Haji T. J. Abdul Shakoor And Others vs Bijay Kumar Kapur And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 176 of 1960

Decision Date: 14 November 1962

Coram: N. Rajagopala Ayyangar, Syed Jaffer Imam, J.R. Mudholkar

In this case, the Supreme Court of India rendered a judgment on 14 November 1962 in the matter of Haji T. J. Abdul Shakoor and others versus Bijay Kumar Kapur and others. The judgment was authored by Justice N. Rajagopala Ayyangar, with Justices Syed Jaffer Imam and J. R. Mudholkar forming the bench. The parties were identified respectively as the petitioners, Haji T. J. Abdul Shakoor and others, and the respondents, Bijay Kumar Kapur and others. The case is reported in 1964 AIR 874 and 1963 SCR Supl. (2) 46. The legal issue concerned the construction of a compromise decree that provided for the sale of mortgaged properties and the maintainability of execution proceedings under Order 23, rule 3 of the Code of Civil Procedure, 1905 (Act 5 of 1908).

The factual background disclosed that the respondents had instituted a suit to recover money due under a simple mortgage from the appellants. Before the suit proceeded to trial, the parties executed a memorandum of compromise dated 30 September 1955, and the trial court passed a decree in accordance with the terms of that compromise. Clause 1 of the memorandum recorded the defendants’ agreement that a decree would be passed as prayed for in the suit. Clause 2 stated that “the mortgaged properties are hereby sold for the amount of the decree in full satisfaction thereof; the defendants will execute a regular sale within ten days from this date.” The appellants failed to comply with the obligations imposed by clause 2. Consequently, on 31 October 1955 the respondents filed an application before the court requesting that the appellants be directed to execute a sale deed as prescribed by the compromise.

The appellants contended that the relief sought could not be granted through execution proceedings because the matter did not fall within the scope of Order 23, rule 3 of the Code of Civil Procedure. They further argued that, on a proper construction of the compromise, the consideration was merely the agreement to execute the conveyance and not the actual execution of the conveyance itself, and therefore a separate suit was required.

The Court held that the terms of the compromise were indeed related to the original suit because the property to be conveyed comprised the very property that was subject to the mortgage. Moreover, the Court clarified that although clauses 2 to 6 of the compromise formed an integrated scheme for adjusting the parties’ rights, the mere agreement to convey contained in clause 2 did not, by itself, satisfy the decree. The true consideration for the compromise was the execution of the conveyance, not merely the promise to do so.

The judgment was issued under the civil appellate jurisdiction as Civil Appeal No. 176 of 1960, arising from the judgment and decree dated 2 June 1958 of the Mysore High Court in Review Application No. 268 of 1957. Counsel for the appellants were S. K. Javali, K. P. Bhat and B. R. L. Iyengar, while counsel for the respondents were S. K. Venkataranga Iyengar and R. Gopalakrishnan. The Court delivered its decision on 14 November 1962, affirming the enforceability of the compromise decree and the appropriate use of execution proceedings to give effect to the sale of the mortgaged properties.

Justice Ayyangar delivered the judgment. On 27 March 1954 the three Kapur brothers, who appear as respondents in the present appeal, instituted original Suit No. 29 of 1954 before the District Judge of Bangalore. The suit was filed against the three appellants, who were also brothers, and sought recovery of a sum exceeding Rs 50,000 together with accrued interest and costs arising from a simple mortgage. Prior to the trial of the suit the parties executed a memorandum of compromise dated 30 September 1955 and jointly prayed that the suit be decreed in accordance with the terms of that compromise. The Court accepted the joint application and issued a decree in the precise form of the parties’ prayer, ordering that “the plaintiff’s suit be and the same is hereby decreed as per terms of the compromise, the copy of which is hereunto annexed.” The compromise, referred to as a Razinama, contained six specific clauses. Clause 1 stipulated that the defendants consented to the decree being passed as prayed for. Clause 2 provided that the mortgaged properties would be sold for an amount equal to the decree, thereby fully satisfying the decree, and required the defendants to execute a regular sale within ten days of the date of the compromise. Clause 3 directed that the mortgaged properties be put into the possession of the plaintiff, who was the decree‑holder, by the third defendant (the judgment debtor) and by judgment debtors 1 and 2, who were to pay rent of Rs 75 each for the two shops numbered 12 and 14 on Godown Street, Bangalore, in their actual occupation, together with attornment of any other tenants occupying the remaining properties. Clause 4 stated that if the judgment debtors or their nominees tendered the decree amount within one year of the decree, the decree‑holders would be bound to reconvey the sold properties at the decree‑holders’ cost, expressly agreeing that time was of the essence, and further providing that any default by the judgment debtors in paying the stipulated rent on or before the 15th of any month would forfeit their right to reconveyance after one year. Clause 5 raised the attachment on the properties belonging to the second and third defendants that had been obtained before judgment. Clause 6 assured that the properties sold under the compromise were not subject to any attachment, and in the event that any attachment persisted, the parties agreed that the mortgage security would not merge with the sale.

