The Supreme Court recently clarified that a party to a compromise decree cannot directly approach the Appellate Court to challenge the compromise. Instead, the party must first raise the issue before the trial court under the procedure given in Order 23 Rule 3 of the Civil Procedure Code (CPC).
"If a person was already a party to the suit, and denies that any lawful compromise ever took place, the CPC requires that person to go back to the Trial Court under the proviso to Order XXIII Rule 3 and ask that Court to decide whether the compromise is valid." — Supreme Court.
A bench of Justices Vikram Nath and Prasanna B. Varale made this observation while hearing an appeal where the appellant, claiming unawareness of the compromise, directly approached the High Court by invoking Order 43 Rule 1A of CPC.
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The Court explained that Order 43 Rule 1A allows a party to challenge a non-appealable order during an appeal against a decree if that order contributed to the final decision. However, it does not create a separate right of appeal against a compromise decree.
Earlier, a Single Judge of the Gujarat High Court referred three legal questions to a larger bench due to conflicting opinions. The larger bench held that when a compromise is disputed, the party must first approach the trial court as required under the proviso to Order 23 Rule 3. The Rule 1A does not offer an independent path for appealing a compromise decree.
Following the larger bench's view, the Single Judge dismissed the appellant’s appeal. The appellant then moved to the Supreme Court.
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Justice Varale, writing for the Supreme Court, confirmed the High Court’s decision. The Court emphasized that once a compromise decree is passed, no appeal can be filed against it due to the clear prohibition under Section 96(3) CPC.
"A party that accepts the compromise is bound by it and cannot appeal (Section 96(3)). A party that denies the compromise must first raise that dispute before the Trial Court (proviso to Order XXIII Rule 3)." — Supreme Court.
The Court further stated that if the trial court rules against the party disputing the compromise, only then a first appeal under Section 96(1) is permitted. During such an appeal, the appellant may challenge the recording of the compromise using Order 43 Rule 1A(2).
Since the appellant in this case did not first raise the objection in the trial court and instead directly invoked Order 43 Rule 1A(2), the Supreme Court held that the High Court rightly dismissed the appeal.
The Court also pointed out an important distinction:
"Someone who was not a party to the suit but whose rights are affected by a consent decree may approach the Appellate Court, but only after obtaining leave. Order XLIII Rule 1-A does not create an independent appeal at all." — Supreme Court.
Thus, the Supreme Court dismissed the appeal, reinforcing that the proper legal path must be followed when questioning a compromise decree.
Case Title: Sakina Sultanali Sunesara (Momin) versus Shia Imami Ismaili Momin Jamat Samaj & Others
Appearance:
For Appellant(s): Mr. Huzefa Ahmadi (Senior Advocate), Mr. Apurva Vakil, Ms. Anushree Prashit Kapadia (AOR), Ms. Rashmi Singh.
For Respondent(s): Mr. Rakesh Uttamchandra Upadhyay (AOR), Ms. Aarti Upadhyay Mishra, Mr. Harsh Som, Mr. Pankaj B. Velani.
