Summary
In a suit for specific performance, the plaintiff and defendants 1 and 2 jointly filed an application under Order XXIII Rule 3 CPC, admitting the agreement and payment of the full consideration and asking for a consent decree. The trial judge referred the matter to the Lok Adalat, where, presided over by the same judge and with both sides' advocates praying for it, a consent decree was passed in 2007. When execution was sought in 2013 the defendants challenged the decree by writ petition as obtained by fraud, and the Karnataka High Court set it aside, observing prima facie that the plaintiff's counsel must have misled the trial court. The Supreme Court allowed the plaintiff's appeal: a reference to the Lok Adalat was no ground to doubt a compromise the defendants admitted filing and whose recital of payment they did not deny, and the remark against counsel had no basis.
Issues
- Whether a consent decree passed in a Lok Adalat on an admitted application under Order XXIII Rule 3 CPC can be set aside as fraudulent merely because the trial court, instead of passing the decree itself, referred the matter to the Lok Adalat.
- Whether the High Court was justified in observing, without material, that the plaintiff's counsel must have misled the trial court, when the compromise was also signed by the defendants' advocates who appeared before both the court and the Lok Adalat.
Provisions considered
- Order XXIII Rule 3, Code of Civil Procedure, 1908The parties and their advocates filed a joint compromise application recording settlement and payment of the balance consideration; its filing was undisputed, the defendants never objected to it before the trial court or the Lok Adalat and did not claim non-receipt of the Rs 70,000 recited in it, so the consent decree founded on it could not be doubted. (¶¶ 2.1, 6, 9)
- Reference of a pending suit to the Lok Adalat and award on compromise, Legal Services Authorities Act, 1987It frequently happens that instead of passing a consent decree in court the matter is referred to the Lok Adalat; such a reference, especially where the Lok Adalat was presided over by the same trial judge and both advocates prayed for the decree, is no ground to infer fraud or that counsel misled the court. (¶¶ 6, 10)
Held
- Merely because the trial court, before whom the Order XXIII Rule 3 application was presented, referred the matter to the Lok Adalat cannot be a ground to doubt the genuineness of the consent decree; the matter was referred by the court itself and the Lok Adalat was presided over by the very same judge, before whom the advocates of both sides prayed for the decree. No fraud or misleading of the court could be inferred from that procedure. (¶ 6)
- The High Court's prima facie observation that the plaintiff's counsel must have misled the trial court rested on no identified material and ignored that the compromise was signed by the defendants' advocates as well, who appeared before the trial court and the Lok Adalat and against whom there was no allegation; nor was it the defendants' case that they had not received the balance consideration recited in the application. (¶¶ 7, 8, 9)
Result
Appeal allowed; the Karnataka High Court's order of 30.11.2020 in Writ Petition No. 35073 of 2015 quashed and the consent decree passed by the trial court in the Lok Adalat restored. No order as to costs.