JUDGMENT G.S. PATEL, J 1. This is a Notice of Motion filed by Defendants Nos. 2 to 6 to the suit. It seeks that the Court do record that the suit has been adjusted wholly by an agreement between the parties and that there has been a compromise, for a decree in those terms and a consequent dismissal of the suit. The submission made by Mr. Jain, learned Advocate for Defendants Nos. 2 to 6, is that under the provisions of Order 23 Rule 3 of the Code of Civil Procedure, 1908 (CPC), where it is proved to the satisfaction of the Court that there exists such an adjustment either in whole or in part by means of lawful agreement or compromise, the Court must order that agreement or compromise to be recorded and must pass a decree. He invites attention to Order 23 Rule 3: O.23 R.3. Compromise of Suit—Where it is proved to the satisfaction of the Court that suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit: Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment. Explanation.—An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule. 2. Mr. Jain’s submission is that this rule is in two parts. The first speaks of a situation where the existence of a lawful agreement that has the effect of an complete or partial adjustment of the suit is proved or established to the satisfaction of the Court. 2. Mr. Jain’s submission is that this rule is in two parts. The first speaks of a situation where the existence of a lawful agreement that has the effect of an complete or partial adjustment of the suit is proved or established to the satisfaction of the Court. The second is where the applicants satisfy the plaintiff in respect of the whole or on part of the subject matter of the Suit. When either two of these eventualities occur, the Court must record that agreement or compromise and decree the suit in those terms. Crucial to this submission are the last two lines which say that such an order must be made even if the subject matter of the agreement, compromise, or satisfaction is not the same as the subject matter of the Suit. 3. The error in Mr. Jain formulation is, I think, in equating the second part in first. In the first part of Order 23 Rule 3, it is the Court that must be satisfied as to the existence of such adjustment, whole or partial. The second part of Order 23 Rule 3 requires the plaintiff’s claim to have been satisfied in whole or in part. These are two different things. Mr. Jain’s submission falls under the first part, not the second; for, according to him, there are, post-suit, several agreements in writing that have the effect of adjusting the suit. The proviso says that where there is dispute as to the adjustment, the Court must decide the question (i.e., whether or not there is an adjustment) and cannot adjourn a decision on that question without recording reasons. Now the first part of the rule itself has two implicit components. The applicant seeking an order under the rule must show (a) the existence of a lawful agreement or compromise in writing and signed by the parties concerned; (b) that this lawful agreement has the effect of adjusting the plaintiff’s claim in suit; and (c) that the agreement or compromise has been effected and implemented, resulting in an adjustment of the suit. All three must be shown; it is not enough to show only one or even two of these essential ingredients. 4. Mr. Jain points out that suit was filed as a derivative action by the Plaintiff for the benefit of 1st Defendant. All three must be shown; it is not enough to show only one or even two of these essential ingredients. 4. Mr. Jain points out that suit was filed as a derivative action by the Plaintiff for the benefit of 1st Defendant. The allegation was that the 1st Plaintiff’s valuable assets a trade mark known as “Marvel Fragrance” was being diluted and infringed and damage was being caused to the 1st Defendant, these being the impugned acts of Defendant Nos. 2 to 6. From the record, it appears that there were also proceedings in the Company Law Board. The Plaintiff’s application for interim relief was rejected by a learned Single Judge. Ad-interim reliefs seem to have been granted by the appeal court thereafter. That appeal was admitted and is still pending. 5. In the meantime, and this is central to Mr. Jain’s present application, a deed of family arrangement was admittedly executed on 31st January 2012, as was a shareholders’ agreement of the same date and a later deed of family arrangement dated 1st March 2012 between all the contesting parties. Mr. Jain’s submission, as I understand it, is that every one of the operative clauses of these two family arrangements and the shareholders’ agreement either have been implemented already, or, in any case, the applicant is willing to perform his obligation under those clauses that have not yet been fully performed. For the purposes of Order 23 Rule 3, Mr. Jain submits, actual implementation is not a necessity. It is enough to show that there exists a lawful agreement or compromise