Century Heatreats (P) Ltd. v. Punjab National Bank, Head Office No. 7, Bhikaji Cama Place, New Delhi, Through Its Senior Manager
2022-04-27
VIVEK SINGH THAKUR
body2022
DigiLaw.ai
ORDER : Petitioners herein are Judgment Debtors (hereinafter referred to as ‘JDs’), who have suffered preliminary decree dated 26.06.2002 which was amended on 08.08.2002 and it was made final by passing final decree dated 26.06.2007 against petitioners-JDs alongwith another JD Janki Khanna (now deceased), and in favour of respondent- Decree Holder (hereinafter referred to as ‘DH-Bank’), whereby a preliminary decree for recovery of the sum of Rs.3,56,989/- with costs and interest @ 9% per annum from the date of filing of the suit till realization of the decretal amount has been passed with further condition that in case of failure on the part of JDs to pay the amount in question within 60 days from the date of passing of judgment, DH-Bank will also be at liberty to put the property to sale as described in para No.8 of the plaint so as to realize the decretal amount in accordance with law. Description of mortgaged property has also been given in the Decree Sheet. 2. On failure of JDs to make payment of decretal amount, DH-Bank has initiated execution proceedings against the JDs by filing an application under Order 21 Rule 66 read with Section 151 Code of Civil Procedure (CPC) for proclamation of sale in execution of judgment and decree by giving details of mortgaged property therein which was mentioned in judgment and decree. At the time of filing this application, amount recoverable was calculated by the Bank, as on 31.01.2008, as Rs.7,80,731/-. Suit was filed by DH-Bank originally against present petitioners and one Ram Lubhaya Khanna. In Execution Petition, petitioners herein are JD Nos.1 and 3 whereas, for death of Ram Lubhaya Khanna, his wife Janki Khanna, being his legal heir, was arrayed as defendant No.2 and thus was JD No.2. JD No.3 is one of the Directors of JD No.1. Mortgaged property belongs to JD No.2. 3. Objection petition filed by JDs was dismissed on 21.04.2010. Thereafter vide order dated 03.07.2010, sale warrant of mortgaged property was issued, but for want of filing of Jamabandi, the said warrant could not be issued till 28.04.2011. In the meanwhile, on 28.05.2011, it was informed that JD No.2 Janki Khanna had expired and this fact was brought in the notice of Executing Court on 28.05.2011. Whereupon, execution petition was adjourned for taking consequential steps for her death.
In the meanwhile, on 28.05.2011, it was informed that JD No.2 Janki Khanna had expired and this fact was brought in the notice of Executing Court on 28.05.2011. Whereupon, execution petition was adjourned for taking consequential steps for her death. On 30.11.2011, it was stated on behalf of DH-Bank that legal representative of JD No.2 was already on record being JD No.3 and, therefore, estate of deceased was duly represented by JD No.3. The said statement was made in presence of learned counsel representing JD Nos. 1 and 3. 4. Thereafter, JD Nos. 1 and 3 did not appear and were proceeded ex-parte vide order dated 07.01.2012. The case was listed for numerous dates and ultimately on 09.11.2012 property of JD No.3 Sanjeev Malhotra was ordered to be attached by issuing necessary warrants of attachment. Since then, till 18.05.2015, no one had appeared on behalf of JDs and on 01.04.2015 name of JD No.2 Janki Khanna was ordered to be deleted on the basis of statement of learned counsel for DH-Bank, whereby it was reiterated that legal representative of JD No.2 was already on record as JD No.3. For that date, JD Nos. 1 and 3 were duly served, but no one had appeared for them and warrant of sale of property of JD No.3 was issued. 5. On 18.05.2015 JD No.3 had put in appearance in the Court alongwith counsel and had given statement on his behalf and also on behalf of JD No.1 that he will pay entire amount alongwith interest to satisfy judgment and decree within two months by depositing entire due amount in the Court. His statement to this effect was also recorded separately and was taken on record. Since JD Nos. 1 and 3 were ready to pay the amount of decree alongwith interest, warrant of sale was recalled unexecuted. On that date, application was also filed on behalf of JD No.3 under Order 21 Rules 58 and 59 CPC and case was adjourned for 25.05.2015. On 25.05.2015, case was adjourned on request of DH-Bank seeking time to file reply to the application and matter was adjourned for 24.06.2015, on which date, it was informed to the Court on behalf of JDs that JD No.3 was making arrangement to pay amount as per his statement dated 18.05.2015, whereupon, case was adjourned for 25.07.2015. 6.
