This article delves into the recent pronouncement by the apex judicial body in the matter of Sakina Sultanali Sunesara (Momin) vs. Shia Imami Ismaili Momin Jamat Samaj & Ors., decided on April 23, 2025. This judgment clarifies the procedural route available to a litigant disputing the validity of a compromise decree recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (CPC).
Factual Background:
The appeals arose from a judgment passed by a Larger Bench of the Gujarat judicial body, which was a reference stemming from Appeal from Order Nos. 16 and 33 of 2017 and cognate AOs. The High Court concluded that a litigant who was already a party to the suit, but disputes the existence or validity of a compromise recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 must first approach the Trial Court; a First Appeal under Section 96 of the CPC, it held, is available only to a person who was not on the record of the suit. Consequently, the Single Judge of the High Court dismissed every pending AO on 06.09.2019 for want of maintainability. Both the reference judgment and the consequential order are impugned in these appeals.
The factual matrix giving rise to the appeal is as follows: Three contiguous parcels of non-agricultural land at Siddhpur, District Patan, city survey Nos. 321, 322 and 323, together 36,354 sq. m., originally belonged to Moosabhai Mooman. On his death they devolved on his widow Noorbanu, his sons Sultan and Shaukatali (respondent no. 3) and his daughter Mumtaz (respondent no. 7). Sultan predeceased, leaving behind the appellant and two children, Salma (respondent no. 5) and Altaf (respondent no. 6) as his legal heirs.
Mumtaz executed an irrevocable General Power of Attorney in favour of Hassan Ali Lad (respondent no. 4) on 15.02.2002; a second joint PoA dated 08.02.2005 in his favour was signed by the appellant, Salma, Altaf and Noorbanu. On 09.03.2007, Shaukat Ali and Hassan Ali (purporting to act for all other co-owners) agreed to sell 28,978.51 sq. m. (“the suit land”) to ten individuals styling themselves ‘Shia Imami Ismaili Momin Jamat, Siddhpur’ (respondent no. 1) for ₹2.51 crore. Only ₹15 lakh was paid; a notice terminating the agreement issued in August 2011.
Up until 2012, Salma, Altaf and Mumtaz conferred individual PoAs on the appellant; two of the original ten proposed purchasers had by then died. On 10.01.2013 the eight survivors executed a deed cancelling the agreement to sell and an indemnity bond. The appellant asserts custody of the originals of both joint PoAs, the agreement, the cancellation deed and the bond. Later in 2013, Shaukat Ali, Salma, Altaf and Mumtaz relinquished their undivided interests in favour of the appellant; four mutation entries were certified, leaving her the sole recorded owner.
In August 2015, the appellant executed three registered sale deeds: two dated 10.08.2015 conveying 3,272 sq. m. and 6,385 sq. m. to Platinum Tradex Private Limited and one dated 12.08.2015 conveying 6,567 sq. m. to four individuals. Two of those individuals had themselves been among the original ten vendees. Later in 2015, Hassan Ali, accompanied by two of the original vendees, persuaded another member of that group, Kurban Momin, to revive the terminated transaction. On 24.11.2015 three revenue appeals were filed before the Deputy Collector, Siddhpur, challenging the mutation entries reflecting the appellant’s sale deeds. The appellant and Shaukat Ali were cited as respondents.
Regular Civil Suit No. 5 of 2016 (“the first suit”) was instituted on 5 January 2016, seeking a declaration that respondent no. 1 possessed the suit land. On 21.01.2016 respondent no. 1, through Kurban, filed Special Civil Suit No. 6 of 2016 (“the second suit”) in Patan for specific performance of the cancelled agreement, showing the appellant and her two children through Hassan Ali and joining Shaukat Ali personally. A compromise dated 12.03. 2016, signed by respondent nos. 1 and 2 (a trust said to represent the Jamat) on one side and Shaukat Ali and Hassan Ali on the other, was recorded on 15.03.2016, resulting in a first consent decree. Relying on that decree, the plaintiff withdrew the first suit unconditionally on 23.04.2016.
