Compromise decree – What constitutes a valid compromise decree:
Held: There was no written compromise deed between the parties, there was no verification as such of any written document – The defendants, in the first round of litigation, were admittedly tenants – They could have become owners of the land in suit either by way of a registered sale deed in their favour or by way of a declaration by the Competent Civil Court whether on merits or by way of a compromise decree granting such declaration – Neither of the two happened – Merely because some statement of the parties is recorded by the first Appellate Court that they have settled the dispute and that the suit may be dismissed, would not make the defendants therein from tenants to owners – Dismissal of the suit would only mean that their status as tenants would continue – A plain reading of Rule 3 of Order XXIII CPC clearly provides that for a valid compromise in a suit there has to be a lawful agreement or compromise in writing and signed by the parties which would then require it to be proved to the satisfaction of the Court – In the present case there is no document in writing containing the terms of the agreement or compromise – Thus, it cannot be said that the order dated 20.08.1984 was an order under Order XXIII Rule 3 CPC – Once it is held that the order dated 20.08.1984 was not an order of compromise of suit under Order XXIII Rule 3 CPC the argument relating to applicability and bar under Order XXIII Rule 3A CPC would have no relevance at all – In the case of Som Dev v. Rati Ram (2006) 10 SCC 788 it was clarified by this Court that after the amendment of Code of Civil Procedure in 1977, a compromise decree can be passed only on compliance with the requirements of Rule 3 of Order XXIII, otherwise it may not be possible to recognize the same as compromise decree – Mere statements of the parties before court about such said compromise, cannot satisfy the requirements of Order XXIII Rule 3 of the CPC – Therefore, the compromise decree is not valid. [Paras 15, 16, 19, 20, 21, 22 and 23] Lis pendens and restriction under Section 52 of the Transfer of Property Act, 1882:
Held: At the time of execution of sale deed, on 22.08.1983, in favour of present appellants, defendants in second suit, Mansha Ram and others, were fully competent to execute the sale deed – Even assuming for the sake of argument that ownership rights were also transferred under the alleged compromise deed, the sale deed executed prior to the said compromise will not be affected in any manner as the plaintiffs were not only recorded as land owners but also had a decree of declaration and permanent injunction in their favour at the time when sale deed was executed – The doctrine of lis pendens or the restriction imposed under section 52 of the Transfer of Property Act, 1882 may not be relevant or applicable in present case considering the fact that one of the parties-plaintiffs in the proceedings and respondents in pending appeal having executed the sale deed during the pendency of appeal, by their subsequent conduct of giving a statement that their suit be dismissed, acted in dishonest and unfair manner – They were fully aware of having executed the sale deed, their subsequent statement would only be termed as collusive and dishonest – The order in the appeal court was not a decree on merits declaring any rights of the defendants to the suit (appellants in the appeal) – In such circumstances, the sale deed dated 22.08.1983 could not be said to be hit by doctrine of lis pendens – In Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd. (2013) 5 SCC 397 it was held that transfer of suit property pendente lite is not void ab initio, as it remains subservient to the pending litigation – Therefore, in the present case the sale deed dated 22.08.1983 is not hit by section 52 of the TP Act. [Paras 12, 15, 17 and 18]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Adeeba Mujahid, Hony. Associate Editor (Verified by: Liz Mathew, Sr. Adv.). Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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