The principal question presented in this appeal concerned the executability of clause 2 of the compromise decree. Before addressing that issue, it was necessary to set out the relevant facts. Under the second sentence of clause 2, the appellants were obligated to execute a regular sale deed within ten days of 30 September 1955. The appellants failed to comply with that requirement. Consequently, on 31 October 1955 the respondents filed Interlocutory Application No. 6 of 1955, which was later re‑numbered as Execution Application No. 83 of 1956, seeking a court order directing the appellants to execute the sale deed as stipulated in the compromise. This application formed the immediate procedural backdrop against which the Court later examined whether clause 2 could be enforced without the institution of a fresh suit.

The respondents filed Interlocutory Application No. 6 of 1955, later numbered Execution Application No. 83 of 1956, requesting that the appellants be ordered to execute a sale‑deed. They attached a draft sale‑deed in which clauses three to six of the razamāna were reproduced. The parties were apparently in dispute, each accusing the other of failing to comply with the compromise, but those disputes were not the subject of the present consideration. On 16 March 1956 the appellants filed a suit application asking that a sale‑deed be executed in favour of a third party who had agreed to purchase the property on the condition of paying the full decree amount as provided by clause four of the Razamāna. The respondents opposed this application, and subsequently similar applications were filed by the appellants. All of these applications proceeded on the premise that the compromise decree could be executed without the necessity of filing a fresh suit. None of the appellants’ applications succeeded. Consequently, the focus may be placed on the respondents’ Execution Application No. 83 of 1956, through which they sought an order directing the appellants to execute a sale‑deed in accordance with the opening sentence of clause two of the compromise. The appellants opposed this application on a technical ground, contending that the relief sought could not be obtained through execution but only by a separate suit, because the relief did not “relate to the suit” within Order XXIII, rule three of the Code of Civil Procedure. The learned District Judge of Bangalore upheld this objection and refused to direct the appellants to execute the sale‑deed. The respondents appealed, and the High Court reversed the District Judge’s order. The present appeal, taken on a certificate of fitness under Article 133(1)(a) of the Constitution, challenges the correctness of the High Court’s judgment. The issue on appeal is narrowly confined to whether the High Court was justified in ordering the appellants to execute a sale‑deed transferring the suit properties to the respondents in the execution of the decree in original suit No. 29 of 1954, or whether the respondents were required to obtain such relief by initiating a separate suit for that purpose.

The decree issued in the original suit incorporated the entire razamāna, including all its terms. The statutory provision governing the passing of decrees by compromise is Order XXIII, rule three of the Code of Civil Procedure, which provides that when a court is satisfied that a suit has been adjusted wholly or in part by any lawful agreement or compromise, or when the defendant satisfies the plaintiff in whole or in part of the subject‑matter of the suit, the court shall record such agreement, compromise or satisfaction and pass a decree accordingly, insofar as it relates to the suit. The present analysis does not hinge on the factual matrix of the case, but instead examines whether, once a decree embodying all the terms of an agreement has been passed, an objection can be raised in execution proceedings regarding the executability of any specific term. The courts below focused heavily on the phrase “so far as it relates to the suit” in rule three. While counsel for the appellants did not emphasize that particular contention before the Supreme Court, they argued the construction and inter‑relation of the various clauses of the compromise. The Court must therefore consider whether the respondents could obtain a decree‑directed sale‑deed within the execution of the original decree, or whether a separate suit was required to enforce that specific clause of the compromise.

The Court quoted the statutory provision that when the subject‑matter of a suit is settled by a lawful agreement, the court must record that agreement, compromise or satisfaction and then pass a decree in accordance with it, “so far as it relates to the suit.” While the Court said it would not examine the factual matrix of the present case, it considered it necessary to address the legal question of whether, after a decree has been issued that incorporates every term of the agreement, a party may still raise an objection in the execution stage that a particular term is not enforceable. The Court proceeded on the assumption that such an objection could indeed be raised. It was undisputed that the underlying agreement was lawful and that an executable decree could be passed “so far as it related to the suit.” In the lower courts most of the debate had centred on the meaning of the phrase “so far as it relates to the suit” found in Rule 3. However, counsel for the appellants did not press that issue before the Court; instead, they focused on the construction of the several clauses of the compromise and the way those clauses interacted, a point to which the Court indicated it would now turn.

