Kerala High Court
Saji Cherian vs Ajayakumaran Nair on 10 April, 2012
Author: K.T.Sankaran
Bench: K.T.Sankaran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.T.SANKARAN
TUESDAY, THE 10TH DAY OF APRIL 2012/21ST CHAITHRA 1934
WP(C).No. 30362 of 2003 (M)
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PETITIONER:
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SAJI CHERIAN,
EXECUTIVE DIRECTOR,
COCHIN STOCK EXCHANGE LTD.,
36/1565, MES BUILDING, 4TH FLOOR,
JUDGES AVENUE, KALOOR, KOCHI-682 017.
BY ADVS.SRI.MATHEW ZACHARIAH
SRI.KOSHY GEORGE
RESPONDENTS:
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1. AJAYAKUMARAN NAIR,
LAKSHMI SADANAM,
VALAMCHUZHI MURI,
PRAMADOM VILLAGE, PATHANAMTHITTA.
2. P.M.PAVITHRAN,
VASUPURAM, KARATTU,
URANACHAL.P.O.,
MATTANNUR, KANNUR DISTRICT.
BY ADV. SRI.G.UNNIIKRISHNAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
10-04-2012, ALONG WITH WPC. 30363/2003 & WPC. 30364/2003, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C)No.30362/2003
APPENDIX
PETITIONER'S EXHIBITS:-
EXHIBIT P1 : COPY OF THE REPORT OF THE DEFAULTS
COMMITTEE.
EXHIBIT P2 : COPY OF THE OBJECTION FILED BY THE
COCHIN STOCK EXCHANGE LTD. IN
E.P.No.109/98 IN O.S.392/96 BEFORE THE
MUNSIFF COURT, PATHANAMTHITTA.
EXHIBIT P3 : COPY OF THE ORDER DTD. 11/04/2002 OF
THE MUNSIFF COURT, PATHANAMTHITTA IN
E.P.109/98 IN O.S.392/96.
EXHIBIT P4 : COPY OF THE ORDER DTD.18/2/2003 OF THE
MUNSIFF COURT, PATHANAMTHITTA IN
E.P.109/98 IN O.S.392/96.
EXHIBIT P5 : COPY OF THE ORDER ISSUED BY THE MUNSIFF
COURT, PATHANAMTHITTA DTD. NIL.
EXHIBIT P6 : COPY OF THE ORDER IN E.A.No.75/2003 in
E.P.109/98 IN O.S.392/96 OF THE MUNSIFF'S
COURT, PATHANAMTHITTA, DTD. 12/12/2003.
RESPONDENTS' EXHIBITS : NIL.
True Copy
P.A. to Judge
K.T.SANKARAN, J.
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W.P.(C).Nos.30362, 30363 & 30364 of 2003
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Dated this the 10th day of April, 2012
JUDGMENT
The petitioner in the three Writ Petitions is the same person and the questions involved in the three Writ Petitions are the same. Therefore, these three Writ Petitions are being disposed of by the common judgment.
2. The first respondent Ajaya Kumaran Nair filed O.S.Nos.392 of 1996, 393 of 1996 and 394 of 1996 on the file of the court of the Munsiff of Pathanamthitta against the second respondent Pavithran for realisation of money. On 13/08/1997 the suits were decreed exparte.
3. The defendant Pavithran was a member of the Cochin Stock Exchange. He committed certain defaults which resulted in the cancellation of his membership and he was declared as a defaulter by the Stock Exchange. The membership of Pavithran was auctioned for a sum of Rupees Twenty lakhs on 17/10/1994. The Cochin Stock Exchange duly published the matter in the Malayala Manorama daily informing the public about the declaration of W.P.(C).Nos.30362, 30363 & 30364/2003 : 2 : Pavithran as a defaulter and inviting claims, if any, against Pavithran. Pavithran filed O.P.No.15056 of 1995 challenging the declaration made by the Stock Exchange. That Original Petition was dismissed.
