Madras High Court
Dr. Vimala vs M/S. Shriman Chits & Investments Pvt. ... on 9 September, 1999
Equivalent citations: 1999(3)CTC210
Author: V. Kanagaraj
Bench: V. Kanagaraj
ORDER
1. The above civil revision petition is directed against the fair and decretal order dated 25.10.1995 made in E.A.No. 2899 of 1994 in E.P.No. 2373 of 1993 in A.R.C. No. 907 of 1991 by the Court of IXth Assistant Judge, City Civil Court, Madras.
2. The petitioner has filed E.A.No. 2899 of 1994 in the lower Court under Section 47; CPC with averments (i) that the Chit Funds Act does not provide for any arbitration in respect of a claim by the Foreman against the surely; (ii) that the arbitrator has no power to order substituted service for service of notice and the award passed against the petitioner is a nullity; (iii) that the arbitrator has no authority to grant interest in the manner set out in the award; and (iv) that the arbitrator has acted beyond the scope of Section 64 of the Chit Funds Act and hence the award passed against the petitioner is a nullity and inexecutable against her. With the above grounds, the petitioner in the Execution Petition would pray with the lower court to declare that award passed in ARC No. 907 of 1991 by the District Registrar of Chits (North Madras) is a nullity and unexecutable.
3. In the counter filed by the respondent, it would be urged that (i) under Section 64(1)(b) of the Chit Funds Act, 1982 (hereinafter referred to as the 'Act') a surety can be proceeded against for any dispute relating the chit business; (ii) that under Section 128 of the Indian Contract Act, the liability of the surety is co-extensive with that of the Principal Debtor; that under Section 67 of the Act, the Registrar or the nominee hearing a dispute, shall in addition to the powers conferred on him under the Act, have the same powers as are vested in a Civil Court while trying a suit under CPC in respect of summoning and enforcing the attendance of persons and examining them on oath; and (iii) that the Chit Funds Act provides for allowing interest as per the contract. The petitioner having jointly and severally executed the Promissory Note, is: liable to pay the interest as per the Promissory Note. With the above contentions, the respondent would pray for dismissing the above petition.
4. During arguments, the learned counsel appearing for the petitioner would contend that the subject matter is one covered by the Chit Funds Act and the above civil revision petition is filed testifying the validity of the dismissal order dated 25.10.1995, under Section 47, CPC questioning the validity and enforcibility of the decree; that the petitioner is the second respondent before the arbitrator; that an ex-parte decree has been passed against her on ground that she had been served by substituted mode of service i.e., by publication; that under Section 64(1)(b) of the Aft; no arbitration is contemplated as it is drafted and there is no scope for initiating proceeding under the Arbitration Act.
5. Secondly, there should be a mandatory notice served under Section 33(1) of the Act and this statutory provision has not been complied with at all. Thirdly, a fraud had been played upon the Court by the respondent in so far as the substituted service is concerned, that Rule 50 contemplates the service, but does not contemplates the substituted service.
6. The learned counsel for the petitioner would lay emphasis on Section 33(1) of the Act which is mandatory; that in this matter, no notice has been served or filed; that this mandatory notice cannot be waived at all; that the lower court presumes that the respondent Company would have given waiver of notice. Coming to the next point i.e. Section 64, the learned counsel would contend that it a statutory arbitration, all the requirements contemplated under this Section should have been complied with. He would further point out that the surety has not suffered, with a decree and there is no question of the surety claiming against the Principal Debtor; that his answer is that he is concerned only with regard to the arbitration as contemplated under Section 64 and would ascertain that the arbitrators cannot go beyond the limits; that there are found judgment debtors; that normally there can be no executor regarding one decree, but the respondent herein has filed E.P.No. 2373 of 1993 against the petitioner alone as the judgment debtor; that for the very same decree sum against another judgment debtor, filed E.P.No. 2375 of 1993 meaning thereby he has been intending to collect the same money simultaneously from two judgment debtors; that Order 21, Rule 21 does not contemplate to proceed in this manner separately; that simultaneous execution against the person by arrest or attachment of property is not permissible, since it means recovery of the entire money twice from both parties.
