In a judgment authored by Justice M. R. Shah, it has been observed that the only remedy available to a party to a consent decree is to approach the court which recorded the compromise and separate suit is not maintainable.
The Court observed that a mere clever drafting would not permit the plaintiff to make the suit maintainable which otherwise would not be maintainable and/or barred by law and if clever drafting of the plaint has created the illusion of a cause of action, the court will nip it in the bud at the earliest so that bogus litigation will end at the earlier stage.
In the instant case, a civil suit was filed against the appellants before the trial Court and thereafter, a compromise was arrived at between the parties vide a Compromise Deed. In furtherance of the compromise, an application under XXIII Rule 3 CPC came to be filed alongwith the Compromise Memo praying for passing of decree in terms thereof. Thereafter, the Compromise Decree came to be passed by trial Court in terms of the Memorandum of Compromise entered into by the father on behalf of respondent No.1 herein, the grandmother and the appellant herein – Developer.
Subsequently, on attaining the age of majority, the respondent No.1 herein filed the present suit through his General Power of Attorney praying inter alia declaration of right, title and interest over the suit schedule property and declaration of Compromise Decree. He also prayed the revocation of deed as null and void.
In response, the appellant filed written statement denying all the material allegations. The appellant also filed application under order VII Rule 11 CPC for rejection of the plaint on various grounds and mainly on the ground that the suit for setting aside the consent decree/Compromise Decree would be barred under Order XXIII Rule 3A of CPC. The Trial Court vide order dated 02.05.2019 allowed the said application and rejected the plaint on the ground that in view of Order XIII Rule 3A CPC, no independent suit would be maintainable against the Compromise Decree.
Feeling aggrieved and dissatisfied with the order passed by the Trial Court rejecting the plaint in exercise of powers under Order VII Rule 11(d) CPC, the original plaintiff preferred the appeal before the High Court.
In Appeal, the High Court by its impugned judgment and order quashed and set aside the order passed by the Trial Court rejecting the plaint and remanded the matter to the Trial Court by observing that the effect of the provisions of Order XXXII Rules 1 to 7 CPC has not been considered by the Trial court, which would have a direct bearing on the validity of the Compromise Decree.
Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High court, the original defendant Nos. 2 and 4 have preferred the present appeals.
Submissions made by the Appellants:
Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the appellant – Developer submitted that in the facts and circumstances of the case, the High Court has committed a grave error in quashing and setting aside the order passed by the Trial court rejecting the plaint in exercise of powers under Order VII Rule 11 CPC holding that in view of Order XXIII Rule 3A CPC, no independent suit would be maintainable against the Compromise Decree.
He further submitted that Order XXIII Rule 3 CPC provides for compromise of suit and Rule 3A specifically provides that no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful and therefore the Trial Court rightly rejected the plaint.
Judgments relied upon by the Appellants:
Banwari Lal Vs. Chando Devi, (1993) 1 SCC 581; Pushpa Devi Bhagat Vs. Rajinder Singh & Ors., (2006) 5 SCC 566; Horil Vs. Keshav, (2012) 5 SCC 525; R. Rajanna Vs. S.R. Venkataswamy & Ors., (2014) 15 SCC 471 and R. Janakiammal Vs. S.K. Kumarasamy, (2021) 9 SCC 114.
Submissions of the Respondents:
Shri B. Adinarayana Rao, learned Senior Advocate appearing on behalf of the original plaintiff(s) submitted that in the present case, the Compromise Decree is hit by Order XXXII Rule 7 CPC. It is submitted that therefore on attaining the majority immediately when respondent No.1 herein – original plaintiff instituted a suit for various reliefs, which otherwise can be granted in a substantive independent suit, the High Court has rightly set aside the order passed by the Trial Court rejecting the plaint.
He further submitted that in the present case, the reliefs prayed in the suit are not only with respect to the Compromise Decree, but other reliefs are sought for which an independent substantive suit shall be maintainable.
Observations of the Court:
At the outset, the Court observed that the High Court while passing the impugned judgment and order has not at all dealt with and considered the provisions of Order XXIII Rule 3A CPC and has not considered at all whether in fact the suit challenging the Compromise Decree and/or for the reliefs sought in the suit would be maintainable or not.
