M.S. Deshpande, J.
1. This appeal by the original plaintiffs Nos. 1, 2, 4 and 5 is directed against a decree passed in terms of compromise.
2. The plaintiff Nos. 1 to 5, claiming to be entitled to certain shares in two properties, viz., a residential house and an open site known as MALBOTA, brought the suit for a declaration that the Instrument of Division executed on 13-7-1973 was null and void and for partition and separate possession of their shares in the properties. A preliminary decree was passed on January 5, 1984, declaring that the partition-deed dated July, 13, 1973 was null and void and also declaring the respective shares of the plaintiffs and the defendants Nos. 1 to 5 in the two properties. A commissioner was appointed to divide the suit properties as well as for reporting whether the division was possible. The Commissioner made a report on April 16, 1984 that the residential house property was indivisible, but the open site could be divided. On February 14, 1990, the proclamation of sale of properties was issued and the date for sale was fixed as March 15, 1990. The respondent No. 5 was the highest bidder, his bid being Rs. 7,50,000/- for the residential house property and Rs. 31,00,600/- for the open site. The deposit of 25 per cent of the sale price was not made, but on the same day an agreement purporting to be between the parties and the respondent No. 6, was filed. Formal order recording the compromise was not passed until May 8, 1990 when, while considering the plaintiffs' application for temporary injunction in Civil Misc. Application No. 197 of 1990, the learned Civil Judge dismissed the application for injunction in Civil Misc. for injunction dated April 24, 1990, for default of appearance and directed that final decree be drawn up in terms of the agreement, dated March 15, 1990.
3. By this appeal, plaintiff Nos. 1, 2, 4 and 5 challenge the decree on several grounds, including that the agreement, dated March 15, 1990, was not a lawful agreement because it was brought about by coercion, undue influence, misrepresentation and fraud and there was no opportunity to raise these pleas before the learned trial Judge until the impugned order dated May 8, 1990 was made. It was also urged that there was no formal order recording the compromise, and in any event, the compromise should not have been recorded because it related to two items of the properties which were not the subject matter of the suit, and the respondent No. 6, who was not a party to the suit, could not have secured an order directing the sale-deed to be executed in his favour. On the other hand, it was urged on behalf of the respondents that since the appeal is directed against a consent-decree, it was not maintainable and it was not open to the plaintiffs to raise the pleas regarding coercion, undue influence, misrepresentation and fraud, for the first time, in memo appeal, without raising these contentions before the trial Court where there was ample opportunity to raise them. Further, it was urged that the recitals in the memo of appeal do not make out a case of want of free consent and no exception can, therefore, be taken to the order recording the compromise.
4. With regard to the question raised about the maintainability of the appeal, it is apparent that under section 96(3) of the Code of Civil Procedure, no appeal lies from a decree passed by the Court with the consent of parties. Original clause (m) of Order 43, Rule 1, which provided for an appeal against an order under Rule 3 of Order 23 recording or refusing to record an agreement, compromise or satisfaction-was omitted by the amending Act of 1976 and a right of appeal was provided by inserting rule 1-A. Sub-Rule (2) thereof provides :
'In an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded.'
Though under section 96(3) an appeal against the consent decree is barred, the right to challenge the recording or refusing to record a compromise is available, though the decree may have been a consent decree. Since in the present appeal, the challenge, in the first instance, is to the passing of a decree without recording a compromise formally and, alternatively, on the ground that the compromise should not have been recorded, obviously the present appeal would be maintainable, and we are supported in this view by the observations in Deoras v. Devkinandan Chandak A.I.R. 1984 Bo 474. Sub-section (3) of section 96 would only debar those appeal which are filed against a decree in which the appellant does not dispute the recording of a compromise, but it would not operate if the appellant disputes the very fact of the decree having been passed with the consent of the parties. Such an appeal would be tenable under section 96(1) of the Code of Civil Procedure. We, therefore, held that the present appeal is maintainable.
