AMRO DEVI & ORS.versusJULFI RAM (DECEASED) THR. LRS. & ORS.

                 [2024] 7 S.C.R. 1398 : 2024 INSC 527

                          Amro Devi & Ors.
                                 v.
                Julfi Ram (Deceased) Thr. Lrs. & Ors.
                       (Civil Appeal No. 7791 of 2024)
                                  15 July 2024
           [Vikram Nath* and Prashant Kumar Mishra, JJ.]

                            Issue for Consideration
       Respondents had filed a suit for declaration and permanent
       injunction against Appellants, claiming to be owners in possession
       of suit land on the basis of an alleged compromise entered into by
       them in an earlier litigation with the original owners of the property.
       The suit was dismissed by the trial court. The order of dismissal
       was set aside in first appeal filed by the Respondents and the
       order of first appellate court was confirmed by the High Court in
       regular second appeal vide the impugned order.
       Whether the High Court was justified in upholding the judgment of
       the first Appellate court vide which Respondents’ suit for declaration
       and permanent injunction was decreed in their favour.

                                   Headnotes†
       Compromise decree – What constitutes a valid compromise
       decree:
       Held: There was no written compromise deed between the parties,
       there was no verification as such of any written document –
       The defendants, in the first round of litigation, were admittedly
       tenants – They could have become owners of the land in suit
       either by way of a registered sale deed in their favour or by
       way of a declaration by the Competent Civil Court whether
       on merits or by way of a compromise decree granting such
       declaration – Neither of the two happened – Merely because
       some statement of the parties is recorded by the first Appellate
       Court that they have settled the dispute and that the suit may be
       dismissed, would not make the defendants therein from tenants
       to owners – Dismissal of the suit would only mean that their
       status as tenants would continue – A plain reading of Rule 3 of
       Order XXIII CPC clearly provides that for a valid compromise

* Author
[2024] 7 S.C.R.                                                           1399

       Amro Devi & Ors. v. Julfi Ram (Deceased) Thr. Lrs. & Ors.


     in a suit there has to be a lawful agreement or compromise in
     writing and signed by the parties which would then require it
     to be proved to the satisfaction of the Court – In the present
     case there is no document in writing containing the terms of the
     agreement or compromise – Thus, it cannot be said that the
     order dated 20.08.1984 was an order under Order XXIII Rule 3
     CPC – Once it is held that the order dated 20.08.1984 was not
     an order of compromise of suit under Order XXIII Rule 3 CPC
     the argument relating to applicability and bar under Order XXIII
     Rule 3A CPC would have no relevance at all – In the case of
     Som Dev v. Rati Ram (2006) 10 SCC 788 it was clarified by this
     Court that after the amendment of Code of Civil Procedure in
     1977, a compromise decree can be passed only on compliance
     with the requirements of Rule 3 of Order XXIII, otherwise it
     may not be possible to recognize the same as compromise
     decree – Mere statements of the parties before court about such
     said compromise, cannot satisfy the requirements of Order XXIII
     Rule 3 of the CPC – Therefore, the compromise decree is not
     valid. [Paras 15, 16, 19, 20, 21, 22 and 23]
     Lis pendens and restriction under Section 52 of the Transfer
     of Property Act, 1882:
     Held: At the time of execution of sale deed, on 22.08.1983, in
     favour of present appellants, defendants in second suit, Mansha
     Ram and others, were fully competent to execute the sale
     deed – Even assuming for the sake of argument that ownership
     rights were also transferred under the alleged compromise
     deed, the sale deed executed prior to the said compromise will
     not be affected in any manner as the plaintiffs were not only
     recorded as land owners but also had a decree of declaration
     and permanent injunction in their favour at the time when sale
     deed was executed – The doctrine of lis pendens or the restriction
     imposed under section 52 of the Transfer of Property Act, 1882
     may not be relevant or applicable in present case considering
     the fact that one of the parties-plaintiffs in the proceedings and
     respondents in pending appeal having executed the sale deed
     during the pendency of appeal, by their subsequent conduct of
     giving a statement that their suit be dismissed, acted in dishonest
     and unfair manner – They were fully aware of having executed the
     sale deed, their subsequent statement would only be termed as
     collusive and dishonest – The order in the appeal court was not
1400                                                       [2024] 7 S.C.R.

