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Karnataka High Court · body

2008 DIGILAW 748 (KAR)

V. S. Dasa Reddy v. Vivek Mehra

2008-12-03

JAWAD RAHIM

body2008
JUDGMENT : 1. This revision under Section 115 of the Code of Civil Procedure, 1908 is directed against the order dated 12-09-2007 in Execution Petition no.1355/1997 on the file of 12th Addl. Judge, court of small causes, Bangalore, allowing the application filed under Section 151 C.P.C. filed by the respondent No.2 and rejecting the memo file by the petitioner herein, thereby permitting the respondent No.2 to withdraw Rs.1,50,550/- and allowing the petitioner to withdraw Rs.24,450/- 2. Heard the learned counsel for both sides. 3. The contextual facts are: The petitioner is the owner of immovable property, which was leased to one Vivek Mehara. He had established an industrial unit, but failed to pay rent as and when it accrued due. It is alleged he committed breach of terms and covenants of the lease consequent to which petitioner initiated eviction proceedings in HRC NO.1577/1994 which on contest was allowed directing eviction of Vivek Mehara – respondent No.1 herein. The decree passed in HRC 1577/1994 was put in execution in E.P. No.1355/1997. Initially warrant for delivery of possession, in terms of the decree, was issued by the trial Court in favour of the petitioner, but it could not be executed as the premises was locked. On his application the trial Court directed issuance of execution warrant with permission to break open the lock with police assistance if necessary. The decree holder while executing the warrant removed the locks of the premises, but found several machineries were imbedded to the earth and could not be removed. The Bailiff prepared detailed panchanama and submitted it to the court. The Petitioner decree holder was again before the trial Court seeking for issuance of direction for removing of the embedded properties. 4. At this stage, the respondent - bank filed application before the executing court seeking custody of the movable properties on the premise that the entire properties were hypothecated to it by the respondent No.1 as security to the loan advanced. The petitioner herein opposed the said request on the ground that he had sought to implead the bank in HRC proceedings but the bank had on its own volition declined to participate in the proceedings on the ground that it had no interest in the lis between the petitioner and the respondent No.1. 5. The petitioner herein opposed the said request on the ground that he had sought to implead the bank in HRC proceedings but the bank had on its own volition declined to participate in the proceedings on the ground that it had no interest in the lis between the petitioner and the respondent No.1. 5. After considering the grounds urged by the petitioner and the respondent No.2 – bank the trial Court by its order on 06-08-1997 directed the petitioner decree holder to keep the movable properties in his custody till the Judgment debtor claims the same and at the same time dismissed the application filed by the respondent No.2 – bank and closed the Execution Petition No. 1355/1997 as fully satisfied. 6. Aggrieved by the order dated 06-08-1997 the petitioner decree-holder was in revision before this court in HRRP No. 1778/1998. This court allowed the petition by an order dated 03-11-1999 directing the trial Court to notify the petitioner decree holder and the respondent No.2 and to put the movable properties found in the premises for sale by public auction and to pass appropriate order regarding money realizes after hearing the interested parties. That order was however modified by this court by its subsequent order dated 15-11-1999 directing the trial Court to take custody of the properties and notify sale by publish it to all concerned and then take appropriate action in the matter. 7. In terms of the order passed by this court the trial Court restored E.P. No. 1355/1997 to its file and in terms of the directions issued by this court in HRRP No.1778/1998 appointed the Registrar, Court of Small Causes, Bangalore as Commissioner to inspect the petition schedule premises after notice to decree holder (petitioner herein) and the respondent No.2 – bank and submit report regarding machineries and other movable properties shown as item No.1 to 11 in Bailiff’s report and to report as to whether those properties could be shifted to the court premises for keeping in court’s custody. The trial Court also directed the Registrar to report as to whether accommodation was available in the court premises for keeping the property until it was disposed of. 8. The trial Court also directed the Registrar to report as to whether accommodation was available in the court premises for keeping the property until it was disposed of. 8. In terms of the said order the Registrar, Court of Small Causes, Bangalore submitted a report that it was not in a position to take physical possession of the machineries and other immovable properties to be kept in court premises hence public auction could be conducted at the spot itself after wide publication in the State level newspapers. Accepting the said report the trial Court directed the publication of the notice in the State level newspapers at the expense of the decree holder permitting him to claim reimbursement of all the expenses that he may incur in this behalf. Accordingly, the petitioner took out public notice in Indian Express enabling the court to conduct auction on 06-02-2002. Auction was accordingly conducted by the trial Court on 06-02-2002 but only two bidders participated. 9. Once again the trial Court passed an order on 14-03-2002 rescheduling the auction and refixing the date. Meanwhile it also directed evaluation report to be prepared to value the properties. In terms of the court’s direction the Joint Director, Bangalore District was asked to nominate one Officer to value the property. He nominated Mr. H.Y. Saidathulla, Industrial Promotional Officer as Commissioner by the Court, fixing his fee at Rs.1,000/- to be recovered out of the sale proceeds. Mr. H.R.Saidathulla, Court Commissioner submitted his report fixing value which the trial Court accepted and refixed the auction to be held on 03-07-2002. On 10-07-2002 after examining the sale proceedings conducted on 03-07-2002 and in the presence of bidders the trail Court accepted the bid of the highest bidder for Rs.1,75,000/- and directed successful bidder to deposit the amount. The successful bidder deposited the amount of Rs.1,75,000/- in court which is in deposit. 