Mara Ramanarasu vs Matta Venkata Reddi (died) and Others represented by their mother and guardian Matta Ademma

Reilly, J.—In O.S. No. 24 of 1922 on the file of the Subordinate Judge of Bezwada the appellant before us obtained a decree for sale on a

mortgage against one Venkata Reddi for something over Rs. 3,500. In O.S. No. 25 of 1922 he obtained a decree on another mortgage deed

executed in his favour by Venkata Reddi''s brother, Rami Reddi. In O.S. No. 25 of 1922 he brought the property to sale and himself purchased it

for Rs. 1,750 less than what was due on Rami Reddi''s mortgage, and for the Rs. 1,750 he obtained a personal decree against Rami Reddi. After

that he brought the property covered by Venkata Reddi''s mortgage to sale in execution. That sale was held on the 25th October, 1926. A man

called Saiyed Murtuza Sahib was the successful bidder at that auction, and he deposited in Court on that occasion Rs. 952-8-0 as 25 per cent, of

the amount of his bid. A few days after that sale it is admitted that the decree-holder, Venkata Reddi, and Saiyed Murtuza entered into an

agreement, which is embodied in Ex. A, dated the 3rd November, 1926. According to Ex. A the land put up for sale in execution of the decree

against Venkata Reddi, for which Saiyed Murtuza had been the successful bidder, was to be transferred to the decree-holder with the crops on it

except the crops on two fields, and the amount paid by Saiyed Murtuza into Court, Rs. 952-8-0, was to be got back from the Court and paid to

the decree-holder; to part of the land which the decree-holder had bought in execution of his decree against Rami Reddi, Venkata Reddi was to

give up a claim which it appears he had put forward; four other items of land were to be transferred to Venkata Reddi or, if he chose, in respect of

one of them Rs. 1,000 was to be paid by the decree-holder; the other consideration on his side was the amount of his decree against Venkata

Reddi and the balance of his decree against Rami Reddi. It will be seen that the agreement embodied in Ex. A covers several matters beyond the

scope of the decree against Venkata Reddi in O.S. No. 24 of 1922. On the 9th November, 1926, Venkata Reddi presented a petition to the

Subordinate Judge, in which he alleged that the decree against him in O.S. No. 24 of 1922 had been adjusted in this way to the satisfaction of the

decree-holder and prayed that satisfaction of the decree might be recorded. That petition it appears was posted to the 4th December, 1926, and

on that day it was dismissed for default, because, as Venkata Reddi explains, though he was in the court-house, he was not in the court-room

when he was called. On that very day he put in another petition, E.A. No. 2198 of 1926, to the same effect, and that is the petition with which we

are concerned. The decree-holder, when he got notice of that petition, alleged that he had been induced by fraud to execute Ex. A, Venkata

Reddi''s object being to keep possession of the land concerned in O.S. No. 24 of 1922 and to reap the crops upon it. He denied that there had

been any satisfaction of his decree, and he contended that at any rate Ex. A was not admissible in evidence because it was unregistered. The

Subordinate Judge after taking evidence found that there had been no adjustment of the decree in O.S. No. 24 of 1922 and also found that Ex. A

was inadmissible in evidence because it was unregistered. Venkata Reddi preferred an appeal to the District Judge, who found that Ex. A was

admissible in evidence in consequence of the amendment of the law by Act II of 1927 and also found as a fact that there had been-adjustment of

the decree to the satisfaction of the decree-holder, and, therefore, he ordered satisfaction to be recorded. Against that decision the decree-holder

has brought the present second appeal.

It is not denied, and it has not been denied at any stage, that the decree-holder executed Ex. A on the date it bears. The allegation that he was

induced to do so by fraud has not been pressed before us nor apparently before the District Judge. It is not denied that it was intended by the

decree-holder, when he executed Ex. A, that the terms of Ex. A should supersede the decree which he had obtained against Venkata Reddi. It is

contended, however, that on the date of Ex. A there was no actual adjustment in satisfaction of the decree, but that Ex. A was only an agreement

that the decree-holder would be satisfied, if certain things were done in accordance with Ex. A, which have not been done. And it is contended for

the decree-holder before us that there can be no adjustment of a decree within the meaning of Rule 2 of Order 21 of the Cade by a mere promise

to do something when that promise has not yet been carried out. In this case it is admitted that the promises contained in Ex. A have not been

carried out. It has been found that the land has not been put into the possession of the decree-holder, as was intended. It has been found, and it is

admitted, that the documents of transfer, which were to be executed by the parties, have not been executed. Therefore it is represented that all we

have in this case on the side of Venkata Reddi is a promise to do things, which he has not done, and that it is contended could not be accepted by

the decree-holder as an adjustment within the rule The words of Rule 2 of Order 21 are