The Court observed that the learned judges below were correct in holding that the terms of the compromise were indeed “related” to the suit. The property to be conveyed comprised entirely the mortgaged premises, which were therefore subject to sale in execution of the mortgage decree that formed the relief claimed in the plaint. The sale price stipulated in the Razinama was precisely the amount that the plaintiff sought to recover through the suit, so nothing fell outside the scope of the original proceedings. Moreover, the conveyance itself formed the consideration for the compromise. In this context, it was unsurprising that counsel for the appellants gave little emphasis to the point that had led the District Judge to dismiss the respondents’ application. Nevertheless, counsel raised two alternative submissions. The primary submission argued that, on a proper construction of the compromise, the consideration was not the actual transfer of the property by the judgment debtor to the decree‑holder but merely the right to effect such a transfer. Counsel explained that clause 1 of the compromise provided that the defendants would consent to a decree being passed as prayed for, which would be a standard mortgage decree. According to counsel, that decree was, under the compromise, to be treated as satisfied and the satisfaction recorded immediately upon filing the compromise. He further argued that the opening words of clause 2—“The mortgaged properties are hereby sold for the amount of the decree in full satisfaction thereof”—referred only to the agreement to execute the conveyance, not to an actual conveyance. Clauses 3 to 6, counsel submitted, dealt with the parties’ inter‑se rights and were separate from the issue of execution.

In the appeal, the parties contended that the remaining provisions of the compromise—referred to as the “razinama”—including the second part of clause 2, were meant to be carried out not by executing the decree in the present suit, but rather by treating the decree to be issued under clause 1 as completely satisfied at the moment the memorandum of compromise was filed and recorded by the court, thereby leaving no portion of the decree operative thereafter. The Court found this argument untenable. While it acknowledged that clause 1 indeed called for a simple mortgage decree as prayed for in the suit, the Court held that it would be an improper construction of the first sentence of clause 2 to interpret that the mere agreement to convey, without the actual conveyance having taken place, was intended to operate as satisfaction of the decree that might be passed under clause 1. The Court agreed that the counsel was correct in observing that the sale of the property to the decree‑holders under clause 2 was not intended to be absolute, because the title to be obtained through that sale was subject to the conditions set out in clauses 3 to 6, and especially clause 4, which provided that the title could be divested from the decree‑holders upon the occurrence of certain contingencies. Consequently, although clauses 2 to 6 could be viewed as an integrated scheme for adjusting the parties’ rights, the Court could not accept a construction whereby the mere agreement to convey—subject to the conditions in clauses 3 to 6—by itself amounted to full satisfaction of the decree. The other submission of counsel was that the learned judges should not have ordered the execution of a conveyance in favour of the respondents without attaching the conditions specified in clauses 3 to 6, and without examining whether the appellants were entitled to enforce the reconveyance provided for in those clauses. In response, the judges had stated that the decree‑holder was entitled to execute the decree with respect to clause 2 of the compromise, and that no view was expressed on the executability of the remaining clauses because that question had not been raised before them. Hence, the issue concerning the relationship between clause 2 and clauses 3 to 6, as well as the appellants’ claim to relief under those clauses, had not been presented to the High Court and was left unresolved. The Court therefore concluded that the appellants had no basis for complaining that the High Court had not dealt with the matter. Whether the appellants were entitled to relief under clauses 3 to 6, or whether they had lost that right, was a question that required factual investigation and could not be decided at this stage. Accordingly, the Court refrained from pronouncing on that issue, noting that the appellants could pursue their rights in an appropriate proceeding if they so desired. No other point had been raised before the Court. The appeal was consequently dismissed with costs.

The Court observed that the question of whether the appellants were entitled to relief under clauses three to six, or whether they had already lost that entitlement, required a detailed factual inquiry. Because such an inquiry could not be performed on the record before this Court, the matter could not be properly urged for decision in the present appeal. Consequently, the Court expressly stated that it would not pronounce any finding with respect to that issue, as the necessary factual basis was unavailable. The Court further observed that the appellants retained the ability to pursue their claimed rights in a separate proceeding, should they choose to do so after receiving appropriate legal advice. No additional argument or point of law was presented to the Court for consideration beyond the issue already discussed. Accordingly, the Court concluded that the appeal could not succeed on the merits and therefore ordered that the appeal be dismissed in its entirety. In addition, the Court directed that the costs of the proceedings be borne entirely by the appellants, as is customary in dismissed appeals. The final order thus recorded the dismissal of the appeal with costs, confirming that no further relief would be granted by this Court.