Telangana High Court
Srirarnula Suresh vs Sri Vijay Chit Funds Karimnagar Pvt. ... on 23 August, 2024
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
CIVIL REVISION PETITION No.2351 OF 2024
ORAL ORDER:
Heard Sri Vadlakonda Ravi Kumar Reddy, learned counsel for
the petitioner, Sri G.Vasantharayudu, learned counsel for the
respondent No.1 and respondent Nos.2 to 7 are not necessary parties
2. 1st respondent has filed an application under Section 64 of the
Chit Fund Act, 1992 against the petitioner, respondents 2 to 7 herein
for recovery of an amount of Rs.12,33,000/-. Learned Deputy
Registrar of Chits, Karimnagar, passed an Award in ARC
No.467/2020, dated 23.03.2021 holding that the petitioner,
respondents 2 to 7 are jointly and severally liable to pay an amount of
Rs.12,33,000/- with interest at 18% p.a. on the principal amount of
Rs.11,00,000/- from the date of filing of dispute till realization of the
said amount. The said decretal amount is not paid. Therefore, 1st
respondent has filed E.P.No.186 of 2021 in ARC.No.467 of 2020 to
realize the said amount from respondent Nos. 2 to 6 including the
petitioner herein. Learned Executing Court vide impugned attachment
order dated 08.10.2021 ordered for recovery of an amount of
Rs.14,43,574/- each.
3. As discussed supra, vide aforesaid Award dated 23.03.2021,
learned Deputy Registrar of Chits, Karimnagar, held that both the
petitioner and other J.Drs. are jointly and severally liable to pay
decretal amount. 1st respondent has filed the aforesaid Execution
Petition for recovery of decretal amount from J.Drs. 2 to 6 including
the petitioner herein. Therefore, the J.Drs. 2 to 6 including the
petitioner herein have to pay the said amount proportionately.
Executing Court cannot issue attachment order for realization of entire
decretal amount each from the petitioner and other J.Drs. They can
recover the said amount proportionately from all the J.Drs. including
the petitioner herein. Without considering the said aspects, the
Executing Court has issued impugned attachment order to the
Disbursement Officer of the petitioner to withheld Rs.14,49,574/-
from the salary of the petitioner herein and remit the same to the credit
of the aforesaid E.P. Similar attachment orders were issued to the
other J.Drs. The petitioner has filed copies of the same. Therefore, the
impugned attachment order is contrary to the provisions of the CPC,
more particularly, Order XXI and provisions of Contract Act and also
principles laid down by this Court in CRP No.1552 of 2024, dated
12.07.2024.
4. It is relevant to note that Section - 36 of the Arbitration and
Conciliation Act, 1996 deals with 'enforcement of award' and the
same is relevant for the purpose of considering the lis in the present
revisions and it is extracted below:
"Section 36:-Enforcement. --Where the time for making an
application to set aside the arbitral Award under section 34 has
expired, or such application having been made, it has been
refused, the award shall be enforced under the Code of Civil
Procedure, 1908 (5 of 1908) in the same manner as if it were a
decree of the Court.
(2) Where an application to set aside the arbitral award has been
filed in the Court under section 34, the filing of such an
application shall not by itself render that award unenforceable,
unless the Court grants an order of stay of the operation of the
said arbitral award in accordance with the provisions of sub-
section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay
of the operation of the arbitral award, the Court may, subject to
such conditions as it may deem fit, grant stay of the operation of
such award for reasons to be recorded in writing:
Provided that the Court shall, while considering the
application for grant of stay in the case of an arbitral award for
payment of money, have due regard to the provisions for grant
of stay of a money decree under the provisions of the Code of
Civil Procedure, 1908 (5 of 1908)."
