Consent Decree: Is it challengeable in appeal?
Consent Decree under the CPC: A Practical Overview
Introduction:
Consent decree is passed with the agreement of the parties when a decree or any part of it is passed by consent of parties, it should so appear on the face of the decree.
By consenting to the settlement of the controversy the parties give up the right of appeal against such agreement. A consent decree operates as an estoppel. It is not appealable and is binding on the parties unless set aside. A consent decree is a judicial order that arises from a voluntary agreement between the parties to a lawsuit. Essentially, it reflects the parties' own resolution of their dispute, as opposed to a decision imposed by the court after a full trial.Case Law: 2023 PLC 76 LAHORE HIGH COURT
Consent Decree or order is nothing but a contract between the parties with command of the Court superadded to it.
Relevant Provisions:
S. 96(3), Order 23, Rule 3 of C.P.C. 1908.
Meaning of Consent Decree:
(i) Case law meaning: “Where a decree is passed in accordance with a judgment, agreement or compromise recorded under the provisions of Order 23, Rule 3, Code of Civil Procedure, 1908, it would be recorded as a consent decree”. (PLD 1961. Lah.823)
Definition of Consent Decree:
When parties solve their differences through mutual consent or agreement before the court, the court issues a decree, the decree upon such agreement is a consent decree.
No appeal Lie: According to S. 96(3): No appeal shall lie from a decree passed by the court with the consent of the parties.
Text of Order 23, Rule 3 of CPC:
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, or where the defendant satisfies the plaintiff in respect of 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 so far as it relates to the suit.
Ingredients of consent decree:
The following are the ingredients of a valid consent decree
(i)Agreement or compromise:
Every decree passed on the basis of a lawful agreement or compromise in accordance with Order 23, Rule 3, is a consent decree and is not open to appeal. Parties to the suit may compromise at any time prior to judgment.
(ii) Between the same parties:
Such an agreement or compromise must be between the parties to the suit. This essential mainly relates to the interests of the parties.
(iii) Subject matter must be present:
Persons who are not parties to a compromise are not bound by it if the court cannot enforce it against them. (1992 SCMR 1860).
Agreement must be concerning the subject matter. The valid consent decree requires that the agreement which is made between the parties must relate to the same subject matter.
(iv) An adjustment of the suit:
The adjustment of the suit must be there, the adjustment may be of the whole suit or relating to a part thereof.
(v) Satisfaction of the court:
The court has the jurisdiction to inquire into and decide whether there has been a lawful compromise in terms of which the suit should be decreed.
(vi) Compromise should be lawful:
The court is to determine whether the adjustment is lawful or not. The court is not required to record an express order to this effect.
(vii) The Court must record the compromise:
The agreement or adjustment between the parties is nonetheless a contract and subject to all the incidents of a contract because it is recorded and decreed and may be challenged and declared invalid.
(viii) Execution of consent decree:
A consent decree is executable like any other decree but only in relation to the operative parts thereof, such that if a consent decree is passed by the court, no appeal will lie.
(ix) Decree shall be passed by the court:
The decree is to be passed after recording the arrangement and need not be passed simultaneously.
(x) Fulfill the requirements of a valid contract:
Such an agreement also fulfills all the requirements of the valid contract according to the Contract Act.
When Consent Decree Be Awarded. Under Order 23 Rule 3
A consent decree will be awarded when, parties to the suit compromise, or Defendant satisfies Plaintiff.
Parties to Suit Compromise:
A consent decree will be awarded when parties to the suit compromise. When compromise is accepted, the following conditions must be fulfilled.
Adjustment of the suit:
There must be an adjustment of the suit. The adjustment may be with regard to the whole or any part of the subject matter of the suit.
Satisfaction of the Court:
The agreement or compromise must constitute an adjustment, Where the Court satisfies that the agreement or compromise does not constitute an adjustment, it has discretion to direct or refuse its specific performance. Order 23 rule 3 of C.P.C requires that the court shall order compromise of the suit to be recorded when it is proved to the satisfaction of the court.
Lawful Agreement or Compromise:
The term lawful refers to the legality of the terms of an agreement or compromise. ‘The agreement or adjustment between the parties is a contract and subject to all the incidents of a contract.
