2025 INSC 570 Civil Appeal Nos. 6681-6682 of 2023 Page 1 of 24

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 6681-6682 OF 2023

SAKINA SULTANALI

SUNESARA (MOMIN) ….APPELLANT (S)

VERSUS

SHIA IMAMI ISMAILI

MOMIN JAMAT

SAMAJ & ORS. ….RESPONDENT(S)

J U D G M E N T

PRASANNA B. VARALE, J.

1. These appeals filed by Sakina Sultanali Sunesara (“the

appellant”) assails the judgment dated 28.08.2019 rendered by

a Larger Bench of the High Court of Gujarat on a reference

Civil Appeal Nos. 6681-6682 of 2023 Page 2 of 24

arising out of Appeal from Order

1 Nos. 16 and 33 of 2017 and

cognate AOs. The High Court concluded that a litigant who was

already a party to the suit, but disputes the existence or validity

of a compromise recorded under Order XXIII Rule 3 of the Code

of Civil Procedure, 1908

2 must first approach the Trial Court; a

First Appeal under Section 96 of the CPC, it held, is available

only to a person who was not on the record of the suit. Following

that pronouncement, the Single Judge of the High Court

dismissed every pending AO on 06.09.2019 for want of

maintainability. Both the reference judgment and the

consequential order are impugned in these appeals.

2. The factual matrix giving rise to the appeal is as follows:

2.1. Three contiguous parcels of non ‑agricultural land at

Siddhpur, District Patan, city survey Nos. 321, 322 and 323,

together 36,354 sq. m., originally belonged to

Moosabhai Mooman. On his death they devolved on his widow

1

AO

2

CPC

Civil Appeal Nos. 6681-6682 of 2023 Page 3 of 24

Noorbanu, his sons Sultan and Shaukatali (respondent no. 3)

and his daughter Mumtaz (respondent no. 7). Sultan

predeceased, leaving behind the appellant and two children,

Salma (respondent no. 5) and Altaf (respondent no. 6) as his

legal heirs.

2.2. Mumtaz executed an irrevocable General Power of Attorney

3

in favour of Hassan Ali Lad (respondent no. 4) on 15.02.2002; a

second joint PoA dated 08.02.2005 in his favour was signed by

the appellant, Salma, Altaf and Noorbanu.

2.3. On 09.03.2007, Shaukat Ali and Hassan Ali (purporting to

act for all other co‑owners) agreed to sell 28,978.51 sq. m. (“the

suit land”) to ten individuals styling themselves ‘Shia Imami

Ismaili Momin Jamat, Siddhpur’ (respondent no. 1) for

₹ 2.51 crore. Only ₹ 15 lakh was paid; a notice terminating the

agreement issued in August 2011.

3

PoA

Civil Appeal Nos. 6681-6682 of 2023 Page 4 of 24

2.4. Up until 2012, Salma, Altaf and Mumtaz conferred

individual PoAs on the appellant; two of the original ten proposed

purchasers had by then died. On 10.01.2013 the eight survivors

executed a deed cancelling the agreement to sell and an

indemnity bond. The appellant asserts custody of the originals of

both joint PoAs, the agreement, the cancellation deed and the

bond.

2.5. Later in 2013, Shaukat Ali, Salma, Altaf and Mumtaz

relinquished their undivided interests in favour of the appellant;

four mutation entries were certified, leaving her the sole recorded

owner.

2.6. In August 2015, the appellant executed three registered

sale deeds: two dated 10.08.2015 conveying 3,272 sq. m. and

6,385 sq. m. to Platinum Tradex Private Limited and one dated

12.08.2015 conveying 6,567 sq. m. to four individuals. Two of

those individuals had themselves been among the original ten

vendees.

Civil Appeal Nos. 6681-6682 of 2023 Page 5 of 24

2.7. Later in 2015, Hassan Ali, accompanied by two of the

original vendees, persuaded another member of that group,

Kurban Momin, to revive the terminated transaction.

On 24.11.2015 three revenue appeals were filed before the

Deputy Collector, Siddhpur, challenging the mutation entries

reflecting the appellant’s sale deeds. The appellant and Shaukat

Ali were cited as respondents.

2.8. Regular Civil Suit No. 5 of 2016 (“the first suit”) was

instituted on 5 January 2016, seeking a declaration that

respondent no. 1 possessed the suit land. On 21.01.2016

respondent no. 1, through Kurban, filed Special Civil

Suit No.6 of 2016 (“the second suit”) in Patan for specific

performance of the cancelled agreement, showing the appellant

and her two children through Hassan Ali and joining Shaukat Ali

personally.

