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Trilok Chand Kapur Vs. Dayaram Gupta - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 16 of 1966
Judge
Reported inAIR1967Cal541
ActsCode of Civil Procedure (CPC) , 1908 - Sections 37 and 48 - Order 23, Rule 3
AppellantTrilok Chand Kapur
RespondentDayaram Gupta
Appellant AdvocateDebi Day and ;A. Choudhury, Advs.
Respondent AdvocateP.K. Sen and ;B. Das, Advs.
DispositionAppeal dismissed
Cases ReferredJai Narain Ram Lundia v. Kedar Nath Khetan
Excerpt:
- banerjee, j.1. this is an appeal from an order by ray, j. by which his lordship dismissed an application for execution of a decree.2. facts, in so far material for this appeal,are hereinafter shortly stated.3. laxmi chandra, respondent no. 2 herein, as plaintiff, instituted suit no. 887 of 1961 against the defendant no. 1 appellant trilok chand rapur, inter alia, claiming a decree for rs. 61,875, declaration that the assets of the business 'capri restaurant' as also the goodwill thereof and all business contracts and other engage ments in connection with thesaid business stood charged with the payment of the dues of the plaintiff and also sale of the business 'capri restaurant' in pro tanto satisfaction of the plaintiff's claim. the circumstances in which the claim was made allegedly were.....
Judgment:

Banerjee, J.

1. This is an appeal from an order by Ray, J. by which his Lordship dismissed an application for execution of a decree.

2. Facts, in so far material for this appeal,are hereinafter shortly stated.

3. Laxmi Chandra, respondent No. 2 herein, as plaintiff, instituted Suit No. 887 of 1961 against the defendant No. 1 appellant Trilok Chand Rapur, inter alia, claiming a decree for Rs. 61,875, declaration that the assets of the business 'Capri Restaurant' as also the goodwill thereof and all business contracts and other engage ments in connection with thesaid business stood charged with the payment of the dues of the plaintiff and also sale of the business 'Capri Restaurant' in pro tanto satisfaction of the plaintiff's claim. The circumstances in which the claim was made allegedly were that the appellant Trilok Chand, as the owner of the business 'Capri Restaurant' approached the plaintiff Luxmi Chandra for a temporary accommodation loan of Rs. 60,000 for running his business, and the plaintiff lent and advanced the said sum of money on a deed of hypothecation and pledge, dated February 2, 1961 of the assets of the business 'Capri Restaurant' and the goodwill thereof. By the deed aforesaid, it was, inter alia, agreed that defendant No. 1 Trilok Chand Kapur would repay the debt by June 1, 1961, together with interest at the rate of 9 per cent per annum and costs, charges and expenses, as between attorney and client, which plaintiff might incur for recovery. The defendant Trilok Chand Kapur did not pay in terms of the deed. Hence the suit. In the said suit, Dayaram, the father of the plaintiff was impleaded as defendant No. 2, because the defendant No. 1, as plaintiff, had earlier filed a suit (being Suit No 843 of 1961) against the said defendant No 2 alleging that his son, the present plaintiff, was benamdar for the father, the latter being bound by a separate agreement with the present defendant No. 1 appellant in the matter of the advancement of the sum of Rs 60,000 No relief, however, was claimed against the defendant, the father. In the said suit (namely Suit No. 887 of 1961) there was decree by consent, on January 16, 1962, on the following terms:

'1. There will be a decree in favour of the plaintiff against the defendant No. 1 for the sum of Rs 60,000 (Rupees Sixty thousand) only with interest thereon at the rate of 9 per cent (Nine per cent) per annum till payment There will also be a decree in terms of Clauses (c) and (e) of the plaint. The first defendant has already paid Rs. 4,500 (Rupees four thousand and five hundred only) which has been appropriated by the plaintiff towards interest payable by the first defendant upto the date of this decree.

2 The defendant No. 1 shall sell and the defendant No. 2 will buy the right, title and interest of the defendant No. 1 in his business of Capri Restaurant carried on by him as the sole proprietor thereof at No. 15/6, Chowringhee Road, Calcutta-13, free from all encumbrances for the sum of Rs. 1,80,000 (Rupees one lakh eighty thousand only) and the Sale Deed and/or other assurances will be executed by the defendant No. 1 in favour of the defendant No. 2 as hereinafter provided.

