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Ex Parte: Champalal Jajodia Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtKolkata High Court
Decided On
Case NumberInsolvency Case No. 3 of 1982
Judge
Reported inAIR1984Cal158
ActsCode of Civil Procedure (CPC) , 1908 - Order 20, Rule 11; ;Limitation Act, 1963 - Schedule - Article 136; ;Presidency Towns Insolvency Act, 1909 - Sections 3 and 9(2); ;Presidency Towns Insolvency (Amendment) Act, 1978
AppellantEx Parte: Champalal Jajodia
RespondentLife Insurance Corporation of India
Appellant AdvocateSudipto Sarkar and ;D. Shome, Advs.
Respondent AdvocateUmesh Banerjee, Adv.
DispositionPetition dismissed
Cases ReferredB) Ranglal Agarwalla v. Shyamlal Tamuli
Excerpt:
- .....decree providing for payment of the decretal amount by instalment but at the same time giving the decree holder a right to recover the entire decretal amount on default of any one instalment, the decree holder has given an option either to enforce the default clause or to waive it. if he waives it he can pursue in execution his right to obtain the instalment as and when they fall due. but if he elects to enforce the default clause such election is final and irrevocable. time begins to run from the date of accrual of the right to enforce the default clause and would not be stopped by reason of subsequent default. an execution application to enforce the default clause filed more than three years from the date of; such accrual would be barred under article 181 of the limitation act (1908)......
Judgment:
ORDER

Padma Khastgir, J.

1. This application had been taken out by Champalal Jaiodia for an order setting aside the notice dated 7th June, 1982 issued by S. K. Mondal on behalf of the respondent Life Insurance Corporation of India. A suit was filed in 1959 by the Life Insurance Corporation of India against one M. Sohan-lal & Co. a partnership firm. At all material times the petitioner was a partner of the said firm. On 4th September, 1969 a decree was passed in the said suit by this Court directing the defendant firm to pay a sum of Rs. 82,412.50 with interest on the principal sum of Rs. 81,687.30 at the rate of 6% per annum from the date of the decree till realisation. By the said decree thisCourt showed the defendant firm to pay the decretal amount by monthly instalment as provided in the said decree. By letter dated 9th January, 1970 it was contended on behalf of the respondent that by reason of default in payment of instalment as provided in the said, decree the balance of the decretal amount then outstanding had become due and payable forthwith and the respondent was entitled to execute the decree. The defendant firm Paid in all a sum of Rs. 48,500/-. The last of such payment was made in April, 1972 and not in April, 1982 as wrongly stated in the said notice. By an order dated 25th of January, 1978 the shares of the partners of the defendant firm in the Calcutta Stock Exchange Society Ltd. were attached for sale in execution of the said decree but no steps were taken by the respondents. On 7th of June, 1982 the respondent issued a notice on the petitioner under Section 9 Sub-section (2) of the Presidency Towns Insolvency Act, 1909 to pay the balance decretal amount of Rs. 33,912.50/- with interest within a month from the date of the receipt of the notice. The petitioner received the said notice on 15th of June, 1982. The petitioner further contended that the execution of the said decree was barred by the law of Limitation by reason of provisions of Article 136 of the Limitation Act. Under the circumstances the said decree was no longer enforceable or executable nor the petitioner was under any obligation to make any payment with regard thereto. The petitioner further contended that the petitioner did not reside, nor does reside within the jurisdiction of this Court: under the circumstances this notice was not maintainable. The petitioner felt that such notice was issued with an ulterior motive and with the sole object of putting pressure upon the petitioner to make the payment in respect of a decree, execution thereof had become time barred. Mr. Sudipto Sarkar with Mr. D. Shome appeared in support of this application. In the notice dated 9th January, 1978 written by S. K. Mondal of M/s. Khai-tan & Co. it was stated that in terms of the decree dated 12th September, 1969 the instalment which fell due on 16th December, 1969 had not been paid. The judgment debtor also made default in payment of the sum of Rs. 2600/- being the assessed cost of the suit which was due and payable, on 31st of December,1969. Under the circumstances the judgment debtor committed breach and default in payment of the decretal amount in terms of the decree. It was written in the said letter that by reason of such default the balance of the decretal amount outstanding had become due and payable forthwith and the plaintiff Corporation was entitled to execute the decree for which steps were being taken accordingly. From the letter dated 7th June, 1982 it appeared that the decretal sum was ordered to be paid within 5 years by monthly instalment until amount was fully paid. In default of payment of three instalments the balance of the decretal amount remaining outstanding became executable forthwith. It was further stated in the said letter that the defendant firm Paid a sum of Rs. 48,500/- in part satisfaction of the decree and the balance of the decretal amount with interest remain still outstanding. Although it was stated that the last payment was made on the 11th April, 1982 but in fact it had been contended by the petitioner herein that last payment was made in the year 1972. The notice stated that the notice was being given calling upon to pay the balance amount of Rs. 33,912.50/- with interest at the rate of 6% per cent per annum until realisation within a month from the date of the receipt of the notice. In default it was contended that the defendant would be deemed to have committed an act of insolvency for not complying with the requirement of the notice.

