Andhra Pradesh High Court - Amravati
Kranthi Speciality Hospital Pvt Ltd vs Diddukunta Kesava Reddy on 24 March, 2022
THE HON'BLE Ms. JUSTICE B.S.BHANUMATHI
Civil Revision Petition No.956 of 2018
ORDER:
This Civil Revision Petition, under Section 115 of the Code of Civil Procedure, 1908 (Code) is preferred by the petitioner/Garnishee against the order, dated 11.07.2017, of the learned III Additional District Judge, Fast Track Court, Anantapur, passed in E.P.No.231 of 2016 in O.S.No.23 of 2016.
2. Heard Sri Ineni Venkata Prasad, learned counsel for the revision petitioner and Sri N. Aswartha Narayana, learned counsel for the 1st respondent/Decree Holder. The 2nd respondent is shown to be not a necessary party to this revision petition.
3. The order, dated 11.07.2017, which is impugned in this revision, reads as under:
"Whereas the above named Decree Holder filed E.P to attach the public shares of judgment debtor which are in Kranthi Special Hospital Pvt. Ltd. (DIN No.0255332) to an extent of Rs.10,00,000/- (Rupees Ten lakhs only) and the attachment warrant also served (sic 'on') on you on 28-10-2016.
Therefore, you are hereby directed to send the amount of Rs.10,00,000/- to this Court on or before 25-07-2017.
Further you are hereby directed to appear (sic 'before') the court and submit your explanation for not sending the amount to the court in spite of repeated directions of the Court."2
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4. In the grounds of revision, the revision petitioner urged as under:
The Execution Court failed to see whether the alleged shares of JDr are with the revision petitioner or not and issued warrant against the revision petitioner who is in no way connected to those shares.
Ordering attachment of the shares or issuing show-cause notice alleging him as the garnishee are incorrect and illegal. The revision petitioner submitted his explanation to the show cause notice dated 11.07.2017 informing the facts.
"(i) Kranthi Super Specialty Hospital Pvt. Ltd., is a private company and the shares available in the company are private shares and the shares belonging to JDr are not public shares;
(ii) The DIN (Director Identification Number) 025532 does not relate to any one of the Directors of the company;
(iii) There is a clear restriction for transfer of shares under Section 2(68)(i) of the Companies Act and therefore, it is not possible to release the shares or realize their value for complying with the orders impugned;
(iv) The name of Kranthi Super Specialty Hospital Pvt. Ltd., has been struck off from the Register of Companies under Section 248(1) of the Companies Act, vide notice dated 30.03.2017 by the Registrar of Companies and the notice was served on the company and all its Directors. As the company was dissolved under Section 248(5) of the Companies Act, there is a bar under Section 250 of the Act for transacting any business or activity except for which is provided and since then, the company is not in a position to transact any business, except for the payment/discharge of its liabilities/obligations as it ceased to operate as a company and its certification of incorporation has been cancelled unless the National Company Law Tribunal revives the company, no activity etc can be done and any violation is punishable;
(v) The decreed loan has been secured by the JDr in his personal capacity and as it does not belong to the company, the company is not personally liable and even the exception provided under Section 250 of the Companies Act cannot be enforced against the revision petitioner. The revision petitioner company including all its Directors have respect for orders of Court;3
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(vi) The proceedings against the petitioner/Garnishee are not sustainable as neither the company nor its Directors are parties to the suit or the execution petition and as the loan covered by the decree is a private loan.
(vii) Impugned notice was issued without affidavit of the DHr. (In other words, based on the affidavit of the counsel for the DHr)"
5. During the course of arguments, the main contention of the revision petitioner is that he is in no way connected to the affairs of the company and he is not a garnishee and that therefore, he is not personally liable for the warrant being issued against him personally. It is further vehemently contended that when the company itself was dissolved, it is impossible to execute the direction of the Court in spite of having respect for law and Court, and thus, there is no willful disobedience.
6. He further submitted that no show cause notice was issued before ordering warrant and that basing on the affidavit of the advocate only, the impugned notice was issued against law.
7. On the other hand, learned counsel for the 1st respondent/DHr contends that it is only a show cause notice which was issued under Rule 46A of Order XXI of the Code and therefore, it does not contemplate any other prior notice to be issued. He further submitted that in support of this application under Order XXI Rule 46A of the Code, any person who has knowledge of the facts in the matter can submit an affidavit and it is not an illegality or irregularity at all. Nextly, it is contended that the company has not been proved to be dissolved or struck off from the Register of Companies by passing proceedings under Section 248(5) of the Companies Act. Insofar as the liability of the revision petitioner as garnishee is concerned, it is 4 BSB, J C.R.P.No.956 of 2018 shown that he is the Managing Director of the Company as can be seen from notice dated 30.03.2017 issued by the Government of India, which he relies. Thus, there is no merit in the revision petition.
