Appeal No 2881 of 1993
From the Judgment are Order dated 16185 of the Bombay High Court in WP No 1755 of 1983 VM Tarkunde R Karanjawala Rajesh Kumar and Ms Suruchi Aggarwal for the Appellant
SB Bhasme and AS Bhasme for the Respondent
AHMADI J Special leave granted
The appellant landlord filed an eviction suit No 419 of 1968 for possession of the demised premises mainly on the ground of arrears of rent under section 123 of the Bombay Rents Hotel and Lodging House Rates Control Act 1947 hereinafter called the Act 
That suit was settled between the parties the relevant terms whereof read as under 1 The possession of the suit premises is to be given by the defendant to the plaintiff by 10th October 1970
If the defendant does not give possession then the plaintiff is to take possession by execution on the basis of this decree
2     3The defendant is given a concession that if the defendant paid the entire amount mentioned in clause 2 above ie the amount involved in the suit future mesne profits electricity charges water charges the rent of the godown expenses of the suit by 10th October 1970 the plaintiff will not execute the decree for possession
 Under clauses 2 and 4 of the compromise terms the rent in respect of the suit premises was to be calculated on the basis of standard rent of Rs 30 per month the rent of the store room godown was to be calculated at the standard rent of Rs 9 per month and electricity and water charges at Rs 3 per month and so calculated
the entire arrears had to be paid on or before 10th October 1970 to avail of the concession given in clause 3 of the compromise terms
The Trial Court passed a decree in terms of the compromise
733 The arrears so calculated worked out to Rs 3353
as on 10th October 1970
The tenant however paid a sum of Rs 2040only on 9th February 1970 and therefore did not comply with the terms regarding payment of entire arrears on or before 10th October 1970
Thereupon the decree holder filed execution proceedings on 2nd November 1970
The tenant raised objections in regard to the executability of the decree
The Executing Court rejected the objections raised by the tenant and issued a warrant for possession of the demised premises under order 21 Rule 35 of the Code of Civil Procedure 1908 hereinafter called the Code 
The tenant preferred an appeal against the order of the Executing Court which came to be allowed
The order of the Executing Court was set aside and the prayer for eviction was dismissed
The decree holder moved the High Court under Article 227 of the Constitution
The High Court set aside the order of the Appellate Court and remitted the matter to the Appellate Court with a direction to decide the character of the compromise terms on the basis of which eviction was sought
After the matter went back to the Appellate Court that court reconsidered the matter and once again allowed the appeal setting aside the order of the Executing Court directing issuance of warrant under Order 21 Rule 35 of the Code
The Appellate Court dismissed the execution proceedings altogether
Against that order passed by the Appellate Court the decree holder once again moved the High Court under Article 227 of the Constitution
The High Court considered the various submissions made before it by the rival parties and summarised the propositions emerging from the relevant provisions and the case law in paragraph 32 of the judgment as under 1 If by a consent decree the status of a landlord and tenant is established between the plaintiff and the dependent the Court in exercise of its equitable jurisdiction is not precluded from granting relief against forfeiture of a term contained in the consent decree
2Where the question is not one of the creation of a tenancy or the continuation of a tenancy and where a decree passed either by consent or in invitum permits payment of the decrement amount in installments and provides that the decretal amount becomes payable at once in the event of failure in the payment of one or more installments there is no question of granting relief
The Courts are bound to execute the decree in accordance with its terms
3Where
however the relationship of landlord and tenant is continued between the parties by a compromise decree
the judo 734 ment debtor who is a tenant
would be entitled to relief against forfeiture resulting from his failure to pay the rent on the stipulated date
4Where the consent decree provides for the continuance of the possession of the tenant up to a particular date beyond which he has no right to remain in possession at all and on which date the landlord is entitled to execute the decree for possession the time given from the date of the decree till the other date is by way of concession and in such a case there is no creation of new tenancy or continuation of the existing tenancy  5 If the consent decree provides possession for the continuation of  the of the tenant on certain terms up to a particular date and also provides for the continuation of the tenant s possession after the date if lie complies with certain conditions then such a decree provides for the continuance of the possession of the tenant from the date of the consent decree itself
In such a case it cannot be said that the plaintiffs allowing the defendant to continue up to and beyond that specified date is by way of concession
 The High Court therefore concluded that the refusal by the Appellate Court to exact the tenant on the basis of the consent decree was correct in law and hence it was not required to interfere with the order of the Appellate Court
