Bava Ramasami Chetti Vs. Venkatasa Tawker and anr. - Court Judgment

Muthusami Aiyar, J.

1. In August 1888, the appellant obtained a decree against respondents for Rs. 5,804 and for costs in O. S. No. 10 of 1888 on the file of the District Court of Trichinopoly. The respondents had at that time applied to the High Court to be declared insolvent. In December 1888 they entered into an arrangement with their creditors, whereby the insolvency was cancelled and their property was vested in trustees under a composition-deed (Exh. A). Under this document to which the appellant was a party, the trustees administer respondents' estate for the benefit of their creditors. In September 1889, however, the appellant applied for execution of the decree and prayed for the attachment and sale of respondents' movable properties. The 2nd respondent contended that he had no property in his hands and that the appellant was not entitled to take out execution under the terms of the composition-deed. The judge upheld this objection observing that the appellant who signed the composition-deed must abide by it and was debarred from taking proceedings on his own account. On appeal, it was urged that the composition-deed being an adjustment of the decree not certified under Section 258 of the Code of Civil Procedure, the appellant was entitled to execute his decree. It was further contended that respondents having in contravention of the terms of document A drawn certain monies deposited in court, the appellant was not debarred from executing his decree and that the judge was in error in refusing execution without taking evidence or making any enquiry. Mr. Justice Parker who heard this appeal was of opinion that the adjustment by the composition deed did not fall under Section 258, and that it was in the nature of an agreement to give time for the gradual payment of the debt and fell under Section 257A. On this view of the case, the learned judge held that the composition deed might be sanctioned by the court executing the decree at any time, and that such deed would be void unless it was made for consideration and directed the judge to enquire whether the composition-deed had been voluntarily entered into and whether it was in force and to give the respondents an opportunity to obtain the formal sanction of the court. For the appellant before us it is argued that the composition-deed was not an agreement to give time for payment of the judgment-debt but was an adjustment of the decree falling under Section 258 of the Code of Civil Procedure.

2. I do not think that the composition-deed can, upon its true construction, be regarded as an agreement falling under Section 257 A. The contract contemplated by that section is one to allow the decree to remain in abeyance for a certain time and thereafter to put it into execution. But document A purports inter alia altogether to release the debtors (respondents) from all 'debts, judgments and executions'; the amount payable under it in full satisfaction of the decree is limited, by the assets available, and the persons who are to pay the debt are the trustees constituted by the instrument and not the judgment-debtors.

3. It is not correct to say that there is an agreement to give time when there is no intention to keep the obligation created by the decree alive and when the intention disclosed by the arrangement is not one to defer performance of the oligation for a time but to extinguish the obligation by novation. In the case reported at I. L. R 11 C 671, Jhabar Mahomed v. Modan Sonahar, it was Held that an instalment bond executed in satisfaction of a decree but not certified to the court was not an agreement such as is contemplated by Section 257 A.

4. Another question arising for consideration is whether the composition-deed is an adjustment of the decree within the meaning of Section 258. That section premises three cases, viz., (1) when money due under the decree is paid out of court, (2) when the decree is otherwise adjusted in whole or in part to the satisfaction of the decree-holder, and (3) when any payment is made in pursuance of an agreement of the nature contemplated by Section 257A, and it then proceeds to direct the decree-holder to certify such payment or adjustment. After prescribing how a judgment-debtor may have such payment or adjustment certified, the section provides that unless such payment or adjustment has been certified, as aforesaid, it shall not be recognized as a payment or adjustment of the decree by any court executing the decree. Throughout the section, the word adjustment is used in contradistinction to payment and it appears to me to imply that there may be an adjustment without payment and that a new contract whereby provision, is made for extinguishing the obligation created by the decree and substituting another for it is within the purview of the section. In the Full Bench case, Mallamma v. Venkappa, reported at I. L. R 8 M 277, a new contract whereby possession of certain land was made over for one year in order that the decree might be satisfied out of the usufruct is referred to as an adjustment.

5. Such being the case, the next question raised for consideration is whether we should order that execution do issue on the ground that the uncertified composition-deed cannot be recognized under Section 258 or whether we should order an enquiry as was done in Krishnaji Kesava Pundit v. Subbaraya Takker 7 M. H. G. R 387. That case was decided with reference to Section 206 of Act VIII of 1859, and the decision therein proceeds on the view that 'when there is dolus in the exercise of a right valid on ordinary legal rules, the court will restrain that exercise.' At that time there was no provision enabling the judgment-debtor to move the court for having the adjustment certified and in the present case the judgment-debtors are to blame for not taking advantage of the remedy provided by Section 258. The parties who have since relied upon uncertified adjustments have been referred to suits for damages. The language of Section 258 is clear and the object with which uncertified adjustments are declared to be incapable of recognition by any court executing the decree is to prevent protracted enquiry in execution proceedings.

6. Again, the judgment-debtors have a remedy by a suit for damages and the trustees may prefer a claim to any property in their possession which may be attached. I am therefore of opinion that there is no necessity for initiating an enquiry not contemplated by Section 258.

7. I would set aside the order appealed against and the order of the District Judge and direct that execution do issue. The respondents will pay appellant's costs.

Best, J.

8. I agree in holding (1) that the arrangement evidenced by Exh. A cannot be regarded as an agreement for giving time so as to bring it within the scope of Section 257A of the Code and (2) that it is an adjustment within the meaning of Section 258. If in the enquiry ordered by Mr. Justice Parker, A is found to be valid, the result will be that the decree cannot be executed. A is therefore a new contract which supersedes the decree and consequently amounts to an adjustment of the decree of which the court executing the decree can take no notice by reason of its not having been certified under Section 258.

9. As pointed out by my learned colleague the decision in 7 M. H. C. R 387 was under Section 206 of the Code of 185 which did not empower the judgment-debtor to call, upon the decree-holder to certify to the court any satisfaction or adjustment of the decree.

10. Under the present Code, however, the judgment-debtor has this power; and the respondent has but himself to blame for not availing himself of it in time. The object of Section 258 is, no doubt, to prevent enquiries on points such as are here raised in execution of the decree.

11. The appellant does not deny the execution of A, but pleads that its terms have been violated by the respondent having taken money out of court. This and other questions that may arise can be decided in a suit to be brought by the respondent for specific performance of the agreement A and consequent injunction against execution of the decree. Cf. Nujeem Mullick v. Erfan Mollah, 22 W. R 298.

12. I concur therefore in the order suggested by my learned colleague.