Monday, 5 September 2016

Whether separate suit is maintainable for setting aside compromise decree?

The provisions of Order XXIII Rule 3­A of the Code
specifically bar the filing of a suit for setting aside a decree on the
ground that the compromise on the basis of which the decree was
passed was not lawful. The explanation to Rule 3 of Order XXIII of
the Code indicates that a compromise that is void or voidable
under the Indian Contract Act, 1872 is not deemed to be lawful
under Rule 3. In  Banwarilal (supra), it was held by the Hon'ble
Supreme Court that the compromise is sought to be challenged as
being fraudulent when it is deemed to be void within the meaning

of the explanation to the proviso to Rule 3 of Order XXIII of the
Code and as such, is not lawful. The prayer for setting aside the
compromise has to be made before the same Court which recorded
the   compromise.   Similarly,   in  Horil   (supra),   this   position   was
reiterated and it was held that a separate suit for challenging the
compromise on the ground that it was obtained by fraud was not
maintainable.   In  R.   Rajanna   (supra),  it   was   again   held   that   a
separate suit of the present nature for challenging a compromise as
not being lawful was not maintainable.
From the aforesaid, therefore, the legal position is well
settled as regards remedy available for challenging a compromise
which is not lawful.  That a compromise which is obtained through
fraud, with coercion and through misrepresentation would not be
lawful also does not admit of any doubt.  Thus, the only recourse
that is available in such case is to approach the same Court under
provisions of Order XXIII  Rule 3 of the Code. The same cannot be
done by a separate suit which is barred in view of provisions of
Order XXIII  Rule 3A of the Code. 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR.
CIVIL REVISION APPLICATION NO.88 OF 2014
APPLICANT:         
(Ori. Deft. No.1)
Sushil S/o Sohanlal Agrawal, 
                                                                                                 
­VERSUS

 Harishankar   Ramnivas   Sharma,

CORAM: A.S. CHANDURKAR, J.

DATED:  26­-02­-2016.
Citation:2016(4) MHLJ 904

2. By this civil revision application filed under Section
115 of the Code of Civil Procedure (for short 'the Code'), the
applicant,   who   is   the   original   defendant   No.1   in   S.C.S.
No.5055/2012 has challenged the order dated 30/06/2014 passed
on the application below Exhibit­33 filed under provisions of Order
VII Rule 11(a) and (d) of the Code for rejection of the plaint.
Similarly,   the   order   dated   15/09/2014   rejecting   the   review
application below Exhibit­49 filed by the applicant is also under
challenge.  
3. Few facts which are relevant to consider the challenge
as raised in the revision application are that, initially the nonapplicant
No.1 had filed S.C.S. No.581/2006 against the present
applicant and three others.  It was the case of the non­applicant
No.1 that he was the lawful owner of land bearing Kh. No.46 and
part of land bearing Kh. No.47, admeasuring 1.75 acres.   It was
the further case that though the non­applicant No.1 was the owner
of   aforesaid   land,   by   sale­deeds   dated   24/12/1998   and
29/01/2001,   he   was   sought   to   be   divested   of   his   title.     The

aforesaid suit was, therefore, filed for declaration that the nonapplicant
No.1 was the lawful owner of the suit lands on the basis
of sale­deed dated 08/01/1999 and for a declaration that the saledeeds
dated 24/12/1998 and 29/01/2001 were null and void.  A
prayer for permanent injunction was also made.   The applicant
who was the defendant No.1 had filed a counter­claim seeking
declaration of his title.   During pendency of the said civil suit, a
compromise petition came to be filed on record on 07/10/2008.
In terms of said compromise petition, the suit was withdrawn and
the counter­claim filed by the applicant came to be decreed.  This
order was passed on 10/08/2008.
4. Thereafter,   the   non­applicant   No.1   on   01/12/2012
filed   S.C.S.   No.5055/2012   against   the   present   applicant   and
another   praying   therein   that   the   compromise   decree   that   was
passed in S.C.S. No.581/2006 be declared as null and void.   A
further   declaration   was   sought   that   the   sale­deed   dated
08/01/1999 was valid and that the sale­deeds dated 24/12/1998
and 29/01/2001 were null and void ab initio.  Other consequential
reliefs were also prayed for.  There was also a prayer for perpetual
injunction with regard to protecting the possession of the nonapplicant
No.1.  
5. The applicant moved an application under provisions

