Research › Search › Judgment

Calcutta High Court · body

2018 DIGILAW 902 (CAL)

G. R. Industries v. Bhanu Iron and Steel Co. Limited

2018-12-07

SANJIB BANERJEE, SUVRA GHOSH

body2018
JUDGMENT : Sanjib Banerjee, J. The appeal is by the judgment-debtor in the execution proceedings, complaining of the executing court virtually conferring title in respect of an immovable property in favour of a stranger applicant despite such applicant questioning the very authority of this court to entertain or continue with the execution proceedings. 2. The appellant suffered a decree for sum of Rs.14 lakh, together with interest thereon, in a court in Madhya Pradesh. The decree of March 9, 2000 was transferred to the court of the District Judge, Kolkata and the decree-holder carried the matter to the City Civil Court at Calcutta by way of Money Execution Case No.7 of 2001. However, since the City Court lacked the pecuniary jurisdiction at the relevant time to execute a decree for an amount in excess of Rs.10 lakh, the decree was returned to the decree-holder for presentation to the appropriate court. In August, 2001 the decree-holder, the first respondent herein, lodged the decree for execution in this court. 3. In the meantime, the Debts Recovery Tribunal-II, Kolkata received an ex parte certificate dated August 31, 2001 issued by the Debts Recovery Tribunal, Patna against, inter alia, the appellant herein for recovery a sum in excess of Rs.4.83 crore. The State Bank of India, Jamshedpur Branch had obtained the certificate and caused the transfer thereof to DRT-II in Kolkata. On February 28, 2002, an order of attachment and receiver was passed by the DRT-II, Kolkata over a property of the appellant herein at 10, Jessore Road, Kolkata-700028. It appears that the appellant herein was the guarantor in respect of the credit facilities granted by State Bank to an entity by the name of G. R. Magnets and the Jessore Road property was put up by the appellant herein as collateral security in such context. 4. It transpires that despite the receiver being appointed over the Jessore Road property by the DRT-II, the receiver could not identify or demarcate the land immediately; but the order of appointment of receiver remained in place. 5. On August 1, 2002, a receiver was appointed by this court in the present execution proceedings over the same property of the appellant at 10, Jessore Road, measuring slightly over 1 bigha and 17 cottah. 5. On August 1, 2002, a receiver was appointed by this court in the present execution proceedings over the same property of the appellant at 10, Jessore Road, measuring slightly over 1 bigha and 17 cottah. On September 3, 2002, the receiver appointed by this court was given liberty to break open the padlocks and take necessary steps to carry out the order of this court to take possession of the Jessore Road property and on September 27, 2002 the receiver appointed by this court apparently took symbolic possession thereof. By a further order of October 3, 2002, the receiver appointed by this court was required to take physical possession of the property and to put up his padlock. Such receiver appears to have taken physical possession of the property on or about November 27, 2002. 6. In the certificate proceedings before the DRT-II there was some confusion for a considerable period of time as to whether the Jessore Road property was subject to any order of this High Court or had been taken possession of by the receiver appointed by this court. During such period, the receiver appointed by this court published advertisements in April, 2003 inviting offers for sale of the property. To add to the confusion, on a writ petition filed by the labour union of the appellant proprietorship firm, a single judge of this court directed on November 30, 2004 that the claim of the workmen should be settled first from the proceeds realised by the sale of the Jessore Road property before settling any other dues. 7. Sometime in 2005, pursuant to orders passed by the DRT-II, the receiver appointed by such tribunal took possession of the Jessore Road property and put up his own padlocks by replacing those that had been put up by the receiver appointed by this court. According to the appellant, the DRT-II was misled into passing an order for the receiver appointed by such tribunal to take possession of the Jessore Road property, since the High Court orders were not placed before such tribunal. However, it is evident that the appellant was aware of the certificate proceedings before the DRTII and the appellant took no immediate steps to rectify the situation, if any rectification was called for at all. 8. However, it is evident that the appellant was aware of the certificate proceedings before the DRTII and the appellant took no immediate steps to rectify the situation, if any rectification was called for at all. 8. On September 2, 2005, pursuant to orders of the DRT-II, the receiver appointed by such tribunal sold the Jessore Road property to the second respondent herein at a price of Rs.1.71 crore. It is the appellant's case that the entire consideration was not deposited by the second respondent herein within the time originally fixed, but it is evident that the delay was condoned by an order of November 23, 2005 passed by the DRT-II. By the end of February, 2006, possession of the Jessore Road property was handed over to the second respondent herein. However, the appellant complains that such exercise was conducted without even undertaking a demarcation of the property. 