In Kalyan Das v. Gangabai, AIR 1961 Madh Pfa 67 it has been held that in a suit by transferees of interest of some partners in a partnership property for dissolution of partnership and accounts, the parties arrived at a compromise during the pendency of second appeal against the preliminary decree. The settlement, provided inter alia for the payment by the judgment-debtors of a sum of money by way of profits of a partnership property upto the date of the final decree and also another amount for the entire costs of the suit of the original court as well as of the first appellate Court. The compromise also provided for the transfer of the share of the decree-holders in the assets of the partnership property to the judgment-debtors for a consideration. The whole of the decretal amount was charged on the subject-matter of the suit i.e. the partnership property. It was held that even if a consent decree incorporates matters extraneous to suit the same is executable and it would not be open to the executing court to go behind the decree.
Allahabad High Court
Bishambhar Nath Agarwal vs Kishan Chand And Others on 23 October, 1989
Equivalent citations: AIR 1990 All 65
Bench: N Mithal, G Dube
1. This appeal has been preferred against the judgment and decree passed by Fourth Additional District Judge, Agra. The lower Court has decreed the suit of the respondents for specific performance of the contract. The defendant No. 1 has been directed to execute a sale-deed within a period of three months after receiving the amount of sale consideration and rent up to 31st October, 1974-75 as is disclosed in the compromise entered into between the parties. The defendant No. 1 was further directed to obtain permission from the District Magistrate, if necessary. It was ordered that in case defendant No. 1 failed to comply the decree, then the sale-deed would be executed through Court at the cost of the appellant. It has also been declared that after 31st October, 1975, the plaintiffs and defendants 2 to 6 are not required to pay rent or interest to defendant No. 1.
2. It is an admitted case between the parties that the house in dispute situated at Agra belonged to the plaintiffs. The sale-deed in respect of this property was executed by the plaintiffs in favour of defendant No. 1 on 25-4-1968. The plaintiff-respondents, however, continued to reside in this house. They had agreed to pay rent. It was contended on behalf of the plaintiff-respondents that they had made improvements in the house, ft was worth rupees two lacs in 1968. As they were in need of money, they had approached defendant No. I. The defendant No. I had agreed to pay Rs. 20,000/-. The defendant No. 1 is a shrewd lawyer. He got the sale-deed executed on 25-4-1968 and also as a security for his money advanced as a loan got a rent note executed. There was no transfer of possession and the plaintiff-respondents continued to be in possession. Later on the defendant No. 1 changed his mind and started asserting his ownership on the property in dispute. Consequently plaintiffs had to file suit No. 293 of 1973 Kishan Chand v. Bishambhar Nath Agarwal in the Court of Civil Judge, Agra. It is also worth mentioning-that the defendant No. 1 also filed suit No. 30 of 1973 in the Court of District Judge, Agra for ejectment and realisation of rent against the plaintiff-respondents.
3. It is an admitted fact that a compromise had taken place between the parties of the above two suits. It was agreed by this compromise that the plaintiff-respondents would pay a sum of Rs. 1,02,120/- (Rupees one lac two thousand one hundred twenty only) to the defendant within a period of two years starting from 1-11-1973 and latest up to 31st October, 1975. The plaintiffs were also given liberty to pay it in instalments or in one lump sum at their convenience. The plaintiffs were to pay interest in the form of rent at the rate of Rs. 1,530/- per mensem. At such payment, it was agreed, the defendant No. 1 will execute the reconveyance deed in favour of the plaintiff of the property in dispute. It was contended on behalf of the plaintiff that on account of his difficulty the interest amount could not be paid. They could pay only a sum of Rs. 9,180/-. However, they had made arrangement for the payment of entire sale consideration and the entire balance of interest in the form of loan and requested the defendant No. 1 to execute the sale deed in favour of the plaintiff-respondents by serving a nolice on 23-10-1975. It had been urged that the defendant No. 1 neither obtained the permission to sell nor took any steps to obtain permission. Despite service of the notice the defendant No. 1 did not send any reply. The plaintiffs had also sent a telegram on 29-10-1975 requesting the defendant