Validity of a decree passed on a compromise cannot be challenged in a separate suit

Supreme Court: In a matter before the Court as to whether the validity of a decree passed on a compromise can be challenged in a separate suit, a bench comprising of T.S. Thakur and R. Banumathi JJ., upheld the decision of the Additional City Civil Judge that a separate suit was not maintainable and that the only remedy available to the aggrieved party is to approach the Court which had passed the compromise decree.

In the instant case, the dispute arose as to the validity of a compromise between the parties with respect to alienation of property as a gift. The trial Court held that the suit holding the gift-deed in question is null and void and not binding on the plaintiff. Aggrieved with the decree of the trial Court, the respondent moved to the High Court which set aside the judgment and decree of the trial Court on the basis that a compromise had taken place between the parties. The aggrieved appellant appeared before the Additional City Civil Judge where the plaint filed by the plaintiff-appellant was rejected in the light of the proviso to Order 23 Rule 3 of CPC. The appellant then filed a miscellaneous application taking plea that no compromise had taken place nor was any compromise petition ever signed between the parties. The High Court declined to consider the prayer made by the appellant and held that the appellant may seek redressal in a separate suit against any such order of rejection.

The question which arose before this Court was whether the High Court was right in directing the appellant to seek redress in separate suit. The Court observed that as soon as a question relating to the lawfulness of the agreement/ 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 concluded that the High Court in the process remained oblivious of the provisions of the Order 23 of Rule 3 and 3 A of CPC, as it cannot direct the parties to file a separate suit on the subject for which no such suit will lie in view of the provision of Order 23 Rule 3 A of CPC.. The Court allowed the appeal and set aside the Order of the High Court and remitted the matter back to the High Court for disposal in accordance with the law. R. Rajanna v. S.R. Ventakaswamy, 2014 SCC OnLine SC 920, decided on November 20, 2014.