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Bharat Bank Ltd. Vs. Sehgal Brothers and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberExn. First Appeal No. 56 of 1958
Judge
Reported inAIR1960P& H459
ActsCode of Civil Procedure (CPC), 1908 - Sections 27 - Order 21, Rule 2 - Order 20, Rule 11
AppellantBharat Bank Ltd.
RespondentSehgal Brothers and ors.
Cases ReferredGanga Bishan v. Raghunath Prasad
Excerpt:
.....to the statements of the parties, the execution application is being dismissed as unsatisfied in accordance with the terms of the compromise. (5) the principal is well stated that if the parties vary the decree, intending to create fresh liabilities, then the old decree comes to an end, and a new contract comes into being......and execution first appeal no. 419 of 1958. the parties to both these appeals are the same. the decree-holder is the bharat bank, now bharat nidhi, and the judgment-debtors are m/s. sehgal bros., ram sarn dass sehgal, pran nath sehgal and puran chand sehgal son of ram sarn sehgal.(2) the bank obtained two decrees against the judgment-debtors--one form the amristar court on 30-1-1953, for a sum of rs. 9128-15-8 with costs and future interest and the other from the jullunder court on 3-7-1953, for a sum of rs. 31,237-12-0 with costs and future interest. execution was taken out of the jullundur decree in the first instance. in execution, a compromise was entered into on the 12th of march, 1955. the terms of this compromise are set out below:'1. that m/s. sehgal brothers, constituting of.....
Judgment:

1. This order will dispose of Execution First Appeal No. 56 of 1958 and Execution First Appeal No. 419 of 1958. The parties to both these appeals are the same. The decree-holder is the Bharat Bank, now Bharat Nidhi, and the judgment-debtors are M/s. Sehgal Bros., Ram Sarn Dass Sehgal, Pran Nath Sehgal and Puran Chand Sehgal son of Ram Sarn Sehgal.

(2) The Bank obtained two decrees against the judgment-debtors--one form the Amristar Court on 30-1-1953, for a sum of Rs. 9128-15-8 with costs and future interest and the other from the Jullunder Court on 3-7-1953, for a sum of Rs. 31,237-12-0 with costs and future interest. Execution was taken out of the Jullundur decree in the first instance. In Execution, a compromise was entered into on the 12th of March, 1955. The terms of this compromise are set out below:

'1. That M/s. Sehgal Brothers, constituting of Shri Ram Sarn Dass Sehgal and Shri Pran Nath Sehgal as partners, shall pay Rs. 31,237-12-0 (Rupees thirty-one thousand, two hundred, thirty-seven and annas twelve only) as the amount of decree and Rs. 2,538-12-0 (Rs. two thousand, five hundred thirty eight, and annas twelve only), as costs with future interest as provided in the decree at 6 per cent per annum as decreed by the Senior Sub-Judge, Jullundur on 3-7-1953, and Rs. 9,128-15-9 (Rs. nine thousand one hundred, twenty eight, annas fifteen and pies nine only) with costs, Rs. 870/- (Rupees eight hundred and seventy only), and future interest at 6 per cent p. a. as decreed by the Senior Sub-Judge, Amristar, on 30-1-1953, by instalments of Rs 3,000/- (Rupees three thousand only) quarterly, the first installment being paid on 15-4-1955, second on 15-7-1955, third on 15-10-1955 and so on for subsequent instalments.

2. These instalments of Rs. 3,000/- will be paid for two years and thereafter in such a manner that the entire decretal amount of both the decrees is paid off within a total period of three and a half years, i.e., by 15-10-1958.

3. In case of judgment-debtors regularly pay the said installments and the interest up to 15-4-1955, then the decree-holder shall give up the amount of interest chargeable form 15-4-1955 to the date of payment. The decretal amounts to be paid by 15-10-1958 shall not include interest otherwise chargeable from 15-4-1955.

4. In case of default of any one installment, the decree-holder shall be entitled to executed the decree for the principal amount then remaining due with cots and future interest as provided in the decree and in this case, no rebate of interest after 15-4-1955, shall be allowed to the judgment-debtor.

