Delhi High Court - Orders
Goyal Mg Gases Private Limited vs Neelachal Ispat Nigam Limited (Ninl) & ... on 17 September, 2021
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~22
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM.) 172/2019 & EX.APPL.(OS) 636/2019,
EX.APPL.(OS) 637/2019, EX.APPL.(OS) 639/2019,
EX.APPL.(OS) 353/2020, EX.APPL.(OS) 607/2021
GOYAL MG GASES PRIVATE LIMITED ..... Decree Holder
Through: Mr. Abhishek Puri, Ms. Surbhi
Gupta and Mr. Shaurya Dhoundiyal, Advs.
versus
NEELACHAL ISPAT NIGAM LIMITED (NINL) & ANR.
..... Judgment Debtors
Through: Mr. Dhananjaya Mishra, Adv.
for R-1/NINL
Mr. Akhisl Sachar and Ms. Sunanda
Tulsyan, Advs. for R-2/MMTC
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
ORDER
% 17.09.2021 (Video-Conferencing) EX.APPL.(OS) 637/2019 in OMP (ENF.) (COMM.) 172/2019
1. This is an application by the decree holder under Order XXI Rules 46 and 46A of the Code of Civil Procedure, 1908 (CPC).
2. The prayer clause in this application reads thus:
"It is therefore most respectfully prayed that this Hon'ble Court may kindly be pleased to:-
(a) Issue warrants of attachment, and/or direct realisation of decretal amount under Order XXI, Rule 46 and 46A from the sums receivable by Judgment Debtor and payable by MMTC Ltd. having its Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 1 of 7 Signing Date:19.09.2021 22:56:06 registered and corporate offices at Core-l, Scope Complex, 7, Institutional Area, Lodhi Road, New Delhi-110003;
(b) Until the aforesaid order as prayed in (a) and (b) above is passed, out of monies payable by MMTC Ltd. to Judgement Debtor, MMTC Ltd. be directed to keep the aforesaid amount under the Arbitral Award of Rs. 34,74,16,164/- plus interest accrued till the payment in an escrow account and further MMTC Ltd. be restrained from transferring such amount of Rs. 34,74,16,164/- plus interest accrued till the date, of payment to the Judgement Debtor to secure the awarded amount of Decree Holder.
(c) Any other and further orders as this Hon'ble Court may deem fit in the fact of the case may kindly be passed in favour of DH and against the Judgment Debtor."
3. Mr. Puri, learned counsel for the applicant, has addressed this Court at considerable length. Empirically submitted, his submission is that MMTC Ltd. owes money to M/s Neelachal Ispat Nigam Limited (NINL), the judgment debtor. He seeks to treat MMTC as a garnishee and invoke, against the said payments, Rules 46 and 46A of Order 21 of the CPC. Mr. Puri has pointed out, to me, that before Order XXI Rule 46A would come up for consideration, in the first instance, the court would have to pass an order under Order XXI Rule 46(1)(a) read with (i) thereof.
4. These provisions may, for ready reference, be reproduced thus:
"Rule 46 Order XXI of Code of Civil Procedure 1908 "Attachment of debt, share and other property not in possession of judgment-debtor"Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 2 of 7 Signing Date:19.09.2021 22:56:06
(1) In the case of-
(a) a debt not secured by a negotiable instrument, xxx xxx the attachment shall be made by a written order prohibiting,-
(i) in the case of the debt, the credit or from recovering the debt and the debtor from making payment thereof until the further order of the Court;"
5. Mr. Puri acknowledges the fact that he is not in possession of the actual contract or any other document, clearly evidencing liability, from MMTC to NINL. He, however, relies on the annual report of NINL for the year 2018-2019, which has been filed with the present application. He has drawn my attention to page 80 of the present application, particularly to Clause (f)(ii) under Note 31 of the Financial Statement: This reads thus:
"Note 31: Other notes on financial statements
f) Related party As per Ind AS 24 (Related Party disclosures) issued under the Companies (Indian Accounting Standards) Rules, 2015, details of Related party transactions are as under:
xxx
ii) Details of transactions with related parties:
(₹ in lakh) Particulars 2018-19 2017-18 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 3 of 7 Signing Date:19.09.2021 22:56:06 Purchase of goods from 1,34,555.93 60,746.03 MMTC Ltd.
Sale of goods to MMTC 2,27,909.08 99,341.69 Ltd.
