Kalyanji Dhana v. Dharamsi Dhana And Co.

1. The facts giving rise to this appeal are as follows: The respondent obtained a decree for Rs. 1,500 odd against the appellant in a suit in the Small Cause Court, Bombay. The decree was transferred for execution to the Subordinate Judge's Court at Andheri. The respondent then filed a darkhast on 6th December 1930, and in reply thereto the appellant (the judgment-debtor) made an application on 19th December 1930, in which he alleged that there had been an adjustment of the decree on 4th November 1930. The trial Court framed issues (1) Whether defendant can lead oral evidence regarding the alleged adjustment; (2) Whether defendant can plead the adjustment and satisfaction before this Court. The learned Subordinate Judge held on both issues against the defendant. He relied on 1922 All 13 (1) and on 1925 Bom 309 (2). The defendant's application was, therefore, rejected. An appeal to the District Judge of Thana was dismissed. That learned Judge agreed with the lower Court. He has cited the case of 1927 Mad 911 (3) in addition to the cases relied on by the Subordinate Judge. There were questions of the defendant's status raised in the lower Courts with which I am not concerned in this appeal. The learned advocate for the appellant-defendant challenges the findings of the lower Courts on the two points which I have mentioned, and in my view they cannot be sustained.

2. I will deal with the three cases on which the learned Judges below have relied and will incidentally refer to other authorities which have been cited before me. Taking first the Full Bench case, 1925 Bom 309 , what was held there was that under O. 21, R. 2(3) of the CPC, the Court executing a decree is barred in limine from considering any allegation that a payment not certified has been made. What had happened in that case was that the decree-holder had not certified any adjustment of the decree under R. 2(1), O. 21 and the judgment-debtors, though they informed the Court of an alleged adjustment, had not done so within the period of ninety days allowed under Article 174, Lim Act. There had, therefore, been no certification or recording of an adjustment as required by R. 2, Cls. (1) and (2), and, therefore, it was held that it could not not be recognised by the Court executing the decree. This Full Bench decision is obviously distinguishable. The Court was there dealing with an uncertified adjustment. In the present case the defendant's application of 19th December 1930, in which the adjustment was alleged, was well within ninety days of the date of the alleged adjustment, viz. 4th November 1930. That information given to the Court in a written statement put in by defendant in answer to an application for execution may be regarded as a sufficient compliance with the terms of O. 21, R. 2(2), is, I think, sufficiently clear from 1932 Bom 202 (4), 1930 Pat 526 (5) and 1928 Rang 62 (6). I can see no justification for the contention of the learned advocate for the respondent that the law requires that the judgment-debtor must certify an adjustment before execution proceedings begin. The Full Bench case is no authority for the proposition that an application to record an adjustment cannot be entertained by the executing Court, if it is made within time. On the other hand, 1932 Bom 202 is an authority, if any be needed, for the proposition that the Sub-Court at Andheri, to which this decree had been transferred, was the Court whose duty it was to execute the decree and the Court which could properly entertain a request from the judgment-debtor for the recording of an adjustment. In 1922 All 13 the circumstances were of a very peculiar nature. It seems that there was not really any adjustment of the decree at all. As Piggot, J., says (p. 262):

What has been pointed out to us on behalf of the respondent is this: that, on the appellant's own showing, the decree had not been adjusted, in whole or in part, to the satisfaction of the decree-holder on 25th October 1920, when the judgment-debtor's petition was presented to the Court. What the judgment-debtor alleges to have taken place is somewhat as follows. On the day after the arrest of the judgment-debtor had been applied for, there was a meeting of the parties concerned, in the presence of members of the brotherhood, and an oral agreement was reached. That agreement was to the effect that the decree-holder would accept satisfaction of his decree in a modified form and would abandon the execution proceedings which were being taken, as soon as four specified conditions had been fulfilled by the judgment-debtor.

3. Further on, on the same page, the learned Judge says:

Beyond all question there had been no adjustment of the decree to the satisfaction of the decree-holder, and there has been none to this day.

