Kota Anjaneyulu v. Margadarsi Chit Fund Private Ltd.
2019-08-13
J.UMA DEVI, M.SEETHARAMA MURTI
body2019
DigiLaw.ai
JUDGMENT : M. Seetharama Murti, J. 1. The unsuccessful 4th Judgment Debtor filed this revision petition, under Section 115 of the Code of Civil Procedure, 1908, assailing the order, dated 03.04.2019, of the learned Principal Senior Civil Judge, Ongole, passed in E.P. No. 179 of 2016 in ARC. No. 116 of 2015. 2. We have heard the submissions of Sri V.N. Anagani, learned counsel representing Sri P. Subhash, learned counsel, appearing for the petitioner/4th Judgment Debtor ('4th J Dr', for brevity); and, of Sri P. Durga Prasad, learned counsel appearing for the 1st respondent/Decree Holder ('DHr', for brevity). We have perused the material record. 3. To begin with, the introductory facts, which are perceptible from the contents of the material record and the submissions made, in brief, are as follows: The 1st respondent - DHr Chit Fund Company having obtained an award filed the subject EP for attachment of the salaries of some of the JDrs including the present petitioner - 4th JDr. The 4th JDr and other JDrs resisted the EP by filing counter. By the orders impugned in this revision, the Court below over ruled the objections of the contesting JDrs and inter alia directed issuance of warrants for attachments of salaries of the JDrs 2, 4 & 7 and directed the respective garnishees of the said JDrs to withhold Rs. 20,000/-, Rs. 20,000/- and Rs. 13,000/- from the respective salaries of the JDrs 2, 4 & 7 till the realisation of the decree debt or 24 months, whichever is earlier. Aggrieved thereof, the present revision petition is filed by the 4th JDr. 4. The case of the DHr in support of the request in the afore-stated EP is this: - 'The DHr obtained the award, dated 20.05.2016, against the JDrs. After the Award, the DHr made several requests to the JDrs to pay the amount covered by the award. Though the JDrs 2, 4 & 7 are Government employees and are having sufficient means to discharge the debt due to the DHr under the award, they had failed to discharge the said debt. Hence, the EP is filed for attachment of salaries of the said JDrs.' 5. Per contra, the case of the 4th JDr as stated in his counter is this: The EP is not maintainable under facts and in law. He is working as a teacher in Uppugunduru. The 1st JDr died.
Hence, the EP is filed for attachment of salaries of the said JDrs.' 5. Per contra, the case of the 4th JDr as stated in his counter is this: The EP is not maintainable under facts and in law. He is working as a teacher in Uppugunduru. The 1st JDr died. His legal heirs are in possession of the estate of the deceased 1st JDr. They are in a position to discharge the entire decree debt. The DHr has to file EP for recovery of the debt against the estate of the deceased. There are already some attachments against the salary of this JDr. The DHr has no right to seek attachment of the salary of this JDr. Hence, the EP may be dismissed. 6. As already noted, the executing Court over ruled the objections of the 4th JDr in his counter and ordered attachment of his salary as well by the impugned order. 7. Learned counsel for the 4th JDr contended as follows: 'The person who filed the EP on behalf of the DHr chit fund company has no authorization. The executing Court did not understand the ambit and scope of Section 128 of the Indian Contract Act, 1872. The executing Court ought to have seen that this JDr, being a guarantor, cannot be saddled with the responsibility and liability to pay the decree debt until the remedies against the principal debtor are exhausted. Instead of fastening the liability on this JDr, who is a poor teacher, liability should have been fastened on the other JDrs and the DHr ought to have proceeded against the estate of the deceased 1st JDr, which is in the hands of his legal heirs. As per Rule 71 of the Chit Fund Act, the DHr has to obtain a certificate from the Registrar to refer the execution petition to the civil Court as per the decision of the High Court in Punyamantula Venkata Viswa Sunidara Rao and another v. M/s. Margadarsi Chit Fund Private Limited. The EP is not maintainable. Rule 55 of the A.P. Chit Funds Rules, 2008, lays down that execution proceedings should be initiated by party concerned in accordance with the provisions of Section 71 of the Chit Fund Act ['the Act', for short]. The procedure for filing execution petition in the civil Court is only through the Registrar.
