Bombay High Court
The Blind Relief Association & Others vs The State Of Maharashtra & Others on 29 November, 1999
Equivalent citations: 2000(2)BOMCR262, (2000)1BOMLR706, 2000(3)MHLJ372, 2000 A I H C 1649, (2000) 3 CIVILCOURTC 275, (2000) 3 MAH LJ 372, (2000) 1 ALLMR 460 (BOM), 2000 BOM LR 1 706, (2001) 1 CIVLJ 489, (2001) 2 BANKCLR 115, (2000) 2 BOM CR 262
Author: T.K. Chandrashekhara Das
Bench: T.K. Chandrashekhara Das
ORDER T.K. Chandrashekhara Das, J.
1. This Chamber Summons is taken out by the defendant No. 8 in Suit No 2231 of 1999. The said suit came to be filed by the plaintiffs for mainly challenging the order passed by the defendant No. 1 State of Maharashtra that threatened to cancel the lease in favour of the plaintiff as per the orders dated 22-9-1999 and 10-3-1999 passed by the third respondent, Collector of Bombay City annexed to the plaint as Exh. U & V respectively. The suit has been disposed of by this Court by order dated 6th September, 1999 passed by my learned brother H.L. Gokhale, J. The said order amplifies that dispute cropped up therein were among three parties unlike in normal suit. Paragraph 4 of the order makes it amply clear this peculiar aspect of the case, which reads as under :
"The defendant No. 4 and its representatives had earlier agreed to vacate the concerned premises but in view of further life give to them by the defendant No. 1 in their orders, the present suit became necessary. The learned Counsel on all the three sides have made their best efforts to see to it that the controversy is resolved amicably and have arrived at the Consent terms which are being tendered to this Court today."
2. Apart from the consent terms the courts also make certain orders therein. Therefore, the order passed by this Court on 6th September, 1999 mainly consists of two parts; (1) the order passed by the Court and (2) the orders passed by the Court in terms of consent terms. The Court has, obviously, for the convenience sake made the order in two parts. It is significant to note at this juncture that the first part of the order concludes by paragraph 17 that liberty to the parties to move in the event of any difficulty. Now I have to come to the facts of the case in some detail, as, it is necessary and useful to decide the controversy involved in this case.
3. In 1969, the State of Maharashtra leased to the 1st plaintiff, the Blind Relief Association, a social organization a plot of land for 99 years for the purpose of constructing a building to house the blind school on the nominal lease rent payable at Re. 1 per year. Accordingly, 1st plaintiff started a blind school called "Happy Home & School for the Blind", the 6th plaintiff herein. The 6th plaintiff, after constructing multi storied building in the lease hold land, permitted M/s. Deluxe Caterers Private Limited, defendant No. 4 herein to use and occupy the ground floor on the building on a leave and licence basis for five years for the purpose of running restaurant. The said restaurant is called "Copper Chimney Restaurant". During the currency of the licence, the aforesaid licence, Bombay Rent Act, 1947 was amended and M/s. Deluxe Caterers, defendant No. 4 has become entitled to protection as tenant and it sought such protection under the Act. The 6th plaintiff thereupon filed suit in the Small Causes Court, Bombay as Suit No. 1782/6521 of 1978 inter alia seeking eviction of the 4th defendant. Another suit more or less for the same reliefs has been filed by the 6th plaintiffs as Suit No. 2698/978 of 1979 against 4th defendant. These two suits were compromised and a consent decree was passed on 24th December, 1997. As a result of this compromise, 4th defendant has agreed and undertook to hand over vacant possession of the suit premises to 6th plaintiff on or before 31st December, 1997. It appears that the time for vacating the premises by the 4th defendant was consequently varied and time to vacate was extended till 31-3-1999. In the meantime on 20-2-1999, a show cause notice was issued by 3rd defendant, Collector of Bombay as to the cancellation of lease in favour of the first plaintiff and the lease was cancelled by order dated 10th March, 1999 which I have already referred to above as Exh. U & V respectively. It seems that in the meantime, an attempt was made by 4th defendant to avoid eviction from suit premises and made representation to the Chief Minister and in view of the order passed on 23-9-1999 by the Under Secretary, Government of Maharashtra directed 4th defendant to continue in occupation of the suit premises. Consequently on 23-9-1999, 4th defendant files Misc. Application No. 234 of 1999 in Small Causes Court praying to be relieved himself from the undertaking made before the Court to vacate the premises by 31st March, 1999. In these circumstances, the present Suit No. 2231 of 1999 was filed by the plaintiff for cancellation of these orders Exh. U and V with other consequential reliefs.
4. On 19-4-1999 ad interim order was passed by this Court in this suit staying the order dated 10-3-1999. Plaintiff also filed Contempt Petition No. 213 of 1999 on the allegation that interim order passed by this Court on 19th April, 1999 has been violated. On 11-8-1999, Small Causes Court however, rejected the application filed by the 4th defendant and refused to relieve the 4th defendant from its undertaking. It is in this circumstances, that parties arrived at a compromise and the order was passed by this Court on 6th September, 1999 referred to above. In terms of that order. Contempt petition stood disposed of. As also it was agreed as per order dated 6th September, 1999, passed by this Court, 4th defendant has to raise the security deposit of Rs. 18 lacs to Rs. 25 lacks and Rs. 3 lacs to be paid as mesne profits per month and Rs. 25,000/- towards donation per month. Defendant No. 4 has also paid Rs. 1.25 lacs towards the donation for five months from April to August, 1999. It is necessary in this context to refer to some of the clauses of the consent terms agreed to between the parties on 6th September, 1999 :
"4(a). Defendant No. 4 through its Managing Director defendant No. 8 (hereafter referred to as "Sunil Kapur") who is present in Court reaffirms and reiterate the terms, conditions and undertakings contained in the order dated 24th December, 1987 and 16th December, 1987 both passed by the Hon'ble Small Causes Court at Mumbai (Exhibits "L" and "P" to the plaint) and in order of this Hon'ble Court dated 27th November, 1987 (Exhibit "K" to the plaint) defendant No. 4 and Sunil Kapur irrevocably undertakes to this Hon'ble Court to abide by all the agreements, order, terms, conditions and undertakings contained in the aforesaid orders and decrees. It is ordered and agreed that the sum of Rs. 1,80,000/- deposited by defendant No. 4 as an interest free deposit with plaintiff No. 6 shall, at or before the signing of these consent terms be augmented by a further interest free deposit of Rs. 7,00,000/- to be made by defendant No. 4.
