SHAMRAO JAIRAM ARBHAT Vs. UTTAM BHOMAJI MODAK

JUDGEMENT

(1.) DOES section 74 of the Indian Contract Act operate also upon the consent decree is the principal question involved in this second Appeal?

(2.) THE point arises against the following factual background. Respondent (judgment -debtor) executed a registered sale deed dated 8 -4 -1961 purported to transfer 1/2 share in field survey No. 29/6, measuring 7 acres 13 gunthas of village Nakhegaon, taluqa Akot, District Akola in favour of the appellant (original decree -holder). Despite recital in the sale deed that possession of 1/2 portion was handed over, common point is that it was not. Indeed, the case of the decree -holder is that this was not done in view of certain understanding between the parties. A civil suit came to be filed some time in the year 1965 for possession of the property. On 14 -3 -1966, a compromise petition was filed in the Court under which the subject matter of the suit was settled for a sum of Rs. 1900/ - . This amount was payable in two installments, Rs. 900/ - on 1 -1 -1967 and the balance of Rs. 1000/ - on 1 -1 -1968. In default of any installment, the decree -holder was entitled to take possession of the property. The amount did not carry any interest and parties agreed to bear their own costs. First installment of Rs. 900/ - was not paid on 1 -1 -1967 and therefore, execution proceedings were filed on 10 -3 -1967. On 14 -4 -1967, judgment -debtor appeared and applied to the Court for permission to deposit the entire sum of Rs. 1900/ - . The said permission was granted. However Darkhast proceeded as the decree -holder insisted upon a decree for possession in terms of the compromise. Evidence was recorded. The trial Court recorded a finding that the market value of the property at the relevant time was between Rs. 12,000/ - to Rs. 15,000/ - and the term regarding obtaining possession in default in terrorem. Holding that under section 74, this term cannot be enforced under the circumstances, darkhast for possession was filed. Being aggrieved by the said decision, the decree -holder carried an appeal but the same was dismissed.

(3.) I find it difficult to accept the submissions on the question and so also to concur with the approach adopted by the learned Judge. Section 74 applies to a contract and makes no distinction between a contract outside the Court and inside the Court, a contract does not cease to be a contract merely by virtue of the fact that decree has been obtained on that basis. Moreover, this section does not make any distinction between the regular Court and the executing Court as regards the jurisdiction to examine its applicability. Under Order 23, Rule 3 Civil Procedure Code while recording a compromise and to pass decree on that basis, the scope of scrutiny is very limited and all that Court can examine is whether agreement is lawful or No. An agreement carrying a penal clause is not always unlawful and illegality may not be apparent on the face of the terms. The question of exercise of discretion of interfering with the terms and not enforcing them will depend upon many factors that are brought on record which is possible only when there is a contest. If a view is taken that once compromise is recorded, the Court would be powerless in the matter, the policy of law would be reversed and object would be frustrated. Contract does not cease to be a contract only because order of Court is super -added to it. Moreover, it is not correct to assume that there is no distinction between a decree on merits and the one passed on terms. The first distinction lies in the fact that while the decree on merits is appealable, the decree on consent is not. Secondly, agreement between the parties may be voidable at the option of one of the parties and compromise decree itself may be set aside on the ground of fraud, undue influence etc. and thus compromise decree may not claim the same sanctity as a decree on judgment on merits. At the stage of recording of compromise, the Court is precluded from coming to any conclusion of its own and has to record a lawful compromise as presented. By and large, that is the function of the Court at that stage and not beyond it. These are my reasons for upholding the decision of the Executing Court of going behind the decree and embarking upon enquiry as to whether term of the compromise regarding delivery of possession of the valuable immovable property worth mote than Rs. 12,000/ - in default of one installment of money decree of total sum of Rs. 1900/ - was in terrorem. Apart from the division bench decision of Gujarat High Court in Gandhi Gopaldas v. B. Lalitabai : A I R 1971 Guj 270 overruling aforesaid single bench decision, there is a host of cases taking a different view of the matter on which reliance was placed by the respondent. They are Mohiuddin v. Mt. Kashmire : A I R 1933 All. 252, Hiralal v. Durga Bai, AIR 1937 Ngp. 413, Chimma v. Chunilal : AIR 1957 Raj. 378 and Shyam Sunder v. Indramoni Das : A I R 1951 Ori 46.