No. 1 to come with permission and execute the sale-deed as agreed upon. Ultimately the plaintiff No. 3 Mahesh Chandra, along with his sister's husband M. C. Agarwal and the husband of the daughter of the plaintiffs elder sister R. C. Agarwal and some other persons, approached the defendant No. 1 to execule the sale deed after obtaining the permission from District Magistrate but the defendant No. 1 avoided contact with the aforesaid persons. Under these circumstances Mahesh Chandra Banshal had sent telegram to defendant No. 1 from Gwalior. On 31st October, 1975 the plaintiffs went to the office of the Sub-Registrar with necessary stamps and financiers Permanand Puri and Bishnu Ram Nagar. The plaintiffs had full arrangement to pay the entire sale consideration and the balance amount of the interest described as the rent in compromise but the defendant No. 1 did not turn up. The plaintiff remained in the Sub-Registrar's Office from 10 a.m. to 4 p.m. but the defendant No. 1 did not turn up to execute the sale deed. It was averred that the plaintiffs were always willing and ready to get the sale deed executed but the defendant No. 1 had not executed the sale deed. On the basis of these pleadings a decree of specific performance of the contract as contained in compromise made in suit No. 293 of 1976 was sought. A declaration that after 31-10-75 the plaintiff and the defendants 2 to 6 are not liable to pay rent to the defendant No. 1 was also prayed for.
4. The defendant No. 1 had contested the suit. It was denied that the transaction of 1968 was actually a transaction of loan. It was urged that the property in dispute had been sold for a consideration of Rs. 20,000/-. The plaintiffs were, however, allowed to remain in occupation of the property in dispute on behalf of the defendant on a rent of Rs. 300/-per mensum. The defendant No. 1 admitted the filing of the suit and the compromise between the parties in the said suit. It was urged that the plaintiff had not paid any rent. Consequently a suit No. 293 of 1973 had been filed on defendant No. 1 by plaintiff in order to save themselves from ejectment. The defendant's case is that during the pendency of the civil suit the compromise had been arrived at between the parties and the terms and conditions as mentioned in the plaint were agreed. It was urged that the plaintiffs themselves had committed breach of terms of the said compromise and did not pay the amount Rs. 1,02,120/- within the aforesaid period of two years. They also failed to pay the rent and mesne profits. Defendant No. 1 had urged in his written statement that the plaintiff was never ready and willing to per-form his part of contract according to the terms of compromise. The defendant had pleaded that the plaintiff had no money to pay the defendant, nor any capacity to pay the amount. That is why they committed the breach of terms of the compromise. On these grounds it was urged that,the plaintiffs were not entitled to the specific performance. The bar of S. 47 of the.C.P.C. and res judicata was pleaded. Plea of limitation was also raised.
5. On the pleadings of the parties the learned Judge had framed 9 issues. The issue No. 1 was regarding valuation and court-fee. It had been answered in favour of the plaintiffs. The 2nd issue was about the limitation.
This issue had been answered in favour of plaintiffs. It was held that the suit was not barred by limitation. The issue No. 3 was regarding the bar of provision of S. 47 of the Code of Civil Procedure. The learned Judge had held that the said provision was not applicable to the compromise. He held that the compromise was a fresh controversy on a fresh cause of action. Therefore, the bar of S. 47 of C.P.C. would not arise. The 4th issue regarding bar of res judicata was also answered against the contesting defendant. Issues 5 to 8 related to the compromise. The 5th was whether the plaintiffs had complied with the terms and conditions of the compromise 6th was regarding the alleged deed of contract, it read; "who committed the breach of contract and its effect?" The 7th was whether the plaintiffs were entitled for decree of specific performance and the 8th was whether the plaintiffs were not liable to pay rent from 31-10-1975 and onwards. These four issues had been decided together. It was held by lower Court that the plaintiffs were always ready and willing to perform their part of contract. It was held that the defendant No. 1 had actually failed to perform his part of contract. The plaintiffs were held not liable for rent on 31-10-1975 and onwards. The plaintiffs were held entitled to the decree of the specific performance. Issue No. 9 regarding relief was answered in favour of plaintiff arid the suit was decreed as stated above.
