[Cites 14, Cited by 0]
Bombay High Court
Sailam B.V.B.A. vs M/S. Helious Jewellery Pvt.Ltd.And 4 ... on 6 March, 2026
Author: R. I. Chagla
Bench: R. I. Chagla
2026:BHC-OS:5765
CHS-66-19-Jt.doc
Sharayu Khot.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO. 66 OF 2019
IN
EXECUTION APPLICATION NO. 1271 OF 2015
IN
SUMMARY SUIT NO. 334 OF 2012
Sailam B.V.B.A. ...Applicant /
Judgment Creditor
Versus
Helious Jewellery Pvt. Ltd. & Ors. ...Respondents
And
Kailash Ashok Jogani & Ors. ...Respondents /
Garnishees
----------
Mr. Rohaan Cama a/w Mr. Archit Jayakar, Ms. Pooja Yadav, Mr. Kshitij
Abbhi i/b M/s. Jayakar & Partners for the Applicant/Judgment
Creditor.
Mr. Karl Tamboly a/w Mr. Aseem Naphade, Ms. Kausar Banatwala,
Mr. Yash Sheth i/b Tushar Goradia for the Respondents - Garnishees.
----------
CORAM : R.I. CHAGLA J.
SHARAYU
PANDURANG
KHOT
Reserved on : 17th October 2025
Digitally
signed by
SHARAYU
PANDURANG
KHOT
Pronounced on : 06th March 2026
Date:
2026.03.06
17:43:27
+0530
1
::: Uploaded on - 06/03/2026 ::: Downloaded on - 06/03/2026 22:31:46 :::
CHS-66-19-Jt.doc
ORDER :
1. By this Chamber Summons, the Applicant / Judgment
Creditor is seeking an order of attachment of loan of Rs.
4,00,36,551/- purportedly payable to Respondent No. 6 by
Respondent No. 2 and a direction to Respondent No. 6 to pay the
said amount to the Applicant in her capacity as a Garnishee. The
Chamber Summons also seeks an order for arrest and detention of
Respondent No. 2 - Judgment Debtor for allegedly dishonestly
writing off the loan of Rs. 4,00,36,551/- purportedly payable by
Respondent No. 6 to Respondent No. 2. There is also prayer for an
order for recovering the said amount of Rs. 4,00,36,551/- from
Respondent No. 6.
2. The relevant facts are set out as under:-
advanced loan amounting to Rs. 4,00,36,551/- to
his mother - Kailash - Respondent No. 6 during the
period 1996 - 2012.
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ii. The Summary Suit was filed by the Applicant /
Judgment Creditor to recover a sum of Rs.
3,76,85,654/- (along with interest) from the
original Defendants on 5th December 2011.
iii. The original Defendants were given conditional
leave to defend the Suit upon deposit of entire
principal amount claimed therein vide order dated
6th March 2014.
iv. The Respondent No. 2 claimed to have written off
the loan on 1st April 2014.
v. The original Defendants filed an Appeal against the
said order dated 6th March 2014. By order dated
6th May 2024 the Original Defendants were
directed to pay 25% of the principal amount within
eight weeks.
vi. The original Defendants' Special Leave Petition
against the aforesaid order dated 6th May 2014,
was dismissed on 8th July 2014.
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vii. The original Defendants failed to deposit 25% of the
principal amount in this Court by virtue of which
the aforesaid Appeal was dismissed vide order
dated 5th August 2014.
viii. The Summary Suit was decreed on 20th August
2014 and the original Defendants were directed to
jointly and severely pay Rs. 3,76,85,654/- along
with interest at the rate of 18% per annum from the
date of the Summary Suit till realization along with
the litigation costs.
ix. The Execution Application No. 1271 of 2015 was
filed by the Applicant / Judgment Creditor in March
2015.
x. The Applicant / Judgment Creditor has filed
Chamber Summons No. 853 of 2016 on 25th
August 2015 inter alia seeking disclosure of
properties, assets and means of the original
Defendants / Respondents.
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xi. This Court by an order dated 1st October 2015
directed the disclosure of assets of original
Defendant No. 1 in the Disclosure Chamber
Summons (1st Order).
xii. This Court passed an order dated 8th October 2015
directing the original Defendant Nos. 2 to 5 to
disclose their independent personal assets, means
and properties in the Disclosure Chamber Summons
(2nd Order).
xiii. The original Defendants failed to file their
disclosures and were granted one last opportunity
vide order dated 23rd December 2015 to file the
same, failing which consequential orders would be
passed in the Disclosure Chamber Summons (3rd
Order).
xiv. An Appeal was filed by the original Defendants
against the 2nd Order, which was dismissed by this
Court on 11th January 2016.
