SYNDICATE BANK BANGALORE Vs. BHARAT MOTOR SERVICES MANGALORE

JUDGEMENT

(1.) CERTAIN complicated legal issues which would have far-reaching repercussions both as far as litigations of the present type are concerned as also to execution proceedings generally have come up for determination in these two civil revision petitions. The controversy hinges essentially around the question as to whether a decree that has become final and that has come up for execution can be varied by the executing Court or whether the executing Court is bound to mechanically implement the terms of that decree irrespective of the nature of objections or rather legal impediments that may be pointed out. Essentially, there exists a well-settled principle that the rule of finality is sacrosanct and that an executing Court is therefore precluded from reopening any issues concerning a decree or, as has often been repeated by the Courts, that there is a bar to going behind a decree. There is good reason for enforcing this view particularly in situations where the Courts have to take judicial notice of the fact that all sorts of frivolous pleas are canvassed at the execution stage with the sole object of praying for time defeating the terms of the decree and in general making a mockery of the rule of law. The inflexibility of this principle is really the main issue that is in debate in these proceedings because the respondents' learned Advocates have advanced the proposition that there may be isolated situations in which an exception will have to be carved out to the application of this rule and they specifically illustrate a situation whereby through an Act of the Legislature, where there is a drastic alteration of the law, that an executing Court would in those circumstances be obliged to act in consonance with the law in its altered form as it would be improper to proceed on the footing that an executing Court must shut its eyes to subsequent changes or amendments of the law. It is necessary to briefly recount the facts that have given rise to the dispute. The petitioner before me in Civil Revision Petition No. 4867 of 1992 is the judgment-debtor, hereinafter referred to as the owner. The petitioner in the second Civil Revision Petition No. 1913 of 1992 is the syndicate Bank, hereinafter referred to as the Bank. The admitted position is that the Bank had made available certain financial assistance to the owners of certain vehicles which had been purchased by them for being run as contract carriages. The state Government took a decision to nationalise all these routes and promulgated Karnataka Contract Carriages (Acquisition)Act, 1976. By virtue of the provisions of this Act, the government virtually took over all the vehicles and we are not concerned with the remaining provisions as regards the staff etc. These vehicles were hypothecated to the Bank as collateral security for the repayment of the loans. The age of the vehicles differs from case to case and consequently, the intrinsic value of the vehicles is different. Also, the position is that the different agreements entered into at various points of time reflect outstanding which are different from case to case depending on the age of the loan, repayments etc. The main difficulty that arose was that the owners had originally expected to run these vehicles, earned certain amounts of money out of them and make the repayments to the Bank. By virtue of the abrupt take-over, this arrangement got frustrated. The Bank which is a financial institution was entitled to insist on the repayment of the amounts due to it in so far as the vehicles were only a collateral security and it is the owners who were personally liable for the repayments by virtue of the documents executed by them. The question of repaying the amounts therefore created certain difficulties principally because under the provisions of the Act, though the State was liable to pay compensation on the take-over of the vehicles, the actual payment was deferred and it also depended on several factors such as the valuation of the vehicles, the number of vehicles etc. As far as the present two proceedings are concerned, the Bank filed suits against the owners for recovery of the amounts due to them and in both the cases the owners who desired not to dispute their liability entered into consent decrees agreeing to pay up the prescribed amount with interest computed at the rate of 17 %. The Bank was entitled to charge the interest that had been agreed to in the documents that had been executed and under these circumstances, the consent decrees in question came to be passed.

(2.) THE Karnataka Contract Carriages (Acquisition) Act, 1976, thereafter went through two amendments in the years 1980 and 1981. We are only concerned in this proceeding with the amendment that was being carried out to Section 11 of the principal Act whereby the interest that was prescribed at the rate of 6% P. A. has been altered to 12%. The amending Act 1990 states that this amendment "shall be and shall be deemed always to have been substituted". As a result of this provision, when the Bank took out execution proceedings in the year 1988, a plea was raised on behalf of the owners that irrespective of what the terms of the consent decree may have provided for, that the Bank was precluded from charging interest at the rate of 17% and that this would have to be limited to the statutorily prescribed rate of 12%. Reliance was sought to be placed on the amendment of 1990 which prescribe that "the secured creditor shall have no right to claim from the contract carriage operator any more amount by way of interest on such amount". In sum and substance therefore, the contention raised was that it is not open to the executing Court to give effect to the terms of the consent decree by virtue of the subsequent change in the law and that the Court would have to limit the operation of the decree to be in consonance with the existing provisions. The Bank seriously contested this position on a variety of grounds the principal one being that the decree in question had become final, that it was a decree passed long before the changes had taken place and that therefore, the amendments to the law cannot in any way alter the complexion of such a decree. The alternate submission was that irrespective of the objections pleaded that an executing Court is required to merely translate the decree into action and cannot permit any reopening of the questions involved in that decision as they have been finally concluded. The executing Court upheld the owner's objection in the first civil revision petition against which the Bank has filed the present civil revision petition and the executing Court rejected the objection in the second proceeding and it is against that order of rejection, that the owner has filed the second civil revision petition. The issues involved in both the proceedings begin common, the learned Counsel have advanced their submissions in respect of the areas of controversy and the two civil revision petitions are being disposed of by the Court through a common order.

(3.) THE learned Counsel who represents the Bank submitted that the challenge to the execution of the decree is totally devoid of merit in so far as according to him, the executing Court has completely overlooked the importance of the time factor. His contention is that once a Court of competent jurisdiction has passed a decree, and that decree has assumed a garb of finality that any subsequent changes either of the facts or for that matter circumstances or even the law cannot affect the complexion of that decree. The learned Advocate submitted that there may be one solitary exception to this rule and that would be in case of a situation where a subsequent amendment of the law includes a non-obstante clause which specifically provides for the abrogation of the effects of the decree. He points out that none of the amendments to the present statue contained such a provision and that in the absence thereof, there can be no question of seeking any alteration or variation of the decree.