Valid or illegal??

You just ask  B to record the settlement in court in pending case and instead of withdrawing the case make a request the court for 3 months so B could comply with its commitment. Alternatively instead of withdrawing the case you can get the suit stay sindie so that if B does not comply with its commitment you can get the case reopened. You can also opt for consent decree.

 

Here B's promise to pay more,i.e.,original RS10000+5000 more is a valid contract and not stifling  prosecution of A.If A' withdraws the case of Rs.10000 money suit against him B agrees to pay  another sum of Rs.5000 within 3 months. B has not absolutly restrained A from suing. if B fails to honor his fresh promise of Rs.5000 in addition to original amount of Rs.10000 within 3 months is a Valid contract. In case B fails to honour his commitment of paying Rs.15000/- altogether it  is a valid contract and A can recover it by filing a money suut because B has not  absolutely restrained A from proceeding to court of law as per section 28 of the Indian Contract  Act.Hence it is not a stifling prosecution as per section 28 of Indian contract Act.