Exclusivity of Trial-Court Remedy for Parties Challenging Compromise Decrees

(Commentary on Supreme Court decision in Sakina Sultanali Sunesara (Momin) v. Shia Imami Ismaili Momin Jamat Samaj, 2025 INSC 570)

1. Introduction

The Supreme Court of India’s judgment dated 23 April 2025 settles a long-standing procedural controversy: Where a litigant who is already on the record disputes the very existence or legality of a compromise recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (CPC), the only initial forum is the trial court itself; a direct First Appeal under Section 96 is reserved for persons who were not parties to the suit.

The case grew out of a protracted property dispute involving three parcels of land in Siddhpur, Gujarat, originally owned by the family of Moosabhai Mooman. After multiple powers of attorney, attempted sale agreements, revocations, and conveyances, two “consent” decrees were procured in 2016 on the basis of compromise applications signed by two family members and an attorney-holder. The appellant, Ms Sakina Sultanali Sunesara, asserted that she neither authorised nor knew of these compromises and that they were vitiated by fraud. Instead of applying to the trial court under the proviso to Order XXIII Rule 3, she filed Appeals from Order (AOs) in the High Court. Those AOs were dismissed as not maintainable; the dismissal was affirmed by a Larger Bench of the Gujarat High Court, and the appellant’s challenge has now been rejected by the Supreme Court.

2. Summary of the Judgment

The Supreme Court dismissed the civil appeals and affirmed the Larger Bench decision of the Gujarat High Court.
It held that, post-1976 amendment, a party to the suit who questions a compromise decree must first invoke the proviso to Order XXIII Rule 3 before the trial court.
Section 96(3) bars any appeal from a consent decree where the compromise itself is not first set aside by that court.
Order XLIII Rule 1-A does not create an independent right of appeal; it only permits an appellant already before the appellate court on other grounds to argue that the compromise “should or should not have been recorded”.
A non-party prejudiced by a consent decree may, with leave, file a First Appeal under Section 96(1).
Allegations of fraud do not alter this procedural pathway; such allegations must be examined by the trial court under the proviso to Rule 3.
The Court left open to the appellant the liberty to file the requisite application in the trial court.

3. Analysis

3.1 Precedents Cited

The judgment revisits—and reconciles—several Supreme Court rulings that had pulled in different directions:

Banwari Lal v. Chando Devi (1993) 1 SCC 581
Held that, after the 1976 amendment, a party can challenge a compromise either by (i) an application under the proviso to Order XXIII Rule 3, or (ii) in an appeal against the decree where the compromise itself is disputed, thanks to Order XLIII Rule 1-A(2).
Pushpa Devi Bhagat v. Rajinder Singh (2006) 5 SCC 566
Laid down four propositions, most notably that “the only remedy” to avoid a consent decree is an application before the court that passed it, emphasising Section 96(3)’s bar on appeal.
Kishun (Dead) v. Behari (Dead) (2005) 6 SCC 300
Recognised that a first appeal could be maintained when the very compromise is disputed.
Triloki Nath Singh v. Anirudh Singh (2020) SCC OnLine SC 444
Three-Judge Bench emphasised that “neither an appeal nor a separate suit is maintainable” to impeach a compromise decree; the proper course is an application under Order XXIII Rule 3’s proviso.
H.S. Goutham v. Rama Murthy (2021) 5 SCC 241 & Sree Surya Developers v. Sailesh Prasad (2022) 5 SCC 736
Further confirmed that the court passing the decree is the correct forum to test the validity of a compromise.

The present judgment harmonises these authorities by distinguishing parties and non-parties:

Banwari Lal’s apparent “dual remedy” was limited to circumstances where the trial court has already pronounced on the objection; only then does Rule 1-A(2) empower the appellant to agitate the issue in appeal.
Pushpa Devi and Triloki Nath are applied in their full force for parties of record: there is no appeal before the trial court decides the objection.

3.2 Legal Reasoning of the Court

a) Statutory Re-engineering in 1976

Deletion of Order XLIII Rule 1(m): removed the earlier appeal against an order recording/refusing a compromise.
Addition of Order XXIII Rule 3 (Proviso & Explanation), Rule 3-A, and Order XLIII Rule 1-A: shifted the challenge to the decree-stage and channelled it first to the trial court, while barring independent suits.
Section 96(3) (renumbered): expressly prohibits appeals from consent decrees.

b) Logical Sequence Mandated by the CPC

Dispute compromise → apply under proviso to Order XXIII Rule 3.
If the trial court refuses to set aside/decline compromise and passes a decree → first appeal under Section 96(1) becomes available.
Within that appeal, Rule 1-A(2) allows the appellant to challenge the recording of compromise.

c) Effect of Estoppel & Consent Decrees

A consent decree is both a contract and a judgment. Unless set aside by the court that recorded it, it carries the full incidents of res judicata and estoppel. Section 96(3) protects this finality by eliminating appellate scrutiny unless the foundational contract is first invalidated below.

3.3 Likely Impact of the Decision

Procedural Clarity Nationwide: Puts to rest conflicting High Court views, thereby providing uniform guidance to trial and appellate courts across India.
Reduction of Frivolous Appeals: Parties can no longer circumvent the trial court by styling their grievance as an “appeal from order”; this will curtail delays and forum-shopping.
Strategic Drafting of Compromises: Lawyers will ensure explicit authority/vakalatnama and signatures are beyond doubt, because any challenge must now pierce the compromise at source.
Non-Party Rights Preserved: The Court expressly keeps open Section 96(1) appeals—with leave—for third parties affected by consent decrees, striking a balance between finality and fairness.
Interplay with Lok Adalat Awards: Although not central to the ratio, the Court underscores that awards of Lok Adalats are non-appealable under the Legal Services Authorities Act, emphasizing the limited supervisory role of writ jurisdiction.

4. Complex Concepts Simplified

Consent / Compromise Decree: A civil court decree passed on the basis of a settlement between the parties. It embodies a contract endorsed by judicial order.
Order XXIII Rule 3 (CPC): Provision enabling courts to record settlements. The proviso (added in 1976) requires the court to determine objections that the compromise is not valid or lawful.
Section 96(3): Statutory bar: “No appeal shall lie from a decree passed by the court with the consent of parties.”
Order XLIII Rule 1-A(2): Allows an appellant already in appeal to argue that the compromise should/should not have been recorded; it does not itself grant a right of appeal.
Per Incuriam: A decision rendered in ignorance of a binding precedent or statutory provision; such observations lack precedential force.
Estoppel: Doctrine preventing a party from denying or asserting something contrary to what is implied by previous actions or statements.

5. Conclusion

The Supreme Court’s ruling in Sakina Sultanali Sunesara crystallises a coherent procedural roadmap for contesting compromise decrees. The judgment:

Affirms that parties of record must first challenge a compromise before the same court that recorded it.
Confirms the absolute bar on direct appeals under Section 96(3) where the compromise is accepted or unchallenged at source.
Clarifies that Order XLIII Rule 1-A is a facilitative, not substantive, provision.
Safeguards the avenue of appeal for non-parties adversely affected, preserving fairness without diluting finality.

In the broader legal landscape, the decision fortifies the sanctity of consent decrees, reduces superfluous litigation, and aligns procedural practice with the intention of the 1976 CPC reforms. Practitioners must now advise clients to contest dubious compromises promptly at the trial level; appellate detours are no longer an option for parties on record.

Exclusivity of Trial-Court Remedy for Parties Challenging Compromise Decrees – Commentary on Sakina Sultanali Sunesara v. Shia Imami Ismaili Momin Jamat Samaj (2025)