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2025 DIGILAW 1054 (AP)

K. Panduranga Reddy v. K. Ravichandra Reddy

2025-09-09

B.S.BHANUMATHI

body2025
ORDER : 1. This revision petition under Section 115 C.P.C. is filed by the J.Dr. aggrieved by the order, dated 28.01.2025, passed in E.P.No.60 of 2022 in O.S.No.393 of 2015 on the file of the Court of the Principal Senior Civil Judge, Kurnool, filed by the respondent herein under Order XXI, Rules 37 & 38 C.P.C. 2. The facts, briefly stated, are as follows: a. The suit, O.S.No.393 of 2015, was filed by K. Ravi Chandra Reddy for recovery of a sum of Rs.5,95,000/- on the foot of an agreement of sale, dated 12.09.2014, against the defendant, K. Pandu Ranga Reddy. The said suit was decreed on 16.02.2022. b. Thereafter, E.P.No.60 of 2022 was filed on the file of the Court of Principal Senior Civil Judge, Kurnool, and the Court ordered for arrest of the defendant / J.Dr., K.Pandu Ranga Reddy, on 04.04.2024. Subsequently, the D.Hr. also obtained police aid against the J.Dr. c. The J.Dr., K. Pandu Ranga Reddy filed insolvency petition vide I.P.No.19 of 2024. The D.Hr. has got arrested the J.Dr. on 17.12.2024 and was produced before the Court of Principal Senior Civil Judge, Kurnool. On 17.12.2024, the Court ordered as follows: “J. Dr produced on execution of the warrant. Already he filed I.P.No.19 of 2024 for obtaining protection order, call on 28.01.2025. J.Dr is directed to be released on execution of the bond.” d. The J.Dr executed personal bond as per the direction of the executing Court and was released. 3. Later, on 28.01.2025, the execution Court directed the issuance of a fresh warrant. The docket order impugned in the revision reads as follows: “D. Hr called absent. J.Dr called present. Protection order not filed by J.Dr. Hence, issue fresh arrest warrant against J.Dr under Order 21, R.38 CPC along with police aid, on payment of process. Call on 28-02-2025.” 4. The revision petitioner raised mainly the following grounds: a. Since the revision petitioner filed insolvency petition, the execution Court ought to have dismissed the execution petition. b. The direction of the execution Court to produce ‘protection order’ from the insolvency Court is not correct as the protection order could be granted under Section 31 of the Provincial Insolvency Act, 1920, only after adjudication of the petitioner as an insolvent and not during the pendency of the insolvency proceedings as was also held by this High Court in Rachamalla Nagi Reddy Vs. Pasupula Naganna , 2004 (6) ALT 220 . c. The subsequent issuance of arrest warrant with the police aid on 28.01.2025 is illegal; 5. The learned counsel for the revision petitioner / J.Dr. submitted that as per Section 55(4) C.P.C., when the petitioner / J.Dr. expresses his intention to apply to the Court to be declared as an insolvent and furnishes security to the satisfaction of the Court that he will, within one month, so apply and that he would appear whenever called upon in any proceeding or upon the decree in execution of which he was arrested and the Court may release him from arrest and in case, he fails to apply, the Court may direct the security to be realized or commit him to the civil prison in execution of the decree. He further submitted that as there is no provision for granting interim protection order, re-arrest of JDr., cannot be ordered till the proceedings of adjudication of insolvency are concluded, or else, the object of Section 55(4) C.P.C. would be defeated in releasing the J.Dr. to apply for such adjudication. 6. The learned counsel for the petitioner / J.Dr. relied on the decision in Sanapala Narasamma and Ors. Vs. Mallana Laxminarayana and Ors., AIR 2000 AP 219 wherein it was held at paragraph No.12 as follows: “12. Apparently, there is a conflict of views taken in Sinnaswamy Chettiar v. Aligi Goundan and others , AIR 1924 Mad 893(1) and Nallagatti Goundan v. Ramana Goundan , AIR 1925 Mad 170. Though in Sinnaswamy Chettiar v. Aligi Goundan (supra), there is no discussion about powers of the Court under Section 5 of Provincial Insolvency Act, but it has been held categorically that unless the judgment debtor is declared as insolvent, protection orders under Section 31 cannot be passed in his favour. Provision under Section 23 has also been considered in this judgment. It has been held that before adjudication, an insolvent has no right to be protected unless he is arrested in execution of a decree. The provision under Section 23 clearly contemplated that an order under it can be passed only where the judgment debtor has been actually arrested. It is obvious that an order under Section 23 of the Provincial Insolvency Act cannot be passed where the judgment debtor apprehends arrest and approaches the Insolvency Court for protection to prevent his arrest. The provision under Section 23 clearly contemplated that an order under it can be passed only where the judgment debtor has been actually arrested. It