Karnataka High Court
Indian Overseas Bank vs S.Mohammad Anis, S/O.Syed Ahamed on 22 November, 2023
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RSA No. 5344 of 2009
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 22ND DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MRS JUSTICE K.S.HEMALEKHA
REGULAR SECOND APPEAL NO.5344 OF 2009 (MON)
BETWEEN:
INDIAN OVERSEAS BANK,
BRANCH AT DASANAKOPPA,
SIRSI-581402
REPRESENTED BY ITS MANAGER
MR. P.M. MARGAL
AGED ABOUT 50 YEARS,
...APPELLANT
(BY SRI MALLIKARJUNSWAMY B. HIREMATH, ADVOCATE)
AND:
S. MOHAMMAD ANIS, S/O. SYED AHAMD,
AGED ABOUT MAJOR,
R/O. DASANAKOPPA,
SIRSI-581402.
...RESPONDENT
Digitally
signed by
VISHAL (BY SRI RAVI S. HEGDE, ADVOCATE)
VISHAL NINGAPPA
NINGAPPA PATTIHAL
PATTIHAL Date:
2023.12.04
THIS REGULAR SECOND APPEAL IS FILED UNDER SECTION
12:48:02
+0530 100 OF THE CODE OF CIVIL PROCEDURE, 1908, AGAINST THE
JUDGMENT AND DECREE DATED 18.09.2008 PASSED IN
R.A.NO.80/1998 ON THE FILE OF THE CIVIL JUDGE (SR.DN.) SIRSI,
DISMISSING THE APPEAL, FILED AGAINST THE JUDGMENT DATED
29.06.1992 AND THE DECREE PASSED IN O.S.NO.26/1991 ON THE
FILE OF THE ADDITIONAL MUNSIFF, SIRSI, DECREED THE SUIT
FILED FOR MONEY.
THIS REGULAR SECOND APPEAL, COMING ON FOR FINAL
HEARING, THIS DAY, THE COURT DELIVERED THE FOLLOWING:
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RSA No. 5344 of 2009
JUDGMENT
The present second appeal by the Indian Overseas
Bank-plaintiff assailing the judgment and decree of the
courts below, whereby, the suit seeking for recovery of
money was decreed in part, the order of attachment, was
made absolute with a condition that such attachment, should
not apply to the provident fund and gratuity amount of the
defendant lying in the sundry creditor's account.
2. The parties herein are referred to as per their
ranking before the Trial Court for the sake of convenience.
3. This Court while admitting the appeal on
10.04.2014 has framed the following substantial question of
law.
"Whether the Trial Court as well as the First
Appellate Court are justified in refusing to make the
attachment order absolute in respect of the Provident
Fund of the respondent and thus the judgments have
become illegal and perverse?
4. Brief facts of the case are that the plaintiff is a
Banking company registered under the Banking Companies
(Acquisition and Transfer Undertaking) Act, 1970 ("BC Act"
for short) with a Branch at Dasankoppa, Sirsi Taluk. The
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defendant is a former staff member of the plaintiff-Bank at
Dasankoppa. On 05.11.1985, the defendant borrowed a sum
of Rs.8,370/- from the plaintiff-Bank and executed a demand
promissory note and agreed to repay the same in 30
monthly instalments of Rs.279/- each. The defendant was
dismissed from service. The defendant hypothecated a BPL
colour TV with antenna and accessories purchased using the
loan and executed a letter of hypothecation in favour of the
Bank and the defendant is liable to pay 0.15 paise per month
penalty for the late payments. It is stated by the plaintiff
that the defendant acknowledged his liability through a
revival letter dated 16.09.1998 and the plaintiff claims a
total sum of Rs.14,715/- as per maintained accounts and the
defendant is liable for cost, interest, penal interest,
inspection charges and other incidental charges as per the
Rules and practices.
5. Pursuant to the notice issued by the Trial Court,
the defendant appeared and filed his written statement. The
defendant concedes for borrowing a loan from plaintiff-Bank,
working as a clerk until dismissal, executing a demand
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promissory note, agreeing to repay the loan by 30
instalments, disputes the liability of interest challenges the
said amount and questions the accuracy of the plaintiff-Bank
maintained accounts and asserts that the suit of the plaintiff-
Bank barred by limitation.
6. The Trial Court on basis of the pleadings framed
the following issues:
(1) Whether the defendant proves that the plaintiff
bank has not maintained the accounts
properly?
(2) Whether the defendant proves that he is not
liable to pay the interest?
(3) Whether the suit is barred by limitation?
(4) Whether the plaintiff bank is entitled to the suit
claim?
(5) What decree or order?
7. In order to substantiate his claim plaintiff
examined one witness Sri G.B.Kanchi, as P.W.1 and got
marked documents at Exs.P.1 to 6. On the other hand,
defendant examined himself as DW.1 and got marked
Exs.D.1 to 5.
