2022 Supreme(SC) 472

SUPREME COURT OF INDIA
M.R. SHAH, B.V. NAGARATHNA, JJ.
K. Srinivasappa and Others – Appellants
Versus
M. Mallamma and Others – Respondents
Civil Appeal No. 3486-3488 of 2022
Decided On : 18-05-2022

IMPORTANT POINTS
(1) Compromise of suit – To recall a compromise that has been recorded would call for strong reasons. Terms of a compromise decree cannot be avoided, unless allegation of fraud has been proved.
(2) Where allegation of fraud is made against a party to an agreement, said allegation would have to be proved strictly, in order to avoid agreement on the ground that fraud was practised on a party in order to induce such party to enter into agreement.

Headnote:

(A) Legal Services Authorities Act, 1987 – Section 21 – Civil Procedure Code, 1908 – Order XXIII Rule 3 – Compromise of suit – Given element of finality attached to an award of Lok Adalat, no appeal would lie under Section 96 of CPC against such award – Writ Court cannot, in a casual manner, de hors any reasoning, set aside order of Lok Adalat – Award of a Lok Adalat cannot be reversed or set aside without setting aside facts recorded in such award as being fraudulent arrived at – To recall a compromise that has been recorded would call for strong reasons – A compromise would result ultimately into a decree of a Court which can be enforced just as a decree passed on an adjudication of a case – This is also true in case of a compromise recorded before a Lok Adalat – Section 21 of Legal Services Authorities Act, 1987 equates award of Lok Adalat, to a decree of a Civil Court and imputes element of finality to an award of compromise passed by Lok Adalat – When Lok Adalat disposes cases in terms of a compromise arrived at between parties to a suit, after following principles of equity and natural justice, every such award of Lok Adalat shall be deemed to be a decree of a Civil Court and such decree shall be final and binding upon parties. (Paras 27, 28 and 29)

(B) Civil Procedure Code, 1908 – Order XXIII Rule 3 – Legal Services Authorities Act, 1987 – Section 21 – Recall of compromise decree passed by Lok Adalat – Level of circumspection which a Court of law ought to exercise while setting aside a consent decree or a decree based on a memo of compromise, would be atleast of same degree, which is to be observed while declaring an agreement as invalid – Since no appeal would lie against a compromise decree, it is imperative that a party seeking to avoid terms of a consent decree has to establish, before Court that passed the same, that agreement on which consent decree is based, is invalid or illegal – Where allegation of fraud is made against a party to an agreement, said allegation would have to be proved strictly, in order to avoid agreement on the ground that fraud was practised on a party in order to induce such party to enter into agreement – Similarly, terms of a compromise decree, cannot be avoided, unless allegation of fraud has been proved – In absence of any conclusive proof as to fraud on part of objectors, High Court could not have set aside compromise decree in instant case – High Court’s decision to set aside order of Lok Adalat, without entering into a discussion as to findings in such order, cannot be sustained – Such decision of High Court runs contrary to established principles of law which seek to protect sanctity and finality of orders based on a compromise or consent between parties – Impugned judgment of High Court set aside and order of Lok Adalat restored. (Paras 33, 34, 35, 36 and 37)

(C) Maxim – “cessante ratione legis cessat ipsa lex ” – Reason is soul of law and when reason of any particular law ceases, so does law itself – Insistence on reason is a requirement for both judicial accountability and transparency – Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (Paras 30 and 31)

Facts of the case:

Present appeals assail the judgment and order dated 17th April, 2015, passed by the High Court of Karnataka at Bengaluru in Writ Petition nos.20607, 20608 and 20609 of 2013, whereby the High Court disposed of the Writ Petitions filed by plaintiff nos. 4 to 6 and has recalled order dated 7th July, 2012 by which the compromise had been recorded by the Lok Adalat, between the parties to Original Suit No. 876 of 2004, being a suit for partition and separate possession instituted by plaintiff nos. 1 to 6 on the file of the Court of Civil Judge (Junior Division), Rural District, Bangalore.

Findings of Court:

It is not the case of plaintiff nos. 4-6 that they had not received an amount of Rs. 30,00,000/- (rupees thirty lakhs) each, in terms of compromise. Further, it is not their case that such sum has been returned, in whole or in part, to the defendants.

Result : Appeals allowed.