5. The next contention on behalf of the appellants was that there was no order recording the agreement or compromise and there is no indication that it was proved to the satisfaction of the Court that the suit had been adjusted by any lawful agreement or compromise and, therefore, the decree could not have been passed, in terms of the alleged compromise. After the preliminary decree was passed on January 5, 1984, and the Commissioner filed his report on April 16, 1984, the matter was adjourned on several occasions for settlement until January 28, 1986 when the parties informed the Court that the compromise was not possible. On February 7, 1989, as the order-sheet shows, the defendant brought one buyer, Akar Constructions, who was ready to purchase 6000 sq. metres of land out of the second property, at the rate of Rs. 500/- per sq. metres and the plaintiffs took time for bringing the purchaser who would pay more. On March 8, 1989, one Ramkrishna Shetty, from Bangalore offered to purchase usable area at the rate of Rs. 6000/- per sq. metres and offered to deposit the amount on April 15, 1989. A cheque for Rs. 35,00,000/- was deposited on that day, but that offer did not materialise, and on September 28, 1989, an order for public auction was made and, ultimately, the sale was fixed for March 15, 1990. The respondent No. 6, was the highest bidder at the auction in the amounts as already stated, but before his bid was accepted a writing purporting to be a compromise between the parties came to be presented on that very day.
6. Curiously enough, the order-sheet dated March 15, 1989 makes no reference to the filing of the compromise or the learned Civil Judge's recording it, but from the stand taken by the appellants in their memo of appeal, it is apparent that the writing was signed by the practice and the learned Civil Judge had explained the contents of the agreement to them. The contention was that the appellants were made to sign the agreement without giving them an opportunity to consult their advocate. It is unusual that the writing should not have found mention in the order-sheet, dated March 15, 1990.
7. On April 18, 1990, the plaintiffs' attorney filed an application (Exhibit 56) alleging that the respondent No. 6 had not deposited 25 per cent of the sale-price and the sale had become void, and that the plaintiff should be allowed to deposit that amount within one month. The respondent No. 6 opposed the application by the reply dated May 1, 1990 and pointed out that the plaintiffs had pretended that only the auction had taken place on March 15, 1990, though there was an agreement executed by the parties to the suit as well as the auction purchaser, and the auction purchaser had been put in possession of the properties, which was the subject matter of the agreement and had to pay the amount Rs. 16,97,385.90, out of which Rs. 14,81,995.47 were paid to Goa Urban Co-operative Bank, the creditor of the plaintiff Nos. 1 and 2. On that very day, the learned Civil Judge passed an order in Civil Misc. Application No. 209 of 1990 making the following observations :
'It may be observed that the plaintiffs and the defendants have acknowledged the highest bidder and, after the auction was over, have entered into an agreement with him. In this background, it was not incumbent upon the highest bidder/auction purchaser to have deposited 25% of the said bid amount. The future relations between the parties as long as the said agreement subsists have to be governed by the conditions of the said agreement and not by general provisions governing sale by public auction. Incidentally, it may be observed that the said agreement was accepted by the Court, though no formal order was made in this respect. It may be observed that the next date, namely, 18-4-1990, a was given to see whether the stipulations of the said agreement were being complied or not, on which date the plaintiffs moved the said application dated 18-4-1990. Consequently, the application dated 18-4-1990 has got to be dismissed and is hereby dismissed.'
Obviously, even at that belated stage, the learned Civil Judge did not try to ascertain whether there was a lawful agreement between the parties, and though he was aware that a formal order was necessary for recording the agreement, no such order had been made. The question of the stipulations being complied with or not, could not have arisen unless the agreement was recorded, pursuant to the provisions of Order 23, Rule 3, of the Code of Civil Procedure.