(b) It is ordered and agreed that in the event of the breach of any of the agreements, terms, conditions, orders and/or undertakings contained in these terms and/or the aforesaid orders, the said interest free deposit of Rs. 25,00,000/- shall forthwith stand forfeited.
4. The plaintiff and defendant No. 4 agree that the aforesaid decree for possession of the said premises (i.e. the area of 3380 sq. ft. in the occupation of defendant No. 4 on the ground floor of the building on C.S. Nos. IA/54 and IC/54 of Lower Parel Division) as well as the decree for possession contained in the aforesaid orders passed by the Hon'ble Small Causes Court shall not be executed until 31st March, 2002. The defendant No. 4 shall on or before 31st March, 2002 hand over to the plaintiffs, peaceful vacant and unencumbered possession of the said premises in an undamaged condition without any further action of any nature whatsoever. The plaintiff agrees not to execute the decrees, as aforesaid, subject to the following conditions, orders and undertakings being complied with;
(i) That Mr. Julio Ribeiro (plaintiff No. 7) be and is hereby appointed as Receiver of the said premises with directions to appoint defendant No. 4 as his agent in respect of the said premises on payment by defendant No. 4 of mesne profit of Rs. 3,00,000/- per month (without any deduction) as well as all other amounts payable by defendant No. 4 under the orders set out in paragraph 4 above including property and municipal taxes and charges and all increases thereof on the 5th day of each month commencing from 7th September, 1999 .....
(ii) That the Receiver, is ordered to pay the amount of mesne profit of Rs. 3,00,000/- per month (without any deductions therefrom) together with the other amounts mentioned in (i) above to the plaintiff on the 7th day of each month commencing from 7th September, 1999.
(iv) Defendant No. 4 and Sunil Kapur do agree and undertake to this Hon'ble Court to make a lump sum donation of Rs. 1,25,000/- to plaintiff No. 8 to be paid on or before the signing of these terms. Defendant No. 4 and Sunil Kapur do agree and undertake to make a donation of Rs. 25,000/- per month on or before 7th day of each month commencing from 7th September, 1999 till 31st March, 2002.
(v) That defendant No. 4 and Sunil Kapur are directed and defendant No. 4 and Sunil Kapur hereby agree and undertake to this Hon'ble Court.
(a) to pay all the aforementioned amounts mentioned in (i), (ii) and (iv) above promptly and without any delay.
(b) not to apply for any extension of time or other indulgence in respect of payment of the aforesaid amounts mentioned in (i), (ii) and (iv) above.
(c) to peacefully hand over vacant and unencumbered possession of the said premises to the Receiver on or before 31st March, 2002 and not to apply for any extention of time or other indulgence in respect thereof on any ground whatsoever, including any purported cancellation/termination of the lease under which the said land is held by the plaintiff No. 1.
(vii) That on any default or failure of defendant No. 4 and/or Sunil Kapur to fully comply with any of the undertakings, agreements, others directions and/or conditions, (referred to in paragraphs 2, 4 and/ or 5 of these terms) it is ordered and decreed that :
(a) Defendant No. 4 shall forthwith hand over vacant unencumbered and peaceful possession of the said premises to the Receiver, without prejudice to any other rights or remedies that may be available to the plaintiffs.
(c) Defendant No. 4 and Sunil Kapur agree and undertake to this Hon'ble Court to make the aforesaid payment and to hand over the aforesaid possession of the said premises, in the event of the said delay, default or failure.
8. It is clarified, agreed to and ordered that on any of the aforesaid undertakings, agreements, orders terms and/or conditions being breached and/or on 31st March, 2002 (whichever is earlier), the aforesaid decree for possession shall become executable forthwith and the aforesaid Receiver shall act as a Receiver in execution without prejudice to the other rights and/or remedies available to the plaintiffs."
5. As laid down in the aforesaid Clauses 4(i), (iii) and (iv), defendant and Sunil Kapur (defendant No. 8) has to pay an amount of Rs. 3 lacs per month along with other amounts mentioned therein to the plaintiff on the 7th day of each month commencing from 7th September, 1999. Likewise defendant No. 4 and defendant No. 8 have to pay donation of Rs. 25,000/- per month on or before 7th day of each month commencing from 7th September, 1999. Rs. 3 lacs to be paid to the Receiver Mr. Julio Ribeiro, plaintiff No. 7 on 5th of every month who in turn to pay aforesaid Rs. 3 lacs to plaintiff on 7th of every month.
6. It is the common case of the parties that there was no controversy regarding the monthly payment stipulated in the aforesaid clauses relating to the month of September, 1999. The controversy in this case in fact arose with regard to the payments relating to the month of October, 1999. It is revealed from the pleadings that in compliance with the aforesaid terms, the amounts due in October, 1999, two cheques were issued; one for Rs. 3 lacs, and another for Rs. 25,000/- by the defendant No. 4 on 5th October, 1999 and handed over the same on 7th October, 1999 and the cheques were accepted by the plaintiff and deposited in their bank for encashment. It is alleged that the banker of the plaintiff told plaintiff on 8th October, 1999 that the aforesaid cheques were dishonoured. According to Counsel for the plaintiff Mr. Seerwai since the cheques issued by the defendant No. 4 (vii) were dishonoured and committed default in making the payment and default clause namely Clause No. 4 (vii) became automatically operative and defendant No. 4 had to hand over vacant and peaceful possession to the receiver and failing which Rs. 50,000/- per day for each delay sic days will incur. For completing the narration of facts, it is disclosed across the bar, the keys were handed over by the defendant No. 4 to the Receiver to avoid payment of penalty of Rs. 50,000/- per day.
