Holding

The consent order must be construed in its entirety; the phrase "balance decree" was used loosely and does not create a fresh enforceable decree, so the appellant could not execute any additional sum, and the compromise in execution proceedings was valid.

Summary

N.K. Rajgarhia sued Mahavir Plantation Ltd. for recovery of Rs. 75 lakh. The parties compromised, and a consent decree for Rs. 41,69,110 was passed, with a clause that dishonour of any cheque would make the whole balance payable and executable. The respondent defaulted, leading to execution proceedings and a further settlement for Rs. 42,04,222, after which the respondent again defaulted and obtained multiple extensions of time from the Delhi High Court. The respondent eventually paid the full amount with interest as per the consent order, and the appellant appealed, claiming that the default revived his original claim and that the High Court lacked jurisdiction to extend time without his consent. The Supreme Court held that the consent order must be read as a whole, the term "balance decree" was used loosely, the waived amount did not form part of the decree, and that compromises are permissible even in execution proceedings; consequently, the appellant was not entitled to execute any further sum and the appeal was dismissed.

Issues considered

Whether the term "balance decree" in the consent order gives the decree holder the right to execute the balance amount upon default.
Whether the Delhi High Court had jurisdiction to grant extensions of time for payment without the decree holder's consent.
Whether a compromise entered into during execution proceedings is valid under Order XXIII Rule 4 of the CPC.
Whether the original claim of the appellant revived upon the respondent's default.

Legislation cited

Code of Civil Procedure, 1908s. Order XXIII Rule 4
Constitution of Indias. Article 136

Subjects

consent decreecompromiseexecution proceedingsCPC Order XXIII Rule 4balance decreeextension of timeinterpretation of ordersArticle 136

Judgment

A N.K. RAJGARHIA
v.
MIS. MAHAVIR PLANTATION LTD. AND ORS.

DECEMBER 16,2005

B (S.B. SINHA AND P.K.BALASUBRAMANY AN, JJ.]

Code of Civil Procedure, 1908-0rder XXlll Rule 4.-Recovery suiJ-
Compromise between parties and consent decree passed for half of the
c· amount-Part payment made and thereafter, settlement in execution
proceedings-Consent order Jo the effect that in case of default in payment,
decree holder would be entitled to execute the balance decree-Judgment
debtor again defaulted, sought extension of time, grant of, by High Court-
Thereafter, judgment debtor paid amount in terms ofconsent order-However,
claim of decree holder that original claim revived on default-Sustainability
D of-Consent order, interpretation of-Held: Consent order is to be construed
in entirety to ascertain its true intent and purport-Word 'decree' after word
'balance' was used loosely-Sum which was waived did not form part of
consent decree-It was merely a claim which did not fructifY into any decree-
Hence, commission of default does not entitle the decree holder to execute
the balance decree-Furthermore, such settlement in execution proceedings
E is permissible in /aw-Constitution of India, 1950-Article 136.
Appellant filed recovery suit for Rs. 75 lakhs towards repayment of
advance with interst and damages against the responde!Jt However, the parties
entered into a compromise and the court passed a consent decree for a sum
F of Rs. 41,69,110/- and respondents issue cheques. In terms of compromise
clause in case of dishonour of cheque, the entire balance amount would be
payable at one time failing which the decree holder was entitled to execute
the decree for the same with interest. Respondent made only part payment
and as such execution proceedings were initiated. Again parties entered into
settlement with regard to the balance amount of Rs 42,04,222/- respondent
G gave an undertaking that in case of dishonour of any of the cheques the decree
holder would be entitled to execute the balance decree. Respondent again
defaulted and execution application was filed. However, respondentfiled an
application for extension of time for payment of decretal dues and High Court
allowed the same. Aggrieved, appellant tiled an appeal. Division Bench of High

H 882

J'
N.K. RA.JGARHIA v. MAHAVIR PLANTATION LTD. 883

Court directed the respondent to present the cheques and in case of non- A
encashment to initiate appropriate proceedings. Respondent was granted
another extension. Thereafter, the judgment-debtor paid the entire amount
with interest, in terms of the consent order.