6. It was urged that the compromise had merged into a decree. This decree was executable. In execution, the lower Court could have executed the sale-deed if the appellant was not willing to execute it. Learned counsel argued that the finding of the lower court that the compromise was a fresh contract was quite erroneous. The compromise was actually a settlement of the dispute raised in the suit filed by the plaintiff-respondents. In these circumstances, no other course except to enforce the decree by execution was open to the plaintiffs. The second point raised was that time was essence of contract and as the relevant part of contract was not performed within the prescribed time by the plaintiffs, then they cannot get the same enforced in this suit. In the alternative it was also argued as a third point that even if it be presumed that the plaintiffs were willing to get the sale-deed executed, then they could not be deemed to be ready. It was urged that the financiers, who were alleged to have agreed to pay Rs.90,000/- which was the money short with the plaintiffs, would not have handed over the money at the time of execution of the sale-deed. Our attention was drawn to the alleged agreement between the plaintiffs and the financiers. Learned counsel for the appellant pointed- out that according to this alleged agreement the financiers could have handed over the money only after execution of mortgage deed in their favour. These are the three points raised on behalf of the appellant.
7. With regard to the first point, learned counsel for the appellant has drawn our attention to Pratap Narain Agarwal v. Ram Narain., 1981 All LJ 591. It is a Division Bench case in which one of us was a sitting Judge. In this case, the question arose whether the consent decree in suit was executable. It was, also pointed out that the words "matters which relate to the suit" occurring in O. 23, R. 3 of the code of Civil Procedure had come up for interpretation. It has been held in this Division Bench case that the aforesaid words must be widely construed. The wider import of aforesaid words than the words "subject-matter" include all matters which form consideration for the adjustment of the suit whether they form its subject-matter or not. It was argued on behalf of the appellant that the dispute involved in suit No. 293 of 1973 was relating to the ownership and tenancy of the plaintiffs. These were matters which had been settled by way of compromise. It was, therefore, urged that the compromise in question ending into a decree could have been executed. There was no necessity to file the present suit.
8. In reply to this contention learned counsel for the respondents argued that the matter of reconveyance was not the subject-matter. It was altogether a different matter. Hence the above case law would not be applicable to the present matter.
9. In order to appreciate the rival contentions on the first point, we should draw our attention to the decree and judgment passed in suit No. 293 of 1973, Kishan Chand and 2 others v. Bishambhar Nath Agarwal. Both of these are on record of the lower court. The prayer made in the above suit reads as under:
"A. That, it may be declared that the plaintiffs are the owners of the property in suit and are not tenants of the defendants.
B. Costs of the suit be allowed to the plaintiffs against the defendant.
C. Any other relief which the Hon'ble Court may deem fit and proper be granted to the plffs. against the defendant."
10. It was pointed out that from the above prayer it is obvious that the ownership of the property in dispute and the tenancy was the subject-matter of the dispute. Since on these matters the parties had come to terms, the consent terms had merged into a decree. Therefore, there were no agreement at all in existence. The only thing in existence was the decree.
11. The decree itself speaks that the real intention of the parties was to settle their disputes and not to create any fresh agreement. In this connection, we may look into the compromise. In the first paragraph of compromise the parties have stated that the plaintiffs along with sub-tenants as detailed in Annexure 'A' to the compromise shall continue to remain as tenants or sub-tenants of the defendants on an enhanced rent of Rs. 1530/- per month with effect from 1-11-1973 which shall be payable to the defendants against receipt on expiry of every calendar month. It was also stipulated that if the (plaintiffs failed to pay the rent for three months continuously, they will cease to have the right of realizing the rent from subtenants. Besides this it was stated in paragraph 3 that on persuasion and considering the uncertainty the result of litigation and in the interest of parties the defendant had agrged to execute a reconveyance deed in favour of the plaintiffs of the property in dispute within a period of two years under the terms and conditions mentioned in clauses 'A' to 'D' of paragraph 3. The terms under clauses 'A' to 'D' were, firstly that the plaintiffs should pay a sum of Rs. 1,02,000/- within the period of two years from 1-11-1973 to 31st October, 1975. Secondly that the mode of payment would be by lump sum or in several instalments and such payments were to be made by the plaintiffs through a crossed account payee draft in favour of the defendant on any bank at Gwalior. None of the instalments were for an amount less than. Rs. 5,000/-. Thirdly that as soon as the payment of the amount of one lac and odd along with rent due upto that date is made the defendant shall execute a reconveyance deed in plaintiffs favour and the expenses of the reconveyance deed and its registration was to be borne by them. Lastly that if the plaintiffs failed to pay the complete amount of rupees one lac and odd and the rent, then they will have no right to get the said reconveyance deed executed in their favour and the plaintiffs will have to vacate the premises and the defendants will have to return to the plaintiffs any amount if partly paid to him by the plaintiffs against amount mentioned in term 3(a) i.e. the part of sum of rupees one lac and odd. The fourth paragraph had put a restraint on the plaintiffs that they shall have no right to transfer their tenancy or sub-let the building. The plaintiffs were, however, given a right that if any tenant vacates the premises, then it could be re-let out by the plaintiffs. All these terms had merged into decree.
