Gopal Lal vs Babu Lal and Others

G.L. Gupta, J.—A short but an interesting question of law has been raised in this appeal. The point for consideration is whether Order XXIII, Rule 3-A, CPC bars a suit for cancellation of the decree passed on compromise entered into between the parties:

Facts First. - The parties, Plaintiff-Gopal Lal and Defendants Babulal, Moda Ram, and Kishan LA are the sons of Tola Ram, who had landed property in the city of Bikaner, Babulal filed Civil Suit No. 28/80 for partition of the property left by Tola Ram. This suit proceeded exparte against Plaintiff Gopal Lal. However, later on he appeared in Court and the parties entered into compromise and as a result of the compromise, the suit was decreed on 31.10.1981. It is after three years that the Plaintiff filed this suit for setting aside the decree passed on 31.10.1981 on the grounds that the compromise-deed was not read over to the Plaintiff and that since Plaintiff is illiterate and simple man, he could not understand the implications of the compromise-deed. It was averred that fraud was played by Defendants on him and so the Plaintiff was bound by the decree and it was liable to be cancelled. The case set up in the written statement was that no fraud was played on the Plaintiff and that he had willingly entered into compromise. It was also pleaded that the suit was barred because of the provisions of Order XXIII, Rule 3-A, Code of Civil Procedure. The learned Additional District Judge framed 5 issues. Issue No. 4 related to the maintainability of the suit. This issue was decided in favour of the Defendants and the suit was dismissed. Hence this appeal.

CONTENTIONS. - Mr. Shishodia has contended that the trial Judge has not correctly understood the provisions of Order XXIII, Rule 3-A, Code of Civil Procedure. According to him the words "not lawful" appearing in Rule 3-A are not engrafted by the limitation as inserted in the Explanation appended to Rule 3 of the Order XXIII, Code of Civil Procedure. He has submitted that this Court in the case of Smt. Mohan Bai Vs. Smt. Jai Kishan and Others, has held that when the decree is obtained by illegal means namely fraud, coercion or under influence, the suit for cancellation of such decree does lie. In this connection he has also placed reliance on the cases of S.G. Thimmappa v. T. Anantha AIR 1986 Kar 1 ; Uphras Lapasam and Another Vs. Ka Esiboll Lyngdoh and Others, and Smt. Mukhtiyar v. Arjun Singh 1993 CCC 81.

As against this Mr. Jain, learned Counsel for the Respondents has con tended that as per the Explanation appended to Rule 3 of Order XXIII, Code of Civil Procedure, an agreement or compromise which is void or voidable under the Indian Contract Act may be taken to be unlawful and, therefore, the word ''lawful'' should be interpreted in the same manner under Rule 3-A. The submission is that object of introducing Rule 3-A, CPC is to control the litigation on the same subject-matter when the parties had already entered into the compromise in that regard. Inviting my attention to the provisions Of Order XXIII, Rule 1-A, Code of Civil Procedure, he argued that when the specific remedy has been provided by the legislature against the decree passed, no civil suit can lie for the cancellation of that decree. He has placed reliance on the cases: Banwari Lal Vs. Smt. Chando Devi (through L.R.) and another, Meenakshi v. Manikkam 1995 AIHC 1348; Smt. Tara Bai v. Krishna Swami AIR 1985 Kar 270; B. Hanumanth Reddy v. P. Laxmamma 1994 (1) CCC 120 ; Anant Mahadeo Godbole Vs. Achut Ganesh Godbole and Others, and M/s Kothari Inter Group v. D. Baldeo 1994 (2) RCJ 551.