The EP is not maintainable. Rule 55 of the A.P. Chit Funds Rules, 2008, lays down that execution proceedings should be initiated by party concerned in accordance with the provisions of Section 71 of the Chit Fund Act ['the Act', for short]. The procedure for filing execution petition in the civil Court is only through the Registrar. He shall forward the application for execution to the proper authority along with a certificate issued by him under Section 71 of the Act. Section 71 of the Act provides that on a certificate issued, the Award acquires the status of a decree of the civil Court. As per Section 71 of the Act, if the award passed by the Registrar or his nominee is not carried out on a certificate issued by the Registrar, the award shall be deemed to be a decree of civil Court and shall be executed in the same manner as a decree of the civil Court. If the amount due under the award is not recovered or the order thereunder is not carried out, then only the award shall be forwarded to the Registrar with an application for execution, along with all information required by the Registrar, for issuance of certificate under Section 71 of the Act. The applicant is also required to state whether he desires to get it executed through the civil Court or through revenue authorities. The Deputy Registrar is not competent to issue a certificate. Only the Registrar is competent to issue a certificate. Since the certificate is issued by the Deputy Registrar, which is supposed to be issued by a Registrar, the certificate is not valid and consequently the EP is liable to be dismissed.' 8. We have given earnest consideration to the facts & submissions. 9. Admittedly, the principal debtor is the 1st JDr. He was a member of a chit. Eventually, he became liable to pay certain amount to the DHr Chit Fund Company, according to the DHr Chit Fund Company. Therefore, the DHr Chit Fund Company opted for resolution of the dispute by reference of the parties to arbitration. In the arbitral dispute, a claim for principal amount of Rs. 6,03,755/- with interest and costs was made. The Deputy Registrar of Chits, Prakasam District at Ongole, passed an award, on 20.05.2016, directing all the respondents including the 4th JDr to pay the chit amount.
In the arbitral dispute, a claim for principal amount of Rs. 6,03,755/- with interest and costs was made. The Deputy Registrar of Chits, Prakasam District at Ongole, passed an award, on 20.05.2016, directing all the respondents including the 4th JDr to pay the chit amount. He also issued recovery certificate under Section 71(a) of the Act on the same day, that is, on 20.05.2016. The execution petition was filed for recovery of the award amount with interest and costs, that is, for Rs. 6,57,595/- with subsequent interest besides costs of Rs. 17,741/- and costs of execution. The 4th JDr did not raise any of the present contentions, which are based on the provision of the Act, before the Court below as is evident from the contents of his Counter filed in the EP. 10. Coming to the contention of the 4th JDr with regard to lack of competency of the Deputy Registrar of Chits to issue recovery certificate under Section 71(a) of the Act, learned counsel for the 4th JDr contends that only the Registrar is competent to issue a certificate; whereas placing reliance on the decision in Madamanchi Anil Kumar v. Margadarshi Chit Fund Pvt. Limited (C.R.P. No. 2338 of 2018, dated 05.11.2018), learned counsel for the DHr/Chit Fund Company contends that even the Deputy Registrar is also competent to issue certificate in view of delegation of powers by the Government. 11. It is apt to refer to Section 71 of the Act, which, reads as under: '71. Money how recovered. -- Every order passed by the Registrar or the nominee under Section 68 or Section 69 and every order passed by the State Government in appeal under Section 70 for payment of any money shall, if not carried out,-- (a) On a certificate issued by the Registrar, be deemed to be a decree of a civil Court, and shall be executed in the same manner as a decree of such Court, or (b) be executed in accordance with the provisions of any law for the time being in force for recovery of amounts as arrears of land revenue.
Provided that no application for execution under clause (b) shall be made after the expiry of three years from the date fixed in the order, and if no such date is fixed, from the date of order.' In the decision referred to supra, a Division Bench held that clause (a) of Section 71 speaks about a certificate issued by the Registrar and that the term 'Registrar' appearing in Section 71(a) of the Act has also to be given the same meaning as found in Section 2(o). Therefore, the Additional, Joint, Deputy or Assistant Registrar appointed by the State Government, by a Notification in the Official Gazette, are competent to perform all the duties dischargeable by the Registrar under the Act and that any one of such delegates is competent to issue such certificate of recovery. Hence, the contention of the 4th JDr that the Deputy Registrar is not competent to issue the certificate needs no countenance being devoid of merit. 12. It is next forcefully contended by the learned counsel for the 4th JDr that award was passed, on 20.05.2016, and that recovery certificate was also issued on the same day and that the recovery certificate cannot be granted on the same day of passing of the award and that the order or award shall be communicated to the person liable to carry out the same and that only on failure to pay the amount, a certificate ought to be issued by the Registrar and that on issuance of such certificate only such decree shall be deemed as a decree of a civil Court. In this regard, reliance is placed on Rule 55 of the A.P. Chit Funds Rules, 2008 ('the Rules', for brevity), which read as under: '55. Procedure for execution of awards:-(1) Every order or award passed by the Registrar, or his nominee under Section 68 or 69 of the said Act, 1982, shall be forwarded by the Registrar to the foreman or to the party concerned with instructions that the foreman or, as the case may be, the party concerned should initiate execution proceedings forthwith according to the provisions of Section 71 of the said Act.
