Palaniandi Servai v. Manoranjitham — 1996 DIGILAW 1275 (MAD)

Judgment :- 1. Decree-holders in O.S. No. 957 of 1980, on the file of District Munsifs Court, Namakkal, are the revision petitioners. 2. Suit filed by the decree-holders was one for specific performance of agreement of sale. On 13.7.1982, a compromise decree was passed. It reads as follows:— “This suit coming on this day for hearing before me in the presence of Thiru N.R. Venkatesan, Advocate for plaintiff, and of Thiru. K. Shanmugham, Advocate for defendants, and both parties made joint endorsement on plaint, and in view of the said joint endorsement, this Court doth order and decree”. 1) That the plaintiffs do pay to the defendants 1 and 2 the sum of Rs. 1,200/- being the sale price and have the sale deed in respect of the suit properties executed by them in accordance with the sale agreement dated 31.8.80. 2) If there are crops in the suit properties, the defendants are entitled to harvest the same and deliver possession to the plaintiff; 3) that if the defendants default in executing the sale deed, the plaintiffs are at liberty to deposit the said sum of Rs. 1,200/- into Court and have the sale deed executed through process of Court and take delivery of possession; and 4) the parties do bear their respective cost. (Cost memo not filed by either side)”. 3. The compromise is dated 13.7.1982. 4. Pursuant to the compromise, when the sale deed was not executed, Execution Petition was filed on 12.7.1985, to enforce the decree. When notice of Execution Petition was received, an objection was taken by defendants contending that the Execution Petition is not executable, since a compromise has been entered into on 20.4.1987, between first plaintiff and first defendant, whereby the first plaintiff has agreed not to execute the decree, and the same was registered before the concerned Sub Registrar. In view of that compromise, the first defendant wanted the Execution Petition to be dismissed. That counter was filed on 1.9.1987. 5. By the impugned order dated 30.4.1991, court below said that the decree itself is null and void, since the same has been cancelled by the first defendant. It was of the view that one decree-holder alone cannot compel the execution of the decree. The said order is challenged in this Revision Petition. 6. Learned counsel for the petitioners submitted that the order of the court below is perverse and illegal. It was of the view that one decree-holder alone cannot compel the execution of the decree. The said order is challenged in this Revision Petition. 6. Learned counsel for the petitioners submitted that the order of the court below is perverse and illegal. According to him, it is a joint decree, and both the decree-holders are entitled to get the benefits of the decree, and one of the decree-holders alone is not competent to have the decree executed, and there is no authority given by one decree-holder to the other decree-holder to enter into a compromise. He also submitted that being a joint decree, discharge by one of the decree-holders will not affect the person who has not joined the compromise. He also said that under Section 23 of the Contract Act, if the compromise is accepted, that will affect the person or property of the other decree-holder, and therefore, the compromise is unlawful. Lastly, learned counsel submitted that even though the alleged compromise is dated 20.4.1987 the same is not recorded by the Executing Court within the time stipulated and, therefore, the Executing Court has no jurisdiction to have the same recognised, satisfaction could not be entered, and finally, when the decree for specific performance is not rescinded by any rule known to law, the decree is liable to be executed. 7. As against the said contention, learned counsel for the respondents submitted that inspite of the decree for specific performance, the agreement does not merge with the decree, the decree only declares that the contract is enforceable and, therefore, inspite of the decree, the Court can refuse to implement the decree, and all the principles for granting a specific relief or refusing a specific relief are applicable to execution also. If so, when one of the parties who wants to take the benefit of the decree, has relinquished his rights in terms of the subsequent compromise, a discretion is given to Court not to execute the decree. According to learned counsel, Court still retains the control over the agreement as well as the parties in enforcing the same. He further submitted that when the registered agreement is brought to the notice of the Court, it can look into it, not for the purpose of entering satisfaction of the decree, but to exercise its discretion in not executing the sale deed in terms thereof. 8. He further submitted that when the registered agreement is brought to the notice of the Court, it can look into it, not for the purpose of entering satisfaction of the decree, but to exercise its discretion in not executing the sale deed in terms thereof. 