2.9. A compromise dated 12.03. 2016, signed by

respondent nos. 1 and 2 (a trust said to represent the Jamat) on

one side and Shaukat Ali and Hassan Ali on the other, was

Civil Appeal Nos. 6681-6682 of 2023 Page 6 of 24

recorded on 15.03.2016, resulting in a first consent decree.

Relying on that decree, the plaintiff withdrew the first suit

unconditionally on 23.04.2016.

2.10. Respondent no. 1 then instituted Special Civil

Suit No. 19 of 2016 (“the third suit”), again suing the appellant

and her children through Hassan Ali. A further compromise

dated 12.11.2016 led to a second consent decree on 17.12.2016.

2.11. The appellant maintains that she had no notice of either

compromise and that both decrees were procured by fraud. She

therefore filed AO No. 16 of 2017 against the first consent decree

and AO No. 33 of 2017 against the second, invoking Order XLIII

Rule 1‑A. Transferee purchasers lodged parallel AOs.

2.12. The Single Judge of the 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 and that

Rule 1‑A itself creates no independent right of appeal. Acting on

Civil Appeal Nos. 6681-6682 of 2023 Page 7 of 24

that pronouncement, the Single Judge dismissed all AOs

on 06.09.2019.

3. Being aggrieved by the decision of the Larger Bench

dated 28.08.2019, the appellant has filed the present civil appeal

claiming that Section 96 of the CPC permits a direct First Appeal

even where the compromise itself is in dispute.

4. Mr. Huzefa Ahmadi, learned Senior Counsel for the

appellant has rendered the following submissions in brief:

4.1. Prior to the 1976 amendment to the CPC,

Order XLIII Rule 1(m) permitted an Appeal from Order against an

order recording or refusing a compromise under Order XXIII Rule

3. Amendment Act No.104 of 1976 deleted that clause and, in

the same breath, introduced Order XLIII Rule 1-A(2). The new

rule shifts the challenge to the decree and preserves a first appeal

under Section 96; no separate Appeal from Order now lies.

4.2. The impugned judgment accords two avenues to a

non‑party (review or First Appeal with leave under Section 96)

Civil Appeal Nos. 6681-6682 of 2023 Page 8 of 24

but limits a party on record to an application under the proviso

to Order XXIII Rule 3. Such a view defeats the purpose of

Rule 1‑A(2), enacted to ensure that any litigant disputing a

compromise may contest it directly in appeal.

4.3. The counsel for the appellant has further submitted that

the ratios laid down in the case of Pushpa Devi Bhagat Vs.

Rajinder Singh and others

4, Banwari Lal Vs. Chando Devi

and another

5 and Triloki Nath Singh vs Anirudh Singh

6 are

not correctly and completely considered by the Larger Bench of

the High Court. It is submitted that in the case of Banwari Lal

(supra) this Court in Paragraphs 9 and 13 has observed as

follows:

“ 9.[.....]But after the amendments which have been

introduced, neither an appeal against the order

recording the compromise nor remedy by way of filing

a suit is available in cases covered by Rule 3A of Order

23. As such a right has been given under Rule 1A(2) of

4

(2006) 5 SCC 566

5

(1993) 1 SCC 581

6

(2020) SCC Online SC 444

Civil Appeal Nos. 6681-6682 of 2023 Page 9 of 24

Order 43 to a party, who challenges the recording of

the compromise, to question the validity thereof while

preferring an appeal against the decree. Section 96(3)

of the Code shall not be a bar to such an appeal

because Section 96(3) is applicable to cases where the

factum of compromise or agreement is not in dispute.

………….

13. [.......] Even Rule 1(m) of Order 43 has been deleted

under which an appeal was maintainable against an

order recording a compromise. As such a party

challenging a compromise can file a petition under

proviso to Rule 3 of Order 23, or an appeal under

Section 96(1) of the Code, in which he can now question

the validity of the compromise in view of Rule 1A of

Order 43 of the Code.”

(emphasis supplied)

4.4. The observation in Banwari Lal (supra) has been relied

upon and approved in the case of H.S. Goutham Vs. Rama

Murthy and another

7 as well. The High Court relied on a

solitary sentence in paragraph 17 of Pushpa Devi (supra) that

“the only remedy … is to approach the court which recorded the

compromise”. Counsel contends that the remark is per incuriam:

7

(2021) 5 SCC 241

Civil Appeal Nos. 6681-6682 of 2023 Page 10 of 24

it neither notices Banwari Lal (supra) nor distinguishes the

later three-Judge Bench ruling in Kishun Alias Ram Kishun

(Dead) through LRS. v Behari (Dead) By LRS.

