IRAMMA Vs. SAROJA

JUDGEMENT

(1.) THIS Revision Petition arises from the order dated 9. 4. 1996 passed by the Principal Civil Judge, Hubli, on the application/petition filed under Order 23 Rule 3 read with Section 151 of the Code of civil Procedure, by the present respondent, who was the petitioner in the Court below for setting aside the compromise decree recorded in O. S. No. 109/95 on 9. 11. 1995. A preliminary objection was raised by the present revision petitioner before the Court below that the application was not maintainable. The Court below after consideration of the matter opined that the petition filed under Order 23 Rule 3 of the Code of Civil procedure, for setting aside the compromise decree was maintainable. Feeling aggrieved from the said order, the Decree holder has come up before this Court by filing the revision under Section 115 of the Code of Civil Procedure and has challenged the order of the court below, whereby the Court below had held that the application/ petition to be maintainable under Order 23 Rule 3 of the Code of civil Procedure. The learned Counsel for the revision petitioners contended that the provisions of Order 23 Rule 3 of the Code of Civil Procedure clearly discloses that when a party files the application/petition to the effect that the suit has been compromised, then it is at that stage i. e. , before recording compromise itself and passing of the decree, it is the duty of the party, who alleges it to be illegal etc. , to have raised the plea that the agreement produced before it is not prevail, but has been illegal and void. The learned Counsel contended that at the time when the compromise petition was filed the respondent did not raise any such objection nor filed any objections. On the contrary the party taken the D. D. and signed the agreement and before the Court he accepted the agreement to have been signed by him. When this has been the position, the learned counsel contended that it was open to the party signing the compromise with open eyes to challenge it at a tatter stage and that it was obtained by fraud. The learned Counsel contended that Order 23 Rule 3 of the Code of Civil Procedure, requires the Court that when compromise is filed, it has to be satisfied or proved before it that the suit had been adjusted by lawful agreement to the satisfaction of the Court or suit has been compromised in writing and signed by the parties and the Court has to be satisfied about the fact that lawful agreement have been entered into between the parties. Rule 3 of Order 23 of the Code of Civil Procedure provides that the Court shall record and order that such agreement and satisfaction be recorded and shall pass the decree in accordance with the compromise. The learned Counsel contended that the proviso has to be read explaining the position very clearly that where the party alleges compromise to have been entered into or compromise to have been arrived at, while the other party denies the adjustment and satisfaction by compromise, then the Court is required to decide whether the suit had been adjusted by the agreement or compromise arrived at in accordance with the law of Contract. The learned counsel further contended that the use of expression 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 adjustments is very significant. The learned Counsel contended that last portion of the proviso is in negative and indicates that such denial of agreement or denial of the execution of the agreement or fraud played etc. , in obtaining consent or signature or such allegations have to be raised before compromise is recorded and decree is passed, and not after the recording of the compromise. The learned Counsel contended that if a party has failed to raise the objection that his remedy might be by way of appeal under Order 43 Rule 1 of the Code of Civil Procedure, but not by way of application/petition under Order 23 Rule 3 of the Code of Civil procedure, for setting aside the compromise decree. The learned counsel contended that fraud on Court stands on different footing than fraud on parties. If fraud is committed on the Court, no doubt, it is the inherent power and duty of the Court to see that because of the Courts action in passing the decree after being put or subjected to fraud played by the party requires that such a decree may be set aside and the parties should be placed and put in position they would have been, prior to passing of the compromise decree based on fraud on Court. But a decree passed on the basis of the alleged fraud on party stands on different footing. The learned Counsel made reference to the Division Bench decision of Patna High Court in sadho SARAN RAI vs ANANT RAP and the Division Bench decision of the Allahabad High Court in Mst. KALPA vs SITA RAM, the above contentions of the learned Counsel for the revision petitioners have been hotly contested by the learned Counsel for the respondent. The learned Counsel for the respondent contended that in the case of Smt. TARA BAi vs V. S. KRISHNASWAMY RAO and in the case of S. G. THIMMAPPA vs T. ANANTHA AND OTHERS has held that the Court can exercise its inherent power under Section 151 of the Code of Civil Procedure, where it comes out that compromise has been got recorded by fraud or coercion. Fraud and coercion being