is obvious that an order under Section 23 of the Provincial Insolvency Act cannot be passed where the judgment debtor apprehends arrest and approaches the Insolvency Court for protection to prevent his arrest. Such a protection from arrest could be ordered only under Section 32 of Provincial Insolvency Act which can be availed only after adjudication and not during pendency of adjudication proceedings. As against this in the case of Nallagatti Goundan v. Ramana Goundan , AIR 1925 Mad 170 it has been categorically held that under Section 5 of Provincial Insolvency Act, the Insolvency Court has powers to grant ad-interim protection to a person who has applied for being adjudicated as insolvent during the pendency of such proceedings. In the case of Jewraj Kharewalla v. Lalbhai Kalyanbhai and Company , AIR 1926 Cal 1011 , a Division Bench of Calcutta High Court has held that there is no provision in the Provincial Insolvency Act in respect of orders to prevent the arrest of the petitioner pending the hearing of the petition for insolvency. The learned Judge reserved their opinion as to whether the Court has jurisdiction to make an order of interim protection under inherent powers under Section 5 of the Provincial Insolvency Act. In the case of Ch. Ghulam Sarwar v. Guru Piara and others , AIR 1934 Lahore 113 (2), the Lahore High Court clearly held that Insolvency Court has no power under Section 5 of Provincial Insolvency Act to issue a protection order to prevent the arrest of the judgment debtor against whom the warrant of arrest was issued. The Court can direct release of the judgment debtor after the arrest by virtue of powers conferred under Section 23 of the Provincial Insolvency Act. 13. It may be mentioned that the judgements of Madras High Court rendered prior to 1954 are binding on this Court. In view of conflicting views expressed in the two Division Bench decisions of Madras High Court referred to above I would have been inclined to frame a question and refer the matter for consideration by Division Bench of this Court. But from the facts of this case it does not appear to be necessary. 14. In view of conflicting views expressed in the two Division Bench decisions of Madras High Court referred to above I would have been inclined to frame a question and refer the matter for consideration by Division Bench of this Court. But from the facts of this case it does not appear to be necessary. 14. It cannot be disputed that under Section 23 of Provincial Insolvency Act, the Insolvency Court has limited powers to order protection even during the pendency of adjudication proceedings. Those powers are restricted to passing an order for release of judgement debtor who has been actually arrested in execution of a money decree, on such terms as to security, as may be reasonable and necessary for reasons to be recorded. Section 23 does not empower the Court to pass an order to prevent the arrest of the judgment debtor who is sought to be arrested an detained in prison for execution of a decree. Section 23 would come into play only where the debtor is under arrest or imprisonment in execution of the money decree passed by any Court. The facts of this case as seen from the order under revision in paras 6 and 7 would show that the debtor was already detained in prison as on the date of the order namely 27-11-1998. The operative portion of the order in para 9 mentions; "Therefore, the petitioner who is already under arrest for (sic in) civil prison is released in E.P. No. 2 of 1996 in O.S. No. 30 of 1989." Thus, in this case the order that has been passed is strictly in conformity with Section 23 of Provincial Insolvency Act. Though the learned Senior Civil Judge has observed that the petitioner was not entitled to get interim protection order under Section 31 Provincial Insolvency Act, it must be deemed to be an order passed under Section 23 of Provincial Insolvency Act on the basis that the debtor was already arrested as on the date of passing of the orders.” 7. On the other hand, the learned counsel for the respondent / D.Hr. supported the order impugned in this revision. 8. Section 5 of the Provincial Insolvency Act, 1920 reads as under:- "5. On the other hand, the learned counsel for the respondent / D.Hr. supported the order impugned in this revision. 8. Section 5 of the Provincial Insolvency Act, 1920 reads as under:- "5. General powers of Courts :- (1) Subject to the provisions of this Act, the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction. (2) Subject as aforesaid, High Courts and District Courts, in regard to proceedings under this Act in Courts subordinate to them, shall have the same powers and shall follow the same procedure as they respectively have and follow in regard to civil suits." 