Where any money payable under a decree of any kind is paid out of Court, or the decree is otherwise adjusted in whole or in part to the

satisfaction of the decree-holder

Mr. Lakshmanna, for the decree-holder, contends in effect that a decree can be adjusted to the satisfaction of the decree-holder by something

being paid by the judgment-debtor to the decree-holder or by some property being transferred by the judgment-debtor to the decree-holder or, as

I understand him, by something being given up by the judgment-debtor to the decree-holder, but that an adjustment cannot be made to the

satisfaction of the decree-holder within the meaning of the rule by a mere promise that the judgment-debtor will do something at some future date,

though that promise may be a legally enforceable contract. That seems to me to be an exceedingly difficult proposition to establish. It is admitted

that a decree-holder who has a decree for the payment of Rs. 1,000 in his favour may accept in adjustment of that decree to his satisfaction an

immediate payment of Rs. 100; but it is contended that a decree-holder in whose favour there is a decree for the payment of Rs. 100 cannot

legally accept in adjustment of that decree to his satisfaction a promise that the judgment-debtor will pay to him at some future date Rs. 1,000. The

argument must go so far as that he cannot accept such a promise in whatever form it is either in a bond with sureties or in a mortgage deed. I

cannot see any basis for such a contention; but it is alleged that there is authority to be found in Lachhman Das v. Baba Ramnath Kalikamliwala

ILR (1921) 44 All. 258. The head-note of that case in the report perhaps seems to suggest something of that sort. There it is stated

The judgment-debtor filed a petition alleging that the question of the execution of the decree had been settled out of Court by means of an

agreement between the parties, under which the judgment-debtor was to make a present payment to the decree-holder and further to convey to

him certain items of Immovable property. The decree-holder denied that any such adjustment as alleged had taken place, and the judgment-debtor

was unable to show that any part of the alleged agreement which, according to his own account of it, was to be performed by him, had been so

performed. Held, that such an agreement as alleged could not be set up by the judgment-debtor under Rule 2 of Order XXI of the CPC as a bar

to execution.

But I think when we examine that case with care, we shall find that it is no authority for any proposition so wide. In Mr. Justice Piggott''s

judgment at page 262 will be found a statement

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

and it was found that none of them had been fulfilled. That was not a case therefore where it was found that the decree-holder had agreed to

accept as immediate satisfaction a promise that something would be done in future by the judgment-debtor but a case where the decree-holder had

agreed that, if at some future date the judgment-debtor did something, then he at that future date would accept satisfaction. The case so examined

is no authority for the proposition that a promise to do something at a future date cannot be accepted by a decree-holder as a legal and immediate

adjustment in satisfaction of his decree. Mr. Justice Walsh, in that case made a quotation with approval which appears to come from Ramakrishna

Kadirveluswami v. Eastern Development Corporation, Limited, London (1917) 43 I.C. 537 a decision of Seshagiri Aiyar and Bakewell, JJ., in this

Court. The words of that judgment on which Mr. Justice Walsh relied - I quote them as they actually appear in Ramakrishna Kadirveluswami v.

Eastern Development Corporation Limited, London (1917) 43 I.C. 537 not with the slight variation with which Mr. Justice Walsh quoted them, -

are

An inchoate contract would not give the judgment-debtor a right to plead against execution that this contract should be completed and that he

should then be permitted to plead that the transferee was only his alias and has no locus standi.

That an inchoate agreement cannot be pleaded as an adjustment within the meaning of Rule 2 of Order 21, I should have thought need hardly be

stated, as it certainly cannot be disputed. I understand an inchoate agreement to be an agreement not yet concluded by the parties, an agreement

which is still in the stage of negotiation, and it is perfectly obvious that a judgment-debtor cannot claim that the decree against him has been

adjusted to the satisfaction of the decree-holder while the matter is still in the stage of negotiation. However Mr. Lakshmanna also relies upon a

decision of Mr. Justice Curgenven in Muthu Vaithilinga Mudaliar v. Sub-baraya Chettiar (1930) M.W.N. 137 There the learned Judge

understands Ramakrishna Kadirveluswami v. Eastern Development Corporation, Ltd., London (1917) 43 I.C. 537 to mean that

so long as an agreement remains executory and has not been fully executed it cannot amount to an adjustment under Order 21, Rule 2.

I think that is not what was laid down in Ramakrishna Kadirveluswami v. Eastern Development Corporation, Ltd., London (1917) 43 I.C. 537

and, although the learned Judge adopted that as a proposition of law, with great respect I cannot agree with it.