practiced by a party. The learned Counsel for the respondent has also made reference to the decision of the Supreme Court in the case of BANWAR! LAL vs SMT. CHANDO DEVI. I have applied my mind to the contentions raised by the learned counsel appearing for the parties. As regards the Allahabad decision in the case of Mst. Kalpa vs sita Ram (Supra), the Hon'ble Mr. Justice Randhir Singh delivering the judgment oh behalf of the Division Bench has observed as under: "it was evidently the duty of the Court below to have come to a conclusion on the allegations made by the defendant with regard to the making of the compromise. If a party to a. compromise denies having entered into the compromise, the Court will have to come to a finding as to whether there had or had not been a compromise effected between the parties and then also to decide if the agreement or the adjustment was lawful. It is only after the court is satisfied that there had in fact been a compromise and further that, that compromise was a lawful compromise that there would be no option left, to the Court, but to record it and to pass a decree in terms of the compromise. " this decision lays down the proposition that when a party files an application/petition alleging that the claim in the suit has been adjusted by any lawful agreement or by compromise and filed compromise, while the other party denies the execution of that compromise may be, in addition there to alleging that it was obtained by fraud and mis-representation, but once the party has denied the execution of the compromise, while the other asserts that compromise has been entered into and it is lawful compromise then before the court records compromise and passed a decree on the basis thereof, it is required to examine that question and it has to come to a finding as to whether there had or had not been a compromise effected between the parlies. The Court in that case remanded the matter to the Trial Court for considering that objection which the Court had not considered at the time when it passed the decree. In the case of Banwari Lai vs Chando Devi (Supra) in paragraph 13 of the said report. Their Lordships after making reference to the various provisions of Order 23 Rule 3 of the Code of Civil Procedure, in paragraphs 7, 13 and 14 of the said report, Their Lordships observed as under: 7. By adding the proviso along with an explanation the purpose and the object of the amending Act appears to be to compel the party challenging the compromise to question the same before' the Court which had recorded the compromise in question. That court was enjoined to decide the controversy whether the parties have arrived at an adjustment in a lawful manner. The explanation made it clear that an agreement or a compromise which is void or voidable under the Indian Contract Act, shall not be deemed to be lawful within the meaning of the said Rule. Having introduced the proviso along with the explanation in Rule 3 in order to avoid multiplicity of suit and prolonged litigation, a specific bar was prescribed by Rule 3a in respect of institution of a separate suit for setting aside a decree on basis of a compromise. 13. When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying that where it is alleged by one party and denied by other that an adjustment or satisfaction has been arrived at, "the Court shall decide the question", the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise " which is void or voidable under the indian Contract Act. . . " shall not be deemed to be lawful within the meaning of the said Rule. In view of the proviso read with the explanation a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. 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 Rule 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. 14. The application for exercise of power under proviso to Rule 3 of Order 23 can be labeled under Section 151 of the Code, but when by the amending Act, specifically such power has been vested in the Court before which the petition of compromise had been field, the power in appropriate cases has to be exercised under the said proviso to Rule 3. It has been held by different high Courts that even after a compromise has been recorded, the Court concerned pah entertain an application under Section 151 of the code, questioning the legality or validity of the compromise. Reference in this connection may be made to the cases Smt. Tara Bai vs V. S. Krishnaswamy Rao, AIR 1985 KAR 270, S. G. Thimmappa vs T. Anantha, AIR 1986 KAR 1. Bindeshwari Pd. Choudhary vs Debendra Pd. Singh, AIR 1958 pat. 618, Mangal Mahton vs Behari Mahton , AIR 1964 PAT 483 and Sri. Sri. Iswar Gopal Jew vs Bhagwandas Shwa, AIR 1982 cal. 12, where it has been held that application under Section 151 of the Code is maintainable. The Court before which it is alleged by one of the parties to the alleged compromise that no such compromise had been entered between the parties that court has to decide whether the agreement or compromise in question was lawful and not void or voidable under the Indian contract Act. If the agreement or the compromise itself is fraudulent then it shall be deemed to be void within the meaning of the explanation to the proviso to Rule 3 and as such not lawful. The learned subordinate Judge was perfectly justified in entertaining the application filed on behalf of the appellant and considering the question as to whether there had been a lawful agreement or compromise on the basis of which the Court could have recorded such agreement or compromise on 27. 