Full Judgment Text
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PETITIONER:
MOTI LAL BANKER
Vs.
RESPONDENT:
MAHRAJ KUMAR MAHMOOD HASAN KHAN
DATE OF JUDGMENT:
09/02/1968
BENCH:
BACHAWAT, R.S.
BENCH:
BACHAWAT, R.S.
BHARGAVA, VISHISHTHA
CITATION:
1968 AIR 1087 1968 SCR (3) 758
ACT:
Civil Procedure Code, 1908 s. 47 and O.21 r. 2--Execution
proceedings ending in compromise whereby interest at rate
higher than decreed rate agreed to be paid--if such
agreement enforceable in execution proceedings.
HEADNOTE:
A suit filed by the appellant ended in a compromise and was
decreed on March 24, 1953 in terms of the compromise. The
decree directed the respondent to pay within six months Rs.
22,500 plus interest at 6%. As the respondent failed to pay,
the appellant commenced execution proceedings on May 23,
1954 for Rs. 24,150 in the same court and these proceedings
also ended in a compromise on May 29, 1954 whereby the
respondent agreed to pay within two months Rs. 24,150 with
interest at 1% per month. The compromise was recorded by
the executing court. Upon the respondent’s continued
failure to pay, the appellant commenced the present
execution proceedings on February 18, 1955 for realization
of Rs. 24.150 and interest at 1%. The respondent filed
objections under s. 47 C.P.C. and one of these was that the
appellant could not realise interest at 1% Per month in
execution of the decree. The executing court dismissed the
objections. On appeal to the High Court and upon a
reference by a Division Bench, a Full Bench of the High
Court held that a compromise entered in a proceeding for
execution of a decree by which the judgment-debtor
undertakes to pay interest at a rate higher than the decree
rate of interest, is not enforceable in a proceeding for
execution of the decree.
On appeal to this Court.
HELD : (i) It is open to the parties to enter into a
compromise with reference to their rights and obligations
under a decree. There is nothing in the Code of Civil
Procedure which prevents the parties from entering into such
a compromise. If the compromise amounts to an adjustment of
the decree it must be recorded under 0. 21, r. 2 and if not
so recorded, it cannot be recognised by any Court executing
the decree. The compromise of May 29, 1954 was so recorded
within the prescribed period of limitation and was a fair
bargain to postpone the execution of the decree on payment
of reasonable interest. The terms of the compromise related
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to the execution of the decree, the executing court has
power to determine all questions arising between the parties
to the suit relating to the execution of the decree and to
give appropriate relief on such determination. Exclusive
power to determine such question is given to the executing
court by s. 47 of the Code of Civil Procedure. The
agreement to pay the higher interest is enforceable in
execution of the decree. [160 F-161 B]
Mr. Hasan Khan v. Motilal, A.I.R. 1961 All. 1; overruled.
The Oudh Commercial Bank Ltd. v. Thakurain Bind Basni Kuer,
(1939) L.R. 66 I.A. 84, 100-103; Sreeshteedhur Shaha v.
Woomeshnath Roy, (1866) 5 W.R. (Miscellaneous Appeals) 1;
and Lakshmana v. Sukiya Bai, (1884) I.L.R. 7 Mad. 400
referred to.
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The jurisdiction of the executing court to enforce such a
compromise under s. 47 and 0. 21, r. 2 is not affected by
the provisions of 0. 23, r. 4, or 0. 20, r. 1 1 or 0. 20, r.
3. [161 D]
Pradyumna Kumar Mullick v. Dinendra Mullick, [1937] L.R. 64
I.A. 302, referred to.
The compromise decree of May 29, 1954 was also, enforceable
on the ground that as the execution proceedings were started
in the same Court which passed the decree, that Court had
the power to pass an order under 0. 20, r. 11 in terms of
the compromise of May 29, 1954 directing postponement of the
execution of the decree on the, term that the judgmentdebtor
would pay interest at the rate of 1 per cent per month until
realisation. The prescribed period of limitation of six
months under Art. 175 of the Indian Limitation Act, 1908 for
an application for payment of the decretal amount by
instalments did not apply to the compromise petition as it
did not ask for payment of the decretal amount by
instalments but for postponement of the execution of the
decree for two months. In any event the order passed on the
petition was binding on the par-ties until it was set aside
and could be enforced in execution proceedings. [162 B-D]
Monmohan v. Khalishkhali Cooperative Bank, (1937) 41 C.W.N.
480; referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 387 of 1965.
Appeal from the judgment and decree dated September 17, 1963
of the Allahabad High Court, Lucknow Bench in First
Execution Decree Appeal No. 11 of 1956.
C. B. Agarwala and J. P. Aggarwal, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by
Bachawat, J. The appellant instituted a suit in the Court of
the Civil judge, Mohanlalganj, Lucknow against the
respondent and his brother, Amir Ali Khan, claiming a decree
for Rs. 41,500. The suit ended in a compromise. On March
24, 1953, the suit ,Was decreed in terms of the compromise.
Under the decree, Amir Ali Khan was liable to pay Rs. 16,500
within a year. He discharged his liability by paying this
amount. The decree directed the respondent to pay within
six months Rs. 22,500 carrying interest at 6 per cent per
annum. The respondent failed to pay the decretal amount.
On May 23, 1954, the appellant took out execution for Rs.
24,150 and attached lqbal Manzil. The application for
execution was filed in the Court of the Civil Judge,
Mohanlalganj, Lucknow. The execution proceedings ended in a
compromise, The appellant agreed not to execute the decree
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for two months. The respondent agreed to pay within two
months Rs. 24,150 with interest at 1 per cent per month
until realisation. In default of payment, the appellant was
authorised to realise the amount due, under the compromise
in execution
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proceedings. The parties agreed that in the meantime lqbal
Manzil would continue to remain attached. The executing
Court recorded the compromise. On February 18, 1955, the
appellant filed the present execution application for
realisation of Rs. 24,150 and interest thereon at 1 per cent
per month. The respondent filed objections under s. 47 of
the Code of Civil Procedure giving rise to Miscellaneous
Case No. 79 of 1955. One of the objections was that the
appellant could not realise interest at 1 per cent per month
in execution of the decree. The objections were dismissed
by the executing Court. The respondent filed an appeal
against this order. At the hearing of the appeal, a
Division Bench of the High Court referred to a Full Bench
the question whether it was open to the parties in execution
proceedings to enter into a compromise postponing the exe-
cution of the decree on condition of paying enhanced
interest. At the hearing of the reference, a Full Bench of
the High Court refrained the question. The question as
refrained by the Full Court was: "Is a compromise entered in
a proceeding for execution of a decree by which the
judgment-debtor undertakes to pay interest at a rate higher
than the decree rate of interest, enforceable in a
proceeding for execution of the decree ?" The Full Bench by
a majority judgment reported in Md. Hasan Khan v.
Motilal(1) answered the question in the negative. The
matter came up for final hearing before a Division Bench.
The Bench gave effect to the Full Bench ruling and held that
the compromise dated May 29, 1954 could not be enforced in
execution proceedings. In other respects, the Bench
confirmed the order of the Civil Judge dismissing the
objections and dismissed the appeal. It is from this order
that this appeal has been filed by the appellant after
obtaining special leave. The sole question in this appeal
is whether the compromise of May 29, 1954 is enforceable in
execution proceedings.
It is open to the parties to enter into a compromise with
reference to their rights and obligations under a decree.
There is nothing in the Code of Civil Procedure which
prevents the parties from entering into such a compromise.
If the compromise amounts to an adjustment of the decree, it
must be recorded under 0. 2 1, r. 2 and if not so recorded,
it cannot be. recognised by any Court executing the decree.
The compromise of May 29, 1954. was so recorded within the
prescribed period of limitation. The compromise was a fair
bargain to postpone the execution of the decree on payment
of reasonable interest. The terms of the compromise related
to the execution of the decree. The executing Court has
power to determine all questions arising between the parties
to the suit relating to the execution of
(1) A.I.R. 1961 All. 1.
