Telangana High Court

Kapil Chits Kakatiya Pvt. Ltd. vs Sri Vakati Gnanaiah on 21 September, 2023

Bench: G.Radha Rani

    THE HONOURABLE Dr. JUSTICE G. RADHA RANI

        CIVIL REVISION PETITION No.1943 of 2023

ORDER:

This Civil Revision Petition is filed by the petitioner-

respondent No.1-Decree Holder aggrieved by the order dated

30.06.2023 in EA No.54 of 2023 in EP No.322 of 2016 on the file

of the Principal Senior Civil Judge, Hanumakonda.

2. Heard the learned counsel for the petitioner-Decree

Holder and the learned counsel for the respondent Nos.1 to 5-Legal

Representatives of the Judgment Debtor No.1.

3. Learned counsel for the petitioner-D.Hr., submitted that

the petitioner would deal with the business of Chit Fund and in the

course of business, the judgment debtor No.1, Sri Vakati Gnanaiah,

joined the chit. He became the successful bidder in the auction

conducted. He produced the respondent Nos.6 to 10 as sureties.

Later, he committed default in payment of monthly subscriptions.

Hence, the petitioner initiated proceedings under the provisions of

Chit Fund Act, 1982 (for short 'the Act') before the Deputy

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Registrar of Chits, Warangal District in Case No.AA/CF

No.387/2015. On contest, the said case was allowed and an

Award was passed on 05.12.2015 for a sum of Rs.9,54,506/- along

with interest @ 18% per annum on principal amount of

Rs.8,59,104/- from the date of filing of the dispute till the date of

realization and costs of Rs.13,603/-. A recovery certificate under

Section 71 A of the Act was issued to that effect. The petitioner

filed I.A. No.192 of 2017 and an order was passed on 22.09.2017

forwarding the award certificate to the court of the Principal Senior

Civil Judge, Warangal for execution.

3.1. The learned counsel for the petitioner further submitted

that the petitioner filed EP No.322 of 2016 for a total sum of

Rs.11,79,293/- against judgment debtor Nos.2 to 6 for attachment

of salary as the judgment debtor No.1 was not getting any salary

and he was not attending to duty. The court below passed order

against the judgment debtors No.2 to 6 by attaching their salaries

on 30.11.2016 by apportioning the amount among 5 of them. In

pursuance thereof, amounts were started to be deducted from the

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salaries of a couple of judgment debtors and others managed not to

get deducted.

3.2. He further submitted that the judgment debtor No.4

Smt. Ch. Nagamani filed E.A.No.457/2017 seeking to attach total

decretal amount from the retirement benefits of the judgment

debtor No.1. The said application was allowed by order dated

17.08.2020. Accordingly, the amount was attached and the

judgment debtors requested to raise their salary attachments. The

amount was sent to the court and the same was lying to the credit

of the case before the trial court.

3.3 The judgment debtor No.4 also filed an application

seeking to raise attachment, but the same was dismissed. As per the

information given by the judgment debtor No.4, the judgment

debtor No.1 had committed irregularity in service. Disciplinary

proceedings were initiated against him and penalty of compulsory

retirement from service was imposed on him.

3.4. He further submitted that the judgment debtor No.3

filed E.A.No.194/2021 seeking to raise attachment of his salary on

Dr.GRR,J CRP No.1943 of 2023

the ground that the entire decretal amount was already attached

from the retirement benefits of judgment debtor No.1. On contest,

the said application was dismissed by order dated 12.04.2022.

Later, the respondents No.1 to 5 herein i.e. L.Rs. of judgment

debtor No.1 filed E.A.No.158/2022 under Section 151 of the Code

of Civil Procedure, 1908, praying to permit them to receive the

amount of Rs.11,79,293/- lying to the credit of the case. The said

application was filed on 28.12.2022. In support of the said

application, it was stated that the judgment debtor No. 1 died on

03.09.2020, his wife died on 19.03.2022 and the respondent Nos.1

to 5 herein were their children. It was not stated in the affidavit

that the entire amount was gratuity amount. However, the court

below without giving an opportunity to the petitioner to file

counter and contest it, allowed the application on the ground that

the said amount was gratuity amount of the deceased judgment

debtor No.1. No material was placed on record to that effect. The

court below ordered for return of the amount to them.

