1. The appellants were the defendants in a suit in which the plaintiff, the owner of a house, claimed certain rights of easement over the adjoining property of the defendants and a permanent injunction restraining the defendants from obstructing him in the enjoyment of those rights. Defendant No. 1 is the father of defendants Nos. 2 and 3, defendant No. 3 being a minor whose guardian ad litem was defendant No. 1.
2. The case was first decided ex parte after which it was restored to the file and set down for hearing in July, 1940. On July 30, 1940, the plaintiff and defendant No. 1 arrived at an agreement, exhibit 128, and the parties in a joint application stated that the plaintiff had agreed to purchase the house of the defendants and that the suit was to be settled on a registered document being passed. Time being asked for, the Court adjourned the case from time to time. The agreement stated that the suit was adjusted by the parties having agreed that the house was to be sold to the plaintiff for Rs. 5,750 for which a registered document was to be passed by the defendants within fifteen days, to which document the signatures of the parties as well as those of defendant No. 1's brother and sister were to be obtained. It was further provided that an application for disposal of the suit was to be given after the document was registered. It appears that a sale-deed was got written on August 8, 1940, and on August 9, 1940, defendant No. 1 applied to the Court stating this fact and also that all the defendants had signed it and that his sister Parvati was also willing to sign the document on the plaintiff's paying the price at the Sub-Registrar's office. The defendant served a notice on the plaintiff on August 15, 1940, again stating that his sister Bai Parvati was willing to sign the sale-deed. Thereafter defendant No. 1 applied to the Court by an application, exhibit 101, on August 20, 1940, stating that the suit was adjusted as the document had been written in accordance with the agreement and that the defendants had done all that was necessary to implement the said agreement, and he asked the Court to pass an order striking off the suit. The pleader for the plaintiff put in his objections stating that the suit had not been compromised, that the sale-deed had not yet been signed by Bai Patvati and that therefore the compromise had fallen through. The application was set down for hearing, and the plaintiff thereupon required the defendants to execute a supplementary document incorporating certain matters which had not appeared in the sale-deed. Thereafter Bai Parvati signed the sale-deed, exhibit 139, and defendant No. 1 got it registered in the absence of the plaintiff on September 14, 1940. The price still remained to be paid by the plaintiff. The matter was heard on March 24, 1941, wherein the main contentions that were urged for the plaintiff were : (1) that the agreement, exhibit 128, was about a matter which was wholly foreign to the subject-matter in suit and therefore it was not a lawful agreement; (2) that the defendants had committed a breach of the agreement, the whole of the sale-deed not having been written in the presence of the plaintiff and his pleader; and (3) that so far as the rights of the minor, defendant No. 3, were concerned, defendant No. 1 had not obtained the Court's permission for entering into the compromise in his behalf as required by Order XXXII, Rule 7. All these objections were overruled and the Court held that there was an adjustment of the suit by lawful agreement as evidenced by exhibits 128 and 139 and that therefore the suit was to be dismissed. On the same day a decree was passed in the following words :
Suit is declared to be adjusted as per order below Exhibit 101. Hence the suit stands dismissed as stated therein.
3. The plaintiff appealed to the District Court against the order made on exhibit No. 101, and the defendants raised a preliminary objection that the appeal against the order did not lie as the plaintiff-appellant should have appealed against the decree dismissing the suit. The Court held that an appeal lay against the said order, that the agreement, exhibit 128, was lawful but that the order dismissing the suit passed below exhibit 101 was not legal. The main grounds on which the last conclusion was based were that there had been neither an application nor an order that the agreement was to be recorded, that the agreement was one about the sale of the defendants' house which, in the opinion of the learned Judge, ' was not the subject-matter of the suit,' that therefore the agreement could not be recorded under Order XXIII, Rule 3, and that the order dismissing the suit was without jurisdiction. Accordingly, the appellate Court set aside the order on exhibit 101 along with the decree passed in pursuance thereof and remanded the suit to the trial Court for being proceeded with from the stage where it had been left. The defendants have appealed. Their main contention is the same as was advanced in the lower appellate Court, viz. that no appeal lay against the order made on exhibit 101, and that if any appeal lay at all, it should have been against the decree in which the said order has merged.
