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CASE NO.: Appeal (civil)  16814 of 1996

PETITIONER: Rajasthan Financial Corporation                          

RESPONDENT: M/s Man Industrial Corporation Ltd.                      

DATE OF JUDGMENT: 26/08/2003

BENCH: S. N. VARIAVA & H. K. Sema.

JUDGMENT: J U D G M E N T

S. N. Variava, J

This Appeal is against an order dated 13th September, 1996  passed by the High Court of Rajasthan. Briefly stated the facts are as follows: The Appellants had sanctioned a loan to the Respondents against  security of a mortgage. As the Respondents failed to repay the loan  the Appellants filed an application under Sections 31 (1) (a) and (c)  and 32 of the State Financial Corporation Act for recovery of a sum of  Rs. 10,89,265.88. Parties compromised the dispute and signed a deed  of compromise. The relevant terms of the compromise deed read as  follows: "1.             xxx             xxx             xxx

2.      That the company hereby confirm the balance dues  of the Corporation (after deduction of Rs. 1,00,000/-  (Rupees one lakh only) received on 1.4.1976) as on  5.9.1977 at Rs. 12,08,806.83 ps. (Rupees Twelve lakhs  eight thousand eight hundred six and paisa eighty three  only) as per the statement of account enclosed herewith  and agree to pay the said dues as follows alongwith future  interest @ 5% above the bank rate prevailing from time to  time subject to a minimum of 13-1/2% per annum or at  such other rate of interest as may be decided by the  Corporation for similar advances from time to time, with  half yearly rests on product basis and expenses and cost of  litigation.  The increased rate of interest shall apply from  the 1st January, 1977. (emphasis supplied)

               xxx             xxx             xxx

7.      That the company and the Corporation further  specifically agree that on non payment of consenting two  installments of the repayment of the loan for the loan or  interest or expenses hereinabove mentioned or on breach  of any of the terms and conditions of this compromise, the  Corporation shall have the right to receive the whole dues  in one lump-sum and to get the compromise decree  executed by sale of mortgaged and attached properties  and to ask the lessee to pay the rent directly to the  Corporation."

On 22nd September 1977 an Order came to be passed wherein it  was recorded that the parties had compromised and that they had  

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filed the compromise deed in Court. The Order then reproduces the  entire compromise deed. Clause 5 of the Order, which is relevant,  reads as under:

"5.     Therefore, the application is allowed and the suit is  decreed in terms of compromise in favour of plaintiff- corporation and against the defendant of Rs. 12,08,806  and 83 paise only.  The defendant shall pay the interest on  this amount at the rate of 5% more than the current Bank  interest rate which all not be less than 13-1/2% and the  cost of the suit shall be paid by the defendant.  The  increased rate of interest shall be effective w.e.f. 1.1.1978.   The above amount be paid in the installments as per the  terms of the compromise.  The compromise shall form part  of the decree and the corporation shall be entitled to  realize the amount of compromise decree from the  property of the defendant which is mortgaged with the  corporation and the same has been attached." (emphasis  supplied)

Payments were not made, as contemplated by the compromise  deed.  The Appellants thus initiated execution proceedings on 5th  February 1987. As has become common nowadays, the Respondents  filed an application under Section 22 of the Sick Industrial Companies  Act, 1985. They thus managed to effectively delay execution.  Unfortunately for the Respondents the Board directed winding up of  the Respondent company. The Respondents filed an appeal before  A.A.I.F.R.   The Respondents submitted a rehabilitation scheme  wherein it was shown that a sum of Rs 62.72 lakhs was to be paid to  the Appellants. On 18th August, 1994 A.A.I.F.R. passed an order  directing that a sum of Rs 62.72 lakhs be paid to the Appellants so  that the properties could be released from mortgage. The Respondents  do not pay the amount. They now cannot also delay execution any  longer. On 27th September, 1995 i.e. more than 9 years after the  execution proceedings were filed, the Respondents file an application,  under Section 151 of the Civil Procedure Code objecting to the  calculation of interest with half yearly rests. The executing Court  overruled the objections and directed execution. The Respondents file  a Revision Petition before the High Court. This has been allowed by the  impugned Judgment. The High Court has held that that the Appellants  are not entitled to charge interest on half yearly rests basis.  Hence  this Appeal.

On behalf of the Appellants Mr Jain submitted that the decree  was in terms of the compromise deed. It was submitted that the  compromise deed, which had been signed by both the parties, clearly  provided that interests could be charged on half yearly rests basis. It  was submitted that under Order 23 Rule 3 Civil Procedure Code the  Court has to pass the decree in terms of the compromise. It was  submitted that the words "the defendant shall pay the interest on this  amount at the rate of 5% more than the current Bank interest rate  which are not be less than 13 1/2 %" do not alter the main provision  in the compromise deed whereunder interest is payable with half  yearly rests. It is submitted that through inadvertence the Court has  omitted to mention that interests is payable with half yearly rests. It  was submitted that the High Court has exceeded its jurisdiction under  Section 115, Civil Procedure Code, by revising/modifying the decree. It  was submitted that the High Court overlooked the fact that the decree  had been passed in pursuance of a compromise deed signed by the  parties.

