Full Judgment Text
2025 INSC 570
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s). 6681-6682 OF 2023
SAKINA SULTANALI
SUNESARA (MOMIN) ….APPELLANT (S)
VERSUS
SHIA IMAMI ISMAILI
MOMIN JAMAT
SAMAJ & ORS. ….RESPONDENT(S)
J U D G M E N T
PRASANNA B. VARALE, J.
1. These appeals filed by Sakina Sultanali Sunesara (“the
appellant”) assails the judgment dated 28.08.2019 rendered by
a Larger Bench of the High Court of Gujarat on a reference
Signature Not Verified
Digitally signed by
ARJUN BISHT
Date: 2025.04.25
15:22:51 IST
Reason:
Civil Appeal Nos. 6681-6682 of 2023 Page 1 of 24
1
arising out of Appeal from Order Nos. 16 and 33 of 2017 and
cognate AOs. The High Court concluded that a litigant who was
already a party to the suit, but disputes the existence or validity
of a compromise recorded under Order XXIII Rule 3 of the Code
2
of Civil Procedure, 1908 must first approach the Trial Court; a
First Appeal under Section 96 of the CPC, it held, is available
only to a person who was not on the record of the suit. Following
that pronouncement, the Single Judge of the High Court
dismissed every pending AO on 06.09.2019 for want of
maintainability. Both the reference judgment and the
consequential order are impugned in these appeals.
2. The factual matrix giving rise to the appeal is as follows:
2.1. Three contiguous parcels of non ‑ agricultural land at
Siddhpur, District Patan, city survey Nos. 321, 322 and 323,
together 36,354 sq. m., originally belonged to
Moosabhai Mooman. On his death they devolved on his widow
1
AO
2
CPC
Civil Appeal Nos. 6681-6682 of 2023 Page 2 of 24
Noorbanu, his sons Sultan and Shaukatali (respondent no. 3)
and his daughter Mumtaz (respondent no. 7). Sultan
predeceased, leaving behind the appellant and two children,
Salma (respondent no. 5) and Altaf (respondent no. 6) as his
legal heirs.
3
2.2. Mumtaz executed an irrevocable General Power of Attorney
in favour of Hassan Ali Lad (respondent no. 4) on 15.02.2002; a
second joint PoA dated 08.02.2005 in his favour was signed by
the appellant, Salma, Altaf and Noorbanu.
2.3. On 09.03.2007, Shaukat Ali and Hassan Ali (purporting to
act for all other co ‑ owners) agreed to sell 28,978.51 sq. m. (“the
suit land”) to ten individuals styling themselves ‘Shia Imami
Ismaili Momin Jamat, Siddhpur’ (respondent no. 1) for
₹ 2.51 crore. Only ₹ 15 lakh was paid; a notice terminating the
agreement issued in August 2011.
3
PoA
Civil Appeal Nos. 6681-6682 of 2023 Page 3 of 24
2.4. Up until 2012, Salma, Altaf and Mumtaz conferred
individual PoAs on the appellant; two of the original ten proposed
purchasers had by then died. On 10.01.2013 the eight survivors
executed a deed cancelling the agreement to sell and an
indemnity bond. The appellant asserts custody of the originals of
both joint PoAs, the agreement, the cancellation deed and the
bond.
2.5. Later in 2013, Shaukat Ali, Salma, Altaf and Mumtaz
relinquished their undivided interests in favour of the appellant;
four mutation entries were certified, leaving her the sole recorded
owner.
2.6. In August 2015, the appellant executed three registered
sale deeds: two dated 10.08.2015 conveying 3,272 sq. m. and
6,385 sq. m. to Platinum Tradex Private Limited and one dated
12.08.2015 conveying 6,567 sq. m. to four individuals. Two of
those individuals had themselves been among the original ten
vendees.
Civil Appeal Nos. 6681-6682 of 2023 Page 4 of 24
2.7. Later in 2015, Hassan Ali, accompanied by two of the
original vendees, persuaded another member of that group,
Kurban Momin, to revive the terminated transaction.
On 24.11.2015 three revenue appeals were filed before the
Deputy Collector, Siddhpur, challenging the mutation entries
reflecting the appellant’s sale deeds. The appellant and Shaukat
Ali were cited as respondents.
2.8. Regular Civil Suit No. 5 of 2016 (“the first suit”) was
instituted on 5 January 2016, seeking a declaration that
respondent no. 1 possessed the suit land. On 21.01.2016
respondent no. 1, through Kurban, filed Special Civil
Suit No.6 of 2016 (“the second suit”) in Patan for specific
performance of the cancelled agreement, showing the appellant
and her two children through Hassan Ali and joining Shaukat Ali
personally.
2.9. A compromise dated 12.03. 2016, signed by
respondent nos. 1 and 2 (a trust said to represent the Jamat) on
one side and Shaukat Ali and Hassan Ali on the other, was
Civil Appeal Nos. 6681-6682 of 2023 Page 5 of 24
recorded on 15.03.2016, resulting in a first consent decree.
Relying on that decree, the plaintiff withdrew the first suit
unconditionally on 23.04.2016.
2.10. Respondent no. 1 then instituted Special Civil
Suit No. 19 of 2016 (“the third suit”), again suing the appellant
and her children through Hassan Ali. A further compromise
dated 12.11.2016 led to a second consent decree on 17.12.2016.
2.11. The appellant maintains that she had no notice of either
compromise and that both decrees were procured by fraud. She
therefore filed AO No. 16 of 2017 against the first consent decree
and AO No. 33 of 2017 against the second, invoking Order XLIII
Rule 1 ‑ A. Transferee purchasers lodged parallel AOs.
2.12. The Single Judge of the High Court, noting conflicting
Division Bench views on the powers of Rule 1 ‑ A, referred three
questions to a Larger Bench, which held that a party to the suit
must first invoke the proviso to Order XXIII Rule 3 and that
Rule 1 ‑ A itself creates no independent right of appeal. Acting on
Civil Appeal Nos. 6681-6682 of 2023 Page 6 of 24
that pronouncement, the Single Judge dismissed all AOs
on 06.09.2019.