It came to the conclusion on a true interpretation of the relevant clauses of the consent decree that the clause by which eviction was permitted was penal in nature and therefore not enforceable
Clause 3 of the compromise term was treated is granting relief  against forfeiture
In this view of the matter the judgment creditor landlord having failed to secure possession of the demised premises by putting the consent decree to execution has approached this Court under Article 136 of the Constitution
The Act was enacted to amend and consolidate the law relating to the control of rents and of evictions from demised premises
It imposes certain restrictions on the right of the landlord from recovering possession so long as the tenant pays or is ready and willing to pay standard rent and permitted increases and observes and performs the other conditions of  the tenancy which are consistent with the provisions of the Act
If the tenant has failed to pay the rent and permitted increases due from him he can be evicted for that neglect in the manner set out in section 12 735 of the Act
The other provision which confers a right of eviction is section 13 of the Act with which we are not concerned in this case
The facts of the case clearly reveal that the landlord had sought eviction under section 12of the Act as the tenant had committed a breach of sub section  1 thereof in that he had failed to pay the rent to the landlord
To comply with the requirement of sub section 2 of that provision the landlord had served the tenant with a notice prior to the institution of the suit seeking eviction under section 123 of the Act
This sub section is in two parts and may be extracted for ready reference 12 3 a Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted in creases if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section 2 the court may pass a decree for eviction in any such suit for recovery of possession
123 b In any other case no decree for eviction shall be passed in any such suit if on the day of hearing of the suit or on or before such other date as the court may fix the tenant pays or tenders in court the standard rent and permitted increases then due and thereafter continues to pay or tender in court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the court
 Clause a sets out the circumstances in which the tenant forfeits the protection of the statute and entitles and landlord to evict him
If the case does not fall within the scope of clause a the question to be considered is whether eviction should be ordered under clause b
This is clear from the opening words in any other case If however the tenant satisfies the conditions of the said clause the law protects him from eviction as is clear from the words no decree of eviction shall be passed in any such suit
The suit in the present case was filed under section 123 of the Act but before the court could adjudicate whether clause a or clause b was attracted the parties arrived at a settlement the relevant terms hereof have been extracted hereinbefore
It is well settled that a decree passed on the basis of a cc promise by and between the parties is essentially a contract between the names which derives supporting by the court superadding its seal to the contract
But all the same the consent terms retain all the elements of a contract to which the court s imprimatur is affixed to give it the sanctity of an executable court 736 order
We must however point out that the court will not add its seal to the compromise terms unless the terms are consistent with the relevant law
But if the law vests exclusive jurisdiction in the court to adjudicate on any matter eg fixation of standard rent the court will not add its seal to the consent terms by which the parties have determined the standard rent unless it has applied its mind to the question and has satisfied itself that the rent proposed by consent is just and reasonable
In such a case it is the independent satisfaction of the court which changes the character of the document from a mere contract to a court s adjudication which will stop the tenant from contending otherwise in any subsequent proceedings and operate as resjudicata
If the standard rent is fixed solely on the basis of agreement between the parties such a decree in invitum will not preclude the tenant from contending in any subsequent proceeding that the rent is excessive and require the Court to fix the standard rent
Therefore the character of the consent decree will depend on the nature of the dispute resolved and the part played by the court while superadding its seal to it
Under clause a of section 12 3 of the Act if the conditions stated therein are satisfied the court has to pass a decree to evict the tenant from the demised premises
So also under clause b of that sub section if the tenant fails to pay or tender in court the standard rent and permitted increases due on the first date of hearing of the suit or on or before such date as the court may fix the court has to pass a decree for ejectment
In the present case the suit was governed by section 123 of the Act and even if we assume that it fell within the purview of clause b the tenant was liable to be evicted as admittedly the tenant had failed to pay or tender in court the standard rent and permitted increases due to the landlord as is obvious from clause 2 of the consent terms
It is for this reason that the tenant suffered a decree for eviction and agreed to deliver possession of the suit premises by 10th October 1970
By clause 2 of the consent terms the tenant further agreed to pay to the landlord by 10th October 1970 the entire amount due including legal fees and expenses from the date of the suit till delivery of possession
