Facts:
The appellant, Navratan Lal Sharma, owned a disputed property and filed a suit for canceling a power of attorney, sale deeds, and seeking permanent injunction. The Trial Court dismissed the suit, prompting a first appeal to the Rajasthan High Court. During the appeal, the appellant and respondent No. 2 entered a compromise, agreeing on property development and financial terms. The High Court disposed of the appeal based on the compromise deed. Later, the appellant sought to restore the appeal, alleging fraud and non-compliance with the compromise terms. The High Court denied restoration, leading to this appeal to the Supreme Court.
Contentions of the Appellant:
The appellant contended that the High Court’s denial of restoration violated his statutory right under the Civil Procedure Code (CPC). He argued that the compromise terms allowed restoration in cases of non-compliance. Alleging fraud by the respondents, he stated that the cheques issued as part of the compromise were dishonored, making the agreement void.
Contentions of the Respondent:
The respondents argued that the compromise was consensual and binding, and the High Court correctly denied restoration based on its earlier order. They contended that the appellant could not challenge the compromise, as it was agreed upon and recorded in the judicial process.
Issues:
- Whether the appellant had a statutory right to seek restoration of the appeal due to alleged non-compliance with the compromise terms.
- Whether the compromise was voidable due to fraud as claimed by the appellant.
- Whether the High Court was correct in denying restoration based on its earlier order.
Observations/Findings by the Supreme Court:
The Supreme Court emphasized that under Order 23, Rule 3 of the CPC, a compromise decree must be based on a lawful agreement. The Court observed that if the agreement is voidable due to fraud, the aggrieved party retains the right to challenge it. It held that the High Court’s denial of restoration improperly curtailed the appellant’s statutory remedy. The compromise deed itself acknowledged the appellant’s right to restoration in case of non-compliance.
Principle of the Case:
A statutory remedy under the CPC to challenge a compromise decree is fundamental and cannot be curtailed. Courts must ensure that agreements recorded in decrees are lawful and enforceable.
Final Order:
The Supreme Court set aside the High Court’s order denying restoration and remanded the case for reconsideration. It affirmed the appellant’s right to challenge the compromise decree based on fraud allegations and directed the High Court to decide on the merits of the application.
Impact on Public Law and Order:
This judgment safeguards litigants’ access to statutory remedies and ensures that courts rigorously scrutinize agreements underlying compromise decrees. It reinforces public confidence in judicial fairness and deters misuse of judicial processes.
Case Citation:
Supreme Court of India, Navratan Lal Sharma v. Radha Mohan Sharma & Ors., Civil Appeal No. 14328 of 2024 (Arising out of SLP (Civil) No. 27723 of 2024), Decided on December 12, 2024. Judges: Pamidighantam Sri Narasimha and Manoj Misra
