Compromise Decrees Obtained Through Fraud Can Be Set Aside Under Section 151 CPC: Patna HC

Fraud vitiates the very foundation of judicial proceedings, rendering any compromise decree obtained through collusion or misrepresentation a nullity in the eyes of law. The Patna High Court has reaffirmed that trial courts possess the inherent power to set aside compromise decrees when it is proven that a party's signature was forged or that they were never served with summons, ensuring that the sanctity of legal procedures remains uncompromised.

In a decisive ruling, a bench of Justice S. B. Pd. Singh dismissed a civil miscellaneous petition that sought to challenge a lower court's decision to vacate a decades-old compromise decree. The Court emphasized that where allegations of fraud and non-service of summons are raised, the burden lies heavily on the beneficiary of the compromise to prove its genuineness, particularly by examining the identifying witnesses and advocates involved.

Key Takeaways

Inherent Power Against Fraud

Courts can invoke Section 151 of the C.P.C. to set aside a decree if it is demonstrated that the compromise was not lawful or was obtained by playing fraud upon the court.

Adverse Inference under Evidence Act

Failure to produce key witnesses, such as the identifying advocate or the 'pairvikar' who signed the compromise petition, allows the court to draw an adverse inference under Section 114(g) of the Indian Evidence Act, 1872.

Verification of Compromise Petitions

Judicial officers and court staff (Shrisetedar) have a procedural duty to check and report on the validity of compromise petitions to prevent collusive litigation.

Restoration of Original Suit

When a compromise decree is set aside for fraud, the original suit is restored to its file, allowing parties to contest the matter on its actual merits rather than being bound by a fraudulent settlement.

Court Rejects Petitioner’s Defense of Long Delay

The petitioner argued that the challenge to the compromise decree was filed 12-13 years after the judgment and only after the death of the original plaintiff. It was contended that the compromise was entered into with full consent and that the subsequent mutation of properties in the petitioner's name based on an adoption deed justified the decree. However, the Court found these arguments insufficient to overlook the fundamental procedural lapses and the evidence of fraud.

The Court, in its reasoning, observed: "All the aforesaid facts clearly suggest that the compromise petition filed in Title Suit No. 185 of 1997 was not fair and bona fide because it does not bear the genuine and valid signature of Samsher Jang Bahadur Singh. Accordingly, the learned Trial Court has rightly set aside the compromise order dated 10.08.1998 and the decree dated 20.08.1998."

Failure to Prove Genuineness of Signatures

During the proceedings, it emerged that the defendant in the original suit had never appeared nor executed any Vakalatnama. The advocate who purportedly identified the defendant was never produced as a witness by the petitioner to rebut the allegations of forgery. The Court noted that under Section 44 of the Indian Evidence Act, 1872, a party is free to challenge a judgment on the ground of fraud.

Referring to the non-production of critical witnesses, the Court held: "That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;"

Directions Issued to the Trial Court

The Court has following directions:

"...the petitioner is granted liberty to contest the Title Suit No. 185 of 1997 on its own merits, without relying upon alleged compromise petition, against the respondents. In that case, trial Court shall decide the above suit on its own merit."

Ratio

A compromise decree that lacks the lawful consent of the parties or is obtained through the fabrication of signatures and non-service of summons is voidable at the instance of the aggrieved party. The court’s inherent jurisdiction under Section 151 CPC is the appropriate remedy to rectify such judicial errors when the fraud is directed at the court itself. Furthermore, the failure of a party to examine the very witnesses who allegedly verified a disputed compromise petition triggers a presumption that their testimony would have been unfavorable to the party relying on the compromise.

Background

The dispute originated from Title Suit No. 185 of 1997, where a compromise decree was passed in 1998 regarding property in Buxar. In 2011, the respondents filed a Miscellaneous Case under Section 151 CPC, alleging that their predecessor, Samsher Jang Bahadur Singh, never signed the compromise and was a victim of collusion between the plaintiff and a purported 'pairvikar'. The Sub Judge-I, Dumraon, after evaluating oral and documentary evidence, found that no summons were served and the Vakalatnama was unauthorized. This led to the setting aside of the 1998 decree. The High Court, after perusing the records, affirmed the lower court's findings, noting the absence of a Shrisetedar’s report and the petitioner’s failure to employ handwriting experts to prove the signatures.

Case Details:
Case No.: CIVIL MISCELLANEOUS JURISDICTION No.180 of 2020
Case Title: Dhiraj Kumar @ Dhiraj Kumar Singh vs. Sukant Singh and Anr.
Appearances:
For the Petitioner(s): Mr. K.N. Chaubey, Ar. Adv., Mr. Dineshwar Pandey, Adv., Mr. Prashant Kumar, Adv.
For the Respondent(s): Mr. Shashi Shekhar Dvivedi, Sr. Adv., Mr. Ashutosh Kumar Pandey, Adv.

Source: 2026 CaseBase(PAT) 2692