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8. The trial Court on the basis of the pleadings, oral
and documentary evidence, decreed the suit in favour of the
plaintiff and held that the plaintiff testified that the loan
amount in question was appropriately managed supported by
Ex.P.7 and account extract and that the defendant presented
evidence but did not dispute Ex.P.7 during his deposition
leading the Court to accept the validity of Ex.P.7 and the
testimony of PW.1's evidence. Consequently, the Court held
that the defendant failed to discharge his burden and is liable
to pay the claimed interest and the suit falls within limitation
period, a fact which remained unchallenged by defendant.
Regarding attachment order sought by the plaintiff, the
Court made absolute excluding the defendant's provident
fund and gratuity amount. The decree awarded to the
plaintiff was Rs.14,715/- with cost, incidental charges and
future interest at the rate of 16% per annum from the date
of the suit.
9. Assailing the order regarding the attachment
order sought by the plaintiff-Bank excluding the defendant's
provident fund and gratuity amount, the Bank preferred
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appeal before the First Appellate Court. The First Appellate
Court confirmed by upholding the order of attachment
excluding provident fund and gratuity amount payable to the
defendant. The appeal filed by the plaintiff-Bank was
dismissed, hence the present second appeal by the plaintiff-
Bank.
10. Heard Sri Mallikarjun Swamy B.Hiremath, learned
counsel appearing for the appellant and Sri Ravi S.Hegde,
learned counsel appearing for the respondent on the
substantial question of law framed by this Court and perused
the judgment and decree of the Courts below as well as
material placed before this Court including the original
records.
11. Learned counsel appearing for the appellant
would contend that the order of attachment sought by the
plaintiff though was made absolute, the Courts below have
excluded the defendant's provident fund and gratuity amount
without considering the Provident Fund Act, 1925 ("PF Act"
for short) is not applicable to the Bank, as the appellant-
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Bank is a Nationalized Bank established under the BC Act
and excluded from the schedule of institution of the PF Act.
12. Learned counsel would contend that the Courts
below have committed serious error in not considering and
appreciating the scope and object of Section 60(1)(k) of the
Code of Civil Procedure, 1908 ("CPC" for short) and would
contend that the Courts below ought to have seen that under
the said provision all compulsory deposits and other sums in
or derived from any fund to which PF Act, for the time being
applies are only exempted from attachment, in the instant
case, the exemptions under Section 60(1)(k) CPC is not
applicable to the appellant-Bank. Learned counsel has taken
this Court to the provisions of Sections 3, 8(2) and the
schedule annexed to the PF Act.
13. Per contra, learned counsel appearing for the
respondent-borrower justifies the judgment and decree of
the Courts below and would contend that the Courts below
have rightly taken into consideration that the provident fund
and the gratuity are exempted under Section 60(1)(k) CPC,
the attachment as sought by the appellant-Bank is opposed
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to the settled proposition of law, supporting the judgment
and decree of the Courts below and contend that the same,
does not warrant any interference by this Court. Learned
counsel for the respondent emphasised on Order XXXVIII
Rule 5 CPC to contend that the procedure as contemplated
under Order XXXVIII Rule 5 CPC, "attachment before the
judgment" has not been followed by the Trial Court.
14. This Court has carefully considered the rival
contentions urged by learned counsel for the parties.
15. Suit laid by the plaintiff against the defendant is
for recovery of amount of Rs.14,715/-. The suit claim
amount is admitted, what is disputed by the defendant is
about the accuracy of the account maintained by the Bank.
Both the Courts have concurrently held that the plaintiff is
entitled for Rs.14,715/- with interest of 16.5% per annum
which stood unchallenged by the defendant. What was in
challenge before the First Appellate Court was not including
of the provident fund and gratuity amount of the defendant
under the order of attachment, which was made absolute.
The plaintiff during pendency of the suit, filed an application
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under Order XXXVIII Rule 5 CPC to attach the amount of
defendant laying in sundry creditor's account. The said
application was allowed ordering for attachment of the
amount of defendant lying in sundry creditor's account. The
order of attachment under Order XXXVIII Rule 5 CPC, stood
unchallenged by the defendant, in light of the said
circumstance, the contention raised by respondent-defendant
that the procedure as contemplated under Order XXXVIII
Rule 5 is not followed by the Trial Court is unsustainable.
16. The order of attachment was made absolute by
the final order and the Trial Court held that the attachment
of provident fund and gratuity amount being protected under
Section 60(1)(k) CPC cannot be included in the attachment
order. In the relevant provisions of PF Act and CPC needs to
be looked into to answer the substantial questions of law
framed by this Court. This Court is aware the limited scope
for consideration of the Second appeal under Section 100
CPC and interference by this Court is when there is
perversity in the judgments impugned before this Court and
when there arises a substantial question of law.
