Introduction 

• Order XXIII of the Code of Civil Procedure, 1908 (CPC) states the rules for the withdrawal and adjustment of the suit. 
• This order basically contains provisions which help to reduce the over burden of the courts and by allowing parties to go for an alternative approach to resolve their dispute. 
• The rules stated under this order are used to avoid litigation by making compromise agreements between the parties and by allowing the parties to abandon suits or claims. 
• Order XXIII consists of seven rules (Rule 1, 1A, 2, 3, 3A, 3B and 4). 

Detailed Analysis of the Rules  

• Rule 1: Withdrawal of Suit or Abandonment of Part of Claim 
  • Plaintiff may abandon his suit or any part of the suit against the defendant. 
  • In case of minor the leave of the court is required for abandonment of suit or any of it. 
  • A part of an application for the leave of the court shall be accompanied by an affidavit of the next friend. 
  • Where the Court is satisfied -  
  • That a suit must fail by reason of some formal defect. 
  • That there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of the 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 such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim.  
• Where the plaintiff—  
  • Abandons any suit or part of claim under sub-rule (1). 
  • 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.  
• 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 under sub-rule (1), or to withdraw, under sub-rule (3), any suit or part of a claim, without the consent of the other plaintiff. 
• Rule 1A: When Transposition of Defendants as Plaintiffs may be Permitted. 
  • Where a suit is withdrawn or abandoned by a plaintiff under rule 1, and a defendant applies to be transposed as a plaintiff under rule 10 of Order I the Court shall, in considering such application, have due regard to the question whether the applicant has a substantial question to be decided as against any of the other defendants.
• Rule 2: Limitation Law not Affected by First Suit 
  • In any fresh suit instituted on permission granted under the last preceding rule, the plaintiff shall be bound by the law of limitation in the same manner as if the first suit had not been instituted.
• Rule 3: Compromise of Suit
  • 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 satisfied the plaintiff in respect to 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 not 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.
• Rule 3A: Bar to Suit 
  • 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.
• Rule 3B: No Agreement or Compromise to be Entered in a Representative Suit without Leave of Court 
  • 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 the leave of the Court as recorded shall be void.  
  • Below granting such leave, the Court shall give notice in such manner as it may think fit to such persons is as may appear to it to be interested in the suit.
• Rule 4: Proceedings in Execution of Decrees not Affected
  • Nothing in this Order shall apply to any proceedings in execution of a decree or order. 

Case Laws

• Baidyanath Nandi v. Shyama Sundar Nandi (1943): 
  • The Calcutta High Court held that when one of several plaintiffs' desires to withdraw from the suit without reserving a liberty to institute a fresh suit in respect of the same matter, the consent of the co-plaintiff is not necessary.
• Triloki Nath Singh v. Anirudh Singh (2020): 
  • The Supreme Court held that the suit for a declaration which was filed before the civil court was not maintainable in the light of Order XXIII Rule 3A of CPC. The bar also applies to strangers to compromise proceeding.
• Moti Dinshaw Irani and Anr. v. Phiroze Aspandiar Irani and Ors. (2024): 
  • It was held that if the earlier suit itself was pending and no decree therein had been passed, there would be no question of the provisions of Rule 3A of Order XXIII of the CPC.
• Kapoori Bai & Ors. v. Neelesh & Ors. (2023):  
  • The Madhya Pradesh High Court has held that if one of several plaintiffs having independent right to relief and which is severable from the right claimed by the other plaintiffs seeks to abandon the claim in the suit, then the Court can grant such relief in its discretion.

Conclusion 

The important part of Order XXIII of CPC is that it puts an end to the litigation. It saves time and money of the parties. It also reduces the burden of courts. This order gives the best alternative to litigation to the parties to resolve their dispute in an amicable way. It encourages settlement between the parties with leave of the court.