Writ Petition No.2898 of 2006

27th April, 2007

Petitioner Counsel: Shri. M. G. BHANGADE,Shri. V. V. BHANGADE
Respondent Counsel: Shri. J. T. GILDA,Shri. PARIHAR,Shri. S. S. GHATE

Cases Cited:
Mr. Oseas Sales Dias Vs. Mrs. Ethehelvina Arcanjala D'Souza, 1999(2) BCR 377 [Para 5,9]
G. K. Prabhakaran & Co., Irinjalakuda Vs. David Traders, Trichur, AIR 1973 Kerala 1 [Para 5,9]
Smt. Bimla Nepak Vs. Budhulal Sahoo, AIR 1985 Orissa 278 [Para 5,9]
Bollapalli Venkat Rao Vs. Chaturvedula Subaiah, AIR 1983 A.P. 166 [Para 6]
Jose Thengumpilil Vs. Secretary, Peruvanthanam Service Co-operative Bank Ltd., AIR 1997 Kerala 261 [Para 6]
Ravindra Sheregara Vs. Syndicate Bank, AIR 2002 Karnataka 324 [Para 6]
Gurram Seetharam Reddy Vs. Gunti Yashoda, AIR 2005 A.P. 97 (FB) [Para 6]
S. Rajeswari Vs. S. N. Kulasekaran, (2006)4 SCC 412 [Para 6]
Natural Sugar and Allied Industries Ltd., Raniani Vs. State of Maharashtra, W.P.No.6082/2006, dt: 20-9-2006 [Para 7]

JUDGMENT

JUDGMENT :- Rule returnable forthwith. Heard finally by consent of parties.

2. By the present Writ Petition, the petitioner has challenged the order dated 13-4-2006 made by the Civil Judge, Senior Division, Bhandara in Special Darkhast No.10 of 2003 dismissing said Darkhast in entirety after allowing the objection Exh.56 filed by the respondent No.3.

3. FACTS :- The petitioner herein is Decree Holder, who obtained a money decree against respondent No.1 - Judgment Debtor on 31-10-2001 from the High Court of Judicature at Madras in Civil Suit No.1314 of 1994 in the sum of Rs.1,28,38,701.50 The petitioner filed execution proceedings in the Court of Civil Judge, Senior Division, Bhandara i.e. Special Darkhast No.10 of 2003 on 20-12-2002, praying for execution of decree for recovery of an amount of Rs.1,37,05,373.63. On 18-8-2003, at the instance of the petitioner, an order was made for attachment of movable property of respondent No.1 - Judgment Debtor. However, the execution of warrant of attachment of movable property was obstructed. Thereafter, by application Exh.37 dated 15-6-2004, petitioner prayed for attachment of immovable property of respondent No.1 and one of the grounds for making such request was that the petitioner could not succeed in executing the warrant of attachment of movable property. In the meanwhile on 20-1-2005, respondent No.3 filed an objection under section 47 R/w Order 21, Rule 58 of the Code of Civil Procedure at Exh.56 and prayed that till the claim of the objector - Apex Bank is satisfied, the decree held by the petitioner cannot be executed. The objector thereafter amended the objection by which it was pointed out that the respondent No.3 by taking resort to the provisions of Securitization and Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (hereinafter referred as 'Securitization Act'), had taken possession on 13-6-2005 of the entire property of respondent No.1 - Judgment Debtor i.e. movable as well as immovable, and thus the objector has become the absolute owner thereof and the petitioner - Decree Holder could not seek any relief in the execution proceedings including the attachment. However, the prayer clause 2 in the objection to the effect that till the claim of the Objector is satisfied decree cannot be executed, was retained by the respondent No.3. The parties led oral evidence in the executing court and finally under the impugned judgment and order dated 13-4-2006, the executing court dismissed the Darkhast in entirety. It is this order which is under challenge in the present writ petition.

4. Looking to the nature of the judgment and order impugned and the controversy involved, the petition is treated as petition under Article 227 of Constitution of India.

