1. Challenge to consent decrees in suits for possession and specific performance — dispute over the maintainability of appeals against such decrees under the Code of Civil Procedure. (Para 1 , 2 )
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2025 Supreme(SC) 716
SUPREME COURT OF INDIA
VIKRAM NATH, PRASANNA B. VARALE, JJ.
Sakina Sultanali Sunesara (Momin) – Appellant
Versus
Shia Imami Ismaili Momin Jamat Samaj & Ors. – Respondents
Civil Appeal No(s). 6681-6682 of 2023
Decided On : 23-04-2025
Important Points
IMPORTANT POINTS
(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 possible.
(2) Award of Lok Adalat can be challenged through limited supervisory jurisdiction under Article 227 of Constitution of India.
(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 possible.
(2) Award of Lok Adalat can be challenged through limited supervisory jurisdiction under Article 227 of Constitution of India.
Subject
Civil Law - Civil Procedure
Act Referred
Headnote
(A) Civil Procedure Code, 1908 - Order XXIII Rules 3 and 3A and Section 96 - Compromise decree - Appeal against - 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 possible - Proviso to Order XXIII Rule 3 is not optional; it is exclusive first port of call for any party on record who denies compromise - Order XLIII Rule 1A does not create a new right of appeal; it merely enables an appellant, already before Appellate Court, to attack the decree on the ground that compromise should not have been recorded - When fact of compromise is not disputed, bar in Section 96(3) is absolute - If a person was already a party to suit, and denies that any lawful compromise ever took place, CPC requires that person to go back to Trial Court under proviso to Order XXIII Rule 3 and ask that Court to decide whether compromise is valid - On the other hand, someone who was not a party to suit, but whose rights are hurt by a consent decree, may approach Appellate Court in a First Appeal under Section 96 of CPC, but only after obtaining leave - Order XLIII Rule 1-A does not create an independent appeal at all; it merely says that, once an appeal is otherwise before Court, appellant may argue that compromise should, or should not, have been recorded - High Court's directions correctly apply structure of statute and do not call for interference. (Paras 8, 11 and 15)
(B) Legal Services Authorities Act, 1987 - Section 21(2) - Constitution of India - Article 227 - Award of Lok Adalat - Appeal against - Section 21(2) of Legal Services Authorities Act, 1987 interdicts any appeal from award of Lok Adalat - However, limited supervisory jurisdiction under Article 227 of Constitution of India remains available. (Para 14)
Facts of the case:
These appeals assail judgment dated 28.08.2019 rendered by a Larger Bench of High Court of Gujarat on a reference arising out of Appeal from Order and cognate AOs. High Court concluded that a litigant who was already a party to suit, but disputes existence or validity of a compromise recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908,2[CPC] must first approach the Trial Court; a First Appeal under Section 96 of CPC, it held, is available only to a person who was not on record of suit. Following that pronouncement, Single Judge of High Court dismissed every pending AO on 06.09.2019 for want of maintainability. Both reference judgment and consequential order are impugned in these appeals.
Findings of Court:
Judgment dated 28.08.2019 of Larger Bench of High Court of Gujarat, as well as consequential order of Single Judge dated 06.09.2019, are affirmed.
Result : Civil Appeals dismissed.
Judgement Key Points
Key Points: - The CPC after 1976 amendment requires a party denying a compromise to first approach the Trial Court under the proviso to Order XXIII Rule 3; a fresh suit is not allowed. (!) (!) - Order XLIII Rule 1-A does not create a separate right of appeal; it allows challenging the recording of a compromise within a first appeal under Section 96 after the Trial Court decides the proviso to Order XXIII Rule 3. (!) (!) - A party who was already a party to the suit and denies the compromise must use the proviso to Order XXIII Rule 3; Section 96(3) bars an appeal if the compromise is not disputed. (!) - A party not on record may pursue a first appeal under Section 96 after obtaining leave; limited supervisory jurisdiction under Article 227 remains available but has not been invoked. (!) - The Larger Bench affirmed that the present appellants’ approach (appealing under Section 96 while the compromise is disputed) is not permissible; remedies depend on whether the party is a party to the suit or not. (!) (!) - Lok Adalat awards are interdictable from appeal under Section 21(2) of the Legal Services Authorities Act, with limited supervisory jurisdiction under Article 227 remaining available. (!)
What is the appropriate remedy when a party denies a compromise recorded under Order XXIII Rule 3: must they go to Trial Court with proviso to Order XXIII Rule 3 before appealing?
What is the effect of amended provisions on the maintainability of appeals from consent decrees versus challenges to compromises recorded in court?
What recourse remains for a party in record to challenge a compromise decree without filing a fresh suit?
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Huzefa Ahmadi, Sr. Adv. Ms. Anushree Prashit Kapadia, AOR
For the Respondent(s): Mr. Rakesh Uttamchandra Upadhyay, AOR
For the Appellant(s) : Mr. Huzefa Ahmadi, Sr. Adv. Ms. Anushree Prashit Kapadia, AOR
For the Respondent(s): Mr. Rakesh Uttamchandra Upadhyay, AOR
Table of Contents
2. Whether a party to a suit may prefer a first appeal under Section 96 CPC to dispute a compromise, notwithstanding the bar under Section 96(3). (Para 3 , 4 , 5 )
3. Analysis of 1976 CPC amendments — sequential remedies for parties on record — distinction between parties and non-parties regarding appeals against consent decrees. (Para 6 , 7 , 8 , 9 , 10 , 11 , 13 , 14 , 15 )
4. A party to a suit disputing a compromise must first approach the Trial Court under Order XXIII Rule 3; Section 96(3) bars direct appeals from consent decrees. (Para 8 , 11 , 15 )
5. Appeals dismissed — High Court judgment affirmed — liberty granted to the appellant to invoke the proviso to Order XXIII Rule 3 before the Trial Court. (Para 16 , 17 , 18 )
