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PETITIONER: LAKSHMI NARAYANAN

       Vs.

RESPONDENT: S.S.PANDIAN

DATE OF JUDGMENT:       04/09/2000

BENCH: Syed Shah Mohammed Quadri  J.  & Y.  K.  Sabharwal  J.

JUDGMENT:

Syed Shah Mohammed Quadri, J. L....I..........T.......T.......T.......T.......T.......T..J      These  appeals, by special leave, are directed  against the  common order of the High Court of judicature at  Madras passed  in C.R.P.Nos.2705 and 2706 of 1996 on June 19,  1997 confirming  the  order of the Small Causes Court  at  Madras (executing court) dated February 20, 1995.

    The  appellant is the owner of premises Nos.31 and  32, measuring  four  thousand feet, of Namasivaya  Chetty  Lane, Madras  (for short, the suit premises) and the  respondent is  the  tenant  on  a  monthly  rent  of  Rs.5,000/-.   The appellant  filed eviction petition (R.C.O.P.No.2852 of 1989) under  the Tamil Nadu Buildings (Lease & Rent Control)  Act, 1960  for  eviction of the respondent, which was decreed  ex parte  on May 2, 1990.  The appellant (decree holder)  filed E.P.NO.459  of 1990 in the Small Causes Court at Madras  for execution of the said ex parte decree to have the respondent (judgment-debtor)  evicted  from the suit premises.   During the  pendency  of  the  execution  proceedings  the  parties entered  into a compromise outside the court on November  7, 1990.    Pursuant   thereto,   the  respondent   surrendered possession of the front portion of Door No.32, measuring 840 square  feet,  and for the rest of the suit premises,  viz., Door No.31 and a back portion of Door No.32 (for short, the premises),  the parties entered into an agreement of  lease for  three  years,  rate of rent remaining  the  same.   The compromise,  inter  alia,  provides that if  the  respondent fails  to  vacate  the premises on the expiry  of  the  said period,  the  appellant will be entitled to have the  decree executed  against  him and get possession of the  same.   On filing  the  memo of compromise in the court, the E.P.   was dismissed as "not pressed".

    Just  before  the  expiry  of   the  said  period,  the appellant  by a written notice, sent by his advocate,  asked the  respondent  to  hand  over  vacant  possession  of  the premises  on November 6, 1993, the date on which the  period of  three years would expire.  On the respondent failing  to do  so, the appellant filed a fresh E.P.  (No.664 of  1993), for  execution  of the decree for recovery of possession  of the  premises  and the executing court ordered  delivery  of possession  on November 16, 1993.  While so, the  respondent filed  E.A.  No.973 of 1993, praying for recalling the order of  November  16,  1993 and for dismissal of the  E.P.   The appellant  also filed E.A.  No.299 of 1994 for permission to

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amend  the  description  of the property  in  the  execution petition.   On  February 20, 1995 the executing court  by  a common  order dismissed the appellants petition and allowed the   respondents  petition.   The   appellant  filed   the aforementioned  two  Civil  Revision Petitions in  the  High Court  challenging  the validity of the said  common  order. The  High  Court  dismissed the revision  petitions  by  the impugned  order and thus the appellant is before us in these appeals.

    Mr.  T.L.V.  Iyer, learned senior counsel appearing for the  appellant,  argued  that  the  compromise  between  the parties  did  not extinguish the decree itself;   it  merely postponed  the execution of the decree and as the respondent did  not  vacate the premises on the expiry of  three  years granted to him, the appellant is entitled to have the decree executed  and  recover possession of the premises.   In  any event,   submits   the  learned   senior  counsel,  as   the compromise/adjustment  of the decree was not recorded by the executing  court  in view of Rule 3 of Order 21,  the  court cannot  recognise  the  same and hold that  the  decree  was extinguished  in proceeding under Section 47 of the Code  of Civil Procedure (for short, ’the C.P.C.’).

