Supreme Court clarifies Executing Court’s Power in Lease Renewal Dispute: Bagalkot Udyog Ltd. vs. Shivashankargouda (2019)

Date of the Judgment: 24 September 2019

Citation: (2019) INSC 970

Judges: Hon’ble Mr. Justice Deepak Gupta and Hon’ble Mr. Justice Aniruddha Bose.

Can an Executing Court alter the terms of a decree while implementing it? The Supreme Court addressed this critical question in a case concerning a lease renewal dispute. The core issue revolved around whether the Executing Court had the authority to include a renewal clause in a lease deed when the original decree did not explicitly provide for it. This judgment clarifies the limits of an Executing Court’s power, emphasizing that it cannot go beyond the scope of the original decree.

Case Background

The appellant, M/S Bagalkot Udyog Limited, was a lessee under the respondents, Shivashankargouda & Ors., based on a lease deed dated 19 November 1952. The lease commenced on 1 April 1953, for a period of 30 years, ending on 31 March 1983. The lease agreement included a clause granting the appellant the right to renew the lease for another 30 years, from 1 April 1983 to 31 March 2013.

The appellant exercised their right to renew the lease, but the respondents refused. Consequently, the appellant filed a suit for specific performance, seeking to enforce the renewal clause. The suit was decreed in favor of the appellant on 10 June 1991, directing the respondents to execute a registered lease deed for 30 years, from 1 April 1983 to 31 March 2013, at an annual rent of Rs. 700/-.

Timeline:

Course of Proceedings

The appellant filed an execution petition after the decree was passed. The respondents were proceeded ex parte, and an Advocate Commissioner was appointed to execute the lease deed. The Executing Court, on the administrative side, prepared a draft lease deed which included a clause for another 30-year extension from 1 April 2013, mirroring the original lease deed. This draft was registered on 17 August 2010, and the execution petition was dismissed as satisfied on 20 August 2010.

Subsequently, the appellant filed a fresh suit for specific performance, seeking renewal of the lease from 1 April 2013. The respondents then filed a writ petition challenging the order dated 20 August 2010, arguing that the Executing Court had exceeded the decree’s scope by including the additional renewal clause. The High Court dismissed the writ petition as not maintainable, as the execution petition had already been disposed of. The respondents then filed a petition under Section 115 of the Code of Civil Procedure.

The High Court, through a detailed order, remitted the matter back to the Executing Court, directing it to examine whether it had exceeded the scope of the decree by approving the draft lease deed with the additional renewal clause.

Legal Framework

The case primarily revolves around the interpretation and application of the Code of Civil Procedure, specifically concerning the powers of an Executing Court. The relevant provisions are:

• Section 115 of the Code of Civil Procedure: This section deals with the High Court’s power to revise orders of subordinate courts.
• Order XXI Rule 106 of the Code of Civil Procedure: This rule pertains to the procedure for setting aside ex parte orders in execution proceedings, specifying a limitation period of 30 days.

The core issue is whether the Executing Court can go beyond the terms of the decree passed by the Civil Court. The Executing Court’s role is to implement the decree as it is, not to modify or add to it. This principle ensures that the Executing Court does not usurp the power of the court that passed the original decree.

Arguments

Appellant’s Arguments:

• The order dated 20 August 2010, which disposed of the execution petition, cannot be challenged under Section 115 of the Code of Civil Procedure. Setting aside this order would revive the proceedings, which is not permissible.
• The respondents’ remedy was to file an application under Order XXI Rule 106 of the Code of Civil Procedure, not a petition under Section 115 of the Code of Civil Procedure.
• The respondents resorted to Section 115 of the Code of Civil Procedure because their remedy to challenge the ex parte order had become time-barred under Order XXI Rule 106 of the Code of Civil Procedure, which has a 30-day limitation period.

