Order XLIII Rule 1A CPC Doesn’t Create Independent Appeal; Party To Suit Who Denies The Compromise Must First Approach Trial Court : Supreme Court

The Appeals before the Apex Court were filed by the appellant assailing the judgment rendered by a Larger Bench of the Gujarat High Court on a reference arising out of an Appeal. The High Court concluded that a litigant who was already a party to the suit, but disputes the existence or validity of a compromise recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 19082 must first approach the Trial Court; a First Appeal under Section 96 of the CPC, it held, is available only to a person who was not on the record of the suit.

Referring to the judgments in Pushpa Devi Bhagat Vs. Rajinder Singh and others (2006) and Banwari Lal Vs. Chando Devi and another (1993), the Division Bench of Justice Vikram Nath and Justice Prasanna B. Varale said, “The path is therefore settled: the proviso to Order XXIII Rule 3 is not optional; it is the exclusive first port of call for any party on record who denies the compromise. Order XLIII Rule 1-A does not create a new right of appeal; it merely enables an appellant, already before the Appellate Court, to attack the decree on the ground that the compromise should not have been recorded. When the fact of compromise is not disputed, the bar in Section 96(3) is absolute.

“Order XLIII Rule 1-A does not create an independent appeal at all; it merely says that, once an appeal is otherwise before the Court, the appellant may argue that the compromise should, or should not, have been recorded. Seen in that light, the High Court’s directions correctly apply the structure of the statute and do not call for interference”, it added.

Senior Advocate Huzefa Ahmadi represented the Appellant while AOR Rakesh Uttamchandra Upadhyay represented the Respondents.

Factual Background

Three contiguous parcels of non‑agricultural land at Siddhpur, District Patan, originally belonged to Moosabhai Mooman. On his death they devolved on his widow, his sons Sultan and Shaukatali (respondent no. 3) and his daughter Mumtaz (respondent no. 7). Sultan predeceased, leaving behind the appellant and two children, Salma (respondent no. 5) and Altaf (respondent no. 6) as his legal heirs.

In 2007, Shaukat Ali and Hassan Ali (purporting to act for all other co‑owners) agreed to sell the suit land to ten individuals, but a notice terminating the agreement was issued in August 2011. Later, a compromise was signed by respondent nos. 1 and 2 (a trust said to represent the Jamat) on one side and Shaukat Ali and Hassan Ali on the other, resulting in a first consent decree. Relying on that decree, the plaintiff withdrew the first suit instituted by him. The first respondent then instituted a Special Civil Suit, again suing the appellant and her children through Hassan Ali. A further compromise led to a second consent decree.

The appellant maintained that she had no notice of either compromise and that both decrees were procured by fraud. She therefore filed AOs against the consent decrees invoking Order XLIII Rule 1‑A. Transferee purchasers lodged parallel AOs. The Single Judge of the High Court noting conflicting Division Bench views on the powers of Rule 1‑A, dismissed all AOs and referred three questions to a Larger Bench. Being aggrieved by the decision of the Larger Bench, the appellant filed the present civil appeal claiming that Section 96 of the CPC permits a direct First Appeal even where the compromise itself is in dispute.

Reasoning

On a perusal of the provisions, the Bench explained that a party that accepts the compromise is bound by it and cannot appeal (Section 96(3)). A party that denies the compromise must first raise that dispute before the Trial Court (proviso to Order XXIII Rule 3). A fresh suit is no longer possible (Order XXIII Rule 3-A). If, and only if, the Trial Court decides the objection and passes a decree adverse to the objector, a first appeal lies under Section 96(1); in that appeal, the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge the recording of the compromise.

Stating that the decrees are consent decrees within the meaning of Section 96(3), the Bench noticed that the appellant never invoked the proviso to Order XXIII Rule 3; instead, she lodged Appeals from Orders on the footing of the deleted Order XLIII Rule 1(m). The Larger Bench of the High Court was correct in holding that such appeals are incompetent since 1976. “The appellant’s submission that allegations of fraud transform a consent decree into an ordinary decree cannot be accepted. Fraud, want of authority or other vitiating elements are precisely the matters that the proviso directs the Trial Court to examine. Unless and until that route is pursued, the statutory bar in Section 96(3) of the CPC remains operative”, it said.

As per the Bench, the appellant, by contrast, was a party to the suits and could not appropriate the remedy reserved for third parties. Both suits were eventually compromised before a Lok Adalat.

Affirming the view of the Larger Bench, the Bench explained that the CPC, after the 1976 amendment, works in two distinct ways. If a person was already a party to the suit, and denies that any lawful compromise ever took place, the CPC requires that person to go back to the Trial Court under the proviso to Order XXIII Rule 3 and ask that Court to decide whether the compromise is valid. On the other hand, someone who was not a party to the suit, but whose rights are hurt by a consent decree, may approach the Appellate Court in a First Appeal under Section 96 of the CPC, but only after obtaining leave. The Bench also reiterated that Order XLIII Rule 1-A does not create an independent appeal.

Affirming the order of the Larger Bench of the High Court of Gujarat, as well as the consequential order of the Single Judge, it ordered, “It is open to the appellant, if so advised, to invoke the proviso to Order XXIII Rule 3 of the CPC before the Trial Court.”

Cause Title: Sakina Sultanali Sunesara (Momin) v. Shia Imami Ismaili Momin Jamat Samaj & Ors. (Neutral Citation: 2025 INSC 570)

Appearance:

Appellant: Senior Advocate Huzefa Ahmadi

Respondents: AOR Anushree Prashit Kapadia, AOR Rakesh Uttamchandra Upadhyay

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