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2023 DIGILAW 429 (CHH)

Ajay Ghosh S/o. Madhavan v. IndusInd Bank Limited

2023-08-23

RAKESH MOHAN PANDEY

body2023
ORDER : 1. By invoking supervisory jurisdiction of this Court under Article 227 of the Constitution of India, the petitioner has challenged the order dated 03.01.2019 passed by the learned IVth Additional District Judge, Durg in Execution Case No. T.D. No. 49 of 2017 whereby the concerned Court has called a report from the District Jail, Durg with regard to expenses for one day civil-prison. 2. The facts of the present case are that the petitioner entered into a loan agreement with respondent No.1 on 07.06.2013 and due to a dispute with regard to the lapse of the petitioner in timely payment of installments, the matter was referred to arbitration by respondent No.1. Respondent No.1 unilaterally appointed an Advocate as the sole arbitrator and decided the seat of arbitration at Chennai without any information to the petitioner. The sole arbitrator passed the award on 18.11.2016 in favour of respondent No.1 upholding its claim of Rs.23,08,563/- and other miscellaneous expenses of Rs.2,000/-. 3. Respondent No.1 through respondent No.2 moved an application for execution of the said arbitral award under Section 36 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act, 1996’) against the petitioner and respondent No.3. There was a prayer to attach the movable and immovable properties of the judgment-debtor and such application was moved on 16.03.2017. A notice was issued to the petitioner and thereafter, Execution Case No. TD 49 of 2017 was registered. On 11.9.2017, the petitioner appeared before the Executing Court and on 21.02.2018 attachment warrant was issued. The petitioner after 11.09.2017 did not appear before the Executing Court and he was proceeded ex parte. On 09.10.2018, a report was submitted to the effect that the petitioner was not having any movable property. On 03.11.2018, an application under Order 21 Rules 37 & 38 of CPC was moved to pass an order against the petitioner with regard to civil jail. On 03.01.2019, the learned Executing Court called a report from the concerned District Jail. 4. Learned counsel for the petitioner would submit that after issuance of the attachment warrant, a report was submitted before the learned Executing Court to the effect that in the name of the petitioner there was no movable property and the learned Executing Court directly called a report according to the provisions of Order 21 Rule 37 of CPC regarding detention in civil-prison. He would submit that when a person has no sufficient means to repay the decreetal amount, no such order can be passed. 5. Dr. N.K. Shukla, learned Senior Counsel has placed reliance on the judgment of the Hon’ble Supreme Court in the matter of Jolly George Varghese and Another vs. The Bank of Cochin, reported in (1980) 2 SCC 360 . 6. On the other hand, learned counsel for respondents No.1 and 2 would submit that the learned Executing Court has committed an error of law in passing such order though an application under Order 21 Rules 37 & 38 of CPC was moved by respondent No.1 but learned Executing Court was under obligation to conduct an enquiry and adopt the process enumerated under Order 21 Rule 40 and Section 51 of CPC. He would submit that a report was submitted after issuance of attachment warrant stating that at the relevant time, the petitioner was not having movable property and thereafter, it was the duty of the learned Executing Court to hear the decree holder and record all the evidence in support of the application for execution and it was also necessary to provide sufficient opportunity to the judgment-debtor as to why he should not be committed to the civil prison. He would further submit that the aforesaid procedure has not been adopted by the learned Executing Court and directly after issuance of attachment warrant with regard to movable property, a report was called from the concerned jail for detention of the judgment-debtor in civil-prison. He also placed reliance on the judgment of the Hon’ble Supreme Court in the matter of Jolly George Varghese (supra). 7. On the other hand, learned counsel for respondent No.3 would adopt the arguments advanced by counsel for the petitioner. 8. I have heard learned counsel for the parties and carefully perused the documents present on the record. 9. It is not in dispute that the award was passed against the petitioner by the sole arbitrator on 18.11.2016 to the tune of Rs.23,08,563/-. An application under Section 36 of the Act, 1996 was moved before the District Court, Durg. Summons was issued to the petitioner and he appeared on 11.09.2017 thereafter, he did not appear and he was proceeded ex parte. An application under Section 36 of the Act, 1996 was moved before the District Court, Durg. Summons was issued to the petitioner and he appeared on 11.09.2017 thereafter, he did not appear and he was proceeded ex parte. On 21.02.2018, the attachment warrant with regard to movable property was issued and on 09.10.2018, a report was submitted to the effect that in the name of the petitioner there is no movable property thereafter, an application was moved by respondent No.1/decree holder under Order 21 Rules 37 & 38 of CPC and the learned Executing Court passed the order on 03.01.2019 whereby a report was called from the concerned jail regarding the expenses of one-day civil prison. 