6. What is the proper remedy for a party to a suit who disputes the validity of a compromise decree?
A party on record must first apply to the Trial Court under the proviso to Order XXIII Rule 3 to decide the validity of the compromise. A first appeal under Section 96(1) is only available after the Trial Court decides the objection and passes an adverse decree. (Para 8 , 10 , 11 , 15 )
7. Does Section 96(3) of the CPC bar all appeals against consent decrees?
Section 96(3) creates an absolute bar against appeals from a decree passed with the consent of the parties, provided the factum of the compromise is not disputed. (Para 8 , 10 , 11 , 12 )
8. Does Order XLIII Rule 1-A(2) of the CPC create an independent right of appeal against a compromise decree?
No, Order XLIII Rule 1-A does not create an independent right of appeal. It merely allows a litigant who is already in a competent appeal against a decree to contend that the compromise should or should not have been recorded. (Para 8 , 11 , 15 )
9. Can a non-party to a suit challenge a consent decree through a first appeal?
Yes, a person who was not a party to the suit but whose rights are affected by a consent decree may institute a first appeal under Section 96(1) of the CPC, provided they obtain leave of the court. (Para 14 , 15 )
10. Do allegations of fraud or lack of authority allow a party to bypass the Trial Court and appeal a consent decree directly?
No, allegations of fraud, want of authority, or other vitiating elements do not automatically transform a consent decree into an ordinary decree; these must be examined by the Trial Court under the proviso to Order XXIII Rule 3. (Para 13 )
JUDGMENT :
PRASANNA B. VARALE, J.
1. These appeals filed by Sakina Sultanali Sunesara (“the appellant”) assails the judgment dated 28.08.2019 rendered by a Larger Bench of the High Court of Gujarat on a reference arising out of Appeal from Order,1[AO] Nos. 16 and 33 of 2017 and cognate AOs. The High Court concluded that a litigant who was already a party to the suit, but disputes the existence or validity of a compromise recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908,2[CPC] must first approach the Trial Court; a First Appeal under Section 96 of the CPC, it held, is available only to a person who was not on the record of the suit. Following that pronouncement, the Single Judge of the High Court dismissed every pending AO on 06.09.2019 for want of maintainability. Both the reference judgment and the consequential order are impugned in these appeals.
2. The factual matrix giving rise to the appeal is as follows:
2.1. Three contiguous parcels of non-agricultural land at Siddhpur, District Patan, city survey Nos. 321, 322 and 323, together 36,354 sq. m., originally belonged to Moosabhai Mooman. On his death they devolved on his widow Noorbanu, his sons Sultan and Shaukatali (respondent no. 3) and his daughter Mumtaz (respondent no. 7). Sultan predeceased, leaving behind the appellant and two children, Salma (respondent no. 5) and Altaf (respondent no. 6) as his legal heirs.
2.2. Mumtaz executed an irrevocable General Power of Attorney,3[PoA] in favour of Hassan Ali Lad (respondent no. 4) on 15.02.2002; a second joint PoA dated 08.02.2005 in his favour was signed by the appellant, Salma, Altaf and Noorbanu.
2.3. On 09.03.2007, Shaukat Ali and Hassan Ali (purporting to act for all other co-owners) agreed to sell 28,978.51 sq. m. (“the suit land”) to ten individuals styling themselves ‘Shia Imami Ismaili Momin Jamat, Siddhpur’ (respondent no. 1) for Rs. 2.51 crore. Only Rs. 15 lakh was paid; a notice terminating the agreement issued in August 2011.
2.4. Up until 2012, Salma, Altaf and Mumtaz conferred individual PoAs on the appellant; two of the original ten proposed purchasers had by then died. On 10.01.2013 the eight survivors executed a deed cancelling the agreement to sell and an indemnity bond. The appellant asserts custody of the originals of both joint PoAs, the agreement, the cancellation deed and the bond.
2.5. Later in 2013, Shaukat Ali, Salma, Altaf and Mumtaz relinquished their undivided interests in favour of the appellant; four mutation entries were certified, leaving her the sole recorded owner.
2.6. In August 2015, the appellant executed three registered sale deeds: two dated 10.08.2015 conveying 3,272 sq. m. and 6,385 sq. m. to Platinum Tradex Private Limited and one dated 12.08.2015 conveying 6,567 sq. m. to four individuals. Two of those individuals had themselves been among the original ten vendees.
2.7. Later in 2015, Hassan Ali, accompanied by two of the original vendees, persuaded another member of that group, Kurban Momin, to revive the terminated transaction. On 24.11.2015 three revenue appeals were filed before the Deputy Collector, Siddhpur, challenging the mutation entries reflecting the appellant’s sale deeds. The appellant and Shaukat Ali were cited as respondents.
2.8. Regular Civil Suit No. 5 of 2016 (“the first suit”) was instituted on 5 January 2016, seeking a declaration that respondent no. 1 possessed the suit land. On 21.01.2016 respondent no. 1, through Kurban, filed Special Civil Suit No.6 of 2016 (“the second suit”) in Patan for specific performance of the cancelled agreement, showing the appellant and her two children through Hassan Ali and joining Shaukat Ali personally.
2.9. A compromise dated 12.03. 2016, signed by respondent nos. 1 and 2 (a trust said to represent the Jamat) on one side and Shaukat Ali and Hassan Ali on the other, was recorded on 15.03.2016, resulting in a first consent decree. Relying on that decree, the plaintiff withdrew the first suit unconditionally on 23.0
