1973 (3) TMI 144 - SC - Indian Laws

Summary

Issues Involved:
1. Liability of the appellants to discharge the respondents' debt to the Faridabad Development Board.
2. The appellants' failure to make the full payment within the stipulated period.
3. The consequences of the appellants' default under clause 7 of the award.
4. The appellants' contention regarding non-cooperation from the respondents.
5. The recognition of the appellants as debtors by the Faridabad Development Board.
6. The nature of the award and its executability.
7. The appellants' claim of the award being a penalty.

Issue-wise Detailed Analysis:

1. Liability of the appellants to discharge the respondents' debt to the Faridabad Development Board:
Under clause 2 of the award, the appellants were liable to discharge the respondents' debt to the Faridabad Development Board amounting to Rs. 23,686-6-0. Clause 7 stipulated that this amount had to be paid within 1 1/2 years or the appellants had to obtain a complete discharge for the respondents from the Board within that period.

2. The appellants' failure to make the full payment within the stipulated period:
The appellants paid only Rs. 8,000 to the Board and forwarded verified claims worth Rs. 10,000, which the Board did not accept. Thus, they failed to discharge the full liability within the specified period.

3. The consequences of the appellants' default under clause 7 of the award:
Clause 7 of the award provided that if the appellants defaulted in making the payment, the respondents would be entitled to take back possession of the property. The court held that the appellants' default entitled the respondents to regain possession of the property.

4. The appellants' contention regarding non-cooperation from the respondents:
The appellants argued that they were ready and willing to pay the amount but were unable to do so due to the respondents' non-cooperation. However, the court found no support for this contention in the correspondence and held that the appellants created impediments by asking the Board to accept verified claims, which the Board was not legally obligated to accept without proper scrutiny.

5. The recognition of the appellants as debtors by the Faridabad Development Board:
The appellants argued that by accepting part payment, the Board had agreed to substitute the appellants as its debtors in place of the respondents. However, the court found no evidence of such recognition. The correspondence and the Board's actions indicated that the Board did not formally recognize the appellants as its debtors and continued to hold the respondents primarily liable.

6. The nature of the award and its executability:
The appellants contended that the award was merely declaratory and thus inexecutable. The court rejected this contention, stating that the award was intended to be executable and that the respondents were entitled to apply for and obtain possession of the property if the appellants defaulted.

7. The appellants' claim of the award being a penalty:
The appellants argued that the term in clause 7 of the award, which allowed the respondents to take back possession on the appellants' default, was in the nature of a penalty. The court found this argument untenable, stating that the term was not a penalty but a consequence of the appellants' failure to discharge their obligations. The award, having become a decree of the court, could not be treated as a penalty clause.

Conclusion:
The Supreme Court confirmed the judgment of the High Court, holding that the appellants' default entitled the respondents to take back possession of the property. The appeal was dismissed with costs.