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Case Title: Ashiya Ummal v. S.N. Sathy & ors.

Case No: RSA NO. 247 of 2023

Decided on:  3^rd January, 2024

CORAM: THE HON’BLE MR. JUSTICE A. BADHARUDEEN

Facts of the Case

S.N.Sathy, the original plaintiff, instituted the Suit for fixation of boundary, recovery of possession and consequential injunction. During pendency of the Suit, Compromise was entered into on 16.01.2019 and the signatories in the compromise are the plaintiff, her counsel, 5th defendant and the counsel for the whole defendants.

The learned counsel for the appellant/1st defendant assails the said compromise on the ground that the 1st defendant did not sign in the compromise and the same should not bind the 1st defendant. Therefore, the learned counsel pressed for setting aside the compromise decree passed in the above Suit, where the 1st defendant is not a signatory.

The learned counsel for the plaintiff submitted that in the compromise entered into between the parties, the signatories are the plaintiff and the 5th defendant, husband of the 1st defendant. It is also pointed out by the learned counsel for the plaintiff that even though the 1st defendant did not directly put signature in the compromise, the 1st defendant thereafter acted upon the same and received benefit out of the same. Therefore, the 1st defendant accepted the compromise, the 1st defendant could not succeed in opposing the finality of the compromise and this appeal must fail.

Issues

1. Whether challenge against a compromise decree is permissible by way of an appeal? If so, on what grounds?
2. What is the legal effect of a compromise where a party did not sign?
3. If a party, who did not sign a compromise, if acts upon the same subsequently, can he avoid the compromise decree thereafter merely on the ground that he did not put his signature in the compromise?

Legal Provisions

Under Order XLIII Rule 1A (2) 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. At the same time, Section 96(3) of the C.P.C. provides that, no appeal shall lie from a decree passed by the court with the consent of parties. An apparent conflict between the two provisions of the Code, viz. S.96(3) C.P.C. which bars an appeal against a compromise decree and Order XLIII, Rule 1A(2) C.P.C. 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, looms large.

Order XXIII Rule 3 C.P.C. reveals the mode of recording compromise. After amending, Rule 3 of Order XXIII C.P.C., it was inserted a requirement that all lawful agreements or compromise would be in writing and signed by the parties, to enable the court to satisfy itself about the authenticity of the compromise/agreement. As per the proviso, where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment. A new Rule 3A was also inserted in Order XXIII in the C.P.C. by the same Amendment Act which bars institution of a separate suit to challenge a decree passed on the basis of a compromise, on the ground that such compromise is not lawful.

Court’s analysis and decision

The Hon’ble High Court of Kerala has dealt with first issue while referring to the following judgements. The Supreme Court in Banwari Lal v. Smt.Chando Devi [1993 (1) SCC 581]: [AIR 1993 SC 1139] held that a party challenging a compromise decree can file an application under the proviso to Order XXIII, Rule 3 C.P.C. before the same court by which the said decree was passed or an appeal under S.96(1) C.P.C. wherein it would be open for a party to question the validity of the compromise in view of Order. The Apex Court in H.S. Goutham v. Rama Murthy and another [2021 (5) SCC 241: AIR OnLine 2021 SC 269], held that an appeal against a compromise decree in terms of Order XLIII, Rule 1A C.P.C. was maintainable.

Neither an appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by R.3A of O.23 of CPC. As such a right has been given under R.1A(2) of 0.43 of CPC to a party, who challenges the recording of the compromise, to question the validity thereof while preferring an appeal against the decree. S.96(3) of the Code shall not be a bar to such an appeal because S.96(3) is applicable to cases where the factum of compromise or agreement is not in dispute.

The Hon’ble High Court of Kerala has combinedly dealt with second and third issues. There is no dispute that the 1st defendant is not a signatory in the compromise and on her behalf her lawyer signed. At the same time, the husband of the 1st defendant (5th defendant) also signed in the compromise. In this case, after passing decree in terms of the compromise as on 16.1.2019, subsequently the 1st defendant filed an affidavit before the Munsiff Court on 02.03.2019 and claimed the amount in terms of clause 5 of the compromise petition. Reading the affidavit, it is vivid that in paragraph No.2 thereof, the 1st defendant affirmed that “the said case was settled in terms of compromise petition dated 16.1.2019”. In paragraph No.3 it is affirmed by the 1st defendant that “as per clause 5 of the said compromise petition, the parties are directed to file separate statements of accounts.”.

The 5th defendant also filed an affidavit as Annexure-R1.C, in terms of the compromise. On perusal of Annexure-R1.D affidavit filed by the 1st defendant, it is emphatically clear that Ashiya Ummal agreed and consented the compromise and subsequently acted upon the same though she did not sign the compromise.

It has to be held that even though the 1st defendant did not sign the compromise, she had given consent to his lawyer to effectuate the compromise and she acted upon the same in view of Annexure R1.D affidavit. Therefore, the appellant herein who had given consent and acted upon the compromise cannot withdraw the consent thereafter and accordingly, it is held that the compromise shall bind the 1st defendant/appellant.

This Second Appeal is found to be meritless and is liable to be dismissed.

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Written by- Afshan Ahmad

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