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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This opinion arises from an appeal against an order of the District Judge who summarily dismissed an appeal from an order of the Munsif. The Munsif had allowed an objection by the judgment-debtor in execution proceedings. By dismissing the appeal summarily, the District Judge effectively dismissed the execution proceedings and treated an alleged adjustment or compromise of the decree as recognized, despite the absence of any certification under Order 21, Rule 2(3) of the Code of Civil Procedure (CPC).

Key factual points (as recorded in the opinion): the judgment-debtor himself stated in his petition that a payment of Rs. 200 was made on 24th September 1934 (the date on which he was arrested) and that, by arrangement, the balance of the decree (and another decree) would be paid by instalments without interest. An objection to execution was raised in February of the following year.

Procedurally, the appeal before the present court challenges the District Judge's summary dismissal and raises multiple legal questions under Order 21 CPC (notably Rules 2(3) and 22), as well as questions of limitation and whether the alleged arrangement qualifies as an "adjustment" requiring certification.

Legal Issues Presented

  1. Whether a payment or adjustment not certified under Order 21, Rule 2(3) CPC can be recognized by a Court executing the decree.
  2. Whether notice under Order 21, Rule 22 CPC was required where one of two judgment-debtors had died and execution was being taken against the surviving person (i.e., whether execution was against a legal representative).
  3. Whether the executing Court may certify an alleged adjustment at the stage when objection to execution is taken (i.e., whether certification can occur during execution proceedings).
  4. Whether, assuming the matter could be treated as an application for certification, that application was barred by limitation (specifically the ninety days' rule).
  5. Whether the specific agreement alleged by the judgment-debtor (payment of Rs. 200 and agreement to accept instalments without interest) amounts to an "adjustment" within the meaning of Order 21, Rule 2 CPC.

Arguments of the Parties

Judgment-Debtor's Arguments

  • The judgment-debtor's petition asserted that on the day of his arrest (24th September 1934) a payment of Rs. 200 was made and an arrangement was agreed whereby the balance of the decree and another decree would be paid by instalments without interest (para. 5 of his petition).
  • Implicit in the result below is that the trial Court recognized that arrangement and accepted it as affecting the decree-holders' right to execution.

Respondents' (Decree-Holders' / Opposing) Arguments

  • The respondents' Advocate argued (as the opinion paraphrases) that if the decree-holder is entitled at any subsequent time to execute the decree, then such an arrangement is not an "adjustment" within the meaning of Order 21, Rule 2 — i.e., that the possibility of future execution negates the characterization as an adjustment.
  • There was an argument (made faintly at first instance) that the Court could recognize or certify the arrangement when the objection was raised in execution proceedings; the opinion rejects this position.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
13 IC 326 (Calcutta High Court; Coxe, J.) That an arrangement being considered was an "adjustment" within the meaning of Order 21, Rule 2, and therefore certifiable; observation that a mere agreement to grant time might be in doubt but was likely an adjustment. The Court described this as the nearest authority on the question and relied on it to support the view that the alleged arrangement could be an adjustment requiring certification.
50 Mad 897 Considering Section 92 of the Evidence Act, held that agreements which vary or modify a decree (and affect the decree-holder's right to execution) must be certified under Order 21, Rule 2 to be recognized by the executing Court. The opinion cites this decision as supportive of the proposition that an agreement which bars or alters the decree-holder's right to execution must be certified.
49 MLJ 730 (Wallace, J.) Concluded that a composition scheme under which a decree-holder accepts 80% of his debt was an "adjustment" and therefore certifiable; noted that if a decree was executable in full there could be no adjustment in that sense. The Court acknowledged this decision as helpful to respondents to an extent but clarified that the decision did not mean that any decree executable at all could never be an adjustment; the Court read it as limited to the specific view about full executability.
56 Mad 198 Held that an agreement which extinguishes a decree in whole or in part is an adjustment within the meaning of the rule; stated that a promise to do something in the future can be valid consideration and constitute an immediate adjustment. The opinion cites the head-note and takes it to support the proposition that promises of future performance can constitute an adjustment certifiable under Order 21, Rule 2.

