What was the main legal point in Banwari Lal v. Chando Devi?

The Supreme Court explained how courts must record compromises under Order 23 Rule 3 CPC and can recall a decree if the compromise is not lawful or is tainted by fraud.

Can a separate suit be filed to set aside a compromise decree?

No. Rule 3A CPC bars a separate suit. The challenge must be made before the same court that recorded the compromise.

What went wrong in this case’s compromise?

The compromise was not signed by both sides and the court accepted it without proper checks, so it failed the mandatory requirements of Order 23 Rule 3 CPC.

What powers does the court have to fix such errors?

Using the proviso to Rule 3 and Section 151 CPC, the court may recall the order and restore the suit if the compromise is not lawful.

Why is this case useful for exams?

It gives a clean roadmap: written and signed compromise, court’s duty to verify lawfulness, Rule 3A bar on separate suits, and recall when fraud exists.

Banwari Lal v. Chando Devi (Through LR) And Ors (1993)

Order 23 Rule 3 CPC • Compromise decree • Fraud • Recall • Rule 3A bar

Supreme Court of India 1993 N.P. Singh & N.M. Kasliwal, JJ. Citation: — Civil Procedure 6 min read

Order 23 Rule 3 CPC Compromise Decree Rule 3A Fraud Recall of Decree

Quick Summary

This case explains how a court should handle a compromise decree under Order 23 Rule 3 CPC. The Court said: the compromise must be written, signed by the parties, and lawful. If there is fraud or the basics are missing, the court can recall the order and restore the suit. A separate suit to set aside such a decree is barred by Rule 3A.

Main theme: Valid compromise Fraud check by court Rule 3A suit bar

Issues

Is the compromise decree liable to be set aside when it is not signed and is alleged to be fraudulent?
Can the trial court recall its order and restore the suit under the proviso to Rule 3 and Section 151 CPC?
Is a separate suit to challenge the compromise decree barred by Rule 3A CPC?

Rules

Order 23 Rule 3 CPC: Compromise must be in writing, signed by parties, and lawful.
Proviso to Rule 3: If the compromise is questioned, the court must decide its validity.
Rule 3A CPC: Separate suit to set aside a compromise decree is barred.
Section 151 CPC: Inherent powers allow recall/restoration to prevent abuse and secure justice.

Facts (Timeline)

14 Sep 1990 — Suit Filed

Dispute over land. Plaintiff filed the suit.

27 Feb 1991 — Compromise Petition

A compromise petition was placed before the trial court. It was not signed by the respondent or counsel. Court dismissed the suit as withdrawn and drew a decree.

03 Apr 1991 — Recall Application

Plaintiff alleged fraud and said no real compromise happened. Sought recall and restoration.

Trial Court

Found non-compliance with Rule 3. Recalled the order and restored the suit.

High Court Revision

Set aside the recall. Treated the petition as withdrawal under Rule 1.

Supreme Court Appeal

Held the trial court was right to recall: the alleged compromise was not lawful.

Arguments

Appellant

The “compromise” was fabricated; no real agreement.
Mandatory signatures were missing; Rule 3 not satisfied.
Fraud vitiates consent; decree must be recalled; suit restored.

Respondent

Treated as simple withdrawal by plaintiff under Rule 1.
Trial court could not recall once dismissed as withdrawn.
No fraud proved; decree should stand.

Judgment

The Supreme Court allowed the appeal. It restored the trial court’s recall order and set aside the High Court’s view.

The paper placed before the trial court was a compromise petition, not a Rule 1 withdrawal.
Rule 3 demands a written and signed compromise. That condition was missing.
Courts must not record a compromise casually; they must check lawfulness.
On finding fraud/non-compliance, the trial court rightly recalled the decree and restored the suit.

Ratio

The court recording a compromise must ensure it is written, signed by the parties, and lawful. If these essentials fail or fraud is shown, the decree can be recalled. A separate suit is barred by Rule 3A.

Why It Matters

Protects parties from forced or fake compromises.
Clarifies that the trial court is the right forum to challenge a recorded compromise.
Promotes judicial diligence before stamping a consent decree.

Key Takeaways

Write + Sign + Lawful — the Rule 3 triad.
When disputed, court must decide validity first.
Rule 3A bars a separate suit to set aside the decree.
Recall & restore possible under proviso to Rule 3 and Section 151 CPC.

Mnemonic + 3-Step Hook

Mnemonic: “WSL → We Sign Lawfully” — Written, Signed, Lawful.

Check form: Is it written and signed?
Check substance: Is it lawful and voluntary?
If doubted: Court first decides validity; may recall.

IRAC Outline

Issue: Can the compromise decree stand when signatures are missing and fraud is alleged?

Rule: Order 23 Rule 3 (written, signed, lawful); Proviso to Rule 3 (court decides validity); Rule 3A (bar on separate suit); Section 151 CPC (recall/restoration).

Application: Petition lacked signatures; court failed to verify; fraud alleged; therefore not a lawful compromise.

Conclusion: Trial court properly recalled the decree and restored the suit; High Court’s contrary view set aside.

Glossary

Compromise Decree: A decree based on the agreement of the parties, recorded by the court.
Rule 3A CPC: Bars a separate suit to set aside a decree on compromise; challenge must go to the same court.
Recall: Court’s act of setting aside its earlier order/decree to correct injustice.

FAQs

It fails Rule 3. Without signatures of both sides, the court should not record it. If recorded, the decree can be recalled.

The same court that is asked to record the compromise decides its validity under the proviso to Rule 3.

No. Rule 3A bars a separate suit. Move the trial court to recall the decree.

Facts showing no real consent—like missing signatures, lack of authority, or misrepresentation—can support the claim. The court will assess evidence.

“Under O.23 R.3, a compromise must be written, signed, and lawful; if disputed, the court decides validity first. Separate suit barred by R.3A; recall is proper.”