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PETITIONER:

LAKSHMI NARAYANAN

Vs.

RESPONDENT:

S.S.PANDIAN

DATE OF JUDGMENT: 04/09/2000

BENCH:

Syed Shah Mohammed Quadri J. & Y. K. Sabharwal J.

JUDGMENT:

Syed Shah Mohammed Quadri, J.

L....I..........T.......T.......T.......T.......T.......T..J

These appeals, by special leave, are directed against

the common order of the High Court of judicature at Madras

passed in C.R.P.Nos.2705 and 2706 of 1996 on June 19, 1997

confirming the order of the Small Causes Court at Madras

(executing court) dated February 20, 1995.

The appellant is the owner of premises Nos.31 and 32,

measuring four thousand feet, of Namasivaya Chetty Lane,

Madras (for short, the suit premises) and the respondent

is the tenant on a monthly rent of Rs.5,000/-. The

appellant filed eviction petition (R.C.O.P.No.2852 of 1989)

under the Tamil Nadu Buildings (Lease & Rent Control) Act,

1960 for eviction of the respondent, which was decreed ex

parte on May 2, 1990. The appellant (decree holder) filed

E.P.NO.459 of 1990 in the Small Causes Court at Madras for

execution of the said ex parte decree to have the respondent

(judgment-debtor) evicted from the suit premises. During

the pendency of the execution proceedings the parties

entered into a compromise outside the court on November 7,

1990. Pursuant thereto, the respondent surrendered

possession of the front portion of Door No.32, measuring 840

square feet, and for the rest of the suit premises, viz.,

Door No.31 and a back portion of Door No.32 (for short, the

premises), the parties entered into an agreement of lease

for three years, rate of rent remaining the same. The

compromise, inter alia, provides that if the respondent

fails to vacate the premises on the expiry of the said

period, the appellant will be entitled to have the decree

executed against him and get possession of the same. On

filing the memo of compromise in the court, the E.P. was

dismissed as "not pressed".

Just before the expiry of the said period, the

appellant by a written notice, sent by his advocate, asked

the respondent to hand over vacant possession of the

premises on November 6, 1993, the date on which the period

of three years would expire. On the respondent failing to

do so, the appellant filed a fresh E.P. (No.664 of 1993),

for execution of the decree for recovery of possession of

the premises and the executing court ordered delivery of

possession on November 16, 1993. While so, the respondent

filed E.A. No.973 of 1993, praying for recalling the order

of November 16, 1993 and for dismissal of the E.P. The

appellant also filed E.A. No.299 of 1994 for permission to

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amend the description of the property in the execution

petition. On February 20, 1995 the executing court by a

common order dismissed the appellants petition and allowed

the respondents petition. The appellant filed the

aforementioned two Civil Revision Petitions in the High

Court challenging the validity of the said common order.

The High Court dismissed the revision petitions by the

impugned order and thus the appellant is before us in these

appeals.

Mr. T.L.V. Iyer, learned senior counsel appearing for

the appellant, argued that the compromise between the

parties did not extinguish the decree itself; it merely

postponed the execution of the decree and as the respondent

did not vacate the premises on the expiry of three years

granted to him, the appellant is entitled to have the decree

executed and recover possession of the premises. In any

event, submits the learned senior counsel, as the

compromise/adjustment of the decree was not recorded by the

executing court in view of Rule 3 of Order 21, the court

cannot recognise the same and hold that the decree was

extinguished in proceeding under Section 47 of the Code of

Civil Procedure (for short, 'the C.P.C.').

Mr.S.Sivasubramaniam, leaned senior counsel appearing

for the respondent, contended that the compromise and

execution of a new lease deed for three years, during the

pendency of the execution proceedings, extinguished the

decree; as the respondent would be enjoying the protection

of the Act, he was not liable to be evicted under the

existing decree. He argued that Order 21 Rule 2 of the

C.P.C. was enacted for the benefit of a decree holder and

that apart no mode of recording adjustment of the decree by

the court having been prescribed under the C.P.C., the order

of the court dismissing the E.P. on filing of the memo of

compromise would amount to recording adjustment of the

decree within the meaning of Rule 2 of Order 21 of the

C.P.C., therefore, the executing court rightly took note of

the compromise and dismissed the E.P.

In view of these contentions, the point that arises for

consideration is : whether in view of the compromise

entered into between the parties and execution of a new

lease deed, the ex parte decree dated May 2, 1990 got

extinguished as such the appellant cannot get possession of

the premises in execution of the existing decree.

It may be pointed out here that after the rights of the

parties are crystallised on passing of a decree by a

competent court, in law they are not precluded from settling

their disputes outside the court. But to have the

compromise recognised by a court, it has to be recorded

under Rule 2 of Order 21, C.P.C. The consequence of not

having it so recorded is contained in Rule 3 of Order 21 of

the C.P.C. Rules 2 and 3 of Order 21 read as under :

2.Payment out of Court to decree-holder -

(1) Where any money payable under a decree of any kind

is paid out of Court, [or a decree of any kind is otherwise

adjusted] in whole or in part to the satisfaction of the

decree-holder, the decree-holder shall certify such payment

or adjustment to the Court whose duty it is to execute the

decree, and the Court shall record the same accordingly.

