Civil Procedure Code, 1908: Order XXIII Rule 3-Settlement arrived at between parties in appeal-Compromise not reduced in "writing and signed by the parties"-Whether can be given effect to. 

HELD: The whole object of the amendment of Rule 3 of the Civil Procedure Code, 1908 by adding the words "in writing and signed by the parties" is to prevent false and frivolous pleas that a suit has been adjusted wholly or in part by any lawful agreement or B compromise, with a view to protract or delay the proceedings in the suit. [408C-D)

Under Rule 3 as it now stands when a claim in suit has been adjusted wholly or in part by any lawful agreement or compromise,the compromise must be in writing and signed by the parties and there must be a completed agreement between them. To constitute an adjustment, the agreement or compromise must itself be capable of being embodied in a decree. When the parties enter into a compromise during the hearing of a suit or appeal, there is no reason why the requirement that the compromise should be reduced in writing in the form of an instrument signed by the parties should be dispensed with. The Court must, therefore, insist upon the parties to reduce the terms into writing. [408D-F]

The present case clearly does not come within the ambit of the second part of Order XXIII Rule 3 of the Code. Under the terms of the proposed compromise, the appellant was required to pay Rs.2,25,000 by a bank draft on March 17, 1987 but before the due date the respondent resiled from the promised compromise, saying that it was detrimental to his interest. That being so, that appellant could only fall back on the first part. But, in the absence of an agreement in writing, the High Court had no other alternative but to direct that the appeal be listed for hearing on merits. [409C-D]