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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Manjari Nehru Kaul, J.
GSM Technologies Private Limited - Appellant
Versus
Dr. Veena Anand - Respondent
CR-924 of 2022 (O&M)
Decided On : 16-05-2022
Appeal - Compromise Decree - Section 96(3) CPC, Order 23 Rule 3 CPC, Order 43 Rule 1A CPC - The court discussed the conflict between Section 96(3) CPC, which bars an appeal against a compromise decree, and Order 43 Rule 1A CPC, which allows an appellant to question the validity of a compromise by preferring an appeal against a decree passed on the basis of such compromise. The court held that a party aggrieved by a compromise decree has a right to either 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 in terms of provision laid down in Order 23 Rule 3 CPC.
Fact of the Case:
The defendant company approached the lower Appellate Court to impugn a consent decree on the basis of a compromise, claiming that the representative who entered into the compromise was not authorized. The lower Appellate Court dismissed the appeal on the ground that appeal against a compromise decree was not maintainable.
Finding of the Court:
The court found that 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 in terms of provision laid down in Order 23 Rule 3 CPC.
Issues: The main issue was whether a party aggrieved by a compromise decree can impugn it before the Appellate Court by way of an appeal under Order 43 Rule 1A CPC or would it have to be challenged before the same court which passed such decree.
Ratio Decidendi: The court's decision was based on the conflict between Section 96(3) CPC and Order 43 Rule 1A CPC, and the interpretation of the provisions in light of the intent of the legislature and the purpose of the amendments.
Final Decision: The instant revision petition is allowed, and the impugned order passed by the lower Appellate Court is set aside. The case is remanded back to the lower Appellate Court to decide it on merits in accordance with law.
JUDGMENT
ORDER
Manjari Nehru Kaul, J. - The petitioner company (hereinafter referred to as the 'defendant') has preferred the instant revision petition under Article 227 of the Constitution of India seeking setting aside of the order dated 07.03.2022 (Annexure P-28), passed by the District Judge, Gurugram, vide which the appeal filed by the defendant was dismissed in limine on the ground of maintainability.
2. Before proceeding further, it would be relevant to give a brief sequence of events leading to the instant revision petition.
3. A civil suit for specific performance and permanent injunction was instituted by the plaintiff (respondent herein) against the defendant. One Ravi Kumar claiming himself to be a representative of the defendant company put in an appearance on its behalf, after engaging a counsel. The civil suit thereafter was disposed off on the basis of a compromise effected between the parties. Admittedly, neither any dispute was raised before the trial court with respect to the compromise arrived at between the parties nor was there any controversy between the parties qua the terms and conditions of the compromise. The trial court passed a consent decree dated 22.12.2021 (Ex.C1) on the basis of the compromise arrived at between the parties before the daily Lok Adalat, Gurugram. However, after the consent decree had been passed, the defendant company approached the lower Appellate Court to impugn the consent decree (Ex.C1) wherein it was pleaded that Ravi Kumar had not been authorized to represent it before the trial court much less to contest the civil suit instituted by the plaintiff and enter into a compromise on its behalf. It was contended that it was on the basis of a forged and fabricated Resolution (Ex.D2) purportedly passed by the Directors of the defendant company that the said Ravi Kumar had engaged a counsel and after colluding with the plaintiff entered into a compromise with her. It was, thus, the case of the defendant that since the decree in question had been passed on the basis of a fraudulent compromise entered into by Ravi Kumar, it deserved to be set aside.
4. The lower Appellate Court dismissed the said appeal preferred by the defendant vide order dated 07.03.2022 (Annexure P-28) on the ground that appeal against a compromise decree was not maintainable in view of the bar created under Section 96(3) of the Code of Civil Procedure (CPC). The learned Appellate Court while relying upon the judgments of the Hon'ble Supreme Court in Banwari Lal v. Smt. Chando Devi (through L.R.) (1993) 1 SCC 581 and R.Rajanna v. S.R.Venkataswamy and others (2014) 15 SCC 471 held that the validity of a compromise could not be challenged by way of a separate suit and the only remedy available to the defendant was to approach the court which had passed the consent decree on the basis of such compromise. Hence, the instant revision petition.
5. Learned counsel for the petitioner-defendant submits that the approach of the lower Appellate Court is totally perverse as it defeats the purpose behind Order 43 Rule 1A CPC wherein a specific remedy of appeal against a consent decree passed on the basis of a compromise (hereinafter referred to as 'compromise decree') has been provided. The legislature in its wisdom has provided for a remedy of appeal by inserting Rule 1A to Order 43 CPC and if it is denied, then the very provision itself would be left redundant which would be against the intent of the legislature.
6. Learned counsel submits that since every provision that exists in a statute book has a specific purpose to serve and unless and until it is revoked, the courts of law are bound to give effect to it; they cannot deprive a party of its right to invoke a statutory provision by exercising their discretion in an arbitrary manner, as it would defeat the very purpose for which such statutory provision was enacted. Learned counsel further submits that the lower Appellate Court grossly misinterpreted the ratio of the law laid d
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 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.
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 ....
Consent and subsequent conduct of the party can validate a compromise even if the party did not sign the compromise.
(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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