Telangana High Court
B.Lalappa vs M/S Neestarn Chits P Ltd, on 5 November, 2024
THE HONOURABLE SMT. JUSTICE M.G.PRIYADARSINI
CIVIL REVISION PETITION No.2569 of 2024
O R D E R:
This Civil Revision Petition is filed by the revision petitioners/judgment debtors aggrieved by the proceedings in E.P. No.26/2021 on the file of learned III Additional Junior Civil Judge, Mahabubnagar filed for enforcement of Arbitration Award in ARB Claim Petition No.213/2019 dated 10.02.2020 without there being proper transfer of award by the Arbitrator to the Civil Court.
2. The revision petitioners herein are the judgment debtors/principal debtor and guarantors before the learned Arbitrator. For the sake of convenience, hereinafter, the parties will be referred as per their array in the Arbitration proceedings before the learned "Arbitrator/Registrar of Chits".
3. The opponent No.1 herein was subscriber of chit with disputant company and opponent Nos.2 to 4 stood as guarantors for the said chit transaction. The opponent No.1 herein stood as successful bidder in the auction held on 29.04.2017 and after deducting the bid amount, Rs.3,00,000/- was paid to opponent No.1. The opponents executed demand promissory notes and other necessary documents in favour of 2 MGP,J Crp_2569_2024 disputant company. The opponent No.1 paid 15 installments totally and partly paid 16th installment and thereafter committed default in payment of installments. Hence, the disputant company has approached the Registrar of Chits/Arbitrator for recovery of Rs.4,13,300/- under Section 64 of the Chit Fund Act, 1982. After due enquiry, the learned Registrar of Chits/Arbitrator has passed an award, dated 10.02.2020. Thereafter, the opponent No.1 approached the learned III Additional Junior Civil Judge at Mahabubnagar by filing execution proceedings vide E.P.No.26 of 2021. In this regard, attachment of salary of revision petitioners/judgment debtor Nos.2 to 4 was ordered under Order XXI Rule 48 of the Code of Civil Procedure. Aggrieved by the same, the present Civil Revision Petition is preferred by the Judgment Debtor Nos.2 to 4.
4. Heard both sides and perused the record including the grounds of revision.
5. The first and foremost contention of the revision petitioners is that until there is a transfer of the award by the Arbitrator as required under Rule 55 of the Chit Funds Rules, the civil court has no jurisdiction to entertain Execution Petition for enforcement of the award and also recovery certificate. In 3 MGP,J Crp_2569_2024 this regard, the learned counsel for the revision petitioners relied upon a decision in Punyamurthula Venkata Vishwasundar Rao v. Margadarshi Chits Private Limited 1 wherein the Division Bench of High Court of Andhra Pradesh observed that executing Court does not have any jurisdiction to entertain application for execution of the award passed by the Arbitrator, without there being transfer of the award to the civil court for the purpose of execution. It is the specific case of the revision petitioners that without there being any transfer of the award to the executing court for the purpose of execution of the award, the executing court directly entertained E.P.No.26 of 2021 and issued notices to the petitioners for execution of arbitration award.
6. There is absolutely no doubt in the principle laid down in the above said decision. It was observed in the above said decision that execution proceedings should be initiated by the party concerned in accordance with the provisions of Section 71 of the Chit Funds Act. The procedure for filing an execution petition before the civil court is only through the Registrar, who shall forward the application for execution to the proper authority along with a recovery certificate issued by him 1 2017 (3) ALD 387 4 MGP,J Crp_2569_2024 under Section 71 of the Chit Funds Act. Section 71 of the Chit Funds Act confers the status of a decree of a civil court, on the certificate issued by the Registrar. It is not the case of the disputant company that they have filed an application before the concerned Registrar for initiation of the proceedings in accordance with the provisions of Section 71 of the Chit Funds Act. It is not even the case of the disputant company that in pursuance of such application, the Registrar concerned has forwarded the award and recovery certificate to the competent civil court for execution of the award.
7. Thus, it is a clear case, where the disputant company/respondent No.1 herein has not complied with the procedure laid down under Section 71 of the Chit Fund Act as well as Rule 55 of the Chit Fund Rules.
8. In Bethi Sagar Reddy v. Kapil Chits Kakatiya Private Limited 2 this Court observed that the course that has to be followed by the decree holder is to make an application to the Registrar for execution, to be forwarded to the proper authority at the option of the decree holder and the Registrar shall himself issue the certificate and forward the said application to the Court or revenue authority, as chosen by the decree holder. A 2 CRP No.1552/2024 decided on 12.07.2024 5 MGP,J Crp_2569_2024 similar view was taken in Talari Vijay Kumar v. Kapil Chits Kakatiya Private Limited 3 wherein this Court observed that the Court cannot entertain the execution petition if directly presented by the decree holder.
9. The learned III Additional Junior Civil Judge at Mahabubnagar without compliance of Section 71 of the Chit Fund Act as well as Rule 55 of the Chit Fund Rules and without considering the principle laid down in the above said decisions, has entertained the execution petition and also proceeded to attach the salary of the judgment debtors, which is unsustainable. Hence, the execution proceedings initiated by the disputant company are not maintainable and the learned III Additional Junior Civil Judge at Mahabubnagar ought not to have entertained E.P.No.26 of 2021. Hence, interference of this Court in the execution proceedings initiated by the disputant company is warranted.
10. Accordingly, the Civil Revision Petition is allowed. The execution proceedings initiated by the disputant company in E.P.No.26/2021 in ARB Claim Petition No.213/2019 on the file of learned III Additional Junior Civil Judge, Mahabubnagar are not maintainable and accordingly, the same are hereby 3 CRP No.2185/2024 decided on 19.07.2024 6 MGP,J Crp_2569_2024 quashed, leaving it open to the disputant company to take appropriate steps for execution of the Award in ARB Claim Petition No.213/2019 by following due process of law. There shall be no order as to costs.
Pending Miscellaneous applications, if any, shall stand closed.
_______________________________ JUSTICE M.G.PRIYADARSINI Date: 05.11.2024 AS