IMPORTANT POINT
When the decree is passed under Order 23 Rule 3, Civil Procedure Code, in terms of compromise, the executing Court cannot go beyond the decree.

Headnote:State Financial Corporation Act-Sections 31(1)(a) & (c) and 32-Civil Procedure Code, 1908-Order 23, Rule 3-Compromise decree-Execution-Appellants had sanctioned a loan to Respondents against security of a mortgage-Failure to repay loan-Appellants filed application under Sections 31(1)(a) & (c) and 32 for recovery of a sum of Rs. 10,89,265/- -Parties compromised the dispute-However, payments not made, as contemplated by compromise deed-Execution proceedings initiated by appellants-Respondents objecting to calculation of interest with half yearly rests-Compromise deed, which had been signed by both the parties, clearly provided that interests could be charged on half yearly rests basis-Executing Court rightly overruled the objections and directed execution-Decree being in terms of compromise deed-Executing Court must take the decree according to its tenor.
Held : 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. (Para 18)

JUDGMENT

S. N. Variava, J.-This Appeal is against an order dated 13th September, 1996 passed by the High Court of Rajasthan.

2. 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."

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

4. 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.

5. 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

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2003 Supreme(SC) 807

IMPORTANT POINTWhen the decree is passed under Order 23 Rule 3, Civil Procedure Code, in terms of compromise, the executing Court cannot go beyond the decree.

Cases Referred (5)

IMPORTANT POINT
When the decree is passed under Order 23 Rule 3, Civil Procedure Code, in terms of compromise, the executing Court cannot go beyond the decree.