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Citibank Vs. Indo-american Electricals Ltd. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberExecution Case No. 22 of 1980
Judge
Reported inAIR1981Delhi27; 18(1980)DLT305; 1980RLR755
ActsCode of Civil Procedure (CPC), 1908 - Sections 39
AppellantCitibank
Respondentindo-american Electricals Ltd.
Advocates: Rajeev Sawhney, Adv
Cases ReferredCitibank N.A. New Delhi v. Rainbow Refraclories
Excerpt:
the case questioned the jurisdiction of the court to execute a decree for the sale of property that was covered by a security bond furnished to the court under order 37, rule 3 of the civil procedure code, 1908 - the property was situated outside its jurisdiction- the property was sold in execution of decree - it was ruled that the court which passed the decree had no jurisdiction thereforee, the decree holder must obtain transfer certificate. - - the property was not to be put to open sale as such, nor the other requirements or a formal execution like attachment, compliance of order 21, rule 66 of the code of ciuil procedure, auction, providing time for objections and confirmation of sale were postulated. section 39 of the code of civil procedure clearly envisages that if the decree..........country and look into the records and books of all the registration offices. (10) moreover, when sale in execution of a decree is directed, the same has not to be looked at from the point of view of advantage to the decree holder only. the stakes of the judgment-debtor are as much involved. it is, thereforee, in the fitness of things that adequate local publicity is given and the sale as far as possible, effected by public auction at the site of the property itself. the object should be to ensure that it fetches the best available price. (11) now in the present case the security bond of this property has, no doubt, been furnished in this court. this bond remains in operation till formally discharged by the registrar) for the decretal amount is satisfied. the same is not dependent upon.....
Judgment:

D.R. Khanna, J.

(1) The question that arises in this execution for determination, is whether the Delhi High Court can execute the present decree for the recovery of Rs. 13,00,000.00 along with interest and costs by attachment and sale of the factory building of the judgment-debtor situated at Durgapur, West Bengal. Notice of the application was issued to the Judgment-debtor but the report came on the registered postal envelop sent that the judgment-debtor had refused service.

(2) The ground on which the decree-holder seeks execution of the decree from Delhi is that the defendant/judgment, debtor had during . the course of the main suit while seeking permission to defend the suit under order 37, rule of the Code of Civil Procedure, furnished security of its immovable properties, namely, the colony land and the colony buildings thereon as per schedule annexed thereto situated in Durgapur, West Bengal, for due discharge of the decretal amount which be awarded against it. The security bond was submitted before the Registrar of this High Court, and accordingly accepted.

(3) The decree-holder pleads that since the security bond was submitted in the Court at Delhi, this Court is competent to proceed on its basis and enforce the liability arising there under. No transfer certificate, it is urged, need be sent to the Court at Durgapur for proceeding against the property so made subject-matter of the security bond. In support, reliance has been primarily placed upon an unreported decision of learned D.K.. Kapur, J, dated 20.2. 1979, in Execution No. 94 of 1978 (Citibank N.A. New Delhi v. Rainbow Refractories (P) Ltd.).

(4) I have carefully perused the said decision and find that it was given in the peculiar circumstances of that case. The security bond furnished there specifically enjoined that on its enforcement, the property tendered was to be sold in favor of the plaintiff, or his nominee at a price to be determined by the plaintiff himself. It was further provided that the sale would be effected by issue of a sale certificate. The scope of that security bond was thus entirely circumscribed and all that was required, was to get issued a sale certificate in favor of the plaintiff, or his nominee. The property was not to be put to open sale as such, nor the other requirements or a formal execution like attachment, compliance of order 21, rule 66 of the Code of Ciuil Procedure, auction, providing time for objections and confirmation of sale were postulated. The plaintiff could seek the enforcement of the security bond by simply asking for the issue of sale certificate. In such a situation, there was little scope for issuing a transfer certificate, or getting the decree executed as normally envisaged by order 21 of the Code of Civil Procedure. The learned Judge made reference to order 21, rule 11 (2) (j) (v) of the Code of Civil Procedure which provides that one of the modes by which assistance of the Court may be required for execution, can be dependent upon the nature and relief otherwise granted. After taking note of a number of decisions, it was held as under :-

'Undoubtedly, the various citations submitted by the learned counsel do so that the court has jurisdiction to order execution in a manner different from the Code if the parties agree to the same and as the parties have agreed to a different procedure in this case, unless there is something very compelling. I should not stand in their way to refuse execution. But, I have still to resolve the the next problem which is whether this decree can be executed in Delhi or has it to be transferred to Muzaffarnagar?'

