what is settlement in legal value

post material facts

one party file a suit against another and during suit they settled in court and take decree and court give direction to government authority in suit in which government is not even party...

direction is about agriculture land which is distributed between petitioner and defendant

two problem if give effect of said decree/order in revenue record
1- government loose stamp duty
2-Non farmer became farmer which is prohibited in saurashtra gharkhed ordinance

is it valid settlement???

plz elaborate