7. The present Chamber Summons as indicated earlier taken out by defendant No. 4 for certain declarations declaring inter alia that the dishonouring of the cheques does not constitute a default and consequently default clause contained in consent order will not operate against him. According to defendant No. 4 there were sufficient funds in his account in the drawee Bank, City Bank and City Bank by mistake dishonoured the cheques and therefore, in law and on facts defendant No. 4 did not commit any default and default clause contained in the consent order will not operate. Chamber Summons contained also an alternate prayer to condone the default and extend the time for payment. In order to substantiate this defendant No. 4 caused to file affidavit sworn in by Ms. Anjali Mohanti, Relationship Manager of City Bank, NA. The same has been taken on record and marked as "X" for identification. It is clearly stated in the affidavit that despite sufficient funds in the account of defendant No. 4 M/s. Deluxe Caterers Private Limited, the cheque of 5th October, 1999 for Rs. 3 lacs and Rs. 25,000/- were erroneously returned on 8th October, 1999 on account of an occasional processing error despite highest standards of control. It is also stated that such facts has been informed to the defendant No. 4 on 16th October and 18th October, 1999 by letters. Copy of these letters are also annexed to the affidavit. They have also mentioned that error has occurred by mistakenly calculating the withdrawable amount of M/s. Delux Caterers. It is also stated that this fact has been informed to M/s. Delux Caterers only on 16th October, 1999. The learned Counsel for the plaintiff Mr. Seerwai however, points out to me some discrepancy in the affidavit filed by the Bank and in the affidavit filed by Mr. Kapur who sworn in affidavit on 20th October, 1999 wherein he stated that till that date, City Bank has not informed about the dishonour. I do not feel this discrepancy will any way affect the fact that sufficient funds were there when the cheque was presented on 7th October, 1999 in the accounts of 4th defendant. Pertinently it may be noted that it is not the case of the plaintiff that there was no funds in the account of the 4th defendant when cheques were issued on 5th October, 1999, nor it is the case of the plaintiff that the City Bank in collusion with defendant No. 4 manipulated the accounts so as to cover up the failure on the 4th defendant to have sufficient funds to honour the cheque issued by 4th defendant on 5th October, 1999. In the absence of such allegation, the discrepancies pointed out by the Counsel for the plaintiff in the affidavit of Mr. Kapur and Ms. Anjali Mohanti assumes no significance. On the other hand, the City Bank is coining with the case of "mistake. Therefore, I have to believe what is stated by the affidavit filed by the City Bank to be true. Apart from that I have also asked the City Bank to produce the extract of the accounts of the 4th defendant maintained in the City Bank during the relevant days and accordingly they have produced the computerised extracts of accounts of the 4th defendant during the period from 1st September to 30th September, 1999 and 1st October, 1999 to 31st October, 1999. The same has been taken on record and marked Exh. "Y" and "Z" for identification. On perusal of these statements I have no hesitation to hold that there is nothing in this case to disbelieve the statement contained in the affidavit of Ms. Anjali Mohanti on 21st October, 1999. So for the purpose of this case, we have to proceed on the premise that the cheques issued by 4th defendant on 5th October, 1999 were dishonoured not on account of any insufficiency of funds in the bank but on account of a sheer mistake or error committed by the City Bank. In this factual matrix, I have to examine rival contentions of the parties.
8. The learned Counsel for the defendant No. 4 Mr. Dwarkadas has submitted that default clause contained in the consent order does not operate against 4th defendant as he is not in default in making the payment and therefore, is entitled to have declaration sought for in the Chamber Summons. Firstly, he contended that in order to attract default clause, there must be willful default on the part of the 4th defendant. When 4th defendant issues cheque on the bona fide belief that there was sufficient fund and in fact there was sufficient fund, but, if out of sheer mistake the cheque is dishonoured, it cannot be said that 4th defendant has defaulted in making the payment as per the consent order. He drew my attention to the dictionary meaning of the word "default". According to Oxford Dictionary, default means :
"Failure to fulfill obligations especially to pay the money"
In Black's Law Dictionary, default means :
"A failure, an omission of that which ought to be done. .... The term also embraces the idea of dishonesty and of wrongful act."
In The Law Lexicon, default means :
"Default means omission, neglect or failure : a failure or omission to do something required: ommission to do that which ought to have been done by one of the parties; non-performance of duty: a failure in the performance of an obligation; neglect or omission of a legal requirement ; fault, transgression ; not doing what is reasonable under the circumstances."
9. Mr. Seerwai contested this contention of Mr. Dwarkadas. If the present clause to operate, it is not necessarily to be willful default. The willful default is relevant according to Mr. Seerwai, only in criminal act. In the Law Lexicon Willful default means : "The word 'willful' does not merely connote that the delinquent was a free agent. The expression willful neglect shows that the neglect was on the part of a person who was not only free agent but who was conscious of the consequences which are likely to ensue from his act or ommission or was recklessly indifferent as to such consequences and that if he had not been so indifferent he would have known what the consequences would be."
