Radhey Shyam Gupta vs Punjab National Bank & Anr

2. On 28th May, 1986, the Respondent No.1 Bank

sanctioned a loan of Rs.83,000/- to Shri Durga

Prasad, the Respondent No.2 herein. The

appellant stood guarantee for the Principal

Debtor for repayment of the loan.

2

3. As the loan was not repaid by the Principal

Debtor, Durga Prasad, the Bank in 1992 filed

Suit No.66 of 1992 for recovery of its dues

against the respondent No.2 in his capacity as

the loanee and against the appellant in his

capacity as guarantor. The suit was decreed on

19th December, 1994, by the learned Additional

District and Sessions Judge, Bayana, District-

Bharatpur, in favour of the respondent No.1

`Bank for a sum of Rs.1,10,360/-, together with

interest at the rate of 12.5% per annum from

the date of institution of the suit till

realization. While decreeing the suit, the

trial Court directed as follows :-

"The plaintiff shall be entitled to recover this amount by auction sale of the hypothecated Matador Mahindra FC RRD/1851. The plaintiff shall also be entitled for cost of litigation. If any amount remains to be paid even after auction sale of the Matador, then the same shall be recovered from other properties of the defendants. The suit of the plaintiff is hereby decreed against the defendants in the aforesaid terms."

3 4. The aforesaid directions have created some

confusion in the execution of the decree.

5. For the purpose of executing the decree the

respondent No.1 Bank initiated execution

proceedings and though warrants for attachment

of the Matador were issued, the same were not

executed by the Bank on the ground that the

vehicle was not traceable and instead the Bank

sought attachment of the appellant's Fixed

Deposits with the said Bank made with the

amounts received by him by way of pension and

gratuity. The Executing Court allowed the

Bank's application and ordered attachment of

the appellant's Fixed Deposit Receipts,

hereinafter referred to as "FDRs". The

appellant moved the High Court against the

order of attachment and the High Court while

allowing the appellant's application, directed

the trial Court to pass appropriate orders in

the light of the specific directions given in

the judgment and decree dated 19th December,

1994, for recovery of the decretal amount. The 4

Executing Court by its order dated 1st

November, 2002, directed release of the

appellant's F.D.Rs and the pension amount with

a further direction that the hypothecated

Matador was to be auctioned first in terms of

the directions contained in paragraph 11 of the

Judgment dated 19th December, 1994. The

Executing Court also took the view that amounts

paid towards gratuity and pension could not be

attached in view of the provisions of proviso

(g) of Section 60(1) of the Code of Civil

Procedure, hereinafter referred to as "the

Code".

6. The Bank filed a Revision Petition against the

said order of the Executing Court dated 1st

November, 2002, and also applied for interim

orders therein. On 15th October, 2003, when

the matter came up before the High Court, the

appellant herein was directed to forthwith

deposit a sum of Rs.50,000/- with the Bank. He

was also directed to furnish the complete 5

details of the movable and immovable properties

of the principal debtor with the stipulation

that in the event the Bank's revision petition

failed, the amount to be deposited by the

appellant herein would be refunded to him with

interest at the rate of 9% per annum. Instead

of complying with the said direction, the

appellant herein moved an application

indicating that two Fixed Deposit Receipts

belonging to him of over a total value of

Rs.50,000/- were lying with the Bank and

instead of cash deposit of Rs.50,000/- the said

two Fixed Deposit Receipts could be adjusted

against the said sum to be deposited and the

balance, if any, could be returned to the

appellant herein.

7. While disposing of the Revision Petition of the

Bank, the High Court noted in its judgment that

the appellant herein had undertaken that he

would furnish the Matador in question to the

Bank for the purpose of auction within a period 6

of one week and the Bank would be free to

auction the same in accordance with the terms

of the decree. It was also noted that the

appellant herein was prepared to submit a

solvent security for realization of the balance

decretal amount, which may still remain due

after the adjustment of 50,000/- and the sale

price that would be fetched from the sale of

the matador.

8. In the light of the above, the order of the

Executing Court was set aside and in terms of

the decree as also the order passed by the High

Court on 15th October, 2003, the amount of

Rs.50,000/- out of the appellant's Fixed

Deposit Receipts was directed to be adjusted in

the first instance. It was also directed that

on the Matador being furnished along with

solvent security before the learned Executing

Court by the appellant herein, the remaining

amount under the Fixed Deposit Receipt would be

released to him. It was further directed that 7

on the Matador being produced, the decree

holder Bank would be entitled to realize the

decretal amount by sale of the Matador and

while realizing the balance of the decretal

amount, if any, through the solvent security to

be furnished by the appellant herein, the Fixed

Deposit Receipts, which were accepted to be the

appellant's retirement benefits, were to be

returned to him.

