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2015 DIGILAW 257 (KAR)

Lakshmamma v. T. H. Ramegowda

2015-03-06

B.SREENIVASE GOWDA, N.KUMAR

body2015
JUDGMENT : N. Kumar, B. Sreenivase Gowda, JJ. The plaintiff has preferred this appeal against the order passed by the Trial Court on an application filed under Order 7, Rule 11 of CPC by the 1st defendant requesting the Court to dismiss the suit as not maintainable. 2. For the purpose of convenience, the parties are referred to as they are referred to in the original suit. 3. Plaintiffs filed O.S.No.438/2011 on the file of the Fast Track Judge, Devanahalli for partition and separate possession of their 1/5th share in all the plaint schedule properties and for a decree to set aside the compromise petition dated 28.03.2005 filed under Order 23, Rule 3 r/w Section 151, CPC by the plaintiffs and the defendants in O.S. No. 121/2000 on the file of the Second Additional Senior Civil Judge, Bangalore Rural District at Bangalore on the ground that fraud and misrepresentation was practised on them in obtaining their signatures on the compromise petition and for other consequential reliefs. 4. After service of summons, the defendant entered appearance and filed an application under Order 7, Rule 11 of CPC contending that if the plaintiffs' case is that compromise decree was obtained by fraud, their remedy is to approach the very same Court, which passed the compromise decree and they have no right to maintain a separate suit for setting-aside the said compromise decree. They further contend that the statutory provisions contained in the Civil Procedure Code in particular Order 23, Rule 3 A, categorically states that no suit shall lie to set-aside a decree on the ground that the compromise on which the decree was passed was not lawful. Therefore, they sought for rejection of the plaint. 5. The plaintiffs filed their objections contending that the subject matter of the earlier proceedings is only item No.8 of the plaint schedule property. The compromise relates only to that item and there is no compromise in respect of other items of the plaint schedule property. 6. The Trial Judge after considering the material on record and hearing the parties recorded a categorical finding that the earlier compromise is not confined to only item No.8. The compromise relates only to that item and there is no compromise in respect of other items of the plaint schedule property. 6. The Trial Judge after considering the material on record and hearing the parties recorded a categorical finding that the earlier compromise is not confined to only item No.8. All the properties, which are the subject-matter of the present suit were the subject matter of the earlier suit and the plaintiffs had given up their right in the entire schedule properties on a receipt of a sum of Rs.4,00,000/- from the 1st defendant. Therefore, the contention that it was confined to only item No.8 of the plaint schedule was not accepted. Further it held that if the grievance is that the said compromise was brought about by practicing fraud by the 1st defendant, his remedy was to approach the very same Court, which passed the compromise decree and the suit for setting aside the decree is not maintainable. Therefore, the learned Trial Judge allowed the application under Order 7, Rule 11 dismissing the suit filed by the plaintiff. Aggrieved by the said order, the plaintiffs have preferred this appeal. 7. We have heard the learned counsel for the parties. 8. The question that arises for our consideration in this appeal is as under: If the party chooses to challenge the compromise decree, which is the forum before which such a challenge is to be made? 9. Order 23, Rule 3 provides for compromise of the suit. It reads as under: R. 3. 8. The question that arises for our consideration in this appeal is as under: If the party chooses to challenge the compromise decree, which is the forum before which such a challenge is to be made? 9. Order 23, Rule 3 provides for compromise of the suit. It reads as under: R. 3. Compromise of suit - Where it is proved to the satisfaction of the court that a 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 avoidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule. 10. Rule 3 A imposes a bar to challenge such compromise which reads as under: R. 3A. Bar to suit.- No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. 11. Order 43, Rule 1 clause (m) of the Code which provided for a miscellaneous appeal against an order passed on the application filed under Order 23, Rule 3 of CPC has now been deleted from the statute. Section 96(3) of the Code declares that no appeal shall lie from a decree passed by the Court with the consent of the parties. 12. Section 96(3) of the Code declares that no appeal shall lie from a decree passed by the Court with the consent of the parties. 