'Parties Cannot Raise Additional Claims Beyond Settlement Terms After Voluntarily Entering Into Compromise': Uttarakhand High Court

The Uttarakhand High Court has held that once parties voluntarily enter into a compromise and act upon its terms, they cannot subsequently raise additional claims beyond what was agreed. The Court observed that a party cannot resile from a binding settlement by seeking amounts not forming part of the compromise.Justice Alok Mahra was hearing an application seeking the quashing of criminal proceedings arising out of a criminal case pending before Judicial Magistrate. The parties had earlier entered into an amicable settlement, which was recorded by a Coordinate Bench on 20.07.2024. As per the settlement, the applicants undertook to pay a sum of ₹38,61,795/- to respondent No.2 within a stipulated period, and accordingly handed over post-dated cheques. It was submitted that the entire agreed amount had been paid, and a joint compounding application was filed wherein respondent No.2 acknowledged receipt of the full amount and stated that no grievance remained.However, at a later stage, respondent No.2 raised an additional contention that although the principal amount had been received, interest remained unpaid. The Court examined the terms of the settlement as well as the affidavits filed in support of the compounding application.The Court noted that the compromise clearly stipulated payment of ₹38,61,795/- and did not provide for any payment of interest. It observed that the settlement had been voluntarily entered into by the parties and fully acted upon, with the agreed amount having been paid and accepted.In this backdrop, the Court held that respondent No.2 could not be permitted to raise any additional claim beyond the terms of the compromise. It observed that allowing such a course would defeat the finality of settlements and undermine the binding nature of agreements voluntarily entered into between parties.“… the terms of the said settlement do not stipulate any payment towards interest. Once the parties have voluntarily entered into a compromise and the same has been acted upon, culminating in full payment of the agreed amount, respondent no.2 cannot be permitted to resile from the said settlement or raise additional claims dehors the terms of the compromise,” the Court observed. The Court also deprecated the conduct of respondent No.2 in seeking to raise such a claim after acknowledging full satisfaction of the settlement, though it refrained from passing any adverse or coercive orders on that aspect.Accordingly, the High Court allowed the application and quashed the criminal proceedings in view of the compromise arrived at between the parties.Case Title: Kapil Garg vs. State Of Uttarakhand [C482 No. 833 of 2024]Click Here To Read/Download Order

'Parties Cannot Raise Additional Claims Beyond Settlement Terms After Voluntarily Entering Into Compromise': Uttarakhand High Court

Saksham Vaishya

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