As against this Mr Diwan, on behalf of the Respondents,  submitted that the High Court had correctly held that the decree did  not provide for interests on half yearly rests basis. Mr Diwan submitted

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that, even though the Respondents signed the compromise deed, they  were not agreeable to payment of interest from 1st  January, 1977 as  in the compromise deed the sum of Rs 12,08,806.83 was the figure  payable along with interest on 5th September, 1977.  It was submitted  that the Respondent was also not willing to pay interest with half  yearly rests. It was submitted that the Respondent was also not willing  to pay expenses. It was pointed out that on 12th September, 1977  when the compromise deed was filed in Court time was taken for  arguments. It was submitted that on 21st September, 1977 the Court  heard arguments. It was submitted that the final Order was dictated  on 22nd September, 1977. It was pointed out that the Order dated 22nd  September, 1977 read as follows:

"Order dictated and pronounced.   Amount  compromised at Rs. 12,08,806.83 be decreed in favour of  the applicant and against the Defendant.  Compromise be  attached to decree.  Installments be paid as mentioned in  the compromise  Order issued on the matter of interest  also.  Decree be prepared as per Order passed today.   Compromise be attached to the Decree"  (emphasis  supplied)

It was submitted that after hearing arguments the Court whilst  passing the decree in terms of the compromise modified the  compromise deed in three aspects viz (a) the increased rate of interest  was to be payable with effect from 1st January, 1978 instead of 1st  January, 1977 (b) the Court did not allow charging of interest on half  yearly rests basis (c) expenses were not permitted. It was submitted  that the final decree which had been drawn up contained the above- mentioned three differences. It was also submitted, rather faintly, that  the Appellants themselves understood that in the final decree interest  had not been granted on half yearly basis. The application for  execution of decree was shown to Court. It was submitted that  paragraph 7 clearly indicates that the Appellants themselves  understood that they had not been granted interest with half yearly  rests.   Paragraph 7, which has been relied upon reads as under:

"7. Amount with interest due     On the decreetal amount of upon the decree or other     Rs. 12,08,806/- the rate of  relief granted thereby          interest will be @ 5% more together with particulars     than the prevalent bank rate or any cross decree               and not less than 13-1/2%    from 1.1.77 to 2.2.87 =    Rs. 46,59,920.83. Cost    of litigation Rs. 12.50/- cost of   execution Rs. 10/-."

At this stage itself it must be mentioned that along with the application  for execution a statement showing interest due has also been  annexed. The statement clearly indicates that interests has been  calculated on half yearly basis. There is thus no substance in the  submission that  paragraph 7 indicates that the Appellants themselves  understood that interest on half yearly basis was not granted under  the decree.          It was submitted that if the Court were to hold that the decree  was in terms of the compromise deed then the decree would be  uncertain and incapable of being executed as it would be unclear  whether the future interest was to be at the rate of 5% above the  prevailing bank rate subject to a minimum of 13 1/2% per annum or

