Holding

The compromise was intended to be a mode of discharging the eviction decree, not to create a fresh lease; consequently the decree remained executable.

Summary

The decree‑holder obtained a decree for eviction of the judgment‑debtor’s shop in 1960. During execution proceedings a compromise was entered in 1968 whereby the debtor, having already vacated half the shop, was given time until 31‑Dec‑1972 to vacate the remaining half and to pay Rs 110 per month as damages; failure to pay six months’ damages would allow the decree‑holder to obtain possession. In 1975 the decree‑holder filed an execution petition for non‑payment of damages. The debtor contended that the compromise created a fresh lease, rendering the original eviction decree unenforceable. The executing court held a fresh lease existed, but the District Judge set aside that order and the High Court affirmed the District Judge. The Supreme Court held that the terms and surrounding circumstances of the compromise showed the parties intended it to be a mode of discharging the decree, not to create a new lease, and therefore the decree remained executable. The appeal was dismissed.

Issues considered

Whether a compromise entered into during execution of an eviction decree extinguishes the decree and creates a fresh lease, or merely provides a mode for its discharge.
Whether, on the facts of this case, the compromise created a fresh lease in favour of the judgment‑debtor.

Legislation cited

Code of Civil Procedure, 1908s. 47, s. Order XX

Subjects

landlord‑tenantevictioncompromiseexecution of decreefresh leasedamagesCode of Civil Proceduredecree extinguishment

Judgment

SMT. KALLOO & ORS. A
v.

DHAKADBVI & ORS .
•
February 9, 1982 B
[B.S. VENKATARAMIAH AND BAHARUL ISLAM, JJ.J

Code of Civil Procedure 1908 s. 47 and Or. XX!.

Landlord.and Tenant-Decree for p0Jse1sion obtained by landlord execution
c
against tenant-Matter compromised-Tenant to continue in portion of property and
pay damages for use and occupation without default-Breach by tenant-Execution
petition by landlord-Whether maintainable._ Test-Whether the compromise extin~
guishes decrees and creates fresh /ecue or provides mere mode for discharge
of decree.
D
The predecessor of the respondents filed a suit for eviction of the predecessor
of the appellants from a shop and obtained a decree on March 21, 1960 for
eviction. The decree-ho Ider filed an application for the execution of the decree
on March 22, 1966 and. during the pendency of these proceedings, a compromise
was entered into between the parties, and the Executing Court passed an order
dated March 21, 1968 in terms of the compromise. The compromise provided
for the judgment-debtor to give vacant possession of the remaining half of the
shop to the decree-holder by December '31, 1972 and to pay damages for use and
·/ occupation by the 5th of every month to the decree-holder at Rs. 110/- per month,
and that on six months damages being due the decree-holder will be entitled to
have the shop vacated.

The decree-holder filed an execution petition for. recovery of possession on
'1 Novell\ber 25, 1975 alleging that the judgment debtor had not paid damages at ·
the rate of Rs. 110/- per month from July 1, 1975. The judgment-debtor contest-
F
ed the execution proceedings contending that the terms of compromise created
a fresh lease in favour of the judgment-debtor in resp.:ct of the remaining half of
the shop, and that the decree was therefore not executable. The Executing Court
upheld the objection holding that the compromise dated March 21, 1968 amounted
to a fresh lease.
G
On appeal, the District Judge, set ~side the order of the Executing Court,
. but in Second Appeal, the High Court upheld the order of the District Judge,
and dismissed the appeal.

In tho appeal to this Court it was contended on behalf of the appellant/
judgment-debtor, that the compromise dated March 21, 1968 created a fresh lease, H
in favour of the judgment-debtor in respect of the undelivered half of th_e shop
and the. decree-holder's remedy was by way of .a suit for recOvery of possession.
202 SUPREME cotJllt R~PORTS (19821 3 s.t.ll.

