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2007 DIGILAW 407 (MAD)

Shri Parvatham Textiles, Rep. By its sole proprietor v. Chona Financial Services Pvt. , Ltd. , Rep. By Managing Director

2007-02-01

R.BANUMATHI

body2007
Judgment :- This Civil Revision Petition is directed against the order dated 111. 2006 in E.A.No.256 of 2006 in E.P.No.219 of 2005 in Arbitration Case No.3 of 2004 passed by the First Additional Subordinate Judge, Erode, ordering arrest of the Petitioner under Order XXI Rule 41(3) C.P.C for disobedience of the order of the Court. The Judgment Debtor is the Revision Petitioner. For convenience, the parties are referred in their rank in E.P.No.219 of 2005 on the file of First Additional Subordinate Court, Erode. 2. Relevant facts are as follows:-The Revision Petitioner is a Constituent of the Decree Holder, who is a Trading Member of National Stock Exchange. The Judgment Debtor had entered into an Agreement with the Decree Holder on 112. 2002 and started trading at the Erode Branch of the Petitioner in the derivative segment. The Respondent / Judgment Debtor defaulted in making payments for the loss in transaction in derivatives instruments to the Petitioner / Decree Holder and thereby dispute arose between the Petitioner and the Respondent and the same had been referred to the National Stock Exchange of India Limited, who are the facilitators for the disputes in derivatives transactions in the National Stock Exchange. For resolving the dispute between the parties, an Arbitrator was appointed and the Arbitrator has passed an Award dated 110. 2004, directing the Respondent / Judgment Debtor to pay to the Petitioner / Decree Holder a sum of Rs.6,27,054.33 with an interest of 18% per annum from the date of award till the date of realisation. 3. The Decree was transmitted from City Civil Court, Chennai to First Additional Subordinate Court, Erode. For executing the Decree, the Petitioner / Decree Holder has filed E.P.No.219 of 2005 under O.21 R.37 C.P.C. before the First Additional Subordinate Court, Erode to realise the amount by arrest of the Respondent / Judgment Debtor. 4. The Judgment Debtor resisted the Execution Petition contending that he has no means and that he does not own movable or immovable properties as claimed by the Decree Holder. The Respondent mainly raised "no means" defence. 5. In E.P.No.219 of 2005, Enquiry was taken up. Both Petitioner and the Respondent have filed Proof Affidavit. The Judgment Debtor has filed Proof Affidavit alleging that he does not own movable or immovable properties. Regarding the averments in the Proof Affidavit, the Judgment Debtor was elaborately cross-examined. 6. The Respondent mainly raised "no means" defence. 5. In E.P.No.219 of 2005, Enquiry was taken up. Both Petitioner and the Respondent have filed Proof Affidavit. The Judgment Debtor has filed Proof Affidavit alleging that he does not own movable or immovable properties. Regarding the averments in the Proof Affidavit, the Judgment Debtor was elaborately cross-examined. 6. In the Execution Proceedings when R.W.1 was in the box, on 07.07.2006, the Petitioner / Decree Holder has given Notice to the Respondent to cause Production of the documents - day to day accounts Ledger of Sriparvatham Textiles, Accounts of Sriparvatham Textiles maintained by the Respondent. The Respondent filed objection stating that he is not doing any business and as such no accounts are available with him. 7. E.A.No.256 of 2006:- Since the Respondent denied running of any business in the name of Sriparvatham Textiles, the Decree Holder has filed this Application under O.21 R.41 C.P.C seeking for a direction to the Respondent for production of details of his income and properties for the satisfaction of the decree, failing which to pass an order of arrest under O.21 R.41(3) C.P.C. In E.A.No.256 of 2006, the Court has held elaborate Enquiry and the Application was ordered on 111. 2006. 8. E.A.No.522 of 2006:- Inspite of allowing of E.A.No.256 of 2006 directing the Respondent to produce the details of his income and properties, the Judgment Debtor has not complied with the direction nor filed any affidavit stating the details of his income. Alleging non-compliance of the order in E.A.No.256 of 2006 and disobedience of that order, the Petitioner has filed this Application under O.21 R.41(3) C.P.C. According to the Petitioner, inspite of the order passed on 111. 2006 to produce the documents, the Judgment Debtor has not furnished the details of his income and properties. Arrest of the Judgment Debtor was ordered on 112. 