- (1.) This revision petition is directed against the order of the executing Court whereby it rejected the application moved by the petitioner (judgment-debtor to refund the amount of Rs. 40,000/- with interest deposited by him in the account of the respondent.
(2.) The facts :- The petitioner thereinafter referred to as the Judgment-debtor entered into an agreement to sell with respect to his House No. 171, Sector 20-A, Chandigarh with the respondent (hereinafter referred to as the decree-holder). The agreement to sell was executed on May 21, 1977 for Rs. 78,000/-. An amount of Rs. 20,000/- was paid as earnest money at the time of execution of the agreement. The sale deed was to be executed on or before September 21, 1977 and the balance amount of Rs. 58,000/- was to be paid by the decree-holder before the Sub-Registrar at the time of registration of the document. The decree holder could not arrange for the sale price. He paid an additional sum of Rs. 9000/- as earnest money on September 20, 1977 and the time to execute the sale deed was extended upto April 21, 1978. The sale deed was not executed as agreed upon necessitating the filing of civil suit. The suit was decreed by the Subordinate Judge vide judgment and decree dated on May 21, 1981. The judgment was affirmed in First Appeal by this Court on March 9, 1983. Execution was taken out by the decree holder. During the pendency of the execution application in the executing Court, the parties arrived at the following settlement which was filed in Court :- "1. That there are number of litigations pending between the parties in the different Courts and they will withdraw all the litigation pending between parties in the Courts. 2. That the judgment debtor Mukhtiar Singh has agreed to withdraw the S.L.P. filed in the Hon'ble Supreme Court of India and in any case the S.L.P. may be considered as withdrawn. 3. That Shri M.L. Goel has agreed to withdraw a criminal appeal in the Hon'ble High Court against Shri Mukhtiar Singh and the criminal appeal should be considered as withdrawn. 4. That the judgment-debtor Mukhtiar Singh undertakes to deliver the vacant possession of the whole house No. 171, Sector 20-A, Chandigarh on or before the 18.7.1983 and the execution application be adjourned to 18.7.1989. In case the judgment debtor does not vacate the premises, i.e., House No. 171 Sector 20-A, Chandigarh and deliver the vacant possession of House on or before 18.7.1983, warrants of possession will be issued immediate and the judgment-debtor will not have any objection whatsoever and the judgment-debtor will also be liable for further proceedings under the provisions of law. 5. That the damages at the rate of Rs. 1,200 per month as directed by the Hon'ble High Court in R.F.A. No. 842 of 1981 have been settled from 18th February, 1982 to 17th April, 1983, which come to Rs. 16,800/- and the cost of R.F.A. come to Rs. 1,500/-. In this way the judgment-debtor Shri Mukhtiar Singh will pay sum of Rs. 18,300/- and this will be withdrawn by the decree-holder M.L. Goel from the Court of Shri L.R. Roojam out of the amount lying deposited in the said court towards the balance consideration and the judgment-debtor will withdraw the remaining amount. 6. That the judgment-debtor will pay further damages at the rate of Rs. 1200 per month till he delivers the vacant possession of the house in question to the decree-holder. 7. That a sum of Rs. 40,000/- was deposited by the judgment debtor under precarious circumstances in the account of Shri M.L. goel one of the decree-holders and the said amount is lying in his S.B. Account No. 275 maintained at the State Bank of Patiala, Evening Branch, Sector 17, Chandigarh. In case the Judgment debtor delivers the vacant possession in accordance with the compromise referred to above on or before 18th July, 1983, M.L. Goel, decree holder will issue a cheque for the said amount along with interest at the Ban rate in favour of the judgment debtor and judgment debtor will be entitled to withdraw the said amount. In case the judgment-debtor does not deliver the vacant possession according to the compromise as referred to above, the J.D. will not be entitled to the said amount. 8. That the judgment debtor has no other document relating to the property in his possession. Conveyance deed has been lost." Prior thereto, objections were also filed under Section of the Civil Procedure Code by the judgment debtor for dismissing the execution application on the ground that the decree had been satisfied and it had been rendered inexecutable. In the objections, it was pleaded that the judgment-debtor paid a sum of Rs. 40,000/- by bank draft to the decree holder on November 29, 1981 pursuant to an agreement of even date and the bank draft was encashed on December 2, 1981. The agreement was prepared before handing over of the bank draft but it was not signed after receipt of the bank draft by the decree holder. This application was hotly contested and was rejected on March 4, 1982. The implied effect was that the case pleaded by the judgment-debtor that there was an agreement and pursuant thereto a sum of Rs. 40,000/- was paid to the decree-holder was not proved. The payment of Rs. 40,000/ by the judgment debtor was not denied