4. Then at p. 263 he says:

I think the Court below was right in holding that such matters could not be inquired into by an execution Court, which could not conceivably substitute a different decree for the one which it was called upon to execute, or give the decree-holder in place of the decree under execution some sort of a decree for specific performance of a contract orally entered into.

5. Walsh, J., also refers to the alleged adjustment as being merely “an inchoate contract.” On those facts it is easy to understand that the learned Judges held that the agreement alleged could not be set up by the judgment-debtor under R. 2, O. 21 as a bar to execution. So also in 1927 Mad 911 it was held that there had been no real adjustment. The facts here, however, are quite different. The lower Courts, owing to the view they took that the judgment-debtor was not entitled to prove the alleged adjustment, do not appear to have inquired into the nature of it. I understand, however, that what the judgment-debtor alleges is that the judgment-creditor agreed to accept the sum of Rs. 700 in place of a balance of Rs. 1,170 which remained due, and the judgment-debtor promised to pay this Rs. 700 by instalments of Rs. 100 a year, the consideration from the point of view of the judgment-creditor being that he would avoid troublesome execution proceedings which might possibly be infructuous. An agreement of that kind has very little similarity to that with which the Allahabad High Court was dealing in 1922 All 13 and I know of no reason why, if proved, it should not be regarded as an adjustment of the decree within the meaning of O. 21, R. 2. There is authority for the view I take: see 1933 Lah 806 (7), 1933 Mad 28 (8) and 1933 Bom 100 (9).

6. Further, I hold that an adjustment of this kind may be proved by oral evidence. Of the two learned Judges who decided 1922 All 13 the question of the application of Section 92 of the Evidence Act, was considered by Walsh, J., only.

7. The finding that S. 92 would be a bar to the setting up of an oral agreement varying; a decree is therefore the finding of a single Judge. Other learned Judges have taken a different view. Thus in 1928 Rang 316 (10) Carr, J., dissented from 1922 All 13 and held that where a judgment-debtor sets up a verbal agreement by the decree-holder to accept some variation or a new contract in substitution for the original decree, he is not debarred from doing so by Section 92 of the Evidence Act. So also in 1933 Lah 806 Addison, J., has held that an oral agreement between the parties to a decree varying the terms of the decree can be proved and the proof thereof is not barred by Section 92 of the Evidence Act. As at present advised I prefer the view taken in these cases. I may mention that the opinion expressed by Walsh, J., in 1922 All 13 has been dissented from by the learned Chief Justice of the Allahabad High Court itself on the ground that S. 92 applies to dispositive documents between contracting parties, and that a decree is not an instrument between parties in the sense in which that expression is used in the section: 1929 All. 79 (11). The same view has been taken by a Bench of the Calcutta High Court in 1926 Cal. 643 (12). I hold that an agreement to accept a portion of the decretal amount to be paid in instalments in full satisfaction of the decree is an adjustment within the meaning of O. 21 R. 2, and, if certified as required by law, as it was in this case, then it can be recorded and acted upon if proved. It is not necessary that such an agreement should be reduced to writing and it is open to the Court to accept oral evidence of it. There is one other point which must be briefly mentioned. The judgment-debtor stated that he had made a payment of Rs. 340 to the judgment-creditor. Dealing with that allegation the trial Judge said:

I find that the defendant and his witnesses have made only vague statements of a payment of Rs. 800 having been made without giving the date on which it was made. So it is not known whether it was within or beyond ninety days of this application.

8. The learned District Judge has not referred to this particular point at all and has given no finding on it. If it should appear that the payment alleged was more than ninety days before the Court was informed of it, O. 21, R. (2)(iii), may prevent the Court from recognising it. But so far there is no elear finding on the point, and, I think, nothing has been decided which prevents an inquiry into the alleged adjustment as a whole. There will now have to be an inquiry by the executing Court as to whether the adjustment alleged by the judgment-debtor did in fact take place. The orders of the lower Courts must be set aside and the case must go back to the executing Court for inquiry as above directed and disposal according to law. The appellant will have his costs in this Court and in the District Court. Costs in the executing Court will be costs in the cause.

K.S

9. Order set aside: case sent back.