Clause 3 of the consent terms carries the crucial term that the tenant is given a concession and that concession is that if he pays the entire amount mentioned in clause 2 by 10th October 1970 the landlord will not execute the decree for possession
That has given rise to the question whether clause 1 of the consent decree is in the nature of a penalty for non payment of the outstanding dues upto 10th October 1970 or clause 3 of the consent decree is merely a concession given to the tenant if he complies with the terms or requirements of that provision
Now as pointed out earlier the ejectment suit was filed on the allegation that the tenant had neglected to pay the rent and other charges in respect of the demised 737 premises
The suit was therefore founded on the right to evict conferred by section 123 of the Act
We will assume that it was a case to which clause b to that sub section was attracted
It is evident from the terms of the compromise that even on the date of the compromise in July 1970 the tenant was in arrears of rent
If the suit had gave to trial the landlord may have secured a decree in ejectment for the tenant s failure to comply with the requirements of clause b of section 123 of the Act
By clause 1 of the compromise decree it was therefore provided that the tenant will vacate and deliver possession of the demised premises by 10th October 1970
Failure to deliver peaceful possession by that date would entitle the landlord to take possession by execution  of the decree
Clause 2 indicates the rate at which the arrears will be calculated and clause 4 describes those rates as standard rent
Clause 4 describes those rates as standard rent
Clause 3 which is the crucial clause gives a concession
What is that concession It is that if the tenant pays up the entire amount of arrears ie the amount involved in the suit meaning thereby the claim of arrears set out in the suit future mesne profits electricity and water charges the rent of the godown cost of the suit by 10th October 1970 the landlord will not execute the decree for possession
Counsel for the appellant argued that as the tenant had failed to clear the arrears of rent and other charges payable under the terms of the lease he was liable ton be evicted under clause b of section 123 of the Act
That is reflected in clause 1 of the compromise terms
However the landlord gave a concession by clause 3 to the effect that if the entire arrears are cleared by 10th October 1970 he would not execute the decree for possession
This counsel argued does not show that the decree for possession was provided for as in terrorism to be construed as a penalty and not a concession
Counsel contended that while a penal stipulation on cannot be enforced a grant of a concession cannot undo the main operative part of the eviction decree unless it is shown that the tenant had done all that was necessary to avail of the concession
Counsel for the tenant however insisted that the provision for delivery of possession is in the nature of a penalty and was therefore unenforceable
He supported the judgment of the High Court and submitted that the appeal should be dismissed with costs
It is settled law that unless the terms of contract are ambiguous the intention of the parties must be gathered from the terms themselves
It is only where the terms are ambiguous and capable of more than one meaning that evidence aliunde can be permitted to gather the intention of the parties
In our view the terms forming the basis of the consent decree in the instant case are clear and unambiguous and do not call for extrinsic material to gather the intention of the parties
Two questions therefore arise for consideration namely i did the parties to the compromise intend to create or continue the relationship of landlord and tenant 738 and ii is the Clause providing for eviction penal in character Now
as pointed out earlier by clauses 1 and 2 of the compromise terms the tenant is required to deliver vacant possession of the demised premises to ether with arrears of rent etc
by 10th October 1970
It is further provided that if the tenant fails to deliver possession and defaults in paying the arrears due from him by 10th October 1970 the landlord will be entitled to recover both possession and arrears of rent etc by executing the decree
Thus by the first two clauses of the consent terms the landlord secured a decree for possession as well as arrears of rent etc  giving a grace period to the tenant to comply therewith by 10th October 1970
Thereafter by clause 3 of the consent terms the tenant is given a concession in that if he pays the entire arrears of rent mesne profits electricity and water charges cost of the suit etc
by 10th October 1970 the landlord agrees not to execute the decree for possession
In other words on the fulfillment of the obligation to clear the entire arrears of rent and other charges by 10th October 1970 the tenant is given a concession that the decree for possession passed against him will not be put to execution
Such a clause cannot in our opinion be said to be penal in character
It is necessary to understand when a clause in the contract can be described as penal in character
Let us illustrate by taking two concrete situations
A plaintiff files a suit to recover Rs 20000 with interest and costs from the defendant
They enter into a compromise the terms whereof are as under Situation 1 The defendant shall pay to the plaintiff a sum of Rs 15000 and costs on or before 31st December 1993