3. Being aggrieved by the decision of the Larger Bench
dated 28.08.2019, the appellant has filed the present civil appeal
claiming that Section 96 of the CPC permits a direct First Appeal
even where the compromise itself is in dispute.
4. Mr. Huzefa Ahmadi, learned Senior Counsel for the
appellant has rendered the following submissions in brief:
4.1. Prior to the 1976 amendment to the CPC,
Order XLIII Rule 1(m) permitted an Appeal from Order against an
order recording or refusing a compromise under Order XXIII Rule
3. Amendment Act No.104 of 1976 deleted that clause and, in
the same breath, introduced Order XLIII Rule 1-A(2). The new
rule shifts the challenge to the decree and preserves a first appeal
under Section 96; no separate Appeal from Order now lies.
4.2. The impugned judgment accords two avenues to a
non ‑ party (review or First Appeal with leave under Section 96)
Civil Appeal Nos. 6681-6682 of 2023 Page 7 of 24
but limits a party on record to an application under the proviso
to Order XXIII Rule 3. Such a view defeats the purpose of
Rule 1 ‑ A(2), enacted to ensure that any litigant disputing a
compromise may contest it directly in appeal.
4.3. The counsel for the appellant has further submitted that
the ratios laid down in the case of Pushpa Devi Bhagat Vs.
4
Rajinder Singh and others , Banwari Lal Vs. Chando Devi
5 6
and another and Triloki Nath Singh vs Anirudh Singh are
not correctly and completely considered by the Larger Bench of
the High Court. It is submitted that in the case of Banwari Lal
(supra) this Court in Paragraphs 9 and 13 has observed as
follows:
“ 9.[.....]But after the amendments which have been
introduced, neither an appeal against the order
recording the compromise nor remedy by way of filing
a suit is available in cases covered by Rule 3A of Order
23. As such a right has been given under Rule 1A(2) of
4
(2006) 5 SCC 566
5
(1993) 1 SCC 581
6
(2020) SCC Online SC 444
Civil Appeal Nos. 6681-6682 of 2023 Page 8 of 24
Order 43 to a party, who challenges the recording of
the compromise, to question the validity thereof while
preferring an appeal against the decree. Section 96(3)
of the Code shall not be a bar to such an appeal
because Section 96(3) is applicable to cases where the
factum of compromise or agreement is not in dispute.
………….
13. [.......] Even Rule 1(m) of Order 43 has been deleted
under which an appeal was maintainable against an
order recording a compromise. As such a party
challenging a compromise can file a petition under
proviso to Rule 3 of Order 23, or an appeal under
Section 96(1) of the Code, in which he can now question
the validity of the compromise in view of Rule 1A of
Order 43 of the Code.”
(emphasis supplied)
4.4. The observation in Banwari Lal (supra) has been relied
upon and approved in the case of H.S. Goutham Vs. Rama
7
Murthy and another as well. The High Court relied on a
solitary sentence in paragraph 17 of Pushpa Devi (supra) that
“ the only remedy … is to approach the court which recorded the
compromise ”. Counsel contends that the remark is per incuriam :
7
(2021) 5 SCC 241
Civil Appeal Nos. 6681-6682 of 2023 Page 9 of 24
it neither notices Banwari Lal (supra) nor distinguishes the
later three-Judge Bench ruling in Kishun Alias Ram Kishun
8
(Dead) through LRS. v Behari (Dead) By LRS. , which
expressly recognises a first appeal where the compromise itself
is disputed.
5. On the other hand, Mr. Rakesh Uttamchandra Upadhyay,
learned counsel for the Respondents has made the following
main submissions:
5.1. The respondents support the High Court's conclusion that
a party to the suit cannot invoke a first appeal. A consent decree,
they urge, operates as estoppel and may be questioned only by
an application to the Trial Court under the proviso to Order XXIII
Rule 3; Section 96(3) bars an appeal and the deletion of Order
XLIII Rule 1(m) removes the earlier avenue of an appeal from
order.
8
(2005) 6 SCC 300
Civil Appeal Nos. 6681-6682 of 2023 Page 10 of 24
5.2. Reliance is placed on Pushpa Devi (Supra) , especially para
17, which summarises:
"No appeal is maintainable against a consent decree in
view of Section 96(3)."
"No appeal survives against the order recording the
compromise after the omission of clause (m) of Order XLIII
Rule 1."
5.3. A three-Judge Bench of this Court in Triloki Nath Singh
(Supra) , after considering Pushpa Devi (supra) and R Rajanna
(supra), holds that post 1976 "neither an appeal nor a separate
suit is maintainable" to impeach a compromise decree; Order
XLIII Rule 1 A(2) is available only when the Trial Court has first
decided, under the proviso to Order XXIII Rule 3, whether a
compromise exists.
5.4. Any apparent divergence between Banwari Lal (supra) and
Pushpa Devi (Supra) was resolved in Sree Surya Developers &
9
Promoters v. N. Sailesh Prasad and others , which affirmed
9
(2022) 5 SCC 736
Civil Appeal Nos. 6681-6682 of 2023 Page 11 of 24
that the Court passing the decree is the proper forum to examine
the validity of the compromise. Paragraphs 9 and 13 of Banwari
Lal (supra) -quoted by the appellant-must be read in that light.
6. Having perused the record and having considered the rival
submissions, the primary question before us is whether a litigant
who was already a party to the suit, yet contests the very fact or
legality of a compromise embodied in a decree, is restricted to an
application before the Trial Court under the proviso to
Order XXIII Rule 3 or may, at her election, maintain a first appeal
under Section 96 of the CPC notwithstanding Section 96(3).