Case Law: 1991 SCMR 426:
Parties are entitled to settle their dispute on terms of compromise at any stage.
Defendant Satisfies Plaintiff:
The court may award a consent decree when the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit.
Recording of Arrangement:
After satisfying itself, that the arrangement is lawful, the court must order it to be recorded, and this is a matter of substance and not merely a matter of form.
Passing of Decree:
After recording the arrangement, the Court will pass the decree. The court is bound under Order 23 Rule 1 to decree suit on the basis of the compromise entered into between the parties. [2004 CLJ 729]
General rule regarding consent decree:
It is a general rule that a consent decree is passed with the consent of the parties in which they settled their controversy through an agreement. Generally, such an agreement is not appealable. Because the parties give up the right of appeal against such agreement such decree operates as estoppel. It is binding upon the parties unless set aside.
Section 96(3), C.P.C in so far as it bars an appeal from the consent decree, gives the principle that a judgment by consent acts as an estoppel. A consent decree can be set aside on any ground which would invalidate an. agreement, such as misrepresentation, fraud, or mistake. This can only be done by a suit, and a consent decree cannot be set aside by an appeal, or a review, or by a rule obtained on a motion.
Appeal Against Consent Decree Under Section 96 (3):
A consent decree is not appealable and is binding on parties. Section 96(3) declares that no decree passed by consent of parties shall be appealable. Under the Civil Procedure Code, a consent decree may be passed under Order 23, Rule 3, but the decree passed without jurisdiction is appealable as revision. Where the decree is not in accordance with the compromise of the parties, an appeal is competent against such decree
Exceptions Where Consent Decree is Appealable: O.XXIII, R.3
- An appeal by a person who was not a party to the compromise;
- Where it is alleged that a decree is not a decree passed with the consent of parties;
- Where the consent decree is alleged to be invalid as for instance where the court did not have jurisdiction over the subject matter;
- Where there is a dispute regarding the nature of compromise;
- Where the decree travels beyond the agreement;
- Where the consent is given under mistake of fact or obtained by practicing fraud upon the court;
- Where there was no compromise at all;
- Where the strict requirements of O.XXIII, Rule 3, Code of Civil Procedure, 1908 are not satisfied.
Exceptions to the Bar on Appeal from Consent Decrees
While Section 96(3) of the CPC generally prohibits appeals from consent decrees, certain exceptions exist:
1. Appeals by Non-Parties to the Compromise:
An appeal may lie by a person who was not a party to the compromise and is adversely affected by its terms. As held in 1976 SCMR 586, such a person may challenge the decree if their interests are prejudiced by the agreement reached between the other parties.
2. Decree Passed Contrary to the Consent of Parties:
If the decree passed by the court does not accurately reflect the terms of the agreed-upon compromise, an appeal may be maintainable. This exception recognizes the fundamental principle that the decree must be consistent with the parties' voluntary agreement.
3. Challenges to the Validity of the Consent Decree:
An appeal may be filed to challenge the validity of the consent decree itself. Grounds for such an appeal may include:
Lack of Jurisdiction: Where the court lacked jurisdiction over the subject matter of the suit or the parties.
Fraud or Misrepresentation: If the consent was obtained through fraud or misrepresentation.
Violation of Public Policy: If the terms of the compromise are contrary to public policy or violate any existing law.
4. Disputes Regarding the Nature of the Compromise:
If there is a genuine dispute regarding the nature or scope of the compromise reached between the parties, an appeal may be necessary to resolve the ambiguity and ensure that the decree accurately reflects the parties' intentions. An appeal will lie where it is alleged that the decree is passed without the consent of the parties.
5. Where No Genuine Compromise Exists:
An appeal may be filed if it can be demonstrated that no genuine compromise was ever reached between the parties. This may occur, for example, if the alleged agreement was procured through coercion or undue influence.
Case Law: 2024 CLC 1881 ISLAMABAD
Where there exists an order recording consent by parties, any party can challenge such order on the basis that no consent was given for the purposes of passing of order on the basis of a compromise, which then leads to the issuance of a decree. Where such ground is raised, the appeal cannot be dismissed out of hand in terms of S. 96(3) of C.P.C.
