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2001 DIGILAW 844 (AP)

K. Bathi Reddy v. V. Chenchu Reddy

2001-08-08

B.S.A.SWAMY

body2001
B. S. A. SWAMY, J. ( 1 ) THE petitioner, who is the Judgment- debtor, filed this revision petition aggrieved by the orders dated 29th June, 2001 passed in E. A. No. 149 of 2000 in E. P. No. 10 of 1999 in O. S. No. 4 of 1996 on the file of Senior civil Judge, Srikalahasti, refusing to give set off for the amounts paid by him to the credit of E. P. No. 10 of 1997 arising out of o. S. No. 34 of 1995 filed by State Bank of india, Srikalahasti. ( 2 ) HEARD both the Counsel. ( 3 ) THE facts of this case are very interesting. Mr. V. Chenchu Reddy, the decree-holder in this suit, has taken a term loan from State Bank of India, Srikalahasti, by mortgaging the title deeds of the mill in the year 1984. During the subsistence of the mortgage, he sold half of the share to the petitioner herein for a consideration of rs. 7,02,000/- under Ex. A-1 dated 25-12-1992. Though it is stated that the entire sale consideration was paid in cash, it appears that the petitioner paid rs. 5,02,000/- in cash and executed a promissory note for Rs. 2,00,000. 00. Both of them seemed to have run the mill jointly for some time till 1995. Thereafter, mr. Chenchu Reddy settled his property on his wife. Normally the settlee being lady and settler being the husband, the settler would be looking after the affairs of the mill. On 01-09-1995 the bank filed O. S. No. 34 of 1995 for recovery of the money advanced to Mr. Chenchu Reddy through one p. S. Gopala Krishna Das. For reasons best known to Chenchu Reddy, he remained ex parte in the suit and the same was decreed on 21-03-1996 and final decree was passed on 07-04-1997. Thereafter, the Bank filed OEP no. 10 of 1997 for realization of the decretal amount. At that stage, the petitioner and the decree-holder s (sic. J. Dr. s) wife in whom the property was settled jointly filed claim petition in E. A. No. 320 of 1998 that the decree-holder has no saleable interest in the mill. But the said E. A. appears to have not been pursued to its logical end and that application was dismissed on 18-06-1999. In the meantime, Mr. Chenchu Reddy got o. S. No. 4 of 1996 filed by Mr. But the said E. A. appears to have not been pursued to its logical end and that application was dismissed on 18-06-1999. In the meantime, Mr. Chenchu Reddy got o. S. No. 4 of 1996 filed by Mr. Gopal krishna Das who appeared for the Bank in the earlier suit against the petitioner for recovery of an amount of Rs. 2,00,000. 00 with interest on the basis of promissory note, said to have been executed at the time of agreement of sale. As usual, the legal ingenuity was exhibited by both the parties by taking conflicting stands and rejecting various contentions raised by the petitioner herein, the suit was decreed on 06-07-1998. On an appeal in A. S. No. 2171 of 1998 filed by the petitioner, this Court in CMP no. 15200 of 1999 by order dated 9-8-1999 directed him to deposit Rs. 1,10,000. 00 together with interest and costs. ( 4 ) BY the time the petitioner filed the above appeal, the respondent seemed to have filed E. P. No. 10 of 1999. In the meantime, in o. E. P. No. 10 of 1997 filed by the Bank, a sale proclamation was issued in February 2001. When the Court tried to proceed with the sale, the petitioner paid the entire decretal amount with interest and costs in instalments to the full satisfaction of the decree, commencing from 23-11-1999 to 28-09-2000, to avoid sale of the mill. ( 5 ) AFTER obtaining the interim orders from this Court and at the time when the executing Court in O. E. P. No. 10 of 1997 filed by the Bank was trying to proceed with the sale, the petitioner paid the entire decretal amount with interest and costs in instalments as stated above under receipts issued by Mr. Gopal Krishna Das, Counsel for the Bank in O. S. No. 34 of 1995 and the counsel for Chenchu Reddy in O. S. No. 4 of 1996. This fact is not in dispute. While paying the decretal amount in instalments and also having paid Rs. 1,10,000. Gopal Krishna Das, Counsel for the Bank in O. S. No. 34 of 1995 and the counsel for Chenchu Reddy in O. S. No. 4 of 1996. This fact is not in dispute. While paying the decretal amount in instalments and also having paid Rs. 1,10,000. 