K S D RADHAKRISHNAN Vs. DEIVANAI ACHI

JUDGEMENT

(1.) THE respondent herein filed O. S. No. 3821 of 1975 on the file of the Court of the VII Assistant Judge, City Civil Court, madras, under Order 37 Rules 1 and 2 of the Code of Civil Procedure, for the recovery of a sum of Rs. 5 ,050 being the principal of rs. 5,000 and interest due under a promissory note, dated 1-5-1975. THE appellant filed an application for leave to defend the suit on the ground that he has got a counterclaim. Since that petition for leave to defend was filed out of time and the delay was not excused, that petition was dismissed and the suit was decreed as prayed for, by judgment and decree dated 21st February, 1977. It may be mentioned that during the pendency of the suit, the respondent-plaintiff had filed an application for attachment before judgment of the debtor's property, namely Door No. 17/1 (New Door No. 30, Devadi Street, Mylapore ,madras -4, in I. A. No. 10450 of 1975 and obtained an order of attachment before judgment on 2-2-1977, which became absolute when the suit was decreed on 21-2-1977. THEn the respondent filed E. P. No. 1644 of 1977 for executing the decree and that was closed without the creditor realising any money. THEreafter, the respondent filed I. A. No. 41 of 1978 adjudicating the appellant as an insolvent. But that petition was dismissed on 27-4-1979 on the ground that it was filed beyond three months since the date of the filing of the execution petition in E. P. No. 644 of 1977. Another petition, in E. P. No. 988 of 1978 filed by the judgment-creditor was also closed without realising any money. THE respondent then filed a fresh execution petition in E. P. No. 1430 of 1979 and obtained a fresh order of attachment on 11-7-79 and actually, attached the property on 3-9-1979. On the ground that the decree amount was not paid for 21 days from the date of the attachment, namely 3-9-1979, another petition to declare the appellant as an insolvent was filed in I. P. No. 5 of 1980 under section 9 (l ) (e) of the Presidency Towns insolvency Act, 1909. This petition also was dismissed on 20-11-1981 on some ground or other, which need not be set out here. In the meanwhile, the presidency Towns Insolvency was amended by the Insolvency Laws (Amendment )Act , 1978 No. 28 of 1978 which came into force on 15-6-1979. One of the amendments effected by the said Act was in respect of section 9 of the original Act by introducing subsections (2), (3), (4) and (5) to the original Section 9 which was renumbered as sub-section (1) subsection (2)provided that without prejudice to the provisions of sub-section (l), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for the payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served on him a notice, (which is referred to in the Act as insolvency notice) and the debtor does not comply with that notice within the period specified in that notice. Taking advantage of this provision, the respondent-decree-holder issued an insolvency notice'no. 15 of 1983 on 30-4-1983, informing the debtor that within thirty days after service of that notice he must pay a sum of Rs. 9,060 being the amount due on the decree obtained by her. In turn, the appellant filed application No. 195 of 1983 under sec-tion9 (5) of the Act praying to set aside the insolvency notice on the ground mentioned in the affidavit filed in support of that application. After the expiry of the thirty days'time given, the respondent filed I. P. No. 49 of 1983 under sections 9 (2), 10, 11, 12 and 13 of the Presidency Towns Insolvency Act, 1909, praying to adjudicate the debtor as an insolvent and direct the estate to be vested with the Official Assignee to be administered according to the Insolvency Law. Number of contentions were raised by the learned counsel for the appellant, but a learned single Judge dismissed Application No. 195 of 1983 filed under section 9 (5) of the Act on 12-9-1983. Consequently, I. P. No. 49 of 1983 was taken up for final disposal and, by an order dated 28-1-1985, that petition was allowed and the appellant was adjudicated insolvent and his assets and other effects were directed to be vested with the Official Assignee for the purposes of administration. It is against these two orders, O. S a. Nos. 2 of 1984 and 26 of 1985 have been filed.

