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B. Kishen Prasad and anr. Vs. Kunj Behari Lal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1926All278
AppellantB. Kishen Prasad and anr.
RespondentKunj Behari Lal
Cases ReferredBalkishen Das v. Run Bahadur Singh
Excerpt:
- - 15,000 odd and the claim had been denied in toto, bat on the date aforesaid the parties came to terms, the language of which will be material, for there is a good deal, of controversy over its interpretation. ghulam ala-ud-din air 1924 all 689..our reasons, briefly, would be something like this. the contention was that time was not of the essence of the contract and therefore, it did not at all matter if the judgment-debtors failed to make the payments on the stipulated dates. the clause in the compromise decree is not like clauses where a penalty is prescribed for default of payment......2,000 also out of court. on the 10th of september 1924 the appellants took out execution of their decree and claimed the whole amount for which the suit had been brought minus the sums which they had already received. in other words, they treated the whole of the claim as due to them and were expressly of opinion that there had been a default in terms of the compromise. on the 15th of september 1924 a further sum of rs. 900 was paid and a few days later, on the 29th of september 1924, a sum of rs. 185-7-9 was paid. thus on the last mentioned data the entire sum of rs. 9,085-7-9, decreed to the plaintiffs, with conditions attached, was paid up.2. in spite of the payments, the decree-holders wanted to proceed with the execution and the judgment-debtors contested the application. they.....
Judgment:

Mukerji, J.

1. This is a decree-holder's appeal. On the 29th of May 1924 the suit out of which the present execution proceedings have arisen was compromised. The appellants here had claimed Rs. 15,000 odd and the claim had been denied in toto, bat on the date aforesaid the parties came to terms, the language of which will be material, for there is a good deal, of controversy over its interpretation. Briefly the terms were to the effect that if the defendants paid a sum of Rs. 6,000 within a month and a half of the date of the compromise, and the balance of the sum that would make up one half of the amount of the claim, namely Rs. 1,832.-8-0 together with the costs in the course of three months, the plaintiffs would remit the balance of their claim. In the cage of default on the part of the defendants the plaintiffs would recover the entire amount of their claim. According to the terms of the compromise, therefore, the sum of Rupees 6,000 was payable on the 13th of July 1924 and the balance to make up the one-half of the amount claimed and the costs were to be paid on or before the 29th of August 1924. The costs amounted to Rs. 1,552-15-9. The defendants paid the sum of Rs. 6,000 on the 15th of July 1924. On the 31st of August 1924 they paid a further sum of Rs. 2,000 also out of Court. On the 10th of September 1924 the appellants took out execution of their decree and claimed the whole amount for which the suit had been brought minus the sums which they had already received. In other words, they treated the whole of the claim as due to them and were expressly of opinion that there had been a default in terms of the compromise. On the 15th of September 1924 a further sum of Rs. 900 was paid and a few days later, on the 29th of September 1924, a sum of Rs. 185-7-9 was paid. Thus on the last mentioned data the entire sum of Rs. 9,085-7-9, decreed to the plaintiffs, with conditions attached, was paid up.

2. In spite of the payments, the decree-holders wanted to proceed with the execution and the judgment-debtors contested the application. They raised a question of fact, namely, the plaintiffs decree-holders had agreed to take the sum of Rs. 185-7-9 in full satisfaction of their claim. This question has been decided against the judgment-debtors and this question has not again been brought up before us for decision.

3. The judgment-debtors further contended that the terms of the compromise were of a nature as could be interfered with on principles of equity by the Court and the Court should not execute the decree for any sum beyond the one already paid out. In reply to this, the decree-holders contended that the Court executing the decree had no jurisdiction to go behind the terms of the decree and in any case the terms of the compromise were not of a penal character and on a true interpretation of the decree the whole amount claimed and the costs were payable.

4. The questions accordingly arise before us for decision. First, whether the executing Court had any jurisdiction to interfere with the terms of the compromise, supposing the terms were such as would enable the Court to interfere with under Section 74 of the Contract Act or on principles of equity akin to the terms of that enactment. The second question is whether on a true interpretation of the terms of the compromise it is open to the judgment-debtors to contend that the terms are penal and the Court should award only such compensation to the decree-holders as it may deem fit.