                    Digital Supreme Court Reports


    a decree on merits declaring any rights of the defendants to the
    suit (appellants in the appeal) – In such circumstances, the sale
    deed dated 22.08.1983 could not be said to be hit by doctrine of
    lis pendens – In Thomson Press (India) Ltd. v. Nanak Builders
    & Investors (P) Ltd. (2013) 5 SCC 397 it was held that transfer
    of suit property pendente lite is not void ab initio, as it remains
    subservient to the pending litigation – Therefore, in the present
    case the sale deed dated 22.08.1983 is not hit by section 52 of
    the TP Act. [Paras 12, 15, 17 and 18]

                            Case Law Cited
    Gurpreet Singh v. Chaturbhuj Gopal [1988] 2 SCR 401 : AIR
    1988 SC 400 – referred to.
    Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd.
    [2013] 2 SCR 74 : (2013) 5 SCC 397 – relied on.
    Som Dev v. Rati Ram [2006] 5 Supp. SCR 778 : (2006) 10 SCC
    788 – relied on.

                               List of Acts
    Transfer of Property Act, 1882; Code of Civil Procedure, 1908.

                            List of Keywords
    Compromise deed; Rule 3 of Order XXIII of CPC; Execution of
    sale deed during pendency of first appeal; Lis pendens; Section 52
    of Transfer of Property Act, 1882; Suit for declaration; Permanent
    prohibitory injunction; Rule 3A of Order XXIII of CPC.

                           Case Arising From

    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7791 of 2024
    From the Judgment and Order dated 15.12.2014 of the High Court
    of Himachal Pradesh at Shimla in RSA No. 55 of 2002

                        Appearances for Parties

    M. C. Dhingra, Gaurav Dhingra, Shashank Singh, Piyush Kant
    Roy, Abhishek Lakra, Rishabh Kumar Singh, Arvind Kumar Singh,
    Mahendra Ram, Dipanker Pokhriyal, Advs. for the Appellants.
    Anil Nag, Adv. for the Respondents.
[2024] 7 S.C.R.                                                          1401

       Amro Devi & Ors. v. Julfi Ram (Deceased) Thr. Lrs. & Ors.


                Judgment / Order of the Supreme Court

                                 Judgment
     Vikram Nath, J.
1.   Leave granted.
2.   The present appeal is filed by defendants against the order of
     Himachal Pradesh High Court dated 15.12.2014. The Respondents
     are original plaintiffs who had filed the suit for declaration and specific
     performance. The Trial Court dismissed the suit. However, the first
     Appellate Court reversed the finding of Trial Court and decreed the
     suit. The High Court, by the impugned order, dismissed the second
     appeal.
3.   Following are the facts leading to the Civil Suit in question:
     On 27.12.1979, Mansha Ram, Dev Raj, Khazana Ram, Ramji Das
     and Bihari Lal (hereinafter referred as “Mansha Ram and others”)
     filed a suit (Civil Suit No. 43 of 1983) for declaration and permanent
     injunction against Julfi Ram, Tihru Ram, Bakshi Ram-all three are
     sons of Khajana, Prem Chand-son of Julfi Ram, Kartar Chand-son
     of Bakshi Ram and Dharam Singh son of Nighu. Plaintiffs were the
     landowners and defendants were the co-tenants of the land. The
     Plaintiffs sought a declaration that they are owners in possession of
     suit land measuring 7 kanals 9 marlas. They also sought permanent
     injunction restraining defendants from interfering in the land in
     suit. The defendants contested the suit and stated that they are in
     cultivatory possession as tenants on payment. Thus, they claimed
     to be owners by virtue of tenancy.
4.   Trial Court by order dated 11.04.1983, decreed the suit in favor of
     plaintiffs-Mansha Ram & others granting them both the reliefs of
     declaration and permanent injunction by holding that they are owners
     in possession. Aggrieved, all six defendants preferred an appeal
     before the District Judge. As one of the plaintiffs-Dev Raj had died
     during the pendency, his widow Asha Devi and his son Suresh Kumar
     were arrayed as Respondents in the first Appeal.
5.   During the pendency of appeal, on 22.08.1983 Mansha Ram and
     others executed a sale deed in favour of Kartar Chand, Sansar Chand
     and Rajinder Kumar-three sons of Bakshi Ram for consideration of
     Rs. 12,500/-. The first Appellate Court, by order dated 20.08.1984,
1402                                                        [2024] 7 S.C.R.