(2.) . In these appeals, learned counsel for the appellant raised a number of contentions. The first contention was that though the decree in O. S. No. 3821 of 1975 is a decree for Payment of money and it has become final, it cannot be considered as a decree "the execution whereof has not been stayed'within the meaning of sub section (2) of section 9 of the Act, This was on the ground that in cases where a period of two years has elapsed from the date of the decree or from the date of the last order in the previous execution petition, the permission of the Court to execute the decree under Order 21, Rule 22, Code of Civil Procedure is necessary and, so long as such permission is not obtained, the decree shall be deemed to be not executable and, in a case where the decree-holder is not entitled to issue immediate execution of the decree, the execution of the decree shall be deemed to have been stayed. In support of this contention, learned counsel placed strong reliance on a decision of the Bombay High Court reported in Bhurmalkapurchand A Co. v. P. M. Tools Co. , A. I. R. 1977 Bom. 305. The matter was considered in that case with reference to the legality of a practice adopted by the Insolvency Registrar of the Bombay High Court with regard to the issuance of insolvency notice. A provision similar to sub-section (2) of section 9 of the Act was there in section 9-A of the Bombay Presidency towns Insolvency Act and whenever an application for issuing an insolvency notice was filed the Registry insisted that before an insolvency notice could be issued in respect of a judgment-debt under a decree which was more than two years old, proceedings under Order 21, Rule 22, C. P. C. must first be initiated and the notice under that rule should be made absolute by a competent Court. It was the legality of this requirement that was considered. The learned Judge was of the view that a judgment-debt, to sustain an insolvency notice, must arise out of an enforceable decree and not out of a decree which otherwise is unenforceable.'a decree which is more than two years old is, by its own force, ( propriovigors) unexecutable. The judgment debt arising out of such a decree is equally unenforceable unless leave as required by Order 21, Rule 22, C. P. C. is first obtained in that behalf.'In support of this view, the learned Judge has a relied upon a Division Bench Judgment of the same high Court in Daljit Kishan v. Nihalchand Jethaji the unreported judgment of Bombay High court dt. 19-7-1973, Which was followed in another decision in A. D. Gandhi v. S. L. Thakurdas , 3 (1978)77 Bom. L. R. , 119 and certain passages in Halsbury's Laws of England. Before we deal with the judgments referred to, we may point out that we are unable to agree with the view that any leave of the Court was required for execution of a decree which is more than two years old under Order 21, Rule 22, C. P. C. Under section 51 of the Code of Civil Procedure, on the application of a decree holder, the Court may order execution of a decree by delivery of any property specifically decreed, by attachment and sale or by sale without attachment of any property, by arrest and detention of the judgment-debtor in prison, by appointing a receiver or in such other manner as the nature of the relief granted may require. The provisions of the Code, in particular Order 21, deal with the various modes of executing the decrees and in respect of every mode of execution, notices are required to be issued to the judgment-debtor, though, in some cases, some interim orders could be made, but where an application for execution is made more than two years after the date of the decree or against a legal representative of a party to the decree, or against an assignee or receiver in insolvency, the Court executing the decree is required to issue notice to the person against whom execution is sought for, requiring him to show cause on the date to be fixed why the decree should not be executed against him. This in our view, does not make the decree inexecutable , nor could it be said that this would amount to a staying of the execution till the notice is served and an explanation is obtained and the execution is ordered to be proceeded with. Issuing a notice under Rule 22 of Order 21 itself is part of the execution of the decree. In cases falling under Rule 11 (1) of Order 21, every application for execution of a decree shall be in writing signed and verified in the manner prescribed. On receipt of the application, the Court shall ascertain whether such of the requirements of Rules 11 to'4 of Order 21 as may be applicable to the case, have been complied with. When the application is defective, until the defects are remedied, the application could not be admitted. Only if the application is in proper form and in accordance with the rules, it could be admitted and only when the application is admitted, the Court shall enter in the proper register a note of the application, the date on which it was made, and order execution