- Order 23 deals with withdrawal and compromise of suits.
- Such withdrawal may be with the leave of the court (qualified) or without the leave of the court (absolute).
- Rule 1 deals with both absolute and qualified withdrawal.
- It provides that any time after the institution of the suit, the plaintiff may withdraw the suit or a part of the claim, without the leave of the court.
- An exception to this rule is that withdrawal is not possible where a vested right gets created before the withdrawal. (case law)
- Such a right of the plaintiff is unqualified and he may withdraw the suit/part of the claim against all or any of the defendants.
- However, the plaintiff shall thereafter be barred from instituting a fresh suit on the same cause of action.
- The court may also ask to plaintiff to render costs in such case.
- This rule is not applicable to minors or persons of unsound mind.
- Where a suit or part of the claim is to be withdrawn by a minor or a person of unsound mind, the leave of the court is necessary. In such a case, an affidavit must be filed by the next friend of such person.
- Further, where such person is represented by a pleader, a certificate must be filed by the pleader stating that the withdrawal or abandonment is for the benefit of the minor or unsound person.
- Qualified withdrawal is allowed where the court is satisfied that the suit shall fail by virtue of some formal defect or that there is sufficient cause to grant withdrawal of the suit or part of the claim and allow institution of a fresh suit.
- A formal defect is where the defect is one of form or procedure. (E.g. misjoinder of parties) Such defect must not deal with the merits of the case or must not be such that it goes to the root of the plaintiff’s case (e.g. non-joinder of a necessary party).
- Where the court permits the plaintiff to withdraw the suit/part of claim in such cases, it may allow the same on certain conditions.
- Further, the plaintiff shall be at the liberty to institute a fresh suit on the subject matter of the suit or part of the claim.
- However, in either case (both absolute and qualified withdrawal), the court shall not allow withdrawal by one plaintiff where there are several plaintiffs involved without the consent of the other plaintiffs.
- Rule 1-A provides that where a plaintiff withdraws the suit or abandons a claim, one of the defendants (where there are many) may apply to the court to be made a plaintiff in the suit.
- The court shall thereafter consider the application having due regard to the fact as to whether the applicant has any substantial question to be decided as against the other defendants.
- Where after withdrawal with the permission of the court, a fresh suit is to be instituted, the period of limitation shall begin from the date of the institution of the fresh suit as if the first suit never existed. (Rule 2)
- The provisions of this Order relating to the withdrawal of the suit or abandonment of a claim are applicable to appeals, revisions and writ petitions.
- However, they are not applicable to a representative suit. In case of a representative suit, a person may choose to get out of the suit. But, this shall not put an end to suit and any other person (who represents the same group of persons) may continue with the suit.
- The provisions of Order 23shall not apply to execution proceedings. (Rule 4)
- Further, the court may not allow a person on application to withdraw execution proceedings with the right to institute fresh proceedings later. Thus, the person may abandon the proceedings on his own in such case and institute fresh proceedings later. (case law)
- The Order also provides for Compromise of a suit (Rule 3) –
(a) Where the court is satisfied that a lawful agreement in writing to that effect (as regards the entire suit or part of it) has been entered into between the parties
(b) Where the defendant satisfies the plaintiff in respect the whole or part of the subject matter
- The court in such cases shall record such agreement or compromise or satisfaction and shall pass a decree (compromise decree) in this regard provided that it relates to all the parties to the suit. It is not necessary that such decree relates to the subject matter of the suit.
- An agreement which is void or voidable under the Indian Contract Act shall not be treated as being a lawful agreement for the purposes of this provision.
- Where any of the party alleges that no compromise or adjustment, etc. has been arrived at, it shall be left to the court to determine such question.
- However, no adjournment shall be allowed for the same unless the court deems fit and provides reasons in writing for such adjustment.
- Rule 3-A further provides that no suit shall lie to set aside a decree passed in such cases where it is alleged that the compromise entered into is not lawful.
- Rule 3-B states that in case of a representative suit, no agreement or compromise shall be arrived at without the leave of the court, recorded in writing.
- Every such compromise or agreement that does not comply with the provisions of this rule shall be deemed to be void.
- Before granting such leave, the court shall issue a notice in this regard to persons who may be interested in such suit.
- A representative suit would be taken to include a suit filed by or against the Karta or manager of an HUF where he represents the other members of such family.
- It also includes any other person who by virtue of the provisions of the code would be affected by the suit inspite of his name not being recorded as a party to the suit.
- The provisions relating to agreement and compromise are not applicable to execution proceedings. (Rule 4)
- No next friend or guardian of a minor can enter into a compromise on his behalf without the leave of the court and such leave must be expressly recorded. (Case law).
- A pleader is deemed to be in the same position as his client and thus he may enter into a compromise or agreement on behalf of his client. (case law)
- A compromise decree is not a decision of the court. Herein, the court merely agrees to what the parties have consented to. Thus, the principle of res judicata does not operate in such case.
- However, as the parties have given their consent to the same, the principle of estoppel applies.
- Where a compromise decree is passed by a court which has no jurisdiction to do so or where it is based on an unlawful compromise, it shall be a nullity and its validity may be questioned even at the time of execution. (case law- check- unlawful compromise- rule 3-A bars institution of suit in such cases)
- Rule 1-A(2) of Order XLIII (Order 43) provides that in an appeal, an order recording or refusing to record a compromise may be questioned.
- S.96 allows a party to challenge a compromise in an appeal.
- A compromise decree may also be challenged by filing a suit on the grounds of fraud, undue influence or coercion.
Submitted By –
(Editor @ Legal Bites)