Orissa High Court
Kishore Kumar Mohanty vs Saroj Kumar Mohanty And Others on 11 August, 2017
Equivalent citations: AIR 2018 (NOC) 578 (ORI.)
Author: A.K.Rath
Bench: A.K.Rath
HIGH COURT OF ORISSA: CUTTACK
C.M.P.No.1575 of 2016
In the matter of an application under Article 227 of the Constitution of
India.
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Kishore Kumar Mohanty .... Petitioner
Versus
Saroj Kumar Mohanty and others .... Opposite parties
For Petitioner -- Mr.Bansidhar Baug
Advocate
For Opposite parties -- Mr.P.K.Lenka,
Advocate
(For O.P.1)
JUDGMENT
PRESENT:
THE HONOURABLE DR. JUSTICE A.K.RATH
Date of Hearing:01.08.2017 & Date of Judgment:11.08.2017
Dr.A.K.Rath, J.This petition challenges the order dated 6.1.2016 passed by the learned Additional Civil Judge (Sr.Division), Balasore in Execution Case No.3 of 2011. By the said order, the learned executing court allowed the application filed by the D.Hr and held that the compromise entered into between the parties is unlawful.
2. Since the dispute lies in a narrow compass, it is not necessary to recount in detail the cases of the parties. Suffice it say that opposite party no.1 as plaintiff instituted Execution Case No.3 of 2011 for partition 2 impleading the petitioner as well as opposite parties 2 to 9 as defendants. The petitioner was defendant no.2 in the suit. The suit was decreed preliminarily on 4.5.2011. The final decree is drawn up on 21.4.2011. Thereafter, D.Hr. levid Execution Case No.3 of 2011. While the matter stood thus, the D.Hr. and J.Dr. no.2 had filed a joint compromise petition on 17.8.2015 in the execution petition to allot a house situate over the suit plot in favour of J.Dr. no.2 since the same was all along in possession of J.Dr.no.2. On 11.12.2015, the D.Hr. and J.Dr. were present in the court. They admitted the compromise to be correct. The learned executing court held that the compromise is lawful and, accordingly, the same was accepted. The execution case was disposed of in terms of the compromise. While the matter stood thus, D.Hr. filed an application on 11.12.2015 to recall the said order. It is stated that taking advantage of the old age of the D.Hr. and his mental condition, J.Dr no.2 managed to take signature from him in some blank papers. The D.Hr. had not put any signature in the compromise petition. He was not mentally fit. The contents of the compromise petition were not read over and explained to him. Further, Order 23 Rule 3 is not applicable in the execution proceeding. The decree having not been registered is unlawful. J.Dr. filed objection. The learned trial court came to hold that on 11.12.2015 both parties were present in the court. The contents of the compromise petition were read over and explained to them. It negatived the plea of D.Hr. that compromise was not within his knowledge. The executing court cannot go behind the decree. In view of the embargo under Rule 4 of Order 23 C.P.C. the compromise cannot be entertained. The contents of compromise are compulsorily registrable. Held so, it allowed the petition of the D.Hr.
3. Mr.B.Baug, learned Advocate for the petitioner submitted that during pendency of the execution case, compromise was arrived at between the D.Hr. and J.Dr. no.2. The compromise petition was filed in 3 the court to allot a house, where J.Dr.no.2 resides with his family. On 11.12.2015 the parties were present in the court. The compromise petition was read over and explained to them. They admitted in the court about the same. The court on being satisfied that the compromise was lawful recoded the same. On untenable and unsupportable grounds, the D.Hr. filed an application to recall the same. He relied on the decisions of the apex Court in the case of N.K.Rajgarhia Vrs. Mahavir Plantation Ltd. and others, 2006 (I) CLR (SC)-152 and Bhoop Singh Vrs. Ram Singh Major and others, AIR 1996 SC 196.
4. Per contra, Mr.P.K.Lenka, learned Advocate for opposite party no.1 submitted that the D.Hr. is an old man. He was not in a fit state of mind. Taking advantage of the old age, J.Dr. no.2 took the signature of D.Hr. in some blank paper and utilized the same. He further contended that Order 23 Rule 4 C.P.C. is a bar to enter into a compromise in an execution case. Further the decree requires registration. The same was not done. The learned executing court rightly allowed the petition.
