JUDGMENT
P.S. Patankar, J.
1. Both these applications are filed by the two plaintiffs (respondents in Appeals) against original defendant (appellant in appeal). The prayer made is the same i.e. to relieve the plaintiffs-applicants from the consequences envisaged by Clause 6 of the consent terms entered into between the parties in the aforesaid two appeals dated 9-4-1991. The prayer arises in view of the following facts. Hereafter the reference shall be made to the parties as plaintiffs and defendant.
2. The plaintiffs are owners of two re-rolling Steel Mills situated at Pune. Two agreements for conducting those 2 mills were entered into between two plaintiffs and defendant on 9-4-1980 and supplementary agreement on clarifying the term regarding the payment of compensation. The period fixed was 3 years from the date of taking over possession i.e. 12-4-1980. As the period came to an end, the plaintiffs on 19-4-1983 demanded possession of machinery and to stop incidental use of premises. However, the defendant invoked viz. major clause and declined to follow the agreements. Hence on 11-2-1987 the plaintiffs issued notices to the defendant claiming possession of machinery and the premises mainly on the ground of (1) expiry of period and (b) breach of terms of agreements. It is also the case that defendant has not made the payment as per agreements and there was balance of Rs. 5,16,401/-. The defendant sent no reply and hence 2 suits came to be filed by the plaintiffs on 19-5-1987. The trial Court passed the order of ex-parte appointment of Court Receiver. The same came to be challenged by the defendant by filing appeals in this Court. The defendant agreed to pay Rs. 65,000/- per month to each plaintiff instead of Rs. 30,000/- and hence the order of Receiver came to be vacated.
3. The suits came to be decreed on 1-1-1990 in favour of the plaintiffs. If was held that the plaintiffs have legally terminated the agreements and defendant was ordered to hand over possession of the machinery in working condition. The defendant was ordered to pay Rs. 21,37,500/- towards compensation at the rate of Rs. 25,000/- per day. Claim of the plaintiffs for outstanding amount of Rs. 3,86,224/- and Rs. 1,36,000/- with 12% per annum interest from 15-2-1987 was granted. Some other reliefs were also granted to the plaintiffs. Against those decrees, the defendant filed two appeals. Appeals came up for hearing and parties entered into consent terms on 9-4-1991.
4. As per the consent terms, the plaintiffs were required to refund the amount paid in excess due to the interim orders passed in the appeals. There was delay of a few days in depositing the amount as per the consent terms. The defendants also had not handed over possession of the property in question i.e. land, plant and machinery, to the plaintiffs. The plaintiffs thereafter filed applications for condoning the delay of four weeks in depositing the amount and to grant extension of period to that extent. Those applications were rejected. Hence, these Civil Applications. In our view, this is a most appropriate case for grant of such extension of time. No prejudice whatsoever will be caused to the defendants by grant of such extension of time. Further, the defendants are unauthorisedly not handing over possession of the property belonging to the plaintiffs.
5. The relevant clauses of the consent terms which require consideration are Clauses 2(a) and 6, which read as under:–
Clause 2(a)—The parties agree that Jolly Steel Industries Pvt. Ltd. and Jolly Tor Steel Pvt. Ltd., the respondents herein and the original plaintiffs in Suit No. 446 of 1987 and Suit No. 447 of 1987, respectively, shall between them deposit in the trial Court, a sum of Rs. 15,00,000/- (Rupees fifteen lakhs only) in the aggregate on or before 31st May, 1991 and a further sum of Rs. 10,40,000/- (Rupees Ten lakhs and forty thousand only) on or before 29th June, 1991;
Clause 6—In case the respondents/plaintiffs commit any default in payment of any of the amounts as mentioned hereinabove, then the said two suits filed by the respondents/plaintiffs to stand dismissed.
