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Thursday, November 21, 2013

Whether suit filed by appellant was barred in terms of Order XXIII Rule 3-A CPC - Held: A compromise forming the basis of the decree can only be questioned before the same court that recorded the compromise and a fresh suit for setting aside a compromise decree is expressly barred under Order XXIII Rule 3-A - However, in the instant case, the compromise decree alleged to be fraudulent was passed not by a civil court but by a revenue court in a suit u/s.176 of the Land Reforms Act - Revenue courts are neither equipped nor competent to effectively adjudicate on allegations of fraud that has overtones of criminality and the courts really skilled and experienced to try such issues are the courts constituted under the CPC - Further, under s.9 of CPC, the civil court has inherent jurisdiction to try all types of civil disputes unless its jurisdiction is barred expressly or by necessary implication, by any statutory provision and conferred on any other tribunal or authority - Nothing in Order XXIII Rule 3-A bars the institution of a suit before the civil court even in regard to decrees or orders passed in suits and/or proceedings under different statutes before a court, tribunal or authority of limited and restricted jurisdiction - In the facts of the case, provision of Order XXIII not a bar against the suit filed by the appellant - Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 - ss. 176, 178, 182, 331 and 341 and Schedule II. = HORIL ... APPELLANT VERSUS KESHAV & ANR. ... RESPONDENTS = published in http://judis.nic.in/supremecourt/helddis.aspx

     Code of Civil Procedure, 1908 - Or.XXIII, r.3-A - Suit - Maintainability -
Appellant filed suit seeking declaration that decree passed by the
Assistant Collector, Class-I, in a suit u/ss.176, 178 and 182 of the Land
Reforms Act was fraudulent, inoperative and not binding upon him -
Allegation that decree passed by Assistant Collector was based on a
fraudulent compromise petition - Defendants-respondents questioned the
maintainability of the suit - Whether suit filed by appellant was barred in
terms of Order XXIII Rule 3-A CPC - Held: A compromise forming the basis of
the decree can only be questioned before the same court that recorded the
compromise and a fresh suit for setting aside a compromise decree is
expressly barred under Order XXIII Rule 3-A - However, in the instant case,
the compromise decree alleged to be fraudulent was passed not by a civil
court but by a revenue court in a suit u/s.176 of the Land Reforms Act -
Revenue courts are neither equipped nor competent to effectively adjudicate
on allegations of fraud that has overtones of criminality and the courts
really skilled and experienced to try such issues are the courts
constituted under the CPC - Further, under s.9 of CPC, the civil court has
inherent jurisdiction to try all types of civil disputes unless its
jurisdiction is barred expressly or by necessary implication, by any
statutory provision and conferred on any other tribunal or authority -
Nothing in Order XXIII Rule 3-A bars the institution of a suit before the
civil court even in regard to decrees or orders passed in suits and/or
proceedings under different statutes before a court, tribunal or authority
of limited and restricted jurisdiction - In the facts of the case,
provision of Order XXIII not a bar against the suit filed by the appellant
- Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 - ss. 176,
178, 182, 331 and 341 and Schedule II.

The appellant filed suit seeking a declaration that the decree passed by
the Assistant Collector, Class-I, in a suit under sections 176, 178 and 182
of the U.P. Zamindari Abolition & Land Reforms Act, 1950 was fraudulent,
inoperative and not binding upon him. It was alleged that the decree passed
by the Assistant Collector was based on a fraudulent compromise petition.
The defendants-respondents questioned the maintainability of the suit
raising the contention that it was barred under the provisions of Order
XXIII Rule 3-A of CPC. The trial court dismissed the objection and held
that the suit was maintainable. The defendants-respondents took the matter
in revision which was dismissed by the District Judge. The respondents
thereafter filed writ petition before the High Court which allowed the same
holding that the suit filed by the appellant was not maintainable being
barred in terms of Order XXIII Rule 3-A CPC.

