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 sati...

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