In Lodd Govindoss v. Ramdoss (1917) 43 I.C. 537 Mr. Justice Sadasiva Aiyar said that

an adjustment referred to in Order 21, Rule 2 of the CPC is a transaction which extinguishes the decree as such in whole or in part.

Why should not a decree be extinguished by a new contract that the judgment-debtor will do something in future, if the decree-holder is willing

to take such a contract instead of the decree which he has in his hand? A promise to do something in future is legal consideration, and, if a decree-

holder thinks it is to his advantage instead of using his decree, the weapon which he has in his hand, to accept in its stead a promise that the

judgment-debtor will do something in future, or if quite apart from any question of advantage, he chooses to accept such a promise, what is there in

law to prevent him from doing so? And why should not that be a legal adjustment? It may well be said that, if a judgment-debtor comes into Court

and alleges that the decree-holder has given up the weapon available in his hand, the decree which he can execute, and in its place has accepted a

promise that the judgment-debtor will do something at a future date and if that is disputed, then the evidence that the decree-holder has done such

a thing should be carefully scrutinised. It may very well be a foolish thing for a decree-holder to do; it may be unreasonably generous; it may be

likely to give him a great deal of trouble in future. But, if it is proved that he has done so, that he has accepted a new contract in place of his decree

as immediate satisfaction of that decree at the time of his acceptance, there is no legal impediment in the way of his doing so and there is no

justification for the Court refusing to find on proper evidence that he has done so.

In the present case the learned District Judge has differed from the Subordinate Judge and has found as a fact that the decree-holder on the 3rd

November, 1926, when he executed Ex. A, did accept as an immediate adjustment and satisfaction of his decree a new contract between the

parties. Unfortunately the learned District Judge has not discussed the evidence on this subject. The part of his judgment which deals with this

matter is far briefer than it should have been; but he has arrived at a finding of fact, and, if we examine the evidence in this case, I do not think we

can say that there is no evidence to support that finding of fact. In the circumstances it appears that there were some reasons for the decree-holder

entering into a new arrangement with Venkata Reddi instead of pressing on with the execution of his decree. According to his account Saiyed

Murtuza had no money for completing the purchase at the auction - indeed according to the decree-holder, Saiyed Murtuza had no money at all

for that purchase, and the money paid had been provided by Venkata Reddi. At any rate his case is that Saiyed Murtuza would not be able to

complete his puixhase, and therefore the sale would have to be held over again, if execution was to go on. Moreover, there was a dispute in

progress between the decree-holder and Venkata Reddi about some of the property which the decree-holder had bought in execution of the

decree in the other suit as tli2 property of Rami Reddi. There were, as Ex. A in the case shows, other matters in dispute between them. In those

circumstances it would not be at all unnatural if the decree-holder thought it to his advantage to settle all the disputes and finish up the execution of

his decrees against Venkata Reddi and Rami Reddi by a comprehensive agreement. But why should he have been content with promises that

certain things would be done in future instead of requiring that they should be done at once? Why should he not have required that the sale deed

for the property, which was to be transferred to him, should be executed at once? Why should he take a promise that that would be done in

future? Ex. A seems to supply an answer. From the document it appears that the parties were not clear in their minds whether the transfer of the

land concerned in the decree in O.S. No. 24 of 1922 should be executed by Venkata Reddi or by Saiyed Murtuza. It may be asked why was

there any hurry to enter satisfaction at once before that question had been cleared up. The answer to that, I think, is to be found in the term in Ex.

A regarding the Rs. 952-8-0, which Saiyed Murtuza had paid into Court. That Rs. 952-8-0, it will be remembered, was to be paid to the decree-

holder. Now, if the auction sale in execution of the decree was not to be completed, if Saiyed Murtuza was not in a position to pay up the other

3/4ths of the amount of his bid, which he had to do within 15 days from the date of the sale, i.e., by the 9th November, 1926, then in the ordinary

course of affairs under Rule 86 of Order 21 the Rs. 952-8-0 would be forfeited to the Government. If that amount was to be recovered from the

Court and to be paid to the decree-holder, the only way in which that was likely to be carried out was that the parties should be able to go before

the Subordinate Judge not later than the 9th November and represent to him that the decree had been adjusted to the satisfaction of the decree-

holder and that, therefore, there was no reason to keep this money any longer and no just reason to forfeit it to the Government. That shows that

there was a reason why the decree-holder might be willing not only to settle up all the disputes between him and Venkata Reddi by a

comprehensive agreement but to accept that agreement, although what Venkata Reddi had to do was to be done in the future, as an immediate

satisfaction of his decree in order that they could go before the Subordinate Judge and represent that an adjustment had already been made. In the

circumstances, whether the decree-holder was rash or not in taking that course, it will be seen that it would not be entirely unreasonable for him to

do that.