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17. Section 3(1) of the PF Act, reads as under:
3. Protection of compulsory deposits.- (1) A
compulsory deposit in any government or Railway
Provident Fund shall not in any way be capable of
being assigned or charged and shall not be liable to
attachment under any decree or order of any Civil,
Revenue Or Criminal Court in respect of any debt or
liability incurred by the subscriber or depositor, and
neither the Official Assignee nor any receiver
appointed under the provincial Insolvency Act, 1920
(5 of 1920), shall be entitled to, or have any claim
on, any such compulsory deposit."
(Emphasis supplied)
18. Plain reading of the above provision makes it
evident, that a compulsory deposit in any Government or
Railway Provident Fund shall not in any way be capable of
being assigned and shall not be liable to attachment under
any decree or order of any civil, revenue or criminal Court in
respect of any debt or liability incurred by the subscriber or
depositor.
19. Section 60(1)(k) CPC reads as under:
"60. Property liable to attachment and sale in
execution of decree.- (1) The following property is
liable to attachment and sale in execution of a
decree, namely, lands, houses or other buildings,
goods, money, bank notes, cheques, bills of
exchange, hundis, promissory notes, Government
securities, bonds or other securities for money, debts,
shares in a corporation and, save as hereinafter
mentioned, all other saleable property, movable or
immovable, belonging to the judgment-debtor, or
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over which, or the profits of which, he has a disposing
power which he may exercise for his own benefit,
whether the same be held in the name of the
judgment-debtor or by another person in trust for
him or on his behalf:
Provided that the following properties shall
not be liable to such attachment or sale,
namely:-
(a) xxxxx
to
(j) xxxx
(k) all compulsory deposits and other sums
in or derived from any fund to which the
Provident Funds Act, 1925 (19 of 1925),
for the time being applies in so far as
they are declared by the said Act not to
be liable to attachment;"
(Emphasis supplied)
20. Sub-cause (1) of Section 60 emphasises the
property liable for attachment and save in execution of
decree. Proviso (k) of sub-section (1) to section 60 CPC
creates a bar to attach all compulsory deposit and other
sums in or derived from any fund to which the PF Act (19 of
1925) and the exemption provided under proviso (k) is that
the PF Act should be applicable. In light of the exemption
provided under proviso (k), sub-clause (1) of Section 60 CPC
it is necessary to considered whether the PF Act applies to
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the appellant-Bank. Section 8(2) of the PF Act reads as
under:
8. Power to apply the Act to other
Provident Funds.-
(1) xxxx
(2) The appropriate Government may, by
notification in the Official Gazette, direct that the
provisions of this Act except section 6A shall apply to
any Provident Fund established for the benefit of the
employees of any of the institutions specified in the
Schedule, or of any group of such institutions, and,
on the making of such declaration, this Act shall apply
accordingly, as if such provident fund were a
Government Provident Fund and the authority having
custody of the Fund were the Government:
(Emphasises supplied)
21. Plain reading of (2) of Section 8 of the PF Act
indicates that the provisions of PF Act shall apply to any
provident fund established for the benefit of the employees
of any of the institutions specified in the schedule of the PF
Act. In the list of institutions under schedule of the PF Act,
the name of the appellant-Bank does not find place. The
conjoint reading of Section 3(1), Section 8(2) and the
schedule of list of institutions of the PF Act and the
exemption provided under Section 60(1)(k) CPC makes it
clear that the PF Act is not applicable to the applicant-Bank
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and the exemption provided under Section 60(1)(k)
exempting compulsory deposits from attachment is not
applicable to the present appellant-Bank. Under the said
circumstances, the Courts below were not justified in arriving
at a conclusion that the attachment order made absolute
excludes the defendant's provident fund and gratuity and
thus warrants interference by this Court.
22. It is the settled proposition of law that the
provident fund and the gratuity is not liable for attachment
as provided under Section 60(1)(k) CPC being compulsory
deposits, however, in light of the exemption granted under
Section 60(1)(k) CPC regarding application of PF Act, the
appellant-Bank is entitled for order of attachment on the
provident fund and gratuity amount.
23. For the foregoing reasons stated supra, the
substantial question of law is answered in favour of the
appellant holding that the attachment order excluding the
defendant's provident fund and gratuity is unsustainable and
accordingly this Court pass the following:
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ORDER
i) The regular second appeal filed by the
plaintiff- Bank is hereby allowed.
ii) The attachment order of the Courts below is
made absolute and the exclusion of
provident fund and gratuity made by the
Courts below is hereby set aside.
Sd/-
JUDGE
EM, CT: UMD