4. Mr. Shah on behalf of appellants has relied on Onkar Bhagwan v. Gamna Lakhaji &Co.; I.L.R. (1932) 57 Bom. 206 in support of his contention. In that case there had been an order made under Order XXIII, Rule 3, recording a compromise, but that order had been made with the consent of the parties, and it was held, followingGulabchand v. Ramsukh : AIR1926Bom39 that the order was not appealable by reason of the provisions of Section 96(3) and of Section 108 of the Civil Procedure Code. Mr. Justice Murphy, however, remarked that where the order for making the decree was passed practically simultaneously with the one recording the compromise, and where the compromise was challenged, on the ground that none had really been arrived at, the proper course would be to challenge the decree, either by an appeal, or by an application for review, or one under Section 151 of the Civil Procedure Code in the original Court; and Mr. Justice Nanavati took the same view, following certain decisions of the Madras and Calcutta High Courts. But the observations of both the Judges on this point were admittedly obiter, as the point in question in that case was decided by reference to the decision in Gulabchand v. Ramsukh. This case, therefore, does not help the defendants.
5. Mr. Shah in the course of his argument admitted that the decree in this case would be covered by the provision of Section 96(3) of the Civil Procedure Code, viz. that no appeal lies from a decree passed by the Court with the consent of parties. In this case the trial Court has found it proved that there was an adjustment of the suit by lawful agreement as evidenced by exhibits 128 and 139, and the lower appellate Court has also found that the agreement was lawful., In Ramalinga v. Ramaswamy : AIR1929Mad696 it was held that the expression 'decree passed by the Court with the consent of the parties' in Section 96 is not limited to the decree passed with the consent expressed at the moment the decree is passed but includes decrees based on consent proved to have been out of Court though subsequently withdrawn or repudiated before the Court. The wording of Order XXIII, Rule 3, makes it quite clear that where the Court finds it proved that there has been an adjustment of the suit by a lawful agreement, two things are obligatory on the Court: (1) to order such agreement to be recorded and (2) to pass a decree in accordance therewith so far as it relates to the suit. The decree follows the order, and must be treated as one made on the basis that there has been a valid agreement, proved to amount to an adjustment of the suit, i.e. as 'a decree passed by the Court with the consent of parties', within the meaning of Section 96(3) of the Civil Procedure Code. If Mr. Shah is right in his contention that there can be no appeal against the order under Order XXIII, Rule 3, the party who is aggrieved by such order or the decree passed thereunder will evidently have no remedy; available to him at all by way of appeal. It seems to me that such could not be the intention of the Legislature. It was thought in Onkar Bhagwan v. Gamna Lakhaji & Co. that it would be open to the aggrieved party to apply for review or to make an application under Section 151 of the Code. But where the decree has been passed by consent of the parties, it is difficult to see how any application for review or any application under Section 151 could be maintained.
6. In Srimaty Sabitri Thakurain v. F.A. Savi I.L.R. (1928) Pat. 528 it was remarked that if the earlier view of the Calcutta High Court [in The Bengal Coal Company, Ltd. v. Apcar Collieries Ltd. (1924) C.W.N. 928 that the appeal in such cases ought to be against the decree were followed in its logical consequences (p. 532) :-
the result would be that there will be no remedy left at all to a party aggrieved by an order of the Court directing a compromise to be recorded in spite of the fact that he has been repudiating the compromise from the very beginning, inasmuch as after the order of the Court directing the compromise to be recorded and a decree being passed therein, ...the right of appeal may be lost altogether by reason of Section 96(3) of the Code....
7. In Ramnarayana Rao v. Ramkrishna Rao : AIR1936Mad385 it was remarked (p. 386) :-.when the Code provides for a right of appeal against the order I do not see how that right of appeal can be taken away merely because the order would in the nature of events be followed by an unappealable decree.
