1. This is second appeal by the judgment-debtor Chimna and arises under, the following circumstances.
2. The respondents Chunnilal and Bhakhtawarmal and certain others as plaintiffs filed a suit against the defendant appellant for Rs. 3073/7/- on the allegation that they had incurred losses with respect to certain transactions for the purchase of gold mohars and silver petiesmade by them for and at the instance of the defendant and the latter was therefore, liable to reimburse them for the losses incurred.
3. The defendant resisted the plaintiffs' suit in his written statement, but it is not necessary for the purposes of this appeal to state the de-Calls of the objections raised. On the 18th March, 1948, the parties entered into a compromise and obtained a decree on its basis. By this compromise decree it was agreed that the defendant would pay a sum of Rs. 700/- on Falgun Sudi 11 Smt. 2004 (corresponding to the 21st March, 1948), and a further instalment of Rs. 100/- on the Baisak Sudi 15 (corresponding to 22nd May, 1948).
It was further provided that if the defendant had failed to pay Rs. 1700/- as specified on the due dates, the plaintiffs would be entitled to recover the entire, amount of the suit. The defendant thereafter paid the first instalment of Rs. 700/- on the 3rd April 1948 instead of the 21st March, 1948 but the decree-holders accepted the amount. The defendant again failed to pay the second instalment on the 22nd May, 1948, and deposited the said amount in the execution Court on the 1st July, 1948.
In his application dated the 1st July, 1948, which appears to have been actually presented in Court on the 1st July, 1948, the judgment-debtor stated that he had offered to the decree-holders the instalment of Rs. 1000/- payable on the 22nd May, 1948 (corresponding to Baisakh Sudi. 15 Section 2004) more than once but that the latter had not accepted it and that as the civil Courts were closed on the 22nd May, 1948, and upto the 30th June, 1948, he was depositing Rs. 100/- on the 1st July, 1948.
It was also mentioned in this application that a notice had been given on behalf of the judgment-debtor by his counsel Shri Sampat Raj to the decree-holders that the sum of Rs. 1000/-been deposited by the judgment-debtor with his counsel and that the decree-holders should take away the same and that if the latter should fail to draw the amount, it would be deposited in Court on the close of the summer vacation and that a postal acknowledgment of the said notice signed by Chunnilal decree-holder dated the 16th May, 1948, (this is obviously a mistake for 16th June, 1948) was being put in.
The money was accordingly deposited in Court on the 1st July, 1948. On the same day the decree-holder Chunnilal filed an execution application for the entire suit amount minus Rs. 700/, already received, on the ground that the Judgment-debtor had failed to pay the second instalment on the due date and, therefore, the decree-holders were entitled to levy execution for the entire amount of the suit. On the 11th August, 1948 the appellant raised an objection that the decree-holders were not entitled to execute the decree as they had paid the sum of Rs. 1700/- settled under the compromise.
The judgment-debtor contended that the Court was closed on Baisakh Sudi 15th Smt. 2004, that is the 22nd May, 1948, and that the money was deposited on the 1st day of the opening of the court on the 1st July, 1943, and, therefore, the instalment of Rs. 1000/- should be considered to have been paid within time. By a subsequent application dated the 15th September, 1948, the judgment-debtor stated that he had offered the second instalment of Rs. 1000/- to the decree-holders on Baisakh Sudi 15 but the latter had refused to accept the same and that thereafter the judgment-debtor had deposited the said instalment with his counsel Shri Sampat Raj and had arranged to send a notice through him to the decree-holders that they should withdraw the amount from Shri Sampat Raj failing which the money would be deposited in court on the 1st July, 1948 and that as the decree-holders had not taken the amount from Shri Sampat Raj, the same had been deposited in court on the 1st July, 1948 and in these circumstances the application of the decree-holders for execution be dismissed.
4. The decree-holders resisted the objection saying that the judgment-debtor had never offered the instalment of Rs. 1000/- to them on the due date. They also contended that the notice from the judgment-debtor's counsel had been received by them alter the stipulated date and, therefore, it was of no avail. Lastly they contended that as the sum of Rs. 1000/- had been deposited in court beyond the time specified in the compromise, they were entitled to levy execution for the entire suit amount. Thereupon the execution Court framed one compendious issue viz., whether the judgment-debtor had offered to the decree-holders the instalment in dispute on Baisakh Sudi 15 (that is the 22nd May 1948) and whether the said instalment having been deposited in Court on the 1st July, 1948, should be considered to have been paid within time.