If however he fails to pay the said amount of Rs 15000 with costs within the time stipulated the plaintiff will be at liberty to recover the entire sum of Rs 20000 with interest and costs from the defendant by executing the decree
The latter clause of such a decree will clearly be in terrorem and therefore penal in character
No court will execute the same
Situation 2 The decree provides that the defendant shall pay Rs 20000 with interest and costs to the plaintiff
However if the defendant pays Rs 1 5000 and costs on or before 3 1 st December 1993 to the plaintiff the plaintiff will treat the decree as fully satisfied and will not claim the balance amount from the defendant
In such a case the latter clause operates as a concession and the 739 plaintiff waives his right to the balance amount
Such a decree will be executable to the full extent if the defendant fails to avail of the concession by paying Rs 15000 and costs on or before 3 1 st December 1993
From the above two illustrations it should become clear that if the defendant is required to suffer the consequence for his failure to abide by the terms by a stipulated date such a consequence would be penal in nature but on the other hand if the defendant gets some benefit by complying with the requirement by the stipulated date such a clause granting benefit can never be treated as penal in character
Applying this test to the decree in question it is obvious that by the first two clauses of the consent terms a decree for possession of the demised premises as well as arrears of rent etc
is passed and the tenant
is given a grace period upto 10th October 1970 to comply with the same failing which the landlord is given the right to put the decree to execution and obtain possession of the premises and recover the arrears of rent etc
through court
By clause 3 of the consent terms however the tenant is granted a concession that if he pays the entire rent etc
due from him by 10th October 1970 the landlord will not put the decree to execution for recovery of possession
This stipulation is clearly to secure his dues ie arrears of rent etc
Depending on the situation in which a landlord is placed he may grant the concession to the tenant to ensure that the huge amount of arrears is not lost
If he grants such a concession and agrees that if the entire arrears is cleared by a stipulated date he will not insist on possession that will not render the clause penal in nature
In a given situation where the tenant is in financial difficulty and is not in a position to comply with the requirement of section 123 of the Act he can request the landlord to grant him a concession in the nature of relief against forfeiture
If such a concession is to be read as penalty rendering the decree nonexecutable even where the tenant fails to satisfy the requirements of availing the concession no landlord will in future grant such a concession thereby causing hardship in deserving cases
We are therefore of the opinion that the First Appellate Court as well as the High Court were in error in treating clause 3 of the consent terms as penal in character and incapable of execution
If the condition precedent for availing of the benefit or concession under clause 3 of the consent terms is satisfied the relationship of landlord and tenant continues but if the tenant fails to comply with the condition precedent for availing of the benefit or concession the forfeiture operates and the tenant becomes liable for eviction under the decree
The High Court has placed reliance on the Full Bench decision in Krishnabai vs Hari 8 BLR 8 13 and Gajanand Govind vs Pandurang Keshav 53 BLR 100
in 740 taking the view that the Executing Court can rant relief against forfeiture on the strength of section 114 of the 
The High Court seems to think that in execution of a consent decree such as the one with which we are concerned it is open to the Executing Court to go behind the decree by invoking section 114 TPAct notwithstanding section 123 of the Act
In our view After the enactment of clause b to section 123 which is a special provision incorporating the equity provision contained in section 1 14TPAct in a modified form cases governed under the Act must be resolved in accordance with section 123 of the Act and not under section 1 14 TPAct The landlord s right to seek eviction has been drastically reduced and circumscribed by section 12 and 13 of the Act
Similarly the tenant must also seek protection from eviction by complying with the requirements of the Act
If such is not the legal position section 123 a of the Act which mandates the Court to pass a decree for eviction if the requirements of that clause are satisfied would be rendered wholly nugatory
Same would be the position in the case of application of section 123 b of the Act because that clause precludes the passing of the decree if the tenant satisfies the requirements of that provision
It must be remembered that after the enactment of the Act the landlord s right to reenter on expiry of the lease is curtailed by the provisions of the Act which has made special provisions granting protection from eviction if the tenant abides by his obligations under the Act
Under the Act a tenant is allowed to continue in possession notwithstanding the termination of the contractual tenancy if he abides by the provisions of the Act
If he fails to abide by the requirement of section 123 of the Act he must take the consequences flowing therefrom
There is no question of granting him double protection
That is what this Court clarified in Pradesh Kumar Bajpai vs Binod Behari Sharkar  That was a case arising under the provisions of the UP Temporary Control of Rent and Eviction Act 1947