3. Out of the said sum of Rs. 1,80,000 (Rupees one lakh eighty thousand only) the defendant No 2 will pay to plaintiff for and on behalf of defendant No 1 the said decretal sum of Rs. 60,000 (Rupees sixty thousand only) in full satisfaction of the mortgage which is the subject matter of the suit and the decree mentioned in Clause (i) hereof and pay the balance sum of Rs. 1,20,000 (Rupees one lakh twenty thousand only) following (sic):--

(i) Rs. 10,000 on confirmation of these terms in part payment of the consideration money.

(ii) Rs. 80,000 (Rupees eighty thousand only) at the time of execution and registration of the Deed of Sale of the said business of Capri Restaurant with all its assets and goodwill free of all encumbrances.

(iii) The balance of Rs. 30,000 (Rupees thirty thousand only) to be paid 90 (ninety) days after registration of the Deed of Sale.

4. The defendant No. 1 shall execute and register in favour of the defendant No. 2 a Deed of Sale against payment of the said sums of Rs. 10,000 and Rs. 80.000 aggregating to Rs. 90.000 (Rupees ninety thousand only) out of the said sum of Rs. 1,20.000 (Rupees one lakh and twenty thousand only) as aforesaid The form of the Sale Deed has been agreed upon between the parties and a copy thereof is annexed herewith and is to be treated as a part of these terms.

5. The defendant No. 1 will make over possession of the said business of Capri Restaurant with all its assets and goodwill to the defendant No. 2 simultaneously with the execution of the Sale Deed Inventory as a preliminary for taking over possession will commence immediately after payment of the mm of Rs. 10,000 as mentioned in Clause 3(i) hereof and defendant undertakes to give all facilities for the same.

6. The defendant No. 1 will withdraw his name from the joint tenancy held by him with defendant No. 2 in respect of premises No. 15/6 Chowringhee Road, Calcutta, and leave the same in exclusive enjoyment and possession of defendant No. 2.

7. Each party will pay and bear his respective costs.'

The defendant No. 2 paid all sums of money, excepting a sum of Rs. 29,000 (admittedly not Rs. 30,000 as in the tabular statement) In these circumstances, the application for execution of the consent decree was made by the defendant No. 1 appellant Trilok Chand Kapur against Dayaram Gupta, defendant No. 2 respondent.

4. The execution was opposed by Dayaram Gupta, inter alia, on the following grounds:--

'3. It was agreed that the defendant No. 1 would convey to me the business carried on under the name and style of 'Capri Restaurant' at No. 15/6. Chowringhee Road. Calcutta free from all encumbrances It was expressly covenanted by the said first defendant with me, inter alia, as follows:--

(a) That there are no debts or liabilities of the said business whatsoever except the claim of the said Luxmi Chandra which is being paid out of the sale proceeds;

(b) That the first defendant had paid and discharged all his dues incurred by him in relation to the said business or otherwise and all outgoings payable in respect thereof upto the date of the conveyance and if any such dues or outgoings appear to be payable in future in respect thereof, the first defendant shall and will forthwith pay and discharge the same and shall and will keep me and my estates and effects duly indemnified from and against all claims and demands on account thereof.'

'4. I say that the aforesaid covenants by the first defendant are false and fraudulent and that as a result of non-payment of rent, sales-tax dues, arrears of Corporation rates and taxes, gas, water and electric charges, telephone charges and other sums amounting to more than Rs. 30,000 are lying outstanding to the best of my knowledge As a result of the wrongful acts and conduct on the part of the first defendant I have suffered damages to the extent of Rs. 1.50,000 and am still suffering damages. I say that the applicant, in any event cannot claim any sum from me without liquidating the aforesaid dues.'

'5 In the premises aforesaid I submit that the present application for execution of the decree dated 15th January, 1962, by the first defendant as the alleged decree-holder against me is misconceived and not maintainable and is not warranted by law and ought to be dismissed with costs.'