5. Both parties led evidence and finally the execution Court came to the conclusion that the version of the judgment-debtor that he had offered the instalment of Rs. 1000/- to the decree-holders on Baisakh Sudi 15 had not been proved. The execution Court further held that the payment of the instalment of Rs. 1000/- in Court on the 1st July, 1948, was contrary to the terms of the compromise and was beyond time and, therefore, the decree-holders were entitled to levy execution fur the entire suit amount.
6. On appeal the District Judge, Pali, upheld the findings of the execution Court. Thereupon the judgment-debtor came up in second appeal to this Court when this appeal came for hearing before this Bench in the first instance a preliminary objection was raised on behalf of the respondents decree-holders that the appeal was not properly constituted for want of necessary parties and deserved to be dismissed. This objection prevailed in this Court but leave was granted for a letters patent appeal.
In that appeal a Bench of this Court came to the conclusion that as the application for execution had been filed by Bakhtawarmal decree-holder alone on behalf of himself and the other decree-holders, he was competent to represent their interest in appeal also and, therefore, it was not necessary for the judgment-debtor to implead other decree-holders as respondents in appeal. The main appeal has thus again come up before this Court for a decision on merits.
7. Three questions have been urged for determination before me on behalf of the appellant judgment-debtor. The first question is whether the judgment-debtor had offered a sum of Rs. 1000/- to the decree-holders on the 22nd May, 1948. This is a pure question of fact. The finding of both Courts below is adverse to the appellant is binding on this Court. Learned counsel for the appellant realised this difficulty and did not seriously press this point. That being so it must be held that the judgment-debtor has failed to prove that he had offered the payment of the second instalment to the decree-holders on the due date that is, the 22nd, May, 1948.
8. The second point is that the payment of the second instalment in Court on the 1st July, 1948, should be deemed to have been made within time inasmuch as the execution Court was closed for the summer vacation on the 22nd May, 1948 and up to the 30th June, 1948. The argument' of learned counsel for the appellant was that under Order XXI, Rule 1, C.P.C., it was open to the judgment-debtor to have made the payment either into the executing Court or out of Court to the decree-holder (as the Court had made no specific direction on the point) and that as the Court was closed for summer vacation on the date on which the second instalment was to have been made according to the compromise, the payment made in Court on the 1st July, 1948 (which was the first opening day after the summer vacation should be taken to have been made on the due date.
I have been referred to a number of cases by learned counsel on both sides in favour of their respective contentions. On the side of the appellant I was referred to Wana Ravji v. Natu Murha, ILR 35 Bom 35 (A); Sankaran v. Raman, AIR 1925 Mad 743 (E); Amolak Ram v. Roda Mal. AIR 1935 Lah 369 (C); Suryaprakasa Rao v. Venkataratnam, AIR 1938 Mad 523 (D) and Premchand Bhikabhai v. Ramdeo Sukdeo, AIR 1949 Nag 141 (E). On the other hand, learned counsel for the respondents placed his reliance on Adya Singh v. Nasib Singh, AIR 1920 Pat 122 (F); Roshan Lal v. Ganpat Lal, AIR 1938 All 199 (G); Ram Kinkar v. Kamal Basini, AIR 1938 Pat 451 (H) and Indal v. Ram Nidh, AIR 1946 Oudh 156 (I). It is not necessary for the purposes of this case to examine as to which on the rival views is better, for, to my mind even the liberal view which has been taken in Madras, Bombay, Lahore and Nagpur High Courts is based on the foundation that it was not possible for the judgment-debtor in such cases to deposit the money in Court on the due date (that being one of the options held out to him under Order XXI, Rule 1, C.P.C.) as the due date fell on a holiday and a party should not be penalised for being unable to do what was not possible.
So far as the present case is concerned, there is not the slightest evidence on the record to show that it was not possible for the judgment-debtor in the present case to have paid the money in Court on the 22nd May, 1948. Learned counsel for the appellant urged that it had all along been assumed in the execution Court that as the 22nd May, 1948, fell during the course of the summer vacation, money could not be deposited in Court on that date; and, therefore, the judgment debtor was justified in depositing the same on the 1st July, 1948 or, at any rate, the judgment-debtor was under that impression.
