JUDGMENT : N. Kumar, J. 1. The plaintiff has preferred this Regular First appeal against the Judgment and Decree of the trial Court which has dismissed the suit of the plaintiff. 2. For the purpose of convenience, the parties are referred to as they are referred to in the suit. 3. Plaintiff is a Co-operative Society registered under the provisions of the Karnataka Co-operative Societies Act, 1959. It was owning a Sugar Factory and Distillery at Gowribidanur. The plaintiff could not run the said factory and distillery and continued to incur losses and therefore, it was put to liquidation under the provisions of Karnataka Co-operative Societies Act, 1959 in the year 1984. The Liquidator notified the Sugar Factory along with Distillery for sale vide notification dated 3.4.1987. The second defendant M/s. Siraguppa Sugars and Chemicals Ltd., purchased the Sugar Factory and Distillery of the plaintiff for consideration of Rs. 5,04,11,111/-. A registered sale deed dated 18.6.1988 came to be executed by the plaintiff in favour of the second defendant. In terms of the sale deed, a sum of Rs. 1.5 crores out of the total consideration was paid as down payment. The remaining sale consideration of Rs. 3,54,11,111/- was required to be paid in six half yearly instalments along with simple interest at the rate of 14% p.a. commencing from the expiry of six months from the date of first down payment as per the schedule of payment attached to the sale deed. Each of such instalments payment was secured by bank guarantee and charge on assets of the two units i.e. factory and distillery. 4. The first defendant bank along with second defendant executed a bank guarantee in favour of plaintiff on 18.6.1988 undertaking that if the second defendant commits default to pay any or all of the half yearly instalments, bank shall pay to the plaintiff without demur such amount or amounts as it may be called upon to pay to the maximum of Rs. 3,54,11,111/- together with interest at the rate of 14% p.a. The said bank guarantee shall be in force till the payment of entire amount. The second defendant paid five instalments out of six instalments to the plaintiff between Dec. 1982 and December 1990. The last and 6th instalment of Rs. 59,01,851/- with interest at the rate of 14% p.a. amounting to Rs. 63,14,980.57/- was due as on 18.6.1991. The second defendant paid five instalments out of six instalments to the plaintiff between Dec. 1982 and December 1990. The last and 6th instalment of Rs. 59,01,851/- with interest at the rate of 14% p.a. amounting to Rs. 63,14,980.57/- was due as on 18.6.1991. At the request of the second defendant and with the consent of the first defendant-Bank and also with the prior approval of the higher authorities in the co-operative department, the plaintiff extended the time for payment of the final instalment from time to time. The last of such extension was on 10.3.1993 and time was extended upto 18.3.1993. In para-5 of the plaint, the full description of seven letters is set out. 5. Though sufficient opportunity was given to the second defendant, the 6th instalment was not paid within the extended period. Therefore, the plaintiff by its letter dated 28.7.1993 invoked the bank guarantee requesting defendant-bank to pay Rs. 87,82,343/- to the plaintiff. The second defendant filed writ petition before this Court in WP No. 27602/1993 challenging the letter dated 28.7.1993 invoking bank guarantee and the interim order of stay was passed on 4.8.1993 restraining the bank from making any payment. Subsequently, the writ petition came to be dismissed. 6. Again the plaintiff invoked bank guarantee on 15.4.1994 and requested the bank to pay a sum of Rs. 1,01,58,644/- which was due as on that day. The second defendant filed OS 10226/94 on the file of City Civil Judge, Mayo Hall, Bengaluru seeking permanent injunction against the plaintiff from invoking bank guarantee. On an application filed for an order of temporary injunction, an order to maintain status-quo was passed. However, after hearing both the parties, on 5.9.1994, the request for temporary injunction was rejected. The second defendant preferred MFA 1630/94 before this Court challenging the said order. Again an interim order of stay was passed. However, by order dated 9.3.2001 the said appeal came to be withdrawn consequently, the interim order granted earlier also stood withdrawn. 7. Thereafter, the plaintiff once again, by its letter dated 31.5.2001 invoked the bank guarantee and requested the first defendant to pay Rs. 4,01,77,064.64 with compound interest at the rate of 20% p.a. till the date of payment. The first defendant-bank by letter dated 7.8.2003 came forward to pay only Rs. 79.25 lakhs. 