judgment-debtor in civil prison for non-payment of the amount decreed: Kerala High Court

IN THE HIGH COURT OF KERALA AT ERNAKULAM

OP(C).No. 185 of 2010(O)
1. T.J.ABRAHAM, AGED 48 YEARS, S/O.
… Petitioner
2. K.A.AUGUSTINE, AGED 49 YEARS,

Vs

1. M/S. MAHARASHTRA APEX CORPORATION
… Respondent

2. T.T.JOSE, AGED 50 YEARS, S/O. THOMAS,

For Petitioner :SRI.JAWAHAR JOSE

For Respondent :SRI.S.R.DAYANANDA PRABHU

The Hon’ble MR. Justice K.T.SANKARAN

Dated :03/06/2011

O R D E R
K.T.SANKARAN, J.
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O.P.(C). NO. 185 OF 2010 O
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Dated this the 3rd day of June, 2011
JUDGMENT
The petitioners and the second respondent are the judgment

debtors in E.P.No.32 of 2003 on the file of the Court of the District

Judge, Kasaragod. The first respondent secured an arbitral award

in A.P.No.357 of 2000. It was put in execution by the decree holder

(first respondent) for realization of the amount by arrest and

detention of the judgment debtors in civil prison.

2. It is submitted that the judgment debtors were originally set

exparte before the executing court and an order for arrest was

passed against them. That order was challenged by them in

C.R.P.No.277 of 2004 before the High Court. An order of stay was

passed on condition that the judgment debtors should deposit

`40,000/- before the executing court. They deposited the amount.

The Revision was later disposed of recalling the warrant and

affording an opportunity to the petitioners to adduce evidence.

O.P.(C) NO.185 OF 2010

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3. The judgment debtors contended that they have no means

to pay the decree debt or a substantial portion thereof and,

therefore, they cannot be detained in civil prison.

4. In the affidavit filed before the executing court, the decree

holder stated that the first petitioner (first judgment debtor) owns an

extent of more than one acre of land under Ext.A1 registered

document and therefore, he has means to pay the decree debt. The

decree holder also contended that the judgment debtors have cash

and immovable properties.

5. The judgment debtors contended that Ext.A1 property was

sold on 12.9.1996 to one Pokker as per Ext.B1 assignment deed.

They have no other property. It was also stated that the first

judgment debtor is an agricultural labourer and he is residing in his

wife’s house.

6. The court below rejected the contentions put forward by

the judgment debtors on the following grounds: (a) Ext.B1 sale

deed was executed by the first judgment debtor on 12.9.1996, one

month after the execution of the hire purchase agreement between

O.P.(C) NO.185 OF 2010

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the judgment debtors and the decree holder. The decree amount is

due on account of the hire purchase agreement. It is clear that

Ext.B1 was executed assigning the property to the third party “to

evade from the proceedings which would be initiated in pursuance of

the hire purchase agreement and to defeat the rights of the

petitioner/decree holder”. (b) The judgment debtors deposited

`40,000/- in compliance with the interim order of stay passed by the

High Court in C.R.P.No.277 of 2004. (c) The first judgment debtor is

a driver by profession and therefore, he is a man of means.

7. As regards the first ground on which the executing court

found against the judgment debtors, it is to be noted that there is no

case for the decree holder that Ext.B1 is a fraudulent transfer. No

such contention was put forward either in the Execution Petition or in

the affidavit filed by the decree holder. It is true that Ext.B1

assignment deed was executed within a short period after the

execution of the hire purchase agreement. That by itself would not

be a sufficient ground to hold that Ext.B1 is a fraudulent transfer.

The court below did not make any enquiry as to whether Ext.B1 is a

fraudulent transfer. No evidence was adduced by the decree holder

on that aspect. The judgment debtors were also not afforded an

O.P.(C) NO.185 OF 2010

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opportunity to defend the case on that aspect. The learned counsel

for the petitioners/judgment debtors contended that the decree

holder is not entitled to contend that Ext.B1 is a fraudulent transfer

as that plea is barred by limitation. It is not necessary to decide that

question in this Original Petition, since the court below did not

consider the question whether Ext.B1 amounts to a fraudulent

transfer. The court below held, only on the ground that Ext.B1 was

executed one month after the execution of the hire purchase

agreement, that “Ext.B1 cannot be treated as a valid document”.

This finding of the court below is erroneous.

8. The executing court found that the plea of no means is not

sustainable, since the judgment debtors deposited `40,000/- in

compliance with the interim order passed by the High Court in the

Revision filed by them earlier. The fact that the judgment debtors

deposited the said amount does not mean that they have the means

to pay the decree debt or a substantial portion thereof. That they

deposited the amount only means that they complied with the

interim order. The deposit could be made either using the resources

of the judgment debtors; or they could arrange funds from

elsewhere. There is no evidence to indicate that the judgment

O.P.(C) NO.185 OF 2010

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debtors had their own funds at the time of deposit of `40,000/-.

