Settlements of Civil Suits Order XIII

ORDER   23 OF THE CODE OF CIVIL PROCEDURE1908 (WITHDRAWAL AND ADJUSTMENT OF SUIT)

Dear friends sometimes it happens that during the pendency of the civil suits, some development happens due to changed circumstances. For example; defendants satisfy the claim of the plaintiff out of court and sometimes court also meditate between them to settle their dispute and sometimes the relief claimed by the plaintiff becomes infructuous and useless for him due to lapse of time and there may be other reasons also for withdrawal and adjustment of suits. Today we shall discuss that how the procedure goes in withdrawal and adjustments of suits in civil cases; I shall be discussing all this in detail here. The order 23 of the Code of Civil Procedure, 1908 deals with withdrawal and adjustments of suits. The right to withdraw a suit is not an exclusive right of the plaintiff and there are some riders on it also. The plaintiff cannot withdraw a suit on his own and before doing so, the plaintiff will have to satisfy the court that why he is choosing to withdraw a suit because a lot of time of the court is wasted in conducting the proceedings in a civil suit. Not only this, a lot of public money is also spent to make the courts functional. The court has to see that why it should permit the plaintiff to withdraw his suit. The court has also to see whether there are more than one plaintiff, because, if that is so, the court has to see whether alone plaintiff is competent to withdraw the suit or he will have to take the consent of the other plaintiffs whose rights have been involved. The courts will have also to see whether there is a minor plaintiff in the suit and their rights have been well protected or not. The court has also to see whether the rights of the minor plaintiff have been properly represented and protected in the suit. The court has  also to see whether there is any adverse effect on the rights of the other remaining plaintiffs in case the suit is allowed to be withdrawn.

Now let us discuss all these aspects. But before doing so let us see what the Order 23 of The Code of Civil Procedure, 1908 is. Let me reproduce The Order 23 of The Code of Civil Procedure, 1908 herein below.

ORDER XXIII Withdrawal and Adjustment of Suits

[1. Withdrawal of suit or abandonment of part of claim.—(1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim:

 Provided that where the plaintiff is a minor or other person to whom the provisions contained in rules 1 to 14 of Order XXXII extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court.

 (2) An application for leave under the proviso to sub-rule (1) shall be accompanied by an affidavit of the next friend and also, if the minor or such other person is represented by a pleader, by a certificate of the pleader to the effect that the abandonment proposed is, in his opinion, for the benefit of the minor or such other person.

 (3) Where the Court is satisfied,

 (a) that a suit must fail by reason of some formal defect, or 1. See now the Limitation Act, 1973 (36 of 1963),

 (b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of 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.

 (4) Where the plaintiff—

 (a) abandons any suit or part of claim under sub-rule (1), or

 (b) 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 authorize 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.]

 [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.]

 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

 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 1 [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 2 [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 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule.

 [3-A. Bar to suit.—No suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful.

 3-B. No agreement or compromise to be entered in a representative suit without leave of Court.—(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 the leave of the Court so recorded shall be void.

 (2) Before granting such leave, the Court shall give notice in such manner as it may think fit to such person is as may appear to it to be interested in the suit.

 Explanation.—In this rule, “representative suit” means,—

 (a) a suit under Section 91 or section 92,

 (b) a suit under rule 8 of Order I,

 (c) a suit in which the manager of an undivided Hindu family sues or issued as representing the other members of the family,

 (d) any other suit in which the decree passed may, by virtue of the provisions of this Code or of any other law for the time being in force, bind any person who is not named as party to the suit.

 4. Proceedings in execution of decrees not affected.—nothing in this Order shall apply to any proceedings in execution of a decree or order.

 

Let us start from Order 23 Rule 1(1) Of the Code of Civil Procedure, 1908 which deals with Withdrawal of Suit or Abandonment of Part of Claim. This Sub Rule says that at any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim. 

First of all let us examine what is there in this Order 23 Rule 1(1) Of the Code of Civil Procedure, 1908. The Sub Rule says “at any time”. Meaning thereby that there is no time limit specified by the Statute for the withdrawal of suit. After institution of suit, the same can be withdrawn at any stage during the pendency of suit or even after decision of the suit and even during the appellate stage also and there is no such bar.  In other words it can be said that the plaintiff has got an absolute right to withdraw his suit and the court can neither stop him nor can compel him to withdraw his suit. In other words it means that the plaintiff is the master of his suit as the maxim goes.

