1. Suit for cancellation of documents — Compromise decree under Order 23 Rule 3 CPC — Non-compliance and dishonour of cheques — Application for restoration of appeal. (Para 2 , 4 , 5 , 6 , 8 )
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2024 Supreme(SC) 1180
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
Important Points
IMPORTANT POINTS
(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 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 – As a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties.
(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 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 – As a matter of public policy, courts must not curtail statutorily provisioned remedial mechanisms available to parties.
Subject
Civil Law - Civil Procedure
Act Referred
Headnote
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.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Varinder Kumar Sharma, AOR Mr. Shantanu Sharma, Adv. Ms. Deeksha Gaur, Adv.
For the Respondent(s): Ms. Surabhi Guleria, AOR Ms. Megha Karnwal, AOR Mr. Aaditya Thorat, Adv. Mr. Lalit Rajput, Adv.
For the Appellant(s) : Mr. Varinder Kumar Sharma, AOR Mr. Shantanu Sharma, Adv. Ms. Deeksha Gaur, Adv.
For the Respondent(s): Ms. Surabhi Guleria, AOR Ms. Megha Karnwal, AOR Mr. Aaditya Thorat, Adv. Mr. Lalit Rajput, Adv.
Table of Contents
2. Whether a party can seek restoration of an appeal after a compromise decree when the court recording the compromise explicitly denied liberty to restore. (Para 2 , 8 )
3. Statutory remedies under CPC for challenging compromise decrees cannot be curtailed by a court's refusal to grant liberty, as such rights are inherent and statutory. (Para 13 , 14 , 15 , 16 )
4. The only remedy to set aside a consent decree is to approach the court that recorded the compromise to establish the agreement was not lawful. (Para 12 , 14 )
5. Appeal allowed — Impugned order set aside — Matter remanded to High Court to decide the recall application on its merits. (Para 17 )
6. What is the available legal remedy for a party seeking to set aside a consent decree?
No appeal or fresh suit is maintainable against a consent decree. The only remedy is to approach the court that recorded the compromise under the proviso to Order 23 Rule 3 CPC to establish that the compromise was not lawful. (Para 12 , 14 )
7. Can a court deny a party the right to seek restoration of a proceeding by stating that no liberty to restore was granted in the compromise order?
No. Statutory remedies available to a litigant do not require the court's permission or liberty to be exercised. Courts cannot curtail statutorily provisioned remedial mechanisms available to parties. (Para 15 )
8. How does an allegation of fraud affect a compromise decree under Order 23 Rule 3 CPC?
Fraud renders an agreement voidable under Section 19 of the Contract Act. Since Order 23 Rule 3 requires the agreement to be lawful, fraud can be agitated via a recall application to challenge the decree's legality. (Para 11 , 13 )
9. Is a compromise clause that restricts a party's right to seek legal restoration valid?
Under Section 28 of the Contract Act, agreements that restrain a party from enforcing their rights through legal remedies are void. (Para 16 )
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:
“(4) That there is a first appeal no. between the parties in the Honourable State High Court. 210/2014 is pending. The said compromise will be presented in other cases and both the parties will be able to get them resolved on the basis of the compromise, but if the terms of the compromise are violated then the second party will have the right to get the said appeal number 210/2014 reinstated by submitting an application.
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(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:
“5. This Court, without entering into the merits of appeal but without giving any liberty to get restored the first appeal, is of considered opinion that when both parties have entered into the terms o