5. The learned trial judge held that the part of the consent decree relating to transactions between defendant No. 1 Trilok Chand Kapur and defendant No. 2 Dayaram Gupta was

'a contract between the parties. Even if it is put into the decree that does not make it executable It is outside the frame of the suit because no relief was claimed against the defendant No. 2 in respect of the subject matter of forming the contract between them. A contract has been made between the parties by which the defendant No. 1 and defendant No. 2 agreed to have a transaction in regard to the business known as 'Capri Restaurant' The contract provided payment of the purchase price Some portion of purchase money was to go to the satisfaction of the decree-holder and the balance is payable by defendant No. 2 to defendant No. 1. In my opinion payment sought to be executed does not fall within the executability of the decree. I am therefore unable to grant any relief.'

6. On behalf of the appellant it was contended that the operative portion of the decree contained the provision for payment of Rs. 30,000 by Dayaram Gupta, defendant respondent No. 1 and that the parties agreed that the said term must be carried into effect That made the terms as between defendant Trilok Chand and defendant Dayaram enforceable by process of execution An executing Court, it was contended, must not go behind the decree and refuse to execute it.

7. Now, it is well settled that an executing Court cannot go behind the decree. A Full Bench of this Court observed in Gorachand Holder's case : AIR1925Cal907 :

'Where the decree presented for execution was made by a Court which apparently had no jurisdiction whether pecuniary or territorial or in respect of the judgment debtor's person to make the decree the executing Court is entitled to refuse to execute it on the ground that it was made without jurisdiction; i.e., within these narrow limits I think that the executing Court is authorised to question the validity.'

The observations were made in the context of a case where the Court passing the decree had no jurisdiction to pass it. Although this is the position in law, it is equally a settled proposition of law that an executing court can execute only a decree and cannot enforce an extraneous contract, included in the decree by consent of parties A decree as is well known, is 'the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters _in controversy in the suit.' But a petition of compromise may deal with various matters extraneous to the suit on which the parties may agree. Nevertheless, the consent decree must he confined to matters which relate to the suit and must not travel beyond that. This appears from the language of Order 23, Rule 3 of the Code of Civil Procedure, which reads as follows:--

'Where it is proved to the satisfaction ofthe Court that a suit has been adjusted whollyor in part by any lawful agreement or compromise the Court shall order such agreement, compromise or to be recorded andshall pass a decree in accordance therewith (sofar as relates to the suit) ' (Underlined(bracketed herein-Ed.) for emphasis)

Explaining the above provision of law (whichwas then Section 375 of the Code of Civil Procedure 1882). Lord Buckmaster observed, inthe rase of Hemanta Kumari Debi v. Midnapore Zemindary Co., 46 Ind App 240 at p. 246:(AIR 1919 PC 79 at p. 81):

'The term of this section need carefulscrutiny In the first place it is plain thatthe agreement or compromise, in whole andnot in part, is to be recorded, and the decreeis then to confine its operation to so much ofthe subject matter of the suit as is dealt withby the agreement a perfectly proper andeffectual method of carrying out the terms ofthis section would be for the decree to recitethe whole of the agreement and then to conclude with an order relative to that part whichwas the subject matter of the suit, or it couldintroduce the agreement in the schedule tothe decree, but in either case the operative partof the decree would be properly confined tothe actual subject matter of the then existinglitigation, the decree taken as a whole wouldinclude the agreement This is in fad whatthe decree did in the present case. It may bethat as a decree it was incapable of beingexecuted outside the lands in the suit but thatdoes not prevent it being received in evidenceof its contents.'

It is true that the observations were made by his Lordship in a context different from the context of executability of the decree--the point for decision being whether the provisions of Section 49 of the Registration Act affected the petition of compromise in the suit. Nevertheless the observations of Lord Buckmaster quoted above, including the obiter dietum about the non-executability of extraneous matters in a decree, have been always followed by this Court as laying down the correct law. (Vide, for example the cases of Makhanlal Samadder v. Khagendra Nath Chakravarty : AIR1936Cal446 ; Arjun Kapali v. Asvini Kumar AIR 1926 Cal. 286.

