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Issues Involved:
1. Interpretation of the phrase "in writing and signed by the parties" in Order XXIII, Rule 3 of the Code of Civil Procedure, 1908. 2. Validity of a compromise not reduced to writing and signed by the parties. 3. Whether the compromise reached during court proceedings requires written documentation to be enforceable. Issue-wise Detailed Analysis: 1. Interpretation of the phrase "in writing and signed by the parties" in Order XXIII, Rule 3 of the Code of Civil Procedure, 1908: The core issue revolves around the interpretation of the words "in writing and signed by the parties" added to Order XXIII, Rule 3 by the Code of Civil Procedure (Amendment) Act, 1976. The primary question is whether a settlement reached in court must be documented in writing to be enforceable. The court emphasized that the amendment aims to avoid false and frivolous claims of settlement to delay proceedings. Hence, any lawful agreement or compromise must be in writing and signed by the parties to be valid under Rule 3. 2. Validity of a compromise not reduced to writing and signed by the parties: The court examined whether the compromise reached between the parties during the appeal hearing, which was not reduced to writing and signed, could be enforced. The respondent initially accepted the compromise but later attempted to resile from it, arguing that it was not signed and was detrimental to his interests. The court concluded that the absence of a written and signed agreement rendered the compromise unenforceable under the amended Rule 3. 3. Whether the compromise reached during court proceedings requires written documentation to be enforceable: The court analyzed the two parts of Order XXIII, Rule 3. The first part pertains to a lawful agreement or compromise in writing and signed by the parties, while the second part involves the defendant satisfying the plaintiff's claim without necessarily having a written agreement. The court clarified that the requirement for a written and signed agreement applies to compromises reached both outside and during court proceedings. The court rejected the view that the first part applies only to out-of-court settlements, stating that the language of Rule 3 does not support such a restricted interpretation. Conclusion: The court held that the compromise reached during the appeal hearing, which was not reduced to writing and signed by the parties, could not be enforced. Consequently, the High Court's direction to hear the appeal on merits was upheld. The appeal was dismissed, and the High Court was instructed to decide the appeal on its merits, with no order as to costs. The judgment underscores the mandatory nature of the requirement for written and signed agreements in compromises under Order XXIII, Rule 3 of the Code of Civil Procedure, 1908.
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