1960 Supreme(MP) 113

High Court Of Madhya Pradesh
T.P. Naik, J.
Kalyandas Anantlal
Versus
Gangabai
Misc. Second Appeal 38 of 1958 Of
Decided On : Apr 25,1960

A compromise decree is not a nullity merely because it incorporates matters which are extraneous to the subject-matter of the suit, provided that the terms of the compromise relate to the adjustment of the matters in dispute.

Headnote:

COMPROMISE DECREE - JURISDICTION - EXECUTION - NULLITY - JURISDICTION OF EXECUTING COURT - COMPROMISE DECREE INCORPORATING MATTERS EXTRANEOUS TO SUIT - WHETHER EXECUTING COURT CAN ENQUIRE INTO - JURISDICTION OF COURT PASSING COMPROMISE DECREE - WHETHER CAN BE QUESTIONED IN EXECUTION PROCEEDINGS - ORDER 23, RULE 3, C. P. C.

Fact of the Case:

The suit was filed for an account of profits of the partnership property and for its payment to the plaintiffs. A compromise was arrived at between the parties and a petition for recording the compromise was filed in the trial Court under Order 23, Rule 3, C. P. C. The compromise decree was passed on 21-11-1946 for dissolution of the partnership and for accounts. The judgment-debtors defaulted in payment of instalments payable under the decree and the decree-holders sought to execute their decree for the full decretal amount. The judgment-debtor filed an objection contending that the decree passed by the Court of the Civil Judge, Class II, was beyond its pecuniary jurisdiction and was therefore a nullity. It was further contended that the charge created by the compromise decree was on property which was not the subject-matter of the suit. The executing Court by its order dated 29-4-1954 held that the decree was not a nullity and that the creation of a charge was not a matter unrelated to the suit. The judgment-debtor filed an appeal against the said order but that was also dismissed. Thereafter, the judgment-debtor amended his objection petition to indicate in what manner the decree embraced matters extraneous to the suit and so was beyond the jurisdiction of the Court which passed the decree. The executing Court then recorded evidence, and by its order dated 3-4-1956 negatived all the objections raised by the judgment-debtor except that it held that the whole of the decree had not become eligible as there was no default of two full instalments amounting to Rs. 8,000/- plus interest. It, therefore, dismissed the application for execution. The decree-holders filed an appeal against the said order and the judgment-debtor also filed an appeal attacking some of the adverse findings given by the executing Court against him. The lower appellate Court allowed the decree-holders appeal holding that as the instalments had not been fully paid, the exigibility clause came into operation and consequently the decree-holders were well within their rights in applying for the execution of the whole amount then due. As regards the appeal of the judgment-debtor it held that: (a) the decree was not a nullity in so far as it was for an amount of Rs. 34,588/- which was beyond the pecuniary jurisdiction of the Court, because the instant case being a suit for accounts, the trial Court could validly pass a decree for a sum which was beyond its pecuniary jurisdiction; (b) that it did not embrace matters extraneous to the suit in so far as the amount of Rs. 10,000/-, the estimated profits up to the date of the final decree, was concerned as it related to the suit and was thus rightly incorporated in the decree; (c) the judgment-debtors objection that the payment of Rs. 20,588/-as a consideration for the transfer of the share of the decree-holders in the assets of the partnership in favour of the defendants 3 (a) and 3 (b) was extraneous to the subject-matter of the suit was negatived on the ground that the dissolution and winding up of partnership and taking of accounts in effect meant division of the surplus profits among the partners or their representatives; and consequently, instead of selling the assets by public auction and then dividing the sale proceeds according to their shares, the parties could well agree that all the assets be retained by the judgment-debtors and the decree holders be paid the price of their shares in the assets. The District Judge held that the ultimate effect of these terms in the compromise decree was to secure the winding up of the assets of the firm and their distribution according to the shares of the parties. (d) In so far as the decree also incorporated an agreement to pay Rs. 2500/- as costs of the original suit and of the first appellate Court, it was held by the District Judge that it could be beyond the jurisdiction of the trial Court because the amount of Rs. 2500/- could not possibly be costs of the two proceedings on the ground that the awarded costs of the original suit and the first appeal did not add up to that amount.

Finding of the Court:

The Court held that: (i) the compromise decree was not a nullity on the ground that it was for a sum of Rs. 34,588/- whereas the pecuniary jurisdiction of the Court of Civil Judge, Class II, was Rs. 2,000/- only; and (ii) that the compromise decree was in contravention of the provisions of Order 23, Rule 3, C. P. C. , as it incorporated matters which were extraneous to the subject-matter of the suit and, therefore, the decree sought to be executed was without jurisdiction and consequently a nullity.

Issues: 1. Whether the compromise decree was a nullity on the ground that it was for a sum of Rs. 34,588/- whereas the pecuniary jurisdiction of the Court of Civil Judge, Class II, was Rs. 2,000/- only? 2. Whether the compromise decree was in contravention of the provisions of Order 23, Rule 3, C. P. C. , as it incorporated matters which were extraneous to the subject-matter of the suit and, therefore, the decree sought to be executed was without jurisdiction and consequently a nullity?

Ratio Decidendi: 1. A compromise decree is not a nullity merely because it is for a sum exceeding the pecuniary jurisdiction of the Court which passed it, provided that the suit was one for accounts and the Court had jurisdiction to entertain the suit. 2. A compromise decree does not become a nullity merely because it incorporates matters which are extraneous to the subject-matter of the suit, provided that the terms of the compromise relate to the adjustment of the matters in dispute. 3. An executing Court cannot go behind a compromise decree and enquire into the question whether the decree incorporates matters which are extraneous to the subject-matter of the suit. 4. The jurisdiction of a Court which passes a compromise decree cannot be questioned in execution proceedings.

Final Decision: The appeal of the judgment-debtor (Misc. (Second) Appeal No. 38 of 1958) was dismissed with costs. The appeal of the decree-holders (Misc. (Second) Appeal no. 69 of 1958) against the order remanding the case to the executing Court for the purpose of elucidating whether the amount of costs incorporated in the compromise decree re lated to matters outside the suit was allowed with costs.