Himachal Pradesh High Court
Smt. Jamna Devi & Others vs Smt. Sarswati Devi & Others on 16 November, 2018
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA RSA No. 339 of 2005 .
Reserved on: 31.10.2018 Date of decision: 16.11.2018.
Smt. Jamna Devi & others .....Appellants.
Versus Smt. Sarswati Devi & others ..... Respondents.
Coram Whether approved for reporting?1 The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Yes.
For the Appellants: Mr. G. D. Verma, Sr. Advocate,
with Mr. Romesh Verma,
Advocate.
For the Respondents: Mr. Bhupender Gupta, Sr.
Advocate with Mr. Neeraj
Gupta, Advocate.
Tarlok Singh Chauhan, Judge
The defendants are the appellants who aggrieved by the judgment and decree passed by the learned first appellate Court whereby it has reversed the decree of learned trial Court, have filed the instant appeal.
2. One Sanehru Devi widow of Labha Ram filed civil suit No. 37/91 against Khillo Devi (present respondent) claiming herself to be the sole widow of Labha Ram. Khillo Devi appointed Shakti Chand (appellant No. 2) as power of attorney and on that 1 Whether the reporters of the local papers may be allowed to see the Judgment?Yes ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 2 authority submitted a compromise before the Lok Adalat leading to the passing of a compromise decree Ext.P1 dated 05.02.1994.
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The compromise decree was subsequently challenged by Khillo Devi on the ground that one day prior to the passing of the compromise decree Khillo Devi has cancelled the power of attorney executed in favour of Shakti Chand vide document Ext.
PW2/A dated 04.02.1994. Therefore, he (Shakti Chand) had no lawful authority to effect any compromise on the basis of the power of attorney, which already stood cancelled. Therefore, the decree passed by the Lok Adalat on the basis of the compromise was against law and having been obtained by fraud, is liable to be set aside.
3. The learned trial Court dismissed the suit, however, the said decree and judgment was reversed by the learned first appellate Court by declaring that decree in civil suit No. 37/91 dated 05.02.1994 of the learned Sub Judge Ist Class-II, Hamirpur was a result of fraud, misrepresentation and collusion between both the defendants and resultantly the same was set aside and the defendants were prohibited from claiming any interest under the decree.
4. Aggrieved by the judgment and decree passed by the learned first appellate Court the defendants have filed the ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 3 present appeal which came to be admitted on the following substantial questions of law:-
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1. Whether it is open for the lower appellate court to ignore the provisions of proviso and explanation of Rule 3 of Order 23 CPC in the instant case?
2. Whether compromise and decree Ext.P1 passed by Lok Adalat on 05.02.1994 having lawfully acquired sanctity of a judicial order, was correctly accepted by the trial court?
3. Whether the provisions of Order 23 Rule 3A were illegally interpreted by the lower appellate Court resulting setting aside a compromise decree?
4. Whether the documents Ext.P4 i.e. suit No. 37/91, Ext. P1 compromise decree, Ex.P2, P3, PX, PW5/B, PW5/A i.e. written statement, written agreement as per provisions of Order 23 Rule 3 CPC judgment of Sub Judge (I) Hamirpur, written statement of Khillo Devi, copy of power of attorney by Khillo Devi in favour of Shakti Chand, respectively were legally and correctly appreciated by lower appellate Court?
5. Whether the appreciation of law and facts made by lower appellate court of the case, is patently erroneous and defective in law and procedure?
5. However during the pendency of the appeal, Shri G.D. Verma, learned Senior Advocate, for the appellant, only raised question of the maintainability of the suit in view of the specific bar contained in Section 96(3) and Order 23 Rule 3 and 3-A of the Code of Civil Procedure (for short the 'Code').
6. In addition to relying upon the aforesaid provisions, Shri G. D. Verma, learned Senior Counsel, for the appellant has ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 4 placed reliance upon the following judgments of the Hon'ble Supreme Court:-
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1. Pushpa Devi Bhagat (D) by Lr. vs. Rajinder Singh & Ors. AIR 2006 SC 2628