    Mr.S.Sivasubramaniam,  leaned senior counsel  appearing for  the  respondent,  contended  that  the  compromise  and execution  of  a new lease deed for three years, during  the pendency  of  the  execution proceedings,  extinguished  the decree;   as the respondent would be enjoying the protection of  the  Act,  he  was not liable to be  evicted  under  the existing  decree.   He  argued that Order 21 Rule 2  of  the C.P.C.   was enacted for the benefit of a decree holder  and that  apart no mode of recording adjustment of the decree by the court having been prescribed under the C.P.C., the order of  the court dismissing the E.P.  on filing of the memo  of compromise  would  amount  to recording  adjustment  of  the decree  within  the  meaning of Rule 2 of Order  21  of  the C.P.C.,  therefore, the executing court rightly took note of the compromise and dismissed the E.P.

    In view of these contentions, the point that arises for consideration  is  :   whether  in view  of  the  compromise entered  into  between  the parties and execution of  a  new lease  deed,  the  ex  parte decree dated May  2,  1990  got extinguished  as such the appellant cannot get possession of the premises in execution of the existing decree.

    It may be pointed out here that after the rights of the parties  are  crystallised  on  passing of  a  decree  by  a competent court, in law they are not precluded from settling their  disputes  outside  the  court.    But  to  have   the compromise  recognised  by  a court, it has to  be  recorded under  Rule  2 of Order 21, C.P.C.  The consequence  of  not having  it so recorded is contained in Rule 3 of Order 21 of the C.P.C.  Rules 2 and 3 of Order 21 read as under :

2.Payment out of Court to decree-holder -

    (1)  Where any money payable under a decree of any kind is  paid out of Court, [or a decree of any kind is otherwise adjusted]  in  whole or in part to the satisfaction  of  the decree-holder,  the decree-holder shall certify such payment or  adjustment to the Court whose duty it is to execute  the decree, and the Court shall record the same accordingly.

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    (2)  The judgment-debtor [or any person who has  become surety for the judgment-debtor] also may inform the Court of such  payment or adjustment, and apply to the Court to issue a  notice to the decree-holder to show cause, on a day to be fixed  by  the Court, why such payment or adjustment  should not be recorded as certified;  and if, after service of such notice,  the  decree-holder  fails  to show  cause  why  the payment  or adjustment should not be recorded as  certified, the Court shall record the same accordingly.

    (2-A) *** *** *** ***

    (3)  A  payment  or  adjustment,  which  has  not  been certified  or recorded as aforesaid, shall not be recognised by any court executing the decree.

    Sub-rule  (1)  of  Rule 2, noted above,  requires  that where  any money payable under a decree is paid out of Court or  the decree of any kind is otherwise adjusted in whole or in  part to the satisfaction of the decree-holder, he  shall certify  that payment or adjustment in the Court which is to execute  the decree and the Court is enjoined to record  the same.  Sub-rule (2) thereof enables the judgment-debtor or a person  who has become surety for him to inform the Court of such  payment or adjustment and prescribes the procedure  to have  it  recorded.  Rule 3 prohibits every Court  executing the  decree  from recognising a payment or adjustment  which has  not  been certified or recorded by the Court under  the aforementioned  sub-rules.

    This  Court  after  reviewing the entire  case  law  in Sultana  Begum vs.  Prem Chand Jain [1997 (1) SCC 373]  laid down as follows :

    It is open to the parties namely, the decree-holder and the  judgment-debtor to enter into a contract or  compromise in  regard to their rights and obligations under the decree. If  such contract or compromise amounts to an adjustment  of the  decree, it has to be recorded by the court under Rule 2 of Order 21.  An agreement, contract or compromise which has the  effect of extinguishing the decree in whole or in  part on  account  of decree being satisfied to that  extent  will amount  to an adjustment of the decree within the meaning of this  rule  and  the court, if approached,  will  issue  the certificate  of adjustment.  An uncertified payment of money or adjustment which is not recorded by the court under Order 21 Rule 2 cannot be recognised by the executing court.  In a situation  like  this, the only enquiry that  the  executing court  can  do is to find out whether the plea taken on  its face value, amounts to adjustment or satisfaction of decree, wholly   or  in  part,  and   whether  such  adjustment   or satisfaction  had the effect of extinguishing the decree  to that extent.  If the executing court comes to the conclusion that  the  decree  was adjusted wholly or in  part  but  the compromise  or  adjustment or satisfaction was not  recorded and/or certified by the court, the executing court would not recognise them and will proceed to execute the decree.

