RSA No.3422 of 2005 -1- In the High Court of Punjab and Haryana at Chandigarh. Date of decision: 14.03.2008. Moorti D/o Kaka Singh ... Appellant Versus Kaur Singh and others ... Respondents. CORAM HON'BLE MR. JUSTICE PERMOD KOHLI Present: Mr. M.S. Uppal, Advocate,for the appellant. Mr.RK Battas, Advocate,for the respondents. PERMOD KOHLI, J. I have head the learned counsel for the parties at length. Notice of motion in this case was issued on 05.05.2006. On 04.02.2008 when this appeal came up for consideration, a question arose regarding the maintainability of the suit filed by the plaintiffs-respondents in view of the provisions of Order 23 Rule 3-A of the Code of Civil Procedure. Learned counsel for the respondents sought time to examine this issue on the following question:- Whether the suit filed by the respondents challenging the compromise decree dated RSA No.3422 of 2005 -2- 25.10.1994 passed in Civil Suit No.647 dated 07.04.1997, is maintainable in view of the specific provisions under Order 23 Rule 3-A of the Code of Civil Procedure? It is admitted case of the parties that the plaintiff-respondents filed suit for declaration challenging the judgment and decree dated 25.10.1994 referred to above. The allegations contained in the plaint are that the decree is a result of fraud committed by the defendant by way of impersonation and misrepresentation and is illegal, null and void, collusive and ineffective. Mutation No.3676 entered on the basis of the aforesaid decree has also been challenged. The aforesaid decree came to be passed on the basis of the compromise by Bhag Singh allegedly on the basis of family settlement. The defendant also did raise a plea regarding the maintainability of the suit and the learned trial Court framed as many as 14 issues. However, the issue regarding maintainability seems to be misdirected. For the convenience issue No.13 is reproduced as under:- “13. Whether the suit is barred by the principles of res judicata and Order 23 Rule 3 C.P.C.? OPD RSA No.3422 of 2005 -3- Both the learned Courts below have decreed the suit filed by the respondent-plaintiffs, setting aside the decree allegedly on the basis of fraud. It is also admitted case that the decree impugned was passed by the learned Sub Judge Ist Class, Bathinda. Mr.Battas, learned counsel appearing on behalf of the plaintiff- respondents has argued that the suit does not come within the mischief of Order 23 Rule 3-A of the Code of Civil Procedure and a separate suit is maintainable. For the brevity, Rule 3-A of Order 23 of Code of Civil Procedure is reproduced as follows:- “3-A. Bar to suit:- No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.” Order 23 Rule 3 of the Code of Civil Procedure empowers the Court to pass a decree on the basis of the compromise between the parties. Explanation appended to the aforesaid provisions provide that the agreement referred to under Order 23 Rule 3 of the Code of Civil Procedure must conform to the test of a valid agreement/contract as prescribed under the Contract Act. However, Sub Rule 3-A imposes a restriction on the party to the compromise decree to challenge the compromise decree by way of a separate suit-meaning thereby that the remedy of the person who may be aggrieved of the compromise decree is to approach the same Court. Mr. Battas has referred to Kashmira Singh (Died) through L.R. RSA No.3422 of 2005 -4- Vs. Gram Panchayat of village Budha Khera and another, (2000-3), Punjab Law Reporter, 195, wherein the following observations have been made:- “ In the instant case the Gram Panchayat which was represented in RFA by Roshan Lal, Panch, under resolution of the Gram Panchayat, made a statement before the learned Single Judge of this Court who acted on the compromise deed and passed the order which is sought to be recalled in this application under Section 151 C.P.C. The action of Roshan Lal, Panch, alleged to be vitiated by fraud, undue influence etc. cannot be said to be void ab initio but the same is only voidable and the same can be avoided till it is proved to be void in a appropriate civil suit filed before a Civil Court of competent jurisdiction.” He has also referred to Ruby Sales and Services (P) Ltd. and another Vs. State of Maharashtra and others , (1994) 1, Supreme Court Cases, 531. The question referred to in para 2 of the judgment, is reproduced as under:- “ The question involved in all these matters is whether a consent decree whereunder the RSA No.3422 of 2005 -5- title to immovable property is conveyed expressly falls under the definition of “Conveyance” under Section 2 (g) or an “instrument” under Section 2 (l) of the Act or such consent decree falls outside the ambit and scope of the definition of “conveyance” or “instrument” under the Act.” This question has been answered in paragraph 10 of the judgment which is as under:- “10. From the above recital in the consent decree there can be no manner of doubt that