Chamber Notes
Abandon or Adjust: The Two Ways Order XXIII Ends a Suit, and the Remedy Each One Leaves
17 October 2026 · 17 min read
A suit can stop short of judgment in two ways that are not failures of procedure at all: the plaintiff decides he no longer wants it, and both sides decide they no longer disagree. A code of civil procedure has to provide for each. Neither produces an adjudication, and both have to produce something, because the suit is on the file of a court and has to come off it.
The Code of Civil Procedure, 1908 puts both in Order XXIII, under the heading "Withdrawal and Adjustment of Suits". Rule 1 deals with the plaintiff who abandons. Rule 3 deals with the suit that has been adjusted. Rule 2 is a single sentence about limitation, Rule 1A about transposing a defendant, Rules 3A and 3B about what may not be done, and Rule 4 excludes execution from the whole Order.
The Order is usually read rule by rule, as two unconnected procedures that happen to share a heading. Read instead for what each exit leaves the party afterwards, it is one question asked twice — what survives a suit that was never decided — and the two answers run in opposite directions. The exit that requires the Court's permission leaves a right that may already be worthless. The exit that produces a decree produces the one decree the Code says cannot be appealed, and then tells the appellant what to contend in the appeal.
Leave is not what makes the withdrawal effective
Rule 1(1), as substituted by section 74 of the Code of Civil Procedure (Amendment) Act, 1976 with effect from 1 February 1977, provides that "[a]t any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim". Nothing in the sub-rule requires him to ask. The proviso carves out one class of plaintiff — a minor, or another person to whom rules 1 to 14 of Order XXXII extend — and for him neither the suit nor any part of the claim may be abandoned without the leave of the Court; sub-rule (2) requires that application to be accompanied by an affidavit of the next friend and, where there is a pleader, a certificate that the proposed abandonment is in his opinion for the minor's benefit. Sub-rule (5) adds the other limit: one of several plaintiffs cannot abandon, or withdraw under sub-rule (3), without the consent of the co-plaintiffs.
Outside those two cases the plaintiff's act is enough. What the Court's permission governs is not whether he may stop, but whether he may start again.
Sub-rule (3) gives it. Where the Court is satisfied "that a suit must fail by reason of some formal defect", or that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of the suit or part of a claim, it may on such terms as it thinks fit grant permission to withdraw "with liberty to institute a fresh suit". Sub-rule (4) states the consequence of doing without it: a plaintiff who abandons under sub-rule (1), or who withdraws without the permission referred to in sub-rule (3), "shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim".
That preclusion is worth separating from the doctrine it is usually filed with. Section 11 bars a Court from trying a suit or issue directly and substantially in issue in a former suit between the same parties which has been "heard and finally decided". Rule 1(4) requires no decision at all. It attaches to the plaintiff's own conduct, and it operates in the one situation where there is nothing to be res judicata about. The Code's other bar of this kind, in Order II Rule 2, works the same way and for the same reason: where no Court has ruled, the preclusion has to be founded on what the party did rather than on what was held.
So the grant of permission is the whole of the difference between a withdrawal that costs the plaintiff his claim and one that costs him only costs. It is also a decision to be obtained on the way out. What sub-rule (3) empowers the Court to grant is "permission to withdraw", which presupposes a suit still there to withdraw from; sub-rule (4) then fixes the consequence of a withdrawal already made without it.
What the liberty does not include
Rule 2 is one sentence long and is the provision most capable of making the rest of Rule 1 useless. "In any fresh suit instituted on permission granted under the last preceding rule, the plaintiff shall be bound by the law of limitation in the same manner as if the first suit had not been instituted."
The permission is thus a permission to file. It is not time in which to file. Years spent prosecuting the first suit are not given back, and a plaintiff who discovers a formal defect in the fourth year of a three-year claim has obtained liberty to institute a suit that is already barred. The Order grants the right and the same Order withdraws the only thing that would make it worth having.
One exclusion exists, and it is not in the Code. Section 14(3) of the Limitation Act, 1963 provides that "[n]otwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908", sub-section (1) of that section shall apply to a fresh suit instituted on permission granted under Rule 1 "where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature". Sub-section (1) excludes the time during which the plaintiff was prosecuting with due diligence, and in good faith, another civil proceeding relating to the same matter in issue in a court which from defect of jurisdiction or other like cause was unable to entertain it.
Two features of that override decide how much of Rule 2 survives it.
It is tied to the ground of the permission, not to the fact of it. The Court's order has to rest on a defect in jurisdiction or a cause of a like nature. A formal defect under Rule 1(3)(a) that is not of that character — a defect of form in the plaint, a misjoinder, a valuation requiring the suit to be recast — attracts no exclusion. Permission under Rule 1(3)(b), which needs only "sufficient grounds", attracts none unless the grounds happen to be jurisdictional.