On 25.05.2015, case was adjourned on request of DH-Bank seeking time to file reply to the application and matter was adjourned for 24.06.2015, on which date, it was informed to the Court on behalf of JDs that JD No.3 was making arrangement to pay amount as per his statement dated 18.05.2015, whereupon, case was adjourned for 25.07.2015. 6. On 25.07.2015, instead of making payment as agreed, JD No.3 had filed two applications one under Section 151 CPC and another under Order 22 Rule 10 CPC, whereupon, case was adjourned for 07.08.2015 for filing reply to both applications. Ultimately, replies were filed on 27.08.2015 and case was adjourned for consideration on 01.09.2015. 7. After listing the execution petition on numerous occasions, on 05.12.2015, application filed under Order 22 Rule 10 CPC for bringing on record actual legal heir of deceased JD No.2 Janki Khanna, was rejected by the Executing Court on the ground that Janki Khanna had expired on 07.03.2011, whereas, application was filed on 22.07.2015 and further that JD No.3 despite undertaking to make payment of entire amount had not deposited any amount, but was lingering on the matter on one pretext or the other and on that date, it was informed by DH-Bank that JD No.3 had no property available for attachment. Therefore, learned counsel for DH-Bank was permitted by adjourning the case to file appropriate application for the arrest of JD No.3. 8. On 24.12.2015, DH-Bank filed an application for arresting and detaining JD No.3 in civil imprisonment. For non- payment of any amount despite giving undertaking before the Court on 18.05.2015, the Executing Court, with observation that recovery of decretal amount was not possible through ordinary process, allowed the application for arrest and detention of JD No.3 and on depositing necessary charges, warrant of arrest was ordered to be issued against JD Sanjeev Malhotra on 24.02.2016. 9. Petitioners (JDs No.1 and 3) had approached this Court by filing CMPMO Nos.66 and 67 of 2016 assailing orders dated 05.12.2015 and 24.02.2016. These CMPMOs were decided on 22.03.2016, whereby order passed by the Executing Court dismissing application filed by JD No.3 under Order 22 Rule 10 CPC was set aside and legal heirs of deceased JD No.2 Janki Khanna namely Sanjeev Seth and Archana Seth were directed to be impleaded in Execution Petition on filing formal application by DH-Bank in the Executing Court.
However, order dated 24.02.2016, whereby warrant of arrest was issued against JD No.3 (petitioner No.2 herein) was not interfered and petition CMPMO No.67 of 2016 was dismissed. 10. Petitioners (JD Nos. 1 and 3) had also approached this High Court by filing a petition bearing CMPMO No.137 of 2016, titled as M/s Century Heatreats (P) Ltd. & another vs. Punjab National Bank, seeking direction to the Executing Court to decide their application filed under Order 21 Rules 58 and 59 CPC and another application preferred by them under Section 151 CPC for sale of mortgaged property before proceeding further. The said petition was disposed of vide order dated 08.04.2016 directing the Executing Court to decide both these applications in accordance with law, as expeditiously as possible, but not later than 31.05.2016. 11. In first application filed under Order 21 Rules 58 and 59 CPC, it is claim of petitioners (JD Nos. 1 and 3) that property of JD No.3 subject matter of proclamation of sale in pursuant to order passed by the Executing Court was not free from encumbrances, but under the charge of Syndicate Bank and Bank of Baroda and, thus, could not have been legally attached and, therefore, a prayer has been made that property detailed in application under the charge of Syndicate Bank and in possession of Bank of Baroda may not be auctioned and auction order be recalled. 12. In second application filed under Section 151 CPC, a prayer has been made firstly, to recall the order dated 30.11.2011, whereby JD No.3 was considered to be legal representative of deceased JD No.2 and secondly, to recall all orders passed thereafter and thirdly, to order sale of mortgaged property belonging to JD No.2 in terms of decree under execution and fourthly, to keep order dated 18.05.2015 directing auction of property of JD No.3 in abeyance. 13. In the meanwhile, Syndicate Bank had also filed an application under Order 21 Rules 26, 29, 58 and 59(b) read with Sections 47 and 151 CPC, on the ground that one flat measuring 34.6 Sq.Mts. owned by JD No.3, attached in execution proceedings by the Executing Court, was under charge and in possession of the Bank since 21.04.2011 and the said Bank had already exercised its action under The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (in short ‘the SARFAESI Act’).