The second part of Order 23 Rule 1(1) Of the Code of Civil Procedure, 1908 is, “the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim.” This is an important aspect of this Sub Rule that gives the plaintiff a right to abandon his whole suit or part of its claim against all or any of the defendants.

But there is a provision to this Order 23 Rule 1(1) Of The Code Of Civil Procedure, 1908 which says, “where the plaintiff is a minor or other person to whom the provision contained in of Order XXXII Rules 1 to 14 Of The Code Of Civil Procedure, 1908   extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court.”

Now we can say that there are two conditions for the withdrawal of the suit i.e., if the plaintiff is minor or is the other person to whom Order XXXII Rules 1 to 14 Of the Code of Civil Procedure, 1908. What are those provisions which debar him? ‘Suits  by or against minors and persons of unsound mind’. This Rule is based upon the principle that court is the guardian of rights and interest of such category of persons and the Court has to look after the interest of those persons either through the next friend of the minor or person of unsound mind or through the guardian appointed by the court. Thus under these circumstances the necessary permission of the court will be required by the plaintiff to abandon the suit or part of claim by the plaintiff.

Now let us discuss Order 23 Rule 1(2) of the Code of Civil Procedure, 1908.

The Sub Rule 2 says that how the application for leave of the court is filed. This sub rule says that If the plaintiff is minor or person of unsound mind, an Affidavit will have to be filed by the next friend of the minor or if the minor or such other person is represented by the pleader, a certificate to the effect that abandonment is for the benefit of the minor or person of unsound mind.

Now when the application together with affidavit of the next friend of the minor or such other person together with a certificate by the pleader is filed in the court, the  Order 23 Rule  1(3)  of The Code of Civil Procedure,1908  comes into play.

 Order 23 Rule  1(3) of The Code of Civil Procedure,1908

Order 23 Rule 1(3) says that, the court is to satisfy itself whether the suit must fail by reason of some formal defect or 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 grant permission to the plaintiff 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 a claim.

Basically three things are there in Order 23 Rule 1(3) of The Code Of Civil Procedure, 1908   i.e. , firstly  if there is formal defect in the suit which can be cured by filing fresh suit, the court can permit the plaintiff to do so; secondly if there are sufficient grounds available with the plaintiff to withdraw and file a fresh suit, the court can allow the plaintiff to do so ,but the main thing in this Sub Rule is the satisfaction of the court. The court has to give reasons for its satisfaction before allowing an application of the plaintiff for the withdrawal of the suit.

But what happens if the plaintiff withdraws his suit or part of claim of a suit without taking leave of the court. There comes into play Order 23 Rule1 (4) of The Code of Civil Procedure, 1908

Order 23 Rule 1(4) of The Code of Civil Procedure, 1908

This Order 23 Rule 1(4) of Code of Civil Procedure,1908  says that if the plaintiff abandons the suit under Sub Rule 1,means at his own will, he is precluded from filing fresh suit because, he does not take permission of the court . Which further means that permission of the court is required if the plaintiff intends to file fresh suit on the same cause of action. However, when the plaintiff withdraw the suit, the court has to satisfy itself that incase the suit is not allowed to      be withdrawn, it will fail for formal defect, or that there are sufficient grounds for allowing the plaintiff to institute a fresh suit, it may on such terms as it thinks fit, grant permission to the plaintiff to withdraw from such suit under sub rule 4. If the court does not allow the plaintiff to withdraw a suit with the permission to file fresh suit, the plaintiff shall be precluded from filing the fresh suit on the same cause of action.

The condition for granting permission to the plaintiff  to file fresh suit on the same cause of action is on the satisfaction of two aspect  i.e. , whether the suit is having formal defect or, there are other sufficient grounds to allow the plaintiff to file fresh suit after withdrawing the same on the same cause of action.

The Order 23 Rule 1(5) Of the Code Of Civil Procedure, 1908.

This rule says that nothing in this rule authorizes the court to permit one of the several plaintiffs to abandon a suit or part of a claim or withdraw any suit or part of claim, without the consent of the other plaintiff.