3.5. Against the said order dated 30.12.2022, the petitioner

filed C.R.P.No.77 of 2023 before this Court and it was allowed by

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order dated 20-01-2023 remanding the matter back to the court

below for passing orders afresh putting all parties on notice and

affording them an opportunity of hearing. The court below

addressed a letter to the General Manager, South Central Railway,

Secunderabad for clarification whether the amount deposited

before the court was gratuity amount or not. It appeared that the

court below got reply from the department that the said amount

under attachment was the retirement benefit of the deceased and

that the same was gratuity amount. Subsequently, the court below

allowed E.A.No.158 of 2022.

3.6. Later, the respondents No.1 to 5 herein filed E.A.

No.54 of 2023 under Rules 230, 231 and 233 of Civil Rules of

Practice, 1980 (for short 'the Rules') to issue cheque for

Rs.11,79,293/- in favour of respondent No.1 herein. The petitioner

herein filed counter and opposed the application vehemently.

However, the court below allowed the said application by order

dated 30.06.2023 and posted the matter to 07.07.2023 for recording

the sworn statement of the deponent therein and also for filing no

objection affidavits by the other petitioners therein.

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3.7. The learned counsel for the petitioner further submitted

that the court below grossly erred in law in not appreciating the fact

that in view of the death of the employee-judgment debtor No.1,

the gratuity amount would become the estate of the deceased and

hence, the protection under Section 60 (g) of the Code of Civil

Procedure, 1908 would not be applicable. The court below had not

followed the due procedure prescribed by law. The legal

representatives of the deceased party could come on record only in

the manner provided under Order XXII of CPC. In the present

case, the respondents No.1 to 5 herein were not brought on record

in the suit or in the Execution Petition and hence, their application

could not be entertained and the same were liable to be

returned/rejected. But, unfortunately, the court below entertained

them and passed orders in their favour resulting in mis-carriage of

justice. The observation of the court below that there was no need

for the petitioners to file an application to implead themselves as

there was no claim in the execution petition against their father was

absurd. As per the information of the petitioner, the entire amount

was not gratuity amount, but the same was retirement benefit of the

Dr.GRR,J CRP No.1943 of 2023

deceased judgment debtor No.1 and hence, the amount was liable

to be paid to the decree holder. The court below failed to

appreciate that judgment debtor No.1 was not attending the duty, as

such, his salary could not be attached and the amount attached was

from his retirement benefits at the instance of judgment debtor

No.4 and not at the instance of the decree holder. Neither the

judgment debtor No.1 had raised any objection for the said

attachment nor his legal heirs. The court below failed to appreciate

that the petitioner was unable to realize the decretal amount for no

fault of them, but only due to the illegal activities and mischief of

the judgment debtors. The judgment debtors No.1 and 5 died. The

judgment debtors No.2, 3 and 6 were retired from service and the

petitioner was unable to recover the decretal amount even after the

award and the order of attachment in execution petition, causing

grave loss to the petitioner. The order of the court below was

against the said principles of law and prayed to set aside the same.

4. This Court granted interim suspension of the order dated

30.06.2023 passed by the Principal Senior Civil Judge,

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Hanumakonda in EA No.54 of 2023 in EP No.322 of 2016 on

07.07.2023.

5. Learned counsel for the respondent Nos. 1 to 5, on the

other hand, contended that the revision petitioner (decree holder)

filed E.P. No.322 of 2016 against the judgment debtors No.2 to 6

but not against the judgment debtor No.1 or his legal heirs i.e.

respondents No.1 to 5 herein. The court attached the salary of the

judgment debtors No.2 to 6 by apportioning the liability to pay the

EP amount by them. In the absence of seeking any relief against

judgment debtor No.1 or his legal heirs in the original execution

petition, the action of seeking to attach the amounts of judgment

debtor No.1 was illegal and perverse. The property in the hands of

the employer of the deceased judgment debtor No.1 was sought to

be attached at the instance of the judgment debtor No.4 vide E.A.