7. We believe it is first necessary to look at the impact of the
Amendment Act 104 of 1976 to CPC. Prior to 01.02.1977 an
order “recording or refusing to record” a compromise was itself
appealable under Order XLIII Rule 1(m). The Parliament
removed that clause and, in the same breath, introduced four
companion provisions:
Civil Appeal Nos. 6681-6682 of 2023 Page 12 of 24
Proviso and Explanation to Order XXIII Rule 3 – obliging
the Trial Court to decide, forthwith and itself, any objection
to the fact or lawfulness of a compromise;
Rule 3-A of Order XXIII – barring a separate suit to avoid
a compromise decree;
Order XLIII Rule 1-A – permitting an appellant who is
already in a competent appeal against a decree to contend
that the compromise “should, or should not, have been
recorded”; and
Section 96(3) (as renumbered) – prohibiting an appeal
from a decree “passed with the consent of parties”.
8. In our opinion, the interpretation of these provisions is
quite clear and coherent. 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). A fresh suit is no
longer possible (Order XXIII Rule 3-A). If, and only if, the Trial
Court decides the objection and passes a decree adverse to the
objector, a first appeal lies under Section 96(1); in that appeal
Civil Appeal Nos. 6681-6682 of 2023 Page 13 of 24
the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge
the recording of the compromise.
9. The above reading stands affirmed in a catena of
judgements passed by this Court. In Banwari Lal (Supra) , this
Court held that, post-1976, the aggrieved party possesses two
concurrent but sequential remedies:
an application under the proviso to Order XXIII Rule 3
before the Trial Court; or
a first appeal under Section 96(1) after the Trial Court has
recorded its finding.
10. More importantly, in Pushpa Devi (Supra) this Court, after
surveying the amendments, stated four propositions, chief
among them that a consent decree is binding “unless set aside
by the Court which recorded the compromise on an application
under the proviso to Rule 3 ”. The relevant paras of Pushpa Devi
(supra) are reproduced hereunder:
“17. The position that emerges from the amended
provisions of Order 23 can be summed up thus:
Civil Appeal Nos. 6681-6682 of 2023 Page 14 of 24
(i) No appeal is maintainable against a consent decree
having regard to the specific bar contained in Section
96(3) CPC.
(ii) No appeal is maintainable against the order of the
court recording the compromise (or refusing to record a
compromise) in view of the deletion of clause (m) of Rule
1 Order 43.
(iii) No independent suit can be filed for setting aside a
compromise decree on the ground that the compromise
was not lawful in view of the bar contained in Rule 3-
A.
(iv) 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 on an
application under the proviso to Rule 3 Order 23.
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 validity of a
consent decree depends wholly on the validity of the
Civil Appeal Nos. 6681-6682 of 2023 Page 15 of 24
agreement or compromise on which it is made. The
second defendant, who challenged the consent
compromise decree was fully aware of this position as
she filed an application for setting aside the consent
decree on 21-8-2001 by alleging that there was no
valid compromise in accordance with law.
Significantly, none of the other defendants challenged
the consent decree. For reasons best known to herself,
the second defendant within a few days thereafter
(that is on 27-8-2001) filed an appeal and chose not to
pursue the application filed before the court which
passed the consent decree. Such an appeal by the
second defendant was not maintainable, having
regard to the express bar contained in Section 96(3) of
the Code.
Re: Point (ii)
18. Order 23 deals with withdrawal and adjustment of
suits. Rule 3 relates to compromise of suits, relevant
portion of which is extracted below:
“3. Compromise of suit.—Where it is proved to the
satisfaction of the court that a suit has been
adjusted wholly or in part by any lawful
agreement or compromise, in writing and signed
by the parties or where the defendant satisfies the
plaintiff in respect of the whole or any part of the
subject-matter of the suit, the court shall order
such agreement, compromise or satisfaction to be
recorded, and shall pass a decree in accordance
Civil Appeal Nos. 6681-6682 of 2023 Page 16 of 24
therewith so far as it relates to the parties to the
suit, whether or not the subject-matter of the
agreement, compromise or satisfaction is the same
as the subject-matter of the suit:”
The said Rule consists of two parts. The first part
provides that where it is proved to the satisfaction of
the court that a suit has been adjusted wholly or in
part by any lawful agreement or compromise in writing
and signed by the parties, the court shall order such
agreement or compromise to be recorded and shall
pass a decree in accordance therewith. The second
part provides that where a defendant satisfies the
plaintiff in respect of the whole or any part of the
subject-matter of the suit, the court shall order such
satisfaction to be recorded and shall pass a decree in
accordance therewith. The Rule also makes it clear
that the compromise or agreement may relate to issues
or disputes which are not the subject-matter of the suit
and that such compromise or agreement may be
entered not only among the parties to the suit, but
others also, but the decree to be passed shall be
confined to the parties to the suit whether or not the
subject-matter of the agreement, compromise or
satisfaction is the same as the subject-matter of the
suit. We are not, however, concerned with this aspect
of the Rule in this appeal.
19. What is the difference between the first part and
the second part of Rule 3? The first part refers to
situations where an agreement or compromise is
entered into in writing and signed by the parties. The
Civil Appeal Nos. 6681-6682 of 2023 Page 17 of 24
said agreement or compromise is placed before the
court. When the court is satisfied that the suit has been
adjusted either wholly or in part by such agreement or
compromise in writing and signed by the parties and
that it is lawful, a decree follows in terms of what is
agreed between the parties. The
agreement/compromise spells out the agreed terms by
which the claim is admitted or adjusted by mutual
concessions or promises, so that the parties thereto can
be held to their promise(s) in future and performance
can be enforced by the execution of the decree to be
passed in terms of it. On the other hand, the second
part refers to cases where the defendant has satisfied
the plaintiff about the claim. This may be by satisfying
the plaintiff that his claim cannot be or need not be met
or performed. It can also be by discharging or
performing the required obligation. Where the
defendant so “satisfies” the plaintiff in respect of the
subject-matter of the suit, nothing further remains to be
done or enforced and there is no question of any
“enforcement” or “execution” of the decree to be passed
in terms of it. Let us illustrate with reference to a money
suit filed for recovery of say a sum of rupees one lakh.
