The Supreme Court has clarified that a person who was not a party to a compromise or consent decree can seek leave to appeal against it if their independent legal rights are allegedly affected. A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran explained that Section 96(3) of the Code of Civil Procedure (CPC), which bars appeals against consent decrees, does not automatically prevent non-parties from challenging such decrees when they can demonstrate a legally recognisable interest prejudiced by the decision. The Court made the clarification while dismissing appeals filed by Girishbhai Natwarlal Patel against Gujarat High Court orders concerning a disputed consent decree passed in 2013.
Background
The dispute concerns land that became the subject of a specific performance suit filed by Geetagram Cooperative Housing Society in 2012. The suit arose from an agreement to sell dated September 11, 1996, and ended in a consent decree on April 29, 2013.
The decree was subsequently executed, and a sale deed was registered in favour of Patel on June 18, 2022. Nine respondents, who claimed interests in the property through a Hindu Undivided Family (HUF), alleged that the decree and subsequent transactions prejudiced their rights.
After discovering changes in the revenue records in 2023, they approached the Gujarat High Court in February 2024, seeking permission to appeal against the decree. The High Court condoned an approximately 11-year delay, granted leave to appeal and restrained Patel from dealing with the property during the proceedings.
Patel challenged these orders before the Supreme Court, arguing that a non-party could not challenge a consent decree and that the delay had been wrongly condoned.
Rejecting the argument that the statutory bar applied equally to outsiders, the Court explained that a person who neither participated in the original proceedings nor consented to the compromise cannot automatically be treated as having accepted the decree.
The judgment stated:
“Thus, it follows that a person who was neither a party to the original proceedings nor a party to the compromise cannot, merely by virtue of the decree having been passed with the consent of others, be deemed to have consented to it or be precluded from asserting an independent right allegedly prejudiced thereby.”
However, the Bench clarified that non-party status does not create an unrestricted right to appeal. Applicants must establish a legally recognisable interest that may have been adversely affected by the decree.
Applying this principle, the Court found that the respondents had presented sufficient material to justify appellate scrutiny of their claims. The circumstances included the history of the property, the execution of the consent decree and Patel's alleged involvement with both the original defendants and the housing society.
The Bench cautioned against treating these circumstances as conclusive proof of wrongdoing, observing:
“These circumstances do not, by themselves, establish fraud or collusion; they do, however, reinforce the conclusion that the grievance raised by the Respondent Nos. 1-9 is not so tenuous as to foreclose their access to the appellate process at the threshold.”
The Supreme Court also upheld the condonation of the delay. It noted that the respondents were not parties to the original suit and claimed to have discovered the changes in the revenue records around August 2023. They subsequently gathered information, including through the Right to Information process, before approaching the High Court.
The Court held that the delay could not be assessed merely by counting the years since the consent decree. Their lack of participation in the original proceedings, the timing of their claimed knowledge and the steps taken afterwards were relevant considerations.
Importantly, the Bench clarified that allowing the appeal to proceed did not establish the respondents' ownership claims or prove their allegations of fraud and collusion.
The Supreme Court dismissed Patel's appeals and upheld the Gujarat High Court's orders granting leave to appeal, condoning the delay and continuing the interim injunction over the disputed property.
The Bench directed that the underlying appeal be taken up for final hearing and disposed of by the High Court within three months.
It left the competing claims over the land and the allegations of fraud and collusion open for determination in accordance with law.