10. Order 21 Rule 37 of CPC deals with discretionary power to permit judgment-debtor to show cause against detention in prison whereas, Order 21 Rule 38 of CPC says about warrant of arrest to direct judgment-debtor to be brought up. In the present case, an application was moved under Order 21 Rule 37 of CPC. 11. Order 21 Rule 37 of CPC says as under : “37. Discretionary power to permit judgment debtor to show cause against detention in prison.- (1) Notwithstanding anything in these rules, where an application is for the execution of a decree for the payment of money by the arrest and detention in the civil prison of a judgment debtor who is liable to be arrested in pursuance of the application, the court shall, instead of issuing a warrant for his arrest, issue a notice calling upon on him to appear before the court on a day to be specified in the notice and show cause why he should not be committed to the civil prison: Provided that such notice shall not be necessary if the court is satisfied, by affidavit, or otherwise, that, with the object or effect of delaying the execution of the decree, the judgment debtor is likely to abscond or leave the local limits of the jurisdiction of the court. (2) Where appearance is not made in obedience to the notice, the court shall, if the decree holder so requires, issue a warrant for the arrest of the judgment debtor.” 12. It would be advantageous to deal with the provisions of Order 21 Rule 40 as well as Section 51 of CPC. (2) Where appearance is not made in obedience to the notice, the court shall, if the decree holder so requires, issue a warrant for the arrest of the judgment debtor.” 12. It would be advantageous to deal with the provisions of Order 21 Rule 40 as well as Section 51 of CPC. Order 21 Rule 40 of CPC says about proceedings on appearance of judgment-debtor in obedience to notice or after arrest. This provision says that when the judgment-debtor appears before the Court in compliance with a notice issued under Order 21 Rule 37 of CPC or after being arrested the Court shall proceed to hear the decree-holder and take all such evidence and thereafter, the judgment-debtor shall be provided an opportunity of showing cause why he should not be committed to civil prison. At the same time, according to the provisions of Order 21 of Rule 37 of CPC, if a person fails to pay the award amount or decreetal amount, such person may be arrested and detained in the civil prison in pursuance of the application moved by the decree-holder and the concerned Court shall pass appropriate order in this regard. Section 51 of CPC says that subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree by delivery of any property specifically decreed; by attachment and sale or by sale without attachment of any property; by arrest and detention in prison; by appointing a receiver; or in such other manner as the nature of the relief granted may require. It is also provided that the order of detention in prison shall not be ordered unless, after giving the judgment debtor an opportunity to show cause why he should not be committed to prison. 13. In the present case, on 09.10.2018 a report was submitted to the effect that the petitioner had no movable property for the execution of the decree at the relevant time and thereafter, respondent No.1 directly moved an application under Order 21 Rule 37 of CPC and the Court below committed an error of law in entertaining such an application and further in calling a report from the concerned jail with regard to expenses of one day civil-prison. Learned Executing Court ought to have carefully perused the provisions of Order 21 Rule 40 of CPC before passing any order. 14. Learned Executing Court ought to have carefully perused the provisions of Order 21 Rule 40 of CPC before passing any order. 14. The Hon’ble Supreme Court in the matter of Jolly George Varghese (supra) while dealing with a similar issue in paragraph 13 held as under : “In the present case the debtors are in distress because of the blanket distraint of their properties. Whatever might have been their means once, that finding has become obsolete in view of later happenings; Sri Krishnamurthi Iyer for the respondent fairly agreed that the law being what we have stated, it is necessary to direct the executing court to readjudicate on the present means of the debtors vis-a-vis the present pressures of their indebtedness, or alternatively whether they have had the ability to pay but have improperly evaded or postponed doing so or otherwise dishonestly committed acts of bad faith respecting their assets. The court will take note of other honest and urgent pressures on their assets, since that is the exercise expected of the court under the proviso to s. 51. An earlier adjudication will bind if relevant circumstances have not materially changed.” 15. It is also held in this judgment that for a judgment-debtor bona fidely unable to pay off his debt, an order for his detention in prison in execution of the decree would be violative of Article 21 of the Constitution of India. The fallout and consequence of the above discussion would be that the order passed by the learned Executing Court dated 03.01.2019 is hereby set aside. Learned Executing Court is directed to take note of the provisions of Order 21 Rule 40 of CPC before passing any order with regard to the detention of the petitioner in civil prison after affording due opportunity of hearing to both the parties. 16. With the aforesaid observations and directions, this petition is disposed of.