MOD LAL BANKER

MAHRAJ KUMAR MAHMOOD HASAN KHAN February 9, 1968

(R. S. BACHAWAT AND V. ~HARGAVA, JJ.)

CivU Procedure Code, 19os, •· 47 and 0.21 "· 2-Execution procutiings ending in compromise whereby interest .at rate higher than dttrttd rate agreed to be paid-if 1uch agreement enforceable in execution Droceedings.

A suit filed by the appellant ended in a compromi&e nd was decreed on March 24, 1953 in. terms of the compromise. 1be decree direcital the respondent to pay within six months Rs. 22,500 plus interest at 6%. As the respondent failed to pay, 4he 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 "ith imerest at I% 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, !955 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 I% per month in execution of the decree.

The executing court dismissed the objections.

On appeal to tm High Court and upon a reference by • Division Bench, a Full Bench of ¢he High Ccurt 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) is open to the parties to enter into a compromise with reference to their rights and obligations under a decree.

Thece is nothing in the Cede of Civil Procedure which prevents the parties from entering into such a compromise. If the compromise amounts l!o an adjustment of the docree, it must be recorded unde'r 0. 21, r. 2 and if not so recorded, it cannot be recognised by any Conrt executing I.he 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 l'<!ated to the execution of the decree, the executing court has power to detennine all questions arising between the parties to the suit relating to the execution of the decree and to give 811Ptopriate 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 BJ

Mr. Hasan Khan v. Moti/al, A.I.R. 1961 All. 1; overruled.

The Oudh Commercial Bank Ltd. v. Thakurain Bind Barni Kzur, (1939) L.R. 66 I.A. 84, 100-103; Sreeshteedhur Shaha v. Woomeshnath Roy, (1866) 5 W.R. (Miscellaneous Appeals) I; and Lakshmana v. Sukiya Bai, (1884) l.L.R. 7 Mad. 400 referred to.

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MOTILAL v. MAHMOOD HASAN (Bachawat, J.) 159

A The jurisdiction of the executing court to enforce suc; h a compromise

under s. 47 and O. 21. r. 2 is not affected by the provisions of 0. 23, r. 4, or 0. 20, r. 11 or o. 20, r. 3. [161 DJ

Prudyumna 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 tha! as the execution proceedings were started in the same Court which passed the decree, that Court had the p0wer to pass an order under

0. 20, r. II in tenns of the comproinise 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 I per cent per month until realisation. The prescribed period of limitation of six molithS under Art. 175 of the Indian Limitation Act, 1908 for an appiidtioii for payment of the decretal amount by instalments did not apply to the Co_mpromise 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 eyent the order passed art the petitioi; i was binding on the P.arties un.til it was set

aside and could be enforced in execution proceedings. (162 BcD]

Monmo/Jcn v. K/Ja/ishk/Jali Cooperdlive Bank, (1937) 41 C.W.N. 480; referred to.

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 Bacllawat, J. The appellant instituted a suit in the Court of the Civil Judge, Mohanlalganj, Lu.cknow against the respondent and his brother, Amir Ali Khan, claiming a decree for Rs. 41,500.

The suit enifed in a compromise. On March 24, 1953, the suit was decreed in terms ()f the compromise. Under the decree, Amir Ali Khan was liable to pay Rs. 16,500 with.in a year. He discharged his liability liy 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 Iqbal Man:i:il. 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 for two months.

The respondent agreed to pay within two months Rs. 24, 150 with interest at I 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 Iqbal Manzi! would continue to remain at!ached. 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 I per cent per month.

The respondent filed objections under s. 47 of the Code of Civil Proce.dure 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 thi~ 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 execution of the decree on condition of paying enhanced interest.

At the hearing of the reference, a Full Bench of the High Court reframed the. question.

The question as reframed by the Full Court was: "Is a compromise entered in a proceeding for execu'.ion 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(') 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, !he Bench onfim1ed 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 whe.ther 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 rightsand 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. uncle"r 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. The compromise was a fair bargain to postpone tile execution of the decree on payment of reasonable interest. The tenns of te comproniise related to the execution of the decree.

The executing Court has power to determine at! questions arising between the parties to the suit relating to the execution of

(I) A.1.R. J961 All. l,

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MOTILAL v. MAHMOOD HASAN (BachDil'll!, /.) 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 Oudh Commercial Bank, Ltd. v. Thakurain Bind Basni Kuer('). 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(') and Lakshmana v. Sukiya Bai(').

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 O. 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 executioff proceedings. Nor does 0. 20, r. 11 (2) affect this power of the executing Court. Order 20, r. 11 enables the C:durt passing the decree to orcfer postponement of the payment of the decretilI

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. 4 7 and 0. 21, r. 2.

Nor dbes 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 G enforce the amended decree.

See Pradyumna Kumar Mullick v. Dinendra Mullick('). 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 mad.~ by instalments on such tenns as. to payment of interest as it thinks fit.

The .two provisions read together show that a direction for postponement of payment of H (I) 11939] 1.R. 66 : J.A. 84, i0<'-!03.

(2) (1866] S W.R. (Miscellaneous Appeals) 1.

(3) [1884] T.L.R. 7 Mad. 4)).

(41 (1937] L.R. 64 I.A. 3)2. 318 ..

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the decreta! al:IM;>Ullt 11pon t~ tenn that 1he ju, dgment-debtor A sho11ld pay a reas()llable ra, te of interest is not an iilteration of or ad, d.ition to tl), e decree. We are of Qte opini9n that the compromise of May 29, 1954 as to payment of interest can be enf9rced ii;1 execution proeeedings.

B compromise is ell{orc.able in execution proceedings on anotlwground. The ree passed On March 24, 1953 by the Coµ, rt of the Civ, il J~, Mohanlalganj, Lucknow.

Execution proceedings were started in the Slll); le Court. As the Court which the dee~ it had the power to pass a_n order under Q. 20, r. 11 in terms of the compromise of May, 29, 1954 directing postponemnt of the excuJion of the decree on the term that !he judgment-debtor would pay interest at the rate of C 1 per cent p, er nionth until realisation. prescribed period of lintitation under Art. 175 of the :Wdian imitation Act, 1908 for an applica"tion for paym!lllt of the decretal amount by instalments was s.i.it months from tbe date of the decree.

The com pro• petitlon cl.id l\Ot ask for payment of the decretal amount by instats. It asked for postponement o_f the exec11tion of D the decree for two l\lOntt\S. Article 17 5 did not apply to the petition. :even if kt,: l 15 appied to the petition, the order pas&¢. on the petitlo11 is binQ.ing on the parties u, ntil it is set aside an4 l\lay be enforced in execution proceedings, see Monmoha11

v. Kha/ishkhali Co.operative Qank(').

E In the result, tl; J.e appeal is al.lowed with costs, and it is declared that thr compromil)e of May 29 1954 can be enforced in the execution pr<>eee@lgs.

RX.P.S.

A ppea/ allowed.

(I) (1937) 41C.W.N.480.