Delhi High Court
Victor Cable Industries Ltd. vs Delhi Vidut Board on 9 November, 2001
Equivalent citations: 95(2002)DLT210, 2002(63)DRJ682
Author: O.P. Dwivedi
Bench: O.P. Dwivedi
JUDGMENT O.P. Dwivedi, J.
1. This order shall govern the disposal of EA. NO. 463/2000 filed by the judgment debtor/DVB for recall of order dated 10th October, 2000 whereby this Court had ordered issuance of warrant of attachment against the applicant.
2. Briefly narrated the facts leading to this application are that judgment debtor/applicant/DVB, had placed two purchase orders one dated 30th January 1990 and the other dated 11/12th March 1992 on the decree holder for supply of cables. Some disputes arose between the parties in respect of first pay order dated 30th January, 1990 which were referred to the sole arbitrator Mr. O.P. Anand, the then Additional General Manager (T&D) for adjudication. Mr. Anand made award dated 29th September, 1993 which was filed in the Court. The petition for making the Award a rule of the court was registered as a suit No. 35/94. The Award was made rule of the Court on 15th January, 1995 as there was no appearance from the other side. Accordingly, a decree was drawn in favor of the DVB against the contractor who is the petitioner herein. The applicant DVB then filed an execution petition being 138/97 where on notices were ordered to be issued to the contractor M/s Victor Cable Industries Limited.
3. Later on some disputes arose regarding the other purchase order dated 11/12th March 1992 also and vide order dated 8th November, 1994 the matter was referred to the arbitrator to be appointed by DVB. Accordingly, DVB appointed, the then Chief Engineer (Distribution I) who passed an award dated 6th February, 1996. DVB/ applicant filed its objections against the said award dated 6th February 1996 but its objections were rejected and the said award dated 6th February, 1996 was also made rule of the Court vide order dated 26th September, 1998 and the decree was accordingly drawn. Thus two decrees came into being one in favor of the DVB and the other in favor of M/s Victor cable Industries Limited.
4. Their execution proceedings relate to decree dated 16th September, 1998 in favor of contractor. DVB has now filed the present application pleading that in April 1999 the amount payable by DVB to the Contractor company in respect of the decree dated 26th September, 1998 in suit No. 605A/96 amounted to Rs. 1,65,37,720.65 whereas the amount which was due to the DVB in the decree passed on 15th January, 1995 in suit No. 35A/94 against the said contractor company, amounted to Rs. 78,09,367.90. The DVB suo moto adjusted the amount due to it against the amount payable by it in respect of the decree passed in suit No. 605A/96 on 26th September, 1998 leaving a balance of Rs. 87,28,352.75 payable by DVB to M/s Victor Cable Industries Limited. This balance amount has been paid to M/s Victor Cable Industries Limited. Thus according to the DVB both the decrees viz. the one passed in suit No. 35A/94 on 15th January, 1995 and the other passed on 26th September, 1998 in suit No. 605A/96 stand duly satisfied. The DVB had filed the execution NO. 138/97 against the said contractor company in respect of the decree passed in the suit No. 35A/94. But later on the said execution was withdrawn on 30th September 1999 because of the adjustment referred to above.
5. The Contractor company has already filed an application for setting aside the ex parte decree in suit No. 35A/94 and that application is still pending. The Contractor company also filed the present execution application being Ex. No. 200/2000 in respect of judgment/decree dated 26th October, 1998 for recovery of the balance amount along with interest which comes to Rs. 99 lacs as on 15th September, 2000, the date of filing of this execution petition. The Court vide order dated 10th October, 2000 had ordered issuance of warrant of attachment against the DVB and now DVB has come up with the present application IA.No. 463/00 pleading that with the adjustment of decretal amount of decree dated 12th January, 1995 in its favor against the decretal amount due to the contractor company in respect of decree dated 26th October 1998 and with the payment of the balance amount Rs. 87,28,352.75 both the decree stood satisfied and therefore the order dated 10th October, 2000 issuing warrant of attachment against the DVB be recalled. The application has been contested by the Contractor Company on various grounds. It has alleged that the arbitrator had misconducted himself in the first arbitration proceedings and the Court order making the award dated 29th September 1993 a rule of the courts was passed exparte. The contractor company has already filed application for setting aside the said ex part decree which is still pending disposal. The contractor company has admitted that DVB has paid a sum of Rs. 87,28,352.75 in respect of decree dated 26th October, 1998 but it is contended that the balance amount is still due and the DVB was not entitled to make suo moto adjustment against the said decree nor the company approves any such adjustment. Thus it is submitted that the contractor company never agreed to any such adjustment nor any adjustment could be made because the petitioner company has been declared to be an sick industrial company within the meaning of section 3(1)(o) of 'The Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'the Act') and scheme for its rehabilitation as has been sanctioned by BIFR and the same is under implementation so in view of section 22 of the same is under implementation so in view of section 22 of the said Act the execution petition filed by the DVB in respect of decree dated 12th January, 1995 could not be proceeded with without the consent of the Board. The contractor company also filed an application under section 22 of the Act for stay of the said execution filed by the DVB but the DVB withdrew the execution itself. For these reasons it is contended by the contractor company that the DVB is liable to pay the balance amount as it was not entitled to make any unilateral adjustment.