12. Now the question arises that whether the matters contained in compromise decree as detailed above could be deemed a subject-matter of the suit. As we have seen above the suit of 273 of 1973 between the parties was regarding declaration of the rights of the plaintiffs. He had prayed for the relief for declaration that he was owner of the property and not the tenant of the defendant. The parties had agreed upon the terms admitting that the defendant was the owner of the property in dispute and on payment of certain sum the reconveyance deed was to be executed.
13. In the compromise in question the parties had settled the question of ownership and agreed upon a reconveyance deed being executed by defendant No. 1 in favour of the plaintiffs. The question of tenancy was also settled and the plaintiffs were required to pay at the enhanced rate of rent of Rs. 1,530/-per mensem. Thus in all essence the compromise was relating to the matter of the suit. Simply because the reconveyance deed was to be executed, it cannot be said that it was a fresh contract and capable of enforcement by way of a suit for specific performance.
14. In the above context of the matter, it is obvious that as the compromise had merged into a decree, then there was no separate agreement at all in existence. The only thing existing was the decree containing the compromise agreement. Since this compromise agreement had ceased to exist, it could not be enforced by way of a separate suit. The only course left to the respondents was to execute the decree. Simply a period of two years was allowed to the plaintiffs to pay the amount of rupees one lac and odd and the rent will not affect the executability of the decree. The decree could be put to execution if defendant No. 1 had failed to execute it within the time mentioned in the compromise i.e. 1-11-1973 to 31-10-1975.
15. We have again examined some of the cases referred to in Pratap Narain Agarwal's case (1981 All LJ 591)(supra).
16. In Zakarali v. Israr Hussain, AIR 1947 Nag 53 a consent decree had been passed, the material terms of which were as follows (at p. 54):
"(i) The Refah (Majlise-refiahe-momineen) Jubbulpore shall have right to perform its function in the Imambara in suit as heretofore till such item as the said Refah does not own its own Imambara.
(ii) If and when the defendant or his legal representatives shall like the aforesaid Refah to stop its functions in the Imambara in suit and to remove its office therefrom the defendant or his legal representatives shall give a written notice giving the said Refah 6 months time to make its own arrangements."
It was held that the above decree was not merely declaratory. It became executable
after the notice had been given by the
defendant. In Saltanat Begam v. Mohd. Sadat Ali Khan : AIR 1951 All 817, the Division Bench had relied upon the Full Bench decision of this Court in Shyam Lal v. Shyam Lal, 55 All 775 : (AIR 1933 All 649) supporting the view of the Division Bench that where the operative part of the decree gives effect to the terms of the compromise which do not relate to the suit, the executing court cannot refuse to execute the decree. Thus this case law supports the long standing view of this Court that where a consent decree has been passed the only course left to the party is to execute it. I n this case the Division Bench had considered the desirability of such steps. It had observed that if any party was aggrieved against any operative part of the consent decree which did not relate 16 the suit the objection should be taken by way of appeal. If no appeal is filed then no question about its executability can be raised in execution.