         Allowing the appeal, the Court

HELD: 1.1. A compromise forming the basis of the decree can only be
questioned before the same court that recorded the compromise and a fresh
suit for setting aside a compromise decree is expressly barred under Order
XXIII Rule 3-A. The expression "not lawful" used in Rule 3-A of Order XXIII
also covers a decree based on a fraudulent compromise hence, a challenge to
a compromise decree on the ground that it was obtained by fraudulent means
would also fall under the provisions of Rule 3-A of Order XXIII. [Para 6]
[6-H; 7-A]

1.2. However, a significant distinguishing feature in this case is that the
compromise decree which is alleged to be fraudulent and which is sought to
be declared as nullity was passed not by a civil court but by a revenue
court in a suit under section 176 of the U.P. Zamindari Abolition & Land
Reforms Act, 1950. [Para 8] [9-B-C]

Banwari Lal v. Chando Devi (1993) 1 SCC 581: 1992 (3) Suppl. SCR 524 -
distinguished.

2.1. Section 331 of the U.P. Zamindari Abolition & Land Reforms Act, 1950
bars the jurisdiction of the civil court and provides that a suit under the
Act can be entertained by no court other than that the courts specified in
Schedule II to the Act. A reference to Schedule II would show that the
court of original jurisdiction for a suit under section 176 of the Act for
division of a holding of a Bhumidhar is Assistant Collector, First Class
and the courts of First Appeal and Second Appeal are Commissioner and the
Board of revenue respectively. Section 341 of the Act, of course, provides
that unless otherwise expressly provided by or under the Act, the
provisions of the Indian Court Fee Act, 1870, the Code of Civil Procedure,
1908 and the Limitation Act, 1963, including section 5 thereof would apply
to the proceedings under the Act. [Para 9] [9-D-F]

2.2. Though the provisions of the Code of Civil Procedure have been made
applicable to the proceedings under the U.P. Zamindari Abolition & Land
Reforms Act, 1950 but that would not make the authorities specified under
Schedule II to the Act as `court' under the Code and those authorities
shall continue to be "courts" of limited and restricted jurisdiction. [Para
10] [9-F-G]

2.3. Revenue courts are neither equipped nor competent to effectively
adjudicate on allegations of fraud that has overtones of criminality and
the courts really skilled and experienced to try such issues are the courts
constituted under the Code of Civil Procedure. [Para 11] [9-H; 10-A]

3. It is also well settled that under section 9 of CPC, the civil court has
inherent jurisdiction to try all types of civil disputes unless its
jurisdiction is barred expressly or by necessary implication, by any
statutory provision and conferred on any other tribunal or authority. There
is nothing in Order XXIII Rule 3-A to bar the institution of a suit before
the civil court even in regard to decrees or orders passed in suits and/or
proceedings under different statutes before a court, tribunal or authority
of limited and restricted jurisdiction. In the facts of the case, the
provision of Order XXIII shall not act as a bar against the suit filed by
the appellant. The order of the High Court is accordingly set aside. As a
consequence, the suit will be restored before the trial court. [Paras 12,
13] [10-B-D]

Case Law Reference:

1992 (3) Suppl. SCR 524 distinguished Para 7

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 776 of 2012.

From the Judgment & Order dated 11.11.2003 of the High Court of Judicature
at Allahabad in Civil Misc. Writ Petition No. 8107 of 1988 and order dated
16.02.2005 in Civil Misc. (Review) Application No. 40253 of 2004 in Civil
Misc. Writ Petition No. 8107 of 1988.

Virag Gupta, Pallavi Sharma, (for Praveen Swarup) for the Appellant.

Ujjal Singh, J.P. Singh, Parvinderjit Singh (for R.C. Kaushik) for the
Respondents.

                               REPORTABLE



              IN THE SUPREME COURT OF INDIA



              CIVIL APPELLATE JURISDICTION





              CIVIL APPEAL NO. 776 OF 2012

   (Arising out of S.L.P(Civil )No.6632 of 2006)





HORIL                                         ... APPELLANT



                            VERSUS





KESHAV & ANR.                              ... RESPONDENTS





                      J U D G M E N T





Aftab Alam, J.





1.    Leave granted.



2.    This   appeal   is   directed   against   the   judgment



and   order   dated   November   11,   2003   passed   by   the



Allahabad   High   Court   by   which   it   allowed   the   writ



petition   filed   by   respondent   nos.   1   and   2,   set



aside   the   order   passed   by   the   District   Judge,


                                                                        2



affirming   the   order   of   the   Munsif,   and   held   that



the      suit      filed      by      the      appellant      was      not



maintainable   being   barred   in   terms   of   Order   XXIII



Rule 3-A of the Code of Civil Procedure.