owned by JD No.3, attached in execution proceedings by the Executing Court, was under charge and in possession of the Bank since 21.04.2011 and the said Bank had already exercised its action under The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (in short ‘the SARFAESI Act’). The said application has been allowed and disposed of by the Executing Court vide order dated 27.04.2016 with observation that for disposal of that application, other applications filed under Section 151 CPC, Sections 24 and 151 CPC had become infructuous and accordingly dismissed. 14. On 23.06.2016, JD No.3 had also filed an application under Section 151 CPC before the Executing Court for passing order in compliance of order dated 22.03.2016 passed by this High Court in CMPMO NO.66 of 2016 and order dated 08.04.2016 in CMPMO NO.137 of 2016. It is also case of JD that he has referred one Ramesh Sharma to the DH-Bank who was a prospective buyer of mortgaged property, and had offered himself, in writing, to be a purchaser of the said property. JDs have sought direction to Executing Court to decide both applications as directed by this Court vide order dated 08.04.2016 passed in CMPMO No.137 of 2016; directing the Executing Court to execute the decree strictly in its terms and not to travel beyond the scope of decree and not to flout the same; and also direction to initiate independent inquiry against the Bank official making false statement to misguide the Executing Court particularly to avoid the sale of mortgaged property already available with the Bank and to ascertain the reason and consideration for such conduct of the bank officials. 15. In present petition, it is contended on behalf of the petitioner herein that DH-Bank cannot proceed to attach and sell the property of JD No.3 by taking steps for attachment of sale of property of JD No.3 without attaching the property of JD No.2, which is mortgaged with the Bank for realization of decretal amount. DH-Bank is adopting a path which is beyond the scope of decree and the Executing Court by allowing such prayer of DH-Bank is traveling beyond the decree.
DH-Bank is adopting a path which is beyond the scope of decree and the Executing Court by allowing such prayer of DH-Bank is traveling beyond the decree. Whereas, Executing Court has no jurisdiction beyond the decree and further that in application filed under Order 21 Rule 66 CPC, DH-Bank has prayed for attachment and sale of mortgaged property only and the property belonging to petitioner has been ordered to be attached and sold by the Executing Court beyond the scope of pleadings and relief sought by the DHBank in its execution petition. Whereas, Executing Court cannot go beyond the decree and has only to execute the decree granted by the competent Court either may be the Trial Court or the Appellate Court. 16. On this count, reliance has been placed by learned counsel for petitioners on Union Bank of India vs. Manku Narayana, (1987) 2 SCC 335 : AIR 1987 SC 1078 ; TCI Finance Ltd. Vs. Calcutta Medical Centre Ltd. and another, (2005) 8 SCC 41 ; Deepa Bhargava and another vs. Mahesh Bhargava and others, (2009) 2 SCC 294 ; Bachhaj Nahar vs. Nilima Mandal & others, AIR 2009 SC 1103 ; State of J. & K. & Another vs. Ajay Dogra, AIR 2011 SC 1830 ; and Shivashankar Gurgar vs. Dilip, (2014) 2 SCC 465 . 17. Reliance has also been placed on judgment of Division Bench of this Court dated 22.07.2015, passed in LPA No.411 of 2012, titled as Regional Provident Fund Commissioner Employee’s Provident Fund Organization vs. R.C. Gupta and others; as well as decision of Chattisgarh High Court passed in WP (227) No.691 of 2016, titled as M/s Indusind Bank Limited vs. Sunil Kumar Sahu & another. 18. It is also contended on behalf of the petitioner that despite passing of order dated 08.04.2016 in CMPMO No.137 of 2016, Executing Court has not passed any order in the applications preferred on behalf of JD No.3, but Executing Court has passed order only in application preferred by Syndicate Bank. Whereas, the said Court was duty bound to decide the applications filed by the petitioner within time stipulated in the order passed by this Court. 19.
