Code of Civil Procedure, 1908 (CPC)
Order XXIII CPC: Withdrawal and Adjustment of Suits
Not every suit is fought to judgment. A plaintiff may decide to give it up, and the parties may decide to settle it. Order XXIII of the Code of Civil Procedure, 1908 governs both: Rule 1 on withdrawal and abandonment, with the narrow permission to withdraw with liberty to sue again; and Rule 3 on compromise, with the safeguards in Rules 3A and 3B that protect the decree and the represented class. These notes cover the whole Order, the effect of each route, and the remedies against a compromise decree that should not have been passed.
The two routes out of a suit under Order XXIII, and the bars that attach to each
1. Withdrawal and Abandonment: Rule 1
§ Order XXIII Rule 1, CPC 1908 (in substance) (1) At any time after the institution of a suit, the plaintiff may abandon his suit or abandon a part of his claim as against all or any of the defendants. (3) Where the Court is satisfied — (a) that a suit must fail by reason of some formal defect, or (b) that there are other sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or part of a claim with liberty to institute a fresh suit in respect of the subject matter of such suit or such part of the claim. (4) Where the plaintiff abandons any suit or part of a claim under sub-rule (1), or withdraws from a suit or part of a claim without the permission referred to in sub-rule (3), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject matter or such part of the claim. (5) Nothing in this rule shall be deemed to authorise the Court to permit one of several plaintiffs to abandon a suit or part of a claim, or to withdraw with liberty to institute a fresh suit, without the consent of the other plaintiffs. |
The two routes are therefore quite different in consequence, and the detail of each, the meaning of a formal defect, what counts as other sufficient grounds, and the exact reach of the bar in sub-rule (4), is developed in the companion topic on withdrawal in this series. For the scheme of the Order it is enough to fix the contrast: withdrawal without leave is free but final, and withdrawal with leave preserves the claim but is granted only on the two grounds Rule 1(3) names.
§ Order XXIII Rule 1A: transposition on withdrawal Where a suit is withdrawn or abandoned by a plaintiff under sub-rule (1), and a defendant applies to be transposed as a plaintiff under Order I Rule 10, the court shall, in considering that application, have due regard to the question whether the applicant has a substantial question to be decided as against any of the other defendants. The rule prevents a plaintiff's withdrawal from destroying the accrued position of a defendant who has a real dispute with a co-defendant, and it is the provision most often invoked in partition suits. |
2. Compromise of a Suit: Rule 3
§ 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 the question, 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. |
§ The four requirements of a recordable compromise All four must be satisfied: • A lawful agreement or compromise. By the Explanation, an agreement void or voidable under the Indian Contract Act, 1872 is not lawful, so a compromise obtained by fraud, coercion, undue influence or misrepresentation, or one with an unlawful object, cannot be recorded. • In writing and signed by the parties. The requirement was made express by the Amendment Act of 1976; an oral compromise cannot be recorded under this rule. • Proved to the satisfaction of the court. The court does not record a compromise mechanically; it satisfies itself that the agreement exists and is lawful, and where its existence is disputed, the proviso requires the court itself to decide the question. • Relating to the suit. The decree follows the compromise so far as it relates to the parties to the suit, though the compromise itself may cover a wider subject matter than the suit. |
3. The Bars and Safeguards: Rules 3A and 3B
§ Order XXIII Rule 3A, CPC 1908 No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful. |
§ Order XXIII Rule 3B, CPC 1908 (in substance) (1) No agreement or compromise in a representative suit shall be entered into without the leave of the Court expressly recorded in the proceedings; and any such agreement or compromise entered into without such leave shall be void. (2) Before granting such leave, the Court shall give notice in such manner as it may think fit to such persons as may appear to it to be interested in the suit. Explanation. A representative suit means a suit under Order I Rule 8, a suit under Order XXXI Rule 1 or Rule 2, a suit in which the manager of an undivided Hindu family sues or is sued as representing the other members, and any other suit in which the decree passed may, by virtue of the provisions of this Code or of any other law, bind any person who is not named as a party. |
The two rules work in opposite directions and are both products of the 1976 amendment. Rule 3A closes a route: a party who says the compromise was unlawful may no longer file a separate suit to upset the decree, and must instead apply to the same court under the proviso to Rule 3. Rule 3B opens a gate: in a representative suit, a compromise requires the court's express leave after notice to those interested, and without that leave it is void, because the persons bound by the decree are not before the court to protect themselves.