Equity participation by 28,934.27 28,934.27 MMTC Ltd. as on 31.03.2019 /31.03.2018 Corporate Guarantee 1,97,500.00 94,500.00 issued to MMTC L.td.
as on 31.03.2019/
31.03.2018
Corporate Guarantee 1,34,582.00 1,40,010.00
issued by MMTC in
favour of banks /FIs for
securing the loans of the
company as on
31.03.2019/31.03.2018
Working Capital 1,42,500.00 1,42,500.00
Borrowing/ Inter
Corporate Loan by
MMTC Ltd. as on
31.03.2019/31.03.2018
Revenue received in 1,16,723.11 35,369.27
advance from / trade
payable to MMTC Ltd.
as on 31.03.2019/
31.03.2018
Purchase of goods from 25,767.95 11,773.87
OMC Ltd.
Equity participation by 7,159.85 7,159.85
OMC Ltd.
Inter Corporate Loan by 16,881.12 16,950.00
OMC Ltd. as on
31.03.2019 /31.03.2018
Payable to OMC on 7,429.49 7,207.05
account of trade as on
31.03.2019 /31.03.2018
6. Mr. Puri submits, relying on the first two entries in sub-clause
(f)(ii) under Note 31 of the Financial Statement, that, in the years 2018-2019 and 2017-2018, goods have been purchased by NINL from Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 4 of 7 Signing Date:19.09.2021 22:56:06 MMTC and goods have been sold by NINL to MMTC.
7. He has sought to point out, from the said statement, that, in each year, the money receivable by NINL against the sales to MMTC was more than the money payable to MMTC against the sales NINL. In each year, therefore, Mr. Puri submits that there was a positive differential amount of money payable to NINL by MMTC. It is on this basis that he seeks an order Order XXI Rule 46(1)(a)(i).
8. To my mind, before any directions can be passed under Order XXI Rule 46(1)(a), it is necessary for the applicant seeking a direction under the said provisions to establish, or at least, prima facie, "the existence of a debt (by the alleged garnishee) not secured by a negotiable instrument".
9. The mere fact that in 2017-2018 and 2018-2019, the amounts receivable by NINL against the sale of goods to MMTC was more than the amount payable to MMTC against the goods purchased by NINL, cannot make out, even a prima facie, case of any debt being owed by MMTC to NINL. For all one knows, the entire payment may already be liquidated.
10. I may, in this regard, refer to a decision of a learned Single Judge of the Madras High Court in Alsidass Kaverlal v. J. Hiriya Gowder 1, on which Mr. Puri himself placed reliance.1
AIR 1961 Mad 189 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 5 of 7 Signing Date:19.09.2021 22:56:06
11. The High Court of Madras has, in the said case, clearly stated that "as pointed out in Mulla's Civil Procedure Code, 12th Edn., page 882, even where a debt is being attached, it is not necessary that the exact amount of the debt should be stated, provided there is a debt actually due at the time of the attachment."
(Emphasis in original)
12. The Madras High Court, too, emphasised the fact that before any order under Order XXI Rule 46 could be passed, the existence of a debt actually due by the alleged garnishee to the applicant debtor is a sine qua non. It does not appear permissible, prima facie, to me, for the applicant to merely make an averment and throw the ball in the court of the debtor or the garnishee to rebut the same. Nonetheless, as Mr. Puri pointed out, in the present case, the response of the respondent, as well as written submissions by parties are also on record.
13. There is no categorical admission, either by NINL or MMTC, of any amount being due as on date, payable by MMTC to NINL against goods supplied by NINL to MMTC. As such, the first requisite of Order XXI Rule 46(1)(a) read with (i) thereunder may not, prima facie, be made out in the present case.
14. This is apart from the fact that, MMTC further contends that such great amounts are due to MMTC from NINL so that, in effect, there is no debt due from MMTC to NINL as on date. That is another aspect of the matter which would require consideration only if, in my view, the first hurdle is crossed.
Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 6 of 7 Signing Date:19.09.2021 22:56:0615. In order to enable Mr. Puri to meet these issues and, if possible produce any judicial authorities on the point, re-notify as part-hard on 27th September, 2021.
C. HARI SHANKAR, J.
SEPTEMBER 17, 2021 dsn Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI OMP (ENF.) (COMM.) 172/2019 Page 7 of 7 Signing Date:19.09.2021 22:56:06