Respondent no. 1 then instituted Special Civil Suit No. 19 of 2016 (“the third suit”), again suing the appellant and her children through Hassan Ali. A further compromise dated 12.11.2016 led to a second consent decree on 17.12.2016. The appellant maintains that she had no notice of either compromise and that both decrees were procured by fraud. She therefore filed AO No. 16 of 2017 against the first consent decree and AO No. 33 of 2017 against the second, invoking Order XLIII Rule 1-A. Transferee purchasers lodged parallel AOs.
The Single Judge of the High Court, noting conflicting Division Bench views on the powers of Rule 1-A, referred three questions to a Larger Bench, which held that a party to the suit must first invoke the proviso to Order XXIII Rule 3 and that Rule 1-A itself creates no independent right of appeal. Acting on that pronouncement, the Single Judge dismissed all AOs on 06.09.2019.
Issues Before the Court:
The primary question before the apex judicial body was whether a litigant already a party to a suit, who contests the very fact or legality of a compromise embodied in a decree, is restricted to an application before the Trial Court under the proviso to Order XXIII Rule 3 or may, at her election, maintain a first appeal under Section 96 of the CPC notwithstanding Section 96(3).
Arguments Presented:
Mr. Huzefa Ahmadi, learned Senior Counsel for the appellant, argued that prior to the 1976 amendment to the CPC, Order XLIII Rule 1 (m) permitted an Appeal from Order against an order recording or refusing a compromise under Order XXIII Rule 3. Amendment Act No. 104 of 1976 deleted that clause and, in the same breath, introduced Order XLIII Rule 1-A(2). The new rule shifts the challenge to the decree and preserves a first appeal under Section 96; no separate Appeal from Order now lies. The impugned judgment accords two avenues to a non-party (review or First Appeal with leave under Section 96) but limits a party on record to an application under the proviso to Order XXIII Rule 3. Such a view defeats the purpose of Rule 1-A(2), enacted to ensure that any litigant disputing a compromise may contest it directly in appeal.
The counsel for the appellant has further submitted that the ratios laid down in the case of Pushpa Devi Bhagat Vs. Rajinder Singh and others, Banwari Lal Vs. Chando Devi and another and Triloki Nath Singh vs Anirudh Singh are not correctly and completely considered by the Larger Bench of the High Court. It is submitted that in the case of Banwari Lal (supra) this Court in Paragraphs 9 and 13 has observed that after the amendments which have been introduced, neither an appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3A of Order 23. As such a right has been given under Rule 1A(2) of Order 43 to a party, who challenges the recording of the compromise, to question the validity thereof while preferring an appeal against the decree. Section 96(3) of the Code shall not be a bar to such an appeal because Section 96(3) is applicable to cases where the factum of compromise or agreement is not in dispute. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1A of Order 43 of the Code.
The observation in Banwari Lal (supra) has been relied upon and approved in the case of H.S. Goutham Vs. Rama Murthy and another as well. The High Court relied on a solitary sentence in paragraph 17 of Pushpa Devi (supra) that “the only remedy is to approach the court which recorded the compromise”. Counsel contends that the remark is per incuriam: it neither notices Banwari Lal (supra) nor distinguishes the later three-Judge Bench ruling in Kishun Alias Ram Kishun (Dead) through LRS. v Behari (Dead) By LRS., which expressly recognizes a first appeal where the compromise itself is disputed.
