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1962 DIGILAW 190 (KER)

Raghavan Nambiar v. Kunhamu Haji

1962-07-09

K.K.MATHEW, S.VELU PILLAI

body1962
Judgment :- 1. The 6th respondent in the lower court is the appellant before us. The appeal is directed against an order in execution. The first respondent who is the plaintiff, sued the defendants on the basis of a pro-note. The plaint claim was for Rs. 10,045. 94 Np. The suit was compromised and according to the terms of the compromise, the defendants were to pay Rs. 7,500/- to the plaintiff in full settlement of the claim of the plaintiff. It was also agreed between the parties that this sum of Rs. 7,500/- was to be paid in three yearly instalments, and that in default of payment of any one of the instalments, the defendants were liable to pay the whole amount claimed in the plaint in a lump. As the defendants did not pay the amount according to the terms of the compromise decree, the plaintiff began to execute the decree by attachment of certain properties belonging to the tarwad of the defendants 2 to 5. The appellant got himself impleaded in the lower court as a junior member of the tarwad and questioned the legality of execution, mainly on two grounds. He contended that the provision in the decree for payment of the plaint amount of Rs. 10,045.94 Np in default of payment of the smaller sum of Rs. 7,500/- was in the nature of a penalty, and that the defendant should be relieved against it. He also contended that the other members of the tarwad were necessary parties to the execution proceedings. 2. With respect to the first point, the lower court came to the conclusion that the provision in the compromise decree for revivor of the original liability in default of payment of the smaller sum was not in the nature of a penalty and that therefore execution was legally levied. 3. Before us the appellant contended that there was no adjudication or admission that the amount claimed in the plaint was legally due to the plaintiff; and as the primary liability was not settled between the parties either by decree of Court or by agreement, the undertaking to pay the plaint claim in default of payment of a lesser sum savours of a penalty. In support of this contention reliance was placed on the ruling reported in Chhunna Mal v. Hanuman Bakhsh (103 Indian Cases 805). In support of this contention reliance was placed on the ruling reported in Chhunna Mal v. Hanuman Bakhsh (103 Indian Cases 805). The head-note of the report correctly represents the principle laid down in the judgment. "The true test for deciding the question whether the provision relating to the payment of a larger amount than the amount decreed on compromise on default by the judgment-debtor to perform any of the conditions of the decree is or is not a penal clause depends on a determination of the question whether or not the larger amount was actually due to the decree-holder at the time of the compromise, in other words, whether the decree-holder is merely withdrawing a conditional concession granted by him to the judgment-debtor or whether he is attempting to recover an amount which was not actually due to him. In Chinnaswamy Chettiar v. Cheru (1953 KLT. 321 at 322; M.S. Menon, J. as he then was, has laid down the rule of law applicable to cases like this. He said: "The English Common Law has never admitted that a greater sum of money can ever be due for the breach of an obligation to pay a smaller one and it can be taken as established that if the obligation of the promisor is to pay a certain sum of money and it is agreed that if he fails to do so, he shall pay a larger sum, that larger sum will not normally be a "reasonable compensation." It follows that what has to be done in cases like this is to find out what is the primary contract between the parties and to enforce that primary contract - and nothing beyond it - subject to any concession granted in the agreement and surviving at the time of enforcement." While we agree with the proposition of law laid down in these cases, we do not agree that the compromise decree in this case does not import an admission on the part of the defendants that the amount claimed in the plaint was legally due from them. The actual term in the compromise is as follows: "That in default of payment of the first instalment on the 30th of Thulam, the plaintiff is entitled to recover the amount claimed in the plaint with interest and costs of the suit without waiting for further instalments." Like terms are inserted to provide for defaults in the payment of the second and third instalments. We think that this clause is sufficiently wide to import an admission that the plaint claim was legally due. Looking at the attendant circumstances of the case, we come to the same conclusion. The suit, as we have said, was on the basis of a pronote, and it is admitted by parties before us that the plaint claim represented correctly the amount that was due on the pronote on the date of the suit, & secondly, the 6th respondent did not specifically put forward the contention in the lower court that the larger amount claimed in the plaint was not legally due from the defendants and therefore it was a penalty. In these circumstances, we cannot accept the submission made by counsel on behalf of the appellant that the stipulation for revivor of the original liability in the compromise decree savours of a penalty. We therefore, over-rule the contentions of the appellant. 4. The second point, that all the members of the tarwad were necessary parties to the execution proceedings, was not pressed - we may say rightly - by counsel for the appellant. But he raised a contention which was not raised before the lower court that the defendants are entitled to pay the decree amount in instalments under Act XXXI of 1958 as amended by Act II of 1961. There is a provision in the compromise decree to the effect that the defendants being agriculturists paying basic tax exceeding Rs. 150/- per annum will not claim the benefit of Act XXXI of 1958. Clause (6) in the compromise decree states as follows: "The defendants are satisfied that they are not entitled to claim the benefits of Act XXXI of 1958 by virtue of the fact that they have been paying a basic tax exceeding Rs. 150/- per annum will not claim the benefit of Act XXXI of 1958. Clause (6) in the compromise decree states as follows: "The defendants are satisfied that they are not entitled to claim the benefits of Act XXXI of 1958 by virtue of the fact that they have been paying a basic tax exceeding Rs. 150/- per annum in the year after 1950-51." It was contended for the respondent that in view of this undertaking, the appellant is not entitled to claim the benefit of the amendment introduced by Act II of 1961, which altered the definition of the word 'Agriculturist' so as to include even persons paying a basic tax exceeding Rs. 150/-. We are of opinion that clause (6) in the compromise decree does not preclude the appellant from claiming the benefit of the amendment introduced by Act II of 1961. A party cannot be deemed to have contracted himself out of the benefit of an enactment which had not come into force at the time of the contract and which took away the very foundation of the contract. Therefore, there is no reason why the appellant should not have the benefit of the same. Under Act 31 of 1958 as amended by Act II of 1961, the defendants are agriculturists and they are entitled to pay the amount in instalments. While we are of opinion that the compromise decree does not preclude the defendants and the appellant from claiming the benefits of the Act, we cannot dispose of the matter without giving an opportunity to the respondent to prove whether the defendants and appellant have forfeited that benefit on account of default in the payment of the necessary instalments. Therefore, we allow the prayer of the appellant for" a remand and direct the lower court to decide the question, namely, whether the defendants and appellant have forfeited the benefit of Act XXXI of 1958 as amended by Act II of 1961, on account of default in not paying the required instalment or instalments in time. In the result, we allow the appeal to the extent indicated above, and remand the case for the purpose of deciding the question whether the defendants and the appellant have forfeited their right to pay the amount in instalments on account of default in the payment of the necessary instalments. No costs. Allowed.