A Dismissing t.he appeal,

HELD : When a compromise takes place in the course o·f execution of ·a
decrCe for eviction the compromise may extinguish the deCree and create a fresh
iease, or the compromise may provide a mere mode for the discharge of the
decree. What actually takes place depends upon the intention of the parties to the
compromise, and the intention has to be gathered from the terms of the compro-
B mise and the surrounding circumstances including the order recorded by the
Court on the basis of the compromise. [205 C-D]

In the instant case para l of the compromise petition and the order of the
Executing Court recording the compromise disclose the intention of the parties.
The judgment-debtor had already vacated "half of the shop and given its posses-
sion" and time was granted till December 31, 1972 for vacating and delivering
c possession of the other half of the shop as the judgment-debtor wanted time till
then Jest bis busiriess "will be ruined by vacating the shop in hurry.'' This shows
that the intention of the parties was nOt to create a fresh lease in respect of the
half of the shop in possession of the judgmeOt-debtor but to help him to find out
alternative accommodation ·and time for vacating was given till December 31,
1972. Further, the term 'damages', and not 'rents' is used in the compromise
petition as well as the order of tbe Executing Court. The intention of the parties
D clearly was not ·to extinguish the decree for eviction but to create a mode of its
full discharge. [205 E-H)
' .
Konchada Ramamurthy Subudhi & Anr. v. Gopinath Naik, [1968] 2 SCR 559,
referred to.

E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2612 of
1981.

Appeal by special leave from the judgment and order dated
the 6th January, 1981 of the Madhya Pradesh High court (Jabalpur
Bench) in M.P. No. 87 of 1980.
F Am/an Ghosh ~or the Appellants.

Sobhagmal Jain and S.K. Jain for the Respondents.
The Judgment of the Court was delivered by

G BAHARUL ISLAM, J. This appeal by special leave is by the
judgment-debtors. The material facts which are not in dispute may
be stated thus :

2. The predecessor of the respondents (hereinafter referred •
H to as 'the decree-holder') filed a suit for eviction of the predecessor
bf ihe appellants (hereinafter referred to as 'the judgment-debtor')
and obtained a decree on 21.3.1960, inter alia, for eviction from a
KALLOO v. DllAKADEVI (/Jaharal Islam, J.) 203
shop. The decree-holder filed a petition for execution of the decree A
for eviction in the executing court on 3.1.1961. The petition was
dismissed on 20.1.1961. A fresh petition for execution was filed
on 19.1.1965. It was also dismissed on 20.3.1965. The decree-
holder again filed an application for execution of the decree on
•
22.6.1966. During the pendency of this execution proceeding, the
parties filed a compromise petition on 31.3.1968. The terms of the B
compromise on the interpretation of which the result of this appeal
depends were as follows :

(Material portions only) :

"In the above case, a compromise has taken place c
between the parties as follows :

(I) That for the present the judgment·debtor is not getting
a shop. His established business will be ruined by
.vacating the shop in hurry. Therefore, the judgment-
debtor wants time till '3L12.1972 from the decree· ·n
holder for vacating half the shop in his possession. So
the judgment-debtor will vacate the shop and give
possession thereof to the decree· holder by 31.12. 1972.
He has vacated half the shop and given its possession.
•
(2) That during this period the judgment-debtor shall pay
damages to the decree-holder for use of the shop
E
@ I IO/- per month.

(3) That the damages shall be paid upto the 5th of every
month. In the event of non-payment of damages for
any six months, the decree-holder shall. be entitled to
get the shop immediately vacated, by filing execution, Ji'
from the possession of th~ judgment-debtor, without
any objection as regards limitation.
(4) The decree-holder wants. to have new shutters put up
after removing the present shutters in the front portion
of the shop. The judgment-debtor will not be entitled G
to object to this.

He will help in the putting of girders and he will vacate the
portion.
H
If he will demur to it, the decree-bolder can have the shop

I vacated, without any objection as regards the above limitation.
204 SUPREME COUllT iIBMkTS [1982J j s.C.R.
A So, the aforesaid compromise be accepted and kept on
record."

3. It is also not in dispute that at the time of the compromise,
half of the shop had _been vacated and its possession delivered to the
decree-holder as stated in the compromise petition. In order to
B appreciate the intention of the parties to the compromise, it is also
necessary to refer to the order dated 21.3 .1968 recorded. by the
execution court on the basis of the compromise. The material para
of the order is para 3 and it is in the following terms :

"The judgment-debtor 'to give vacant possession of the
c shop to the decree-holder by 31.12.72 according to the
compromise and he will pay damages for use and occu-
pation by the 5th of every month to the decree-holder
according to the compromise @ Rs. 110/· per month. On
six months' damages being due, the decree-holder will be
entitled to have the shop vacated. The decree-holder will
D
provide shutters in the front portion. The judgment·
debtor will not object to them.

The case is decided in terms of the com promise.

E The compromise be recorded."