Of all this I am not at all sure. In the first place, I am of opinion that it was the duty of the judgment-debtor to show that he could not have deposited the money during the course of the summer vacation but he has failed to do that. In the second place. I have looked into the order dated the 5th May announcing the summer vacation from the 17th May to the 30th June, 1948, published in the issue of the Jodhpur Government Gazette of the 8th May, 1948, at page 1196 B.
According to this notification, the Courts were enjoined to undertake all urgent work even during the vacation and that being so, I have no hesitation in saying that if the judgment-debtor had made an urgent application on orbefore the due date, namely, the 22nd May, 1948,putting in the money, the Court was bound to have accepted it and if the Court should not have accepted it even on such an application being filed thereto, the judgment-debtor would have stood absolved of all blame and a different situation would have came into existence.
But the Judgment-debtor did nothing of the kind. And he having not taken due steps to deposit the money, it is not open to him to assume, or to rely on this assumption, that he could not have possibly deposited the money on the stipulated date. At the request of the parties, I also sent for the file of the original suit namely, suit No. 6 of 1946-47 between the parties out of which this execution proceeding has arisen, and I find that the judgment-debtor there Put in an application, on the 15th June, 1948, in which he stated that Baisakh Sudi 15 Smt. 2004 had been fixed for the payment of the second instalment of Rs. 1000/- to the decree-holders but that he had a, civil suit pending in the Bali Hakumat on that date which he was required to attend and consequently it was not possible for him to have deposited the money in court on that date and so the judgment-debtor proceeded to say that he was depositing the sum of Rs. 1000/- and he prayed that the same be allowed to be deposited in court.
The judgment-debtor further stared that on Jeth Badi 5 S. 2004 (equal to 28th May, 1948) he had offered the said instalment to the decree-holders but the latter declined to accept it. This, application was presented by Chimna himself as the endorsement on it goes to show and the Court passed an order thereon that the money be deposited in Court. This application dated the 15th June 1948, and the order thereon which bears the same date clearly show that the Court was not closed even during the summer vacation in the sense the judgment-debtor would have us believe or that it was prepared to accept the deposit.
But strange to say, the judgment-debtor, for reasons best known to him, himself did not deposit the money even in spite of the order dated the 15th June, 1948. All this, to my mind, clearly shows that the contention of the appellant that the deposit made by him on the 1st July, 1948, should be considered to have been made in time, as he could not have deposited the money in Court during the summer vacation, is ill-founded and my conclusion is that it was quite possible for the judgment-debtor to, have deposited the money even in Court on the 22nd May, 1948, which was the stipulated date for the payment of the second instalment in this case. I, therefore, overrule this contention.
9. The third and the last contention raised before me on behalf of the appellant was that the agreement on the part of the judgment-debtor to pay a larger amount than the total of the two instalments amounting to Rs. 1700/- in the event of his failure to pay any one, of the instalments on the due date, was in the nature of a penalty within the meaning of Section 74 of the Contract Act and was quite enforceable at law. Learned counsel relied on a number of cases in support of his contention.
These are Mohiuddin v. Mt. Kashmiro, AIR 1933 All 252 (FB) (J); Shyam Sunder v. Indafoni Das. AIR 1951 Qrissa 46 (K); Chinnaswami v. Cheru AIR 1953 Trav-Co 464 (L); Nanalal v. Shivsingh, AIR 1954 Madh-B 84 CM) and Mangal Singh v. Bajrang Bali, AIR 1955 Pepsu 110 (N).Now, before I deal with these cases, the questionthat arises for consideration is whether, on a true construction of the decree passed in this case, it can be postulated that the agreement of the judgment-debtor to pay the entire suit amount in the event of his failure to pay any one of the instalments on the stipulated date amounts to a penalty. To my mind, the decided cases clearly establish the principle that; a penalty is something in the nature of a punishment or an infliction, that is, it is something over and above the claim that is due by the one party to the other. Thus, suppose, A claims Rs. 500/- from B and they settle the claim by a compromise according to which A agrees to accept a sum of Rs. 300/- provided that the payment is made on a specified date.
