Calcutta High Court
Nepal Food Corporation vs Thye Shipping Panama S.A. & Ors on 21 May, 2010
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose, Harish Tandon
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ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
APOT NO. 205OF 2010
APO NO. 161OF 2010
GA NO. 523 OF 2002
SUIT NO. 1010 OF 1979
NEPAL FOOD CORPORATION
VERSUS
THYE SHIPPING PANAMA S.A. & ORS.
APOT NO. 204OF 2010
APO NO. 162 OF 2010
GA NO. 522 OF 2002
SUIT NO. 922 OF 1979
NEPAL FOOD CORPORATION
VERSUS
U.P.T. IMPORTS EXPORTS LIMITED & ANR.
BEFORE
THE HON'BLE JUSTICE PINAKI CHANDRA GHOSE
&
THE HON'BLE JUSTICE HARISH TANDON
Date : 21.5.2010
Dictated Order
The Court :
This appeal is directed against an order dated 1st March 10, 2010 passed by the
Hon'ble First Court disposing of an application under Order 41 Rule 6 (2) of the Code of
Civil Procedure filed by the judgment-debtor His Lordship was pleased to grant stay of
operation of the order dated February 6, 2001 and February 16, 2001 upon depositing
the Title Deeds of the entire Dankuni properties by way of a security. The Hon'ble First
Court was further pleased to restrain the judgment debtor from transferring, alienating,
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disposing of or otherwise creating any third party interest in respect of the aforesaid
properties.
The decree holder obtained a decree on 9th September 1987 for a sum of Rs.
95,67,537.31 together with the interest @ 9% p.a. in a Suit no. 1010 of 1979.
Being aggrieved, the judgment debtor namely Shaw Wallace and Company Ltd.
preferred an appeal being Appeal no. 322 of 1988. In the said appeal an application for
stay of the operation of the said decree was filed. By an order dated February 27, 1999
the Hon'ble Appeal Court stayed the operation of the decree unconditionally until 15th
March 1990 subject to the said judgment debtor depositing a sum of Rs. 25 lacs in cash
within 15th March 1990 with Mr. G. C. Banerjee, Manager, Grindlays Bank Plc. (now
Standard Chartered Bank), Church Lane Branch, Kolkata who shall hold the said sum
as Receiver with further direction to secure the balance sum of Rs. 1.75 crores by way of
bank guarantee in the manner as would appear therefrom.
Pursuant to the said order the judgment debtor deposited a sum of Rs. 25 lacs
with the said Receiver but sought for an extension of time to furnish the bank guarantee.
Subsequently the said order of stay of the operation of the decree was vacated. The
decree holder took out an application, being GA no. 3793 of 1999, applied for execution
of the said decree after furnishing particulars of the various assets and properties of the
judgment debtor, and also prayed for an order in terms of a tabular statement. The said
application was disposed of by the executing court on September 7, 1999 granting an
order of injunction restraining the said judgment debtor from charging, encumbering,
selling, assigning disposing of or otherwise dealing with the lease hold interest and right
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in respect in the said "Wallace House" no. 4, Bankshall Street, Calcutta including the
furnitures, fittings and equipments and other movables lying thereat and the "magnet
House" M.M. Marg. Ballard Estate, Mumbai and also from charging, encumbering,
selling disposing of or otherwise dealing with any of the properties and assets or
withdrawing any money mentioned in Schedule "A", "B", "C", "D", "E" and "F" separately
attached to the said application. By the said order it was clarified that the said
injunction order would not prevent the defendant no. 2, Eastern Steamship &
Enterprises (S) Ltd. from dealing with the properties and assets indicated in prayer (d) of
the said application excepting in usual course of business.
The judgment debtor thereafter filed an application being GA no. 5 of 2001, inter
alia, for variation and/or modification of the stay order dated 7th September 1999 to the
extent that the judgment debtor should be permitted to furnish the said land by way of a
security to the satisfaction of the Registrar, Original Side of this Hon'ble Court to cover
the entire decretal amount in addition to a sum of Rs. 60,63,861.00 already deposited
with the Hon'ble court by way of a security.
The judgment debtor specifically averred in the said application the following :
"17. Defendant no. 3 is seized and possessed of and is otherwise well and
sufficiently entitled to 35.27 acres of land situate at Mouza Dankuni, Dankuni Bill LL.
No. 83, PS- Dankuni, Dist. - Hooghly, West Bengal (hereinafter refereed to as the "said
Land"), valued at Rs. 5.29 crores as the sole and absolute owner thereof. In this
connection, a valuation certificate from Messers K.C. Banerjee & Co..., a reputed firm of
valuers/assessors is annexed hereto and marked with the letter "E". The said valuation
certificate may be treated as part and parcel of this application.
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18. The said sum of Rs. 25,00,000/- deposited in cash by defendant no. 3 in
terms of the said order of this Hon'ble court dated 27th February 1990 in the said
Appeal, with the learned Receiver was deposited in short term fixed deposited with the
Standard Chartered Grindlays, Church Lane Branch. The said sum with interest
amounts today to Rs. 60,63,861.47p.