                     Digital Supreme Court Reports


     allowed the appeal, setting aside the decree of Trial Court in light
     of statements made by plaintiffs before the court. It noted that ‘the
     plaintiffs have compromised the case and stated that they do not
     want to pursue with the suit and it to be dismissed.’ Before the first
     Appellate Court, Julfi Ram, Tihru Ram, Bakshi Ram, Prem Chand
     and Kartar Singh made a joint statement on 20.06.1984 that they
     have reached a settlement with Respondents. They have also paid
     money to Mansha Ram and others and they shall be the owners and
     hold possession of the land in dispute. Thus, Suit filed by Plaintiffs
     be dismissed. Dharam Singh-son of Nighu recorded a separate
     statement to the same effect. On the other hand, Bihari Lal, Suresh
     Kumar (son of Devraj and holder of General power of attorney of
     Asha Devi), Ramji Das and Dhyan Chand made a statement that
     they have reached a settlement and have received money. Thus,
     possession and ownership of the land shall be with appellants/
     defendants. Mansha Ram and Khazana Ram also recorded their
     statements on 20.06.1984, that they have reached a settlement and
     the suit may be dismissed. These four statements are on record of
     the High Court and of this Court.
6.   Appellants submit that Bakshi Ram’s three son got exclusive
     possession and mutation in revenue records by virtue of the sale
     deed dated 22.08.1983. However, the Respondents submit that by
     virtue of dismissal of suit by first Appellate Court, all four brothers-
     Julfi, Tihru, Bakshi and Nighu became owners and the sale deed
     executed in favour of the three sons of Bakshi Ram shall be subject
     to compromise decree passed by first Appellate Court.
7.   On 23.02.1988, the present suit (Civil Suit No. 41 of 1988) was
     instituted by Respondents/Plaintiffs- Julfi Ram, Prem Chand, Dharam
     Singh, Premi Devi, Atmi Devi, Asha Devi, Subhash Chand and Gian
     Chand- two sons of Nighu represented by their mother Premi Devi
     (hereinafter referred as “Julfi Ram and others”) against appellants/
     Defendants- Bakshi Ram(since deceased), Tihru Ram, Amro Devi
     (wife of Bakshi Ram), Sansar Chand, Kartar Chand, Rajinder Kumar
     (minor son of Bakshi Ram), Mansha Ram, Khazana Ram, Ramji Das,
     Bihari Lal and Asha Devi- widow of Suresh Kumar (hereinafter referred
     as “Bakshi Ram and others”). Thus, the erstwhile owners Mansha
     Ram and others were also impleaded as defendants. The suit was
     filed for declaration and permanent prohibitory injunction claiming
     that plaintiffs are owners in possession of half share i.e. 3 kanals
[2024] 7 S.C.R.                                                       1403

         Amro Devi & Ors. v. Julfi Ram (Deceased) Thr. Lrs. & Ors.


      15 marlas in the suit land as per the compromise between parties
      in Civil Appeal decided by District Court on 20.08.1984. Plaintiffs
      also stated that they continued to be in possession and they were
      cultivating the land. However, in June 1987 the defendants started
      interfering with the land in suit stating that they have purchased the
      land and plaintiff cannot continue to cultivate. Only at this stage
      plaintiffs claim to have received knowledge about mutation entries
      where only the names of defendants have been recorded.
8.    On the other hand, defendants (Bakshi Ram and others) submitted
      a written statement on 28.01.1992, contending that there was no
      compromise in earlier proceedings since no compromise deed was
      executed and placed on record before the Court in appeal. They
      also claimed that they have spent Rs. 9,000/- on improvement of
      suit land after the purchase.
9.    The Trial Court, by order dated 19.12.1992, dismissed the suit. It
      held that for proceeding under Order XXIII Rule 3 of Code of Civil
      Procedure, 19081 the existence and production of written compromise
      between the parties duly signed by them is most important. It relied
      upon the ruling of this Court in Gurpreet Singh vs Chaturbhuj
      Gopal.2 Since the said compromise was not presented in written
      form duly signed by the parties, the mandate under Order XXIII
      Rule 3 CPC is not fulfilled and thus it lacks legal force. The Trial
      Court also held that statements before the District Court cannot be
      treated as agreement or compromise. On the fact of possession,
      the Trial Court noted that plaintiffs could not prove that they were in
      possession and in cultivation of the land in suit as pleaded.
10. As the Trial Court dismissed the suit, Julfi Ram and others preferred
    Civil Appeal No.17/1993 before the District Judge, Hamirpur. By order
    dated 21.12.2001, the District Judge, allowed the appeal thereby
    decreeing the suit. It held that the Trial Court had no occasion to
    comment upon the legality of compromise because neither parties
    challenged the compromise decree by filing an appeal under Order
    43 Rule 1-A of CPC. Thus, it operated as res judicata and could not
    have been re-opened in a subsequent suit. The said compromise
    would be binding on parties. On merits, it observed that the sale was


1    CPC
2    [1988] 2 SCR 401 : AIR 1988 SC 400
1404                                                        [2024] 7 S.C.R.