(2) If the amount due under the award is not forthwith recovered, or the order thereunder is not carried out, it shall be forwarded to the Registrar with an application for execution along with all information required by the Registrar, for the issue of certificate under Section 71 of the said Act. The applicant shall state whether he desires to get it execute the award through a civil Court or through the revenue authorities as provided under Section 71 of the said Act. (3) On receipt of such application for execution, the Registrar shall forward the same to the proper authority for execution along with a certificate issued by him under Section 71 of the said Act and a proclamation issued under Rule 54 in the manner prescribed therein. (4) Every order passed in appeal under Section 70 of the said Act shall also be executed in the manner laid down in sub-rules (2) and (3).' As per this provision, the award or order shall be forwarded to the foreman of the Chit Fund Company to initiate execution proceedings forthwith according to Section 71 of the Act and that in the event, the amount due under the Award is not forthwith recovered and the order thereunder is not carried out under sub-rule (2) of Rule 55, the award or order shall be forwarded to the Registrar with an application for execution along with all information for issuance of certificate under Section 61 of the said Act. In the application, the applicant shall state whether he desires to execute the award through a civil Court or through the revenue authorities as provided under Section 71 of the Act. On receipt of the application, the Registrar shall forward the same to proper authorities for execution along with a certificate issued under Section 71 of the Act and proclamation issued under Rule 54 of the Rules in the manner prescribed thereunder. As per the said Section, if the order or award passed is not carried out, on a certificate issued by the Registry, every such order/Award be deemed to be a decree of Civil Court and shall be executed in the same manner as a decree of such Court. 13.
As per the said Section, if the order or award passed is not carried out, on a certificate issued by the Registry, every such order/Award be deemed to be a decree of Civil Court and shall be executed in the same manner as a decree of such Court. 13. A conjoint reading and harmonious consideration of the provisions of law referred to supra would indicate that the party concerned is competent to initiate execution proceedings forthwith according to the provision of Section 71 of the Act. As per Section 71, as already noted, on a certificate issued by the Registrar, every order/award passed be deemed to be a decree of Civil Court and shall be executed in the same manner as a decree of such Court. The award has become final. Admittedly, the amount being claimed is not paid. Therefore, the contentions that a proclamation ought to have been issued by the Registrar and that without such proclamation, the execution petition filed before the Civil Court is not maintainable and such other contentions of the 4th JDr, which are adverted to supra, are all untenable. The judgment debtors did not contest the matter before the Arbitrator, though they are served with notices. It is for the 4th JDr to be diligent and pursue his defence, if any. The JDrs need not be informed by the DHr, that if the JDrs fail to pursue their defence, the normal legal consequences would follow. The date of the decree/award is 20.05.2016. The execution petition was filed on 02.08.2016. The 4th JDr filed a counter without any of the contentions, which are also now advanced before this Court. It is only contended before the Court below that he is working as a teacher in Uppugunduru and that the legal heirs of the 1st JDr are in possession of his estate and that they are in a position to discharge the entire decree debt and that there are already some attachments against the salary of this JDr. By the order impugned, the executing Court overruled the objections and directed attachment of the salary of the 4th JDr under Rule 48 of Order XXI of the Code and gave necessary directions in the orders to the garnishee of the 4th JDr as well. 14.
By the order impugned, the executing Court overruled the objections and directed attachment of the salary of the 4th JDr under Rule 48 of Order XXI of the Code and gave necessary directions in the orders to the garnishee of the 4th JDr as well. 14. Dealing with the last contention of the 4th JDr that the DHr has to exhaust the remedies against the principal debtor by first proceeding against his estate in the hands or his LRs, it is beneficial to refer to the decision in Ram Kishun v. State of U.P., (2012) 11 SCC 511 , wherein the Supreme Court held as follows: "In view of the provisions of Section 128 of the Contract Act, the liability of the guarantor/surety is coextensive with that of the debtor. In view of Section 146 of the Act in case there are more than one surety/guarantor, they have to share the liability equally unless the agreement of contract provides otherwise. However, in this case, though there are not some documents to show that there were two guarantors but who was the other guarantor is not evident from the record, nor had such a plea ever been taken by the appellants before the courts below. The creditor has a right to obtain a decree against the surety and the principal debtor. The surety has no right to restrain execution of the decree against him until the creditor has exhausted his remedy against the principal debtor for the reason that it is the business of the surety/guarantor to see whether the principal debtor has paid or not. The surety does not have a right to dictate terms to the creditor as to how he should make the recovery and pursue his remedies against the principal debtor at his instance." In State Bank of India v. Saksaria Sugar Mills Ltd. and others, AIR 1986 SC 868 , the Supreme Court while considering the provision of Section 128 of the Indian Contract Act held that the liability of a surety is immediate and is not deferred until the creditor exhausts his remedies against the principal debtor. (See also: Industrial Investment Bank of India Ltd. v. Biswasnath Jhunjhunwala, (2009) 9 SCC 478 ; and United Bank of India v. Satyawati London and others (4), AIR 2010 SC 3413 .
(See also: Industrial Investment Bank of India Ltd. v. Biswasnath Jhunjhunwala, (2009) 9 SCC 478 ; and United Bank of India v. Satyawati London and others (4), AIR 2010 SC 3413 . In view of the above settled legal position the instant contention of the 4th JDr needs no countenance. 15. In the facts & circumstances and the legal position obtaining and for the reasons aforesaid, this Court finds that none of the contentions of the 4th JDr merit consideration and that no grounds much less valid grounds are made out warranting interference with the impugned order of the executing Court and that therefore, the impugned order does not brook interference. 16. In the result, the Civil Revision Petition is dismissed. There shall be no order as to costs. Pending miscellaneous petitions if any, shall stand closed.