Parties may enter into a lawful agreement or
compromise in writing and signed by them, agreeing
that the defendant will pay the sum of rupees one lakh
within a specified period or specified manner or may
agree that only a sum of Rs 75,000 shall be paid by
the defendant in full and final settlement of the claim.
Such agreement or compromise will fall under the first
part and if the defendant does not fulfil the promise,
Civil Appeal Nos. 6681-6682 of 2023 Page 18 of 24
the plaintiff can enforce it by levying execution. On the
other hand, the parties may submit to the court that the
defendant has already paid a sum of rupees one lakh
or Rs 75,000 in full and final satisfaction or that the
suit claim has been fully settled by the defendant out
of court (either by mentioning the amount paid or not
mentioning it) or that the plaintiff will not press the
claim. Here the obligation is already performed by the
defendant or the plaintiff agrees that he will not
enforce performance and nothing remains to be
performed by the defendant. As the order that follows
merely records the extinguishment or satisfaction of
the claim or non-existence of the claim, it is not capable
of being “enforced” by levy of execution, as there is no
obligation to be performed by the defendant in
pursuance of the decree. Such “satisfaction” need not
be expressed by an agreement or compromise in
writing and signed by the parties. It can be by a
unilateral submission by the plaintiff or his counsel.
Such satisfaction will fall under the second part. Of
course, even when there is such satisfaction of the
claim or subject-matter of the suit by the defendant and
the matter falls under the second part, nothing
prevents the parties from reducing such satisfaction of
the claim/subject-matter, into writing and signing the
same. The difference between the two parts is this:
where the matter falls under the second part, what is
reported is a completed action or settlement out of court
putting an end to the dispute, and the resultant decree
recording the satisfaction, is not capable of being
enforced by levying execution. Where the matter falls
Civil Appeal Nos. 6681-6682 of 2023 Page 19 of 24
under the first part, there is a promise or promises
agreed to be performed or executed, and that can be
enforced by levying execution. While agreements or
compromises falling under the first part can only be by
an instrument or other form of writing signed by the
parties, there is no such requirement in regard to
settlements or satisfaction falling under the second
part. Where the matter falls under the second part, it is
sufficient if the plaintiff or the plaintiff's counsel
appears before the court and informs the court that the
subject-matter of the suit has already been settled or
satisfied.”
11. The path is therefore settled: the proviso to
Order XXIII Rule 3 is not optional; it is the exclusive first port of
call for any party on record who denies the compromise.
Order XLIII Rule 1-A does not create a new right of appeal; it
merely enables an appellant, already before the Appellate Court,
to attack the decree on the ground that the compromise should
not have been recorded. When the fact of compromise is not
disputed, the bar in Section 96(3) is absolute.
Civil Appeal Nos. 6681-6682 of 2023 Page 20 of 24
12. The present appellant was a defendant-of-record in Special
Civil Suit No. 6 of 2016 and Special Civil Suit No. 19 of 2016.
Both decrees rest on written compromise terms signed by
counsel who held unquestioned vakalatnamas. The signature of
duly authorised counsel is the signature of the party. The decrees
are therefore consent decrees within the meaning of
Section 96(3). The appellant never invoked the proviso to
Order XXIII Rule 3; instead, she lodged Appeals from Orders on
the footing of the deleted Order XLIII Rule 1(m). The Larger
Bench of the High Court was correct in holding that such appeals
are incompetent since 1976.
13. The appellant’s submission that allegations of fraud
transform a consent decree into an ordinary decree cannot be
accepted. Fraud, want of authority or other vitiating elements are
precisely the matters that the proviso directs the Trial Court to
examine. Unless and until that route is pursued, the statutory
bar in Section 96(3) of the CPC remains operative.
Civil Appeal Nos. 6681-6682 of 2023 Page 21 of 24
14. It must also be noted that the presence of subsequent
purchasers does not assist the appellant. Those purchasers were
never parties to the suits; they have, with leave, instituted first
appeals in the High Court, a course that Section 96(1) of the CPC
permits to non-parties. The appellant, by contrast, was a party
to the suits and cannot appropriate the remedy reserved for third
parties. Both suits were eventually compromised before a
Lok Adalat. Section 21(2) of the Legal Services Authorities Act,
1987 interdicts any appeal from the award of a Lok Adalat. The
limited supervisory jurisdiction under Article 227 of the
Constitution of India remains available, but has not been
invoked.
15. We are satisfied that the Larger Bench took the right view. It
noticed that the CPC, after the 1976 amendment, works in two
distinct ways. 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
Civil Appeal Nos. 6681-6682 of 2023 Page 22 of 24
proviso to Order XXIII Rule 3 and ask that Court to decide
whether the compromise is valid. On the other hand, someone
who was not a party to the suit, but whose rights are hurt by a
consent decree, may approach the Appellate Court in a First
Appeal under Section 96 of the CPC, but only after obtaining
leave. Order XLIII Rule 1-A does not create an independent
appeal at all; it merely says that, once an appeal is otherwise
before the Court, the appellant may argue that the compromise
should, or should not, have been recorded. Seen in that light, the
High Court’s directions correctly apply the structure of the
statute and do not call for interference.
16. For the reasons recorded above, the civil appeals fail and
are dismissed.
17. The judgment dated 28.08.2019 of the Larger Bench of the
High Court of Gujarat, as well as the consequential order of the
Single Judge dated 06.09.2019, are affirmed.
Civil Appeal Nos. 6681-6682 of 2023 Page 23 of 24
18. It is open to the appellant, if so advised, to invoke the
proviso to Order XXIII Rule 3 of the CPC before the Trial Court.
We express no opinion on the merits of any such application.
19. There shall be no order as to costs.
20. Pending application(s), if any, shall stand disposed of.
................................J.
[VIKRAM NATH]
..….............................J.
[PRASANNA B. VARALE]
NEW DELHI;
APRIL 23, 2025.
