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1973 Supreme(Cal) 173
HIGH COURT OF CALCUTTA
S. C. Deb
DEEPCHAND MINI - Appellant
Versus
TICAMCHAND MINI - Respondent
Suit 1346 Of 1965
Decided On : JUNE 12, 1973
P.K.DAS, P.K.ROY, Sarbani Roy
The Court has jurisdiction to relieve a party from penal or forfeiture clauses inserted in terrorem in a compromise decree, even without the consent of the other party, provided that the time for payment is not of the essence of the contract.
Headnote:
COMPROMISE DECREE - PENAL CLAUSE - RELIEF AGAINST - JURISDICTION OF COURT - EQUITABLE JURISDICTION - TIME FOR PAYMENT OF INSTALMENTS - ESSENCE OF CONTRACT - DEFAULT CLAUSE - CONSTRUCTION OF COMPROMISE DECREE - ACCIDENT - RELIEF AGAINST - LIMITATION ACT, 1963, ARTICLE 125.
Fact of the Case:
The plaintiff filed a suit claiming Rs. 16,204/- with interim interests and costs against the defendant. A compromise decree was passed, whereby the defendant was to pay Rs. 10,000/- to the plaintiff, and in the event of the defendant paying Rs. 8,000/- in the manner specified, the plaintiff was to accept the same in full settlement of his claim. The decree also provided that in default of payment of any two instalments, the plaintiff would be at liberty to execute the decree for the balance of the decretal amount then remaining due. The defendant failed to pay the fourth and eleventh instalments on their respective due dates, but subsequently paid them with the consent of the plaintiff. The plaintiff obtained an ex parte order for transmission of the decree to the Court of the District Judge, Bikaner, for execution. The defendant filed an application for condonation of delay in payment of the fourth and eleventh instalments, and for setting aside the ex parte order for transmission of the decree.
Finding of the Court:
The Court held that the compromise decree created a right in favour of the defendant to liquidate the decretal amount of Rs. 10,000/- by payment of Rs. 8,000/- in instalments, and that this right was liable to be forfeited on his failure to pay any two instalments. The Court further held that the default clause and the additional liability for Rs. 2,000/- were penal provisions inserted in terrorem for securing the due payment of Rs. 8,000/-, and that the Court had jurisdiction to relieve the defendant from these penal or forfeiture clauses. The Court also held that the time for payment of the instalments was not of the essence of the contract between the parties, and that the defendant's illness prevented him from sending the amount of the eleventh instalment to the plaintiff on its due date, and therefore, the delay in payment of this instalment should be condoned. The Court further held that the plaintiff's refusal to accept the tenth instalment, which was paid by the defendant to the Post Office on its due date, was wrongful, and that the defendant could not be made a defaulter by the plaintiff's wrongful refusal. The Court also held that Article 125 of the Limitation Act, 1963, did not stand in the way of the defendant to have the payments made by him recorded in the suit register.
Issues: 1. Whether the Court had jurisdiction to condone the delay in payment of the fourth and eleventh instalments. 2. Whether the time for payment of the instalments was of the essence of the contract between the parties. 3. Whether the default clause and the additional liability for Rs. 2,000/- were penal provisions inserted in terrorem. 4. Whether the defendant's illness prevented him from sending the amount of the eleventh instalment to the plaintiff on its due date. 5. Whether the plaintiff's refusal to accept the tenth instalment, which was paid by the defendant to the Post Office on its due date, was wrongful. 6. Whether Article 125 of the Limitation Act, 1963, stood in the way of the defendant to have the payments made by him recorded in the suit register.
Ratio Decidendi: 1. The Court has jurisdiction to relieve a party from penal or forfeiture clauses inserted in terrorem in a compromise decree, even without the consent of the other party, provided that the time for payment is not of the essence of the contract. 2. The time for payment of instalments is not of the essence of the contract between the parties, when the agreement is for the payment of money on a prescribed date, whether upon default of payment on that date money or land is forfeited. 3. A default clause and an additional liability for payment of a sum of money in case of breach of contract are penal provisions inserted in terrorem, when they are intended to secure the due payment of a smaller sum of money. 4. Illness is an accident which can prevent a party from performing his obligations under a contract, and the Court has jurisdiction to grant relief against such an accident. 5. A party cannot be made a defaulter by the wrongful refusal of the other party to accept payment. 6. Article 125 of the Limitation Act, 1963, does not apply to payments made by a party to a compromise decree, which are recorded in the records of the suit.
