John Beaumont, Kt., C.J.
1. These are two appeals from decisions in darkhast proceedings before the First Class Subordinate Judge of Ahmedabad. Both the appeals raise the same points in respect of two different respondents, and I can deal with them in the same judgment.
2. The facts giving rise to the darkhast proceedings are that in August, 1930, four suits were proceeding in the Court of the First Class Subordinate Judge of Ahmedabad between the present appellant and the two respondents. The appellant was suing each of the respondents in separate suits Nos. 1446 and 1527 of 1927 for a sum of Rs. 18,000 and interest, and then there were two other suits against the appellant which were in the nature of cross suits. On August 14, 1930, the parties executed a document, which is Exh. 15, under which they left it to Mr. Mavlankar, who was the appellant's pleader in the suits, to settle the matters in dispute between the parties, and by that document, to which I will refer more in detail in a moment, the parties admitted that they had referred the matter to Mr. Mavlankar to settle out of Court all the suits and that he had given his decision in the terms stated. Then darkhast proceedings were started in December, 1931, by the appellant to enforce the payments allowed by Mr. Mavlankar, and the answer of the defendants to the darkhast proceedings was that they did not lie by virtue of the agreement of August 14, 1930. To that the appellant retorted that that agreement had not been carried out by the defendants, and could not, therefore, be relied upon. The learned Subordinate Judge held that the agreement, though not carried out as to certain stipulations as to time, nevertheless, had been substantially carried out, and that it was competent to him to grant relief by way of extending the time for certain payments to be made under that agreement. Accordingly, he extended the time for payment under that agreement and dismissed the plaintiff's darkhast in both suits, and from those decisions these appeals are brought.
3. The question turns primarily on the construction of Exh. 15, to which I will now refer. It is signed by the appellant and the respondents in the two appeals. It recites that 'certain disputes are going on between us three', and then it refers to the four pending suits before the First Class Subordinate Judge of Ahmedabad. Then it refers to the fact that Mr. Mavlankar is an advocate for the appellant and that notwithstanding that they had insisted on his settling the matter out of Court according to his desire. Then in paragraph 2 it states.- 'Pursuant to that reference you have decided as follows.' Then the first two sub-paragraphs deal With what I have called the two cross suits and provide that those should be dismissed. Then sub-paragraph 3 deals with the two suits by the appellant against the two respondents and it provides that the two respondents shall apply to the Court to pass full decrees against them as prayed in the plaints and that they shall withdraw all the objections raised by them. Then Sub-clause (4) is in these terms:
We Somchand and Madhavlal undertake jointly and severally to pay Rs. 27,000, in words twenty-seven thousand, viz., Rs. 13,500 of the share of Somchand and Rs. 13, 500 of the share of Madhavlal within 15 days from today towards the two decrees to be passed in suits Nos. 1446 of 1927 and 1527 of 1927. If we do so within 15 days Barjorji will give up the remaining decretal balance by way of concession and get both the decrees marked satisfied. If we both jointly and severally cannot pay the said sum of Rs. 27,000 within the said time, both the decrees will remain in force against us for the full amount and Barjorji will be entitled to recover the full amount thereof.
4. That document is, in my opinion, an agreement by the appellant and the respondents to accept the decision of Mr. Mavlankar as there set out.
5. Now, the first point taken by the appellant is that the executing Court cannot look at that agreement at all because it is said that there has been no payment or adjustment certified under Order XXI, Rule 2, and therefore, by virtue of sub-paragraph (3) of that rule, the agreement cannot be looked at. In my opinion the answer to that is to be found in the decision of a full bench of this Court in Laldas v. Kishordas I.L.R(1896) 22 Bom. 463. It was there held that an executing Court can look at an agreement made before the date of the decree providing that the decree shall not be executed according to its terms. I think that the effect of this agreement, Exh. 15, is to provide that if certain moneys are paid within a specified time then the decree is not to be executed for the balance. Mr. Carden Noad for the appellant distinguishes Laldas v. Kishordas on the ground that it is necessary in this case not only to refer to the agreement but also to the payment, and he says that the agreement and the payment are an adjustment within Order XXI, Rule 2. In Laldas v. Kishordas (supra) it was held that an agreement made before the date of the decree could not be treated as an adjustment of the decree within that rule, and so far as the payment is concerned, the payment in this case is not a payment proved in order to show that execution for the amount paid cannot be levied. It is a payment proved merely to establish the fact that a condition precedent to the operation of the agreement has been performed. It is a mere accident that the condition happens to be a payment, and I can see nothing in Order XXI, Rule 2, which prevents proof of the fact that a condition precedent to the coming into operation of such an agreement as this has been performed. We are bound by the decision in Laldas v. Kishordas (supra), though it has not met with universal approval in other High Courts, and I think we must, therefore, hold that the executing Court was entitled to look at this agreement in order to see whether it prevented execution according to the terms of the decrees.