I have given the matter my anxious consideration. Rule 3-A was inserted by the CPC Amendment, 1976. The amendment has been introduced with a view to avoid multiplicity of the suits, as the Courts were plagued with the suits challenging compromise decrees for one reason or the other. This resulted in appeals and further appeals and procrastination of disputes. To avoid the predicament of the Courts and the parties, the Parliament in its wisdom introduced Rule 3-A. By adding the proviso of Rule 3 and the explanation thereto, the parties now can challenge the compromise to question the same before the Court which had recorded it. Explanation makes it clear that an agreement or compromise which is void or voidable under the Indian Contract Act, shall not be deemed to be lawful within the meaning of Rule 3. A reading of the rulings cited at the Bar shows that the view of all the High Courts is not same on the question as to whether the suit for cancellation of decree an the ground of fraud etc. is barred or not. There is no direct ruling of the Supreme Court on the point. However, the observations made in the case of "Banwari Lal" (supra) lead us to infer that suit a suit is, barred by Rule 3-A Code of Civil Procedure. It was held by the Supreme Court that a party challenging the compromise can file a petition under proviso to Rule 3 of Order XXIII, or an appeal u/s 96(1) of the Code and he can question the validity of the compromise in view of Rule 1-A of Order XLIII of the Code. It was further held that if the agreement or the compromise itself is fraudulent, then it shall be deemed to be void Within the meaning of explanation to the proviso to Rule 3 and as such not lawful. The Supreme Court reversed the judgment of the High Court, which held that such an application was not maintainable. Though the Supreme Court was concerned with Rule 3 of Order XXIII, the entire gamut of Order XXIII, including Rule 3-A as well as Section 69(1) and Order XLIII, were gone into and elaborately considered. Reference to Rule 3-A of Order XXIII, it was observed:

Having introduced the proviso alongwith the explanation in Rule 3 in order to avoid multiplicity of suit and prolonged litigation, a specific bar was prescribed by Rule 3-A, in respect of institution of a separate suit for setting aside a decree on basis of compromise.

Similarly a suit used to be filed for setting aside such decree on the ground that the decree is based on an invalid and illegal compromise not binding on the Plaintiff of the second suit. But - after the amendments which have been introduced; neither an appeal against the order recording the compromise nor remedy by was of filing a suit is available in cases covered by Rule 3-A of Order XXIII.

Dealing with the remedy open to the party when the validity of the compromise is questioned, it was observed:

To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise ''which is void or voidable'' under the Indian Contract Act" shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act.

It is thus manifest that Hon''ble Supreme Court has found that any party challenging the compromise can file petition under proviso to Rule 3 of Order XXIII, CPC or can appeal u/s 96 (1) and he can question the validity of the compromise in view of Rule 1-A of Order XLIII of the Code. The Kerala High Court, relying on the judgment of the Apex Court in ''Banwari Lal'' case has observed In the case of Meenakshi (supra) that Order XLIII, Rule 1-A and Order XXIII, Rule 3-A make the position abundantly clear that challenge against the compromise decree cannot be by a separate suit. It has been further held in this case that in view of proviso to Rule 3 and the explanation thereto, the Court which entertained the compromise petition only can examine whether it was void or voidable.

The Andhra Pradesh High Court had also occasion to deal with the matter in the case of ''Hanumantha Reddy'' (supra) and it has been held that the suit to question a compromise decree on the ground of fraud of misrepresentation is barred by Rule 3-A of Order XXIII, Code of Civil Procedure.

The Bombay High Court has also interpreted Rule 3-A in the case of ''Anant'' (supra) and it has been held that a party to a suit which was decreed after accepting the compromise is only relegated to the remedy of questioning the same in ah appeal under Rule 1-A of Order XLIII and a second suit based on the cause of action that the compromise itself was not lawful, is clearly barred.