2006. 9. This Revision Petition is directed against the order made in E.A.No.256 of 2006, directing the Judgment Debtor to produce the details of his income and properties. 10. The Impugned Order is challenged contending that before ordering arrest, the Court must have passed an order under O.21 R.41(2) C.P.C. and when no such order has been passed, the order of arrest is unsustainable. It was further submitted that O.21 R.41 C.P.C speaks about the examination of Judgment Debtor prior to passing of any order in the Execution Petition. Mr. It was further submitted that O.21 R.41 C.P.C speaks about the examination of Judgment Debtor prior to passing of any order in the Execution Petition. Mr. V.Raghavachari, learned counsel for the Petitioner further urged that when the Judgment Debtor had filed an Objection stating that he is not in possession of any documents sought for by the Decree Holder, the Court ought not to have allowed the Application in E.A.No.256 of 2006. It was urged that the order in E.A.No.256 of 2006 is not a conditional order for the Court to arrest in an automatic manner. 11. On behalf of the Decree Holder, learned Senior Counsel Mr. S.Parthasarathy has submitted that when the Judgment Debtor had refused to disclose the income and the details of his business and in view of disobedience of the order passed in E.A.No.256 of 2006, the Execution Court has rightly ordered arrest of the Judgment Debtor in E.A.No.522 of 2006. 12. On behalf of the Judgment Debtor, learned counsel has contended that O.21 R.41 C.P.C is an application in aid of execution and not by itself an execution and drew my attention to O.21 R.41 C.P.C which reads as under:- "...Examination of Judgment Debtor as to his property – (1) Where a decree is for the payment of money the decree holder may apply to the Court for an order that - .(a) the judgment debtor, or .(b) any officer thereof, or (c) any other person be orally examined as to whether any or what debts are owing to the judgment debtor and whether the judgment debtor has any and what other property or means of satisfying the decree; and the Court may make an order for the attendance and examination of such judgment debtor, or officer or other person and for the production of any books or documents. .(2) Where a decree for the payment of money has remain unsatisfied for a period of thirty days, the Court may, on the application of the decree holder and without prejudice to its power under sub-rule (1), by order require the judgment debtor or where the judgment debtor is a corporation, any officer thereof, to make an affidavit stating the particulars of the assets of the judgment debtor. .(3) In case of disobedience of any order made under sub-Rule (2), the Court making the order, or any Court to which the proceeding is transferred, may direct that the person disobeying the order be detained in the Civil person for a term not exceeding three months unless before the expiry of such term the Court directs his release......" 13. The object of O.21 R.41 C.P.C is to obtain discovery in aid of execution of money decrees when there is difficulty in getting information regarding Judgment Debtors Property. The object is to enable the Decree Holder to get information of assets which is within the special knowledge of the Judgment Debtor. Considering the scope of O.21 2.R.41 C.P.C, in the decision reported in United Phosphorous Ltd., Vs. K. Kanoria (A.I.R. 2003 BOMBAY 97), the Bombay High Court has observed as follows:- "...12. In my opinion, application under Order XXI, Rule 41 is not an application in an execution. It is an application in aid of execution or a step towards the execution. Under Clause (j) of Rule 11(2) of Order XXI of the Code of Civil Procedure, the execution petition must specify the mode in which assistance of the Court is required for the execution of a decree. Clause (j) reads as follows:- .(j) the mode in which the assistance of the Court is required whether - .(i) by the delivery of any property specifically decreed. .(ii) By the attachment, or by the attachment and sale, or by the sale without attachment, of any property. (iii) By the arrest and detention in prison of any person; .(iv) by the appointment of a receiver; .