8. On April 24, 1990, the plaintiffs' filed an application, being Misc. Civil Application No. 197 of 1990, that there was an order of injunction dated September 1, 1990 restraining the plaintiffs from carrying on any construction activity, but the respondent No. 6 had started digging trenches and dumping building material on the site and since there was an attempt on the part of the defendants to create third party interests in favour of the respondent No. 6, an injunction restraining the defendants and the respondent No. 6 from carrying out any construction activity or dumping any construction material on the site, should be granted. On April 27, 1990, the defendants filed an application purporting to be under Order 23, Rule 3 of the Code of Civil Procedure, pursuant to the agreement dated March 15, 1990, for passing a compromise decree, pointing out that the respondent No. 6 had already paid an amount of Rs. 18,89,583.35 to the defendants as the price of the property. On May 1, 1990, the learned Civil Judge passed an order in Civil Misc. Application No. 197 of 1990, in respect of the application filed by the plaintiffs recording the statement of the advocate for the respondent No. 6, that the auction purchaser had not been able to comply with the terms and conditions of the agreement and requesting for three months' time together with the undertaking not to carry out any works till the application dated April 24, 1990 was decided on merits. A reply had been filed on April 27, 1990 to the show-cause-notice dated April 25, 1990, in Civil Misc. Application No. 197 of 1990, opposing the application for temporary injunction, and the application for temporary injunction came to be dismissed on May 8, 1990 for default of the appearance of the plaintiffs. The order-sheets in Misc. Civil Application No. 197 of 1990 show that on May 1, 1990, the plaintiff was represented by Advocate Shri Afenso, defendants Nos. 1(a) to 1(g) and 2 by Shri Khandeparkar and the respondent No. 6 by Mrs. Albuquerque, and that case was posted for May 8, 1990. On the adjourned date, the plaintiff was not represented, but the defendants were represented by Shri. Khandeparkar and respondent No. 6 by Shri Dias. The order sheet in Civil Misc. Application No. 197 of 1990, dated May 8, 1990, records that the application dated April 24, 1990 was fixed for arguments on May 8, 1990 and the auction purchaser had, on May 5, 1990, filed an application with a draft for the sum of Rs. 16,97,385.90, and a copy of that application was served on the plaintiff, but though Shri Afonso, accepted the notice, neither he nor the plaintiffs were present, though a lady presented a reply to the application.
9. The summer vacation of the Court began from May 6, 1990 and May 8, 1990 fell during summer vacation. Since Shri Afonso was present on May 1, 1990 and the date May 8, 1990 came to be fixed in his presence, it may be inferred that Shri Afonso, had consented to the Civil Misc. Application No. 197 being taken up during vacation and had notice thereof. We see no illegality in the application of the plaintiffs for injunction dated April 24, 1990, being dismissed for default of the appearance of the plaintiffs. The order, dated May 8, 1990, however, does not stop there, but observed that the application had become infructuous after the auction purchaser had complied with the conditions of the agreement, dated March 15, 1990, by depositing the cheque for the amount of Rs. 16,97,385.90, and a direction was issued on the basis of the letter dated May 8, 1990 from Goa Urban Co-operative Bank that the sum of Rs. 13,67,204.20 should be paid to the bank and the balance should be converted in a fixed deposit amount in the name of the Court for a period of three months. It then records that as suggested by learned advocate Shri Khandeparkar and Shri Joaquim Dias, a final decree in terms of the agreement dated March 15, 1990 should be drawn up.
10. The submission on behalf of the respondents was that since the suit also was fixed during summer vacation, along with the Civil Misc. Application, on May 1, 1990, and Shri Afonso was present when, on that day, the case was adjourned to May 5, 1990, he must be deemed to have had notice that the suit would also be taken up on that day. The order-sheets of the Civil Misc. Application (No. 197 of 1990) do not show that that the application was fixed for May 5, 1990. The order-sheet in the main suit recorded on May 5, 1990 shows that Mrs. Albuquerque appeared for the respondent No. 6 and presented an application for depositing the plaintiff's share as per the agreement dated March 15, 1990 and case was fixed for May 6, 1990. Shri Afonso, obviously, was not present on May 5, 1990 and therefore, he could not have consented to the main suit being taken up during vacation on May 8, 1990. The order-sheet dated may 8, 1990 shows that the plaintiffs were absent and not represented and only the defendants and the sixth respondents were represented. The learned Civil Judge entirely overlooked the position that the main suit could not have been fixed during vacation, without the consent of parties and if he was inclined to take the matter during vacation, he should have issued a notice to the plaintiffs that the main suit would be taken up during vacation for passing appropriate orders on the agreement dated March 15, 1990. This was not done. Merely because a notice was served by the Counsel for the respondents on the Counsel for the plaintiffs, that he would be moving for orders on the Civil Misc. Application, it would not follow that there was an order of the Court in this respect, and the most, the plaintiffs could have legitimately suffered was an order adverse to them on the Civil Misc. Application.
