M.C. Chagla, Actg. C.J.

1. The facts leading up to this appeal are that on August 20, 1936, the appellant obtained a mortgage decree for Rs. 7,303-7-0. That decree was made payable by certain instalments. The first instalment was to be made payable on May 1, 1937. The instalment fixed was Rs. 300, the next instalment of Rs. 200 on or before May 1, 1938, the third instalment of Rs. 300 on or before May 1, 1939, the fourth instalment of Rs. 500 on or before May 1, 1940 and the subsequent instalments of Rs. 500 each payable on or before May 1, of every subsequent year. There was a default clause which was to operate on the failure to pay any two instalments. The judgment-debtor committed default and on June 2, 1941, the decree-holder filed a darkhast applying for the execution of the decree. A notice was issued under O. XXI, r. 22. The judgment-debtor did not appear in answer to that notice and on August 2, 1941, the mortgaged property was ordered to be sold and notice was issued under O. XXI, r. 66. Thereafter the decree-holder obtained a sum of Rs. 100 from the judgment-debtor and he decided not to proceed with his darkhast and the darkhast was dismissed. Thereafter certain amounts were paid by the judgment-debtor to the decree-holder. On October 11, 1943, the present darkhast was filed by the decree-holder and again the mortgaged property was ordered to be sold and a notice was issued under O. XXI, r. 66. The date for the sale of the property was fixed on June 12, 1944. Before that on June 9, 1944 the judgment-debtor presented an application submitting among other grounds that he was bringing into Court the sum of Rs. 1,210, the amount then due under the various instalments, that that amount should be accepted and he should be relieved against the breach he had committed in payment of the instalments on their respective due dates.

2. The learned Civil Judge, Senior Division, took the view that this was a case where the judgment-debtor should be relieved against the penalty provided under the decree and ordered the darkhast to be struck off on the amount paid by the judgment-debtor being credited to the decree-holder. The appeal came before my brother Gajendragadkar J. and Mr. Justice Macklin and as there are conflicting decisions of this Court the matter was referred to this Full Bench.

3. Mr. Abhyankar for the appellant has contended that this is a case where effect should be given to the provisions and terms of the decree and that the judgment-debtor having made default, the rights which accrued to the decree-holder should be strictly enforced. On the other hand, the Government Pleader has contended that the judgment-debtor should be relieved from the consequences of the breach committed by him in not making payments on their respective due dates.

4. There are two conflicting views which have been taken by this Court on this question and the two protagonists of these two views are Sir John Beaumont and Sir Norman Macleod two learned Chief Justices of this Court. Sir John Beaumont in Burjorji Shapurji v. Madhavlal Jesingbhai (1934) I.L.R. 58 Bom : 610 s.c. 36 Bom. L.R. 798 was considering a case where a certain amount was made payable under the decree and it was provided that if a certain amount was paid on the dates specified, then satisfaction was to be entered up. In default of payment on the due date the full amount under the decree became payable. The judgment-debtor failed to pay the smaller amount on the due date and the decree-holder applied for execution and the question arose whether the delay in payment on the due date should be condoned and Sir John Beaumont took the view that what the decree-holder had done was to have made a concession to the judgment-debtor, the concession being that if he paid the smaller amount by a particular date, full satisfaction would be entered up, but in default of payment on the due date the amount actually due under the decree would become payable, and the learned Chief Justice took the view that the provision for the payment of the full amount in default of payment of the smaller amount on the due date was not in the nature of a penalty and the Court could not relieve against the breach committed in the failure to pay the amount on the due date. At page 617 the learned Chief Justice sets out the law which he says is not open to any serious question and what he says is this:

If there is an agreement to pay a sum of money by a particular date with a condition that if the money is not paid on that date a larger sum shall be paid, that condition is in the nature of a penalty against which a Court of equity can grant relief and award to the party seeking payment only such damage as he has suffered by the non-performance of the contract. But if, on the other hand, there is an agreement to pay a particular sum followed by a condition allowing to the debtor a concession, for example, the payment of a lesser sum, or payment by instalments, by a particular date or dates, then the party seeking to take advantage of that concession must carry out strictly the conditions on which it was granted, and there is no power in the Court to relieve him from the obligation of so doing.