8. It is settled law that while a Court grants a decree for specific performance, it only declares that it is enforceable. The agreement does not merge with the decree, nor does the decree for specific performance create any interest in the property of the proposed purchaser. It is said that notwithstanding the decree, the contract to sell is still treated a subsisting contract, and that is why Court is given power in spite of the decree, to extend the time provided under the decree or to have the contract rescinded. A reading of Sec. 28 of the Specific Relief Act makes the legal position clear. It is also settled law that the provisions of Specific Relief Act are not exhaustive. 9. But, how far the said contention of learned counsel for the respondents is helpful in this case will have to be considered. When a Court declares that the contract is enforceable, and that enforceability is not curtailed by a subsequent order, it continues to be an executable decree. If the provision for executing such a decree is provided under O. 21, Rule 32, C.P.C. and the same is not rescinded, it continues to be an enforceable decree O. 21, R. 32, C.P.C. prescribes the mode of execution of a decree for specific performance. If such a decree is also liable to be executed, and provisions have also been made under the Code of Civil Procedure, naturally, it follows that both Section 47 and Order 21, C.P.C. apply. While the Court declares that the contract is enforceable, it is for that purpose, the contract is kept intact. When the parties have refused to enforce the agreement by themselves, and one of the parties has taken recourse through Court, and the Court also declares its enforceability naturally, the decree has to be executed in terms of that contract. The Court is not enforcing a new contract, but only declares that it could be enforced by Court. When the parties have refused to enforce the agreement by themselves, and one of the parties has taken recourse through Court, and the Court also declares its enforceability naturally, the decree has to be executed in terms of that contract. The Court is not enforcing a new contract, but only declares that it could be enforced by Court. It is only on the basis of that declaration, decree-holder comes to Court to have the decree enforced as provided under O. 21, R. 32, C.P.C. It is for that reason, the law has declared that the contract has not merged with the decree. 10. If in enforcing such a decree, the aid of Court is sought, naturally, all the provisions of O. 21 C.P.C. also will have to be made applicable. 11. Now let us see as to what are the relevant provisions that are to be applied to the execution of a decree. 12. Under Order 21, Rule 15, C.P.C. one of the joint decree-holders is entitled to execute a decree for the benefit of all. The said Rule provides that one of the decree-holders is not entitled to enter into a compromise without the authority of others and the same is not binding on him. If a discharge is to be given, it must be by all the decree-holders with the judgment-debtors. In this case, in spite of the so called agreement, both the decree-holders have joined in filing the Execution Petition, and even this Revision Petition is filed by both the joint decree-holders. 13. In Mulla, on Code of Civil Procedure, Volume II, 1996 Edition, the learned Author has said (at page 1627) as follows: “Sub-rule (1) of R. 15 of Order 21, C.P.C. lays down two conditions (1) that there is no condition in the decree which may bar one decree-holder to take out execution proceedings and (ii) that such proceedings by one or some of the decree-holders are, for the benefit of all the decree-holders or where one of them has died, for the benefits of his legal representatives. The sub-rule is not in conflict with Sec. 214 of the Succession Act since the section envisages a case where there is a single decree-holder. The rule does not permit such a decree-holder to agree on behalf of the rest of the decree-holders to a variation or curtailment of their rights under the decree. The sub-rule is not in conflict with Sec. 214 of the Succession Act since the section envisages a case where there is a single decree-holder. The rule does not permit such a decree-holder to agree on behalf of the rest of the decree-holders to a variation or curtailment of their rights under the decree. It is based on the principles of equity and good conscience and saves a judgment debtor from harassment by multiplicity of proceedings.” (Emphasis Supplied) 14. In AIR 1974 Allahabad 175 ( Shital Prasad v. Dhan Kumar ), it was held thus:— “Order 21, Rule 15 is not a provision which entitled one of the decree-holders, maintaining the execution application on behalf of the entire body of decree-holders, to agree to a variation or curtailment of the rights of the decree-holders under the decree. The said provision is for the benefit of the decree-holders not in deregation of their rights. The mere fact that one of the “decree-holders was doing Pairavi in the execution proceedings on behalf of the other decree-holders cannot therefore, lead to the inference that he was also entitled to agree to variation or a curtailment of the rights of the decree-holders under the decree. One out of several decree-holders needs to have special, specific authorisation from the other decree-holders to enter into a compromise or adjustment on behalf of the other decree-holders”. 