Whereas, the said Court was duty bound to decide the applications filed by the petitioner within time stipulated in the order passed by this Court. 19. It is contended on behalf of DH-Bank that petitioner has not approached this Court with clean hands as he had made the statement on oath in the Executing Court on 18.05.2015 that he shall pay entire decretal amount alongwith interest by depositing the same in the Court within two months and on that basis, warrant of sale of property of JD No.3 was recalled unexecuted and despite that petitioner had not paid any single penny to satisfy the decree and in order to delay the execution, he has been filing petitions in this Court and further that JD No.3 is main beneficiary of the loan amount and only for that reason he had agreed to pay entire decretal amount and further that bank had made an endeavour to sell the mortgaged property, but latest particulars of mortgaged property were not properly identifiable on the spot and, therefore, bank undertook exercise of attachment and sale of property of JD No.3 to recover decretal amount for which bank is entitled in accordance with law and there is no ulterior motive or extraneous reasons for switching over to attachment and sale of property of JD No.3 instead of mortgaged property and, therefore, prayer of JD No.3 seeking direction to attach and sell mortgaged property first is not tenable and liable to be rejected. It is also submitted on behalf of the DH-Bank that the statement by the counsel for DH-Bank before Executing Court that JD No.3 is legal representative of JD No.2 was not made under wrong impression, but bonafide belief for the reasons that to the best of knowledge of the bank official JD No.3 has also inherited property of deceased Janki Khanna. The fact stated to this effect in reply to para-8 has not been specifically denied by JD No.3 in its rejoinder. It is further submitted on behalf of DH-Bank that irrespective of the aforesaid facts, Bank has taken steps for impleadment of legal heirs of deceased Janki Khanna in execution proceedings and, therefore, grievance of the petitioner on this count does not survive. 20.
It is further submitted on behalf of DH-Bank that irrespective of the aforesaid facts, Bank has taken steps for impleadment of legal heirs of deceased Janki Khanna in execution proceedings and, therefore, grievance of the petitioner on this count does not survive. 20. Regarding right of the bank to proceed further against the guarantor or property of JD other than mortgaged property, reliance has been placed on State Bank of India vs. Messrs. Indexport Registered and others, AIR 1992 SC 1740 : (1992) 3 SCC 159 ; and Ashwani Kumar Abrol and another vs. S.B.I and another, 1988(2) Sim. L. C. 175. 21. In Manku Narayana’s case, Division Bench of the Supreme Court had held that even if decree is a composite one against principal debtor, mortgaged property and the guarantor, then Bank to recover decretal amount, must proceed first against the mortgaged property and then against the guarantor and, therefore, learned counsel for the petitioners-JDs is contending that in present case, action of the Bank and order passed by the Executing Court in pursuance thereto are beyond the scope of decree as well as pleadings and relief sought by the Bank as well as decree. 22. Learned Single Bench of this High Court in Ashwani Kumar Abrol’s case, taking into consideration pronouncement of the Supreme Court in Manku Narayana’s case, had observed that proposition that a Decree Holder must exhaust, in the first instance, his remedy against principal debtor suffers from the vice of total vagueness, for the stage when such remedy would be deemed to have been exhausted will have to be necessarily spelt out and if not, such proposition would create almost in insurmountable difficulties in the way of Decree Holder and it was held that provisions of law cannot and should not be interpreted so as to deny to the Decree Holder the fruits of the decree. Referring Manku Narayana’s case, it was observed that in this judgment also it was held that if the Executing Court is satisfied about inadequacy of the mortgaged property to meet the decretal amount in full, the Decree Holder would be entitled to simultaneously pursue other remedies either against principal debtor or the surety for recovery of expected shortfall. 23. Supreme Court in Bank of Bihar vs. Damodar Prasad, AIR 1969 SC 297 , has held as under:- “It is the duty of the surety to pay the decretal amount.
