LAW FOR ALL

Banking/Bank/Code of Civil Procedure, 1908; Proviso (g) to s.60(1): Recovery of loan - Loan for purchasing a Vehicle - Not repaid - Filing of suit by the Bank against principal debtor and guarantor - Decreed by trial Court directing to recover the amount by auction sale of hypothecated vehicle and remaining amount from other properties of loanee and guarantor - Execution of decree - Executing Court directing attachment of Fixed Deposit Receipts in respect of the amount received by guarantor by way of pension and gratuity as vehicle was not traceable - Challenge to - High Court directing the trial Court to pass an appropriate order - Executing Court directing release of F.D.R. in view of proviso (g) to s.60(1) of C.P.C. - Filing of Revision petition by Bank - High Court directing the guarantor to deposit certain sum which could be adjusted out of F.D.Rs. of the guarantor - Review Petition dismissed by High Court - Correctness of - On appeal, Held: High Court erred in altering the decree of the trial Court in exercise of revisional jurisdiction by directing the decretal amount to be satisfied from Fixed Deposit Receipts held by Bank in respect of pension and gratuity of the guarantor in contravention to proviso (g) to s.60(1) of C.P.C. - The amount received by way of pension and gratuity did not lose their character and continued to be covered by proviso (g) to s.60(1) CPC - Right to proceed against either the guarantor or the principal debtor restricted in terms of order of the trial Court - Nothing is recorded in the impugned judgment by the High Court as to the steps taken by the Bank for recovery of the vehicle for auction sale in order to recover decretal amount - Hence, the impugned order cannot be sustained and set aside - Order of the Executing Court restored - Executing Court - Power of, in issuing order for attachment of F.D.Rs. of pension and gratuity. Code of Civil Procedure, 1908 - S. 115 - Power of the High Court in altering decree of the trial Court, in exercise of revisional jurisdiction - Discussed. Respondent No.2 took a loan of Rs.83, 000/- from respondent No.1, Bank for purchase of a motor vehicle. Appellant stood guarantee for the loanee. Since loanee could not repay the loan, Bank filed a suit for recovery of the loan against the loanee and the guarantor. The suit was decreed by the trial Court for a sum of Rs.1, 10, 360/-with interest with a direction to recover the said amount by auction sale of the hypothecated vehicle and the amount, if any, which remained to be paid could be recovered from the other properties of the loanee and the guarantor. As the vehicle was not traceable, the Bank sought for order of attachment of Fixed Deposits of the guarantor allegedly made from the amounts received by him by way of pension and gratuity. The Executing Court ordered attachment of the Fixed Deposit Receipts. Aggrieved by the order of the Executing Court, the guarantor moved the High Court. The High Court directed the Executing Court to pass appropriate orders. The Executing Court directed release of F.D.Rs. as the amount in the F.D.Rs. could not be attached under proviso (g) to s.60(1) of C.P.C. It further directed that the vehicle was to be auctioned first. Aggrieved, the Bank filed a revision petition. The High Court directed the guarantor to deposit a sum of Rs.50, 000/- forthwith and also to furnish details of the movable and immovable properties of the Principal debtor. The guarantor moved an application praying for adjusting the sum of Rs.50, 000/- out of the F.D.Rs. and balance, if any, could be returned to him. The High Court disposed of the revision petition, inter alia, directing that the amount of Rs.50, 000/- out of the guarantor's Fixed Deposit Receipts could be adjusted in the first instance. It also directed that on the vehicle being furnished along with solvent security before the Executing Court, the remaining amount under the Fixed Deposit Receipt would be released to the guarantor. Aggrieved, the guarantor filed a Review Petition, which was dismissed in limine by the High Court. Hence the present appeals. Appellant, inter alia, contended that it was clearly the intention of the trial Court that the sale proceeds 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. On behalf of the Bank, it was submitted that despite several attempts having been made to locate the vehicle, 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 the dues; that the provision of proviso (g) to Section 60(1) C.P.C. 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; and 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. Citation: 2008(15 )SCALE24 , - Allowing the appeals, the Court HELD: 1.1. 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 Civil Procedure Code as it sought to finally decide the manner in which the decree passed in the Suit in question by the trial Court, was to be satisfied. However, this Court is also of the view that having regard to proviso (g) to Section 60 (1) of the Civil Procedure 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 and in placing the onus on the appellant to produce the vehicle in question for being auctioned for recovery of the decretal dues. In other words, the High Court erred in altering 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. [Para 24] [224-G-H; 225-A-B] Calcutta Dock Labour Board and ANOTHER v. Smt. Sandhya Mitra and Ors., [1985] 2 SCC 1; Union of India v. Wing Commander R. R. Hingorani, (1987) 1 SCC 551; Gorakhpur University and Ors. v. Dr. Shitla Prasad Nagendera and Ors., [2001] 6 SCC 591 and Union of India v. Jyoti Chit Fund and Finance and Ors., [1976] 3 SCC 607, relied on. 1.2. 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. 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 covered by proviso (g) to Section 60(1) of the Code. [Para 25] [225-D-E] 1.3. The High Court, 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 was prescribed by the Trial Court, which clearly indicates that the Bank should at first recover whatever amount it can from the sale of the vehicle. 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 vehicle for sale in order to recover its decretal dues. [Para 26] [255-G-H; 256-A-C] Union of India v. Jyoti Chit Fund and Finance and Ors., [1976] 3 SCC 607, referred to. 1.4. 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 vehicle or against any other property of the principal-debtor, having particular regard to the finding of the Executing Court that the said fixed deposits represented the retiral benefits of the appellant. Hence, the order passed by the High Court is set aside and that of the Executing Court is restored. [Paras 26 and 27] [256- C-E] Case Law Reference : [1985] 2 SCC 1 relied on Para 15 [1987] 1 SCC 551 relied on Para 16 [2001] 6 SCC 591 relied on Para 16 [1976] 3 SCC 607 relied on Para 17 [1976] 3 SCC 607 referred to Para 17 Shobha, Harish Sharma and R.P. Yadav for the Appellant. Dhruv Mehta, Harshvardhan Jha, Yashrah Singh Deora and T.S. Sabarish (for M/s K.L. Mehta & Co.) for the Respondents.