In the appeal, appellant-creditor contended that since the respondent
failed to abide by its undertaking, the original claim of the appellant revived; B
and that the High Court had no jurisdiction to grant extension of time for
payment of the decretal dues without his consent.

Respondent - debtor contended that this Court should not exercise its
discretionary jurisdiction under Article 136 of the Constitution in favour of C
the appellant since the entire amount stands paid; and that despite Rule 4 of
Order XXIll of CPC, there does not exist any bar to enter into a compromise
at the execution stage.

Dismissing the appeal, the Court
D
HELD: 1.1. An order of a court of law and, in particular, a consent order,
must be read in its entirety for the purpose of ascertaining its true intent
and purport. It cannot be said that once a default is committed by the
respondent, the appellant in terms thereof, would be ·entitled to execute the
balance decree immediately which would mean he would be entitled to a further
sum of about Rs. 41 lakhs, which was waived by him on the premise that the E
respondent had agreed to settle the disputes. The word 'decree' after the word
'balance', has been us.ed loosely. The matter might have been different ifthe
amount payable under the compromise entered into by the parties in the
execution case would have been less than the amount paid by the respondent
to the appellant in terms of the consent decree passed originally. It is not so. F
Whereas under the original decree, a sum of Rs. 41,69,110/- was payable, in
terms of the consent order passed in the execution case, a sum of Rs.
42,04,222/- became payable. Furthermore, the sum which was waived did not
form part of the consent decree. It was merely a claim which never fructified
into any decree. (889-E; 890-D-F)
G
1.2. Order XXIII Rule 4 of CPC, 1908 states that other provisions
thereof are not applicable to an execution proceedings. But, despite the same,
the parties may enter into a settlement even in a execution proceedings. Thus,
the compromise entered into by and between the parties in the execution
proceedings was valid in law. The same was acted upon. Appellant received
H
884 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A the entire amount thereunder, albeit belatedly; but even therefor the
respondent applied for and obtained extension of time to pay the same. Appellant
had accepted such amount and did not question the order granting extension
of time, thus the same had attained finality. !888-B; 889-A-C)

Smt. Periyakkal and Ors. v. Smt. Dakshyani, AIR (1983) SC 428; Moti
B Lal Banker (dead) by his legal Representative .v. Maharaj Kumar Mahmood
Hasan Khan, AIR (1968) SC 1087, referred to..

1.3. If the orders of extension have ·validly been passed, the. order of the
court stood complied with. The order of the Division Bench of High Court
C was ~ot questioned by the r~pondent before this Court but then no direction
was issued therein. No judgment was passed. The said order was passed
without issuing any notice to the respondents. The appeal was disposed of as
having become infructuous. Thus, it was not final. Thereby, merely a liberty
had been granted to the appellant to agitate his grievances before the Single
.
Judge of High Court for execution as well as for contempt. By reason of the
D said order, alone the appellant could not put forth his claim. Appellant, thus,
cannot take any benefit thereof. 1889-D, El

.1.4. Respondent agreed to pay not only a lump sum interest but also
15% interest on the principal amount of the further payment On calculation,
a sum of Rs. 42,04,222/- was found to be payable out of which the judgment
E debtor had paid a sum of Rs. 10,00,000/- by way of three demand drafts. <

Appropriating the said amount, the outstanding principal sum came to Rs.
26;69,110. However, the balance amount outstanding as on that day came to
Rs. 32,()4,222. It was that amount which was to be liquidated by paying
instaHment of Rs. 6 lakhs each per month. It is in the aforementioned
F backdrop, the undertaking given by the respondent before the Single Judg'(
of the High Court is to be construed. (890-B, C)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7535 of200~.

From the Judgment and Order dated 17 .5.2005 of the Delhi High Court
G in E.F.A.(OS) No. 22 of2004.

C. Mukund, Ashok Jain, Pankaj Jain, Mrs. Neeraj Anand and Bijoy
Kumar Jain for tlie Appellant.
, I
C.N. Sree Kumar and Ms. Deepa S. for the Respondents.
H
N.K. RAJGARHIA v. MAHAVIR PLANTATION LTD. [SINHA, J.] 885

The Judgment. of the Court was delivered by A
S.B. SINHA, J. Leave granted.