7. Thereafter, the plaintiff once again, by its letter dated 31.5.2001 invoked the bank guarantee and requested the first defendant to pay Rs. 4,01,77,064.64 with compound interest at the rate of 20% p.a. till the date of payment. The first defendant-bank by letter dated 7.8.2003 came forward to pay only Rs. 79.25 lakhs. As the said amount was not paid, the plaintiff filed a suit for recovery of a sum of Rs. 7,58,31,272/- against the Bank. 8. After service of summons, the first defendant entered appearance and filed a detailed written statement. They did not dispute the sale of Sugar Factory for a total consideration of Rs. 5,04,11,111/- payment of Rs. 1.5 crores and the execution of the bank guarantee, six instalments to be paid and payment of five instalments by the second defendant to the Bank. They admitted the invoking the bank guarantee by the plaintiff by writing letters. They admitted that in terms of the bank guarantee, they were always ready and willing to pay what is lawfully payable towards 6th instalment to the plaintiff. However, by virtue of the interim orders passed by the High Court as well as by the Civil Court they were prevented from making such payment. Therefore, during the pendency of the said proceedings, the first defendant could not have paid the bank guarantee nor the plaintiff could have received the amount. The plaintiff having suffered an order, cannot pass on the liability of interest for the aforesaid periods. First defendant-bank was in no way liable to pay such a huge amount of interest. The bank cannot be fastened with the liability to pay interest for said period. 9. The first defendant also contended that, suit is barred by limitation. Therefore, limitation for the purpose of filing the suit starts from invoking bank guarantee on 28.7.1993 for the first time. In fact the liquidator in his letter dated 31.5.2001 requested the bank to pay the amount of guarantee after vacation of the stay order. Therefore, the suit filed is barred by time. It was also pleaded that, the bank by letter dated 15.12.1992 had restricted the liability under guarantee to Rs. 79,25,018.20 inclusive of principal and interest. They also pointed out the expiry date of guarantee and therefore the bank had closed openness to the guarantee. Therefore, the suit filed is barred by time. It was also pleaded that, the bank by letter dated 15.12.1992 had restricted the liability under guarantee to Rs. 79,25,018.20 inclusive of principal and interest. They also pointed out the expiry date of guarantee and therefore the bank had closed openness to the guarantee. The unilateral extension granted by the plaintiff to the second defendant does not bind the first defendant to any extent whatsoever. Therefore, on that score also, suit is barred by limitation. They also pleaded that on 30.7.2001, there was a meeting before the Principal Secretary, Government of Karnataka in respect of dues of the purchaser in M/s. Siraguppa Sugars and Chemicals Limited. Further, after elaborate discussion, a decision was arrived at and the liquidator was appointed to clear the dues as on 18.6.1993 and not thereafter. The statement is also binding on the plaintiff and the plaintiff cannot seek subsequent interest. They also contended, the second defendant is before BIFR and therefore, the suit is not maintainable by virtue of Section 22 of the Sick Industrial Companies (Spl. Provision) Act, 1995. 10. The second defendant filed an application to implead themselves and the same was allowed. Thereafter, they have filed a detailed written statement reiterating what the Bank has stated especially with regard to the sale of factory for a total consideration of R. 5,04,11,111/- payment of Rs. 1.5 crores as down payment and agreement to pay the balance instalment amount in six instalments, execution of the bank guarantee, payment of five instalments as per agreed terms and also the default committed by the second defendant in so far as 6th instalment is concerned. They have also admitted invoking of bank guarantee by the plaintiff and filing of the writ petition and passing of an interim order, dismissal of the writ petition filed by the plaintiff, filing of the suit, dismissal of the application, filing of appeal before this court granting of interim order, withdrawal of the appeal. 11. Thereafter, they have also set out in detail the compromise talk entered into between the parties and at the behest of the Government and the agreement arrived at between the parties, payment of agreed balance amount towards full and final settlement of the entire plaintiff's claim. 11. Thereafter, they have also set out in detail the compromise talk entered into between the parties and at the behest of the Government and the agreement arrived at between the parties, payment of agreed balance amount towards full and final settlement of the entire plaintiff's claim. They have produced the requisite correspondences in this regard, letters written by the Liquidator and the acknowledgement for having received and therefore, they sought for dismissal of the suit. 12. On the aforesaid pleadings, the trial Court framed the following issues: "1. Whether the plaintiff proves that defendant were due in a sum of Rs. 63,14,980.57 ps. as on 18/6/1991? 2. Whether the plaintiff further proves that time for payment was being extended with the consent of defendant No. 1 by defendant No. 2? 