4. On 25.11.1975, the decree-holder filed an execution petition
for recovery of possession of the portion of shop in possession of
the judgment-debtor, alleging that the judgment-debtor had not paid
./ ~
damages at the rate of Rs. 110/- per month from 1.7.1975.
F Notice of the execution petition was issued to the judgment-debtor
who appeared and raised several objections to · the execution
proceedings. But we are concerned in _this appeal only with one
wl;lich was that in terms of the compromise, a fresh lease was created
in favour of the judgment-debtor in respect of the remaining half of
the shop. It was therefore submitted that the decree was not
G executable. The Executing Court upheld the objection ho)ding that
the compromise dated 21.3.1968 amounted to a fresh lease. An
appeal was taken to the Court of the District Judge who set aside
the order of the Executing Court. In a second appeal, the High ' /_
Court upheld the order of the District Judge, and dismissed the
H appeal. It is against this order of the High Court is. this appeal by
special leave.
KALLOO v. DHAKADEVI (Baharul Islam, J.) 205

5. The only p·oint urged before us by Shri Amlan Ghosh, A
learned counsel for the judgment-debtor was that the compromise
dated 21.3.1968 created a fresh lease in favour of the judgment-
debtor in respect of the undelivered half of the shop, and the decree-
holder's remedy was by a suit for recovery of its possession.
8
_, 6. When a compromise petition is filed in an execution
proceeding, and a contention is raised by the judgment-debtor on a
subsequent execution being started by the decree-holder that the
compromise bas given rise to a fresh contract between the parties
and that the decree sought to be executed is not executable, what is
to be seen is whether the decree has been extinguished as a result C
of the compromise and a fresh contract has emerged. When a
compromise takes place in the course of execution of a decree-for
eviction, the compromise may extinguish the decree and create a
fresh lease, or the compromise may provide a mere mode for the
discharge of the decree. What actually takes place depends on the
intention of the parties to the compromise. And the intention has D ,
to be gathered from the terms of the compromise and the surround-
ing circumstances ·including the order recorded by the Court on
the basis of the compromise.

7. In the instant case, paragraph I of the compromise petition E
quoted above and the order of the . Executing Court recording the
compromise are important and disclose the intention of the parties.
Paragraph I of the compromise petition shows that the judgment-
debtor had already "vacated half of the shop and given its posses-

-.. ' ~
sion" and time was granted till 31.12.1972 for vacating and delivering
possession ~f the other half of the shop as the judgment-debtor
wanted time till then lest his business "will be ruined by vacating
the shop in hurry". This clearly shows that the intention of the
F

parties was not to create a fresh lease in respect of the half of the
shop in possession of the judgment-debtor, but to help the judgment:
debtor find out, not in a hurry; alternative accommodation for his
shop so that his established business waq not 'ruined' and time for G
vacating the half of the room was given till 31.12.1972. And this
was also how the compromise petition waq understood by the
Executing Court when it recorded in para 3 of its order : "The
judgment-debtor to give vacant possesssion of the shop to the decree-
holder by 31.12.1972 according to thP- compromise-............ ". The H
intention of the parties clearly was not to extinguish the decree for
.eviction but to create a mode of it~ f11ll dischar¥e·

,.
206 SUPREME COURT REPORTS (1982] 3 s.c.R.

A 8. The above interpretation gets support from the use of the
term 'damages', and not 'rents', in the compromise petiiion as well
as the order of the Executing Court. The view we have taken gets
support also from a decision of this Court reported. in [1968] 2 SCR
559.(') In that case, the appellant filed a suit for eviction of the
respon<)ent from the appellant's house. The suit was dismissed by
B the trial court In appeal compromise was entered into between the
parties and the decree was passed in terms of the compromise. The
compromise provided for the responden <'s continuation of possession
of the house for five years, but it enabled the appellant to execute
the decree by evicting the respondent, if the latter failed to pay rent
for three consecutive months. When the appellant sought to evict
c the respondent, the latter claimed protection from eviction on the
ground that the compromise decree created a lease. It was held by
this Court that the facts that the appellant bad filed a suit for
eviction of the respondent and the compromise decree enabled him
to execute the decree by evicting the respondent, showed that the
intention of the parties, which was the decisive test, was not to enter
D into a relationship of landlord and tenant.
0

9- This appeal has no merit and is dismissed with costs.

N.V.K. Appeal dismissed.

E

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•
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(!) Kanchada Ramamurth1 Subudhl & Ors. v. Goplnath Naik.