Romesh Lal vs Charanji Lal etc.

Chet Ram Thakur, J.—This appeal has arisen out of an order, dated 16-5-1974, passed by the Sub-Judge 1st Class, Kulu, dismissing the application of the Defendants for disposing of the suit in terms of the compromise arrived at between the parties during the pendency of the suit on 21-11-1969.

Charanji Lal Plaintiff is the father of Romesh Lal Defendant and Plaintiff No. 2 is also the son of Charanji Lal. The Plaintiffs and the Defendant constitute a partnership. The Plaintiffs brought a suit for dissolution of partnership and for rendition of accounts. The suit was filed on 18-11-1969. On 21-11-1969 a compromise was arrived at between the parties and the compromise deed is Exhibit D. I. By this agreement it was decided that the firm shall stand dissolved with effect from 15-12-1969. According, to the compromise deed the Plaintiff No. 1 was to get Rs. 27,000/- and Plaintiff No. 2 was to get Rs. 62,216/-, i.e. Rs. 89,216/- in all from the Defendants. The Defendants were to be owners of the assets and liabilities. Later on the Defendants made an application purporting to be one under Order 23, Rule 3 of the CPC on 16-3-1970 alleging that the suit had been adjusted and that the same could not proceed and that the same be disposed of in accordance with the terms of the compromise. The Plaintiffs opposed this application and denied any adjustment. The court framed the following issue:

Whether the suit has been adjusted? (O.P.A.)

Before the trial court evidence had been led and by this evidence the Defendants tried to establish that the payment which was required to be made under the terms of the compromise to the Plaintiffs had already been made by the Defendants before 15-12-1969, which was mentioned as the date on which the firm shall stand dissolved in terms of the compromise. It was argued by the learned Counsel for the Plaintiffs before the trial court that the Defendants could not lead any evidence to prove the factum of payment of the amount of Rs. 89,216/-as they had not made any mention about the payment of money in their application. Further, that no evidence contrary to the pleading could be considered in the absence of any plea or any issue on the point. This argument found favour with the learned trial court and it brushed aside the evidence and held that no adjustment had been made and accordingly dismissed the application for decreeing the suit in terms of the compromise alleged to have been arrived at between the parties for non-adjustment of the claim.

Before this Court Shri M.G. Chitkara, learned Counsel for the Appellants contended that once the plantiffs-Respondents had admitted the execution of the compromise deed, Exhibit D. 1, it was not open for the Court to take into consideration the matters which were not actually recorded in the compromise. There was no date fixed in the compromise deed, enjoining upon the Defendants to make payment of the money, and on that account the Plaintiffs also could not repudiate the agreement of compromise and reliance is placed on Srimati Sabitri Thakurain Vs. Mrs. F.A. Savi and Others, which says:

When a compromise is in dispute, the party repudiating it, on whatever ground it may be, cannot reasonably ask that the entire suit be reopened. To hold otherwise will create an absurd position: every party who wants to go back on a compromise lawfully entered into by him would ask, when the compromise is under inquiry, that the entire suit should be tried first before the compromise can be recorded. This will defeat the very object of Order 23, Rule 3

The compromise, in fact, was arrived at between the parties in the instant case on 21-11-1969, i.e. 3 days after the filing of the suit. By this compromise it had been settled to dissolve the firm with effect from 15-12-1969. The compromise had not been filed in the court nor any decree had been passed thereunder. It was presented by the Appellants before the court only on 16-3-1970 along with an application for disposing of the suit pending before it. The Plaintiffs had served the Defendants with a notice, Exhibit P. 3, dated 12-12-1969 calling upon them to make payment before 15-12-1969 or to bring the same with them in the court and it was only thereafter that they would agree to the compromise otherwise the same shall be deemed to have been revoked by them and that the suit shall proceed. But it may be stated that there was no such condition in the compromise deed that this amount shall be payable by the Defendants before 15-12-1969 and it was only in that case that the compromise shall be put up before the court for recording the same and to get a decree passed in terms thereof. A perusal of the document shows that this liability of the Defendants to pay Rs. 62,216/- plus another amount of Rs. 27,000/- had to be cleared of by the Defendants themselves. No doubt the date for the payment of the same had specifically been mentioned but what appears from the concluding portion of the deed is that the third and fourth parties jointly and severally covenanted with the first and second parties, i.e. the Plaintiffs and their assigns and representatives to pay all debts, and liabilities of the said partnership thereby dissolved excepting Income Tax and sales tax liabilities which shall be borne personally by the retiring parties including the tax accruing in the name of the firm as stipulated therein. So, the only conclusion that can be arrived at is that the liability had to be cleared of by the Defendant before the compromise was put up in the court otherwise there was no point in keeping that compromise deed in their possession till 16-3-1970. The compromise could have been produced before the court the very day when it was executed and a decree in terms thereof could be obtained. So the clear intention of the parties was that the adjustment of this liability must be made before the date when according to the terms of the agreement, thefirm was declared to have been dissolved, i.e. on 15-12-1969. In these circumstances, I am of the view that the plantiffs were right in repudiating the contract or the agreement when the Defendants had failed to adjust the sum as intended by them. Therefore, this authority has got no application to the facts of the present case.

