Madras High Court
Micheal Builders And vs The President on 12 January, 2023
Author: B.Pugalendhi
Bench: B.Pugalendhi
CRP(MD)No.1107 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED On : 24.08.2022
PRONOUNCED On : 12..01.2023
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
CRP(MD)No.1107 of 2021
and
CMP(MD)No.6450 of 2021
Micheal Builders and
Developers Pvt Limited,
Represented by its Managing Director,
Praveen T.T.
1/2/182, Kanathukonam,
Cheriyakolla,
Cheruvalloor PO,
Kanniyakumari,
Tamil Nadu ... Petitioner
Vs
The President,
St.Alphoza Trust,
R.C.Diocese of Kottar,
Represented by the Bishop of Kottar,
Nazarene Soosai,
Nagercoil,
Kanniyakumari District ... Respondent
PRAYER: Civil Revision Petition is filed under Section 227
of the Constitution of India, to set aside the order dated
10.06.2021 in EA.No.1 of 2019 in EP.No.14 of 2019 in
AROP.No.934 of 2017 on the file of the Principal District
Judge, Kanniyakumari at Nagercoil and to allow EP.No.14 of
2019 in AROP.No.934 of 2017 on the file of the Principal
District Judge, Kanniyakumari at Nagercoil.
1/20
https://www.mhc.tn.gov.in/judis
CRP(MD)No.1107 of 2021
For Petitioner : Mr.Veera Kathiravan,
Senior Counsel.
For M/s.Veera Associates
Respondent : Mr.S.Meenakshi Sundaram,
Senior Counsel
assisted by Mr.M.Sengu Vijay
ORDER
This Civil Revision Petition is filed by the decree holder as against the orders of the executing Court in EA.No.1 of 2019 in EP.No.14 of 2019 dated 10.06.2021.
2.The petitioner is a construction company and it was approached by the respondent in the year 2011 to construct a medical college and hospital for the respondent trust. In this regard an agreement was entered into between the respondent and the petitioner on 13.10.2013. Pursuant to the same, the petitioner has constructed a building for the medical college and hospital for the respondent trust. There was a due of Rs.20 Crores from the respondent to the petitioner in respect of the construction of the medical college. Since the respondent did not to pay the said due, the petitioner initiated arbitration proceedings under 2/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 Section 9 of the Arbitration and Conciliation Act, 2013 before the Principal Seat at Madras in OP.No.934 of 2017, wherein this Court by order dated 06.02.2018 appointed Hon'ble Ms Justice R.Mala as Sole Arbitrator to adjudicate the issue between the parties. Pending arbitration proceedings, an agreement was arrived at between the parties on 13.03.2018, wherein the respondent has agreed to pay a sum of Rs.15,95,00,000/- (Rupees Fifteen Crores and Ninety Five Lakh Only) to the petitioner within a period of seven months from the date of the agreement and in default, he has agreed to pay the amount with interest @12% per annum with service tax. Based on that agreement, the award was passed in Arbitration proceedings in OP.No.934 of 2017 on 27.06.2018 that this respondent is liable to pay a sum of Rs.15,95,00,000/-(Rupees Fifteen Crores and Ninety Five Lakh Only) and in default to pay the amount with interest @12% per annum along with service tax.
3.While so, the petitioner filed an execution petition before the Principal District Court at Kanyakumari @ Nagercoil in EP.No.14 of 2019 that the respondent has deliberately failed to pay the award amount with interest 3/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 as agreed. On receipt of notice in EP.No.14 of 2019, the respondent / judgment debtor filed an application in EA.No.1 of 2019 in EP.No.14 of 2019 praying to dismiss the said EP. The executing Court by order dated 10.06.2021 allowed EA.No.1 of 2019 filed by this respondent and dismissed EP.No.14 of 2019 filed by the petitioner. Aggrieved over the same, the decree holder has preferred this civil revision petition.
4.Mr.Veera Kathiravan, learned Senior Counsel appearing for the petitioner submits that the petitioner, based on the agreement dated 31.10.2013 entered with the respondent, has constructed the buildings for the medical college and has incurred a sum of Rs.20 Crores for the said construction. Since the respondent failed to pay the money, even after receipt of the legal notice, the arbitration proceedings was initiated. Before the Sole Arbitrator appointed by this Court, the respondent has agreed to pay a sum of Rs.15,95,00,000/- to the petitioner within seven months from the date of the agreement of settlement and in default, he agreed to pay the said amount with 12% interest per annum. Even then the respondent has 4/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 deliberately failed to pay the entire amount and therefore, the petitioner was constrained to file the execution petition in EP.No.14 of 2019 for order of arrest and detention of the respondent.