6. I have heard learned counsel for the parties and perused the record.
7. The moot point for consideration in this case is whether where two parties hold cress decrees against each other, the party holding decree of a Lesser amount can make adjustment on its own and get the satisfaction of other decree recorded by paying off the balance amount, without concurrence of the decree holder of the larger amount. The relevant provision which governs the situation is Order XXI Rule 2 CPC which reads as under :-
2. Payment out of Court to decree-holder Where any money payable under a decree of any money payable under a decree of any kind is paid out of Court, (or a decree of any kind is otherwise adjusted) in whole or in part to the satisfaction of the decree-holder, the decree holder shall certify such payment of adjustment to the Court whose duty is to execute the decree, and the Court shall record the same accordingly.
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8. In the case of A.P. Bagchi v. F. Morgan- it was held that for recording satisfaction under Order XXI Rule 2 CPC " and allegation of some understanding as to adjustment between judgment debtor and decreed holder is necessary. Order XXI Rule 2 applies to cases in which the payments have been made to the decree holder or where the adjustment of decree otherwise has taken place to the satisfaction of the decree holder. It cannot apply to a case in which the adjustment was not acceptable to the decree holder. It is not open to the judgment debtor to decide for himself and act on the supposition that decree has been wholly or partly adjusted though the decree holder is unwilling to accept that position. Mutual understanding is the essence of the rule. This obviously means that when it is not suggested by the judgment debtor that there was and understanding between the parties that the decree should be mutually adjusted Order XXI Rule 2 will not apply. Likewise in the case of M.P. Shreevastava v. Veena -- it was observed that provisions of Order XXI Rule 2 CPC are not applicable if consent of parties for adjustment is absent. In absence of allegation of consent of decree holder to the adjustment, Order XXI Rule 2 cannot be invoked. In the present case the application under consideration viz. IA No. 463/2000 filed by the DVB does not contain any allegation to the effect that the decree holder contractor company had agreed to and consented to the adjustment of the money due to the DVB in respect of decree dated 15th January, 1995 against the decree dated 26th September, 1996 in favor of the contractor. Contractor company is vehemently against any such adjustment as is clear from the reply filed by it. What DVB did is that it unilaterally adjusted the amount due to it in respect of the decree dated 15th January, 1995 against decree dated 26th September, 1996 in favor of the contractor company without getting adjustment recorded through the Court under Order XXI Rule 2 CPC which is clearly not permissible under the law. Therefore the applicant/ DVB cannot be allowed adjustment of the amount claimed by them.
9. The fact that the contractor Company M/s Victor Cable Industries has been declared to be a sick company and a scheme prepared by the BIFR under section 15 is under implementation, is not seriously disputed. Learned counsel for the contractor company has placed on record various orders passed and the scheme prepared by B.I.F.R. for rehabilitation of the sick company. Section 22 of the Act which prohibits the execution of any decree against a sick industrial company reads as under :-
"22. Suspension of legal proceedings, contracts, etc- (1) Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or nay other instrument having effect under the said act or other law, no proceedings for the winding up of the industrial company r for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof [ and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company ] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.
10. In the case of The Gram Panchayat and another v. Shree Vallabh Glass Works Limited- - it has been held that the proceedings to recover any type of dues from a sick industrial company shall not lie without the consent of Board for Industrial and Financial Reconstruction in view of Sub-section (1) of Section 22 of the Act.
11. The DVB, therefore, could not have executed its decree against the contractor company without the consent of the Board. That is probably why instead of approaching BIFR, DVB took a short cut by making unilateral adjustment and deposition the balance amount but that is not permissible under the law. The unilateral adjustment made by the DVB without the consent of contractor-company and BIFR cannot be recognised under the law and therefore there is no legal warrant for recalling order dated 10th October, 2000.