161
the decree and to give appropriate relief on such
determination. Exclusive power to determine such questions
is given to the executing Court by s. 47 of the Code of
Civil Procedure. The executing Court can determine all
questions relating to the agreement postponing the execution
of the decree and the incidental term as to payment of the
higher rate of interest. The agreement to pay the higher
interest is enforceable in execution of the decree, see The
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Oudh Commercial Bank, Ltd. v. Thakurain Bind Basni Kuer(1).
On the question whether the agreement to pay interest at a
rate higher than the rate provided in the decree can be
enforced in execution proceedings there was a conflict of
judicial opinion. The Privy Council decision settled the
law on this point. There were also earlier decisions which
held that execution could issue both for the sum decreed and
for the interest promised, see Sreeshteedhur Shaha v.
Woomeshnath Roy ( 2 ) and Lakshmana v. Sukiya Bai(3 ) .
The jurisdiction of the executing Court to enforce such a
compromise is not taken away by 0. 23, r. 4 of the Code of
Civil Procedure. The effect of 0. 23, r. 4 is that 0. 23,
r. 3 does not apply to execution proceedings. Independently
of 0. 23, r. 3, the provisions of 0. 21, r. 2 and s. 47
enable the executing Court to record and enforce such a
compromise in execution proceedings. Nor doe,, 0. 20, r.
11(2) affect this power of the executing Court. Order 20,
r. 11 enables the Court passing the decree to order
postponement of the payment of the decretal amount on such
terms as to the payment of interest as it thinks fit on the
application of the judgment-debtor and with the consent of
the decree-holder. It does. not affect the power of the
executing Court under s. 47 and 0. 21, r. 2.
Nor does 0. 20, r. 3 affect the power of the executing Court
to record and enforce the compromise. Order 20, r. 3
provides that a judgment once signed cannot afterwards be
amended or altered save as provided by s. 152 or on review.
The decree is drawn up in accordance with the judgment. The
parties cannot by an agreement confer upon the Court the
power to amend the decree in contravention of 0. 20, r. 3 or
the power to, enforce the amended decree. See Pradyumna
Kumar Mullick v.Dinendra Mullick(4). Order 20, r. 3 should
be read with 0.20, r. 11 which shows that after the passing
of the decree the Court may order that payment of the amount
decreed shall be postponed or shall be made by instalments
on such terms as to payment of interest as it thinks fit.
The two provisions read together show that a direction for
postponement of payment of
(1) [1939] I.R. 66 : I.A. 84, 100-103.
(2) [1866] 5 W.R. (Miscellaneous Appeals) 1.
(3) [1884] I.L.R. 7 Mad. 400.
(4) [1937] L.R. 64 I.A. 302, 308.
162
the decretal amount upon the term that the judgment-debtor
should pay a reasonable rate of interest is not an
alteration of or addition to the decree. We are of the
opinion that the compromise of May 29, 1954 as to payment of
interest can be ,enforced in execution proceedings.
The compromise is enforceable in execution proceedings
on .another ground. The decree was passed on March 24, 1953
by the Court of the Civil Judge, Mohanlalganj, Lucknow.
Execution proceedings were started in the same Court. As
the ,Court which passed the decree it had the power to pass
an order :under 0. 20, r. 11 in terms of the compromise of
May, 29, 1954 ,directing postponement of the execution of
the decree on the term that the judgment-debtor would pay
interest at the rate of 1 per cent per month until
realisation. The prescribed period ,of limitation under
Art. 175 of the Indian Limitation Act, 1908 for an
application for payment of the decretal amount by instal-
ments was six months from the date of the decree. The com-
promise petition did not ask for payment of the decretal
amount by instalments. It asked for postponement of the
execution of the decree for two months. Article 175 did
no,- apply to the petition. Even if Art. 175 applied to the
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petition, the order passed on the petition is binding on the
parties until it is set aside and may be enforced in
execution proceedings, see Monmohan v.Khalishkhali Co-
operative Bank(1).
In the result, the appeal is allowed with costs, and it is
declared that the compromise of May 29 1954 can be enforced
in the execution proceedings.
R.K.P.S. Appeal allowed.
(1) [1937] 41 C.W.N. 480.
163