Respondents’ Arguments:

• The respondents were not challenging the ex parte order. They argued that the Executing Court could not grant relief beyond the scope of the original decree.
• Even if the respondents were rightly proceeded ex parte, the decree must be executed according to its terms. The Executing Court could not have granted an additional 30-year extension beyond 2013, as this was not part of the decree.
• The respondents argued that the Executing Court exceeded its jurisdiction by including a renewal clause not present in the original decree.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether the High Court was right in remitting the matter back to the Executing Court to decide whether the order passed by it is in accordance with the decree passed by the Civil Court or not.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific case laws or books in this judgment. However, the Court considered the following legal provisions:

• Section 115 of the Code of Civil Procedure: This section empowers the High Court to revise orders of subordinate courts.
• Order XXI Rule 106 of the Code of Civil Procedure: This rule deals with setting aside ex parte orders in execution proceedings, specifying a 30-day limitation period.

Judgment

How each authority was viewed by the Court?

• Section 115 of the Code of Civil Procedure: The Court upheld the High Court’s decision to exercise its power of revision under this section as no appeal lies against the order of the executing court.
• Order XXI Rule 106 of the Code of Civil Procedure: The Court acknowledged that the respondents did not seek remedy under this provision, but clarified that the respondents were not challenging the ex parte order but the Executing Court’s action of going beyond the decree.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that no party should be left without a remedy. The Court recognized that the respondents had no other avenue to challenge the Executing Court’s action of including an additional renewal clause in the lease deed, as no appeal lies against such an order. The Court emphasized that the Executing Court cannot go beyond the scope of the decree passed by the Civil Court.

The Court also noted that remitting the matter back to the Executing Court would bring the proceedings to an end, as the Executing Court would then determine whether the decree allowed for an extension beyond 31 March 2013. This demonstrates the Court’s concern for ensuring that the execution of the decree is in line with the original intent of the Civil Court.

The Supreme Court considered the High Court’s decision to remit the matter back to the Executing Court as the correct approach. The Court emphasized that the Executing Court should not have included the further renewal clause, as it was not part of the original decree. The Court also noted that no party should be left without a remedy, and the High Court’s decision was in accordance with the principles of justice.

The Supreme Court’s reasoning was based on the principle that an Executing Court cannot go beyond the scope of the decree. The Court noted that the Executing Court’s role is to implement the decree as it is, not to modify or add to it. The Court also highlighted that the respondents were not challenging the ex parte order but rather the fact that the Executing Court had gone beyond the scope of the decree. The Court held that the High Court was within its jurisdiction to entertain the matter under Section 115 of the Code of Civil Procedure.

“The issue, that arises is whether the Executing Court could have given one more extension beyond 2013 or not.”

“No party can be left remedy-less.”

“We make it clear that the Executing Court will decide the issue as to whether the decree limited the renewal of the lease deed up to 31.03.2013 or the decree permitted another extension thereafter.”

Key Takeaways

• An Executing Court cannot go beyond the scope of the original decree. It must implement the decree as it is, without modifying or adding to it.
• If an Executing Court exceeds its jurisdiction, the High Court can exercise its power of revision under Section 115 of the Code of Civil Procedure.
• No party should be left without a remedy. If an order of the Executing Court is not appealable, the High Court can intervene to ensure justice.
• The principle that the Executing Court cannot modify the original decree ensures that the court implementing the decree does not usurp the power of the court that passed the decree.

Directions

The Supreme Court directed the Executing Court to decide whether the decree limited the renewal of the lease deed up to 31 March 2013, or whether the decree permitted another extension thereafter. The Court also directed the Executing Court to remain uninfluenced by any observations made by the High Court or the Supreme Court.

Development of Law

The ratio decidendi of this case is that an Executing Court cannot go beyond the scope of the decree passed by the Civil Court. The Court reiterated that the Executing Court’s role is to implement the decree as it is, not to modify or add to it. This judgment reinforces the existing legal position regarding the powers of an Executing Court.

Conclusion

The Supreme Court dismissed the appeal, affirming the High Court’s decision to remit the matter back to the Executing Court. The Court emphasized that the Executing Court must adhere to the terms of the original decree and cannot introduce new clauses or conditions. This judgment reinforces the principle that an Executing Court’s role is limited to implementing the decree as it is, without any modifications.