The Supreme Court, comprising Justice Vikram Nath and Justice Prasanna B. Varale, has dismissed the appeals filed by Sakina Sultanali Sunesara against the Gujarat High Court’s Larger Bench judgment dated 28 August 2019 and a consequential Single Judge order dated 6 September 2019. The Court held that a litigant who was already a party to a suit and disputes a compromise must first approach the Trial Court under the proviso to Order XXIII Rule 3 of the Civil Procedure Code, 1908 (CPC), and cannot directly maintain a First Appeal under Section 96 CPC.
Background of the Case
The case arose from disputes concerning three parcels of non-agricultural land at Siddhpur, District Patan. These lands originally belonged to Moosabhai Mooman and devolved upon his heirs, including the appellant Sakina Sultanali Sunesara and other respondents.
In 2007, a sale agreement was entered into with members of the Shia Imami Ismaili Momin Jamat (respondent no.1). After partial payment and subsequent cancellation in 2011, several developments followed, including execution of sale deeds by the appellant and institution of civil suits.
Two consent decrees were passed based on compromises dated 15 March 2016 and 17 December 2016, which the appellant later challenged, alleging fraud and lack of notice.
The appellant filed Appeals from Orders before the High Court under Order XLIII Rule 1-A CPC, which were dismissed based on a Larger Bench ruling that a party to a suit must challenge a compromise first before the Trial Court.
Appellant’s Arguments
- Senior Advocate Mr. Huzefa Ahmadi contended that after the 1976 amendment to the CPC, while an Appeal from Order recording a compromise under Order XLIII Rule 1(m) was deleted, Order XLIII Rule 1-A(2) was introduced to permit disputing the compromise during a First Appeal against the decree.
- It was argued that Section 96(3) CPC’s bar against appealing a consent decree does not apply where the very existence or validity of the compromise is disputed.
- Reliance was placed on Banwari Lal vs Chando Devi (1993) 1 SCC 581, where it was held that a party challenging a compromise may file a petition before the Trial Court or prefer a First Appeal questioning the validity of the compromise.
- The appellant also cited Pushpa Devi Bhagat vs Rajinder Singh (2006) 5 SCC 566 and Triloki Nath Singh vs Anirudh Singh (2020 SCC Online SC 444), asserting that the High Court failed to correctly consider these precedents.
Respondents’ Arguments
- Counsel for the respondents contended that once a decree based on compromise is passed, it binds the parties and an appeal is barred by Section 96(3) CPC.
- It was argued that only an application before the Trial Court under the proviso to Order XXIII Rule 3 is maintainable.
- Reliance was placed on Pushpa Devi Bhagat (supra), wherein the Supreme Court emphasised that a consent decree can only be challenged before the Court which recorded the compromise.
- It was further contended that Triloki Nath Singh (supra) and Sree Surya Developers & Promoters v. N. Sailesh Prasad (2022) 5 SCC 736 affirm the necessity of first approaching the Trial Court.
Court’s Analysis
- The Court observed that the 1976 amendments to the CPC specifically removed the provision allowing an appeal from an order recording or refusing a compromise and introduced a coherent mechanism.
- It stated:
“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).” - The Court emphasised that the decision in Pushpa Devi Bhagat (supra) accurately summed up the law by holding that “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.”
- It was clarified that Order XLIII Rule 1-A CPC does not create an independent right of appeal; it only permits raising the compromise issue during an otherwise maintainable First Appeal.
Decision
- The Supreme Court held that since Sakina Sultanali Sunesara was a defendant on record in the suits that led to the consent decrees, she could not bypass the mandatory procedure under the proviso to Order XXIII Rule 3 CPC.
- It ruled that her Appeals from Orders were incompetent, affirming the Gujarat High Court’s judgment.
- The Court observed:
“The appellant’s submission that allegations of fraud transform a consent decree into an ordinary decree cannot be accepted. Fraud, want of authority or other vitiating elements are precisely the matters that the proviso directs the Trial Court to examine.” - Dismissing the appeals, the Court granted liberty to the appellant to move an application before the Trial Court under the proviso to Order XXIII Rule 3 CPC if so advised, expressly declining to express any opinion on its merits.
There was no order as to costs.