5. On behalf of the appellants the case of Raghunandan Prasad v. Ghulum Alauddin Beg AIR 1924 All 689. has been cited as authority. The facts of that case are slightly different in nature from the facts of the case before us, but there can be no doubt that the Court laid down the rule that the Court executing the decree must take the decree as it stood and had no power to go behind it or entertain an objection as to the enforceability of the terms of the decree. The learned Judges also held that the terms of Section 74 of the Contract Act were not applicable to a decree. This seems to be the only case in this Court which is directly to the point. On the other hand, there is a host of rulings of other High Courts which would establish that a compromise decree does not stand in many respects on a higher footing than a private contract. Such cases are, to mention some only, Nagappa v. Venkat Rao (1901) 24 Mad 265; Lakshmanaswami Naidu v. Rangamma (1903) 26 Mad 31; Ramasami Naik v. Ramasami Chetti (1907) 30 Mad 255; Kandarpa Nag v. Banwari Lal Nag AIR 1921 Cal 356; Nand Rani Kuer v. Durga Das Narain AIR 1924 Pat 387; and Krishna Bai v. Hari Govind Kulkarni (1907) 31 Bom 15.

6. In view of the fact that on the second question involved in this case we are going to accept the appeal it is not necessary for us to express any definite opinion as to the question of law raised before us. If it were necessary we would find it rather difficult to agree with the case of Raghunandan Prasad v. Ghulam Ala-ud-din AIR 1924 All 689.. Our reasons, briefly, would be something like this. Under Order 23, Rule 3 of the Civil P.C., where parties to a' suit arrive at a lawful agreement or compromise, the Court is bound to record such agreement or compromise and to pass a decree in accordance with the terms of the same. It will be noticed that no option is left to the Court to examine the terms of the compromise beyond seeing whether the agreement is lawful or not. An agreement which carries a penal clause, such as may be covered by Section 74 of the Contract Act, is not in any sense of the term 'unlawful'. The agreement is lawful. The only question is whether the Court, in its discretion, would interfere with the terms or not in enforcing the same. Such being the case, an agreement which contains a penal clause will have to be recorded by the Court and is bound to form a part of the decree according to law. The question would then arise whether the Court would be powerless to interfere with a compromise decree when executing the same. If the Court be powerless the whole policy of law would be reversed. As already stated, the Court has no power to scrutinize the terms of the compromise in order to see whether it contains any penal clause or not. Notwithstanding the rule contained in Section 74 of the Contract Act or the principles on which the enactment is based, a decree-holder would be free to enforce any terms, however oppressive, against the judgment-debtor, and all this will happen although the decree is based on nothing more than an agreement between the parties.

7. If we examine the terms of Section 74 of the Contract Act we shall see that there is nothing in it which says that the Court has to use its discretion only in the case of a suit and at no other stage of it. The language used is extremely wide and would cover a case where a compromise decree is being sought to be enforced by way of execution. We need not definitely decide whether Section 74 in terms applies to the execution of a decree or not. It has been held in the rulings already quoted that the principle underlying Section 74 of the Contract Act will apply. From reasons of policy, therefore, it would be open to the Court to examine the terms of a compromise decree before enforcing it. On principle and authority, therefore, it was open to the Court below to examine the terms of the compromise and to see whether the penal clause, if there was any, was to be enforced in toto or not.

8. Coming to the second point in the appeal it appears to us that the compromise comes within the purview of the rule in Ratub-ud-din Ahmad v. Bashir-ud-din (1910) 32 All 448. As already indicated, and as we read the compromise, the defendants agreed that the plaintiffs' case was wholly true and enforceable. As a matter of concession, however, the plaintiffs agreed that they would accept one half of the amount claimed and full costs in lieu of entire amount claimed and the costs if half the money claimed and the costs were paid within a certain time limited in the compromise. According to the terms of the compromise, therefore, if there was to be a default the plaintiffs wore to get nothing more than what was declared to be due to them. It is not the case that because of a default the plaintiffs were to get something more than what they were entitled to. The compromise repeatedly states that in case of regular payment of the amounts mentioned, the plaintiffs would remit and excuse the payment of the remaining sum claimed. It was stated in the clearest of terms that in the case of default the plaintiff would recover the amount claimed and the costs. We find, therefore, nothing in the terms of the compromise which would enable us to interfere and to accept the contention of the judgment-debtors that the decree-holders are entitled only to the lesser sum mentioned in the compromise and such compensation as the Court may award.