by which the entire suit is adjusted. Once that is shown, the Court must, in his submission record that adjustment and pass a decree. In this context, he asserts that there are clauses that require the inter-se exchange of certain sums, evidently on some form of accounts having been taken. The plaintiff has been given additional shareholding in the 1st defendant company, apart from other entitlements. The shareholders’ agreement was itself in implementation of a clause of the family arrangement of 31st January 2012. That shareholders’ agreement was admittedly executed. Clauses 2 and 2.1 of the shareholders’ agreement deal with the exclusive use of the trade mark in suit. Finally, the arrangements and agreement record that this suit itself “stands withdrawn”. Therefore, according to Mr. The shareholders’ agreement was itself in implementation of a clause of the family arrangement of 31st January 2012. That shareholders’ agreement was admittedly executed. Clauses 2 and 2.1 of the shareholders’ agreement deal with the exclusive use of the trade mark in suit. Finally, the arrangements and agreement record that this suit itself “stands withdrawn”. Therefore, according to Mr. Jain, an order or decree under O.23 R.3 of the CPC must follow; nothing further remains in the suit. 6. I have considered the Notice of Motion and the affidavits filed by the contesting parties. That there were these family arrangements and shareholders agreement does not seem to be in dispute. What Mr. Kadam, learned Senior Counsel for the Plaintiff, is at pains to point out is that Order 23 Rule 3 cannot be oversimplified in this fashion. In the affidavit in reply the Plaintiff has specifically alleged, among other things, that certain meetings required to be called of the Board of Directors of Defendant No.1 were illegal, null and void; that there has ever been any sort of adjustment in whole or in part or any part of the claim in suit; that the 5th Defendant has not satisfied or complied with all his obligations; the 5th defendant has not met his obligations of payment of various amounts to different specified entities; and that the 5th Defendant has shown no apparent anxiety to comply with or fulfull his obligations. While, therefore, the documents may not be disputed, their implementation most certainly is. The second limb of the first part of O 23 R 3, i.e., establishing that there has, as a matter of fact, been such an adjustment of the claim in suit, is not accepted by the plaintiff. It is yet to be demonstrated. 7. Mr. Kadam makes a compelling case. It would indeed be extremely strange if suits were to be disposed of in this fashion. Indeed every defendant might then be very agreeable to entering into an agreement or compromise that ostensibly adjusts the suit with no intention whatsoever of honouring of his obligations under that agreement. That cannot be surely be the intention of Order 23 Rule 3. It would indeed be extremely strange if suits were to be disposed of in this fashion. Indeed every defendant might then be very agreeable to entering into an agreement or compromise that ostensibly adjusts the suit with no intention whatsoever of honouring of his obligations under that agreement. That cannot be surely be the intention of Order 23 Rule 3. To my mind the rules requires it to be shown and proved not only that there exists a written, signed, lawful agreement or compromise but also that that agreement or compromise has resulted in an adjustment of the suit. I do not think it is possible to accept Mr. Jain’s interpretation that actual implementation need not be shown, but only the existence of an agreement or compromise that has the effect, be it as yet unrealised and unfulfilled, of adjusting the suit; in other words, an agreement that, when fully implemented, would adjust the suit. That adjustment cannot be inchoate. It cannot be a matter to be done in future. The adjustment must be proved to have already happened before an order or decree is taken under O.23 R.3 of the CPC. Mr. Kadam is, in my view, correct in saying that where implementation of such an agreement or compromise is disputed, no such order or decree can be passed. An applicant under this rule must hew to its requirements in full. 8. Given the nature of the defence to this application, and on a fair consideration of the rival pleadings, it seems to me that this is a matter that must be taken to trial. At this stage all that can be said was that there were family arrangements and a shareholders’ agreement. Whether or not these constituted a sufficient compromise or adjustment of the suit, and whether or not these were implemented, and whether or not the non-implementation of these would result in the suit not being adjusted, especially given the admitted fact that the 5th Defendant has not yet complied with all his obligations under those arrangements, is not matter that can be decided at this stage in this manner. These are not questions that can be decided in a