8. As the Legislature has expressly provided Clause (m) of Order XLIII, Rule 1, in the present Code, it seems to me clear that the intention was that there being, no right of appeal against the decree under Sub-clause (3) of Section 96, which was enacted at the same time, there should be a right of appeal against the order that the agreement, compromise or satisfaction shall be recorded. Under the old Code a decree passed under Section 375 (corresponding with the present Order XXIII, Rule 3) was final, i.e. there was no appeal against it. It seems, therefore, that it had to be held in cases like The Goculdas Bulabdas Manufacturing Company, Limited v. James Scott I.L.R. (1891) 16 Bom. 202 that notwithstanding the declared finality of the decree under the said Section 375, an appeal against it might be maintainable where the party against whom the decree had been passed alleged that there had not been in fact any lawful agreement come to. In. view, however, of the new provisions of Section 96(5) and Order XXIII, Rule 3, of the present Code, the cases decided prior to 1908, some of which were relied on by Mr. Shah, would not be applicable to the facts of this case.
9. The Calcutta High Court no doubt held in The Bengal Coal Company Limited v. Apcar Collieries, Limited, that the proper course, where a decree was made under Order XXIII, Rule 3, was to file an appeal against the decree. That decision was dissented from in Damodar Shaha v. Ashwinikumar Shaha I.L.R. (1934) Cal. 910 where it was held that where no appeal had been preferred against the decree, an appeal against an order for the compromise to be recorded was competent. No doubt that case proceeded on an analogy with decisions relating to preliminary decrees and final decrees, an analogy which, in my opinion, is misleading, as the law provides for an appeal from a final decree while Section 96(3) is against appeals being filed from decrees made with the consent of parties. The argument as to the order made under Order XXIII, Rule 3, merging in the decree is also fallacious in our opinion when the Legislature has expressly provided for an appeal, the reason for this provision apparently being that it is the order which would contain the Court's reasons for holding that there has been a lawful agreement or compromise or satisfaction amounting to an adjustment of the suit, while the decree would merely follow such findings, so that any party wishing to challenge that finding ought to have the right to appeal against the order containing such finding and not against the decree.
10. In Srimaty Sabitri Thakurain v. F.A. Savi it was held that the right of appeal against an order passed under Order XXIII, Rule 3, Code of Civil Procedure, directing a compromise to be recorded, is not lost by reason of a decree having been passed in accordance with the order. Their Lordships remarked that the terms of Order XXIII, Rule 3, make it imperative upon a Court to forthwith pass a decree when it orders that the agreement, compromise or satisfaction shall be recorded, and that ordinarily (as in the present case) the order and the decree should be simultaneous. Their Lordships continued (p. 530) :-
If that is so, the right of appeal from the order that the agreement, compromise or satisfaction be recorded can be easily frustrated by preparing a decree at once, giving no time to the aggrieved party to appeal against the order recording the compromise, and in the majority of cases the time allowed for an appeal from such an order allowed by law will always be curtailed.
that is on the supposition that where a decree is passed an appeal lies against the decree alone and not against the order. This decision was followed in Srimati Sabitri Thakurain v. Mrs. F.A. Savi I.L.R. (1932) Pat. 359. It was there held that an appeal lies from an order recording a compromise, but that an appeal from the decree following the order is barred under Section 96(3) of the Code.
11. In Ramnarayana Rao v. Ramkrishna Rao it was held that Order XLIII, Rule 1, gives a right of appeal against an order recording a compromise without any restriction as to the nature of that order, whether passed after contest or without contest, and that such an appeal lies against the order recording a compromise even when a decree has been passed in terms of the compromise. In our opinion, though ordinarily where a decree has been passed after some contest between the parties such decree is appealable, where it has been proved that the suit has been adjusted by a lawful agreement, there can be no appeal against the decree under Section 96(3), but there is a right of appeal against the order made under Order XXIII, Rule 3. The observations made in Onkar Bhagwan v. Gamna Lakhaji & Co. on this point were clearly obiter and are not binding on us.