6. The next question for decision is, whether the agreement Exh. 15 does operate to prevent execution. On that point I have to state certain further facts. The two decrees sought to be executed were passed on August 30, 1930, in accordance with purshis filed by the respondents on August 15. The fifteen days for payment limited under the agreement expired on August 30, 1930, and admittedly Rs. 27,000 was not paid by that date. The actual dates of payment are given in the judgment of the lower Court. The respondent Somchand paid the whole amount of his Rs. 13,500 between August 30 and September 15, and Madhavlal the other respondent paid his moiety of Rs. 27,000 between September 17 and October 9, 1930. So that these moneys were not paid within the fifteen days specified in the agreement, though they were paid soon after. The learned Subordinate Judge held that the moneys having been paid within a reasonable time after the specified date, it was open to him to grant relief against the consequences of non-payment by the specified date and that such relief ought to be granted, with the result that the agreement Exh. 15 became effective. The law on the subject is not, I think, open to any serious question. If there is an agreement to pay a sum of money by a particular date with a condition that if the money is not paid on that date a larger sum shall be paid, that condition is in the nature of a penalty against which a Court of equity can grant relief and award to the party seeking payment only such damage as he has suffered by the non-performance of the contract. But if, on the other hand, there is an agreement to pay a particular sum followed by a condition allowing to the debtor a concession, for example, the payment of a lesser sum, or payment by installments, by a particular date or dates, then the party seeking to take advantage of that concession must carry out strictly the conditions on which it was granted, and there is no power in the Court to relieve him from the obligation of so doing. We were referred to a very large number of cases in which the Courts either had or had not granted extension of time. Some of them, and particularly the decision of this Court in Narsinha v. Balvant : (1921)23BOMLR1238 , provoke this comment, that there is no general principle of equity that the Court can relieve a party in default in respect of money payments whenever the Court thinks it just so to do. Courts of equity will, in cases which have become well defined, relieve against the rigours of the common law, and for the purpose of this case two heads of relief are relevant. A Court of equity will relieve against a penalty, and will also refuse to enforce strictly stipulations as to time where it is satisfied that the parties themselves did not intend those stipulations to be acted upon strictly. Those two matters are dealt with in this country by Sections 55 and 74 of the Indian Contract Act, and unless the present case can be brought under one of those heads, in my judgment, the Court has no power to relieve the respondents from the consequences of their failure to carry out strictly the terms of their agreement.
7. Now, coming back to Exh. 15 what we have first to determine is whether the contract is for the payment of the smaller sum of Rs. 27,000 by a particular date with a condition that if not so paid the larger sum of Rs. 36,000 is to be payable under the decrees, or whether the contract is for payment of the larger sum with a concession enabling a smaller sum to be paid in a particular way in full satisfaction. In my opinion, the contract is of the latter class, and the law relating to penalties, and Section 74 of the Indian Contract Act, have no application. Sub-clause (3) of paragraph 2 of Exh. 15 provides for the two respondents submitting to decrees for the whole amount claimed by the plaintiff. Mr. Thakor for the respondents has relied on the fact that apart from this agreement there never had been any admission that the appellant: was entitled to these sums, and his claim was being disputed in the suits. I think we may assume from, the fact that the respondents left the settlement of the matter to the appellant's pleader that they did not think well of their chances of success. But, however that may be, there was this plain agreement to submit to decrees for the full amount claimed and those decrees were passed and have never been challenged. Then comes Sub-clause (4) which is, I think, both in form and substance, a clear concession under which the two respondents covenanted to pay Rs. 27,000, which is less than the amount for which decrees were to be passed, 'within 15 days from to-day,' and then it is provided that if they do so within fifteen days the appellant will give up the remaining decretal balance 'by way of concession' and get both the decrees marked satisfied, but that if the respondents cannot pay the said sum of Rs. 27,000 'within the said time' both the decrees will remain in force against the respondents for the full amount. It seems to me impossible to conceive of an agreement being drafted in clearer terms so as to provide that the primary liability is to be on the decrees with a condition added that if a specified lesser sum than the decretal amount is paid within a certain time then that shall be taken as satisfying the decrees. In my opinion, therefore, this being a concession, the terms must be carried out according to the intention of the parties.
8. Then the next point is, whether according to the intention of the parties time was of the essence of the contract. It is argued by the respondents that time was not intended to be of the essence, but I do not see any ground on which we can so hold. No doubt the evidence of Mr. Mavlankar is that he realized-and I will assume that the plaintiff also realised-that the respondents would have to collect this money from third parties, and it might have been reasonable if Mr. Mavlankar had allowed some elasticity in his decision as to the time within which the payments were to be made; if, for instance, he had provided that the money should be paid within fifteen days or such extended period as he might allow. But he did not do that. To my mind, the whole point of the concession allowed to the respondents lay in the stipulation as to the time within which payment was to be made. The plaintiff was to accept much less than the amount claimed if it was paid promptly, and I do not see any ground on which we can say that what the parties really meant was that payment was to be within fifteen days or a reasonable time thereafter. In my judgment, therefore, we must hold that in this agreement time was of the essence, and there is no doubt that the condition as to time was not complied with.
