‘When a compromise is to be recorded & a decree is to be passed, Rule 3 of Order XXIII of CPC requires that terms of compromise should be reduced to writing & signed by parties’ : Supreme Court allows appeal, sets aside HC order in land dispute case
Justices Vikram Nath & PK Mishra [15-07-2024]

Read Order: AMRO DEVI & ORS v. JULFI RAM (DECEASED) THR.LRS. & ORS[SC- CIVIL APPEAL NO. 7791 OF 2024]

LE Correspondent

New Delhi, July 17, 2024: The Supreme Court has allowed a civil appeal filed against an order of the Himachal Pradesh High Court in a land dispute case. The High Court had dismissed a second appeal filed by the defendants, confirming the decree passed by the first Appellate Court.

“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,” the apex court observed in the judgement.

The Top Court held that as per Order XXIII Rule 3 Code of Civil Procedure (CPC),for a valid compromise in a suit there has to be a lawful agreement or compromise in writing and signed by the parties which would then require it to be proved to the satisfaction of the Court.

“In the present case there is no document in writing containing the terms of the agreement or compromise. In the absence of any document in writing, the question of the parties signing it does not arise. Even the question of proving such document to the satisfaction of the Court to be lawful, also did not arise. Thus, it cannot be said that the order dated 20.08.1984 was an order under Order XXIII Rule 3 CPC,” observed a Bench of Justice Vikram Nath and Justice Prashant Kumar Mishra.

“Once it is held that the order dated 20.08.1984 was not an order of compromise of suit under Order XXIII Rule 3 CPC the argument relating to applicability and bar under Order XXIII Rule 3A CPCwould have no relevance at all,” the bench further held.

The case relates to a dispute over ownership and possession of a piece of land measuring 7 kanals 9 marlas. In 1979, the original owners of the land Mansha Ram and others had filed a suit against Julfi Ram and others, who were co-tenants of the land, seeking declaration of ownership and permanent injunction. In 1983, the trial court decreed the suit in favor of Mansha Ram granting them ownership and possession. While an appeal by Julfi Ram was pending, Mansha Ram executed a sale deed in 1983 in favor of three sons of one of the defendants Bakshi Ram.

In the appeal, the parties stated that they had reached a settlement and the suit should be dismissed, which the first Appellate Court did in 1984. In 1988, Julfi Ram and others filed a fresh suit claiming half share in the land based on the 1984 compromise. The trial court dismissed this suit but the first Appellate Court and High Court decreed it in their favor.

The Supreme Court has now held that the 1984 order was not a valid compromise decree under Order 23 Rule 3 of CPC as there was no written agreement signed by parties. It said the sale deed of 1983 was not affected by the doctrine of lis pendens. Since Mansha Ram had ownership and a decree in their favor when executing the sale deed, the subsequent statements for dismissal of suit were termed as collusive and dishonest conduct by them.

Setting aside the High Court and first Appellate Court orders, the Supreme Court restored the trial court decree dismissing the 1988 suit by Julfi Ram and others. The 1983 sale deed in favor of Bakshi Ram's sons remains valid.