Civil Appeal Nos. 6681-6682 of 2023 Page 24 of 24
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s). 6681-6682 OF 2023
SAKINA SULTANALI
SUNESARA (MOMIN) ….APPELLANT (S)
VERSUS
SHIA IMAMI ISMAILI
MOMIN JAMAT
SAMAJ & ORS. ….RESPONDENT(S)
J U D G M E N T
PRASANNA B. VARALE, J.
1. These appeals filed by Sakina Sultanali Sunesara (“the
appellant”) assails the judgment dated 28.08.2019 rendered by
a Larger Bench of the High Court of Gujarat on a reference
Signature Not Verified
Digitally signed by
ARJUN BISHT
Date: 2025.04.25
15:22:51 IST
Reason:
Civil Appeal Nos. 6681-6682 of 2023 Page 1 of 24
1
arising out of Appeal from Order Nos. 16 and 33 of 2017 and
cognate AOs. The High Court concluded that a litigant who was
already a party to the suit, but disputes the existence or validity
of a compromise recorded under Order XXIII Rule 3 of the Code
2
of Civil Procedure, 1908 must first approach the Trial Court; a
First Appeal under Section 96 of the CPC, it held, is available
only to a person who was not on the record of the suit. Following
that pronouncement, the Single Judge of the High Court
dismissed every pending AO on 06.09.2019 for want of
maintainability. Both the reference judgment and the
consequential order are impugned in these appeals.
2. The factual matrix giving rise to the appeal is as follows:
2.1. Three contiguous parcels of non ‑ agricultural land at
Siddhpur, District Patan, city survey Nos. 321, 322 and 323,
together 36,354 sq. m., originally belonged to
Moosabhai Mooman. On his death they devolved on his widow
1
AO
2
CPC
Civil Appeal Nos. 6681-6682 of 2023 Page 2 of 24
Noorbanu, his sons Sultan and Shaukatali (respondent no. 3)
and his daughter Mumtaz (respondent no. 7). Sultan
predeceased, leaving behind the appellant and two children,
Salma (respondent no. 5) and Altaf (respondent no. 6) as his
legal heirs.
3
2.2. Mumtaz executed an irrevocable General Power of Attorney
in favour of Hassan Ali Lad (respondent no. 4) on 15.02.2002; a
second joint PoA dated 08.02.2005 in his favour was signed by
the appellant, Salma, Altaf and Noorbanu.
2.3. On 09.03.2007, Shaukat Ali and Hassan Ali (purporting to
act for all other co ‑ owners) agreed to sell 28,978.51 sq. m. (“the
suit land”) to ten individuals styling themselves ‘Shia Imami
Ismaili Momin Jamat, Siddhpur’ (respondent no. 1) for
₹ 2.51 crore. Only ₹ 15 lakh was paid; a notice terminating the
agreement issued in August 2011.
3
PoA
Civil Appeal Nos. 6681-6682 of 2023 Page 3 of 24
2.4. Up until 2012, Salma, Altaf and Mumtaz conferred
individual PoAs on the appellant; two of the original ten proposed
purchasers had by then died. On 10.01.2013 the eight survivors
executed a deed cancelling the agreement to sell and an
indemnity bond. The appellant asserts custody of the originals of
both joint PoAs, the agreement, the cancellation deed and the
bond.
2.5. Later in 2013, Shaukat Ali, Salma, Altaf and Mumtaz
relinquished their undivided interests in favour of the appellant;
four mutation entries were certified, leaving her the sole recorded
owner.
2.6. In August 2015, the appellant executed three registered
sale deeds: two dated 10.08.2015 conveying 3,272 sq. m. and
6,385 sq. m. to Platinum Tradex Private Limited and one dated
12.08.2015 conveying 6,567 sq. m. to four individuals. Two of
those individuals had themselves been among the original ten
vendees.
Civil Appeal Nos. 6681-6682 of 2023 Page 4 of 24
2.7. Later in 2015, Hassan Ali, accompanied by two of the
original vendees, persuaded another member of that group,
Kurban Momin, to revive the terminated transaction.
On 24.11.2015 three revenue appeals were filed before the
Deputy Collector, Siddhpur, challenging the mutation entries
reflecting the appellant’s sale deeds. The appellant and Shaukat
Ali were cited as respondents.
2.8. Regular Civil Suit No. 5 of 2016 (“the first suit”) was
instituted on 5 January 2016, seeking a declaration that
respondent no. 1 possessed the suit land. On 21.01.2016
respondent no. 1, through Kurban, filed Special Civil
Suit No.6 of 2016 (“the second suit”) in Patan for specific
performance of the cancelled agreement, showing the appellant
and her two children through Hassan Ali and joining Shaukat Ali
personally.
2.9. A compromise dated 12.03. 2016, signed by
respondent nos. 1 and 2 (a trust said to represent the Jamat) on
one side and Shaukat Ali and Hassan Ali on the other, was
Civil Appeal Nos. 6681-6682 of 2023 Page 5 of 24
recorded on 15.03.2016, resulting in a first consent decree.
Relying on that decree, the plaintiff withdrew the first suit
unconditionally on 23.04.2016.
2.10. Respondent no. 1 then instituted Special Civil
Suit No. 19 of 2016 (“the third suit”), again suing the appellant
and her children through Hassan Ali. A further compromise
dated 12.11.2016 led to a second consent decree on 17.12.2016.
2.11. The appellant maintains that she had no notice of either
compromise and that both decrees were procured by fraud. She
therefore filed AO No. 16 of 2017 against the first consent decree
and AO No. 33 of 2017 against the second, invoking Order XLIII
Rule 1 ‑ A. Transferee purchasers lodged parallel AOs.
2.12. The Single Judge of the High Court, noting conflicting
Division Bench views on the powers of Rule 1 ‑ A, referred three
questions to a Larger Bench, which held that a party to the suit
must first invoke the proviso to Order XXIII Rule 3 and that
Rule 1 ‑ A itself creates no independent right of appeal. Acting on
Civil Appeal Nos. 6681-6682 of 2023 Page 6 of 24
that pronouncement, the Single Judge dismissed all AOs
on 06.09.2019.