2. In R. Rajanna vs. S.R. Venkataswamy & Ors., 2014 (15) SCC 471
3. In Y. Sleebachen and Ors. vs. State of Tamil Nadu & Anr., 2015 (5) SCC 747.
7. On the other hand, Shri Bhupender Gupta, learned Senior Advocate, would vehemently contend that a separate suit to assail the compromise, that too, on the ground of fraud was maintainable, especially, when it is settled law that fraud vitiate all transactions. He has placed reliance upon the following judgments:-
1. Kewal Krishan vs. Shiv Kumar & Ors., AIR 1970 P&H 176.
2. S.G. Thimmappa vs. T. Anantha & Ors., AIR 1986 Kar. 1.
3. Mukhtiar Singh vs. Arjun Singh, 1993 (Suppl) CCC 81.
4. Karnail Singh & Ors. vs. Dalip Kaur & Ors., 1995 (2) CCC 588.
5. Dhan Sukh vs. Liaq Ram, 1997 (2) SLC 203.
6. Ram Kishan & Ors. Vs. Sardari Devi & Ors., 2003 (1) CCC 11.
8. Section 96(3) and Order 23 Rules 3 and 3-A of the Code of Civil Procedure, read thus:-
"Section 96(3) - No appeal shall lie from a decree passed by the Court with the consent of parties."
Section 23(3) ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 5 Compromise of suit - 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 (in writing and signed by the parties) 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 parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit) Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation - An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule."
"Section 23(3-A) Bar to suit - No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.
9. Rule 3-A was introduced in Order 23 to give finality to litigation and to avoid multiplicity of suits by putting a bar on new suit on the ground that the agreement on which compromise decree was passed in the first suit was not lawful.
10. I find that substantial question of law is no longer res intergra in view of the authoritative pronouncement of the Hon'ble Supreme Court in R. Rajanna's case (supra), wherein ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 6 the precise question before the Hon'ble Supreme Court was whether the validity of a decree passed on compromise could be .
challenged in a separate suit as is evident from para 2 of the judgment. The appellant therein had filed a suit for declaration to the effect that gift deed dated 12.08.1982 executed by one Ramaiah was void. The suit was decreed by the learned trial Court by holding that the gift deed in question to be null and void and hence not binding on the appellant. Aggrieved by the judgment and decree, appeal came to be filed before the Hon'ble High Court of Karnataka. According to the respondent a compromise petition was in terms of Order 23 Rule 3 of the CPC filed by the parties before the Court in the said appeal settling the dispute amicably. The appellant stoutly disputed that position and asserted that no such compromise was needed nor was the same entered into between the parties and such compromise was, in fact, termed as a forged and fabricated document. The appellant denied that he ever signed any such compromise petition and asked his advocate to file the same before the Court and would allege that even so the High Court had proceeded on the basis that a comprise had indeed taken place between the parties and consequently the judgment and decree passed by the learned trial Court was set aside and the appeal filed by the respondent came to be allowed. The appellant contested before ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 7 the Hon'ble Supreme court that the order passed by the High Court was a result of fraud played upon the High Court.
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11. Aggrieved by the judgment and order passed by the High Court, appellant filed suit before the Additional City Civil Judge, Bangalore, in which he prayed for setting aside the compromise recorded by the High Court and the decree passed on the basis thereof. The defendant/respondent No. 1 moved an application in the said suit under Order7 Rule 11(d) read with Section 151 of the code for rejection of the plaint on the ground that the suit in question was barred by Rule 3-A Order 23 of the Code. The application was allowed and consequently the plaint came to be rejected. The Court took the view that in light of the proviso to Order 23 Rule 3 CPC inserted w.e.f. 01.02.1977, a party aggrieved of a decree on compromise had to approach the Court that passed the decree to establish that no compromise had taken place between the parties which could provide a basis for the Court to act upon the same. In doing so, the Court placed reliance upon the decision of the Hon'ble Supreme Court in Pushpa Devi's case (supra).
12. After rejection of the plaint, the appellant filed miscellaneous applications before the Karnataka High Court for setting aside the compromise. It was alleged that no such compromise had taken place nor was any compromise petition ::: Downloaded on - 17/11/2018 22:57:43 :::HCHP 8 was ever signed by the appellant. It was further alleged that appellant had given no instructions to his advocate for .