7. In this context, the learned counsel would cite a judgment in S.P. Chengalvaraya Naidu v. Jagannath, wherein it is held as follows:
"The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. It can be said without hesitation that a person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. A litigant, who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If the withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party."
8. On the contrary, the learned counsel appearing for the respondent/decree holder would contend that the case in ARC No. 907 of 1991 before the Registrar is for the recovery of a sum of Rs. 20,585 in which the revision petitioner is a surety; that notice was sent and since the petitioner was not found, it was served by affixure on substituted service; that thereafter, an ex parte award was passed on 6.11.1992 with interest at 12 per cent; that the decree holder then filed E.P.No. 2373 of 1993; that he filed another E.P.No. 2375 of 1993; that the first one is for the attachment of movables and the second one is for the immovable property; that the revision petitioner filed E.A.No. 2899 of 1994 under Section 47, CPC contending thereby that the award passed in ARC No. 907 of 1991 is a nullity; that there is no agreement of alteration between the revision petitioner and the respondent; that it is not correct to say that the Chit Funds Act does not provide for an arbitration in respect of the claim by the foreman against the surety.
9. To the question raised by the other side whether the Arbitrator viz., the Registrar has no powers to order substituted service, the learned counsel for the respondent would contend that under Section 67(1) of the Chit Funds Act, such powers are conferred on the Registrar, that regarding the non-issue of notice contemplated under Section 33(1) of the Chit Funds Act, the learned counsel would cite the explanation offered by the lower court to this question in justifying the non-issue of the notice required under Section 33(1) of the Act. The learned counsel for the respondent would ascertain that under Section 64 of the Act, the foreman is entitled to proceed against the surety. Regarding the allegation that the Registrar has no powers to order substituted service, the learned counsel besides pointing out Section 67 of the Act in order to show that the Registrar has all powers not only under the Act, but also under the Civil Procedure Code as are vested in a Civil Court while trying a suit and would also cite Section 71(a) of the Act wherein the certificate issued by the Registrar should be deemed to be a decree of a Civil Court, and shall be executed in the same manner as a decree of such Court Ultimately dealing with the last point that parties cannot be split and execution proceedings instituted against each and every one of the judgment debtors independently for one and the same decree obtained. The learned counsel would try to explain that if one decree is executed as against one of the judgment debtors, the other would be withdrawn and it has also done only to recover the decree amount and not to cheat or play fraud on the party or the Court. The learned counsel for this point would contend that in the even that this Code does not accept the dual proceeding instituted for execution of one and the same decree, the above matter could be remanded back to the concerned court with directions.
10. In assessing the merits of the case, as projected by the revision petitioner and the respondent, besides taking into consideration the facts, figures and the other circumstances that encircle the whole case, I have to consider the position of law relating to the legal questions raised on the part of the revision petitioner hence and the arguments advanced by the learned counsel for both.
11. Though the revision petitioner has filed the petition before the lower court under Section 47 of the Code of Civil Procedure in order to determine certain questions by the Court executing the decree, the very questions that are to be determined are all quite legal spreading its spheres to very many Acts like Chit Funds Act. The Indian Contract Act, The Arbitration Act. The Code of Civil Procedure, etc. So far as Section 47(1) of the Code of Civil Procedure is concerned;
"All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, will be determined by the Court executing the decree and not by a separate suit"
12. The first and foremost question raised by the revision petitioner who is the second respondent before the Arbitrator is that she was a surety only and not the principal debtor and that she should not have been proceeded against when the principal debtor is available. For this question, on the part of the respondent, it would be answered that under Section 128 of the Indian Contract Act, 'the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract'. So far as Section 128 of the Indian Contract Act is concerned, the said liability which is co- extensive with the principal debtor must be proved against the surety in the same way as against the principal debtor. A judgment or award against the principal is not admissible as against the surety without a special agreement to that effect. The petitioner, in so far as he has not come forward to either plead or prove that his liable as a surety is not co-extensive, but otherwise provided by the contract, he cannot escape, the co extensive liability with that of the principal debtor. Therefore, this question is answered against the revision petitioner.
