Consent Decree

Code of Civil Procedure, 1908 — Order XXIII Rule 3

A court decree passed with the consent of both parties — typically as part of an out-of-court settlement ratified by the court. In debt recovery, banks and borrowers sometimes agree to a One-Time Settlement (OTS) which is then recorded as a consent decree in the DRT, providing the bank with an executable decree if the borrower defaults on the OTS terms.

In practice, a consent decree is how parties turn a private deal into a court-enforceable judgment. When a bank and a borrower negotiate a One-Time Settlement, the settlement on its own is only a contract; recording it as a consent decree under Order XXIII Rule 3 CPC before the DRT gives the bank an executable decree if the borrower later defaults on the agreed terms, sparing it a fresh round of litigation to prove the breach. For the borrower, the trade-off is finality — the consent decree usually forecloses re-agitating the underlying dispute. The drafting is where matters are won or lost: the decree must spell out the settlement figure, the payment schedule, and precisely what happens on default, ideally reviving the original claim amount. A loosely worded consent decree, or one that omits a default-revival clause, leaves the creditor back at square one. Well-advised parties ensure the consent terms are complete and the default consequences explicit before the decree is recorded.