Judgment:
N.K. Mody, J.
1. Being aggrieved by the order dated 17-4-2006 passed by Civil Judge Class I, Neemuch in Civil Execution Case No. 10-A/92-97, whereby the objections filed by the petitioner were dismissed, the present revision petition has been filed.
2. Short facts of the case are that a suit for eviction was filed by the respondent against the petitioner on the basis of arrears of rent, in which it was alleged that petitioner is tenant in the suit accommodation @ Rs. 300/- per month and is in arrears of rent w.e.f. 14-8-1989. The suit was contested by the petitioner. During pendency of the suit, the compromise took place between the parties on 21-2-1997 whereby the petitioner agreed to vacate the suit accommodation on or before 20-8-1997. It was also agreed that the respondent relinquishes the claim of arrears of rent and if the petitioner commits default in vacating the accommodation on or before 20-8-1997, then the petitioner will be liable to pay the arrears of rent w.e.f. 14-8-1989 to 20-8-1997 @ Rs. 300/- per month and the petitioner will be further liable to pay the mesne profits @ Rs. 2000/- per month from 21-8-1997 till the date of handling over of the possession. On the basis of aforesaid compromises, a decree was passed in favour of respondent. Since the accommodation was not vacated on or before 20-8-1997, therefore, execution petition was field by the respondent for realization of Rs. 38,460/- on the basis that the petitioner has vacated the suit accommodation on 9-12-1997 and not on 20-8-1997 as agreed between the parties. The objections were filed by the petitioner under Section 47, CPC read with Sections 73 and 74 of the Indian Contract Act alleging that the term of payment of mesne profits was in terrorem hence the respondent is not entitled for the alleged decreetal amount.
3. After hearing the parties, learned Trial Court vide order dated 17-4-2006 dismissed the objections filed by the petitioner holding that the clause for payment of mesne profits and arrears of rent is not a penal clause and the respondent is entitled to get the decree executed as per the compromise decree, hence this revision.
4. Learned Counsel for petitioner submits that the demand of arrears of rent and mesne profits was in terrorem and was not permissible under the law. For this contention, reliance was place in the matter of Prilhvichand Ramchand Sablok v. S.Y. Shinde, reported in : [1993]3SCR729 , wherein it was held that-
A decree passed on the basis of compromise between the parties is essentially a contract between the parties which derives sanctity by the Court superadding its seal to the contract. But all the same the consent terms retain all the elements of a contract to which the Court's imprimatur is affixed to give it the sanctity of the Executable Court order. The Court will not add its seal to the compromise terms unless the terms are consistent with the relevant law. But, if the law vests exclusive jurisdiction in the Court to adjudicate on any matter, e.g., fixation of standard rent, the Court will not add its seal to the consent terms by which the parties have determined the standard rent unless it has applied its mind to the question and has satisfied itself that the rent proposed by the consent is just and reasonable.
5. Learned Counsel also placed reliance on a decision in the matter of Pannalal v. Jagdish Prasad 1982 MPWN SN 23, wherein this Court has held that
in money decree in compromise where the amount was payable in installments, no amount more than decretal amount can be recovered in case of default.
6. Further reliance was placed on a decision in the matter of Rameshchandra v. Ramkaran 1974 MPLJ SN 77, wherein it was held that
where the result of enforcing the default clause is to make the amount due primarily liable under the decree recoverable, the stipulation is not in the nature of penalty and such a stipulation having been made subsequent to the decree is merely a concession granted to the judgment debtor the withdrawal of which by the decree holder does not amount to imposing penalty.
7. In the matter of Basanti v. Laxman Singh 1977(I) MPWN SN 600, it was held that
Where the Court has jurisdiction to hold that a particular term in the compromise decree is penal in nature and therefore, it should not be given effect to against a party. The consistent view of the Court was that even after passing of the compromise is penal in nature, relief should be granted under Section 74 of the Contract Act.
8. The compromise application was filed on 21-2-97. The important term of compromise was as under:
(i) The rent was due from 14-8-89 @ Rs. 300/- per month.
(ii) The petitioner agreed to vacate the suit accommodation on or before 20-8-97.
(iii) In case the accommodation is vacated on or before the agreed date, the respondent agreed not to realize the rent from the petitioner from 14-8-89 to the date when the accommodation was to be vacated by the petitioner. In case the accommodation is not vacated on or before 20-8-97, then respondent shall be entitled to receive the mesne profits @ Rs. 2000/- per month.
9. Section 74 of the contract Act reads as under:
Section 74. Compensation for breach of contract where penalty stipulated for.
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
10. In the matter of Birbal Singh v. Chandrawati 1992 MPWN SN 247, it was held that-
It is now well settled by a long series of authorities that a consent decree is nothing but a contract between the parties to which is super-added with the command of a Judge. The consent decree, however, in such a case retrains the character of a contract between the parties and the provisions of Section 74 of the Contract Act would apply to such a consent decree.
11. In the matter of Bahadursingh v. Smt. Gulabdevi 1975 MPLJ 470, this Court had an occasion to deal with the penal clause of Section 74 and observed that-
stipulation would not be regarded as a penalty. The exigibility clause, that is, if there was default in payment of any installment, the whole amount would become payable, is understandable. It does not involve any penal clause. Because of the default, the defendants merely forfeited the indulgence which was granted to them, i.e., the facility of payment by installments. It was further stipulated that in case of default in payment of any installment, the judgment-debtors would forfeit their right to the superstructure constructed earlier by them and that the decree-holder will be entitled to take possession of the superstructure as well. This was a penal clause. The Court has discretionary jurisdiction to relieve the judgment-debtors of the said penal clause.
12. After going through the record of the case, this Court is of the view that undisputedly the petitioner was liable to pay the rent to the respondent w.e.f 14-8-89 and it was agreed between theparties that the petitioner had to vacate the suit accommodation on or before 20-8-97. It was also agreed that in case the petitioner vacates the suit accommodation on or before 20-8-97, the respondent shall not claim the rent w.e.f. 14-8-89 till to the date when the accommodation was vacated. Since the respondent was entitled for this amount, therefore, it cannot be said that it was penal in nature. So far as the condition that in case the petitioner does not vacate the accommodation on or before 20-8-97, then the petitioner shall be liable to pay mesne profits @ Rs. 2,000/- per month, undisputedly was a penalty. Since the petitioner could not vacate the accommodation as per terms of the compromise, therefore, the petitioner was liable to make the payment of rent @ Rs. 300/- per month from 14-8-89 to 20-8-97. Since the amount of rent payable @ Rs. 2000/- was penal in nature, therefore, the respondent cannot be allowed to recover the rent at that rate.
13. In the opinion of this Court, the learned Executing Court committed error of law in holding that respondent is entitled to recover the amount as per decree which includes the amount of mesne profits @ Rs. 2000/-.
14. In view of this, the revision petition is allowed in part. Part of the order impugned herein whereby Rs. 2000/- per month as mesne profit has been awarded, is set aside with a direction that respondent shall be entitled to recover the agreed rent @ Rs. 300/- from 14-8-89 till the date of vacation of suit accommodation.
15. With the aforesaid observation, the petition stands disposed of.