Mere Withdrawal Of Suit Pursuant To Compromise Doesn't Culminate Into Executable Decree: Delhi High Court

The Delhi High Court has held that mere withdrawal of a suit, even pursuant to a compromise, does not in itself culminate into an executable decree unless the compromise is expressly recorded by way of an order and a decree is drawn under Order XXIII Rule 3 of CPC.The provision authorises the Court to pass a decree on a compromise.Justice Purushaindra Kumar Kaurav held,“There are preconditions to the execution of a compromise decree. While the compromise or MoU remains binding inter se the parties, its enforcement in execution is precluded unless crystallised into a decree; otherwise, independent alternative legal remedies must be pursued.”The observation was made while dealing with an execution petition filed by the Decree Holder seeking enforcement of the order passed by the High Court, permitting the suit to be withdrawn on account of settlement between the parties.As per the Decree Holder, it was agreed under the settlement that the Judgment Debtor would transfer her title in the subject property to the three trustees of Sujan Mohinder Charitable Trust (including the Decree Holder).The Judgement Debtor argued that the order sought to be enforced by the Decree Holder is not executable in law inasmuch as the suit was dismissed as withdrawn in terms of Order XXIII Rule 1 of CPC and no decree was passed under Rule 3.The High Court held that the requirement of drawing up a formal consent decree is mandatory for the Trial Court in case of compromise of a suit.It relied on Sir Sobha Singh and Sons Pvt. Ltd. v. Shashi Mohan Kapur (2019) where the Supreme Court held that Order XXIII Rule 3 of CPC prescribes two steps for the Trial Court, i.e., an order recording the compromise and simultaneous passing of a decree to that effect. The Top Court had explicitly rejected the argument that the order of the Court recording a compromise in itself amounts to a decree which could be executed.Though the Top Court had permitted compromise to be treated as a decree till the decree is formally drawn up, the High Court clarified,“this position of law operates in the interim, meant to enable the Decree Holder to proceed for execution and to obviate any loss of right due to delay on the part of the Court in drawing up a decree…the order sought to be executed, if it is not followed by a decree and to seek the benefit of Sir Sobha Singh, must be an order in the manner contemplated by Order XXIII Rule 3 of CPC. If the order itself does not fulfil the foundational criteria of Order XXIII Rule 3 CPC, the execution is bound to fail.”In the case at hand, the Court noted that the suit was dismissed as withdrawn and the prayer seeking a consent decree was simply not adverted to. It said,“There was no formal consideration of the terms of the compromise, lawfulness of the settlement and no order recording the satisfaction of the Court qua the compromise or directing the drawing up of any decree was passed,”As such, the Court held that no executable decree exists and dismissed the execution petition as non-maintainable.Appearance: Mr. Rajat Aneja, Mr. Kunal Gosain, Mr. Aditya Sharma, Ms. Anamika Bag and Mr. Kartikey Sikka, Advocates for Decree holder; Gaurav Gupta and Mr. Rupal Gupta, Advocates for JD No.1. Mr. Desh Raj and Mr. Gaurav Gupta, Advocates for JD No.2.Case title: Pritpal Singh v. Jupinder Kaur Maker & Ors.Citation: 2025 LiveLaw (Del) 1269Case no.: EX.P. 65/2021Click here to read order

Mere Withdrawal Of Suit Pursuant To Compromise Doesn't Culminate Into Executable Decree: Delhi High Court

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