SANWARLAL AGRAWAL & ORS. versus ASHOK KUMAR KOTHARI & ORS.

Citation: [2023] 2 S.C.R. 497 · Decided: 21-02-2023 · Supreme Court of India · Bench: KRISHNA MURARI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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   [2023] 2 S.C.R. 497
497
SANWARLAL AGRAWAL & ORS.
v.
ASHOK KUMAR KOTHARI & ORS.
(Civil Appeal No(s). 1312-13 of 2023)
FEBRUARY 21, 2023
[KRISHNA MURARI AND S. RAVINDRA BHAT, JJ.]
Decree – Execution of – Expansion of decree – Impermissibility
of – Parties entered into a joint venture agreement for a project –
Each party brought in  10 crores as loans to finance the project –
Respondents bid for the entire 50% shareholding of the appellants
for consideration of   36.75 crores which was accepted, reduced
in writing by way of email dtd. 28.03.19 – However, disagreement
arose as to whether this amount was inclusive of the loan of 
10
crores – Suit filed by respondents for declaration that the agreement
dtd. 28.03.19 was binding on the appellants and for specific
performance – Decree on admission passed – In execution
proceedings, Single Judge construed the decree by looking into the
pleadings and held that  36.75 crores was inclusive of the loan
amount – Upheld by Division Bench – Held: An Executing Court
can construe a decree if it is ambiguous – However, in the present
case, this cannot result in additions (to the terms of the consent,
embodied in the email dtd. 28.03.19) which were not agreed upon
by the parties, since the decree was drawn on by consent of both
parties at admissions stage itself – There was a clear lack of
consensus on the inclusion of the loan amount into the agreement
consideration – Both the Courts have, by selectively perusing the
emails, altered the terms of the decree to include the loan amount
into the agreement consideration – Impugned judgment set aside –
Code of Civil Procedure, 1908 – Order XII, r.6.
Allowing the appeals, the Court
HELD: The decree awarded (on agreement by both parties)
captures, in essence, parts (A) to (D) of the prayer made by the
Respondents in their suit. They are analogous to the terms of
the agreement dated 28.03.2019, which allude only to  the ‘sale
of the 50% shareholding of the defendants’ (i.e., of the appellants),
and do not mention anything separately regarding the outstanding
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498
SUPREME COURT REPORTS
[2023] 2 S.C.R.
loan amount. The single judge has described the decree as
‘ambiguous’ simply on the absence of its engagement with the
loan amount, and proceeded to go behind it by looking into the
pleadings (of only the respondents, as appellants had not filed
any – which has been adversely inferred by the Court) – and relied
on the term, ‘free of all claims of the defendants’ contained in the
decree, to enlarge its scope to include the contested amount.
Affirming the same, the Division Bench of the High Court has
laid emphasis on the exchange of emails pursuant to the one
containing the agreement, especially the email dated 29.03.2019
sent by Respondents outlining the break-up of the amount for
the first time, which was expressly rejected by appellants in their
response dated 11.04.2019. There was a clear lack of consensus
on this inclusion. Both the Courts’ interpretation of reading the
appellants’ consent into the same is clearly an exercise in
overreach. Both Courts have, by selectively perusing the emails,
altered the terms of the decree to include the loan amount into
the agreement consideration. Such a reading was despite the
clauses in the joint venture agreement entered into between the
parties in 2017 which provided for separate mechanism of settling
all outstanding loans. The joint venture agreement also
contemplated a clear distinguishment between the bidding
process and subsequent repayment of loan. An Executing Court
can construe a decree if it is ambiguous. However, as in the facts
of the case herein, this cannot result in additions (to the terms of
the consent, embodied in the email dated 28.03.2019) which were
not agreed upon by the parties, since the decree was drawn on by
consent of both parties at admissions stage itself. Both the single
judge and Division Bench of the High Court have interpreted
the appellants’ silence (manifest in their not filing any written
statement) as acquiescence to the inclusion of the loan amount,
which, is although worthy of adverse inference, cannot be the
reason to justify expansion of the decree. [Paras 13, 14, 16, 17
and 19][506-C-G; 507-E; 508-C; 509-F-H; 510-A]
S. Satnam Singh & Ors. v. Surender Kaur & Anr.,
(2009) 2 SCC 562 : [2008] 16 SCR 904 – distinguished.
Topanmal Chhotamal v. Kundomal Gangaram, AIR 1960
SC 388; Meenakshi Saxena v. ECGC Ltd., (2018) 7 SCC
479 : [2018

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