Hunter v. de Silva.
Present : Soertsz A.C.J. and de Kretser J.
HUNTER et al. V. DE SILVA.
132—D. C. Colombo, 45,279.
Decree■—Subsequent agreement to pay higher rate of interest—Application to
alter decree and certify adjustment—Civil Procedure Code, s. 3~:9.
Where after decree was entered in an action the defendants entered intoan agreement with the plaintiffs to pay a rate of interest higher than thatgiven by the decree and where the plaintiffs applied to have the decreealtered and the adjustment certified under section 343 of the CivilProcedure Code,-—
Held, that the decree could not be altered to give effect tc the agree-ment.
The agreement may go beyond the terms of the decree but the Courtwill recognize and certify only so much of the agreement as adjusts thedecree in whole or in part.
DE KRETSER J.—Hunter v. de Silva.
^ PPEAL from an order of the District Judge of Colombo.
H. V. Perera, K.C. (with him E. B. Wikremanayake), for defendants,appellants.
N. Nadarajah (with him Nadesan and Manikavasagar), for plaintiffs,respondents.
Cur. adv. vult.
June 7, 1939. de Kretser J.—
On September 16, 1931, decree was entered in favour of the plaintiffsfor the payment of Rs. 10,800 with interest at 18 per cent, per annum onRs. 10,000 from date of action to date of decree, with further interest onthe aggregate amount at 9 per cent, till payment in full.
In October, 1931, the plaintiffs applied for execution; but on November20, plaintiff’s Proctor filed a paper signed by the defendants, and movedthat the same be embodied in the decree.
The Court minuted “ Note and File ”. The paper is signed by all threedefendants, and is to this effect: —“ We consent to pay interest at therate referred to in the mortgage bond No. 197 filed of record, from the dateof decree till payment in full, in lieu of the rate of 9 per cent, provided forin the decree ”.
On September 20, 1937, the plaintiffs moved that the rate of interestspecified in the decree be altered to 12 per cent. The Court refused theapplication. The plaintiffs then moved to certify of record the adjust-ment of the decree in accordance with the motion referred to, and movedthat the commission be reissued.
The defendants objected to this application and moved that the matterbe fixed for inquiry. The‘ District Judge, after inquiry, made orderallowing the application and, certifying of record the adjustment of thedecree, ordered that commission be reissued for the recovery of the balancedue in accordance with the adjustment and in terms of the plaintiffs’application.
The defendants thereupon deposited a sum of Rs. 5,000 which isadmitted to be due on account of principal, and appealed against theorder certifying the adjustment in the way in which it has beencertified.
The main contention for the appellants was that any agreement whichadded to the decree and increased the liability of the defendants was notan adjustment within the terms of section 349 of the Civil ProcedureCode.
It became apparent during the argument that the plaintiffs were reallyseeking that a new decree should be entered; in effect they were askingfor an amendment of the decree.
It was also apparent that though the defendants conceded that theagreement was valid, they nevertheless hoped that if they succeeded inopposing the application they would be able to bring into an accountingthe excess of interest which they had been paying.
DE KRETSER J.—Hunter v. de Silva.
In my opinion both these positions are unsound. When a decree isadjusted, section 349 does not contemplate that the original decree shallbe superseded. It does not contemplate the entering of any decree basedon the agreement. The entering of decrees based on agreements is dealtwith in section 408, where the Court is expressly required to pass a decreein accordance with the agreement or compromise, and we have the veryimportant qualification that the passing of the decree will be only so faras it relates to the action. We have here an indication that an actionmay be adjusted by an agreement which goes beyond the scope of theaction. I see no reason why, when an action has proceeded to the stagewhere a decree has been entered, thereafter the agreement should be. limited by the terms of the decree. In my opinion the agreement maygo beyond the terms of the decree; but the Court will recognize andcertify only so much of the agreement as adjusts the decree in whole orin part.
For example, if the defendants had agreed to pay more than theprincipal sum of the decree for some valid reason and the Court wasinformed of the agreement, the Court would recognize that the decree hadbeen satisfied to the extent of the amount decreed, and would not concernitself with the excess.
Similarly, where a defendant had obtained time by agreeing to pay ahigher rate of interest and had paid that higher rate, then the Courtwould recognize that payment of the -interest under the decree had beensatisfied up to the time when the last payment was made, and would notconcern itself with what had been paid in excess by way of interest on aprivate agreement between the parties which would be perfectly valid andbinding on them although it would not be binding on the Court.
To allow an arrangement between the parties to supersede the decreealready entered would be to detract from the sanctity which attaches to adecree of Court.
We have repeatedly held that parties cannot by consent vary the termsof a decree, nor can the Court itself vary its decree except in certaincircumstances set out in the Code.
The provision in section 349 is intended to enable the Court to see thatits decree is not abused. And the precaution which the legislature hastaken is to provide means whereby one or other or both parties willinform the Court of any private arrangement between them. There isnothing to prevent parties from abandoning the decree and suing on theprivate agreement, but the agreement not being made part of the decreecannot be executed as part of the decree, and the agreement not beingembodied in the decree is no part of it.
In Broughton’s work on the Indian Civil Procedure Code he refers totwo authorities, viz., Krishna Kamal Singh v. Hiru Sirdar1 and MadhubChunder Dhundput v. Madhub Loll KhanV neither of which unfortunatelyis available to me. He quotes both these cases in support of theproposition I have just stated.