3. Being aggrieved by the decision of the Larger Bench
dated 28.08.2019, the appellant has filed the present civil appeal
claiming that Section 96 of the CPC permits a direct First Appeal
even where the compromise itself is in dispute.
4. Mr. Huzefa Ahmadi, learned Senior Counsel for the
appellant has rendered the following submissions in brief:
4.1. Prior to the 1976 amendment to the CPC,
Order XLIII Rule 1(m) permitted an Appeal from Order against an
order recording or refusing a compromise under Order XXIII Rule
3. Amendment Act No.104 of 1976 deleted that clause and, in
the same breath, introduced Order XLIII Rule 1-A(2). The new
rule shifts the challenge to the decree and preserves a first appeal
under Section 96; no separate Appeal from Order now lies.
4.2. The impugned judgment accords two avenues to a
non ‑ party (review or First Appeal with leave under Section 96)
Civil Appeal Nos. 6681-6682 of 2023 Page 7 of 24
but limits a party on record to an application under the proviso
to Order XXIII Rule 3. Such a view defeats the purpose of
Rule 1 ‑ A(2), enacted to ensure that any litigant disputing a
compromise may contest it directly in appeal.
4.3. The counsel for the appellant has further submitted that
the ratios laid down in the case of Pushpa Devi Bhagat Vs.
4
Rajinder Singh and others , Banwari Lal Vs. Chando Devi
5 6
and another and Triloki Nath Singh vs Anirudh Singh are
not correctly and completely considered by the Larger Bench of
the High Court. It is submitted that in the case of Banwari Lal
(supra) this Court in Paragraphs 9 and 13 has observed as
follows:
“ 9.[.....]But after the amendments which have been
introduced, neither an appeal against the order
recording the compromise nor remedy by way of filing
a suit is available in cases covered by Rule 3A of Order
23. As such a right has been given under Rule 1A(2) of
4
(2006) 5 SCC 566
5
(1993) 1 SCC 581
6
(2020) SCC Online SC 444
Civil Appeal Nos. 6681-6682 of 2023 Page 8 of 24
Order 43 to a party, who challenges the recording of
the compromise, to question the validity thereof while
preferring an appeal against the decree. Section 96(3)
of the Code shall not be a bar to such an appeal
because Section 96(3) is applicable to cases where the
factum of compromise or agreement is not in dispute.
………….
13. [.......] Even Rule 1(m) of Order 43 has been deleted
under which an appeal was maintainable against an
order recording a compromise. As such a party
challenging a compromise can file a petition under
proviso to Rule 3 of Order 23, or an appeal under
Section 96(1) of the Code, in which he can now question
the validity of the compromise in view of Rule 1A of
Order 43 of the Code.”
(emphasis supplied)
4.4. The observation in Banwari Lal (supra) has been relied
upon and approved in the case of H.S. Goutham Vs. Rama
7
Murthy and another as well. The High Court relied on a
solitary sentence in paragraph 17 of Pushpa Devi (supra) that
“ the only remedy … is to approach the court which recorded the
compromise ”. Counsel contends that the remark is per incuriam :
7
(2021) 5 SCC 241
Civil Appeal Nos. 6681-6682 of 2023 Page 9 of 24
it neither notices Banwari Lal (supra) nor distinguishes the
later three-Judge Bench ruling in Kishun Alias Ram Kishun
8
(Dead) through LRS. v Behari (Dead) By LRS. , which
expressly recognises a first appeal where the compromise itself
is disputed.
5. On the other hand, Mr. Rakesh Uttamchandra Upadhyay,
learned counsel for the Respondents has made the following
main submissions:
5.1. The respondents support the High Court's conclusion that
a party to the suit cannot invoke a first appeal. A consent decree,
they urge, operates as estoppel and may be questioned only by
an application to the Trial Court under the proviso to Order XXIII
Rule 3; Section 96(3) bars an appeal and the deletion of Order
XLIII Rule 1(m) removes the earlier avenue of an appeal from
order.
8
(2005) 6 SCC 300
Civil Appeal Nos. 6681-6682 of 2023 Page 10 of 24
5.2. Reliance is placed on Pushpa Devi (Supra) , especially para
17, which summarises:
"No appeal is maintainable against a consent decree in
view of Section 96(3)."
"No appeal survives against the order recording the
compromise after the omission of clause (m) of Order XLIII
Rule 1."
5.3. A three-Judge Bench of this Court in Triloki Nath Singh
(Supra) , after considering Pushpa Devi (supra) and R Rajanna
(supra), holds that post 1976 "neither an appeal nor a separate
suit is maintainable" to impeach a compromise decree; Order
XLIII Rule 1 A(2) is available only when the Trial Court has first
decided, under the proviso to Order XXIII Rule 3, whether a
compromise exists.
5.4. Any apparent divergence between Banwari Lal (supra) and
Pushpa Devi (Supra) was resolved in Sree Surya Developers &
9
Promoters v. N. Sailesh Prasad and others , which affirmed
9
(2022) 5 SCC 736
Civil Appeal Nos. 6681-6682 of 2023 Page 11 of 24
that the Court passing the decree is the proper forum to examine
the validity of the compromise. Paragraphs 9 and 13 of Banwari
Lal (supra) -quoted by the appellant-must be read in that light.
6. Having perused the record and having considered the rival
submissions, the primary question before us is whether a litigant
who was already a party to the suit, yet contests the very fact or
legality of a compromise embodied in a decree, is restricted to an
application before the Trial Court under the proviso to
Order XXIII Rule 3 or may, at her election, maintain a first appeal
under Section 96 of the CPC notwithstanding Section 96(3).