Court's Reasoning and Analysis

The Court proceeded through a series of legal determinations, grounded in the statutory text of Order 21 CPC and the record:

  1. Interpretation and mandatory nature of Order 21, Rule 2(3): The Court emphasized that O.21 R.2(3) is mandatory: "A payment or adjustment, which has not been certified or recorded as aforesaid, shall not be recognized by any Court executing the decree." The Court construed this to mean that an executing Court must refuse to recognize any payment or adjustment not previously certified.
  2. Scope of Order 21, Rule 22: The Court analyzed the question whether notice under O.21 R.22 was necessary because one of the two judgment-debtors (the son) had died. It concluded that the decree-holders were taking execution against Borho Sahu personally, not against him as the legal representative of his son; therefore O.21 R.22 (which requires notice where execution is against a legal representative) was inapplicable in these proceedings.
  3. On the possibility of certifying at the objection stage: The Court rejected the contention that the executing Court could certify the arrangement when the objection was raised. The Court reasoned that sub-clause (3) of Rule 2 clearly contemplates certification before an objection is taken in execution proceedings; it is too late to apply for certification when the executing Court is already engaged in execution.
  4. Limitation (ninety days) and application of Section 103 CPC: Although the point of limitation had not been fully argued below, the Court invoked Section 103 CPC to decide the issue on the material before it. The record showed payment on 24th September 1934 and the objection was in February of the following year. The Court held that the objection was clearly barred by the ninety days' rule, so that, as an application to certify, it was out of time.
  5. Whether the arrangement amounted to an "adjustment" under O.21 R.2: After reviewing authorities (including the cited precedents), the Court concluded that the language of Rule 2 is wide enough to include agreements like the one alleged (partial payment, promise to pay by instalments, remission of interest). The Court rejected the respondents' narrower argument that the possibility of future execution negates characterization as an adjustment. The Court regarded the legislature's policy in O.21 R.2 as preventing disputes during execution about whether the parties had settled and read the rule as having broad implication.
  6. Conclusion from the above reasoning: Because the alleged adjustment was not certified under the rules, the trial Court should have dismissed the objection; the decisions below were therefore erroneous and required setting aside.

Holding and Implications

Holding: The appeal was allowed; the decisions of the Courts below were set aside. The Court held that adjustments or payments not certified under Order 21, Rule 2(3) CPC shall not be recognized by a Court executing the decree and that the trial Court should have dismissed the objection. The judgment-debtors were given credit for the Rs. 200 admitted to have been received by the decree-holders. There will be no costs.

Implications:

  • The direct effect on the parties is reversal of the lower courts' decisions, allowance of the appeal, and crediting the judgment-debtors with Rs. 200.
  • The opinion reinforces the principle that an executing Court must not recognize a payment or adjustment that has not been certified under Order 21, Rule 2(3) CPC; certification cannot, in the Court's view, be effected at the stage when objection is taken in execution proceedings.
  • The Court also applied the ninety days' limitation rule to bar a late application to certify, on the facts of this case.
  • The opinion discusses existing authorities and reads the statutory language broadly, but it does not purport to state that this is a novel or sweeping new precedent beyond the application of Order 21 CPC and the facts before the court.

Disposition in the opinion: "Appeal allowed." Judgment-debtors to receive credit for Rs. 200; no costs.

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    (Babu) Banarsi Lal And Others Decree-Holders v. Borho Sahu Judgment-Debtor And Another Surety

    1. This is an appeal from an order of the District Judge who dismissed summarily an appeal from the order of the Munsif allowing an objection by the judgment-debtor in an execution case. The case is one of some difficulty, but in spite of that Mr. Lucas, the District Judge, seems to have thought it of little importance and, as I have stated, dismissed the case summarily. It is true that one of the main points which has been argued before me does not appear to have been argued before the lower appellate Court. But it was a point of law which in the circumstances arose and should have been disposed of by the Courts below having regard to the provisions of O. 21, R. 2 of the CPC. In dismissing summarily the appeal before him the District Judge in effect dismissed the execution proceedings and recognized an adjustment or compromise of a decree which had not been certified under O. 21. O. 21, R. 2(3) is mandatory and provides:

    A payment or adjustment, which has not been certified or recorded as aforesaid, shall not be recognized by any Court executing the decree.