On the other hand, the Karnataka High Court in the case of ''Thimmappa'' (supra) has taken different view. The High Court has observed that the contract of agreement may be lawful, but it could be challenged on the ground that it was entered into or achieved by exercising the fraud, undue influence or coercion and can be avoided. This, in my humble opinion, cannot be held to be correct view in the light of the decision of Hon''ble Supreme Court in the case of ''Banwari Lal'' (supra). It is significant to point out that even Karnataka High Court has not followed this view. In the subsequent case of Smt. Tara Bai (supra) which was decided on. 4.6.1985, The Karnataka High Court in the case of ''Tara Bai'' has clearly held that now a suit to question the compromise decree on the ground that it is unlawful is barred and the Section 151 CPC is the only section that is applicable to such case, The case of ''Uphras Lapasam'' (supra) relied on by learned Counsel for the Appellant does not touch the point in issue, The Court in that case was considering the scope of Section 11 of CPC in the matter of compromise. In the case of "Smt. Mukhtiyar".(supra) the Punjab and Haryana High Court has held that the suit to challenge the decree on the ground of fraud, coercion or undue influence is not barred by Rule 3-A, Code of Civil Procedure. With respect, this view cannot be accepted in view of the observation of Hon''ble Apex Court in the case of ''Banwari Lal.''

Now there remains the case of ''Smt. Mohani Bai'' (supra) of our own High Court in which it has been observed at para 5 that the consent decree is contract between the parties and suit for adjudging it void and/or setting aside a decree On the ground of its having been obtained through misrepresentation or fraud lies u/s 31 of the Specific Relief Act whereunder a person against whom a void or voidable instrument, which includes a decree, and which causes serious injury can file a suit in Civil Court to get it cancelled.

It may be noted that in this case, this Court had not addressed itself to the provisions of Rule 3-A of Order XXIII or Rule 1-A of Order XLIII, Code of Civil Procedure. The facts of that case were that one ''J'' instituted a suit in the year 1975 against ''M''. The preliminary decree was passed by the learned trial Court. In the first appeal, compromise was filed by the Plaintiff and by the Advocate of Defendant. This compromise was verified and the suit was decreed in terms of the compromise. As against that the compromise decree, second appeal was filed in this Court. In that appeal, the Defendant challenged the compromise decree on the ground that it was not signed by the Defendant herself and was signed only by her Advocate and as such it could not be acted upon. The Second Appeal was dismissed by this Court holding that Order XXIII, Rule 3, CPC does not debar Counsel from signing the compromise petition. Thereafter, the Defendant filed an application u/s 151, CPC before the trial Court for setting aside the decree on the ground that me Defendant had not given instructions to her Counsel to compromise the suit. That application was dismissed by the learned District Judge and Civil Revision Petition against that order was filed in this Court. Thus the question before this Court in that case was whether the application u/s 151.Code of Civil Procedure for cancelling the compromise decree was maintainable or not. This Court held that this petition was not maintainable. There was no occasion to interpret the provisions of Rule 3-A or the explanation appended to Rule 3 of Order XXIII, Code of Civil Procedure. That being so, it cannot be held that this Court authoritatively pronounced that remedy of filing civil suit for getting a compromise decree set aside on the ground of fraud etc. was available. In any case, in view of the judgment of the Apex Court in the case of ''Banwari Lal'' it cannot be held that a suit can be filed for setting aside the decree, passed on compromise, on the ground of fraud misrepresentation, coercion etc.

In this connection request made by learned Counsel for the Appellant that the matter may be referred to larger Bench is not acceptable for the reasons; first in the case of ''Mohani Bai'', the provisions of Order XXIII, Rule 3-A or the explanation appended to Rule 3, CPC was not interpreted as a matter of fact, in that case there was no occasion to interpret the provisions and second there is authoritative pronouncement of the Apex Court in the case of ''Banwari Lal'' that remedy for setting aside the decree on the ground of fraud etc. is available (under Ed.). Order XXIII, Rule 3, CPC coupled with Rule 1-A of Order XLIII, Code of Civil Procedure. Needless to say that even the obiter dicta laid-down by the Supreme Court is binding on all the High Courts and no decision contrary to the obiter of the Hon''ble Supreme Court can be relied upon.

As a result of the foregoing discussion, the question formulated is answered in the affirmative and it is held that the learned trial Judge has not erred when he found issue No. 4 in favour of the Defendants. There is no need to enter into the facts of the case in view of the fact that the suit has not been found to be maintainable.

Consequently, there is no merit in this appeal which is hereby dismissed. In the special circumstances of the case, the parties are left to bear their own costs.