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V. Ramaswami Naidu, Formerly Managing Director, Kadri Mills Limited and ors. Vs. Syndicate Bank a Body Corporate Under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai High Court
Decided On
Reported in(1977)1MLJ420
AppellantV. Ramaswami Naidu, Formerly Managing Director, Kadri Mills Limited and ors.
RespondentSyndicate Bank a Body Corporate Under the Banking Companies (Acquisition and Transfer of Undertaking
Cases ReferredSrinivasa Ayyar v. Lakshmi Ammal
Excerpt:
- .....the learned subordinate judge took the view that for executing the decree in this ease the decree-holder was not restricted to the charged properties alone. according to the learned subordinate judge, the decree-holder was at liberty to proceed against any of the other properties of the judgment-debtors unless it was shown that the execution petition was mala fide. on the facts, lie found no evidence of mala fides on, the part of the bank. he accordingly, entertained the execution petition and posted it for settlement of proclamation of sale.3. the judgment-debtors have now come to this court in appeal against the order of the learned subordinate judge. mr. vedantham, learned counsel appearing for the judgment-debtor reiterated before me the same contention as was advanced before.....
Judgment:
ORDER

V. Balasubrahmanyan, J.

1. The Syndicate Bank, which is the respondent in this appeal, obtained a decree against the appellants for payment of Rs. 1,50,766-89 and costs, on a charge of 4000 shares in Pankaja Mills Limited, and 101 shares in Pioneer Fertilisers Limited. To execute the decree aforesaid, the Bank filed E.P. No. 380 of 975 in the Sub Court, Coimbatore for attachment and sale of the judgment-debtors' properties. But the properties sought to be proceeded against in execution were not the joint stock company shares mentioned in the decree as a charge, but were quite different. They consisted of an item of immoveable property which was a cinema house called 'Central Theatre' and various items of machinery, furniture and fittings therein. The judgment-debtors resisted the execution. They submitted that the Bank should not be allowed to proceed against the Central Theatre before exhausting the remedy against the shares over which the decree had declared a charge.

2. The learned Subordinate Judge took the view that for executing the decree in this ease the decree-holder was not restricted to the charged properties alone. According to the learned Subordinate Judge, the decree-holder was at liberty to proceed against any of the other properties of the judgment-debtors unless it was shown that the execution petition was mala fide. On the facts, lie found no evidence of mala fides on, the part of the Bank. He accordingly, entertained the execution petition and posted it for settlement of proclamation of sale.

3. The judgment-debtors have now come to this Court in appeal against the order of the learned Subordinate Judge. Mr. Vedantham, learned Counsel appearing for the judgment-debtor reiterated before me the same contention as was advanced before the execution Court.

4. Mr. Kasthurirangan, learned Counsel for the Bank, on the other hand, submitted that the levy of execution against the Central Theatre was not bad, merely because the shares stood charged under the decree for payment of the debt and merely because those shares had not been proceeded against earlier for the realization of the decree.

5. The question which arises in the appeal is, whether the Bank is disentitled or disabled from proceeding against the properties of the judgment-debtors other than the shares charged under the decree. The answer to the question must be found, in my opinion, in the terms of the decree. Clause 1 of the decree directs the judgment debtors to pay the bank Rs. 1,50,766-89. Clause 2 specifies the costs, and directs the judgment-debtors to pay the same. Clause 3 of the decree, which is relevant to the present purpose, is to the effect that 'the shares mentioned in the plaint schedules I and II be a charge for the due payment of the amount to the plaintiff as mentioned in Clauses 1 and 2 above'. The decree would thus seem to be only a personal decree for money, and none the-less so for its also declaring a charge over the shares. For the decree does not, direct that the decree-holder should only proceed against the charged shares for the realization of the decree amount, or even that it should proceed against those shares in the first instance. Nor is there any prohibition or restriction which learned Counsel for the appellants could point out to me under the law relating to execution. Order 21, Rule 30 of the Code of Civil Procedure provides that every decree for the payment of money may be executed by the detention in the civil prison of the judgment-debtor or by the attachment and sale of his property or by both. The present execution petition has been filed by the respondent for attachment and sale of an item of immovable property which admittedly belongs to the judgment-debtors. Indeed, it is stated that this property had been attached before judgment during the pendency of the suit. It does not appear that any objection was taken by the appellants to that attachment on any of the grounds on which they now resist execution against the same property. It seems to me that there is nothing at all in Order 21 of the Code of Civil Procedure which prohibits or restricts the right of the decree-holder to proceed against any properties of the judgment debtor in execution of the decree in this case, which, as I have earlier shown, is only a decree for money, both in form and in substance.

