Morgan Securities & Credits Pvt. ... vs B.K.Modi
2011 Latest Caselaw 1690 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         Ex.P.No.112/2010

                                       Date of Decision : 24.03.2011

MORGAN SECURITIES & CREDITS PVT. LTD.
                                 ...... Decree Holder
                     Through: Mr. Pawan Bindra, Adv.

                                   Versus

B.K.MODI                                      ...... Judgment Debtor
                               Through:     Mr.     Harish Malhotra,
                                            Sr.Adv. with Ms.Shweta
                                            Bharti, Adv.


CORAM :
HON'BLE MR. JUSTICE V.K. SHALI

1.     Whether Reporters of local papers may be
       allowed to see the judgment?                           NO
2.     To be referred to the Reporter or not ?                NO
3.     Whether the judgment should be reported
       in the Digest ?                                        NO

V.K. SHALI, J.

1. The question to be decided in this Execution Petition is

whether the present execution petition titled Morgan

Securities & Credits Private Limited Vs B.K. Modi can be

permitted to be continued when the SLPs emanating from two

connected execution petitions bearing No. 84/2004 and

111/2010 titled as Morgan Securities & Credits Private

Limited Vs. V.K. Modi and Morgan Securities & Credits

Private Limited Vs. Modi Rubber Ltd., respectively, are still

pending adjudication before the Supreme Court.

2. Briefly stated, the facts giving rise to the present execution

petition are that on the dispute/differences having arisen

between Morgan Securities and M/s. Modi Rubber Limited

and others on account of some loan transaction, a retired

Judge of this Court was appointed as the sole arbitrator by

the High Court. The learned arbitrator passed an award on

06.05.2004 for a sum of Rs.6,72,63,015/-, which included

interest up to the date of reference and thereafter interest at

the contractual rate of 21% per annum from the date of

reference till the date of award and thereafter interest @ 18%

per annum from the date of award till the payment.

3. The present execution petition was filed on 23.04.2010 for

recovery of Rs.26,52,78,600/- as on that date, by way of

attaching and selling the movable as well as the immovable

properties of the judgment debtor Dr. B.K. Modi. Notices

were issued to the judgment debtors. It was averred in the

execution petition that all the three judgment debtors had

filed objections against the award dated 06.05.2004 under

Section 34 of the Arbitration and Conciliation Act, 1996. The

said objections were dismissed by a common order vide order

dated 21.10.2009.

4. Feeling aggrieved by the dismissal of the objections, all the

judgment debtor preferred an appeal under Section 37 of the

Arbitration and Conciliation Act, 1996 before the Division

Bench. The appeal of the present judgment debtor was

numbered as FAO(OS) 39/2010. The said FAO(OS) was

dismissed as withdrawn vide order dated 19.01.2010. The

remaining two appeals of the other two judgment debtors i.e.

V. K. Modi and Morgan Securities were dismissed on merits

on 09.2.2010.

5. It has been contended by the learned counsel for the

judgment debtor that the decree may not be executed on

account of the fact that against the same award dated

06.05.2004, the borrower i.e., M/s. Modi Rubber Limited as

well as one of the guarantor V.K. Modi, who are the judgment

debtors respectively in Ex.P. No. 111/2010 & Ex.P.

No.84/2004, have preferred special leave petitions before the

Apex Court bearing SLP Nos. 14293/2010 & 21589/2010

respectively arising out of FAO(OS) No.620/2009 and

FAO(OS) No.75/2010.

6. It was urged by Mr. Nayyar, learned senior counsel for the

judgment debtor in the present execution petition that the

Apex Court in SLP No. 21589/2010 has stayed the execution

of the decree subject to V.K.Modi depositing the principal

amount of Rs. 5 crores, which he has already done. Thus,

the principal amount having been deposited the decree is to

that extent satisfied or alternatively the interest of the decree

holder is secured and he cannot recover the said amount

twice over from the present judgment debtor, and, therefore,

the present execution petition against Dr. B.K. Modi could not

continue.

7. It is further stated that so far as the Special Leave Petition

bearing No. 14293/2010 filed by M/s Modi Rubber Limited is

concerned, the Apex Court has observed and directed the

judgment debtor to deposit interest component with the

Registrar General of the Supreme Court, which is stated to

have been deposited by him. It is also contended by him that

the FAO(OS) no. 620/2010 having been dismissed by the

learned Division Bench, the Supreme Court in SLP No.

