Rule 3 of CPC : Rule 3: Compromise of suit.

Explanation using Example

Example 1:

Ravi and Suresh are involved in a civil suit over a property dispute. During the course of the trial, both parties decide to settle the matter out of court. They draft a written agreement where Ravi agrees to pay Suresh a sum of ₹10 lakhs, and in return, Suresh agrees to transfer his share of the disputed property to Ravi. Both parties sign the agreement. Ravi and Suresh present this agreement to the court. The court, after verifying the authenticity and legality of the agreement, records the compromise and passes a decree in accordance with the terms of the agreement. The property dispute is thus resolved without further litigation.

Example 2:

Meena files a suit against her business partner, Anil, for breach of contract. During the proceedings, Anil offers to settle the dispute by paying Meena ₹5 lakhs as compensation. Meena agrees to this settlement. They both sign a written compromise agreement. However, when they present the agreement to the court, Meena claims that Anil has not fulfilled his part of the agreement. Anil denies this allegation. The court then examines the evidence and decides whether the compromise has indeed been fulfilled. If the court finds that Anil has satisfied the terms of the agreement, it will record the compromise and pass a decree accordingly. If not, the court may refuse to record the compromise and continue with the trial.

Example 3:

Priya sues her neighbor, Raj, for encroaching on her land. During the trial, they decide to settle the matter amicably. They draft a written agreement where Raj agrees to remove the encroachment and pay Priya ₹1 lakh for any inconvenience caused. Both parties sign the agreement. When they present the agreement to the court, the court finds that the agreement is lawful and records it. The court then passes a decree based on the terms of the agreement, thus resolving the dispute.

Example 4:

Aman and Bharat are in a legal dispute over a loan agreement. Aman claims that Bharat owes him ₹2 lakhs. During the trial, Bharat agrees to pay Aman ₹1.5 lakhs as a full and final settlement. They draft a written compromise agreement and sign it. When they present the agreement to the court, Aman alleges that Bharat has not paid the agreed amount. Bharat denies this. The court examines the evidence and decides whether the payment has been made. If the court finds that Bharat has paid the amount, it will record the compromise and pass a decree accordingly. If not, the court will continue with the trial.

Example 5:

Sunita files a suit against her employer, a private company, for wrongful termination. During the trial, the company offers to settle the matter by paying Sunita ₹3 lakhs and providing her with a positive reference letter. Sunita agrees, and they draft a written compromise agreement, which both parties sign. They present the agreement to the court. The court verifies the legality of the agreement and records it. The court then passes a decree based on the terms of the agreement, thus resolving the dispute.