presenting any compromise petition and alleged that compromise petition was totally fraudulent and based on formed signature of the appellant apart from unauthorised, the counsel engaged by him had no authority to present or report any such compromise before the Court. The High Court of Karnataka without adverting to the provisions of Order 23 Rule 3-A CPC, dismissed the application and it was in this background that the Hon'ble Supreme Court held as under:-
"7.It was after the rejection of the plaint that the appellant filed miscellaneous application IA Nos. 1 and 2 of 2011 in RFA No.223 of 1991 praying for setting aside of order dated 1st August, 1995 by which the High Court had allowed the appeal filed by the respondents and set aside the decree passed in OS No.5236 of 2005 on the basis of the alleged compromise between the parties. The appellant's case before the High Court was that no such compromise had taken place nor was any compromise petition ever signed by him. It was also alleged that the appellant had given no instructions to his advocate for presenting any compromise petition and that the alleged compromise petition was totally fraudulent and based on forged signature of the appellant apart from being unauthorised as the counsel engaged by him had no authority to present or report any such compromise before the Court. The appellant also prayed for condonation of delay in filing the application for setting aside the compromise decree passed by the High Court.
8. The High Court of Karnataka has by its orders impugned in this appeal, dismissed IA No.1 of 2011 filed by the appellant without even adverting to the provisions of Order XXIII Rule 3 CPC and in particular Rule 3A which bars a suit to have a ::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 9 compromise decree set aside on the ground that the compromise on which the decree had been passed did not exist or take place. The High Court appears to have taken the view .
that even if the compromise was fraudulent since the appellant had filed a suit for declaration he ought to pursue the same to its logical conclusion. The High Court further held that even if the plaint in the suit filed by the appellant had been rejected in terms of Order VII Rule 11(d) of CPC, the appellant ought to seek redress against any such order of rejection. The High Court has on that basis declined to consider the prayer made by the appellant for setting aside the compromise decree.
9. The precise question that falls for determination in the above backdrop is whether the High Court was right in directing the appellant to seek redress in the suit having regard to the provisions of Order XXIII rule 3 and Rule 3A of CPC.
10. Order XXIII Rule 3 and Rule 3A of CPC may at this stage be extracted for ready reference:
"3. Compromise of suit. - 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 [in writing and signed by the parties], 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 it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise, or satisfaction is the same as the subject-matter of the suit]:
[Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.] Explanation - An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 shall not be deemed to be lawful within the meaning of this rule."
11. It is manifest from a plain reading of the above that in terms of the proviso to Order XXIII Rule 3 where one party alleges and ::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 10 the other denies adjustment or satisfaction of any suit by a lawful agreement or compromise in writing and signed by the parties, the Court before whom such question is raised, shall .
decide the same. What is important is that in terms of Explanation to Order XXIII Rule 3, the agreement or compromise shall not be deemed to be lawful within meaning of the said rule if the same is void or voidable under Indian Contract Act, 1872. It follows that in every case where the question arises whether or not there has been a lawful agreement or compromise in writing and signed by the parties, the question whether the agreement or compromise is lawful has to be determined by the Court concerned. What is lawful will in turn depend upon whether the allegations suggest any infirmity in the compromise and the decree that would make the same void or voidable under the Contract Act. More importantly, Order XXIII Rule 3A clearly bars a suit to set aside a decree on the ground that the compromise on which the decree is based was not lawful. This implies that no sooner a question relating to lawfulness of the agreement or 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 cannot direct the parties to file a separate suit on the subject for no such suit will lie in view of the provisions of Order XXIII Rule 3A of CPC.
That is precisely what has happened in the case at hand. When the appellant filed OS No.5326 of 2005 to challenge validity of the compromise decree, the Court before whom the suit came up rejected the plaint under Order VII Rule 11 CPC on the application made by the respondents holding that such a suit was barred by the provisions of Order XXIII Rule 3A of the CPC. Having thus got the plaint rejected, the defendants (respondents herein) could hardly be heard to argue that the plaintiff (appellant herein) ought to pursue his remedy against the compromise decree in pursuance of OS No.5326 of 2005 and if the plaint in the suit has been rejected to pursue his remedy against such rejection before a higher Court.
::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 1112. The upshot of the above discussion is that the High Court fell in a palpable error in directing the plaintiff to take recourse to the remedy by way of separate suit. The High Court in the .
process remained oblivious of the provisions of Order XXIII Rules 3 and 3A of the CPC as also orders passed by the City Civil Court rejecting the plaint in which the Trial Court had not only placed reliance upon Order XXIII Rule 3A but also the decision of the Court in Pushpa Devi's case holding that a separate suit was not maintainable and that the only remedy available to the aggrieved party was to approach the Court which had passed the compromise decree. The following passage from the decision of Pushpa Devi case is, in this regard, apposite:
"17. ..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 second defendant, who challenged the consent compromise decree was fully aware of this position as she filed an application for setting aside the consent decree on 21-8- 2001 by alleging that there was no valid compromise in accordance with law. Significantly, none of the other defendants challenged the consent decree. For reasons best known to herself, the second defendant within a few daysthereafter (that is on 27-8-2001) filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by the second defendant was not maintainable, having regard to the express bar contained in Section 96(3) of the Code."
