Rajasthan High Court reiterated that despite order 23, rule 3A being a strong bar to challenging compromise decrees, if there is evidence that the compromise was obtained by fraud or coercion, even if it cannot be pursued as an independent suit, it could be entered into section 151, CPC.

Order 23, Rule 3A, CPC, provides that no suit can set aside a decree on the ground that the compromise on which the decree was based was not legal.

Bank of Justice Manoj Kumar Garg relied on the Supreme Court case of Ajanta LLP vs. Casio Keisanki Kabushiki Kaisha d/b/a Casio Computer Co. Ltd. and another (“Ajanta LLP Case”) to be observed that if the compromise decree has been vitiated by fraud, misrepresentation or mistake, the Court can use the inherent powers conferred under section 151, CPC to rectify the decree for alterations/modifications of the consent decree.

A decree of compromise was pronounced in a civil suit between the petitioner and the respondent. The respondent filed an application under Section 151, CPC, to set aside the compromise decree, alleging that the decree was obtained by fraud.

The petitioner filed an application with a prayer to dismiss the application made by the respondent, but the petitioner’s application was rejected by the trial court. Against this decision of the trial court, the petitioner filed a review request with the Court.

It was contended by the learned counsel for the petitioner that the compromise decree cannot be set aside on an application filed under Section 151, CPC and the only remedy available was to institute a civil suit to set aside the decree.

This argument was rejected by the Court, which referred to Order 23, Rule 3A and held that the main purpose of the provision was to enhance the finality of compromise decrees and to prevent further litigation based on claims of illegality of compromise, thus reducing the burden of litigation in the courts.

However, the Court further observed, this clause did not mean that a compromise could not be called into question if evidence was presented that it was obtained by deception or coercion. The Court referred to the Supreme Court case of R. Rajanna Vs. SR Venkataswamy and others wherein it was held that Order 23, Rule 3A held that a question relating to the legality of the compromise could be heard only by that court which passed the decree under that compromise. And the court cannot require the parties to file a separate lawsuit on this issue.

Additional reference was also made to The case of Ajanta LLPin which it was noted that,

“A consent decree would serve as no protection where the compromise was vitiated by fraud, misrepresentation, or mistake. In exercise of its inherent power, the Court may rectify the consent decree to ensure that it is free from clerical or arithmetical errors so as to bring it into conformity with the terms of the compromise. No doubt the Court will entertain an application under Section 151 of the Code of Civil Procedure for modification/modification of the consent decree if it is vitiated by fraud, misrepresentation or misunderstanding.”

In this context, it was held that the trial court did not commit any error in rejecting the petitioner’s application and accordingly, the application was dismissed.

Title: Umesh Kumar and Anr. v Lila Bai & Anr.

Citation: 2024 LiveLaw (Raj) 332

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