Gujarat Co-operative Societies Act, 1961 (GCoSA, 1961) – Ss. 103, 103 (a) - Code of Civil Procedure 1908 – Ss. 38, 39, Or. 21, r.46A, Or. 26, r.46 – Limitation Act S. 5 – The Appellant-Bank granted a financial facility to a firm (M/s. Vimal Traders, Partnership Firm) of three partners (Respondents and one Gautam Vishnuprasad Tripathi) – Amount was not repaid – Lavad Suit was filed in 1988 by the Appellant before the Board of Nominees u/ GCoSA 1961, which held to make payment with interest p.a. from the date of suit till realisation and cost of the suit to the Plaintiff (therein) – Matter was adjudicated in the form of an arbitration proceeding – Certificate contemplated u/s. 103(a) of the Act came to be issued on 17.09.1995 – Appellant filed execution application before Civil Court – During pendency of said application, Jangam Warrant was issued against Respondents (therein) for recovery – Appellant filed an application seeking withdrawal of the Execution Application with liberty to file the petition before the Court of competent jurisdiction on the ground that the respondent had shifted the place of residence – Withdrawal application was allowed on 02.02.2005 – On 19.01.2006, the Appellant-Bank filed an execution petition before the 4th Additional Senior Civil Judge – Appellant had obtained a decree against another partnership firm in which the Respondents were partners alongwith one ‘H’ – Deemed decree obtained against the said parties in previous Lavad Suit again under the Act, was put to execution – Mother of respondents, who stood as guarantor for the loan granted in the transaction which led to Lavad Suit – Her property was put to sale in the Court auction – After auction was held there was excess amount which belongs to mother and lying in deposit – Based on the developments in the other suit namely the holding of the Court auction in connection with the enforcement of the liability of the mother as guarantor, an application was filed on 24.01.2007 by Appellant – The purport of the application appears to be to obtain satisfaction of the deemed decree with reference to the amount which was realized in the Court auction – Respondents filed objection, which was dismissed and held that the amount to be deposited and the interest and cost be come on the share of respondents herein – Respondent challenged the order – High Court held that (Impugned Order) - a) The execution application filed by Appellant is not maintainable as after the first application was dismissed on default the application before second execution court was not within period of limitation; b) execution petition filed to get it transferred to second court was done without an order u/s. 39 of CPC; c) without observing the mandatory requirement i.e., to affords an opportunity to the person aggrieved that is the garnishee to raise his objection to the attachment the Execution Court had allowed the prayer under Order
21 Rule 46A – On appeal, held: Mere dismissal of the first application on the ground of default may not result in the decree holder being precluded from filing a fresh execution petition provided it is within time – When the Authority passed the award under the Act, it was a Civil Court – It is not a Court within the meaning of Section 38 of CPC – For effective working of Section
39 of CPC, there must be a Court which has passed a decree - In the context of the CPC there is no such Court within the meaning of Section 38 in these cases instead, there was essentially arbitration proceedings and what is passed by the said authority is clothed only with the effect of a decree and it is enforceable as a decree – Certificate being granted it resulted in a deemed decree – Words ‘decree as defined in clause (2) s. 2 of CPC’ as used in s. 103 of the Act is to reinforce in the concept of a decree with greater clarity and by way of abundant caution – The mere presence of these words by itself cannot support the attempt at distinguishing the principle which is that in view of the fact that Sections 38 and 39 of the CPC are not as such applicable, the decree-holder may seek to execute the decree in any Court which otherwise has jurisdiction – In case of debt, share and other property covered u/ Order 26 Rule 46 procedures begins with an attachment, but in this case there is no attachment of debt in the form of money lying in the deposit, which is not a manner to pass order with Order 21 Rule 46 A – In the facts, therefore, the second execution petition is maintainable – The filing of the second execution petition was not illegal for the reason that there was no order under Section 39 of CPC – The filing of the application under Order 21 Rule 46A and the order passed as such by the Execution Court may be flawed.