But the further agreement between the parties is that if B fails to pay A the said sum on the stipulated date, A will be entitled to receive a such of RS. 1000/- from E. It is clear that in such a case A will not be allowed to enforce the payment of Rs. 1000/- from B in the event of the latter's failure to pay the sum of Rs. 300/- on the due date as A's claim against B only amounted to Rs. 500/- and the agreement to pay anything over and above that amount must amount to a Penalty.
Now, suppose in the above case, A and B in the event of B's failure to pay Rs. 300/- on the stipulated date merely agreed that B would pay him the full amount of Rs. 500/- which was the amount of his original claim and that on B's failure to pay the instalment on the due date. A seeks to recover the sum of Rs. 500/- being the amount of his original claim. Does this amount to a penalty? The answer, to my mind, must be in the negative; the reason being that the agreement to pay Rs. 500/- in such a case cannot on authority or in reason be said to be any punishment or anything over and above the amount claimed by A against B.
The true position in a case like this is that A is prepared to hold out a concession to B as a consideration for punctual payment, and where B fails to abide by his promise, it scarcely lies in his mouth to say that he is now being asked to pay a penalty and is entitled, to be relieved in law against it. This principle is clearly deducible from a number of English and Indian cases vide Thompson v. Hudson, (1869) 4 HL 1 (O); Ford v. The Earl of Chesterfield, (1854) 52 ER 416 (P); Sewell v. Musson (1683) 23 ER 420 (Q); Ex parte Burden. In re Neil, (1881) 16 Ch D 675 (R); Burjorji v. Madhavlal. AIR 1934 Bom 370 (S); Mitha v. Remal Das AIR 1937 Lah 828 (T); Hiralal v. Durga Bai, AIR 1937 Nag 413 (U); Subbayya v. Peddayya AIR 1937 Mad 234 (V) and Khetro Swain v. Padmanabha Singh Deo, AIR 1943 Pat 403 KW).
10. Now let us see what is the true effect ofthe decree passed in this case, and whether itfalls within the ambit of the principle deduciblefrom the cases cited above. The decree was passed on a compromise and this compromise wasthat in a suit between the parties for a sum ofof Rs. 3073/7- they had come to an amicablesettlement for a sum of Rs. 1700/- as mentionedthereafter. Then the two instalments of Rs. 700/-and Rs. 1000/- payable on Smt. 2004 Palgun Sudi11 and Smt. 2004 Baisakh Sudi 15 respectivelywere specified.
It was further mentioned that if the defendant should fail to pay Rs. 1700/- on the due dates, the plaintiffs would be entitled to recoverthe amount of the suit from the defendant. Finally it was prayed that a decree be passed according to the plaint. Following upon this, a decree was Passed in accordance with the compromisefor Rs. 1700/-, the two instalments together with their stipulated dates were then mentioned and it was further stipulated that if the defendant failed to pay the said instalments to the plaintiffs on the stipulated dates, the plaintiffs would be entitled to recover the entire amount of the claim from the defendant.
I have carefully considered the terms of the compromise and the decree and although it may be permissible to point out that they might have been drafted in more felicitous phraseology, their clear import is that the plaintiffs were willing to accept a sum of Rs. 1700/- only, in full satisfaction of their claim for Rs. 3000/- odd, provided that the defendant paid the two instalments on the dales fixed, but, that, if the defendant failed to pay any of the instalments on their respective dates, the plaintiffs would be entitled to re-assert their original claim and recover the entire suit amount.
In other words, what the plaintiffs were prepared to do was to extend a concession to the defendant with a clear reservation in their favour 'to withdraw it should there be a failure to pay the smaller sum on a day certain. In this view of the matter, I have no hesitation in coming to the conclusion that the stipulation to pay the full amount of the suit in the present case does not amount to a penalty. In the words of Lord Colonsay, in the House of Lords' case of Thompson v. Hudson (O):
'It is a reservation of an existing right. It is not the emergence of a right that never had any existence at all except on the violation of the agreement which was made, it is merely the reservation of what is the just and honest right of the party, which he was willing to waive to a certain extent provided his debtor would do certain things, but if the debtor fails in doing these things, then that right which belongs to the creditor shall continue to belong to him, and he may enforce it.'
