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Report No. 144

4.2.2. Question for consideration.-

There has arisen the question whether an order under Order 23, rule 3, recording or refusing to record a compromise, is appealable.

4.2.3. In an Andhra Pradesh case1 it was held that an order rejecting an application to record to compromise is not a "decree" and is not appealable under section 96 of the Code, because it does not conclusively determine the rights of the parties. This was the view of Sitaram Reddy, J. and Raghuvir, J., who held in the above case that such an order is a decree, but is not appealable, because of the deletion of Order 43, rule 1(m), in 1976. They seem to have stressed the words "Save as otherwise expressly provided" in section 96.

According to them, the intention of the Parliament is that no appeal would lie when the compromise is recorded or rejected tinder Order 23, rule 3. Actually, in the Andhra Pradesh case, the matter had not been death with in the Trial Court on the merits. It was a civil miscellaneous appeal, brought in by the petitioning first defendant, against an order made by the Sub-Judge, rejecting to record a compromise in terms of the affidavit and to pass a compromise decree.

1. G. Peddi Reddy v. G. Tirupatty Reddy, AIR 1981 AP 362 (Raghubir and Seetha Ram Reddy, JJ.)

4.2.4. Neither of the Judge seems to have noted Order 43, rule 1A which was itself inserted in 1976. Order 43, rule 1(m) (before 1976) provided an appeal under section 104 against-

"an order under rule 3 of Order 23, recording or reusing to record an agreement, compromise or satisfaction."

This was deleted in 1976 by the amending Act. But as stated above, the same Act inserted Order 43, rule 1A, permitting the appellant in an appeal against the main decree, to challenge the recording or non-recording of compromise.

4.2.5. Some difficulty is created on the above point, as the High Court of Madhya Pradesh1 has expressly dissented from the Andhra Pradesh case of 1981 mentioned above. In the Madhya Pradesh case (leaving aside facts which are not material for the present purpose), an application for recording a compromise had been accepted by the Trial Court, dismissing the objection raised by the opposite party, inter alia, to the effect that his signature to the compromise had been taken under coercion and that it was not legal. Some question arose as to whether the compromise application embraced properties which were not subject-matter of the suit, or whether it involved persons who were not parties to the suit.

1. Thakur Prasad v. Bhagwandas AIR 1985 MP 171 (175) paras. 5-6 (C>P> Sen and Gulab Gupta, JJ).

4.2.6. The Trial Court, however, recorded the compromise apparently rejecting the objections and this point was raised before the District Judge by way of a miscellaneous civil appeal under Order 43, rule 1A. The appeal against the order rejecting the compromise was dismissed on merits. But in the meantime, against the order of the Trial Court, passing a decree in terms of the compromise, a civil revision was taken to the High Court. In 1983, the High Court (in that Civil revision) set aside the order of the Trial Court, because ii embraced other properties and parties, as stated above.

The case was remanded to the Trial Court with a direction that it will be open to the non-applicant to urge that decree be passed with respect to that part of the compromise which related to the suit. But the applicant would be at liberty to show that the clause was inseparable from other clause, i.e. that he could raise that point in opposition to the non-applicant. The Trial Court, holding the clause to be separable, passed a decree in respect of eviction of the applicant from the suit property.

Against this order a civil revision was preferred to the High Court. The applicant also preferred, before the District Judge, under Order 43, rule 1A, an appeal against the order. The District Judge held that as a regular appeal lies under section 96 of the code against the judgment and decree of the Trial Court, the proper court fee must be paid.

4.2.7. Against this order, the applicant took a civil revision in the High Court. The High Court held that no revision lies against the order of the Trial Court recording the compromise and passing a decree in terms thereof, because an appeal lies under section 95, read with Order 43, rule 1A, against such an order.

4.2.8. The Andhra Pradesh Judges, with respect, failed to notice Order 43, rule 1A. If they had noticed that provision, probably, the ruling would have been different.

4.2.9. The High Court of Madhya Pradesh has observed:

"The apparent conflict between section 96(3) and Order 43, rule 1A can only be resolved in the manner suggested by us1. The court should lean against a construction which would make any particular provision futile. The court should also, as far as possible, avoid a construction which results in an anomaly. Clearly, the intention of the Legislature in making the amendments in the Civil Procedure Code was to simplify the procedure and avoid multiplicity of the proceedings in order to curtail litigation.

Therefore, the clear intention in enacting Order 23, rule 3A and deleting Order 43, rule 1(m) and adding rule 1A to Order 43, is that whatever objection may be against recording or non-recording of the compromise should be in the same proceeding, that is firstly in the suit and then in appeal under section 96. If it is otherwise, then the party will be left with no remedy when the court wrongly records a compromise, because the party aggrieved cannot file a separate suit and the appeal under Order 43, rule 1(m) has been abolished, so he has to challenge the same in the appeal against the decree that may be filed under section 96 read with Order 43, rule 1A.

If the appellate court finds that a compromise was lawfully recorded, then the appeal has to be thrown out as incompetent. If any other interpretation is put, then Order 43, rule 1A(2) becomes meaningless. If there can be no appeal against the decree recording a compromise, then what is the purpose is saying in this sub-rule that the recording of the compromise can be challenged in an appeal against the decree, which means that if the compromise is not lawful, then an appeal can be filed and recording of the compromise can be challenged under this sub-rule."

1. Emphasis supplied.



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