IRAC ANALYSIS

Pushpa Devi Bhagat v. Rajinder Singh and Ors. (2006) 5 SCC 566

ISSUE:-

(i) whether the appeal against the consent decree is maintainable?

(ii) whether the compromise statement of the appellant’s counsel and respondent’s counsel
recorded by the court is a valid compromise in terms of Order XXIII, Rule 3 of the Code of
Civil Procedure? 

(iii) Whether the appeal filed by Pushpa Devi under section 96 of the Code of Civil
Procedure, against the consent decree was maintainable.

(iv) Whether the compromise on 23.5.2001 resulting in a consent decree dated 18.7.2001 was
not a valid compromise under Order 23 Rule 3 CPC.

(v) The next question is whether the agreement falls under the first part or the second part. If
first part, then what is the significance of words ‘in writing’ and ‘signed by the parties’
would contemplate occurring in rule 3?

RULE:-

Order 23 Rule 3 having two parts- (i) when there is an agreement in writing by the parties to
enter into a compromise and the court also passes a decree for the same (ii) when the
defendant satisfies the plaintiff with relation to the claim of the suit and the court passes a
decree for the same, whether or not the subject matter of the agreement, compromise or
satisfaction is the same as the subject matter of the suit.

The SC suit that there was no appeal maintainable having regard the specific bar contained in
Sec 96(3) of CPC provides that no appeal lie from a decree passed by the court with the
consent of the parties. Moreover, no independent suit can be filed setting aside the
compromise decree on the ground that the compromise was not lawful in view of the bar
contained in Rule 3-A. A consent decree operates as an estoppel and is valid and binding
unless it is set aside by the court which passed the consent decree by an order or an
application under the proviso to Order 23 Rule 3.
Order 43 Rule 1 says where any Order is made under this Code against a party and thereupon
any judgment is pronounced against such party and a decree is drawn up, such party may, in
an appeal against the decree, contend that such Order should not have been made and the
judgment should not have been pronounced.

Section 96 clause 3 provides with no appeal shall lie from a decree passed by the Court with
the consent of parties.

Article 136 - Special leave to appeal by the Supreme Court –

(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any
cause or matter passed or made by any court or tribunal in the territory of India

(2) Nothing in clause (1) shall apply to any judgment, determination, and sentence or order
passed or made by any court or tribunal constituted by or under any law relating to the
Armed Forces.

ANALYSIS:-

The landlords terminated the said tenancy as at the end of 31-03-1989 and filed a suit against
the firm and Pushpa Devi in the District Court of Delhi for recovery and possession of suit
property. The firm of the defendants Pushpa Devi and others got dissolved and therefore she
says that the suit was not maintainable without making other partners as co-tenants.

Defendants 4 and 5 in this particular case were given opportunity several times to give their
evidences but they failed to do so. Hence, the court made the order that they will close the
matter if they did not produce any evidence one last time on the date of hearing that is
23/05/1991. Earlier they presented their compromise agreement and on that basis the court
made the submission in the order that the defendants undertake to vacate the premises by
22/02/2002 and will pay rent and damages of Rs 4800 with effect from 01/05/2001 till the
vacation of suit premises. The defendants through the counsel also agree to this agreement
and give their consent thereby and ask the court to kindly dispose of the suit accordingly.
Even if the decree has passed the defendant 1 which is the firm it will be executable by
defendant 2 to 5. The said court passed the consent decree on 23/05/2001.
On 21/08/2001 the defendant (Pushpa Devi) filed an application setting aside the decree of
18/07/ 2001 that she had not directed her counsel to make a compromise and it was not
written hence no lawful agreement or compromise. The counsel filed a detailed statement to
the court that he has been receiving instructions from defendant 2 and her daughter mostly
Ms. Sadhna Rai. Within six days of filing the application dated 21/08/2001 she filed an
appeal against the said consent decree before the Distrct Judge, Delhi. The court by
judgement dated 21/12/2002 set aside the consent decree on the ground that there was no
agreement or compromise in writing and signed by the parties.

The same was challenged by the landlords in the High Court of Delhi. During the pendency
of the suit Pushpa Devi died and her daughter came on as the defendant. The High Court of
Delhi allowed the appeal and said that the consent decree passed earlier did not fall under
first part of order 23 rule 3 rather it fell under the second part. The learned counsel contented
to the High Court having held that the case did not fall under the first part which was a
serious error. He submitted that the defendants agreed to vacate the premises on a future date
that is 22/01/2002 and it was an agreement for future to satisfy the suit claim and is not the
case where the defendants satisfy the plaintiff in respect of the subject matter of the suit. The
court said that the remedy available to the parties is to go back to the court by filing an
application where the consent decree was awarded and that court will itself decide if the
compromise was a valid compromise or not.

1. For the best reasons the second defendant had filed an appeal without pursuing her
application where the court had passed the consent decree. Such an appeal was not
maintainable as per Section 96(3) of the code.
2. The difference between the first part and second part- the first part refers to an
agreement or compromise entered into by parties in writing and duly signed and it is
lawful, a decree follows in terms of those agreement. Whereas the second part refers
to the case where the defendant satisfies in respect of the subject matter of the suit
and the suit is disposed with no execution decree.
3. In para 25 this judgement the statements of the parties recorded by the court and duly
signed by the parties making the statement would be “The council for the defendants
was appointed and authorized by the second without any doubt for entering into a
compromise. Both the parties made an oath before the trial court specifying the terms
of compromise which was recorded and signed by them. Hence the requirement of
the first part of Order 23 Rule 3 is satisfied.
This appeal was directed against the judgment dated 3/3/2004 passed by a single learned
judge of Delhi high court in the appeal number 247/203. in this case, respondents number
1and 2 are the landlords of the suit property. Landlords 1 and 2 terminated the tenancy at
the end of 1989 by notice dated 9/2/1989 and filed the suit against the firm and Pushpa
Devi in the court of district judges Delhi to recover the possession of suit property.

Two witnesses were examined on behalf of the plaintiff, and their evidence was closed on
16/9/1998. After the case adjourned many times, this case was filed in 1989. The patient
was delayed on 13/5/1991. Two plaintiffs and their counsel appeared on this basis that
the submission had been made. The court recorded the following submission because of
the statement made by the party's counsel in the presence of both the plaintiffs. The suit
stands as disposed of as a settled party to be bounded by their statement made.

Accordingly, a new decree was drawn on 18/7/2001 in terms of the final order dated
23/5/2001. On 21/7/2001, the second defendant filed an application under section 151 of
CPC for setting aside decree dated18/7/2001alleging that she has not instructed counsel,
there was no written compromise between both the parties.

After closing the evidence by the plaintiff, the case was listed for the defendant's
evidence time and again under the instruction of defendant number 2. The council took
the adjournment for evidence for several years.

After contesting this matter for about ten years, when it was impossible to take any
further date for recording the evidence of the defendant, the counsel advised that
defendant number 2 to lead the evidence and made it clear that it would not be possible
for any other adjournment. After that, the term was negotiated, and ultimately, with the
prior approval of defendant number 2, the statement was made on behalf of the number 2
and other defendants.

The landlord challenged the said judgment of the applied court. The appellant challenged
the high court's judgment (2nd defendants' legal representative in this appeal.

The appeal filed by Pushpa Devi under section 96 of CPC was against the consent decree
and was maintainable. The compromise on 23/5/2001 resulting in a consent decree dated
18/7/2001 was not valid and compromised under Order 23 Rule 3 of CPC.
It is no doubt to prove that landlord did not content as a first appellant before the High
Court that the appeal against the consent decree was not maintainable. The contention
had been urged for the first time in court, and the contention relates to the jurisdiction of
the appealed court and evidence from the records. Such a plea does not require evidence.

Though the jurisdiction has not been urged before the high court, in this case, the
contention raised was related to the appealed court's jurisdiction.

Section 96 provides for an appeal from the original decree. the position that emerged
from the amended provision of Order 23 can be summed up as below -

No appeal is maintainable against the consent decree.

No request is maintainable against the order of the court recalling the
compromise.
No independent suit can be filed for setting aside a compromised decree.
A consent decree operates as estoppel and is valid and binding unless the court
does not set it aside.

Therefore the only remedy available to the party is to avoid such a consent decree.

To approach the court, which recorded the compromise unless a decree established there
was no compromise.