And it operates on the ground the permission was granted on, which has to be shown from somewhere. The sub-section does not ask whether a jurisdictional defect existed; it asks what the permission was granted on. An order that does not say leaves that to be established later from the rest of the record, in a suit where the point will be taken as a preliminary objection.
That is the practical content of Rule 2. Liberty to sue again is nearly always liberty on the clock that was already running, and the exception has to be earned at the moment of withdrawal, in the terms of the order, by a plaintiff whose attention is on getting out.
The compromise the Court is directed to record
Rule 3 is drafted the other way round. It does not permit the Court to do something; it directs it.
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 in writing and signed by the parties", or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter, "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 parties to the suit, whether or not the subject-matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit". The words requiring writing and signature, and the words beginning "so far as it relates to the parties", were both put in by section 74 of the 1976 Act.
The rule has two limbs, and the conditions are not the same on each. On the first limb — an adjustment by agreement or compromise — there are four, and each of them is something a party resisting the compromise can take hold of. It must be proved to the Court's satisfaction. It must be lawful. It must be in writing. It must be signed by the parties. The Explanation inserted by the same section then supplies a definition of unlawfulness for this purpose: an agreement or compromise void or voidable under the Indian Contract Act, 1872 is not lawful within the meaning of the rule. The second limb — the defendant satisfying the plaintiff in respect of the whole or any part of the subject-matter — carries none of the three formal requirements. What has to be proved there is the satisfaction itself, and the writing and the signatures are not what the rule asks for.
The qualification about subject-matter does a separate and easily missed job. A settlement reached between litigants is rarely confined to the suit; it disposes of the dispute, which may include property, accounts and transactions outside the plaint. Rule 3 permits the decree to follow the compromise beyond the suit's subject-matter — but only "so far as it relates to the parties to the suit". Terms that bind somebody who is not a party may be recorded, and cannot be decreed.
The proviso deals with the case the rule otherwise assumes away: one side says there was an adjustment and the other denies it. The Court is to decide that question, and the proviso forbids an adjournment for the purpose unless the Court records reasons for granting one. It is thus an issue to be tried, in the suit, by the Court seized of it, on the footing that it will be tried at once.
The decree from which no appeal lies
Section 96(1) gives an appeal from every decree passed in the exercise of original jurisdiction, save where otherwise expressly provided. Sub-section (2) preserves the appeal from an ex parte decree. Sub-section (3) is the exclusion: "No appeal shall lie from a decree passed by the Court with the consent of parties."
A decree under Rule 3 is the paradigm case of a decree passed with the consent of parties. Order XXIII then closes the other route. Rule 3A, inserted by section 74 of the 1976 Act, provides that "[n]o suit shall lie to set aside a decree on the ground that the compromise on which the decree is based was not lawful" — and lawfulness is precisely what the Explanation to Rule 3 defines. The ground the Order takes the trouble to define is the ground on which it forbids a suit.
Nor is there an appeal from the recording itself. Order XLIII Rule 1 lists the orders from which an appeal lies under section 104, and no entry in the list refers to Order XXIII at all. The list carries a footnote recording that clauses (b), (e), (g), (h), (m), (o) and (v) were omitted by section 89 of the 1976 Act; whatever stood in those gaps, what remains gives no appeal against an order recording, or refusing to record, an agreement or compromise.
What the same Act put in instead is Rule 1A of Order XLIII. Sub-rule (1) states the general right to attack a non-appealable order in the appeal against the decree that followed it. Sub-rule (2) is specific: "In an appeal against a decree passed in a suit after recording a compromise or refusing to record a compromise, it shall be open to the appellant to contest the decree on the ground that the compromise should, or should not, have been recorded."
Set that beside section 96(3) and the two provisions appear to contradict each other. One says no appeal lies from a consent decree; the other tells an appellant what he may argue in an appeal against a decree passed after a compromise was recorded. The reconciliation is in what sub-rule (2) permits the appellant to argue. He may contend that the compromise should not have been recorded — that it was not proved, or not lawful, or not in writing, or not signed. If that contention is right, the decree was not a decree passed with the consent of parties, and section 96(3) never applied to it. On the terms of the two provisions the appeal is competent to decide whether the bar on appeals covers the decree, and the ground Rule 1A(2) supplies is no wider than that. A party who accepts that there was a lawful compromise and complains about its consequences is outside Rule 1A(2) and inside section 96(3).
The result is a single channel, and it runs back to a hearing. Rule 3's proviso requires the trial Court to decide a disputed adjustment; Rule 3A forbids a separate suit about it; Order XLIII Rule 1A(2) carries the same question into the first appeal. The 1976 Act did not remove the remedy against a compromise decree. It moved it out of the ordinary jurisdiction of a second Court and into the proceeding where the compromise was recorded, plus one appeal.
Who cannot settle, and in which of the two ways
The Order protects two classes of party, and it does not do it the same way at each exit.