5.The learned Senior Counsel for the petitioner further submits that the respondent RC Diocese of Kottar is running several colleges, viz., St.Xaviers College of Engineering, St.Xaviers Polytechnic College, Nursing College and running around 200 schools including CBSE schools. The respondent is also owning shopping complexes in the prime location of the Nagercoil Corporation and is also having valuable vacant lands. The respondent is also getting a sum of Rs.50,00,000/- from those properties as rental income. The total worth of the properties is around Rs.3,000/- crores. The agreement for the construction of building for the medical college was executed by the petitioner by the President of the St.Alphonsa Trust, who is also the Bishop of RC Diocese of Kottar. The agreement was executed not only on behalf of St.Alphonsa Trust, but also on behalf of RC Diocese of Kottar by the Bishop in his capacity as the President of St.Alphonsa Trust as well as the President of 5/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 RC Diocese of Kottar.
6.The learned Senior Counsel also submits that the St.Alphonsa Trust is an unit and part of RC Diocese of Kottar. The Trust was formed only with an object to start Medical college. There are so many properties of the respondent, which are free from encumbrance. But the respondent has not taken any effort to settle the due by selling any of such properties. As per the Trust Act that a Trustee is personally liable for any debt incurred, when acting as a Trustee regardless of the fact that the Trustee gets benefit personally from the Trust or not. In the deed of formation of St.Alphonsa Trust, it is clearly stated that in the event of any dissolution of the Trust, the property and assets in the Trust would devolve on the RC diocese of Kottar and not among the trustees.
7.The learned Senior Counsel further submits that the Principal District Judge, Kanyakumari dismissed EP.No.14 of 2019 holding that there is no wilful default in payment on the part of the respondent. But the respondent is wilfully refusing to repay the award amount. On 05.05.2022, the 6/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 respondent settled the entire loan amount of Rs.85,00,00,000/- (Rupees Eighty Five crores) to the South Indian Bank Limited, Nagercoil Branch and receipt was executed by the Bank in favour of the St.Alphonsa Trust RC Diocese of Kottar. Moreover, the respondent has started hospital in the building constructed by the petitioner on 11.08.2022 and they have also applied for NOC before the Tamil Nadu Government to start medical and nursing college in the name of KMMC.
8.The learned Senior Counsel has also relied on the judgments in Anand Agro Chemicals India Limited Vs Suresh Chandra (2014) 3 SCC page 631; and Subrata Roy Sahara Vs Union of India, reprted in (2014) 8 SCC page 470.
9.Mr.Meenakshi Sundaram, learned Senior Counsel for the respondent submits that the petition seeking for arrest for payment of money should be invoked as an extraordinary remedy, since it affects the personal liberty of an individual under Article 21 of the Constitution of India. The Hon'ble Supreme Court in Jolly George Varghese and another vs Bank of Cochin 1980 (SC) 470, held that the 7/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 forcible usurping the right of personal liberty guaranteed under Article 21 of the Constitution of India cannot be accepted.
10.The learned Senior Counsel for the respondent further submits that the entire super structure belongs to St.Alphonsa Trust. The President of the trust is an individual. The trust owns vast property worth of several crores and when the same is under the clutches of the money lender bank and unless the money lent by the bank is discharged, the present decree holder cannot realise the amount. The executing court has taken into consideration of this fact and come to the conclusion that the judgment debtor has means to pay the decree amount, because prior to the loan, there had been a subsisting prior mortgagee. The judgment debtor is not in a position to pay the money and hence an order of arrest cannot be ordered. The executing Court has passed the order based on the dictum laid down by the Hon'ble Apex Court in Jolly George Varghese and another Vs Bank of Cochin, reported in 1980 AIR (SC) 470; the judgment of this Court in Ganesh Vs Sankaran and another reported in 2006 3 CTC 8/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 page 549; M.Muthusamy Vs Supasri Chit Funds, Coimbatore and another reported in 2002(II) CTC 168; and K.M.Kannu Gounder Vs Mahboon Ali Sahib and another, reported in (2003) 2 MLJ Page 329.