< Interpretation of a consent order falls for determination by this Court
in this appeal which arises out of a judgment and order dated 17.05.2005
passed by a Division Bench of High Court of Delhi in EFA(OS) No. 22/2004. B
The Respondent herein took an advance of certain sum of money from
the Appellant herein. A suit for recovery of Rs. 75 lakhs towards refund of
the said amount with interest and damages was filed by the Appellant. The
parties, however, entered into a compromise in terms whereof the Appellant
was to receive a sum of Rs. 41,69,110/-, the relevant clause whereof reads as C
under:

" ... .It is specifically made clear that on dishonour of the said cheques
or any one of them on any ground whatsoever then and in that event
the entire remaining balance amount shall become payable at one time
and the plaintiff shall be entitled to execute the decree for realization D
of the entire remaining balance amount which shall remain payable
plus interest to be calculated @15% p.a. and shall also be entitled to
take all legal steps as may be permissible under the law to the plaintiff."

... It is not in dispute that the Respondent herein paid a sum of Rs. 5 lakhs
to the Appellant and as it failed and/ or neglected to abide by its undertaking E
as regard payment of the balance sum, an execution application came to be
filed which was marked as Execution Application No. 58 of 2001. In the said
execution proceedings again, the parties entered into a settlement and a
learned Single Judge of the Delhi High Court by an order dated 13.9.2001
recorded the same which reads as under: F
" ... These undertakings are accepted. He further agrees that in case
any of the cheques is dishonoured he will be liable for not only
contempt for violating these undertaking. The decree holder shall be
entitled to execute the balance decree immediately. It is also agreed
between the parties that the decree holder shall withdraw all civil/ G
criminal cases after the entire payment is made by judgment debtor in
the manner stated above. However, the decree holder shall not pursue
these cases and get these cases adjourned after 20.3.2002 by which
time the judgment debtor is supposed to clear the entire decretal
amount.
H
A
886 SUPREME COURT REPORTS [2005] SUPP. 5 S;C.R.

The execution petition accordingly is disposed of."

Allegedly, the Respondent became a defaulter again. As three cheques
-
out of six post dated cheques were dishonoured, another execution application
was filed by the Appellant herein which was marked as Execution Application
No. 45 of 2002. The Respondent, however, filed an application for extension
B of time and a learned Single Judge of the Delhi High Court, relying on or on
the basis of the decision of this Court in Smt. Periyakkal and Ors. v. Smt.
Dakshyani, AIR (1983) SC 428, granted such extension stating:

" .. .It is on account of the illness of the Managing Director of the
judgment debtor company and on account of the fact that the company
c is facing financial problems, extension/ enlargement of time for the
payment of balance decretal amount is made. The judgment debtor is
also agreeable to pay interest at the rate of 15% per annum on the
reduced balance amount. Though ordinarily time for payment should
not be extended on the mere asking of the judgme::it debtor, but in the
present case disallowing the judgment debtors' request would cause
D
great injustice to the judgment debtor. Accordingly, in order to meet
the ends of justice, the application for extension of time is allowed.
The decree holder would present the cheque dated 20th January, 2002
and 20th February, 2002 for. Rs. 6 lakhs each on 20th March, 2002
along with the third cheque dated 20th March, 2002 for Rs. 2,04,222.
E The judgment debtor would also pay Rs. 22,500/- towards interest
calculated at the rate of 15% per annum on that date. The judgment
debtor would, thus, clear the entire decretal amount on 20th March,
2002. The application is accordingly disposed of." ·
The Appellant preferred an appeal thereagainst and by an order dated
F 20th March, 2002, a direction was issued hy the Division Bench of the Delhi
High Court. The Division Bench directed the Respondent to present three
cheques on that day itself and in case those cheques were not encashed it
was threatened that appropriate proceedings would be initiated. I_t does not
appear that any notice was issued to the Respondent in the said appeal. By
G an order dated 1.4.2002, the said appeal was disposed of stating:

"We have perused the record ai:id also the application filed today
indicating that two of the cheques given by the judgment debtor have
been dishonoured and the fate of the third cheque is not known. The
respondent primarily filed an application before the learned Single
H Judge for grant of extension of time for making payment. The learned
N.K. RAJGARHIA v. MAHA VIR PLANTATION LTD. [SINHA . .I. ] 887