6. Learned Counsel for the appellants relied on a decision of a learned single Judge of the Bombay High Court in Ramabai Balkrishnan v. Janardan Eknath : AIR1943Bom158 . as enunciating a different principle. In that case, a decree for maintenance in favour of a Hindu widow was sought to be executed against some property of the judgment-debtor other than the property which was charged under the decree. Objection was taken to this execution by the judgment-debtor on the score that the decree-holder ought to have exhausted her remedies as against the properties specifically charged for the decree amount and till that was done she could not proceed against the other properties of the judgment-debtor. The learned Judge sustained the judgment-debtor's objection, holding that the charged properties should be proceeded against first before the decree-holder sought execution against the judgment-debtor personally or against his other properties.

7. Mr. Kasthaurirangan, learned Counsel for the Bank, submits that Ramabai Balkrishna v. Janardan Eknath 1943 Bom 158. does not lay down the correct principle. He relied on an earlier Bombay case reported as Gurappa v. Amarangji : AIR1941Bom90 . decided by a Full Bench of the Bombay High Court. In that case, the Full Bench had to deal with the execution of a consent decree for payment of Rs. 9.000. The amount was made payable under the decree in instalments. The decree also created a charge over certain joint-stock company shares and security for payment of the money. The decree provided that 'if the defendant fails to pay the moneys in time, the same should recovered by sale of the said shares. The judgment-debtor committed default in payment of the amount. Thereupon, the decree-holder proceeded against the shares, sold them and realised Rs. 4,350. Thereafter, he took out an execution petition to recover the balance of the decree debt by attachment and sale of an item of immovable property belonging to the judgment-debtor. This execution-petition was resisted by the judgment-debtor on the ground that once the decree-holder had proceeded against the property, which was made a charge under the decree, the decree itself stood exhausted and the decree-holder could not proceed against the other properties of the judgment-debtor. It was urged that under the terms of the decree the entire judgment debt was to be realised only from the properties charged under the decree for the payment of the debt. This contention, however, was negatived by the Full Bench. Beaumont C.J., who, was a member of the Full Bench, explained the position thus:

In taking a charge it seems to me that what the creditor is looking to is his protection against the rights of intervening creditors, who may attach the property of the judgment-debtor, whilst the plaintiff's hands are tied by the time given for payment of instalments. That seems to me to be the object of a charge; not to regulate the order in which the defendant's property is liable to be attached.

Proceeding to construe the terms of the decree in that case, the learned Chief Justice observed that it was prima facie a personal decree. He further held that the analogy of a decree for sale in a mortgage action could not be applied to the decree before them. Adverting to the contention that by taking a charge upon a specified property the creditor had abandoned his right to proceed against the other properties of the judgment-debtor, the learned Chief Justice observed that 'such an abandonment should not be presumed in the absence of language making clear the intention to abandon. On the other hand, to hold that creditor can only attach other property after obtaining a fresh order for payment is to ignore the fact that the decree already contains an order for payment.

8. The learned single Judge who deciced Ramabai Balakrishna v. Janardan Eknath : AIR1943Bom158 . had expressed the view that the Full Bench in Gurappa v. Amarangji A.I.R. 4941 Bom 90. had before them only a limited question to decide namely, whether a charge decree exhausted it self once the charged property had been sold and realized. But this is not, with respect, a correct reading of the Full Bench decision The passages I have earlier extracted from the judgment of Beaumont, G.J., would show that the Full Bench had also examined the wider question whether the holder of a a charge-decree is entitled to proceed against the properties other than those which are specifically charged under the decree.

9. The reasoning and the ultimate conclusion of the Full Bench of the Bombay High Court, which I have summarised above, are apposite to the present case. If anything this seems to me to be an a fortiori case. The decree obtained by the Bank in this case merely declares a charge over the shares; it does not even say that the charged property is to be proceeded against for the realization of the debt.

10. Learned Counsel for the Bank brought to my notice yet another decision concerning the execution of charge decrees. He cited Shyamshankar v. Nathuram . a judgment of Vivian Bose, A.J.C., as he then was. In that case, the suit was for recovery of money. The defendants accepted a personal decree against themselves. They further submitted to a declaration in the decree that a portion of their immovable properties should be charged for payment of the decretal amount. Bose, A.J.G., held that the decree, on the aforesaid terms, was nothing but a personal decree. He further held that although the decree also created a charge it cannot be regarded as a mortgage decree under Order 34 of the Code of Civil Procedure. The learned Judge, observed that the Code gives the decree-holder the right to decide whether he should execute his decree in one way or another. He added that if the Court considers that the decree-holder should not exercise his right to levy execution in the manner he desires, then the Court must give reasons for so holding. The last observation from the judgment of Vivian Bose, A.J.C. is particularly relevant to this case, to meet one of the contentions raised by the learned Counsel for the judgment-debtors. He urged that the decree-holder had not given any reasons as to why he had not proceeded against (he charged shares, but was seeking to levy execution against the Central Theatre which was not charged under the decree. As observed by Vivian Bose, A.J.C., however, it is not necessary for the decree-holder to state any reason as to why he picks and chooses any particular property of the judgment-debtor as the object of his execution proceeding. So long as there is no restriction or prohibition under the law for executing the personal decree for money, the decree holder is at perfect liberty to seek the aid of the executing Court for proceeding against any property of the judgment-debtor.