3.     The appellant filed a suit (No. 43 of 1980) in



the   court   of   Munsif,   Karwi   (Banda)   seeking   a



declaration that the decree passed by the Assistant



Collector,   Class-I,   in   a   suit   under   sections   176,



178 and 182 of the U.P. Zamindari Abolition & Land



Reforms   Act   was   fraudulent,   inoperative   and   not



binding   upon   him.   According   to   the   appellant,   the



defendants   had   instituted   the   suit   before   the



Assistant   Collector   in   which   his   father   namely



Chunkai was made as one of the opposite party.   In



that   suit,   a   compromise   petition   was   filed   on



October  7,  1971  with  the  fake  signature  of  Chunkai



and  on  that  basis  a  compromise  decree  finally  came



to   be   passed   on   April   25,   1979.   It   is   the   case   of



the   appellant   that   no   notice   of   the   suit   was   ever



served  upon  his  father  Chunkai.    He  never  appeared


                                                                  3



in the proceeding and was not even aware of it. He



did   not   sign   any   compromise   petition   and   his



alleged   signature   on   the   compromise   petition   dated



October 7, 1971 was faked. He had died much earlier



and was not even alive in 1979 when the decree was



passed.   The   appellant,   accordingly,   sought   a



declaration   that   the   decree   dated   April   25,   1979



passed   by   the   Assistant   Collector,   Class-I,   Karwi,



may   be   cancelled   or   it   may   be   declared   as   void  ab



initio, inoperative and not binding upon him.    



4.    The defendants (respondents 1 and 2 before this



Court)   filed   a   written   statement   in   which   they



questioned the maintainability of the suit as well.



It   was   contended   on   their   behalf   that   as   the   suit



related   to   agricultural   lands   it   was   beyond   the



jurisdiction   and   competence   of   the   civil   court   and



it  could  only  be  tried  by  the  revenue  authorities.



The   Munsif   by   his   order   dated   October   1,   1985



upheld   the   defendants'   objection   and   held   that   the



suit   was   not   maintainable   before   a   civil   court.


                                                              4



Against   the   order   passed   by   the   Munsif,   the



appellant preferred an appeal (M.C.A.No.21 of 1985)



which   was   allowed   by   the   judgment   and   order   dated



April   14,   1987   passed   by   the   Additional   District



Judge,   Karwi,   (Banda).   The   Additional   District



Judge   rightly   pointed   out   that   the   suit   filed   by



the  appellant  was  based  on  the  allegation  that  the



decree   passed   by   the   Assistant   Collector   was   based



on  a  fraudulent  compromise  petition  and  it  did  not



involve   any   adjudication   of   rights   or   interests   in



the   agricultural   lands.   Hence,   the   suit   was



maintainable before a civil court. It, accordingly,



set   aside   the   order   passed   by   the   Munsif   and



directed him to proceed with the suit in accordance



with law.



5.    When   the   matter   came   before   the   Munsif   on



remand,   the   defendants   once   again   objected   to   the



maintainability   of   the   suit,   this   time   raising   the



contention   that   it   was   barred   under   the   provisions



of   Order   XXIII   Rule   3-A   of   the   Code   of   Civil


                                                                                    5



Procedure. The Munsif by his order dated January 7,



1988   dismissed   the   objection   and   found   and   held



that   the   suit   was   maintainable.   The   defendants-



respondents   took   the   matter   in   revision   (Civil



Revision   No.   Nil   of   1988)   which   was   dismissed   by



the   District   Judge,   Banda,   by   his   order   dated



February   17,   1988.     Against   the   orders   passed   by



the   Munsif   and   the   District   Judge,   the   defendants



preferred a writ petition before the High Court and



the   High   Court,   as   noted   above,   allowed   the   writ



petition         holding         that         the         suit         was         not



maintainable.     It   is   a   brief   order   in   which   the



High   Court   referred   to   the   provisions   of   Order



XXIII Rule 3-A, and relying upon a decision of the



Allahabad High Court allowed the writ petition.



