Telangana High Court

Kawarpal Pihal vs Kanakadurga Chit Funds Private Limited on 7 February, 2025

Author: K. Lakshman

Bench: K. Lakshman

              HON'BLE SRI JUSTICE K. LAKSHMAN

            CIVIL REVISION PETITION No.212 OF 2025
ORDER:

Heard Sri Venu Cheggam, learned counsel for the petitioners -

Judgment Debtor Nos.4 and 5 and Smt. Srilakshmi, learned counsel

representing Sri N.Amarnath, learned counsel for the respondent No.1.

2. This revision is filed under Section - 115 of the Code of

Civil Procedure, 1908, challenging the order dated 06.04.2024 passed

in E.P. No.84 of 2024 in ARB. No.152 of 2021 by the learned III

Additional Junior Civil Judge at Karimnagar.

3. Respondent had filed an application under Section 64 of the

Chit Fund Act, 1982 before the Chit Arbitrator/Deputy Registrar of

Chits at Karimnagar against the petitioners herein for recovery of

Rs.2,50,192/- with interest at the rate of Rs.18% p.a. from the date of

filing of dispute to till the date of realization of the said amount and

costs.

4. The Deputy Registrar of Chits at Karimnagar, has passed an

award dated 16.02.2023 holding that the petitioners herein - J.Drs.4

and 5 and respondents 2, 4 and 5 are jointly and severally liable to pay

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an amount of Rs.2,50,192/- with interest at 18% p.a. to the 1st

respondent herein.,

5. 1st respondent has filed E.P.No.84 of 2024 in ARB No.152 of

2021 for execution of the aforesaid Award. Learned III Additional

Junior Civil Judge at Karimnagar, has issued impugned salary

attachment order dated 06.04.2024 directing the Disbursing Officer of

the petitioners herein/J.Dr.Nos.4 and 5 i.e. The Superintendent, ESI

Hospital, Sirpur Kagaznagar District, Komuram Bheem (Asifabad), to

withhold the sum of Rs.3,69,873/- each from the monthly salary of the

petitioners and remit to the account of the aforesaid EP.

6. It is also relevant to note that, learned Executing Court has

issued similar orders directing the Disbursing Officers of other

Judgment Debtors also to withhold the said amount of Rs.3,69,873/-

each from their salaries as per Section - 60 of CPC after deducting

standard deduction plus one thousand and 2/3rd of remaining gross

salary and shall remit balance 1/3rd of salary every month from the

date of receipt of the warrant.

7. Challenging the said attachment order dated 06.04.2024, the

petitioners herein filed the present revision.

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8. Perusal of the aforesaid salary attachment order dated

06.04.2024 issued by the Executing Court in respect of the petitioners

would reveal that Executing Court has directed the Disbursing Officer

of the petitioners herein to withhold the amount of Rs.3,69,873/-from

the salary of the petitioners herein. Learned Executing Court has also

passed similar salary attachment orders in respect of the other J.Drs.

Thus, the Executing Court directed the Disbursing Officers of the

petitioners to deduct and recover an amount of Rs.3,69,873/- each

from their salaries. In fact, the aforesaid execution petition was filed

by respondent to execute the award for recovery of Rs.3,69,873/- from

the petitioners herein. If the Disbursing Officer withhold the said

amount and remit to the Executing Court, to the account of the

aforesaid EP, it amounts to recovery of more than the awarded

amount. The same is in violation of the procedure laid down under

Contract Act, the Chit Fund Act, 1982 and also the principle laid

down by this Court in CRP No.2660 of 2024 dated 18.10.2024. The

said aspects were not considered by the Executing Court while issuing

impugned salary attachment order.

9. It is relevant to note that Section - 36 of the Arbitration and

Conciliation Act, 1996 deals with 'enforcement of award' and the

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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)."

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10. 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;

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(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

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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.

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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.

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(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."

11. 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

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date fixed in the order, and if no such date is fixed, from the date of the order."

12. 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."

13. Thus, the liability of the co-surety is co-extensive with that

of principal debtor unless it is otherwise provided by the contract.

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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.

14. 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.84 of 2024.

15. In Punyamurthula Venkata Viswa Sundara Rao1, the

Division Bench on consideration of the contentions advanced by the

parties, framed the following two (02) points for consideration:

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.

. 2017 (3) ALT 82 (D.B.)

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16. 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.

17. 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 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

. C.R.P. NO.2338 of 2018, decided on 05.11.2018

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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.

18. 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.

19. As discussed above, the Award was passed for recovery of

Rs.2,50,192/- along with interest @ 18% per annum on the principal

amount of Rs.2,05,762/-, and the petitioners are jointly and severally

liable to pay the said amount. 1st respondent has filed the aforesaid

execution petition against the petitioners and the respondent Nos.2, 4

and 5 herein to recover the aforesaid amount of Rs.2,50,192/- with

interest at 18% p.a. each from their salaries. Without considering the

aforesaid aspects, more particularly, Sections - 128 and 146 of the

. Common Order in CRP Nos.133 & 151 of 2023, decided on 02.03.2023

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provisions of the Indian Contract Ac and Section -71 of the Chit Fund

Act and also the principle laid down in Punyamurthula Venkata

Viswa Sundara Rao1, Madamanchi Anill Kumar2 and Prattipati

Srinivasa Rao3, the Executing Court issued the impugned salary

attachment order dated 06.04.2024 in E.P. No.84 of 2024. Thus, by

virtue of the said salary attachment, there would be recovery of more

than the awarded amount which is impermissible under law. The same

is in violation of the procedure laid down under Contract Act, Chit

Fund Act, 1872 and also the principle laid down by this Court in CRP

No.2660 of 2024 dated 18.10.2024. The said aspects were not

considered by the Executing Court while passing the impugned order

dated 06.04.2024 in E.P. No.84 of 2024. Therefore, the said order is

liable to be set aside.

20. The present Civil Revision Petition is accordingly allowed.

The impugned order dated 06.04.2024 in E.P. No.84 of 2024 in ARB

No.152 of 2021 passed by learned III Additional Junior Civil Judge, at

Karimnagar, is set aside. The matter is remanded back to the

Executing Court with a direction to consider the said E.P.No.84 of

2024 in ARB No.152 of 2021 afresh and pass appropriate orders in

accordance with law including the aforesaid provisions and principle

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laid down by this Court. In the circumstances of the case, there shall

be no order as to costs.

As a sequel thereto, miscellaneous petitions, if any, pending in

this revision shall stand closed.

_________________ K. LAKSHMAN, J Date: 07.02.2025.

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