The seminal question that hinges for consideration is what is the remedy available to the party aggrieved when a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise?
6. Order 23 Rule 3(A) CPC is the hub of issue. The same reads as under:-
"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 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:
Provided that where it is alleged by one party and denied by the other than an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation: An agreement or compromise which is void or avoidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule.
7. In R. Rajanna v. S.R., Venkataswamy and others, MANU/SC/1060/2014 : (2014) 15 SCC 471, the apex Court held thus;
IN THE HIGH COURT OF ORISSA
C.M.P. No. 1193 of 2015
Decided On: 05.04.2017
Subash Mohapatra Vs. Kamala Mohapatra and Ors.
Hon'ble Judges/Coram:
Dr. Akshaya Kumar Rath, J.
Citation: AIR 2017(NOC)819 Orissa
1. By this petition under Article 227 of the Constitution of India, challenge is made to the order dated 11.08.2015 passed by the learned District Judge, Bhadrak in Civil Revision No. 04 of 2011. By the said order, learned revisional court allowed the revision and set aside the order dated 8.7.2011 passed by the learned Civil Judge (Senior Division), Bhadrak in I.A. No. 375 of 2010 filed under Order 23 Rule 3(A) CPC and remitted the matter back for de novo enquiry. Opposite party Nos. 1 & 2 as plaintiffs instituted C.S. No. 105 of 2009-I in the court of the learned Civil Judge (Senior Division), Bhadrak for partition of the suit schedule property impleading the petitioner as defendant. During pendency of the suit, a compromise was arrived at between the parties. Accordingly, a compromise petition was filed in the Lok Adalat. Thereafter, the suit was disposed of in terms of the compromise. While matter stood thus, plaintiff No. 1 filed an application to set aside the compromise on the ground of fraud. The defendant objected to the same. Learned trial court rejected the same. Challenging the same, plaintiff No. 1 filed Civil Revision No. 04 of 2011 before the learned District Judge, Bhadrak. The learned Revisional Court set aside the order dated 8.7.2011 and remitted the matter back to the learned trial court for disposal of I.A. No. 375 of 2010.
2. Heard. Mr. P.K. Rath, learned counsel for the petitioner and Mr. S.S.K. Nayak, learned counsel for the opposite parties.
3. Mr. Rath, learned counsel for the petitioner, submits that against the order dated 8.7.2011 passed by the learned trial court, the revision is not maintainable. According to him in view of proviso to Section 115 CPC if the order in favour of a party applying for revision would have given finality to the suit or other proceeding, then only the revision is maintainable.
4. Per contra, Mr. Nayak, learned counsel for the opposite parties, submits that since fraud has been played in the court, an application was filed in the court below to set aside the compromise petition. In such an eventuality, the aggrieved party may file an appropriate application under Order 23 Rule 3 CPC in the same court or file an appeal. Thus the learned trial court is justified in rejecting the application under Order 23 Rule 3(A) CPC.
5. The seminal question that hinges for consideration is what is the remedy available to the party aggrieved when a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise?
6. Order 23 Rule 3(A) CPC is the hub of issue. The same reads as under:-
"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 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:
Provided that where it is alleged by one party and denied by the other than an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation: An agreement or compromise which is void or avoidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule.
7. In R. Rajanna v. S.R., Venkataswamy and others, MANU/SC/1060/2014 : (2014) 15 SCC 471, the apex Court held thus;
"10. It is manifest from a plain reading of the above that in terms of the proviso to Order XXIII Rule 3 where one party alleges and the other denies adjustment or satisfaction of any suit by a lawful agreement or compromise in writing and signed by the parties, the Court before whom such question is raised, shall decide the same. What is important is that in terms of Explanation to Order XXIII Rule 3, the agreement or compromise shall not be deemed to be lawful within meaning of the said rule if the same is void or voidable under Indian Contract Act, 187.2. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties, the question whether the agreement or compromise is lawful has to be determined by the Court concerned. What is lawful will in turn depend upon whether the allegations suggest any infirmity in the compromise and the decree that would make the same void or voidable under the Contract Act. More importantly, Order XXIII Rule 3A clearly bars a suit to set aside a decree on the ground that the compromise on which the decree is based was not lawful. This implies that no sooner a question relating to lawfulness of the agreement or compromise is raised before the Court that passed the decree on the basis of any such agreement or compromise, it is that Court and that Court alone who can examine and determine that question. The Court cannot direct the parties to file a separate suit on the subject for no such suit will lie in view of the provisions of Order XXIII Rule 3A of CPC. That is precisely what has happened in the case at hand. When the appellant filed OS No. 5326 of 2005 to challenge validity of the compromise decree, the Court before whom the suit came up rejected the plaint under Order VII Rule 11 CPC on the application made by the respondents holding that such a suit was barred by the provisions of Order XXIII Rule 3A of the CPC, Having thus got the plaint rejected, the defendants (respondents herein) could hardly be heard to argue that the plaintiff (appellant herein) ought to pursue his remedy against the compromise decree in pursuance of OS No. 5326 of 2005 and if the plaint in the suit has been rejected to pursue his remedy against such rejection before a higher Court.
11. The upshot of the above discussion is that the High Court fell in a palpable error in directing the plaintiff to take recourse to the remedy by way of separate suit. The High Court in the process remained oblivious of the provisions of Order XXIII Rules 3 and 3A of the CPC as also orders passed by the City Civil Court rejecting the plaint in which the Trial Court had not only placed reliance upon Order XXIII Rule 3A but also the decision of the Court in Pushpa Devi's case (supra) holding that a separate suit was not maintainable and that the only remedy available to the aggrieved party was to approach the Court which had passed the compromise decree. The following passage from the decision of Pushpa Devi (supra) case is, in this regard, apposite:
"17. ...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 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."
8. The inescapable conclusion is that the application under Order 23 Rule 3(A) CPC is maintainable. Learned trial court is not justified in holding that the petition is not maintainable.
9. Before parting with the case, it is apt to state here that the learned trial court relied upon a Division Bench decision of this Court in the case of Rama Krushna Swain v. Smt. Fulmani Kamila and another, MANU/OR/0045/1975 : 1975 (I) CWR 52 and held that the petition is not maintainable.
10. In Rama Krushna Swain (supra), this Court on the interpretation of Rule 3 Order 23 CPC held that:-
"8. We have not been shown any decision of this Court though we called upon counsel for parties to cite such precedence, if any. There is, in our opinion, consensus in the judicial opinion on the interpretation of Rule 3 of Order 23, of the Code, namely, the enquiry envisaged under the Rule admits of two questions being examined, that is
(1) (a) whether there has been an adjustment or compromise;
(b) whether such adjustment or compromise is lawful and
(2) challenge on grounds of undue influence, fraud, or misrepresentation make an agreement voidable and not void and when a compromise is challenged on such ground, the matter is not within the ambit of Rule 3 and must be left to be decided by an independent suit."
11. The decision in the case of Rama Krushna Swain (supra) was rendered before the CPC was amended. The law has undergone a sea change. The CPC was amended. The 'proviso' and 'explanation' was inserted to Rule 3 Order 23 CPC by Act 104 of 1976, which came into effect on 01.02.1977. In view of the amendment to the CPC and authoritative pronouncement of this Court in the case of R. Rajanna (supra), decision of this Court in the case of Rama Krushna Swain (supra) is no longer law. As a sequel to above, the order dated 08.07.2011 passed by the learned Civil Judge (Senior Division), Bhadrak is quashed. The matter is remitted back to the learned trial court to dispose of the application on merit. The petition is disposed of. No costs.
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