of Order VII Rule 11(a) and (d) of the Code below Exhibit­33.  It
was stated in the application that S.C.S. No.581/2006 had been
withdrawn by the non­applicant No.1 without seeking any further
liberty/ permission to file fresh proceedings.   It was stated that,
such course was not permissible.   The subsequent suit was also
barred in view of provisions of Order XXIII Rule 3­A of the Code.
It was further stated that the subsequent suit was also barred by
limitation.   On these counts, it was   prayed that the plaint be
rejected.  The non­applicant No.1 filed his reply below Exhibit 36­
A and opposed the application.   The trial Court by order dated
30/06/2014   rejected   said  application  below  Exhibit­33.  It  held
that the subsequent suit had been filed within limitation and that
withdrawal   of   the   earlier   suit   would   not   preclude   the   nonapplicant
No.1 from instituting the subsequent suit.
6. The   applicant   thereafter   filed   an   application   below
Exhibit­49 seeking review of the order passed below Exhibit­33 on
the ground that the trial Court had committed an error apparent
on the face of record while rejecting said application. The review
application was also rejected on 15/09/2014.  Both these orders
are challenged in this revision application.
7. Shri M.G. Bhangde, the learned Senior Counsel for the
applicant submitted that the trial Court committed an error when

it rejected the application below Exhibit­33.  It was submitted that
S.C.S.  No.581/2006  had   been   withdrawn   by  the   non­applicant
No.1 on the ground that the proceedings had been compromised.
No   liberty   was   sought   by   the   non­applicant   No.1   before
withdrawing the civil suit and therefore no suit could have been
filed   seeking   similar   reliefs.   The   subsequent   suit   seeking   to
challenge the compromise decree was also not maintainable in
view of the bar under provisions of Order XXIII Rule 3­A of the
Code.  It was submitted that the compromise having been entered
into by practicing fraud cannot be a ground for filing a subsequent
suit for setting aside the compromise decree.   The applicant in
support of the application below Exhibit­33 had relied upon the
averments made in S.C.S. No.581/2006 and without considering
these aspects, the trial Court was not justified in holding that the
subsequent suit was maintainable.   In support of his submission
that the subsequent suit was barred in law, the learned Senior
Counsel relied upon the judgments of the Hon'ble Supreme Court
in  Banwari Lal vs. Chando Devi and another (1993) 1 SCC 581;
Horil vs. Keshav and another (2012) 5 SCC 525 and R. Rajanna vs.
S.R. Venkataswamy and others (2014) 15 SCC 471.   It was then
submitted that the subsequent suit was barred by limitation in as
much   as   the   same   was   filed   more   than   three   years   from   the

disposal   of   the   earlier   proceedings.     S.C.S.   No.581/2006   was
disposed of on 10/10/2008, while according to the non­applicant
No.1, the cause of action for filing S.C.S. No.5055/2012 as stated
in   paragraph   43   of   the   plaint   accrued   on   23/10/2008.     The
subsequent suit was filed on 01/12/2012 which was beyond three
years   from   the   date   when   the   cause   of   action   had   accrued.
Reference   was   made   to   the   provisions   of   Article   59   of   the
Limitation Act, 1963.  It was submitted that from the averments in
the plaint, the aspect of limitation ought to have been considered
by the trial Court.   In that regard, the learned Senior Counsel
placed reliance on the judgment of the Hon'ble Supreme Court in
Suresh Kumar Dagla vs. Sarwan and another, 2014 (9) SCALE 675.
It was then submitted that though the applicant had sought a
review of the order passed below Exhibit­33, the trial Court did
not consider the application for review in the proper perspective.
It was, therefore, submitted that the order passed below Exhibit­33
was liable to be set aside and the suit deserved to be dismissed.
8. On the other hand, Shri S.P. Bhandarkar, the learned
Counsel   for   the   non­applicant   No.1   supported   the   impugned
orders.    It   was   submitted   that   the   trial   Court  was   justified   in
rejecting   the   application   below   Exhibit­33.   According   to   the
learned Counsel, the reliefs sought in the subsequent suit basically