No.457 of 2017. Thereupon, the court passed an order attaching

the property of the judgment debtor No.1. As a result, the

employer of the judgment debtor No.1 sent a sum of

Rs.11,79,293/- to the court. Thus, the amount and benefits of

judgment debtor No.1 was attached not at the instance of the

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revision petitioner herein. The very registration of application filed

by judgment debtor No.4 was in gross violation of Order VIII-A of

CPC. As per Order VIII-A of CPC, the guarantor should file a

separate suit for recovery of money against the principal debtor and

he could not seek attachment in the execution proceedings. Later,

the judgment debtor No.4 filed a petition seeking to raise his salary

attachment order dated 05.02.2019 vide EA No.194 of 2021 due to

the order passed in EA No.457 of 2017. The said application was

dismissed vide order dated 12.04.2022. In the said order, the

executing court held that the amount attached and deposited before

the court was gratuity amount of Rs.11,79,293/- of judgment

debtor No.1 and that the same was liable to be returned to the

employer of the judgment debtor No.1. Further it also directed the

employer of judgment debtor No.1 to disburse the same to the legal

heirs of the deceased. The order passed in EA No.194 of 2022

dated 12.04.2022 was not challenged by the petitioner herein. It

attained finality. Hence, the petitioner, by way of the present CRP,

could not question the order passed in the impugned petition in EA

No.54 of 2023 filed under Rules 230, 231 and 233 of Civil Rules of

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Practice. The limited question involved in the application for

cheque petition was identifying the persons, who sought issuance

of cheque in their favour. The revision petitioner received a

substantial portion of the amount lent to judgment debtor No.1 but

dishonestly claiming excess amount and prayed to vacate the

interim order dated 07.07.2023 passed in I.A. No.1 of 2023.

6. As seen from the record, the respondents No.1 to 5 were

the legal representatives of the judgment debtor No.1. An award

was passed by the Deputy Registrar of Chits, Warangal District

against judgment debtors No.1 to 6 in case No.AA/CF

No.387/2015 for recovery of a sum of Rs.9,54,506/- with interest at

18% per annum. E.P. No.322 of 2016 was filed by the revision

petitioner-decree holder herein for recovery of a sum of

Rs.11,79,793/- against judgment debtors No.2 to 6 seeking

attachment of their salaries. The court below passed order

attaching the salaries of judgment debtors No.2 to 6 by

apportioning the amount among the 5 of them. E.A. No.457 of

2017 was filed by the judgment debtor No.4 seeking attachment of

the entire decreetal amount from the retirement benefits of

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Judgment debtor No.1. The said application was allowed by order

dated 17.08.2020. Accordingly, the amount was attached and the

employer of the judgment debtor No.1 sent the amount of

Rs.11,79,293/- to the court and the same was lying to the credit of

the case before the trial court. Later, judgment debtor No.3 filed a

petition seeking to raise his salary attachment vide EA No.194 of

2021. The respondents No.1 to 5 herein were arrayed as parties to

the said petition. The said application was dismissed vide order

dated 12.04.2022. In the said order, the executing court held that

the amount attached and deposited before the court was the gratuity

amount of the judgment debtor No.1, after receiving a reply from

the department confirming that it was the gratuity amount of the

deceased judgment debtor No.1.

7. Pursuant to the orders in EA No.194 of 2022 dated

12.04.2022, the respondents No.1 to 5 herein filed EA No.158 of

2022 seeking permission of the court to file a cheque petition and

to receive the amount lying in the CCD account. On 30.12.2022,

the executing court allowed the petition. Aggrieved by the said

order, the revision petitioner herein filed CRP No.77 of 2023. As

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no opportunity was given to the petitioner herein before passing the

said order, the said order was set aside by this Court and the matter

was remanded to conduct enquiry afresh. After conducting enquiry

afresh, the executing court passed orders on 17.03.2023 reiterating

its order dated 30.12.2022. The revision petitioner, if aggrieved by

the said order, ought to have challenged the same but failed to do

so.

8. The contention of the petitioner that the respondents No.1

to 5 herein were not parties to the execution petition filed by it, as

such, they could not maintain the present application was untenable

as the attachment proceedings attaching the amounts of the

judgment debtor No.1 in his absence itself were not proper as the

amounts attached and deposited before the court would belong to

judgment debtor No.1. The respondents No.1 to 6 being the legal

heirs had every right to come on record and question the

attachment.

