2007 (10) TMI 708 - HC - Indian Laws

Summary

Issues Involved:
1. Recovery of Rs. 12 lacs based on partnership agreement and subsequent default.
2. Settlement agreement and default in payment of installments.
3. Court's power to extend time for payment of installments without respondent's consent.
4. Nature of the decree: whether it was a decree on admission or a consent decree.

Summary:

Issue 1: Recovery of Rs. 12 lacs based on partnership agreement and subsequent default

The plaintiff filed a suit for recovery of Rs. 12 lacs from the defendant, based on an agreement where the defendant was to induct the plaintiff as a partner upon contributing Rs. 13.50 lacs. The defendant failed to contribute his share, leading the plaintiff to request a refund. Despite confirming the debt and agreeing to repay, the defendant only paid Rs. 1.50 lacs, leaving a balance of Rs. 12 lacs unpaid. The plaintiff filed the suit u/s Order 37 of the Code of Civil Procedure, seeking a decree for Rs. 12 lacs with 18% interest p.a.

Issue 2: Settlement agreement and default in payment of installments

During the suit's pendency, the parties settled, with the defendant agreeing to pay the decretal amount in installments of Rs. 1 lac. The settlement included a clause that any default would make the entire amount recoverable. The defendant defaulted twice, leading the plaintiff to oppose the defendant's notice of motion for condonation of default. The Court held it had no power to extend the time without the plaintiff's consent and rejected the notice of motion.

Issue 3: Court's power to extend time for payment of installments without respondent's consent

The primary question was whether the Court could extend the time for payment of installments without the respondent's consent. The Court held that it could not, relying on the Supreme Court's judgment in Hukumchand v. Bansilal, which stated that the Court cannot rewrite a contract between parties but can relieve against a forfeiture clause. The Court found that the decree was a consent decree, and the time schedule was binding, not extendable without the respondent's consent.

Issue 4: Nature of the decree: whether it was a decree on admission or a consent decree

The Court examined whether the decree was on admission u/s Order 12, Rule 6 of the CPC or a consent decree u/s Order 23. It concluded that the decree was a consent decree, as it was based on an agreement between the parties without the Court's intervention. The Court distinguished between a decree on admission, which does not require party consent, and a consent decree, which is based on a lawful agreement between parties.

Conclusion:

The Court dismissed the appeal, holding that the appellant must face the consequences of default as per the agreed terms. The Court could not alter the terms without the respondent's consent, and the appellant's request for extension was rightly rejected. The appeal was dismissed, with parties bearing their own costs.