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whether the future interest was to be at such other rate of interest as  may be decided by the Corporation for similar advances from time to  time. It was submitted that it would be unclear and uncertain as to  what was meant by the words "with half yearly rests on product  basis". It was submitted that it would be unclear whether the half  yearly rests on product basis was to be only applied if the rate of  interest was to be decided by the Corporation and not if the rate of  interests was to be 5% above the prevailing bank rate subject to a  minimum of 13 1/2 %. It was submitted that the final decree which  had been passed removed these uncertainties by providing for simple  interest at the rate of 5% above the prevailing bank rate subject to a  minimum of 13 1/2%.          It was submitted that the decree being clear the executing Court  could not go behind the decree. It was submitted that the executing  Court erred in rejecting the objections raised by the Respondents. It  was submitted that the Respondents could have led evidence to show  that it was pursuant to the arguments made before the decree was  passed that the trial Court made the aforementioned three changes  whilst passing the decree.          Reliance was placed on the case of Vasudev Dhanjibhai Modi v.   Rajabhai Abdul Rehman reported in 1970 (1) SCC 670. In this case it  had been held that the executing Court cannot go beyond the decree.  It has been held that the executing Court must take the decree  according to its tenor. It was held that the executing Court cannot  entertain any objection that the decree was incorrect in law or in fact.  It was held that the decree, even if erroneous, is binding between the  parties.          Reliance is also placed on the case of Greater Cochin  Development Authority v. Leelamma Valson reported in 2002 (2) SCC  573. In this case a decree was passed in terms of the award given by  the arbitrators. The decree provided for interest only up to the date of  the decree. Thereafter an application, under Section 114 Civil  Procedure Code, was made for modification of the decree on the  ground that "by an accidental slip, omission or oversight" future  interest from the date of the decree to payment had not been provided  for. This application was rejected. It was held that there was no  omission or slip. It was held that the Court had not granted any future  interest. No appeal was filed against this order. In the execution  proceedings future interest was also claimed. The executing Court  refused future interest but the High Court, in Appeal, construed the  decree and held that the decree was in terms of the award and the  arbitrators had granted interest till payment. The High Court held that  therefore future interest was payable and allowed execution even for  future interest. This Court held that the reasoning of the High Court  would normally have been faultless. In other words this Court held  that when a decree is in terms of award (or some other document like  a compromise deed) the terms of that award/document have to be  looked that to see what is provided in the decree. However on facts of  that case this Court held that in the earlier application, under Section  114 Civil Procedure Code, it had already been held that the Court had  refused future interest. This Court held that once future interest had  been refused and no appeal had been filed against that Order,  subsequently future interest could not have been granted.           Reliance was also placed on the case of Bhawarlal Bhandari v.   Universal Heavy Mechanical Lifting Enterprises reported in 1999 (1)  SCC 558. In this case the judgment debtor challenged the decree,  when it was before the executing Court, on the ground that the award  on which the decree was based was a nullity. It was submitted that the  award had been filed in Court by the arbitrator 4 years after it was  passed. This Court held that the executing Court could not go beyond  the decree. It was held that the executing Court had to take the

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decree according to its tenor and that the executing Court could not  entertain any objection that the decree was incorrect in law or on  facts.          Reliance was next placed on the case of Rameshwar Dass Gupta  v. State of U.P.  reported in 1996 (5) SCC 728. In this case it was held  that the executing Court cannot travel beyond the decree. It was held  that the executing Court only got jurisdiction to execute the decree. It  was held that the executing Court could not granted interest, on the  money decree, when interest was not granted in the decree.          Reliance was next placed on the case of C.V. Rajendran v. N. M.  Muhammed Kunhi reported in 2002 (7) SCC 447 wherein it has been  held that principles of res judicata applied even to different stages of  the same proceeding. It has been held that if an issue has been  decided at an earlier stage it cannot be allowed to be re-agitated at a  subsequent stage.          Based on the above authorities Mr Divan submitted that the  decree being clear the executing Court could not go beyond the decree  on the basis that there was a mistake in the decree. He submitted that  the decree had been passed after hearing arguments on behalf of both  the parties on what the final decree should be as per the compromise  deed. He submitted that even on principles of res judicata the  Appellants are precluded from now contending that they were entitled  to interest on half yearly basis.         Finally Mr Divan made a With Prejudice Offer. He stated that the  Respondents are willing to pay to the Appellants a sum of Rs 75 lakhs  in full and final settlement of all the claims of the Appellants.         We have considered the rival submissions. There can be no  dispute to the proposition that the executing Court cannot go beyond  the decree. There can be no dispute that the executing Court must  take the decree according to its tenor. Also as has been set out in the  Greater Cochin Development Authority’s case (supra) when a decree is  in terms of an award/document then the terms of that document have  to be looked at. In this case the decree is in terms of the compromise  deed. The decree does not provide that the compromise deed or any of  its terms have been varied. To be remembered that the decree is  passed under Order 23 Rule 3 Civil Procedure Code. Under this  provision normally the Court passes the decree in terms of the  compromise. Of course the Court can make a change. However if the  Court was making a change it would have had to record why it was  making the change and what change it was making. It could not then  provide that the decree was in terms of the compromise. If the Court  was not passing the decree in terms of the compromise then this  opening portion of the decree could not have been there. The  subsequent portion is mere classificatory in nature as to which of the  options was to be exercised.  This does not govern or detract from the  main terms of the decree which is a decree in terms of the  compromise. Clauses 2 and 7 of the compromise deed make it very  clear that the Appellants were entitled to charge interest on half yearly  basis.  We see no substance in the submission that the "half yearly  rests" was to apply only if the rate of interest was to be decided by the  Appellants.  These words clearly applied to both the options. In the  classificatory portion the words "on half yearly basis" have not been  mentioned because the portion is only clarifying how interest was to be  calculated.  This portion thus does not detract from the fact that the  decree is in terms of the compromise deed. Merely because some  other minor changes, which appear to be inadvertent changes, have  crept in do not also detract from the fact that the decree is in terms of  the compromise deed.  We also do not find any uncertainty in the  decree.         In this view of the matter we are unable to sustain the impugned  Judgment. It is accordingly set-aside and the Order of the executing  Court is restored.

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The Appeal is allowed accordingly. There will be no order is to  cost.