2. Mr. Shome drew my attention to Section 9 Sub-section (5c) of the Presidency Towns Insolvency Act and submitted that apart from a bare statement in the notice, the judgment creditor had not substantiated its bald allegation that the judgment debtor was transferring his property or which could be considered as fraudulent transfer in preference to his creditors,

3. This application had been taken out for setting aside the notice on the Ground that the decree was not other-wise executable in as much as the suit was filed in 1959. decree passed in 1969 and the default was committed on 9th January, 1970. Under the circumstances the notice being served on 26th June, 1962. the decree became barred by the Law of Limitation. Limitation would start from 9th January, 1970. Article 137 of the Limitation Act provided for three years limitation in respect of decreeswhich provided for default clause. Article 136 provides limitation for execution of any decree within 12 years from the date when the decree becomes enforceable or any order directing payment of money to be made at a certain date or at recurring periods, when default in making payment in respect of which execution is sought, takes place. Article 137 provides three years limitation from the date when the right to apply accrues in respect of any application for which no period of limitation is provided elsewhere.

4. In the case reported in : AIR1967Pat124 Narayan Chandra Dutta v. Nath Bank Ltd. It was held that (at p. 127):

'If a money decree is a simple instalment decree without any default clause the period of limitation for its execution under Clause 7 of Article 182 of the Limitation Act is reckoned in respect of each instalment from the date when such instalment fell due. If the decree is an instalment decree with a default clause that is the decree providing for payment of the decretal amount by instalment but at the same time giving the decree holder a right to recover the entire decretal amount on default of any one instalment, the decree holder has given an option either to enforce the default clause or to waive it. If he waives it he can pursue in execution his right to obtain the instalment as and when they fall due. But if he elects to enforce the default clause such election is final and irrevocable. Time begins to run from the date of accrual of the right to enforce the default clause and would not be stopped by reason of subsequent default. An execution application to enforce the default clause filed more than three years from the date of; such accrual would be barred under Article 181 of the Limitation Act (1908). A decree holder electing to enforce the default clause cannot approbate and reprobate and seek to realise different instalment remaining due in disregard to the allegation previously made by him.

This case referred to the cases reported in : AIR1950Bom188 (FB). AIR 1946 Cal 500 (FB) and : AIR1952All900 (FB).

The aforesaid view was approved by a Full Bench of the Bombay High Court in Chunilal v. Shivram. : AIR1950Bom188 . It has been laid down by the Full Bench that where an instalment decree provides that on the failure of paymentof certain instalments the whole amount due may be recovered, the decree-holder is not entitled to exercise his option to recover the whole amount then recoverable when the first default has occurred more than three years before the filing of the execution application. It is no doubt open to a decree-holder to waive the benefit of a default clause and although a default may take place he may treat the decree as still a decree for instalments and he may pursue in execution his right to obtain the instalments as and when they fall due. But once the right to enforce the default clause accrues to the decree-holder for the first time and there is no waiyer of such right, time begins to run from the date of such accrual and would not be stopped by reasons of subsequent default. An execution application to enforce the default clause filed more than three years from the date of such accrual would be barred under Article 181.'

5. In the case reported in AIR 1946 Cal 500 (FB) Ranglal Agarwalla v. Shyamlal Tamuli it was held :

'For the purposes of limitation, an application must be taken as it is and an application for execution relating to instalments whether it is maintainable or not cannot be treated as one made on the footing of a default clause. The maintainability of such an application depends upon the construction of the particular decree concerned. But so far as the recovery of instalments as such is concerned, the application for that purpose clearly comes under Article 182 (7) and there is no room whatever for the application of the residuary Article 181 in such a case.'

An instalment decree, containing a default clause, consists really of three parts. Firstly there is the part which decrees the amount due and it binds the decree-holder and the judgment debtor equally and absolutely. Next, there is the part providing for payment by instalments and it is for the benefit pf the judgment-debtor. Lastly, there is the part providing that in case of default, the whole of the unpaid balance shall become due, and, it is for the benefit of the decree-holder, who is given a right to foreclose, as it were, the instalments. Such a provision must, whenever possible, be construed in favour of the decree holder whose right to get immediate payment has once been interfered with by the order for instalments and the correct way to construe it is to hold in favour of an option, unless the language used in the decree clearly bars it.

A Proviso in an instalment decree which merely says that in the event of a default, the entire amount shall immediately become due or payable does not exclude an option in the decree-holder to take advantage of it or not to do so: it is not intended to be sub-stitutive of the order for instalments in case of a default, but only to come into force as an alternative at the Will of the decree-holder.

The correct view is not that when there is no evidence of waiver, the option must be deemed to have been exercised, but that when there is no evidence that the option has been exercised, it must be deemed to have been waived. When the decree-holder applies for realisation of instalments rather than for the whole amount, that itself is evidence that he does not wish to exercise his option or, to put it in another way, wishes to exercise it in favour of abiding by the instalments; and unless there is something to show that he had previously sought to enforce the default clause, it cannot be said that he must nevertheless be deemed to have done so.