Allowing the appeals, the Court
HELD: 1. Mere dismissal of the first application on the ground of default may not result in the decree holder being precluded from filing a fresh execution petition provided it is within time. [Para 21][17-F]
2. The plea of limitation though pressed before the Execution Court was not pursued by the Respondents before the High Court. No doubt, a pure question of law may be permitted to be raised in an appeal generated by the grant of special leave under Section 136 of the Constitution of India. Section 103 of the Act appears to contemplate that after the adjudication by the Authorities, which would include any appeal carried therefrom, the order passed, is to be certified by the Registrar or the Liquidator. This would give birth to what is by way of a deeming provision a decree of a Civil Court. In this case, an award was passed in the year 1988 and the certificate was issued in the year 1995. As to when the application was made by the Appellant seeking the certificate and what was the time taken by the Authority to issue a certificate are all matters shrouded in mystery. There is a case for the Appellant, no doubt, that the apprehension of the learned Counsel for the Respondents that if the creditor sleeps over the matter even for a period beyond time provided for executing a decree and makes an application with great delay then it would result in a completely inequitable situation may not rise as the facts speak otherwise. [Para 22][17-G-H; 18-A-D]
3. The Respondents may not be justified in seeking to distinguish the judgment of this Court Sundaram Finance Limited. It cannot be in the region of doubt that when the Authority passed the award under the Act, it was a Civil Court. It is not a Court within the meaning of Section 38 of Code of Civil Procedure. If there is no Court, which can be said to have passed the award in this case, then it is inconceivable as to how it could be maintained in the same breath that it is indispensable to the maintaining of the execution proceedings in another Court that the Court which passed the decree must necessarily transfer the proceedings to the latter Court. For the effective working of Section 39 of Code of Civil Procedure, there must be a Court which has passed a decree. The words ‘decree as defined in Clause (2) of Section 2 of Code of Civil Procedure’ as used in Section 103 of the Act is to reinforce in the concept of a decree with greater clarity and by way of abundant caution. The mere presence of these words by itself cannot support the attempt at distinguishing the principle which has been laid down in the decision of Sundaram Finance Limited which is that in view of the fact that Sections 38 and 39 of the Code of Civil Procedure are not as such applicable, the decree holder may seek to execute the decree in any Court which otherwise has jurisdiction. This would mean that the finding by the High Court in this regard is flawed and is liable to be overturned. [Para 24][19-G-H; 20-A-E]
4. In this case, there is no attachment of the debt in the form of the money lying in deposit. The order which is passed is expressly made Under Order 21 Rule 46A. Certainly, this is not the manner in which an order could have been passed within the meaning of Order 21 Rule 46A. There is a definite scheme as already noticed which is clear from the perusal of Order 21 Rule
46 and by the subsequent additions to the law by the amendment of the year 1976 which is contained in Order 21 Rule 46A to Order 21 Rule 46I. It would unerringly point to the provisions being mandatory. Therefore, the High Court appears to be right in its finding that the Execution Court should have first attached the debt under Order 21 Rule 46 before proceeding to pass the order under Order 21 Rule 46A of Code of Civil Procedure. [Para 28][24-G-H; 25-A]
5. The filing of the second execution petition was not illegal for the reason that there was no order under Section 39 of Code of Civil Procedure. The filing of the application Under Order 21 Rule 46A and the order passed as such by the Execution Court may be flawed. In the facts of this case, the more appropriate order would have been one under Order 21 Rule 52 of Code of Civil Procedure. The amount is lying in deposit with the same Court in which the Appellant has moved the second application for execution. It is directed that the order passed by the Execution Court must be treated as an order by which the attachment has been made Under Order 21 Rule 52 of Code of Civil Procedure. By order dated 08.08.2022, this Court had permitted the Respondents to withdraw the amount lying in deposit in excess of Rs. 12 lakhs. It would thus be open to the Appellant to proceed against the said amount, to the extent of Rs. 12 lakhs. The order will be treated as an order of attachment. The Execution Court, will therefore proceed with the matter in accordance with law. However, the Respondents-Patel brothers had an opportunity to raise objections before the Execution Court and the right which is given Under Order 21 Rule 46C is for the benefit of the garnishee. It is nobody’s case that the Respondents-Patel brothers are the garnishees. [Para 32][26-G-H; 27-A-D]
6. The Execution Court will however look into the complaint of the Respondents that the Appellant has not properly accounted with reference to the directions given by the Arbitrator regarding the adjustment to be done of the amount which would be due to the Respondents under an award obtained by them. It is left open to the Execution Court to undertake the said exercise and it is for the Execution Court to finally decide the exact amount which is to be made available to the Appellant. The impugned order is set aside. Appeals allowed. [Para 33][27-E-F] Shivashankar Prasad Shah and Others Versus Baikunth Nath Singh and Others 1969 (1) SCC 718: [1969] 3 SCR 908; Sundaram Finance Limited versus Abdul Samad and Another (2018) 3 SCC 622: [2018] 10
SCR 451; Nuthalapati Kotaiah vs. Executive Officer TTD Office at Guntu (1985) 3 AP LJ 103; The Madurai City Municipal Corporation, represented by its Commissioner, Madurai vs. N. Baskara Pandian & another 1998 SCC Online Mad 75; Executive Engineer, T. C. Division, K.S.E. Boards, Palghat versus J. H. Sharma and another AIR 1988 Ker. 285 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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