9. On 5th April, 2005, the appellant filed a

Review Petition before the High Court in

respect of the order dated 28th February, 2005,

on the ground that the Revisional Court had

wrongly proceeded on the basis that the

appellant had given an undertaking to furnish

the Matador to the Bank and that he would also

submit a solvent security for realization of

the decretal amount, if any amount remained to

be recovered by the Bank after sale of the

Matador. The Review Petition filed by the

appellant was dismissed in limine by the High 8

Court on 24th August, 2005, holding that no

case had been made out in the Review Petition

for review of the order dated 28th February,

2005.

10. The Special Leave Petition is directed against

the said orders of the High Court dated 28th

February, 2005 and 24th August, 2005.

11. Ms. Shobha, learned advocate, who appeared for

the appellant, questioned the judgment and

order of the High Court mainly on three

grounds. Her first ground for challenge was

that the direction of the trial Court in its

decree was quite clear and there was no

ambiguity whatsoever which called for any

clarification by the High Court. She submitted

that the direction of the trial Court entitled

the decree holder Bank to recover the decretal

amount as well as the cost of litigation by

auction sale of the hypothecated vehicle, and

if any amount remained to be paid even after 9

the auction sale of the Matador, then the same

could be recovered from the other properties of

the defendants. According to Ms. Shobha, the

plain meaning which emerges from such direction

entails the sale of the Matador first and after

adjustment of the sale price with the amount to

be recovered under the decree, any amount still

unpaid, could, at the second stage, be

recovered from the other properties of the

defendant. Ms. Shobha submitted that it was

clearly the intention of the trial Court that

the sale proceed of the hypothecated vehicle

should first be utilized for realization of the

decretal amount before touching the other

properties of the defendants for recovery of

the said dues.

12. In this regard Ms.Shobha referred to and

relied upon the decision of this Court in the

case of Industrial Credit and Development

Syndicate vs. Smithaben H. Patel and Ors.,

[1999 (3) SCC 80}, wherein faced with a 10

situation where the trial Court had not

prescribed any mode for payment of the decretal

amount, except for fixing of instalments, it

was, inter alia, held that the general rule of

appropriation of payments towards a decretal

amount was that such an amount has to be

adjusted firstly, directly in accordance with

the direction contained in the decree, and in

the absence of such direction, adjustments are

to be made firstly in payment of interest and

costs and thereafter in payment of the

principal amount, subject to the exception that

the parties could agree to the adjustment of

the payment in any other manner despite the

decree.

13. The second ground urged by Ms. Shobha was that

although initially the appellant's Fixed

Deposit Receipts were attached by the Executing

Court, ultimately, on objections being filed on

behalf of the appellant, the Executing Court by

its order dated 1.11.2002 came to the finding 11

that the appellant's Fixed Deposit Receipts

could not be attached in view of proviso (g) to

Sub-Section (1) of Section 60 of the Code of

Civil Procedure (hereinafter referred to as

`the Code'). Ms.Shobha submitted that in the

revision filed by the Bank against the said

order of the Executing Court it was erroneously

recorded by the High Court that the appellant

had undertaken to produce the Matador before

the Bank so that the same could be sold for

recovery of the Bank's dues and the balance

dues, if any, could then be recovered from a

solvent security to be provided by the

appellant. It was submitted that since such an

undertaking had not been given to the High

Court, a Review Petition was filed on behalf of

the appellant which was dismissed in limine.

Ms. Shobha also added that without making any

attempt to locate the Matador, so that the same

could be sold in keeping with the directions

given by the Trial Court for satisfaction of

the decree, the Decree Holder proceeded only 12

against the appellant since it held the Fixed

Deposit Receipts of the appellant in respect of

the fixed deposit made out of the retiral

benefits, including gratuity received by the

appellant at the time of his retirement from

service. Ms. Shobha reiterated her submission

that, as had been rightly held by the Executing

Court, the appellant's Fixed Deposits which

represented his retiral benefits could not be

attached or sold to satisfy the decree obtained

by the Decree Holder Bank. She urged that even

after the retiral benefits obtained by the

appellant had been converted into Fixed

Deposits it did not lose its essential

character of comprising the retiral benefits of

the appellant, and could not, therefore, be

attached in view of proviso (g) to Section 60

(1) of the Code.

14. Although, the law is well-settled on the point,

various decisions were cited by Ms. Shobha in

support of her submission that the Executing 13

Court could not go behind the decree or to

alter the provisions thereof. The first

decision cited by her in this regard is the

decision of this Court in Rajasthan Financial

Corporation v. Man Industrial Corporation

Limited [(2003) 7 SCC 522], wherein while

construing the provisions of Section 47 and

Order XXI of the Code, this Court held that an

Executing Court cannot go beyond the decree and

that the Executing Court must take the decree

according to its tenor. Ms. Shobha also

referred to the decision of this Court in State

Bank of India v M/s. Indexport Registered and

others [(1992) 3 SCC 159), wherein the same

principle had earlier been dealt with.