12. The result is that the lower appellate Court was right in holding that an appeal lay against the order made below exhibit 101 which was clearly an order under Order XXIII, Rule 3, though it did not say in terms that the compromise, agreement or satisfaction was to be recorded. That being our view, a second appeal would be barred under the provisions of Section 104(2) of the Code.
13. We have been asked by the learned advocate for the appellants, however, to convert this appeal into a revision application in view of the fact that the lower appellate Court has held that the order made below exhibit 101 was illegal on the ground that what was agreed to be purchased being the defendants house was not the subject-matter of the suit. It is contended that this conclusion was clearly wrong, as the defendants agreed to sell their house in order to settle the dispute between them and the plaintiff concerning certain easement rights over their house. The learned trial Judge has found that the merger of the plaintiff's claim by the sale of the property was the best remedy which the parties could think of, and that, therefore, the agreement, exhibit 128, operates as an adjustment of the suit. In my opinion, this line of reasoning is clearly right, and the fact that exhibit 128 begins by saying that the suit is adjusted and that the sale of the defendants' house was decided upon solely with the object of settling the dispute with which the suit was concerned and not for any other purpose, clearly shows that the learned appellate Judge is entirely wrong in the view that he has taken that the sale of the defendants' house was outside the subject-matter of the suit. He has stated that 'if the agreement which pertains to the subject matter of the suit cannot be separated from the extraneous matter the whole agreement falls outside the scope of Order XXIII, Rule 3 '. I am unable to follow the reasoning, for in such a case the so-called extraneous matter would be so intimately connected with the so-called subject-matter of the suit that it would really be a consideration of the agreement or compromise, and as held in Bajirao v. Sakharam (1930) 33 Bom. L.R. 463 the words 'so far as it relates to the suit' (which, it may be observed, refer to the decree and not the order made under Order XXIII, Rule 3) are sufficiently wide to embrace such matter.
14. It has been contended on behalf of the plaintiff-respondent that the order of the trial Court should have been that the agreement be recorded and the decree should not have been merely that the suit is dismissed. But we find that all the matters agreed upon except the payment of the purchase price by the plaintiff were complied with prior to the date of the order of the trial Court, viz. March 24, 1941. A sale-deed was written out and signed by all the defendants as well as by defendant No. 1's brother and sister as required by the agreement and it was duly got registered. All these steps having already been taken, and the final term of the agreement being that on the sale-deed being registered, the matter was to be disposed of by the Court, we think that it would have been academical to say that the decree was to be in terms of the agreement : under Order XXIII, Rule 3, the decree has to be in accordance with the agreement, compromise or satisfaction, and the dismissal of the suit was obviously in accordance with the agreement which was found proved. The trial Judge, therefore, was right in dismissing' the suit.
15. The appeal is, therefore, treated as a revision application and it is allowed, the decree of the lower appellate Court being set aside and that of the trial Court restored. As regards costs, we maintain the orders of the lower Courts and allow the appellants the costs of the revision application.
16. I concur and would like to add a few words.
17. The first question is whether the present appeal from order as filed by the appellants is competent. That depends on a further question as to whether the appeal made to the lower appellate Court as an appeal from order was according to law. The appellants' contention is that no appeal lay against the order of the trial Court inasmuch as the order recording the compromise under Order XXIII, Rule 3, was merged in the decree which was subsequently passed, and the decree itself could not be appealed against as it was a consent decree under Section 96(3) of the Civil Procedure Code. The result, therefore, was that there was no competent appeal against the order as well as the decree of the trial Court. This argument would have been good if the adjustment had been recorded at the instance of both the parties consenting to it. But if the alleged adjustment is denied by one party as having not taken place at all or having subsequently fallen through as it is alleged in the present case, and the Court comes to the conclusion that there has been a lawful compromise, the decree passed after that decision must be taken to be a decree passed on consent under Section 96(3) and could not, therefore, be appealed against and I think that because it was to be treated as such that the Legislature, when it introduced for the first time Sub-section (3) of Section 96 in the present Civil Procedure Code, made provision for an appeal against an order under Order XXIII, Rule 3. The intention seems to have been that the propriety of an order recording or refusing to record an adjustment under Order XXIII, Rule 3, should be decided by the appellate Court in an appeal from that order, because if a decree was passed according to the compromise, there could be no opportunity to test the order as there could be no appeal from such a decree by virtue of Section 96(3).
