Mere Statements Of Parties Before Court About Compromise Cannot Satisfy Requirements Of Order XXIII Rule 3 CPC: Supreme Court
The Supreme Court held that mere statements of the parties before a court about a compromise cannot satisfy the requirements of Order XXIII Rule 3 of the CPC as the same needs to be reduced to writing and signed by the parties.
The Court explained that a lawful agreement or compromise in writing and signed by the parties would be required to be proved to the satisfaction of the Court. Since there was no document in writing, the question of the parties signing it did not arise as per the Court.
A Bench of Justice Vikram Nath and Justice Prashant Kumar Mishra observed, “In this case, it was clarified by this Court that after the amendment of Code of Civil Procedure in 1977, a compromise decree can be passed only on compliance with the requirements of Rule 3 of Order XXIII, otherwise it may not be possible to recognize the same as compromise decree. When a compromise is to be recorded and a decree is to be passed, Rule 3 of Order XXIII of the Code requires that the terms of compromise should be reduced to writing and signed by the parties.”
AOR M. C. Dhingra appeared for the appellants, while AOR Anil Nag represented the respondents.
The original plaintiffs had filed a suit seeking a declaration and permanent injunction against the defendants for the ownership and possession of a suit land. The Trial Court had initially decreed the suit in favour of the plaintiffs. However, during the pendency of the first appeal, the plaintiffs executed a sale deed. Subsequently, the first Appellate Court allowed the appeal, stating that the plaintiffs had compromised the case and requested dismissal of the suit.
The current suit was instituted by the respondents against the appellants seeking a declaration and permanent prohibitory injunction for their ownership of half share in the suit land as per the compromise decree. The Trial Court dismissed the suit holding that the statements before the District Court could not be treated as an agreement or compromise due to the absence of a written compromise duly signed by the parties, as mandated by Order XXIII Rule 3 of the CPC.
On appeal, the District Judge decreed the suit in favour of the plaintiffs. The High Court upheld this decision, explaining that the sale deed executed during the pendency of the first appeal did not abrogate the plaintiffs' rights, which remained intact as per the doctrine of lis pendens.
The Supreme Court observed that that the statements made by the parties before the first Appellate Court did not constitute a lawful agreement or compromise in writing and signed by the parties, as required under Order XXIII Rule 3 CPC.
Consequently, the Court held, “Neither the compromise deed has been reduced to writing, nor it is recorded by the court. Mere statements of the parties before court about such said compromise, cannot satisfy the requirements of Order XXIII Rule 3 of the CPC. Therefore, the compromise decree is not valid.”
Accordingly, the Supreme Court allowed the appeal.
Cause Title: Amro Devi & Ors. v. Julfi Ram (D) & Ors. (Neutral Citation: 2024 INSC 527)
Appearance:
Appellants: AOR M. C. Dhingra; Advocates Gaurav Dhingra, Shashank Singh, Piyush Kant Roy, Abhishek Lakra, Rishabh Kumar Singh, Arvind Kumar Singh, Mahendra Ram, and Dipanker Pokhriyal
Respondents: AOR Anil Nag