Case Note & Summary
The appellant, Navratan Lal Sharma, filed a suit for declaration and injunction against respondents Radha Mohan Sharma and others, alleging forgery of power of attorney and sale deeds. The trial court dismissed the suit on 17.02.2014, and the appellant preferred a first appeal before the Rajasthan High Court. During the pendency of the appeal, the appellant and respondent no. 2 entered into a compromise on 18.05.2022, with a corrigendum on 08.07.2022, under which respondent no. 2 was to pay certain amounts to the appellant. The compromise deed expressly provided that if the terms were violated, the appellant could seek reinstatement of the appeal. The parties filed an application under Order 23 Rule 3 CPC for disposal of the appeal in terms of the compromise. On 14.07.2022, the High Court disposed of the appeal, taking the compromise on record, but expressly stated that the parties were not given liberty to restore the appeal. When the cheques issued by respondent no. 2 were dishonoured, the appellant filed an application for restoration of the appeal, alleging fraud and non-compliance. The High Court dismissed the application on the ground that its order had denied liberty to restore. The Supreme Court allowed the appeal, holding that restoration is a statutory right under Order 23 Rule 3 CPC, and the court cannot deprive a party of this right by denying liberty. The court relied on Banwari Lal v. Chando Devi and Pushpa Devi Bhagat v. Rajinder Singh to hold that the only remedy for a party aggrieved by a compromise decree is to approach the same court under the proviso to Order 23 Rule 3, and that no appeal or suit lies against a consent decree. The court set aside the High Court's order and restored the first appeal to its original number for hearing on merits.
Headnote
A) Civil Procedure - Compromise Decree - Restoration of Appeal - Statutory Right - Order 23 Rule 3 CPC - The court held that restoration of an appeal after a compromise decree is a statutory right under Order 23 Rule 3 CPC, and the court cannot deprive a party of this right by denying liberty in its order. The only remedy for a party aggrieved by non-compliance with compromise terms is to approach the same court for recall/restoration, as per the proviso to Order 23 Rule 3. (Paras 11-14) B) Civil Procedure - Consent Decree - Bar on Appeal and Suit - Section 96(3) and Order 23 Rule 3A CPC - No appeal lies against a consent decree under Section 96(3) CPC, and no suit lies to set aside a compromise decree under Order 23 Rule 3A CPC. The only remedy is to apply to the court that recorded the compromise under the proviso to Order 23 Rule 3. (Paras 12-13) C) Civil Procedure - Compromise - Fraud - Legality of Compromise - Order 23 Rule 3 Explanation - The Explanation to Order 23 Rule 3 states that void or voidable agreements under the Indian Contract Act, 1872 are not lawful. Allegations of fraud in obtaining compromise can be examined by the court recording the compromise even after the decree is passed. (Paras 11, 13)
Issue of Consideration
Whether a party to a compromise decree can seek restoration of the appeal when the court's order disposing of the appeal in terms of compromise expressly states that no liberty to restore is granted, and whether restoration is a statutory right under Order 23 Rule 3 CPC.
Final Decision
Appeal allowed. The impugned order of the High Court dated 19.10.2023 is set aside. The first appeal (S.B. Civil First Appeal No. 210/2014) is restored to its original number for hearing on merits. The High Court is directed to decide the appeal expeditiously.
Law Points
- Restoration of appeal after compromise decree is a statutory right under Order 23 Rule 3 CPC
- not dependent on court's grant of liberty
- consent decree can be challenged only before the same court under proviso to Order 23 Rule 3
- no appeal lies against consent decree under Section 96(3) CPC
- no suit lies to set aside compromise decree under Order 23 Rule 3A CPC
- court recording compromise can examine legality of agreement even after decree.