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(2) The judgment-debtor [or any person who has become

surety for the judgment-debtor] also may inform the Court of

such payment or adjustment, and apply to the Court to issue

a notice to the decree-holder to show cause, on a day to be

fixed by the Court, why such payment or adjustment should

not be recorded as certified; and if, after service of such

notice, the decree-holder fails to show cause why the

payment or adjustment should not be recorded as certified,

the Court shall record the same accordingly.

(2-A) *** *** *** ***

(3) A payment or adjustment, which has not been

certified or recorded as aforesaid, shall not be recognised

by any court executing the decree.

Sub-rule (1) of Rule 2, noted above, requires that

where any money payable under a decree is paid out of Court

or the decree of any kind is otherwise adjusted in whole or

in part to the satisfaction of the decree-holder, he shall

certify that payment or adjustment in the Court which is to

execute the decree and the Court is enjoined to record the

same. Sub-rule (2) thereof enables the judgment-debtor or a

person who has become surety for him to inform the Court of

such payment or adjustment and prescribes the procedure to

have it recorded. Rule 3 prohibits every Court executing

the decree from recognising a payment or adjustment which

has not been certified or recorded by the Court under the

aforementioned sub-rules.

This Court after reviewing the entire case law in

Sultana Begum vs. Prem Chand Jain [1997 (1) SCC 373] laid

down as follows :

It is open to the parties namely, the decree-holder and

the judgment-debtor to enter into a contract or compromise

in regard to their rights and obligations under the decree.

If such contract or compromise amounts to an adjustment of

the decree, it has to be recorded by the court under Rule 2

of Order 21. An agreement, contract or compromise which has

the effect of extinguishing the decree in whole or in part

on account of decree being satisfied to that extent will

amount to an adjustment of the decree within the meaning of

this rule and the court, if approached, will issue the

certificate of adjustment. An uncertified payment of money

or adjustment which is not recorded by the court under Order

21 Rule 2 cannot be recognised by the executing court. In a

situation like this, the only enquiry that the executing

court can do is to find out whether the plea taken on its

face value, amounts to adjustment or satisfaction of decree,

wholly or in part, and whether such adjustment or

satisfaction had the effect of extinguishing the decree to

that extent. If the executing court comes to the conclusion

that the decree was adjusted wholly or in part but the

compromise or adjustment or satisfaction was not recorded

and/or certified by the court, the executing court would not

recognise them and will proceed to execute the decree.

That decision was followed by this Court in Badamo Devi

& Ors. vs. Sagar Sharma [1999 (6) SCC 30].

Where in any execution proceedings objection to

executability a decree is taken under Section 47 of the

C.P.C. on the ground that by virtue of a compromise, the

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decree got extinguished and became inexecutable, the germane

question that should be asked is whether the compromise was

recorded by the court whose duty it is to execute the

decree.

As long back as in 1939, the Privy Council in The Oudh

Commercial Bank Limited vs. Thakurain Bind Basni Kuer &

Ors. [1938-39 (66) PC 84] laid down the law on the subject

as follows :

"If it appears to the Court, acting under Section 47,

that the true effect of the agreement was to discharge the

decree forthwith in consideration of certain promises by the

debtor, then no doubt the Court will not have occasion to

enforce the agreement in execution proceedings, but will

leave the creditor to bring a separate suit upon the

contract. If, on the other hand, the agreement is intended

to govern the liability of the debtor under the decree and

to have effect upon the time or manner of its enforcement,

it is a matter to be dealt with under Section 47. In such a

case to say that the creditor may perhaps have a separate

suit is to misread the Code, which by requiring all such

matters to be dealt with in execution discloses a broader

view of the scope and functions of an executing court.

Their Lordships are in agreement with the statement in the

case of Goburdhan Das (I) that in numerous cases a

compromise between the decree-holder and the judgment-

debtor entered into in the course of execution proceedings,

which was duly recorded, has been enforced and they are not

of opinion that the practice, which is both widespread and

inveterate, is contrary to the Code. They are of opinion

that in the present case the compromises can and should be

enforced in these execution proceedings".

This Court in Smt.Kalloo & Ors. Vs. Dhakadevi & Ors.

[1982 (3) SCR 207} held as follows :

"When a compromise petition is filed in an execution

proceeding, and a contention is raised by the

judgment-debtor on a subsequent execution being started by

the decree-holder that the compromise has given rise to a

fresh contract between the parties and that the decree

sought to be executed is not executable, what is to be seen

is whether the decree has been extinguished as a result of

the compromise and a fresh contract has emerged. When a

compromise takes place in the course of execution of a

decree for eviction, the compromise may extinguish the

decree and create a fresh lease, or the compromise may

provide a mere mode for the discharge of the decree. What

actually takes place depends on the intention of the parties

to the compromise. And the intention has to be gathered

from the terms of the compromise and the surrounding

circumstances including the order recorded by the Court on

the basis of the compromise".