6.    It is true that a compromise forming the basis



of   the   decree   can   only   be   questioned   before   the



same   court   that   recorded   the   comprise   and   a   fresh



suit   for   setting   aside   a   compromise   decree   is



expressly  barred  under  Order  XXIII  Rule  3-A.  It  is


                                                                              6



equally   true   the   expression   "not   lawful"   used   in



Rule 3-A of Order XXIII also covers a decree based



on  a  fraudulent  compromise  hence,  a  challenge  to  a



compromise   decree   on   the   ground   that   it   was



obtained   by   fraudulent   means   would   also   fall   under



the provisions of Rule 3-A of Order XXIII.



7.    In  Banwari   Lal  Vs.  Chando   Devi  (1993)   1   SCC



581,   this   Court   examined   the   provisions   of   Order



XXIII   Rule   3-A   in   some   detail   and   in   light   of   the



amendments   introduced   in   the   Code   and   in   paragraph



7 of the judgment came to hold as follows:





      "7.   By   adding   the   proviso   along   with   an

      explanation   the   purpose   and   the   object   of

      the   amending   Act   appears   to   be   to   compel

      the   party   challenging   the   compromise   to

      question   the   same   before   the   court   which

      had   recorded   the   compromise   in   question.

      That   court   was   enjoined   to   decide   the

      controversy   whether   the   parties   have

      arrived   at   an   adjustment   in   a   lawful

      manner. The explanation made it clear that

      an agreement or a compromise which is void

      or   voidable   under   the   Indian   Contract   Act

      shall   not   be   deemed   to   be   lawful   within

      the   meaning   of   the   said   rule.   Having

      introduced   the   proviso   along   with   the

      explanation   in   Rule   3   in   order   to   avoid

      multiplicity          of         suit         and         prolonged


                                                                              7



     litigation,   a   specific   bar   was   prescribed

     by Rule 3-A in respect of institution of a

     separate   suit   for   setting   aside   a   decree

     on basis of a compromise saying:



          "3-A.   Bar   to   suit.-   No   suit   shall   lie

     to   set   aside   a   decree   on   the   ground   that

     the   compromise   on   which   the   decree   is

     based was not lawful."







It   further   held   in   paragraphs   13   and   14   as



follows:-





     "13.   When   the   amending   Act   introduced   a

     proviso   along   with   an   explanation   to   Rule

     3   of   Order   23   saying   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",   the   Court   before

     which   a   petition   of   compromise   is   filed

     and   which   has   recorded   such   compromise,

     has   to   decide   the   question   whether   an

     adjustment          or         satisfaction         had         been

     arrived   at   on   basis   of   any   lawful

     agreement.   To make the enquiry in respect

     of   validity   of   the   agreement   or   the

     compromise          more             comprehensive,             the

     explanation   to   the   proviso   says   that   an

     agreement   or   compromise   "which   is   void   or

     voidable   under   the   Indian   Contract   Act...."

     shall   not   be   deemed   to   be   lawful   within

     the   meaning   of   the   said   Rule.     In   view   of

     the   proviso   read   with   the   explanation,   a

     Court   which   had   entertained   the   petition

     of   compromise   has   to   examine   whether   the


                                                            8



compromise   was   void   or   voidable   under   the

Indian   Contract   Act.     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

1-A of Order 43 of the Code."





14.   .................The   court   before   which   it   is

alleged   by   one   of   the   parties   to   the

alleged  compromise that  no such  compromise

had   been   entered   between   the   parties   that

court   has   to   decide   whether   the   agreement

or   compromise   in   question   was   lawful   and

not   void   or   voidable   under   the   Indian

Contract   Act.     If   the   agreement   or   the

compromise   itself   is   fraudulent   then   it

shall   be   deemed   to   be   void   within   the

meaning   of   the   explanation   to   the   proviso

to   Rule   3   and   as   such   not   lawful.     The

learned   Subordinate   Judge   was   perfectly

justified   in   entertaining   the   application

filed   on   behalf   of   the   appellant   and

considering   the   question   as   to   whether

there   had   been   a   lawful   agreement   or

compromise on the basis of which the court

could   have   recorded   such   agreement   or

compromise   on   February   27,   1991.     Having

come   to   the   conclusion   on   the   material

produced   that   the   compromise   was   not

lawful within the meaning of Rule 3, there

was   no   option   left   except   to   recall   that

order."      


