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Shambhusing Sujansing Thakor Vs. Manual Vadilal Gandhi - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 74 of 1931
Judge
Reported inAIR1932Bom47; (1931)33BOMLR1457
AppellantShambhusing Sujansing Thakor
RespondentManual Vadilal Gandhi
DispositionAppeal dismissed
Excerpt:
.....code (act v of 1008), order xxiii, rule 3--compromise--decree --'so far as it relates to the suit'--matters beyond the scope of the suit can be included in decree if they form a consideration for the compromise.;defendant no. 1 executed a first mortgage on his property, on which there was an award followed by a decree. subsequently, defendant no. 1 executed a second mortgage on the property in favour of plaintiff, defendant no. 2 next purchased the rights of the mortgagor and. the mortgagee under the first mortgage. the suit on the second mortgage brought by the plaintiff against defendants nos. 1 and 2 ended it a compromise decree, by which defendant no. 2 undertook to pay the mortgage amount to plaintiff and defendant no. 1 was personally liable for the balance. the decree..........case. 11. now, i have already given the facts of the present case and pointed out that this is a suit on a mortgage and the question in the case was, how was the mortgage to be paid off? that was a matter in case which defendant no. 2 was directly interested, and, therefore, by the compromise he undertook to pay the mortgage amount, and the consideration for his undertaking to pay this sum, which legally defendant no. 1 was bound to pay, was the undertaking by defendant no. 1 to repay him, it may be, as has been pointed out by the learned counsel for the appellant, that no relief was sought by the plaintiff against defendant no. 2 in the suit which is primarily against the mortgagor defendant no. 1. but defendant no. 2 is made a party to the suit; he was, therefore, perfectly justified.....
Judgment:

Baker, J.

1. This is an appeal arising out of execution proceedings. The appellant is defendant No. 1 and the respondent No. 1 is defendant No. 2.

2. The facts are that the appellant Thakor Shambhusing Sujansing had mortgaged his property to the firm of Doshi Shamaldas Jethabhai represented by one Kantilal. On this mortgage there was an award followed by a decree for Rs. 13,000 and odd. Subsequent to this award, which is on August 25, 1926, Shambhusing executed a second mortgage in favour of the plaintiff in this suit Dajibhai Bhagvandas. There was another firm known as Manilal Vadilal in which a pleader named Nagindas was a partner. He was the pleader for the mortgagee Kantilal in the execution proceedings which followed the award-decree. The date of the second mortgage to Dajibhai Bhagvandas is November 21 1926. Subsequently, by one document dated June 18, 1928, the first mortgagee sold his rights to the firm of Manilal Vadilal and the mortgagor Shambhusing sold his equity of redemption to the same person and thus the first mortgage was extinguished, and the firm of Manilal Vadilal became the owners of the property, but the second mortgage of Rs. 6,000 was still outstanding. On the second mortgage Dajibhai Bhagvandas brought a suit No. 30 of 1928, defendant No. 1 being Shambhusing the mortgagor, the present appellant, and the present respondent No. 1 being Manilal Vadilal defendant No. 2. Mr. Nagindas appeared for both the defendants. There was a compromise between the parties by which defendant No. 2, that is, the firm of Manilal Vadilal, undertook to pay the mortgage amount by three instalments of Rs. 1,500 Rs. 2,000 and Rs. 2,000, defendant No. 1, that is the mortgagor, to be personally liable for any balance, and by this decree it was also provided that on payment of the sum by defendant No. 2 to the mortgagee defendant No. 2 should recover it from defendant No. 1. This decree' is dated June .27, 1929. Subsequently, the parties, i.e., the defendants, quarrelled. There were various civil and criminal proceedings between them and ultimately the present darkhast was presented on September 19, 1930, by which defendant No. 2 having paid the money of the first two instalments sought to recover it from defendant No. 1 original mortgagor.

3. Various contentions were raised by defendant No. 1. The First Class Subordinate Judge of Nadiad decided three preliminary issues: (1) Whether the decree is a legally executable one, (2) an issue as regards Court fees with which we are not concerned, and the third under Section 138 of the Transfer of Property Act with which also we are not now concerned. On the first issue which is the only one that arises now he held that the decree was legally executable. So far as regards the contention set up by Shambhusing alleging fraud and undue influence the Judge held that the only remedy for setting aside the consent decree is by suit or review of judgment. That position is conceded in appeal and the only point which has been argued at considerable length is this; whether part of the decree is foreign to the suit and inoperative or not, in other words, can defendant No. 2 execute the decree?, The question with which this appeal is concerned is one arising under Order XXIII, Rule 3, and relates to the last line of that Order 'the Court shall pass a decree in accordance therewith, so far as it relates to the suit.' The question then is whether that part of the decree which directs that defendant No. 2 should recover from defendant No. 1 the amount which he pays under the decree to the plaintiff the mortgagee, goes beyond the claim in the suit. There are very numerous decisions on this point but on a reference to them it will be found that each case has been decided on its own particular facts.

