Telangana High Court
Chinthala Vikas vs M/S Kanakadurga Chit Funds Pvt. Ltd on 20 June, 2025
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
CIVIL REVISION PETITION No.1960 OF 2025
ORAL ORDER:
Heard Mr. Bathula Rajesh, learned counsel for the petitioner - judgment debtor No.5 and Mr. N.Amarnath, learned counsel for respondent No.1- decree holder.
2. This revision is filed under Section - 227 of the Constitution of India challenging the registration of EP and the consequential attachment order dated 05.12.2024 passed in E.P. No.128 of 2022 in Arbitration Case ARB No.18 of 2020 by Principal Junior Civil Judge, Karimnagar.
3. Perusal of record would reveal that on the application filed by respondent No.1 vide Arbitration Case ARB No.18 of 2020, the Chit Arbitrator/Deputy Registrar of Chits, Karimnagar, had passed an award dated 30.10.2021 holding that the petitioner herein and respondent Nos.2 to 6 are jointly and severally liable to pay an amount of Rs.8,16,278/- along with interest @ 18% per annum from the date of petition to till the date of realization. They shall also pay Rs.12,920/- towards costs of the arbitration proceedings. 2
KL,J CRP No.1960 of 2025
4. Pursuant to the said award, respondent No.1 herein had filed an execution petition vide E.P. No.128 of 2022 in ARB No.18 of 2020 against the petitioner herein and respondent Nos.2, 3, 5 and 6 for recovery of Rs.11,54,582/- from them. Vide the aforesaid order, learned Principal Junior Civil Judge, Karimnagar, directed the Disbursing Officer of the petitioner herein to withhold the aforesaid amount from the monthly salary of the petitioner herein/judgment debtor No.5 in the said E.P. Respondent No.2 herein is the chit subscriber, while the petitioner herein and respondent No.3 to 6 are the guarantors for the subject chit.
5. It is contended by learned counsel for the petitioner herein that the Executing Court did not order for proportionate deduction among judgment debtor Nos.1 to 6. Before passing the order, the Executing Court neither issued notice, nor provided opportunity of hearing.
6. In the light of the said submission, it is relevant to extract Order - XXI, Rules - 11 (2), 48 and 48A of the CPC, which are as under:
"XXI Rule 11 (2) of CPC-Written application- Save as otherwise provided by sub-rule(1), every application for the 3 KL,J CRP No.1960 of 2025 execution of a decree shall be in writing, signed and verified by the applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case, and shall contain in a tabular form the following particulars, namely-
(a) the number of the suit;
(b) the names of the parties;
(c) the date of the decree;
(d) whether any appeal has been preferred from the decree;
(e) whether any, and (if any) what, payment or other adjustment of the matter in controversy has been made between the parties subsequently to the decree;
(f) whether any, and (if any) what, previous applications have been made for the execution of the decree, the dates of such applications and their results;
(g) the amount with interest (if any) due upon the decree, or other relief granted thereby, together with particulars of any cross-decree, whether passed before or after the date of the decree sought to be executed;
(h) the amount of the costs (if any) awarded;
(i) the name of the person against whom execution of the decree is sought; and
(j) the mode in which the assistance of the Court is required whether-
(i) by the delivery of any property specifically decreed;
(ii) by the attachment, or by the attachment and sale, or by the sale without attachment, of any property;
(iii)by the arrest and detention in prison of any person;
(iv) by the appointment of a receiver;
(v) otherwise, as the nature of the relief granted may require."
"Order XXI Rule 48 of CPC-Attachment of salary or allowances of servant of the Government or railway company or local authority.- (1) Where the property to be attached is the salary or allowances of a servant of the Government or of a servant of a railway company or local 4 KL,J CRP No.1960 of 2025 authority or of a servant of a corporation engaged in any trade or industry which is established by a Central, Provincial or State Act, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956)] the Court, whether the judgment-debtor or the disbursing officer is or is not within the local limits of the Court's jurisdiction, may order that the amount shall, subject to the provisions of section 60, be withheld from such salary or allowances either in one payment or by monthly instalments as the Court may direct; and upon notice of the order to such officer as the appropriate Government may by notification in the Official Gazette appoint in this behalf,-
(a) where such salary or allowances are to be disbursed within the local limits to which this Code for the time being extends, the officer or other person whose duty it is to disburse the same shall withhold and remit to the Court the amount due under the order, or the monthly instalments, as the case may be;
(b) where such salary or allowances are to be disbursed beyond the said limits, the officer or other person within those limits whose duty it is to instruct the disbursing authority regarding the amount of the salary or allowances to be disbursed shall remit to the Court the amount due under the order, or the monthly instalments, as the case may be, and shall direct the disbursing authority to reduce the aggregate of the amounts from time to time, to be disbursed by the aggregate of the amounts from time to time remitted to the Court.
