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SUPREME COURT OF INDIA
(From the High Court for the State of Telangana at Hyderabad)
M.R. SHAH, SANJIV KHANNA, JJ.
M/s. Sree Surya Developers and Promoters – Appellant
Versus
N. Sailesh Prasad and Others – Respondents
Civil Appeal No. 439 of 2022
WITH
M/s. Raja Pushpa Properties Pvt. Ltd. – Appellant
Versus
N. Sailesh Prasad and Others – Respondents
Civil Appeal No. 440-441 of 2022
Decided On : 09-02-2022
Civil Procedure Code, 1908 – Order 7 Rule 11(d) and Order XXIII Rule 3A – Rejection of plaint – Suit seeking declaration that revocation of Gift-Deed as being illegal and not binding on plaintiff therein and also for perpetual injunction – Trial Court rejected plaint in exercise of powers under Order VII Rule 11 CPC on the ground that suit would not be maintainable in view of specific bar under Order XXIII Rule 3A CPC – However, High Court by impugned judgment and order has set aside said order and has remanded the matter to Trial Court by observing that while passing order rejecting plaint, Trial Court had not considered provisions of Order XXXII Rules 1 to 7 CPC – What was required to be considered by High Court was whether independent suit questioning Compromise Decree would be maintainable or not – Such crucial aspect has not been dealt with by High Court at all and High Court has gone into validity of Compromise Decree in view of Order XXXII Rule 7 CPC – No suit shall lie to set aside a decree on the ground that compromise on which decree is based was not lawful – Rule 3A of Order XXIII bars suit to set aside decree on the ground that compromise on which decree was passed was not lawful – An agreement or compromise which is clearly void or voidable shall not be deemed to be lawful and bar under Rule 3A shall be attracted if compromise on the basis of which decree was passed was void or voidable – A party to a consent decree based on a compromise to challenge compromise decree on the ground that decree was not lawful i.e., it was void or voidable has to approach same court, which recorded compromise and a separate suit challenging consent decree has been held to be not maintainable – Trial Court was absolutely justified in rejecting plaint on the ground that suit for reliefs sought challenging Compromise Decree would not be maintainable – Mere clever drafting would not permit plaintiff to make suit maintainable which otherwise would not be maintainable and/or barred by law – If clever drafting of plaint has created illusion of a cause of action, court will nip it in bud at the earliest so that bogus litigation will end at earlier stage – Impugned judgment and order passed by High Court set aside and order passed by Trial Court rejecting plaint restored. (Paras 6, 8, 9, 10.1 and 13)
Facts of the case:
Feeling aggrieved and dissatisfied with the impugned judgment and order dated 01.10.2019 passed by the High Court for the State of Telangana at Hyderabad in Appeal Suit No.454 of 2019 by which High Court has allowed the said appeal preferred by the respondent No.1 herein – original plaintiff and has quashed and set aside the order passed by II Additional District Judge, Ranga Reddy District dated 02.05.2019 in I.A. No.108 of 2019 in O.S. No.537 of 2018 by which Trial Court rejected the plaint under Order 7 Rule 11(d) of the Civil Procedure Code, original defendants to O.S. No.537 of 2018 have preferred the present appeals.
Findings of Court:
Respondent No.1 – original plaintiff has already moved an appropriate application before concerned Court, which passed the decree setting aside the compromise Decree by submitting an application under Order XXIII Rule 3A CPC therefore the said application will have to be decided and disposed of in accordance with law in which all the defences / contentions which may have been available to the respective parties on validity of the Compromise Decree would have to be gone into by concerned court in accordance with law and on its own merits. By impugned judgment and order, the High Court has allowed said appeal and has quashed and set aside the order passed by Trial Court rejecting the plaint and has remanded the matter to the Trial Court by observing that the effect of the provisions of Order XXXII Rules 1 to 7 CPC has not been considered by the Trial court, which would have a direct bearing on the validity of the Compromise Decree.
Result : Appeals allowed.
