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

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal Nos. 149 and 150 of 1960
Judge
Reported inAIR1961P& H439
ActsCode of Civil Procedure (CPC) , 1908 - Sections 47 - Order 20, Rule 11 - Order 21, Rule 2
AppellantMessrs Sehgal Brothers and ors.
RespondentBharat Bank Ltd.
Appellant Advocate D.D. Khanna, Adv.
Respondent Advocate S.L. Puri and; Pratap Singh, Advs.
DispositionAppeal dismissed
Cases ReferredAnantalal v. Debi Prasad
Excerpt:
.....and adjusted, and a new contract between the parties had come into existence and that the decree-holder was not entitled to execute the decrees in terms of the compromise but was only entitled to file a suit on the basis of the new contract. to borrow the language of the privy council in the oudh commercial bank ltd, fyza-bad v. ' these are wise words for they rest the matter on the intention of the parties and there can, in my opinion, be no better footing than the will of the parties. the important question, therefore, in each such case is whether the parties intended that the existing decree will stand satisfied because of the new set of promises made between them, or whether the intention was merely to provide a mode in which the existing decree is to be executed and the..........of the same compromise.3. the terms of the compromise were that the judgment-debtors will pay the decree-holder the amount of the two decrees along with costs and future interest as calculated upto 15th of april 1955 in certain instalments, the entire amount to be paid by 15th october, 1958. to begin wit the instalments were to be of rs. 3,000/- each payable quarterly for a period of two years and after that the instalments were to be so arranged that the balance of the amount was all paid by the date fixed, that is 15th of october, 1958.it was agreed that in case the instalments were paid regularly the interest accruing under terms of the two decrees subsequent to the 15th of april, 1955, will not be charged by the decree-holder but in case there was default in payment of any.....
Judgment:

S.S. Dulat, J.

1. On 30th of January, 1953, the Bharat Bank Limited now called Bharat Nidhi Limited, obtained a decree for Rs. 9,128/15/9 and costs and future interest from the Court of the Senior Subordinate Judge, Amritsar, against Messrs. Sehgal Brothers of Jullundur represented by two brothers, Ram Saran Das Sehgal and Pran Nath Sehgal. On 31st of July, 1953, the same bank obtained another decree for Rs. 31,237/12/- with costs and future interest against the same judgment-debtors, from the Court of the Senior Subordinate Judge, Jullundur,

2. On 12th of March, 1955, when an execution application was pending in the Court of the Senior Subordinate Judge, Jullundur, the parties entered into a compromise covering both the decrees. This compromise was recorded and the execution application was dismissed as unsatisfied in accordance with the terms of the compromise. On 29th of August, 1955, the same compromise was mentioned in the Court of the Senior Subordinate Judge at Amritsar where an execution application was then pending and that execution application was similarly dismissed as unsatisfied in terms of the same compromise.

3. The terms of the compromise were that the Judgment-debtors will pay the decree-holder the amount of the two decrees along with costs and future interest as calculated upto 15th of April 1955 in certain instalments, the entire amount to be paid by 15th October, 1958. To begin wit the instalments were to be of Rs. 3,000/- each payable quarterly for a period of two years and after that the instalments were to be so arranged that the balance of the amount was all paid by the date fixed, that is 15th of October, 1958.

It was agreed that in case the instalments were paid regularly the interest accruing under terms of the two decrees subsequent to the 15th of April, 1955, will not be charged by the decree-holder but in case there was default in payment of any installment, the decree-holder was entitled to charge full interest and the two decretal amounts were in that case recoverable in full as provided in the decrees.

In return for the concession allowing instalments and giving up interest after the 15th of April, 1955, the judgment-debtors agreed that the decree-holder will in the meantime have a lien on Certain properties mentioned in Sch, 'A' and in case of default they agreed that the decree-holder will be entitled to recover the amounts by sale of those properties apart from any other method. It appearsthat some of the judgment-debtors' properties were at the time of this compromise liable to be seized by the Income-tax Department and the decree-holder was therefore allowed a second lien on the properties.

A provision was also made that if the income-tax arrears were cleared off, the two properties specified in Schedule 'B' to the compromise would be under mortgage with the decree-holder and the remaining properties would be released. Another term of the compromise not very material now provided that a dispute regarding certain goods pledged by the judgment-debtors with the decree-holder then pending before the Senior Subordinate Judge, Amritsar would be settled by that Court and the judgment-debtors would abide by the decision. As I have said, the two execution applications in the two Courts were in pursuance of this compromise dismissed as unsatisfied, one on the 12th of March, 1955, and the other on the 29th of August, 1955.

4. In terms of the compromise, the judgment-debtors Paid the first instalment of Rs. 3000/- that was due on the 15th of April, 1955, and also the second instalment due on the 15th of July, 1955. The third instalment was not paid in time but it was later on paid on the 27th of December, 1955, and the fourth instalment, I understand, was also paid on the 27th of July, 1956. In the meantime, however, because of default in the payment of the third instalment which had become due on the 15th October, 1955, the decree-holder on the 24th of December 1955, filed an application in the Court at Jullundur for the execution of the decrees in terms of the Compromise.

The prayer apparently was for the execution of both the decrees but later on realising that the Amritsar decree could not in this manner be executed at Jullundur, a separate application was made in the Court at Amritsar for the execution of that Court's decree on the 25th of April, 1956. The decree-holder's claim in both the Courts was that the judgment-debtors had not stood by the terms of the compromise and had committed default and the decree-holder was, therefore, entitled to realise the entire decretal amount in each case.

5. In each of the Courts, objection to the execution of the decree was taken on behalf of the judgment-debtors and the main plea was that under the compromise, the two decrees had been satisfied and adjusted, and a new contract between the parties had come into existence and that the decree-holder was not entitled to execute the decrees in terms of the compromise but was only entitled to file a suit on the basis of the new contract. The executing Courts both found that the compromise had the effect of satisfying both decrees and replacing them by a new contract and in the result neither decree was capable of execution. Both the execution applications were, therefore, dismissed.

6. Two appeals were filed in this Court against the two orders and they were heard by Mahajan, J., who, on considering the terms of the compromise, concluded that it concerned only the mode of executing the two decrees and that it was never intended that the decrees should be wiped out and a new contract should take their Place. He held, therefore, that the decrees could be executed and executed in terms of the compromise and that al-though the terms o the decrees had been partly altered by the compromise that did not in any manner prevent the executing Court from giving effect to the compromise in the course of execution Proceedings.

In the result the learned Single Judge allowed the two appeals and set aside the judgments of the two Courts and directed those Courts to proceed with the execution in each case. This decision led to two Letters Patent Appeals by the judgment-debtors which came up before Mehar Singh and Gosain, JJ. Mehar Singh J., agreed with the view expressed by Mahajan, J., Gosain, J., was, however, unable to agree and it is because of that difference of opinion between the two learned Judges that the case has come to me.

7. It is common ground that subsequent to a decree the parties may arrive at a settlement and such a settlement might have the effect of wholly satisfying the existing decree or it might not have such effect. To borrow the language of the Privy Council in the Oudh Commercial Bank Ltd, Fyza-bad v. Bind Basni Kuer, 66 Ind APp 84 : (AIR 1939 PC 80), which has been referred to again and again in this case

'If it appears to the Court, acting under section 47 that the true effect of the agreement was to discharge the decree forthwith in consideration of certain promises by the debtor, then no doubt the Court will not have occasion to enforce the agreement in execution Proceedings, but will leave the Creditor to bring a separate suit upon the contract. 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.'

These are wise words for they rest the matter on the intention of the parties and there can, in my opinion, be no better footing than the will of the parties. The important question, therefore, in each such case is whether the parties intended that the existing decree will stand satisfied because of the new set of promises made between them, or whether the intention was merely to provide a mode in which the existing decree is to be executed and the compromise is not intended to wipe out the decree. In the present case the intention was made perfectly clear by the express terms of the compromise itself which said -

In case of default of any one installment, the decree-holder shall be entitled to execute the decree for the principal amount then remaining due, with costs 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-debtors.'

Leaving alone these words and considering the substance of the compromise also it is clear that the intention never was that the existing decrees should be taken as satisfied by the promises made by the judgment-debtors in the compromise. As I have mentioned, the whole point of the compromise was this that the judgment-debtors instead of being required to pay the two decretal amounts at once were allowed a latitude in point of time and method of payment and a further concession in the form of a rebate on interest after 15th April, 1955, and the judgment-debtors in turn agreed to provide security for the payment of the amount by agreeing to a charge on some of their properties. I find it impossible to accept the suggestion that the decree-holder when agreeing to these terms intended or could have even contemplated that in case the judgment-debtors did not pay the agreed instalments at the agreed time, the decree-holder would seek his remedy against the judgment-debtors by a separate suit instead of executing the decrees ill terms of the compromise. I, therefore, find myself in entire agreement with Mahajan, J., that the compromise was never intended to entirely supersede or satisfy the existing decrees but that its terms merely provided a mode of executing the two decrees.

8. It is said in support of the present appeals that an executing Court has no jurisdiction to vary the terms of a decree and even the parties' consent cannot give that Court such jurisdiction; that the only express provision in this connection is in Order XX Rule 11 of the Code of Civil Procedure, which empowers an executing Court to direct postponement of the payment of the decretal amount or its payment by intalment on certain terms and that this has to be done within six months of the decree as provided by the Limitation Act and after the expiry of such period there is no power left to the executing Court to accept any compromise which would change the terms of the decree and that if therefore any such compromise is arrived at, it can only have the effect of adjusting the decree but the compomise cannot otherwise be enforced in execution proceedings.

This was in substance the line of reasoning accepted by a Full Bench of the Allahabad High Court in Gobardhan Das v. Dau Dayal, AIR 1932 All 273. That decision was cited before the Privy Council in 66 Ind App 84 : (AIR 1939 PC 80), already referred to but was not accepted and the Privy Council said -

'The authority relied upon by the learned Judges of the Chief Court is AIR 1932 All 273 (FB) and the principle invoked is that the original decree cannot be altered or varied by the parties even with the sanction of the Court, and that in any case mere consent of the parties cannot confer such a jurisdiction on the executing Court. This line of reasoning is not without support from other decisions of Indian High Courts, though authority and practice to the contrary is also to be found. On this difficult and important question, their Lordships are not in agreement with the view taken by the Chief Court. They do not consider that it takes sufficient account of the facts that the Code contains no general restriction of the parties' liberty of Contract with reference to their rights and obligations under the decree, and that, if they do contract upon terms which have reference to and affect the execution, discharge or satisfaction of the decree, the Provisions of Sec. 47 involve that questions relating to such terms may fall to be determined by the executing Court. Their Lordships see nothing in the Code requiring them to hold that, had the judgment-debtor paid the agreed instalments punctually,the appellants, after 1927, could have executed the decree for the whole sum outstanding contrary to the terms of the compromise. Nor do they think it reasonable that such a compromise, if enforced by the executing Court, should not be enforced as a whole. They are not prepared to regard a fair and ordinary bargain for time in consideration of a reasonable rate of interest as an attempt to give jurisdiction to a Court to amend or vary the decree. Such a bargain has its effect upon the parties' rights under the decree, and the executing Court under Section 47 has jurisdiction to ascertain its legal effect and to order accordingly.'

And a little later the Privy Council said -

'The purpose of providing a limitation of six months for such applications to the Court which passed the decree is not altogether plain and the objects may be more than one, but this provision like the rule itself, affords no sufficient ground for holding that the Code makes Parties wholly incompetent to come to an arrangement for time enforceable in execution proceedings.'

9. Mr. Khanna for the appellants suggested that the view of the privy Council as expressed in 66 Ind App 84 ; (AIR 1939 PC 80) is not necessarily correct and that a recent decision of the Allahabad High Court by a Full Bench of that Court did not think it correct In Mahmud Hasan Khan v. Moti Lal. AIR 1961 All 1 (FB), the majority of the learned Judges composing the Full Bench did think that the Privy Council's view was not entirely correct and certain provisions of the Coda had not been properly placed before the Privy Council.

To me, it appears, that the broad view of the matter taken by the Privy Council is far more convincing and far more useful than the rigid interpretation of an abstract Principle like the one relied upon namely that an executing Court cannot give itself jurisdiction to vary a decree even with the consent of the parties. It is admitted that such compromises in the course of execution Proceedings have been recorded by executing Courts beyond the period of six months and they have been enforced by executing Courts. As the Privy Council tersely put it.

'in numerous cases a compromise between the decree-holder and the Judgment-debtor entered into in the course of execution proceedings, which was duly recorded, has been enforced and they are not of opinion that the practice, which is both widespread and inveterate, is contrary to the Code.'

I am in the circumstances not in agreement with the view expressed by the Allahabad High Court in AIR 1961 All 1 (FB). Mr. Khanna then, referred to a Division Bench decision of the Patna High Court, in Anantalal v. Debi Prasad, AIR 1959 Pat 258. In that case, the Privy Council decision was distinguished as the compromise contained more onerous terms concerning the Payment of interest than the decree itself. It is unnecessary for me to say anything about this Patna decision because in the present case, the compromise did not change the rate of interest to the detriment of the judgment-debtors. On the other hand, the judgment-debtors were allowed certain concessions in respect of interest and in case of default the two decrees as they stood, could be executed. Mr.Khanna said that two money decrees were by the compromise changed into mortgage decrees because the compromise created a charge on certain properties, I do not see how that could make any difference, the plain fact being that all the properties of the judgment-debtors were all the time liable to be seized in execution of the decree.

10. One argument which was accepted by Gosain, J., and therefore repeated before me on behalf of the appellants was that the compromise had the effect of inextricably mixing up the two decrees and in the result it has become difficult now to execute the two decrees separately as it cannot be found out whether the actual payments so far made are to be adjusted against one or the other decree. Gosain, J., formed the opinion that it would be impossible to discover, whether the payments are to be accounted against one or the other decree and it was, therefore, not possible to say whether one or the other decree still remains unsatisfied.

Actually, however, no such difficulty arises for sections 59 to 61 of the Contract Act provide for a contingency and when there is no indication as to appropriation and the Creditor does not specifically appropriate the payments to a particular debt, the payments are to be utilised in discharge of each debt proportionately. Mr. Khanna agreed to some extent that in view of these provisions, the practical difficulty would not arise, and all that the executing Court has to do in each case is to discover what Proportion of the payments has to be credited towards each decree.

11. In the course of arguments, a number of decided cases were referred to in support of the view asserted by the Full Bench of the Allahabad High Court in AIR 1932 All 273 and some in support of the opposite view. It is unnecessary to refer to all those cases in view of what the Privy Council said in 66 Ind App 84 : (AIR 1939 PC 80) which 1 accept both as authoritative and convincing.

The contrary view, in my opinion, would have the wholly undesirable effect of preventing Parties coming to a fair and reasonable settlement concerning their own affairs, what seems to me the most sensible and satisfactory basis for settling disputes.

12. For the reasons I have mentioned, I find that the compromise in these cases concerned the mode of executing the two decrees and was intended to be enforced by the executing Courts and it is in law capable of being so enforced. I therefore find no force in these appeals and would in agreement with Mehar Singh J., dismiss them both with costs.


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