Now this is a catch here. The court cannot allow one of the plaintiffs to abandon or withdraw a suit without the consent of the other plaintiffs under Order 23 Rule1 (3) of the Code of Civil Procedure, 1908 because Order 23 Rule1 (3) talks about the grounds on which a suit can be withdrawn i.e., formal defect, other grounds on which he can be allowed to file fresh suit after withdrawal of the same. Why one of the several plaintiffs needs permission of the other plaintiffs? The reason being, all the plaintiffs had the same cause of action  before the filing of the suit and on the same cause of action all the plaintiffs filed the suit jointly and the subject matter of the suit was also the same and now if one of them withdraws the suit and files the fresh one, it will prejudice the rights of the other plaintiffs in the earlier suit because in that eventuality there will be two suits  on the same cause of action and on his abandonment alone also, will prejudice the rights of the other plaintiffs because it will weaken their case and also cause of action . If he withdraws under sub rule 3, there can be different facts on the same cause of action in two different suits resulting in two conflicting judgments of the court on the same cause of action which is also not permissible under the law.

Order 23 Rule 1-A Of The Code of Civil Procedure, 1908.

This  Order  23 Rule 1-A Of The Code of Civil Procedure,1908 says that when the plaintiff has withdrawn  or abandoned a suit under Rule1 of Order 23 Of The Code Of Civil Procedure,1908, and a defendant files an application under Order 1 Rule 10  of The Code of Civil Procedure,1908 for his transposition as Plaintiff, the court shall give due regard to the question, ‘whether that defendant applying for transposition as plaintiff’, has a substantial question of law to be decided as against any of the other defendants.

Let us try to understand this provision of law which was inserted by the Code of Civil Procedure (Amendment) Act, 1976, with effect from 1-2-1977. Order 23 Rule 1-A of The Code of Civil Procedure, 1908 makes a departure from the preexisting law and the limitations which the courts were observing prior to 1976 Amendment are no longer applicable.

Why such a situation is created after withdrawal of suit by the plaintiff under Order 23 Rule 1 Of The Code of Civil Procedure, 1908.There are situations where after withdrawal of suit by the plaintiff, the contesting defendants may not have left any claim against the plaintiff, but the contesting defendants may have interest against each other’s which require decision by the court. Thus while dealing with the  application under Order 23 Rule 1-A of the Code of Civil Procedure,1908, the court has to ascertain the question whether there is a substantial question to be decided against any of the other defendants.

Now let’s move forward to another rule i.e., Order 23 Rule 2 Of the Code of Civil Procedure, 1908.

Order 23 Rule 2 of The Code of Civil Procedure, 1908 says that if the plaintiff withdraws the suit with the permission to file afresh, it means that suit will be deemed to have not been filed and the law of Limitation will not apply to the filing of the fresh suit.

Let us discuss Order 23 Rule 3 Of the Code of Civil Procedure, 1908 which deals with compromise of suit.

Some times during the pendency of suit, the parties to the suit reach to a settlement between t themselves and compromise with each other’s  by way of an lawful agreement or compromise in writing signed by the parties.

 It is worthwhile to mention here that earlier before Amendment Act of 1976 of the Code of Civil Procedure, 1908, there was not a condition for the parties that the agreement or compromise entered into between the parties should be in writing and signed by the parties by the parties but the same was made a condition for taking cognizance by the court after Amendment of 1976. After an agreement or compromise has been entered into between the parties and reduced into writing, duly signed by them, the court shall record such satisfaction and pass a decree in accordance with that agreement or compromise or settlement.

It is further necessary to mention here that before the amendment of 1976 in the Code Of Civil Procedure, 1908, it was necessary that the subject matter of the agreement, compromise or satisfaction should be the same as the subject matter of the suit but after amendment of 1976, it was not kept as a condition that the subject matter of the compromise, agreement or satisfaction should be the same. There is another provision added to this in1976 that incase one party allege and another party denies that an adjustment or satisfaction has been arrived at between them, the court shall decide that question but the court will not grant any adjournment for deciding that question, unless the court record such reason for adjournment .

There is an explanation added to this Rule is that 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.

It is meaningful to mention here that certain amendments have also been carried out in Oder 23 Rule 3 of The Code of Civil 1908 in the year 1976 which came into affect w.e.f.  1.2.1977.

