IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
RAKESH MOHAN PANDEY, J.
Ajay Ghosh S/o. Madhavan - Petitioner
Versus
M/s IndusInd Bank Limited & Ors. - Respondents
WP227 No. 49 of 2019
Decided On : 23-08-2023
Constitution of India, 1950 – Article 21 and 227 - Civil Procedure Code,1908 - Order 21 - Rule 40 - Loan agreement - Payment of instalments - Held, Report was submitted to the effect that petitioner had no movable property for execution of decree at relevant time and respondent No.1 directly moved an application under Order 21 Rule 37 of CPC and Court below committed an error of law in entertaining such an application and further in calling a report from concerned jail with regard to expenses of one day civil-prison - Learned Executing Court ought to have carefully perused - Fallout and consequence of above discussion would be that order passed by learned Executing Court dated is hereby set aside - Learned Executing Court is directed to take note of the provisions of Order 21 Rule 40 of CPC before passing any order with regard to detention of petitioner in civil prison after affording due opportunity of hearing to both parties - Petition is disposed of.
ORDER :
1. By invoking supervisory jurisdiction of this Court under Article 227 of the Constitution of India, the petitioner has challenged the order dated 03.01.2019 passed by the learned IVth Additional District Judge, Durg in Execution Case No. T.D. No. 49 of 2017 whereby the concerned Court has called a report from the District Jail, Durg with regard to expenses for one day civil-prison.
2. The facts of the present case are that the petitioner entered into a loan agreement with respondent No.1 on 07.06.2013 and due to a dispute with regard to the lapse of the petitioner in timely payment of installments, the matter was referred to arbitration by respondent No.1. Respondent No.1 unilaterally appointed an Advocate as the sole arbitrator and decided the seat of arbitration at Chennai without any information to the petitioner. The sole arbitrator passed the award on 18.11.2016 in favour of respondent No.1 upholding its claim of Rs.23,08,563/- and other miscellaneous expenses of Rs.2,000/-.
3. Respondent No.1 through respondent No.2 moved an application for execution of the said arbitral award under Section 36 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act, 1996’) against the petitioner and respondent No.3. There was a prayer to attach the movable and immovable properties of the judgment-debtor and such application was moved on 16.03.2017. A notice was issued to the petitioner and thereafter, Execution Case No. TD 49 of 2017 was registered. On 11.9.2017, the petitioner appeared before the Executing Court and on 21.02.2018 attachment warrant was issued. The petitioner after 11.09.2017 did not appear before the Executing Court and he was proceeded ex parte. On 09.10.2018, a report was submitted to the effect that the petitioner was not having any movable property. On 03.11.2018, an application under Order 21 Rules 37 & 38 of CPC was moved to pass an order against the petitioner with regard to civil jail. On 03.01.2019, the learned Executing Court called a report from the concerned District Jail.
4. Learned counsel for the petitioner would submit that after issuance of the attachment warrant, a report was submitted before the learned Executing Court to the effect that in the name of the petitioner there was no movable property and the learned Executing Court directly called a report according to the provisions of Order 21 Rule 37 of CPC regarding detention in civil-prison. He would submit that when a person has no sufficient means to repay the decreetal amount, no such order can be passed.
5. Dr. N.K. Shukla, learned Senior Counsel has placed reliance on the judgment of the Hon’ble Supreme Court in the matter of Jolly George Varghese and Another vs. The Bank of Cochin, reported in (1980) 2 SCC 360.
6. On the other hand, learned counsel for respondents No.1 and 2 would submit that the learned Executing Court has committed an error of law in passing such order though an application under Order 21 Rules 37 & 38 of CPC was moved by respondent No.1 but learned Executing Court was under obligation to conduct an enquiry and adopt the process enumerated under Order 21 Rule 40 and Section 51 of CPC. He would submit that a report was submitted after issuance of attachment warrant stating that at the relevant time, the petitioner was not having movable property and thereafter, it was the duty of the learned Executing Court to hear the decree holder and record all the evidence in support of the application for execution and it was also necessary to provide sufficient opportunity to the judgment-debtor as to why he should not be committed to the civil prison. He would further submit that the aforesaid procedure has not been adopted by the learned Executing Court and directly after issuance of attachment warrant with regard to movable property, a report was called from the concerned jail for detention of the judgment-debtor in civil-prison. He also placed reliance on the judgment of the Hon’ble Supreme Court in the matter of Jolly
Arrest of a judgment-debtor in civil proceedings requires strict adherence to procedural safeguards and evidence of willful neglect to pay.
The court emphasized the need to establish an attitude of refusal on demand and the debtor's means to pay the decree or a substantial part of it.
The central legal point established in the judgment is the mandatory requirement for the Executing Court to give the judgment debtors an opportunity to show cause before issuing arrest/detention warr....
Judicial authority must follow mandatory procedures in executing arrest, including notice and inquiries into the judgment-debtor's means of payment.
Imprisonment for non-payment of debts must comply with procedural safeguards to ensure fairness and assess the debtor's ability to pay.
The court established that the execution of a decree for payment of money must prioritize the sale of the judgment debtor's property before resorting to arrest and detention, and that any order for a....
The main legal point established is that the provisions of Order 21 Rule 37 of the CPC can only be invoked when there is an application for the execution of a decree for the payment of money.
Arrest warrants against judgment debtors cannot be issued without exhausting property execution options as mandated by CPC; reasoned orders are essential in judicial decisions.
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