5. In Lakshmi Narayanan Vrs. S.S.Pandian, AIR 2000 SC 2759, the appellant was the owner of premises. The respondent was a tenant. The appellant filed an eviction petition for eviction of the respondent. The same was decreed ex parte. Thereafter the appellant levied execution case. During pendency of the execution proceeding, the parties entered into a compromise outside the court. Pursuant thereto, the respondent surrendered possession of the front portion of the house and for the rest of the suit premises, the parties entered into an agreement of lease for three years. The compromise, inter alia, provided that in the event 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 4 court, the execution case was dismissed as not pressed, which is just before expiry of the said period. The appellant sent a written notice to the respondent to handover the vacant possession of the premises, the date on which the period of three years would be expire. The respondent failed to do so. The appellant filed a fresh execution case for recovery of possession of the premises. The respondent filed an application to dismiss the same. The executing court by a common order dismissed the appellant's petition and allowed the respondent's petition. The appellant filed two civil revision petitions in the High Court of Madras. The High Court dismissed the said revision petitions. Thereafter the matter went to apex Court. The question arose before the apex Court for consideration 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. The apex Court held :
"7. 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. ............
8. 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 5 been certified or recorded by the Court under the aforementioned sub-rules.
9. This Court after reviewing the entire case law in Sultana Begum vs. Prem Chand Jain [1997 (1) SCC 373 :
(AIR 1997 SC 1006) laid down as follows : (at Pp.1010-1011 of AIR):
"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."
10. The decision was followed by this Court in Badamo Devi & Ors. vs. Sagar Sharma [1999 6 SCC 30 :
(1999 AIR SCW 4810).
xxx xxx xxx
13. 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 6 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 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."
6. Taking a cue from Moti Lal Banker (dead) by his L.Rs Vrs.
Maharaj Kumar Mahmmod Hasan Khan, A.I.R. 1968 SC 1087, the apex court in the case of N.K.Rajgarhia (supra) held that it now well settled that the parties may enter into a settlement even in an execution proceeding. The decisions in the case of in the case of Lakshmi Narayanan (supra) and N.K.Rajgarhia apply with proprio vigore to the facts of the case.
7. The next question arises as to whether the compromise decree requires registration. On a survey of earlier decisions, the apex Court in the case of Bhoop Singh (supra) held thus.
"16. We have to view the reach of Clause (vi), which is an exception to sub-section (1), bearing all the aforesaid in mind. We would think that the exception engrafted is meant to cover that decree or order of a Court, including a decree or order expressed to be made on a compromise, which declares the pre-existing right and does not by itself create new right, title or interest in praesenti in immovable property of the value of Rs.100/- or upwards. Any other view would find the mischief of avoidance of registration, which requires payment of stamp duty, embedded in the decree or order.
17. It would, therefore, be the duty of the Court to examine in each case whether the parties have pre-existing 7 right to the immovable property, or whether under the order or decree of the Court one party having right, title or interest therein agreed or suffered to extinguish the same and created right, title or interest in preasenti in immovable property of the value of Rs.100/- or upwards in favour of other party for the first time, either by compromise or presented consent. If latter be the position, the document is compulsorily registerable.
18. The legal position qua Clause (vi) of Section 17(2) can, on the basis of the aforesaid discussion, be summarised as below :
(1) Compromise decree if bona fide, in the sense that the compromise is not a device to obviate payment of stamp duty and frustrate the law relating to registration, would not require registration. In a converse situation, it would require registration.
(2) If the compromise decree were to create for the first time right, title or interest in immovable property of the value of Rs.100/- or upwards in favour of any party to the suit, the decree or order would require registration.
(3) If the decree were not to attract any of the Clauses of sub-section (1) of section 17, as was the position in the aforesaid Privy Council and this Court's cases, it is apparent that the decree would not require registration.
(4) If the decree were not to embody the terms of compromise, as was the position in Lahore case, benefit from the terms of compromise cannot be derived, even if a suit were to be disposed of because of the compromise in question.
(5) If the property dealt with by the decree be not the "subject matter of the suit or proceeding", Clause (vi) of sub-
section (2) would not operate, because of the amendment of this clause by Act 21 of 1929, which has its origin in the aforesaid decision of the Privy Council, according to which the original clause would have been attracted, even if it were to encompass property not litigated."
88. In view of the authoritative pronouncements of the apex Court in the case of Lakshmi Narayanan (supra) and N.K.Rajgarhia (supra), the conclusion is irresistible that the parties may enter into settlement even in an execution proceeding. But in the instant case, the compromise decree is to create for the first time right, title or interest in immovable property in favour of J.Dr. No.2 value of which is more than Rs.100/-. Thus the decree would require registration.
9. In view of the foregoing discussions, the petition is disposed of with an observation that in the event of non-registration of the compromise decree, the same shall not be given effect to and shall not have any binding effect.
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Dr.A.K.Rath, J.
Orissa High Court, Cuttack The 11th August, 2017/CRB