 First condition was added to reduce any settlement, compromise or agreement into writing and be signed by the parties and this condition was not there earlier in the Code of Civil Procedure, 1908. Secondly it was not there before Amendment of 1976 that subject matter of the agreement, compromise or satisfaction can be other than the subject matter of the suit. This amendment has widened the scope of compromise or settlement between the parties to the suit because earlier the compromise or settlement was only confined to the subject matter of the suit and neither the parties to the suit had the opportunity nor the court adjudicating the suit had the power to include other subject matters in the agreement, satisfaction or settlement for the purpose of settlement of dispute between them. Thirdly if a situation would arise as to whether any settlement or compromise or agreement has been arrived at between the parties to the suit or not that is to say that if one party alleges and another denies such settlement, the court shall decide such question and the court shall not adjourn the case for deciding such question. Fourthly if the agreement, settlement or compromise is in itself is not valid and lawful, and can be termed as void or voidable under the Indian Contract Act, 1972, the same is not a lawful agreement or compromise or settlement.

Order 23 Rule 3-A of the Code of Civil Procedure, 1908.

There has also been insertion of  a clause i.e. ,  Clause A to Rule 3 of the Code of Civil Procedure,1908  which says that there shall be a bar for filing a suit to set aside a decree on the ground that the compromise on which it has been based is not lawful. This bar is estoppel against the parties entering into an agreement, compromise or settlement from denying such agreement, compromise or settlement at later stage on the ground of lawfulness.

Order 23 Rule 3-B of the Code of Civil Procedure, 1908.

There is another clause to Order 23 Rule 3-A of the Code of Civil Procedure, 1908   which says that no agreement or compromise is to be entered into a representative suit without leave of court. Since the interest of other persons is also involved in representative suit, therefore it was made mandatory to take leave of the court for compromising a suit of representative capacity.

Further clause Sub Clause 2 has been added to Clause 3-B which says that before granting 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. The sub clause further clarifies that which are the representative suits. The representative suits means the suit filed under section 91 or 92, or order 1 Rule 8, in a suit in which the manager of an undivided Hindu family sues or is sued as representing the other members of the family, any other suit in which the decree passed may by virtue of the provisions of this Code or of any other law for the time being in force, bind any person who is not named as party to the suit.

Thereafter comes Order 23 Rule 4 of the Code of Civil Procedure, 1908.

Order 23 Rule 4 of the Code of Civil Procedure says that nothing in this Order shall apply to any proceedings in execution of a decree or order

 This is so because the executing court has to execute the judgment and decree and cannot  go beyond the decree.

This is a very important rule which sometimes misinterpreted by the executing courts. Order 23 Rule 4 of the Code of Civil Procedure, 1908 says that this Order only applies to the pending cases and will not applies to the cases in which the court has passed its judgment and decree.

Now let us examine why this Order has no application in the execution proceedings.

 When a court passes a judgment, it also directs that how the judgment will be acted upon and for doing that the court prepares a Decree which is provided under Section 33 of the Code of Civil Procedure, 1908 and the procedure provided for the same has been mentioned in Order 20 of the Code of Civil Procedure, 1908 and the Decrees are executed under order 21 of the Code of Civil Procedure, 1908.

The answer is that firstly the executing court has to execute the decree in letter and spirit and it cannot go behind the decree, nor the executing court has the powers to alter the decree, so after passing of the decree, it cannot be amended or altered except for some clerical or arithmetical errors which the court can do while exercising powers under section 152 of the Code of Civil Procedure, 1908. The decree is the final and ultimate expression of the judge on his judgment. If the judgment can’t be altered by the executing court, it can’t also alter the terms of the decree by entertaining any compromise, settlement or satisfaction between the powers.

But the very interesting question would arise here, if, no agreement, compromise or satisfaction cannot be entertained by the executing court, then how the matters between the parties are settled by the executing courts or by the appellate courts and even upto highest court of the country as we see in general practice.

In this regard it is clarified that there are certain powers of the executing court which it uses while dealing with the questions to be determined by it which are provided under section 47 of the Code of Civil Procedure. This part deals with the powers of the executing court in dealing with question of execution, discharge or adjustment or satisfaction of the decree. While doing the executing court can consider the compromise or settlement between the parties for adjustment purposes.There is also exception to Order 23 of the Code of Civil Procedure, 1908 which is provided under Order 20 Rule 11(2) of the Code of Civil Procedure,1908 wherein the executing court may modify the decree in regard to time for the payment or installments. I shall be dealing with these provisions of law in my coming blogs.

Rakesh Kumar Sharma, Advocate, Punjab And Haryana High Court, Chandigarh,

Email:- rakesh1569@yahoo.com

Mob.6280805261.