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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. 159 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 160 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