11. Learned counsel for the appellant then sought to distinguish the present case from some of the cases referred to above on the plea that In many of these cases, the defendant had either admitted the amount of the original claim or, that a decree had been passed against him to that extent and the concession extended by the creditor to the debtor had been specified in so many words in the decree: but his contention is that so far as the present case is concerned, the sum of Rs. 3073/7/- had neither been admitted by the judgment-debtor to be due nor a decree had been passed for that amount.
I have carefully considered this argument and am of the opinion that it is not necessary to pronounce any considered opinion on the requirement insisted upon by the judgment-debtor so far as the facts and circumstances of the present case are concerned. My answer to the contention raised is this. Either the sum claimed by the plaintiffs decree-holders was actually due and legally recoverable or it was not. In the first case it would certainly not amount to a penalty and would clearly fall within the principle of the English and Indian cases referred to above.
If, on the other hand, the contention is that it was not actually due and therefore not recoverable, then I will say that it was the bounden duty of the appellant judgment-debtor, who seeks to be relieved against it, on the ground of its being a penalty, to raise this question at the proper time, namely, that the suit amount was in fact never due from him which question he has not raised in execution proceeding up to this date. Again, as this is a question of pure fact, it cannot possibly be allowed to be raised now. The true conclusion, therefore, seems to be, in my opinion, that it must be taken that the sum of Rs. 3073/7/- was actually due from the defendant judgment-debtor to the plaintiffs decree-holders; and, if that is so, its realisation is not hit on the ground of being a penalty. I accordingly over, rule this contention also.
12. I shall now briefly deal with the cases relied on by the judgment-debtor. The decision in Mohiuddin v. Mt. Kashmiro (FB) (JJ, simply lavs down that Section 74 of the Contract Act applies as much to compromise decrees as to mere agreements and that point must now be taken to be settled by overwhelming authority, but it has no bearing on the question as to what is or is not a penalty. The same remarks apply to Shyam Sunder v. Indramoni Das (K). With respect, I entirely agree in this view inasmuch as a compromise decree essentially embodies the agreement arrived at between the parties and merely because there is a command of a Judge super-added, it does not cease to be an agreement and, therefore, an executing Court is perfectly competent to relieve one of the parties to the agreement where any of its terms operates as penalty under Section 74 of the Contract Act. ,
13. So far as the decision of the Travancore Cochin High Court in Chinnaswami v. Cheru, (L) is concerned, the report is a brief one and we do not know what the terms of the compromise decree were. This case is therefore of not much help.
14. The facts of Nanalal v. Shiv Singh, (M) afford no parallel to the facts of the present case and that case also does not afford any guidance on the decision of the point before me.
15. The decision of the Pepsu High Court In Mangal Singh v. Bajrang Ball, (N) was concerned with a stipulation for enhanced rate of interest operative retrospectively on default, and It was held that the stipulation that, on default in the payment of an instalment, interest shall become due from the date of the compromise was in the nature of penalty, and hence it was unenforceable against the judgment-debtor. This is unquestionably correct as, on the view held by me above, the award of such interest would be by way of punishment over and above something to which the creditor was entitled according to the primary contract, and such stipulation certainly falls within the mischief of Section 74 of the Contract Act. I am, therefore, of opinion that none of the cases relied on by the appellant afford him any assistance.
16. My conclusion, therefore is that the decree-holders in the present case, when they compromised their claim for a larger amount by accepting Rs. 1700/- only, to be paid on certain specific dates, with a stipulation that in the event of default of payment of any of the promised Instalments on the stipulated dates, they would be entitled to recover the entire amount sued for had in truth and substance agreed to a concession in favour of the judgment-debtor and were not stipulating for a penalty. If the judgment-debtor failed to take advantage of this concession, he has only to thank himself and cannot blame the decree-holders for that.
17. I need scarcely add that the circumstance that even the first instalment was paid and accepted out of time does not and cannot have the effect of waiver as to the remaining instalment, and the respondents decree-holders are well within their right to base their claim for realisation of the entire amount of the suit as a result of the judgment-debtor's failure to pay the second instalment on the due date, notwithstanding the waiver in respect of the first instalment.
18. In view of the conclusions arrived at by me above, I hold that the respondents decree-holders are entitled to execute their decree for the entire suit amount in accordance with the terms of the compromise and that the objections of the appellant judgment-debtor are not well founded and, therefore, this appeal fails and I hereby dismiss it. Having regard to all the circumstances of the case, I leave both parties to bear their own costs in this Court.