6. By Clause 2(a) of the said consent terms it was provided that both the plaintiffs together should deposit in the trial Court a sum of Rs. 15 lakhs on or before 29-6-1991. It is the case of the plaintiffs that certified copy of cogent decree became available to them on 10-5-1991 and they approached their bankers viz. Central Bank of India for getting the necessary amount by hypothecation of their lands, buildings etc. However, they discovered on 7-5-1991 that Reserve Bank of India has directed the Nationalised banks not to extend new credit. The plaintiffs were therefore financially checked and hence they tried the alternative, that is to receive Rs. 30 lakhs from ONGC on account of warehousing facilities given to it by them. However, ONGC was reluctant to make payment. Finally on 18-5-1991 settlement was arrived at between the plaintiffs and ONGC and plaintiffs agreed to accept Rs. 25 lakhs by sacrificing an amount of Rs. 4,00,000/-. Therefore, plaintiffs issued 4 different cheques of Rs. 2 lakhs dated 21-5-1991, Rs. 3 lakhs, Rs. 5 lakhs and Rs. 5 lakhs (3 different cheques) dated 29-5-1991. All the cheques were delivered to Nazir of the trial Court at Pune. Nazir obtained the orders from the trial Court to deposit the same in the bank on 5-6-1991. Cheques were sent to the Government Treasury for encashment by Nazir. On 8-6-1991 there was heavy down pour at Bombay and Pune and commercial life was paralized for about 10 to 15 days. The cheque of Rs. 3 lakhs dated 29-5-1990 was encashed. However, the other 3 cheques of Rs. 12 lakhs came to be returned as the funds were not sufficient. There is delay on the part of ONGC as cheques of ONGC were required to be counter-signed by the General Manager from Dehra Dun and because of disorganisation of normal life due to heavy rain at Bombay and Pune, the cheques were realised on 25-6-1991. Therefore, the plaintiffs asked their bankers to send 3 demand drafts for Rs. 12 lakhs to Nazir. Accordingly the Bank sent 3 demand drafts on 27-6-1991 to Nazir. Similarly another demand draft of Rs. 10.40 lakhs was also sent to Nazir on 28-6-1991 being second amount payable under Clause 2(a). This demand draft was duly realised in time. In fact payments as envisaged by Clause 2(a) of the consent terms were in the hands of the Nazir of the Court at Pune, but Nazir did not encash 3 demand drafts of Rs. 12 lakhs nor put them into bank account. The plaintiffs came to know about the same on 29-6-1991 and filed an application in the trial Court requesting it to encash them. The learned Judge called for the say of the defendant and the defendant objected to encashment of the same. The learned Judge rejected the prayer of the plaintiffs for encashment. Therefore, it is clear that though first payment was not made before 30-5-1991 as per consent terms under Clause 2(a), second payment of Rs. 10.40 lakhs was duly made before 30-6-1991. In view of this the plaintiffs are praying that they may be relieved from penal consequences envisaged by Clause 6 of the consent terms. It is contended that in spite of success in the suit and there is not dispute that rolling mills belong to them, they will be losing the entire huge property because of the small default i.e. delay of about 4 weeks in deposit. They shall be penalised heavily.
7. Reply has been filed on behalf of the defendants, inter-alia, contending that Clause 6 of the consent terms cannot be said to be a penal one. It is incorrect to say so. By the consent terms, decree was set aside and concessions were granted to the plaintiffs. The plaintiffs have failed to avail of those concessions. It is further submitted that after the consent decree was passed, the Court has become functus officio and has no jurisdiction to extend time as prayed for or to vary the consent terms. It is submitted that provisions of sections 148-A and 151 of Civil Procedure Code are not applicable in the present case. It is further submitted that in fact plaintiffs were not to pay from their own pocket but to refund the amounts which were deposited by defendant in excess pursuant to the order passed by this Court in the First Appeals. Those amounts which were withdrawn by the plaintiffs only were to be refunded. It was further contended that defendant has filed the suits claiming protection of Bombay Rent Act. Those suits came to be withdrawn in view of settlement taking place between the parties and that the defendant would be seriously prejudiced if the application is granted.
8. The consent terms clearly show that the plaintiffs entered into the compromise for getting delivery of possession of the properties by 31-3-1992 and for that they had agreed to make the payments. Even the consent was given in the compromise term by providing that decree passed by the trial Court for arrears was also to be waived by the plaintiffs. In order to ensure definite payments by the plaintiffs to the defendant, Clause 6 was incorporated, which provided that suits would stand dismissed on plaintiffs’ failure to pay. Therefore in the facts it is quite clear that Clause 6 was in the nature of penalty intended to ensure the payment of the said amounts to the defendant for delivery of possession of machinery and for vacating the land belonging to the plaintiffs, by 31-3-1992. It is also clear that after the period of agreement was over the defendant was wrongfully in possession of the machinery and the land and enjoying the same. Prima-facie the defendant was liable to pay enhanced amount and therefore was required by this Court in the appeals to deposit Rs. 65,000/- per month for each plaintiff (instead of Rs. 30,000/- as per agreement). The plaintiffs even agreed to give up the said enhancement claimed. We accept the contention that in order that there should be some explanation for the same which can be offered to the tax authorities by the defendant, it was mentioned in the consent terms as a return of excess payment made by the defendant to the plaintiffs. Therefore, in fact the plaintiffs have given up their valuable claim and it cannot be said that the plaintiffs ware not paying out of their pocket and only refunding what was deposited by the defendants or that plaintiffs were only given concession.
9. Further in our opinion, the claim made by the defendant regarding withdrawal of the suits is not correct. No doubt term 11(iii) contemplated that suit filed by the defendant in Small Causes Court bearing No. 119/1990 and Standard Rent Application No. 244/88 shall be withdrawn by it. However, the said suit was admittedly dismissed for default even prior to compromise. Prima-facie there was no substance in the suit and it was a mere counter-blast for these suits filed by the plaintiffs. Therefore it cannot be said that defendant would be seriously prejudiced if these applications are granted.