8. I need, however, notice that the expression 'so far as it relates to the suit', in Order 23, Rule 3 of the Code, at times raises difficulties in the case Gobinda Chandra v. Dwarkanath, (1908) ILR 36 Cal 837 (841), it was observed:

'The question whether any particular termrelates to the suit must be decidedfrom the frame of the suit, the relief claimedand the relief allowed by the decree on adjustment by lawful agreement The mutual connection of the different parts of the relief granted by a consent decree is an importantelement for consideration in each case in deciding whether any portion of the relief is withinthe scope of the suit. No hard and fast rulecan be laid down, such case being governedby its own facts.'

In a later case, Sashi Bhusan v. Hari Narain, ILR 48 Cal 1059: (AIR 1921 Cal 202), the above view was reiterated m the following language:

'In some of the decisions Section 375 has been applied by making a distinction between property in suit and property extraneous to the litigation Where a suit is merely for the recovery of specific properties, the distinction will be adequate and will be equal to the distinction between matters which relate to the suit and matters which do not. In some cases, however suits are not for the recovery of properly but to establish particular rights: and I certainly prefer the opinion expressed in the case reported in (1968) ILR 36 Cal. 837, to the effect that facts have to be looked as a whole in order to decide whether matters have been introduced in the suit that do not relate to the suit.'

Keeping in view the above proposition of law we need at this stage consider some of the case laws on which, the learned Counsel for the respondent very strongly relied. The first in order of citation after Gorachand Halder's case : AIR1925Cal907 (supra) already dealt with, was the case of Shahu Shyamlal v. Shyamlal : AIR1933All649 That was a case of dissolution of partnership, which was decreed on compromise Under the compromise apart from the liability to pay Rs. 1.000 the defendant agreed that Rs. 1,500 was further due to the plaintiff from the defendant and he agreed to pay the amount m annual instalments of Rs. 150 each, spread over a number of years, in default whereof the whole of the amount was to become payable with interest. It was further agreed that a property specifically mentioned would remain hypothecated for the amount due to the plaintiff and in default of instalments he would be entitled to realise the amount by the sale of the property by execution of the decree. In that context Sulaiman, C. J. observed:

'It seems to us that the expression, 'sofar as it relates to the suit' is somewhat widerthan the expression 'so far as relates to somuch of the subject matter of the suit as isdealt with by the compromise'. It is clearlypossible to conceive of matters which may not,strictly speaking, be the subject matter of thesuit itself as brought and vet they may relateto the suit, No doubt it is the duty ofthe Court to see that although the whole ofthe compromise between the parties is tobe recorded the operative portion ofthe decree is confined to that partonly which relates to the suit.... Wethink that even in cases where the compromisedoes not strictly speaking relate to the suit andnevertheless the Court decides that it relatesto the suit and incorporates it into the operative portion and passes a decree in terms of it,the decree is not a nullity and not one passedwithout jurisdiction, but would be binding uponthe parties to the decree and its validity cannot be questioned in the execution department.'

In the context of the facts in the case, theabove decision was a correct decision. Butthe view, in so far as it generally lays downthat terms of a compromise not strictly relating to the suit may also be incorporated in theoperative part of a decree and be enforced byexecution of the compromise decree, in ouropinion, goes beyond the view expressed bythe Privy Council in Hemanta Kumari Devi'scase, 46 Ind App 240: (AIR 1919 PC 79) (supra)and may not be a good guide to follow.

9. The other case relied upon, on behalf of the appellant was a Bench decision of this Court in Manindra Nath Blswas v. Radhasyam Biswas, AIR 1963 Cal. 676, in which P N. Mookerjee J construed a consent decree and held-

'When in a pending suit parties come to a settlement and either party accepts a monetary liability and consents to a decree being passed against him in respect of the same, charging certain properties for the realisation Of the decretal dues, as in the present case, it is quite reasonable to hold that the charge so created would be enforceable in execution and, would not, in the absence of express or specific words or any clear indication to the contrary, be merely declaratory requiring a fresh suit for its enforcement Such a conclusion would be quite legitimate as, ordinarily, there being already a pending suit, the parties would hardly be contemplating at the moment another suit for recovery of the self-same dues for which a decree is suffered or obtained in the pending suit itself. Different consideration may arise where the decree is not made by consent but, as regards consent decrees, the rule of construction, suggested above, seems to be quite apposite.'