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xv. The original Defendants' Special Leave Petition
against the 2nd Order and the Appellate Order
dated 11th January 2016 was dismissed vide order
dated 22nd February 2016 with liberty to apply to
this Court to defer the execution till the original
Defendants' Motion to set aside the decree was
heard.
xvi. The Notice of Motion was filed by the original
Defendants to set aside the decree, which Notice of
Motion came to be dismissed vide order dated 16th
April 2016 by which the original Defendants were
directed to strictly and meticulously comply with
the 2nd Order, failing which contempt proceedings
would be initiated (4th Order).
xvii. The original Defendants failed to file their Affidavits
on the ground of personal difficulty of their
Advocates. The original Defendant Nos. 3 and 4
personally undertook to file their Affidavits and this
Court granted one final indulgence vide order dated
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27th April 2016 (5th Order).
xviii. First Affidavit of Disclosure was filed by the original
Defendants on 2nd May 2016.
xix. In view of First Affidavit of Disclosure being
inadequate, the original Defendants were directed
to file further Affidavits vide order dated 4th May
2016, which imposed costs of Rs. 25,000/- each on
them.
xx. Second Affidavit of Disclosure was filed by the
original Defendants in May 2016.
xxi. The original Defendants were directed to file further
Affidavits of Disclosure vide order dated 15th June
2016.
xxii. Third Affidavit of Disclosure was filed by the
original Defendants on 22nd June 2016. It is in this
Affidavit that the original Defendant No. 2 revealed
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that he had advanced loan to his mother Kailash -
Respondent No. 6 herein much prior to 2010 and
the same was stated to have been written off on or
about 1st April 2014.
xxiii. Fourth Affidavit of Disclosure filed by the original
Defendant on 2nd August 2016 claiming they had
no monies to satisfy the decree.
xxiv. This Court was informed that the further Affidavits
filed by the original Defendants were also
inadequate and accordingly, vide order dated 3rd
August 2016, the original Defendants were directed
to file additional Affidavits furnishing better
particulars. This Court had also considered that in
the original Defendants' Third Disclosure Affidavit
there was mention of certain transfers / gifts made
by the original Defendants inter se and this Court
directed the original Defendants not to deal with
the amounts gifted to their family members without
leave of this Court.
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xxv. Thereafter, there were certain proceedings taken
out, namely Chamber Summons No. 819 of 2017 by
the Applicant / Judgment Creditor for the gift /
transfers termed as fraudulent in the sum of Rs.
1.25 crores. There were orders passed pursuant to
the Chamber Summons as well as the contempt
proceedings taken out by the Applicant / Judgment
Creditor with regard to non-compliance of orders.
xxvi. Pursuant to the Third Affidavit of Disclosure filed by
the original Defendants, the Applicant / Judgment
Creditor filed Chamber Summons No. 69 of 2018 on
3rd October 2018 for the loans advanced by the
original Defendants inter se and thereafter,
purportedly written off.
xxvii. On 5th October 2018, the present Garnishee
Chamber Summons was filed.
xxviii. The pleadings in the Garnishee Chamber Summons
were thereafter completed and it is pertinent to
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note that in the Affidavit in Reply filed by the
original Defendant No. 2 and the said Kailash -
Respondent No. 6, the loan was stated to have been
advanced from 1996 - 2012 and was claimed to
have been purportedly capitalized on 1st April
2014.
xxix. The present Garnishee Chamber Summons had
come up for consideration before this Court and an
order dated 25th October 2021 came to be passed
in terms of prayer clause (c) and the Show Cause
Notice was issued to the said Kailash - Respondent
No. 6.
3. Mr. Rohaan Cama, the learned Counsel for the
Applicant / Judgment Creditor has submitted that it was only in the
Income Tax Returns for the Assessment Year 2015-16 which were
filed on 17th May 2016, i.e. almost two years after the decree and
after virtually all orders which have been set out in the above facts
had gone against Respondent No. 2, and when Respondent No. 2 was
well aware that the decree had been confirmed and was in execution,
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that for the very first time the loan amount of Rs. 4,00,36,551/-
mysteriously disappeared from the books and the Income Tax Returns
of Respondent No. 2. He has submitted that pertinently, nowhere in
the Income Tax Returns is there any reference to any 'write-off' by
Respondent No. 2. The entry simply ceases to appear in the Income
Tax Returns filed for the Assessment Year 2015-16, which as
aforesaid was filed only on 17th May 2016, almost two years after
the decree was passed.
4. Mr. Cama has submitted that this Court and the other
Courts have repeatedly held that the Court ought to take a healthy
and practical view so that execution proceedings are not defeated; all
frivolous objections must be forthwith beaten down and decrees
executed forthwith because they are orders of Competent Courts.
Further, it has been held that in cases where mischievous and
dishonest tactics are resorted to in order to delay or defer the
execution, the executing Courts must be absolutely firm and ruthless
in stopping such unhealthy practices. This is absolutely essential
because otherwise the rule of law would not only be set at naught,
but it would virtually nullify and neutralize the orders of Competent
Courts. In this context, he has placed reliance on the judgment of the
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Karnataka High Court in Vigneshwar Vs. Gangabai Kom Narayan
Bhat Prasad & Ors.1 and the judgment of this Court in T.A. Darbar &
Co. Vs. Union Bank of India2.