14293/2010 had issued notice to the respondents namely the

decree holder in the present case and in the meantime, it was

directed that the respondent shall not proceed with the

execution petition. It was accordingly contended that the

execution of the award dated 06.05.2004 having been stayed

by the Apex Court on account of the deposit having been

made by the two judgment debtors, the present execution

petition against Dr. B.K. Modi deserves to be stayed or

alternatively, this Court may await the decision in the Special

Leave Petition. The learned senior counsel in support of his

contention urged, since the interest amount has already been

deposited by the principal borrower, i.e., Modi Rubber Ltd.

and the principal amount has been deposited by the

guarantor i.e. V.K. Modi, therefore, the decree holder cannot

be permitted to continue the present proceedings, as it will

tantamount to executing the decree twice over. It is on the

basis of this submission that both as a matter of law and as a

matter of propriety, the execution of decree against Dr. B.K.

Modi be kept in abeyance till the time the matter is

adjudicated by the Apex Court.

8. Mr. Maninder Singh, learned senior counsel appearing for the

decree holder, has refuted the contention made by Mr.

Nayyar. It is contended that it is open to the decree holder as

against whom he would like the decree to be executed. For

this purpose, the learned senior counsel has placed reliance

on State Bank of India Vs. Indexport Registered. & Ors.

AIR 1992 SC 1740. In the aforesaid judgment, it has been

held that for the purpose of execution of a decree, it is not

necessary that the decree holder must first execute the decree

against the principal borrower and thereafter run after the

guarantor only in the event the decree remains unsatisfied.

9. It has been further contended by Mr. Singh that there is no

legal impediment in execution of the decree against Dr. B.K.

Modi. In this regard, it has been stated that the judgment

debtor had not only filed the objections which were rejected

by the learned Single Judge vide order dated 21.10.2009 in

OMP No. 277/2004 but even the appeal bearing FAO(OS) No.

39/2010 which was filed by him was also dismissed as

withdrawn. It is further contended that even the passing of

the orders by the Apex Court in the two connected execution

petitions where the judgment debtor V. K. Modi and the

principal borrower have been put to terms by directing them

to deposit a sum of Rs. 5 crores and the interest component

ipso facto does not result in staying the execution of the

decree in the present case. It is contended, on the other

hand, that after the orders having been passed by the Apex

Court, the judgment debtor filed an application bearing CM

No. 17037/2010 in appeal bearing FAO(OS) No. 39/2010 for

recalling the earlier order of withdrawal of his appeal on the

ground that the judgment debtor being one of the co-

guarantors must be dealt with, on equal footing with the

principal borrower as well as the co-guarantor V.K. Modi who

are enjoying the stay against the execution of the decree. It is

further stated that not only his application was rejected by

the Division Bench but even the SLP filed by the judgment

debtor against the dismissal order of the Division Bench was

dismissed by a Bench headed by the same Hon'ble Judge of

the Apex Court which had issued notices in the other

connected SLPs, therefore, no advantage can be drawn from

the same.

10. Having gone to the Apex Court against the reopening of his

matter, and seeking the recall of the order of withdrawal, it

was contended that so far as the award in question against

the present judgment debtor Dr. B.K. Modi is concerned, the

same having attained finality, it is not open to Mr.B.K.Modi to

contend that the petitioner must wait for the outcome of the

Special Leave Petition. It was further contended that the

decree may be executed against Dr. B.K. Modi and so far as

the deposit of money made by the other two co-judgment

debtors is concerned, he has no objection in case the said

money is returned back to them. It was also contended by

the learned senior counsel for the decree holder that in

pursuance to the directions passed by this Court, the

judgment debtor has filed an affidavit wherein he has

disclosed that he owns the following three immovable

properties:-

"(i) Property bearing No.36, Amrita Shergil Marg, New Delhi-

110003.

(ii) Flat at Panchkula

(ii) Prithvi Raj Road, New Delhi"

11. It was contended that according to Section 60(1)(c) CPC, one

of the dwelling unit or the house of the judgment debtors,

cannot be attached. If that be so, it is contended by Mr.

Singh, learned senior counsel that it is not open to the

judgment debtor to contend before this Court as to which of

the dwelling unit/house must be attached and which must be

exempted. On the contrary, it is urged that it is open to the

decree holder to contend as to which of the property

belonging to the judgment debtor deserves to be attached and

then auctioned so that there can be maximum retrieval of the

decretal amount.

12. In the light of the aforesaid submissions, it has been

contended by Mr. Singh that the judgment debtors are only

adopting dilatory tactics and the Court may attach any of the

immovable properties, so that as on date, the liability of more

than Rs. 70 crores against the judgment debtor is satisfied.

13. I have carefully considered the submissions made by the

learned senior counsel for the parties and perused the record.