8, which

expressly recognises a first appeal where the compromise itself

is disputed.

5. On the other hand, Mr. Rakesh Uttamchandra Upadhyay,

learned counsel for the Respondents has made the following

main submissions:

5.1. The respondents support the High Court's conclusion that

a party to the suit cannot invoke a first appeal. A consent decree,

they urge, operates as estoppel and may be questioned only by

an application to the Trial Court under the proviso to Order XXIII

Rule 3; Section 96(3) bars an appeal and the deletion of Order

XLIII Rule 1(m) removes the earlier avenue of an appeal from

order.

8

(2005) 6 SCC 300

Civil Appeal Nos. 6681-6682 of 2023 Page 11 of 24

5.2. Reliance is placed on Pushpa Devi (Supra), especially para

17, which summarises:

 "No appeal is maintainable against a consent decree in

view of Section 96(3)."

 "No appeal survives against the order recording the

compromise after the omission of clause (m) of Order XLIII

Rule 1."

5.3. A three-Judge Bench of this Court in Triloki Nath Singh

(Supra), after considering Pushpa Devi (supra) and R Rajanna

(supra), holds that post 1976 "neither an appeal nor a separate

suit is maintainable" to impeach a compromise decree; Order

XLIII Rule 1 A(2) is available only when the Trial Court has first

decided, under the proviso to Order XXIII Rule 3, whether a

compromise exists.

5.4. Any apparent divergence between Banwari Lal (supra) and

Pushpa Devi (Supra) was resolved in Sree Surya Developers &

Promoters v. N. Sailesh Prasad and others

9, which affirmed

9

(2022) 5 SCC 736

Civil Appeal Nos. 6681-6682 of 2023 Page 12 of 24

that the Court passing the decree is the proper forum to examine

the validity of the compromise. Paragraphs 9 and 13 of Banwari

Lal (supra)-quoted by the appellant-must be read in that light.

6. Having perused the record and having considered the rival

submissions, the primary question before us is whether a litigant

who was already a party to the suit, yet contests the very fact or

legality of a compromise embodied in a decree, is restricted to an

application before the Trial Court under the proviso to

Order XXIII Rule 3 or may, at her election, maintain a first appeal

under Section 96 of the CPC notwithstanding Section 96(3).

7. We believe it is first necessary to look at the impact of the

Amendment Act 104 of 1976 to CPC. Prior to 01.02.1977 an

order “recording or refusing to record” a compromise was itself

appealable under Order XLIII Rule 1(m). The Parliament

removed that clause and, in the same breath, introduced four

companion provisions:

Civil Appeal Nos. 6681-6682 of 2023 Page 13 of 24

 Proviso and Explanation to Order XXIII Rule 3 – obliging

the Trial Court to decide, forthwith and itself, any objection

to the fact or lawfulness of a compromise;

 Rule 3-A of Order XXIII – barring a separate suit to avoid

a compromise decree;

 Order XLIII Rule 1-A – permitting an appellant who is

already in a competent appeal against a decree to contend

that the compromise “should, or should not, have been

recorded”; and

 Section 96(3) (as renumbered) – prohibiting an appeal

from a decree “passed with the consent of parties”.

8. In our opinion, the interpretation of these provisions is

quite clear and coherent. 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

Civil Appeal Nos. 6681-6682 of 2023 Page 14 of 24

the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge

the recording of the compromise.

9. The above reading stands affirmed in a catena of

judgements passed by this Court. In Banwari Lal (Supra), this

Court held that, post-1976, the aggrieved party possesses two

concurrent but sequential remedies:

 an application under the proviso to Order XXIII Rule 3

before the Trial Court; or

 a first appeal under Section 96(1) after the Trial Court has

recorded its finding.

10. More importantly, in Pushpa Devi (Supra) this Court, after

surveying the amendments, stated four propositions, chief

among them that a consent decree is binding “unless set aside

by the Court which recorded the compromise on an application

under the proviso to Rule 3”. The relevant paras of Pushpa Devi

(supra) are reproduced hereunder:

“17. The position that emerges from the amended

provisions of Order 23 can be summed up thus:

Civil Appeal Nos. 6681-6682 of 2023 Page 15 of 24

(i) No appeal is maintainable against a consent decree

having regard to the specific bar contained in Section

96(3) CPC.