15. Ms. Shobha's submission finds support in the

decision of this Court in Calcutta Dock Labour

Board and another v Smt. Sandhya Mitra and

Others [(1985) 2 SCC 1], wherein it was

reaffirmed that gratuity payable to dock

workers under a scheme in absence of a 14

Notification under Section 5 of the Payment of

Gratuity Act, 1972, would not be liable to

attachment for satisfaction of a Court's

decree.

16. The same principle was reiterated by this Court

in Union of India v Wing Commander R. R.

Hingorani [(1987) 1 SCC 551] and Gorakhpur

University and others v Dr. Shitla Prasad

Nagendera and others [(2001) 6 SCC 591].

17. However, in all fairness, Ms. Shobha also cited

the decision of this Court in Union of India

vs. Jyoti Chit Fund and Finance and Others

[(1976) 3 SCC 607], where while dealing with

the provisions of Sections 3 and 4 of the

Provident Funds Act, 1925, prohibiting

attachment of sums held by the Government, as

well as proviso (g) to Section 60(1) of the

Code, this Court held that till such time as

amounts payable by way of provident fund,

compulsory deposits and pensionary benefits did 15

not reach the hands of the employee they

retained their character as such and could not,

therefore, be attached. However, once the

amounts were received by the employee they

ceased to retain their original character and,

were, therefore, capable of being attached. Ms.

Shobha urged that the aforesaid decision had

been rendered long before the other decisions

cited by her and the subsequent decisions would

prevail over the earlier decision.

18. In addition to her two aforesaid grounds, Ms.

Shobha lastly submitted that the revision

petition filed by the Bank before the High

Court was in itself not maintainable in view of

the provisions of Section 115 of the Code, as

amended, which makes it clear that if an order

in favour of a party applying for revision

decides the matter finally then only a revision

would be maintainable, but if the same did not

decide the suit or other proceeding finally,

then such revision would not be maintainable. 16

Ms. Shobha urged that in the instant case the

Bank had filed a revision against an

interlocutory order which did not have the

effect of finally disposing of the execution

proceedings and consequently the revision

filed on behalf of the Bank should have been

dismissed by the High Court. In this regard,

Ms. Shobha referred to the decision of this

Court in Shiv Shakti Coop. Housing Society,

Nagpur v Swaraj Developers and others [(2003) 6

SCC 659] and also in Surya Dev Rai v Ram

Chander Rai and others [(2003) 6 SCC 675]

reported in the same volume at page 675.

19. Ms. Shobha urged that the High Court had erred

in interfering with the judgment and order

passed by the Executing Court and its judgment

and order impugned in these proceedings were

liable to be set aside.

20. On behalf of the Bank, Mr. Dhruv Mehta

submitted that despite several attempts having 17

been made to locate the Matador, the same could

not be traced and the Bank, therefore, had no

alternative but to proceed against the

appellant in his capacity as the guarantor for

recovery of its dues. Mr. Mehta urged that the

provision of proviso (g) to Section 60(1) of

the Code would apply only to the source of the

amounts received by way of retiral benefit,

such as pension and gratuity, but not to

payments made in respect thereof. On the other

hand, once such payments were made, their

character stood altered as they became mixed

with the other assets of the concerned

employee. In support of his submission, Mr.

Mehta also relied on the case of Wing Commander

R.R. Hingorani (supra) which had been referred

to by Ms. Shobha, wherein in the context of

Section 11 of the Pensions Act, 1871, which

provided for exemption of pension from

attachment, this Court referred to the decision

in the Jyoti Chit Fund case (supra) where

Krishna Iyer, J., speaking for the Bench, had 18

indicated that once the monies covered by the

provisions of the proviso to Section 60(1) of

the Code had been paid to the concerned

employee, they no longer retained their

original character and were, therefore,

amenable to attachment.

21. On the construction of the directions of the

trial Court, which were subsequently altered by

the High Court, Mr. Mehta urged that when the

hypotheticated vehicle was not traceable, the

Bank could not be left without remedy and it

could not have been the intention of the Trial

Court that even if the vehicle could not be

apprehended the decree of the Bank would remain

unsatisfied. If a pragmatic meaning is to be

given to the language of the decree, it would

have to be interpreted to mean that an attempt

should first be made to realise the decretal

dues by sale of the Matador, and, thereafter,

to realise the balance dues, if any, from the

solvent security to be produced by the 19

appellant herein. The decree does not indicate

that in the event the Matador could not be

sold, the decree could not be executed at all

against the other assets either of the Judgment

Debtor or the guarantor.