5. Mr. Cama has submitted that the test required to be
fulfilled in a garnishee proceeding is evident from the judgment of
Mackinnon Mackenzie and Company Pvt.Ltd. Vs. Anil Kumar Sen &
Anr.3. He has submitted that the Court at the stage of determining
whether to pass a garnishee order is required to consider whether
there is a real dispute as to the existence of a debt. A frivolous
dispute or one which is moonshine or has no substance ought not to
be countenanced and in such circumstances, the Court is entitled to
direct payment of the debt by the Garnishee. Further, the dispute
must be a dispute to the existence of the debt as between the
Garnishee and the Judgment Debtor. It must be shown that there is
some bona fide, real and actual dispute as between the Judgment
Debtor and the Garnishee as to the existence of the debt. He has
submitted that applying these principles to the facts of the present
case, this Court would have to assess as to whether the loan was
1 AIR 1997 Kar 149 para 5
2 AIR 1994 Bom 217 paras 6 and 7
3 AIR 1975 Cal 150
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admittedly given by Respondent No. 2 to Respondent No. 6 -
Garnishee and whether there is any genuine, real and bona fide
defence that warrants acceptance to hold that the debt is disputed.
6. Mr. Cama has submitted that the entire defence of the
Respondent No. 2 and Respondent No. 6 - Garnishee is that the debt
was written off with effect from 1st April 2014, i.e. prior to the
decree, which is fallacious. He has referred to the third Disclosure
Affidavit, wherein it is mentioned for the first time that the loan had
been "written off". He has compared the third Disclosure Affidavit
with several Affidavits filed by Respondent No. 6 - Garnishee and
Respondent No. 2, wherein their stand has nothing to do with the
loan being written off, but they have stated that the loan was
"capitalized". He has submitted that if this edifice itself falls away,
then nothing remains in this defence as the loan was never in fact
written off, but was allegedly merely "capitalized", which means that
the loan / debt is admitted and the interest is added thereto to make
it the new outstanding amount inclusive of principal and interest
both.
7. Mr. Cama has submitted that without prejudice to the
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above submission, the entire submission of the Respondent is
founded on the basis that the writing off was bona fide done prior to
the date of the decree, as the same is purportedly done with effect
from 1st April 2014 and the date of the decree is 20th August 2014.
He has submitted that this argument ignores the fact that the Suit
was filed in 2012. The decree having been passed later is irrelevant,
as the original Defendants were not only aware of the Suit, but had
by 16th March 2014, i.e. prior to 1st April 2014, already suffered an
order of deposit of conditional leave, which as the subsequent events
show, they had no intention to comply with.
8. Mr. Cama has submitted that it is evident from the
Income Tax Returns filed on 20th March 2015, i.e. much after the
date of the decree and for the Assessment Years 2013-14, 2014-15,
that the loan is shown as outstanding. He has submitted that the
Respondents seek to rely upon the event which occurred in the filing
on 17th May 2016 i.e. almost two years after the passing of the
decree; after passing of various orders of disclosure and after
attempts to set aside the decree had been met with abject failure.
Viewed from this prism, it is clear that not only is this purported
writing off or capitalization entirely bogus and contrived to avoid
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making payment pursuant to the decree, but in any event, has taken
place much after the decree.
9. Mr. Cama has submitted that the contention on behalf
of the Respondents that this Court would have to adjudicate upon
whether there has been a debt and whether the same was illegally
written off on account of the declaration sought in prayer clause (a),
is a complete bogey. He has submitted that this declaration had been
sought on the basis of the Respondent No. 2 having stated in his third
Disclosure Affidavit that the loan was written off. Such a declaration
does not require evidence, but merely on the admitted facts on
record, the declaration was sought to aid in issuing garnishee orders.
He has submitted that even without such a prayer, this Court would
have to determine and would in fact determine as to whether the
defence of writing off is a bona fide, real and actual defence. He has
submitted that this is not a matter that would require any evidence,
as there is no dispute as to the fact that there was a loan, the loan
was shown in the Books of Accounts and in the Income Tax Returns
and the same has now been removed from the Income Tax Returns
for the financial year ending 31st March 2014. He has submitted that
the only question that this Court would require to decide is whether
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there is any case of write-off pleaded and if so, can the same be
believed given the facts and circumstances narrated.
10. Mr. Cama has submitted that the case of written off
has been completely abandoned and in fact, the only case is one of
capitalization of the loan and hence, this prayer becomes redundant
and the issue to be considered by this Court is only whether the
defence of capitalization ought to be accepted or not.