Single Judge granted the extension for making payment until 20.3.2002. A
Since th·e extended time has already come to an end the appeal to our
mind has become infructuous. The appellant will be, however, within
his rights to approach the learned Single Judge for execution as well
as for contempt. The filing of the appeal will not come in the way of
the appellant in pursuing his remedy before the learned Single Judge." B

The said order of the Division Bench is said to be still in force. The
Respondent, however, obtained another extension from another learned Single
Judge of the High Court in terms of an order dated 28.8.2002. The Appellant,
herein did not question the said order. The said order, thus, attained finality.

It is, however, not in dispute that the judgment debtor has paid the C
entire amount together with interest in terms of the consent order dated
5.2.2002 passed in the aforementioned execution petition. It is, furthermore,
not in dispute that the contempt application filed against the Respondent
herein by the Appellant for violating the undertaking by him has ultimately
been dismissed. D
The short question. which, thus, arises for consideration is the
interpretation of the words "balance decree" occurring in the order dated
13.9.2001, as extracted supra.

The contention of the learned counsel appearing on behalf of the E
Appellant is· two-fold. Firstly, the High Court of Delhi had no jurisdiction to
grant extension of time for payment of the decretal dues without his consent
and secondly, having regard to the fact that the Respondent failed to abide
by its undertaking, the original claim of the Appellant revived.

The contention of Mr. C.N. Sree Kumar, learned counsel appearing on F
behalf of the Respondent, on the other hand, was that despite Rule 4 of Order
XXIII of the Code of Civil Procedure, there does not exist any bar to enter
into a compromise at the execution stage and, in any event, with regard to
the fact that the entire amount has now been paid, this Court should not
exercise its discretionary jurisdiction under Article 136 of the Constitution of G
India in favour of the Appellant.

The suit was filed for recovery of a sum of Rs. 75 lakhs. The consent
decree passed by the court shows that a decree for a sum of Rs. 41,69, 110
became payable wherefor nine cheques were issued. It is also not in dispute
that the plaintiff waived his remaining claim on the premise that the Respondent H
888 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A had agreed to settle the disputes.

Clause (b) of the Compromise Petition filed by the parties merely shows
that in the event, any of the cheque is dishonoured or returned unpaid, the
entire remaining balance amount shall become payable at one time in which
event, the decree holder would be entitled to execute the decree for realization
B of the entire remaining balance amount plus interest calculated at the rate of
15% per annum. Order XXW, Rule 4 of the Code of Civil Procedure states that
other provisions thereof are not applicable to an execution proceedings. But,
despite the same, it is now well-settled that the parties may enter into a
settlement even in a execution proceedings.

c In Moti Lal Banker (dead) by his legal Representative v. Maharaj
Kumar Mahmood Hasan Khan, AIR (1968) SC 1087, this Court held such
compromise to be permissible in law stating:

" .. .Independently of Order 23, Rule 3, the provisions of Order 21, Rule
2 and Section 47 enable the executing Court to record and enforce
D such a compromise in execution proceedings. Nor does Order 20, Rule
11 (2) affect this power of the executing. Court. Order 20, Rule II
enables the court passing the decree to order postponement of the
payment of the decretal amount on such terms as to the payment of
interest as it thinks fit on the application of the judgment-debtor and
E with the consent of the decree-holder. It does not affect the power of
the executing Court under Section 47 and Order 21, Rule 2."

Yet again in Periyakkal, (supra),. this Court held that, in certain situations,
the court has also jurisdiction to extend the time stating:

F " ... The parties, however, entered into a compromise and invited the
court to make an order in terms of the compromise, which the court
did. The time for deposit stipulated by the parties became the time
allowed by the court and this gave the court the jurisdiction to extend
time in appropriate cases. Of course, time would not be extended
ordinarily, nor for the mere asking. It would be granted in rare cases
G to prevent manifest injustice. True the court would not rewrite a
contract between the parties but the court would relieve against a
forfeiture clause; And, where the contract of the parties has merged
in the order of the court, the court's freedom to act to further the ends
of justice would surely not stand curtailed."
H
N.K. RAJGARHIAv. MAHAVIR PLANTATION LTD. [SINHA, J.] 889

