Telangana High Court
B.Lalappa vs M/S Neestarn Chits P Ltd, on 5 November, 2024
THE HONOURABLE SMT. JUSTICE M.G.PRIYADARSINI
CIVIL REVISION PETITION No.2569 of 2024
O R D E R:
This Civil Revision Petition is filed by the revision
petitioners/judgment debtors aggrieved by the proceedings in
E.P. No.26/2021 on the file of learned III Additional Junior Civil
Judge, Mahabubnagar filed for enforcement of Arbitration
Award in ARB Claim Petition No.213/2019 dated 10.02.2020
without there being proper transfer of award by the Arbitrator to
the Civil Court.
2. The revision petitioners herein are the judgment
debtors/principal debtor and guarantors before the learned
Arbitrator. For the sake of convenience, hereinafter, the parties
will be referred as per their array in the Arbitration proceedings
before the learned "Arbitrator/Registrar of Chits".
3. The opponent No.1 herein was subscriber of chit with
disputant company and opponent Nos.2 to 4 stood as
guarantors for the said chit transaction. The opponent No.1
herein stood as successful bidder in the auction held on
29.04.2017 and after deducting the bid amount, Rs.3,00,000/-
was paid to opponent No.1. The opponents executed demand
promissory notes and other necessary documents in favour of
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disputant company. The opponent No.1 paid 15 installments
totally and partly paid 16th installment and thereafter
committed default in payment of installments. Hence, the
disputant company has approached the Registrar of
Chits/Arbitrator for recovery of Rs.4,13,300/- under Section 64
of the Chit Fund Act, 1982. After due enquiry, the learned
Registrar of Chits/Arbitrator has passed an award, dated
10.02.2020. Thereafter, the opponent No.1 approached the
learned III Additional Junior Civil Judge at Mahabubnagar by
filing execution proceedings vide E.P.No.26 of 2021. In this
regard, attachment of salary of revision petitioners/judgment
debtor Nos.2 to 4 was ordered under Order XXI Rule 48 of the
Code of Civil Procedure. Aggrieved by the same, the present
Civil Revision Petition is preferred by the Judgment Debtor
Nos.2 to 4.
4. Heard both sides and perused the record including the
grounds of revision.
5. The first and foremost contention of the revision
petitioners is that until there is a transfer of the award by the
Arbitrator as required under Rule 55 of the Chit Funds Rules,
the civil court has no jurisdiction to entertain Execution Petition
for enforcement of the award and also recovery certificate. In
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this regard, the learned counsel for the revision petitioners
relied upon a decision in Punyamurthula Venkata
Vishwasundar Rao v. Margadarshi Chits Private Limited 1
wherein the Division Bench of High Court of Andhra Pradesh
observed that executing Court does not have any jurisdiction to
entertain application for execution of the award passed by the
Arbitrator, without there being transfer of the award to the civil
court for the purpose of execution. It is the specific case of the
revision petitioners that without there being any transfer of the
award to the executing court for the purpose of execution of the
award, the executing court directly entertained E.P.No.26 of
2021 and issued notices to the petitioners for execution of
arbitration award.
6. There is absolutely no doubt in the principle laid down in
the above said decision. It was observed in the above said
decision that execution proceedings should be initiated by the
party concerned in accordance with the provisions of Section
71 of the Chit Funds Act. The procedure for filing an execution
petition before the civil court is only through the Registrar, who
shall forward the application for execution to the proper
authority along with a recovery certificate issued by him
1 2017 (3) ALD 387
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under Section 71 of the Chit Funds Act. Section 71 of the Chit
Funds Act confers the status of a decree of a civil court, on the
certificate issued by the Registrar. It is not the case of the
disputant company that they have filed an application before
the concerned Registrar for initiation of the proceedings in
accordance with the provisions of Section 71 of the Chit Funds
Act. It is not even the case of the disputant company that in
pursuance of such application, the Registrar concerned has
forwarded the award and recovery certificate to the competent
civil court for execution of the award.
7. Thus, it is a clear case, where the disputant
company/respondent No.1 herein has not complied with the
procedure laid down under Section 71 of the Chit Fund Act as
well as Rule 55 of the Chit Fund Rules.
8. In Bethi Sagar Reddy v. Kapil Chits Kakatiya Private
Limited 2 this Court observed 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. A
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similar view was taken in Talari Vijay Kumar v. Kapil Chits
Kakatiya Private Limited 3 wherein this Court observed that
the Court cannot entertain the execution petition if directly
presented by the decree holder.
9. The learned III Additional Junior Civil Judge at
Mahabubnagar without compliance of Section 71 of the Chit
Fund Act as well as Rule 55 of the Chit Fund Rules and without
considering the principle laid down in the above said decisions,
has entertained the execution petition and also proceeded to
attach the salary of the judgment debtors, which is
unsustainable. Hence, the execution proceedings initiated by
the disputant company are not maintainable and the learned III
Additional Junior Civil Judge at Mahabubnagar ought not to
have entertained E.P.No.26 of 2021. Hence, interference of this
Court in the execution proceedings initiated by the disputant
company is warranted.
10. Accordingly, the Civil Revision Petition is allowed. The
execution proceedings initiated by the disputant company in
E.P.No.26/2021 in ARB Claim Petition No.213/2019 on the file
of learned III Additional Junior Civil Judge, Mahabubnagar are
not maintainable and accordingly, the same are hereby
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quashed, leaving it open to the disputant company to take
appropriate steps for execution of the Award in ARB Claim
Petition No.213/2019 by following due process of law. There
shall be no order as to costs.
Pending Miscellaneous applications, if any, shall stand
closed.
_______________________________
JUSTICE M.G.PRIYADARSINI
Date: 05.11.2024
AS