11. Mr. Cama has submitted that under Section 58 of the
Indian Evidence Act, 1872, it is clear that when there is an admission
of a particular document or fact there is a dispensation of proof in
this regard. He has placed reliance on the judgment of the Supreme
Court in Nagindas Ramdas Vs. Dalpatram Icharam 4. The Supreme
Court has clearly held that an admission made in judicial proceedings
(in this case the various affidavits speaking of the loan and the
capitalization), constitutes a dispensation of the need for proof and
can found a claim for legal rights without anything more. He has
submitted that in similar circumstances of garnishee proceedings, this
Court in the judgments of Vardhaman Developers Vs. Orbit
4 AIR 1974 SC 471 para 27
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Corporation & Ors.5 and Drive India Enterprises Solutions Limited Vs.
Haier Telecom (India) Pvt. Ltd. & Anr. 6 has considered similarly
specious defences and has categorically rejected the same by noting
inter alia that admissions in the balance sheets and financial
statements (such as the ITR in the present case) constitutes a clear
admission of the debt and the liability to pay the same.
12. Mr. Cama has submitted that it is a categoric case of
the Respondent No. 2 that the loan existed but was purportedly
capitalized with effect from 1st April 2014. No explanation of what
this term 'capitalized' means has been attempted to be given by the
Respondent No. 2 in the course of arguments and indeed the
arguments proceed without making any reference to the actual
pleaded defence, i.e. capitalization. He has referred to the various
pleadings which have been filed in the Execution Application and in
the Chamber Summons taken out therein, wherein it is stated that
the original Defendant No. 2 - Respondent No. 2 herein had
capitalized the accumulated loan amount on 1st April 2014.
5 2018 SCC OnLine Bom 9845 paras 1, 2, 8, 9, 10 and 11
6 2024 SCC OnLine Bom 3537 paras 4, 5, 9, 10, 11, 13, 16 and 18
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13. Mr. Cama has submitted that the concept of
capitalizing a loan has been explained in the judgment in House of
Lords in Inland Revenue Commissioners Vs. Oswald 7. The House of
Lords has clearly explained that capitalization means that the interest
on the loan is simply added back to the capital, i.e. the principal
amount and the new composite / aggregate amount of principal plus
interest is the capitalized amount upon which further interest is liable
to be paid.
14. Mr. Cama has submitted that capitalization does not
constitute a write-off or a waiver of liability to pay the loan, but on
the contrary, is in fact the antithesis of a write-off.
15. Mr. Cama has submitted that far from the case of
Respondent No. 2 being one of write-off, which requires any
adjudication, the defence is one of capitalization which in fact admits
the existence of the loan and continued liability to pay the same with
interest.
16. Mr. Cama has submitted that in the event, the
7 (1945) A.C. 360
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argument on behalf of Respondent No. 2 viz. that the loan being
between mother and son may be written off is accepted, it would
have catastrophic effects on the execution proceedings in this
country. He has submitted that in every single case, where the loan is
owed to the Judgment Debtor at the time of filing of the Suit or
thereafter, a Judgment Debtor would, with full knowledge of a decree
being imminent or indeed being passed, as in the present case,
simply fudge, alter or manipulate his Books of Accounts to show the
loans as having been written off. In this event, not a single garnishee
proceeding would ever survive.
17. Mr. Cama has submitted that in the present case there
is nothing to show that the transaction was even remotely done in a
bona fide manner. He has submitted that on the contrary, the record
bears out that every effort has been made by the Judgment Debtors
to avoid paying the decretal amount which is in excess of Rs. 11.5
crores as on date.
18. Mr. Cama has submitted that this Court ought to take
notice of the fact that this is not the sole occasion of Respondent No.
2 and the other Judgment Debtors having sought to use such a
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contention of the loans being written off. He has submitted that the
various loans given to sons, nephews and grandchildren, many of
whom were minors, were purportedly written off. He has submitted
that this is a pattern and practice adopted by the Judgment Debtors
including Respondent No. 2 to try and thwart the decree. He has
submitted that the same ought not to be countenanced by this Court.
19. Mr. Cama has submitted that as regards the procedure
to be followed under Order XXI Rule 46 of the Code of Civil
Procedure, 1908 ("the C.P.C.") and the attendant provisions for
garnishees, this Court (Mr. Justice S.M. Modak) by an order dated
9th October 2023 had clarified that the order has been passed under
prayer clause (b) for the attachment of the debt. He has submitted
that now there is no question of revisiting or reopening the question
of attachment. The debt has clearly been attached as required. He
has submitted that the reference to keeping open rights and
contentions is as to whether there is an admitted debt between the
Garnishee and Judgment Debtor and certainly not that the learned
Single Judge intended to keep open the question as to whether there
is a debt or not. He has submitted that thus, there has been a valid
attachment and it is not open for the Respondent No. 2 to contend to
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the contrary without having challenged the said order or sought to
have it set aside.
20. Mr. Cama has dealt with the judgment cited by the
Respondent No. 2 on the ground that these judgments either run
contrary to the arguments made on behalf of Respondent no. 2 or are
entirely irrelevant to the facts of the present case.