(5) Dealing with the other problem whether the sale certificate could be issued at Delhi while the property was situated at Muzaffarnagar, it was held that since the security bond had been furnished in the Delhi Court, it could enforce the same by carrying out its terms. The following observations would next bring out that it were the unusual circumstances of that case which justified that course :-

'I have) thereforee, come to the conclusion that this court has jurisdiction to execute the decree in an unusual way because the parties have agreed that an unusual execution should take place.'

(6) It was further observed as under :-

'The normal mode of execution would be to transfer the decree to Muzaffarnagar because the property is situated there. However, as the property has been offered as security to this court in terms of section 145, the court has power to sell the property which has been given as security to the court. I would, thereforee, reach the conclusion that this property can be sold by this court and it can be sold in the manner agreed to by the parties and, thereforee, a sale deed can be drawn up in favor of the nominee of the bank as indicated in the decision of Kutty's case referred to earlier the sale deed has to be drawn up in this court and for this purpose the requisite stamp paper and draft documents may be furnished for completing the formalities. In order to ensure full compliance with all the provisions of law, the necessary sale deed should be got registered in Delhi under the Registration Act, as the Registrar has such power in Delhi to register documents which relate even to places outside Delhi.'

(7) There is no gain-saying that the jurisdiction of a Court is circumscribed by and is co-extensive with its territorial limits. Where the property sought to be attached is outside the jurisdiction of the Court which passed the decree, that Court cannot attach it, but must transfer the case to the Court within which local limits the property is situated. Section 39 of the Code of Civil Procedure clearly envisages that if the decree directs the sale or delivery of immovable property situated outside the local limits of the jurisdiction of the Court which passed it, the Court may send it for execution to the Court where that property is situated. The word 'may' used in this section does not mean that in such a case it is the discretion of the Court which passes the decree either to execute the decree itself, to transfer it to another Court. The Calcutta High Court in the case reported as : AIR1929Cal818 , in Ambika Ranjan Majumdar v. Manikganj Loan Office Ltd., held that properties situated outside the jurisdiction cannot be sold even though they were attached by the Court before the judgment. The proper course is to issue a transfer certificate.

(8) As a general rule, territorial jurisdiction is a condition precedent to a Court executing a decree, and neither the Court which passed the decree nor the Court to which it is sent for execution, can execute it in respect of the property lying outside its territorial jurisdiction.

(9) A sale of an immovable property worth Rs. 100.00 or more, necessarily requires registration. he provisions of the Registration Act, in this regard, require that such registration can take place, where the subject- matter of transfer is entirely situated in a particular district, within that district. Such registration in turn has implied notice to all persons subsequently acquiring any interest in the property vide section 3 of the Transfer of Property Act. The basis underlying the concept of this notice is that the records and books maintained in the office of the Registrar or Sub-Registrar, are open to inspection by all. Any person, thereforee, intending to effect purchase of a property can go through those records and books, and ensure that the person effecting transfer is competent to do so, and further whether there is encumbrance thereon or not. The requirement of registration of transfers of immovable property within the local limits where they are situated, has, thereforee, a public purpose and the same should not ordinarily be set at naught. To permit transfer of property and its registration in contravention of these provisions is to ignore the entire scheme and purport of registration. The same may render any innocent unwary purchaser to fall prey to deception. After all, he cannot be expected to go round all over the country and look into the records and books of all the registration offices.

(10) Moreover, when sale in execution of a decree is directed, the same has not to be looked at from the point of view of advantage to the decree holder only. The stakes of the judgment-debtor are as much involved. It is, thereforee, in the fitness of things that adequate local publicity is given and the sale as far as possible, effected by public auction at the site of the property itself. The object should be to ensure that it fetches the best available price.

(11) Now in the present case the security bond of this property has, no doubt, been furnished in this Court. This bond remains in operation till formally discharged by the Registrar) for the decretal amount is satisfied. The same is not dependent upon the execution of decree by this Court, or the Court to which the execution is transferred. The bond will, in any case, remain operate, and the Court to which the decree is transferred, will represent the present Court for its enforcement. This bond, thereforee, does not affect or alter the requirements otherwise enjoined for execution of decree. I am, thereforee, of the considered opinion that the decree-holder must obtain a transfer certificate in case he wants to proceed against the properties situated in district Durgapur, West Bengal, in execution of this decree. The sale of that property cannot be ordered from this Court. The security bond, of course, will remain in operation and the rights available to this Court to enforce the same, will be exercisable by the transferee Court, as all it does is to step into the shoes of this Court within the territory of its own local limits. The decision in the case of Citibank N.A. New Delhi v. Rainbow Refraclories (P) Lid., as observed above, is distinguishable inasmuch as that was given in the special circumstances of that case.

(12) In the transfer certificate it should be specified that the properties are lying as security for the decretal amount with this Court, and the transferee Court is empowered to as well proceed in terms of the security bond for realisation of the decretal amount. A copy of the security bond be also sent along with the transfer certificate to the court concerned.


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