5. In this case also the decree provides for the payment of a particular sum. It proceeds to confer a concession upon the debtor, viz. if he pays the decretal amount by certain instalments, then he need not pay the full decretal amount at once. But if he fails to pay those instalments on their respective due dates, then the concession disappears and he is under an obligation to pay the full amount and what we are now asked by the Government Pleader to do is to relieve the judgment-debtor from his obligation to pay the instalments on their respective due dates, he having obtained the concession as a result of undertaking that obligation.

6. Sir John Beaumont also considered the same question in an unreported judgment, Pari Chimanlal Dholidas v. Chimanlal Bhudardas Shah (1940) First Appeal No. 244 of 1939 decided by Beaumont C.J. and Sen J., on November 29, 1940 (Unrep.). There he points out that there is no general power in Courts of equity to disregard agreements which it thinks unjust and he also points out that at the present time the rules of equity are almost as well settled as rules of the common law and he sounds a note of warning that more harm than good would be done by allowing Courts to interfere with agreements made between the parties merely because the Court may think a particular agreement unfair. The principle enunciated by him applies not only to consent decrees but also to decrees passed by the Court in invitum. Whereas in the case of a consent decree it is the question of the sanctity of contract, in the case of a decree it is the question of a solemn adjudication by the Court of the rights of parties.

7. The other view found favour with Sir Norman Macleod and he gave expression to that view in Narayan v. Rajimal (1925) 27 Bom. L.R. 1453. In that case a consent decree provided for the payment of a sum in certain fixed instalments. It also provided that on failure to pay two instalments the plaintiff was entitled to take possession of certain lands. There was a delay of a few days in the payment of two instalments. The plaintiff accepted the instalments and then he next applied to get possession of the lands and Sir Norman Macleod and Mr. Justice Coyajee held that the default should be excused and the defendants relieved against forfeiture and Sir Norman Macleod expressed himself rather emphatically at page 1455 that he was always opposed to the suggestion that one Court can bind all Courts in future by deciding that no consent decree can possibly be departed from even when justice and equity demanded it. According to him, it was the privilege of this Court to administer equity, and, in following the principles of equity, to relieve against forfeiture, if it considers the nature of the case requires it. With great respect, what the learned Chief Justice overlooked was whether there was any penalty provided in the consent decree. It is not disputed and it cannot be disputed that a Court of equity can relieve against penalties or against forfeiture. But the question that has got to be determined is whether a certain obligation undertaken by a judgment-debtor is in the nature of a penalty or whether it is the result of a concession conferred upon him by the decree-holder.

8. The same view of the law was taken by Sir Norman Macleod in a previous case reported in Narsinha Gopal v. Balvant Madhav (1922) I.L.R. 46 Bom. 463 s.c. 23 Bom. L.R. 1238. There again there was an instalment decree. There was failure to pay instalment on the due date and Sir Norman Macleod and Mr. Justice Shah took the view that the delay should be excused and the judgment-debtor should be relieved from the consequences of the default.

9. The more extreme view is to be found in two earlier decisions, one is Skirekuli Timapa Hegda v. Mahablya (1880) I.L.R. 10 Bom. 435, where Mr. Justice Birdwood and Mr. Justice Jardine went to the length of suggesting that the doctrine of penalties was not applicable to stipulations contained in decrees, and that the plaintiff was entitled to recover, and in Lachiram v. Jana Yesu (1914) 16 Bom. L.R. 668, Sir Basil Scott and Mr. Justice Beaman refused to excuse delay and save the judgment-debtor from the consequences of default on the ground that a consent decree could only be varied by consent. It is unnecessary to consider in this appeal whether these two decisions have not gone too far in restricting the jurisdiction of the Court to give relief against penalties. It is sufficient to hold that Narayan v. Rajimal and Narsinha Gopal v. Balvant Madhav were wrongly decided and must be overruled.

10. A point has also been urged as to whether the decree-holder waived the breach by accepting payments. The facts show that from 1938 till October 11, 1943, the decree-holder accepted payments from time to time from the judgment-debtor. On the default having taken place admittedly the whole decretal amount became due and payable and there is nothing to show on the record that the decree-holder accepted these payments not towards what was due to him under the decree but in waiver of the breach committed by the judgment-debtor. As a matter of fact the learned Judge below has found as a fact that these payments were not accepted as a waiver of the decree-holder's rights and we see no reason to differ from that finding of fact. The result is that the appeal must be allowed, the order of the lower Court set aside and the Darkhast sent back to the executing Court to be disposed of according to law. Respondents must pay the costs of the appellant.