7. We believe it is first necessary to look at the impact of the
Amendment Act 104 of 1976 to CPC. Prior to 01.02.1977 an
order “recording or refusing to record” a compromise was itself
appealable under Order XLIII Rule 1(m). The Parliament
removed that clause and, in the same breath, introduced four
companion provisions:
Civil Appeal Nos. 6681-6682 of 2023 Page 12 of 24
Proviso and Explanation to Order XXIII Rule 3 – obliging
the Trial Court to decide, forthwith and itself, any objection
to the fact or lawfulness of a compromise;
Rule 3-A of Order XXIII – barring a separate suit to avoid
a compromise decree;
Order XLIII Rule 1-A – permitting an appellant who is
already in a competent appeal against a decree to contend
that the compromise “should, or should not, have been
recorded”; and
Section 96(3) (as renumbered) – prohibiting an appeal
from a decree “passed with the consent of parties”.
8. In our opinion, the interpretation of these provisions is
quite clear and coherent. 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). A fresh suit is no
longer possible (Order XXIII Rule 3-A). If, and only if, the Trial
Court decides the objection and passes a decree adverse to the
objector, a first appeal lies under Section 96(1); in that appeal
Civil Appeal Nos. 6681-6682 of 2023 Page 13 of 24
the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge
the recording of the compromise.
9. The above reading stands affirmed in a catena of
judgements passed by this Court. In Banwari Lal (Supra) , this
Court held that, post-1976, the aggrieved party possesses two
concurrent but sequential remedies:
an application under the proviso to Order XXIII Rule 3
before the Trial Court; or
a first appeal under Section 96(1) after the Trial Court has
recorded its finding.
10. More importantly, in Pushpa Devi (Supra) this Court, after
surveying the amendments, stated four propositions, chief
among them that a consent decree is binding “unless set aside
by the Court which recorded the compromise on an application
under the proviso to Rule 3 ”. The relevant paras of Pushpa Devi
(supra) are reproduced hereunder:
“17. The position that emerges from the amended
provisions of Order 23 can be summed up thus:
Civil Appeal Nos. 6681-6682 of 2023 Page 14 of 24
(i) No appeal is maintainable against a consent decree
having regard to the specific bar contained in Section
96(3) CPC.
(ii) No appeal is maintainable against the order of the
court recording the compromise (or refusing to record a
compromise) in view of the deletion of clause (m) of Rule
1 Order 43.
(iii) No independent suit can be filed for setting aside a
compromise decree on the ground that the compromise
was not lawful in view of the bar contained in Rule 3-
A.
(iv) 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 on an
application under the proviso to Rule 3 Order 23.
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 validity of a
consent decree depends wholly on the validity of the
Civil Appeal Nos. 6681-6682 of 2023 Page 15 of 24
agreement or compromise on which it is made. The
second defendant, who challenged the consent
compromise decree was fully aware of this position as
she filed an application for setting aside the consent
decree on 21-8-2001 by alleging that there was no
valid compromise in accordance with law.
Significantly, none of the other defendants challenged
the consent decree. For reasons best known to herself,
the second defendant within a few days thereafter
(that is on 27-8-2001) filed an appeal and chose not to
pursue the application filed before the court which
passed the consent decree. Such an appeal by the
second defendant was not maintainable, having
regard to the express bar contained in Section 96(3) of
the Code.
Re: Point (ii)
18. Order 23 deals with withdrawal and adjustment of
suits. Rule 3 relates to compromise of suits, relevant
portion of which is extracted below:
“3. Compromise of suit.—Where it is proved to the
satisfaction of the court that a suit has been
adjusted wholly or in part by any lawful
agreement or compromise, in writing and signed
by the parties or where the defendant satisfies the
plaintiff in respect of the whole or any part of the
subject-matter of the suit, the court shall order
such agreement, compromise or satisfaction to be
recorded, and shall pass a decree in accordance
Civil Appeal Nos. 6681-6682 of 2023 Page 16 of 24
therewith so far as it relates to the parties to the
suit, whether or not the subject-matter of the
agreement, compromise or satisfaction is the same
as the subject-matter of the suit:”
The said Rule consists of two parts. The first part
provides that where it is proved to the satisfaction of
the court that a suit has been adjusted wholly or in
part by any lawful agreement or compromise in writing
and signed by the parties, the court shall order such
agreement or compromise to be recorded and shall
pass a decree in accordance therewith. The second
part provides that where a defendant satisfies the
plaintiff in respect of the whole or any part of the
subject-matter of the suit, the court shall order such
satisfaction to be recorded and shall pass a decree in
accordance therewith. The Rule also makes it clear
that the compromise or agreement may relate to issues
or disputes which are not the subject-matter of the suit
and that such compromise or agreement may be
entered not only among the parties to the suit, but
others also, but the decree to be passed shall be
confined to the parties to the suit whether or not the
subject-matter of the agreement, compromise or
satisfaction is the same as the subject-matter of the
suit. We are not, however, concerned with this aspect
of the Rule in this appeal.
19. What is the difference between the first part and
the second part of Rule 3? The first part refers to
situations where an agreement or compromise is
entered into in writing and signed by the parties. The
Civil Appeal Nos. 6681-6682 of 2023 Page 17 of 24
said agreement or compromise is placed before the
court. When the court is satisfied that the suit has been
adjusted either wholly or in part by such agreement or
compromise in writing and signed by the parties and
that it is lawful, a decree follows in terms of what is
agreed between the parties. The
agreement/compromise spells out the agreed terms by
which the claim is admitted or adjusted by mutual
concessions or promises, so that the parties thereto can
be held to their promise(s) in future and performance
can be enforced by the execution of the decree to be
passed in terms of it. On the other hand, the second
part refers to cases where the defendant has satisfied
the plaintiff about the claim. This may be by satisfying
the plaintiff that his claim cannot be or need not be met
or performed. It can also be by discharging or
performing the required obligation. Where the
defendant so “satisfies” the plaintiff in respect of the
subject-matter of the suit, nothing further remains to be
done or enforced and there is no question of any
“enforcement” or “execution” of the decree to be passed
in terms of it. Let us illustrate with reference to a money
suit filed for recovery of say a sum of rupees one lakh.