21. Mr. Cama has submitted that strictly without
prejudice to what has been submitted by him, under Section 51(e)(a)
(ii) of the C.P.C. read with Order XXI Rule 37, it is evident that apart
from any aspect pertaining to garnishee proceedings, if Respondent
No. 2 is right in contending that there is a write-off of the loan after
the date of the Suit, then such action on the part of Respondent No. 2
is evidently gifting away or transfer of the valuable asset of the
Respondent No. 2. He has submitted that Respondent No. 2 has
clearly done this to thwart the decree. In such circumstances, this is a
fit case where the notice may be issued to Respondent No. 2 for his
arrest and detention for having caused to be transferred an asset
after the date of filing of the Suit.
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22. Mr. Cama has submitted that the prayers sought for in
the Chamber Summons are required to be allowed or else the
Respondent No. 2 would thwart the execution, which has been
ongoing for more than ten years and the Applicant has received a
piffling sum of Rs. 1 Crore on account of the dilatory tactics, as
against an outstanding liability of Rs. 11.5 Crores.
23. Mr. Karl Tamboly, the learned Counsel for the
Respondents has submitted that there is no debt payable by
Respondent No. 6 to Respondent No. 2. He has submitted that on the
Applicant's own showing it is an admitted position that before the
decree dated 20th August 2014 could be passed and in fact, even
before the present Execution Application could be filed on 5th March
2015, the loan amount purportedly payable by Respondent No. 6 to
Respondent No. 2 was written off on 1st April 2014. He has in this
context referred to the Applicant's own case as seen from: (i) prayer
clause (a1); (ii) paragraph 4(k) of the Affidavit in Support of the
Chamber Summons; (iii) paragraph 5 of the Affidavit in Support of
the Chamber Summons.
24. Mr. Tamboly has submitted that a garnishee
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proceeding can lie only if: (i) there exists a valid and subsisting debt
owed by the Garnishee to the Judgment Debtor; (ii) such debt is
capable of being attached. He has submitted that this is inter alia
evident on a conjoint reading of Order XXI Rule 46(1)(a) and Order
XXI Rule 46(1)(i) of the C.P.C., which provides that in case of a debt
not secured by a negotiable instrument an attachment shall be made
by an order prohibiting the recovery of the debt or from making
payment towards the debt until further orders of the Court.
25. Mr. Tamboly has submitted that in the present case,
none of the aforesaid twin conditions are satisfied. He has submitted
that it is the Applicant's own case that the loan amount purportedly
payable by Respondent No. 6 to Respondent No. 2 was written off on
1st April 2014. Since the loan was written off, there can be no
question of attachment of such a loan which does not exist. He has
submitted that therefore, a garnishee proceeding as envisaged under
Order XXI Rule 46 of the C.P.C. would not lie.
26. Mr. Tamboly has submitted that there was no
subsisting debt payable by Respondent No. 6 to Respondent No. 2
and this is borne out from order dated 25th October 2021, wherein
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this Court had allowed the Chamber Summons in terms of prayer
clause (c), which simply sought to issue a notice to Respondent No. 6
to pay an amount of Rs. 4,00,36,551/- and/or to show cause as to
why such amount is not payable. The said order is not for attachment
of the debt, as in fact, there is no subsisting debt payable by
Respondent No. 6 to Respondent No. 2. It is further borne out by the
order dated 9th October 2023, wherein this Court had granted ad-
interim relief in terms of prayer clause (b), which provides for
attachment of the loan of Rs. 4,00,36,551/- purportedly payable by
Respondent No. 6 to Respondent No. 2. However, while granting the
aforesaid prayer, this Court recorded the submission of the
Respondents that there is no debt since 2014 between Respondent
No. 6 to Respondent No. 2 and proceeded to observe that prayer
clause (b) was being granted only to avoid further complications of
not following the procedure and all contentions including the
contention of there being no admitted debt were kept open and this
Court specifically observed that the Judgment Debtor and the
Garnishee were at liberty to show that there exists no debt. It is
pursuant to this order that Warrant of Attachment came to be issued
on 9th January 2024, whereby the loan of Rs. 4,00,36,551/- came to
be attached. He has submitted that this was done only to ensure that
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the procedural aspect was complied with while keeping the
Respondents' rights and contentions open.
27. Mr. Tamboly has submitted that the Applicant's
reliance on the order dated 9th October 2023 does not assist its case
on merits. He has placed reliance on the judgment of the Delhi High
Court in Global Trust Bank Vs. Fargo Freight Limited 8, wherein the
Court held that the foundation of a garnishee proceeding is an
attachment of the debt under Order XXI Rule 46(1) of the C.P.C..
Therefore, if there is no subsisting debt between the Garnishee and
the Judgment Debtor (which is an admitted position in the present
case), then there cannot be any attachment of such a debt and
consequently no garnishee proceeding can possibly lie. He has also
placed reliance on Jatin Keshruwala Vs. Dag Creative Media 9,
wherein this Court held that when a Decree Holder is seeking an
order against the Garnishee, the Court has to ascertain whether the
debt is actually due and payable by the Garnishee to the Judgment
Debtor. When the Garnishee has not admitted the debt, the Court
cannot compel the Garnishee to deposit any amount on account of
8 AIR 2002 Del 13
9 2019 SCC OnLine Bom 1346
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the Judgment Debtor. The Court has discretion to direct the parties to
adopt appropriate proceedings even for determination of the said
debt. He has also placed reliance upon the judgment of the High
Court of Judicial Commissioner, Bhopal in The Bharat Pictures Vs.
