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2014 DIGILAW 1141 (AP)

M. Rama Rao v. Sriram City Union Finance Ltd.

2014-09-11

ANIS, K.C.BHANU

body2014
Judgment : K.C. Bhanu, J. 1. This Civil Revision Petition, under Section 115 of the Code of Civil Procedure, 1908 (for short, ‘CPC’) is directed against the order, dated 28.02.2014, in Execution Petition No.11 of 2013 in Arbitration Case No.443 of 2010 on the file of the IV Senior Civil Judge, City Civil Court, Hyderabad, whereunder and whereby, petition filed to realize the decretal amount of Rs.1,38,668/- from petitioner herein/judgment debtor No.2 by attaching his salary, was allowed. 2. Arbitration Award was passed on 03.05.2012 and it has become final, as the petitioner herein, who is a guarantor, did not challenge the said Award though he contended that he did not receive notice in the Arbitration proceedings. 3. Learned counsel for the petitioner raised two points before this Court 1) that a decree holder, without proceeding against the principal borrower, cannot proceed against a guarantor and on that point he placed reliance on a decision reported in JAICHAND T. GANGWAL V. SHRIRAM CHITS PVT.LTD ( 2013 (5) ALD 425 ); 2) that in terms of Section 2 (e) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’), the Court below is not Principal Civil Court of original jurisdiction in a District, therefore, the order passed by the Court below is without jurisdiction to issue warrant to attach salary of the petitioner and hence, he prays to set aside the impugned order. 4. On the other hand, learned counsel for respondent No.1 contended that the said issue has no longer res integra in view of decision of this Court reported in BHOOMATHA PARA BOILED RICE AND OIL MILL V. M/s. MAHESHWARI TRADING COMPANY AND OTHERS ( 2010 (1) ALT 808 (DB), wherein it was held that if the value of the award is more than Rs.1,00,000/- but does not exceed Rs.10,00,000/-, Senior Civil Judge Court got jurisdiction; that in view of unreported Division Bench judgment of this Court in Civil Revision Petition No.2980 of 2009 (Chalapathi Chit Fund Private Ltd. V. Adusumalli Malleswara Rao and others), Execution Petition can be filed against any one of the judgment debtors and therefore, the order under challenge needs no interference by this Court and hence, he prays to dismiss the Civil Revision Petition. 5. 5. With regard to point No.1 whether decree holder can proceed against the guarantor or surety, it is not in dispute before this Court that Award was passed jointly and severally against the petitioner as well as the principal borrower. The said Award passed by the Arbitrator has become final because it has not been challenged. Section 128 of the Indian Contract Act 1872 (for short, ‘Contract Act’) reads as follows: “Surety’s liability:- The liability of the surety is co-extensive with that of principal debtor, unless it is otherwise provided by the contract…………….” From the above provision, it is clear that the word ‘co-extent’ is an objective for the word ‘extent’ and it can relate only to the quantum of the principal debt. Hence, surety or guarantor is equally liable to pay the principal debt. 6. Learned counsel for the petitioner placed reliance on JAICHAND’s case (1 supra) wherein it was held thus (para 6): “The basic obligation to pay the decretal amount is with the prized subscriber. In case, the 1st respondent finds any difficulty in recovering the amount from the 2nd respondent, it can certainly take steps against other judgment debtors. An effort as such must be made against the principal debtor. The proceedings against one of the guarantors, keeping aside the principal debtor and the other sureties, would certainly give scope for the collusion between the decree holder on the one hand and some of the judgment debtors on the other. The only legal consequence of the liability being joint and several is that the discharge by one of them would enure to the benefit of others. The determination in this behalf, however, must take place in the presence of all. If the other judgment debtors are omitted from the array of the parties in the E.P., the one who is singled out and proceeded against would face handicap in the context of pleading satisfaction of the decree by others or collusion among the other parties.” 7. The determination in this behalf, however, must take place in the presence of all. If the other judgment debtors are omitted from the array of the parties in the E.P., the one who is singled out and proceeded against would face handicap in the context of pleading satisfaction of the decree by others or collusion among the other parties.” 