The consent decree that came up for consideration, in the case referred to above, was a money decree and the compromise contained the mode and manner of payment of the decretal debt by instalments. As a consideration for the plaintiffs allowing the defendant to pay the decretal amount in instalments, the terms of the compromise further provided that the defendant would keep certain specified immovable properties charged by way of security for payment of the decretal dues. Now, a consent decree for money, which provides for security of the decretal debt, payable by instalments, may be treated as the operative part of the decree and may not be quite unrelated to suit The context of fact, in which the observation was made in our respectful opinion, justified the aforesaid construction of the compromise decree.

10. The third case, on which the appellant relied, was a judgment of the Andhra Pradesh High Court in Seth Harak Chandas v. Hyderabad State Bank, : AIR1960AP56 . In that case, a claim for recovery of money, secured by mortgage was decreed on compromise, under which, apart from the mortgaged property, certain other properties were also given by way of further security because the original mortgaged property was not sufficient to meet the claim of the plaintiff. On this decree being executed, there was an objection taken to the effect that the properties subsequently mortgaged by wav of further security were not the subject matter of the suit and the Court was not justified in passing a decree to that extent and the decree embodying the terms of the compromise, under Order 23, Rule 3 of the Code, would only amount to an agreement enforceable by a regular suit and not by way of execution Negativing the contention, their Lordships held that such an objection should not be allowed to be raised in execution proceedings but must be taken by way of appeal In expressing the above, their Lordships were pleased to dissent from the views of this Court and of the Bombay High Court and to draw inspiration from the views expressed by the High Courts of Madras, Allahabad, Lahore and Patna. We find ourselves in respectful disagreement with the above view. If a contract, embodied in the compromise petition, does not relate to the suit, then such a contract does not become executable as a decree, merely because of its fortuitous embodiment in the inoperative (operative) part of the decree The person against whom such a contract is sought to be enforced, by process of execution, may justly object to the execution and try to slop such abuse of the process of the Court, On the merits, however, their Lordships held that the compromise related to the suit and allowed the execution to proceed Their Lordships did not give separate reasonings of their own but were pleased to follow the view expressed by certain other High Courts, particularly Madras High Court to the effect that

'the language of Section 375 (now Order 23, rule 3) of the Code of Civil Procedure was wide and general and did not preclude parties from settling their disputes on such lawful terms as they might agree to without being restricted to such relief as only one the parties had chosen to claim in the plaint.'

In our respectful opinion, the proposition has been stated much too broadly.

11. The fourth case cited was a decision of the Punjab High Court, in Gurbax Rai v. Man Singh, , which followed the line of reasoning as in Sahu Shvamlal's case (supra).

12. The last case relied upon, on behalf of the appellant was the decision of the Supreme Court in Jai Narain Ram Lundia v. Kedar Nath Khetan, : [1956]1SCR62 . In that case, in the context of execution of a decree for specific performance, the Supreme Court was pleased to observe:

'When a decree imposed obligation on both sides, which are so conditioned that performance by one is conditional on performance by the other execution will not be ordered unless the party seeking execution not only offers to perform his side but, when objection is raised, satisfies the executing court that he is in a position to do so. Any other rule would have the effect of varying the conditions of the decree, a thing that an executing Court cannot do.

There may of course be decrees where the obligations imposed on each side are distinct and severable and in such a case each party might well be left to its own execution. But when the obligations are interlinked so they cannot be separated, any attempt to enforce performance unilaterally would be to defeat the directions in the decree and to go behind them, which of course an executing court cannot do.'

This case is not a direct authority on the proposition how far extraneous matters, incorporated in a compromise decree, may be enforced by execution. The case, so far as we could understand, was cited in support of the argument that an executing Court cannot go behind the decree or direct enforcement of a contract unilaterally, by process of execution. The case does not lay down the broad proposition that even if certain terms of compromise do not relate to the suit and are wholly extraneous thereto, even then the same may be enforced by process of execution.