of the decree in accordance with the nature of the relief asked for in the application. It could not be contended that the decree itself was inexecutable on the ground that the application filed was not in accordance with law. The procedure to be adopted for executing the decree in a given situation is, in our view, different from the executability or otherwise of the decree itself. The decree may not be executable if a time for compliance with the terms of the decree had been granted to the judgment-debtor or the appellate Court may amend or the executing Court may stay the execution of the decree or where the decree had been satisfied by payment. But, on the ground that before an actual relief is obtained in execution of the decree certain formalities have to be gone into, the decree itself does not become inexecutable. One such requirement of issuing a notice before the relief is granted is that contained in Rule 22 of Order 21, requiring a notice to be given to the judgment-debtor in cases where the execution petition is filed more; than two years after the decree or where two years have elapsed from the date of the last order in the prior execution petition. The decision in Daljit Kishan v. Nihalchand Jethaji unreported judgment of Bombay High Court, dt. 19-7-1973. relied on by the leaned single judge of the Bombay High Court, does not, in our opinion, support the view of the learned Judge. It may be mentioned that that was not a case relating to one falling under Order 21, Rule 22, C. P. C. That was a case where the suit was decreed with costs by the High Court of Bombay, but while drafting the decree in exercise of the powers under section 118, C. P. C. the High Court drafted the decree before the costs incurred in the suit were ascertained and taxed. The question for consideration was whether that decree for the principal amount and interest alone, without the prevision for costs, was executable. It may be mentioned that section 118 enables the High Court to draft a decree without waiting for ascertainment of the costs and taxation of the same. The Division Bench, in that case, held that the decree was executable and merely because the costs were not taxed and included in the decree, the decree did not cease to become an executable decree. While holding so, the learned Chief Justice observed: "it is well settled that if there is any impediment in the way of a judgment creditor executing a decree or if the decree is not presently executable, no insolvency notice can be founded on such a decree. It is not necessary that the execution of the decree should be stayed formally by the executing Court. Even without any such formal order of stay, if the judgment-creditor is not in a position to satisfy the insolvency Court that he has a right to execute the decree inpresenti the insolvency notice taken out by the judgment - credkor must fafl. " This is the passage relied on by the learned Judge in the decision reported in Bhurmal Kapurchand & Co. v. PM. Tools Co. , A. I. R. 1977 Bom. 305. We are unable to see how this passage, in any way, support the decision of the learned Judge. Repeatedly, the learned Chief Justice was expressing the view that for the purpose of determining whether an insolvency notice could be issued or not, the only point that could be considered is that the amount is due in respect of a decree to the creditor and that the amount has not been paid by the debtor on his being called upon to pay. That was the cause of action to file the insolvency petition and that amounted to an act of insolvency. The decree, in the present case, has not been satisfied by payment or otherwise. The decree-holder can file a petition for execution. There is no impediment for filing such an execution petition, though, in respect of any relief that is asked for, a particular procedure prescribed under the Code will have to be followed. It does not make the decree itself not executable.

(3.) IT was lastly contended by learned counsel that the decree in O. S. No. 3821 of 1975 is inexecutabl e and that it is open to the debtor to go behind the decree. We are unable to see how this contention is open to the appellant at all. The decree had become final. In fact, he was all along aware of that and he never took steps to set aside the decree on the ground that it was, in any way, illegal or unsustainable. On the other hand- we find that the Division Bench judgment in Daljit Kishan v. Nihalchand Jethaji reported judgment of Bombay High Court dt. 19-7-1972 clearly holds that an insolvency notice cannot be challenged by the judgment-debtor on the ground that the decree on which it is based was not validly and properly passed against him. The power of the insolvency Court at this stage of considering the validity of the insolvency notice is confined to determining whether any amount is due under the decree to the creditor and it would not be open to the insolvency Court at this stage to permit the debtor to challenge the very validity of the decree.