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PUNJAB & HARYANA HIGH COURT
D.K.Mahajan, J.
Bharat Bank Ltd.
Versus
Sehgal Brothers
Execution Second Appeal No. 56 of 1958,
Decided On : MARCH 14, 1960
EXECUTION OF DECREE - COMPROMISE - ADJUSTMENT OF DECREE - NEW CONTRACT - ENFORCEABILITY IN EXECUTION - LEGAL PRINCIPLES.
Fact of the Case:
The decree-holder obtained two decrees against the judgment-debtors, one from the Amritsar Court and the other from the Jullundur Court. Execution was taken out of the Jullundur decree first, and a compromise was entered into between the parties. The compromise provided for the payment of the decretal amount in installments and created a second lien and charge over the judgment-debtors' property. The decree-holder took execution of both decrees after the compromise was not carried out. The judgment-debtors objected, arguing that the decrees had been adjusted and a new contract had come into being by reason of the compromise.
Finding of the Court:
The court held that the compromise did not adjust the decrees or create a new contract. It merely provided a mode for the execution of the decrees. The court relied on the fact that the compromise specifically stated that the decrees were still subsisting and would only be adjusted after the compromise had been carried out fully. The court also noted that the parties and the court treated the decrees as subsisting after the compromise.
Issues: 1. Whether the compromise adjusted the decrees and created a new contract. 2. Whether the compromise could be enforced in execution or required a separate suit.
Ratio Decidendi: 1. The court held that the compromise did not adjust the decrees or create a new contract because: - The compromise specifically stated that the decrees were still subsisting and would only be adjusted after the compromise had been carried out fully. - The parties and the court treated the decrees as subsisting after the compromise. - The compromise merely provided a mode for the execution of the decrees. 2. The court held that the compromise could be enforced in execution because: - The compromise was duly recorded or certified by the court. - The compromise was entered into with the consent of the parties. - The compromise did not create a new contract, but merely provided a mode for the execution of the decrees.
Final Decision: The court allowed both appeals, set aside the judgments of the courts below, and directed that the execution should proceed according to law.
1. This order will dispose of Execution First Appeal No. 56 of 1958 and Execution First Appeal No. 419 of 1958. The parties to both these appeals are the same. The decree-holder is the Bharat Bank, now Bharat Nidhi, and the judgment-debtors are M/s. Sehgal Bros., Ram Sarn Dass Sehgal, Pran Nath Sehgal and Puran Chand Sehgal son of Ram Sarn Sehgal.
2. The Bank obtained two decrees against the judgment-debtors--one form the Amristar Court on 30-1-1953, for a sum of Rs. 9128-15-8 with costs and future interest and the other from the Jullunder Court on 3-7-1953, for a sum of Rs. 31,237-12-0 with costs and future interest. Execution was taken out of the Jullundur decree in the first instance. In Execution, a compromise was entered into on the 12th of March, 1955. The terms of this compromise are set out below:
"1. That M/s. Sehgal Brothers, constituting of Shri Ram Sarn Dass Sehgal and Shri Pran Nath Sehgal as partners, shall pay Rs. 31,237-12-0 (Rupees thirty-one thousand, two hundred, thirty-seven and annas twelve only) as the amount of decree and Rs. 2,538-12-0 (Rs. two thousand, five hundred thirty eight, and annas twelve only), as costs with future interest as provided in the decree at 6 per cent per annum as decreed by the Senior Sub-Judge, Jullundur on 3-7-1953, and Rs. 9,128-15-9 (Rs. nine thousand one hundred, twenty eight, annas fifteen and pies nine only) with costs, Rs. 870.00 (Rupees eight hundred and seventy only), and future interest at 6 per cent p. a. as decreed by the Senior Sub-Judge, Amristar, on 30-1-1953, by instalments of Rs 3,000.00 (Rupees three thousand only) quarterly, the first installment being paid on 15-4-1955, second on 15-7-1955, third on 15-10-1955 and so on for subsequent instalments.
2. These instalments of Rs. 3,000.00 will be paid for two years and thereafter in such a manner that the entire decretal amount of both the decrees is paid off within a total period of three and a half years, i.e., by 15-10-1958.
3. In case of judgment-debtors regularly pay the said installments and the interest up to 15-4-1955, then the decree-holder shall give up the amount of interest chargeable form 15-4-1955 to the date of payment. The decretal amounts to be paid by 15-10-1958 shall not include interest otherwise chargeable from 15-4-1955.
4. In case of default of any one installment, the decree-holder shall be entitled to executed the decree for the principal amount then remaining due with cots and future interest as provided in the decree and in this case, no rebate of interest after 15-4-1955, shall be allowed to the judgment-debtor.
5. That the judgment-debtors hereby agree and consent that the decree-holder shall have the second lien and charge over the property mentioned in the schedule A annexed herewith, which is the exclusively owned property of the judgment-debtors till the entire amount of the decree is paid off as provided in this compromise. In case of default, in payment of any one installment, the decree-holder shall be entitled to proceed against this property along with personal liability of the judgment-debtors and the judgment-debtors shall then raise no objections to the execution of decree by way of sale through Court, of this property.
6. The judgment-debtors unequivocally and honestly undertake not to alienate, transfer, encumber or otherwise dispose of the property mentioned in the Schedule A annexed hereto except after paying the amount of the two decrees under this compromise. On the income-tax arrears being cleared of, the two buildings known as godowns, one situated on the Mandi Road, leading to Metro Hotel and the second in Krishan Nagar, more particularly described in the schedule B annexed hereto shall be under equitable mortgage with the Bharat Nidhi Ltd., for the unpaid balance of the said two decrees by deposit of title deeds and then the remaining property will be released from lien of decree-holder.
7. The question of the liability or non-liability of the decree-holder
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