And, when we look at his evidence, what do we find? It has been suggested by Mr. Lakshmanna that Venkata Reddi rushed into Court and

tried to get satisfaction recorded prematurely, before he had done what he had to do. As I have pointed out, if that Rs. 952-8-0 was to be saved

from being forfeited to the Government because Saiyed Murtuza was not in a position to pay up the remainder of his bid, then the 9th November,

1926, was the last day for going to the Court to make the representation that the decree had been adjusted and ask for the return of the Rs. 952-

8-0. Therefore it cannot be said that Venkata Reddi moved prematurely. If it is suggested that at any rate he should have done something in

fulfilment of the agreement and have executed the documents on his side before he went to Court the answer is supplied I think by the evidence of

the decree-holder. He says the agreement was that all the documents mentioned in Ex. A should be executed on the same day after the money in

Court was paid to him. So that according to his own account the money had first to be recovered from the Court, and then both he and Venkata

Reddi were to execute the transfer deeds in accordance with Ex. A. As I have pointed out, that money could not be recovered from the Court,

and there was no hope of recovering it from the Court, unless a representation was going to be made to the Subordinate Judge within 15 days of

the sale that there had been an actual adjustment to the satisfaction of the decree-holder. The decree-holder''s evidence itself shows that he was

well aware that the money was first to be recovered before the transfer deeds were executed and that is good evidence out of his own mouth that

the effect of the transaction really was that he had been satisfied by an adjustment, by the new contract on the 3rd November, 1926. It appears to

me therefore that, although the learned District Judge has not discussed the evidence in this case, there is clear evidence to support his finding that

there was an actual adjustment to the satisfaction of the decree-holder on the date of Ex. A. Whether that was an adjustment into which the

decree-holder was wise or unwise to enter is not a matter with which we are concerned. There is a finding of. fact, with evidence to support it, that

he did accept an immediate adjustment in satisfaction of his decree on that date. With that finding there is no sufficient reason for us to interfere,

and, that being so, in my opinion this appeal fails and should be dismissed with costs.

Anantakrishna Aiyar, J.

In execution of a decree for money obtained on a mortgage executed by the defendant in favour of the plaintiff the mortgaged properties were

advertised for sale. A third person bid at the auction and deposited the necessary 25 per cent, of the purchase money. At that stage, the decree-

holder mortgagee, the mortgagor - the defendant, and the auction purchaser, all the three together entered into an agreement, and relying on that

agreement the defendant-mortgagor filed an application in the Lower Court for recording adjustment of the decree alleging that the adjustment was

evidenced by that agreement. The mortgagee contended that there was no consideration for that agreement, and also raised other pleas. The

learned Subordinate Judge found that the agreement between the parties had not been carried out by the defendant, and for that reason dismissed

the application for recording satisfaction. On appeal, the learned District Judge came to the conclusion that there was a completed contract

between the parties, and directed that the adjustment should be recorded. The decree-holder mortgagee has preferred the present Civil

Miscellaneous Second Appeal.

I may state at once that I must accept in this second appeal the finding of the learned District Judge that there was a completed contract

between the parties. The wording of the agreement entered into by the parties lends support to the finding, as also the evidence of the decree-

holder, given in these proceedings. The main argument advanced by the learned advocate for the decree-holder-appellant before us was that the

defendant-mortgagor had not really carried out what he had to perform under the terms of this agreement, and that the agreement only evidences a

promise on his part to do something in future and that such a promise would not be a ground for the Court recording satisfaction of the decree. I

find myself unable to accept that contention. On the analogy of Section 62 of the Indian Contract Act, ""if the parties to a contract agree to

substitute a new contract for the old, the contract originally entered into between the parties need not be performed"". If the decree-holder entered

into a fresh contract with the judgment-debtor with reference to the satisfaction of the decree, then, unless there be anything illegal with reference to

the new contract, the new contract would surely be a ground for the judgment-debtor applying to the Court to enter up satisfaction of the decree.