against the defendant No.2 therein and only the first prayer in the
said suit was sought against the present applicant.   Similarly, the
prayers made in the earlier suit and those made in the subsequent
suit were distinct.  According to him, the entire suit was not liable
to be dismissed under provisions of Order VII Rule 11 of the Code
and that it was not permissible to reject the plaint in part.   The
cause of action for filing the subsequent suit had been clearly
stated in the plaint and, hence, there was no case made out for
dismissing the suit under provisions of Order VII Rule 11(a) of the
Code.  Similarly, there was no statement in the plaint on the basis
of which the provisions of Order VII Rule 11(d) of the Code could
be attracted.  It was then submitted that the question of limitation
was a mixed question of law and facts and said aspect could not
have been decided under provisions of Order VII Rule 11(d) of the
Code.   In that regard, the learned Counsel placed reliance on the
judgment of the Hon'ble Supreme Court in Balasaria Construction
(P) Ltd. vs. Hanuman Seva Trust and others (2006) 5 SCC 658.  The
learned Counsel also relied upon the decision in  Bhau Ram vs.
Janak Singh and others (2012) 6 Mh.L.J. 758 (SC) in support of his
submissions.   It was then submitted that the review application
had been rightly rejected by the trial Court.  Therefore, in absence
of any error of jurisdiction, there was no case made out to invoke

jurisdiction under Section 115 of the Code.
9. In the present case, the applicant has sought rejection
of the plaint for relying upon the provisions of Order VII Rule
11(a) & (d) of the Code.  Under clause (a) if the plaint does not
disclose a cause of action it has to be rejected.  Under clause (d) if
the suit appears from the statement in the plaint to be barred by
law, the plaint shall be rejected. The applicant has relied upon the
provisions   of   Order   XXIII   Rule   3A   of   the   Code   while   seeking
rejection of the plaint.   Similarly, according to the applicant the
suit is barred by limitation.
10. It would be first necessary to examine whether the bar
under provisions of Order XXIII  Rule 3A would be attracted in the
present case.  Special Civil Suit No.581/2006 was filed by the nonapplicant
No.1 in which he had sought the relief of declaration
that the sale deed dated 24­12­1998 executed by the defendant
No.2 in favour of the defendant No.3 as well as the sale deed
dated 29­1­2001 executed by the defendant No.3 therein in favour
of the defendant No.1 were null and void. A further declaration
was sought that the non­applicant No.1 was the owner of the suit
property admeasuring 1.75 acres as per the sale deed dated 8­1­
1999.  In said suit, the present applicant had filed a counter claim
challenging the sale deed dated 8­1­1999 that was executed in

favour of the non­applicant No.1.  The applicant further sought the
relief of permanent injunction.
Special Civil Suit No.581/2006 came to be disposed of
on the basis of a compromise between the parties.  The suit filed
by the non­applicant No.1 came to be withdrawn while a decree
was passed in the counter claim filed by the applicant on 10­10­
2008.
11. In so far as the SC.S. No.5055 of 2012 is concerned,
the same has also been filed by the non­applicant No.1 against the
present applicant and the defendant No.3 in S.C.S. No.581/2006.
In paragraph Nos.31 to 33 of this suit, it has been pleaded that the
compromise petition in the earlier suit was got executed by the
applicant   fraudulently,   under   coercion   and   threat.   The   relief
sought in this suit is a declaration that the compromise dated 24­
10­2008 be declared null and void.  A prayer is also made that the
sale deed dated 8­1­1999 in favour of the non­applicant No.1 be
declared legal and valid and that the sale deeds dated 24­12­1998
and 29­1­2001 be declared null and void.  Further consequential
relief of setting aside the mutation entries standing on record on
the basis of aforesaid transactions be declared to be illegal.  There
is also a prayer for perpetual injunction.  The cause of action for
this   suit   is   stated   to   have   accrued   on   24­10­2008   when   the