10. Willful default according to Black Dictionary, the default must be result of deliberation or intention or to be conscience of the reckless omission. However, it says that the element of extent of inadvertent or honest error of judgment should be eliminated. In the context of these dictionary meaning assigned to the word "default", I have to agree with the contention of learned Counsel Mr. Seerwai. Default clause in order to become operative, it need not necessarily be willful default. If in a contract, default clause is incorporated without the adjective 'willful' then simple failure or omission to pay what ought to have paid, will amount to default. "Default" and "Willful default" operates in two mental plains. The later is in an higher degree of the former. Even on account of passiveness a failure or omission to do a thing may occur; If the argument of Mr. Dwarkadas is accepted, wherever there is no dishonest or deliberate act or omission, the default clause will not become operative. If that be the legal position, even mere inability to pay out of poverty or incapacity to pay, a defaulter will escape from the liability. Therefore, to this limited purpose, viewing its very technicality, I have to proceed on the basis that in fact there is a default. In this premise, a very controversial and debatably volatile question arose in this case. If the party commits a default in the terms of the consent decree and that default is not on account of any act or omission on the part of the party who is alleged to be in default and in that circumstances if a party is not responsible for such failure, can this Court condone the default to eliminate the manifest injustice by exercising the power of this Court under section 148 or section 151 of Code of Civil Procedure. This Court had to examine this controversy as early as in the year 1949 in the case of Waman Vishwanath Bapat v. Yeshwant Tukaram, reported in A.I.R. 1949(36) Bom. 97 : 50 Bom.L.R. 688. The Full Bench of this Court examining the controversy, in the above case held that the consequences of the default in the consent decree if amount forfeited, then this Court can condone and discharge forfeiture. If on the other hand defaulter is availing a concession provided under the consent decree, then Court has no power to condone his default. It is profitable to reproduce the observations in para 5 of the learned Justice Mr. Chagla, the Acting Chief Justice, as he then was :
"There are two conflicting views which have been taken by this Court on this question and the two protagonists of these two views are Sir. John Beamount and Sir Norman Macleod, two learned Chief Justices of this Court. Sir John Beamount in Burjorji Shapurji v. Madhavlal Jesingbhai, 58 Bom. 610 : A.I.R. 1984(21) Bom. 370 was considering a case where a certain amount was made payable under the decree and it was provided that if a certain amount was paid on the dates specified, then satisfaction was to be entered up. In default of payment on the due date, the full amount under the decree became payable. The Judgment-detor failed to pay the smaller amount on the due date and the decree holder applied for execution and the question arose whether the delay in payment on the due date should be condoned and Sir. John Beamount took the view that what the decree holder had done was to have made a concession to the judgment-debtor, the concession being that if he paid the smaller amount by a particular date, full satisfaction would be entered up, but in default of payment on the due date the amount actually due under the decree would become payable, and the learned Chief Justice took the view that the provision for the payment of the full amount in default of payment of the smaller amount on the due date was not in the nature of a penalty and the Court could not relieve against the breach committed in the failure to pay the amount on the due date. At p. 617 the learned Chief Justice sets out the law which he says is not open to any serious questions and what he says is this :
"If there is an agreement to pay a sum of money by a particular date with a condition that if the money is not paid on that date a larger sum shall be paid, that condition is in the nature of a penalty against which a Court of equity can grant relief and award to the party seeking payment only such damages as he was suffered by the non-performance of the contract. But if, on the other hand, there is an agreement to pay a particular sum followed by a condition allowing to the debtor a concession, for example, the payment of a lesser sum, or payment by installments, by a particular date or dates, then the party seeking to take advantage of that concession must carry out strictly the condition on which it was granted, and there is no power in the Court to relieve him from the obligation of so doing."
11. The aforesaid decision has been relied upon by the Division Bench of this Court in Gajanan Govind Pathak v. Pandurang Keshav Puntambekar, where Gajendragadkar, J., examinging the Full Bench decision of this Court in Waman v. Yeshwant, reported in 50 Bom.L.R. 688 rendered by Lord Sir John Bimount and also Krishnabai v. Hari, 7 Bom.L.R. 813 : 31 Bom. 15 which was rendered by Maxleode, C.J., and it is observed in paragraph 4 and 5 as under :
Para (4) :
"We must however, proceed to examine the contention urged before us by the applt. that this decision is inconsistent with the subsequent F.B. decision in Waman v. Yeshwant, 50 Bom.L.R. 688 : A.I.R. 1949(36) Bom. 97(F.B.), the F.B. was dealing with a mtge. decree which was passed on an award. The decree directed the judgment-debtor to pay the decretal amount by certain installments and it provided that if the judgment-debtor fail to pay any two installments regularly, the decree-holder would be entitled to realise the moneys due to him by getting the mortgaged property sold through Ct. The judgment-debtor failed to pay two installments regularly and the decree holder sought to exercise his right to recover the whole amount due by sale of the properties. There upon the judgment debtor pleaded to be relieved against the said claim. The question as to whether in such a case the executing Ct. was entitled to grant relief to the judgment-debtor had given rise to conflicting decisions and so the matter was referred to the F.B. As was pointed out by Chagla, Ag. C.J., as he then was, who delivered the judgment of the F.B. the two protagonists of these conflicting views were Sir. John Beamount and Sir. Norman Macleod. The F.B. in Woman's case, 50. Bom.L.R. 688 : A.I.R. 1949(36) Bom. 97(F.B.) preferred the view expressed by Beaumount, C.J., and ruled that the contrary view adopted by Macleod, C.J., on several occasions should be treated as no longer good law. Shortly stated the view accepted by the F.B. was that if it appears that the decree in question directs a certain sum of money to be paid by a particular date and adds a condition that if the said money is not paid on the said date a larger sum shall be paid, that condition is in the nature of a penalty against which a Ct. of equity can grant relief and award to the party seeking payment only such damages as he may have suffered by the non-performance of the term as to the payment of the money. On the other hand, if the decree makes particular sum payable on a certain date and it follows the said direction by a condition allowing to the debtor a concession, as for example, the liberty to pay a lessor sum or to pay the said sum by installments, then the party who seeks to take advantage of that concession must carry out strictly the condition on which the concession was granted. If the terms on which the concession was thus given are not carried out, there is no power in the Ct. to relieve the defaulting party from the obligation of so doing ....."
