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SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, MANOJ MISRA, JJ.
Navratan Lal Sharma – Appellant
VERSUS
Radha Mohan Sharma & Ors. – Respondents
Civil Appeal No. 14328 of 2024 @ SLP (Civil) No. 27723 of 2024
Decided On : 12-12-2024
Civil Procedure Code, 1908 – Order 23 Rules 3 and 3A – Contract Act, 1872 – Section 24 – Compromise of suit – Breach of compromise – Recall of compromise decree – Only remedy available to aggrieved party is to approach court that recorded compromise under proviso to Order 23, Rule 3 of CPC – Appellant has alleged fraud by respondents in his recall application which he bears burden to prove – Void and voidable agreements under Contract Act shall not be deemed to be lawful – By alleging fraud in his recall application, appellant is effectively impugning legality of compromise as proving the same would render agreement voidable under Contract Act – By impugned order, High Court dismissed application solely on the ground that order recording compromise does not grant liberty to restore appeal – This is not the correct approach, as it defeats statutory right and remedy available to appellant under CPC – Only court that entertains petition of compromise can determine its legality at the time of recording compromise or when it is questioned by way of a recall application – No other remedy is available to party who is aggrieved by compromise decree as an appeal and fresh suit are not maintainable under CPC – When there is a statutory remedy available to a litigant, there is no question of a court granting liberty to avail of such remedy as it remains open to the party to work out his remedies in accordance with law – High Court was not correct in curtailing statutory remedy available to appellant – As a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties – Impugned order set aside and matter remanded to High Court to decide application for recall on its own merits. (Paras 12, 13, 14, 15, 16 and 17)
Facts of the case:
Parties filed application under Order 23, Rule 3 of CPC for disposal first appeal as per compromise, wherein it was stated that respondent no. 1 does not have any objection to compromise and that appellant can file for restoration of appeal if agreed payment is not completed and cheques are dishonoured.
Findings of Court:
There was no occasion for court to deny liberty to file for restoration by its order dated 14.07.2022 and consequent dismissal of recall application by impugned order on this ground alone does not arise. Further, as a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties.
Result : Civil Appeal allowed.
JUDGMENT
PAMIDIGHANTAM SRI NARASIMHA, J.
1. Leave granted.
2. The appellant initially filed a suit for declaration and injunction, which was dismissed by the Trial Court. The appellant then filed a first appeal. During its pendency, the parties reached a compromise, agreeing to dispose of the appeal based on its terms. On 14.07.2022, the High Court decided the appellant’s application under Order 23, Rule 3 of the Code of Civil Procedure, 1908 [Hereinafter “CPC”] and disposed of the first appeal in terms of the compromise. However, when the respondent failed to comply with the compromise terms, the appellant filed an application to restore the appeal.
Unfortunately, this application was dismissed by the order impugned before us, citing that the High Court had not granted liberty for restoration of the appeal while recording the compromise.
3. After careful consideration of the statutory framework and Order 23, Rules 3 and 3A, as informed by relevant judicial precedents, we have allowed the appeal. We have directed that, in such circumstances, restoration is the sole remedy, which the aggrieved party may exercise as a statutory right.
4. The short facts are that the appellant is the owner of the suit property. He filed a suit against the respondents for cancellation of the power of attorney dated 19.07.2010 and 27.07.2010, sale deeds dated 31.08.2010 and 15.09.2010, and grant of permanent and mandatory injunction on the ground that respondent no. 1 forged the abovementioned power of attorney and subsequently entered into the abovementioned sale deeds for the suit property in favour of respondent no. 2. The Trial Court dismissed the suit on 17.02.2014, and the appellant preferred a first appeal before the Rajasthan High Court.
5. During the pendency of the first appeal, the appellant and respondent no. 2 entered into a compromise, recorded in deed dated 18.05.2022 and corrigendum compromise dated 08.07.2022. The compromise contemplated development of the suit property, as per which certain amounts were to be paid by respondent no. 2 to the appellant. Paras 4 and 7 of the compromise deed dated 18.05.2022 are relevant and extracted hereinbelow for ready reference:
***
(7) That the first party issued a check dated 18/5/22 to the second party, check no. 160711 amount of Rs 11,00,000/- has been given today itself, payment can be taken by presenting the check in the bank on the date written in it. After giving the lease of the developed land, an amount equal to the value of the said amount will be transferred to Khasra No. Out of 11, the second party will give it to the first party. If any check is dishonoured, the agreement will be considered void.”
6. The parties filed an application under Order 23, Rule 3 of the CPC for disposal of the first appeal as per the compromise, wherein it was stated that respondent no. 1 does not have any objection to the compromise and that the appellant can file for restoration of the appeal if the agreed payment is not completed and the cheques are dishonoured.
7. By order dated 14.07.2022, the High Court disposed of the first appeal by taking the compromise dated 18.05.2022 and the corrigendum compromise dated 08.07.2022 on record and making them a part of its order. However, it also held that the parties do not have liberty to get the first appeal restored. The relevant portion of the order reads:
(1) Breach of compromise – Only remedy available to aggrieved party is to approach court that recorded compromise under proviso to Order 23, Rule 3 of CPC.(2) When there is a statutory remedy availab....
A party aggrieved by a compromise decree has a right to challenge the compromise decree by way of an appeal or to approach the same court which passed such decree by way of an appropriate application....
A party can appeal against a compromise decree to challenge its validity despite Section 96(3) CPC barring appeals against such decrees.
An appeal is not maintainable from a compromise decree under Section 96(3) of CPC, and the compromise decree confers only a right in personam and is not binding on parties who are not part of the com....
A consent decree obtained through fraud is void, and courts must investigate claims of fraud before accepting the decree as valid.
(1) Compromise decree - A party that accepts compromise is bound by it and cannot appeal - A party that denies compromise must first raise that dispute before Trial Court - A fresh suit is no longer ....
(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....
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