3. Whether the suit is barred by limitation? 4. Whether defendant No. 1 proves that on the intervention of Government plaintiff has received Rs. 87.22 lakhs on 28/11/2005 in full and final settlement of claim and released the documents? 5. What order or decree?" 13. The plaintiff in order to substantiate his claim, examined one Karibasvayya as PW. 1 and produced 34 documents vide Ex. P1 to P34. On defendant's side, one Anand was examined as DW. 1 and one Kalegowda was examined as DW. 2 and eight documents were produced which were marked as Ex. D1 to D8. 14. The trial Court on appreciation of the oral and documentary evidence on record held that the parties were not in dispute so far as payment of Rs. 87.22 lakhs by the defendant No. 1 to plaintiff was concerned. The said payment was towards full and final settlement of the plaintiff's claim. Ex. P. 33 would show that, parties intended to settle the matter at the intervention of the Government and ultimately settled the matter. Exs. D. 1 and D. 3, which were not in dispute would show the payment of the aforesaid amount. It was only because of Ex. P. 34 the suit was instituted and therefore it was held answering Issue Nos. 1 and 4 that the plaintiff had failed to prove that the defendants were due in a sum of Rs. 63,14,980.57 ps. as on 18-06-1991. It was also held by the trial Court that defendant No. 1 had proved that at the intervention of the Government, plaintiff had received Rs. 1 and 4 that the plaintiff had failed to prove that the defendants were due in a sum of Rs. 63,14,980.57 ps. as on 18-06-1991. It was also held by the trial Court that defendant No. 1 had proved that at the intervention of the Government, plaintiff had received Rs. 87.22 lakhs on 28-11-2009 in full and final settlement of the claims and relief thereon. In so far as the issue regarding limitation was concerned, it was held that the suit was barred by time. Similarly, it was also held that the request for extension of time granted by the plaintiff to the second respondent would not bind the first defendant and therefore on that score also, the suit was barred by time. Accordingly, the suit of the plaintiff was dismissed. Aggrieved by the said judgment and award of the trial Court, the plaintiff has preferred this appeal. 15. The learned Counsel appearing for the plaintiff assailing the impugned judgment and decree urged that if any effective compromise were to be arrived at between the parties during the pendency of the proceedings, it has to be reduced into writing and then it has to be brought to the notice of the Court with a request to pass a decree in terms of the said agreement. Otherwise, the said agreement would have no value and the Court has to decide the case on merits. Further he submitted that though in Ex. P. 33 the Government issued directions to compromise the matter and settle the amount payable, subsequently that has been withdrawn as per Ex. P. 33 and therefore there is no valid agreement or compromise entered into between the parties and as such, the Court below was not justified in dismissing the suit. On the question of limitation, he submitted that the correspondence between the parties, the extension of time granted by the second defendant and the fact that interim order was passed by this Court have not been taken into consideration, the suit would be within time and the finding of the Trial Court is erroneous. 16. Per contra, the learned Counsel appearing for the first defendant submitted that the facts are not in dispute. After the filing of the suit, at the intervention of the Government, the dispute was settled. In terms of the settlement, the liquidator wrote Ex. D. 3 demanding payment of Rs. 16. Per contra, the learned Counsel appearing for the first defendant submitted that the facts are not in dispute. After the filing of the suit, at the intervention of the Government, the dispute was settled. In terms of the settlement, the liquidator wrote Ex. D. 3 demanding payment of Rs. 87.22 lakhs, which amount has been paid and duly acknowledged by him as per Ex. D. 1. Thus, the entire claim of the plaintiff is fully discharged and the aforesaid payment was made towards full and final settlement of the plaintiff's claim as is clear from the contents of Ex. D. 1. Further he submitted, the Bank did not agree for three extensions or further extensions. In the last extension, they have crystalised the amount due by them and therefore that is the starting point of limitation as far as Bank is concerned. So the suit is barred by time. Even otherwise, the interim order passed by this Court in the MFA was vacated. The suit ought to have been filed within three years there from and the suit is filed beyond the time, and as such, the finding of the trial Court that the suit is barred by limitation is correct. 17. The learned Counsel appearing for the second defendant adopted the arguments of the learned Counsel for the first defendant. 