Source: Supreme Court 

Why in News? 

A bench of Justice Vikarm Nath and Justice PB Varale held that Order XLIII Rule 1A of CPC does not create a new right to appeal, it merely enables an appellant already before the Appellate Court to attack the decree on the ground that compromise should not have been recorded. 

• The Supreme Court held this in the case of Sakina Sultanali Sunesara (Momin) v. Shia Imami Ismaili Momin Jamat Samaj & Ors. (2025). 

What was the Background of Sakina Sultanali Sunesara (Momin) v. Shia Imami Ismaili Momin Jamat Samaj & Ors. (2025) Case?   

• Three parcels of land in Siddhpur originally belonged to Moosabhai Mooman and were inherited by his family members after his death. 
• Various family members executed Powers of Attorney (PoAs), including one by Mumtaz in favor of Hassan Ali Lad in 2002, and a joint one in 2005 signed by the appellant, Salma, Altaf, and Noorbanu. 
• In March 2007, Shaukat Ali and Hassan Ali agreed to sell a large portion of the land to ten individuals calling themselves "Shia Imami Ismaili Momin Jamat, Siddhpur" for ₹2.51 crore, with only ₹15 lakh paid upfront. 
• The sale agreement was terminated in August 2011, and in January 2013, the surviving eight purchasers executed a deed cancelling the agreement. 
• In 2013, several family members relinquished their interests in favor of the appellant, making her the sole recorded owner of the property. 
• In August 2015, the appellant sold portions of the land through three registered sale deeds to Platinum Tradex Private Limited and four individuals. 
• Later in 2015, Hassan Ali and some original vendees convinced Kurban Momin to revive the terminated transaction, leading to legal challenges against the appellant's ownership. 
• Three civil suits were filed between January and November 2016, with two resulting in consent decrees based on compromises signed by Shaukat Ali and Hassan Ali without the appellant's knowledge. 
• The appellant filed appeals against both consent decrees, claiming they were procured by fraud and without her notice. 
• The High Court dismissed all appeals, ruling that a party must first invoke the proviso to Order XXIII Rule 3 before using Rule 1-A of Order XLIII of Civil Procedure Code, 1908 (CPC). 
• The appellant has now filed a civil appeal, arguing that Section 96 of the CPC permits a direct First Appeal even when the compromise itself is disputed. 

What were the Court’s Observations? 

• The question that the Court aimed to answer in this judgment was whether a litigant who was already a party to the suit, yet contests the very fact or legality of a compromise embodied in a decree, is restricted to an application before the Trial Court under the proviso to Order XXIII Rule 3 or may, at her election, maintain a first appeal under Section 96 of the CPC notwithstanding Section 96(3). 
• For this purpose the Court dived deep into the changes brought by Amendment Act of 104 of 1976 to the CPC. In 1976 the following changes were made: 
  • An order “recording or refusing to record” a compromise was no longer made appealable. 
  • Proviso and Explanation to Order XXIII Rule 3 – obliging the Trial Court to decide, forthwith and itself, any objection to the fact or lawfulness of a compromise 
  • Rule 3-A of Order XXIII – barring a separate suit to avoid a compromise decree 
  • Order XLIII Rule 1-A – permitting an appellant who is already in a competent appeal against a decree to contend that the compromise “should, or should not, have been recorded” 
  • Section 96(3) (as renumbered) – prohibiting an appeal from a decree “passed with the consent of parties”. 
• The Court held that the interpretation of these provisions is quite clear and coherent. A party that accepts the compromise is bound by it and cannot appeal (Section 96(3)). 
  • A party that denies the compromise must first raise that dispute before the Trial Court (proviso to Order XXIII Rule 3). 
  • A fresh suit is no longer possible (Order XXIII Rule 3-A). 
  • If, and only if, the Trial Court decides the objection and passes a decree adverse to the objector, a first appeal lies under Section 96(1); 
• in that appeal the appellant may, by virtue of Order XLIII Rule 1-A(2), challenge the recording of the compromise. 
  • In the case of Banwari Lal v. Chando Devi and another (1993) the Court held that the aggrieved party possesses two concurrent but sequential remedies: 
  • an application under the proviso to Order XXIII Rule 3 before the Trial Court; or 
  • a first appeal under Section 96(1) after the Trial Court has recorded its finding. 
• The Court thus held that the path is clear that the proviso to Order XXIII Rule 3 of CPC is not optional, it is in fact a first port of call for any party on record that denies the compromise. 
• Order XLIII Rule 1 A does not create a new right of appeal it merely enables the appellant already in appeal to attack the decree on the ground that the compromise should not have been recorded. Thus, when the fact is not disputed the bar of Section 96 (3) of CPC is absolute. 
•  Thus, the Court held that in the facts of the present case in view of the law laid down above the civil appeals fails and are dismissed. 

What is Order 43 Rule 1A of CPC? 

• The provision for compromise is provided for under Order XXIII Rule 3 of CPC. 
• Order XXIII Rule 3 of CPC provides: 
  • When it is proven to the Court's satisfaction that a suit has been adjusted through a lawful written agreement or compromise signed by the parties, the Court must record this agreement. 
  • Similarly, if a defendant has satisfied the plaintiff regarding the whole or part of the subject matter of the suit, the Court must record this satisfaction. 
  • In either case, the Court shall pass a decree in accordance with the agreement, compromise, or satisfaction as it relates to the parties in the suit. 
  • This applies regardless of whether the subject matter of the agreement matches the subject matter of the original suit. 
  • The proviso provides that if one party alleges that an adjustment or satisfaction has been reached and the other party denies it, the Court is required to decide this question. 
  • No adjournment shall be granted specifically to decide this question unless the Court, for reasons it must record, believes such an adjournment is necessary. 
• Order XXIII Rule 3 A of CPC provides: 
  • A plain reading of this provision indicates that the earlier suit should have been disposed of by passing a decree in view of a compromise entered into between the parties. In such a contingency, a subsequent suit raising a challenge that the compromise recorded in the earlier suit was not lawful would not lie. 
• Further, Order XLIII Rule 1A of CPC provides: 
  • When an order is made against a party under the Code, followed by a judgment and decree against that party, the affected party may appeal against the decree. 
  • In such an appeal, the party may argue that the original order should not have been made and the judgment should not have been pronounced. 
  • When appealing against a decree that was passed after recording a compromise, the appellant can contest the decree by arguing that the compromise should not have been recorded. 
  • Similarly, when appealing against a decree that refused to record a compromise, the appellant can contest the decree by arguing that the compromise should have been recorded. 
  • This provision creates a mechanism for parties to challenge aspects of non-appealable orders by incorporating those challenges into appeals against the resulting decrees.