by the decree holder. The decree holder took possession of the disputed property and a statement was made by his counsel on October 31, 1983, that the decree holder had got the possession and the execution be dismissed as satisfied. Thereafter, this application was moved for refund of Rs. 40,000/-. The decree holder took objection that the terms of the written compromise referred to in Clause No. 7 of the agreement were not complied with by the judgment debtor, he could forfeit the amount. The submission prevailed with the executing Court. However, the order of the learned Judge is patently illegal and cannot be sustained. The circumstances of the case leave no manner of doubt that the decree holder is a clever man who has devised all considerable methods to deprive the judgment debtor of the amount in dispute. It may be true that the judgment debtor handed over the draft for Rs. 40,000/- to the brother of the decree holder and it was encashed and deposited in account of the decree holder, may be with some oblique motive since he wanted to avoid the transfer of the house to the decree holder. The decree holder has also been adopting similar tactics during the pendency of the suit for specific performance. It seems that he had funds to purchase the house and he arranged it by raising a loan from the Life Insurance Corporation of India but this matter cannot be raised in these proceedings since in the first appeal, this Court has already held that the decree holder was ready and willing to perform his part of the agreement and he did arrange for a loan from the Insurance Company for making payment to the judgment debtor. The amount in dispute is admittedly not claimed by the decree holder except on the ground of forfeiture which was introduced in the settlement. The forfeiture clause is itself penal in nature. The judgment debtor had to deliver the possession of the house on the date specified in the settlement and the decree holder was to issue the cheque for the amount in the name of the judgment debtor. Evidence has come on record that the judgment debtor offered to deliver possession of that portion which was in his possession but he expressed his inability to deliver possession of that portion which was in possession of others. After recording the statement of the judgment debtor, the executing Court on July 30, 1983, directed the issuance of warrant of possession for August 29, 1983. This version of the judgment debtor gets corroboration from the statements of Gurpreet Singh, Sohan lal and Ramesh Bhushan. Their statements were recorded on oath by the executing Court. They stated that they were in possession and they may be allowed to vacate the premises by October 31, 1983. Their statements were recorded on October 23, 1983. On the same day, statement of the judgment-debtor was also recorded and he stated that the ground floor which was in his possession was vacated by him on July 30, 1983 and the decree holder could take possession of the same. The statements of Sarvshri Gurpreet Singh, Sohan Lal and Ramesh Bhushan clearly indicate that except the ground floor, the remaining portion was not in possession of the judgment debtor. It was in possession of all these persons. It cannot be inferred that the judgment debtor did not comply with the terms of the settlement. He duly performed his part of the terms of the settlement. It was beyond him to deliver possession of that portion which was not in his possession and the evidence brought on record corroborates his version. It is difficult to hold that the judgment debtor avoided delivery of possession within the extended period. In all likelihood, the persons in possession refused to oblige the judgment debtor and the possession of that portion which was in their possession could not be delivered by the judgment debtor within the time specified. Another question which arises for consideration that whether the conditions mentioned in the settlement that in the event the judgment debtor fails to deliver possession within the time prescribed, the decree holder will be entitled to forfeit the amount is penal or not. It cannot be disputed that the Court can relieve the defaulting party from the consequences of the default. In Jwala Ram and another V. Mathra Dass and others, 1931 AIR(Lah) 696on difference of opinion between Jai Lal, J. and Agha Haidar, J.; the case was referred to Bhide, J.; who agreeing with Jai Lal, J.; laid down thus :- "(a) where a decree is passed as a result of an agreement between the parties, it does not stand on a higher footing than the agreement which proceeded it and, therefore, the Court has the power to relieve the defaulting party from the consequences of the default (b) but that the Court does not possess unrestricted power in the matter, inasmuch as it cannot interfere with the effect of the default if as a result thereof the decree-holder seeks merely to take away the concession which had been given to the judgment-debtor. If, on the other hand, as a result of the default the decree-holder attempts to realise more than was originally due to him, in other words, if he is enforcing a penalty, then the Court is entitled to step in and to give relief to the judgment debtor against the forfeiture."