(ii) No appeal is maintainable against the order of the

court recording the compromise (or refusing to record a

compromise) in view of the deletion of clause (m) of Rule

1 Order 43.

(iii) No independent suit can be filed for setting aside a

compromise decree on the ground that the compromise

was not lawful in view of the bar contained in Rule 3-

A.

(iv) A consent decree operates as an estoppel and is

valid and binding unless it is set aside by the court

which passed the consent decree, by an order on an

application under the proviso to Rule 3 Order 23.

Therefore, the only remedy available to a party to a

consent decree to avoid such consent decree, is to

approach the court which recorded the compromise

and made a decree in terms of it, and establish that

there was no compromise. In that event, the court

which recorded the compromise will itself consider and

decide the question as to whether there was a valid

compromise or not. This is so because a consent decree

is nothing but contract between parties superimposed

with the seal of approval of the court. The validity of a

consent decree depends wholly on the validity of the

Civil Appeal Nos. 6681-6682 of 2023 Page 16 of 24

agreement or compromise on which it is made. The

second defendant, who challenged the consent

compromise decree was fully aware of this position as

she filed an application for setting aside the consent

decree on 21-8-2001 by alleging that there was no

valid compromise in accordance with law.

Significantly, none of the other defendants challenged

the consent decree. For reasons best known to herself,

the second defendant within a few days thereafter

(that is on 27-8-2001) filed an appeal and chose not to

pursue the application filed before the court which

passed the consent decree. Such an appeal by the

second defendant was not maintainable, having

regard to the express bar contained in Section 96(3) of

the Code.

Re: Point (ii)

18. Order 23 deals with withdrawal and adjustment of

suits. Rule 3 relates to compromise of suits, relevant

portion of which is extracted 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

Civil Appeal Nos. 6681-6682 of 2023 Page 17 of 24

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:”

The said Rule consists of two parts. The first part

provides that 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, the court shall order such

agreement or compromise to be recorded and shall

pass a decree in accordance therewith. The second

part provides that where a defendant satisfies the

plaintiff in respect of the whole or any part of the

subject-matter of the suit, the court shall order such

satisfaction to be recorded and shall pass a decree in

accordance therewith. The Rule also makes it clear

that the compromise or agreement may relate to issues

or disputes which are not the subject-matter of the suit

and that such compromise or agreement may be

entered not only among the parties to the suit, but

others also, but the decree to be passed shall be

confined 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. We are not, however, concerned with this aspect

of the Rule in this appeal.

19. What is the difference between the first part and

the second part of Rule 3? The first part refers to

situations where an agreement or compromise is

entered into in writing and signed by the parties. The

Civil Appeal Nos. 6681-6682 of 2023 Page 18 of 24

said agreement or compromise is placed before the

court. When the court is satisfied that the suit has been

adjusted either wholly or in part by such agreement or

compromise in writing and signed by the parties and

that it is lawful, a decree follows in terms of what is

agreed between the parties. The

agreement/compromise spells out the agreed terms by

which the claim is admitted or adjusted by mutual

concessions or promises, so that the parties thereto can

be held to their promise(s) in future and performance

can be enforced by the execution of the decree to be

passed in terms of it. On the other hand, the second

part refers to cases where the defendant has satisfied

the plaintiff about the claim. This may be by satisfying

the plaintiff that his claim cannot be or need not be met

or performed. It can also be by discharging or

performing the required obligation. Where the

defendant so “satisfies” the plaintiff in respect of the

subject-matter of the suit, nothing further remains to be

done or enforced and there is no question of any

“enforcement” or “execution” of the decree to be passed

in terms of it. Let us illustrate with reference to a money

suit filed for recovery of say a sum of rupees one lakh.

Parties may enter into a lawful agreement or

compromise in writing and signed by them, agreeing

that the defendant will pay the sum of rupees one lakh

within a specified period or specified manner or may

agree that only a sum of Rs 75,000 shall be paid by

the defendant in full and final settlement of the claim.

Such agreement or compromise will fall under the first

part and if the defendant does not fulfil the promise,

Civil Appeal Nos. 6681-6682 of 2023 Page 19 of 24

the plaintiff can enforce it by levying execution. On the

other hand, the parties may submit to the court that the

defendant has already paid a sum of rupees one lakh

or Rs 75,000 in full and final satisfaction or that the

suit claim has been fully settled by the defendant out

of court (either by mentioning the amount paid or not

mentioning it) or that the plaintiff will not press the

claim. Here the obligation is already performed by the

defendant or the plaintiff agrees that he will not

enforce performance and nothing remains to be

performed by the defendant. As the order that follows

merely records the extinguishment or satisfaction of

the claim or non-existence of the claim, it is not capable

of being “enforced” by levy of execution, as there is no

obligation to be performed by the defendant in

pursuance of the decree. Such “satisfaction” need not

be expressed by an agreement or compromise in

writing and signed by the parties. It can be by a

unilateral submission by the plaintiff or his counsel.