2. 1991. Having come to the conclusion on the material produced that the compromise was not lawful within the meaning of Rule 3, there was no option left except to recall that order. " their Lordships also held that other party challenging the compromise can file objections under proviso to Rule 3 of Order 23. He has also filed appeal challenging the validity of compromise decree under Rule 1a of Order 43. Their Lordships further held that the application for exercise of power under proviso to Rule 3 Order 23 is covered under Section 151 C. P. C. It further observes that when by amending Act specifying such power has been vested in the court before which the petition of compromise had been filed, the power in appropriate cases has to be exercised under proviso to rule 3 of Order 23. Their Lordships appear to have followed the principles of law laid down in Smt. Tara Bai's case (Supra) wherein it has been held that the application under Section 151 C. P. C. is maintainable, in such circumstances, where agreement or adjustment is obtained by playing fraud and fraud comes to the notice of the party later on. There is no doubt that ordinarily when a party approaches the Court with an application or memorandum of compromise alleging that a|suit has been satisfied or adjusted by a written compromise signed by the parties, then it is the duty of the court not to simpliciter treat the compromise in the usual form without being satisfied about the lawful agreement being entered into. It is the duty of the Court to be satisfied that it has been established before it that the parties have entered into a lawful agreement or contract to the satisfaction of the Court to satisfy the claim in the suit or to adjust in the suit, because Rule 3 of Order 23 requires that when it is proved to the satisfaction of the Court that the claim made in the suit had been adjusted or satisfied by lawful agreement entered into between the parties, then it shall record compromise and shall pass a decree. The condition precedent for recording the compromise and passing of the decree on the basis thereof is that the Court should be satisfied that the claim in the suit has been adjusted by compromise lawfully entered into between the parties and it is the duty of a party to raise the objection at that very stage, if he has not entered into agreement or fraud played comes to his knowledge, but it does not mean that if fraud comes to the knowledge of the party later on or compromise has been got singed by use of , threat and decree is got passed, then the party cannot raise objection and bring such fact to the notice of the Court even at a later stage or a case where compromise is got signed by getting that signed by some person other than the party concerned, then that party concerned is not to be allowed the same on the ground that the decree has been passed. When such facts of coercion, fraud or misrepresentation to come to the notice of the party that compromise has been obtained by fraud or coercion or misrepresentation or impersonation, it cannot be said that the doors of Court of Justice are closed. In those cases power under Section 151 read with Order 23 Rule 3 CPC is always available to the Court to examine such matter and to pass suitable orders in the interest and to serve the interest of justice applying this basic principle, and the spirit of law as contained in Rule 3 of Order 23 which provides that the contract which is void or voidable under the Indian Contract Act, shall not be deemed to be lawful. Now it clearly reveals that even if a contract has been obtained by fraud or coercion, then such contract would be void and cannot be taken to be the lawful contract or agreement,. the scope of investigation in view of the proviso to explanation is enhanced. Now in view of this amendment read with Rule 3a there may not be any need or necessity for such party who is affected by compromise obtained for fraud to file the suit for cancellation of that compromise decree, as Jhe suit is barred. But remedy is there to a party to approach the Court under Section 151 alleging those facts or to file appeal under Order 43 Rule 1-A (2) read with Section 96 alleging those facts of fraud or coercion. No doubt the appeal could be filed when the party has got two remedies he may opt one. For filing of appeal may result in remand of the matter and direction to the Court to consider the matter after recording evidence. So in such cases avoiding likely delay if application under Section 151 is filed and those facts are to be investigated. It can be said that the Court thus has has jurisdiction. In this view of the matter, in my opinion, the order passed by the learned Principal Civil Judge, Hubli, on 9. 4. 1996 appears to be perfectly valid, correct and in accordance with law, when it held that the petition under Order 23 Rule 3 read with Section 151 of the Code of Civil Procedure, was maintainable, the Civil Revision Petition, as such, being devoid of merit and the same is hereby dismissed. Costs made easy.