    That decision was followed by this Court in Badamo Devi & Ors.  vs.  Sagar Sharma [1999 (6) SCC 30].

    Where  in  any  execution   proceedings  objection   to executability  a  decree  is taken under Section 47  of  the C.P.C.   on  the ground that by virtue of a compromise,  the

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decree got extinguished and became inexecutable, the germane question  that should be asked is whether the compromise was recorded  by  the  court  whose duty it is  to  execute  the decree.

    As  long back as in 1939, the Privy Council in The Oudh Commercial  Bank  Limited vs.  Thakurain Bind Basni  Kuer  & Ors.   [1938-39 (66) PC 84] laid down the law on the subject as follows :

    "If  it appears to the Court, acting under Section  47, that  the true effect of the agreement was to discharge  the decree forthwith in consideration of certain promises by the debtor,  then  no doubt the Court will not have occasion  to enforce  the  agreement in execution proceedings,  but  will leave  the  creditor  to  bring a  separate  suit  upon  the contract.   If, on the other hand, the agreement is intended to  govern the liability of the debtor under the decree  and to  have effect upon the time or manner of its  enforcement, it is a matter to be dealt with under Section 47.  In such a case  to  say that the creditor may perhaps have a  separate suit  is  to misread the Code, which by requiring  all  such matters  to  be dealt with in execution discloses a  broader view  of  the  scope and functions of  an  executing  court. Their  Lordships are in agreement with the statement in  the case  of  Goburdhan  Das  (I)   that  in  numerous  cases  a compromise  between  the  decree-holder  and  the  judgment- debtor  entered into in the course of execution proceedings, which  was duly recorded, has been enforced and they are not of  opinion that the practice, which is both widespread  and inveterate,  is  contrary to the Code.  They are of  opinion that  in the present case the compromises can and should  be enforced in these execution proceedings".

    This Court in Smt.Kalloo & Ors.  Vs.  Dhakadevi & Ors. [1982 (3) SCR 207} held as follows :

    "When  a  compromise petition is filed in an  execution proceeding,   and   a   contention    is   raised   by   the judgment-debtor  on a subsequent execution being started  by the  decree-holder  that the compromise has given rise to  a fresh  contract  between  the parties and  that  the  decree sought  to be executed is not executable, what is to be seen is  whether the decree has been extinguished as a result  of the  compromise  and a fresh contract has emerged.   When  a compromise  takes  place  in the course of  execution  of  a decree    for eviction, the compromise may  extinguish  the decree  and  create  a fresh lease, or  the  compromise  may provide  a mere mode for the discharge of the decree.   What actually takes place depends on the intention of the parties to  the  compromise.  And the intention has to  be  gathered from  the  terms  of  the  compromise  and  the  surrounding circumstances  including the order recorded by the Court  on the basis of the compromise".

    In  a case where parties compromise after the decree in a  case has been passed, the effect of the compromise on the executability  of  the decree depends upon the intention  of the  parties, which is a mixed question of law and fact  and has   to  be  determined  by   the  executing  court  on  an application   under   Section   47   of   the   C.P.C.    on interpretation of the decree and the compromise in the light of  the  facts and circumstances of each case.  If  on  such determination  it  is  gathered that the  intention  of  the

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parties  is  to extinguish the decree and either the  decree holder  or  the judgment-debtor got the compromise  recorded under  Rule 2 of Order 21 of the C.P.C.  by the court  whose duty  it  is  to execute the decree, the  execution  of  the decree cannot be proceeded with by the executing court.  But if  the intention of the parties is to keep the decree alive and  to give effect to it in the manner agreed upon  between the  parties  in  the compromise, the decree will  be  given effect  to  accordingly or executed as it is depending  upon whether  the  compromise  is  recorded   by  the  court   as aforementioned or not.