the parties to the transaction and the suit agreed that the consent decree itself shall operate as conveyance from defendants in favour of the plaintiffs in respect of the suit property particularly described in Ex. “A” to the plaint. Before the High Court it was not contested that the consent decree does not operate as “conveyance”. In this Judgment, the Court has further observed in paragraph 15, which is as follows:- RSA No.3422 of 2005 -6- “15. As we have noticed earlier the definitions of “conveyance” and “instrument” start with the expression “includes” which shows that the definitions are very wide. It appears to us that the amendment was made out of abundant caution and it does not mean that the consent decree was not otherwise covered by the definitions given in Section 2 (g) or 2 (l) of the Act. As stated earlier it depends on the terms thereof. Merely because an agreement is put in the shape of a consent decree it does not change the contents of the document. It remains an agreement and it is subject to all rights and liabilities which any agreement and it is subject to all rights and liabilities which any agreement may suffer. Having a stamp of court affixed will not change the nature of the document. A compromise decree does not stand on a higher footing than the agreement which preceded it. A consent decree is a mere creature of the agreement on which it is founded and is liable to be set aside on any of the grounds which will invalidate the agreement.” RSA No.3422 of 2005 -7- Another judgment referred to by Mr. Battas is in the case of S.P.Chengalvaraya Naidu Vs. Jagannath, 1994 (2), Civil Court Cases, 131 (S.C.), wherein paragraph 1 of the judgment it is held as under:- “Fraud-avoids all judicial acts, acclesiastical or temporal” observed Chief Justice Edward Coke of England about three centuries ago. It is settled proposition of law that a judgment or decree obtained by playing fraud on the Court is a nullity and non est in the eyes of law. Such a judgment/decree –by the first Court or by the highest Court, whether superior or inferior. It can be challenged in any Court even in collateral proceedings.” In the case of Asharfi Lal Vs. Smt. Koili (Dead) by LRs, 1996, HRR, 162, the question which fell for consideration of the Court is referred to in paragraph 14 of the judgment which reads as under:- “14. The question for consideration is whether, apart from filing a separate suit for setting aside a decree on the ground of gross negligence on the part of his next friend, it is permissible for a minor to avoid a decree.” This question has been answered by the Hon’ble Supreme RSA No.3422 of 2005 -8- Court in the same paragraph of the judgment which is as follows:- “14. …………………In other words, in cases where an inference of fraud or collusion can be drawn from the negligence or gross-negligence of the next friend it would be permissible for a minor to avoid the judgment or decree passed in the earlier proceedings by invoking Section 44 of the Evidence Act without taking resort to a separate suit for setting aside the decree or judgment.” Another judgment relied upon is M/s.R.K. Plastics Vs. Punjab Land Development Reclamation & Corporation Ltd. 2002 (2) Civil Court Cases, 47 (P&H), wherein paragraph 8 of the judgment, the following observations have been made:- “8. It is true that fraud vitiates everything judgment obtained through fraud is an absolute nullity and nobody can be allowed to thrive on fraud. …………….”. The judgments referred to herein above, cannot come to the rescue of the plaintiff-respondents. The proposition that the fraud vitiates the proceedings is settled. In Asharfi Lal’s case (supra), the question was RSA No.3422 of 2005 -9- the right of the minor to challenge the act of negligence or fraud on the part of his next friend resulting in a decree against the minor. Definitely in such proceedings the minor is required to institute a separate suit. This judgment has no application to the issue involved in the present case. In other judgment of Ruby Sales and Services (P) Ltd's. Case (supra), again the question which the Hon’ble Supreme Court considered was “whether the consent decree having the title to the immovable property, falls within the definition of “conveyance” or an “instrument”. In this case also, Hon’ble the Supreme Court has not considered the provisions of Order 23 Rule 3-A of the Code of Civil Procedure. As a matter of fact in the entire judgment there is no reference to Order 23 Rule 3-A of the Code of Civil Procedure, though in the Head Note reference is made to Rule 3-A of the CPC which seems to be deceptive. The question of bar of Section 3-A of the C.P.C. came up for consideration before the Hon’ble Supreme Court in the case of Banwari Lal Vs. Chando Devi (Smt.) (through LRs ) and another, (1993) 1 Supreme Court Cases, 581, wherein it has been observed as under:- “After the amendments which have been introduced, neither an appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3-A of order 23. As such a right has been given under Rule 1-A (2) of Order 43 to a party, who challenges the recording of the compromise, to question the validity thereof while preferring an appeal against the decree.” RSA No.3422 of 2005 -10- This view is further reiterated by the Apex Court in Pushpa Devi Bhagat (D) Th. LR. Smt.Sadhna Rai Vs. Rajinder Singh & Ors., 2006 (3) Civ. C.C., 540, wherein paragraph 12 of the judgment, it is observed as under:- “12. The position that emerges from the amended provisions of Order 23, can be summed up thus:- (i) .......................... (ii) .......................... (iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3A. (iv) ......................... Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree, is RSA No.3422 of 2005 -11- nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made. The second defendant, who challenged the consent compromise decree was fully aware of this position as she filed an application for setting aside the consent decree on 21.8.2001 by alleging that there was no valid compromise in accordance with law. Significantly, none of the other defendants challenged the consent decree. For reasons best known to herself, the second defendant within a few days thereafter (that is on 27.8.2001), filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by second defendant was not maintainable, having regard to the express bar contained in Section 96 (3) of the Code.” This issue was also considered by this Court in the case of Smt. Shanti Devi (dead) represented by LR Vs. Gian Chand, RSA No.1329 RSA No.3422 of 2005 -12- of 1985, decided on 17.09.2007, wherein it has been held as follows:- “In terms of explanation to Rule 3 of Order 23 of the Code of Cviil Procedure, an agreement or compromise, which is void or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful within the meaning of this rule. Its natural corollary is, if any compromise is entered into between the parties, it must satisfy the requirements of a valid contract. Fraud, coercion, mis-representation etc. vitiate the transaction and, thus, the contract entered into between the parties ceases to be a lawful. It is settled proposition that a compromise is a contract/agreement between the parties. When it is presented in the Court, in any suit or proceedings and the Court is called upon to accept the compromise and pass consequential order, the Court merely takes on record the agreement of the parties and satisfies itself regarding the voluntary nature of such a compromise. If any of the parties later on assails the compromise as invalid on account of exercise of fraud, coercion, RSA No.3422 of 2005 -13- misrepresentation etc. and pleads that the compromise/agreement was unlawful and involuntary, such a compromise cannot be challenged by a separate suit in view of the clear Bar created by Rule 3-A of Order 23 of the Code of Civil Procedure. Therefore, the suit filed by the present appellant- plaintiff on 06.12.1979, after insertion of Rule 3-A in Order 23 of the C.P.C., was not maintainable.” Mr. Battas has lastly contended that a void decree, otherwise also, has no binding effect and, therefore, decree impugned in the suit filed by respondents does not bind the plaintiff-respondents even without being challenged. If this contention is accepted, then there was no necessity to file the suit. However, the fact remains that the plaintiff-respondents did challenge the decree on the ground that the same is void and nullity and sought a declaration therefor. It is, however, settled law that even a void decree or action needs to be challenged to wash it out so that it may not create any cloud on the right of the person who is adversely affected by the void decree. A similar view has been adopted by this Court in the case of Sawarna Ram Vs. State of Punjab, 2004 (2) RCR (Civil), 25, in which it was held as under:- “It is settled proposition of law that even RSA No.3422 of 2005 -14- void orders have to be challenged so that the same can be declared void. Even void orders continue to have effect till the same are declared non-est.” Hon’ble the Supreme Court in the case of Sultan Sadik Vs. Sanjay Raj Subha and others, 2004 (1) RCR (Civil), 767, also held as under:- “An order may be void for one and voidable for the other. An invalid order necessarily need not be non est; in a given situation it has to be declared as such.” In view of the above, it is held that the suit filed by the plaintiff-respondents to challenge the compromise decree is not maintainable in view of the specific bar contained under Order 23 Rule 3-A of the Code of Civil Procedure. Accordingly, the judgments and decrees passed by the learned Courts below are set aside and consequently, the suit is dismissed with no order as to costs. 14. 03.2008 (PERMOD KOHLI) BLS JUDGE Note: Whether to be referred to the Reporter? YES