17. In Kalyan Das v. Gangabai, AIR 1961 Madh Pfa 67 it has been held that in a suit by transferees of interest of some partners in a partnership property for dissolution of partnership and accounts, the parties arrived at a compromise during the pendency of second appeal against the preliminary decree. The settlement, provided inter alia for the payment by the judgment-debtors of a sum of money by way of profits of a partnership property upto the date of the final decree and also another amount for the entire costs of the suit of the original court as well as of the first appellate Court. The compromise also provided for the transfer of the share of the decree-holders in the assets of the partnership property to the judgment-debtors for a consideration. The whole of the decretal amount was charged on the subject-matter of the suit i.e. the partnership property. It was held that even if a consent decree incorporates matters extraneous to suit the same is executable and it would not be open to the executing court to go behind the decree.
18. In view of these case laws and Pratap Narain Agarwal's case, 1981 All LJ 591 (supra), it is obvious that the suit was not maintainable. The finding of the lower Court that the compromise was a separate contract is erroneous. It is not at all sustainable and must be set aside.
19. As regards the second point, learned counsel for the appellant urged that, according to the plaintiffs, they had made arrangement with Parma Nand Puri and Vishnu Ram Nagar-on 28-10-1975 about financing of Rs.90,000/- as loan against the security of the house in dispute. It was pointed out that this agreement (Paper No. 84-Ka) was unilateral., it was executed by Kishan Chand Agarwal and Smt. Kapoori Devi only. The mortgagees and financiers, i.e. Parma Nahd and Vishnu Ram Nagar were only attesting witnesses. It was urged that Parma Nand Puri and his colleague Vishnu Ram Nagar could not be bound by this agreement. It was also pointed that it was provided in this document (84-Ka) that after Bishambhar Nath Agarwal defendant No. 1 executed sale deed in favour of plaintiffs Kishan Chand Agarwal and Smt. Kapoori Devi, these persons will execute a mortgage deed in favour of the financiers. It was, therefore, urged that from this very term it was clear that the plaintiffs would not have been able to get Rs. 90,000/- at the time of sale, from Parma Nand Puri and Vishnu Ram Nagar. It was, therefore, clear that the plaintiff had not the sufficient money in his hands even on the dale of execution of the said agreement. This date was only three days before the expiry of the period granted to the plaintiffs to pay the amount of consideration and get the reconveyance executed.
20. In reply to the above contention, it was argued that the decision of the High Court is to this effect that it is not at all necessary for the purchaser to show the money to the seller. The case law relied upon by respondents is Nathulal v. Phoolchand, AIR 1970 SC 546. In this case it was held that the purchaser need not produce money or vouch a concluded scheme for financing the transaction.
21. It was pointed out that the appellant had sent a notice on 23rd October, 1975 asking respondent No. 1 to execute a sale deed after taking he necessary permission. He also stated that the had given a telegram to defendant No 1 on 29th of October. 1975. On 30th October, 1975, he had purchased the neces-
sary stamps for execution of the deed. On the sanie day he went to Gwalior to meet the defendant No. 1 who he had refused to meet. On 31st October, 1985, he had gone to Sub-Registrar's office and an application was moved by plaintiff No. 1 Kailash Chand Agarwal at 10.00 a.m. before the Registrar that he was present at the Sub-Registrar's Office. Another application was also moved at 4.00 p.m. the same day before the Sub--Registrar stating that the plaintiffs remained present at the Sub-Registrar's Office throughout the day. It was, therefore, urged that all these go to show that the plaintiffs were willing and ready to get the sale deed executed.
22. The above argument of the learned counsel for the respondents is not at all tenable. If any agreement states that a particular act relating to the furtherance of the contract Was to be done in a particular manner, then it should be done in that manner and it is not open to the concerned parties to chalk out his own manner of performing his part of contract. We may again advert to the contents of the compromise, it would be better to get the relevant extract from the compromise. It is as under:--
"B) That the mode of payment of above sum of Rs. 1,02,120/- would be that the plaintiff can pay this amount al one time is one instalment or in several instalments within the stipulated period but no instalment can be less than the amount of Rs. 5,000/-(Rupees five thousand only) and such payment would be made by the plaintiffs through a crossed account payee draft in favour of defendant on any bank al Gwalior."