(2) Where the attachable proportion of such salary or allowances is already being withheld and remitted to a Court in pursuance 5 KL,J CRP No.1960 of 2025 of a previous and unsatisfied order of attachment, the officer appointed by the appropriate Government in this behalf shall forthwith return the subsequent order to the Court issuing it with a full statement of all the particulars of the existing attachment.
(3) Every order made under this rule, unless it is returned in accordance with the provisions of sub-rule (2) shall, without further notice or other process, bind the appropriate Government or the railway company or local authority or corporation of Government company, as the case may be, while the judgment-
debtor is within the local limits to which this Code for the time being extends and while he is beyond those limits, if he is in receipt of any salary or allowances payable out of the Consolidated Fund of India or the Consolidated Fund of the State or the funds of a railway company or local authority or corporation or Government company in India; and the appropriate Government or the railway company or local authority or corporation or Government company, as the case may be, shall be liable for any sum paid in contravention of this rule.
Explanation.-In this rule, "appropriate Government"
means,-
(i) As respects any person in the service of the Central Government, or any servant of a railway administration or of a cantonment authority or of the port authority of a major port, or any servant of a corporation engaged in any trade or industry which is established by a Central Act, or any servant of a Government company in which any part of the share capital is held by the Central Government or by more than one State Governments or partly by the Central Government and partly by one or more State Governments, the Central Government;6
KL,J CRP No.1960 of 2025
(ii) As respects any other servant of the Government, or a servant of any other local or other authority, or any servant of a corporation engaged in any trade or industry which is established by a Provincial or State act, or a servant of any other Government company, the State Government."
"Order - XXI, Rule - 48A. Attachment of salary or allowances of private employees.- (1) Where the property to be attached is the salary or allowances of an employee other than an employee to whom rule 48 applies, the Court, where the disbursing officer of the employee is within the local limits of the Court's jurisdiction, may order than the amount shall, subject to the provision of section 60, be withheld from such salary or allowances either in one payment or by monthly instalments as the Court may direct; and upon notice of the order to such disbursing officer, such disbursing officer shall remit to the court the amount due under the order, or the monthly instalments, as the case may be.
(2) Where the attachable portion of such salary or allowances is already being withheld or remitted to the Court in pursuance of a previous and unsatisfied order of attachment, the disbursing officer shall forthwith return the subsequent order to the Court issuing it with a full statement of all the particulars of the existing attachment.
(3) Every order made under this rule, unless it is returned in accordance with the provisions of sub-rule (2), shall, without further notice or other process, hind the employer while the judgment-debtors, is within the local limits to which this Code for the time being extends and while he is beyond those-limits, if he is in receipt of salary or allowances payable out of the 7 KL,J CRP No.1960 of 2025 funds of an employer in any part of India, and the employer shall be liable for any sum paid in contravention of this rule."
7. It is relevant to extract Section - 71 of the Chit Fund Act, 1982 and the same is as under:
"71. Money how recovered.--Every order passed by the Registrar or the nominee under section 68 or section 69 and every order passed by the State Government in appeal under section 70 for payment of any money shall, if not carried out,--
(a) on a certificate issued by the Registrar, be deemed to be a decree of a Civil Court, and shall be executed in the same manner as a decree of such Court, or
(b) be executed in accordance with the provisions of any law for the time being in force for the recovery of amounts as arrears of land revenue: Provided that no application for execution under clause (b) shall be made after the expiry of three years from the date fixed in the order, and if no such date is fixed, from the date of the order."