4. Three suits were filed by Ajaya Kumaran Nair, as stated earlier, in the year 1996. Execution Petitions were filed by Ajaya Kumaran Nair as E.P.Nos.109 of 1998, 110 of 1998 and 111 of 1998 for realisation of the decree amounts. In the Execution proceedings, the decree holder filed application to realise the amount from the garnishee, namely, the default committee of the Cochin Stock Exchange. It was contended by the decree holder that by sale of the membership of Pavithran, amounts were realised by the Cochin Stock Exchange and the decree amounts in the three suits referred to above could be realised by directing the garnishee to deposit the amount before court. Notice under Rule 46-A of Order XXI of the Code of Civil Procedure was issued to the garnishee. Even before the notice was issued to the garnishee, it would appear that a prohibitory order was issued restraining the garnishee from disbursing the amounts. W.P.(C).Nos.30362, 30363 & 30364/2003 : 3 :
5. On behalf of the garnishee, the Cochin Stock Exchange appeared and filed Ext.P2 objections. They contended that Pavithran having been declared as a defaulter, he lost all his membership rights and all his rights vested with Stock Exchange. It was also contended that on the date of filing of the suits, Pavithran was not a member of the Cochin Stock Exchange Ltd. In the objections, it was further contended that the Chairman of the defaults committee did not hold any amount on behalf of a member who is declared as a defaulter. The duties and responsibilities of the defaults committee are laid down under the bye laws of the Exchange framed under the provisions of the Securities Contracts (Regulations) Act. The assets held by the default committee are to be distributed pro-rata among the creditor members whose claims were admitted. It was also contended that the decree holder was not entitled to claim any amount from the Cochin Stock Exchange or the defaults committee as garnishee or otherwise. It was also contended that Ajaya Kumaran Nair had filed a claim petition before the defaults committee and after considering the claim, the default committee rejected the claim.
W.P.(C).Nos.30362, 30363 & 30364/2003 : 4 :
6. The details regarding the claims made by Ajaya Kumaran Nair were stated in the objection filed by the Cochin Stock Exchange. It was contended that as per the byelaws and regulations of the Cochin Stock Exchange, a machinery is provided for settlement of disputes, including by way of arbitration and conciliation. The decree holder did not resort to those remedies. The amounts realised by the Cochin Stock Exchange are to be distributed among the claimants in the manner provided under the byelaws.
7. After the objections were filed by the Cochin Stock Exchange, the executing court considered the question of jurisdiction of the court to attach the property outside the territorial and the pecuniary jurisdiction of the court. The court below held, as per the Ext.P3 order dated 11th April, 2002 that prima facie, the Execution Petition was maintainable and the court had jurisdiction to proceed with the Execution Petition. The question of liability of the garnishee was relegated to be decided after hearing detailed arguments.
8. The executing court, thereafter, passed orders dated 18th February, 2003 rejecting the contentions raised by W.P.(C).Nos.30362, 30363 & 30364/2003 : 5 : the Stock Exchange. It was held that the garnishee stepped into the shoes of the judgment debtor. The garnishee was directed to pay the attached amount for the full satisfaction of the three decrees.
9. Thereafter, applications were filed by the decree holder under Section 151 of the Code of Civil Procedure and Section 3 of the Contempt of Courts Act to recover the decree amounts from the salary of Saji Cheriyan, the Executive Director of Cochin Stock Exchange. On receiving the notice, Saji Cheriyan filed objections and stated that he was not a garnishee and he did not owe any amount to the judgment debtor. He contended that he was only an employee of the Cochin Stock Exchange.
10. The court below rejected the contentions raised by Saji Cheriyan and directed the decree holder to take proper steps to prosecute the garnishee and put the garnishee in civil prison under the Contempt of Courts Act. The petitioner rushed to this Court and filed the Writ Petitions. The registry raised objections that Ext.P4 orders are appealable under Rule 46-I of Order XXI of the Code of Civil Procedure. The petitioner replied to the objections raised by the registry as W.P.(C).Nos.30362, 30363 & 30364/2003 : 6 : follows:-
"REPLY The petitioner is an employee of Cochin Stock Exchange Ltd. He is not a party to any of the proceedings including Exhibit P4. No notice is given to the petitioner before Exhibit P5 order is issued. Ext.P5 order seeks to execute the decree against a stranger. Stock Exchange is a separate and distinct person. Salary of the petitioner is his private property and not part of debt due to the Judgment Debtor. Hence appeal provision is not applicable as far as the petitioner is concerned. O.P. is maintainable under Articles 226 and 227.
There is no defect. The Writ Petition may be
posted before the Bench."
11. The court directed the registry to number the Writ Petitions. The Writ Petitions were admitted and stay was granted.
12. The Writ Petitions having been admitted in 2003 and the entire matter having come before this Court for consideration, at this distance of time, I do not think it would be proper to consider any objection as to the maintainability of the Writ Petitions. By Exts.P5 and P6 series orders, the salary of an employee of the Cochin Stock Exchange (Saji Cherian) was sought to be attached. It is submitted by the learned W.P.(C).Nos.30362, 30363 & 30364/2003 : 7 : counsel for the petitioner that Saji Cheriyan is not in the service of the Cochin Stock Exchange now and therefore the question of attachment of his salary has become irrelevant. The learned counsel for the petitioner, however, submitted that the procedure adopted by the court below was quite illegal. It is submitted that the defaults committee was shown as the garnishee.
