2022 (2) TMI 1364 - SC - Indian Laws

Supreme Court rules independent suit challenging Compromise Decree not maintainable

Sree Surya Developers and Promoters Versus N. Sailesh Prasad and Ors. And Raja Pushpa Properties Pvt. Ltd. Versus N. Sailesh Prasad and Ors.

The Supreme Court upheld the Trial Court's decision, ruling that an independent suit challenging a Compromise Decree is not maintainable under Order XXIII ... Rejection of plaint in exercise of powers Under Order VII Rule 11 Code of Civil Procedure - independent suit would be maintainable against the Compromise Decree, or not - Order XXIII Rule 3A Code of Civil Procedure - HELD THAT:- On plain reading of Order XXIII Rule 3A Code of Civil Procedure, the Trial Court was justified in rejecting the plaint. On plain reading of Order XXIII Rule 3A Code of Civil Procedure, no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. Identical question came to be considered by this Court in the case of R. JANAKIAMMAL VERSUS S.K. KUMARASAMY (DECEASED) THROUGH LEGAL REPRESENTATIVES AND OTHERS AND S.R. SOMASUNDARAM AND ANOTHER VERSUS S.K. KUMARASAMY (DECEASED) THROUGH LEGAL REPRESENTATIVES AND OTHERS [2021 (6) TMI 1140 - SUPREME COURT]. It is observed and held by this Court that Rule 3A of Order XXIII bars the suit to set aside the decree on the ground that the compromise on which decree was passed was not lawful. It is further observed and held that an agreement or compromise which is clearly void or voidable shall not be deemed to be lawful and the bar Under Rule 3A shall be attracted if compromise on the basis of which the decree was passed was void or voidable. In this case, this Court had occasion to consider in detail Order XXIII Rule 3 as well as Rule 3A. The Trial Court was absolutely justified in rejecting the plaint on the ground that the suit for the reliefs sought challenging the Compromise Decree would not be maintainable. As held by this Court in a catena of decisions right from 1977 that a mere clever drafting would not permit the Plaintiff to make the suit maintainable which otherwise would not be maintainable and/or barred by law. It has been consistently held by this Court that if clever drafting of the plaint has created the illusion of a cause of action, the court will nip it in the bud at the earliest so that bogus litigation will end at the earlier stage. It is not in dispute that as such the Respondent No. 1-original Plaintiff has already moved an appropriate application before the concerned Court, which passed the decree setting aside the compromise Decree by submitting an application Under Order XXIII Rule 3A Code of Civil Procedure therefore the said application will have to be decided and disposed of in accordance with law in which all the defences/contentions which may have been available to the respective parties on the validity of the Compromise Decree would have to be gone into by the concerned court in accordance with law and on its own merits. Appeal allowed. Issues:1. Maintainability of the suit challenging the Compromise Decree under Order XXIII Rule 3A of the Code of Civil Procedure (CPC).2. Validity of the Compromise Decree considering the provisions of Order XXXII Rules 1 to 7 CPC.3. Allegations of clever drafting by the Plaintiff to circumvent legal provisions.4. The High Court's failure to address the maintainability of the suit.Detailed Analysis:1. Maintainability of the Suit Challenging the Compromise Decree:The primary issue in this case is whether an independent suit challenging a Compromise Decree is maintainable under Order XXIII Rule 3A CPC. The Trial Court rejected the plaint under Order VII Rule 11(d) CPC, citing the specific bar under Order XXIII Rule 3A, which states, 'No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.' The Supreme Court upheld the Trial Court's decision, emphasizing that the Plaintiff's suit challenging the Compromise Decree is barred by Order XXIII Rule 3A. The Court referenced several precedents, including Banwari Lal v. Chando Devi, Pushpa Devi Bhagat v. Rajinder Singh, and R. Janakiammal v. S.K. Kumarasamy, to support the conclusion that the only remedy available to challenge a Compromise Decree is to approach the same court that recorded the compromise.2. Validity of the Compromise Decree Considering Order XXXII Rules 1 to 7 CPC:The High Court set aside the Trial Court's order, remanding the matter by observing that the provisions of Order XXXII Rules 1 to 7 CPC, which deal with suits involving minors, were not considered. The Supreme Court criticized this approach, stating that the High Court should have focused on the maintainability of the suit rather than the validity of the Compromise Decree at this stage. The Supreme Court clarified that the validity of the Compromise Decree should be examined by the court that recorded the compromise, not through an independent suit.3. Allegations of Clever Drafting by the Plaintiff:The Appellant argued that the Plaintiff engaged in clever drafting by seeking multiple reliefs to circumvent the bar under Order XXIII Rule 3A CPC. The Supreme Court agreed, stating that clever drafting cannot make a suit maintainable if it is otherwise barred by law. The Court cited T. Arivandandam v. T.V. Satyapal and Ram Singh v. Gram Panchayat Mehal Kalan, emphasizing that courts should nip such bogus litigation in the bud.4. The High Court's Failure to Address the Maintainability of the Suit:The Supreme Court found that the High Court erred by not addressing the maintainability of the suit under Order XXIII Rule 3A CPC. The High Court delved into the merits of the Compromise Decree's validity, which was premature at the stage of deciding an application under Order VII Rule 11 CPC. The Supreme Court reiterated that the only issue to be considered was whether the suit challenging the Compromise Decree was maintainable, which it was not.Conclusion:The Supreme Court allowed the appeals, quashing the High Court's order and restoring the Trial Court's decision to reject the plaint. The Court emphasized that the Plaintiff's remedy lies in approaching the court that recorded the Compromise Decree under Order XXIII Rule 3A CPC. The validity of the Compromise Decree will be decided by the concerned court in accordance with law and on its own merits. The appeals were allowed with no order as to costs, and pending applications were disposed of accordingly.