(v) otherwise, as the nature of the relief granted may require. Examination of a Judgment Debtor under sub-rule (1) of Rule 41 of Order XXI or direction to the judgment debtor to file an affidavit to be issued under sub-rule (2) of Rule 41 or Order XXI is not one of the mode of execution of a decree provided in Clause (j) of Rule 11(2) of Order XXI, Rule 30. Disclosure of the assets is a preliminary step towards the execution of a decree. Rule Nos.3 to 9 of Order XXI of the Code of Civil Procedure contemplate transfer of a decree by the Court which passed the decree to another Court for execution. Disclosure of the assets is a preliminary step towards the execution of a decree. Rule Nos.3 to 9 of Order XXI of the Code of Civil Procedure contemplate transfer of a decree by the Court which passed the decree to another Court for execution. The decree holder, who is not aware of the assets of the judgment debtor, is often unable to decide in which Court he should file the execution petition or in which Court he should get the decree transferred unless he knows the particulars of the assets of the judgment debtor. Rule 41 of Order XXI enable the decree holder to get from the judgment debtor the information of the assets, which is within the special knowledge of the Judgment Debtor. Therefore, an application under Order XXI, Rule 41 is not an application for execution of the decree but, merely an aid to the decree holder to enable him to execute the decree by obtaining information which is within the special knowledge of the Judgment Debtor. If this be so, the application under Order XXI, Rule 41 would ordinarily precede the filing of an execution petition, though it can also be filled in the pending execution petition itself. I am fortified in this view by the judgment of the Calcutta High Court in Shew Kumar Company ..Vs.. Grindlays Bank Ltd., reported in A.I.R. 1987 CAL. 328 wherein the Division Bench observed in Para 9 of its judgment: "We accept the contention of the respondent that an application for examination of a judgment – debtor (under Order XXI, Rule 41) is strictly not an application for execution. "In the said case, the Division Bench further held even after the decree is transmitted for execution to another Court, the Court passing the decree retains jurisdiction in respect of the decree and can examine the judgment debtor, under Order XXI Rule 41. It is not necessary in this case to consider whether the Court which passes the decree retains jurisdiction over the decree even after its transmission for execution to another Court, but I am of the opinion that the Court which passed the decree does not cease to have a jurisdiction to entertain an application under Order XXI Rule 41 atleast till the decree is transmitted to another Court for execution..." (Underlining added) 14. Learned counsel for the Petitioner has vehemently contended that O.21 R.41 C.P.C is only an enabling provision to obtain information of details of the assets of the Judgment Debtor, which invariably precede the Execution Petition. It was further submitted that in this case, after filing of Execution Petition, the Application under O.21 2.R.41 C.P.C was filed when the parties have adduced evidence in the main Execution Petition and the Court ought not to have ordered production of particulars regarding income and assets of the Judgment Debtor. The contention that O.21 R.41 C.P.C should invariably precede the Execution Petition has no force. Application under O.21 R.41(2) C.P.C would normally precede the Execution Petition to get information about the assets of the Judgment Debtor. But the Application under O.21 R.41(2)C.P.C can also be filed in the pending Execution Petition. 15. O.21 R.41(2) C.P.C empowers the Court to call for an Affidavit of Assets of Judgment Debtor as filing of such an Affidavit would be much more effective than the examination under sub-rule (1). Sub-rule (3) is the penal provision to secure compliance of the order under Sub-Rule (2). Laying emphasis upon the words in Sub-rule (3) i.e., "...in case of disobedience of any order made under sub-rule (2)...", learned counsel for the Judgment Debtor has submitted that when no order has been passed under O.21 R.41(2) C.P.C and the order of arrest made without affording any opportunity to the Judgment Debtor is unsustainable. The main contention urged is that O.21 R.41 C.P.C is only an application in aid of execution and not by itself an execution. .16. The above argument of the learned counsel proceeds on the misconception that no order has been passed under sub-rule (2) before ordering arrest. As noted earlier, in the Execution Petition, the parties have filed Proof Affidavit. The Judgment Debtor