9. In Karunakaran Pillai v. Joseph (1976 K.L.T. 433), a

question arose whether the offer made by the judgment debtor to

pay the decree debt in instalments would amount to forfeiture of the

plea of no means. It was held thus:

“10. That a debtor offers to pay the decree debt in

instalments need not necessarily mean in every case

that he has at the time of the offer the means to pay the

decree debt in full or a substantial part thereof. It is

quite possible that he makes the offer to maintain his

respectability before the public and under the hope and

expectation that money would be forthcoming in future

for payment of the instalments. Whether he has means

to pay has to be decided irrespective of the offer to pay

instalments.”

10. In Jolly George Varghese v. Bank of Cochin (AIR 1980

SC 470 : 1980 KLT 375),speaking for the Bench, Justice

V.R.Krishna Iyer held:

“There must be some element of bad faith beyond

mere indifference to pay, some deliberate or recusant

O.P.(C) NO.185 OF 2010

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disposition in the past or, alternatively, current means to

pay the decree or a substantial part of it. The provision

emphasises the need to establish not mere omission to

pay but an attitude of refusal on demand verging on

dishonest disowning of the obligation under the decree.”

11. I am of the view that the court below was not justified in

arriving at the conclusion that the judgment debtors have the means

to pay the decree debt only on the ground that they deposited

`40,000/- as mentioned above. Under clause (b) of the proviso to

Section 51 of the Code of Civil Procedure, in order to pass an order

for arrest and detention of the judgment debtor in civil prison, the

executing court has to arrive at a finding that the judgment debtor

has, or has had since the date of the decree, the means to pay the

amount of the decree or some substantial part thereof and refuses

or neglects or has refused or neglected to pay the same. Only on

arriving at a finding as provided in clause (b) of the proviso to

Section 51 of the Code of Civil Procedure, the executing court would

be justified in passing an order for arrest and detention of the

judgment debtors in civil prison. Such an order cannot be passed

on surmises and conjunctures. There must be clear evidence to

prove the ingredients of clause (b) of the proviso to Section 51. The

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object of detaining a judgment debtor in civil prison for nonpayment

of the amount decreed is not to punish him. Detention in civil prison

is aimed at enabling the decree holder to realize the decree for

payment of money. Mere inability to pay the money does not render

the judgment debtor liable to be arrested and detained in civil prison.

In the case on hand, there is no finding to the effect that the

judgment debtors had, since the date of the decree, the means to

pay the decree debt or a substantial portion thereof or at the time

when they deposited `40,000/-. The mere deposit would not lead to

such a conclusion. No finding was arrived at that the deposit was

made using the funds of the judgment debtors. There is also no

evidence to show that the judgment debtors have the current means

to pay the decree debt. The decree holder stated in evidence that

the judgment debtors have resources and immovable properties.

However, the decree holder could not produce any evidence to

substantiate the same.

12. The finding of the court below that the first judgment

debtor himself admitted that he is a driver by profession is absolutely

incorrect. I have gone through the evidence of DW1. There is no

such admission. He only stated that he knows driving. That does

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not mean that he is a driver. He stated in evidence that he is an

agricultural labourer. It cannot be presumed that a person who

knows driving is a driver by profession. A person may have several

skills. Those skills may enable such person to become a

professional or to get a job. Mere possession of the skills would not

lead to the conclusion that the person concerned earns money from

any profession, trade or job which could be pursued using those

skills. In order to arrive at the conclusion that such a person has the

means to pay the decree debt, it must be proved that he earns

money using the skill which he possesses. In the present case,

PW1 did not state that the first judgment debtor is a driver by

profession. Only in the cross examination of the judgment debtor,

an answer was elicited that he “knows to drive vehicle”. The finding

of the court below that the first judgment debtor, being a driver by

profession, has the means to pay the decree debt, is clearly

erroneous.

13. The learned counsel for the decree holder submitted that

the judgment debtors have subsequently acquired assets and that

they have liquid resources to pay the decree debt. The counsel also

submitted that the decree holder did not get an adequate and

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meaningful opportunity to produce the necessary data to prove that

the judgment debtors have the means to pay the decree debt. The

counsel further submitted that an opportunity may be granted to the

decree holder to adduce evidence to prove the ingredients of clause

(b) of the proviso to Section 51 of the Code of Civil Procedure.

14. For the aforesaid reasons, the order impugned is set

aside. The executing court shall consider the matter afresh after

affording an opportunity to both parties to produce documents and to

adduce evidence. Both parties shall be afforded an opportunity to

submit further pleadings. The executing court shall consider all the

contentions put forward by the parties.

The Original Petition is allowed as indicated above. No order

as to costs.
(K.T.SANKARAN)
Judge

ahz/
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