Rule 3 of Order 23 of the Civil Procedure Code (CPC) specifically permits compromise of a suit pending in the court. As per this, after a suit has been instituted in the court by plaintiff against the defendant, it is open to both the parties to compromise, adjust or settle it by an agreement or a compromise. In the case of K.K. Chari v. R.M. Seshadri, (1973) 1 SCC 761 : AIR 1973 SC 1311, the Supreme Court has held that under Order 23 Rule 3 of the Code of Civil Procedure, all matters to be decided in a suit can be settled by means of a compromise.
Rule 3 of Order 23 of the CPC is reproduced below:
“3. Compromise of suit.— Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, in writing and signed by the parties or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit:
Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.
Explanation.— An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule.”
Thus, following conditions must be satisfied before the court passes a consent decree in the suit on the basis of a compromise between the parties:
- There must be an agreement or compromise between the parties.
- It must be in writing and must be signed by the parties to the suit.
- Such agreement or compromise must be lawful.
- It must be recorded by the court.
- A compromise or consent decree must have been passed by the court.
Thus, if above conditions are satisfied, the suit will stand disposed of, with the passing of a consent decree.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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