Today we will discuss the latest judicial pronouncement of Compack Enterprises India (P) Ltd. V. Beant Singh, SLP (Civil) No. 2224-2225/2021. The instant case involves a Civil Suit in which the High Court had passed a Consent Decree directing the Petitioner to pay the Respondent certain sums of money till date the Petitioner hands over the actual possession of the suit-property to the Respondent. To read more about it, please visit our Blog http://www.desikanoon.co.in/2021/02/modification-consent-decree-compromise-agreement-order-xxiii-23-rule-3-3a-compack.html Please subscribe and follow us on YouTube, Instagram, iTunes, Twitter, LinkedIn, Discord, Telegram and Facebook. Credits: Music by Wataboi from Pixabay Stay tuned for more updates. Thanks for listening!
Consent Decree
A Compromise between the parties to a litigation is generally recorded under O.23 R.3 of the Code of Civil Procedure, 1908 that states as under: -
“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 satisfied the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise satisfaction to be recorded, and shall pass a decree is 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 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.
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;”
Further, in the case of Ruby Sales and Services (P) Ltd. v. State of Maharashtra, (1994) 1 SCC 531, it was observed that: -
“Merely because an agreement is put in the shape of a consent decree it does not change the contents of the document. It remains an agreement and it is subject to all rights and liabilities which any agreement may suffer. Having a stamp of court affixed will not change the nature of the document. A compromise decree does not stand on a higher footing than the agreement which preceded it. A consent decree is a mere creature of the agreement on which it is founded and is liable to be set aside on any of the grounds which will invalidate the agreement.”
Observations by the Court
According to the Court, the Consent Decrees are intended to create estoppels by judgment against the parties, thereby putting an end to further litigation between the parties. Therefore, normally, the Courts are hesitant to unilaterally interfere in, modify, substitute or modulate the terms of a consent decree, unless it is done with the revised consent of all the parties thereto.
However, the Court further observed that this is not an absolute rule and cited the case of Byram Pestonji Gariwala v. Union Bank of India & Ors., (1992) 1 SCC 31, wherein it was held that “a consent decree would not serve as an estoppel, where the compromise was vitiated by fraud, misrepresentation, or mistake. Further, this Court in the exercise of its inherent powers may also unilaterally rectify a consent decree suffering from clerical or arithmetical errors, so as to make it conform with the terms of the compromise.”
Held by the Court
Upon considering the above-stated position of law, the Court held that though it would be cautious in exercising its inherent powers to interfere in a Consent Decree, yet in the present case, upon perusing the entire record, the Court was of the view that there are errors and inconsistencies in the Consent Decree that are apparent on the face of the record. Hence, the Court found this case a fit one to exercise the inherent jurisdiction to correct the terms of the consent decree, to bring it in conformity with the intended compromise and directed the parties to comply with the Consent Decree.
Concluding Remarks
In the instant case, the Court explained its power to rectify a Consent Decree in order make it conform with the terms of the Compromise. Though it is true that no modification in a Consent Decree should be made without revised consent of all the concerned parties, yet in situations, where there is a deadlock that has arisen due to an error apparent on the face of the record in the Consent Decree, the Court can very well modify the terms of the Consent Decree to do complete justice. Civil litigations usually take decades to reach to an end point and a Consent Decree in such cases is a valuable tool to preserve the precious judicial time of this country. Mere clerical or arithmetical errors should never come in the way of dispute resolution and the Courts should keep an open mind to correct such errors.