                                                                   9



8.     In   light   of   the   decision   in  Banwari   Lal  it



would  prima   facie  appear   that   the   High   Court   was



right  in  holding  that  the  appellant's  suit  was  hit



by   the   provisions   of   Order   XXIII   Rule   3-A   and   was



not         maintainable.         But         the         significant



distinguishing   feature   in   this   case   is   that   the



compromise decree which is alleged to be fraudulent



and   which   is   sought   to   be   declared   as   nullity   was



passed not by a civil court but by a revenue court



in   a   suit   under   section   176   of   the   U.P.   Zamindari



Abolition & Land Reforms Act, 1950 (hereinafter the



Act).



9.     Section   331     of     the     Act       bars     the



jurisdiction of the civil court and provides that a



suit   under   the   Act   can   be   entertained   by   no   court



other than that the courts specified in Schedule II



to   the   Act.   A   reference   to   Schedule   II   would   show



that  the  court  of  original  jurisdiction  for  a  suit



under   section   176   of   the   Act   for   division   of   a



holding   of   a   Bhumidhar   is   Assistant   Collector,


                                                               1



First   Class   and   the   courts   of   First   Appeal   and



Second   Appeal   are   Commissioner   and   the   Board   of



revenue   respectively.   Section   341   of   the   Act,   of



course,   provides   that   unless   otherwise   expressly



provided by or under the Act, the provisions of the



Indian   Court   Fee   Act,   1870,   the   Code   Of   Civil



Procedure,   1908   and   the   Limitation   Act,   1963,



including   section   5   thereof   would   apply   to   the



proceedings under the Act.



10.    Though   the   provisions   of   the   Code   Of   Civil



Procedure   have   been   made   applicable   to   the



proceedings   under   the   Act   but   that   would   not   make



the   authorities   specified   under   Schedule   II   to   the



Act as `court' under the Code and those authorities



shall   continue   to   be   "courts"   of   limited   and



restricted jurisdiction.



11.    We   are   of   the   view   that   Revenue   courts   are



neither   equipped   nor   competent   to   effectively



adjudicate   on   allegations   of   fraud   that   has



overtones   of   criminality   and   the   courts   really


                                                                                1



skilled  and  experienced  to  try  such  issues  are  the



courts   constituted   under   the   Code   of   Civil



Procedure.



12.    It is also well settled that under section 9 of



the   Civil   Procedure   Code,   the   civil   court   has



inherent   jurisdiction   to   try   all   types   of   civil



disputes         unless         its         jurisdiction         is         barred



expressly   or   by   necessary   implication,   by   any



statutory   provision   and   conferred   on   any   other



tribunal   or   authority.   We   find   nothing   in   Order



XXIII   Rule   3-A   to   bar   the   institution   of   a   suit



before the civil court even in regard to decrees or



orders   passed   in   suits   and/or   proceedings   under



different   statutes   before   a   court,   tribunal   or



authority of limited and restricted jurisdiction.



13.    In   our   view   in   the   facts   of   the   case   the



provision   of   Order   XXIII   shall   not   act   as   a   bar



against   the   suit   filed   by   the   appellant.   We,



accordingly  set  aside  the  order  of  the  High  Court.



As  a  consequence,  the  suit  will  be  restored  before


                                                                                                  1



the   Munsif   who   is   directed   to   accord   it   priority



having   regard   to   the   fact   that   for   the   last   31



years         it         is         stuck         up         on         the         issue         of



maintainability.   The   trial   court   should   try   to



dispose   of   the   suit   without   any   delay,   and   in   any



case,   not   later   than   one   year   from   the   date   of



receipt/production of a copy of this order.



14.    In   the   result,   the   appeal   is   allowed   but   with



no order as to costs.





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

                                                  (Aftab Alam)





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

                                                  (Ranjana Prakash Desai)

New Delhi;

January 20, 2012.




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