12. This brings us to the end of our examination of the case-laws cited. Having done so, we do not think that anything else remains for us to do than to examine the frame of thesuit, the reliefs claimed and the reliefs allowed by the decree on adjustment and from such examination to ascertain whether the termsought to be enforced by execution of the decree related to the suit. Now, the frame of the suit, in which the disputed decree was made, was one for recovery of money lent and advanced by the plaintiff respondent, Luxmi Chandra, to the defendant appellant Trilok Chand on the security of the defendant appellant's business known as 'Capri Restaurant'. The reliefs claimed were a decree for Rs. 61,875, further interest, declaration of charge on the assets of the secured business sale of the secured business and appropriation of the sale proceeds in pro tanto satisfaction of the plaintiff's claim. The father of the plaintiff, Dayaram Gupta, was impleaded as pro forma defendant in the suit, because the principal defendant Trilok Chand had earlier filed a suit alleging that plaintiff was the benamdar of his father, in the matter of advancement of the money, and the father defendant was bound by a separate agreement with the principal defendant to enter into a partnership with the principal defendant in 'Capri Restaurant' business and to pay himself out of the profits of the business. The reliefs the plaintiff received under the compromise decree, were a decree for money for Rs. 60,000, interest at the rate of 9 per cent per annum until payment, declaration as prayed for and also a decree for sale of the assets of Capri Restaurant. The compromise further provided:

(a) that the principal defendant Trilok Chand would sell to the pro forma defendant Dayaram the business of Capri Restaurant for Rs. 1,80,000, by a formal document,

(b) out of the consideration money the pro forma defendant would pay Rs. 60,000 to the plaintiff 'in full satisfaction of the mortgage which is the subject matter of the suit and the decree' and pay the balance sum of Rs. 1,20,000, in the following instalments-

(i) Rs. 10,000 on confirmation of theterms,

(ii) Rs. 80,000 at the time of execution and registration of the Sale Deed,

(iii) balance Rs. 30,000, ninety days after registration of the Deed of Sale.

Thus, (i) the frame of the suit did not include, within its ambit, the sale of the business 'Capri Restaurant' by the principal defendant Trilok Chand to the pro forma defendant Dayaram, (ii) the relief claimed by the plaintiff was for a decree for money by enforcement of a charge on the business 'Capri Restaurant' created in his favour, (iii) under the compromise decree, the plaintiff's claim for money was upheld and satisfaction thereof was provided out of the consideration money to be paid by the pro forma defendant Dayaram to the principal defendant Trilok Chand, under a separate agreement for purchase of 'Capri Restaurant' by the former from the latter. This is the only nexus, if at all one of the transaction to take place between the pro forma defendant Dayaram and the principal defendant Trilok Chand on the one hand and the plaintiff on the other. In our reading, the transaction to take place between the pro forma and the principal defendant was wholly extraneous to the frame of the suit, the relief claimed and the relief allowed. The fact that instead of the principal defendant Trilok Chand paying up the judgment-debt to the plaintiff, out of the consideration money for sale of Capri Restaurant to the pro forma defendant, the pro forma defendant took upon himself the duty of paying up the plaintiff made the least difference to the plaintiff himself. It may be that if the pro forma defendant had not paid him, the plaintiff decree-holder might execute the money decree for Rs. 60,000 against the pro forma defendant or might, as against the principal defendant enforce the charge in his favour by sale of the business 'Capri Restaurant', which charge also had been declared and sale in enforcement of the charge decreed by compromise. What the compromise contemplated was that the pro forma defendant would buy the business 'Capri Restaurant' free from all encumbrances, including the encumbrances in favour of the plaintiff. For that purpose it was necessary for him to clear up the encumbrance in favour of the plaintiff by payment out of the consideration money Thus, for the implementation of an independent contract between himself and the principal defendant, the pro forma defendant took upon himself the duty of paying up the plaintiff. Even if we apply the principle of construction of compromise decree, as laid down by P.N. Mookerjee, J. in : AIR1953Cal676 , the decree may at most become executable by the plaintiff against the pro forma defendant in so far as regards Rs. 60,000, recoverable under the decree. The unpaid purchase price payable by the pro forma defendant to the principal defendant, under the independent contract between them, would not be part of the decree and executable as such. That is a matter wholly extraneous to suit and not in any wav related to suit.

13. In the view that we take, we find no substance in the appeal and dismiss the same. Since respondent Dayaram succeeds, for the present, in avoiding payment of sum of money due by him, under a technical plea, we direct that the parties shall bear their own costs, here and in the Court below.

14. Certified for two Counsel.

Masud, J.

15. I agree.


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