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1957 Supreme(MP) 114

High Court Of Madhya Pradesh
G. P. Bhutt and B. K. Chaturvedi, JJ.
S.S.NIRMALCHAND - Appellant
Versus
PARMESHWARI DEVI - Respondents
Letters Patent Appeal 36 Of 1953
Decided On : 07/02/1957

Advocates Appeared:
A.P.SEN, M.R.BOBDE

A minor's guardian has the power to compromise a suit and extend the time for payment of a decree, provided that the compromise is in the minor's best interests and that the court has applied its mind to the compromise before sanctioning it.

Headnote:

COMPROMISE - ADJUSTMENT OF DECREE - EXTENSION OF TIME - MINOR - GUARDIAN - POWER TO COMPROMISE - AGREEMENT TO PAY FULL AMOUNT ON DEFAULT - PENALTY - RELIEF AGAINST - CODE OF CIVIL PROCEDURE (V OF 1908), ORDER 21, RULE 2; ORDER 23, RULE 3; ORDER 32, RULE 7; SECTION 47 - INDIAN CONTRACT ACT (IX OF 1872), SECTION 74.

Fact of the Case:

A minor, Nirmalchand, through his mother and guardian, entered into a compromise with the respondents, agreeing to reduce the amount due on a mortgage decree and extend the time for payment. The compromise was sanctioned by the court and a preliminary decree for sale in terms of the compromise was passed. The respondents paid only a portion of the amount due within the agreed period, and a final decree for sale for the full amount due was passed. The respondents then made further payments, and a second compromise was reached, under which the amount due was maintained at Rs. 1,62,000/-, and after adjusting Rs. 1,35,873/- towards it, time till 3-11-1948 was granted to the respondents for payment of the balance of Rs. 26,127/- in full satisfaction of the decree. The court sanctioned the proposed compromise and recorded its terms. Nirmalchand, after attaining majority, withdrew the amount deposited by the respondents in court. He then filed an appeal challenging the validity of the compromise and the satisfaction of the decree.

Finding of the Court:

The court found that the compromise was not entered into under any undue influence or pressure, that the mother of Nirmalchand had acted in his best interests, and that the court had applied its mind to the compromise before sanctioning it. The court also held that the agreement to reduce the amount due on the decree was supported by consideration and was not gratuitous, that the agreement to extend the time for payment was not of the essence of the contract and could be relieved against under Section 74 of the Indian Contract Act, and that the mother of Nirmalchand had the power to compromise the suit and extend the time for payment.

Issues: 1. Whether the agreement to reduce the amount due on the decree was an adjustment of the suit or the decree and whether it could be recorded or acted upon. 2. Whether the agreement to pay the full amount on default was of a penal character and whether the time for payment could be extended.

Ratio Decidendi: 1. The agreement to reduce the amount due on the decree was an adjustment of the suit and was liable to be adjudged and given effect to under Order 32, Rule 7, of the Code of Civil Procedure, as it related to an agreement or compromise with reference to the suit. 2. The agreement to extend the time for payment was not of the essence of the contract and could be relieved against under Section 74 of the Indian Contract Act, as it was in the nature of a penalty.

Final Decision: The appeal was dismissed with costs.

( 1 ) THIS is a Letters Patent Appeal by appellant No. 1, Nirmalchand, and is directed against the order of Mudholkar, J. in Miscellaneous Appeal No. 89 of 1949. His grand-mother Mst. Rajrani has formally joined as appellant No. 2. The miscellaneous Appeal was filed against the final decree of satisfaction passed by the 1st Additional District Judge, Jabalpur, in Civil Suit No. 3-A of 1934.

( 2 ) THE suit, out of which this appeal arises, was filed on 10-2-1934 for recovery of rs. 2,79,596/- and odd due on a simple mortgage bond, dated 13-8-1921. The sum advanced was Rs. 2,00,000/- which carried interest at 11 annas per cent, per mensem, with half yearly rests, the interest to be added to the principal on default and liable itself to carry interest at the same rate. The respondents paid Rs. 1,37,121/- towards the debt before the institution of the suit. As there was some dispute about calculation of interest, a round sum of Rs. 2,61,000/-, which roughly included interest at the agreed rate, was settled as the amount due on the date of the suit, towards which Rs. 1000/- were paid during the pendency of the suit. On making accounts with interest at 3 per cent, per annum from the date of the suit, a sum of Rs. 3,71,800/- was found due on 9-41941. Towards this amount, two sums of Rs. 1,28,000/- and Rs. 200/- were paid by transfer of property. On adjustment of the repayments a sum of Rs. 2,53,216/- was found due which was made payable on or before 9-4-1942 with costs, and future interest at 6 per cent, per annum till realisation on Rs. 2,43,600/- which was the net amount due on' 9-4-1941. The parties agreed that the decree would stand satisfied if the respondents paid Rs. 1,62,000/- either in cash or by transfer of property within a period of 12 months. As Nirmalchand and three of the respondents were minors, an application for grant of sanction to enter into the compromise and for recording the terms thereof was made by the parties on 16-4-1941. By an order passed on that date, the Court found the terms to be beneficial to both the parties and granted sanction to the proposed compromise. A preliminary decree for sale in terms of the compromise was accordingly passed on 18-4-1941.

( 3 ) THE respondents paid only Rs. 60,238/-within the agreed period and as default was made in the payment of the balance, a final decree for sale for the full amount due, was passed on 5-2-1945. This decree was sought to be executed on 12-91946, but the application was dismissed as infructuous. Another execution application was thereafter filed on 1-11-1947. During its pendency the respondents paid further sums of Rs. 17,635/-, Rs. 28,000/- and Rs. 30,000/towards the debts. Thus a sum of Rs. 1,35,873/- was paid by the respondents since the preliminary decree was passed. On 5-3-1948, the parties again came to terms and made an application for the court's permission to enter into the compromise and for recording its terms. Under the compromise, the amount due was maintained at Rs. 1,62,000/-, and after adjusting Rs. 1,35,873/- towards it, time till 3-11-1948 was granted to the respondents for payment of the balance of Rs. 26,127/- in full satisfaction of the decree. After hearing the parties, the Court sanctioned the proposed compromise by an order dated 9-3-1948 and recorded the terms thereof.

( 4 ) NIRMALCHAND was represented in the proceedings by his mother and guardian mst, Indrani Bahu and the minor respondents, by their mother Mst. Parmeshwari devi.

( 5 ) THE amount of Rs. 26,127/- was deposited by the respondents in Court on 20/21-10-1948. Simultaneously they made an application for recording full satisfaction of the decree. Thereupon Mst. Rajrani, grand-mother of Nirmalchad, put in a demurrer on his behalf. She contended that the compromise was not in the interest of the minor, that his mother acted with gross neglect in entering into it, and that she was prevailed upon by her munims and made to accept a 'stupid settlement'. She also alleged that





















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