A non-party can appeal consent decree with leave of the appellate court if it prejudicially affects a legally cognisable interest, the Supreme Court has held, explaining that the estoppel of a compromise binds only those who agreed to it.
New Delhi: The Supreme Court on Friday, October 30, upheld a Gujarat High Court order granting nine members of a Hindu Undivided Family (HUF) leave to appeal against a 2013 consent decree in a land suit to which they were never parties, holding that Section 96(3) and Order XXIII Rules 3 and 3A of the Code of Civil Procedure, 1908 do not bar a stranger to a compromise from seeking leave [Girishbhai Natwarlal Patel v. Gautam Punjabhai Palkhiwala (Dead) by LRs & Ors.].
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran dismissed the appeals filed by Girishbhai Natwarlal Patel, in whose favour a sale deed had been executed in execution of the consent decree. The judgment was authored by Justice J.B. Pardiwala.
The case
The land in question had been sold by Purshottambhai Punjabhai to Vikram Punjabhai Palkhiwala by a sale deed of August 29, 1975. In 1996, the heirs of Purshottambhai executed a registered agreement to sell the same land to Geetagram Cooperative Housing Society. In 2012, the Society filed Civil Suit No. 322 of 2012 against the heirs for specific performance. A compromise followed, and a consent decree was passed on April 29, 2013.
The decree was put into execution in 2020, and on June 18, 2022 a sale deed was executed through a Court Commissioner in favour of Patel, with the Society joining as confirming party. Respondent Nos. 1 to 9, members of the Punjabhai Mohanbhai HUF associated with the original purchaser, then approached the Gujarat High Court in February 2024. They alleged that the decree was the product of fraud and collusion, that the heirs had no subsisting title to transfer, and, relying on RTI material, that Patel had been the Society’s chairman in 2002 to 2003. Patel disputes these allegations.
The High Court granted an ex parte ad interim injunction on April 2, 2024 restraining Patel from dealing with the land. On August 14, 2024, it confirmed the injunction, condoned a delay of about 11 years and granted the HUF members leave to appeal. Patel challenged these orders before the Supreme Court.
What the Court said
The Court called Patel’s argument that the provisions barred the appeal “thoroughly misplaced” and explained that the estoppel arising from a compromise operates only among those who were parties to it:
“…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. A stranger to a compromise decree cannot be said to be barred under Section 96(3) read Order XXIII Rule 3 & Rule 3A of the CPC, 1908, since the scope and import of these provisions are limited to the parties to the compromise and act as an estoppel only with respect to them.”
At the same time, the Bench made clear that a non-party does not get an automatic right to appeal:
“…non-party status does not confer an unrestricted right of appeal. Such a person must prima facie demonstrate that the impugned decree prejudicially affects his rights or interests and must obtain leave of the appellate court in accordance with the settled principles governing appeals by persons who were not parties to the original proceedings.”
The Court added that the consent character of a decree neither relaxes nor tightens this test:
“The decisive consideration remains whether the applicant has demonstrated a legally cognisable interest that is prejudicially affected by the impugned decree so as to warrant the exercise of the appellate court’s discretion in granting leave. The fact that the decree in question is a consent decree neither dispenses with this requirement nor, in itself, constitutes a bar to the grant of leave.”
The outcome
Applying the test, the Court found that the material on record showed, for the limited purpose of leave, that the HUF members had asserted a legally cognisable interest that may be prejudicially affected by the consent decree. It held that the High Court was justified in granting leave to appeal and found no error in the ad interim injunction, which it said was needed to preserve the subject matter. The appeals were dismissed.
The Bench stressed that its conclusion is confined to standing and “shall not be construed as an expression of opinion on the ultimate merits of their claim to the subject land or on the truth of the allegations of fraud and collusion, which must be determined in accordance with law.”
Why the judgment matters
Compromise decrees are often treated as unassailable because Order XXIII Rule 3A bars a fresh suit to set them aside and Section 96(3) bars an appeal from a decree passed with consent. The judgment confirms that these bars protect only the parties who consented. A third party whose title or interest is hit by a collusive compromise is not left without a remedy.
The ruling also guards against misuse. Leave is not a formality: the outsider must show, at the threshold, a real and legally cognisable interest that the decree prejudices. That keeps the door open for genuine claimants while shielding settled decrees from speculative challenges.
Case Title: Girishbhai Natwarlal Patel v. Gautam Punjabhai Palkhiwala (Dead) by LRs & Ors. [Civil Appeal Nos. 14017-14018 of 2026]
Citation: 2026 INSC 1177
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran, Supreme Court of India
Date of Judgment: October 30, 2026
Appearances: Senior Advocate Anshin H. Desai with Advocates Shiv Mangal Sharma, Venu Nanavaty and Shalini Singh for the appellant; Senior Advocates Mihir J. Thakore and Megha Jani with AOR Anushree Prashit Kapadia for Respondent Nos. 1 to 9