In para 5 of the judgment it is held thus :
"It would thus be clear that the two F.B. decisions do not cover the same or similar ground & were in fact dealing with entirely different situations. The earlier F.B. was dealing with a compromise decree creating the relationship of landlord and tenant and it was hold that the equitable jurisdiction to give relief to the tenant against the landlords' claim for forfeiture and re-entry can be exercised by Cts. even though the said relationship of landlord and tenant is the result of the terms of a compromise decree. In a sense, therefore, this decision recognizes an exception to the rule that consent decrees can be varied only by consent. On the other hand, the subsequent. F.B. decision in Woman's case, 50 Bom.L.R. 688 : A.I.R. 1949(36) Bom. 97(F.B.) was not concerned with compromise decrees of this kind. In this latter F.B. case the question was as to the powers of the executing Ct. to grant relief to the judgment-debtors to pay certain amounts on specified dates or within a specified period, and in dealing with this question the F.B. held that there is jurisdiction to grant such relief if on a construction of the decree in question it appears that the clause sought to be enforced amount to a penalty. This again can well be regarded as another exception to the rule that consent decrees can be varied only by consent. If it is borne in mind that the question of granting relief which the two F.B. decisions deal with arose under dissimilar circumstances and involved the consideration of different principles, it would be difficult to hold that there is any conflict between them. On the other hand, there is one feature which is common to both the decisions and that consist in the fact that both the decisions do not accept unreservedly or without exception the broad principle that consent decrees can be varied only by consent. We are, therefore, unable to accept the argument of the applt. that there is any conflict between the two F.B. decisions at all. We think that whenever Cts. are dealing with the question of granting relief to judgment-debtors, they must decide in which class of cases the decree in question falls."
From the above statement of law discussed and laid down by this Court, we have seen that this Court was trying to make out difference between concession and forfeiture.
12. Coming to a recent decision of Division Bench of this Court, in M/s. Jolly Steel Industries Pvt. Ltd. v. Gupta Steel Industries, this Court was examining the power of this Court under section 148(A) and 151 of Code of Civil Procedure. This Court in that judgment repelled the contention that in the consent decree this Court has become functus officio and in any circumstances extension of time cannot be granted without the consent of the parties or there is no jurisdiction with the Court to vary the consent terms. Mr. Patankar, J., in paragraph No. 10 in the above case, observes as follows :
"It is not possible to accept that provisions of sections 148 and 151 of Civil Procedure Code are not attracted in the present case, or that Court becomes functus officio after the consent terms were signed. It is not possible to accept that under no circumstances extension of time cannot be granted or there is no jurisdiction with the Court to vary the consent terms."
Para 11 : (Page 197 of Bom.C.R.) "First it is to be noted that there was delay of less than 4 weeks in depositing the first installment as per consent terms. The second installment was correctly deposited. The plaintiffs have explained the small delay and statements in support thereof are not disputed by the defendant."
Para 12 : (Page 197 of Bom.C.R.) "The learned Counsel appearing for the defendant relied upon Smt. Periakkal and others v. Smt. Dakshkyani. In the said case, under compromise terms appellant agreed to deposit and respondent agreed to receive a sum of Rs. 60,000/- in full and final settlement of the decree as per terms of compromise. If the deposit was made on or before November 30, 1979 the sale was to be set aside and the appeal of the respondent was to stand dismissed. If the amount of Rs. 60,000/- was not deposited on or before 30-11-1976 the appeal was to stand allowed and the same was to stand confirmed. Time was in fact stated to be essence to the contract between the parties. The appellant failed to deposit. High Court declined to relieve the appellant from rigour of the consent terms. However, the Apex Court relieved the appellant."
13. It is clear that from the above judgment, the Division Bench of this Court had relied upon the Supreme Court decision reported in Smt. Periyakkal and others v. Smt. Dakshyani, . The learned Counsel for the plaintiff brought to my notice that aforesaid decision of this Court was taken to the Supreme Court and "Periyakkal" case of the Supreme Court has been held to be not a correct law. He brought to my notice the decision of the Supreme Court in M/s. Gupta Steel Industries v. Jolly Steel Industries Pvt. Ltd., held thus :
"As principle of law, the High Court was obviously incorrect in interfering with and modifying the consent decree unless parties agree for the same. Though it is contended by Shri Bhimrao Naik, learned Senior Counsel for the appellants, that the High Court has no power after the expiry of the period to extend the time for the compliance on the facts and circumstances, we do not think that we would be justified to interfere with this order at this distance of time. However as regards the direction to make payment of compensation, we do not think that it would be appropriate at this stage to give any finding, however, the trial Court is directed to conduct an enquiry whether the appellant was prevented by the acts of the respondents to remain in possession and work out the factory. In the event of the finding being recorded that the appellant was prevented by the acts of the respondent for working out the factory, the appellant will not be liable to pay damages whatsoever. On the other hand, if it is found that the appellant had worked out the factory in view of the fact that the High Court had granted the order of status quo, we think that they are liable to pay @ Rs. 2500 p.m."