23. Supreme Court in Bank of Bihar vs. Damodar Prasad, AIR 1969 SC 297 , has held as under:- “It is the duty of the surety to pay the decretal amount. On such payment he will be subrogated to the rights of the creditor under Section 140 of the Indian Contract Act, and he may then recover the amount from the principal. The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. In the present case the creditor is banking company. A guarantee is a collateral security usually taken by a banker. The surety will become useless if his rights against the surety can be so easily cut down.” 24. It is noticeable that in Indexport’s case, Three Judges’ Bench of the Supreme Court taking into consideration pronouncement in Damodar Prasad’s case, has overruled the verdict of the Division Bench of the Supreme Court pronounced in Manku Narayana’s case. Following paragraphs would be relevant in this regard:- “10. … … …The question arises whether a decree which is framed as a composite decree, as a matter of law, must be executed against the mortgage property first or can a money decree, which covers whole or part of decretal amount covering mortgage decree can be executed earlier. There is nothing in law which provides such a composite decree to be first executed only against the property. It will be noticed that there is no preliminary mortgage decree either. It is a final mortgage decree for sale of shop after three months. The decree is not in the prescribed Form No.5 of Appendix ‘D’ to the Code of Civil Procedure. … … … 13. In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including the guarantor. It is the right of the decree-holder to proceed with it in a way he likes. Section 128 of the Indian Contract Act itself provides that "the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract”. 14. In Pollock & Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728 it is observed thus: "Coextensive-Surety's liability is coextensive with that of the principal debtor.
14. In Pollock & Mulla on Indian Contract and Specific Relief Act, Tenth Edition, at page 728 it is observed thus: "Coextensive-Surety's liability is coextensive with that of the principal debtor. A surety's liability to pay the debt is not removed by reason of the creditor's omission to sue the principal debtor. The creditor is not bound to exhaust his remedy against the principal before suing the surety, and a suit may be maintained against the surety though the principal has not been sued." 15. In Chitty on Contracts, 24th Edition, Volume 2 at page 1031 paragraph 4831 it is stated as under: "Conditions precedent to surety.—Prima facie the surety may be proceeded against without demand against him, and without first proceeding against the principal debtor." 16. In Halsbury's Laws of England, Forth Edition paragraph 159 at page 87 it has been observed that "it is not necessary for the creditor, before proceeding against the surety, to request the principal debtor to pay, or to sue him, although solvent, unless this is expressly stipulated for." 17. In Hukumchand Insurance Co. Ltd. v. The Bank of Baroda and others, AIR 1977 Karnataka 204, a Division Bench of the High Court of Karnataka had an occasion to consider the question of liability of the surety vis-a-vis the principal debtor. Venkatachaliah, J. (as His Lordship then was) observed: "The question as to the liability of the surety, its extent and the manner of its enforcement have to be decided on first principles as to the nature and incidents of surety ship. The liability of a principal debtor and the liability of a surety which is coextensive with that of the former are really separate liabilities, although arising out of the same transaction. Notwithstanding the fact that they may stem from the same transaction, the two liabilities are distinct. The liability of the surety does not also, in all cases, arise simultaneously." 18. It will be noticed that the guarantor alone could have been sued, without even suing the principal debtor, so long as the creditor satisfies the court that the principal debtor is in default. … … … 22. The decree for money is a simple decree against the judgment debtors including the guarantor and in no way subject to the execution of the mortgage decree against the judgment debtor No. 2.
