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2015 DIGILAW 612 (ORI)

Madhusudan Sahu v. Jhunumani Behera

2015-11-06

KRUSHNA RAM MOHAPATRA

body2015
ORDER : Krushna Ram Mohapatra, J. 1. Heard Miss D. Priyanka learned counsel for the appellant and learned counsel for the respondents. 2. This appeal has been filed assailing the decree and order dated 14.10.1998 passed by the learned Civil Judge (Senior Division) Balasore in T.S. No. 411 of 1998 recording a compromise between the parties to the suit. This appeal is filed mainly on the ground that the compromise recorded was an outcome of fraud. Hence, learned counsel for the appellant prays for setting aside the impugned compromise decree and for issuance of a direction for disposal of the suit on merit. 3. Learned counsel for the respondents raises objection to the above submissions on the ground that the appellant who was defendant No. 2 in the Court below is an signatory to the compromise petition and in view of the provision under Order 23 Rule 3 CPC he could not have filed this appeal against decree of compromise and any grievance with regard to such compromise can only be raised before the Court which recorded such compromise. Learned counsel for the respondents also submits that in view of provision of Section 96(3) CPC an appeal is barred as against the said decree recorded on compromise. 4. Miss Priyanka learned counsel for the appellant on the other hand submits that in view of Order 43 Rule 1-A(2) CPC this appeal is maintainable and the Court can entertain and pass necessary orders thereon. She relies upon a decision of the Hon'ble Supreme Court in the case of Banwarilal Vs. Smt. Chando Devi (through L.R.) and another reported in AIR 1993 SC 1139 wherein the Hon'ble Supreme Court at paragraphs 9 to 13 held as under: 9. Section 96(3) of the Code says that no appeal shall lie from a decree passed by the Court with the consent of the parties. Rule 1A(2) has been introduced saying that against a decree passed in a suit after recording a compromise it shall be open to the appellant to contest the decree on the ground that the compromise should not have been recorded. When Section 96(3) bars an appeal against decree passed with the consent of parties it implies that such decree is valid and binding oh the parties unless set aside by the procedure prescribed or available to the parties. When Section 96(3) bars an appeal against decree passed with the consent of parties it implies that such decree is valid and binding oh the parties unless set aside by the procedure prescribed or available to the parties. One such remedy available was by filing the appeal under Order 43 Rule 1(m). If the order recording the compromise was set aside there was no necessity or occasion to file an appeal against the decree. Similarly a suit used to be filed for setting aside such decree on the ground that the decree is based on an invalid and illegal compromise not binding on the plaintiff of the second suit. But after the amendments which have been introduced neither an appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3A of Order 23. As such a right has been given under Rule 1A(2) of Order 43 to a party who challenges the recording of the compromise to Question the validity thereof while preferring an appeal against the decree. Section 96(3) of the Code shall not be a bar to such an appeal because Section 96(3) is applicable to cases where the factum of compromise or agreement is not in dispute. 10. xx xx xx 11. xx xx xx 12. xx xx xx 13. When the amending Act introduced a proviso along with an explanation to Rule 3 of 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 take 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 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. In view of the proviso read with 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 of 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 of Order 43 of the Code." (emphasis supplied) Hon'ble Supreme Court in Banwarilal (supra) had the occasion to examine the said question with regard to the remedy available to a party to the suit being aggrieved by a decree of compromise. In the light of the elaborate discussion of the scope of provision under Section 96(3). Rule 3 and 3-A of Order 23 as well as Rule 1-A of Order 43 of the Code and findings thereon it leaves no scope of doubt that the remedy open to a party to the suit to call in question a compromise is either to file a petition under the proviso to Rule 3 of Order 23 CPC or to file an appeal under Section 96(1) of the Code in view of Rule 1-A of Order 43 of the Code. The Hon'ble Supreme Court in the case of Pushpa Devi Bhagat (D) by LR Vs. Rajinder Singh & Ors. reported in AIR 2006 SC 2628 at paragraph 12 held as under:- 12. The position that emerges from the amended provisions of Order23 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. (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. (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 of 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...". (emphasis supplied) In the decision of Pushpa Devi Bhagat (supra) however the Hon'ble Supreme Court had no occasion to examine the applicability of Section 96(3) and Rule 1-A of Order 43 of the Code. Placing reliance upon the aforesaid two decisions the Hon'ble Supreme Court in the case of R. Rajanna Vs. S.R. Venkataswamy and others reported in, AIR 2015 SC 706 at paragraph 10 held as under:- 10. It is manifest from a plain reading of the above that in terms of the proviso to Order XXIII Rule 3 where one party alleges and the other denies adjustment or satisfaction of any suit by a lawful agreement or compromise in writing and signed by the parties the Court before whom such question is raised shall decide the same. What is important is that in terms of Explanation to Order XXIII Rule 3 the agreement or compromise shall not be deemed to be lawful within meaning of the said rule if the same is void or voidable under Indian Contract Act 1872. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties the Question whether the agreement or compromise is lawful has to be determined by the Court concerned. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties the Question whether the agreement or compromise is lawful has to be determined by the Court concerned. What is lawful will in turn depend upon whether the allegations suggest any infirmity in the compromise and the decree that would make the same void or voidable under the Contract Act. More importantly Order XXIII Rule 3A clearly bars a suit to set aside a decree on the ground that the compromise on which the decree is based was not 7 Page 8 lawful. This implies that no sooner a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise it is that Court and that Court alone who can examine and determine that question. The Court cannot direct the parties to file a separate suit on the subject for no such suit will lie in view of the provisions of Order XXIII Rule 3A of CPC. That is precisely what has happened in the case at hand. When the appellant filed OS No. 5326 of 2005 to challenge validity of the compromise decree the Court before whom the suit came up rejected the plaint under Order VII Rule 11 CPC on the application made by the respondents holding that such a suit was barred by the provisions of Order XXIII Rule 3A of the CPC. Having thus got the plaint rejected the defendants (respondents herein) could hardly be heard to argue that the plaintiff (appellant herein) ought to pursue his remedy against the compromise decree in pursuance of OS No. 5326 of 2005 and if the plaint in the suit has been rejected to pursue his remedy against such rejection before a higher Court. 11. xx xx xx 12. 11. xx xx xx 12. We may also refer to the decision of this Court in Banwari Lal v. Chando Devi, (1993) 1 SCC 581 where also this Court had observed: "As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order XXIII or an appeal under S. 96(1) of the Code in which he can now question the validity of the compromise in view of Rule 1-A of Order 13 of the Code." (emphasis supplied) 5. On a conjoint reading of the aforesaid decisions it is manifest that party to the compromise can call in question its validity either by filing an application under proviso to Rule-3 of Order 23 before the Court which has recorded the compromise or by filing an appeal under Section 96(1) of the Code in view of the provision under Rule 1-A of Order 43 of the Code depending upon the facts and circumstances of each case. In the instant case the appellant alleges that fraud has been practised in recording the compromise by the learned Trial Court. Hence essentially evidence has to be led to substantiate the allegation made. Hence it will be appropriate for the appellant to file an application under the proviso to Rule 3 of Order 23 of the Code before learned Trial Court questioning the compromise which recorded the compromise. As it appears the appellant has not filed any application questioning the validity of the compromise before the Court which recorded it. 6. In that view of the matter this Court while setting aside the impugned order remits the same to the learned Trial Court granting liberty to the appellant to file appropriate application along with documents before the Trial Court for adjudication if so advised which shall be decided on its own merit. 7. With the aforesaid observations and direction the appeal is allowed but in the circumstances there is no order as to costs. Issue urgent certified copy of the order on proper application.