9. It was only on or about December 13, 2006 that the appellant herein challenged the sale of the Jessore Road property before the DRT-II and in October, 2007 the appellant herein applied in the executing court here and, by way of a contempt petition, complained of the receiver appointed by this court having been dispossessed by a receiver appointed by a lesser forum. Pursuant to the directions of the executing court here, the receiver appointed by this court took physical possession of the Jessore Road property in December, 2007 from the second respondent herein. The executing court here also restrained the DRT-II from taking any steps in respect of such property without the leave of this court. 10. The second respondent applied before the executing court for being examined pro interresse suo, in effect, to protect its right to the Jessore Road property in terms of the sale in its favour in the certificate proceedings conducted by the DRT-II. Two other facts that ought to be taken note of are the dismissal of the appellant's challenge to the order of sale of the Jessore Road property by the DRT-II and the exercise of demarcation of the Jessore Road property being carried out by the receiver appointed by the executing court here. The order of dismissal of the challenge to the sale has been carried in appeal or by way of a review or the like. 11. The order of dismissal of the challenge to the sale has been carried in appeal or by way of a review or the like. 11. By the order impugned dated July 24, 2018, the executing court here discharged the receiver appointed over the Jessore Road property, vacated all subsisting orders of this court operating on the Jessore Road property and, in effect, removed the impediment standing between the second respondent herein and the Jessore Road property without declaring the second respondent's rights thereof in express terms. 12. In course of the order impugned, the executing court observed that in view of the Section 39(4) of the Code of Civil Procedure, 1908, this court could not have proceeded against the Jessore Road property, which was outside its jurisdiction, for executing the money decree. It was also observed in passing that the decree could not have been transferred to this court and the orders pertaining to the Jessore Road property passed by this court in the execution proceedings were void. 13. The appellant joins issue and contends that a long line of decisions of this court recognises an age-old practice that this High Court has due authority to appoint receivers over properties outside its ordinary original civil jurisdiction and even execute decrees by attaching and selling properties outside jurisdiction. The second ground urged by the appellant is that after the introduction of Rule 97 to Rule 104 in Order XXI of the Code, an application in the nature of being examined pro interresse suo in respect of an immovable property sought to be proceeded against in execution could no longer be maintained, notwithstanding the archaic practice in this court. The third ground canvassed by the appellant is that the property has been allowed to pass to the second respondent at a gross undervalue and even the certificate-holder's claim in the certificate proceedings had been satisfied prior to the sale of the Jessore Road property. 14. In support of its first ground, the appellant has relied on a judgment (Raja Pramatha Nath Malia v. H. V. Low and Co., reported at 34 CalWN 238). 14. In support of its first ground, the appellant has relied on a judgment (Raja Pramatha Nath Malia v. H. V. Low and Co., reported at 34 CalWN 238). In such case, the practice in this court on its original side to appoint a receiver over a property outside of its territorial jurisdiction, in a proper case, was recognised in the following passage: "This Court succeeded the Supreme Court and on its Original Side, it had and has all the powers which the Supreme Court had. The Supreme Court was a Court of equity and under the 18th Clause of the Letters Patent of the Supreme Court, it assimilated its powers and authority to the Court of Chancery in England. The process of the Court of Chancery was in its origin against the person in order to enforce a decree; but in time from experience of the evils attendant on this mode of procedure, it had recourse to a species of process against the property itself by means of writs of sequestration. The Supreme Court adopted these processes and exercised its jurisdiction over immoveable property situate outside the limits of Calcutta. In other words, the Supreme Court executed its decrees by the appointment of Receivers of immoveable property outside Calcutta. This practice was adopted by this Court on its Original Side and has been exercised in numerous cases. [See in this connection the remarks of Mr. Justice Markby in Jugadomba v. Puddomoney ]. The view I take, therefore, is that this Court on its Original Side can in a proper case appoint a Receiver of property outside its territorial jurisdiction." 