23. The above quoted paragraph clearly speaks that the payment was to be made by the plaintiffs through a crossed account payee draft in favour of defendant No. 1 on any bank at Gwalior. Kishan Chand Agarwal had admitted in his cross examination that he had not got any draft prepared in favour of defendant No. 1. In this way, the manner of payments as enjoined in Clause3(B) of the compromise were not at all complied with. Hence, any amount of readiness in any other manner of the part of the plaintiffs by making arrangement for the money giving notice to defendant No. 1 sending telegram and remaining present at the Sub-Registrar's Office will not amount to a 'due performance of the contract part. In this way, there is every force in the contention of the learned counsel for the appellant that even if it be deemed that the compromise was just a contract, the respondents had failed to perform part of agreement and thus could not be deemed to be ready to get the sale deed executed.
24. The last contention of the learned counsel for the appellant that the time was essence of the contract is not tenable in this case as we have said above the compromise had merged into decree. The decree had prescribed a particular mode of execution of its term. The defendant-appellant could get the decree executed only after performing his part of the act in prescribed manner. The time given in the contract was only for the facility of the plaintiffs. Even if they had arranged payments before 31 -10-1975 in the manner stated above in the above quoted paragraph 3(B) of the compromise the defendant No. 1 was' bound to execute the reconveyance deed. If it was not done by the defendant No. 1, then the reconveyance deed could be got executed through the process Of the Court in execution proceedings. One of the modes suggested in Pratap Narain Agarwal's case (supra) was execution, under O. 21, R. 34 of the Code of Civil Procedure.
25. In view of the observations made above, the point whether the financiers should have parted with Rs.90,000/-al the time of execution is now only of academic interest. The plaintiffs have not examined any one of the financiers to show that even though they were attesting witnesses of the alleged agreement executed by Kishan Chand Agarwal on 28th October, 1975, they were ready to hand over the sum of Rs. 90,000/- to the plaintiffs at the time of execution of the sale-deed and they would have thereafter got the mortgage deed executed by the plaintiffs. The agreement in question itself speaks that first of all a sale deed was to be executed by defendant No. 1 and thereafter a mortgage deed was to be executed. It is no doubt it is probable that the documents of sale and mortgage might have been prepared and signed by both the parties at one time and transaction of money might have taken at that time. This is a possibility which can be only speculated. Such a speculation is not possible in the absence of supporting evidence. The nature of the agreement in question is unilateral. It does not bind the financiers at all. In these circumstances, it would have been proper for the plaintiffs to examine the financiers to show that they were also ready and willing to hand over Rs.90,000/- to the plaintiffs at the time of execution of the sale deed.
26. As we have seen above, even if the finan ciers were ready to part with a sum of Rs.90,000/- at the time of execution of the sale deed, it would not have been a comp liance of the terms of the compromise. This agreement in question between the plaintiffs and the financiers was of no help to the plaintiffs.
27. The last contention of the respondents is the obtaining of necessary permission of the District Magistrate for sale under the Urban Property Ceiling (Temporary Restrictions on Transfer) 36 of 1972 had been extended beyond up to 1975 and thereafter Urban Land Ceiling and Regulations Act, 1976 was passed. It was urged that the appellant had not taken required permission even upto the last date of execution of reconveyance deed. It was argued from the side of the appellant that such restrictions were not required in transfers through courts. In this respect reliance has been placed upon Pratap Narain Agar-wal's case (supra) wherein it was held on page 595 of the report in 1981 All LJ that such restrictions were applicable to voluntary transfer. They could not be applicable to transfer; being made in pursuance of the decree. We agree with the contention of the appellant that any such permission was not required in this matter as the transfer was being made in a matter which had merged into a decree. Therefore, the contention of the respondents' learned counsel has no force.
28. For the reasons mentioned above, we find that the suit was not maintainable at all. The plaintiffs had failed to prove their case. The suit ought to have been dismissed. The judgment and decree passed by the lower Court are riot sustainable. The appeal must be allowed.
29. In the result, the appeal succeeds and is allowed. The judgment and decree of the lower Court are set aside. The suit is dismissed. In the peculiar circumstances of the case, both the parties shall bear their own costs throughout.
30. Appeal allowed.
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