13. Shri.G.Unnikrishnan, the learned counsel for the first respondent submitted that the Writ Petitions are not maintainable, since Ext.P4 series orders are appealable under Rule 46-I of Order XXI of the Code of Civil Procedure. He also submitted that the Cochin Stock Exchange has not filed the Writ Petitions and the Writ Petitions were filed only by an employee. He also contended that the parties went to trial after fully knowing the contentions raised by both sides and any of them cannot later contend that the order passed by the court below is bad since the procedure and formalities were not fully complied with.
14. The Cochin Stock Exchange entered appearance and raised a contention that the application filed by the decree holder to realise the amount from the defaults committee or W.P.(C).Nos.30362, 30363 & 30364/2003 : 8 : from the Cochin Stock Exchange was not maintainable. Even assuming that the Cochin Stock Exchange is to be treated as the garnishee, the court below should have considered the questions raised in the objections as if they were issues in a suit. The court below should have determined such issues and passed an order under Rule 46-C of Order XXI of the Code of Civil Procedure. On a perusal of Ext.P4 series orders, it is clear that the court did not follow the procedure as laid down in Rule 46-C of Order XXI of the Code of Civil Procedure.
15. Rule 46 of Order XXI of the Code of Civil Procedure provides for the attachment of (a) a debt not secured by a Negotiable Instrument, (b) a share in the capital of a Corporation and (c) other movable property not in the possession of the judgment debtor. Garnishee proceedings are taken when the decree holder has to realise the decree amounts from the judgment debtor and the garnishee is liable to the judgment debtor in any of the cases covered by Rule 46 of Order XXI of the Code of Civil Procedure. The prerequisite for initiating proceedings against the garnishee is that the garnishee is liable to the judgment debtor. The Cochin Stock Exchange denied their liability to the judgment debtor. This is W.P.(C).Nos.30362, 30363 & 30364/2003 : 9 : a matter to be considered by the court as an issue in a suit as provided under Rule 46-C of Order XXI of the Code of Civil Procedure. As stated earlier, the court below does not appear to have decided the case in such a manner. Ext.P5 series notice and Ext.P6 series orders directing Saji Cheriyan to deposit the amount and directing the decree holder to take appropriate steps for keeping the garnishee in civil prison and to initiate Contempt of Court's proceedings against the garnishee were issued on the basis of Ext.P4 series orders.
16. The learned counsel for the petitioner submitted that the name of the garnishee is not shown in Ext.P4 series orders. It is not clear whether the default committee or the Cochin Stock Exchange is the garnishee. Going by Ext.P5 notice and P6 series orders, the liability was cast on Saji Cheriyan, the Executive Director of Cochin Stock Exchange. Even assuming that the Executive Director is liable as the representative of the Cochin Stock Exchange, I do not think it would be possible to attach his salary for realisation of the decree debt. If the salary of Saji Cheriyan is to be attached, that presupposes that his salary is liable to be paid to the decree holder. There is no liability for Saji Cheriyan to W.P.(C).Nos.30362, 30363 & 30364/2003 : 10 : pay his salary to the decree holder. If so, by initiating garnishee proceedings, the salary of Saji Cheriyan could not be attached for payment of the decree debt in favour of the decree holder.
17. On a perusal of the various orders passed by the court below, I am of the view that the court below committed a jurisdictional error which goes to the root of the matter, thereby vitiating the whole of the garnishee proceedings. It is true that an Appeal could be filed by the garnishee under Rule 46-I of Order XXI of the Code of Civil Procedure. But going by the orders passed by the court below, it is not clear as who is the garnishee. The name of the garnishee is not shown in the cause title of the orders passed by the court below.
18. After hearing the counsel on either side and after perusing the orders passed by the court below, I am of the view that this is a case in which the jurisdiction of this Court under Article 227 of the Constitution of India should be exercised to set things right and to correct the jurisdictional errors committed by the court. Accordingly, the Writ Petitions are allowed and Ext.P4 series orders dated 18th February, 2003 and Ext.P6 series orders dated 12th December, 2003 are W.P.(C).Nos.30362, 30363 & 30364/2003 : 11 : set aside. The court below shall consider the matter afresh after hearing the proper parties and after affording them an opportunity to adduce evidence. The court below shall raise issues on the objections filed by the Cochin Stock Exchange and any other party to whom notice was issued and try and determine such issues in the manner provided under Rule 46-C of Order XXI of the Code of Civil Procedure.
The parties shall appear before the court below on 04th June, 2012.
K.T.SANKARAN, JUDGE skj