JUDGMENT :
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 01.10.2019 passed by the High Court for the State of Telangana at Hyderabad in Appeal Suit No. 454 of 2019 by which the High Court has allowed the said appeal preferred by the respondent No. 1 herein-original plaintiff and has quashed and set aside the order passed by the learned II Additional District Judge, Ranga Reddy District dated 02.05.2019 in I.A. No. 108 of 2019 in O.S. No. 537 of 2018 by which the learned Trial Court rejected the plaint under Order 7 Rule 11(d) of the Civil Procedure Code (hereinafter referred to as “CPC”) the original defendants to O.S. No. 537 of 2018 have preferred the present appeals.
2. The facts leading to the present appeals in nutshell are as under:
2.2 The father of the respondent No. 1-original plaintiff (original respondent No. 3 herein and defendant No. 3 in O.S. No. 537 of 2018) filed a suit being O.S. No. 1750 of 2015 as the next friend of then minor respondent No. 1 herein seeking for declaration that revocation of Gift Deed dated 10.04.2004 as being illegal and not binding on the plaintiff therein and also for perpetual injunction. Subsequently, a compromise was arrived at between the parties to O.S. No. 1750 of 2015 vide Compromise Deed Dated 30.12.2015. Under the Compromise, it was agreed that the respondent No. 1 herein-original plaintiff would be entitled to entire 35,000 sq. ft. of the constructed area, which was agreed to be allocated to the grandmother under the Development Agreement. It was further agreed as per the Compromise Decree that the Developer would be entitled to assign the development rights accrued to it under the said Development Agreement to the third parties. In furtherance of the compromise, I.A. No. 31 of 2016 under Order XXIII Rule 3 CPC came to be filed alongwith the Compromise Memo praying for passing of decree in terms thereof. The father of the respondent No. 1 (respondent No. 3 herein-original defendant No. 3) filed I.A. in the said suit under Rule 172 of the Civil Rules of Practice seeking permission to act on behalf of the respondent No. 1 herein and the Trial Court was pleased to permit him to do so.
2.3 Thereafter, the Compromise Decree came to be passed by the VIII Additional Senior Civil Judge, RR District dated 13.01.2016 in O.S. No. 1750 of 2015 in terms of the Memorandum of Compromise entered into by the father on behalf of respondent No. 1 herein, the grandmother and the appellant herein-Developer. It appears that thereafter the appellant-Developer assigned its development rights under the abovementioned Development Agreement to respondent No. 4 herein under a Deed of Assignment dated 06.04.2016 and on the basis of the same, the respondent No. 4 has started developing the subject property in O.S. No. 537 of 2018.
2.4 That on attaining the age of majority, the respondent No. 1 herein filed the present suit being O.S. No. 537 of 2018 through his General Power of Attorney praying inter-alia declaration of right, title and interest over the suit schedule property and
(1) No suit shall lie to set aside a decree on the ground that compromise on which decree is based was not lawful.(2) Mere clever drafting would not permit plaintiff to make suit maintainable which o....
A suit challenging a compromise decree not challenged, but the compromise itself is called into question, would be barred by the provisions of Order XXIII Rule 3A of CPC. Additionally, a third party,....
An appeal against a consent decree is barred under Section 96(3) of the CPC; aggrieved parties must contest the decree's validity in the same court that issued it.
The main legal point established in the judgment is that a compromise deed, once recorded by the court, is lawful and binding, and a subsequent suit challenging the compromise decree is not maintaina....
An independent suit challenging a consent decree is barred under Order XXIII Rule 3A of the C.P.C. if the allegations of fraud are predominantly about breach/non-compliance of the consent terms/conse....
A suit where a decree based on compromise is not challenged, but compromise itself is called into question, would also be barred by provisions of Order XXIII Rule 3A of CPC.
A separate suit to set aside a compromise decree is barred under Order XXIII Rule 3A of the CPC, and challenges to such decrees must be raised in the court that issued them.
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