Similarly the authority Subramania Iyer Sivarama Iyer v. Chinnu Pillai Pichandi Pillai AIR 1952 T.C. 179 is also not applicable because it only says:

If the Court proposes to dispose of the petition to set aside the execution sale, not on the merits, but on the basis of the compromise entered into by the parties, the order should be in accordance with the terms of the compromise. The Court will be acting without jurisdiction if it embodies in the order any provision not agreed to by the parties.

In this case nothing was embodied in the order, which was not a term of the compromise. The Defendants themselves came forth with the plea that they had made payment of the amount and that they had adjusted the suit and they wanted the decree to be passed in terms of the compromise, although now they contend that there was no date fixed in the compromis for the payment of the money. Therefore, they cannot be permitted to blow hot and cold in the same breath. Once they take the plea of payment before 15-12-1969 they cannot now turn back and say that there was no such condition for payment. I have stated that the parties did intend that the payment shall be made before the partnership was declared dissolved from 15-12-1969 as can be easily inferred from the phraseology of the document itself.

According to Maung Hlay v. U. Go. AIR 1939 Ran 300 if there is a suit pending in a Court and the parties have referred the matter to an arbitrator without intervention of the Court and an award is obtained and one of the parties disputes the same, the award cannot be said to be adjustment by lawful agreement or compromise within Order 23, Rule 3. In the instant case also the compromise which had been brought about by the parties during''the pendency of the suit and the same was filed after the date which had been fixed for declaring the partnership dissolved cannot be said to be an adjustment when the same has been disputed by the Plaintiff Respondents. There is undoubtedly an amount which had been settled jat Rs. 89,216/- payable by the Defendants to the Plaintiffs under the compromise and unless this amount was paid before the dissolution !of the partnership this cannot be said to be a valid adjustment when (the Plaintiffs deny the payment of the same and the Defendants jemphatically assert that they had made the payment of the entire jamount. Therefore, when there is a dispute it cannot be said to be an adjustment, as contemplated under Order 23, Rule 3.

Learned Counsel for the Appellants had also contended that the order was without jurisdiction, inasmuch as the amount which was settled was beyond the pecuniary jurisdiction of the trial court and that the only course open for the court was to have returned the plaint for presentation to the proper court and not to have dismissed this application. There can be no doubt about this proposition that a court cannot pass a decree in excess of its pecuniary jurisdiction because that would be without jurisdiction. But it may be stated that it was a suit for dissolution of partnership and rendition of accounts and the question of competency of the court for passing a decree would have arisen only at a later stage. In the instant case there was no question of decree, etc. It was only an application of the Defendants-Appellants which has been dismissed on the ground that there was no adjustment and that the compromise was not valid and the court ordered that the suit should proceed. Hence this objection has got no substance.

The authority Shambhu Mada Hegde v. Rama Ishwar Hegde AIR 1970 Mys 97 on which the learned Counsel has placed reliance to support the fact that the order was without jurisdiction is distinguishable inasmuch as in that case the court failed to consider the compromise pleaded by the Petitioner. In the instant case the learned trial court has inquired into the question whether there was a compromise and it was only thereafter that it passed this well considered order.

Mohammad Daud Vs. Abu Mohammad and Another, which was cited at the bar by the learned Counsel for the Appellants has also got no bearing on the facts of the present case, inasmuch as there a new term was sought to be introduced in the written compromise which was inconsistent with the tenor of the draft of the compromise petition and it was held that the evidence of the new term was not admissible u/s 91, when compromise was sought to be enforced as a contract. The Appellants themselves wanted to establish by their evidence which was against their own pleadings and on which there was no issue that they had made payment of the amount settled as their liability under the terms of the compromise on 12-12-1969 and the contention of the opposite party was that this evidence was not admissible because there was no plea and much-less any issue on the point and that no amount of evidence could be looked into in the absence of the pleading and the issue. Therefore, this authority in a way helps the Respondents and not the Appellants. It is the own case of the Defendants that they made the payment, therefore, there is no question of introducing any new term inconsistent with the tenor of the draft of the compromise.

Further, in so far as the question of payment is concerned it is purely a question of fact. The trial court has not believed the evidence produced by the Defendants with regard to their liability for payment so as to make adjustment towards the terms of the compromise whereunder liability for payment of Rs. 89,216/- was fastened on the Defendants. I have got no hesitation in repelling this evidence adduced by the Defendants and agreeing with the findings of the trial court.

The result, therefore, is that the learned trial court was right in dismissing this application of the Defendants-Appellants on the ground that there was no adjustment whereby a decree could follow on the basis of the compromise. I, therefore, affirm this order and dismiss the appeal with costs.