12. These provisions fell for consideration before the Apex Court in the case of Banwari Lal v. Smt.Chando Devi (through L.R.) and another reported in AIR 1993 SC 1139 (1) where interpreting Order 23, Rules 1 and 3, Order 43, Rule 1A and Section 96(1) of the code, it was held as under at paras 13 and 14: 13. When the amending Act introduced a proviso along with an explanation to Rule 3 Order 23 saying that where it is alleged by one party and denied by other that an adjustment or satisfaction has been arrived at, "the Court shall decide the question", the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise "which is void or voidable under the Indian Contract Act..." shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation, a Court which had entertained the petition of Compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1A Order 43 of the Code. 14. The application for exercise of power under proviso to Rule 3 Order 23 can be labeled under Section 151 of the Code but when by the amending Act specifically such power has been vested in the Court before which the petition of compromise had been filed, the power in appropriate cases has to be exercised under the said proviso to Rule 3. It has been held by different High Courts that even after a compromise has been recorded, the Court concerned can entertain an application under Section 151 of the Code, questioning the legality or validity of the compromise. Reference in this connection may be made to the casesSmt. Tarn Bai v. V. S. Krishnaswamy Rao, AIR 1985 Karnataka 270, S.G. Thimmappa v. T. Anantha ( AIR 1986 Kar 1 ), Bindeshwari Pd. Chaudhary v. Debendra Pd. Singh ( AIR 1958 Pat 618 ), Mangal Mahton v. Behari Mahton ( AIR 1964 Pat 483 ) and Sri. Sri. Iswar Gopal Jew v. Bhagwandas Shaw ( AIR 1982 Cal 12 ), where it has been held that application under Section 151 of the Code is maintainable. The Court before which it is alleged by one of the parties to the alleged compromise that no such compromise had been entered between the parties that Court has to decide whether the agreement or compromise in question was lawful and not void or voidable under the Indian Contract Act. If the agreement or the compromise itself is fraudulent then it shall be deemed to be void within the meaning of the explanation to the proviso to Rule 3 and as such not lawful. The learned Subordinate Judge was perfectly justified in entertaining the application filed on behalf of the appellant and considering the question as to whether there had been a lawful agreement or compromise on the basis of which the Court could have recorded such agreement or compromise on 27.2.1991. Having come to the conclusion on the material produced that the compromise was not lawful within the meaning of Rule 3, there was no option left except to recall that order. 13. The Apex Court again in the case of Pushpa Devi Bhagat (D) by L.R. v. Rajinder Singh and others, reported in AIR 2006 SC 2628 (1) after considering the aforesaid provisions has held as under at para 12: 12. The position that emerges from the amended provisions of Order 23, can be summed up thus : (i) No appeal is maintainable against a consent decree having regard to the specific bar contained in section 96(3) CPC. (ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) Rule 1, Order 43. (ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) Rule 1, Order 43. (iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3A. (iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23. Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree, is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made. 14. In view of the aforesaid pronouncement of the law by the Apex Court and the aforesaid statutory provisions, the law is well settled. Once the parties settle the disputes by way of a compromise by presenting an application under Order 23, Rule 3 of the Code of Civil Procedure and the Court accepts compromise and passes a decree in terms of the compromise, the decree passed by the Court attains finality. Section 96 of the Code provides for appeal from original decrees. It provides that an appeal shall lie from every decree passed by any Court exercising original jurisdiction to the Court authorised to hear appeals from the decisions of such Court. However sub-section (3) of Section 96 provides that no appeal shall lie from a decree passed by the Court with the consent of parties. In other words, Section 96(3) of the Code prohibits an appeal challenging a decree passed by the Court with the consent of parties. However sub-section (3) of Section 96 provides that no appeal shall lie from a decree passed by the Court with the consent of parties. In other words, Section 96(3) of the Code prohibits an appeal challenging a decree passed by the Court with the consent of parties. Earlier, Order 43, Rule 1 (m) of CPC provided