18. In the light of the aforesaid facts and rival arguments, the points that arise for our consideration in this appeal are as under: (i) Whether the trial Court was justified in holding that the plaintiffs claim is fully satisfied on the basis of the compromise entered into between the parties during the pendency of the proceedings though the said agreement or compromise was not reduced into writing by way of an application under Order 23 Rule 3 of CPC? (ii) Whether the finding of the trial Court that the suit is barred by limitation is valid or not? POINT No. (i): 19. The plaintiff filed the suit for recovery of the last instalment of Rs. 59,01,851 which was payable with interest at the rate of 14% p.a., totally amounting to Rs. 63,14,980.57 ps. as on 18-06-91. As the first defendant stood as a guarantor and in terms of the bank guarantee issued to the second defendant, he ought to have paid the said amount without a murmur. 59,01,851 which was payable with interest at the rate of 14% p.a., totally amounting to Rs. 63,14,980.57 ps. as on 18-06-91. As the first defendant stood as a guarantor and in terms of the bank guarantee issued to the second defendant, he ought to have paid the said amount without a murmur. The evidence on record shows, that the first defendant was ready to make the said payment, but the second defendant challenged invoking of the bank guarantee by filing a writ petition before this Court, and obtained an interim order of stay preventing the payment of the said amount. After the writ petition was dismissed, the second defendant filed a suit for permanent injunction to restrain the Bank as well as the plaintiff from invoking the bank guarantee. In the said suit, there was an interim order restraining the invoking of the bank guarantee. Thus, once again the first respondent - Bank was prevented from making the payment. Later the said order was vacated and that was challenged before this Court in MFA wherein again an interim order was passed that came in the way of the first defendant making the payment. It is only after the said order was vacated, there was no impediment for the Bank to make the payment. However, the plaintiff claimed interest on the last instalment which the first defendant denied. According to the first defendant it is because of the interim orders passed by the Courts, he was prevented from making the payment; they are not at fault. Therefore, they are not liable to pay interest for the period during which the interim orders were in force. As the plaintiff did not agree, the suit came to be filed claiming a sum of Rs. 7,58,31,272. The first defendant filed written statement and contested the matter. Second defendant was impleaded as a party and he supported the first defendant. It is during the pendency of these proceedings that the Government intervened. The Principal Secretary to Government, Co-operative Department addressed a letter as per Ex. P33 dated 23.07.2005 to the plaintiff directing that it would be in the interest of the liquidator and ultimately the Government, to settle the matter and get the amount paid in one go as per the decision taken on 16.07.2001 by the Government. Civil litigation and BIFR will take number of years and the outcome is not predictable. P33 dated 23.07.2005 to the plaintiff directing that it would be in the interest of the liquidator and ultimately the Government, to settle the matter and get the amount paid in one go as per the decision taken on 16.07.2001 by the Government. Civil litigation and BIFR will take number of years and the outcome is not predictable. Thereafter there are appeal provisions. It would therefore be better to settle the matter as an "out of Court settlement" and give effect to the Government's decision already taken namely that the liquidator to collect the dues including interest from the purchaser and hand over the documents. The amount together with interest comes to Rs. 87.22 lakhs. Since the amount of Rs. 5.86 lakhs has already been deposited in the Civil Court, in case refund of the said amount of Rs. 5.86 lakhs does not materialize, a condition to be incorporated that the same will be made good by the purchaser. Further, it was made clear that during the pendency of the BIFR case as per the BIFR Act, no coercive measures can be initiated for recovery till the final disposal of the case. The liquidator was directed to take immediate necessary action and send action taken report to the Government. On receipt of the said letter, the official liquidator as per Ex. D. 3 addressed a letter to the second defendant, bringing to his notice the aforesaid Government letter and requested the second defendant to pay Rs. 87.22 lakhs immediately in one lumpsum, so as to enable the plaintiff to return the documents to the second defendant as per the direction of the Government. Further, it was stated that the plaintiff has deposited Rs. 5,86,281-00 in the Civil Court, Bangalore in O.S. No. 1901/2004. In case of withdrawal of the suit, if the said amount is not refunded to the plaintiff, the second defendant is liable to make good this demand. On receipt of the said letter, the first defendant - Bank sent a pay order No. 4648 dated 26-11-05 for Rs. 87.22 lakhs towards full and final settlement of dues from the second defendant. The plaintiff as per Ex. D. 1, acknowledged the said payment and the letter. On receipt of the said letter, the first defendant - Bank sent a pay order No. 4648 dated 26-11-05 for Rs. 87.22 lakhs towards full and final settlement of dues from the second defendant. The plaintiff as per Ex. D. 1, acknowledged the said payment and the letter. All the original documents with a list was sent to the Bank with a request to keep them in custody till the matter of deposit of amount in the Civil Court is settled. 