15. A more recent judgment (Hindustan Gas and Industries Limited v. Adhish Chandra Sinha reported at, (1994) 2 CalLJ 246 ) has been brought by the appellant, where the possession of a property outside jurisdiction was given through a receiver appointed by this court to the decree-holder landlord. However, that was a case where the eviction suit was transferred to this court under Clause 13 of the Letters Patent and it was held that in case of such transfer, the transferee court "assumed of the jurisdiction of the original court and can exercise territorial jurisdiction over the subject matter of the suit." 16. However, that was a case where the eviction suit was transferred to this court under Clause 13 of the Letters Patent and it was held that in case of such transfer, the transferee court "assumed of the jurisdiction of the original court and can exercise territorial jurisdiction over the subject matter of the suit." 16. Another judgment (Union of India v. Radha Kissen Agarwalla reported at, 0 65 CalWN 848) has been cited by the appellant to assert that an application in the nature of pro interresse suo would be confined to what was covered by Rules 58 to 63 of the Order XXI of the Code prior to the 1976 Amendment to the Code. The contention of the appellant is that in the absence of a person claiming a right over an immovable property which is the subject-matter of any execution proceedings by applying under Rules 97 to 104 of Order XXI of the Code, no cognizance of such right should be taken by the executing court. 17. The decree-holder has been conspicuous in its absence. Indeed, it is somewhat baffling that the judgment-debtor resists the second respondent's attempt to secure the property at Jessore Road in the absence of the decree-holder. 18. The second respondent asserts that upon the law undergoing a substantial change with sub-section (4) being added to Section 39 of the Code, most of the submission of the appellant is of no avail and even the judicial authorities cited cannot be seen to override a provision that was subsequently engrafted. According to the second respondent, Section 39(4) of the Code, which was introduced with effect from July 1, 2002, would override Order XXI Rule 9 or, at any rate, would nullify the additional authority that a High Court exercising original jurisdiction may have wielded under Order XXI Rule 9 of the Code. Section 39 of the Code deals with the transfer of a decree and Order XXI thereof deals with execution of decrees and orders. Sub-section (4) of Section 39 and Rule 9 of Order XXI of the Code need to be seen: "39. Transfer of decree. (1)............ (2)............ (3)............ (4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction." "9. Execution by High Court of decree transferred by other court. Transfer of decree. (1)............ (2)............ (3)............ (4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction." "9. Execution by High Court of decree transferred by other court. Where the Court to which the decree is sent for execution is a High court, the decree shall be executed by such Court in the same manner as if it had been passed by such Court in the exercise of its ordinary original civil jurisdiction." 19. The second respondent accepts the legal proposition that a long-standing practice may confer authority on a court to continue such practice in the absence of there being any specific law in such regard. However, the second respondent submits that if a subsequent provision is brought in by any statute which has the effect of negating the long-standing practice of any court, the practice can never prevail over the specific provision of a statute. The larger submission of the second respondent is that whatever authorities may have been cited by the appellant in support of his contention that this High Court can take steps in respect of an immovable property situated outside the ordinary limits of jurisdiction of this court while executing a decree, the bar introduced by the incorporation of subsection (4) in Section 39 of the Code would necessarily imply that such practice could no longer be continued. 20. The second respondent places the history of the long-standing practice of this court to execute decrees against immovable properties situated outside the ordinary original jurisdiction of this court by referring to a judgment (Puddomoney Dossee v. Juggodumba Dossee, reported at 15 BLR 318). Such practice is recognised in the following sentence figuring at paragraph 8 of the report: "It has been the practice of this Court, where it is necessary to do so in order to enforce its own decree, to appoint a receive in respect of landed property situate in the mofussil, and we feel ourselves justified in following that practice." 