On the other hand, Mr. Rakesh Uttamchandra Upadhyay, learned counsel for the Respondents, submitted that the respondents support the High Court’s conclusion that a party to the suit cannot invoke a first appeal. A consent decree, they urge, operates as estoppel and may be questioned only by an application to the Trial Court under the proviso to Order XXIII Rule 3; Section 96(3) bars an appeal and the deletion of Order XLIII Rule 1(m) removes the earlier avenue of an appeal from order. Reliance is placed on Pushpa Devi (Supra), especially para 17, which summarises that no appeal is maintainable against a consent decree in view of Section 96(3) and no appeal survives against the order recording the compromise after the omission of clause (m) of Order XLIII Rule 1. A three-Judge Bench of this Court in Triloki Nath Singh (Supra), after considering Pushpa Devi (supra) and R Rajanna (supra), holds that post 1976 “neither an appeal nor a separate suit is maintainable” to impeach a compromise decree; Order XLIII Rule 1 A(2) is available only when the Trial Court has first decided, under the proviso to Order XXIII Rule 3, whether a compromise exists. Any apparent divergence between Banwari Lal (supra) and Pushpa Devi (Supra) was resolved in Sree Surya Developers & Promoters v. N. Sailesh Prasad and others, which affirmed that the Court passing the decree is the proper forum to examine the validity of the compromise. Paragraphs 9 and 13 of Banwari Lal (supra)-quoted by the appellant-must be read in that light.
Reasoning of the Court:
The apex judicial body, after perusing the record and considering the rival submissions, addressed the primary question of whether a litigant who was already a party to the suit, yet contests the very fact or legality of a compromise embodied in a decree, is restricted to an application before the Trial Court under the proviso to Order XXIII Rule 3 or may, at her election, maintain a first appeal under Section 96 of the CPC notwithstanding Section 96(3).
The court found it necessary to examine the impact of the Amendment Act 104 of 1976 to CPC. Prior to 01.02.1977 an order “recording or refusing to record” a compromise was itself appealable under Order XLIII Rule 1(m). The Parliament removed that clause and, in the same breath, introduced four companion provisions:
- Proviso and Explanation to Order XXIII Rule 3 – obliging the Trial Court to decide, forthwith and itself, any objection to the fact or lawfulness of a compromise;
- Rule 3-A of Order XXIII – barring a separate suit to avoid a compromise decree;
- Order XLIII Rule 1-A – permitting an appellant who is already in a competent appeal against a decree to contend that the compromise “should, or should not, have been recorded”; and
- Section 96(3) (as renumbered) – prohibiting an appeal from a decree “passed with the consent of parties”.
The court opined that the interpretation of these provisions is quite clear and coherent. A party that accepts the compromise is bound by it and cannot appeal (Section 96(3)). A party that denies the compromise must first raise that dispute before the Trial Court (proviso to Order XXIII Rule 3). A fresh suit is no longer possible (Order XXIII Rule 3-A). If, and only if, the Trial Court decides the objection and passes a decree adverse to the objector, a first appeal lies under Section 96(1); in that appeal the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge the recording of the compromise.
This reading, the court affirmed, stands affirmed in a catena of judgements passed by this Court. In Banwari Lal (Supra), this Court held that, post-1976, the aggrieved party possesses two concurrent but sequential remedies: an application under the proviso to Order XXIII Rule 3 before the Trial Court; or a first appeal under Section 96(1) after the Trial Court has recorded its finding. More importantly, in Pushpa Devi (Supra) this Court, after surveying the amendments, stated four propositions, chief among them that a consent decree is binding “unless set aside by the Court which recorded the compromise on an application under the proviso to Rule 3”.
The court in Pushpa Devi (supra) summarised the position that emerges from the amended provisions of Order 23 thus:
- No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.
- No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of clause (m) of Order XLIII Rule 1.
- No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3-A.
- A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 Order 23.
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 court further elucidated the difference between the first part and the second part of Rule 3. The first part refers to situations where an agreement or compromise is entered into in writing and signed by the parties. The said agreement or compromise is placed before the court. When the court is satisfied that the suit has been adjusted either wholly or in part by such agreement or compromise in writing and signed by the parties and that it is lawful, a decree follows in terms of what is agreed between the parties. The agreement/compromise spells out the agreed terms by which the claim is admitted or adjusted by mutual concessions or promises, so that the parties thereto can be held to their promise(s) in future and performance can be enforced by the execution of the decree to be passed in terms of it. On the other hand, the second part refers to cases where the defendant has satisfied the plaintiff about the claim. This may be by satisfying the plaintiff that his claim cannot be or need not be met or performed. It can also be by discharging or performing the required obligation. Where the defendant so “satisfies” the plaintiff in respect of the subject-matter of the suit, nothing further remains to be done or enforced and there is no question of any “enforcement” or “execution” of the decree to be passed in terms of it.