We may also refer to the decision of this Court in Banwari Lal v. Chando Devi, 1993 1 SCC 581where also this Court had observed:
"13..........As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order XXIII, or an appeal under S. 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1-A of Order 13 of the Code."::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 12
13. Bearing in mind the aforesaid exposition of law, more particularly, the observations made in para -10 of the aforesaid .
judgment, it is evidently clear that all questions with regard to lawfulness validity of the agreement or compromise as being void or voidable or where the compromise, in question, having been obtained by a fraud, duress, coercion etc., the same has to be raised before that Court which passed the decree on the basis of any such agreement or compromise. The Court cannot direct the parties to file a separate suit on the subject or no such suit will lie in view of the provisions of Order 23 Rule 3-A CPC.
14. The substantial question of law is answered in favour of the appellants. Resultantly, I find merit in this appeal and the same is allowed and the judgment and decree passed by the first appellate Court is set aside and the suit filed by the plaintiff-
respondent is ordered to be dismissed as being not maintainable under the provisions of Section 96(3) and Order 23 Rule 3 and 3- A of the CPC.
15. However, before parting, it needs to be noticed that learned Single Judge of this Court in Dhan Sukh's case (supra) has taken a contrary view to the one taken by the Hon'ble Supreme Court in R. Rajanna's case (supra) and has held that a suit set aside a compromise decree on the ground of fraud and misrepresentation would still be maintainable even after ::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 13 insertion of Rule 3-A to Order 23 of the Code of Civil Procedure.
Obviously, the view taken by the learned Single Judge is no .
longer good law in light of the ratio laid down by the Hon'ble Supreme Court in R. Rajanna's case (supra).
16. Normally, the judgment of Coordinate Bench of this Court, in absence of any judgment to the contrary by Hon'ble Supreme Court or by Larger Bench of this Court would be binding
17.
r to on this Bench and, in case, of any difference of opinion would be required to be referred to a Larger Bench.
However, no such reference is necessary if the Hon'ble Supreme court has given a decision in the matter because as soon as the Hon'ble Supreme Court gives its decision, all the decisions of the High Court on the point are overruled and this legal position has been duly noticed by Hon'ble Division Bench of this Court in Samriti Gupta and another vs. State of H.P. and others, Latest HLJ 2016 (HP) 191, wherein it was observed as under:
"13. Before parting, we may clarify that the judgment in Arti Gupta case (supra) was rendered by the Hon'ble Full Bench of this Court and would normally in absence of any judgment to the contrary by the Hon'ble Supreme Court be binding on this Bench and in case of any difference of opinion would be required to be referred to a larger Bench. However, no such reference is necessary if the Hon'ble Supreme court has given a decision in the matter because as soon as the Hon'ble Supreme Court gives its decision all decisions of the High Court on the point are overruled. (Reference in this ::: Downloaded on - 17/11/2018 22:57:44 :::HCHP 14 regard is given to D. D. Basu Commentary on the Constitution of India, 8 th Edition and to the judgment of the .
Hon'ble Supreme Court in D. C. M. vs. Shambhu, AIR 1978 SC8.)
14. Even otherwise, Article 141 of the Constitution provides that the law declared by the Hon'ble Supreme Court shall be binding on all courts within the territory of India. Therefore, once the Hon'ble Supreme Court has decided the issue by passing a reasoned order, a fortiori, the ratio decidendi declared in the said decision would be binding on all the Courts in the Country for giving effect to it while deciding the lis of the same nature. All the Courts are under legal obligation to take note of the said decision and decide the lis in conformity with the law laid down therein."
18. The appeal is disposed of in the aforesaid terms, leaving the parties to bear their own costs. Pending application(s), if any, also stands disposed of.
16th November, 2018. (Tarlok Singh Chauhan) (sanjeev) Judge ::: Downloaded on - 17/11/2018 22:57:44 :::HCHP