9. Though the learned counsel for the respondents before the High Court in Sanapala Narasamma and others (supra), argued that the insolvency Court shall have the same power and follow the same power as a civil Court on original jurisdiction, there is no express finding that no interim protection order can be granted by exercising power under Section 5 of the Provincial Act and the finding at the concluding paragraph No.14 is limited only to the scope of Sections 23 and 31, more particularly Section 23 which deals with interim protection that can be granted for release of the J.Dr., who is actually arrested and power under Section 31 which shall be exercised after final adjudication. Therefore, the above decision cannot be relied on by the revision petitioner as a precedent on the question whether inherent power can be exercised by virtue of Section 5 of the Provincial Insolvency Act read with Section 151 C.P.C. to grant interim protection pending adjudication of insolvency proceedings when the J.Dr., is not under arrest. This Court also concurs with the finding given regarding the scope of Sections 23 and 31 of the Act as held in the cited decision. This Court is of the view that it is not a binding precedent that the insolvency Court has no jurisdiction to pass an interim protection order. If any interim protection is given by exercising inherent power, the interest of the respondent / D.Hr. also can be duly guarded by granting the relief subject to some terms which balance the interest of both parties. It is open for the revision petitioner / J.Dr. to make an application before the insolvency Court seeking interim protection order. If any interim protection is given by exercising inherent power, the interest of the respondent / D.Hr. also can be duly guarded by granting the relief subject to some terms which balance the interest of both parties. It is open for the revision petitioner / J.Dr. to make an application before the insolvency Court seeking interim protection order. But, he has not chosen to do so. 10. The petitioner, as represented during the course of arguments, has not so far filed any application before the insolvency Court seeking interim direction and consequently, there is no order granting any such relief by the said Court nor was any argument advanced before the execution Court about the incapacity of the J.Dr. to obtain such order. 11. When a J.Dr. is arrested in execution of a decree for the payment of money and brought before the Court, as per Section 55(3) of C.P.C., the Court shall inform him that he may apply to be declared an insolvent, and that he may be discharged if he has not committed any act of bad faith regarding the subject of the application and if he complies with the provisions of the law of insolvency for the time being in force. Next, as per Section 55(4) of C.P.C., where a judgment debtor expresses his intention to apply to be declared an insolvent and furnishes security, to the satisfaction of the Court, that he will within one month so apply, and that he will appear, when called upon, in any proceeding upon the application or upon the decree in execution of which he was arrested, the Court may release him from arrest, and if he fails so to apply and to appear, the Court may either direct the security to be realised or commit him to the civil prison in execution of the decree. Thus, Section 55(4) of C.P.C. empowers the execution Court to order re-arrest of J.Dr., or realise the security, if J.Dr. fails to apply to be declared as insolvent and to appear. 12. In the present case, the insolvency petition was filed before he was arrested and brought before the execution Court. It does not seem that the execution Court has ordered J.Dr. to furnish any security at the time of release of the J.Dr. brought under arrest. Release of J.Dr. fails to apply to be declared as insolvent and to appear. 12. In the present case, the insolvency petition was filed before he was arrested and brought before the execution Court. It does not seem that the execution Court has ordered J.Dr. to furnish any security at the time of release of the J.Dr. brought under arrest. Release of J.Dr. under Section 55(4) of C.P.C. is discretionary as the word ‘may’ is used, but, when such discretion is exercised in favour of J.Dr., also security as stated therein is required. It is to bring about a balance of interests of both parties, not just for the benefit of a J.Dr. Since release of a person under Section 55(4) of C.P.C. is to enable a J.Dr. to apply for declaration of insolvency, his release on arrest after filing an insolvency petition is contemplated therein. It is obvious from the order of the execution Court that the J.Dr. was released to obtain an interim order of protection pending the adjudication proceedings. When he failed to comply the order, the next step was ordered by the execution Court. This Court is of the view that the order of the execution Court impugned in this revision does not suffer from any illegality. 13. Subject to the above observations, the revision petition is dismissed. There shall be no order as to costs. Pending miscellaneous petitions, if any, shall stand closed.