Introduction 

• This is a landmark judgment relating to decree based on compromise under Order XXIII Rule 3 of Civil Procedure Code, 1908. 
• This judgment was delivered by a bench consisting of Justice TK Thommen and Justice RM Sahai. 

Facts 

• The case concerns an appeal against a High Court judgment regarding the validity of a compromise decree. 
• The compromise was written down and signed by the counsel (lawyers) representing both parties, but not by the parties themselves. 
• The High Court upheld this compromise decree as valid and binding on the parties. 
• The High Court also ruled that since there was no challenge to the execution order under Order XXI, rule 23 of Civil Procedure Code, 1908 (CPC), the defendant couldn't resist execution through Chamber Summons. 
• The appellant's main contention was that after the 1976 amendment requiring compromises to be "in writing and signed by the parties," a decree based on a compromise signed only by counsel (and not parties themselves) was null and void. 
• The respondents argued that the term "party" traditionally included their legal representatives (pleaders), and counsel had implied authority to represent clients in court matters including compromises, unless specifically restricted. 
• The matter was hence before the Supreme Court. 

Issues Involved  

• Whether the compromise entered into between the parties was valid and binding under Order 23 Rule 3 of CPC? 

Observation  

• The Court held that following is the traditional role of counsel: 
  • Before 1976, counsel could enter compromises within the scope of the suit 
  • Only matters within suit's subject matter were executable 
  • Matters outside suit scope were admissible only as judicial evidence 
• As a result of the amendment in 1976 following points were added: 
  • Consent decrees became executable even for matters outside suit's subject matter 
  • Main objective was to expedite court proceedings 
  • The term 'parties' was to be interpreted to achieve faster case disposal 
• The Court observed that following is the legislative intent behind CPC: 
  • There was no intention to limit counsel's implied authority 
  • The relationship between counsel and party remains contractual 
  • The Parliament by way of amendment aimed to reduce case backlogs and provide certainty. 
• Following were the key points laid down in this case: 
  •  The Court held that compromise through counsel remained valid even after 1976 amendment. 
  • It was observed that consent judgments create estoppel by judgment. 
  • Parties can still enter compromises through authorized agents 
  • Consent decrees are meant to end litigation definitively. 

Conclusion 

• In this case the Court held that amicable settlements should be encouraged between the parties in order to reduce litigation in Courts.