applicant obtained the compromise decree by practicing fraud on
the non­applicant No.1.   It was stated that the cause of action
continued thereafter when the mutation entries were recorded.
12. From   the   aforesaid,   it   can   be   seen   that   S.C.S.
No.5055/2012   is   essentially   a   suit   for   setting   aside   the
compromise   decree   that   was   passed   in   Special   Civil   Suit
No.581/2006.  Besides said prayer, the other prayers in relation to
the   sale   deed   dated   24­12­1998,   8­1­1999   and   29­1­2001   are
identical   to   the   prayers   made   in   S.C.S.   No.581/2006.     The
averments in the subsequent suit clearly indicate that according to
the non­applicant No.1, the compromise deed was got signed by
the   applicant   by   practicing   fraud,   through   coercion   and
misrepresentation.
13. The provisions of Order XXIII Rule 3­A of the Code
specifically bar the filing of a suit for setting aside a decree on the
ground that the compromise on the basis of which the decree was
passed was not lawful. The explanation to Rule 3 of Order XXIII of
the Code indicates that a compromise that is void or voidable
under the Indian Contract Act, 1872 is not deemed to be lawful
under Rule 3. In  Banwarilal (supra), it was held by the Hon'ble
Supreme Court that the compromise is sought to be challenged as
being fraudulent when it is deemed to be void within the meaning

of the explanation to the proviso to Rule 3 of Order XXIII of the
Code and as such, is not lawful. The prayer for setting aside the
compromise has to be made before the same Court which recorded
the   compromise.   Similarly,   in  Horil   (supra),   this   position   was
reiterated and it was held that a separate suit for challenging the
compromise on the ground that it was obtained by fraud was not
maintainable.   In  R.   Rajanna   (supra),  it   was   again   held   that   a
separate suit of the present nature for challenging a compromise as
not being lawful was not maintainable.
From the aforesaid, therefore, the legal position is well
settled as regards remedy available for challenging a compromise
which is not lawful.  That a compromise which is obtained through
fraud, with coercion and through misrepresentation would not be
lawful also does not admit of any doubt.  Thus, the only recourse
that is available in such case is to approach the same Court under
provisions of Order XXIII  Rule 3 of the Code. The same cannot be
done by a separate suit which is barred in view of provisions of
Order XXIII  Rule 3A of the Code. 
14. In the light of aforesaid legal position, the question is
whether the plaint  is liable to be rejected  under  provisions of
Order   VII   Rule   11(a)   and/or   (d)   of   the   Code.     In   S.C.S.
No.5055/2012   it   has   been   pleaded   that   S.C.S.   No.581/2006

came to be compromised and this compromise dated 24­10­2008
was null and void.  The pleadings to that effect can be found in
paras 31 to 33 of the plaint.  If these are the pleadings in S.C.S.
No.5055/2012, it is obvious that this suit would be barred in view
of provisions of Order XXIII Rule 3A of the Code.  The pleadings in
paras 31 to 33 of S.C.S. No.5055/2012 are by themselves sufficient
to attract provisions of Order VII Rule 11(d) of the Code.   The
judgment   in   the   case   of  Bhauram   (supra)  therefore,   does   not
support the stand of the non­applicant No.1 as only the averments
in the plaint have been considered while deciding the application
under Order VII Rule 11(d) of the Code. It will, therefore, have to
be held that in view of aforesaid averments appearing in S.C.S.
No.5055/2012 and  on a plain reading of the plaint, the suit itself
is barred by law.
15. According to the applicant, the suit is also barred by
limitation in view of the fact that the cause of action for filing the
said suit is stated to have accrued on 24­-10-­2008 and the suit was
filed on 1­1-2­-2012.   This was more than three years from the
accrual of the cause of action and hence, it was beyond the period
of limitation prescribed by Article 59 under the Limitation Act,
1963.     That   a   suit   which   is   barred   by   limitation   can   also   be
dismissed under provisions of Order VII Rule 11 of the Code is not