13. The next question that is raised by the revision petition is that the Chit Funds Act does not provide for any arbitration in respect of a claim by the foreman against the surety. It is the firm contention of the revision petitioner that under Section 64(1)(b) of the Chit Funds Act, no arbitration is contemplated as it is drafted and there is no scope for initiating proceeding under the Arbitration Act. A reading of the said Section would reveal that any dispute regarding the management of a chit business shall be referred by any of the parties to the dispute, to the Registrar for arbitration of each party thereto in one or the other of following:
"(a) a foreman, a prized subscriber or a non-prized subscriber, including .a defaulting subscriber, past subscriber or a person claiming through a sub scriber, or a deceased subscriber to a chit;
(b) a surety of a subscriber, past subscriber, or a deceased subscriber".
From the above, it is made clear that the surety of a subscriber is one who could be referred to the Registrar for arbitration being a surety of a subscriber as contemplated under Section 64(1)(b) of the Act From the reading of the whole section along with the explanation, it could be summed up that a surety can either refer for arbitration to the Registrar or be referred by the other patties thereto to the Registrar for arbitration. So far as the case in hand is concerned, the surety of a subscriber has been referred to the Registrar for arbitration and it is not correct to argue on the part of the revision petitioner that no arbitration is contemplated, since there is no scope for initiating proceeding against her as a surety tinder the Arbitration Act. Hence, this question is also decided against the revision petitioner.
14. The third question raised by the revision petitioner is that the Arbitrator has no power to order substituted service for the service of notice and the award passed against the petitioner is a nullity. This question would be answered that under Section 67 of the Act, the Registrar or the nominee hearing a dispute under Section 66, shall, in addition to the powers conferred on him under the section, have the same powers as are vested in a Civil Court white trying a suit under the Code of Civil Procedure in respect of summoning and enforcing the attendance of persons and examining them on oath. True, Section 67 of the Act is exhaustive and empowers the Registrar or the nominee hearing the dispute under Section 66 of the Act, with not merely the powers conferred on him by the Section, but also to exercise all powers that are vested in a Civil Court under Code of Civil Procedure while trying a civil suit and hence, issuing substituted service since this being the part of the powers entrusted with the Civil Court while trying a suit, the Registrar or nominee in an arbitration proceeding exercising the same powers of issuing substituted service the Registrar is quite legal and within his competence and in the case in having served by affixure has committed no irregularity or error. While the position of law is clear, under no circumstance it could be argued that the arbitrator has no power to order substituted service for service of notice. Hence, the award passed against the petitioner on such substituted service can never be termed as a nullity as argued on the part of the revision petitioner. Therefore, this question is also decided against the revision petitioner.
15. The next question is that there should be a mandatory notice served under Section 33(1) of the Chit Funds act and this statutory provision has not been complied with. Section 33(1) of the Act reads as follows:
"A foreman shall not be entitled to claim a consolidated payment from a defaulting prized subscriber under Section 32 unless he makes a demand to that effect in writing".
A plain reading of the Section would show that it is negative in its approach and character starting with the words 'a foreman shall not be entitled to claim a consolidated payment from a defaulting prized subscriber.' The next part of the Section reads 'unless he makes a demand to that effect in writing' meaning thereby that making a demand in writing is a pre-condition for a foreman to claim payment from a defaulting prized subscriber and without such statutory notice, demand for payment by a foreman cannot be done. Admittedly by the respondent, no such statutory notice seems to have been issued to the revision petitioner, nor any copy of the notice with proof has been served or filed and the issue of such a notice being mandatory, the presumption of the lower court that the respondent Company would have given waiver of notice is only a myth as against the statutory mandate and the lower court without proof, has no right to arrive at the conclusion that the respondent Company would have given waiver of notice, which is nothing but a decision arrived at on suppositions and surmises and the same is quite against the convictions of law.