20. From the aforesaid undisputed correspondence, it is clear that during the pendency of the suit the parties by agreement agreed to settle the entire claim on payment of Rs. 87.22 lakhs. Accordingly, the payment was made. On payment of such amount, the entire claim of the plaintiff stood fully discharged. It is after this payment and discharge of the debt, Ex. P. 34 came to be issued on 23-05-08 and letter addressed to the plaintiff informing him that the letter dt. 23-07-05 i.e. Ex. P. 33 is withdrawn and the plaintiff was informed that they may take action as per law in the matter. It is because of the said letter, the suit was filed though the entire suit claim had been duly discharged. It is in this context, it is necessary to look into the statutory provision which deals with compromise of suit. 21. Order 23 Rule 3 of the Code of Civil Procedure reads as under: "3. Compromise of suit. It is because of the said letter, the suit was filed though the entire suit claim had been duly discharged. It is in this context, it is necessary to look into the statutory provision which deals with compromise of suit. 21. Order 23 Rule 3 of the Code of Civil Procedure reads as under: "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." 22. The language employed in the aforesaid provision makes it clear that it provides for two ways of compromising a suit i.e., (i) when a suit has been adjusted wholly or in part by any lawful agreement or a compromise in writing and signed by the parties. (ii) where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit. 23. The first way and probably the best way of a compromising of a suit is by reducing into writing the lawful agreement or compromise and getting the said writing duly signed by the parties. The second way is, without such writing if the defendant satisfies the claim of the plaintiff wholly or in part. The legislature has consciously used two words "adjusted" and "satisfies" Adjustment of a suit has to be in writing signed by the parties whereas no such requirement is prescribed in respect of satisfaction of the subject matter of the suit. An adjustment (may necessarily involve) involves an element of give and take. The legislature has consciously used two words "adjusted" and "satisfies" Adjustment of a suit has to be in writing signed by the parties whereas no such requirement is prescribed in respect of satisfaction of the subject matter of the suit. An adjustment (may necessarily involve) involves an element of give and take. When a suit has been adjusted, there may be mutual obligations on both the parties. On the basis of such adjustment, it is possible to pass a decree that is executable. Therefore, when the parties mutually agree to resolve the dispute by such adjustment, the law mandates that it shall be in writing and signed by the parties, in order to reduce, though not to altogether eliminate the controversies about the factum or terms of the agreement or compromise. 24. The whole object of amendment of Rule 3 of Order 23 by adding the words 'in writing' and 'signed by the parties' is, firstly to prevent false and frivolous pleas that a suit has been adjusted wholly or in part by any lawful agreement or compromise. Secondly, to avoid protraction of or delaying of the proceedings in the suit. If such lawful agreement or compromise is not reduced into writing and signed by the parties, the Court cannot take note of the same. 25. Even after entering into such a lawful agreement or compromise and reducing the same into writing bearing the signature of the parties, if one of the parties to such adjustment were to deny the same, it is open to the other party to produce such writing which is duly signed by the parties and prove to the satisfaction of the Court that such a lawful agreement or compromise was entered into and if it is proved to the satisfaction of the Court that such a lawful agreement or compromise in writing is duly signed by the parties, then the Court shall order for recording such agreement or compromise and pass a decree in accordance there with so far as it relates to the parties to the suit. 26. However, if the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the same need not be reduced into writing and signed by the parties. 