JD can not challenge execution of compromise decree on ground of fraud

I am not inclined to give to the words "not lawful", the unrestricted connotation which Mr. Modi invites me to do. To my mind, Rule 3A, bars a substantive suit not in all imaginable cases but in cases where the compromise was "not lawful", where for instance in passing the consent decree the Court had on the face of it no jurisdiction to do so or where fraud or misrepresentation was perpetrated on the Court (as distinct as in the present case, from fraud, coercion or misrepresentation perpetrated by one party on the other or where on the face of it the consent decree suffers from some palpable defect or error which the Court must correct, where for instance it contains a term or clause opposed to law, morality or public policy or where the Court was misled into passing the consent decree, say by reason of lack of authority or limited authority of the consenting advocate or advocates not brought to the Court's notice at the time (as in Basangouda Hanmantgouda v. Churchigirigouda Yogangouad relied on by Mr. Modi), and so forth. It is in such context thus illustrated that the words "not lawful" must be construed in reference to a compromise envisaged by Rule 3A and not in each and every case where a party seeks to set aside a compromise on the ground of fraud, coercion or misrepresentation practised upon him by the other party as alleged in the present case. In such a case resort to Rule 3A would be impermissible. I do not see anything in Rule 3A as stultifying the ratio of the decisions relied on have been simpler than to have enacted that no suit shall be filed to set aside by Mr. Chagla. If such had been the intention of the Legislature, nothing could a compromise decree, rather than enacting Rule 3A in the phraseology it has been done.1

Bombay High Court

Jethalal C. Thakkar vs Lalbhai Hiralal Shah on 4 October, 1983

Equivalent citations: (1984) 86 BOMLR 10

Lentin, J.

1. [After narrating the events leading to Misc. Appln. No. 568 of 1980 in the Court of Small Causes in R.A.E. Suit No. 1247/4477 of 1978 being transferred by Mis. Petition No. 6 of 1983 in the High Court and by the consent of parties being fixed for hearing along with High Court Suit No. 1660 of 1981 with prayer (c) of the former being treated as a Notice of Motion, His Lordship proceeded].

2. At the outset, 1 shall deal with a preliminary contention urged by Mr. Chagla, the learned Counsel appearing on behalf of the respondent. Mr. Chagla invited me to vacate the orders passed by the Court of Small Causes on the ground that Misc. Application No. 568 of 1980 itself is not maintainable. Relying on Fatmabai v. Sonbai , Yusuf I.A. Lalji v. Abdullabhoy Lalji (1929) 32 Bom. L.R. 667, and Yusuf Ismailbhai Abdullabhai Lalji v. Abdullabhai Lalji (1931) 34 Bom. L.R. 880, Mr. Chagla urged that the applicants' remedy was to file a substantative suit for setting aside the consent decree, which they have done in the High Court as also in the Court of Small Causes. On the other hand, supporting the maintainability of Misc. Application No. 568 of 1980, Mr. Modi, the learned Counsel appearing on behalf of the applicants, urged that under the amended Rule 3A of Order XXIII of the Code of Civil Procedure a substantive suit to set aside a consent decree was not called for and that the proper remedy was the one which the applicants had adopted, namely, filing Misc. Application No. 568 of 1980, to set aside the constant decree, which was not lawful as it was obtained by fraud and/or misrepresentation practised by the respondent on the applicants.

3. I do not agree with the construction placed by Mr. Modi on Rule 3A, It reads thus :-

No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.

4. I am not inclined to give to the words "not lawful", the unrestricted connotation which Mr. Modi invites me to do. To my mind, Rule 3A, bars a substantive suit not in all imaginable cases but in cases where the compromise was "not lawful", where for instance in passing the consent decree the Court had on the face of it no jurisdiction to do so or where fraud or misrepresentation was perpetrated on the Court (as distinct as in the present case, from fraud, coercion or misrepresentation perpetrated by one party on the other or where on the face of it the consent decree suffers from some palpable defect or error which the Court must correct, where for instance it contains a term or clause opposed to law, morality or public policy or where the Court was misled into passing the consent decree, say by reason of lack of authority or limited authority of the consenting advocate or advocates not brought to the Court's notice at the time (as in Basangouda Hanmantgouda v. Churchigirigouda Yogangouad relied on by Mr. Modi), and so forth. It is in such context thus illustrated that the words "not lawful" must be construed in reference to a compromise envisaged by Rule 3A and not in each and every case where a party seeks to set aside a compromise on the ground of fraud, coercion or misrepresentation practised upon him by the other party as alleged in the present case. In such a case resort to Rule 3A would be impermissible. I do not see anything in Rule 3A as stultifying the ratio of the decisions relied on have been simpler than to have enacted that no suit shall be filed to set aside by Mr. Chagla. If such had been the intention of the Legislature, nothing could a compromise decree, rather than enacting Rule 3A in the phraseology it has been done.

5. It is, however, not because prima facie I disagree with the construction placed by Mr. Modi on Rule 3A, that I propose vacating the ad-interim orders but for reasons appearing hereafter in this Judgment.

6. (The rest of the judgment is not material to this report).