10. On such deposit being made the decree holder / petitioner filed a memo seeking release of the amount to him. He also filed memos seeking release of amount in his favour while opposing the application filed by the respondent No.2 – Bank. Despite tenable grounds the trial Court allowed bank’s application and rejected the memo and applicants filed by the decree holder – petitioner claiming Rs.3,91,250/- by the order impugned in this revision. 11. He also filed memos seeking release of amount in his favour while opposing the application filed by the respondent No.2 – Bank. Despite tenable grounds the trial Court allowed bank’s application and rejected the memo and applicants filed by the decree holder – petitioner claiming Rs.3,91,250/- by the order impugned in this revision. 11. The learned counsel on both sides have taken me though the records in support of their respective contentions. 12. Petitioner’s contention is that in terms of the decree in HRC 1577/1994 he was entitled to vacant physical possession of the schedule property. Since the movable properties were embedded in the earth and could not be removed, the bailiff had reported it to the court. It was the duty of the bailiff to remove properties and take into custody of the court, but bailiff failed. On the Bailiff’s report the court had directed him to keep properties in his custody till Judgment Debtor claims the same. Therefore, by virtue of the order of the trial Court he had kept the properties in his custody. To safe guard property he had to incur heavy expenditure as detailed in the memo file by him. He submits that apart from his claims towards arrears of rent, the expenditure incurred by him for safe keeping of the property was required to be reimbursed. Therefore, Rs.1,75,000/- which is the sale proceeds of the properties should be paid to him by way of reimbursement of the amount incurred by him as expenditure, reserving liberty to recover the balance. 13. Regarding claim of the respondent No.2 – Bank he submits that bank was notified of the eviction proceedings against the respondent No.1 but it refused to come into the party array in HRC No. 1577/1994. Even thereafter the respondent No.2 –bank did not seek custody of the properties when the warrant was executed. During public auction also respondent No.2 – Bank did not participate. Belatedly it claims lien on the immovable properties referring to loan transaction bank had. If it had lien it was necessary to have applied to the court to take possession of the properties. He submits that if the bank had taken possession of the property when the warrant was executed, the petitioner would not have incurred heavy expenditure for its safe custody. If it had lien it was necessary to have applied to the court to take possession of the properties. He submits that if the bank had taken possession of the property when the warrant was executed, the petitioner would not have incurred heavy expenditure for its safe custody. Therefore, even it is to be accepted that bank had lien or charge over the property it had waived its right when the public auction was conducted. 14. Per contra, the respondent No.2 – Bank supports the impugned order. 15. In supplementation to what is urged by both sides, I have examined the records. I am satisfied that on facts there is not much dispute. It is not in dispute that petitioner was entitled to ‘vacant possession’ of the schedule property in pursuance to the decree in HRC No.1577/1994. When he applied for execution of the decree it was incumbent upon the trial Court to have granted him the relief in terms of the decree i.e. deliver to him vacant possession which implies appropriate steps should have been taken to remove movable properties. 16. No doubt, the trial Court has issued the delivery warrant, but the Bailiff while executing the delivery warrant has only broke is open the locks and gained entry but has not removed machineries (movable properties of the Judgment Debtor). In fact, he has not delivered the vacant possession of the premises to the petitioner, as could be seen from his report submitted to the trial Court. The trial Court was required to have considered the circumstances and to pass appropriate order for removal of movable property and for its safe keeping. The trial Court has failed to notice that merely removing of the lock of the premises would not amount to execution of the decreed to enable the decree holder to enjoy the fruits of the decree. Undoubtedly, he could not put the premises to his personal use. Instead of ensuring physical vacant possession is delivered to the petitioner decree holder the trial Court directed him to keep custody of the properties till the Judgment Debtor claims. 17. However, from the order dated 06-08-1997, it is seen that Decree Holder was directed to keep custody of the property till Judgment Debtor claims. Instead of ensuring physical vacant possession is delivered to the petitioner decree holder the trial Court directed him to keep custody of the properties till the Judgment Debtor claims. 17. However, from the order dated 06-08-1997, it is seen that Decree Holder was directed to keep custody of the property till Judgment Debtor claims. Such a direction appears to be for the reasons the trial Court could not take possession of the property and keep the property in its custody in court premises. In view of commissioners report referred to supra. 