No doubt if the substance of the new contract be to vary the terms of the decree, or to allow execution in a manner different from that directed by

the decree, then, having regard to the provisions of Section 47, etc., of the CPC and the scheme of the Code as pointed out by the Privy-Council

in (1900) L.R. 27 I.A. 197 (Privy Council) the Court would not accept that new contract as a satisfaction of the decree when in essence it

purports to vary the terms of the decree with a view to enable the parties to carry out in execution something contrary to the provisions of the

decree. But when the new contract is n6t open to any such objection and is otherwise legal, I fail to understand why the same should not be a

ground for, the defendanc asking the Court to enter up satisfaction of the decree. No doubt if the contract between the parties was that it is only

the actual carrying out of the terms of the contract that should be the consideration for entering satisfaction of the decree, then no doubt unless

those terms be carried out, it may not be open to the judgment-debtor to apply to the Court successfully to have the adjustment recorded. But the

contention that even though there was a completed contract between the parties, yet if the contract be to do something in future and was really of

an executory nature, then the defendant could not apply to record the adjustment is, I think, not supported by any provision of law to which our

attention was drawn in this case. What the exact meaning of the expression ""adjustment of a decree"" as used in Order 21, Rule 2 is, has been

explained by Mr. Justice Sadasiva Aiyar in Lodd Govindoss v. Ramdoss 1915 M.W.N. 225. The learned Judge there stated that ""any transaction

which extinguishes the decree as such in whole or in part and results in a satisfaction of the whole or a portion of the decree in respect of the

particular relief or reliefs granted by the decree"" is an adjustment of the decree. That opinion of the learned Judge was followed in Azizur Rahman

Choudhury v. Aliraja Choudhury (1927) 43 I.C. 537. The learned advocate for the appellant, however, argued that the decision in Lachhman Das

v. Baba Ramnath Kalikamliwala ILR (1921) 44 All. 258 is against this view. As my learned brother has pointed out in his judgment just now

delivered, the head note to the report of that case would seem to go beyond the terms of the judgment. That would seem to be a case where the

decree-holder agreed to accept particular acts if actually done by the judgment-debtor as satisfaction of the decree which he was entitled to

execute. It is the actual performance of particular acts mentioned by the judgment-debtor that was considered to be the real gist of the contract

between the parties, which would enable the judgment-debtor to apply for recording satisfaction of the decree. Having regard to the terms of the

judgment of Mr. Justice Piggott, I am not obsessed by that decision. On the other hand, as I have already remarked, it is open to the parties to

provide for particular acts being done, or particular terms being actually carried out, as""the consideration for the decree-holder agreeing to enter

satisfaction of the decree. The decision in Rama-krishna Kadirvelusami v. Eastern Development Corporation, Ltd., London (1917) 43 I.C. 537

only lays down, as far as I am able to understand it, that inchoate agreements could not be taken to be the basis for recording satisfaction of the

decree. Unless there be a completed contract between the parties, an inchoate agreement would only be a step, or steps, in the negotiations

between the parties which may ultimately end or not end in a completed contract. No doubt there are certain observations in the judgment

reported in Muthu Vaithilinga Mudaliar v. Subbaraya Chettiar 1930 M.W.N. 137 where the learned Judge, Curgenven, J., observes that a mere

promise may not be enough to enable the judgment-debtor to apply under Order 21, Rule 2; but the learned Judge in his judgment also uses the

words ""inchoate agreement""; and, as I already remarked, there is nothing in law which would enable the judgment-debtor to rely upon an inchoate

agreement for recording satisfaction. If, on the other hand, the learned Judge really meant to lay down that a promise, though supported by

consideration and otherwise legal, would never be the basis for an application under Order 21, Rule 2, unless the same be actually carried out,

then, with all respect, I find myself unable to agree. In the case before me, the terms of the agreement, coupled with the evidence given by the

decree-holder himself, make it reasonably clear that the intention of the parties as evidenced by the agreement was that the same should be taken

as an adjustment of the decree, since certain things contemplated by the parties could not be carried out except on this view of the agreement. If

there is any doubt upon this point as to the meaning of the agreement, the decree-holder''s evidence makes the matter reasonably clear. No doubt

the agreement entered into by the decree-holder in this case seems to be rather of a complicated nature; and whether he was well advised in having

entered into this contract in this particular case, is not for me to say. There is no finding that there was any fraud practised upon him, or that he was

induced to sign the document without knowing the contents of the same. His deposition given in these proceedings makes it clear that he knew

what the arrangement was. Being therefore of opinion that in this case there was a legal contract supported by consideration, - a completed

contract entered into between all the parties interested, - by which the decree in question should be taken as satisfied and that the rights of the

parties should be worked out on the basis of the new agreement, (which further contains a default clause, by which the parties are, in case of any

default, allowed recourse to civil or criminal proceedings as may be deemed proper), I think that the defendant was entitled to have the relief

prayed for by him in his application under Rule 2 of Order 21 granted to him. 1 agree with my learned brother that this appeal should be dismissed

with costs.