11. A few other decisions were also cited in argument at the bar. It is enough to notice two of them from this Court. One is Rangaswami v. fanakiammal : AIR1953Mad876 . decided by Mack, J. An earlier Bench decision of this Court in Srinivasa Ayyar v. Lakshmi Ammal 36 L.W.714 : 63 M.L.J.843 : I.L.R.56 Mad. 343 : A.I.R. 1933 Mad. 33. was also cited. These two decisions, however, when examined, are found to have been especially concerned with problems raised by execution of maintenance decrees obtained by Hindu widows. In the earlier decision of Srinivasa Ayyar v. Lakshmi Ammal 36 L.W. 714 : 63 M.L.J 843 : I.L.R.56 Mad 343 : A.I.R. 1933 Mad. 33. Venkatasubba Rao, J., remarked that 'considerations that apply to decrees obtained by widows for maintenance are different from those that apply to mortgage decrees.' This decision was followed by Mack, J., in Rangaswami v. fanakiammal : AIR1953Mad876 . Mack, J., observed as under:

It is settled law that a widow cannot be confined to property charged with her maintenance and that she need not exhaust it all before she can proceed against other property belonging to her husband's joint family.

12. I am inclined to regard the charge-decrees obtained by Hindu widows as a class by themselves. Questions arising in execution of such decrees, perforce, raise aspects of the personal law relating to maintenance of Hindu widows. Decisions bearing on the execution of such decrees cannot, therefore, be regarded as laying down any principle of general application to other charge-decrees.

13. The learned Subordinate Judge under stood the law to be that where the holder of a charge decree proceeds in execution against the judgment-debtors uncharged properties, the judgment-debtors can successfully resist the execution only by establishing that the decree-holder's proceeding is mala fide. I do not think this is a correct view of the law. In cases where execution of charge-decrees obtained by Hindu widows have figured, it is true that Courts have sometimes laid down this limitation. It is not however necessary to examine in this case the theoretical validity of such a rule even in the ease of execution of charge-decrees obtained by Hindu widows. It is sufficient to state that the decree in the present case does no belong to that class. I know of no statutory provision or rule of law which compels executing Courts to examine the bona fides or mala fides of a decree-holder just for determining questions arising to execution. At all events, in a case where, such as the present, the decree is simply a personal decree for money, it seems to me that the decree-holder is free to proceed against any property of the judgment-debtor, without constraint of any kind. It is not necessary that he should first proceed against the charged property or else establish his bona fides for proceeding against the other properties of the judgment-debtor.

14. As I have more than once pointed out, the decree in this case barely declares a charge over the shares. It may be a nice question to debate whether the charge so declared could be enforced under the decree straightaway by the decree-holder applying for a sale of the shares, or whether on the analogy of Order 34, Rule 14 of the Code of Civil Procedure, the decree-holder would be driven to the necessity of filing a separate suit for enforcement of the charge by sale of the shares for realization of the amount decreed in this suit. Much would depend on the way the terms of the decree are construed. One view may be that the terms of a declaratory decree of this kind serve no purpose other than to ensure the position of the decree-holder as a secured creditor vis-a-vis the other creditors of the judgment-debtors. The other view may be to regard the decree as being analogous to a mortgage decree enabling the decree holder to ask for a sale of the charged shares even without a precedent attachment. Whichever view might be entertained on the effect of the declaratory decree in respect of the shares, does not, however, touch the question in the present case, which relates to execution as against different properties of the judgment-debtors. On the latter question, as I have earlier shown, there can be little doubt, both on principle and on the authorities, that the decree in the present case must fall to be regarded as a personal decree for payment of money, that it is executable as such as against any of the properties of the judgment-debtors, and that such execution can be levied without first proceeding against the shares over which the decree-holder declares a charge.

15. For the reasons stated above, I agree with the learned Subordinate Judge's decision upholding the maintainability of the execution petitions. The civil miscellaneous appeal is dismissed, but, in the circumstances, without costs, S.J.


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