Monday, 19 September 2016

Whether filing of objection to execution application will amount to refusal to pay decretal amount?

In this appeal against the order of the executing Court, Mr. R. Gopalaswami Aiyangar first contended that, as there has been no refusal by the appellant to pay the moneys due under the decree, the execution application was premature. We are, however, unable to agree with that contention. After the filing of the execution, the appellant filed a counter affidavit, objecting to his liability to pay the decree amount, as, according to aim, the execution petition was premature. If the execution application were held to be maintainable, that would certainly amount to a refusal to pay.
Madras High Court
K.P. Mohamed Ibrahim vs The State Bank Of Travancore on 12 August, 1963
Equivalent citations: AIR 1964 Mad 233

Bench: S R Iyer, Ramakrishnan


1. This is an appeal by the second defendant in. O.S. No. 35 of 1961 against the order of the Subordinate Judge of Padmanabhapuram, directing execution of the decree, by his arrest. The decree-holder, who is the (first) respondent to this appeal, had advanced certain moneys to one Mohamed" Ayoob who was given certain overdraft facilities by the bank. The appellant guaranteed the payment of the liabilities incurred by Mohamed Ayoob. The latter had also secured certain properties belonging to him to the bank. On his failure to honour his obligation: O.S. No. 35 of 1961 was filed against Mohamed Ayoob as well as the appellant. The latter contested the claim on the ground that he was a surety and in the events that happened he was not liable for the suit claim. Alternatively, he claimed that the decree should be made enforceable against him only if there were to be any surplus left after the sale of the mortgaged properties.
A preliminary decree was passed on 22nd February, 1962. In form, it was a preliminary mortgage decree against the first defendant and the properties with a personal decree against the second. There was also a provision for a passing of the final decree against the first defendant. Clause 6 of the decree stated:
"It is hereby further ordered and decreed that the second defendant is also liable for this decree amount."
This clause in the decree is not very clear. It: does not, for example, stand in the form of a mandate directing the second defendant to pay the money to the plaintiff. Nor does it say as to when that liability arises, whether the liability to payment should arise at the time when the personal decree against the first defendant is to be passed' or even before the mortgaged properties are sold. Clauses 2 to 5 of the decree appear to provide for the passing of a personal decree against the first defendant if the money realised by sale in execution was not found sufficient to satisfy the amount. due to the creditor.
There being this ambiguity under paragraph 6 of the decree, it is essential to refer to the judgment in the case. That states that a preliminary decree on the mortgage will be passed and the first defendant will be given six months' time for payment. A separate decree is passed against the second defendant. The judgment is not very clear as to whether the liability of the second defendant, under the decree was to be concurrent with the liability of the mortgaged properties. But a reading of the judgment as a whole would appear to lead us to the conclusion that it was only after the mortgaged properties were exhausted, and when the question of personal liability of the first defendant is to be taken up, there should be available the personal decree against the second defendant-appellant to pay the amount.
2. The Bank however, did not proceed to execute the decree against the properties of the first defendant in the first instance. It applied for execution by way of arrest of the second defendant. The lower Court has ordered the arrest.
3. In this appeal against the order of the executing Court, Mr. R. Gopalaswami Aiyangar first contended that, as there has been no refusal by the appellant to pay the moneys due under the decree, the execution application was premature. We are, however, unable to agree with that contention. After the filing of the execution, the appellant filed a counter affidavit, objecting to his liability to pay the decree amount, as, according to aim, the execution petition was premature. If the execution application were held to be maintainable, that would certainly amount to a refusal to pay.
It was next argued that, as the appellant had not the means to pay the money due under the decree, no personal execution should be levied against him. It is admitted that the appellant is in possession of considerable properties which would easily enable him to pay off the decree. But what is argued is that the word 'means' occurring in Section 51 should be taken as equivalent to cash, and as the appellant says that there was no cash available with him, the order for arrest should not have been made. We are unable to accept that argument either. "Means" occurring in Section 51 can only mean realisable assets, and, as there is no doubt that the appellant has got sufficient assets from out of which the necessary moneys can be realised to pay up the decree amount, he will not be exempted by the provisions of Section 51 from being proceeded against personally for the realisation of the amount due under the decree.
4. But the more substantial point that has been urged on behalf of the appellant is whether the execution application is maintainable or whether it is premature. From what we have stated above, it will be clear that the personal decree which is passed against the second defendant would become available for execution only after the properties of the first judgment-debtor had been exhausted, or, when otherwise they could not be brought to sale. In that view, the present execution application must be held, to be. premature. The remedy of the decree-holder will be first to proceed against the mortgaged properties and exhaust them, and, if there is a balance left, the Bank will have to apply for a personal decree against the first judgment-debtor and it can, by virtue of the present preliminary decree, enforce that remedy against the second judgment-debtor also personally concurrently therewith.
But Mr. Ratan, appearing for the Bank, has referred us to the judgment in the case to show that it does not contemplate the decree-holder waiting for execution of the decree as against the second judgment-debtor till the properties are exhausted. (Issues 1 and 3 in the suit related to the question whether the second defendant was only a surety and whether he was liable for the suit claim. These points were answered in favour of the plaintiff. By his written statement, the second defendant claimed that the plaintiff should be directed to proceed against him only if the decree amount were not realised from the first defendant and his properties. It was evidently this request that was acceded to in the judgment which directed a separate decree being passed against the second defendant without any direction that the decree against the second defendant should concurrently subsist with the mortgage decree against the first defendant.

Reference was next made to the judgment of the lower Court, on the basis of which a final decree was sought. The second defendant then pressed his case before the learned Subordinate Judge that the decree-holder should not be allowed to 'proceed against him even before he exhausted the mortgaged properties. The Court thought that, as no further clarification was required as regards the decree against the second defendant, no orders need be passed. That observation can only be taken as supporting the stand now taken in regard to the construction of the decree, namely, that even under the terms of the original preliminary decree, his liability was to come into force only after the remedy against the mortgaged properties had been exhausted. We are, therefore, of opinion that the execution petition, filed as it has been for the arrest of the second judgment-debtor could not be maintained before the mortgaged properties have been exhausted. The appeal succeeds and is allowed with costs.=
Print Page

No comments:

Post a Comment