Mr. Perera referred me to Chitaley and Sarkar on the Indian CivilProcedure Code and to a case reported in I. L. R. 24 Madras, p. 1. I1 i B. L. R., F. B., 101.J li B. L. R. 285.
DE KRETSER J.—Hunter v. de Silva.
have referred to Chitaley, Sarkar and Ameer Ali, also to the case cited byhim. I can find nothing in them opposed to the view I am now taking.
From the fact that an adjustment in full extinguishes the decree onedoes not get the corollary that the adjustment must be equal to thedecree. For an agreement that covers more than the decree also canextinguish the decree.
The real point is whether the adjustment takes the place of the decree,and whether in effect the decree is amended. In my opinion the decreeremains unaffected by the adjustment except in so far as the execution ofit is concerned.
Mr. Nadarajah quoted a case of the Bristol Hotel Co., Ltd. v. Power In that case the judgment-creditor entered into-an agreement with thejudgment-debtor to receive payment of the judgment debt by monthly(instalments, and the Court held that he could not go back on his originaldecree. With all respect, this seems to me not to conflict with what Ihave stated for the agreement extinguished the decree. Withers J. wenton to say that the judgment-creditor must either sue the debtor on theagreement, or if he wishes to execute it as a decree he must have itcertified of record as an adjustment under section 349. This opinion wasobiter. I quite agree with the first part,—that the creditor can sue onthe agreement,—but I do not agree with the second part which suggeststhat if certified the agreement might be executed as a decree. As a matterof fact, the agreement had not been certified, but once it was admittedby the creditor and the Court made aware of its existence and the adjust-ment brought to its notice, the further certification thereof was withinthe powers of the Court. The opinion of Withers J. appears to have beengiven without any argument on the point. With all respect, I am unableto follow it.
Mr. Nadarajah also referred me to a case reported in the A. I. R. (1925)Oudh 364. In that case apparently execution was taken out on thesubsequent agreement on the footing that it was an adjustment of thedecree duly certified by the Court but the grounds on which this wasallowed are not stated, and in the absence of any reasoning I must declineto follow that judgment.
Mr. Nadarajah then referred me to a case reported in A. 1. R. (1914)Calcutta 697. In that case it had been found that an oral agreement hadbeen entered into to give the judgment-debtor time to pay, and it wassought to certify the agreement. The Subordinate Judge refused theapplication on three grounds, viz., (1) that the sanction of the Court hadnot been obtained; (2) that oral evidence was inadmissible; (3) thatthere was no consideration for the agreement.
The High Court pointed out that the first ground was bad inasmuch assection 257a of the old Code had been omitted from the existing Codeand therefore such agreements were tested as to their legality like otheragreements and if valid could be given effect to. They held that oralevidence was admissible and that the agreement would be void if therehad been no consideration, and they sent the case back for inquiry.Mr. Nadarajah argues that they would not have sent the case back if they
1 3 s. C. B. 168.
SOKRTSZ A.C.J.—Hunter v. de Silva.
thought that such an agreement could not be given effect to. I amaverse from imputing to a Court a decision thus inferentially deducedand which they could have stated quite simply and clearly if their mindshad been directed to the question, but assuming that the inference iscorrect and that the agreement might be given effect to in the case, allthat happens is that the operation of the decree, execution thereof, isaffected and no new decree is entered. There was nothing to compel thejudgment-creditor to execute his decree at once, and if the Court admittedan agreement to defer execution it might see that he did not execute hisdecree contrary to the agreement. That would not be a variation of thedecree at all but of the rights flowing from the decree.
In my opinion, therefore, the agreement now relied upon has beenproperly recorded and may be certified. All payments made under it ofinterest will be recognized up to 9 per cent. The final result is thatplaintiff can issue writ to recover the principal sum remaining unpaidand interest at 9 per centum per annum from the date of the lastpayment of interest under the agreement, and he cannot issue writ on thefooting of the agreement. Neither can defendant recover interest alreadypaid under a valid agreement.
Both parties were wrong in the attitude they adopted, and there will beno costs either in this Court or in the Court below.
I agree, but I wish to say that, in my view, section 349 of the CivilProcedure Code itself, considered apart from the cases to which we werereferred, disposes of the difficulties that seem to arise in this case. In thefirst instance, the duty of certifying any adjustment is imposed on thejudgment-creditor and he is required to certify any adjustment made tohis satisfaction. In this case, there was such an adjustment, when thejudgment-creditor and judgment-debtor entered into an agreement thatwas quite valid, and was to the effect that interest should be paid at 12per cent, instead of at the 9 per cent, rate allowed in the decree. Theresult was that the additional 3 per cent, was paid on the agreement,but so far as the decree was concerned, it was adjusted just as if the12 per cent, paid on the agreement was no more than the 9 per cent, dueon the decree. The additional 3 per cent, was consideration given bythe debtor for the extension of time he obtained. It was not paid underthe decree. It had no bearing on the decree itself. Consequently, thoseadditional payments cannot be taken into account when the amounts stilldue on the decree is to be ascertained. That is so far as the judgment-debtor is concerned.
In regard to the judgment-creditor, his application to have the rate ofinterest provided in the decree at 9 per cent, altered to 12 per cent,on the ground that the judgment-debtor agreed to that alteration, cannotbe entertained at all. That is not an adjustment of the decree. It is anattempt to substitute a decree of the parties in place of the decree enteredby Court. It cannot be tolerated. The judgment-debtor must proceedon his agreement if he wishes to recover anything due to him outside thedecree.
HUNTER et al. v. DE SILVA