Rule 3B provides that no agreement or compromise in a representative suit shall be entered into without the leave of the Court expressly recorded in the proceedings, and that an agreement or compromise entered into without such recorded leave shall be void. Before granting leave, the Court must give notice in such manner as it thinks fit to the persons who appear to it to be interested in the suit. The Explanation defines a representative suit in four clauses: a suit under Section 91 or Section 92, a suit under rule 8 of Order I, a suit in which the manager of an undivided Hindu family sues or is sued as representing the other members, and any other suit in which the decree may bind a person not named as a party.
Rule 3B says nothing about withdrawal. A representative plaintiff who abandons under Rule 1(1) is not within it, and Order XXIII sets no condition on his doing so. For the second of the four classes the Code deals with that elsewhere: Order I Rule 8(4) provides that no part of the claim in such a suit shall be abandoned, and no such suit withdrawn, and no agreement, compromise or satisfaction recorded in it, unless the Court has given notice at the plaintiff's expense to all persons so interested in the manner sub-rule (2) specifies. For a suit under Order I Rule 8, a compromise therefore needs both the recorded leave of Rule 3B and the notice of Rule 8(4), while a withdrawal needs the notice alone. For the other three classes in the Explanation to Rule 3B, the position on withdrawal has to be found, if anywhere, outside this Order.
The minor is protected at both exits and by different sanctions. Abandonment requires leave under the proviso to Rule 1(1), with the affidavit and certificate of sub-rule (2). A compromise requires leave under Order XXXII Rule 7(1), expressly recorded in the proceedings, with the affidavit and certificate of sub-rule (1A) — and a proviso to that sub-rule stating that the opinion so expressed does not preclude the Court from examining for itself whether the compromise is for the minor's benefit. The consequence of acting without leave differs from Rule 3B. An agreement or compromise entered into in breach of Order XXXII Rule 7(1) is "voidable against all parties other than the minor". A compromise in a representative suit without recorded leave is void. The provision that protects an identified person makes the transaction attackable at that person's election; the provision that protects an indeterminate class destroys it.
After the decree, the Order does not apply
Rule 4 is one line: "Nothing in this Order shall apply to any proceedings in execution of a decree or order."
Settlements after decree are dealt with elsewhere, in Order XXI Rule 2, and on a different principle. Where money payable under a decree is paid out of Court, or a decree of any kind is otherwise adjusted, in whole or in part, to the satisfaction of the decree-holder, "the decree-holder shall certify such payment or adjustment to the Court whose duty it is to execute the decree, and the Court shall record the same accordingly". Sub-rule (2) gives the judgment-debtor, or a surety for him, the alternative: inform the Court and apply for notice to the decree-holder to show cause why the payment or adjustment should not be recorded as certified, and if cause is not shown the Court shall record it. Sub-rule (2A) restricts what may be recorded at the judgment-debtor's instance to a payment made in the manner Rule 1 provides, a payment or adjustment proved by documentary evidence, or one admitted by or on behalf of the decree-holder. Sub-rule (3) states the sanction: "A payment or adjustment, which has not been certified or recorded as aforesaid, shall not be recognized by any Court executing the decree."
The contrast with Rule 3 is exact and runs in the same direction as the rest of the Order. Before decree, a compromise proved to the Court's satisfaction must be recorded and must be decreed, and the question whether it happened is tried in the suit. After decree, the burden of putting the settlement on the record is placed on the party who received the benefit of it, the judgment-debtor's route requires documentary proof or an admission, and an adjustment that reaches the record by neither route is not merely unenforceable but invisible to the executing Court.
Three things that follow at the Bar
The first concerns the order, not the application. Permission to withdraw under Rule 1(3) is worth what the order recording it says. Liberty granted without a stated ground leaves the fresh suit on the limitation the first suit was filed under, because section 14(3) of the Limitation Act attaches only to a permission granted on the ground of a defect of jurisdiction or a cause of a like nature. The ground belongs in the order, and the moment to secure it is the moment the Court is being asked to let the plaintiff go.
The second concerns the form of a settlement. Rule 3 requires writing, signature by the parties, and proof to the Court's satisfaction, and an application to record is where those are tested. They are also the only grounds on which the resulting decree can be attacked afterwards: by the proviso to Rule 3 before the trial Court, and by Order XLIII Rule 1A(2) in appeal, with Rule 3A barring a suit and section 96(3) barring any wider appeal. A compromise drawn so that each of the four conditions is demonstrable on the record is, for that reason, harder to undo than one that merely reflects what the parties agreed.
The third concerns the day a settlement is reported. Before decree, the Court must decide a disputed adjustment and may not adjourn to do it without recording reasons. After decree, the settlement has no legal existence until it is certified or recorded, and the duty to certify lies on the decree-holder. In both places the Code expects the compromise to be put on the record at once, and in neither does it provide for a settlement that the parties have performed and nobody has reported.
Authored by Eshan Kumar Gupta, Advocate, Hon'ble Allahabad High Court, Lucknow Bench.