19. Defendant no. 3 is desirous of offering the said land by way of security to this
Hon'ble Court with a view to covering the entire decretal amount, under the said
impugned decree in addition to the said sum of Rs. 60,63,861/- which already is lying
deposited in Standard Chartered Grindlays, Church Lane Branch, Calcutta by the
Receiver appointed by this Hon'ble Court by way of security."
The aforesaid application was ultimately dismissed by an order dated 6th February
2001 with a further order to publish an advertisement notice of auction of the properties
as enumerated in para 17 of the said application.
Subsequent to the said order the said appeal no. 322 of 1988 was disposed of on
14th September 2001. A special leave petition was filed before the Hon'ble Supreme
Court challenging the said order dated 14th September 2001 wherein the Hon'ble
supreme Court has granted the leave but refuses to pass any interim order of stay and
the said appeal is appearing in the list and has not been finally disposed of. The
judgment debtor thereafter filed an application praying for stay of the operation of the
order dated 6th February 2001 and 16th February 2001 on the basis of the following
averments :
"7. The defendant/judgment debtor no. 3 in view of the aforesaid facts and
circumstances most respectfully states and submits that the Special Leave Petition is
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pending and in view of the order dated 6th February 2001 directing receiver to sell the
property situate at Dankuni the said property be accepted as security ad the sale of the
said property be stayed on such terms as to giving security and/or as this Hon'ble court
thins fit and proper until the appeal is disposed of pending before the Hon'ble Supreme
Court of India. The defendant/judgment debtor no. 3 most respectfully submits that the
Special Leave Petition pending before the Hon'ble Supreme Court of India against the
impugned order and judgment dated 14th September 2001. It is most respectfully
submitted that the property situate at Dankuni against which an order for sale dated 6th
February 2001 as already been passed in execution of the decree and for the due
performance of the decree be stayed on such terms as to giving security or otherwise as
this Hon'ble court may think fit and proper until the Special Leave Petition is disposed
of. Furthermore in view of the pendency of the appeal before the Hon'ble Appeal Court
being Appeal No. 149 of 2001, GA No. 1063 of 2001, Suit No 1010 of 1979 is pending for
final disposal which is an appeal from an order made in the execution of such decree
dated 6th February 2001 it is most respectfully submitted that this Hon'ble court be
pleased to sty the ale of the said immoveable property in execution of a decree until the
disposal of Special Leave Petition pending before the Hon'ble Supreme Court of India and
before the Hon'ble Appeal Court
8.the defendant/judgement debtor no. 3 most respectfully states and submits
that the property situate at Dankuni be accepted as security and/or an order of stay be
passed staying the operation of the execution of the decree dated 9th September 1987
and/or an order of stay be passed until the Special Leave Petition before the Hon'ble
Supreme Court of India and the appeal against the orders dated 6th February 2001 and
16th February 2001 pending before the Hon''ble Appeal Court until the disposal of the
same on such terms as this Hon'ble Court may deem fit and proper."
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The said application is disposed of by an impugned order by the Hon'ble First
Court directing the judgment debtor to deposit all the tittle deeds pertaining to the
aforesaid property with the Registrar, Original Side of this Hon'ble court.
Mr. Ranjan Bachwat, learned Advocate assailed the said order on the ground that
the Hon'ble First Court erred in staying the operation of the order dated February 6,
2001 and February 16, 2001 pending disposal of an appeal before the Hon'ble Supreme
Court subject to the judgment debtor depositing by way of a security of the title deeds of
the entire Dankuni property with the Registrar, Original Side of this Hon'ble court. He
further contended that once the Appellate Court directed the judgment debtor to deposit
the money as and by way of a security the direction by an executing court to deposit the
title deeds as security amounts to overstepping its powers above the Appellate Court. He
further contended that the Appellate Court passed an order for furnishing a bank
guarantee as security, the executing court cannot pass an order contrary to the order
passed by the appellate court. He further contended that the judgment debtor offered the
aforesaid properties as security in an earlier stage of the proceeding and the same was
rejected the same application cannot be taken out at the subsequent stage of the same
litigation.
Mr. Ratnanko Banerjee, learned Advocate appearing for the judgment debtor
submitted that the power conferred upon the appellate court under Order 41 Rule 5 of
the Code of Civil Procedure is distinct, separate and different than the power conferred
upon the executing court under Order 41 Rule 6(2) of the said Code. He further
contended that the aforesaid powers are not overlapping and there is no bar in passing
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an order by an executing court for stay of the sale of the property on such terms or
security even if the appellate court refuses to pass an order of stay. In support of such
contention Mr. Banerjee relied upon a judgment reported in AIR 1940 Cal 582 : AIR
1940 Madras 82 : 44 CWN 701 : AIR 2006 Punjab & Haryana 22.
He further submitted that the invocation of Order 41 Rule 6(2) of the Code can
only be made if there is an appeal pending. He further submitted that an appeal before
the Supreme Court is still pending and as such there is no fetter for invocation of the
said provision. Mr. Banerjee strenuously contended that the Hon'ble First Court has
exercised discretion in depositing the title deeds of the properties and as such the appeal
against such discretion should not be entertained (1990 (Supp.) SCC 727).