U.P. Chougani10, wherein it was held that a Garnishee not being a
party to the Execution Application was a stranger and not liable
under the decree. The questions raised by the Garnishee would not
be covered by Section 47 of the C.P.C.. The Court further held that
the procedure set out in Order XXI Rule 46 of the C.P.C. must be
strictly complied with.
28. Mr. Tamboly has submitted that there has never been
in that sense a debtor - creditor relationship between Respondent
No. 6 and Respondent No. 2. In this regard, he has referred to the
undisputed facts, as under :-
a) The relationship between Respondent No. 6 and
Respondent No. 2 is that of mother and son;
b) Respondent No. 6 and Respondent No. 2 do not have
10 AIR 1954 Bhopal 30
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any commercial dealings or any commercial
relationship between them;
c) There is no loan agreement or any other commercial
document between Respondent No. 6 and Respondent
No. 2 indicating the existence of any debt, the terms
and conditions of any debt, the rate of interest and/or
period of repayment; and
d) The monies which are sought to be canvassed by the
Applicant as a debt were given by Respondent No. 2 to
Respondent No. 6 between 1996 to 2012 i.e. over a
period of 16 years.
29. Mr. Tamboly has submitted that in these facts, it is
inconceivable that a creditor would go on lending money between
1996 and 2012 i.e. over the period of 16 years. The mode and
manner in which monies were given by Respondent No. 2 to
Respondent No. 6 and considering that the relationship between
them was that of mother and son, clearly indicates that the
transaction is not that of a loan and consequently, there is no
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relationship of debtor and creditor between Respondent No. 6 and
Respondent No. 2. He has submitted that even on this count, the
present Application is misconceived.
30. Mr. Tamboly has submitted that even assuming
without admitting that the present Application is maintainable, given
that Respondent No. 6 has raised a reasonable and bona fide defence
to the purported debt payable to Respondent No. 2, the present
Application cannot be decided in a summary fashion and will have to
be tried like a Suit. He has relied upon Order XXI Rule 46C of the
C.P.C. in this context.
31. Mr. Tamboly has submitted under the said provision
where the Garnishee disputes the liability the Court may order that
any issue necessary for determination of liability shall be tried as it
was an issue in a Suit.
32. Mr. Tamboly has submitted that in the present case,
not only Respondent No. 6 who is the purported debtor, but even
Respondent No. 2, who is the purported creditor are ad-idem that
there is no debt subsisting between them. The Applicant itself has
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unequivocally admitted this position which can be seen from the
prayer clause (a1) and paragraphs 4(k) and 5 of the Application,
that the purported loan between Respondent No. 2 and Respondent
No. 6 was written off on 1st April 2014. This is therefore, more than
a prima facie defence of Respondent No. 6 to the Applicant's claim
and therefore, the Application ought to be tried like a Suit.
33. Mr. Tamboly has submitted that in Global Trust Bank
(supra), the Delhi High Court has held that even if there is a
reasonable doubt about the debt payable by the Garnishee to the
Debtor, the matter should be tried like a Suit (paragraph 25). Further,
in Mackinnon Mackenzie and Company Pvt. Ltd. (supra) the Calcutta
High Court has held that a garnishee proceeding under Order XXI
Rule 46 of the C.P.C. is akin to the proceeding under Order XII Rule 6
of the C.P.C., which provides for a judgment / decree on admission. It
is held that where the claim by the Garnishee is bona fide and the
dispute is not frivolous, the matter should be tried like a Suit.
34. Mr. Tamboly has relied upon the judgment of the Delhi
High Court in Goyal Mg Gases Private Limited Vs. Neelachal Ispat
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Nigam Limited (NINL) & Anr.11. The Delhi High Court has construed
the word "debt" under Order XXI Rule 46 of the C.P.C. as a clear and
existing debt in present time. It cannot be a debt which is uncertain
or denied by the Garnishee, who, according to the Award Holder,
owes the debt to the Award Debtor. He has also placed reliance upon
the judgment of the Supreme Court in Bhagyoday Cooperative Bank
Ltd. Vs. Ravindra Balkrishna Patel12 in support of his submission that
no garnishee proceeding can take place under under Order XXI Rule
46A without attachment of debt under Order XXI Rule 46.