7. He also relied on unreported decision of this Court in CHALAPATHI CHIT FUND’s Case, wherein it was held thus: “In view of the aforesaid authoritative pronouncement of Supreme Court and the relevant provisions of the Act and the Code of Civil Procedure, we are of the opinion that when the judgment debtors have suffered a joint and several decree, the decree holder is entitled to recover the money against all or any of the judgment debtors. Therefore, it cannot be said that the decree holder is not entitled to file execution proceedings against one or few judgment debtors and it is open to the decree holder to proceed against one or few of the judgment debtors under the decree.” In view of the law laid by this Court coupled with Section 128 of the Indian Contract Act, it is clear that it is for the decree holder to proceed against the principal borrower or surety/guarantor. Therefore, point No.1 on this aspect is untenable. We hold that decree holder can proceed to recover the amount in accordance with law against principal borrower or guarantor or both simultaneously. 8. With regard to point No.2 that the Court below, which ordered attachment of salary of the petitioner, is not Principal Senior Civil Judge Court within the meaning of Section 2 (e) of the Act. He also relied on a decision of this Court in BHOOMATHA’s Case (2 supra), wherein it was held thus (para 28): “The question that cropped up in this case often comes up before the Courts enforcing arbitral awards. Therefore, we have referred to various statutes and applied settled principles of interpretation of reading statute as a whole and reading statute literally to find out the intention of the Parliament. Therefore, we have referred to various statutes and applied settled principles of interpretation of reading statute as a whole and reading statute literally to find out the intention of the Parliament. We may now sum up the principles as follows: (i) If an arbitral award is passed, an application for enforcement by way of execution petition need not always be filed under Section 36 of Arbitration Act before District Court; (ii) Depending on the amount awarded in the arbitral award, subject to territorial jurisdiction, an application for enforcement under Section 36 of Arbitration Act can be filed if the value of the award is less than Rs.1,00,000/-before the Court of Junior Civil Judge; if the value of the award is more than Rs.10,00,000/-before the Court of Senior Civil Judge; and if the value of the award is more than Rs.10,00,000/-before the Court of District Judge or Additional District Judge if it is assigned to such Additional District Judge. (iii) Every arbitral award can be enforced “as if it is a decree of Civil Court” following relevant provisions in Part II and Order XXI of CPC; and (iv) An application for enforcement of foreign award either under Section 49 or 58 of Arbitration Act shall have to be made only before the District Court and can also be decided by Additional District Court if the case is assigned to such Court.” From the above decision, it is clear that it is the Principal Civil Court of original jurisdiction in a District has got jurisdiction to execute a decree. 9. Contention of the learned counsel for the petitioner that the Principal Civil Court of original jurisdiction in a District got jurisdiction cannot be accepted, because there is no mention in Section 2 (e) of the Act about the jurisdiction of the District Court. Principal Court of original jurisdiction will be having jurisdiction to try the cases, if the value of property or the value of decree is less than Rs.10,00,000/- Senior Civil Judge will be having original jurisdiction to execute a decree. The Senior Civil Judge is also Principal Civil Court of original jurisdiction because in respect of all the suits where the value is more than Rs.1,00,000/- and less than Rs.10,00,000/-, Senior Civil Judge will be having jurisdiction to try the cases. The Senior Civil Judge is also Principal Civil Court of original jurisdiction because in respect of all the suits where the value is more than Rs.1,00,000/- and less than Rs.10,00,000/-, Senior Civil Judge will be having jurisdiction to try the cases. There is no other reason to deviate from the findings recorded by the Division Bench of this Court in Civil Revision Petition No.2980 of 2009, as the findings are based upon proper appreciation of evidence on record as well as law. Contention of the learned counsel for the petitioner to refer the matter to the Larger Bench does not arise. Therefore, the Civil Revision Petition is devoid of merit and it is liable to the dismissed. 10. Accordingly, the Civil Revision Petition is dismissed. There shall be no order as to costs. Miscellaneous petitions, if any, shall stand closed.