4. The learned counsel for the appellant has relied principally on the case of Hemanta Kumari Debi v. Midnapur Zamindari Company I.L.R. (1919) Cal. 485 L.R. 46 IndAp 240 22 Bom. L.R. 488 as laying down that the operation of a compromise decree is limited to so much of the subject-matter of the suit as is dealt with by the agreement and that it may be incapable of being executed outside the lands of the suit. That case was a case in which there had been a compromise between the plaintiff and the defendant and amongst other terms of the compromise was one that if the plaintiff succeeded in obtaining a decree against Government in respect of lands other than those contained in the suit against defendant she would grant a lease of them to the defendant on the same conditions as those agreed to with regard to the lands in his possession. Subsequently, although the plaintiff succeeded in the suit against Government, she refused to grant a lease to the defendant who thereupon sued her for specific performance of the agreement. The principal question which was raised in the lower Court was that the consent decree was inadmissible in evidence for want of registration. That was a point which was decided against the appellant by the Subordinate Judge and by the High Court and the appeal to the Privy Council was principally concerned with that question. In the course of the judgment the Privy Council referred to Section 375 of the Code of Civil Procedure of 1882, which corresponds to Order XXIII, Rule 3, and stated that under the terms of that section it was plain that the agreement or compromise, in whole or in part) was to be recorded, and the decree was then to confine its operation to so much of the subject-matter of the suit as was dealt with by the agreement, and laid down the rule as to the manner in which the terms of the section were to be carried out in the case of compromise decrees, remarking that although the operative part of the decree would be properly confined to the actual subject matter of the then existing litigation the decree taken as a whole would include the agreement. It goes on to say (p. 496):--

This in fact is what the decree did in the present case. It may be that as a decree it was incapable of being executed outside the lands of the suit, but that does not prevent it being received in evidence of its contents.

5. The question whether the decree in the former suit went outside the subject-matter of the suit was not directly before their Lordships, nor did they decide that question. Their remarks were merely with relation to the question of whether the compromise was admissible in evidence or whether being part of the decree it did not require registration.

6. The question whether the terms of a compromise decree go beyond the subject-matter of the suit is one which has to be determined on the facts of each particular case with reference to what the claim in the suit was and what was the nature of the compromise. In the present case the suit was on a mortgage. The mortgagor was the present appellant. But the purchaser both of the equity of redemption as regards the first mortgage and of the mortgagee rights under the first mortgage was defendant No. 2 who was, therefore, the owner of the land subject to such charges as were created by the second mortgage, the terms of which are not before me. Therefore, defendant No. 2 was a necessary party to the suit and he was vitally interested in seeing that the property which he had purchased should not be sold in execution of a decree obtained by the second mortgagee against defendant No. 1 the mortgagor. Now, whatever may be the position financially as regards defendant No. 1, it is apparent from the record of this Case that he had encumbered this property twice over, and that he had not been able to pay off the first mortgagee who had obtained a decree against him. It was, therefore, very likely that he would not pay the amount of the decree obtained against him by the second mortgagee, and it was, therefore, a wise precaution on the part of defendant No. 2, who for the purposes, of this case may be taken to be a firm of money-lenders, to ensure that the charge on the second mortgage was paid off and their property would come to defendant No. 2 unencumbered by any charges created by the mortgagor. Therefore, the agreement by defendant No. 2, who was a party to the suit, to pay off the mortgage charge of the plaintiff, which was the subject of the suit, is, in my opinion, a matter which clearly falls within the scope of the suit.

