Even third party cannot challenge Compromise Decree by separate suit, SC

The SC on May 6, 2020 {TRILOKI NATH SINGH v. ANIRUDH SINGH(D) THR. LRS & ORS.} held that finality   of   decisions   is   an   underlying   principle   of   all adjudicating forums.   It was held, thus, creation of further litigation should never be the basis of a compromise between the parties. It was held that Rule 3A of Order 23 CPC put a specific bar that no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. It was further held that the scheme of Order 23 Rule 3 CPC is to avoid multiplicity of litigation and permit parties to amicably come to a settlement which is lawful, is in writing and a voluntary act on the part of the parties. It was held that the Court can be instrumental in having an agreed compromise effected and finality attached to the same. It was held that the Court should never be party to imposition of a compromise upon an unwilling party, still open to be questioned on an application under the proviso to Rule 3 of Order 23 CPC before the Court.

The question arose in this appeal before the SC was as to whether the decree passed on a compromise can be challenged by the stranger to the proceedings in a separate suit.

It was held by the SC Bench, comprising of Justice Ajay Rastogi  & Justice A.M. Khanwilkar, that  after   the   amendment   which   has   been   introduced, neither any 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 CPC. It was held that as such, a right has been given under Rule 1A(2) of Order 43 to a party, who denies the compromise and invites order of the Court in that regard in terms of proviso to Rule 3 of Order   23   CPC   while   preferring   an   appeal   against   the   decree. It was held that Section 96(3) CPC shall not be a bar to such an appeal, because it is applicable where the factum of compromise or agreement is not in dispute.

The precise question that fallen for determination before the SC was as to whether   the   suit   filed   by   the   appellant-­plaintiff   in   seeking   a declaration against the decree of compromise dated 15th September, 1994 passed by the High Court of Patna in Second Appeal was maintainable in view of the provisions of Order 23 Rule 3 and Rule 3A CPC. It was the case of the appellant that a total of 3 Bigha 6 Katha 3 Dhurs was sold   by Sampatiya   to   appellant-­plaintiff   for   a   sum   of   Rs. 25,000/­ by a registered sale deed dated 6th January, 1984 and put the appellant-­plaintiff in possession over the suit property, and without the knowledge of appellant and having left with no interest, Sampatiya fraudulently entered upon compromise   decree   dated   15^th September, 1994.

The Court held that indeed,   the   appellant   was   not   a   party   to   the   stated compromise decree.   It was held that he was, however, claiming right, title and interest over the land referred to in the stated sale deed dated 6^th January,   1984,   which   was   purchased   by   him   from   Sampatiya judgment debtor and party to the suit.   It was held that it is well settled that the compromise decree passed by the High Court in the second appeal would relate back to the date of institution of the suit between the parties thereto. It was held that in the suit now instituted by the appellant, at the best, he could seek relief against Sampatiya, but cannot be allowed to question the compromise decree passed by the High Court in the partition suit. The SC held that, in other words, the appellant could file a suit for protection of his right, title or interest devolved on the basis of the stated sale deed dated 6th January, 1984, allegedly executed by one of the party (Sampatiya) to the proceedings in the partition suit, which could be examined independently by the Court on its own merits in accordance with law. It was held that the trial Court in any case would not be competent to adjudicate the grievance of the appellant herein in   respect   of   the   validity   of   compromise   decree   dated   15^th September, 1994 passed by the High Court in the partition suit.

The SC held that the   appellant   can   only   claim   through   his predecessor­   Sampatiya,   to   the   extent   of   rights   and   remedies available   to   Sampatiya   in   reference   to   the   compromise   decree. It was held that merely because the appellant was not party to the compromise decree in the facts of the present case, will be of no avail to the appellant, much less give him a cause of action to question the validity of the compromise decree passed by the High Court by way of   a   substantive   suit   before   the   civil   Court   to   declare   it   as fraudulent, illegal and not binding on him.  The Court held  that assuming, he could agitate about the validity of the compromise entered into by the parties to the partition suit, it is only the High Court, who had accepted the compromise and passed decree on that basis, could examine the same and no other Court under proviso to Rule 3 of Order 23 CPC.   It was held that it must, therefore, follow that the suit instituted before the civil Court by the appellant was not maintainable in view of specific bar under Rule 3A of Order 23 CPC as held in the impugned judgment.

Consequently, the SC held that the appeal is without substance and the same was accordingly dismissed.