Compromise of suit || Order 23 Rules 3, 3-B Under CPC

Compromise of suits: Order 23 Rule 3 and 3-B

In this article, we will discuss the compromise of suits by the parties under Order 23 Rule 3 and 3b of the CPC


                         Order 23 deals with withdrawal and compromise of suits. Provisions regarding the withdrawal of the suit are provided under Order 23 Rules 1, 2 and 4 and provisions regarding the compromise of suits are provided under Rules 3 and 3B.
               We have discussed the withdrawal of the suit in our last article withdrawal of suit under Order 23, Rule 1,2 and 4 of CPC.
              Whenever a suit is instituted in the court, it is open to the parties to compromise, adjust or settle it by an agreement or compromise. In the case of Hiralal Moolchand versus Barot Raman Lal AIR 1993 SC 1449, a General principle held that all matters which can be decided in a suit can also be settled by means of a compromise.

Meaning of compromise:-

                                            The word “compromise” denotes settlement of the dispute by mutual consent. In such a process, the adversarial claims between the parties come to rest. A compromise arrived at by the parties puts an end to litigation battle. In some cases or sometimes party to the dispute realize that it is an unfortunate bitter struggle and allow good sense to prevail to resolve the dispute. And in certain cases, by the intervention of well-wishers, the conciliatory process commences and eventually, by consensus and concurrence, rights get concretized. At last, we can say that the compromise is a reciprocal statement with a clear mind and according to the parties.


                        There are some conditions which must be satisfied before a consent decree is passed:
  1. There must be an agreement or compromise;
  2. It must be in writing and signed by the party;
  3. It must be lawful;
  4. It must be recorded by the court; and
  5. A compromise decree must have been passed.

           Under provisions of Rule 3a party to the compromise may challenge it if the above-stated conditions are not fulfilled by the parties. Such questions must be decided by the court recording compromise.

Applicability to other proceedings:-

                                                                Order 23 rule 3 of the code applies to the Civil suits. But the underlying principle of the said provision applies to other proceedings also.

Satisfaction of Court:-

                                              Court has the duty to satisfy itself regarding the terms of the agreement. The court must be satisfied that the agreement or compromise is according to the conditions stated above and it can pass a degree in accordance with it. A court passing a compromise decree performs a judicial act and not a ministerial act. Therefore, the court must satisfy itself by taking evidence or on affidavits or otherwise that the agreement is lawful or fulfilled the above-stated conditions.

Compromise on behalf of a minor:-

                                                           Order 32 Rules 6, 7 provide that no next friend or guardian of the minor shall, without the leave of the court, enter into an agreement or compromise on behalf of the minor with reference to the suit, unless that leave is expressly recorded in the proceedings.

Representative suit rule 3B:-

                                                   No agreement or compromise in a representative suit can be entered into without the leave of the court. Before granting such leave, notice to the persons interested should be given by the court.

Execution of compromise decree:-

                                                             Compromise decree is executable in the same manner as an ordinary degree. But in some conditions where the decree gives effect to an unlawful compromise or is passed by the court without any jurisdiction to pass it, it is a nullity and its validity can be set up even in the execution.

Bar to suit: Rule 3-A:-

                                                No suit can be filed to set aside a compromise decree on the ground that it is not lawful.


               Section 96(3) provides that no appeal lies against the decree passed by the court with consent of parties, nor a suit can be instituted to set aside compromise decree on the ground that such compromised is not lawful, Order 23 rule 3A, though such order was appealable before the Amendment Act, 1976 under Order 43 Rule 1(m).


                  An order recording or refusing to record compromise is a “case decided” within the meaning of section 115 of the code. A High Court can revise such order provided the conditions laid down in the said section are satisfied.


                         As per the above-stated matter, we can say that after the institution of the suit the parties to the suit are free to settle or adjust their case by the agreement or by the compromise. Order 23 Rules 3, 3B provide the provisions regarding the compromise by the parties and also provide some condition for the agreement. After the fulfillment of the condition, the court can pass a compromise decree in the suit. 
                                                                               Keep learning and keep growing                                                  
                                                                                    Thanks for reading

Leave a Reply