7. Then, as regards the agreement that defendant No. 2 should be reimbursed by defendant No. 1 for the amount which he paid and which defendant No. 1 otherwise would have to pay, as consideration for the compromise by defendant No. 2 to pay the amount on behalf of defendant No. 1, there are various rulings which have been quoted of various High Courts as to whether such an agreement goes beyond the scope of Order XXIII, rule 3, and whether a compromise decree based on such an agreement can be enforced or not. But each case, as I have already said, has to be decided on its own merits. I am unable to accept the view that the ruling of the Privy Council in Hemanta Kumari Debi v. Midnapar Zamindari Company would prohibit such a clause as occurs in the circumstances of the present case from being enforced, I have already referred to the circumstances of that case and in that case the land which was the subject of the agreement, specific performance of which was sought in the suit, was altogether distinct from the land which formed the subject-matter of the suit brought by the plaintiff against the defendant. I should not, however, lay much stress on that, but, as I have already stated, the Privy Council dealt with the principle in an abstract manner and, as I have said, it may be that the decree could not be enforced as regards property which lay outside the scope of the suit, but they did not expressly decide whether it was so or not. The learned counsel for the appellant has relied principally on this case and also on the case of Jasimuddin Biswas v. Bhuban Jelini I.L.R. (1907) Cal. 456 in which it was held that where in a suit claiming damages for wrongfully taking fish from a jalkar, which I presume means a Jheel, and in the compromise the amount of damages was reduced and the defendant agreed to take a permanent lease of the jalkar at a fixed rent, it was held that the terms of the compromise regarding the taking of the lease could not have been enforced in execution of the decree, and that the Court executing that decree would not have been empowered under it to compel the defendant to execute a kabulayat in favour of the plaintiff or to accept a lease on the terms agreed to. He has also referred to Purna Chandra Sarkar v. Nil Madhub Nandi (1901) 5 C.W.N. 485 laying down a similar proposition. There is a conflict of authority on this point. There are a number of Allahabad and Madras decisions to the contrary. The learned counsel for the respondent has referred to Sabapathy v. Vanmahalinga I.L.R. (1913) Mad. 959 Jasimuddin Biswas v. Bhuban Jelini I.L.R. (1907) Cal. 456 and Gobinda Chandra Pal v. Dwarka Nath Pal I.L.R. (1908) Cal. 837 Reference has also been made to Joti Kuruvetappa v. Izari Sirusappa I.L.R. (1906) Mad. 478 which lays down the proposition that the language of Section 375, which is now Order XXIII, Rule 3, is wide and general, and does not preclude parties from settling their disputes on such lawful terms as they might agree to without being restricted to such relief as one only of the parties had chosen to claim in the plaint. How far that decision could be supported in face of the Privy Council decision in Hemanta Kumari Debi v. Midnapur Zamindari Company is doubtful. The criterion in each case appears to be what are the facts of the particular case. I have already set out the facts and it has been held in most of the cases quoted that where part of the terms of the compromise amounts to consideration for the compromise it can be enforced in the decree.

8. The cases of this Court which have been referred to are, Vishnu v. Sadashiv : AIR1925Bom509 and Bajirao v. Sakharam (1930) 33 Bom. L.R. 463 In Vishnu v. Sadashiv, where under the compromise the decretal amount was to be paid by instalments and it was provided that in default of payment of any two instalments, not only the mortgaged property (which was insufficient), but also other lands of the judgment-debtors (which were given as security by the decree) should be sold, it was held that the decree-holder was entitled to sell not only the mortgaged property but also the other properties on which a charge was created by the decree. It was stated at p. 947; 'There is nothing in the language of that enactment (Order XXIII, Rule 3) to restrict its operation to the relief claimed in the plaint.' This, I may remark, is directly contrary to the principle laid down in a case quoted by the learned counsel for the appellant, Gauri Dutt v. Dohan Thakur (1917) 2 P.L.J. 673 The latest case on the point of this Court is Bajirao v. Sakharam, which was very recently decided by a single Judge, but all the authorities are set out and the matter is fully discussed at p. 467. The learned Judge says, relying on Gora Ghand Haldar v. Prafulla Kumar Boy I.L.R. (1925) Cal. 166--

the general rule is that an executing Court cannot question the decree sought to be executed except on the score of patent want of jurisdiction;...It was, therefore, very doubtful whether it was open to the lower Courts to consider this question at all....It was not open to him (the appellant) and his heirs to raise the question in execution proceedings [as he did not oppose its incorporation in the decree before the decreeing Court or in appeal.]