    In the instant case, as noticed above, after the decree was  passed in favour of the appellant for ejectment of  the respondent,  the parties entered into compromise during  the pendency  of  the execution proceedings which,  inter  alia, mentions that a portion of the suit premises was handed over to the appellant and in respect of rest of it the respondent was allowed three years to vacate the suit premises and hand over  possession  of  it  to  the  appellant  for  which  an agreement  of  lease  was  also  entered  into  between  the parties.  Clause (6) of the compromise memo is as follows :

    "(6)  On  the  expiry of 3 years from the date  of  the agreement if the tenant does not surrender vacant possession of  the  above  referred properties, the landlord  shall  be entitled  to  execute the order of eviction granted in  RCOP No.2852/89  without any notice to the tenant (except 3  pump sets and other movables)."

    On filing of the compromise in the Court, the E.P.  was dismissed as not pressed.  There is thus no recording of the compromise as contemplated in Rule 2 of Order 21, therefore, the  court cannot recognise the compromise having regard  to the language of sub-rule (3).

    However, the contention of the respondent, based on the finding of the executing court that the parties have entered into a new lease in respect of the suit premises on 7.11.90, is  as a new lease was entered into between the parties,  he is  entitled to the protection of the Act and unless a fresh decree  of  eviction is passed against the respondent  by  a competent  court,  the appellant cannot evict him  from  the suit  premises by executing the existing decree.  On a plain reading  of  the decree, the memo of compromise and  on  the facts  of  this  case, we have no doubt  that  the  existing decree  is  not extinguished.  The parties agreed  upon  the mode and time of the enforcement of the decree by satisfying the  decree  in  part and postponing the  execution  of  the decree in respect of the remaining part by three years.

    The fact that the parties entered into a new lease deed for  three years pursuant to the compromise cannot be  taken note  of  for  reasons more than one.   First,  because  the compromise  was  not recorded under Rule 2 of Order  21  and secondly,  because the agreement of tenancy though for three years  is not a registered document as it should be in  view of the provisions of Section 107 of the Transfer of Property Act  and Section 17 of the Indian Registration Act.  Be that as  it  may, we do not propose to rest our decision  on  the second  ground as this point was not taken either before the executing  court or before the High Court.  We are now  left with  the first reason only.  The executing court has simply dismissed  the  earlier  E.P.  as not pressed.  It  did  not

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record  the compromise between the parties, for this  reason alone  the compromise cannot be pleaded to bar the execution of  the decree in view of the provisions of Rule 3 of  Order 21 of the C.P.C.

    However,  the contention of Mr.Sivasubramaniam is  that as  no  specific  procedure  or   method  of  recording  the adjustment  has  been prescribed under the rules, the  order dismissing  the  E.P.   as  withdrawn must to  be  taken  as recording  of the compromise by the executing court.  We are afraid,  we  cannot  accept this contention of  the  learned counsel.   It is true that no specific procedure or  formula is  prescribed  for  recording the adjustment  in  the  said Rules;   what  is required under rule (2) is that the  Court should  take  cognizance of the fact of the  compromise  and pass  appropriate  orders accepting or giving effect to  it. Admittedly,  no  such  order is passed in this  case.   Even assuming,  without  so  holding that the  order  amounts  to recording  of the compromise inasmuch as it did not have the effect  of  extinguishing  the decree, as  held  above,  the decree  has  to be executed.  The compromise indicates  that there has been part satisfaction of a part of the decree and in  regard to the remaining part, they contemplated granting time  for  three  years to the respondent for  vacating  the premises.   Even  so, this does not justify  the  conclusion that  the decree has become inexecutable with regard to  the rest of the suit premises.

    This  being the position, there is no legal bar to have the  decree  executed  and the executing court  has  clearly erred  in recalling its earlier order of November 16,  1993, directing  the delivery of possession to the appellant.  The High  Court also fell into an error in confirming the  order of the executing court.

    For  the  above reasons, we are unable to  sustain  the order under challenge.  The appeals are accordingly allowed; the  order  of the High Court dated June 19,1997  passed  in C.R.P.Nos.2705-06/96  confirming the order of the  executing court  dated February 20, 1995, is set aside.  Consequently, the executing court shall give effect to the order passed on November  16,1993.   The respondent shall pay the  costs  of these appeals to the appellant.