Where, therefore, a decree directs Payments of the decretal amount by instalments on particular dates and provides that in case the defendant fails to pay any instalments at the stipulated period, the entire decretal amount would be due, then, after a default has occurred, an application for execution relating to subsequent instalments which fell due within three years of the date of the application, is within time and is governed by Article 182 (7) Limitation Act.'

6. Under the circumstances Mr. Shome submitted that in view of the provisions made in Section 137 of the new Act three years had lapsed from the date when the right to execute accrued in favour of the decree-holder. Althoush Mr. Shome submitted that no act of insolvency had been committed by the petitioner but non-payment of the decretal amount is regarded as an act of insolvency. Mr. Shome further contended that in view of the provisions of Section 9 Sub-section (5) this Court has no jurisdiction to pass an order as prayed for. Apart from that Mr. Shome further contended that the notice as served by Mr. S. K. Mondal was bad inasmuchas the notice should be given for a period of not less than a month whereas in the instant case the notice directed payment within a month. Under the circumstances there has not been sufficient compliance of Section 3 (d) of the Presidency Towns Insolvency Act.

7. Mr. Umesh Banerjee appeared on behalf of the decree-holder and submitted that the limitation being a question of mixed fact and law the petitioner should have pleaded the said points in the petition itself. Apart from that Mr. Banerice submitted that the notice already served cannot be set aside under Section 5 of the Act, on the around that the time Riven in the notice was short. Further he submitted that under Article 136 provides for execution within 12 years. Under the circumstances the present notice was not bad nor the decree had become time barred. Inasmuch as the petitioner carried on business at Kohinoor Mansion at No. 105. Park Street, this Court had ample jurisdiction to pass necessary orders in the application. Mr. Baneriee craved reference to the case reported in (1969) 73 Cal WN 61 : (AIR 1968 Cal 5541 (FB).

8. In para 6 of the affidavit affirmed by Ramdulal Chowdhury of Life Insurance Corporation on 3rd of August, 1982 it has been stated that the judg-ment-debtor paid the instalments regularly till April, 1972 a total sum of Rs. 48,500/- but neglected to pay the balance amounts. According to the deponent on 9th of January, 1970 the said firm did not make default in paying three instalments in terms of the said decree which was payable within five years by monthly instalments us such the said decree did not become executable and that the decree became executable only after April, 1972. Apart from that the decree-holder caused a notice to be served under Order 21. Rule 50 of the Code of Civil Procedure on the partners of the said firm to show cause as to why the said decree should not be executed against the said partners. The said application was allowed. There-after Life Insurance Corporation also made an application for examination of the judgment-debtor under Order 21. Rule 22 (1a). In spite of an order being passed the petitioner did not come for being orally examined on the ground of ill health but stated in the affidavit affirmed on 4th July, 1981 staling therein thathe did not own any assets either move-able or immoveable.

9. Under the presidency Towns In-solvency Act as amended by the Act of 1978 shortness in the length of notice is not a ground for setting aside the notice. Under the circumstances Mr. Sarkar's submission that the notice is bad as a result the said notice should be set aside and cannot be accepted for that reason. Non-payment of a decretal amount had also been made a ground for declaration of the judgment-debtor an insolvent under the amended Act. Although Section 9 Sub-section (5) (c) provides for requirement of notice but that had not been made a around for setting aside the notice. The around that the decree is not otherwise executable had been contended to be barred on the around that the decree was barred by the Law of Limitation. Whatever had been contended by S. K. Mondal while demanding payment from the judgment-debtor but in fact execution of the decree does not appear to be barred by the Laws of Limitation. Under Article 136 the judgment creditor was entitled to execute the decree within 12 years from the date of the default and the last default was committed in the year 1972, Inasmuch as under the decree, the decree did not become executable unless three defaults were committed by the judgment-debtor. In paragraph 5 of the petition it had been admitted that the last of such payment was made in April, 1972 the letter dated 9th January, 1970 written for and on behalf of the judgment-creditor by Mr. S. K. Mondal did not set out the correct facts and the law relating thereto. Under the consent decree, the decree became executable only in the event of default of payment of three instalments. Under the circumstances the notice dated 9th January, 1970 written by Mr. S. K. Mondal on behalf of the LIC did not set out the correct facts inasmuch as there had been no default of three instalments as on that day. Under the circumstance the entire decretal amount in terms of the decree had not become payable. The decree become executable after April, 1972.

10. The judgment-debtor carried on business at Kohinoor Mansion. 24-Park Street, Calcutta is well within the jurisdiction of this Court. Under the circumstances this Court had jurisdiction under the Presidency Towns Insolvency Act to pass the necessary orders. Under the circumstances this court does not thinkit fit to pass any order on this application and the application is dismissed with cost.


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