5. It is also relevant to extract Order - XXI, Rules - 11 (2), 48
and 48A of the CPC and the same are as under:
"XXI Rule 11 (2) of CPC-Written application- Save as otherwise
provided by sub-rule(1), every application for the execution of a
decree shall be in writing, signed and verified by the applicant or by
some other person proved to the satisfaction of the Court to be
acquainted with the facts of the case, and shall contain in a tabular
form the following particulars, namely-
(a) the number of the suit;
(b) the names of the parties;
(c) the date of the decree;
(d) whether any appeal has been preferred from the decree;
(e) whether any, and (if any) what, payment or other adjustment of the
matter in controversy has been made between the parties subsequently
to the decree;
(f) whether any, and (if any) what, previous applications have been
made for the execution of the decree, the dates of such applications
and their results;
(g) the amount with interest (if any) due upon the decree, or other
relief granted thereby, together with particulars of any cross-decree,
whether passed before or after the date of the decree sought to be
executed;
(h) the amount of the costs (if any) awarded;
(i) the name of the person against whom execution of the decree is
sought; and
(j) the mode in which the assistance of the Court is required whether-
(i) by the delivery of any property specifically decreed;
(ii) by the attachment, or by the attachment and sale, or by the sale
without attachment, of any property;
(iii) by the arrest and detention in prison of any person;
(iv) by the appointment of a receiver;
(v) otherwise, as the nature of the relief granted may require."
"Order XXI Rule 48 of CPC-Attachment of salary or allowances
of servant of the Government or railway company or local
authority.- (1) Where the property to be attached is the salary or
allowances of a servant of the Government or of a servant of a railway
company or local authority or of a servant of a corporation engaged in
any trade or industry which is established by a Central, Provincial or
State Act, or a Government company as defined in section 617 of the
Companies Act, 1956 (1 of 1956)] the Court, whether the judgment-
debtor or the disbursing officer is or is not within the local limits of
the Court's jurisdiction, may order that the amount shall, subject to the
provisions of section 60, be withheld from such salary or allowances
either in one payment or by monthly instalments as the Court may
direct; and upon notice of the order to such officer as the appropriate
Government may by notification in the Official Gazette appoint in this
behalf,-
(a) where such salary or allowances are to be disbursed within
the local limits to which this Code for the time being extends, the
officer or other person whose duty it is to disburse the same shall
withhold and remit to the Court the amount due under the order,
or the monthly instalments, as the case may be;
(b) where such salary or allowances are to be disbursed beyond
the said limits, the officer or other person within those limits
whose duty it is to instruct the disbursing authority regarding the
amount of the salary or allowances to be disbursed shall remit to
the Court the amount due under the order, or the monthly
instalments, as the case may be, and shall direct the disbursing
authority to reduce the aggregate of the amounts from time to
time, to be disbursed by the aggregate of the amounts from time
to time remitted to the Court.
(2) Where the attachable proportion of such salary or allowances is
already being withheld and remitted to a Court in pursuance of a
previous and unsatisfied order of attachment, the officer appointed by
the appropriate Government in this behalf shall forthwith return the
subsequent order to the Court issuing it with a full statement of all the
particulars of the existing attachment.
(3) Every order made under this rule, unless it is returned in
accordance with the provisions of sub-rule (2) shall, without further
notice or other process, bind the appropriate Government or the
railway company or local authority or corporation of Government
company, as the case may be, while the judgment-debtor is within the
local limits to which this Code for the time being extends and while he
is beyond those limits, if he is in receipt of any salary or allowances
payable out of the Consolidated Fund of India or the Consolidated
Fund of the State or the funds of a railway company or local authority
or corporation or Government company in India; and the appropriate
Government or the railway company or local authority or corporation
or Government company, as the case may be, shall be liable for any
sum paid in contravention of this rule.