26. However, if the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the same need not be reduced into writing and signed by the parties. In other words, it is not a case of adjustment of the claim but, it is a case of satisfying the entire claim of the plaintiff. Once the claim of the plaintiff is satisfied, nothing remains to be done further. The decree that follows 'satisfaction', is not an executable decree as the claim is satisfied even before passing of the decree and the decree only records such satisfaction. If that satisfaction pleaded by the defendant is denied, then the Court shall decide the question of satisfaction. If such adjustment or satisfaction is proved by giving acceptable evidence and if the Court is satisfied that the defendant has satisfied the claim of the plaintiff, then it shall pass a decree in accordance with the terms of such satisfaction. 27. There is no bar under the law even for the satisfaction to be reduced into writing and signed by the parties, but, it is left to the discretion of parties. Therefore, adjustment of the suit claim may be by way of satisfaction and the same also could be reduced into writing and signed by the parties. But, where there is no satisfaction of the suit claim and the claim of the plaintiff is adjusted and the said adjustment is reduced into writing and signed by the parties, only when the Court is satisfied that the said agreement is lawful, it shall order such agreement or compromise be recorded and pass a decree in accordance there with so far as it relates to the parties. Therefore, the scheme of Order 23 Rule 3 CPC is to avoid multiplicity of litigation and permit the parties to amicably come to a settlement which is lawful; and it should be a voluntary act on the part of the parties. 28. If a party to a suit alleges that an adjustment or satisfaction has been arrived at and applies to the Court to record the agreement and to pass a decree in accordance therewith, a decree can be passed recording such adjustment or satisfaction if it is not denied by the plaintiff. 28. If a party to a suit alleges that an adjustment or satisfaction has been arrived at and applies to the Court to record the agreement and to pass a decree in accordance therewith, a decree can be passed recording such adjustment or satisfaction if it is not denied by the plaintiff. But, if the opposite party to the suit denies the agreement, or wishes to retract from it, then the question arises, whether the Court has the power to decide if such adjustment or satisfaction was entered into and to pass a decree accordingly in spite of the opposite parties' reluctance. 29. The words "Where it is proved to the satisfaction of the court" appearing in the rule, are wide enough to impose a duty on the Court to enquire whether a compromise was lawfully arrived at. The proviso in express terms directs the Court to decide the controversy about the parties arriving at the adjustment or satisfaction. If it is satisfied that the same was not arrived at or vitiated by fraud, coercion or undue influence, it must reject the compromise and proceed with the suit. In other words, unless it is clearly established that an accord or compromise has been lawfully entered into between the parties, the powers under Order 23 Rule 3 of Code of Civil Procedure cannot be exercised. 30. Therefore it is clear that, notwithstanding the amendment to Order 23 Rule 3 of CPC, by Act 104 of 1976 even in the absence of a lawful agreement of compromise reduced into writing and signed by the parties, still the Court can order such adjustment or satisfaction to be recorded and pass a decree in accordance with if the defendant satisfies the plaintiff in respect of the subject matter of the suit. It is in this context, the proviso assumes importance and only in a case where the parties do not reduce into writing, an agreement or compromise and a dispute would arise, one party alleging the compromise or agreement and another denying the same. Therefore, the proviso inserted by Act No. 104 of 1976 mandates the Court to decide that question. Further it mandates that no adjournment shall be granted for the purpose of deciding the question. 31. Therefore, the proviso inserted by Act No. 104 of 1976 mandates the Court to decide that question. Further it mandates that no adjournment shall be granted for the purpose of deciding the question. 