DEEPA BHARGAVA & ANR. versus MAHESH BHARGAVA & ORS.

Citation: [2008] 17 S.C.R. 636 · Decided: 16-12-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

(2008] 17 S.C.R. 636 
A 
DEEPA BHARGAVA & ANR. 
II. 
MAHESH BHARGAVA & ORS. 
(Civil Appeal Nos. 7310-11 of 2008) 
B 
DECEMBER 16, 2008 
[S.B. SINHA AND CYRIAC JOSEPH, JJ.] 
Code of Civil Procedure, 190Q: 
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s.47 - Execution of decree -
Executing court -
c Jurisdiction of "'.'"" Scope - Held: Executing court has no 
jurisdiction to modify a decree - It cannot go behind the 
decree and must execute the decree as it is. 
Default clause contained in a compromise decree -
Nature of- Held: It is not penal in nature - s. 7 4 of the Contract 
D Act is not attracted - Stipulation to pay interest@ 18% p.a. 
for default in payment within agreed period not unreasonable. 
In a suit for declaration and permanent injunction 
;..-
between brothers and sisters in respect of ancestral 
property, compromise petition was filed by the· parties 
E which was accepted by the Court. A decree was passed 
thereupon. Some of the terms of compromise decree 
were that the respondents.:.deferidants would pay Rs.10 
lakhs to the appellants-plaintiffs and in case of failure of 
payment within stipulated time, appellant would be 
F entitled to claim interest thereon @ 18% p.a. and that 
respondents would be at liberty to alienate/sell the suit 
_, 
' 
property. As payment was not made in terms of the 
consent decree, the appellants filed an application for 
execution. Respondents filed objection under s.47 CPC 
G 
before the executing Court, which was rejected. A 
revision petition was filed thereagainst contending that 
the respondents were not liable to pay interest @ 18% 
p.a. The High Court rejected the objection holding that the 
consent decree was beyond the subject matter of the 
suit. Moreover, it opined that the question as to whether 
.....
H 
636 
DEEPA BHARGAVA & ANR. V. MAHESH BHARGAVA 
637 
& ORS. 
the stipulation of payment of interest @ 18% p.a. on the 
A 
.. 
judgment debtors is in the nature of penalty and is 
unreasonable within the purview of s.74 of the Contract 
Act, 1872 or not, should be considered afresh by the 
Executing Court. 
The Executing Court directed payment of interest @ 
14% p.a. Respondents filed writ petition. High Court a 
reduced the rate of interest to 9% p.a. holding that the 
litigating parties were real brothers and sisters, the 
consent decree was not in respect of any commercial 
transaction and in the circumstances, the stipulation of c 
interest in default of payment within the agreed period 
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was by way of penalty, and thus the rate of interest of 
"I 
' 
· 18% p.a., looking at the nature of decree, was 
unreasonable and excessive. Hence the present appeal. 
Allowing the appeal, the Court 
D 
HELD: 1. A decree remains valid unless set aside. 
Respondents never challenged the validity or otherwise 
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of the said consent decree. It was acted upon. They 
disposed of the suit property pursuant thereto and, thus, 
took advantage of a part thereof. It was, therefore, 
impermissible for them to resile therefrom. There is no 
E 
doubt_ OJ._dispute as Tegards interpretation or application 
of the said consent terms. [Paras 10 and 11] (643-D-E] 
2. An executing court cannot go behind the decree. 
It has no jurisdiction to modify a decree. It must execute 
the decree as it is. A default clause contained in a 
F 
compromise decree even otherwise would not be 
considered to be penal in nature so as to attract the 
provisions of Section 74 of the Indian Contract Act. [Para 
11) [643-F] 
Sova Ray & Anr. v. Gostha Gopal Dey & Ors. AIR (1988) 
G 
SC 981, referred to. 
3. 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. [Para 14] (645-D] 
H 
638 
SUPREME COURT REPORTS 
(2008] 17 S.C.R. 
A 
_ P. D'Souza v. Shondrilo Naidu (2004) 6 SCC 649, 
distinguished 
Yogesh Mehta v. Custodian appointed under the Special 
Court & Ors. (2007) 2 SCC 624, held inapplicable. 
4. The question as to whether the executing court 
B had any jurisdiction to travel beyond the decree was not 
raised. The executing court had no such jurisdiction. The 
High Court while exercising the revisional jurisdiction 
also had no jurisdiction to invoke the provisions of 
Section 7 4 of the Contract Act which for all intent and 
C purport amounts to modification of a valid decree passed 
by a competent court of law. The decision of the High 
Court, therefore, was wholly without jurisdiction. 
Furthermore, the High Court d

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