11. Though, there were two applications by the plaintiffs earlier urging that the sale was void and seeking an injunction against the defendants, and the learned Civil Judge had himself indicated in his order dated May 1, 1990 that there was no formal order recording the compromise, he did not pay attention to the mandatory requirements of Order 23, Rule 3, Code of Civil Procedure which are as follows :
'Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, in writing and signed by the parties or where the defendants satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit.'
12. The learned Counsel for the respondents urged that merely because an order recording the compromise had not been formally passed, it would not affect the validity of the decree, and reliance was placed on Suleman Noormohamed v. Umarbhai Janubhai, : [1978]3SCR387 , for the proposition that while recording the compromise under Order 23, Rule 3 of the Code, it is not necessary for the Court to say in express terms in the order that it was satisfied that the compromise was a lawful one. It will be presumed to have done so unless the contrary is shown. There, the matter arose in execution where the compromise-decree came to be challenged on the ground that on account of non-compliance of the provisions of the Rent Act, the decree was nullity. Obviously, an executing Court could not have gone behind the decree, though it may be one passed pursuant to the compromise. This position was considered in Sushil Chandra Sur v. Smt. Sadhana Bakobi, : AIR1982Cal417 , and it was pointed out that executing Court could not go behind the decree, and to allow the executing Court to go beyond that limit would be to exalt the executing Court to the status of a super Court sitting in appeal, over the decision of the trial Court. We have not been referred to any authorities to show that recording of a compromise is a mere formality and that the necessary requirement, that it should be proved to the satisfaction of the Court that a suit has been adjusted by lawful agreement or compromise, can be dispensed with.
13. The power of the Court to order an agreement, compromise or satisfaction to be recorded and to pass a decree in accordance therewith can be exercised only if it is proved to its satisfaction that there was a lawful agreement or compromise. This is not an employ formality which can be dispensed with. It requires judicial determination which is evident from the requirement of the proviso to Rule 3 of Order 23, Civil Procedure Code, that where it is alleged by one part and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but not adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment. Though the latter part, which is merely procedural, may be regarded as a directory, there can be no escape from the position that the first part requiring the Court to decide the question, being mandatory. The explanation added by the amending Act of 1976, along with the proviso reinforces this position, because an agreement or compromise which is void or voidable under the Indian Contract Act, shall not be deemed to be lawful within the meaning of this rule. The enquiry, which must be proceeded to the satisfaction of the Court, has to be elaborate, taking in the determination the question whether the agreement is void or voidable, if such an issue is raised as is contemplated by the proviso.
14. The controversy, which arose on the provisions of Rule 3 of Order 23, Civil Procedure Code, prior to the amendment, brought about by the amending Act of 1976 as to the ambit of the enquiry, is now settled by the insertion of the Explanation. Kania, J., as he then was, took the view in Western Electric Co. Ltd. v. Kailas Chand A.I.R. 1948 Bom 60, that the term 'lawful agreement' excludes not only unlawful agreements, the object or consideration for which is unlawful as defined in the Contract Act, but all agreements which on the fact of them are void and therefore will not be enforced by the Court. For this purpose, no enquiry is necessary, because the terms of the agreement themselves will show the defect. The Court, therefore, has to consider whether on the face of the agreement, it is lawful or not. The word 'lawful' cannot be construed as wide enough to include an inquiry whether the agreement is voidable or not. A different view was taken by Shah, J., as he then was, in Misrilal Jalamchand v. Sobhachand Jalamchand : AIR1956Bom569 , observing that the Court has power under Rule 3, where an agreement or compromise is denied, to decide whether as a fact, the alleged agreement or compromise was made, and if it is satisfied that it was made, to record it. When the Court is required to satisfy itself as to the existence of an agreement and is further required to satisfy itself that there is lawful agreement adjusting the suit, the Court must, on an application to record compromise, consider, especially where a plea of undue influence is raised, whether the agreement is not vitiated on any such ground as illegality, fraud, misrepresentation etc. This was also the approach taken in Pannalal v. Kishanlal, A.I.R. 1952 Nag 84, by Bose, C.J., as he then was, observing that as regards the powers of the Court to look into questions of this kind, it does not matter whether the right to do so arises under section 151 of the Code of Civil Procedure or under Order 23, Rule 3, where the words are 'where it is 'proved' to the satisfaction of the Court'. The fact remains that the Court has power and must enquire into allegations of this nature. If a compromise is induced by fraud or if the object or consideration is to defraud somebody also then naturally the Court would not record it.