There cannot, thus, be any doubt that the compromise entered into by A
and between the parties hereto in the execution proceedings was valid in law.
The Appellant moreover does not say that the same was not acted upon.
Admittedly, he received the entire amount thereunder, albeit belatedly; but
even therefor the Respondent applied for and obtained extension of time to
pay the same.
B
!lightly or wrongly, the learned Single Judge of the Delhi High Court by
an order dated 28.8.2002 extended the time to the Respondent herein for
paying the decretal amount with interest upto 23. 7.2002. The Appellant herein
had accepted such amount and that order was not questioned and, thus, the
same had attained finality. What was questioned was the liability incurred by C
the Respondent not being able to adhere to the terms thereof.

If the orders of extension have validly been passed, the order of the
court stood complied with. It may be true that the order dated 1.4.2002 was
not questioned by the Respondent before this Court but then no direction
was issued therein. No judgment was passed. The said order was passed D
without issuing any notice to the Respondents. The appeal was disposed of
as having become infructuous. It was, thus, not final. Thereby, merely a
liberty had been granted to the Appellant to agitate his grievances before the
learned Single Judge for execution as well as for contempt. By reason of the
said order, alone the Appellant could not put forth his claim. The Appellant,
thus, cannot take any benefit thereof. E
An order of a court of law and, in particular, a consent order, must be
read in its entirety for the purpose of ascertaining its true intent and purport.

The learned Single Judge in his order dated 13.9.2001 recorded as to
how much amount was paid by the Respondent to the Appellant before the F
execution case was filed. The execution case admittedly was filed for recovery
of the balance sum of Rs. 36,59, l l 0/- together with interest at the rate of 15%
per annum. The settlement between the parties was arrived at at this juncture
in terms whereof it was agreed:

"1. The judgment debtor shall pay the balance amount of Rs. 36,59, 110 G
in the instalments.

2. For the past period, i.e., from the date of Decree till date the
judgment debtor shall pay the lump sum interest of Rs. 6,35,082.

H
890 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A 3. The judgment debtor shall pay 15% interest on the principal amount
of the further period."

Not only the Respondent agreed to pay a lump sum interest of Rs.
6,35,082 but also became agreeable to pay 15% interest on the principal
amount of the further payment. On calculation, a sum of Rs. 42,04,222/- was
B found to be payable out of which the judgment debtor had paid a sum of Rs.
10,00,000/- by way of three demand drafts. Appropriating the said amount, the
outstanding principal sum came to Rs. 26,69, 110. However, the balance amount
outstanding as on that day came to Rs. 32,04,222. It was that amount which
was to be liquidated by paying instalment of Rs. 6 lakhs each per month. It
C is in the aforementioned backdrop, the undertaking given before the learned
Single Judge of the High Court by the Respondent herein is to be construed.

The contention of the learned counsel appearing on behalf of the
Appellant is that once a default is committed by the Respondent, the Appellant
in terms thereof, would be entitled to execute the balance decree immediately
D which would mean he would be entitled to a further sum of about Rs. 41 lakhs,
which was waived by him. We do not agree. The word 'decree' after the word
'balance', in our opinion, has been used loosely. The matter might have been
different if the amount payable under the compromise entered into by the
parties in the execution case would have been less than the amount paid by
the Respondent to the Appellant in terms of the consent decree passed
E originally. It is not so. Whereas under the original decree, a sum of Rs.
41,69,110/- was payable, in terms of the consent order passed in the execution
case, a sum of Rs. 42,04,222/- became payable. The sum which was waived
by the Appellant did not form part of the consent decree. It was merely a
claim. Such a claim never fructified into any decree and in that view of the
F matter the plea of Respondent being liable to pay the said amount to the
Appellant despite the fact that no decree i!l relation thereto was passed
cannot be countenanced.

For the reasons aforementioned, we are of the opinion that the impugned
judgment and order cannot be faulted. This appeal is dismissed. However, in
G the facts and circumstances of this case, there shall be no order as to costs.

N.J. Appeal dismissed.