in dispute.  In Hardesh Ore Limited Vs. Hide and Company 2007 (5)
Mh.L.J. 571, it was held that the expression barred by law would
include the law of limitation. Considering the cause of action as
pleaded and the fact that admittedly the suit has been filed beyond
the   period   of   three   years   from   its   accrual,   the   suit   is   even
otherwise barred by limitation under Article 59 of the Limitation
Act, 1963.   Though it has been averred that the cause of action
was continuous in view of the subsequent mutation entries, these
mutation entries are based on the sale deeds in question and are
merely the consequence of execution of said sale deeds. If the
challenge  to the sale deeds in question is barred by limitation, the
challenge only to the mutation entries also cannot succeed. It was
also  urged on behalf of the non­applicant  No.1 by relying upon
the   judgment   of   the   Hon'ble   Supreme   Court   in  Balsaria
Construction Pvt. Ltd. (supra) that the question of limitation was a
mixed   question   of   law   and   fact.   However,   the   same   does   not
appear so in the present case inasmuch as the suit is based on the
compromise decree dated 24­10­2008 and the sale deeds referred
to herein above.  Thus, even on this count, the suit appears to be
barred by law of limitation under provisions of Order VII Rule
11(d) of the Code.
16. The learned Counsel for the non­applicant No.1 tried

to salvage the case of the non­applicant No.1 by urging that there
were other reliefs sought in the plaint and hence, the entire plaint
was not liable to be rejected.  This submission cannot be accepted
for the reason that the prayer with regard to declaration that the
mutation entries taken on the basis of the sale deeds in question
were liable to be set aside cannot be considered independently of
the challenge to the sale deeds on the basis of which the same
were   effected.     Moreover,   absence   of   one   defendent   in   the
subsequent suit also cannot be a ground for refusing the prayer for
rejecting the plaint.
17. The matter can be viewed from another angle. Even if
the prayer with regard to setting aside the compromise decree is
kept aside for some time,   under provisions of Order XXIII Rule
1(3) of the Code, it is open for the plaintiff to withdraw the suit or
such  part  of the  claim   with  liberty to  institute  a fresh  suit  in
respect of the subject matter of such suit or such part of the claim.
However, such withdrawal without the permission of the Court
precludes the plaintiff from instituting any fresh suit in respect of
such subject matter or such part of the claim. Admittedly, the
earlier suit was withdrawn without reserving any right or liberty to
file any fresh suit.  No permission of the Court was sought in that
regard.  Thus, even under provisions of Order XXIII Rule 1(4) of

the Code, the non­applicant No.1 was precluded from instituting
the subsequent suit for challenging the sale deeds dated 24­12­
1998 and 29­1­2001 or for that matter seeking declaration as to
the legality of the sale deed dated 8­1­1999.   This is one more
reason why the plaint is liable to be rejected under provisions of
Order VII Rule 11(d) of the Code.  
18. The trial Court misdirected itself when it rejected an
application   moved   by   the   applicant   below   Exhib­33.     The
averments in the plaint in Special Civil Suit No.5055/2012 were
sufficient to come to the conclusion that the plaint was liable to be
rejected.  As the trial Court had failed to consider said application
in the proper perspective, the applicant had moved an application
seeking   review   of   said   order   by   filing   an   application   below
Exhib.49.     Similarly,   the   written   notes   of   argument   were   also
sought   to   be   relied   upon   by   the   applicant.     However,   said
application was also rejected.  It is, therefore, clear that the trial
Court by rejecting the application below Exhibit­33 has failed to
exercise the jurisdiction vested in it for rejecting the plaint under
provisions of Order VII Rule 11(d) of the Code.   The impugned
order suffers from material irregularity and is thus, liable to be set
aside.

19. In view of aforesaid discussion, the following order is
passed:
ORDER
(1) The order dated 30­6­2014 passed below Exhibit­33 as
well  as  the  order dated 15­9­2014 passed below Exhibit­49 in
Special Civil Suit No.5055/2012 are set aside.
(2) The application below Exhibit­33 is partly allowed and
the plaint in Special Civil Suit No.5055/2012 stands rejected under
provisions of Order VII Rule 11(d) of the Code.
(3) The Civil Revision Application is allowed in aforesaid
terms with no order as to costs.
  
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