Compromise Decree Cannot Be Passed Where Parties Enter Into Agreement Without Specifying How The Suit Is To Be Decided: Kerala High Court

The Kerala High Court recently held that where the parties agreed to settle a suit on the basis of an agreement entered into between themselves, without saying how the suit is to be decided or what the terms of the compromise are, no decree can be passed by the Court in such suit.  

The Division Bench comprising Justice Anil K. Narendran and Justice P.G. Ajithkumar passed the above order while dismissing the judgment rendered by the Family Court which held that all the pending cases between the parties were settled in terms of the compromise. It was noted by the Division Bench that the compromise agreement in Clause 5 merely pertained to the settlement of the case relating to setting aside of a gift deed. 

"On the basis of an agreement by which the parties agreed to settle a suit, without saying how is the suit to be decided and what are the terms of compromise, no decree can be passed. If the suit is to be withdrawn also, there shall be a stipulation to that effect. Clause (5) or any other clause in Annexure A1 does not enable this Court or the Family Court, Thiruvananthapuram to dispose of any of the cases mentioned above except, O.P.No.780 of 2021. Therefore, the apprehension of the appellant that Annexures A1 and A2 would be interpreted to mean that all the aforesaid pending cases have been settled is genuine. In view of that Annexure A2 judgment is wrong", it was observed. 

The wife and children (appellants herein) of the 1st respondent had filed an original petition before the Family Court seeking a decree setting aside a registered gift deed. They had also filed a petition claiming maintenance. The first respondent on his part, had filed a petition for a decree of dissolution of marriage, and another for declaring him the guardian of the children and to get their permanent custody. Two more cases were also pending before the Family Court at Thiruvananthapuram. It is in this light that a compromise was entered into between the parties, and which was signed by the 1st appellant and 1st respondent.

The Family Court in its order dated July 1, 2022, recorded the compromise, and declared that as the petition for setting aside of the gift deed and other connected matters had been settled in the counselling, the OP shall be allowed in terms of the compromise. 

It is in this context that the appellants filed the interlocutory application seeking review of the said judgment. It was contended by Advocates M.R. Dhanil and Senitta P. Jojo on behalf of the appellants that the 1st appellant had been made to believe that by such compromise, the petition to set aside the gift deed alone would be disposed of, while the judgment declared that all the litigations between appellants and the respondents pending before the Family Court and High Court had been settled. When the appellants brought this before the notice of the Family Court, it dismissed the review petition. It was averred that both the compromise as well as the judgment rendered were vitiated by fraud, and the same could thus be challenged by filing an interlocutory application.

On the other hand, it was contended by Advocates S. Majida, Ajikhan M., and Muhammed Suhail K.H., on behalf of the respondents that the 1st appellant, who is a Doctor by profession holding a Post Graduate Decree in Medicine, signed the compromise after understanding all the clauses, and she cannot thus be allowed to retract and assail the judgment. The counsels also drew the attention of the Court to the decisions in Sindhu P.K. v. Sreekumar P.A. & Anr. (2015), and Thriloki Nath Singh v. Anirudh Singh (D) through LRs. & Ors. (2020) to contend that once the compromise was found to be lawful, the court was obliged to record the same and no challenge to the same by way of appeal or review can be entertained.

The High Court ascertained that as per the agreement, other cases between the parties would have to be settled.

"In what way those cases should be settled has not been mentioned. On the basis of such a clause, either Rule 1 or Rule 3 of Order XXIII of the Code can be invoked. If there is a compromise and a decree based on the same has to be passed, the compromise agreement shall ordinarily be an executed one and not merely an executory one", it noted while holding the judgment rendered by the Family Court to be erroneous. 

The Court in this case went on to observe that the 2nd and 3rd appellants were minors. 

"When a compromise decree is passed in a suit to which minor is a party, it is the mandate of Order XXXII Rule 7 of the Code to obtain leave of the court before the disposal of the suit. O.P.No.780 of 2021 was allowed in terms of Annexure A1 compromise without obtaining such a leave from the court. Leave of the court is a mandatory pre-requirement when the suit is compromised by the next friend or guardian. In that view of the matter, Annexure A2 judgment by which the compromise was recorded is an apparent error. In such circumstances, the Family Court ought to have allowed the review petition", it observed. 

The Appeal and the interlocutory application were thus allowed, and the Family Court was directed to proceed with the original petition in accordance with law. 

Case Title: Dr. Drisya D.T. & Ors. v. Dr. Kiran & Ors. 

Citation: 2023 LiveLaw (Ker) 48

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