10. It is not possible to accept that provisions of sections 148 and 151 of Civil Procedure Code are not attracted in the present case, or that Court becomes functus officio after the consent terms were signed. It is not possible to accept that under no circumstances extension of time cannot be granted or there is no jurisdiction with the Court to vary the consent terms.
11. First it is to be noted that there was delay of less than 4 weeks in depositing the first instalment as per consent terms. The second instalment was correctly deposited. The plaintiffs have explained the small delay and statements in support thereof are not disputed by the defendant.
12. The learned Counsel appearing for the defendant relied upon , Smt. Periyakkal and others v. Smt. Dakshyani. In the said case under compromise terms appellant agreed to deposit and respondent agreed to receive a sum of Rs. 60,000/- in full and final settlement of the decree as per terms of compromise. If the deposit was made on or before November 30, 1976 the sale was to be set aside and the appeal of the respondent was to stand dismissed. If the amount of Rs. 60,000/- was not deposited on or before 30-11-1976 the appeal was to stand allowed and the sale was to stand confirmed. Time was in fact stated to be essence to the contract between the parties. The appellant failed to deposit. High Court declined to relieve the appellant from rigour of the consent terms. The Apex Court relieved the appellant by observing as follows :–
“The time for deposit stipulated by the parties became the time allowed by the Court and this gave the Court the jurisdiction to extend time in appropriate cases. Of course, time would not be extended ordinarily, nor for the mere asking. It would be granted in rare cases to prevent manifest injustice. True, the Court would not rewrite a contract between the parties but the Court would relieve against a forfeiture clause; And where the contract of the parties, has merged in the order of the Court, the Court’s freedom to act to further the ends of justice would surely not stand curtailed.”
13. The learned Counsel next relied upon , Gajanan Govind Pathak v. Pandurang Keshav Puntambekar. The question involved was whether judgment-debtor tenant should be relieved against the forfeiture clause of the consent decree as he has failed to pay the rent. The Division Bench observed as follows:–
“In the present case there is no doubt that the compromise decree did create or continue the relationship of landlord and tenant between the decree-holder and the judgment-debtor, and the forfeiture which the decree holder seeks to enforce has resulted from the judgment-debtor’s failure to pay the amount in question within the stipulated period. The courts below have held, following the earlier F.B. decision, that the judgment debtor is entitled to the relief as claimed by him, and so long as that decision stands, there can be no doubt that he is entitled to such relief.”
It was held that there are exceptions to the general rules that consent decrees can be varied only by consent. One such exception is whether the clause sought to be enforced amounts to penalty.
14. The learned Counsel for the plaintiffs then relied upon Jadabendra Nath v. Smt. Manorama Devba. In the said case a compromise was filed. Under the compromise the petitioner was to pay a certain amount within certain time for getting reliefs. It was provided that in case the petitioner fails to make payment within the specified time then he would not be entitled to get the said reliefs. On account of illness the petitioner could not make the deposit in time and the case filed by him stood dismissed. Therefore the application came to be filed under sections 148 and 151 of Civil Procedure Code. The trial Court declined to grant reliefs. However, the Division Bench held that the provisions of sections 148 and 151 are attracted. It was held that the Court has ample power to grant reliefs against such forfeiture even without consent of the parties.
15. The learned Counsel for the plaintiffs then relied upon the judgment of Calcutta High Court Smt. Mangada Ghosh v. Rabindra Nath Hazra. It was the case of reconveyance of property. Compromise decree stipulated payment of Rs. 24,700/- by the plaintiff to the defendant within 5 weeks and on such payment suit was to be decreed. As the plaintiff could not make the payment he filled application for extension of time. The learned Judge, inter-alia, relied upon judgments , Smt. Periyakkal and others v. Smt. Dakshyani, and Jadabendra Nath Mishra v. Smt. Manorama Debva, and held that the Court can extend time taking into consideration the provisions of sections 148, 149 and 151 of Civil Procedure Code. It was held that relief could be given by the Court by extending time fixed for payment of amount in compromise decree under section 148 of Civil Procedure Code because such clause is in the nature of penalty or forfeiture clause.
16. Consideration the facts of the case and the law laid down by the Apex Court, in the interest of justice we grant prayer (a) of both the applications. In our opinion, it is necessary to extend the time in order to avoid manifest and serious injustice to the plaintiffs. It is an exceptional case, and that if the time is not extended the plaintiffs would be losing not only all rights accrued under consent terms, but the entire landed property and machinery belonging to them for a small fault.
We make it clear that the plaintiffs shall be bound by other terms and conditions of the consent terms.
Rule in each of the Civil Applications made absolute to the aforesaid extent. No order as to costs.