15. The position that, therefore, emerges on the authorities is that the Court has the power and also the duty of enquiring into all these aspects. If this is so, an enquiry would become necessary, and since there were already applications pending before the learned Civil Judge when the writing dated March 15, 1990 was filed before him, he should have applied his mind to finding whether there was a lawful and voluntary compromise. On the contrary, what we have from the mention made in the learned Civil Judge's order dated May 1, 1990, is that the compromise had been accepted and time was granted for its implementation. There is no indication in the order-sheet that the compromise was accepted, and if there is any acceptance, it cannot be done in secrecy, but the record must indicate that the parties were openly questioned, or that the learned trial Judge went into the material that was placed before him and applied his mind for ascertaining whether the compromise was lawful and voluntary. Unless this is done, it cannot be said that the compromise was accepted by the Court. A judicial order must follow, after considering all the relevant material, recording the compromise, and this is not a matter which the Court must grant merely at the suggestion of the Counsel for the respondents, as the order dated May 8, 1990 purports to show.
16. It was urged on behalf of the respondents that any objection, which is to be raised to the compromise, should be raised when the compromise is presented to the Court, before a decree is passed, and the objections should not be allowed to be raised after the decree, because there has to be some limitation of time on the raising of such objections. Neither the text of Rule 3 or Order 23, nor the proviso, nor the explanation, put such a limitation, but obviously if any objection is to be raised, ordinarily it should be raised before the compromise is recorded, after complying substantially with the provisions of Rule 3. The requirement of the proviso is that the Court shall decide the question if it is alleged by one party and denied by the other that there was an adjustment or satisfaction has been arrived at, the object being that the Court should be satisfied that there has been a lawful adjustment of compromise. This is all the more so, because under Rule 3-A, no suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. There is some divergence in the views, at least of two learned Judges, on the scope of Rule 3-A, Masodkar, J., holding in Anant Mahadeo Godbole v. Achut Ganesh Godbole, : AIR1981Bom357 , that Rule 3-A bars the remedy of a second suit on the cause of action that the compromise which resulted in the passing of the decree was not lawful. By their very nature, the words 'not lawful' are wide enough and would take in the case where parties set up want of authority or exceeding of authority in the matters of agreements or compromises on the basis of which the decrees are made. All those types of challenges cannot now, because of bar to suit under Rule 3A, be the subject-matter of a second suit. A party to a suit, which was decreed after accepting the compromise, is only relegated to the remedy of questioning the same in an appeal under Rule 1A of Order 43 and second suit based on the cause of action that the compromise itself was not lawful is clearly barred. If this were the position, then even the cases covered by the Explanation to Rule 3, which renders the agreement void or voidable under the Indian Contract Act, will come within the bar of Rule 3-A. The other view is represented by the observation of Lentin, J., in Jethalal C. Thakkar v. Lalbhai Miralal Shah 1985 Mh.L.J. 299, that Rule 3A of Order 23 bars a substantive suit not in all imaginable cases but in cases where the compromise was 'not lawful', where for instance in passing a consent decree the Court had on the face of it no jurisdiction to do so or where fraud or misrepresentation was perpetrated on the Court (as distinct from fraud or misrepresentation said to have been perpetrated by one party on the other) or where, on the face of it, the consent decree suffers from some palpable defect or error which the Court must correct where for instance it contains a term or clause opposed to law, morality or public policy or where the Court was misled into passing the consent decree, say by reason of lack of authority or limited authority of the consenting advocate or advocates not brought to the Court's notice at the time and so forth. It is in such context thus illustrated that the words 'not lawful' must be construed in reference to a compromise envisaged by Rule 3-A and not in each and every case where a party seeks to set aside a compromise on the ground of fraud, coercion or misrepresentation practised upon him by the other party. In such a case resort to Rule 3-A would be impermissible.
