Decree Holder Cannot Trigger Execution By Refusing Judgment Debtor’s Cheque Tendered In Satisfaction Of Compromise Decree: Madhya Pradesh High Court
Safiya Malik
The High Court of Madhya Pradesh Single Bench of Justice Alok Awasthi has set aside an executing court’s refusal to record satisfaction of a compromise decree, holding that a decree holder cannot derail settlement terms by declining to accept or encash cheques tendered in lawful discharge. The dispute arose after a judgment debtor deposited cheques for the full compromise amount within the one-year period fixed for payment, while the decree holder pressed ahead with execution on the ground of non-payment and sought additional interest. The Court held that where the compromise does not stipulate a payment mode, interest, or consequences for delayed instalments, timely tender by cheque amounts to compliance. It directed redeposit by fresh cheque with 12% simple interest from July 18, 2022, within 30 days, failing which execution may continue.
Two civil proceedings were initiated: one seeking enforcement of a specific agreement relating to agricultural land and another seeking recovery of money. During the pendency of these proceedings, the parties entered into a compromise, under which a consolidated sum was agreed to be paid by the judgment debtor within one year.
The compromise stipulated that in the event of non-payment within the agreed period, the decree holder would be entitled to seek execution of sale deeds for the land in proportion to the unpaid amount. The compromise did not specify the mode of payment, prescribe instalment consequences, or provide for interest.
The judgment debtor deposited the entire compromise amount by cheque within the stipulated period before the executing court. The cheque was not dishonoured, though the decree holder declined to accept it. Subsequently, execution proceedings were pursued for enforcement of sale deeds. An application filed by the judgment debtor under Order XXI Rule 2 of the Code of Civil Procedure asserting satisfaction of the decree was rejected by the executing court, leading to the present petition under Article 227 of the Constitution.
The Court examined the compromise decree and noted that “the only material condition under the said compromise deed is that the total amount of Rs. 5,32,38,000/- which was to be paid under the compromise decree was to be paid within one year”.
It was recorded that "This Court also finds that under the said compromise application and decree, installment amount has not been prescribed, no consequence upon failure to pay installment has been prescribed, no mode or manner of payment has been precribed and it has also not been prescribed that Decree Holder/ Respondent is entitled to any interest over the agreed amount in the case that the installment is delayed.
On the issue of res judicata, the Court recorded that “there is no mention of application under Order XXI Rule 2 of CPC which was filed by the petitioner” in the earlier execution order and that “application under Order XXI Rule 2 of CPC was not decided”. Consequently, it was stated that “the present petition is in no way barred from being entertained on account of principle of res judicata”.
While dealing with the tender of payment, the Court observed that “undisputedly within the stipulated period of one year, on 18.07.2022, the Judgment Debtor deposited a sum of Rs. 5,32,38,000/- before the learned Court below by way of a cheque” and that “the said cheques were never dishonoured”. The Court further recorded that the decree holder “did not collect the cheques from the Court within a period of 90 days despite having knowledge of the same”.
Referring to settled law, the Court stated that “payment by cheque constitutes a valid tender in the eyes of law” and that “refusal by the decree holder to accept such payment does not render the tender illegal or ineffective”. It was observed that “Thus, in the considered opinion of this Court, the decree stood satisfied upon presentation of cheques before Executing Court and respondent cannot get benefit of his own fault of not presenting the cheques for encashment despite getting the knowledge of the same well within time".
The Court further noted that the executing court “failed to appreciate that payment by cheque constitutes a valid tender” and that it “travelled beyond the scope of execution by introducing conditions not agreed upon between the parties”.
The Court directed that “the impugned order dated 12.04.2025 passed in the Execution Case No. 44/2023 by the XIIIth District Judge, Indore is hereby quashed. The petitioner/judgment debtor is directed to deposit decretal amount of Rs. 5,32,38,000/- before the Executing Court by way of new cheque alongwith simple interest at the rate of 12% per annum from 18.07.2022 within a period of 30 days. The petitioners’ old cheque be returned to him by the concerned Executing Court. if the petitioner fails to comply with the aforementioned directions, the executing Court shall proceed with execution proceedings in accordance with law”.
Advocates Representing the Parties
For the Petitioners: Shri Mini Ravindran, learned counsel
For the Respondents: Shri Abhay Chand Jain, learned counsel (Caveator)
Case Title: Parth Credit and Capital Market Pvt. Ltd. & Ors. v. Ideal Electronics Pvt. Ltd.
Neutral Citation: 2026: MPHC-IND:2495
Case Number: Misc. Petition No. 2145 of 2025
Bench: Justice Alok Awasthi
