of the compromise, thus reducing the burden of litigation on the courts.

However, the Court observed further, this clause did not mean that a compromise could not be questioned if evidence presented that it was obtained by deception or coercion. The Court referred to the Supreme Court case of R. Rajanna Vs. S.R. Venkataswamy and Others in which it was ruled that Order 23, Rule 3A implied that a question relating to lawfulness of compromise could be examined by only that court which passed the decree based on that compromise. And the court cannot ask parties to file a separate suit on the subject.

Further reference was also made to the Ajanta LLP Case, in which it was held that,

“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. Undoubtedly, The Court an entertain an application under Section 151 of the Code of Civil Procedure for alterations/modification of the consent decree if the same is vitiated by fraud, misrepresentation, or misunderstanding.”

In this background, it was opined that the trial court committed no error in rejecting the application of the petitioner and accordingly, the petition was dismissed.

Title: Umesh Kumar & Anr. v Lila Bai & Anr.

Citation: 2024 LiveLaw (Raj) 332

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