5. ARGUMENTS :- Mr. M. G. Bhangade, learned senior Advocate, submitted on behalf of the petitioner that the decree obtained by the petitioner from the Madras High Court was final and conclusive and the same was not put to challenge anywhere. He then submitted that it was a money decree as the petitioner - Decree Holder was not paid for the goods supplied by it to respondent No.1 - Judgment Debtor. He then argued that the attempt of the petitioner to attach the movable property or recover its money claim through Receiver had failed and therefore, the only option that remained was to apply for attachment of immovable property of the respondent No.1 - Judgment Debtor. Mr. Bhangade, learned senior counsel then submitted that respondent No.3 Apex Bank came with an objection below Exh.37 stating that the entire immovable property of the respondent No.1 - Judgment Debtor was mortgaged with it and at subsequent point of time, by exercising the powers under the said Securitization Act, entire property was taken into possession and control by the respondent No.3 bank. He then submitted that assuming but not admitting that the respondent No.3 bank was entitled to take the possession and control of the entire property mortgaged with it by the respondent No.1 - Judgment Debtor for satisfaction of its dues under section 13(7) of the Securitization Act, the petitioner - Decree Holder is entitled to the residue after satisfaction of the claim of the respondent No.3 bank and therefore, the impugned judgment dismissing the execution proceeding in entirety has resulted into miscarriage of justice to the petitioner. Apart from the fact that the impugned judgment and order is in clear error of jurisdiction, Mr. Bhangade, learned senior counsel then submitted that even otherwise the objection as filed by respondent No.3 bank under Section 47 R/w Order 21, Rule 58 of the Code of Civil Procedure was not maintainable in as much as the same was premature. In his submission, unless there is an actual attachment of the property of the Judgment Debtor, such an objection is not tenable. In support of his contention, he relied upon the decision of this court in the case of Mr. Oseas Sales Dias Vs. Mrs. Ethehelvina Arcanjala D'Souza and others, reported in 1999(2) BCR 377 and the Full Bench decision of Kerla High Court in the case of G. K. Prabhakaran & Co., Irinjalakuda Vs. David Traders, Trichur, reported in AIR 1973 Kerala 1, so also the decision of Orissa High Court in the case of Smt. Bimla Nepak Vs. Budhulal Sahoo, reported in AIR 1985 Orissa 278. During the course of argument, Mr. Bhangade, learned senior counsel also pointed out to this court that after an action under the Securitization Act was taken by the respondent No.3 Bank, the petitioner - Decree Holder filed an appeal before the Debt Recovery Appellate Tribunal, Bombay, on 24-1-2007. The Appellate Tribunal has made an order directing respondent No.3 bank not to sell, transfer or create assignment in respect of the property of the respondent No.1 - Judgment Debtor. He, therefore, submitted that at any rate the executing court had absolutely no reason to dismiss the execution proceedings in entirety and proper course for the said Court was to keep the execution pending till decision of the appeal by Debt Recovery Appellate Tribunal, Bombay.

6. Per contra, Mr. S. S. Ghate, learned counsel for respondent No.3 Bank countered the submissions made by Mr. Bhangade, learned counsel. At the outset, he raised a preliminary objection stating that the impugned judgment and order has the force of decree as contemplated by Order 21, Rule 58(4) of the Code of Civil Procedure and therefore, the appeal would lay to the appropriate court. He, therefore prays that the petition should be dismissed as not maintainable in the wake of availability of remedy of appeal. He relied upon the following decisions :

1. AIR 1983 Andhra Pradesh 166 (Bollapalli Venkat Rao Vs. Chaturvedula Subaiah and another).

2. AIR 1997 Kerala 261 (Jose Thengumpilil Vs. Secretary, Peruvanthanam Service Co-operative Bank Ltd. and another).

3. AIR 2002 Karnataka 324 (Ravindra Sheregara Vs. Syndicate Bank).

4. AIR 2005 Andhra Pradesh Full Bench 97 (Gurram Seetharam Reddy Vs. Gunti Yashoda).

5. (2006)4 SCC 412 (S. Rajeswari Vs. S. N. Kulasekaran and Others)

7. Mr. Ghate, learned counsel also relied upon Rule 419 of the Civil Manual in Chapter 11 thereof and argued that the proper remedy was to file an appeal and not the writ petition. Mr. Ghate, learned counsel then invited my attention to Section 13 of the Securitization Act and also relied upon an unreported judgment of this Court dated 20-9-2006 in the case of Natural Sugar and Allied Industries Ltd., Raniani Vs. State of Maharashtra and others in Writ Petition No.6082 of 2006. He then argued that Section 35 of the Act gives an overriding effect and as such the provisions of the Maharashtra Co-operative Societies Act or other enactments must yield to the extent of inconsistency to Section 13 of the Securitization Act. Mr. Ghate, learned counsel then submitted that under Section 37 of the Maharashtra Co-operative Societies Act, the respondent No.3 has a first charge on the properties of respondent No.1 - Judgment Debtor and therefore, the claim of the petitioner - Decree Holder is far inferior. Mr. Ghate, learned counsel further submitted that factually there was an order of attachment and actual attachment also, on 28-8-2003 and therefore, the submission of Mr. Bhangade that there was no attachment actually made, is erroneous. He, therefore, submitted that the filing of appeal by the petitioner was a proper remedy. Finally Mr. Ghate, learned counsel supported the impugned judgment and order and reasons recorded therein.