9. The contention of the learned counsel for the petitioner

was that the character of the amount of gratuity would change once

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it comes out of the hands of the employer and the employee. He

relied upon the judgment of the High Court of Madras in

Murugaiah Velar v. Velammal and Ors. 1, wherein it was held

that:

"5. ...it is found that when the exemption provided to the gratuity amount would be made applicable only to the deceased borrower and the said exemption cannot be claimed by his legal representatives as they inherit the gratuity amount in their capacity as the legal representatives of the deceased and in such circumstances, the estate of the deceased lying in the hands of the legal representatives are liable for action pursuant to the decree passed in the suit and in such view of the matter, it is found that the respondents 1 to 3 / defendants cannot claim the benefit of the provision of Section 60(g) of the Code of Civil Procedure as they cannot be equated as pensioners entitled to receive the gratuity amount as such. When it is found that they would be entitled to get the gratuity amount only in their capacity as the legal representatives of the deceased borrower and so seen it is found that the same would constitute only the estate of the deceased in their hands and the position being above, it is found that the respondents 1 to 3 / defendants cannot seek the benefit of the exemption provided to the deceased borrower under Section 60(g) C.P.C.

6. ......a perusal of Section 60(g) C.P.C., would go to show that the gratuity amount allowed to the pensioners alone is exempted from attachment and once the gratuity amount is lying in the hands of the legal representatives of the pensioners, it would come under the classification of the estate in the hands of the legal representatives and therefore, the legal

2017 (6) MLJ 416

Dr.GRR,J CRP No.1943 of 2023

representatives cannot seek the benefit of the above said provision of law..."

10. The learned counsel for the respondents No.1 to 6, on

the other hand, relied upon the judgment of the Hon'ble Apex

Court in Radhe Shyam Gupta v. Punjab National Bank and

another 2, wherein it was held that:

"35. We also agree with Ms. Shobha that the High Court could not have gone behind the decree in the execution proceedings and the alteration in the manner of recovery of the decretal amount was erroneous and cannot be sustained. We also agree with Ms. Shobha that even after the retiral benefits, such as pension and gratuity, had been received by the appellant, they did not lose their character and continued to be covered by proviso (g) to Section 60(1) of the Code. Except for the decision in the Jyoti Chit Fund and Finance case (supra), where a contrary view was taken, the consistent view taken thereafter support the contention that merely because of the fact that gratuity and pensionary benefits had been received by the appellant in cash, it could no longer be identified as such retiral benefits paid to the appellant."

11. He also relied upon the judgment of this Court in G.

Surya Kumari v. Union Bank of India, Hyderabad and

another 3 wherein by referring to the above judgment of the

Hon'ble Apex Court, it was held that:

2009 (1) SCC 376

2022 (3) ALD 673 TS

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10. In Radhey Shyam Gupta's case (supra), the dispute involved was regarding attachment of pension and gratuity amounts which were converted into fixed deposit receipts. The contention of the bank placing reliance on the judgment of the Hon'ble Supreme Court in Union of India v. Jyoti Chit Fund and Finance, (1976) 3 SCC 607, was that once payments (pension and gratuity) are made, their character stood altered as they become mixed with the other assets of the employee concerned [Paragraph No.27 in Radhey Shyam Gupta's case (supra)]. However, such contention was impliedly rejected by making the following observations:

"33. However, we are also of the view that having regard to proviso (g) to Section 60(1) of the Code, the High Court committed a jurisdictional error in directing that a portion of the decretal amount be satisfied from the fixed deposit receipts of the appellant held by the Bank. The High Court also erred in placing the onus on the appellant to produce the Matador in question for being auctioned for recovery of the decretal dues. In other words, the High Court erred in altering the decree of the Trial Court in its revisional jurisdiction, particularly when the pension and gratuity of the appellant which had been converted into fixed deposits, could not be attached under the provisions of the Code of Civil Procedure. The decision in Jyoti Chit Fund's case (supra), has been considerably watered down by later decisions which have been indicated in Para 22 hereinbefore and it has been held

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that gratuity payable would not be liable to attachment for satisfaction of a Court decree in view of proviso (g) to Section 60(1) of the Code."

12. Thus, as seen from the above judgment of the Hon'ble

Apex Court, the character of the amount of gratuity would not

change even if the same was in the hands of the legal

representatives of the deceased employee and continued to be

covered by proviso (g) to Section 60(1) of the Civil Procedure

Code, 1908.

13. The present revision is filed by the petitioner against the

orders in EA No.54 of 2023. The said application was filed by the

respondent Nos.1 to 5 herein under Rules 230, 231, 233 of the

Civil Rules of Practice to issue cheque in their favour. The

petitioner without challenging the orders in EA No.158 of 2022

dated 17.03.2023 cannot challenge the orders in EA No.54 of 2023.