In a case where parties compromise after the decree in

a case has been passed, the effect of the compromise on the

executability of the decree depends upon the intention of

the parties, which is a mixed question of law and fact and

has to be determined by the executing court on an

application under Section 47 of the C.P.C. on

interpretation of the decree and the compromise in the light

of the facts and circumstances of each case. If on such

determination it is gathered that the intention of the

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parties is to extinguish the decree and either the decree

holder or the judgment-debtor got the compromise recorded

under Rule 2 of Order 21 of the C.P.C. by the court whose

duty it is to execute the decree, the execution of the

decree cannot be proceeded with by the executing court. But

if the intention of the parties is to keep the decree alive

and to give effect to it in the manner agreed upon between

the parties in the compromise, the decree will be given

effect to accordingly or executed as it is depending upon

whether the compromise is recorded by the court as

aforementioned or not.

In the instant case, as noticed above, after the decree

was passed in favour of the appellant for ejectment of the

respondent, the parties entered into compromise during the

pendency of the execution proceedings which, inter alia,

mentions that a portion of the suit premises was handed over

to the appellant and in respect of rest of it the respondent

was allowed three years to vacate the suit premises and hand

over possession of it to the appellant for which an

agreement of lease was also entered into between the

parties. Clause (6) of the compromise memo is as follows :

"(6) On the expiry of 3 years from the date of the

agreement if the tenant does not surrender vacant possession

of the above referred properties, the landlord shall be

entitled to execute the order of eviction granted in RCOP

No.2852/89 without any notice to the tenant (except 3 pump

sets and other movables)."

On filing of the compromise in the Court, the E.P. was

dismissed as not pressed. There is thus no recording of the

compromise as contemplated in Rule 2 of Order 21, therefore,

the court cannot recognise the compromise having regard to

the language of sub-rule (3).

However, the contention of the respondent, based on the

finding of the executing court that the parties have entered

into a new lease in respect of the suit premises on 7.11.90,

is as a new lease was entered into between the parties, he

is entitled to the protection of the Act and unless a fresh

decree of eviction is passed against the respondent by a

competent court, the appellant cannot evict him from the

suit premises by executing the existing decree. On a plain

reading of the decree, the memo of compromise and on the

facts of this case, we have no doubt that the existing

decree is not extinguished. The parties agreed upon the

mode and time of the enforcement of the decree by satisfying

the decree in part and postponing the execution of the

decree in respect of the remaining part by three years.

The fact that the parties entered into a new lease deed

for three years pursuant to the compromise cannot be taken

note of for reasons more than one. First, because the

compromise was not recorded under Rule 2 of Order 21 and

secondly, because the agreement of tenancy though for three

years is not a registered document as it should be in view

of the provisions of Section 107 of the Transfer of Property

Act and Section 17 of the Indian Registration Act. Be that

as it may, we do not propose to rest our decision on the

second ground as this point was not taken either before the

executing court or before the High Court. We are now left

with the first reason only. The executing court has simply

dismissed the earlier E.P. as not pressed. It did not

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record the compromise between the parties, for this reason

alone the compromise cannot be pleaded to bar the execution

of the decree in view of the provisions of Rule 3 of Order

21 of the C.P.C.

However, the contention of Mr.Sivasubramaniam is that

as no specific procedure or method of recording the

adjustment has been prescribed under the rules, the order

dismissing the E.P. as withdrawn must to be taken as

recording of the compromise by the executing court. We are

afraid, we cannot accept this contention of the learned

counsel. It is true that no specific procedure or formula

is prescribed for recording the adjustment in the said

Rules; what is required under rule (2) is that the Court

should take cognizance of the fact of the compromise and

pass appropriate orders accepting or giving effect to it.

Admittedly, no such order is passed in this case. Even

assuming, without so holding that the order amounts to

recording of the compromise inasmuch as it did not have the

effect of extinguishing the decree, as held above, the

decree has to be executed. The compromise indicates that

there has been part satisfaction of a part of the decree and

in regard to the remaining part, they contemplated granting

time for three years to the respondent for vacating the

premises. Even so, this does not justify the conclusion

that the decree has become inexecutable with regard to the

rest of the suit premises.

This being the position, there is no legal bar to have

the decree executed and the executing court has clearly

erred in recalling its earlier order of November 16, 1993,

directing the delivery of possession to the appellant. The

High Court also fell into an error in confirming the order

of the executing court.

For the above reasons, we are unable to sustain the

order under challenge. The appeals are accordingly allowed;

the order of the High Court dated June 19,1997 passed in

C.R.P.Nos.2705-06/96 confirming the order of the executing

court dated February 20, 1995, is set aside. Consequently,

the executing court shall give effect to the order passed on

November 16,1993. The respondent shall pay the costs of

these appeals to the appellant.