Order XIII deals with withdrawal and adjustment of the suit. Rule 3 relates to the
compromise of the case.

The next question is where an agreement of compromise falls under the first part. What is
the meaning and significance of the word in writing and signed by the parties in rule 3 of
CPC?

The appellant consent that word in writing and signed by the parties could contemplate
grounds of the documents or a compromised documents containing the terms of
settlement in writing and signed by the parties.

So, as long as the system of judicial administration in India continues unaltered and so
long as parliament has convinced and intended to changes its essential character, there is
no reason to ruin that the parliament has though not expressly but employed reduced
counsel roles of capacity to represent it is a client as effectively as in the past.
Consequently, the statements of the parties of their counsel recorded by the court and
duly signed by the person making a statement would be signed by the party.

We are also of the view that the judgment of decree passed due to consent rise as before
court is always set to compromise adjustment and settlement. The appellant placed firm
reliance on the following observation of this court in the case of Gurmeet Singh vs.
Chaturbhuj Goel.

CONCLUSION:-

The apex court while answering the first issue negatively, has observed that the validity
of a consent decree depends wholly on the validity of the agreement or compromise on
which it is made and no appeal is maintainable against a consent decree having regard to
the specific bar contained in section 96 (3) CPC. The only remedy available to a party to
a consent decree to avoid such consent decree is to approach the court, under proviso to
Rule 3 of Order 23, which recorded the compromise and made a decree in terms of it, and
establish that there was no compromise. The court answered the second issue
affirmatively and observed that: the words ‘by parties’ occurred in Order XXIII, Rule 3
refer not only to parties in person, but their attorney holders or duly authorized pleaders.
And, therefore, the statement of the counsels of both the parties recorded by the court is a
valid compromise in terms of Order XXIII, Rule 3 of the Code of Civil Procedure.

As the facts to be understood in brief the suit was first a simple suit for possession of
property against the tenant filed in the year 1993. The plaintiff’s evidence was closed in
1998. Defendant 2 did not lead any evidence and her evidence was treated as close. The
matter was extended for three years for the defendant’s evidence. It was noted on
19/05/2001 that no further adjournment will be granted for defendant 4 and 5 (on the next
date of hearing 23/05/2001). Evidences were not tendered. On the other hand the trail
court made sure that the statements made by both the parties were recorded in an oath
and signed by them and hence a consent decree was not passed therefore.

Appeal was not maintainable by the tenants under the Section 93(3) of the code.

In the present case the compromise between the tenants and landlords was in the form of
oath in writing and the decree in pursuant of such settlement did not fall under the second
part but the first. The HC had definitely made an error with regards to this.
It was an attempt of the tenants to protract the litigation indefinitely by frivolous and
vexatious contentions regarding the compromise and going back to the solemn
undertaking given to court should be deprecated.

The facts shows that nothing further can be done for the tenants and that all what the
counsel did was to get the maximum advantage of his clients by dragging on the matter to
the extent possible.

The appeal was therefore dismissed as being devoid of any merit. The consent decree to
upheld through for which the reasons weighted different in the HC. The landlords (the
respondents) will be entitled to seek mesne profits for the period from 22/01/2002 to the
date of delivery of possession in accordance with law. Appeal stands dismissed and the
costs payable by the appellant amounts to Rs 25,000/- .

Therefore, 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 made a decree in
terms of it, and establish that there was no compromise. In that event, the court which
recorded the compromise will itself consider and decide the question as to whether there
was a valid compromise or not. This is so because a consent decree is nothing but
contract between parties superimposed with the seal of approval of the court.

The facts are similar in this case. Neither the second defendant nor her legal
representative has accused the second defendant's lawyer of having an unlawful motive.
The facts suggest that the defendants-tenants could not have been helped any further. All
the defendants' lawyer had done was try to achieve the most benefit for his clients in the
circumstances by dragging the case out as long as possible.

This appeal is, therefore, liable to be dismissed as being devoid of merit. The consent
decree is upheld, though for reasons different from those which weighed with the High
Court. The landlords (respondents) will be entitled to seek mesne profits for the period
from 22.1.2002 to date of delivery of possession in accordance with law. The appeal is
accordingly dismissed with costs. The costs payable by the appellant are quantified at
Rs.25,000/-