Explanation.-In this rule, "appropriate Government" means,-
(i) As respects any person in the service of the Central Government, or
any servant of a railway administration or of a cantonment authority
or of the port authority of a major port, or any servant of a corporation
engaged in any trade or industry which is established by a Central Act,
or any servant of a Government company in which any part of the
share capital is held by the Central Government or by more than one
State Governments or partly by the Central Government and partly by
one or more State Governments, the Central Government;
(ii) As respects any other servant of the Government, or a servant of
any other local or other authority, or any servant of a corporation
engaged in any trade or industry which is established by a Provincial
or State act, or a servant of any other Government company, the State
Government."
"Order - XXI, Rule - 48A. Attachment of salary or allowances of
private employees.- (1) Where the property to be attached is the
salary or allowances of an employee other than an employee to whom
rule 48 applies, the Court, where the disbursing officer of the
employee is within the local limits of the Court's jurisdiction, may
order than the amount shall, subject to the provision of section 60, be
withheld from such salary or allowances either in one payment or by
monthly instalments as the Court may direct; and upon notice of the
order to such disbursing officer, such disbursing officer shall remit to
the court the amount due under the order, or the monthly instalments,
as the case may be.
(2) Where the attachable portion of such salary or allowances is
already being withheld or remitted to the Court in pursuance of a
previous and unsatisfied order of attachment, the disbursing officer
shall forthwith return the subsequent order to the Court issuing it with
a full statement of all the particulars of the existing attachment.
(3) Every order made under this rule, unless it is returned in
accordance with the provisions of sub-rule (2), shall, without further
notice or other process, hind the employer while the judgment-
debtors, is within the local limits to which this Code for the time being
extends and while he is beyond those-limits, if he is in receipt of
salary or allowances payable out of the funds of an employer in any
part of India, and the employer shall be liable for any sum paid in
contravention of this rule."
6. It is also relevant to extract Section - 71 of the Chit Fund
Act, 1982 and the same is as under:
"71. Money how recovered.--Every order passed by the Registrar or
the nominee under section 68 or section 69 and every order passed by
the State Government in appeal under section 70 for payment of any
money shall, if not carried out,--
(a) on a certificate issued by the Registrar, be deemed to be a decree of
a Civil Court, and shall be executed in the same manner as a decree of
such Court, or
(b) be executed in accordance with the provisions of any law for the
time being in force for the recovery of amounts as arrears of land
revenue: Provided that no application for execution under clause (b)
shall be made after the expiry of three years from the date fixed in the
order, and if no such date is fixed, from the date of the order."
7. It is also relevant to extract Sections - 126, 128 and 146 of the
Indian Contract Act, 1872 and the same is as under:
"126. "Contract of guarantee", "surety", "principal debtor" and
"creditor".--A "contract of guarantee" is a contract to perform the
promise, or discharge the liability, of a third person in case of his
default. The person who gives the guarantee is called the "surety"; the
person in respect of whose default the guarantee is given is called the
"principal debtor", and the person to whom the guarantee is given is
called the "creditor". A guarantee may be either oral or written."
"128. Surety's liability.--The liability of the surety is co- extensive
with that of the principal debtor, unless it is otherwise provided by the
contract."
"146. Co-sureties liable to contribute equally.--Where two or more
persons are co-sureties for the same debt or duty, either jointly or
severally, and whether under the same or different contracts, and
whether with or without the knowledge of each other, the co-sureties,
in the absence of any contract to the contrary, are liable, as between
themselves, to pay each an equal share of the whole debt, or of that
part of it which remains unpaid by the principal debtor."
8. Thus, the liability of the co-surety is co-extensive with that
of principal debtor unless it is otherwise provided by the contract.
The said principle was also laid down by a Division Bench of the
High Court of Judicature for the States of Telangana and Andhra
Pradesh at Hyderabad in Punyamurthula Venkata Viswa Sundara
Rao v. M/s. Margadarsi Chit Fund Pvt. Ltd. 1.
9. The aforesaid relevant provisions would reveal that for
realization of the amount covered under the arbitration award,
respondent No.1 - decree holder has to file an application under
Section - 36 of the Arbitration and Conciliation Act, 1996, and
Order - XXI Rule 11 (2) of CPC. Accordingly, respondent No.1 had
filed the aforesaid execution petition vide E.P.No.13 of 2022.
