Compromise Decree Without Party’s Signature or Counsel’s Express Authority Is Invalid Under Order XXIII Rule 3 CPC

Case Name: Krishna Kumar Ojha & Ors. v. Jitendra Chaudhary & Ors.

Citation: 2026 INSC 662

Date of Judgment/Order: 1 July 2026

Bench: Sanjay Karol, J. and Nongmeikapam Kotiswar Singh, J.

Held: The Supreme Court held that an Order XXIII Rule 3 CPC compromise decree must be based on a lawful compromise in writing and signed by the parties, and where a counsel purports to compromise substantial property rights, there must be express authority or clear exigent circumstances justifying such action. A counsel cannot, merely on implied authority, surrender or conclude the substantial legal rights of a client. Since Defendant No. 5 had not signed the compromise and there was no express authorisation permitting his counsel to enter into the compromise on his behalf, the compromise decree was contrary to law and rightly set aside.

Summary: The dispute arose from a partition suit filed in 1989, in which a compromise decree was passed on 22.02.1994 and a final decree was prepared on 27.05.1997. Nearly twenty-five years later, the legal heirs of Defendant No. 5 sought recall of the compromise decree, alleging that the compromise had been obtained fraudulently, without Defendant No. 5’s signature, and without authority given to the counsel who recorded “no objection” on his behalf. The Trial Court allowed the recall application, and the Patna High Court affirmed the order. The Supreme Court examined Order XXIII Rule 3 CPC and the governing precedents on compromise decrees, holding that after the 1976 amendment, a compromise must be in writing and signed by the parties, and that although counsel may act on behalf of a party in appropriate cases, such authority cannot be presumed where substantial rights in immovable property are being surrendered. The Court further held that, despite the long delay, limitation could not be used to perpetuate a decree that was not in accordance with law, particularly where fraud and lack of authorisation were specifically alleged.

Decision: The Supreme Court dismissed the appeal and affirmed the orders setting aside the compromise decree. The Court held that the compromise decree was not in conformity with Order XXIII Rule 3 CPC and that the delay of nearly twenty-five years had to be overlooked in the peculiar facts of the case, since the basic facts regarding authority, signatures, family relationship, title and possession were seriously disputed. The Court directed that the issues in the partition suit must be adjudicated through a full trial, notwithstanding the difficulty arising from the age of the 1989 suit. No costs were awarded.