31. The aforesaid rule gives a mandate to the Court to record a lawful agreement or compromise or satisfaction and pass a decree in terms of such an agreement, compromise or satisfaction. The conditions to be satisfied for invoking the provisions of Order 23 Rule 3 of CPC are as under: (a) there should be a lawful agreement or compromise; (b) this compromise has to be in writing and signed by the parties; (c) the compromise must be recorded by the Court; (d) The defendant should satisfy the plaintiff in respect of the whole or any part of the subject matter, in which event no writing signed by the parties is required. (e) a decree on such agreement, compromise or satisfaction can be passed so far as it relates to the parties to the suit, but may extend to a special matter which is not the subject matter of the suit. 32. In fact the Apex Court had an occasion to consider this point, in the case of Gurpreet Singh v. Chatur Bhuj Goel, reported in AIR 1988 SC 400 wherein it is held that: "The word 'satisfies' denotes satisfaction of the claim of the plaintiff wholly or in part, and for this there need not be an agreement in writing signed by the parties. It is open to the defendant to prove such satisfaction by the production of a receipt or payment through bank or otherwise. The satisfaction of the claim could also be established by tendering of evidence. It is for the Court to decide the question upon taking evidence or by affidavits as to whether there has in fact been such satisfaction of the claim and pass a decree in accordance with O. XXIII, R. 3 of the Code." At para 9 it has been held as under: "Under the rule prior to the amendment, the agreement compromising the suit could be written or oral and necessarily the Court had to enquire whether or not such compromise had been effected. It was open to the Court to decide the matter by taking evidence in the usual way or upon affidavits. It was open to the Court to decide the matter by taking evidence in the usual way or upon affidavits. The whole object of the amendment by adding the words 'in writing and signed by the parties' is to prevent false and frivolous pleas that a suit had been adjusted wholly or in part by any lawful agreement or compromise, with a view to protract or delay the proceedings in the suit." 33. In the background of this legal position, when we look at this suit, though the parties entered into a compromise agreement, it was not reduced into writing and not signed by the parties. On the other hand, after agreement was arrived at, the plaintiff addressed a letter as per Ex. D. 3 calling upon the second defendant to pay a sum of Rs. 87.22 lakhs immediately in one lumpsum, so as to enable the return of the documents as per the directions of the Government. On receipt of the said letter, the second defendant brought to the notice of the Bank, the need for making such payment. Accordingly, the first defendant - Bank paid Rs. 87.22 lakhs by way of a pay order No. 464798 dt. 26-11-2004 to the plaintiff towards full and final settlement of the second defendant's dues. By Ex. D. 1, the plaintiff acknowledged the receipt of the letter and the pay order and also promptly handed over the documents of title to the custody of the Bank. Thus the agreed amount representing the last instalment consisting of principal plus interest, was paid towards full and final settlement. Thus, the defendants satisfied the plaintiff in respect of the whole of the subject matter of the suit, i.e., suit claim, as agreed in Ex. P. 3. In fact the plaintiff, in all fairness should have reported to the Court receipt of the aforesaid amount on 26th December, 2005 and should have withdrawn the suit immediately. But, it was not done. It is only after Ex. P. 34 was issued on 23-05-2008, nearly three years after the payment, the suit which was kept in cold storage was sought to be prosecuted. 34. The defendants by filing an application for amendment have incorporated all these facts in the written statement and brought the same to the notice of the Court. All that the plaintiff contends is, that in view of Ex. 34. The defendants by filing an application for amendment have incorporated all these facts in the written statement and brought the same to the notice of the Court. All that the plaintiff contends is, that in view of Ex. P. 34, the aforesaid compromise is not valid and the suit has to be decided on merits. There is no substance in the said contention. Ex. P. 34 has come into existence three years after the resolution of the dispute in terms of Ex. P. 33. For all practical purposes, the suit ought to have been dismissed in the year 2005 on payment of the amount towards satisfaction of the suit claim. Merely because the said fact was not immediately brought to the notice of the Court by the parties and in the meanwhile Ex. P. 34 came into existence, is no justification for prosecuting the suit. In view of Order 23 Rule3 of CPC, when the defendant has satisfied and discharged the entire claim of the plaintiff and the said fact is clearly established by the documentary evidence, and the said document is undisputed by the parties, the trial Court was bound to take note of the said compromise and dismiss the suit. That is precisely what the trial Court has done. Therefore, we do not see any infirmity in the said order. 35. When we are holding that the entire claim of the plaintiff is fully satisfied, the question of limitation pales into insignificance. Even otherwise, we do not see any infirmity in the order passed by the trial Court on this issue also. There is no merit in this appeal. Therefore, Appeal is dismissed.

Gowribidanur Sahakara Sakkare Karkhane Ltd. v. Indian Bank