Since we are not concerned with the scope of the suit under Rule 3-A in the present appeal, we are not called upon to decide which of the two contending views should be preferred and, in fairness, it must be said that the learned Counsel appearing before us agreed that the position should be left to be reconciled when the point may directly arise.
If the agreement is voidable and if a suit is competent, it would be possible to set aside the compromise decree under Article 59 of the Limitation Act, within a period of three years.
17. The learned Counsel for the respondents referred to the observations of S.J. Deshpande, J., in Keshav v. Yamunabai 1985 Civil Law Jou 361, to the effect that the true intendment of the Legislature seems to be that the Court has no option but to accept and record the compromise and accordingly pass a decree immediately as far as possible. Unless for the reasons given in the proviso, if the Court thinks it fit to decide the question, some time may be granted to the party. The obligation to decide the disputed nature of adjustment as provided in the proviso and the further obligation to pass decree in accordance with the compromise clearly shows that it is not discretionary for the Court to refuse to record the compromise.
It is not possible for us to agree with the further observations, in view of what we have already indicated earlier, that the defendant's allegation that the compromise was an outcome of fraud is beyond the scope of enquiry and investigation on the plain terms of Rule 3 of Order 23 of the Code. There, the parties had admitted before the learned Civil Judge, on 20th July, 1976 that they had signed on the documents and the advocates of the first defendant were present and the terms were read and recorded, but no final order was passed. The compromise was challenged nearly six years later and on the basis of the evidence, that was lad, the learned Judge did not agree with the conclusion of the Court below that the fraud had been established.
18. In the present context, where the compromise was not recorded, though we appreciate the contention that the objection from the appellants should have come as early as possible, immediately after the agreement dated March 15, 1990 was filed in the Court, we see nothing in the provisions of Rule 3 setting a limitation of time, except that the objections to be considered by the Court before whom the agreement is filed, must be filed before the compromise is recorded. Since the compromise was not recorded by the learned Civil Judge, as required under Order 23, Rule 3, it was open to the appellants to raise the objections, which they have done by reciting them in the memo of appeal. We do not see why, in the circumstances of the present case, the appellants should not be allowed to raise those objections when, in our view, the proceedings regarding the recording of the compromise have not ended as contemplated by Rule 3 of Order 23 of the Code of Civil Procedure.
19. Our attention was drawn to the Nazir's report and several other circumstances by the learned Counsel for the appellants as well as the respondents to indicate why the plea of fraud or misrepresentation, undue influence and coercion as set out in the memo of appeal, should or should not be accepted; but we do not think that we should enter into the merits of the controversy, because the parties will have to lead evidence in support of their final contentions, if there has to be an investigation, and such an investigation, in our view, must follow. Something had been said regarding the manner in which the learned Trial Judge acted, while receiving the compromise, but the learned Counsel for the appellants stated that he did not intend to cast any as person on the learned Civil Judge and that he had nothing against the learned Civil Judge, and that if there were anything, it would have been necessary for him to implead the learned Civil Judge, as a party. In the memo of appeal only the grounds, on which the compromise should not have been accepted, have been stated, and we do not think that we must approach the averments made in the memo of appeal and expect the same exactitude as is required of pleadings. While indicating the contentions before us. The contentions, which have been in substance in corporated in the memo of appeal, will have to be raised before the learned Trial Judge for showing that the compromise should not be recorded, and it would be open to the appellants to bring out their case property at that stage, but not by departing from whatever has been said or adding to the pleas already raised, except by furnishing the further and better particulars.