Such satisfaction will fall under the second part. Of

course, even when there is such satisfaction of the

claim or subject-matter of the suit by the defendant and

the matter falls under the second part, nothing

prevents the parties from reducing such satisfaction of

the claim/subject-matter, into writing and signing the

same. The difference between the two parts is this:

where the matter falls under the second part, what is

reported is a completed action or settlement out of court

putting an end to the dispute, and the resultant decree

recording the satisfaction, is not capable of being

enforced by levying execution. Where the matter falls

Civil Appeal Nos. 6681-6682 of 2023 Page 20 of 24

under the first part, there is a promise or promises

agreed to be performed or executed, and that can be

enforced by levying execution. While agreements or

compromises falling under the first part can only be by

an instrument or other form of writing signed by the

parties, there is no such requirement in regard to

settlements or satisfaction falling under the second

part. Where the matter falls under the second part, it is

sufficient if the plaintiff or the plaintiff's counsel

appears before the court and informs the court that the

subject-matter of the suit has already been settled or

satisfied.”

11. The path is therefore settled: the proviso to

Order XXIII Rule 3 is not optional; it is the exclusive first port of

call for any party on record who denies the compromise.

Order XLIII Rule 1-A does not create a new right of appeal; it

merely enables an appellant, already before the Appellate Court,

to attack the decree on the ground that the compromise should

not have been recorded. When the fact of compromise is not

disputed, the bar in Section 96(3) is absolute.

Civil Appeal Nos. 6681-6682 of 2023 Page 21 of 24

12. The present appellant was a defendant-of-record in Special

Civil Suit No. 6 of 2016 and Special Civil Suit No. 19 of 2016.

Both decrees rest on written compromise terms signed by

counsel who held unquestioned vakalatnamas. The signature of

duly authorised counsel is the signature of the party. The decrees

are therefore consent decrees within the meaning of

Section 96(3). The appellant never invoked the proviso to

Order XXIII Rule 3; instead, she lodged Appeals from Orders on

the footing of the deleted Order XLIII Rule 1(m). The Larger

Bench of the High Court was correct in holding that such appeals

are incompetent since 1976.

13. The appellant’s submission that allegations of fraud

transform a consent decree into an ordinary decree cannot be

accepted. Fraud, want of authority or other vitiating elements are

precisely the matters that the proviso directs the Trial Court to

examine. Unless and until that route is pursued, the statutory

bar in Section 96(3) of the CPC remains operative.

Civil Appeal Nos. 6681-6682 of 2023 Page 22 of 24

14. It must also be noted that the presence of subsequent

purchasers does not assist the appellant. Those purchasers were

never parties to the suits; they have, with leave, instituted first

appeals in the High Court, a course that Section 96(1) of the CPC

permits to non-parties. The appellant, by contrast, was a party

to the suits and cannot appropriate the remedy reserved for third

parties. Both suits were eventually compromised before a

Lok Adalat. Section 21(2) of the Legal Services Authorities Act,

1987 interdicts any appeal from the award of a Lok Adalat. The

limited supervisory jurisdiction under Article 227 of the

Constitution of India remains available, but has not been

invoked.

15. We are satisfied that the Larger Bench took the right view. It

noticed that the CPC, after the 1976 amendment, works in two

distinct ways. 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

Civil Appeal Nos. 6681-6682 of 2023 Page 23 of 24

proviso to Order XXIII Rule 3 and ask that Court to decide

whether the compromise is valid. 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.

16. For the reasons recorded above, the civil appeals fail and

are dismissed.

17. The judgment dated 28.08.2019 of the Larger Bench of the

High Court of Gujarat, as well as the consequential order of the

Single Judge dated 06.09.2019, are affirmed.

Civil Appeal Nos. 6681-6682 of 2023 Page 24 of 24

18. It is open to the appellant, if so advised, to invoke the

proviso to Order XXIII Rule 3 of the CPC before the Trial Court.

We express no opinion on the merits of any such application.

19. There shall be no order as to costs.

20. Pending application(s), if any, shall stand disposed of.

................................J.

[VIKRAM NATH]

..….............................J.

[PRASANNA B. VARALE]

NEW DELHI;

APRIL 23, 2025.