TMI Blog2008 (12) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... etition in terms of Order XXIII Rule 3 of the Code of Civil Procedure, 1908 was filed which was accepted by the Court by an order dated 12.5.1995, some of the terms whereof are as under : (i) (ii) ... (iii) That the Plaintiffs have claimed a declaration to the suit properties which were given to them by dint of Will executed by the late Smt. Parmeshwari Devi in favour of the Plaintiffs. It is now agreed between the Plaintiffs and Defendants 3 to 5 that in respect to the above the Plaintiffs shall remain entitled to a sum of ₹ 10 (Rs. Ten) Lakhs each only and rest of sale money shall be exclusive property of the Defendant 3 to 5. (iv) That the defendant No. 3 to 5 shall be at liberty to alienate the properties in any manner they like. (v) (a) That the Defendant No. 3 to 5 have paid ₹ 1 Lakh (Rs. One Lakh) each to the plaintiffs and the remaining balance shall be paid within six months from the date the decree is passed by the Court. In case of failure of payment within the stipulated time, the Plaintiffs shall be entitled to claim interest on the above mentioned amount at the rate of 18% per annum and the total balance amount along with interest will be fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as adequate court fee had not been paid. The contention relying upon Sections 59 to 61 of the Indian Contract Act that the amount deposited in the court must be first adjusted towards the principal amount was also dismissed. The contention raised that the interest at the rate of 18 per cent per annum being excessive is hit by the provisions Usurious Loans Act was also rejected. However, the High Court opined that the question as to whether the stipulation of payment of interest at the rate of 18 per cent per annum on the judgment debtors come within the purview of Section 74 of the Indian Contract Act or not, should be considered afresh by the Executing Court, directing: On a perusal of the impugned order, it is found that the learned executing Court has not adverted itself to the applicability of Section 74 of the Indian Contract Act. Though, the provisions of Usurious Loans Act, may not be applied so as to relieve the judgment debtors from the rate of interest when the same is excessive, Section 74 of the Contract Act does empower even an executing Court to consider whether the same is in the nature of penalty and is unreasonable. In such a situation, the executing Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per annum in defaults of payment within the agreed period is by way of penalty, the rate of interest of 18% per annum looking to the nature of the decree is unreasonable and excessive. Considering the entire facts and circumstances of the case, the compromise decree passed, I am of the view that the reasonable rate of interest would be 9% per annum and not 18% as per the decree or even 14% per annum as held by the Executing Court. 9. Appellant is, thus, before us. 10. The parties had claimed their interest in the lands in suit from a common ancestor. They entered into a compromise. A decree was passed thereupon. A decree, as is well known, remains valid unless set aside. Respondents never challenged the validity or otherwise of the said consent decree. It was acted upon. They had disposed of a property pursuant thereto and, thus, took advantage of a part thereof. It was, therefore, impermissible for them to resile therefrom. 11. There is no doubt or dispute as regards interpretation or application of the said consent terms. It is also not in dispute that respondents-judgment debtors did not act in terms thereof. An executing court, it is well known, cannot go behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial right was bestowed on the defendant No. 9 to acquire the same for an amount considerably low. In this background the defendant was subjected to the condition that if he had to take the advantage of the bargain he was under a duty to pay the stipulated amount by the time mentioned in the agreement. On failure to do so within time, he was to be deprived of this special benefit. Such a clause cannot be considered to be a penalty clause. The expression 'penalty' is an elastic term with many different shades of meaning but it always involves an idea of punishment. The impugned clause in the present case does not involve infliction of any punishment; it merely deprives the defendant No. 9 of a special advantage in case of default. 13. Even assuming that the term stipulating payment of interest in the event the entire amount was not paid within a period of six months is penal in nature, the Executing Court was bound by the terms of the decree. 14. Interest becomes leviable either under a statute or under a contract. The stipulation to pay interest at the rate of 18% per annum cannot, by itself, be said to be unreasonable. 15. Mr. Tiwari, learned Counsel appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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