Andhra HC (Pre-Telangana)
Y. Saratchandra vs Lakshminarasimha Finances And Anr. on 12 August, 2004
Equivalent citations: 2004(5)ALD469, 2004(5)ALT449
ORDER D.S.R. Varma, J.
1. Heard both sides.
2. This revision is directed against the order, dated 1-6-2004, passed in E.P. No. 496 of 2002 in O.S. No. 1228 of 2000, by the Principal Junior Civil Judge, Kurnool, ordering arrest of the petitioner under Order XXI, Rules 37 and 38 of the Code of Civil Procedure.
3. The petitioner is Judgment Debtor No. 2, first respondent is Decree Holder and second respondent is Judgment Debtor No. 1 respectively before the Executing Court.
4. For the sake of convenience, in this order, parties will be referred to as arrayed before the Executing Court.
5. The facts, which are not in dispute, are that E.P. has been filed by the Decree Holder against Judgment Debtor-2. Judgment Debtor-2 is the guarantor. Judgment Debtor-1 is the principal borrower. The Executing Court, having considered the material available on record, allowed the E.P. filed under Order XXI, Rules 37 and 38 C.P.C., ordering arrest of JDR-2. Aggrieved by the same, the present civil revision petition is filed.
6. Having heard the learned Counsel on either side, I have perused the impugned order as well the other material papers available on record.
7. A perusal of the record, in particular, the order of the Executing Court, discloses that the E.P. had been filed only against JDr-2 under Order XXI, Rules 37 and 38 of C.P.C. Even Column No. 10 of the execution petition also indicates that the present execution petition is filed only against the Judgment Debtor No. 2
8. Sub-rule (1) of Rule 37 of Order XXI C.P.C. contemplates that the Court shall, instead of issuing a warrant for the arrest of the JDr, issue a notice calling upon him to appear before the Court on a date to be specified in the notice and show-cause as to why he should not be committed to civil prison.
Sub-rule (2) of Rule 37 of Order XXI C.P.C. postulates that where appearance is not made in obedience to the notice, the Court shall, if the Decree Holder so requires, issue a warrant of arrest of the judgment debtor, who was not present in the Court.
Rule 40 of Order XXI C.P.C. contemplates the procedure that has to be followed by the Court when the judgment debtor appears before the Court voluntarily in response to the notice, or is brought after arrest by way of compulsion.
9. A perusal of the counter-affidavit filed by the Judgment Debtor-2 in the execution petition discloses that he was prepared to discharge the decretal liability by paying a sum of Rs. 500/- per month in instalments, on the ground that he is a petty employee drawing a meager salary. When Judgment Debtor No. 2, who is only a guarantor, comes-forward with such a plea, it cannot be held that there was any deliberate negligence on his part in discharging the decretal liability. In normal course, when a decree was obtained against the principal debtor and the guarantors, it is permissible under law for the Decree Holder to seek execution of the decree in different modes, as contemplated under Section 51 C.P.C., which deals with the powers of the Court to enforce execution of the decree.
Sub-rule (1) of Rule 40 of Order XXI C.P.C. postulates that an enquiry has to be conducted when the judgment debtor appears before the Court in response to the notice, issued under Rule 37, and a fresh opportunity shall have to be given to the judgment debtor to show-cause as to why he should not be committed to civil prison.
Sub-rule (2) of Rule 40 of Order XXI C.P.C. postulates that pending conclusion of enquiry as contemplated under Sub-rule (1) of Rule 40 of Order XXI C.P.C., the Court may, in its discretion, order detention of the judgment debtor in the custody of an Officer of the Court or release him on his furnishing security to the satisfaction of the Court for his appearance when required.
Sub-section (3) of Section 55 C.P.C, which deals with arrest and detention of judgment debtor, contemplates that where a judgment-debtor is arrested in execution of a decree for payment of money and brought before the Court, the Court shall inform him that he may apply to be declared as insolvent, and that he may be discharged if he has not committed any act of bad faith regarding the subject of the application and if he complies with the provisions of the law of insolvency for the time being in force.
