Case Note & Summary
The appeal arose from a suit filed by the appellant, Triloki Nath Singh, seeking a declaration that a compromise decree dated 15 September 1994 passed by the Patna High Court in Second Appeal No. 495/86 was illegal, inoperative, and obtained by fraud and misrepresentation. The appellant also sought an injunction restraining the respondents from interfering with his possession. The appellant claimed that he had purchased the suit property from Sampatiya Devi, one of the parties to the compromise, by a registered sale deed dated 6 January 1984, prior to the compromise decree. The compromise decree was entered into between Sampatiya and Salehari Devi, who claimed to be the daughter of Kunjan Singh, the original owner. The appellant alleged that the compromise was collusive and fraudulent, as it was entered into after the sale deed in his favour and without his knowledge. The trial court dismissed the suit, holding that it was barred by Order 23 Rule 3A CPC and that the appellant had no right, title, or interest in the property. The first appellate court and the High Court affirmed this decision. The Supreme Court considered the question of whether a stranger to a compromise decree can challenge it by a separate suit. The Court held that Order 23 Rule 3A CPC only bars a suit to set aside a compromise decree at the instance of a party to the compromise, not a stranger. Since the appellant was a stranger to the compromise decree, he was not barred from filing a separate suit challenging it on grounds of fraud. The Court also noted that the trial court had framed issues and decided them on merits, but the High Court had dismissed the second appeal at the motion stage without proper consideration. The Supreme Court set aside the impugned judgment and remanded the matter to the High Court for fresh disposal of the second appeal on merits, after hearing the parties. The Court clarified that it had not expressed any opinion on the merits of the case.
Headnote
A) Civil Procedure Code - Order 23 Rule 3A - Bar to Suit - Scope - Order 23 Rule 3A CPC bars a suit to set aside a compromise decree only at the instance of a party to the compromise, not a stranger - The appellant, a purchaser of property from one of the parties to the compromise, was a stranger to the compromise decree and thus not barred from filing a separate suit challenging it on grounds of fraud and misrepresentation (Paras 1, 10, 13-14). B) Civil Procedure Code - Order 23 Rule 3 - Compromise Decree - Fraud - A compromise decree obtained by fraud and misrepresentation is voidable and can be challenged by a person whose rights are affected, even if he is not a party to the proceedings - The appellant alleged that the compromise was collusive and fraudulent to defeat his rights under a prior sale deed (Paras 6, 11, 14). C) Transfer of Property Act, 1882 - Section 52 - Lis Pendens - Purchaser pendente lite - The appellant purchased the property after the dismissal of the first suit but before the compromise decree in the second appeal - His rights as a purchaser pendente lite are subject to the doctrine of lis pendens, but he can still challenge the compromise decree if it was obtained fraudulently (Paras 5-6, 14).
Issue of Consideration
Whether a decree passed on a compromise can be challenged by a stranger to the proceedings in a separate suit.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of the High Court dated 20 April 2009, and remanded the matter to the High Court for fresh disposal of the second appeal on merits, after hearing the parties. The Court held that a stranger to a compromise decree is not barred by Order 23 Rule 3A CPC from filing a separate suit to challenge it on grounds of fraud.
Law Points
- Order 23 Rule 3A CPC does not bar a suit by a stranger to a compromise decree
- stranger can challenge compromise decree by separate suit
- compromise decree obtained by fraud is voidable
- right of a purchaser pendente lite under Section 52 Transfer of Property Act
