Sir Lionel Leach: This is an appeal by special leave from a decree of the Chief Court of Oudh, dismissing an appeal from an order passed by the Civil Judge of Lucknow in execution proceedings. The questions which arise are whether the court’s equitable jurisdiction to grant relief against penalties and forfeitures extends to the granting of relief in proceedings taken for the execution of a final decree for foreclosure, the decree having been passed by consent, and, if so, whether this is a proper case for the exercise of the jurisdiction.

On the 16th January, 1934, the appellants mortgaged three houses in Lucknow to Raja Sir Mohammad Ejaz Rasul Khan to secure an advance of Rs. 32,000. Possession of the houses was given to the mortgagee, who had the right to collect the rents from the tenants and, after providing for repairs, to appropriate the balance of the money received by him as rent in satisfaction of interest on the amount advanced. The mortgagors undertook to redeem the properties after five years by the payment in one sum of the total amount due. It was stipulated that if the mortgagors did not redeem within the five years the mortgagee would have the right to obtain through the court a decree for foreclosure. It was subsequently agreed that the mortgagors should collect the rents and, after deducting outgoings, should pay the balance to the mortgagee.

The mortgagors failed to redeem the mortgage at the end of the stipulated period of five years, and on the 16th May, 1939, the mortgagee instituted a suit in the court of the Civil Judge, Lucknow, claimining a decree for the payment of Rs. 32,000 and in default a decree for foreclosure. He also claimed to be entitled to a further sum of Rs. 7,000, which he averred was the balance of the rents collected by the mortgagors in accordance with the arrangement made subsequent to the mortgage.

On the 18th October, 1940, an agreement of compromise was entered into and a copy of the agreement was filed in court. Clauses 1,2 and 6 are important. They read as follows:

“1. That the plaintiff has given up all the profits due to him and has reduced his claim to a sum of Rs. 20,300 inclusive of costs.

2. That a decree for the said sum of Rs. 20,300 shall be passed in favour of the plaintiff against the defendants in accordance with the following conditions:

(a) That the said sum of Rs. 20,300 shall be paid by the defendants to the plaintiff in two equal instalments of Rs. 10,150 each on the 15th February, 1941, and the 15th February, 1942.

(b) That if the said two instalments are not paid by the 15th February, 1942, and a single pice remains due to the plaintiff on that date this decree shall be deemed to be a final decree for foreclosure in lieu of the full sum claimed in the suit and costs.

The plaintiff shall be entitled to obtain possession of the houses mortgaged and if there is any difficulty in his so doing he shall be entitled to obtain possession through court in execution of this decree.

That if at any time the defendants do not abide by the conditions of this compromise with regard to the payment of the money and make any application for further instalments, then the reduction which the plaintiff has made in his claim shall be deemed to have been withdrawn and this decree shall be deemed to be a decree for foreclosure for the full amount claimed in the suit together with costs and profits occurring due since the date of the suit.”

On the same date a decree described as a preliminary decree for foreclosure, was passed in accordance with the agreements. On the 24th February, 1942, the mortgagee applied for execution of the decree by delivery of possession. This was granted and possession was duly given. On the 16th March, 1942, the mortgagors filed objections to the execution under section 47 of the Civil Procedure Code. They asked the court in exercise of its equitable jurisdiction to set’ aside the order for delivery of possession and the warrant issued in pursuance thereof and to gi

Click Here to Read the rest of this document