Telangana High Court

Md.Fazulul Rahman Khan vs M/S Pavanasutha Chits Pvt. Ltd on 28 March, 2025

Author: K. Lakshman

Bench: K. Lakshman

            HON'BLE SRI JUSTICE K. LAKSHMAN

          CIVIL REVISION PETITION No.752 OF 2025
ORAL ORDER:

Heard Mr. Rajesh Bathula, learned counsel for the petitioners

and Mr. K. Sai Krishna, learned counsel for respondent No.1.

2. This revision is filed under Section - 227 of the Constitution

of India challenging the order dated 05.07.2024 passed in E.P. No.61

of 2022 in Arbitration Case ARB No.868 of 2021 by the Junior Civil

Judge at Huzurabad.

3. On the application filed by respondent No.1 vide Arbitration

Case ARB No.868 of 2021, the Chit Arbitrator/Deputy Registrar of

Chits, Warangal, had passed an award dated 20.06.2022 directing the

petitioners herein and respondent Nos.2 and 3 to pay an amount of

Rs.6,66,105/- along with interest @ 18% per annum on the principal

amount of Rs.4,33,600/- from the date of filing the dispute till the date

of realization. They shall also pay Rs.14,441/- towards costs of the

arbitration proceedings.

4. Pursuant to the said award, respondent No.1 herein had filed

an execution petition vide E.P. No.61 of 2022 in ARB No.868 of 2021

seeking execution of the said award against the petitioners herein and

KL,J

respondent No.3 for recovery of Rs.7,41,735/- from them. Vide the

aforesaid order, learned Junior Civil Judge, directed the Disbursing

Officer of the petitioners, to withhold the amount of Rs.8,63,832/-

from the monthly salary of the petitioners herein. They are judgment

debtor Nos.2 and 3 in the said E.P. Respondent No.2 is the chit

subscriber, while the petitioners herein and respondent No.3 are

guarantors for the subject chit.

5. It is contended by learned counsel for the petitioners herein

that the Executing Court did not order for proportionate deduction

among the judgment debtors. Before passing the order, the Executing

Court neither issued notice, nor provided opportunity of hearing.

6. It is also relevant to note that, it appears that learned

Executing Court issued similar orders directing the Disbursing Officer

of judgment debtor No.4 to withhold the said amount of Rs.8,63,832/-

from his 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. Thus, the Executing Court directed the Disbursing Officer of

judgment debtor No.2 to 4 to deduct and recover the aforesaid amount

KL,J

from the salaries of judgment debtor Nos.2 to 4 each. If the

Disbursing Officer withholds the said amount and remits to the

account of the aforesaid E.P., it amounts to recovery of more than the

awarded amount. Thus, 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. The said aspects were not

considered by the Executing Court while issuing impugned salary

attachment orders.

8. It is 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;

KL,J

(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

KL,J

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

KL,J

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

KL,J

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."

9. It is relevant to extract Section - 71 of the Chit Fund Act,

1982 and the same is as under:

KL,J

"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."

10. 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."

KL,J

"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."

11. 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.

12. 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 Order

- XXI Rule 11 (2) of CPC. Accordingly, respondent No.1 had filed the

aforesaid execution petition vide E.P.No.176 of 2018.

13. In Punyamurthula Venkata Viswa Sundara Rao1, the

Division Bench of this Court on consideration of the arguments

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

KL,J

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.

14. 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.

KL,J

15. 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

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.

16. On consideration of the aforesaid provisions and on

examination of the facts of the case therein, in Bandi Chandra Hari

v. Brindavan Chits Karimnagar India Private Limited3, this Court

held that respondent No.1 - decree-holder cannot recover double the

awarded amount from the petitioner - judgment debtors, and it is

entitled for the decretal amount and interest including pendent lite

interest as claimed by it from the judgment debtors.

. CRP No.2338 of 2018, decided on 05.11.2018

. CRP No.1237 of 2024, decided on 03.05.2024

KL,J

17. However, learned counsel for respondent No.1 - decree-

holder, on instructions, would submit that on receipt of realization of

the decretal amount, costs and pendent lite interest, respondent No.1

will file a full-satisfaction memo before the Executing Court with a

request to terminate the proceedings in the subject EP. It is also

clarified that if respondent No.1 fails to file full-satisfaction memo,

even the Executing Court can terminate the execution proceedings in

the subject EP on its own.

18. In view of the aforesaid submissions, the present Civil

Revision Petition is disposed of directing the Executing Court to

follow the procedure laid down under the Indian Contract Act and

principle laid down in the aforesaid judgments. 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 28th March, 2025 Mgr