    2. I understand that to mean (although the point has not been taken) that if there is a question of any payment in satisfaction of the decree or adjustment of the decree which has not been certified, the Court shall refuse to recognize it in an execution proceedings. It has been argued in this case that the Judge of the trial Court was wrong in recognizing the adjustment which in this case is alleged to have been made. There is also a further question which I propose to deal with at once and that is that of the two persons who were judgment-debtors (father and son), the son having died before the present execution, the decree-holders should have given notice under O. 21, R. 22, which was not done. O. 21, R. 22, provides:

    Where an application for execution is made against the legal representative of a party to the decree, the Court executing the decree shall issue a notice to the person against whom execution is applied for requiring him to show cause.

    3. Now quite clearly O. 21, R. 22, provides for a case where a person against whom execution has been taken out is not on the record of the execution case, or, if he is on the record, execution is being taken out against him as such. The short answer to this point is this: that in this case it is not asserted by the decree-holders that they are taking out execution against the father as heir (if he be that) of the son. The result may be that if the execution proceeds difficulties might arise, but with those difficulties we are not concerned. To repeat what in my judgment is conclusive on this matter, the decree-holders in these execution proceedings are taking out execution against Borho Sahu personally, not against him as the legal representative of his son. Therefore notice under O. 21, R. 22, is unnecessary. It is obvious that some meaning must be given to O. 21, R. 2(3):

    A payment or adjustment which has not been certified or recorded… shall not be recognized by any Court executing the decree.

    4. It was faintly argued in the first instance that the Court could recognize or certify this arrangement if proved at the stage at which the matter was when the objection was raised. With that I cannot agree. It would be in a sense repealing the third sub-clause of R. 2 of the order if that view of the law were taken: in other words, sub-cl. (3) clearly contemplates a certification before the objection is taken to the execution on the basis of an adjustment or payment in satisfaction of the decree, or, to put it in another way, when the executing Court is about the business of execution as such it is too late then to apply for certification under O. 21. It is therefore too late, when objection is taken to the proceedings in execution, to assert that there is an agreement which has not so far been certified. Now the argument by the learned Advocate for the respondents in this case is this: that the arrangement (set out in his petition) was that on the date the payment of Rs. 200 was made, that is to say, on the day that he was arrested, it was agreed that not only the balance of this decree but also another decree should be paid by instalments. Para. 5 of his (the judgment-debtor's) petition asserted that arrangement was made and that the decree-holders agreed to that arrangement and agreed to accept these instalments without interest. Before I deal with that I revert for a moment to the other question. Assuming it was an adjustment contemplated by O. 21, R. 2, this objection could be taken in substance to be an application to certify the payment. Now that will depend in this case upon the question of whether such an application was barred by limitation apart from the other considerations which I have stated. Now in the ordinary circumstances this point not having been raised in its particular form there was no decision by the trial Court on this matter, and, if it became necessary, the case would be remanded to the Judge to come to some finding with regard to this question.

    5. But I am entitled, in the circumstances, to consider the matter under Section 103 of the CPC, and I adopt that procedure all the more readily in this case because the fact is sufficiently clear from the record. It was the judgment-debtor's own case that this arrangement was made on the date of payment, that appears in his petition, and from the order-sheet it is found that the payment of Rs. 200 was made on 24th September, 1934. As the objection was made in February of the following year, it is clearly barred by the rule of ninety days' limitation. I again come back to the point of whether this was a payment or adjustment coming within O. 21, R. 2. Now this point has never been directly decided, but the nearest case is the decision of the Calcutta High Court in 13 IC 326(1). Coxe, J., decided that the arrangement which they were there considering was an adjustment within the meaning of O. 21, R. 2, and therefore certifiable, and that without certification the Court could not recognize it. In the course of his judgment he made this observation:

    It may be open to doubt whether a mere agreement to grant time would be an adjustment within the meaning of that section; although, speaking for myself, I should be inclined to think that it would be such an adjustment.

