Statutory Bar On Appeal Against Compromise Decree Does Not Apply To Stranger: Supreme Court
The Court upheld the Gujarat High Court’s grant of leave to appeal, condonation of 11-year delay and interim injunction in challenge to alleged collusive consent decree by non-parties.
Justice J. B. Pardiwala, Justice K. Vinod Chandran, Supreme Court
The Supreme Court has held that a person who was neither a party to a suit nor to the compromise on which a consent decree rests cannot be barred by Section 96(3) of the Code of Civil Procedure, 1908, read with Order XXIII Rules 3 and 3A. The bar and the estoppel, it said, operate only against parties to the compromise.
The Court dismissed an appeal against the Gujarat High Court’s orders granting leave to appeal against a 2013 consent decree, condoning an 11-year delay and continuing an ex parte ad interim injunction. It clarified that non-party status confers no unrestricted right of appeal. Such a person must prima facie show a legally cognisable interest prejudicially affected by the decree.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran observed, “…A stranger to a compromise decree cannot be said to be barred under Section 96(3) read Order XXIII Rule 3 & Rule 3A of the CPC, 1908, since the scope and import of these provisions are limited to the parties to the compromise and act as an estoppel only with respect to them”.
Senior Advocate Anshin H. Desai for the appellant while Senior Advocates Mihir J. Thakore and Megha Jani appeared for the respondent.
Respondent Nos. 1 to 9, members of the Palkhiwala family and an HUF, claimed the land under a 1975 sale deed from Purshottambhai Punjabhai. Geetagram Cooperative Housing Society sued the seller’s heirs for specific performance of a 1996 agreement to sell, and a consent decree was passed on April 29, 2013. Execution was sought in 2020, and the Court Commissioner executed a sale deed on June 18, 2022 in favour of the appellant, Girishbhai Natwarlal Patel. The respondents say they learned of the revenue entry changes only in 2023.
They filed a First Appeal on February 28, 2024, with applications for leave to appeal and condonation of delay, alleging fraud and collusion. The High Court granted an ex parte ad interim injunction against the appellant on April 2, 2024. After hearing him, it confirmed the injunction, condoned the delay and granted leave on August 14, 2024.
The Bench held that cases such as Pushpa Devi Bhagat v. Rajinder Singh [2006 (5) SCC 566] concern only parties to a compromise. It distinguished Triloki Nath Singh v. Anirudh Sing (Dead) through legal heirs and representatives [2020(6) SCC 639], where the appellant claimed through a party to the suit. Applying V.N. Krishna Murthy and Another v. Ravikumar and others [(2020) 9 SCC 501] and H. Anjanappa and others v. A. Prabhakar [2025 SCC OnLine SC 183], it found the respondents had asserted a cognisable interest. It noted the appellant held a power of attorney from the original defendants and had allegedly chaired the plaintiff society. The decree also remained unexecuted for about seven years. These facts, it said, do not establish fraud but show the grievance is not tenuous.
“A conjoint reading of Section 96(3) of the CPC, 1908 with Order XXIII Rule 3 & Rule 3A thereof, makes it clear that the statutory bar on an appeal against a consent decree, and the estoppel arising therefrom, are founded upon the binding effect of the compromise between the parties thereto. The legislative scheme seeks to ensure finality to lawful compromises and to prevent parties who have consented to a decree from subsequently resiling from their agreement through collateral proceedings. The statutory bar, however, cannot be mechanically invoked to defeat the right of a person who was not a party to the compromise and who asserts an independent legal interest prejudicially affected by the decree. The distinction between a party seeking to avoid a compromise to which he has consented and a non-party seeking to challenge a decree on the ground that it prejudicially affects his independent rights is, therefore, material”, it noted.
On delay, the Court held that knowledge could not be presumed from the decree date, and the respondents had explained when they learned of it. The injunction was held justified to preserve the land pending adjudication, since the appellant was later heard.
Cause Title: Girishbhai Natwarlal Patel v. Gautam Punjabhai Palkhiwala (Dead) by LRs & Ors. (Neutral Citation: 2026 INSC 1177).
Appearances:
Appellant: Senior Advocate Anshin H. Desai
Respondent: Senior Advocates Mihir J. Thakore and Megha Jani.