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Showing contexts for: compromise decree is executable in Novartis A.G. vs Wander Pvt. Ltd on 11 May, 2009Matching Fragments
9. The plaintiff preferred SLP Civil No.25981/2004 to the Apex court against order dated 29th November, 2004 (Supra). The Apex court on 4th January, 2005 dismissed the said Special Leave Petition observing that the impugned order dated 29th November, 2004 was only an interlocutory order and that both parties had agreed that they will argue the appeal on the date fixed next in the same without seeking adjournment.
10. The plaintiff instituted this execution on 25th August, 2004 stating that the sum of Rs.5 crore along with interest at 18% per annum from 1st August, 2004 was due under clause 15 of the compromise decree. The decree is sought to be executed by directing the Bank of India to immediately pay Rs.32,10,000/- to the decree holder being the sum guaranteed under clause 8 (vi) of the compromise decree and by directing the bank to pay the sum of Rs.5 crore in terms of clause 15 aforesaid of the compromise application. It is further pleaded that Mr Rayana is the principal officer of the judgment debtor and the decree is personally binding on him. His arrest and detention in civil prison is sought for willfully disobeying the order of permanent injunction which came into force on 1st August, 2004, by continuing to use the word WANDER as part of its corporate name and trading style.
29. The single-most factor which leads me to hold in this case that the decree in clause 15 is not an executable decree is that it in its sweep also includes breach of terms and conditions of Distributorship and Marketing Agreement to be entered into pursuant to compromise, not between the decree holder and the judgment debtor but between a nonparty to the suit and the judgment debtor. The parties could never have intended, also in law of an executable decree on default by judgment debtor of terms of an agreement with a party not a party to the suit or the compromise. Even though the courts have held that subsequent events can be gone into in execution and can be subject matter of adjudication under Section 47 CPC, but such adjudication also is not possible in the absence of the party to the agreement of which breach is alleged. Clause 15 of the compromise does not permit of bifurcation, i.e., that in the case of breach of terms of Distributorship and Marketing Agreement, proceedings for recovery of Rs 5 crores were to be instituted and in the event of breach of terms of compromise, such breach was to be determined by execution. This reason alone, coupled with others given in para 26 above, compel me to interpret the clause 15 of the compromise decree to be not executory but merely expressing satisfaction of the validity of the agreement recorded in compromise application and on which the claim in suit was settled/adjusted. I must record that in doing so, I am conscious of the amendment of 1976 to Rule 3 of Order 23, permitting compromise decree with respect to matters other than subject matter of suit and have not relied upon judgments interpreting the decrees for the said reasoning.
32. The courts have in some cases mostly relating to money recoveries held decrees which provide for the decree being satisfied upon a lesser amount than due under the decree being paid within the certain time only on the principle that in those cases the decree is for the full amount. However, when there is no decree as in the present case, it cannot be executable.
33. It was also held in J.K. Seth Vs Narendra Nath Bannerjee AIR 1977 Cal 388 DB that where two interpretations are possible in respect of a compromise decree, that interpretation which is favourable to the judgment debtor should be accepted. The same view was taken in Punjab & Sindh Bank Ltd Vs Jagdish Lal AIR 1972 Punjab & Haryana 144. Of course, in relation to other decrees and on aspect of limitation, it was held in Deep Chand Vs Mohan Lal (2000) 6 SCC 259 that where language of a decree is capable of two interpretations, one which assists the decree holder to have the fruits of the decree should be preferred, but the same will have no application to compromise decree. The decree holder having failed to ensure language as to executability of decree and having acted in its zeal to protect the rights of a non party to the suit also, under an agreement then still to be entered into cannot be permitted to have benefit of the interpretation, since in view of ambiguous language, it cannot be said with certainty that the judgment debtor understood that it was suffering a decree for Rs 5 crores. I also do not find any merit in the contention that from IA.No.4839/2004 and other correspondence, it can be said that the judgment debtor understood the decree to be so. As aforesaid, on 1st August, 2004 the decree for permanent injunction was to come into force. The anxiety of the judgment debtor was to seek extension of coming into force of the decree for injunction and not to avoid execution of decree for Rs 5 crores.
36. The decree holder has in the execution not pleaded that the judgment debtor inspite of having had an opportunity of obeying the decree, failed to do so, though the word willfully is used. In the facts and circumstances of the case I am not inclined to give any opportunity to the decree holder to amend its pleadings in the execution, or to lead any evidence on this aspect. Though the decree for permanent injunction was to come into operation as aforesaid but in another part of the compromise application a provision was made only for the judgment debtor to take steps for change of name and trading style. The said steps were admittedly taken by the judgment debtor and change of name was in fact effected shortly after 1st August, 2004. In these circumstances, it cannot be said that the judgment debtor inspite of opportunity to obey has willfully failed to obey. The judgment debtor could have been under a bona fide impression that all that it was required to do was to take steps before 1st August, 2004 for change of name. No ground for executing the decree for permanent injunction is thus made out. The decree for permanent injunction is executable by arrest and attachment only and not by enquiry into any damages suffered because of breach. The purpose is to ensure compliance. Even if it be hled that the parties had in compromise agreed for payment of Rs 5 crores in case of breach, the same will be only when decree is found executable in terms of CPC. Since the decree has not been found executable owing to ingredient of failure to obey inspite of opportunity lacking, the question of execution by payment also does not arise.