The Court has the power and duty to enquire into all aspects of a compromise, including allegations of fraud, misrepresentation, coercion and undue influence, before recording the compromise.

Headnote:
COMPROMISE DECREE - MAINTAINABILITY OF APPEAL - CONSENT DECREE - RECORDING OF COMPROMISE - SATISFACTION OF COURT - LAWFUL AGREEMENT - SCOPE OF ENQUIRY - LIMITATION - FRAUD, MISREPRESENTATION, COERCION AND UNDUE INFLUENCE - INCLUSION OF PROPERTIES NOT SUBJECT MATTER OF SUIT - RIGHTS OF PURCHASER AT COURT AUCTION.
Fact of the Case:

Plaintiffs brought a suit for partition and separate possession of their shares in two properties. A preliminary decree was passed declaring the partition-deed null and void and also declaring the respective shares of the plaintiffs and the defendants. A commissioner was appointed to divide the suit properties. The commissioner made a report that the residential house property was indivisible, but the open site could be divided. On February 14, 1990, the proclamation of sale of properties was issued and the date for sale was fixed as March 15, 1990. The respondent No. 5 was the highest bidder, his bid being Rs. 7,50,000/- for the residential house property and Rs. 31,00,600/- for the open site. The deposit of 25 per cent of the sale price was not made, but on the same day an agreement purporting to be between the parties and the respondent No. 6, was filed. Formal order recording the compromise was not passed until May 8, 1990 when, while considering the plaintiffs' application for temporary injunction in Civil Misc. Application No. 197 of 1990, the learned Civil Judge dismissed the application for injunction in Civil Misc. for injunction dated April 24, 1990, for default of appearance and directed that final decree be drawn up in terms of the agreement, dated March 15, 1990.
Finding of the Court:

1. The appeal against a consent decree is maintainable under section 96(1) of the Code of Civil Procedure, if the appellant disputes the very fact of the decree having been passed with the consent of the parties. 2. The Court has the power and also the duty of enquiring into all aspects of the compromise, including allegations of fraud, misrepresentation, coercion and undue influence. 3. There is no limitation of time for raising objections to a compromise, but ordinarily they should be raised before the compromise is recorded. 4. The inclusion of properties not the subject matter of the suit in the compromise is permissible under the amended Rule 3 of Order 23 of the Code of Civil Procedure. 5. A purchaser at a court auction is deemed to be a party to the suit in which the decree is passed and is entitled to claim a benefit under an agreement which he could have claimed in the event of his being a purchaser in execution of the decree.
Issues: 1. Whether an appeal against a consent decree is maintainable? 2. Whether the Court has the power and duty to enquire into all aspects of a compromise, including allegations of fraud, misrepresentation, coercion and undue influence? 3. Whether there is a limitation of time for raising objections to a compromise? 4. Whether the inclusion of properties not the subject matter of the suit in a compromise is permissible? 5. Whether a purchaser at a court auction is entitled to claim a benefit under an agreement which he could have claimed in the event of his being a purchaser in execution of the decree?
Ratio Decidendi: 1. The right to challenge the recording or refusing to record a compromise is available, though the decree may have been a consent decree. 2. The Court has the power and duty to enquire into all aspects of the compromise, including allegations of fraud, misrepresentation, coercion and undue influence, before recording the compromise. 3. There is no limitation of time for raising objections to a compromise, but ordinarily they should be raised before the compromise is recorded. 4. The inclusion of properties not the subject matter of the suit in the compromise is permissible under the amended Rule 3 of Order 23 of the Code of Civil Procedure. 5. A purchaser at a court auction is deemed to be a party to the suit in which the decree is passed and is entitled to claim a benefit under an agreement which he could have claimed in the event of his being a purchaser in execution of the decree.
Final Decision: The appeal was allowed, the final decree passed by the Court below was set aside and the appellants were permitted to raise the grounds indicated in their memo of appeal, before the Court below, within two months from the date of the judgment, by making a proper application, why the agreement dated March 15, 1990 should not be recorded on the decree passed pursuant thereto.

JUDGMENT - M.S. DESHPANDE, J.:---This appeal by the original plaintiffs Nos. 1, 2, 4 and 5 is directed against a decree passed in terms of compromise.

2. The plaintiff Nos. 1 to 5, claiming to be entitled to certain shares in two properties, viz., a residential house and an open site known as MALBOTA, brought the suit for a declaration that the Instrument of Division executed on 13-7-1973 was null and void and for partition and separate possession of their shares in the properties. A preliminary decree was passed on January 5, 1984, declaring that the partition-deed dated July, 13, 1973 was null and void and also declaring the respective shares of the plaintiffs and the defendants Nos. 1 to 5 in the two properties. A commissioner was appointed to divide the suit properties as well as for reporting whether the division was possible. The Commissioner made a report on April 16, 1984 that the residential house property was indivisible, but the open site could be divided. On February 14, 1990, the proclamation of sale of properties was issued and the date for sale was fixed as March 15, 1990. The respondent No. 5 was the highest bidder, his bid being Rs. 7,50,000/- for the residential house property and Rs. 31,00,600/- for the open site. The deposit of 25 per cent of the sale price was not made, but on the same day an agreement purporting to be between the parties and the respondent No. 6, was filed. Formal order recording the compromise was not passed until May 8, 1990 when, while considering the plaintiffs' application for temporary injunction in Civil Misc. Application No. 197 of 1990, the learned Civil Judge dismissed the application for injunction in Civil Misc. for injunction dated April 24, 1990, for default of appearance and directed that final decree be drawn up in terms of the agreement, dated March 15, 1990.

3. By this appeal, plaintiff Nos. 1, 2, 4 and 5 challenge the decree on several grounds, including that the agreement, dated March 15, 1990, was not a lawful agreement because it was brought about by coercion, undue influence, misrepresentation and fraud and there was no opportunity to raise these pleas before the learned trial Judge until the impugned order dated May 8, 1990 was made. It was also urged that there was no formal order recording the compromise, and in any event, the compromise should not have been recorded because it related to two items of the properties which were not the subject matter of the suit, and the respondent No. 6, who was not a party to the suit, could not have secured an order directing the sale-deed to be executed in his favour. On the other hand, it was urged on behalf of the respondents that since the appeal is directed against a consent-decree, it was not maintainable and it was not open to the plaintiffs to raise the pleas regarding coercion, undue influence, misrepresentation and fraud, for the first time, in memo appeal, without raising these contentions before the trial Court where there was ample opportunity to raise them. Further, it was urged that the recitals in the memo of appeal do not make out a case of want of free consent and no exception can, therefore, be taken to the order recording the compromise.

4. With regard to the question raised about the maintainability of the appeal, it is apparent that under section 96(3) of the Code of Civil Procedure, no appeal lies from a decree passed by the Court with the consent of parties. Original clause (m) of Order 43, Rule 1, which provided for an appeal against an order under Rule 3 of Order 23 recording or refusing to record an agreement, compromise or satisfaction-was omitted by the amending Act of 1976 and a right of appeal was provided by inserting rule 1-A. Sub-Rule (2) thereof provides :

"In an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded

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