                     Digital Supreme Court Reports


     clandestinely executed by the vendors (Mansha Ram and others) in
     favour of sons of Bakshi Ram. It further stated that even if the sale
     deed is considered to be valid, the same cannot be allowed to be
     acted upon as it has been executed during the pendency of Civil
     Appeal No. 64 of 1993 between the parties.
11. The Appellants/Defendants preferred a Regular Second Appeal No.
    55 of 2002 before the High Court. The High Court, by the impugned
    order, dismissed the same and confirmed the decree passed by the
    first Appellate Court dated 21.12.2001. The High Court held that
    execution of sale deed does not either abrogate, detract or dilute
    the effect of a previous conclusive determination comprised in the
    decree of 1984. Thus, the rights of plaintiffs remained intact to the
    extent of one-half share in the suit land. The sale deed is thus hit
    by the doctrine of lis pendens.
12. We have heard learned counsel for the parties and perused the
    material on record. The question to be determined in the present
    case is as to what is the status of the so called compromise order
    dated 20th August 1984 in the first round of litigation. The plaintiffs
    in the second round of litigation were the defendants whereas the
    Mansha Ram and others were plaintiffs in the first round of litigation.
    The first suit was for declaration and for permanent injunction on
    account of interference by the defendants therein. The plaintiffs were
    already recorded in the revenue records. Their suit was decreed by
    the Trial Court on 11.04.1983. At the time of execution of sale deed,
    on 22.08.1983, in favour of present appellants (defendants in second
    suit, Mansha Ram and others) were fully competent to execute the
    sale deed. It is true that when the said sale deed was executed, the
    first appeal was pending before the first Appellate Court.
13. Before the first Appellate Court, the plaintiff-respondent therein Bihari
    Lal gave a short statement to the effect that they had reached a
    settlement, received money and that possession and ownership of
    the land would be with the appellants. Mansha Ram and Khazana
    Ram stated that they had reached a settlement with the appellants,
    they agreed to the statement of the appellant that suit may be
    dismissed. At the same time appellants Julfi Ram and others stated
    that they have reached a settlement with the respondents, they had
    paid money to Mansha Ram and others, that they shall be owners
    in possession of the land in dispute and that the suit be dismissed.
[2024] 7 S.C.R.                                                         1405

        Amro Devi & Ors. v. Julfi Ram (Deceased) Thr. Lrs. & Ors.


14. Based on these statements, the District Judge, Hamirpur by order
    dated 20.08.1984 accepted the appeal, set aside the judgement
    and decree of Trial Court and dismissed the suit. It further directed
    that decree sheet be prepared and file be consigned to the record.
    The effect of this decree would be that the suit of the plaintiffs was
    dismissed. No declaration was granted to the defendants in the said
    suit. There was no written compromise deed between the parties,
    there was no verification as such of any written document.
15. At best, under the alleged compromise order of dismissal of suit
    the defendants therein could have claimed to be in possession of
    the land in suit and no further. The ownership could not have been
    transferred because of the dismissal of the suit. Even assuming for
    the sake of argument that ownership rights were also transferred
    under the alleged compromise deed, the sale deed executed prior
    to the said compromise will not be affected in any manner as the
    plaintiffs were not only recorded as land owners but also had a
    decree of declaration and permanent injunction in their favour at the
    time when sale deed was executed.
16. The defendants, in the first round of litigation, were admittedly tenants.
    They could have become owners of the land in suit either by way of a
    registered sale deed in their favour or by way of a declaration by the
    Competent Civil Court whether on merits or by way of a compromise
    decree granting such declaration. Neither of the two happened.
    Merely because some statement of the parties is recorded by the
    first Appellate Court that they have settled the dispute and that the
    suit may be dismissed, would not make the defendants therein from
    tenants to owners. Dismissal of the suit would only mean that their
    status as tenants would continue.
17. The first Appellate Court and the High Court failed to consider that
    there was no challenge to the sale deed dated 22.08.1983. The
    doctrine of lis pendens or the restriction imposed under section 52 of
    the Transfer of Property Act, 18823 may not be relevant or applicable
    in present case considering the fact that one of the parties- plaintiffs in
    the proceedings and respondents in pending appeal having executed
    the sale deed during the pendency of appeal, by their subsequent
    conduct of giving a statement that their suit be dismissed, acted