(3.) This ruling was again followed by Tek Chand, J.; in Jhanda Singh V. Piara Singh,1932 33 PunLR 1026. The same proposition was reiterated in Mitha and others V. Remal Lal and others,1937 AIR(Lah) 828The same view was taken in Chattar Singh and another V. Khetu and another, 1966 CurLJ 665(Pb) wherein the question arose in the following circumstances :- "Khetu filed a suit for possession of land in dispute measuring 32 Kanals on the allegations that the same had been sold to him by Jugti for Rs. 2,000/-. The land was in possession of Chattar Singh and Rattan singh, minor sons of Jugti, the possession was not delivered to the plaintiff at the time of execution of the sale deed. The plaintiff claimed decree for possession of the land against Jugti, Chattar Singh and Rattan Singh. During the pendency of the suit, the plaintiff and the contesting defendants with the leave of the Court arrived at the following compromise :- "That the defendant are owners of the suit land by gift but as their father has executed the sale-deed in favour of the plaintiff, the defendants by way of pious obligations, are ready to pay Rs. 1000/- towards the consideration and as to the rest of money amounting to Rs. 1,000/- the plaintiff will be entitled to seek his remedy against Jugti and as such the suit be decreed on the condition that if the defendants pay Rs. 1,000/- upto 1st may, 1960 to the plaintiff then the suit of the plaintiff shall stand dismissed and he will have no right in the land and if the defendants Chattar Singh and Rattan singh do not pay Rs. 1,000/- within time or do not deposit the same in Court then the suit shall stand decree and plaintiff will be entitled to take the possession of the land. The parties shall in both cases bear their own costs." A decree in terms of the compromise was granted by the Court. Chattar Singh and Rattan Singh deposited the amount of Rs. 1,000/- though their guardian on May 11, 1980. Khetu decree holder applied for the cheque of Rs. 1,000/- on June 2, 1960 and the order was made. Instead of receiving the cheque, Khetu decree holder applied for execution of the decree for possession on the ground that the amount of Rs. 1,000/- has not been deposited within the agreed time. The objection to the execution was raised by the two appellants and it was averred inter alia that if any default had been committed by the appellants in the deposit of money, relief might be granted to them as a term of compromise in decree for possession was of Penal nature." H.R. Khanna, J. speaking for the Bench held as under :- "The clause in the compromise, that if the appellants failed to pay or deposit in Court the above amount by the agreed date the suit would stand decreed, should be held to be of a penal nature because Khetu decree-holder by that clause was getting more than what was really due to him. The appellants being the owners of the land by virtue of the gift in their favour Khetu could not on the basis of a subsequent sale in his favour by Jugti acquired any title in the land and as such had no right to claim decree for possession of the land. Despite this infirmity in the title of Khetu, to enforce the above clause and to grant possession of the land in dispute to Khetu because of delay of ten days in the deposit of the amount of Rs. 1000/- by the appellants would manifestly be exacting obedience of a clause which is penal and has the element of punishment and unduly drastic consequences and not one embodying a mere withdrawal of concession or favour. The Executing Court as well as the Court of First Appeal, in the circumstances, were Justified in granting relief to the appellants against the rigorous of the penal clause." The ratio of this judgment is fully attracted to the facts of the present case. Thus I hold that the judgment debtor did not commit any default in complying with the terms of the settlement. I further hold that Clause 7 of the settlement under which the judgment debtor was obliged to deliver possession within the specified period failing which the decree holder was entitled to forfeit the amount is penal in nature. The decree holder is enforcing the penalty. He is attempting to get more than what he was entitled to at the institution of the suit. I relieve the judgment debtor of this default clause.;