18. The recent decisions in Mohammad Miya Pandit v. Osman Ali I.L.R. (1934) Cal. 229 as well as in Srimati Sabitri Thakurain v. Mrs. F.A. Savi I.L.R. (1932) Pat. 359 also take the same view. That being so, I do not think that the Legislature intended to deprive the aggrieved party of the right of appeal against an order under Order XXIII, Rule 3. When it is said that the order under Order XXIII, Rule 3, is merged in the decree on the analogy of a preliminary decree being merged in the final decree, I do not think that that analogy completely applies. In the case of a preliminary decree the aggrieved party must appeal against the decree and he may appeal against the final decree. But, as I have just observed, if the Court finds that a lawful adjustment has been arrived at by agreement between the parties, there cannot be any appeal against the decree recording the adjustment. It is for that very reason that the Legislature provided for an appeal against an order made under Order XXIII, Rule 3. If ultimately the appellate Court sets aside the order of the trial Court, the decree based on the order will also go as it will cease to be a decree on consent. The decision in Onkar Bhagwan v. Gamna Lakhaji & Co., I.L.R. (1932) 57 Bom. 206 on which the appellants rely, is clearly distinguishable as both the parties there applied for recording the compromise and the order of the Court being by consent was not appealable as also the decree based on the order. Here the order of March 24, 1941, holding the adjustment proved is not by consent. The observation in that case that the order merges in the decree applies to the facts of that case where the order was by consent, If the order is passed in spite of one party opposing the adjustment on the ground that it was not carried out as here, it is not a consent order and would not merge in the decree. I think, therefore, that the correct view is that in such a case an appeal against the order under Order XXIII, Rule 3, is competent to the aggrieved party. That being so, the present appeal which has been brought against the decree of the appellate Court would be incompetent as there can be only one appeal against an order under Order XXIII, Rule 3.
19. But we have been asked to treat the appeal as a revisional application, and after hearing the reasons for doing so, we think that this is a case in which the appeal should be allowed to be converted into a revisional application. The learned Judge below seems to have held that it was not competent to the trial Court to record this adjustment as the defendants' house was not the subject-matter of dispute in the suit, and that therefore the trial Court had no jurisdiction in recording the compromise. That conclusion on the question of jurisdiction seems to me to be illegal as well as materially irregular. If a person comes to the Court claiming certain easement rights against the defendants' house, it would certainly be open to both the parties to agree that the rights of easement which the plaintiff claims might be converted into absolute rights of ownership by sale to him of the house in which he claims the easement rights. Under Order XXIII, Rule 3, a lawful agreement or compromise can be recorded and a decree passed so far as it relates to the suit. In the present case the adjustment provides that the defendants should pass a sale-deed of the house in suit over which the rights were claimed to the plaintiff and after it was registered the suit was to be disposed of; and all that the trial Court was asked to do was that as the sale-deed had been executed and registered the suit should be disposed of. The trial Court was therefore certainly competent to direct that the suit should be dismissed as per the terms of the adjustment because the sale-deed had been registered a provided in it. But even apart from that, I1 think,' it cannot be said that the sale of the servient tenement to the owner of the dominant tenement can be said to be an adjustment not relating to the suit. In my opinion, therefore, the trial Court had the power to direct such adjustment to be recorded.
20. The result, therefore, is that the order of the lower appellate Court sending back the case to be disposed of on the merits must be set aside and the order of the trial Court restored.