18 July 2024

1. O. 23 R. 3 CPC | Compromise in Civil Suits Mandatorily Required to be in Writing and Signed by the Parties

The Supreme Court, deciding an appeal involving a suit for declaration and specific performance in a case Amro Devi & Ors. vs. Julfi Ram (Deceased) Thr. Lrs. & Ors., by laying importance to the formal documentation and signatures in legal agreements to ensure their enforceability, determined that a compromise deed cannot be acknowledged unless it is put in writing and signed by the parties involved. It stated that a settlement or compromise cannot be considered valid based solely on the recording of statements before the Court.

Factual Matrix

• The factual background of the case is that the Respondents (Plaintiff in the Original Suit), based on a prior compromise recorded between the parties before the Court, filed a new suit for possession and a temporary injunction against the Appellants/Defendant. The Plaintiffs argued that they were the rightful owners of a half share in the suit land according to the compromise reached in the previous suit.
• However, the Appellant/Defendant refuted the Plaintiff’s claim, arguing that the compromise made in the earlier suit could not be recognised. They reasoned that no compromise decree was passed by the Court due to non-compliance with Order 23 Rule 3 of the C.P.C.
• The trial court dismissed the suit due to the absence of a written compromise between the parties, duly signed by them. Additionally, the trial court ruled that statements made before the District Court could not be considered as an agreement or compromise.
• The First Appellate Court, however, reversed the trial court’s findings, a decision later upheld by the High Court. As a result, the Appellant/Defendant approached the Supreme Court for further review. 

Legal Provision Involved

The law relating to compromise between the parties to the civil suit is provided under Order 23 Rule 3 of the Code of Civil Procedure, 1908. According to the Rule, a court may issue a compromise decree when the parties involved in the suit reach a lawful agreement or compromise in writing. This rule also specifies that the compromise must be signed by the parties to be recognised. In other words, if the mandatory conditions outlined in Order 23 Rule 3 C.P.C. are not met, the compromise cannot be recorded.

Observations made by the Court

• The Supreme Court noted that in the case in hand, the compromise deed was neither put in writing nor recorded by the court. Simply having the parties make statements before the court about the compromise does not fulfill the requirements of Order XXIII Rule 3 of the C.P.C.
• The Court reasoned that Rule 3 of Order XXIII of C.P.C. specifies that when recording a compromise and passing a decree, the terms of the compromise must be written down and signed by the parties involved.
• Following the legal mandate and noting the irregularity, the Apex Court allowed the appeal and set aside the impugned order.

2. Standard of Living a Crucial Factor in Determining Permanent Alimony for Wife

A division bench of the Supreme Court in case Kiran Jyot Maini vs. Anish Pramod Patel., while ordering the dissolution of marriage made a noteworthy pronouncement that the granting of maintenance or permanent alimony should aim to provide a dignified standard of living for the wife, rather than being punitive in nature.

Factual Background in Brief

• The appellant and respondent were husband and wife, married on April 30, 2015. Within a year, the appellant-wife filed as FIR against the respondent-husband, alleging offenses under Sections 498A, 323, and 504 of the Indian Penal Code, and Sections 3/4 of the Dowry Prohibition Act, 1961.
• In response, the respondent-husband filed a Criminal Miscellaneous Writ Petition before the Allahabad High Court seeking stay on arrest and quashing of the F.I.R.
• The High Court referred the parties to mediation and granted stay on the respondent’s arrest. The Writ Petition was later dismissed on its merits.
• The appellant-wife further filed Application under Section 12 of the Protection of Women from Domestic Violence Act, 2005. She also sought interim maintenance under Section 23 of the PWDV Act.
• Through several applications/petitions the matter finally reached before the Supreme Court in form of a criminal appeal.

“Status of parties” a significant factor

• The Apex Court discussed in detail the factor of status of parties and living standard and highlighted the need to balance the financial needs of parties post-divorce while maintaining a reasonable standard of living. The Court was of view that the status of the parties, including their social standing, lifestyle, and financial background, is pivotal in determining matters such as maintenance or alimony.
• Assessing the reasonable needs of the wife and any dependent children involves considering essential expenses like food, clothing, shelter, education, and healthcare. The educational qualifications, professional background, and employment history of the applicant are crucial indicators of their ability to achieve financial independence.
• Any independent income or property owned by the applicant is also considered to determine if it can sustain the standard of living established during the marriage.
• Furthermore, the court needs to see whether the applicant made career sacrifices due to family responsibilities, such as childcare or eldercare, which may have affected their earning potential.

Observations and Decision of the Court

To determine the one-time settlement amount, the Bench relied upon several judicial precedents, including the case Vishwanath Agrawal vs. Sarla Vishwanath Agrawal, where it was noted that the grant of permanent alimony should predominantly consider factors such as the social status of the parties, their conduct, lifestyle, and related ancillary factors.

Furthermore, in the case of Rajnesh vs. Neha and Another, the Court established various criteria for determining the maintenance amount. These criteria encompassed factors such as the parties’ independent income or assets, the preservation of the standard of living from the matrimonial home, and other pertinent considerations.

These factors encompass, but are not limited to:

1. Social and financial status of the parties.
2. Reasonable needs of the wife and dependent children.
3. Qualifications and employment status of the parties.
4. Independent income or assets owned by the parties.
5. Maintenance of the standard of living established in the matrimonial home.
6. Sacrifices made in employment for family responsibilities.
7. Reasonable litigation costs for a non-working wife.
8. Financial capacity of the husband, including income, maintenance obligations, and liabilities.

• Expanding on the aforementioned points and relevant factors, the Supreme Court observed that both parties were educated and employed, maintaining high standards of living and responsibilities towards dependents. It noted that the respondent-husband earned a monthly income exceeding Rs. 8 Lakhs, while the appellant-wife earned Rs. 1,39,000 per month.
• Additionally, the Court highlighted the responsibilities of both parties towards their dependents. The respondent-husband was accountable for the medical expenses and accommodation of his parents. In contrast, the appellant-wife bore responsibilities for her parents and also for her minor daughter.

Taking into account the aforementioned facts, circumstances, and pertinent factors, the Court arrived at a fair and equitable sum of Rs. 2 Crores. The Court further specified that this amount would encompass all current and prospective claims.