Summary
Oral statements that a dispute had been settled and the suit should be dismissed did not constitute a compromise decree under Order XXIII Rule 3. Dismissal of the earlier owners’ suit did not confer ownership on the defendant tenants or defeat an earlier registered sale. The later suit claiming ownership through the supposed compromise was dismissed, restoring the trial court’s decree.
Issues
- Whether recorded statements seeking dismissal of a suit constituted a compromise decree transferring ownership.
- Whether the written-and-signed requirement under Order XXIII Rule 3 was fulfilled and Rule 3A applied.
- Whether lis pendens defeated the sale executed before the alleged compromise.
Provisions considered
- Order XXIII Rules 3 and 3A, Code of Civil Procedure, 1908No written and signed compromise existed; recorded statements did not satisfy Rule 3, and the Rule 3A objection therefore did not arise. (¶¶ 19, 20, 21, 22, 23)
- Section 52, Transfer of Property Act, 1882A pendente lite transfer is not void merely for that reason. On these facts the subsequent collusive statements and dismissal granting no ownership declaration did not defeat the earlier sale. (¶¶ 17, 18)
Held
- The earlier appellate order merely set aside the decree and dismissed the owners’ suit. It granted no declaration of ownership to the defendant tenants, who could not become owners solely because statements recording settlement were made. (¶¶ 12, 13, 14, 15, 16)
- Order XXIII Rule 3 requires a lawful agreement or compromise reduced to writing, signed by the parties and proved to the court’s satisfaction. There was no such document here; oral statements before the court could not substitute for those requirements. (¶¶ 19, 20, 22, 23)
- Because the earlier order was not a compromise decree under Rule 3, the argument invoking the bar under Rule 3A had no relevance. (¶ 21)
- The sale deed had not been challenged and was executed by the recorded owners while a declaratory decree stood in their favour. Their later statements seeking dismissal were collusive and could not defeat that conveyance. A transfer during litigation is not void ab initio, but is subject to rights established in the litigation; no ownership declaration favouring the tenants emerged here. (¶¶ 12, 15, 17, 18)
Result
Appeal allowed; High Court and first appellate judgments set aside. Trial court’s decree dismissing the subsequent suit restored.