11.The learned Senior Counsel further submits that the revision petitioner has not adduced any evidence in the execution petition and no sufficient materials have been placed before the Court to show that the respondent has sufficent means to pay. He has also relied on the decision of Jolly George Verghese's case cited supra, wherein it has been held as follows:
“16. Equally meaningful is the import of Article 21 of the Constitution in the context of imprisonment for non-payment of debts. The high value of human dignity and the worth of the human person enshrined in Article 21, read with Arts. 14 and 19, obligates the State not to incarcerate except under law which is fair, just and reasonable in its procedural essence. Maneka Gandhi's case [1978] 1 S.C.R 248 as developed further in Sunil Batra v. Delhi Administration (1978 CriLJ 1741), Sita Ram and Ors. v. State of 9/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 U.P. (1979 CriLJ659) and Sunil Batra v. Delhi Administration (1978 CriLJ 1741) lays down the proposition. It is too obvious to need elaboration that to cast a person in prison because of his poverty and consequent inability to meet his contractual liability is appalling. To be poor, in this land of daridra Narayana, is no crime and to 'recover' debts by the procedure of putting one in prison is too flagrantly violative of Article 21 unless there is proof of the minimal fairness of his wilful failure to pay in spite of his sufficient means and absence of more terribly pressing claims on his means such as medical bills to treat cancer or other grave illness. Unreasonableness and unfairness in such a procedure is inferable from Article 11 of the Covenant. But this is precisely the interpretation we have put on the Proviso to Section 51 C.P.C. and the lethal blow of Article 21 cannot strike down the provision, as now interpreted.
17. The simple default to discharge is not enough. There must be some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or, alternatively, current means to pay the decree or a substantial part of it.10/20
https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 The provision emphasises the need to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree. Here considerations of the debtor's other pressing needs and straitened circumstances will play prominently. We would have, by this construction, sauced law with justice, harmonised Section 51 with the Covenant and the Constitution.
19.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 Section 51. An earlier adjudication will bind if relevant circumstances have not materially changed.
20. We set aside the judgment under appeal and direct the executing court to decide de novo the means of the judgment-
debtors to discharge the decree in the light 11/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 of the interpretation we have given.” The lerned Counsel therefore, prayed that this civil revision is liable to be dismissed and there is no reason to interfere with the orders of the executing Court.
12.This Court considered the rival submissions and perused the materials placed on record.
13.The execution petition in EP.No.14 of 2019 has been filed by the decree holder for order of arrest of the President of the respondent Trust, since he failed to pay the amount as per the award passed by the Sole Arbitrator. As per the award, the respondent/ judgment debtor is liable to pay a sum of Rs.19,60,50,470/- including interest, GST and service tax. The judgment debtor has filed the above EA.No.1 of 2019 in EP.No.14 of 2019 that the properties of the st.Alphonsa Trust were given as security to the Banks and the Banks are also taking steps for recovery of the dues. Accepting this contention of the judgment debtor, the executing Court allowed the said EA.No.1 of 2019 and dismissed EP.No.14 of 2019 that the judgment debtor has 12/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 taken steps to discharge his liability and hence all the immovable properties of the judgment debtor were given as security to the Banks and the Banks have also taken steps for realising the amount given to the trust and there is no negligence on the part of the judgment debtor in paying the award amount.
14.During the course of arguments, the learned Senior Counsel appearing for the petitioner has filed the additional typed set of papers-III enclosing five documents dated 01.08.2022 with regard to the encumbrances in Survey Nos.528/1A, 528/1B, 529/2, 530/3 and 534/1A1 that those encumbrances with regard to these properties were made in favour of the South Indian Bank, pursuant to the loan transaction, after the settlement of agreement with the judgment debtor and the encumbrances with regard to those properties have been cleared and this is recorded in encumbrance certificates dated 01.08.2022. These documents filed by the petitioner in the additional typed set of papers are accepted by the respondent that the encumbrance certificates in respect of those five survey numbers (land alone) formerly were owned by the RC Diocese Kottar 13/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 and later, they were transferred in favour of the Alphonsa Trust by the Diocese by way of five independent gift deeds dated 09.05.2022. These documents have come into existence only after filing of this civil revision petition in the month of July 2021. These encumbrance certificates reveal that the South Indian Bank, one of the creditors was paid with a sum of Rs.85,00,00,000/- on 05.05.2022 by the respondent St.Alphonsa Trust. However, the liabilities of the respondent towards the petitioner is Rs.19,60,50,470/- (Rupees Ninety Crore Sixty Lakh Fifty thousand and Four Hundred and Seventy Only).