12. Learned counsel for the DVB submitted that a person is entitled to pay to himself that amount which is sue to him from another if he has in his hands money belonging to the other person provided that his dues are legally recoverable. Although that question will be adjudged by the Court of law when it arises, he is not oblige to sue for the recovery of monies which is already in his possession. Reference in this connection was made to the DB decision of this Court in the case of 1997 IV AD (Delhi) 32 titled Cofex Exports Ltd. v. Canara Bank. In that case the Court was dealing with the situation wherein in a suit for recovery filed by the Bank, the defendant had pleaded set-off or counter claim in written statement. With the coming into force of D.R.T. Act 1993 the question arose whether along with the civil suit the set-off or counter claims pleaded by the defendant will also be transferred to the Tribunal. The Court answered in negative and also prescribed procedure in such a situation. In that case there was no discussion about the adjustment or execution or the cross decrees. In the case of Union of India v. Raman Iron Foundry - AIR 1974 Supreme Court relied upon by the learned counsel for the DVB, Supreme Court was dealing with the appeal against an injunction order passed by this Court restraining the appellant UOI from effecting recoveries of the amounts claimed to be due as damages from other pending bills of the contractor. Learned single Judge of this Court had held that Clause 18 of the General Conditions of Contract did not authorise UOI to appropriate the amounts of any pending bills of the contractor towards satisfaction of his claim for damages against the contractor. The order was upheld in the appeal by the Supreme Court with the observations that a claim for damages for breach of contract is not a claim for a sum presently due and payable and therefore appellant UOI is not entitled under clause 18 of GCC to recover the amount of such claim by appropriating other sums due to the contractor. This judgment also does not deal with the execution/satisfaction/adjustment of the cross decrees. It is important to bear in mind that we are now at the stage of the execution. Both parties have obtained decrees against each other. The adjustment/satisfaction of the decrees can be done only in accordance with the provisions of CPC and not otherwise. As already held adjustment of the decrees can be recorded only in accordance with the provisions of Order 21(2) CPC for which consent of decree holder is a necessary ingredient. The only other provisions which deals with the cross decrees is Order 21 Rule 18 CPC which reads as under :-
18. Execution in case of cross-decrees- (1) Where applications are made to a Court for the execution of cross-decrees in separate suits for the payment of two sums of money passed between the same parties and capable of execution at the same time by such Court, then-
(a) if the two sums are equal, satisfaction shall be entered upon both decrees; and
(b) if the two sums are unequal execution may be taken out only by the holder of the decree for the larger sum and for so much only as remains after deducting the smaller sum, and satisfaction for the smaller sum shall be entered on the decree for the larger sum as well as satisfaction on the decree for the smaller sum.
(2) This rule shall be deemed to apply where either party is an assignee of one of the decrees and as well in respect of judgment debts due by the original assignor as in respect of judgment debts due by the assignee himself.
(3) This rule shall not be deemed to apply unless-
(a) the decree-holder in one of the suits in which the decrees have been made is the judgment debtor in the other and each party fills the same character in both suits; and
(b) the sum due under the decrees are definite.
(4) The holder of a decree passed against several persons jointly and severally may treat it as a cross-decree in relation to decree passed against him singly in favor of one or more of such persons.
13. From a plain reading of Order 21 Rule 18 CPC it is clear that the said provision can be invoked only when the execution application in respect of both the cross decrees are pending. In that case when the two decrees are not equal sums the satisfaction of the smaller decree could be recorded and holder of decree for the larger amount could maintain execution only in respect of the remaining amount. In the present case, however, the DVB has already withdrawn its execution without getting satisfaction to that extent recorded in the contractor's decree. So now there is no occasion for the court to record satisfaction of the DVB's decree and order execution only in respect of the balance amount alone to the contractor who is the holder of a decree for the larger amount. Since neither the adjustment of decree can be recorded under the provisions of Order 21 Rule 2 CPC for the reasons already given nor part satisfaction can be recorded under Order 21 Rule 18 CPC, this execution has to be proceeded with as there could not be any unilateral adjustment of the decree by DVB.
14. Learned counsel for the DVB also submits with reference to - Deputy Commercial Tax Officer and Ors. v. Corromandal Pharmaceuticals and Ors. that embargo contained under Section 22(1) of SICA is applicable only to the dues reckoned or included in the sanctioned scheme and the said bar does not apply to dues like sales tax etc collected by the sick company. In that case it was observed by the Supreme Court that any step for execution, distress or the like against the properties of the sick industrial company or other similar steps should not be pursued which will cause delay or impediment in the implementation of the sanctioned scheme and that is why embargo is place under Section 22 of the Act against any step for execution, distress or the like or other similar proceedings against the company without the consent of the Board. It was held that though the language of Section 22 of the Act is of wide import regarding suspension of legal proceedings form the moment an inquiry is started, till after the implementation of the scheme it will be reasonable to hold that the bar or embargo envisaged in Section 22 (1) of the Act can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc., which the sick industrial company is enabled to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be and could not have been intended to be covered within Section 22 of the Act. The petitioner has place on record the scheme sanctioned by the BIFR in respect of the petitioner company and orders passed by the board in this connection. There is nothing therein to indicate that the amount claimed by the DVB is not covered there under. Section 22(1) of the Act covers in its sweep all the recoveries of money due from the sick company except, of course, the tax which forms part of the revenue which the company has been allowed to collect even after the scheme came into being. The amount claimed by the DVB to be due against the company is not of that nature. In the present proceedings this court is only required to see whether the unilateral adjustment made by the DVB can be recognised under Order 21 Rule 2 CPC. The Court in these proceedings is not called upon to decide the question as to the applicability of Section 22(1) of SICA. The occasion to plead the embargo under Section 22(1) of the Act would arise only if DVB files any fresh execution proceedings against the contractor company.
15. For these reasons, I am of the view that there is no ground for recalling the order dated 10th October, 2000. Accordingly, application being EA. No. 463/2000 is hereby rejected.
Ex. No. 200/200016. Let the fresh warrant of attachments be issued, returnable of 30th April, 2002.