21. The second respondent emphasises that it was never the second respondent's case, even before the executing court, that this court had no jurisdiction to receive or proceed with the execution proceedings. The second respondent emphasises that it was never the second respondent's case, even before the executing court, that this court had no jurisdiction to receive or proceed with the execution proceedings. After all, the second respondent maintains, the appellant judgment-debtor has his place of business within the ordinary original civil jurisdiction of this court and, simply by virtue of such fact, this court had the authority to receive the execution proceedings. However, according to the second respondent, when it came to executing the decree in respect of a property situated beyond the territorial jurisdiction of this court, this court may have acted without authority in the light of Section 39(4) of the Code and its effect of eclipsing any long-standing practice of this court that may have been continued under Order XXI Rule 9 thereof. 22. The final submission of the second respondent is that it is plain to see that a receiver was appointed over the Jessore Road property by the DRT-II and it was only subsequently that a receiver was appointed over the property by this court. In such a situation, the second respondent claims, even if this court may have had jurisdiction over the property which is strongly refuted it is the DRT-II which had taken the Jessore Road property within its fold for the purpose of the certificate proceedings pending before it and, if the executing court here had been made aware of such position, this court may have refrained from appointing a receiver over the same property. The second respondent says that it was from the receiver as originally appointed by DRT-II that the second respondent had obtained possession of the Jessore Road property before being dispossessed by this court's receiver; and, even if the other grounds were not urged by the second respondent, upon the executing court here being informed that it had appointed a receiver over a property which had already a receiver over it pursuant to an order of another competent forum, the executing court here may, only on such score, have vacated its order of appointment of the receiver. 23. 23. Contrary to the submission of the appellant that the executing court found the execution proceedings launched in this court to be incompetent, it appears that what was found to be without jurisdiction was the essay by the executing court to execute the decree by seeking a property outside the territorial limits of this court's ordinary original civil jurisdiction. Indeed, if the executing court or the order impugned had found that the execution proceedings were altogether incompetent, the execution case would have been dismissed and costs could not have been awarded to the decreeholder. 24. The moot question is whether this court in exercise of its authority on the original side can stretch its arms to reach out to a property beyond its territorial limits in course of execution, whether of a decree passed by this court or as a transferee of a decree. As a proposition of law, it cannot be said that a civil court may not touch a property beyond its territorial limits. Such a proposition would lead to a rightful claimant approaching several courts to obtain an order of attachment or an order pertaining to an immovable property situated outside. Further, the principle embodied in Section 21 of the Code must never be lost sight of and the distinction between inherent lack of jurisdiction and the lack of jurisdiction on territorial or pecuniary grounds can never be over-stated. At the same time, Section 21 cannot be the refuge of a scoundrel to enable colluding parties to procure orders to affect an immovable property to the prejudice of a stranger who has an interest in such immovable property. In other words, the bar of raising a belated objection under Section 21 of the Code may operate on the parties to the action, but a stranger to the proceedings cannot be bound by the genuine or contrived acquiescence of the parties to the action to be precluded from questioning the jurisdiction or the authority of the court to entertain the action or continue interim orders that may have been passed, whether before or after a decree. 25. It is in such light that the present matter must be approached. 25. It is in such light that the present matter must be approached. Upon it being evident that a receiver had been appointed in respect of a property outside jurisdiction in 2005, an objection on such ground could not have been taken by the appellant herein in 2016 or 2017; but such inability of the judgment-debtor would not fasten to a stranger affected by an order perceived to have been passed an error or excess of jurisdiction. Thus, the locus and the propriety of the second respondent herein to approach the executing court here was beyond question. 