The court illustrated this with a money suit, explaining the differing implications of agreements versus settlements. The key distinction lies in enforcement: agreements involve future performance enforceable by decree execution, while settlements represent completed actions, leaving no room for enforcement.
The court emphasized that the proviso to Order XXIII Rule 3 is the exclusive first step for any party denying the compromise. Order XLIII Rule 1-A doesn’t create a new appeal right but allows challenging the decree’s validity within an existing appeal. When the compromise isn’t disputed, Section 96(3) bars appeals absolutely.
In the present case, the appellant was a defendant-of-record in Special Civil Suit No. 6 of 2016 and Special Civil Suit No. 19 of 2016. Both decrees were based on written compromise terms signed by counsel holding valid authorizations. The signature of a duly authorized counsel is considered the signature of the party. The decrees are therefore consent decrees under Section 96(3). The appellant did not invoke the proviso to Order XXIII Rule 3 but instead filed Appeals from Orders based on the deleted Order XLIII Rule 1(m). The Larger Bench of the High Court correctly held such appeals incompetent post-1976.
The appellant’s argument that fraud allegations transform a consent decree into an ordinary decree was rejected. The court clarified that fraud, lack of authority, or other vitiating factors are precisely what the proviso to Order XXIII Rule 3 directs the Trial Court to examine. Until that procedure is followed, the bar in Section 96(3) of the CPC remains in effect.
The presence of subsequent purchasers does not aid the appellant. These purchasers, not being parties to the suits, rightly instituted first appeals with leave under Section 96(1) of the CPC. The appellant, as a party to the suits, cannot claim a remedy meant for third parties. Furthermore, both suits were compromised before a Lok Adalat, and Section 21(2) of the Legal Services Authorities Act, 1987, prohibits appeals from a Lok Adalat award. While supervisory jurisdiction under Article 227 of the Constitution of India exists, it was not invoked.
The court concluded that the Larger Bench of the High Court was correct in its view. It reiterated the two distinct ways the CPC operates post-1976 amendment:
- For a party to the suit denying a lawful compromise, the recourse is to the Trial Court under the proviso to Order XXIII Rule 3 to determine the compromise’s validity.
- For someone not a party but affected by a consent decree, a First Appeal under Section 96 of the CPC is possible with the Appellate Court’s leave.
Order XLIII Rule 1-A does not independently create an appeal right; it only allows challenging the compromise’s recording within an otherwise valid appeal. Therefore, the High Court’s directions accurately reflect the statute’s structure and require no interference.
Conclusion:
For the reasons stated, the apex judicial body dismissed the civil appeals and affirmed the Larger Bench’s judgment and the Single Judge’s consequential order. The appellant was granted the liberty to invoke the proviso to Order XXIII Rule 3 of the CPC before the Trial Court if so advised, but the court expressed no opinion on the merits of such an application.
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FAQs:
Q1: How can I challenge a compromise decree if I was a party to the suit?
You must file an application before the same trial court under the proviso to Order XXIII Rule 3 of the CPC. This is the only initial remedy available to parties disputing the existence or validity of a compromise recorded by the court.
Q2: Can I appeal a consent decree if I think it was based on fraud?
No direct appeal is allowed under Section 96(3) of the CPC if it’s a consent decree. Even allegations of fraud must be first raised in the trial court under the proviso to Order XXIII Rule 3. The appellate route opens only after the trial court rules on that objection.
Q3: What is the role of Order XLIII Rule 1-A in compromise decree cases?
Order XLIII Rule 1-A does not create a new appeal right. It allows a party already in an appeal against a decree to argue that the compromise should or should not have been recorded—but only after the trial court has ruled on the compromise’s validity.
