Order 43 Rule 1A Doesn't Create Independent Appeal; Party To Suit Cannot Directly Appeal Against Compromise Decree : Supreme Court

The Supreme Court recently ruled that a party to a compromise decree cannot directly challenge the compromise before the Appellate Court without first approaching the trial court.

“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.”, the court said.

A bench comprising Justices Vikram Nath and Prasanna B. Varale clarified the legal position while hearing an appeal in which the appellant, claiming lack of knowledge of the compromise, directly challenged the recorded compromise before the Appellate Court (before the High Court under Section 96 CPC) by invoking Order XLIII Rule 1-A of the CPC.

Order XLIII Rule 1-A of the CPC permits a party, while appealing a decree, to challenge a non-appealable order if that order contributed to the judgment resulting in the decree, which formed the basis for the appellant's appeal.

Single Judge of the Gujarat High Court, noting conflicting Division Bench views on the powers of Rule 1 A, referred three questions to a Larger Bench, which held that a party to the suit must first invoke the proviso to Order XXIII Rule 3 (obliging the Trial Court to decide, forthwith and itself, any objection to the fact or lawfulness of a compromise) and that Rule 1 A itself creates no independent right of appeal.

Acting on the larger bench's advice, the Single Judge dismissed the Appellant's appeal.

Following this, an appeal was preferred before the Supreme Court by the Appellant.

Affirming the High Court' larger bench's decision, the judgment authored by Justice Varale noted that once the compromise decree is drawn, no appeal can be directed against the compromise decree as per the bar enshrined under Section 96(3) CPC (prohibiting an appeal from a decree “passed with the consent of parties).

The Court said that the option available with the party to the compromise suit, if he wish to challenge the compromise is to approach is to first approach the trial court under proviso to Order 23 Rule 3.

“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.”, the court explained.

Since, the Appellant directly approached the Appellate Court invoking Order XLIII Rule 1-A(2), which do not grant a separate right to appeal from the compromise decree, the Court ruled that the High Court dismissed the Appellants appeal against the compromise decree.

No Independent Appeal Under Order XLIII Rule 1-A; Remedy Lies Only in Existing Appeals

“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. 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.”, the Court clarified.

In terms of the aforesaid, the Court dismissed the appeal.

Case Title: SAKINA SULTANALI SUNESARA (MOMIN) VERSUS SHIA IMAMI ISMAILI MOMIN JAMAT SAMAJ & ORS.

Citation : 2025 LiveLaw (SC) 489

Click here to read/download the judgment

Appearance:

For Appellant(s) Mr. Huzefa Ahmadi, Sr. Adv. Mr. Apurva Vakil, Adv. Ms. Anushree Prashit Kapadia, AOR Ms. Rashmi Singh, Adv.

For Respondent(s) Mr. Rakesh Uttamchandra Upadhyay, AOR Ms. Aarti Upadhyay Mishra, Adv. Mr. Harsh Som, Adv. Mr. Pankaj B. Velani, Adv.