summary manner on affidavits. These are not questions that can be decided in a summary manner on affidavits. In the face of denials by the Plaintiff, and the more so given there his specific assertion that 5th Defendant has not complied with his obligations under the family arrangements, I do not see how I can possibly record the kind of compromise Mr. Jain would have me do. Evidence will undoubtedly required to be lead as to whether the various facets of the family arrangement have been complied with and if not who or which is the defaulting party. Unless a proper enquiry is made, I do not see how the Plaintiff can be unseated in this fashion. If that was the intention of the law, it would be a fearsome weapon in the hands of the dishonest Defendants. 9. Mr. Kadam relies on a decision of learned single Judge of this Court in Shri Purshottam Pandurang Nipane Vs. Tarachand Pandurang Nipane & Ors.,1 one that indicates that the fullest enquiry is mandated under Order 23 Rule 3. This seems to me to fortify my own reasoning. Mr. Kadam submits that what Order 23, Rule 3 and its proviso require or contemplate is an enquiry that is complete. An adjournment to decide whether there is a compromise or agreement in existence is not permitted. But that surely cannot mean that even where the agreement is an undisputed, the Court cannot make an enquiry as to the effect of that agreement, its implementation and the consequences of non-implementation by any particular parties, i.e., whether or not there is an adjustment. It would, in my view, be more appropriate to require the applicant to lead evidence. Defendants Nos.2 to 6 must establish by cogent evidence that the suit has been adjusted, and that the compromise or agreement is complete. It is this question, whether or not there is in fact an adjustment of the suit claim (and not only that agreements have been signed that might on implentation and fulfilment of all reciprocal obligations of have the effect of such an adjustment), that is covered by Order 23 Rule 3. 10. Finally, I do not think it is correct to say that such an enquiry can never be adjourned, or that a Court is bound to put all else aside and take up that question immediately. 10. Finally, I do not think it is correct to say that such an enquiry can never be adjourned, or that a Court is bound to put all else aside and take up that question immediately. The proviso says that “no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.” The key words here are “adjournment” and “granted”, with their grammatical variations. Taken together, they mean that the matter cannot ordinarily be deferred on the application for an adjourment of one or the other party. This is not the same thing as saying that a Court cannot post the trial on the issue to a subsequent date. That is not an adjournment; it is a scheduling by the Court having regard to what is on its docket at any given time. The word “granted” clearly shows that the prohibition is on allowing, without recording reasons, of a party’s application for adjournment. Ineed, a court could always grant such an application, if made (and which it is not today), provided reasons are given. It is not possible to accept the submission that an enquiry into the issue or question under Order 23 Rule 3 cannot be posted to some date convenient to the court. 11. Prayer (b) of the Notice of Motion, for an immediate dismissal of the suit, is rejected. The following issue is framed in relation to prayer (a) of the Notice of Motion: 1. Whether Defendant Nos. 2 to 6 prove that the suit has been adjusted wholly by virtue of the Family Arrangement dated 31st January 2012 read with the Shareholders’ Agreement dated 31st January 2012 and the Family Arrangement dated 1st March 2012? 12. I do not propose to allow parties to waste the court’s time by allowing parties to lead evidence in instalments. For that reason, the hearing of the Notice of Motion on the issue framed above is adjourned to court for recording evidence, to be heard along with the suit. It is made clear that I have not ‘granted’ any ‘adjournment’ for decision on the issue framed. I have scheduled the trial or enquiry on that issue to a convenient time and propose to direct this to be done in an orderly manner. It is made clear that I have not ‘granted’ any ‘adjournment’ for decision on the issue framed. I have scheduled the trial or enquiry on that issue to a convenient time and propose to direct this to be done in an orderly manner. It is also clarified that this issue is a mixed question of fact and law. It cannot, therefore, be decided as a preliminary issue. It will also not be necessary for the contesting defendants to amend their written statement for raising the plea of such an adjustment. It is also clarified that a decision on the issue will dispose of prayer (a) of the Notice of Motion. 13. List the Suit for framing issues on 26th June 2014. The issue framed above will be added to the list of issues framed on that date.