6. Non-Compliance with Order 23, Rule 3:
As held in 2013 MLD 1897, an appeal may lie if the court has not strictly adhered to the requirements of Order 23, Rule 3 of the CPC in recording and approving the compromise.
7. Decree Exceeding the Scope of the Agreement:
If the decree granted by the court exceeds the scope of the agreed-upon compromise, it may be subject to appeal as it goes beyond the terms of the parties' voluntary settlement.
Other Available Remedies Against Consent Decrees
While generally non-appealable, certain avenues exist to challenge or rectify a consent decree:
1. Appeal Against Order to Record or Refuse to Record Compromise:
An appeal lies from an order of the court either directing the recording of a compromise or refusing to do so. The validity of the subsequent decree is intrinsically linked to the correctness of this order. If the order is set aside on appeal, the decree itself will automatically become void.
2. Application under Section 12(2) of the CPC:
Where the consent to the compromise is allegedly vitiated by fraud, misrepresentation, or mistake of fact, the appropriate remedy lies in filing an application under Section 12(2) of the CPC. As held in 2002 CLC Kar. 166, "A consent decree is liable to be recalled, set aside or canceled if it can be proved that the same was the result of fraud or misrepresentation under section 12(2)."
3. Review under Section 114 of the CPC:
A consent decree may be subject to review under Section 114 of the CPC on grounds of any error apparent on the face of the record.
4. Revision under Section 115 of the CPC:
Where no appeal lies, and the court has committed an illegality or material irregularity in recording and approving the compromise, or where the decree itself is a nullity due to disregard of the law, revision may be sought under Section 115 of the CPC.
5. Remedy under Section 151 of the CPC:
Section 151 of the CPC provides the court with inherent powers to correct any clerical errors or mistakes arising from an accidental slip or omission, including instances where the decree does not accurately reflect the terms of the agreed-upon compromise.
6. Separate Suit to Set Aside the Decree:
In certain circumstances, a separate suit may be filed to set aside a consent decree. This avenue is available on any ground that would justify setting aside the underlying compromise itself, such as undue influence, coercion, or misrepresentation.
Limitations of a consent decree:
(a) Compromise on a particular issue:
Where a party agrees to the disposal of the suit on the finding of a particular issue, the decree will not be a consent decree.
(b) Bound by statement:
Likewise, when a party is bound by the statement of another person, the decree will not be a consent decree.
Execution of consent decree:
A consent decree is executable like any other decree but only in relation to the operative parts thereof. However, an executing court can refuse to execute a decree which is based upon an unlawful compromise.
Consent decree and res judicata:
A consent decree is based upon the agreement of the parties. The court neither hears the suit nor does it give any decision. As such a consent judgment is not res judicata.
Consent decree and Estoppel:
A judgment based on the consent of the parties raises estoppel between the parties. The Estoppel will only arise with regard to matters dealt with actually. Estoppel generally prevents a party from asserting claims or defenses that contradict the terms of the consent decree. However, the scope of estoppel is typically limited to the specific matters addressed and resolved within the agreement, allowing parties to potentially pursue claims or defenses related to issues not covered by the decree.
Effect of Consent Decree:
Where the parties according to the provisions of Order 23, Rule 3, make an agreement or compromise and the court gives a decree on the basis of the agreement such a decree would be called a “Consent decree” and according to S. 96(3) such decree operates as an estoppel it is not appealable.
The stage when compromise can be made:
The parties can compromise even in appeal or in a revisional stage.
Conclusion:
In essence, a consent decree, born from the voluntary agreement of the parties, embodies a unique legal status. Unlike typical court judgments, which are often subject to appeal, a consent decree is generally non-appealable. This reflects the principle of party autonomy, recognizing the parties' right to resolve their disputes through negotiation and compromise. However, this non-appealability is not absolute. Circumstances such as fraud, misrepresentation, or a decree exceeding the scope of the agreement may provide grounds for challenging a consent decree.
RELATING QUESTIONS
Q. What do you understand by a "consent decree"? Is such a decree appealable under the law?
Q. If parties to suit obtain a decree by compromise, can it be challenged in appeal?
Q. “A” files suit against “B” which is decreed with the consent of the parties? Enumerate the grounds on which “B” can challenge the decree?
Q. Can an appeal be filed against a consent decree?