35. Mr. Tamboly has further relied upon the judgment of
the Andhra Pradesh High Court in Nuthalapati Kotaiah Vs. Executive
Officer TTD Office at Guntur13, wherein the Court construed the
power under Order XXI Rule 46-A to issue notice to the Garnishee,
which has couched the language as "may". The Court has held that
though the word "may" appears to be an enabling word, when the
object of the power is to affect a legal right, it must be construed to
be mandatory and is substituted as "shall". The Court has also held
that an order without notice is a nullity and void and it is open to a
11 2022 SCC OnLine Del 736 at paras 81, 82, 88, 91, 92, 93, 95, 96 to 101
12 2022 SCC OnLine SC 1704 paras 14, 27 to 30 and 33
13 (1985) 3 AP LJ 103 paras 4, 6 and 7
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Garnishee to assail its correctness, when he first became aware of it,
when the decree is sought to be executed and the Executing Court is
bound to consider the same, instead of relegating him to the
Appellate Forum. The object of introducing Rule 46C manifests that
on a notice issued, the Garnishee has a statutory remedy of placing
before the Court his non-liability and the Court has to try it as an
issue in the Suit, so that the Garnishee is bound by the order to be
passed under Order XXI Rule 46B.
36. Mr. Tamboly has submitted that in the present case, no
notice has been issued as prescribed under FORM 55 of the OS Rules
read with Order XXI Rule 46.
37. Mr. Tamboly has dealt with the judgments relied upon
by the Applicant and has submitted that they were decided on the
facts of those cases and are inapplicable in the present case.
38. Mr. Tamboly has accordingly, submitted that the
present Chamber Summons is without any merit and is liable to be
dismissed.
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39. Having considered the submissions, it is pertinent to
note that there appears to be no debt, which is due by the Garnishee
- Respondent No. 6 to Respondent No. 2 as can be seen from the
Income Tax Returns filed for the Assessment Year 2015-16, i.e. for the
year ending 31st March 2014, wherein the loan amount is not
shown. Further, in the third Disclosure Affidavit filed by Respondent
No. 2, the loan advanced by Respondent No. 2 to Respondent No. 6 is
stated to have been much prior to 2010 and the same had been
written off on or about 1st April 2014. Although in subsequent
Affidavits filed in these proceedings, Respondent No. 2 has stated
that he has capitalized the accumulated loan amount on 1st April
2014, this appears to be an obvious error on the use of the word
'capitalized' as it runs contrary to the undisputed fact that there was
no loan agreement or any other commercial document between
Respondent No. 6 and Respondent No. 2 indicating the existence of
any debt, terms and conditions of debt, rate of interest and/or period
of repayment.
40. The House of Lords in Inland Revenue
Commissioners Vs. Oswald (supra) has enunciated meaning of the
term "capitalized". It has been held by the House of Lords that
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capitalization means that interest on the loan is simply added back to
the capital, i.e. the principal amount and new composite / aggregate
amount of principal plus interest is the capitalized amount upon
which further interest is liable to be paid. In the present case, there
could not have been a capitalization of the loan, in view of the
admitted position that there was no loan agreement indicating the
charging of interest on the loan. Thus, it is evident that Respondent
No. 2 has incorrectly used the phrase "capitalized the accumulated
loan amount on 1st April 2014" in its pleadings.
41. The contention on behalf of the Applicant that the
entire case of capitalization of the loan is the only defence raised in
the pleadings, which is predicated on there being a loan for the
principal amount upon which interest is then added on and the loan
is capitalized, is thus misconceived. The loan was no longer existing
as it had been written off on 1st April 2014. This was before the
decree dated 20th August 2014 had been passed and prior to the
filing of the present Execution Application on 5th March 2015.
42. It is settled law that garnishee proceedings can only lie
if, (i) there exists a valid and subsisting debt owed by the Garnishee
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to the Judgment Debtor; (ii) such debt is capable of being attached.
This is evident from a conjoint reading of Order XXI Rule 46(1)(a)
and Order XXI Rule 46(1)(i) of the C.P.C.. The order dated 9th
October 2023, which has been relied upon by the Applicant to
contend that there was an attachment of the debt i.e. loan amount of
Rs. 4,00,36,551/- is in my considered view, a misplaced reliance. I
find much merit in the interpretation placed by the Respondents on
the said order namely that the attachment of the said loan amount
was ordered only as a matter of procedure so that the matter could
make progress. The order is not an expression of the Court's opinion
that there is a subsisting debt between Respondent No. 6 and
Respondent No. 2. This is apparent from paragraphs 6 and 7 of the
said order. The Court kept all contentions open including the aspect
that it is open to the Respondents to show that there is no subsisting
debt between Respondent No. 6 and Respondent No. 2.
43. Further, the prior order dated 25th October 2021, by
which this Court had allowed the Chamber Summons in terms of
prayer clause (c) and issued notice to the Garnishee - Respondent No.
6 to pay the said amount of Rs. 4,00,36,551/- and/or to show cause
as to why such amount is not payable, is not an order for attachment
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of the debt, as it appears from the record that there was no subsisting
debt payable by Respondent No. 6 to Respondent No. 2.
44. It has been held by the Delhi High Court in Global
Trust Bank (supra) that the foundation of a garnishee proceedings is
an attachment of the debt under Order XXI Rule 46(1) of the C.P.C.