Final Decision: The Court condoned the delay in payment of the fourth and eleventh instalments, and directed that the payment of Rs. 6,000/- being the balance of Rs. 8,000/- be recorded in the records of the suit. The Court further directed that the full satisfaction of the plaintiff's claim in the suit be recorded in terms of the compromise decree, and that the plaintiff be restrained from executing the decree. The Court also ordered the plaintiff to pay the costs of the application to the defendant.
( 1 ) IN order to appreciate the questions involved in this specially assigned application it is necessary to set out below the material portion of the compromise decree dated March 22, 1968 passed in this suit which was filed by the plaintiff respondent claiming Rs. 16,204/-, with interim interests and costs against the petitioner defendant. "it is ordered and decreed that the defendant do pay to the plaintiff the sum of Rs. 10,000/ -. And in the event of the defendant paying to the plaintiff the sum of Rs. 8,000/- in the following manner, it is further ordered and decreed that the plaintiff shall accept the same in full settlement of his claim in this suit. (1) Rs. 2,000/- on or before the 22nd day of March, 1968. (2) The balance sum of Rs. 6,000/- by quarterly instalments of Rs. 375/- each, th" first of such instalments to be paid on or before the 15th day of July, 1968 and the subsequent instalments to be paid by the 15th day of every three months thereafter. And it is further ordered and decreed that in default of payment of any two instalments the plaintiff shall be at liberty to execute the decree for the balance of the decretal amount then remaining due. And it appearing that the defendant has paid to the plaintiff the first payment of Rs. 2,000/- through Mr. S. M. Chowdhury, Attorney for the plaintiff, it is further ordered and decreed that the said payment be recorded in the register of this suit. "
( 2 ) NOW, I will briefly state the facts in a few following paragraphs.
( 3 ) THE defendant having failed to pay the fourth quarterly instalment which fell due on April 15, 1969 an Order was passed giving him leave to deposit the said amount into this Court without prejudice to the rights, if any, of the plaintiff and in terms of the said order he duly deposited the said amount on June 13, 1969 and it was withdrawn by the plaintiff without prejudice to his rights, if any.
( 4 ) BEFORE the ninth instalment became due, the plaintiff by his solicitor's letter dated June 24, 1970 informed the defendant's Solicitors that he would receive the subsequent instalments if they were paid by the defendant to him through the Post Office as he was then residing at Bhimasar in the State of Rajasthan whereas the defendant was residing at Tripura. In terms of that offer the defendant paid the ninth instalment to the plaintiff through the Post Office and then the plaintiff refused to accept the tenth instalment though posted by the defendant on its due date on the plea that the said amount was tendered to him by the Post Office after October 15, 1970.
( 5 ) THE eleventh instalment became due on January 15, 1971 and the defendant could not pay it to the plaintiff and then, with their consent, an order was passed giving leave to the defendant to pay through his solicitors the tenth and the, eleventh instalments to the plaintiff through his solicitor without prejudice to the contentions of the plaintiff namely that Rs. 10,000/- has become payable to him by the defendant in view of the defaults made by the defendant in payment of the fourth and the eleventh instalments on their respective due dates and that the plaintiff was entitled to execute the decree for the balance of the decretal amount of Rs. 10,000/ -.
( 6 ) IN terms of the said order the defendant paid and the plaintiff accepted the tenth to thirteenth instalments and thereafter, the plaintiff's Solicitor refused to accept the fourteenth instalment and this Court made an order directing the defendant to deposit the said instalment and the subsequent instalments into this court and accordingly the defendant duly deposited the fourteenth instalment in time. Then, on November 5, 1971, the defendant received a notice from the Court of District Judge, Bikaner and from that notice he came to know that the plaintiff has got the decree transmitted to that Court for execution. In these circumstances, he made this application on November 24, 1971 for the following Orders:--