22. Mr. Mehta urged that in Hingorani's case

(supra) the High Court was considering the

question as to whether the Executing Court

could go behind the decree in coming to the

finding that the same was not executable

against the appellant on account of proviso (g)

to Section 60(1) of the Code, and in that

context the directions given by the High Court

in the revision petition were justified.

23. Mr. Mehta lastly contended that the order

passed by the learned Executing Court on 1st

November, 2002, impugned in revision by the

respondent Bank, was final in nature and did

not, therefore, attract the bar under the

proviso to Section 115(1) of the Code. 20

24. Having considered the submissions made on

behalf of the respective parties, we are

inclined to accept Mr. Mehta's submission that

the order impugned in the revision petition

before the High Court did not attract the bar

of the proviso to sub-section (1) of Section

115 of the Code as it sought to finally decide

the manner in which the decree passed in Suit

No.66 of 1992 by the learned Additional and

Sessions Judge, Bayana, Rajasthan, was to be

satisfied. However, we are also of the view

that having regard to proviso (g) to Section 60

(1) of the Code, the High court committed a

jurisdictional error in directing that a

portion of the decretal amount be satisfied

from the fixed deposit receipts of the

appellant held by the Bank. The High Court

also erred in placing the onus on the appellant

to produce the Matador in question for being

auctioned for recovery of the decretal dues. In

other words, the High Court erred in altering 21

the decree of the Trial Court in its revisional

jurisdiction, particularly when the pension and

gratuity of the appellant, which had been

converted into Fixed Deposits, could not be

attached under the provisions of the Code of

Civil Procedure. The decision in the Jyoti Chit

Fund case (supra)has been considerably watered

down by later decisions which have been

indicated in paragraphs 15 and 16 hereinbefore

and it has been held that gratuity payable

would not be liable to attachment for

satisfaction of a Court decree in view of

proviso (g) to Section 60(1) of the Code.

25. We also agree with Ms. Shobha that the High

Court could not have gone behind the decree in

the execution proceedings and the alteration in

the manner of recovery of the decretal amount

was erroneous and cannot be sustained. We also

agree with Ms. Shobha that even after the

retiral benefits, such as pension and gratuity,

had been received by the appellant, they did

not lose their character and continued to be 22

covered by proviso (g) to Section 60(1) of the

Code. Except for the decision in the Jyoti Chit

Fund and Finance case (supra), where a contrary

view was taken, the consistent view taken

thereafter support the contention that merely

because of the fact that gratuity and

pensionary benefits had been received by the

appellant in cash, it could no longer be

identified as such retiral benefits paid to the

appellant.

26. The High Court, in our view, erroneously

proceeded on the basis that a concession had

been made by the appellant that he was willing

to have the decretal amount adjusted partly

from his fixed deposits, which represented his

retiral benefits and that he had also

volunteered to produce the vehicle before the

Bank so that the same could be sold to recover

the major portion of the dues. Further-more,

although the Bank was entitled to proceed both

against the principal-debtor and the guarantor

for recovery of its dues, the mode of recovery 23

was prescribed by the Trial Court, which, in

our view, clearly indicates that the Bank

should at first recover whatever amount it can

from the sale of the Matador. The right of the

Bank to proceed against either the principal-

debtor or the guarantor stood restricted by the

directions of the Trial Court. Except for

recording that the vehicle was not traceable,

nothing is recorded in the impugned judgment of

the High Court as to what steps were actually

taken by the Bank for recovery of the Matador

for sale in order to recover its decretal

dues. In our view, instead of disturbing the

order of the Executing Court, which was passed

in consonance with the provisions of the Code

of Civil Procedure, the High Court should have

directed the respondent Bank and the Executing

Court to seriously pursue the recovery of the

Matador or against any other property of the

principal-debtor, having particular regard to

the finding of the Executing Court that the 24

said fixed deposits represented the retiral

benefits of the appellant.

27. We, therefore, allow the appeals, set aside the

order passed by the High Court and restore that

of the Executing Court. The respondent Bank may

take appropriate steps for recovery of the

Matador for recovery of its dues in the manner

indicated in the judgment and in the decree of

the Trial Court. Consequently, let the fixed

deposit receipts of the appellant be released

to him as per the directions of the Executing

Court while disposing of the application dated

6.2.1999 and 27.7.2001 by its order dated

1.11.02.

_________________J.

(ALTAMAS KABIR)

_________________J.

(MARKANDEY KATJU)

New Delhi Dated: 4th November, 2008