00 as directed by this Court, the petitioner filed e. A. No. 149 of 2000 on 17-07-2000 within the time stipulated in E. P. arising out of o. S. No. 4 of 1996 under Section 47 of C. P. C. claiming set off for the amounts paid by him to the credit of O. E. P. No. 10 of 1997. This application seemed to have been objected by the Counsel for the respondent by stating that there was an oral agreement between the respondent and the petitioner for the discharge of all the debts raised by him including the bank debt. ( 6 ) FROM the above factual narration, the only question that arises for consideration would be whether the petitioner can claim set off for the amounts paid to the full satisfaction of the decree in O. E. P. No. 10 of 1997 in O. S. No. 34 of 1995 in the E. P. filed by Mr. Chenchu Reddy for recovery of the decretal amount in O. S. No. 4 of 1996. Unfortunately the learned Senior Civil Judge without knowing the scope and ambit of the controversy to be decided, framed the following issues: (1) Whether the petitioner had no knowledge about the encumbrances particularly the State Bank of India loan amount by the time of purchase of Sri Sivasankara Rice Mill? (2) Whether there was any agreement or understanding between parties that the amount paid by the petitioner in O. E. P. No. 10 of 1997 has to be adjusted against the amount due in O. E. P. No. 10 of 1999? (3) Whether the petitioner is entitled for the adjustment of amount paid in e. P. No. 10 of 1997 towards E. P. amount due in O. E. P. No. 10 of 1999? (4) Whether the petitioner is entitled for instalments as prayed? ( 7 ) ON the first issue the Senior Civil judge has drawn an adverse inference against the petitioner on the ground that under Ex. A-1, it is mentioned that the entire sale consideration is paid. (4) Whether the petitioner is entitled for instalments as prayed? ( 7 ) ON the first issue the Senior Civil judge has drawn an adverse inference against the petitioner on the ground that under Ex. A-1, it is mentioned that the entire sale consideration is paid. But, in fact he paid only Rupees five lakhs and executed a promissory note for Rupees two lakhs and recorded a finding that the recitals in ex. A-1 are not true and correct and they are not acted upon. The learned Judge further observed that as the mortgage debt is a pre existing debt, the petitioner is under an obligation to pay the debt. This finding is nothing but perversity of the highest order for the simple reason that the respondent himself never raised such a contention in the plaint filed in O. S. No. 4 of 1996 nor has he taken such a plea as a defendant in the suit filed by the Bank. On the other hand, ex. A-1 categorically states that the value of half-share in the mill was assessed at rs. 7,02,000/- and the petitioner initially paid an amount of Rs. 5,02,000. 00 and executed a promissory note for Rs. 2,00,000. 00. The petitioner categorically gave an explanation for this recital to the effect that he has executed a promissory note for the remaining amount of Rs. 2,00,000. 00 and it is deemed that the entire sale consideration was paid under agreement of sale. ( 8 ) SECONDLY, the lower Court completely missed the averment in Ex. A-1 agreement as admitted by the respondent that there were no debts existing on the mill. It is also seen from the evidence of the parties that on the date of the sale of the half-share in the mill, the petitioner has discharged some of the debts raised by the respondent and not this debt. Even assuming that the petitioner is aware of the mortgage deed, there need not be any apprehension in his mind for the simple reason that he is purchasing only half of the share in the mill, but not the entire mill and as long as half of the share in the mill is retained by Mr. Chenchu Reddy, he is expected to discharge the bank debt. Chenchu Reddy, he is expected to discharge the bank debt. If the intention of the parties is that the petitioner has to discharge the mortgage debt