Code of Civil Procedure, 1908 (CPC)
Consent Decree and Compromise Decree Distinguished
These two expressions describe the same kind of decree from two different angles, and much of the confusion about them comes from expecting a sharp difference where there is only a difference of emphasis. A consent decree is one passed with the consent of the parties, the phrase used in Section 96(3) of the Code of Civil Procedure, 1908 when barring an appeal. A compromise decree is one passed on an adjustment of the suit by a lawful agreement or compromise, the phrase used in Order XXIII Rule 3. These notes set out what is common, where a difference can matter, and the rules that govern both.
One decree, two names, and what is true of both
1. The Two Provisions
§ Order XXIII Rule 3, CPC 1908 (in substance) Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise, in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit: Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding it unless the Court, for reasons to be recorded, thinks fit to grant such adjournment. Explanation. An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 shall not be deemed to be lawful within the meaning of this rule. |
§ Section 96(3), CPC 1908 No appeal shall lie from a decree passed by the Court with the consent of parties. Why. There has been no adjudication. The court has not decided anything against the appellant; it has recorded what the parties themselves agreed. There is nothing for an appellate court to review. |
2. What Is Common to Both
§ Five propositions that apply equally • There is no adjudication on the merits. The decree gives effect to the parties' agreement, not to the court's decision. • No appeal lies, by force of Section 96(3), however the decree is described. • The remedy against it is an application to the same court. By the proviso to Order XXIII Rule 3, where one party alleges and the other denies that an adjustment was arrived at, the court that passed the decree decides the question. • No separate suit lies. Order XXIII Rule 3A provides that no suit shall lie to set aside a decree on the ground that the compromise on which it is based was not lawful. • It operates as res judicata and is executable in the ordinary way, so far as it relates to the parties to the suit. |
3. Where a Difference Can Matter
Basis | Consent decree | Compromise decree |
|---|---|---|
The phrase's home | Section 96(3), which bars an appeal | Order XXIII Rule 3, which requires the court to record and decree |
What it emphasises | HOW the decree came to be passed: with the parties' consent | WHAT underlies it: an adjustment by a lawful agreement or satisfaction |
Is mutual give and take necessary? | Not necessarily. A decree may be passed on a bare submission to the claim, or on an admission | A compromise ordinarily implies concessions on both sides |
Form required | Consent must be established, and in practice is recorded in the same way | The agreement must be LAWFUL, IN WRITING and SIGNED BY THE PARTIES |
Subject matter | Confined to the suit | Rule 3 expressly allows the agreement to cover matters beyond the suit, but the decree is passed only so far as it relates to the parties to the suit |
Appeal | Barred by Section 96(3) | Equally barred, the decree being by consent |
Challenge | Application to the court that passed it | The proviso to Rule 3, with Rule 3A barring a separate suit |
The practical upshot is that the two expressions are used interchangeably in most judgments, and correctly so. The one distinction worth carrying into an answer is that a compromise connotes mutual adjustment, while a decree may be passed by consent even where one side has simply submitted to the claim without conceding anything in return. That distinction rarely changes the result, because Section 96(3) and Order XXIII Rule 3A apply to both.
4. The Safeguards on a Compromise Decree
§ Four requirements a court checks before recording • Lawfulness. The Explanation to Rule 3 provides that an agreement void or voidable under the Indian Contract Act, 1872 is not lawful within the rule, so a compromise procured by coercion, fraud or misrepresentation cannot be recorded. • Writing and signature. Since the 1976 amendment the agreement must be in writing and signed by the parties; an oral compromise cannot be recorded under the rule. • Capacity and leave, where a party is under disability. Order XXXII Rule 7 requires the leave of the court expressly recorded before a next friend or guardian for the suit may compromise on behalf of a minor, and a compromise without leave is voidable against all parties other than the minor. • Leave in a representative suit. Order XXIII Rule 3B provides that no agreement or compromise in a representative suit shall be entered into without the leave of the court expressly recorded, after notice to the persons interested, and a compromise entered into without such leave is void. |
5. Landmark Points
- Order XXIII Rule 3. Where a suit is adjusted by a lawful agreement or compromise in writing and signed by the parties, or the defendant satisfies the plaintiff, the court shall record it and pass a decree accordingly, so far as it relates to the parties.
- The Explanation to Rule 3. An agreement void or voidable under the Contract Act is not lawful for this purpose.
- The proviso to Rule 3. Where the adjustment is alleged and denied, the court that passed the decree decides the question.
- Order XXIII Rule 3A. No suit lies to set aside a decree on the ground that the compromise was not lawful.
- Section 96(3). No appeal lies from a decree passed with the consent of parties.
- Order XXXII Rule 7 and Order XXIII Rule 3B. Leave is required for a compromise on behalf of a minor and in a representative suit.
6. Frequently Asked Questions
Is there a real difference between a consent decree and a compromise decree?
Very little. They describe the same kind of decree from different angles: consent looks at how it was passed, compromise at the adjustment underlying it. A compromise ordinarily implies mutual concessions, while a consent decree may be passed on a bare submission to the claim.
Can either be appealed?
No. Section 96(3) provides that no appeal lies from a decree passed by the court with the consent of parties, because there has been no adjudication for an appellate court to review.
How is such a decree challenged?
By an application to the court that passed it. Under the proviso to Order XXIII Rule 3, where one party alleges and the other denies that an adjustment was arrived at, that court decides the question, and Rule 3A bars a separate suit.
Must a compromise be in writing?
Yes. Since the 1976 amendment, Order XXIII Rule 3 requires the agreement or compromise to be in writing and signed by the parties. An oral compromise cannot be recorded under the rule.
What makes a compromise unlawful?
The Explanation to Rule 3 provides that an agreement which is void or voidable under the Indian Contract Act, 1872 shall not be deemed lawful, so a compromise procured by coercion, undue influence, fraud or misrepresentation cannot be recorded.
Can a compromise cover matters outside the suit?
The agreement may, and Rule 3 says so expressly. But the decree is passed in its terms only so far as it relates to the parties to the suit; the rest of the agreement stands as a contract between them.
What special rules apply where a minor is a party?
Order XXXII Rule 7 requires the leave of the court expressly recorded before a next friend or guardian may compromise on the minor's behalf, supported by an affidavit and, where he is represented, a pleader's certificate. A compromise without leave is voidable against all parties other than the minor.
7. Related Topics in This CPC Series
- Compromise of a Suit under Order XXIII Rule 3
- Order XXIII: Withdrawal and Adjustment of Suits
- Order XXXII: Suits by Minors and Persons of Unsound Mind
- First Appeals: Sections 96 to 99A and Order XLI