26. More importantly, there may be situations where a person, whether a stranger or a party, may assert the lack of jurisdiction of a court or like forum, but such person still set up some modicum of right for adjudication in the forum whose jurisdiction such person questions. An appropriate example in such regard has been cited by the second respondent herein. The second respondent says that if the receiver appointed by this court over the Jessore Road property had put up a board indicating that the land was in the possession of such receiver pursuant to an order of this court passed in execution, upon noticing the contents of such board, a passenger on a bus to Nagerbazar could not have come and complained to this court that the appointment was without jurisdiction. Unless such person also asserted an interest in the property, this court could not have entertained the objection despite the objection otherwise having the backing of law. It is in such context that the second respondent's application in the execution proceedings here ought to be seen and assessed. 27. While on the topic of the nature of the application carried by the second respondent to the executing court here, it must be emphasised that notwithstanding the application apparently being in the nature of pro interresse suo, it could also have been perceived to be one made under Order XXI Rule 97 or 99 of the Code. Just as a person should not be judged by the colour of his skin but appreciated on the basis of the conduct of his character, similarly, a petition or an application has to be assessed not from the manner in which it is intituled, but on the basis of the substance thereof. Just as a person should not be judged by the colour of his skin but appreciated on the basis of the conduct of his character, similarly, a petition or an application has to be assessed not from the manner in which it is intituled, but on the basis of the substance thereof. That is elementary; and the purpose of law is not to lay traps or play tricks, but to ensure that justice in accordance with law is reached to the worthy and deserving. 28. Despite the Code as it stands today, an application in the nature of pro interresse suo may not be outdated or redundant in the present context in several situations; though its efficacy to resist execution pertaining to an immovable property may have been considerably diluted. In the present case, however, such application may not have been appropriate in the light of the specific provisions in the Code providing a remedy to the second respondent. But again, nothing turns on such aspect, if the substance and not the form of the application is accorded its rightful recognition. 29. As to the effect of Section 39(4) of the Code, it must be said that upon such an objection being cited in this court, the executing court here may not lengthen its arms to reach out to a property beyond jurisdiction in course of execution; but upon an order being made in respect of a property outside in ignorance of the provision or without an objection in such regard being raised, the order may not be regarded as void and a stranger affected thereby would have to apply for it to be vacated. Execution proceedings are for the purpose of ensuring that the decrees and orders passed by a court are implemented and the beneficiaries thereunder enjoy the fruits thereof. 30. It is possible in a case that the person of the judgment-debtor is within jurisdiction, but no immovable asset of such judgment-debtor is within the jurisdiction of the executing court. Execution proceedings are for the purpose of ensuring that the decrees and orders passed by a court are implemented and the beneficiaries thereunder enjoy the fruits thereof. 30. It is possible in a case that the person of the judgment-debtor is within jurisdiction, but no immovable asset of such judgment-debtor is within the jurisdiction of the executing court. The executing court will, in such a scenario, be well within its rights to restrain the judgment-debtor from alienating the immovable property outside jurisdiction till the satisfaction of the decree, but the executing court ought not appoint a receiver or direct a sale of such immovable property outside jurisdiction unless such order is invited by the judgment-debtor or, if the court passes the same without realising the property to be outside, the judgment-debtor acquiesces therein. But if a stranger were to be affected by the order of attachment or appointment of receiver or sale or consequent possession and such stranger were to carry an objection to the executing court, the executing court would have to set the matter right, if called for. 31. The question here is not one of judicial ego or a consideration that the High Court is a superior forum qua a Debts Recovery Tribunal operating within its jurisdiction under Article 227 of the Constitution. The question is whether the DRT-II, Kolkata was competent to appoint a receiver over the Jessore Road property and whether it was proper for this court to also appoint a receiver over such property, whether or not the executing court here was aware of the certificate proceedings in DRT-II, Kolkata at the time of the initial appointment of the receiver. 