Tuesday, 10 July 2018

What constitute consideration for passing of compromise decree?

 Section 2(d) of the Indian Contract Act, 1872 defines consideration. It is something done or promised to be done or something not done or something promised not to be done by the promisee at the desire of the promiser. This definition clearly shows that the consideration could be monetary as well as in kind or in the nature of some sacrifice made by the promisee at the desire of the promiser. Having understood the concept of consideration under the Indian Contract Act, now we would have to take a look at the compromise application signed and executed by the parties.

7. It is seen from the compromise application that even though there is no mention in it about payment of price of the suit properly, the deficiency is made up by what is stated in it's paragraph 3(1). Contents of this para disclose that the defendant (applicant-judgment debtor) has shown his readiness to execute the sale deed in respect of 1/4th share out of his 1/3rd share from the property bearing Khasra No. 81/2, RH. No. 46 situated at mouza Isasani. So, this is an act promised to be done by the defendant or the applicant who is the promisee in the instant case. The respondent or the decree holder is the promiser in this case and as seen from the prayer clause, has expressed a desire that in lieu of the promise so given by the promisee, the Court be pleased to grant a compromise judgment and decree as per the terms and conditions mentioned in the application. These mutual acts performed or promised to be performed by both parties from the consideration for what each of the parties to the compromise application has agreed to do in the present case. Therefore, this is not a case wherein one can surely say that the compromise application was devoid of any consideration, as the term is defined in law.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 86 of 2017

Decided On: 13.09.2017

Suresh Daulatrao Wirulkar Vs.  Ganesh Rajaram Bodkhe

Hon'ble Judges/Coram:
S.B. Shukre, J.

Citation: 2018(3) MHLJ 112



1. Rule. Rule made returnable forthwith. Heard finally by consent.

2. By this revision application, the legality and the correctness of the order, dated 6.4.2017, passed on objection application (Exh. 36) filed by the applicant-judgment debtor has been questioned.

3. According to the applicant, the compromise decree regarding specific performance of contract passed in Special Civil Suit No. 303/2008 between the applicant, the judgment debtor and the non-applicant, the decree holder is illegal as the compromise agreement between the parties being devoid of any consideration was void in terms of Section 10 and Section 25 of the Indian Contract Act and therefore, was hit by the explanation given to Order XXIII, Rule 3 of the Code of Civil Procedure. The objection application has been rejected by the executing Court, the Court of Civil Judge, Senior Division, Nagpur on the ground that the decree passed by Lok-Adalat on the basis of mutual settlement between the parties is final in terms of Section 21 of the Legal Services Authorities Act and therefore, it is not amenable to any such challenge as raised in the objection application. The executing Court was also of the view that there is a distinction between an agreement devoid of consideration, which is void in law and the compromise arrived at between the disputing parties in a pending civil suit and that to a compromise agreement between the parties, the rigors of valid agreement between the parties would not apply.

4. Learned counsel for the applicant submits that a bare perusal of the compromises application jointly filed by both the parties would show that there is not even a whisper about the price of the agricultural field, the suit property, being paid by the decree holder and therefore, one has to say that this compromise application executed by both the parties is not accompanied by any consideration and as such void in law.

5. Learned counsel for the non-applicant disagrees. He submits that the consideration between the parties is implicit in this agreement.

6. Section 2(d) of the Indian Contract Act, 1872 defines consideration. It is something done or promised to be done or something not done or something promised not to be done by the promisee at the desire of the promiser. This definition clearly shows that the consideration could be monetary as well as in kind or in the nature of some sacrifice made by the promisee at the desire of the promiser. Having understood the concept of consideration under the Indian Contract Act, now we would have to take a look at the compromise application signed and executed by the parties.

7. It is seen from the compromise application that even though there is no mention in it about payment of price of the suit properly, the deficiency is made up by what is stated in it's paragraph 3(1). Contents of this para disclose that the defendant (applicant-judgment debtor) has shown his readiness to execute the sale deed in respect of 1/4th share out of his 1/3rd share from the property bearing Khasra No. 81/2, RH. No. 46 situated at mouza Isasani. So, this is an act promised to be done by the defendant or the applicant who is the promisee in the instant case. The respondent or the decree holder is the promiser in this case and as seen from the prayer clause, has expressed a desire that in lieu of the promise so given by the promisee, the Court be pleased to grant a compromise judgment and decree as per the terms and conditions mentioned in the application. These mutual acts performed or promised to be performed by both parties from the consideration for what each of the parties to the compromise application has agreed to do in the present case. Therefore, this is not a case wherein one can surely say that the compromise application was devoid of any consideration, as the term is defined in law.

8. In the case of Namdeo Hambira Babar and others v. Gajanan Bhauso Babar and others, reported in MANU/MH/2483/2014 : 2015(1) Mh L J 932, relied upon by the learned counsel for the applicant, learned Division Bench of this Court has held that just because consent terms are filed before the Civil Court, the Civil Court is not obliged to accept the consent terms mechanically and the Civil Court is required to examine whether the compromise is lawful. There can be no dispute about the proposition of law laid down in this case by the learned Division Bench of this Court. Unless the compromise arrived at between the parties is ex facie seen to be lawful, no decree for giving effect to the compromise could be passed by a Civil Court. In the case of Namdeo (supra) one of the consent terms, it appears, was against the provisions of law because it was agreed by the petitioner therein to surrender tenancy rights in favour of some of the respondents, which was not permissible in law. In this background, the learned Division Bench of this Court held that it was improper on the part of the Civil Court to have mechanically passed a decree in terms of consent terms. In the instant case, the compromise application filed by both the parties does not reflect any agreement which is unlawful or invalid. The objection in this regard was that the agreement was devoid of any consideration and it has been found by this Court that this agreement was very much accompanied by consideration, as defined in Section 2(d) of the Indian Contract Act. Therefore, no direct assistance from the said case of Namdeo (supra) could be solicited in the present case by the applicant. It would then also follow that the provisions of explanation to Order XXIII, Rule 3 as well as Sections 10 and 25 of the Indian Contract Act would not be attracted in the present case.

9. In the result, I find that the impugned order, though passed for different reasons, could not be seen to be illegal or containing any material irregularities. There is no merit in this application.

10. The application stands rejected. Parties to bear their own costs.


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