8. It is apt to refer to Order XXI Rule 46A of the Code herein, which reads as under:
"46A. Notice to garnishee.- The Court may in the case of a debt (other than a debt secured by a mortgage or a charge) which has been attached under rule 46, upon the application of the attaching creditor, issue notice to the garnishee liable to pay such debt, calling upon him either to pay into court the debt due from him to the judgment-debtor or so much thereof as may be sufficient to satisfy the decree and costs of execution, or to appear and show cause why he should not do so.
(2) An application under sub-rule (1) shall be made on affidavit verifying the facts alleged and stating that in the belief of the deponent, the garnishee is indebted to the judgment-debtor.
(3) Where the garnishee pays in the Court the amount due from him to the judgment-debtor or so much thereof as is sufficient to satisfy the decree and the costs of the execution, the Court may direct that the amount may be paid to the decree-holder towards satisfaction of the decree and costs of the execution."
A perusal of the above provision indicates that after a copy of order of attachment has been served on a garnishee under Rule 46 of Order XXI, a Court has two options under Rule 46A to call upon the garnishee to deposit the amount in court (or) to direct garnishee to appear and show cause why he should not do so. In the present case, the execution Court resorted to both modes at a time in the same order. In pursuance thereof, the revision petitioner, to whom it was 5 BSB, J C.R.P.No.956 of 2018 addressed, he submitted an explanation, dated 24.08.2017 with reasons very much identical to the ground of revision. As per Rule 46C, where the garnishee disputes liability, the Court may order that any issue or question necessary for the determination of liability shall be tried as if it were an issue in a suit and upon the determination of such issue shall make such order(s) as it deems fit. Instead of inviting an order of execution court on the explanation under Rule 46C or appropriate provision, this revision is preferred as if the order is illegal. Since then, the execution proceedings have been stayed by virtue of interim order now and then passed. This revision is premature as the Court has not yet passed any order after submitting the explanation.
9. As rightly submitted, order under Rule 46A does not contemplate one more notice prior to the issuance of show cause notice impugned in this revision, except service of copy of order of attachment under Rule 46 which was served on 28.10.2016 and the same is not in dispute. Thus, the impugned order is not vitiated on that count.
10. Insofar as affidavit of advocate enclosed to the petition is concerned, Rule 46A does not mandate affidavit of DHr. What is mandated under Rule 46A (2) is that the application under Rule 46A(1) be made on affidavit verifying the facts and stating about indebtedness of garnishee to JDr as per the belief of deponent. Thus, as rightly submitted by the learned counsel for the respondent/DHr, person having knowledge of facts regarding the requirement can give affidavit. A copy of EA 41 of 2017 was filed along with this revision petition and this petition is supported by affidavit of the Advocate. Learned counsel for petitioner advanced arguments based on this 6 BSB, J C.R.P.No.956 of 2018 petition. Its docket shows that that it was filed on 24.08.2017 for issuance of a warrant against the garnishee for not complying the order sent to the garnishee. This relief appears to be covered by Rule 46B. Later this petition is coming up for hearing of the petitioner/DHr from 22.09.2017 to 20.12.2017 and no orders were passed thereon and was posted to 30.01.2018. This petition was filed obviously after issue of the impugned notice dated 11.07.2017 and the notice does not bear EA number. Obviously this petition does not relate to impugned order.
11. Though it is vehemently contended that the company is no longer in existence and proceedings were issued under Section 248(5) of the Companies Act, striking off the company's name from the Register of Companies, except filing a copy of the notice issued under Section 248(1) of the Companies Act, there is no other proof of the actual proceeding contemplated under Section 248(5) of the Companies Act was filed. It is not known whether the notice issued under Section 248(1) has culminated into proceedings under Section 248(5) of the Companies Act, as contended by the revision petitioner. In the absence of such proof, the contention of the revision petitioner that the company is no more in existence having been removed from the register of the companies cannot be accepted.
12. As already noted, since the grounds raised in the explanation about causes shown as to why he should not do as directed to pay the amount, it is for the execution Court to decide thereon. Since there is no other ground vitiating issue of the impugned order (notice), dated 11.07.2017, there is no merit to approach this Court at this juncture. 7
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13. For the foregoing discussion, this Court does not find any grounds to interfere with the order impugned.
14. Accordingly, the Civil Revision Petition is dismissed.
There shall be no order as to costs.
Miscellaneous petitions pending, if any, shall stand closed.
________________ B.S BHANUMATHI, J 24th March, 2022 RAR