2009 (2) TMI 744 - SC - Indian Laws

Whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit? Held that - No error has been committed by the High Court in arriving at the finding that the appellant had knowledge of the passing of the compromise decree much earlier. She did not file any application for condonation of delay. She filed two more applications for recall of the order dated 6.11.2004 in other enacted appeals. Those applications were also filed after expiry of the period of limitation and none of those applications were also accompanied with an application for condonation of delay. In absence of any application for condonation of delay, the Court had no jurisdiction in terms of Section 3 of the Limitation Act, 1963 to entertain the application for setting aside the decree. Appeal dismissed.

Issues Involved:
1. Interpretation of Order XXIII Rule 1 of the Code of Civil Procedure (CPC).
2. Legality of the compromise entered into during the pendency of the appeal.
3. Validity of the mutation order and subsequent transfers.
4. Rights of non-party heirs under the compromise decree.
5. Applicability of the principles of natural justice and limitation.

Detailed Analysis:

1. Interpretation of Order XXIII Rule 1 of the Code of Civil Procedure (CPC):
The appeal involved the interpretation of Order XXIII Rule 1 of the CPC, which deals with the withdrawal of suits. The Supreme Court noted that the original plaintiff applied for withdrawal of the suit based on a compromise. It was emphasized that even if a suit is to be decreed or dismissed on the basis of a compromise, permission to withdraw the suit could only be given with notice to the respondents who had become entitled to some interest in the property by reason of a judgment and decree passed in the suit. The Court stated, "Order XXIII Rule 3 of the Code of Civil Procedure provides that a compromise decree is not binding on such defendants who are not parties thereto."

2. Legality of the Compromise Entered Into During the Pendency of the Appeal:
The compromise was entered into by some parties during the pendency of the appeal. The Supreme Court held that the compromise was illegal and without jurisdiction as it was done without the knowledge and consent of all parties entitled to a share in the property. The Court observed, "If a compromise is to be held to be binding, as is well known, must be signed either by the parties or by their counsel or both, failing which Order XXIII, Rule 3 of the code of Civil Procedure would not be applicable."

3. Validity of the Mutation Order and Subsequent Transfers:
The mutation order and subsequent transfers were declared illegal, null, and void by the trial court. The Supreme Court upheld this finding, noting that the order of mutation was not passed in the presence of Banu Mal and was based on fraudulent representations. The Court stated, "A finding of fact was arrived at that no such transaction had taken place as Banu Mal was seriously ill and had been residing at some other place."

4. Rights of Non-Party Heirs Under the Compromise Decree:
The Supreme Court emphasized that the appellant and other heirs of Munni Devi were not parties to the compromise and thus the compromise decree could not bind them. The Court noted, "She, therefore, indisputably was entitled to a share in the property of Munni Devi as one of her legal heirs." The compromise entered into by some parties could not deprive the non-party heirs of their vested rights.

5. Applicability of the Principles of Natural Justice and Limitation:
The Court held that the principles of natural justice were violated as the appellant was not given notice of the compromise. The Court also addressed the issue of limitation, stating that even if an order is void or voidable, it must be set aside within the prescribed period of limitation. The Court observed, "The compromise may be void or voidable but it is required to be set aside by filing a suit within the period of limitation."

Conclusion:
The Supreme Court dismissed the appeal, holding that the compromise decree was illegal and without jurisdiction. The Court emphasized the necessity of notice to all parties entitled to a share in the property and upheld the trial court's finding of fraud in the mutation order and subsequent transfers. The principles of natural justice and limitation were also discussed, with the Court concluding that the appellant had knowledge of the decree much earlier and failed to file an application for condonation of delay.

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