10. From a conjoint reading of the aforesaid provisions, it is clear that the judgment-debtor is entitled to have the necessary information in the execution proceedings and, when the judgment debtor is arrested in execution of a decree for payment of money and is brought before the Court, the executing Court is also under a statutory obligation to inform the judgment-debtor regarding the remedy available to him i.e., to make an application to declare him as an insolvent, and discharge him if he has not committed any act of bad faith regarding the subject of the application and if he complies with the provisions of the law of insolvency for the time being in force.
11. A plain reading of the provisions contained in Sub-section (3) of Section 55 C.P.C, and the procedure contemplated under Rules 37, 40 of Order XXI C.P.C, would indicate that compliance of the requirements of those provisions is mandatory in nature, inasmuch as those provisions relate to the rights guaranteed to a citizen under Article 21 of the Constitution of India.
12. In Kalindindi Rama Raju v. Vijaya Bank, 2002 Suppl. (2) ALD 300 = 2001 (2) An.WR 184 (AP), a learned Judge of this Court (P.S. Narayana, J.), referring to the judgment of the Apex Court in Jolly George Varghese v. Bank of Cochin, ; the decision of the Karnataka High Court in K. Karunakar Shety v. Syndicate Bank, ; and the decision of this Court in Vemanarayana v. Sakku Bai, 1994 (4) ALT 422, laid down the following guidelines, to be followed by the executing Court while ordering arrest of the judgment-debtor in execution proceedings:
(1) Passing cryptic orders not based on reasons have to be avoided;
(2) Courts are expected to be cautious while making order of arrest in execution of decree since it involves personal liberty;
(3) Proper opportunity has to be given and necessary enquiry has to be made while making an order of arrest;
(4) Courts may also examine whether other modes of recovery are available to the decree-holder and is it necessary to order arrest for recovery of the amount and whether the judgment-debtors are wilfully and intentionally neglecting to discharge the decree debts and Courts may examine the relevant circumstances also in this regard;
(5) Even while making an order of arrest in default of appearance of the judgment-debtors, Courts have to prima facie satisfy themselves on the material placed before them that an order of arrest can be made;
(6) Courts shall also fix the period for which the judgment-debtors are to be kept in detention.
13. In K. Vijayakumar v. N. Gururaja Rao, , following the aforesaid guidelines and also the decision of a Division Bench decision of this Court in Sastry v. Bank of India, 1978 (2) APLJ 335, while considering the provisions of Clause (b) of proviso to Section 55 of the Civil Procedure Code, took the view that ordering of arrest of judgment-debtor is not proper when other alternative mode of recovery of decretal amount is available to the decree-holder. One of the guidelines formulated by the learned Judge in Kalindindi Rama Raju's case (supra) is that the Executing Court must explore other possibilities also and should necessarily record a finding with reasoning that there was deliberate negligence on the part of the judgment debtor in discharging the decretal amount.
14. Coming to the case on hand, it has to be seen that the relief sought for in the present execution petition is only against JDR-2, who is only a guarantor. A guarantor, in normal course, would expect the principal borrower to discharge his liability. Therefore, any delay in discharging the decretal liability on the part of the principal borrower cannot be treated as deliberate negligence on the part of a guarantor. In such cases, the aspect of negligence on the part of the guarantor would start only from the date of filing of the E.P. but not from the date of passing of the decree. Furthermore, when the Judgment Debtor-2 came-forward to perform his obligation by way of paying the decretal amount in monthly instalments, at the rate of Rs. 500/-, it cannot be construed, at any stretch of imagination, that there was omission on the part of JDr-2 in discharging the decretal amount and that there was deliberate negligence on his part in discharging the decretal amount. It cannot also be treated as a "mala fide" act on the part of the judgment debtor.
15. For the aforementioned reasons, the impugned order is set aside and the matter is remanded back to the Executing Court for disposal afresh. The executing Court is directed to consider and decide the matter afresh, as per law, as indicated above, and pass appropriate orders after giving due opportunity of being heard to both parties.
16. The civil revision petition is allowed, at the admission stage, as indicated above.