there should be a clear recital in the agreement. When such a recital is not there, it is not known how the Sub-Court can jump at the conclusion that the petitioner is under an obligation to discharge the mortgage debt. ( 9 ) NEXTLY, the Court below missed another recital in Ex. A-1 stating that if there are any other debts in respect of the rice mill, the respondent will discharge the same. In the light of the above two averments, I am really astonished to see the finding recorded by the Court below that the petitioner is under an obligation to discharge the debt of mr. Chenchu Reddy to the State Bank of india. Hence, this finding cannot be sustained in law. ( 10 ) ON the other issues, the Court below disbelieved the plea of the petitioner that on an oral promise, he paid the amount to the bank and made certain comments forgetting the fact that the Counsel for the decree-holders in both the suits is one and the same. If there is no oral promise for giving credit to these amounts, the Counsel for the respondent ought not have and would not have received the amounts from the petitioner as there is neither any privity of contract between the petitioner and the Bank to discharge the debt, nor is he a party defendant in the suit filed by the Bank. The very fact that the Counsel for the respondent received the amounts itself shows that the decree-holder in this case has knowledge with regard to the receipt of the monies and therefore, the oral consent has to be presumed. Even assuming for argument sake that he has not given oral promise for adjustment, the petitioner having half share in the mill, is perfectly entitled to see that the mill is not brought to sale to the detriment of his interest and as the decree obtained by the bank became final, he paid the amount. It is not in dispute that Mr. Chenchu Reddy, the decree-holder in O. S. No. 4 of 1996 suffered a decree in O. S. No. 34 o 1995 filed by the bank. It is not in dispute that Mr. Chenchu Reddy, the decree-holder in O. S. No. 4 of 1996 suffered a decree in O. S. No. 34 o 1995 filed by the bank. The amounts due by the respondent to the bank were cleared by the petitioner and therefore, the petitioner is entitled to claim set off. In fact, under Section 47 of C. P. C. all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the executing court and not by a separate suit. Hence, as a representative of the Judgment Debtor in o. S. No. 34 of 1995, the petitioner paid the amounts to the full satisfaction of the decree in that suit and he is perfectly entitled to claim set off in this execution proceeding. Hence, the findings recorded by the Senior civil Judge that there is no oral promise and that the petitioner is not entitled for any instalments in the alternative are not sound in law. ( 11 ) THE issue can be looked at from another angle also. The appeal filed by the petitioner against the Judgment and decree in o. S. No. 4 of 1996 is still pending and he has complied with the interim orders of this court by depositing Rs. 1,10,000. 00 to the credit of E. P. though there is some dispute with regard to the actual amount paid to the full satisfaction of the decree in O. E. P. No. 10 of 1997. Hence, he is not under an obligation to pay any amount by virtue of the interim orders granted by this Court in c. M. P. No. 15200 of 1999 pending a. S. No. 2179 of 1998. But he was forced to pay over and above the amount directed by this Court to the credit of O. E. P. No. 10 of 1997 to prevent the auction of the mill in which he had half share and to see that his interest is not adversely affected. But he was forced to pay over and above the amount directed by this Court to the credit of O. E. P. No. 10 of 1997 to prevent the auction of the mill in which he had half share and to see that his interest is not adversely affected. ( 12 ) ACCORDINGLY, I hold that the petitioner is entitled to claim set-off for the amounts paid to the credit of O. E. P. No. 10 of 1997 and the order of the senior Civil Judge in e. A. No. 149 of 2000 in E. P. No. 10 of 1999 dated. 29-06-2001 is set aside. ( 13 ) THE Civil Revision Petition is accordingly allowed. No costs.