has pleaded no means and he was elaborately cross-examined. During his cross-examination, the Judgment Debtor has admitted that he is the owner of Sriparvatham Textiles. However, the Judgment Debtor pleaded no means to satisfy the decree amount. Since the Judgment Debtor is admittedly the owner of Sriparvatham Textiles, even during pendency of E.P.No.219 of 2005, the Decree Holder filed a Memo on 07.07.2006 calling upon the Judgment Debtor to produce "day to day" accounts Ledger of Sriparvatham Textiles and Bank Accounts of the said Firm. However, the Judgment Debtor pleaded no means to satisfy the decree amount. Since the Judgment Debtor is admittedly the owner of Sriparvatham Textiles, even during pendency of E.P.No.219 of 2005, the Decree Holder filed a Memo on 07.07.2006 calling upon the Judgment Debtor to produce "day to day" accounts Ledger of Sriparvatham Textiles and Bank Accounts of the said Firm. The Judgment Debtor has filed objection stating that he is not doing any business. 17. Since the Judgment Debtor has denied doing any business, Application in E.A.No.256 of 2006 was filed under O.21 R.41(2) C.P.C. In the said Application, the Decree Holder interalia averred that the Judgment Debtor is running textile firm, earning considerable profit out of the sale and that the Judgment Debtor is an Income Tax Assessee and maintaining bank accounts in his name and that the Judgment Debtor is taking hasty steps to unlawfully alienate his properties. On those averments, the Decree Holder prayed for:- (a) issuance of summons to Judgment Debtor for production of details of his income and the properties and (b) failing which, to pass an order of arrest of the Judgment Debtor under O.21 R.41(3) C.P.C. .18. The Execution Court heard both sides in E.A.No.256 of 2006 and allowed the Application by observing as under:- .Tamil .19. The impugned order is assailed contending that there is no specific direction calling upon the Judgment Debtor to produce the documents showing the details of his income and properties and without any such specific direction, the Court has erred in straight passing an order of arrest. This contention does not merit acceptance. As noted earlier, in E.A.No.256 of 2006, the first prayer was for production of documents to show the details of income and properties of the Judgment Debtor. The next prayer then is, on failure of production of the documents to order arrest of the Judgment Debtor. By allowing the Application in E.A.No.256 of 2006 dated 111. 2006, the Execution Court has passed the order under O.21 R.41(2) C.P.C calling upon the Judgment Debtor to produce the documents showing his assets and income. Though the order was passed on 111. 2006, the Judgment Debtor has not complied with the same. 20. Since the Judgment Debtor has not produced the details of accounts nor filed an Affidavit stating his income, alleging non-compliance of the order made in E.A.No.256 of 2006, on 012. Though the order was passed on 111. 2006, the Judgment Debtor has not complied with the same. 20. Since the Judgment Debtor has not produced the details of accounts nor filed an Affidavit stating his income, alleging non-compliance of the order made in E.A.No.256 of 2006, on 012. 2006, the Decree-Holder has filed another Application E.A.No.522 of 2006 seeking for arrest. In E.A.No.522 of 2006, the Decree Holder has specifically averred that there is disobedience of the order passed in E.A.No.256 of 2006 [O.21 R.41(2) C.P.C.] and prayed for arrest invoking the penal provision – Sub-rule (3). Observing that "there is deliberate wilful default committed by the Judgment Debtor and notice of hearing and counter not necessary" the Execution Court allowed E.A.No.522 of 2006 on 112. 2006, ordering arrest of the Respondent by 03.01.2007. 21. Though this Civil Revision Petition was filed on 112. 2006, the order of arrest passed by the Execution Court in E.A.No.522 of 2006 on 112. 2006 was not brought to the notice of this Court. The Decree Holder, who has entered appearance by filing Caveat has produced Typed Set of Papers containing the papers relating to E.A.No.522 of 2006 and the order passed thereon. From the Typed Set of Papers filed by the Decree Holder, it is seen that on the same day i.e. on 112. 2006, the Judgment Debtor has filed an Application under Section 151 C.P.C in E.A.No.523 of 2006 praying to stay the operation of the order of arrest of the Judgment Debtor for a period of two weeks stating that the Judgment Debtor has intended to prefer Civil Revision Petition against the order made in E.A.No.256 of 2006. In E.A.No.523 of 2006, the Decree Holder has filed elaborate Counter Affidavit on 212. 