5. That the judgment-debtors hereby agree and consent that the decree-holder shall have the second lien and charge over the property mentioned in the schedule 'A' annexed herewith, which is the exclusively owned property of the judgment-debtors till the entire amount of the decree is paid off as provided in this compromise. In case of default, in payment of any one installment, the decree-holder shall be entitled to proceed against this property along with personal liability of the judgment-debtors and the judgment-debtors shall then raise no objections to the execution of decree by way of sale through Court, of this property.

6. The judgment-debtors unequivocally and honestly undertake not to alienate, transfer, encumber or otherwise dispose of the property mentioned in the Schedule 'A' annexed hereto except after paying the amount of the two decrees under this compromise. On the income-tax arrears being cleared of, the two buildings known as godowns, one situated on the Mandi Road, leading to Metro Hotel and the second in Krishan Nagar, more particularly described in the schedule 'B annexed hereto shall be under equitable mortgage with the Bharat Nidhi Ltd., for the unpaid balance of the said two decrees by deposit of title deeds and then the remaining property will be released from lien of decree-holder.

7. The question of the liability or non-liability of the decree-holder to the value of the goods pledged by the judgment-debtors with the decree-holder or the amount thereof, would follow the decision of the Senior Sub-Judge, Amristar, before whom the said point is pending for decision. If the claim of the judgment-debtors is disallowed, then they undertake, not to prefer any appeal against that order and to admit the said order to be finally binding on them. In case the decision of the case pending in the Court of the Senior Sub-Judge, Amritsar, is allowed in favour of the judgment-debtors, then the decree-holder shall be entitled to seek its remedy available to it under the law.'

'According to the statements of the parties, the execution application is being dismissed as unsatisfied in accordance with the terms of the compromise.'

A copy of this compromise was also produced before the executing Court, at Amritsar and in Amritsar Court also the following order was passed:

'The file is consigned to the record room because of the non-satisfaction of the decree.'

As the agreement was not carried out, the decree-holder took execution of the decrees both in the Jullundur and the Amritsar Courts. To this execution, objections were raised by the judgment-debtors, the principal plea being that both the decrees had been adjusted and a new contract had come into being by reason of the compromise of 12-3-1955 and that the same could only be enforced by a separate suit and not in execution. This plea prevailed with the executing courts, with the result that the decree-holder has come up to this Court in appeal.

(3) The contention of Mr. Puri, learned counsel for the decree-holder, is that the compromise merely provides a mode for the execution of the decrees. In other words, it merely provides how the decree have to be paid and it does not either adjust the decrees or create a new contract. The contention of Mr. Khanna, learned counsel for the judgment-debtors, on the other hand, is that the compromise of 12-3-1955, is a new contract and the decrees having been adjusted, nothing remains to be executed and the only remedy available to the decree-holder is to file a separate suit to enforce the contract.

(4) After hearing the learned counsel for the parities I am of the view that the contention of Mr. Puri is sound and must prevail. The decision of the present controversy depends on the true construction of the compromise. If the compromise is read as a whole and particularly clause (4), it will be apparent that it merely provides the mode of discharging the decrees, and does not create any new liability. The other clauses Nos. (5) and (6) of the compromise merely provide guarantees for the carrying out of the compromise. Read in this manner, it cannot be said that the compromise creates a new contract or that the decrees that were passed by the Amritsar and the Jullundur Courts have been wiped out. As a matter of fact, after the compromise neither the parties nor the Court treated the decrees as having been wiped out. The execution applications were consigned to the record room not on the basis that the decrees had been adjusted, but on the ground that the decrees were still subsisting and would only be adjusted after the compromise had been carried out fully.

(5) The principal is well stated that if the parties vary the decree, intending to create fresh liabilities, then the old decree comes to an end, and a new contract comes into being. Thereafter the new contract has to be enforced by a suit and it cannot be enforced in execution. But if no new contract is brought about and only a mode is provided for the discharge of the liability under the decree, then the decree subsists and can be executed subject to the laws of limitation. In this connection, reference may be made to Oudh Commercial Bank Ltd., Fyzabad v. Bind Basni Kuer, AIR 1939 PC 80, Het Ram Bodh Raj v. Aya Ram Toal Ram, 172 Ind Cas 999 (PC), Bhagwant Singh v. Santa Singh, AIR 1933 Lah 758, Shivappa Dandappa v. Gurpadappa Doddappa, AIR 1933 Bom 100, Monmohan Sanyal v. Khalishkhali Co-operative Bank. AIR 1937 Cal 236 Murlidhar Narsinghrao v. Balmukund Jainaryan, AIR 1946 Nag 313. It was held by their Lordships of the Privy Council in AIR 1939 PC 80 (p. 86) wherein their Lordships had approved of the decision in Gobardhan Das v. Dau Dayal, ILR 54 All 573: (AIR 1932 All 273 (FB)) as under:

'Their Lordships are in agreement with the statement in ILR 54 All 573 at p. 585: (AIR 1932 All 273 (FB) at p. 279) that in numerous cases a compromise between the decree-holder and the judgment-debtor entered into the course of execution proceedings, which was duly recorded, has been enforced, and they are of opinion that the practice, which is both widespread and inveterate, is contrary to the Code. They are of opinion that in the present case, the compromise can and should be enforced in these execution proceedings.'

It was further held by their Lordships:

'If, on the other hand, the agreement is intended to govern the liability of the debtor under the decree and to have effect upon the time or manner of its enforcement, it is a matter to be dealt with under section 47. In such a case to say that the creditor may perhaps have a separate suit is to misread the Code which by requiring all such matters to be dealt with in execution discloses a broader view of the scope and functions of an executing Court.'

In 172 Ind Cas 999 (PC), the Privy Council in an appeal from the Lahore High Court, wherein the terms of the compromise were as follows:

'The decree, dated April 12, 1923, in Suit No. 1105 of the year 1920 having been passed by the Court of the Judicial Commissioner, Sindh, was for the purpose of execution, transferred to this Court. Execution proceedings thereof are pending in this Court. Rupees 20,000/- in respect of the first installment, which according to the terms of the decree was due on 28-6-1923, have been realised prior to the filing of the application for execution which is now pending. The decree-holder has produced in the Sindh Court the receipt of the sum thus realised. And now, according to the terms of the said decree the remaining amount due to the decree-holder is, up to 27-1-1928, Rs. 1,08,707-6-9 detailed below: Rs. A. P.The remaining principal amount 84,000-0-0Interest 24,400-0-0Costs of execution and appeal in execution in all 307-6-9--------------Total 1,08,707-6-9

For the payment and realisation of this sum payable the parties have made the following settlement:

(a) Rs. 8,000/- including interest have today been paid to the decree-holder through Rai Dholan Ram Salooja.

(b) The balance of Rs. 1,00,707-6-9 will be paid by the judgment-debtors in the following instalments:

(i) The 1st installment of the sum of Rs. 13,000 with interest at the rate of Re. 0-5-6 per cent per mensem from 27-1-1928 to January 26, 1929 will be paid on January 27, 1929.

(ii) The second installment of the sum of Rs. 12,600/- with interest at the rate of Re. 0-5-6 per cent per mensem form 27-1-1928 to January 26, 1930, will be paid on January 27, 1930.

(iii) The third installment of the sum of Rs. 12,600/- with interest at the rate of Re. 0-5-6 per cent per mensem from January 27, 1928 to January 26, 1931, will be paid on January 27, 1931.

(iv) The fourth installment of the sum of Rs. 13,000/- with interest at the rate of Re. 0-5-6 per cent per mensem from January 27, 1928 to January 26, 1932, will be paid on January 27, 1932.

(v) The fifth installment of the sum of Rs. 12,500/- with interest at the rate of Re. 0-5-6% per mensem form January 27, 1928 to January 26, 1933, will be paid on January 26, 1933 will be paid on January 27, 1933.

(vi) The sixth installment of the sum of Rs. 12,000/- with interest at the rate of Re. 0-5-6 per cent per mensem from January 27, 1928 to January 26, 1934 will be paid on January 27, 1934.

(vii) The seventh installment of the sum of Rs. 13,707-6-9 with interest at the rate of Re. 0-5-6 per cent per mensem from January 27, 1928 to January 26, 1933 (5) will be paid on January 27, 1935.

If the judgment-debtors do not make the payment of any installment out of the first six ones mentioned above at the stipulated time, the decree-holder will allow them a further period of one month. Even after one month having been allowed, an installment as given above is not paid, the decree-holders shall then be entitled to realise the entire sum remaining due to them by a single installment along with the additional interest at the rate of Re. 0-2-6 per cent per mensem besides the rate of interest mentioned above. In other words, the interest under such circumstances shall be calculated at the rate of Re. 0-8-0 per cent per mensem instead of at the rate of Re. 0-5-6 per cent per mensem. The decree-holders will also realise the remaining interest at the rate of Re. 0-2-6 on the installment paid prior to default. If the judgment-debtors make the payment of the instalments detailed above at the fixed time, the decree-holders shall remit Rs. 10,300/- out of the principal.

Conditions Nos. 4, 5, 6 and 7 given in the decree-sheet dated 12-4-1923, are still in force. The liability of R. S. Dharu Lal, as given in the decree-sheet and as has been declared by the order of the High Court, dated 6-5-1927, shall continue to be in force.

The application is, therefore, submitted under S. 27 and Order 21, Rule 2 of the Civil Procedure Code, for the above adjustment being certified.'

Held as under:

'Under the circumstances, it is immaterial to consider whether the compromise was or was not an adjustment within Order 21, Rule 2(2). If it was, it was duly recorded or certified, and the Court could recognize it in executing the decree. If it was not such an adjustment, there was nothing to prevent the Court from doing that which it obviously should do viz., looking and it and taking it and the payments made under it into account in executing the decree;'

The case before the Privy Council was almost identical with the instant case and the rule laid down by their Lordships in that case fully applies to the facts of the present case.

(6) In AIR 1933 Lah 758, Jai Lal J. held as under:

'The agreement between Santa Singh and the decree-holder was for the payment of an amount smaller than the decretal amount payable by installments and, as I have already stated, his arrangement was attested by the Court. It is not now open to the executing Court to go behind that adjustment or arrangement. Under Order 20, Rule 11, it is open to the Court, with the consent of the parties, to vary the terms of a decree, and this was done in the present case. Moreover, the order attesting the terms of the compromise having been passed by the Court in the presence of the parties and with their consent it is not now open to either of them to contend that the Court was not competent to attest it. I accordingly accept this appeal with costs throughout, set aside the order of the District Judge and restore that of the executing Court.'

In AIR 1933 Bom 100, the Division Bench of the Bombay High Court held as under:

'Where a decree is adjusted by an agreement to pay a certain sum in satisfaction of the decree amount and only a portion of that amount under the agreement is paid, the balance can be recovered by execution of the decree to that extent and no separate suit is necessary.'

In AIR 1937 Cal 236, in a similar compromise, it was held that no separate suit was necessary. To the same effect is the decision of the Nagpur High Court in AIR 1949 Nag 313.

(7) In this view of the matter, the argument that a separate suit lies cannot be accepted.

(8) The argument that the decree-holder should file a separate suit on the basis of the compromise for the recovery of the amount due under the decrees is not available to the judgment-debtors. In view of clause (4) of the compromise, it is not open to either of the parties to contend that the amount due cannot be recovered in execution. Reference in this connection may be made to Ganga Bishan v. Raghunath Prasad, ILR 10 Pat 173: (AIR 1930 Pat 615) where in similar circumstances the doctrine of estoppel was applied and the similar objection by the judgment-debtor was negatived. To the same effect are the observations of Jai Lal J. in AIR 1933 Lah 758 which have been quoted in extenso in the earlier part of this judgment.

(9) The other contention of the learned counsel is that in execution of Jullundur decree, the Amritsar decree was also adjusted and therefore, a new contract came into being. This argument is also fallacious. The adjustment qua both the decrees was recorded in one document, but to give effect to that adjustment, proceedings were taken simultaneously in both the courts independently. The mere fact that one document is executed for the purpose of convenience will not affect the legal position, inasmuch as separate applications for the purpose were made to both the Courts independently. Therefore, there is no merit in this contention either.

(10) For the reasons given above, both these appeals are allowed, the judgments of the Courts below are set aside and it is directed that the execution should proceed according to law. The decree-holder will have his costs in both these appeals.

(11) Appeals allowed.


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