What was required to be considered by the High Court was whether the independent suit questioning the Compromise Decree would be maintainable or not. The aforesaid crucial aspect has not been dealt with by the High Court at all and High Court has gone into the validity of the Compromise Decree in view of Order XXXII Rule 7 CPC, the Court noted.
Note: Order 23 Rule 3A. Bar to suit. — No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.
The Court further observed that at the stage of deciding the application under Order VII Rule 11 CPC, the only thing which was required to be considered by the High Court was whether the suit would be maintainable or not and that the suit challenging the Compromise Decree would be maintainable or not in view of Order XXIII Rule 3A CPC and at this stage, the High Court / Court was not required to consider on merits the validity of the Compromise Decree.
While upholding the order of the trial Court, the Court observed that on plain reading of Order XXIII Rule 3A CPC, the Trial Court was justified in rejecting the plaint. Order XXIII Rule 3A CPC, which has been inserted by amendment in 1976.
The Court relied upon the judgments of Pushpa Devi [Pushpa Devi Bhagat v. Rjinder Singh, (2006) 5 SCC 566] as well as Banwari Lal [Banwari Lal v. Chando Devi, (1993) 1 SCC 581] wherein this Court held that no sooner a question relating to lawfulness of the agreement or compromise is raised before the court that passed the decree on the basis of any such agreement or compromise, it is that court and that court alone which can examine and determine that question.
In subsequent judgment, Triloki Nath Singh v. Anirudh Singh, (2020) 6 SCC 629, this Court again referring to earlier judgments reiterated the same proposition i.e. the only remedy available to a party to a consent decree to avoid such consent decree is to approach the court which recorded the compromise and separate suit is not maintainable. In paras 17 and 18, the following has been laid down: (SCC p. 638)
“17. By introducing the amendment to the Civil Procedure Code (Amendment) Act, 1976 w.e.f. 1-2-1977, the legislature has brought into force Order 23 Rule 3-A, which creates bar to institute the suit to set aside a decree on the ground that the compromise on which decree is based was not lawful. The purpose of effecting a compromise between the parties is to put an end to the various disputes pending before the court of competent jurisdiction once and for all.
18. Finality of decisions is an underlying principle of all adjudicating forums. Thus, creation of further litigation should never be the basis of a compromise between the parties. Rule 3-A Order 23 CPC put a specific bar that no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. The scheme of Order 23 Rule 3 CPC is to avoid multiplicity of litigation and permit parties to amicably come to a settlement which is lawful, is in writing and a voluntary act on the part of the parties. The court can be instrumental in having an agreed compromise effected and finality attached to the same. The court should never be party to imposition of a compromise upon an unwilling party, still open to be questioned on an application under the proviso to Order 23 Rule 3 CPC before the court.”
Clever Drafting would not permit the plaintiff to make the suit maintainable which is otherwise barred by law:
The Court observed that a mere clever drafting would not permit the plaintiff to make the suit maintainable which otherwise would not be maintainable and/or barred by law. It has been consistently held by this Court that if clever drafting of the plaint has created the illusion of a cause of action, the court will nip it in the bud at the earliest so that bogus litigation will end at the earlier stage.
The Court referred to the judgment in T. Arivandandam Vs. T.V. Satyapal, (1977) 4 SCC 467, wherein it is observed and held as under;-
“5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif’s Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful — not formal — reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7 Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order 10 CPC. An activist Judge is the answer to irresponsible law suits.”
In the case of Ram Singh v. Gram Panchayat Mehal Kalan, (1986) 4 SCC 364, this Court has observed and held that when the suit is barred by any law, the plaintiff cannot be allowed to circumvent that provision by means of clever drafting so as to avoid mention of those circumstances, by which the suit is barred by law of limitation.
In view of the above, the Court allowed the appeals and set aside the impugned judgment and order passed by the High Court and the order passed by the Trial Court rejecting the plaint was restored.
Civil Appeal No. 439 Of 2022
M/s. Sree Surya Developers and Promoters versus N. Sailesh Prasad and Ors
Civil Appeal Nos. 440-441 Of 2022
M/s. Raja Pushpa Properties Pvt. Ltd versus N. Sailesh Prasad and Ors
Coram: Justice M. R. Shah and Justice Sanjiv Khanna
Date of Judgment: 09-02-2022
Note: Two appeals were clubbed and heard by the Court and it is recommended to read the original copy of the judgment.