15. In ‘Code of Civil Procedure’ - 3rd Edition (1990) by Sir John Woodroffe and Ameer Ali, Commenting on Order 21, Rule 15, C.P.C., the learned Authors have said thus:— “A Payment of the amount of a decree to two out of three joint decree-holders cannot be treated as a satisfaction of the decree even in part unless it is admitted by the third decree-holder or unless it is proved that he and the other two decree-holders to whom the money was paid, own separate or definite shares in a joint decree-debt. . . .” In this case, even the alleged agreement with the first decree-holder is not certified, nor was any application filed before Court for entering satisfaction of the decree. 16. The contention of the judgment-debtors also has to be rejected for one more reason. When there is a joint decree if without the consent of all the decree-holders, a compromise is entered, the rights of the non-consenting decree-holders are affected thereby. Or. 16. The contention of the judgment-debtors also has to be rejected for one more reason. When there is a joint decree if without the consent of all the decree-holders, a compromise is entered, the rights of the non-consenting decree-holders are affected thereby. Or. 21, R. 15, C.P.C. is a bar on Court from entering satisfaction of any such compromise. The same has to be read along with Section 23 of the Contract Act. Section 23 of the Contract Act reads thus:— “The consideration or object of an agreement is lawful, unless: — It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent; or involves or implies injury to the person or property of another: or the Court regards it as immoral proposed to public policy ”. (Emphasis Supplied) In this case, if the compromise is accepted, that will affect the rights of the second decree-holder, and it will be an injury to the person and property of the second decree-holder. In this connection, certain decisions of Courts may also be considered. 17. In AIR 1991 S.C.W. 874 =1991-2-L.W. 15 (Gurmukh Singh v. Amar Singh), their Lordships were considering the scope of an agreement entered into among bidders at an auction to form a ring, to peg down the price and purchase the property at knock-out price. In that case, their Lordships said that “An agreement between A and B to purchase property at an auction sale jointly and not to bid against each other at the auction is perfectly lawful, though the object may be to avoid competition between the two. But if there is an agreement between all the computing bidders at the auction sale, be it of the Court sale or revenues sale, or sale by the Government of its property or privilege to form a ring and peg down the price and to purchase the property at knock out price, the purpose or design of the agreement is to defend the third party, namely, the debtor or Govt. whose property is sold out at the Court auction or revenue sale, or public welfare. The object or consideration of the contract, oral or written, to share such property is unlawful. There is also implied “injury to the debtor” within the meaning of S. 23. Thereby the contract is fraudulent. whose property is sold out at the Court auction or revenue sale, or public welfare. The object or consideration of the contract, oral or written, to share such property is unlawful. There is also implied “injury to the debtor” within the meaning of S. 23. Thereby the contract is fraudulent. It is also opposed to public policy and is void .” (Emphasis). In that case, their Lordships approved a decision reported in AIR 1933 Oudh 124 (Ram Lal Misra v. Rajendra Nath Sanyal), wherein the agreement was not merely of an honest combination between two bidders to purchase a property at an advantageous price, but it went further by resorting to secret artifice for the purpose of defrauding a third person, namely, the rival decree-holder, and it was held that the agreement was fraudulent and, therefore, void under Sec. 23 of the Contract Act. 18. In AIR 1980 Delhi 90 (Kiran v. Ram Prakash) it was a case where a suit for dissolution of firm and for settlement of accounts was filed. A compromise was entered into between some of the defendants. The question whether the same could be recorded, came for consideration. Their Lordship of the Delhi High Court said that such a compromise is not lawful and, therefore cannot be recognised. In that case, the learned Judge held that the Court should be very cautions in determining whether the compromise entered into between the parties was lawful or not. In that judgment, it was held thus:— “Under O. 23, R. 3, Court must be satisfied that there has been a lawful agreement or compromise, the Court has to be very cautious and should determine whether compromise arrived at is lawful or not. In a suit for rendition of accounts, every plaintiff is a defendant and every defendant is a plaintiff. In such a suit, if all the plaintiffs and defendants are not parties to compromise, it does not decide the suit and it may prejudice the rights of non-compromising parties and thus it would not be a lawful compromise. In the present case, K is contending that he is continuing as a partner. Unless there is a settlement regarding accounts amongst all partners, there would be no lawful agreement” (Emphasis supplied) In a suit for specific performance, defendant has also got certain rights, and he can also be considered as a plaintiff under certain circumstances. In the present case, K is contending that he is continuing as a partner. Unless there is a settlement regarding accounts amongst all partners, there would be no lawful agreement” (Emphasis supplied) In a suit for specific performance, defendant has also got certain rights, and he can also be considered as a plaintiff under certain circumstances. Even though he is bound to execute the sale deed, it there is a default on the part of the plaintiff, he can move the Court to have the contract rescinded. Likewise, the plaintiff who has not jointed the compromise is also entitled to have the decree executed. Both the plaintiff and defendant have corresponding rights and obligations under the decree. If that be so, when one of the plaintiffs-decree holders has not joined the compromise, the rights will be affected and, therefore, it will not be lawful agreement. 