14. So far as the question of execution of the decree against the

judgment debtor Dr. B.K. Modi is concerned, I am of the

considered opinion that the legal position is very clear with

regard to the execution of the decree against the guarantors.

It is not necessary that the decree holder must run after the

principal borrower in the first instance to realize his decree

and it is only when the decree is not satisfied against the

principal borrower that he should seek the execution of the

decree against the guarantors. Reliance in this regard can be

placed on State Bank of India (supra).

15. There is no impediment in law or otherwise which can be said

to be coming in the way of the decree holder to get the decree

executed against Dr. B.K. Modi but the question which arises

for consideration is as to whether it will be just, fair and

proper to execute the decree against the judgment debtor

especially when against the said award, the matter is pending

before the Apex Court and there is a stay at least in one of the

matters on account of the judgment debtor having deposited

a sum of Rs. 5 crores (refer to the SLP bearing

No.21589/2010 of V. K. Modi).

16. I feel that since the award was common, there ought to have

been common objections filed on behalf of all the three

judgment debtors. But judgment debtor no. 1, the company

of which judgment debtors no. 2 & 3 namely V.K. Modi and

Dr. B.K. Modi were the directors, choose to file separate

objections while as all the objections were dismissed by a

common order dated 21.10.2010 but the appeals preferred by

all the three met separate fate. The appeal filed by Dr. B. K.

Modi bearing FA(OS) No.39/2010 was dismissed as

withdrawn on 09.01.2010, while as the other two appeals

were dismissed on merits on 09.02.2010. In the SLP

preferred by Mr. V. K. Modi bearing SLP No.21589/2010

there was an order that he shall deposit a principal amount of

Rs.5 crores with the Registrar General of the Supreme Court

and the respondent shall not continue his execution

proceedings.

17. The argument of Mr. Nayyar, the learned senior counsel that

the word used in the order is proceedings which is plural

and that means the respondent shall not continue with any of

his execution proceedings meaning thereby that all the

execution proceedings by the decree holder irrespective of the

fact whether the other judgment debtor has gone to Apex

Court or not, or whether their objections have been dismissed

or not is not acceptable because the word 'proceedings' is no

doubt a plural word but it refers only to those proceedings

out of which the SLP is arising and not that of others because

if the argument of Mr. Nayyar, the learned senior counsel is

accepted then the question would be what is the sanctity of

the decree having attained finality? Dr.B.K.Modi's SLP has

already been dismissed and that too by Hon'ble Judge of the

Apex Court which had passed the earlier order in the other

two SLPs of the remaining two judgment debtors. Same

analogy in my view, would apply to the submission of Mr.

Nayyar, the learned senior counsel with regard to the deposit

of the interest component by way of guarantee. It may be

pertinent here to mention that the order of deposit of interest

component by the judgment debtor i.e. M/s Modi Rubber was

not in the SLP arising out of the dismissal of the appeal on

merits but it was against another order passed in the

Execution Petition against the said judgment debtor.

Anyhow, even if the principal and the interest component

have been deposited by the judgment debtor V.K.Modi and

M/s Modi Rubber, with the Apex Court, the money has not

come to the decree holder.

18. According to Order 21 Rule 1 (1) (a) CPC, all money payable

under a decree shall be paid, by deposit in the Court whose

duty it is to execute the decree. Thus, a decree is satisfied

only on the money being deposited in the executing Court and

not any other Court. So far as the orders of the Apex Court

in one SLP of V.K.Modi of stay of execution are concerned

that could not be treated as a general stay against all

Execution Petitions filed by the decree holder.

19. I, accordingly, consider the plea purported to be raised by the

judgment debtor that the decree cannot be executed qua him

as totally bereft of any merit and accordingly, the same is

disallowed and the execution petition must continue.

20. The judgment debtor has filed an affidavit and has given the

list of three immovable properties, one at Panchkula and two

in Delhi. The two properties in Delhi are the properties in

Prithvi Raj Road, which is stated to be mortgaged to a bank

and being used as a dwelling house. According to Section

60(1) (c) CPC, one dwelling unit cannot be attached, therefore,

this property is exempted prima facie from attachment. The

third property is stated to be a property at 36, Amrita Shergill

Marg, which is stated to be in the name of a company but no

documents of title or photocopies thereof are attached. The

decree holder has also sought attachment of the said

property. In absence of the documents of title of this property

at Amrita Shergil Marg, the said property is attached.

However, liberty is given to the judgment debtor to seek

modification, vacation or variation of this order in case the

documents of title indicating the ownership of company is

shown in respect of this property.

21. List for further proceedings on 6th April, 2011.

V.K. SHALI, J.

MARCH 24, 2011 MA