that an appeal shall lie from an order under Rule 3 Order 23 recording or refusing to record an agreement, compromise or satisfaction. If the party wanted to treat the order accepting the compromise itself as an order and wanted to prefer a miscellaneous appeal, Order 43 Rule I l(m) of the Code provided a miscellaneous appeal. However, clause (m) was omitted by Act 104 of 1976 with effect from 01.02.1977. Now such a course is not open to him. No miscellaneous appeal lies against the order accepting or rejecting the compromise by the Trial Court. Order 23, Rule 3A which was inserted by Act 104/1976 which came into effect from 01.02.1977 provides that no suit shall lie to set-aside a decree on the ground that the compromise on which the decree is passed was not lawful. In view of the aforesaid statutory provisions, a regular appeal, a miscellaneous appeal and a separate suit is not maintainable to challenge a compromise decree. Therefore, the only remedy available to an aggrieved person, who wants to challenge the compromise decree is to approach the very same Court, which passed the compromise decree. He has to file application in the suit, in which the compromise was recorded and a decree is passed on such compromise. Thus, after a compromise has been recorded, the Court concerned can entertain an application under Section 151 of the Code questioning the legality or validity of the compromise. If such an application is filed, then the Court which passed the decree shall consider the said application after notice to either side. Then the said Court has to decide the question as to whether the compromise entered into and the decree passed thereon is lawful or valid. It can also decide whether such compromise is void or voidable. If the agreement or compromise itself is fraudulent, then it shall be deemed to be void within the meaning of the explanation to the proviso to Rule 3 and as such not lawful. 15. It can also decide whether such compromise is void or voidable. If the agreement or compromise itself is fraudulent, then it shall be deemed to be void within the meaning of the explanation to the proviso to Rule 3 and as such not lawful. 15. Order 23, Rule 3 of the Code mandates the acceptance of the compromise by the Court should not be mechanical. The parties may agree, they may reduce the compromise into writing and place that compromise before the Court. Unless the said compromise agreement is lawful, the Court gets no jurisdiction to pass a decree on the basis of the agreement. Therefore, a duty is cast upon the Court before passing a decree on the basis of the compromise, to apply its mind, look into the terms of the compromise and find out whether the agreement entered into between the parties is lawful or not. If in its view, it is not lawful it shall reject the compromise. Such a power is conferred on the Court under Order 23, Rule 3 of the Code. But once the compromise is recorded and a decree is passed in terms of the compromise, then the presumption is the agreement is lawful. A consent decree, is nothing but contract between parties superimposed with the seal of approval of the court. 16. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made. It is open to the parties to the compromise to show that the agreement is not lawful and by misrepresentation, fraud or mistake, they were made to agree to such compromise. A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree. The explanation to the proviso says that an agreement or compromise "which is void or voidable under the Indian Contract Act..." shall not be deemed to be lawful within the meaning of the said Rule. In view of the said proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Then, if the compromise is not lawful, it may be either invalid decree or a void decree. In view of the said proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Then, if the compromise is not lawful, it may be either invalid decree or a void decree. In either event, unless, the compromise is challenged and a competent Court declares it as invalid or void, the compromise is binding on the parties. 17. In the instant case, the suit filed by the plaintiff for setting aside the compromise petition dated 28.03.2005 and consequential decree passed in O.S. No. 121/2000 on the file of the II Additional Senior Civil Judge, Bangalore Rural District was challenged on the ground that it is vitiated on the ground of fraud and misrepresentation. Such a suit was not maintainable. Therefore, the Trial Court was justified in invoking Order 7, Rule 11 of the Code to dismiss the suit as not maintainable. 18. In that view of the matter, we do not see any merit in this appeal. Accordingly, this appeal is dismissed reserving liberty to the appellants-plaintiffs to approach the Court, which passed the decree and work out their remedies. Appeal dismissed.