The question which was seriously debated at the Bar before this Court was whether in addition to the safeguards provided to the tenant under the said Act the tenant was also entitled to the benefit of section 1 14 TPAct
The right of the landlord to have the tenant evicted was restricted under the said rent restriction legislation
As that law had restricted the power of the landlord to evict the tenant except in accordance with the provisions therein contained the terms of the contract and the provisions of the TPAct it was urged were no longer attracted
Clause a of section 31 inter alia provided that the suit may be filed with the permission of the District magistrate when the tenant is in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of the notice of demand
Dealing with this contention this Court held that once the requirements of the rent legislation are satisfied the tenant cannot claim the double protection of invoking the provisions of the TPAct or the terms of the contract and the provision of 741 section 114 TPAct cannot be read into the rent legislation
This Court concluded thus  In the case before us it is not indispute that after the Rent Act came into force the landlord cannot avail himself of clause 12 which provides for forfeiture even if the tenant neglected to pay the rent for over two months
The landlord cannot enter into possession forthwith without notice
The only remedy for him is to seek eviction under the provisions of the Rent Act
In such circumstances the tenant cannot rely on section 114of the and claim that he should be given an opportunity to pay the arrears of rent even though the requirements of section 31 had been fulfilled
 It is therefore obvious that the tenant cannot avail of the benefit of section 114 TPAct since his case was governed by the provisions of section 123 b of the Act
For the foregoing reasons we are of the opinion that the executing court was right in issuing a warrant for possession under order 21 Rule 35 of the Code against the tenant since the tenant had failed to take advantage of the concession clause by clearing the arrears of rent mesne profits etc
by 10th October 1970
The First Appellate Court as well as the High Court were in error in holding that the decree was not executable as clause 3 thereof was in the nature of a penalty
We set aside the order of the First Appellate Court as well as the High Court and remit the matter to the executing court to proceed further in accordance with law
We may however make it clear that if there have been subsequent developments between the parties creating any de novo relationship that will not be affected by this order
In the facts and circumstances of the case we make no order as to costs
UR Appeal allowed


Summary:
The respondent who owned landed properties at Banaras in Uttar Pradesh and at Purnea in Bihar was heavily indebted and applied to the Collector Banaras under section 4 of the U P Encumbered Estates Act 1934 for liquidation of his debts
The Collector acting under section 6 forwarded the application to the Special judge appointed under the Act who on March 21 1940 passed after the enquiry directed by the Act three money decrees in favour of three creditors of the respondent and forwarded them to the Collector for execution
Section 147 of the Act provided that such decrees were to be deemed to be decrees of a civil Court 365 of competent jurisdiction
Section 243 of the Act provided that for purposes of execution against property outside U P such decrees were to be deemed to be in favour of the Collector
The execution of the decrees was commenced by the Additional  Collector Banaras against the respondent s properties in U P Thereafter the Additional Collector applied to the Additional Civil judge Banaras and on January 4 1947 got the said decrees transferred to the Subordinate judge Purnea and on March 17 1947 he applied to the Subordinate Judge for execution of the decrees by attachment and sale of the respondents properties at Purnea
The Subordinate judge made an order directing execution to issue but on appeal the High Court set aside the order on the ground that the Subordinate Judge had no jurisdiction to entertain the execution application
Held that the Subordinate judge Purnea had jurisdiction to execute the decrees
By virtue of section 147 of the Act a decree of the Special judge was within U P a decree for all purposes of the Code of Civil Procedure and could properly be transferred under section 39 Of the Code for execution to a Court outside U P
No question of extra territorial operation of the Act arose in the application of section 147 to the decrees as the Purnea Court was merely applying the U P Act to decrees passed in U P
For the purposes of execution and sale the Additional Collector was to be deemed to be the Collector as he exercised the Collector s powers in this regard
As such the applications for transfer and execution of the decree were properly made by the Additional Collector
It was the same Court which exercised the powers of the Additional Civil Judge as also those of the Special judge
The order of transfer of the decree made by the Additional Civil judge could be treated as having been made by the Special judge
As such it was made by the same Court which passed the decrees and was a good order under section 39 of the Code
The application for execution before the Subordinate judge Purnea was made while execution proceedings in respect of the same decrees were pending before the Additional Collector Banaras and was a continuation of the same
No question of limitation could arise in respect of such an application