8. CONSIDERATION :- Having considered the submissions made by rival parties and having considered the entire record that was called by me from the executing court, I find that it is an undisputed position that the money decree in favour of the petitioner passed by the Madras High Court has attained finality. The submissions made by respondent No.1 - Judgment Debtor before the executing court that they wanted to file proceedings for setting aside the ex-part decree, are not even worth considering as record shows that no steps were taken by the respondent No.1 - Judgment Debtor to get the ex-parte decree set aside from the Madras High Court. It is further seen that after filing of the execution proceedings in the executing court at Bhandara, the petitioner - Decree Holder has made an attempt to attach the movable property of the respondent No.1 - Judgment Debtor. I would quote the order dated 18-8-2003 made by the executing court to dispel the doubts expressed by the parties as to whether the order was for attachment of movable properties or immovable properties. The order dated 18-8-2003 reads thus :-

O R D E R           “In view order passed below Exh.18, application is rejected. Issue warrant of attachment of movable property against Judgment Debtor No.1 under Order 21, Rule 43 of the C.P.C. on payment of P.F. within three days. (B. R. Kamble) Civil Judge, Sr.Dn., Bhandara dt:18-8-2003”

9. The learned counsel for respondent No.3 could not point out to me from the record any order by which attachment of immovable property was ordered or actually made. I have myself seen the entire record, but I also could not find any order at the instance of petitioner for attachment of immovable property. This is the reason why Exh.37 was filed by the petitioner for attachment of immovable property of the respondent No.1 - Judgment Debtor. This application has been dismissed as sequel to the dismissal of entire Darkhast and hence, there was no question of any order for attachment or actual attachment of immovable property of respondent No.1 - Judgment Debtor. Now, coming to the preliminary objection raised by Mr. Ghate, learned counsel in the light of of above facts gathered from the record, I find that in all the decisions cited by him in support of his preliminary objection, the order of attachment of immovable property was made and objection and prayer for raising attachment was made. In the facts of all these decisions cited by Mr. Ghate, the High Court of Andhra Pradesh and Kerala, held that the appeal was the proper remedy. Now, looking to the decision of this court, in the case of Mr. Oseas Sales Dias (supra), Full Bench judgment of Kerla High Court in the case of G. K. Prabhakaran and Co. (supra) and Single Judge judgment of Orissa High Court in the case of Smt. Bimala Nepak (Supra), the legal position that can be stated is that an order of adjudication of a claim or objection to the attachment of the property under Rule 58 of Order 21 of Code of Civil Procedure can be only when the property is attached, and 'not otherwise'. In the instant case, it is seen that even an order of attachment of immovable property was not made but that was prayed for by application Exh.37. Therefore, no appeal would be maintainable as argued by Mr. Ghate, learned counsel on the strength of provisions of sub-Rule 4 of Rule 58 under Order 21 of C.P.C. I, therefore, find no difficulty in over ruling preliminary objection raised by Mr. Ghate, learned counsel.

10. Now, coming to the objection that was filed by the respondent No.3 and as amended, it is clear that the objector has never intended that execution proceedings should be dismissed in entirety. On the contrary, prayer clause 2 of the objection shows that respondent No.3 Bank wanted its claim to be satisfied first and till then attachment at the instance of petitioner - Decree Holder should not be made. In my opinion, therefore, the executing court committed an error in dismissing the execution proceedings in entirety in the absence of any prayer made by the respondent No.3 bank.

11. Now, coming to the action of respondent No.3 bank taken under the Securitization Act of taking possession and control of entire property of respondent No.1 - Judgment debtor, it is not disputed before me by the learned counsel for the parties that the said action is under challenge in appeal before the Debt Recovery Appellate Tribunal, Bombay and that tribunal has also made an interim order in the nature of status-quo, which is still in force. In other words, the tribunal under the said special Act is seized of the matter for examining the pros and cons of the action under the Securitization Act and also the claim of the petitioner - Decree Holder. Section 13(7) of the said Securitization Act, reads thus :-

13. Enforcement of Security Interest:-

"(7) Where any action has been taken against a borrower under the provisions of sub-section (4) all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests."

12. Now, upon perusal of the said provision, it is clear that even under this Act, the Parliament in its wisdom has taken care to protect the interest of such Decree Holders, who are not secured under the provisions of Securitization Act. Section 13(7) of the Act, therefore, provides that after satisfaction of the claim of the bank, the Decree Holder like petitioner have a right to claim satisfaction of their decree.

13. For all these reasons, therefore, the executing court has erred in dismissing the entire execution proceeding. The impugned judgment and order made by executing court dated 13-4-2006 in Special Darkhast No.10 of 2003 is thus clearly illegal and is quashed and set aside. The petitioner is entitled to keep the said execution alive and seek such reliefs as are permissible in law at appropriate time. Writ Petition is, therefore, allowed in terms of prayer clause (1) of the petition, with costs which is quantified at Rs.10,000/-, payable by respondent No.3 to the petitioner within a period of four weeks from today. Writ petition disposed of.

Petition allowed.