Is independent suit questioning a compromise decree maintainable or one has to approach the same Court which recorded the compromise to challenge it? SC answers

Supreme Court: The Division Bench of M.R. Shah* and Sanjiv Khanna, JJ., held that an independent suit questioning the Compromise Decree would not be maintainable. The Bench observed that a mere clever drafting would not permit the plaintiff to make the suit maintainable which otherwise would not be maintainable and/or barred by law.

Factual Background

Brief facts of the case were such that the suit schedule property was gifted to the respondent 1–original plaintiff during his minority by his paternal grandmother, respondent 2 vide registered Gift Deed dated 13-02-2003, however the deed was revoked on 10-12-2004 and thereafter a registered Development Agreement-cum- General Power of Attorney dated 18-01-2008 came to be executed between the grandmother and the appellant–M/s. Sree Surya Developers and Promoters. Under the said Development Agreement, the grandmother was entitled to 35,000 sq. ft. of fixed saleable super built-up area along with proportionate number of car parking spaces and undivided share in the land.

The father of the respondent 1 filed a suit as the next friend of then minor respondent 1 seeking for declaration that revocation of Gift Deed as being illegal and not binding on the plaintiff therein and also for perpetual injunction. Subsequently, a compromise was arrived at between the parties vide Compromise Deed Dated 30-12-2015 under which it was agreed that the respondent 1 would be entitled to entire 35,000 sq. ft. of the constructed area and the Developer would be entitled to assign the development rights accrued to it under the said Development Agreement to the third parties. Thereafter the appellant–Developer assigned its development rights to respondent 4 and on the basis of the same, the respondent 4 had started developing the subject property.

On attaining the age of majority, the respondent 1 filed a suit before the Trial Court praying inter alia declaration of right, title and interest over the suit schedule property and declaration of Compromise Decree. He also prayed the revocation of deed as null and void.

Findings of the Courts below

The Trial Court rejected the plaint on the ground that in view of Order XIII Rule 3A CPC, no independent suit would be maintainable against the Compromise Decree. In appeal, the High Court had quashed and set aside the order passed by the Trial Court and has remanded the matter to the Trial Court by observing that the effect of the provisions of Order XXXII Rules 1 to 7 CPC had not been considered by the Trial court, which would have a direct bearing on the validity of the Compromise Decree.

Analysis and Observations

The Bench observed that the High Court had not at all dealt with and considered the provisions of Order XXIII Rule 3A CPC and had not considered whether in fact the suit challenging the Compromise Decree and/or for the reliefs sought in the suit would be maintainable or not. The Bench opined,

“What was required to be considered by the High Court was whether the independent suit questioning the Compromise Decree would be maintainable or not. The aforesaid crucial aspect had not been dealt with by the High Court at all and High Court had gone into the validity of the Compromise Decree in view of Order XXXII Rule 7 CPC.”

The Bench held that the plaint in exercise of powers under Order VII Rule 11 of CPC to challenge the Compromise Decree would be barred under Order XXIII Rule 3A of CPC and the party to a consent decree based on a compromise has to approach the same court, which recorded the compromise to challenge a decree based on compromise.

Rejecting the argument of the respondent that he had not specifically prayed for setting aside the Compromise Decree and what was prayed was to declare that the Compromise Decree was not binding on him and that for the other reliefs sought, the suit would not be barred, the Bench held that a mere clever drafting would not permit the plaintiff to make the suit maintainable which otherwise would not be maintainable and/or barred by law. The Bench remarked,

If we consider the reliefs of declaration of title, recovery of possession, cancellation of revocation of Gift Deed, declaration for DGPA and Deed of Assignment-cum-DGPA, the said reliefs can be granted only if the Compromise Decree is set aside.

Conclusion

In the light of the above, the Bench concluded that the High Court had erred in setting aside the order of the Trial Court. Accordingly, the impugned judgment and order passed by the High Court was set aside and quashed and the order of the Trial Court was restored.

[Sree Surya Developers and v. N. Sailesh Prasad, 2022 SCC OnLine SC 165, decided on 09-02-2022]


*Judgment by: Justice M.R. Shah


Kamini Sharma, Editorial Assistant has put this report together

 

 

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