    6. It is not necessary in this case to fall back upon the words of the Court in that case as it is asserted by the judgment-debtor in this case that not only was it an agreement to give time, but it was also an agreement to relinquish the interest which the decree-holders would otherwise be entitled to. Again in 50 Mad 897(2), there was an appeal by the-judgment-debtor and the question which came to be decided was whether by reason of Section 92 of the Evidence Act, an agreement which was not contemplated by O. 21, R. 2, that is to say, an agreement which did not extinguish the decree as such but which varied or modified a decree, could be proved having regard to the section of the Evidence Act to which I have referred. They there took a view different from the Calcutta High Court and also from that, of one of the learned Judges of the Allahabad High Court and held that, in any event any agreement made, barring in any way the decree-holder's right to execution to be recognized by the Court, must be certified. In a case reported in 49 MLJ 730(3), Wallace, J., as he then was, was considering the question of whether an agreement in the form of a composition scheme under which a decree-holder was to accept 80 per cent of his debt, was an adjustment of a decree and therefore certifiable and came to the conclusion that it was, as according to the decision of the learned Judge the decree did not become executable in full. The learned Advocate appearing on behalf of the respondents argues that if the decree-holder is entitled hereafter to execute his decree, it is not an adjustment within the meaning of O. 21, R. 2. I trust I have not misunderstood the argument, but as it appeared to me, it was an argument, to express it in other words to this effect; if at any time the decree-holder could execute any decree, it was not an adjustment under O. 21, R. 2. That argument in any event cannot be accepted for obvious reasons. It is an agreement which is certifiable under O. 21, R. 2 although only a part of the decree has been paid. That is obvious from the plain reading of the rule. That is the first answer to the argument advanced. Again the case which would assist the respondents most in this respect is the decision in 49 MLJ 730, to which I have already referred. But there the decision was no more than this: that if the decree was executable in full there could be no adjustment within the meaning of O. 21, R. 2. But the learned Judge deciding the other case did not contemplate or did not say that if the decree could be executed at all there was no adjustment within the meaning of O. 21. Now there is the other decision in 56 Mad 198(4) to the effect that an agreement which extinguishes a decree as a whole or in part is an adjustment within the meaning of the rule, and:

    A promise to do something in future is legal consideration, and there is no legal impediment in the way of a decree-holder accepting a mere promise that the judgment-debtor will do something at some future date as a legal and immediate adjustment in satisfaction of his decree.

    7. I am reading for the moment from the head-note in that case which accurately states the effect of the judgment of the Court. I have already said and repeat that there is no definite decision on this point by any Court and the possible explanation of that is this that in most of the cases I have referred to, objection has been advanced by the decree-holder in the first instance asserting that the agreement made is not certifiable under O. 21, R. 2. In this case we have an agreement on the judgment-debtor's own showing which has certainly affected the decree-holders' right to execute if that agreement can be proved. The question is whether it answers to the description of an adjustment under O. 21, R. 2. It is true that the decree-holders under the agreement are not entitled to execute a decree but it is also obvious that they cannot execute their decree immediately nor could they execute the full decree in the sense that the interest has been remitted. I must say that I do not feel disposed to hold that under these circumstances it is not an adjustment. It has been stated by a number of Judges in many cases that the obvious policy of the legislature is to prevent a controversy during execution proceedings as to whether the dispute between the parties has been settled, and it seems to me that the legislature enacting O. 21, R. 2 has used words which are of the widest implication.

    8. Reference has been made not merely to payment but a payment of a part or a whole. As I have already said it appears to me that the words used are wide enough to contemplate the agreement alleged in this case. As the adjustment was not certified under the rules of the Code of Civil Procedure (O. 21, R. 2), the trial Court should have dismissed the objection as the law prohibits a Court to recognize any such payment or adjustment.

    9. It seems to me that the decisions of the Courts below were wrong and they must be set aside and the appeal allowed. As the point was not taken in the exact form in which it was argued before me, there will be no costs. The judgment-debtors of course in the circumstances will get credit for Rs. 200 admitted to have been received by the decree-holders.

    R.M/R.K

    10. Appeal allowed.

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    Comments

    (Babu) Banarsi Lal And Others Decree-Holders v. Borho Sahu Judgment-Debtor And Another Surety
    (Jan 24, 1936)