14. The learned Counsel for the plaintiff Mr. Seervai, strongly argued that the norms laid down by the Supreme Court in "Periyakkal" case (supra) that this Court has jurisdiction to save the party from the manifest injustice is not a correct law. However, we have to see that the Supreme Court has not set aside the order of this Court, except a statement that the High Court was obviously incorrect in modifying consent decree as principle of law. No discussions were seem to have been made by the Supreme Court about "Periyakkal case". Therefore, we have to deal with Periyakkal case in some what detail. The facts of that case is that the decree holder purchased the property in the execution sale for the sum of Rs. 28,000/-. Judgment-Debtor Narayan Swami died in the meantime and his Legal representatives filed an application under provisions of Order 21, Rule 90 for setting aside the sale on various grounds. The Executing Court dismissed the application. The appeal was filed and the sale was set aside on 31st July, 1974. Then second appeal has been taken before Karnataka High Court. The parties entered into the compromise with the leave of the Court. As per the terms of the compromise, the legal heirs of the judgment-debtor agreed to deposit and respondent agreed to receive the sum of Rs. 60,000/- in full and final settlement of the decree. It is also a condition that if the deposit was made on or before November, 1976, the sale which though confirmed, be set aside and second appeal stands dismissed. If the amount of Rs. 60,000/- was not deposited on or before November 30, 1976, the second appeal was to stand allowed and the sale was to stand confirmed. Time was stated to be the essence of the contract between the parties. The appellants were also permitted under the compromise, to raise funds by sale, mortgage etc. of the property in question. The appellants failed to deposit the amount in terms of the compromise. It appears that they were unable to raise the necessary funds as they could not evict the tenant who was in occupation of the property. Finally the appellants filed an application purporting to be under sections 148 and 151 of the Civil Procedure Code to extend the time for depositing the sum of Rs. 60,000/- in terms of the compromise dated June 24, 1976. The High Court dismissed the application on the ground that the Court could not extend time where time had been stipulated by the parties themselves in the compromise arrived at between them.
15. The matter was taken to the Supreme Court. The Supreme Court after discussing the early decision of Hukumchand v. Bansilal and others, and observed in "Periyakkal" case thus :
"The time for deposit stipulated by the parties became the time allowed by the Court and this gave the Court the jurisdiction to extend time in appropriate cases. Of Course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice. True, the Court would not rewrite a contract between the parties but the Court would relieve against a forfeiture clause.
And where the contract of the parties, has merged in the order of the Court, the Court's freedom to act to further the ends of justice would surely not stand curtailed." .
16. In case of "Periyakkal" it has been held that the Court has the power to extend time to obviate manifest injustice. The Supreme Court was, however cautioning limitation of the Court when it observed that the Court would not re-write the contract between the parties but the Court would relieve against a forfeiture clauses and where the contract of the parties has merged in the order of the Court, the Court's freedom to act to further the ends of justice would surely not stand curtailed. This reasoning by the Supreme Court appears to be good law even today. Subsequent decision of the Supreme Court in "Gupta Steel" , however, has not declared that the observation in "Smt. Periyakkal" case was wrong. Argument of the learned Counsel for the plaintiff, Mr. Seervai that "Smt. Periyakkal" case deemed to have been overruled in "Gupta Steel" case cannot be accepted, firstly, both the decisions were rendered by two Judges Bench. Therefore, "Gupta Steel" cannot overrule "Periyakkal" going by the rule of judicial discipline. Secondly, on the face of the judgment in "Gupta Steel", it did not refer to "Smt. Periyakkal" case at all. The Periyakkal case was also of the view that in normal case, the consent decree can not be altered without the consent of the parties. It only stated that the Court is powerless to obviate failure of justice especially when the party in default is not consciously responsible for the failure to act according to the consent decree. According to me on a close examination of these two decisions of the Supreme Court, I am of the view that these two decisions are not in conflict to each other. Both the decisions recognized the principle that in normal case the Court will not alter the terms of consent decree without the consent of the parties. But in an abnormal circumstances, where it appears to the Court that without the interference of the Court, a serious miscarriage of justice can not be obviated, then certainly this Court can exercise its inherent power under section 151 of Code of Civil Procedure and save the sufferers from deflection refraction of justice.
17. The learned Counsel for plaintiff Mr. Seerwai has strongly contended that even relying on the Full Bench decision of this Court in Waman Vishwanath Bapat (supra), this Court can have only relieved the party from forfeiture and not from the concession. He tried to argue that the provisions contained in the Clause 4(1) to (iv) gives concession to the defendant No. 4 and therefore, this Court can not give extension of time. I do not find that any concession is made by any party in the consent terms. As I indicated earlier, the consent order is a contract entered into between the three parties. It contains reciprocal rights and obligations. In that circumstances, we can not say one party made any concession to another parry. The Full Bench of this Court has clearly laid down in Waman Vishwanath Bapat v. Yeshwant Tukaram and position was made clear. A clear distinction has been made in that case as to what is concession and what is penalty. If there is agreement to pay certain amount by a particular date, failing which larger sum shall be paid, it has been held that it is a penalty which the Court can relieve. If on the other hand, there is an agreement to pay particular sum allowing the Debtor a concession of payment of lesser payment by installment on particular dates, then the parties taking advantage of that concession must carry strictly the conditions failing which there is no power left with the Court to relieve him from the obligation. In any case, I need not labour much about the exercise of the power of this Court under sections 148(A) and 151 of Code of Civil Procedure on the facts of this case. As I observed earlier, the main prayer in the Chamber Summons is for the declaration declaring that defendant No. 4 has not committed any default in order to operate default clause against him. We have been that the dishonour of cheque was not within the control of the defendant No. 4. It is not the case of the plaintiff that there was no sufficient amount in the defendant's account. Defendant No. 4 has done everything what was possible at his command. A supervening circumstances came in, which was never in the contemplates of the defendant No. 4 and the cheques issued by the defendant No. 4 were dishonoured by mistake. In this context, we have to examine another argument of Mr. Seervai. He blamed defendant No. 4 that in spite of the fact the cheque was to be paid on 5th October as agreed between the parties, the cheque was handed over only on 7th October though the cheque was dated 5th October and therefore, defendant No. 4 was in default. I do not think this argument can be set up against the defendant when the plaintiff without any demur accepted the cheque on 7th October, 1999 which he could have very well refused to accept. Plaintiff is deemed to have waived his right to receive the cheque on 5th October, 1999.