16. For the above, discussion, it is held that there is no statutory notice in writing as warranted by Section 33(1) of the Act and hence the decree passed against the revision petitioner/judgment- debtor is a nullity, and the same cannot be executed as claimed by the respondent. This question is thus answered in favour of the revision petitioner.
17. The last and very important question raised by the revision petitioner is that a fraud has been played not only against the revision petitioner, but also upon the very Court itself in filing two separate execution proceedings for recovery of one and the same decree. The petitioner would clarify that there are four judgment - debtors to the decree; that there could be only one execution regarding one decree. But the respondent herein has filed E.P.No. 2373 of 1993 which is the subject herein against the revision petitioner alone as the judgment debtor that for the very same decree sum, the respondent has filed another EP.No. 2375 of 1993 against another judgment -debtor thereby revealing his intention to collect the said decree sum simultaneously from these two judgment debtors; that Order 21, Rule 21 does not contemplate to proceed in this manner separately; that simultaneous execution against the person by arrest and by attachment of property is not permissible, that by filing two separate execution proceedings independently against two judgment- debtors, the intention of the petitioner to recover the entire decree amount twice from both parties is revealed. At this juncture, the petitioner would also cite a judgment report in S.P. Chengalvarya Naidu v. Jaganath, wherein it is emphasised that one who comes to the court, must come with clean hands; that a person whose case is based on falsehood has no right to approach the Court; that he can be summarily thrown out at any stage of the litigation.
18. In so far as this question raised by the petitioner is concerned, it must be said that the respondent is defenceless, since it is admitted that he has initiated both the above proceedings against two different judgment debtors for the recovery of one and the same decree amount and the only prayer made by the respondent in this regard is to remand the matter to the lower court for rectification of the irregularities.
19. The explanation offered on the part of the lower court in justifying the dual proceeding instituted by the petitioner that one execution proceeding is under Order 21, Rule 43 i.e. for the attachment of the immovable property and the other is under Order 21, Rule 48 i.e. for attachment of the salary or allowances and hence it cannot be said that both the execution proceedings cannot be maintained is neither sound, nor convincing nor agreeable. It is not the attachment of the immovable property or the salary which is relevant. What is essential at this juncture is whether that dual proceeding has been instituted for the realisation of one and the same decree amount or not. How could two independent execution proceedings be maintained against two judgment debtors separately, wherein the realisation of the amount aimed at by the decree holder is for double the decree amount, which he is not entitled to is the aspect that is to be given utmost importance. It is answered that the respondent/decree holder is not at all entitled to proceed in the manner as he has done which is nothing but illegal. For this question, it is answered that the respondent/judgment- debtor is not entitled to institute or maintain dual execution proceedings as he has done for the recovery of one and the same decree amount and hence this question is also answered in favour of the revision petitioner.
20. In view of the answer given in para 15 above for want of statutory notice in writing, the award passed in ARC.No. 907 of 1991 on the file of the District Registrar of Chits (North Madras) becomes a nullity and unacceptable and the lower court should have dismissed the Execution Proceeding. For the answer given for the last question in para 18 that no dual proceeding as instituted by the respondent in E.P.Nos. 2373 of 1993 and 2375 of 1993 could be maintained for the recovery of one and the same decree amount, the lower court has failed to arrive at a valid and proper decision. The order of the lower court in dismissing the petition filed by the petitioner in E.A.No. 2899 of 1994 suffers from patent errors of law and perversity in approach thus calling for interference by this court.
In result, the above civil revision petition is allowed, setting aside the fair and decretal order dated 25.10.1995 made in E.A.No. 2899 of 1994 in E.P.No. 2373 of 1993 in A.R.C.No. 907 of 1991 on the file of the IXth Assistant Judge, City Civil Court, Madras.
Consequently, the connected CMP, is dismissed. No costs.