Report No. 54
Order 23, rule 1A (New)
23.6. We now proceed to deal with a situation not expressly provided for in Order 23. Where a suit is withdrawn by a plaintiff under Order 23, rule 1, one of the opposite parties sometimes finds it necessary to be transposed as a plaintiff, so that he can pursue whatever claims he may have made against a co-defendant. The Court has, under Order 1, rule 10, already a power to order transposition of parties1. But it appears to be desirable to provide that where there is a request by the defendant for transposition (as plaintiff) in view of withdrawal or abandonment of the suit by the plaintiff, the court should have due regard to this consideration.
1. (a) Eduljee v. Vullebhoy, ILR 7 Born 167;
(b) Bhismadev v. Radhakishan, AIR 1968 Ori 230 (reviews cases).
23.7. The insertion of the following rule in Order 23, is, therefore, recommended:-
"1A. Where a suit is withdrawn or abandoned by a plaintiff under rule 1 of this Order, and a defendant applies to be transposed as a plaintiff under Order 1, rule 10, the Court shall, in considering such application, have due regard to the question whether the applicant has a substantial question to be decided as against any of the other defendants".
Order 23, rule 3--Lawful
23.8. Order 23, rule 3 deals with compromises. One of the important conditions precedent to the applicability of this rule is that the compromise must be 'lawful'. Now, where a decree is passed on compromise and it is alleged that it embodies terms which are not lawful, can the validity of the decree be challenged? On this question, there seems to be a conflict of decisions. We proceed to examine the case-law on the subject.
23.9. In a Bombay case1, it was held that a consent decree passed by a Court of competent jurisdiction cannot be treated on the same footing as a contract between the parties. It is true that before a Court passes a consent decree, it can, and should, examine the lawfulness and validity of the terms of the proposed compromise. But once that stage is passed and a decree follows, different considerations arise.
1. Govind Woman v. Murlidhar Shrinivas, AIR 1953 Born 412.1.
23.10. Thus, as were the facts in that case, where the compromise decree contained a term against alienating certain property, and gave the other party a right to its possession on such alienation, the decree was held not to be a nullity, in spite of the fact that the term was opposed to section 10, Transfer of Property Act. The decree was merely contrary to law, and bound the parties thereto, unless it was set aside by taking proper proceedings.
23.11. Same is the Andhra view1.
1. Venkateshhayya v. Virayaa, AIR 1958 AP 1 (FB),
23.12. In a recent Mysore case1, it was held that where a compromisd decree passed by a court of competent jurisdiction contains a term which is opposed to law or public policy and the decree has not been set aside in proper proceedings, it is res judicata. The Mysore High Court, following the Bombay case, said that though the court should examine the lawfulness and validity of the terms of the proposed compromise, once that stage is passed and the court has put its seal of approval to a compromise and made it a decree of the court, then that decree is binding between the parties and must be enforced, unless it is set aside in a proper proceeding. It was also held that "finality of decision is an important principle of law based on public policy, if a compromise decree of competent Court, which has not been set aside, can be ignored on the ground of it embodying an illegal term, there will be confusion and uncertainty."
1. Bhima Rama v. Abdul Rashid, AIR 1968 Mys 184 (DB).
23.13. The Madras High Court1 and the Patna High Court2 have taken a different view. In the Patna case, a compromise decree providing for recovery of pension contrary to section 12Pensions Act, 1871, was held to be void. (The Bombay case is not referred to in the Patna judgment).
1. (a) Lalcshmanaszvamy Naidu v. Rangamma, 1930 ILR 26 Mad 31; (b) Ramachariya v. Venkatalakshminarayanna, AIR 1919 Mad 429.
2. Baldeo Jha v. Ganga Prasad, AIR 1959 Pat 17 (Ramaswami, C.J. and R.K. Chowdhri J.).
23.14. In the Patna case1 it was observed-
"It is a settled principle of law that a contract is not less a contract and subject to the incident of a contract because there is superseded the command of the judge. If any authority is indeed in support of this proposition, reference may be made to Wentworth v. Bullen, 109 ER 313 (316) (This case, however, does not relate to an illegal contract). The compromise is received under the provisions of Order 23, rule 3 of the Code of Civil Procedure, which states that 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, 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 suit."
23.15. The House of Lords2 has decided that a consent decree beyond the contractual powers of the corporation is void-
"It is quite clear that a company cannot do what is beyond its legal powers by simply going into court and consenting to a decree which orders that the thing shall be done."
That case, however, is distinguishable from a case of having an illegal object.
1. Baldeo Jha v. Ganga Prasad, AIR 1959 Pat 17 (20), para. 9.
2. Great North-West Central Railway v. Charbhois, 1899 AC 114 (124).
23.16. In the above state of the case-law, it is desirable to make a clarification. In the interests of finality of litigation, it may be better to provide that a decree shall not be set aside on the ground of illegality1 of the compromise on which it is based.
1. Actual amendment not drafted.
Recommendation to insert Order 23, rule 3A
23.16A. Accordingly, we recommend the insertion of the following rule as Order 23, rule 3A-
"3A. No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful."