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Citibank N.A. Vs. Brake Linings Ltd., Etc. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberExecution Appeal No. 36 of 1982
Judge
Reported inILR1983Delhi135
AppellantCitibank N.A.
RespondentBrake Linings Ltd., Etc.
Advocates: Arun Mohan,; Mala Goel and; Astender Kumar, Advs
Cases ReferredJhurai Lal v. Mohin Das Bose
Excerpt:
.....to be paid was to be paid in installments. the judgment debtor made a default in payment. the decree holders applied for execution of the whole amount for which the suit was filed including the amount of concession in the compromise. the judgment debtors resisted on the ground that the decree provided for penalty in so far as it provides for payment of a larger amount in case of default in payment of installments and that the penalty clause is not enforceable and that there was a mistake in calculations. dismissing the objections of the judgment debtors,; 1. in this case only a concession was given by the decree holder to the judgment debtor, that concession can be taken away due to non compliance of the terms of the decree. penalty is embodied in the decree if amount of claim of..........go behind the decree and must execute the same as it comes. the calculations, if any, should have been gone into by the parties at the time of the passing of the decree and nothing can be done afterwards. thereforee, this matter cannot be re-opened and cannot be agitated by the judgment-debtors. (16) i, thereforee, dismiss the objections with costs. the decree-holder prays for appointment of a receiver for taking into possession the hypothecated goods only. the decreeholder is entitled to have such relief. i am told by the learned counsel for the judgment-debtors that perhaps the hypothecated goods have been taken into possession by the sales-tax authorities. if that is so, the receiver can take up the matter with the said authorities. but there is no bar to the appointment of the.....
Judgment:

G.R. Luthra, J.

(1) The decree-holder (Citibank N.A., Jeevan Vihar Building, New Delhi brought a suit for recovery of Rs. 16,57,277.00 with future interest thereon of the rate of 16 1/2 per cent per annum from the date of the suit till the date of decree and thereafter on the decretal amount till repayment.

(2) The suit was brought on 28th September 1977. A compromise was arrived at between the parties on October 13, 1977. On the basis of that compromise the suit was decreed. However, it was provided that in case the Judgment-debtors paid a sum of Rs. 12,50,000.00 (Rupees Twelve Lakhs and fifty thousand only) with interest at the rate of 12 1/2 per cent per annum on the said amount by monthly Installments of Rs. 25,0001- each, the entire decree could stand satisfied and that thus judgment-debtors would get a remission of Rs. 4,57,277.00 as also of the costs of the suit.

(3) The Judgment-debtors paid a sum of Rs. 11,75,000.00 but did not pay the balance amount. thereforee, the C decree-holder brought an execution application on 16th February, 1982. That execution application was registered as Ex. No. 36182.

(4) The decree was against M)s. Brake Linings Ltd. and Shri M. N. Seth. Shri M. N. Seth died in the meanwhile and thereforee his legal representatives, namely Smt. Aruna Seth, S/Shri Vikramjee Seth and Indrajeet Seth were implemented as Judgment-debtors in the execution application.

(5) Notice of the execution application was sent. The Judgment-debtors filed obj'etotions. The first objection is than Rs. 12,50,0001-. It is further stated by the Judgfor payment of more money in the event of default of compliance of the terms of the same, and lhat, thereforee, the penalty clause is not enforceable. It is also pleaded that the principal amount has been wrongly calculated and the same should have been shown as Rs. 12,00,000.00 rather than Rs.' 12,50,000.00 . It is further stated by the Judgment-debtors that the Judgment-debtor company had no intention to make any default but could not keep up their promise on account of acute financial hardships due to decline in the production of automobiles to which industry the company was supplying parts. It was, thereforee, prayed that the amount payable by the Judgment-debtors be determined and they be allowed to pay the balance amount of principal plus interest by monthly Installments of Rs. 25,000.00 each. It was also prayed that the execution application be dismissed.

(6) Following issues were framed on 19th May, 1982.

1.Were any of the terms embodied in the decree in the nature of penalty and hence not enforceable? Onus on J.D. 2. Can the objections be entertained and gone in- to by the executing court 3. Relief.

I have today heard arguments advanced by learned counsel for the parties. Issue NO. 1

(7) It is well settled law that a court of equity can give relief against penalty clause in a compromise decree but not against taking away of a concession in the event of noncompliance of a decree. thereforee, the question to be determined is whether the obligation undertaken by a Judgment debtor under a decree is in the nature to penalty or whether it is the result of a concession. In case only a concession was given by the decree-holder to the Judgment debtor, that concession can be taken away due to non-compliance of the terms of the decree. This was the proposition of law laid down in Waman Vishwanath Report v. Yaswant Tukaram, Air (36) 1949 Bom 97. This was also the view taken in Chimma v. Chunnilal and another, ' and Abdul Ghanisab v. Alampalli Nanjuda Setty and Others Air 1962 Mys 9.

(8) thereforee, the first question is whether in the present case there was any penalty embodied in the decree. There is a penalty clause if amount of claim of the decree-holder in the suit was less than the amount to which he is entitled on account of invoking of the penalty clause.

(9) The total amount claimed by the plaintiff was Rs. 16,57,277 along with interest at rate of 16% per cent p.a. from the date of the institution of the suit till repayment. The decree-holder gave the following decree connections to the judgment-debtors on account of compromise :-

(A)The amount was reduced to Rs. 12,50,000 for the purpose of charging interest instead of Rs. 16,57,277. (b) The rate of interest was reduced from 16 1/2% p.a to 12 1/2 per cent p.a. (c) Interest on the arrears of interest was given up.

The aforesaid were the final concessions but the judgment-debtors had to get further concession of Rs. 4,57,277 and the costs of the suit provided the entire amount of Rs. 12,50,000 was paid with interest at 12 1/2 per cent p.a. within the stipulated time by way of Installments. It is apparent from the above that there was no pgnalty attached but on the other hand a concession was given. Such a concession can be withdrawn and a court of equity cannot step in for the purpose of giving any relief.

(10) It may be further mentioned that the aforesaid concession had to come into force had the judgment-debtors performed their part of the contract by way of payment the entire amount as stipulated in the compromise. The judgment-debtors failed to pay the entire decretal amount and, thereforee, this concession cannot be availed of.

(11) Learned counsel for the Judgment-debtors relied upon a judgment of the Calcutta High Court reported as Deepchand Mini v. Ticamchand Mini, : AIR1974Cal222 . In that case it was held that where decree did not provide for payment by Installments punctually or within the time mentioned therein, the timely payment of Installment was not the essence of the contract and that, thereforee, the judgment-debtors must, in equity, be relieved against the forfeiture clause by condoning the delay in the payment of the Installments. The learned counsel for the Judgment-debtors urges that in the present case also time was not the essence of the contract and that, thereforee, the judgment-debtors cannot be burdened with any penalty as provided in the decree.

(12) First of all. in the present case, as I have already held, there is no penalty clause. Secondly even if it is taken to be granted that time was not the essence of the contract, there is hardly any ground for giving any relief. The Judgment-debtors have not even uptil now resumed the payment of the Installments although default occurred long ago. The default had actually acquired much before the bringing of the execution application in February 1982. Hence even if it is taken for granted that time was not the essence of the contract, the judgment-debtors are not entitled to any relief. In the case before the Calcutta High Court the payment of E last Installment was tendered through post office to the decree-holder but the same was not accepted by the Decree-holder. This is clear from a plain reading of para 49 of the judgment.

(13) Reliance is also placed by the learned counsel for the judgment-debtors on Jhurai Lal v. Mohin Das Bose, : AIR1972All457 . But the authority is also to the effect that reilef should be given to a judgment-debtor if there is any forfeiture clause but I have already held that in the present case there is none. Hence that authority has no application.

(14) For the foregoing reasons I decide issue No. I in favor of the decree-holder. Issue N0. 2

(15) The contention of the Judgment-debtors is that Rs. 50,000 have been wrongly added to the principal amount and that the principal amount should have been Rs. 12,00,000. But he must not forget that the executing court cannot go behind the decree and must execute the same as it comes. The calculations, if any, should have been gone into by the parties at the time of the passing of the decree and nothing can be done afterwards. thereforee, this matter cannot be re-opened and cannot be agitated by the Judgment-debtors.

(16) I, thereforee, dismiss the objections with costs. The decree-holder prays for appointment of a receiver for taking into possession the hypothecated goods only. The decreeholder is entitled to have such relief. I am told by the learned counsel for the judgment-debtors that perhaps the hypothecated goods have been taken into possession by the sales-tax authorities. If that is so, the receiver can take up the matter with the said authorities. But there is no bar to the appointment of the receiver in that respect.

(17) I, thereforee, appoint Shri H. S. Mac, Advocate as receiver. His fee shall be Rs. 1,000 plus actual expenses, if any. The receiver shall take into possession all the hypothecated goods and submit his report within 5 weeks. List the matter for November 10, 1982 for further proceedings.


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