Having considered the respective submissions we are of the view that the powers
conferred upon the appellate court under Order 41 Rule 5 is quite distinct, separate and
different than the power conferred upon the executing court under Order 41 Rule 6(2) of
the Code. The said proposition has been clearly and categorically laid down by a Division
Bench in a judgment reported in AIR 1940 Cal 582 and AIR 1940 Madras 82 even if
the appellate court refuses to grant stay, the executing court is empowered to pass an
order under Order 41 Rule 6 (2) of the Code of Civil Procedure provided the conditions
therein are fulfilled. On perusal of the judgments cited above we are of the same view
that the power conferred under Order 41 Rule 5 is distinct, separate and different than
the power conferred under Order 41 Rule 6(2) of the Code.
The power of the appellate court to interfere with an order passed by the court
below in exercise of the discretion vested by the statute was considered in a case of
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Manjunath Anandappa Vs. Tammanasa & Ors. (2003) 10 SCC 390 the apex court
was pleased to hold :
"36. It is now also well settled that a court of appeal should not ordinarily
interfere with the discretion exercised by the courts below
37. In U.P. Coop. Federation Ltd. V. Sunder Bros. the law is stated I the following
terms (AIR p. 253, para8)
"8. It is well established that where the discretion vested in the court under
section 34 of the Indian Arbitration Act has been exercised by the lower court the
appellate court should be slow to interfere with the exercise of that discretion. In dealing
with the mater raised before it at the appellate stage the appellate court would normally
not be justified in interfering with the exercise of the discretion under appeal solely on
the ground that if it had considered the matter at the trial stage it may have come to a
contrary conclusion. If the discretion has been exercised by the trial court reasonably
and in a judicial manner the fact that the appellate court wold have taken a different
view may not justify interference with the trial court's exercise of discretion. As is often
said, it is often said, it is ordinarily not open to the appellate court to substitute its own
exercise of discretion for that of the trial Judge; but if it appears to the appellate court
that in exercising its discretion the trial court has acted unreasonably or capriciously or
has ignored relevant facts then it would certainly be open to the appellate court to
interfere with the trial court's exercise of discretion. This principle is well established;
but as has been observed by Viscount Simon, L.C., in Charles Osenton & Co. V.
Johnston, AC at p.138 :
'The law as to the reversal by a court of appeal of an order made by a Judge below
in the exercise of his discretion is well established, and any difficulty that arises is due
only to the application of El settled principles I an individual case.'"
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(Emphasis supplied)
As has been held in the said judgment Manjunath Anandappa Vs. Tammanasa
& Ors. (supra) the power of the appellate court to interfere with the order passed by the
trial court in exercise of the discretion should be exercised slowly and the interference
should not be made merely on the ground that a different view should have been taken.
It has further been held that if it appears to the appellate court that in exercise of its
discretion the trial court has acted unreasonably or capriciously or has ignored the
relevant fact then it would certainly be open to the appellate court to interfere with such
discretionary order.
In the case before us more than one attempt has been made by the judgment
debtor to put the same properties as security and the same has been dismissed by an
order of the co-ordinate Bench. The conduct of the judgment debtor as it appears in
avoiding to make the payment of the decretal amount or putting the money has security
to such decretal amount is evident. Repeated attempt to get rid of deposit of the decretal
mount or furnishing of bank guarantee and placing the Dankuni properties as security
is deplorable. The facts as stated above cannot be ignored by us and we have no
hesitation holding that the order directing the judgment debtor to deposit all the title
deeds of the Dankuni property as security as condition for stay of the order of sale of the
properties is unreasonable.
We, therefore, set aside that part of an order by which the Hon'ble First Court
directed the judgment debtor to deposit the title deed of the entire Dankuni properties as
and by way of a security with the Registrar, Original Side of this Hon'ble court.
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It appears that in terms of the said decrees the judgment debtor is liable to pay a
sum of Rs. 7,51,48,125/-. However, the judgment debtor has deposited with the bank a
sum of Rs. 1,88,44,760/- thereby leaving a sum of Rs. 5,63,03,365/- and such amount
should be sufficiently secured either by depositing the entire amount with the said
Receiver or by furnishing the bank guarantee covering the said amount within six weeks
after the reopening of the summer vacation. During such period there shall be an
unconditional stay of the sale of the said properties. Upon depositing the same amount
or upon furnishing the bank guarantee the Registrar, Original Side shall return all the
title deeds which has been deposited by the respondent in terms of an order under
challenge forthwith The instant appeal, is thus, disposed of. However, there will be no order as to costs.
(Pinaki Chandra Ghose, J) (Harish Tandon, J)