Narayanan Vs. S.S. Pandian  INSC 465 (4 September 2000)
Shah Mohammed Quadri J. & Y. K. Sabharwal J.
Shah Mohammed Quadri, 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.
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,
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".
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 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.
High Court dismissed the revision petitions by the impugned order and thus the
appellant is before us in these appeals.
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.').
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.
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
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 :
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.
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.
*** *** *** *** (3) A payment or adjustment, which has not been certified or
recorded as aforesaid, shall not be recognised by any court executing the
(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
Court after reviewing the entire case law in Sultana Begum vs. Prem Chand Jain
[1997 (1) SCC 373] laid down as follows :
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
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
decision was followed by this Court in Badamo Devi & Ors. vs. Sagar Sharma
[1999 (6) SCC 30].
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
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.
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 :
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.
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".
(3) SCR 207} held as follows :
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".
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 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.
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 :
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).
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
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 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.
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.
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.
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.
the above reasons, we are unable to sustain the order under challenge. The
appeals are accordingly allowed;
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.