19. In AIR 1983 Kerara 1 (K. Abdulkhadar v. Plantation Corpn. of Kerala Ltd.,) it was a case where the contract was entered into by a person to maintain a road having a particular length. If the road was to be repaired for the entire length, the property belonging to a third party will also be affected. The question was, by refusing to perform that part of the contract, any claim for damages could be sustained. At page 4 of the Reports, Division Bench of the Kerala High Court held thus:— “The plaintiff after issuing Ext. A-24 notice terminating Ext. A-1 contract, had rendered the balance extent of the road-work over and above the part performed by “the defendant, and P.W. 4 on acceptance of his tender by the plaintiff had completed the work except as regards the 600 metres at the commencement point. He has also deposed that the area involving 600 metres had not yet been acquired by the plaintiff and was not available for the construction of the road. He was, therefore, relieved of his r esponsibility to make the road on lands belonging to strangers. This would also make it clear that the plaintiff had not been able to acquire the entire area of land over which the road is to be laid even at the time when P.W. 4 had executed the work. An agreement which involves injury to the properties of other persons is void under S. 23 of the Contract Act and cannot be enforced in law. An agreement which involves injury to the properties of other persons is void under S. 23 of the Contract Act and cannot be enforced in law. No claim for damages is sustainable for the breach of an unlawful agreement”. (Emphasis supplied). 20. Though not exactly on the same point, reference also may be made to a decision of a Division Bench of this Court reported in AIR 1973 Madras 25= (1972) 85 L.W. 648 (P.R. Nallathambi v. V. Raghavan). There, one of the questions that came for consideration was, whether the manager of a Hindu family is entitled to enter into a compromise which is likely to affect the junior members of the family, and whether such junior members can come on record in the suit. Such a question arse during the trial of the suit. Their lordships said that if a compromise is to be recorded, the compromise must be lawful, and persons whose rights are affected by the compromise are entitled to come on record. The contention that a Managing Member is entitled to compromise without consent of the junior members, was not accepted. 21. Under Order 21, Rule 2, C.P.C., compromise alleged to have been entered into between one of the decree holders and the judgment debtor is also an adjustment. The same will have to be certified within 30 days from the date of adjustment. Otherwise, it shall not be taken into consideration by Court. Article 125 of the Limitation Act provides for the time during which the adjustment has to be recorded, if the same is treated as lawful adjustment. On the date when the so called adjustment is made, the Execution Petition was pending. No application was made by any one to have the decree adjusted. Mere filing of an application in Execution is not sufficient. The petition was filed long after the period of limitation. That is a matter affecting the jurisdiction of Court. In that way also, the Order of the lower Court requires interference. 22. The Executing Court has held that one of the decree-holders is not entitled to have the decree executed. The same is fundamentally wrong. The further finding is that the decree is a nullity and the same cannot be challenged in execution are all findings without any basis. In fact, the decree was a compromise decree, was failed to be taken note of by the Court below. The same is fundamentally wrong. The further finding is that the decree is a nullity and the same cannot be challenged in execution are all findings without any basis. In fact, the decree was a compromise decree, was failed to be taken note of by the Court below. 23. When both the decree-holders pursue their remedy to have the decree executed, it follows that both of them do not recognise the agreement. In fact, evidence is also not satisfactory to come to the conclusion that the so called cancellation of the agreement was entered into by the first decree-holder and the judgment-debtor. 24. In the result, setting aside the Order of the Court below, I allow this Revision Petition with costs. On receipt of a copy of this order, executing Court is directed to restore the Execution Petition and proceed with the same in accordance with law. From the records, I find that the entire balance sale consideration has been deposited and even the draft sale deed has been filed before Court for approval.