(paragraph 25). Where there is no subsisting debt, as in the present
case, i.e. between the Garnishee and the Judgment Debtor, then there
cannot be any attachment of such debt and consequently no
garnishee proceeding can possibly lie.
45. This Court in Jatin Keshruwala Vs. Dag Creative Media
(supra) has held that when a Decree Holder is seeking an order
against the Garnishee, the Court has to ascertain whether the debt is
actually due and payable by the Garnishee to the Judgment Debtor.
When the Garnishee has not admitted the debt, as in the present
case, the Court cannot compel the Garnishee to deposit any amount
on account of the Judgment Debtor.
46. The Applicant / Judgment Creditor has contended that
if the argument of the Respondents, namely that a loan being
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between mother and son may be written off, was accepted, it would
have catastrophic effects on the execution proceedings in this
country. This is in my view is a misconceived contention in the facts
of the present case. It is an admitted position that the loan in the
present case, no longer appeared in the Income Tax Returns filed for
the Assessment Years 2015-16. Further, the Applicant has not been
able to establish that Respondent No. 6 and Respondent No. 2 had
any commercial relationship between them and/or there being a
loan agreement between them indicating existence of any debt, the
terms and conditions of such debt, the rate of interest and/or period
of repayment. Further, the loan which the Applicant contends is owed
to the Judgment Debtor is nothing but an advancement of monies by
Respondent No. 2 to Respondent No. 6 between 1996 to 2012, i.e. for
over a period of 16 years. It is in this context that the argument has
been made by the Respondents that this is a loan between the mother
and son and therefore may be written off.
47. The Applicant has contended that there is no question
of any evidence being required to ascertain whether there is debt in
the present case as there is no dispute that there was a loan and that
a debt exists. It is further contended that the only defence of the
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Respondent No.2 in the pleadings is of capitalization of the loan. As
has been held above the use of the word "capitalization" by
Respondent No. 2, in the subsequent Affidavits is an obvious error
given that the Applicant has not been able to establish that there was
a loan agreement between Respondent No.2 and Respondent No.6
indicating the existence of any debt, the terms and conditions of such
a debt, the rate of interest and / or period of repayment.
Capitalization can only be if the interest charged on the loan is added
back to the capital which is not case here. Thus, the loan being
written off would be the only plausible reason for the loan no longer
appearing in the Income Tax Returns on 17th May, 2016 for
Assessment Year 2015-16 i.e. for the year ending 31st March, 2014.
Thus, there is misplaced reliance by the Applicant on Section 58 of
the Indian Evidence Act, 1872 and the judgments in support of its
contention that when there is an admission of a particular document
or fact, there is a dispensation of proof in this regard.
48. There being no valid and subsisting debt owed by the
Garnishee to the Judgment Debtor would result in the garnishee
proceeding not being maintainable and requiring rejection. The
judgments relied upon by the Applicant, viz. Vardhaman Developers
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(supra) and Drive India Enterprises Solutions Limited (supra) are not
applicable in the present case as the defence raised herein is not
specious. There is a genuine, real and bona fide defence raised by the
Respondents that warrants acceptance.
49. In Mackinnon Mackenzie and Company Pvt.Ltd.
(supra) the Calcutta High Court has held that the Court at the stage
of determining whether to pass a garnishee order is required to
consider whether there is a real dispute as to the existence of a debt
between the Garnishee and the Judgment Debtor. The rationale being
that if the Garnishee was entitled to raise all such defences available
in law in a Suit brought against it by a Judgment Debtor which
would then be tested by a Civil Court of Competent Jurisdiction,
merely because the proceedings are in execution does not mean that
the Garnishee is deprived of the defences and remedies available in
law.
50. The other prayer in the Chamber Summons is for
arrest and detention of Respondent No. 2 for having caused to
transfer an asset after the date of filing of the Suit under Section
51(e)(a) (ii) of the C.P.C. read with Order XXI Rule 37. This prayer
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cannot be granted in view of my finding that there was no valid and
subsisting debt owed by Respondent No. 6 - Garnishee to
Respondent No. 2 - Judgment Debtor. Hence, the contention of the
Applicant regarding Respondent No. 2 having gifted away or
transferred the valuable asset after filing of the Suit does not arise.
51. In that view of the matter, I find that there is no merit
in the present Chamber Summons seeking to recover the sum of Rs.
4,00,36,551/- from Respondent No. 6 - Garnishee.
52. The Chamber Summons is accordingly, dismissed.
There shall be no order as to costs.
[R.I. CHAGLA J.]
53. After the order has been pronounced, Mr. Archit
Jayakar, the learned Counsel for the Applicant / Judgment Creditor,
has applied for stay of this order.
54. In view of this order dismissing the Chamber
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Summons on the ground that there is no valid and subsisting debt of
Respondent No. 6 - Garnishee to Respondent No. 2 - Judgment
Debtor, the application for stay is rejected.
[R.I. CHAGLA J.]