Parties may enter into a lawful agreement or
compromise in writing and signed by them, agreeing
that the defendant will pay the sum of rupees one lakh
within a specified period or specified manner or may
agree that only a sum of Rs 75,000 shall be paid by
the defendant in full and final settlement of the claim.
Such agreement or compromise will fall under the first
part and if the defendant does not fulfil the promise,
Civil Appeal Nos. 6681-6682 of 2023 Page 18 of 24
the plaintiff can enforce it by levying execution. On the
other hand, the parties may submit to the court that the
defendant has already paid a sum of rupees one lakh
or Rs 75,000 in full and final satisfaction or that the
suit claim has been fully settled by the defendant out
of court (either by mentioning the amount paid or not
mentioning it) or that the plaintiff will not press the
claim. Here the obligation is already performed by the
defendant or the plaintiff agrees that he will not
enforce performance and nothing remains to be
performed by the defendant. As the order that follows
merely records the extinguishment or satisfaction of
the claim or non-existence of the claim, it is not capable
of being “enforced” by levy of execution, as there is no
obligation to be performed by the defendant in
pursuance of the decree. Such “satisfaction” need not
be expressed by an agreement or compromise in
writing and signed by the parties. It can be by a
unilateral submission by the plaintiff or his counsel.
Such satisfaction will fall under the second part. Of
course, even when there is such satisfaction of the
claim or subject-matter of the suit by the defendant and
the matter falls under the second part, nothing
prevents the parties from reducing such satisfaction of
the claim/subject-matter, into writing and signing the
same. The difference between the two parts is this:
where the matter falls under the second part, what is
reported is a completed action or settlement out of court
putting an end to the dispute, and the resultant decree
recording the satisfaction, is not capable of being
enforced by levying execution. Where the matter falls
Civil Appeal Nos. 6681-6682 of 2023 Page 19 of 24
under the first part, there is a promise or promises
agreed to be performed or executed, and that can be
enforced by levying execution. While agreements or
compromises falling under the first part can only be by
an instrument or other form of writing signed by the
parties, there is no such requirement in regard to
settlements or satisfaction falling under the second
part. Where the matter falls under the second part, it is
sufficient if the plaintiff or the plaintiff's counsel
appears before the court and informs the court that the
subject-matter of the suit has already been settled or
satisfied.”
11. The path is therefore settled: the proviso to
Order XXIII Rule 3 is not optional; it is the exclusive first port of
call for any party on record who denies the compromise.
Order XLIII Rule 1-A does not create a new right of appeal; it
merely enables an appellant, already before the Appellate Court,
to attack the decree on the ground that the compromise should
not have been recorded. When the fact of compromise is not
disputed, the bar in Section 96(3) is absolute.
Civil Appeal Nos. 6681-6682 of 2023 Page 20 of 24
12. The present appellant was a defendant-of-record in Special
Civil Suit No. 6 of 2016 and Special Civil Suit No. 19 of 2016.
Both decrees rest on written compromise terms signed by
counsel who held unquestioned vakalatnamas. The signature of
duly authorised counsel is the signature of the party. The decrees
are therefore consent decrees within the meaning of
Section 96(3). The appellant never invoked the proviso to
Order XXIII Rule 3; instead, she lodged Appeals from Orders on
the footing of the deleted Order XLIII Rule 1(m). The Larger
Bench of the High Court was correct in holding that such appeals
are incompetent since 1976.
13. The appellant’s submission that allegations of fraud
transform a consent decree into an ordinary decree cannot be
accepted. Fraud, want of authority or other vitiating elements are
precisely the matters that the proviso directs the Trial Court to
examine. Unless and until that route is pursued, the statutory
bar in Section 96(3) of the CPC remains operative.
Civil Appeal Nos. 6681-6682 of 2023 Page 21 of 24
14. It must also be noted that the presence of subsequent
purchasers does not assist the appellant. Those purchasers were
never parties to the suits; they have, with leave, instituted first
appeals in the High Court, a course that Section 96(1) of the CPC
permits to non-parties. The appellant, by contrast, was a party
to the suits and cannot appropriate the remedy reserved for third
parties. Both suits were eventually compromised before a
Lok Adalat. Section 21(2) of the Legal Services Authorities Act,
1987 interdicts any appeal from the award of a Lok Adalat. The
limited supervisory jurisdiction under Article 227 of the
Constitution of India remains available, but has not been
invoked.
15. We are satisfied that the Larger Bench took the right view. It
noticed that the CPC, after the 1976 amendment, works in two
distinct ways. 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
Civil Appeal Nos. 6681-6682 of 2023 Page 22 of 24
proviso to Order XXIII Rule 3 and ask that Court to decide
whether the compromise is valid. On the other hand, someone
who was not a party to the suit, but whose rights are hurt by a
consent decree, may approach the Appellate Court in a First
Appeal under Section 96 of the CPC, but only after obtaining
leave. Order XLIII Rule 1-A does not create an independent
appeal at all; it merely says that, once an appeal is otherwise
before the Court, the appellant may argue that the compromise
should, or should not, have been recorded. Seen in that light, the
High Court’s directions correctly apply the structure of the
statute and do not call for interference.
16. For the reasons recorded above, the civil appeals fail and
are dismissed.
17. The judgment dated 28.08.2019 of the Larger Bench of the
High Court of Gujarat, as well as the consequential order of the
Single Judge dated 06.09.2019, are affirmed.
Civil Appeal Nos. 6681-6682 of 2023 Page 23 of 24
18. It is open to the appellant, if so advised, to invoke the
proviso to Order XXIII Rule 3 of the CPC before the Trial Court.
We express no opinion on the merits of any such application.
19. There shall be no order as to costs.
20. Pending application(s), if any, shall stand disposed of.
................................J.
[VIKRAM NATH]
..….............................J.
[PRASANNA B. VARALE]
NEW DELHI;
APRIL 23, 2025.
Civil Appeal Nos. 6681-6682 of 2023 Page 24 of 24