9. It was contended on behalf of the respondents that Section 55 of the Contract Act applied and the Court had to see whether time was of the essence of the contract or not. The contention was that time was not of the essence of the contract and therefore, it did not at all matter if the judgment-debtors failed to make the payments on the stipulated dates. We cannot accept this contention and there is no authority for it. In cases of enforcement of contracts for sale of land it has been held that ordinarily time is not of the essence of contract. We are not aware of any case in which it has been held that where a person is conceding something to another on the ground of the latter performing his part of the contract within a specified period the former is compelled to treat time as being not of the essence of the contract. If we entered into the spirit of the compromise, we should see that the whole claim was to stand decreed, but the defendants were to have this concession that if they paid certain sums of money, almost immediately and within the time limited, the plaintiff's would remit the balance of their claim. We are of opinion that even if Section 55 of the Contract Act were applicable, time was of the essence of the contract in this particular case, and there having been a default on the part of the judgment-debtors the de cree was executable in its entirety.

10. I would, therefore, allow the appeal with costs, set aside the decree of the Court below and send the case back to that Court to proceed with execution. The costs in the Court below will abide the event and the costs in this Court will include counsel's fees on the higher scale.

Sulaiman, J.

11. I agree. With regard to the ruling of Raghunandan Prasad v. Ghulam Ala-ud-din AIR 1924 All 689. which purported to follow the case of Kalipada Sarkar v. Hari Mohan Dalal AIR 1917 Cal 844 it does seem that the attention of the learned Judges was not drawn to various rulings in which the contrary view had been upheld. My learned brother has referred to the cases of the Madras High Court where it has been consistently held that it is open to an executing Court to apply the principle underlying Section 74 of the Contract Act to a compromise decree. The Bombay High Court is also inclined to the same view. The Calcutta case in Kalipada Sarkar v. Hari Mohan Dalal AIR 1917 Cal 844 is not directly in point, and it is noteworthy that Mr. Justice Mukerji, who was one of the learned Judges who decided that case, subsequently held in the case of Kandarpa Nag v. Banwari Nag AIR 1921 Cal 356 that the question should be gone into in the execution department. In a subsequent suit their Lordships of the Privy Council also interfered with a compromise decree: vide Ram Gopal Mookerjea v. Masseyk [1859-61] 8 MIA 239. It also does appear that in the case of Balkishen Das v. Run Bahadur Singh [1884] 10 Cal 305 their Lordships of the Privy. Council were prepared to consider the binding nature of a compromise decree in the execution department, though in that particular case it did not turn out to contain any penal clause. It is not, however, absolutely necessary in this case to express any final opinion on this point.

12. I agree that the terms of the compromise decree make it quite clear that the plaintiffs had agreed to make a concession in favour of the defendants in case the amounts were paid in two instalments within the times fixed. If the amounts were paid in time then the plaintiffs agreed to give up and relinquish the remaining portions of the amount claimed and to excuse its nonpayment;. This was a concession which they agreed to make in case no default was made. In the present case it cannot be disputed that the default was made at least with regard to the second instalment. The clause in the compromise decree is not like clauses where a penalty is prescribed for default of payment.

13. It must also be conceded that the true intention of the parties must have been that time was of the essence of the contract. When the defendants did not make payments as directed by the compromise decree they cannot compel the plaintiffs to make the concession which they have agreed to make only if no default was made.

14. The appeal is allowed with costs. We sat aside the decree of the Court below and remand the execution application to it with direction to proceed with it according to law. The costs in the Court below will abide the result. The costs in this Court will include counsel's fee on the higher scale.


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