2006. This Revision Petition filed on 112. 2006 came up before the Court on 19.01.2007. Neither the filing of Stay Petition in E.A.No.523 of 2006 nor the subsequent proceedings were brought to the notice of this Court. Be that as it may, the order of arrest made in E.A.No.522 of 2006 has been passed only on disobedience of order made under Sub-rule (2) in E.A.No.256 of 2006. 22. Neither the filing of Stay Petition in E.A.No.523 of 2006 nor the subsequent proceedings were brought to the notice of this Court. Be that as it may, the order of arrest made in E.A.No.522 of 2006 has been passed only on disobedience of order made under Sub-rule (2) in E.A.No.256 of 2006. 22. In E.A.No.256 of 2006, the Court has passed an elaborate order under O.21 R.41(2) C.P.C. In E.A.No.256 of 2006, the Execution Court has called upon the Judgment Debtor to file Affidavit regarding his income and to produce the documents showing details of his income and properties. Sufficient opportunity had been given to the Judgment Debtor to file Affidavit and to produce the documents showing the details of his assets, but the Judgment Debtor did not do so and he was persistent in contending that he had no assets. Even assuming if the Judgment Debtor had no assets, the Judgment Debtor ought to have obeyed the order of the Court by filing an Affidavit to that effect or producing the documents showing his income whatever it may be. But, the Judgment Debtor has not chosen to do so and there was disobedience of the order made under Sub-rule (2). I am unable to accept the argument of Judgment Debtor that the order of arrest of the Judgment Debtor is vitiated by impropriety. 23. Learned Counsel for the Respondent / Judgment Debtor has drawn the attention of the Court to some of the oldest decisions reported in United Motor Finance Co..Vs.. Fiat Motors Eastern India Agency (A.I.R. 1939 MADRAS 699) and Kovummal Ammal (A.I.R. 1934 MADRAS 199(1)) which have no relevance. In the decision reported in Mathiyam Bivi Ammal and another ..Vs.. Union Bank Ltd., (A.I.R. 1938 MADRAS 771) the Court has held that power vested in the Court by O.21 R.41 C.P.C is discretionary and should be exercised with caution. In the said case, the Garnishee totally denied the Debt and the Garnishee was directed to produce Account Books. In the context that the Debt was totally denied, the Court has observed that the Court ought not ordinarily examine the Garnishee or direct him to produce Account Books unless the Court is satisfied on the Affidavit that in the interest of the Decree Holder, the Garnishee should be examined and books to be produced to proceed with the Execution. In the context that the Debt was totally denied, the Court has observed that the Court ought not ordinarily examine the Garnishee or direct him to produce Account Books unless the Court is satisfied on the Affidavit that in the interest of the Decree Holder, the Garnishee should be examined and books to be produced to proceed with the Execution. The observation in A.I.R. 1938 MADRAS 771, in a case of denial of debt and dealing with Garnishee has no relevance to the case in hand. 24. In E.A.No.256 of 2006, the Court has rightly called upon the Judgment Debtor to produce the documents showing the details of his income accounts of Sriparvatham Textiles and properties. Since there was disobedience of that order, in E.A.No.522 of 2006 the Court was justified in ordering arrest. The Impugned Order and the subsequent order of arrest do not suffer from any procedural impropriety calling for interference. This Revision Petition is bereft of merits and is bound to fail. 25. In the result, the order dated 111. 2006 of the First Additional Subordinate Judge, Erode in E.A.No.256 of 2006 in E.P.No.219 of 2005 in Arbitration Case No.3 of 2004 is confirmed and this Civil Revision Petition is dismissed. No costs. Consequently, the connected M.P.No.1 of 2007 is also dismissed. 26. When the order was pronounced, learned counsel for the Respondent has stated that the Execution Court has closed E.A.No.256 of 2006 and E.A.No.522 of 2006. When this Court ordered to maintain Status Quo, the Execution Court was not justified in closing E.A.No.256 of 2006 and E.A.No.522 of 2006. The Execution Court is directed to restore E.A.No.256 of 2006 and E.A.No.522 of 2006 and proceed with the matter in accordance with law.