8. It is also relevant to extract Sections - 126, 128 and 146 of the Indian Contract Act, 1872 and the same is as under:
"126. "Contract of guarantee", "surety", "principal debtor"
and "creditor".--A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is 8 KL,J CRP No.1960 of 2025 called the "surety"; the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written."
"128. Surety's liability.--The liability of the surety is co- extensive with that of the principal debtor, unless it is otherwise provided by the contract."
"146. Co-sureties liable to contribute equally.--Where two or more persons are co-sureties for the same debt or duty, either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor."
9. Thus, the liability of the co-surety is co-extensive with that of principal debtor unless it is otherwise provided by the contract. The said principle was also laid down by a Division Bench of the High Court of Judicature for the States of Telangana and Andhra Pradesh at Hyderabad in Punyamurthula Venkata Viswa Sundara Rao v. M/s. Margadarsi Chit Fund Pvt. Ltd. 1. 1 . 2017 (3) ALT 82 (D.B.) 9 KL,J CRP No.1960 of 2025
10. The aforesaid relevant provisions would reveal that for realization of the amount covered under the arbitration award, respondent No.1 - decree holder has to file an application under Order
- XXI Rule 11 (2) of CPC. Accordingly, respondent No.1 had filed the aforesaid execution petition vide E.P.No.128 of 2022.
11. In Punyamurthula Venkata Viswa Sundara Rao1, the Division Bench of this Court on consideration of the submissions made by the parties, framed the following two (02) points for consideration:
i. whether the decree holder has to proceed against all the judgment debtors, who are guarantors, by claiming proportionate amount decreed.
ii. whether the execution Courts in which E.Ps. were filed against the present judgment debtors, who are revision petitions herein, have jurisdiction to entertain the execution petitions.
12. On consideration of the provisions of the Chit Fund Act and the CPC, the Division Bench held 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 10 KL,J CRP No.1960 of 2025 certificate and forward the said application to the Court or revenue authority, as chosen by the decree holder. The decree holder has an option to proceed against either the principal debtor or any of the guarantors or against all of them.
13. Referring to Section - 128 of the Indian Contract Act, the Division Bench held that the liability of a surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract.
14. In Madamanchi Anill Kumar v. Margadarshi Chit Fund Pvt. Limited,2 Division Bench of the High Court of Andhra Pradesh at Hyderabad considering the said principle laid down by the Division Bench in Punyamurthula Venkata Viswa Sundara Rao1, held that liability of the sureties is joint and several. The Division Bench also negatived the contention raised by the petitioner therein that a Recovery Certificate issued by the Deputy Registrar of Chits cannot be acted upon, as per Rule - 55 of the Andhra Pradesh Chit Fund Rules, 2008 and that an execution is maintainable only if the recovery certificate has been issued by the Registrar of Chits to the competent Civil Court.
2 . CRP No.2338 of 2018, decided on 05.11.2018 11 KL,J CRP No.1960 of 2025
15. On consideration of the aforesaid provisions and on examination of the facts of the case therein, in Bandi Chandra Hari v. Brindavan Chits Karimnagar India Private Limited3, this Court held that respondent No.1 - decree-holder cannot recover double the awarded amount from the petitioner - judgment debtor No.5, and it is entitled for the decretal amount and interest including pendent lite interest as claimed by it from the judgment debtors.
16. It is apt to note that on realization of the decretal amount, costs, interest and pendent lite interest, respondent No.1 - decree- holder shall file a full-satisfaction memo before the Executing Court with a request to terminate the proceedings in the subject EP. If respondent No.1 fails to file such full satisfaction memo, Executing Court can terminate the execution proceedings in the EP on its own.
17. In view of the aforesaid discussion and observation, the present Civil Revision Petition is disposed of directing the Executing Court to follow the procedure laid down under the Indian Contract Act and principle laid down in the aforesaid judgments and dispose of the 3 . CRP No.1237 of 2024, decided on 03.05.2024 12 KL,J CRP No.1960 of 2025 said execution petition. In the circumstances of the case, there shall be no order as to costs.
As a sequel thereto, miscellaneous petitions, if any, pending in this revision shall stand closed.
_________________ K. LAKSHMAN, J 20th June, 2025 Ynk