32. As noticed above, the receiver appointed by the DRT-II, Kolkata was first in point of time and it matters little in law whether such receiver was able to take actual possession of the property or had the property demarcated or not. Not only was the order of appointment by the executing court here subsequent to the appointment of a receiver over the same property by the DRT-II, Kolkata, but when possession was taken of the property by the receiver appointed by the executing court here, legally such possession was taken from the receiver appointed by the DRT-II, Kolkata. Not only was the order of appointment by the executing court here subsequent to the appointment of a receiver over the same property by the DRT-II, Kolkata, but when possession was taken of the property by the receiver appointed by the executing court here, legally such possession was taken from the receiver appointed by the DRT-II, Kolkata. Again, the DRTII, Kolkata required the receiver appointed by it to take physical possession of the Jessore Road property unaware that orders of the executing court here were subsisting in respect of such property at the relevant time. By the time the receiver appointed by this court retrieved possession of the Jessore Road property pursuant to orders passed at the behest of the judgment-debtor appellant, the possession had already been made over by the receiver appointed by the DRT-II, Kolkata to the second respondent herein pursuant to the sale of the property in favour of such party. It is, therefore, quite evident that the apparently tenable rights of the certificate-holder in the DRT proceedings and, subsequently, of the auction-purchaser in such certificate proceedings had been affected by orders of this court, whether passed erroneously or consciously. In such circumstances, when the appropriate facts were brought to light before the executing court here, such court had due authority to right the wrong and to withdraw its orders and its receiver from the Jessore Road property. All that was necessary for the executing court here to see was that the second respondent established its locus and demonstrated a modicum of interest in the relevant property. The executing court here was not required to confer title, nor has such course of action been adopted in the order impugned. 33. In the same vein, the last ground canvassed by the appellant can be repelled by observing that the propriety of the sale conducted by DRT-II, Kolkata or in course of the certificate proceedings could not have been adjudicated upon by the executing court here and the executing court has appropriately refrained from addressing such extraneous issue. It is possible that the certificate-holder's claim may have been satisfied by payment or even that the Jessore Road property had been sold at a gross undervalue; but these side issues could not have been addressed by the executing court here and does not call for any opinion in course of the present appeal. It is possible that the certificate-holder's claim may have been satisfied by payment or even that the Jessore Road property had been sold at a gross undervalue; but these side issues could not have been addressed by the executing court here and does not call for any opinion in course of the present appeal. It may only be noticed that there is an appeal or application that has been filed by the appellant herein before the DRT-II, Kolkata or the appellate forum challenging the sale in favour of the second respondent herein. In the light of such matter remaining pending, the only modification to the order impugned is that the second respondent here is restrained for a period of six months from today from creating any third party rights in respect of the 10, Jessore Road property or parting with possession of any part thereof in favour of any other person. If, within such time, the appellant is unable to have the sale set aside or obtain any appropriate order in respect of the Jessore Road property from any forum authorised to make such order, the limited embargo foisted on the second respondent by this order will cease to operate. 34. An appeal has been made by the appellant to consider the costs awarded by the order impugned. Since the decree-holder has not participated in the present appeal and appears to have been, if at all, only in the wings in course of the hearing that culminated in the order impugned, the costs of 3000 GM awarded against the appellant and in favour of the decree-holder are set aside. As far as the costs awarded against the appellant and to the second respondent herein are concerned, they are halved since the attempt by the appellant to resist the second respondent from taking over the property of the appellant, however unmeritorious, does not appear to have been mala fide. 35. Apo No. 218 of 2018, GA No. 2554 of 2018 and GA No. 2108 of 2018 are disposed of on the above basis. 36. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. Suvra Ghosh, J. - I agree.