… … … 22. The decree for money is a simple decree against the judgment debtors including the guarantor and in no way subject to the execution of the mortgage decree against the judgment debtor No. 2. If on principle a guarantor could be sued without even suing the principal debtor there is no reason, even if the decretal amount is covered by the mortgaged decree, to force the decree-holder to proceed against the mortgaged property first and then to proceed against the guarantor. It appears the above quoted observations in Manku Narayana's case are not based on any established principle of law and/or reasons, and in fact, are contrary to law. It, of course depends on the facts of each case how the composite decree is drawn up. But if the composite decree is a decree which is both a personal decree as well as a mortgage decree, without any limitation on its execution, the decree-holder, in principle, cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone and told that only if the amount recovered is insufficient, he can be permitted to take recourse to the execution of the personal decree. For a simple mortgage decree as prescribed in Form No. 5 of Appendix ‘D’ of the Code of Civil Procedure it could be so because the decree provides like that. It is only when the sum realised on sale of the mortgaged property is insufficient then the judgment-debtor can be proceeded with personally. But the observations of the court in Manku Narayana's case that even if the two portions of the decree are severable and merely because a portion of the decretal amount is covered by the mortgage decree, the decree-holder per force has to proceed against the mortgaged property first are not based on any principle of law. With all due respect to the learned Judges, in the light of the observations made by us earlier, we are constrained to observe that Manku Narayana's case was not correctly decided. … … … 32. The guarantor in the present suit never took any plea to the effect that his liability is only contingent if remedies against the principal debtor fail to satisfy the dues of the decree-holder.
… … … 32. The guarantor in the present suit never took any plea to the effect that his liability is only contingent if remedies against the principal debtor fail to satisfy the dues of the decree-holder. If such a plea had been taken and the court trying the suit had considered the plea and gave any finding in favour of the guarantor, then it would have been a different position. But in the present case, on the face of the decree, which has become final, the court cannot construe it otherwise than its tenor. No executing court can go beyond the decree. All such pleas as to the rights which the guarantor had, had to be taken during trial and not after the decree while execution is being levied.”” 25. In view of settled exposition of law of the land, discussed supra, plea of the petitioners-JDs that before taking any action against JD NO.3, DH-Bank as well as Executing Court, should exhaust possibility of recovering the decretal amount from the mortgaged property or principal debtor, is not tenable. 26. It is also noticeable, in present case, that loan was taken in the name of JD No.1 Firm by Ram Lubhaya Khanna and JD No.3, who were Chairman and Director of JD No.1 Firm at that time. Therefore, real beneficiary of the loan were Ram Lubhaya Khanna and JD No.3. Both of them had extended guarantee for repayment of the loan. In addition, Ram Lubhaya Khanna had also mortgaged his property. Therefore, present case is not a case where principal debtor was someone else and guarantor is someone else. Principal debtor is juristic person, wherein JD No.3 is beneficiary being Director and is also liable to pay decretal amount as principal debtor on behalf of JD No.1. 27. In the pronouncements, referred by learned counsel for the petitioners-JDs, in TCI Finance Limited’s, Deepa Bhargva’s, Bachhaj Nahar’s, Ajay Dogra’s and Shivashankar Gurgar’s cases (supra), the Supreme Court has held that cannot travel beyond the pleadings and relief sought and Court cannot make out a case not pleaded and grant relief not sought for. Further that Executing Court cannot go beyond the decree except when the decree is nullity or is without jurisdiction as Executing Court has no jurisdiction to modify the decree, but it has to execute a decree as it is. 28.
Further that Executing Court cannot go beyond the decree except when the decree is nullity or is without jurisdiction as Executing Court has no jurisdiction to modify the decree, but it has to execute a decree as it is. 28. In view of discussion hereinabove, especially pronouncements by Three Judges’ Bench in Indexport’s case, I find that Executing Court is not travelling beyond the decree or exceeding its jurisdiction. 29. It has come on record that DH-Bank has rectified mistake of its officials whereby it was informed to the Court that JD No.3 is legal heir of JD No.2 and now sons of JD No.2 are stated to have been impleaded as party in Execution Petition. 30. In the aforesaid facts and circumstances, prayer in present petition, is not sustainable except the prayer that before proceeding further Executing Court has to decide both applications (referred in Para-11 and 12 of this Order) as directed by this Court vide order dated 08.04.2016, passed in CMPMO No.137 of 2016. 31. Accordingly, present petition is disposed of with direction to the Executing Court to decide both applications as directed by this Court vide order dated 08.04.2016 in CMPMO No.137 of 2016 first before proceeding further and it is also clarified that other prayers made in the petition, being devoid of any merit, are rejected. Pending application(s) also stand disposed of.