20. However, two more points were urged before us on behalf of the appellants' firstly that the respondent No. 6, who was not a party to the suit, would secure a right to enforce the agreement against the appellants and, secondly that the two properties, which did not form subject matter of the suit, were included in the terms of the compromise.
21. Reliance was placed on Dooly Chand Srimaly v. Mohanlal Srimall, A.I.R. 1924 Calcutta 722. There, it was said that the Court, before it records a compromise, must be satisfied that the suit has been adjusted wholly or in part by any lawful agreement or compromise. A compromise, which purports to govern the rights and liabilities of persons not parties to the suit, is not a lawful agreement or compromise within Rule 3 and cannot be recorded. In the matter before us, the claim was for partition and separate possession of the respective shares of the appellants, and the preliminary decree granted that relief, but provided that the property be sold, if it could not be partitioned and, ultimately, the Court made an order for sale of the property with a view to dividing the sale-proceeds between the parties. In the event of the respondent No. 6 depositing 25% of the purchase-money and the balance, he would have been entitled to get the possession of the property. This position would not change, if by virtue of a lawful agreement, he can obtain the property for the consideration agreed. Under Explanation II(a) to section 47 of the Code of Civil Procedure, for the purposes of this section, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed, and when section 47 provides that all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by the separate suit, it cannot be said that the respondent No. 6, was a stranger to the proceeding and that he would not be entitled to claim a benefit under the agreement which he could have claimed in the event of his being a purchaser in execution of the decree. We, therefore, see no merit in the first contention, in view of the Explanation which has been added to section 47 of the Code of Civil Procedure by the amending Act of 1976.
22. With regard to the contention that two of the properties mentioned in the agreement, were not the subject matter of the suit, reliance was placed on Trilok Chand Kapur v. Dayaram Gupta, : AIR1967Cal541 , but that was a decision rendered under the provisions of Rule 3 of the Order 23, prior to its amendment by Act of 1976. Now, the lawful agreement or compromise can be recorded, so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit. We, therefore, see no merit in the contention that the law precluded the inclusion of two additional properties in the agreement, though they were not the subject matter of the suit.
23. It was contended on behalf of the respondent No. 6 that he has paid all the moneys under the agreement and has performed his apart thereof, and it would be a hardship to him if the matter is unsettled in this appeal. Even the bank, respondent No. 7, has been paid its dues from the plaintiffs share of the amount. This is the consequence of the non-recording of the agreement and all that we can say is that the respondent No. 6 should have been diligent in getting the compromise recorded before making the payments. If the appellants have a grievance that the compromise was induced by fraud, misrepresentation, coercion and undue influence, these allegations will have to be gone into because of the requirements of Rule 3, before an order recording the compromise can be made. It is noteworthy that under Order 43, Rule 1A(2) of the Code of Civil Procedure, as inserted by amendment of 1976, in an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded. This provision enables the appellants to raise the grounds which they had no opportunity to raise, or had not been raised before the compromise was recorded. Even at the appellate stage, if it were found that there was no valid order recording the compromise, as in the present case, there is no escape from the position that the grounds taken in the memo of appeal shall have to be allow to be raised.
24. In the result, we allow the appeal, set aside the final decree passed by the Court below and permit the appellants to raise the grounds which have been indicated in their memo of appeal, before the Court below, within two months from today, by making a proper application, why the agreement dated March 15, 1990 should not be recorded on the decree passed pursuant thereto. The respondents will be at liberty to file their reply to these objections and the trial Court shall, after giving the parties opportunity to adduce such evidence as may be necessary, dispose of the matter as required under the proviso to Rule 3 of Order 23 of the Code of Civil Procedure, within six months from today. The points, which have been decided are shall not reagitated before the Court below.
Since we are remanding the matter to the trial Court for a fresh decision, the appellants application under Order 41, Rule 27 of the Code of Civil Procedure does not survive and is disposed of.
In the circumstances, there will be no order as to the costs of this appeal.
The parties are directed to appear before the Trial Court on 12th June, 1991.