4. The Consequences Compared
Basis | Withdrawal, Rule 1 | Compromise, Rule 3 |
|---|---|---|
Whose act ends the suit | The plaintiff's alone; the defendant's consent is not required | The agreement of both parties, recorded by the court |
What the court does | Permits withdrawal, with or without liberty, on such terms as it thinks fit | Satisfies itself that the compromise is lawful, records it, and passes a decree in its terms |
The resulting order | An order of withdrawal; no adjudication on the merits | A decree, executable as any other decree |
Effect on a fresh suit | Barred by Rule 1(4) where there was no leave; permitted where leave under Rule 1(3) was granted | Barred by Rule 3A so far as the challenge is that the compromise was unlawful; the remedy is an application to the same court |
Costs | The plaintiff is liable for such costs as the court awards | As agreed between the parties, or as the court orders |
Special protection | Rule 1A: a defendant may be transposed as plaintiff where he has a substantial question against a co-defendant | Rule 3B: in a representative suit, express leave after notice to interested persons, failing which the compromise is void |
5. Related Provisions
i. Order XXIII Rule 2: limitation on the fresh suit. In any fresh suit instituted on permission granted under Rule 1, the plaintiff shall be bound by the law of limitation in the same manner as if the first suit had not been instituted. Leave therefore preserves the claim but does not stop the clock.
ii. Order XXIII Rule 4: exclusions. The Order does not apply to proceedings in execution of a decree or order, nor does Rule 3 apply to any proceeding in which no decree can be passed.
iii. Order I Rule 8(4). In a representative suit under that rule, no part of the claim may be abandoned, the suit may not be withdrawn, and no agreement, compromise or satisfaction may be recorded, unless the court has given notice to all persons interested, which complements Rule 3B.
iv. Section 89. Where the court refers a dispute to settlement outside court and the parties settle, the settlement is given effect in the suit, and a compromise so arrived at is recorded under Order XXIII Rule 3.
6. Landmark Points
- Order XXIII Rule 1(3) and (4). Withdrawal with liberty is permitted only on a formal defect or other sufficient grounds; withdrawal without leave bars a fresh suit on the same subject matter.
- Order XXIII Rule 1A. On withdrawal, a defendant may be transposed as plaintiff where he has a substantial question to be decided against a co-defendant.
- Order XXIII Rule 3 with its Explanation. A compromise must be lawful, in writing and signed, and proved to the court's satisfaction; an agreement void or voidable under the Contract Act is not lawful.
- Proviso to Rule 3. Where an adjustment is alleged and denied, the court itself decides the question, without an adjournment unless reasons are recorded.
- Order XXIII Rule 3A. No suit lies to set aside a decree on the ground that the compromise on which it is based was not lawful.
- Order XXIII Rule 3B with Order I Rule 8(4). A compromise in a representative suit requires express leave after notice to interested persons, and is void without it.
7. Frequently Asked Questions
Can a plaintiff withdraw a suit at any time?
Yes. Under Order XXIII Rule 1(1) he may abandon the suit or part of the claim at any time after institution, as against all or any of the defendants. But by Rule 1(4) he is then liable for costs and precluded from instituting a fresh suit on the same subject matter.
When can a plaintiff withdraw with liberty to file a fresh suit?
Only where the court is satisfied that the suit must fail by reason of some formal defect, or that there are other sufficient grounds for allowing a fresh suit, under Order XXIII Rule 1(3). Leave is granted on such terms as the court thinks fit.
What are the requirements of a valid compromise under Rule 3?
The agreement or compromise must be lawful, in writing and signed by the parties, proved to the satisfaction of the court, and it must relate to the suit. By the Explanation, an agreement void or voidable under the Indian Contract Act, 1872 is not lawful.
Can a separate suit be filed to set aside a compromise decree?
No. 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. The remedy is an application to the same court under the proviso to Rule 3.
Can a representative suit be compromised?
Only with the express leave of the court, recorded in the proceedings, and after notice to the persons interested. Order XXIII Rule 3B makes a compromise entered into without such leave void, and Order I Rule 8(4) requires notice before any compromise is recorded in such a suit.
Does leave to file a fresh suit extend the limitation period?
No. Order XXIII Rule 2 provides that in any fresh suit instituted on such permission, the plaintiff is bound by the law of limitation as if the first suit had not been instituted. Leave preserves the claim but does not stop the clock.
8. Related Topics in This CPC Series
- Withdrawal of a Suit under Order XXIII Rule 1
- Compromise of a Suit under Order XXIII Rule 3
- Order XXII: Death, Marriage and Insolvency of Parties
- Representative Suit under Order I Rule 8