18. Be that as it may, it is not in dispute decree holder had kept the properties in his possession till it was auctioned pursuant to the order of the trial Court and hence the trial Court had to make appropriate provisions for its care, custody and safe keeping. Petitioner – Decree Holder had rightly questioned the order of the trial Court dated 06-08-1997 before this court in HRRP No. 1778/1998 closing execution petition as fully satisfied without giving finality to this issue. Noticing inaction on the part of the trial Court this court allowed the revision of the petitioner by the following order: “The grievance of the revision petitioner appears to be that he has incurred lost of expenditure for keeping watch of the property given to him and that the judgment debtor is due few lakhs of rupees towards the electricity arrears and also the rent and it has become very difficult for him to recover the same. The decree holder should have adverted these things before taking the property into his custody. He has taken the property to his custody on his own risk. There is no application made by the petitioner before the trail court for permitting him to put the property in auction for recovering the arrears, if any. The executing court also has not considered the claim of the Bank. This matter is for the executing court to consider, if necessary application is made by the parties and not for this court to give directions as sought for. In this context, the impugned order is liable to be set aside. It is for the executing court to take custody of the property and public it to all concerned and then take appropriate action in the matter. 19. In this context, the impugned order is liable to be set aside. It is for the executing court to take custody of the property and public it to all concerned and then take appropriate action in the matter. 19. The order passed by this court is clear that the trial Court was directed to consider the claim of the petitioner-decree holder and also respondent No.2 – bank. To decide as to who would be entitled to receive the amount deposited in court, the trial Court had to understand the nature of right on which said claim was raised by the petitioner and respondent. As noted in para supra, respondent No.2 – bank has claimed the amount only on the basis that respondent No.1 had borrowed the loan from it to purchase the machineries and machineries purchased by him were hypothecated to it. In other words, the bank claims lien on the immovable properties as security for recovery of the loan amount. If that be so, Bank was expected to seek attachment of the property judgment in civil proceedings. It has also filed the application before Debts Recovery Tribunal in OA No. 284/1996, which is pending adjudication. Since bank claims lien over the property it was incumbent upon it to have taken possession of the property when the decree in HRC 1755/1994 was executed. The bank did not take any steps on its own. Even when the petitioner filed application on 04-07-1996 to implead the bank in HRC proceedings the bank opposed the same by its objection statement dated 12-09-1976 categorically stating that it had no interest in lis between the petitioner and respondent No.1. It is due to such stand taken by the bank, the petitioner had to take custody of the movable properties. 20. It is further to be noticed that the bank was aware of the fact situation that respondent No.1 had suffered an order of eviction and the movable properties had to be removed from the schedule premises but neither applied to any court nor any other proceedings to take attachment before the Judgment. Therefore, properties were free of court attachment when its custody was given to the decree holder and also as on the date of properties were sold by the public auction on 03-07-2002 confirmed by the court on 10-07-2002. 21. Therefore, properties were free of court attachment when its custody was given to the decree holder and also as on the date of properties were sold by the public auction on 03-07-2002 confirmed by the court on 10-07-2002. 21. So far as petitioner is concerned, the trial Court had directed him to incur expenditure towards publication of notice in newspaper regarding public auction and also directed him to keep safe custody of the properties till the Judgment Debtor claims or till the order of the court. That means since the Judgment Debtor had not claimed the properties till the properties were delivered to successful bidder in the public auction, the custody remained with the petitioner. Any expense incurred by him legitimately had to be reimbursed to him. The trial Court has not considered this aspect. Hence, a question arises as what procedure, the trial Court had to follow. 22. In this behalf, it is necessary to refer to the provisions of Rules 122 to 125 of Karnataka Civil Rules of Practice, 1967, which read thus: Rule 122: “’Curator’ – In order to provide for the custody of property which cannot be conveniently stored or kept in the Court-house, the District Judge may appoint for any court or group of Courts a Curator who shall furnish security, in any form applicable to a Government servant, for an amount to be fixed in each case by the District Judge.” Rule 123: The Nazir or Curator, as the case may be, shall be responsible for the due custody and preservation of all property entrusted to him until he delivers it up under the order of the Court. Rule 124: Every Nazir and every Curator shall maintain a Register of attached movables and livestock in Register No. XXXII. Rule 125: The Curator (or other person) shall receive such reasonable sums as the court may order for his remuneration and expenses incurred for the custody and preservation of attached movable which cannot be conveniently stored in the Court-house. 23. Therefore, it is seen that the provision requires appointment of curator by the District Judge of the District Judge of the District, to whom custody of any property which cannot be conveniently stored or kept in the court house must be handed over. 24. 23. Therefore, it is seen that the provision requires appointment of curator by the District Judge of the District Judge of the District, to whom custody of any property which cannot be conveniently stored or kept in the court house must be handed over. 24. Rule 123 of Karnataka Civil Rules of Practice further requires that every Nazir or Curator as the case may be shall be responsible for due custody and preservation of property entrusted to him until he delivers it up under the order of the court. 