10. In Punyamurthula Venkata Viswa Sundara Rao1, the
Division Bench on consideration of the arguments advanced by the
parties, framed the following two (02) points for consideration:
. 2017 (3) ALT 82 (D.B.)
i. whether the decree holder has to proceed against all the
judgment debtors, who are guarantors, by claiming
proportionate amount decreed.
ii. whether the execution Courts in which E.Ps. were filed
against the present judgment debtors, who are revision
petitions herein, have jurisdiction to entertain the execution
petitions.
11. On consideration of the provisions of the Chit Fund Act and the
CPC, the Division Bench held that the course that has to be followed by
the decree holder is to make an application to the Registrar for execution,
to be forwarded to the proper authority at the option of the decree holder
and the Registrar shall himself issue the certificate and forward the said
application to the Court or revenue authority, as chosen by the decree
holder. The decree holder has an option to proceed against either the
principal debtor or any of the guarantors or against all of them. Referring
to Section - 128 of the Indian Contract Act, the Division Bench held that
the liability of a surety is co-extensive with that of the principal debtor
unless it is otherwise provided by the contract.
12. In Madamanchi Anill Kumar v. Margadarshi Chit
Fund Pvt. Limited, 2 Division Bench of the High Court of Andhra
Pradesh at Hyderabad considering the said principle laid down by
the Division Bench in Punyamurthula Venkata Viswa Sundara
. C.R.P. NO.2338 of 2018, decided on 05.11.2018
Rao1, held that the liability of the sureties is joint and several. The
Division Bench also negatived the contention raised by the
petitioner therein that a Recovery Certificate issued by the Deputy
Registrar of Chits cannot be acted upon, as per Rule - 55 of the
Andhra Pradesh Chit Fund Rules, 2008 and that an execution is
maintainable only if the recovery certificate has been issued by the
Registrar of Chits to the competent Civil Court.
13. On consideration of the aforesaid provisions and on
examination of the facts of the case therein, in Prattipati Srinivasa
Rao v. M/s. Shriram City Union Finance Limited 3, this Court
held that respondent No.1 - decree-holder cannot recover double the
awarded amount from the petitioners - judgment debtors, and it is
entitled for the decretal amount and interest as claimed by it from
the judgment debtors.
14. The facts of the present case are squarely covered by the
said order. 1st respondent filed Execution Petition seeking recovery of
an amount of Rs.14,49,574/- from the J.Drs. 2 to 6 and executing
Court without considering the said aspects issued impugned
attachment order for recovery of Rs.14,49,579/- each fromJ.Drs.3 to 5.
. Common Order in CRP Nos.133 & 151 of 2023, decided on 02.03.2023
Therefore, the impugned attachment order dated 08.10.2021 issued by
the Executing Court is liable to be set aside.
15. As discussed supra, as per the award, 1st respondent being the
Chit Fund Company is entitled for recovery of an amount of
Rs.12,33,000/- along with interest at 18% p.a. on the principal sum of
Rs.11,00,000/- i.e. decretal amount from the date of filing the suit to till
the date of realizaztion of the said amount from J.Drs.
16. In the light of the same, this Civil Revision Petition is
allowed. The impugned attachment order dated 08.10.2021 passed in
E.P.No.186 of 2021 in ARC No.467 of 2020 is set aside. Matter is
remanded back to the learned Junior Civil Judge, Karimnagar, to
decide the aforesaid E.P.No.186 of 2021 in ARC No.467 of 2020
afresh strictly in accordance with law by considering the principle laid
down by this Court order dated 12.07.2024 in CRP No.1552 of 2024.
There shall be no order as to costs.
As a sequel, the miscellaneous petitions, if any, pending in the
revision shall stand closed.
_________________
K. LAKSHMAN, J
Date: 23.08.2024
Vvr
