2006 Supreme(SC) 592

2006(5) Supreme 403
SUPREME COURT OF INDIA
B.P. Singh and R.V. Raveendran, JJ.
Pushpa Devi Bhagat (D) Th. LR.Smt. Sadhna Rai — Appellant
versus
Rajinder Singh and Ors. — Respondents
Civil Appeal No. 2896 of 2006
(Arising out of S.L.P. (C) No. 13894/2004)
Decided on 11-7-2006
Counsel for the Parties :
For the Appellant : U.U. Lalit, Sr. Advocate, Maulik Nanavati, Shakeel Ahmed, Ms. Nithasha Nanavati, and Ms. B. Vijayalakshmi Menon, Advocates.
For the Respondents : Sanjay Karol, Sr. Advocate and Harshad V. Hameed, Advocate (for M/S. K.J. John & Co.)

IMPORTANT POINTS
1. No appeal is maintainable against consent decree.
2. In a compromise to be in writing and signed by parties expression “by parties” refer not only to parties in person but their attorney holders or duly authorised pleaders.
3. Statements recorded by Court will amount to a compromise in writing in terms of Rule 3 of Order 23 CPC.

Headnote:(i) Civil Procedure Code, 1908 — Section 96(3) — Consent decree — Appeal — Maintainability — Appellate Court set aside consent decree on ground that there was no agreement or compromise reduced to writing and signed by parties — High Court allowed landlord’s appeal holding that consent decree fell under second part of Rule 3 of Order 23 CPC — Appeal — Appeal before lower appellate Court against consent decree was not maintainable.

       Held : 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.

       (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. The second defendant, who challenged the consent compromise decree was fully aware of this position as she filed an application for setting aside the consent decree on 21.8.2001 by alleging that there was no valid compromise in accordance with law. Significantly, none of the other defendants challenged the consent decree. For reasons best known to herself, the second defendant within a few days thereafter (that is on 27.8.2001), filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by second defendant was not maintainable, having regard to the express bar contained in section 96 (3) of the Code. (Para 12)

       (ii) Civil Procedure Code, 1908 — Order 23 Rule 3 — Withdrawal and adjustment of suits and compromise of suits — 1st part of the Rule proved for adjustment wholly or in part of suit by compromise in writing and signed by parties — Second part provided for where defendant satisfied plaintiff in respect of whole or any part of subject matter of suit — Difference between 1st part and 2nd part — Meaning and significance of words “in writing and signed by parties” — Words “by parties” refer not only to parties in person but their attorney holders or duly authorised pleaders — Expression “in writing” includes statements recorded by Court which would amount to a compromise in writing — Statements of parties or their pleader/counsel, recorded by Court and duly signed by persons making statements would be statements in writing singed by parties” — Respondent landlord filed suit for possession by eviction of appellant tenant — Suit was decreed by consent statement made by Counsels for parties recorded by trial Court — Appellate Court set aside consent decree on ground that there was no agreement or compromise reduced to writing and signed by parties — High Court set aside lower appellate Court’s judgment holding that consent decree fell in second part of Rule 3 of Order 22 CPC — By that consent statement appellant tenant had agreed to vacate suit premises on a future date — Appeal — High Court was wrong in holding that compromise fell within 2nd part of Rule 3 — However compromise statement made by Counsels for parties and recorded by Court satisfied requirement of Order 23 Rule 3 CPC — There was a valid compromise in writing signed by parties — Appeal was without merits.

       Held : What is the difference between the first part and the second part of Rule 3 ? The first part refers to situations where an agreement or compromise is entered into in writing and signed by the parties. The said agreement or compromise is placed before the court. When the court is satisfied that the suit has been adjusted either wholly or in part by such agreement or compromise in writing and signed by the parties and that it is lawful, a decree follows in terms of what is agreed between the parties. The agreement/compromise spells out the agreed terms by which the claim is admitted or adjusted by mutual concessions or promises, so that the parties thereto can be held to their promise/s in future and performance can be enforced by the execution of the decree to be passed in terms of it. On the other hand, the second part refers to cases where the defendant has satisfied the plaintiff about the claim. This may be by satisfying the plaintiff that his claim cannot be or need not be met or performed. It can also be by discharging or performing the required obligation. Where the defendant so satisfies the plaintiff in respect of the subject-matter of the suit, nothing further remains to be done or enforced and there is no question of any enforcement or execution of the decree to be passed in terms of it.(Para 14)

       The statements of the parties or their counsel, recorded by the court and duly signed by the persons making the statements, would be statement in writing signed by the parties. The court, however, has to satisfy itself that the terms of the compromise are lawful. In this case we find from the trial court records that the second defendant had executed a vakalatnama empowering her counsel Sri Dinesh Garg to act for her in respect of the suit and also to enter into any compromise. Hence there can be no doubt that Sri Dinesh Garg was authorized by the second defendant to enter into a compromise. We also find that the counsel for the plaintiffs and counsel for the defendants made solemn statements on oath before the trial court specifying the terms of compromise, which were duly recorded in writing and signed by them. The requirements of the first part of Rule 3 of Order XXIII are fully satisfied in this case.(Para 20)

       At the cost of repetition, we may recapitulate the facts of this case. The suit was a simple suit for possession by a landlord against a tenant filed in the year 1993. Plaintiffs evidence was closed in 1998. The contesting defendant (defendant No.2) did not lead any evidence, and her evidence was treated as closed. The matter was dragged on for 3 years for defendants evidence after the conclusion of plaintiffs evidence. It was noted on 19.5.2001 that no further adjournment will be granted for the evidence of defendants 4 and 5 (who are not contesting the matter), on the next date of hearing (23.5.2001). When the matter finally came up on 23.5.2001, no evidence was tendered. On the other hand, a statement was made agreeing to vacate the premises by 22.1.2002. The trial court took care to ensure that the statements of both counsel were recorded on oath and signed. Thereafter, it passed a consent decree. The attempts of tenants in such matters to protract the litigation indefinitely by raising frivolous and vexatious contentions regarding the compromise and going back on the solemn undertaking given to court, should be deprecated.(Para 23)