25. On inquiry, it is ascertained from the office of the Principal District and Sessions Judge, Bangalore, and the Chief Judge, Court of Small Causes, Bangalore, that no curator on permanent basis has been appointed by the courts for the purpose of keeping the properties in custody as and when the court takes custody of movable properties. The court of Small Causes is under the administration and control of the Principal City Civil & Sessions Judge, Bangalore, and whenever possession of movable properties is taken into custody in pursuance of the court order, as in this case, the property had to be kept in the court premises. If keeping such property in the court premises was not possible or convenient, then it has to be handed over to the custody of the Nazar of the Court who shall keep it in safe custody till further orders. 26. The trial court has not examined whether the curator was appointed by the Principal District and Sessions Judge, or not. However, the next step for the executing court was to hand over movable properties to the custody of the Nazar for its safe keeping. That has also not been done. Instead, the petitioner-decree holder has been directed to keep the movable properties removed during execution of the decree in his custody by its order which was subsequently confirmed by order dated 16.8.1997. Therefore, affirmatively it has to be recorded that the decree holder did not take custody of movable properties belonging to the judgment debtor while executing the decree on his own volition or at his risk, he did so only in pursuance of the direction of this court. Therefore, affirmatively it has to be recorded that the decree holder did not take custody of movable properties belonging to the judgment debtor while executing the decree on his own volition or at his risk, he did so only in pursuance of the direction of this court. Once the court has directed the petitioner-decree holder to take possession of the properties in question and to keep them in his custody, then such order has to be treated as an order passed under Rule 123 of the Karnataka Civil Rules of Practice, and for all intent and purposes, the decree holder shall be deemed to be “curator” referred to under Rule 122 of the Civil Rules of Practice. 27. Thus, it is affirmatively recorded that the petitioner-decree holder has to be treated as a “curator” holding custody of movable properties which the court had taken possession of till it was handed over to the successful bidder in the public auction. 28. The next and important question is, since the petitioner-decree holder has acted as ‘curator’, what is his right regarding expenditure incurred by him for preservation and safe keeping of such movable properties. 29. Rule 125 of the Civil Rules of Practice is relevant which postulates ‘the curator (or other person) shall receive such reasonable sums as the court may order for his remuneration and expenses incurred for the custody and preservation of attached movable properties which cannot be conveniently stored in the court house.’ Thus, from the language of Rule 125, there can be no doubt that the petitioner-decree holder has acted as ‘curator’ in pursuance to the court order and kept the properties in safe custody by incurring expenditure and was entitled to remuneration towards reimbursement of expenses and expenditure for preservation of such properties. 30. For removal of doubt, reference could be made to Rule 126 of the Civil Rules of Practice which envisages that not only the curator, Nazar, but ‘any other person’ referred to under Rule 125 will be entitled to remuneration and also reimbursement of expenditure incurred for custody and preservation of attached movable properties which cannot be conveniently stored in the court house. 31. 31. In the fact situation, an application filed by the petitioner-decree holder reporting to the court that he has incurred expenditure of Rs.3,91,250/- as detailed in the application had to be treated as an application under Rules 125 and 126 and an appropriate order had to be passed about payment of the said amount to him. His right was undoubtedly a preferential right over the right of any other person including the respondent bank herein. Thus, from and out of the sale proceeds, the court was required to order payment of the amount claimed by the petitioner-decree holder and if the amount of money recovered as sale proceeds was less than that amount, then the least that the executing court could have done was, to order payment of the amount which was in deposit. Instead of doing so, the learned trial judge has misled itself in belief that the claim of the 2nd respondent bank was preferential against the claim of the petitioner-decree holder and on that basis, permitted the bank to draw Rs.1,75,000/- and has restricted unjustifiably the claim of the petitioner-decree holder only to Rs.24,450/-. Such order is certainly not sustainable. 32. For the reasons discussed above, I am satisfied that the petitioner-decree holder had the first charge on the amount recovered as sale proceeds retained in court deposit, to receive the same as reimbursement of expenditure incurred by him for safe keeping, preservation of movable properties which are the subject matter of execution proceedings. 33. In the result, the petition is allowed. The impugned order is set aside and the application filed by the petitioner-decree holder is accepted. Consequently, the application filed by the 2nd respondent bank is rejected. The trial court is directed to release the amount realized through sale of immovable properties to the petitioner-decree holder, reserving his right to recover the balance, if any, by other modes available in law. It is further made clear that the petitioner-decree holder is entitled to cost of these proceedings, fixed at Rs.5000/- to be paid by the respondent-bank.