18. In the circumstances of the case it can be held that the cheques were dishonoured not on account of the default of the defendant. It is necessary in this context to refer to decision of Supreme Court in Mahanth Ram Das v. Ganga Das, . There also the Court was examining the power of this Court for extension of time under sections 148 and 151 of C.P.C. In the suit, he has asked declaration. In the appeal Court, the High Court allowed his appeal and decided in his favour on the condition that he pay the deficit Court fees on the property involved in the suit for which purpose the case was sent to the Court for determining the value of the property. The matter was again placed before the High Court and High Court fixed the valuation at Rs. 12,117.04. Office of the High Court gave notice to the appellant to pay deficit Court fees of Rs. 1,987/-. The time for filing of the Court fee was to expire on July 8, 1954. But the appellant was not able to find money. He instructed his Counsel to seek extension of time before the Vacation Judge but no Division Bench was sitting in the vacation. He made an application in July 8, 1954 that he be allowed to pay Rs. 1400/- immediately and balance within one month thereof. But this petition ultimately dismissed and the case went in Supreme Court. The Supreme Court held thus :
"Section 148 of the Code in terms, allows extension of time, even if the original period fixed has expired, and section 149 is equally liberal. A fortiori, those sections could be invoked by the applicant, when the time had not factually expired. That the application was filed in the vacation when a Division Bench was not sitting should have been considered in dealing with it even on July 13, 1954, when it was actually heard. The order though passed after the expiry of the time fixed by the original judgment, would have operated from July 8, 1954. How undersirable it is to fix time peremptorily for a future happening which leaves the Court powerless to deal with events that might arise in between it is not necessary to decide in this appeal. These orders turn out, often enough to be inexpedient. Such procedural orders, though peremptory (conditional decrees apart) are, in essence, in terrorem, so that dilatory litigants might put themselves in order and avoid delay. They do not, however, completely stop a Court from taking note of events and circumstances which happen within the time fixed. For example, it can not be said that if the appellant had started with the full money ordered to be paid and came well in time but we set upon and robbed by thieves the day previous, he could not ask for extension of time, so that the Court was powerless to extend it. Such orders are not like the law of the Medes and the Pesians. Cases are known in which courts have moulded their practice to meet a situation such as this and to have restored a suit or proceedings, even though a final order had been passed. We need cite only one such case, and that is Lachmi Narain Marwari v. Balmukund Marwari, I.L.R. 4 Pat. 61 : A.I.R. 1924 P.C. 198. No doubt, as observed by Lord Phillimore, we do not wish to place an impediment in the way of courts in enforcing prompt obedience and avoidance of delay, any more than did the Privy Council. But we are of opinion that in this case, the Court could have exercised its powers first on July 13, 1954, when the petition filed within time was before it, and again under the exercise of its inherent powers, when the two petitions under section 151 of the Code of Civil Procedure were filed. If the High Court had felt disposed to take action on any of these occasions, sections 148 and 149 would have clothed them with ample power to do justice to a litigant for whom it entertained considerable sympathy, but to whose aid it erroneously felt unable to come."
Here for no default of the defendant No. 4, the cheques were dishonoured and for this reason on which he had no control, if he were to deprive the fruits of the consent decree. This Court will not be slow in exercising its inherent power under sections 148 and 151 of Code of Civil Procedure to undo such apparent injustice. According to me, this observation made by the Supreme Court in Smt. "Periayakkel" case (supra) is squarely applicable to the facts of this case and I have to hold that there is no default of making payment in terms of compromise order. Counsel for the parties cited before me certain decisions of the Single Judge of this Court. They are, M & A Associate v. Telard Ltd. (Vimdalal, J.), Hindurao Annasaheb Patil v. Yeshwant Laxman Yadav, (Mr. R.M. Rege, J.) Durga Mohan v. International Medal Industries, (Smt. Sujata Manohar, J.) and unreported decision of Mr. R.M.S. Khandeparkar, J. in Civil Revision Application No. 114 of 1998 etc. These decisions support the parties in their respective contentions. In view of the decision of the Supreme Court and in view of decision of Division Bench of this Court, I think it is not necessary for me to discuss those decisions in detail. Suffice it to say that all the judgments were examining the scope of the power of this Court to interfere in a consent order on various facts of each case.
19. This case has to be viewed in another angle. The consent terms stipulates that Rs. 3 lacs and Rs. 25,000/- to be paid on 7th of every month. Therefore, the defendant No. 4 is under obligation to pay the amount to plaintiff No. 4 on that date, failure of which attracts default clause. Needless to say if a party is bound to pay an amount as normally and generally understood it should be paid in cash. Payee is entitled to receive payment in currency. Suppose in lieu of that right, payee accepted a cheque instead of currency, in law, it has to be presumed the right of party to receive in currency has been waived. It is profitable in this case to refer to an old English case in Madrof Peach & Co. Ltd. v. Attica Sea Carriers Corporation of Liberia, reported in 1976(2) All.E.R. 249. In January 1970 the charterers hired the owners vessel on a time charter. The charter provided that the payment of the hire was to be made "in cash ... semi-monthly in advance .... otherwise failing the punctual and regular payment of the hire ... the owners shall be at liberty to withdraw the vessel from the service of the Charterers... Hire was to be paid to owners ... into their account with: the branch of a bank (FNC) to the credit of a named account. The first six installments of hire were paid punctually; the seventh fell due on Sunday, 12th April, 1970, when the banks were closed. Accordingly the charters took no steps to pay the installment until the following day. On the Monday morning the owners warned the charterers that in their opinion the charterers were in breach of their obligation to make punctual payment and that the owners were contemplating withdrawal of the ship. The charters gave instructions to their bank to make immediate payment. Bank has made out a payment order and ordered to Owner's Bank. It took time for processing of 24 hours before the amount was credited to the Owner's account. In the meanwhile on 13th April, owner withdrew the vessel. The Court held when the Owner's Bank received the payment order, issued by the Charterer's Bank, It is to be deemed the owner has waived the forfeiture clause. While discussing the case law in that case, Lord Denning MR was quoting an observations of Lord Campbell C.J., in Croft v. Lamely which reads thus :"
"If the party to whom the money is offered does not agree to apply it according to the expressed will of the party offering it, he must refuse it, and stand upon the rights which the law gives him."