9. It has been stated by the learned counsel for the appellant that his client, who was represented by the same pleader as defendant No. 2, was not aware of the terms of the decree until an injunction was served upon him preventing him from reaping his crops. It may be, therefore, that if he succeeds in substantiating this position he might not be barred by this provision, and I do not, therefore, propose to decide the appeal on this ground, which moreover has not been considered by the lower Court. In Bajirao v. Sakharam it is stated that while where the terms of the compromise plainly go outside the suit and cannot be said to 'relate to it,' the Court may refuse to incorporate the terms in the compromise, but where the clause is a consideration of the compromise and therefore intimately connected with it, the words 'that relates to the suit' are sufficiently wide to embrace such a term of the compromise, as for instance, the consideration for the compromise, even though this consideration may be entirely out--side the scope of the suit and relate to property which was never in question in the suit itself. And the learned Judge refers to these cases which have already been quoted in this case, viz., Vishnu v. Sadashiv, Joti Kuruvetappa v. Izari Sirusappa, Gobinda Chandra Pal v. Dwarka Nath Pal, Karu Mian v. Tejo Mian (1917) 3 P.L.J. 43 and the decision of the Privy Council in Mehdi Ali Khan v. Ghanshiam Singh : (1927)29BOMLR1376 which is subsequent to the decision in Hemanta Kumari Debi v. Midnapur Zamindari Company.

10. The learned counsel for the appellant has devoted a great deal of argument and- ingenuity to showing that the facts of these cases are entirely different from the facts of the present case. I entirely admit that, but, as I have said more than once in the course of this judgment, the rule is in a case of this character that each case must be decided on its own particular facts. The law is quite plain and is that a decree baaed on the compromise must not go beyond the matters relating to the suit. The last line of Order XXIII, Rule 3, says: 'the Court shall order such...compromise...to be recorded, and shall pass a decree in accordance therewith so far as it relates to the suit.' Therefore, the point in each particular case will be whether the clause in the compromise decree which is objected to is one which ' relates to the suit' or not, and that is obviously a question which can only be decided in each particular case, and it is very difficult to apply a ruling meant to apply to the facts of one case to those of another case. But the ruling of the Privy Council in the case of Hemanta Kumari Debi v. Midnapore Zamindari Company does not really advance the case any further. It merely lays down this principle, that the decree would not be executable in so far as it relates to matters outside the scope of the suit. It does not say what matters are to be regarded as outside the scope of the suit and it would be impossible for any decision to say so except with reference to the case immediately before it, and I am fortified in this view by the view taken by Mr. Justice Madgavkar in the case in Bajirao v. Sakharam, where, referring to Hemanta Kumari Debi v. Midnapore Zamindari Company, he says, bottom of p. 467:--

These observations in the last case, it should be noticed, are negative and do not in any way limit a liberal construction of the words 'so far as it relates to the suit '...The question, therefore, in the present ease is whether this particular clause as to turns relates to the suit or whether it does not...(which) must be a question dependent upon the facts of each case.

11. Now, I have already given the facts of the present case and pointed out that this is a suit on a mortgage and the question in the case was, how was the mortgage to be paid off? That was a matter in case which defendant No. 2 was directly interested, and, therefore, by the compromise he undertook to pay the mortgage amount, and the consideration for his undertaking to pay this sum, which legally defendant No. 1 was bound to pay, was the undertaking by defendant No. 1 to repay him, It may be, as has been pointed out by the learned counsel for the appellant, that no relief was sought by the plaintiff against defendant No. 2 in the suit which is primarily against the mortgagor defendant No. 1. But defendant No. 2 is made a party to the suit; he was, therefore, perfectly justified if he wanted to compromise with the plaintiff in the way which was most beneficial to his interests. Now, amongst. the numerous cases which have been quoted there is a balance of authority in favour of the view that where the term in question is a consideration of the compromise and therefore intimately connected with it, the words ' that relates to the suit' are sufficiently wide to embrace it. With respect I agree with this view. Here where we are not concerned with any land other than the land which formed the subject-matter of the suit, nor with any mortgage other than that which formed the subject matter of the suit, and the terms of the decree really relate to the manner in which the claim of the plaintiff in this suit is to be met, I am of opinion that the terms of Order XXIII, Rule 3, are sufficiently wide to cover a term of the nature with which we are now concerned.

12. I, therefore, agree with the finding of the lower Court and am of opinion that the appeal should be dismissed with costs.

13. Application No. 235 of 1931 rejected with costs, and the other application dismissed. Rule discharged with costs in the stay application. Name of respondent No. 2 to be struck off.

Nanavati, J.

14. I agree and have nothing to add.


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