3   The TP Act.
1406                                                          [2024] 7 S.C.R.

                           Digital Supreme Court Reports


     in dishonest and unfair manner. They were fully aware of having
     executed the sale deed, their subsequent statement would only be
     termed as collusive and dishonest. The order in the appeal court
     was not a decree on merits declaring any rights of the defendants
     to the suit (appellants in the appeal). In such circumstances, the
     sale deed dated 22.08.1983 could not be said to be hit by doctrine
     of lis pendens.
18. At this juncture, it would be appropriate to note the judicial decision
    which has been relied upon by the appellants to substantiate their
    claim that the sale deed is not hit by Section 52 of the TP Act. In
    Thomson Press (India) Ltd. v. Nanak Builders & Investors (P)
    Ltd.4 it was held that transfer of suit property pendente lite is not
    void ab initio, as it remains subservient to the pending litigation. The
    purchaser of any such property takes the bargain subject to the rights
    of the plaintiff in pending suit. Therefore, in the present case the
    sale deed dated 22.08.1983 is not hit by section 52 of the TP Act.
19. Referring to the second submission of the respondents regarding
    the compromise decree being valid in law, at the outset, Order XXIII
    Rule 3 CPC is reproduced:
            “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
            1 [in writing and signed by the parties] or where the
            defendant satisfied the plaintiff in respect to 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
            2 [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 not
            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.]


4   [2013] 2 SCR 74 : (2013) 5 SCC 397
[2024] 7 S.C.R.                                                      1407

        Amro Devi & Ors. v. Julfi Ram (Deceased) Thr. Lrs. & Ors.


            [Explanation.— An agreement or compromise which is
            void or voidable under the Indian Contract Act, 1872 (9
            of 1872), shall not he deemed to be lawful within the
            meaning of this rule.]”
20. A plain reading of the above provision clearly provides that for a
    valid compromise in a suit there has to be a lawful agreement
    or compromise in writing and signed by the parties which would
    then require it to be proved to the satisfaction of the Court. In the
    present case there is no document in writing containing the terms
    of the agreement or compromise. In the absence of any document
    in writing, the question of the parties signing it does not arise. Even
    the question of proving such document to the satisfaction of the
    Court to be lawful, also did not arise. Thus, it cannot be said that
    the order dated 20.08.1984 was an order under Order XXIII Rule
    3 CPC.
21. Once it is held that the order dated 20.08.1984 was not an order
    of compromise of suit under Order XXIII Rule 3 CPC the argument
    relating to applicability and bar under Order XXIII Rule 3A CPC
    would have no relevance at all.
22. Additionally, we must also note the case of Som Dev v. Rati Ram 5
    as presented by the appellants to clarify the rigors of Order XXIII
    Rule 3 of CPC. In this case, it was clarified by this Court that after
    the amendment of Code of Civil Procedure in 1977, a compromise
    decree can be passed only on compliance with the requirements of
    Rule 3 of Order XXIII, otherwise it may not be possible to recognize
    the same as compromise decree. When a compromise is to be
    recorded and a decree is to be passed, Rule 3 of Order XXIII of
    the Code requires that the terms of compromise should be reduced
    to writing and signed by the parties.
23. In the present case, neither the compromise deed has been reduced
    to writing, nor it is recorded by the court. Mere statements of the
    parties before court about such said compromise, cannot satisfy
    the requirements of Order XXIII Rule 3 of the CPC. Therefore, the
    compromise decree is not valid.



5   [2006] 5 Supp. SCR 778 : (2006) 10 SCC 788
1408                                                             [2024] 7 S.C.R.

                         Digital Supreme Court Reports


24. In view of the above analysis, the present Civil Appeal is allowed,
    the orders passed by the High Court and first Appellate Court are
    set aside. The judgment and decree of Trial Court dated 19.12.1992
    dismissing the suit is confirmed.
25. Pending application(s), if any, is/are disposed of.

     Result of the case: Appeal Allowed.



     †
         Headnotes prepared by: Adeeba Mujahid, Hony. Associate Editor
                                 (Verified by: Liz Mathew, Sr. Adv.)