9. Then it is said that if time was of the essence the appellant has by his conduct waived the stipulation as to time. As I have already stated, Rs. 27,000 were paid by these two respondents during September and October, 1930, the last due date for payment being August 30, and the plaintiff accepted those sums. Some delay in the payment was occasioned by the fact that Mr. Mavlankar was arrested, presumably in relation to the Civil Disobedience campaign, and was imprisoned at about the end of August, and on September 2, he wrote a letter to the appellant, which is relied on by the respondents, in which he gives some particulars of the payments to be made by these two respondents. He refers to the fact that the respondent Madhavlal was proposing to raise part of the money from his mother-in-law, that is to say, from a third party. But neither of the respondents went into the witness box. They did not suggest that they were in any way misled by the plaintiff, so as to found a case of estoppel, nor that they paid this money in the mistaken idea that the appellant had waived the stipulation as to time. It may be that the appellant knew that Rs. 27,000 were being paid by people who imagined that they would by such payment enable the respondents to escape compliance with the full terms of the decrees. But, on the other hand, the appellant was entitled in any event to this money, since, if default had been made in payment of Rs. 27,000 within the time limited by the agreement, the whole amount due under the decrees was payable, and there is no evidence that the plaintiff ever represented in any way that the moneys he accepted were received by him under the contract, Exh. 15, and not under the decrees. I think, therefore, that the claim of the respondents that there was waiver of the breach of the stipulation as to the time within which Rs. 27,000 were to be paid has not been established, and that the appeals must be allowed.
10. The appeals are allowed, the decrees of the lower Court are set aside, and the darkhasts remanded to be proceeded with according to law.
11. The appellant should get costs throughout.
12. We do not express any opinion as to whether execution should be enforced by arrest as the point was not argued and does not arise in the appeals.
13. I agree. The appellant seeks to execute the two decrees which he obtained against the respondents in the two suits filed by him in 1927. Those suits were compromised, or rather the parties went to arbitration, and they agreed to accept the decision of Mr. Mavlankar. He decided that the defendants should file purshis admitting the full claim of the plaintiff, the present appellant, and that they should then pay a portion of that claim within fifteen days, and that if they succeeded in paying the money the appellant should give up the remaining balance by way of concession, and get both the decrees marked satisfied. Therefore, when the appellant filed the darkhasts in this case he was met by the plea that the respondents-judgment-debtors had carried out the terms of the agreement and paid the amount for which they were liable under the agreement and that it was his duty to have the darkhasts marked satisfied.
14. The first point which has been raised in this case is, whether this is an adjustment within the meaning of Order XXI, Rule 2. That rule says that any payment or adjustment which is not certified or recorded shall not be recognised by any Court executing the decree, and so if this agreement has to be looked at as an adjustment of the decrees, it cannot be looked at. But it has been decided by a full bench of this Court in Laldas v. Kishordas I.L.R. (1896) . 22 Bom. 463 that an agreement of this nature, which precedes a decree, cannot be looked upon as an adjustment of the decree and that evidence of it can be received by the Court. The learned Counsel for the appellant has admitted that this case is binding on us; but he asks us to hold that, as the payments were not; certified within the proper time, and as the judgment-debtors cannot now certify the payments, we cannot take them into account, and, therefore, we have no evidence to show that the respondents-judgment-debtors actually complied with the terms of the decree. But, with respect, it seems to me that these payments have been certified inasmuch as they are mentioned by the judgment-creditor-appellant in his application. It has always been held that a mention by a decree-holder of payments made out of Court is sufficient to entitle a Court to consider them. A certificate of payment given by a decree-holder to a Court is merely an intimation that he has received the money. Therefore, since the decree-holder has himself mentioned these payments, we can take them into account and we are entitled to hold that the judgment-debtors have paid the money.
15. The second point is, whether the agreement was properly carried out by the respondents. Actually, payments were not made within the fixed time, but it has been argued on their behalf that time was not of the essence of the contract and that the intention of the parties was that the payments were to be made as soon as they could collect the money. This view commended itself to the learned Subordinate Judge, but I agree with his Lordship the Chief Justice that it is not correct. It is difficult to hold that the parties to an agreement of this nature, which gives a concession for prompt payment, or, if we look at it from another point of view, imposes a penalty for default, have not looked on prompt payment as essential, and there is nothing in the evidence to show that the appellant intended anything different to the agreement. Mr. Mavlankar, who has given evidence on behalf of the judgment-debtors, has said all that can foe said on their behalf, when he says that he understood that the appellant had no objection to a slight change in the period of fifteen days. But this is very vague and there is nothing to show that the judgment-creditor thought that time was not essential. It appears to me that the intention of the parties was what they said, and that as the payments were not made within the proper time, the agreement was not properly fulfilled.
16. On the last point I have nothing to add to what his Lordship the Chief Justice has said.
17. I agree that the appellant must succeed.