In the very judgment, Lawton. LJ., observed thus :
"Once the bank official had accepted the payment for what it was intended to be, the charters would have no control over what happened next. They would not be concerned with any paperwork which had to be done before entries were made in the owners account: nor would they be concerned with any arrangement which might have been made between the bank and the owners for the letter to be kept informed about receipt of the cash or its equivalent. In my judgment the parties must have intended that the time of payment should be when the charterers handed over cash or its equivalent to the bank official whose job it was to receive cash or deal with credit transfers and he accepted it for what it purported to be. Any other construction would make commercial life very difficult for charterers under this form of charter party, as can be shown by the following example."
20. The above principle has been more or less accepted in the Negotiable Instruments Act. Once the cheque is accepted all the consequences and incidences of payment through cheque that emanates from the provisions of Negotiable Instruments Act would follow. Human conduct in such circumstances has to be interpreted subject to the presumptions that is available under the Negotiable Instruments Act. The person who is entitled to get money on particular date and in lieu whereof he accepts the cheque without any demour and present it for encashment, presumptions, particularly under section 139 of the Negotiable Instruments Act will follow. Section 139 reads as follows :
"Presumption in favour of holder---It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
Section 138 mainly deals with dishonour of cheque for insufficiency of funds. Sufficiency of fund has been established here. Therefore, contrary proof referred to section 139 does not exist here.
21. Therefore, it can not be said that by handing over the cheque on 7th instead of 5th by defendant No. 4 to plaintiff, defendant No. 4 has committed any default. Still this presumptions will continue till the cheque is dishonoured for insufficiency of funds. As I pointed out earlier, dishonour of cheque in this case is not on account of insufficiency of funds. It is by a sheer mistake of the bank, not even by the defendant No. 4 or Mr. Kapur. In the affidavit filed by Mr. Kapur he has stated that even today, the cheque will be honoured in case it is represented before the bank. A difficult position arose in this case which both parties did not have anticipated. Para 17 of the Part I of the order permits the parties to approach this Court to obviate such difficulties. This Court therefore, always retains the power to exercise the difficult situations to help the parties. Therefore, the terms of the consent order itself, without recourse to the power under sections 148 and 151 of Code of Civil Procedure, this Court can interfere in this matter to remove manifest injustice.
Before summing up, I have to dispose of another contention of the Counsel on both sides based on section 237 of the Indian Contract Act. Interestingly, both sides relied on this section in support of their case. Apparently the section deals with binding factor of the unauthorized act of the agent on the principal when agent exceeds its authority. Mr. Seervai contends that City Bank's action as agent of defendant No. 4 is binding on defendant No. 4 and he is therefore, liable and can have no escape. On the other hand, Mr. Dwarkadas argues that, City Bank has dishonoured the cheque without the authority of defendant No. 4 and therefore, he is not liable. According to me, firstly, this debate on section 237 of the Indian Contract Act assumes little importance in the facts of this case. Section 237 deals with extent of the liability of Principal and agent for damages to third party in a breach of contract. That is not a subject of discussion here at all. Assuming it has some relevancy, legal incidences of section 237 must be viewed subject to the provisions of the Negotiable Instruments Act, because Negotiable Instruments Act is a special enactment, effect of which on the facts of this case, always overwhelming rather than the effect of section 237. Therefore, the section 237 of the Indian Contract Act will be of no help to the case of either party.
22. In view of the above discussion, I hold that defendant No. 4 did not commit any default to attract any of the default clauses in the consent order dated 6-9-1999. Therefore, he is entitled to the relief prayed for in the Chamber Summons.
23. In the result, Chamber Summons is made absolute in terms of Prayer Clause (a)(i) to (iii). Consequently, I order that the Receiver or plaintiff, as the case may be, shall hand over keys of the restaurant to the defendant No. 4 forthwith. Defendant Nos. 4 and 8 are directed to pay the monthly payments due for the month of October and November, 1999 on or before 5th December, 1999 notwithstanding defendant No. 4 and 8 could not run the restaurant during the period of this litigation. Defendant Nos. 4 and 8 are also directed to strictly continue to observe the payment conditions promptly from December, 1999 till the period of consent terms expires.
Prayer Clause (a) :
"That this Hon'ble Court be pleased to declare that:
(i) that the dishonour of Cheque No. 918089 and 918090 both dated 5th October, 1999 for Rs. 3,00,000/- and cheque for Rs. 25,000/- respectively by City Bank NA despite there being sufficient funds, in the Account of defendant No. 4, does not constitute a default or failure on the part of defendants Nos. 4 and 8 as contemplated by the Consent Terms dated 6th September, 1999.
(ii) that the plaintiffs have waived and/or are estopped from contending that there has been a default or failure on the part of defendants Nos. 4 and 8 in paying the monthly installment of mesne profits of 3 lacs payable on or before 5th October, 1999 to the Receiver, under the Consent Terms dated 6th September, 1999.
(iii) that, the plaintiffs are not entitled to forfeit the deposit amount of Rs. 25 lakhs as claimed by the plaintiffs in their Advocates letter dated 16-10-1999 (Exh. 4 to the Affidavit of Mr. Sunil Kapur dated 20-10-1999) under the Consent Terms dated 6th September, 1999."
P.A. to issue ordinary copy of this order. Officer to act on ordinary copy of this order authenticated by Associate of this Court.
After pronouncing the order, Mr. Seerwai, Counsel for the plaintiff requests for staying this order for two weeks. Hence, operation of this order is stayed till 3rd December, 1999.