15.The execution petition was filed in the year 2019 and pending the proceedings, the judgment debtor was in a position to settle a sum of Rs.85,00,00,000/-(Rupees Eighty Five Crores) to the South Indian Bank. The judgment debtor has taken a plea that all its properties have been attached by the Banks. But, perusal of these documents now placed before this Court shows that the liabilities towards the Bank to the extent of Rs.85 crores have been settled by the judgment debtor on 05.05.2022 and all the encumbrances have been cleared. Even thereafter, the judgment debtor has not 14/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 taken any step to settle the dues to the petitioner deliberately. The decree holder claims that the apart from the properties shown in the additional typed set of papers, the judgment debtor is also having several other properties worth about several crores. The president of the respondent trust is also a Bishop of RC Diocese of Kottar. The agreement was executed on behalf of St.Alphonsa Trust as well as on behalf of the RC Diocese of Kottar by the Bishop in his capacity as the President of St.Alphonsa Trust and also as the President of RC Diocese of Kottar. According to the petitioner, the RC Diocese is running several colleges and more than 200 schools and is also having shopping complexes in the prime location of Nagercoil Corporation and is also getting monthly rental income of rupees several lakhs.
16.The specific stand taken by this petitioner in this civil revision petition that the respondent has sufficient means to pay the award amount has not been denied by the respondent / judgment debtor. The judgment debtor knowing his capacity has entered into an agreement with the petitioner to construct a medical college and hopistal, 15/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 made the petitioner to spend a huge amount for construction of the building. The respondent is now running a hospital in the building and has also proposed to start medical college in the building constructed by the petitioner.
17.Evidently the judgment debtor is utilising the building, which is constructed by the petitioner as per the agreement, but the judgment debtor has not taken any step to settle the dues to the petitioner for more than 5 years. It appears that the judgment debtor has been deliberately avoiding payment to the petitioner / decree holder.
18.The award in the arbitration proceedings was passed based on the agreement of settlement dated 13.03.2018 arrived at between the petitioner and the respondent. According to the agreement of settlement, the respondent should pay a sum of Rs.15,95,00,000/- within a period of seven months from the date of the agreement, in default, he should pay the dues with 12% interest per annum. Subsequent to the award, the respondent has paid only part of the award amount and has not taken any step to settle the entire dues. Only after the respondent failed to pay the dues, the petitioner has filed the execution petition. 16/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021
19.The decision of the Hon'ble Supreme Court in Jolly George Verghese and Bank of Cochin, referred to by the respondent, cannot be made applicable to this case, because, in that case the judgment debtor was a poor and was not in a position to settle the dues. But in this case the respondent is the President of Alphonsa Trust and also the President of RC Diocese of Kottar, which is having more than several crores of properties and the respondent was also in an able position to settle Rs.85 crores to a bank, pending the execution petition. Moreover, the Hon'ble Supreme Court in Subrata Roy Vs Union of India, reported in (2014) 8 SCC page 470, after observing the dictum laid down in Jolly George Verghese's case has held as follows:
“77……….Having perused the judgment rendered by this Court in Jolly George Verghese's case (supra), we are of the view, that the conclusions recorded therein, have a pointed and definite reference to the ability of a judgment-debtor, to pay off his debt. The conclusion drawn in the above judgment, was with respect to a judgment-debtor, who was unable to pay off his debt. Accordingly it was felt, that an order of detention in prison should not be adopted, to effectuate the execution of the decree. While dealing with the preconditions expressed in the proviso to Section 51 of the Code of Civil Procedure, we have already concluded, that the Sahara Group has enormous 17/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 assets with a huge market and marketable value. It is also clear that after 5.12.2012, the two companies have not deposited a single paisa, in furtherance of the compliance of this Court's orders (dated 31.8.2012 and 5.12.2012). It is therefore clear, that despite the Petitioner (and the other companies) having means to pay, they have unfairly and willfully failed to pay. It is, therefore also clear, that the Petitioner in the present case is not similarly situated as the Petitioner in Jolly George Verghese's case (supra). Accordingly reliance placed by the learned Counsel for the Petitioner on the above judgment, is wholly misconceived.”
18.As this Court has already found that the respondent in this case is having sufficient means to pay the dues and is wilfully avoiding the payment, applying the ratio laid down in the above cited judgment, the civil revision petition is allowed and the order passed by the trial Court in EA.No.1 of 2019 and EP.No.14 of 2019 are set aside.
The executing Court shall restore EP.No.14 of 2019 to its file and proceed further with the same in accordance with law. No costs. Consequently connected miscellaneous petition stands closed.
12.01.2023 Index: Yes/No. dsk 18/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 To The Principal District Judge, Kanniyakumari at Nagercoil.
19/20 https://www.mhc.tn.gov.in/judis CRP(MD)No.1107 of 2021 B.PUGALENDHI, J.
dsk CRP(MD)No.1107 of 2021 12.01.2023 20/20 https://www.mhc.tn.gov.in/judis