A cross-appeal is the exercise of substantive right of appeal and only the procedure varies.[1]
Order XLIII of Rule 1-A (2) of the CPC.
The same reads as under:
“1A. Right to challenge non-appealable orders in appeal against decrees.
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(2) In an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded.”
In the case of Banwari Lal v. Chando Devi (Smt) and Another reported in (1993) 1 SCC 581, more particularly, paras 9 to 13 resply therein:
“9. Section 96(3) of the Code says that no appeal shall lie from a decree passed by the Court with the consent of the parties. Rule 1-A(2) has been introduced saying that against a decree passed in a suit after recording a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should not have been recorded. When Section 96(3) bars an appeal against decree passed with the consent of parties, it implies that such decree is valid and binding on the parties unless set aside by the procedure prescribed or available to the parties. One such remedy available was by filing the appeal under Order 43, Rule 1(m).
If the order recording the compromise was set aside, there was no necessity or occasion to file an appeal against the decree. Similarly, a suit used to be filed for setting aside such decree on the ground that the decree is based on an invalid and illegal compromise not binding on the plaintiff of the second suit. But after the amendments which have been introduced, neither an appeal against the order recording the compromise nor remedy by way of filing a suit is available in cases covered by Rule 3-A of Order 23
As such a right has been given under Rule 1-A(2) of Order 43 to a party, who challenges the recording of the compromise, to question the validity thereof while preferring an appeal against the decree. Section 96 (3) of the Code shall not be a bar to such an appeal because Section 96 (3) is applicable to cases where the factum of compromise or agreement is not in dispute.
In the case of Gurpreet Singh v. Chatur Bhuj Goel [(1988) 1 SCC 270 : AIR 1988 SC 400] it has been said: (SCC p. 276, para 10)
“Under Rule 3 as it now stands, when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise, the compromise must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal, there is no reason why the requirement that the compromise should be reduced in writing in the form of an instrument signed by the parties should be dispensed with. The court must therefore insist upon the parties to reduce the terms into writing. “
The requirement of the petition of compromise being signed by the parties concerned has been considered also in the case of Byram Pestonji Gariwala v. Union Bank of India [(1992) 1 SCC 31 : AIR 1991 SC 2234].
When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying 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”, the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise “which is void or voidable under the Indian Contract Act .” shall not be deemed to be lawful within the meaning of the said Rule.
In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal under Section 96(1) of the Code, in which he can now question the validity of the compromise in view of Rule 1-A of Order 43 of the Code.”
In Vipan Aggarwal and Another v. Raman Gandotra and Others reported in 2022 SCCOnLine SC 1357 more particularly paras 4 and 5 resply therein:
“4. This Court in a judgment reported in `Banwari Lal v. Chando Devi (Smt.) (Through LRS.)’ (1993) 1 SCC 581 held the question as to whether an aggrieved person against the compromise decree has a right to file an application before the Court which granted the decree or an appeal in terms of Order 43 Rule 1A of the Civil Procedure Code, 1908 (for short, `the CPC’). It was held as under:
“13. When the amending Act introduced a proviso along with an explanation to Rule 3 of Order 23 saying 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”, the Court before which a petition of compromise is filed and which has recorded such compromise, has to decide the question whether an adjustment or satisfaction had been arrived at on basis of any lawful agreement. To make the enquiry in respect of validity of the agreement or the compromise more comprehensive, the explanation to the proviso says that an agreement or compromise “which is void or voidable under the Indian Contract Act .” shall not be deemed to be lawful within the meaning of the said Rule.
In view of the proviso read with the explanation, a Court which had entertained the petition of compromise has to examine whether the compromise was void or voidable under the Indian Contract Act. Even Rule 1(m) of Order 43 has been deleted under which an appeal was maintainable against an order recording a compromise. As such a party challenging a compromise can file a petition under proviso to Rule 3 of Order 23, or an appeal under Section 96 (1) of the Code, in which he can now question the validity of the compromise in view of Rule 1-A of Order 43 of the Code. “
The appellants had thus the right to avail either the remedy of appeal in terms of Order 43 Rule 1A CPC or by way of an application before the court granting decree. Therefore, the application filed by the appellants before the Court which granted the decree cannot be said to be without jurisdiction.”
[1] Urmila Devi and Others v. Branch Manager, National Insurance Company Limited and Another, (2020)11 SCC 316, para 16
Reference
Prasanta Kumar Sahoo & Ors. Versus Charulata Sahu & Ors. (2023)