IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE P.BHAVADASAN FRIDAY, THE 19TH JUNE 2009 / 29TH JYAISHTA 1931 ESA.No. 1 of 2002(A) -------------------- OS.459/1997 of II ADDL.SUB COURT,ERNAKULAM AS.302/2000 of VI ADDL.DISTRICT COURT, ERNAKULAM .................... APPELLANT(S): APPELLANT/GARNISHEE --------------------------------- COCHIN STOCK EXCHANGE LTD.,VEEKSHANAM ROAD, ERNAKULAM, NOW HAVING ITS OFFICE AT MES BUILDING, KALOOR, ERNAKULAM. BY ADV. SRI.MATHEW ZACHARIAH SRI.KOSHY GEORGE SRI.P.I.DAVIS SRI.GEORGE ZACHARIAH ERUTHICKEL RESPONDENT(S): RESPONDENTS/ D/H AND J/D --------------------------------------- 1. JOSE JOSEPH, THOPPIL HOUSE, KURUPPAM ROAD, THRISSUR. 2. K.T.TITUS, KOCHERY HOUSE,SOUTH BRIDGE AVENUE, ERNAKULAM, KOCHI-36. ADV. SRI.JOSEPH A.VADAKKEL FOR R1 SRI.GEORGE KARITHANAM VARGHESE FOR R1 SRI.V.J.JOHN FOR R1 SRI.JOSE KURIAKOSE (VILANGATTIL) FOR R1 THIS EXECUTION SECOND APPEAL HAVING BEEN FINALLY HEARD ON 12/06/2009, THE COURT ON 19.06.2009, DAY DELIVERED THE FOLLOWING: P.BHAVADASAN, J. -------------------------------------------- ESA NO.1 OF 2002 -------------------------------------------- Dated 19th June 2009 Judgment The second respondent, the garnishee in EA No.206/1999 in EP No.91/1999 in OS No.459/1997, who suffered the order at the hands of the execution court, is the appellant herein. The parties are hereinafter referred to as referred in the order passed by the court below. 2. The first respondent obtained a money decree against the 2nd respondent, which was put in execution. In execution before the court below, the decree holder pointed out that the appellant herein, namely, the garnishee had amounts with them, due to the judgment debtor and therefore, they may be directed to deposit the amount due to the 1st respondent before the court. The garnishee entered appearance. They pointed out that there were several claims against the judgment debtor by other persons and money was due to several persons. Therefore, appropriate order should be passed. Details were given by the ESA 1/02 2 garnishee. 3. The trial court thought that the garnishee was disputing his liability and therefore, went on to adjudicate the claim on that basis. The trial court held that had the garnishee, namely, the Cochin Stock Exchange strictly followed its rules and bye-laws, such a contingency would not have arisen and it was only due to the default on the part of the garnishee that things have come to such a state. Consequently, the garnishee was directed to deposit Rs.1,40,000/- with them and which was due to the judgment debtor. Aggrieved by the said order, the garnishee carried the matter in appeal as AS No.302/2000 before the VIth Additional District Judge, Ernakulam. The said court by judgment dated 9th November 2001, dismissed the appeal, confirming the order of the court below. It is against the said order that this appeal is filed. 4. The learned counsel appearing for the appellant pointed out that both the courts below have missed the real issue involved in the proceedings and that has resulted in causing injury and difficulties to the appellant. The appellant ESA 1/02 3 pointed out that the appellant did not either dispute the status of the garnishee or that they had the amount due to the judgment debtor. They pointed out that there were several other claims pending as against the judgment debtor, with reference to which, attachment and other proceedings were served on the garnishee. 5. Therefore, according to the learned counsel for the appellant, when such a contention was urged before the court below, the executing court ought to have proceeded under Order XXI, Rule 46D and 46E of the Code of Civil Procedure. Instead of doing that, both the courts have gone to adjudicate on the basis of the rules and bye-laws of the Cochin Stock Exchange and as mentioned in Order XXI Rule 46B and C. 6. The learned counsel for the respondents, on the other hand, pointed out that the courts below were fully justified in the order passed. Had the Cochin Stock Exchange taken the proceedings as contemplated under Articles 20(a) and 148 of the bye-laws and regulations, the situation could have been avoided. It was due to their fault that such a contingency had ESA 1/02 4 arisen and they cannot take advantage of the same. The learned counsel, therefore, prayed that the appeal be dismissed. 7. During the hearing of the Second Appeal, I am given to understand that the appellant was directed to file a statement regarding the other claims against the judgment debtor. They have done so. 8. The appellant did not dispute that they had with them, the amount due to the judgment debtor. It was also pointed out that the judgment debtor had a liability of Rs.21,220/- to the appellant, Cochin Stock Exchange, two other award amounts and also another payment to one Shri.Philipose, to be made from the amounts, which the appellant held with them. They pointed out that the respective decree holders had charge over the amount. At no point of time, they disputed that they had the money due to the judgment debtor. The adjudication under Order XXI Rules 46B and 46C arises only when either the garnishee does not comply with the order or when he appears and contests his liability to pay the amount. Of course, while disputing the liability, it is open to the to the court to direct that ESA 1/02 5 the garnishee should deposit the amount in court. 9. In the case on hand, in the appeal memorandum as well as the statement filed before this court by the appellant, it has been specifically pointed out that the judgment debtor had several liabilities towards different persons and there were attachment, lien etc., in favour of those persons also. As far as those persons are concerned, they are third parties to the proceedings. Order XXI Rule 46-D reads as follows : “Procedure when debt or property belongs to a third person - Where in any proceedings under these rules, it is alleged or appears to the court to be probable that the debt or property attached or sought to be attached belongs to some third person or that any third person has a lien or a charge upon or an interest in its, the court may order such third person to appear and state the nature and particulars of his claim if any, to such debt or property and prove the same.” ESA 1/02 6 Order XXI Rule 46-E reads thus: “Order to be made on hearing such person - After hearing such third person and any other person, who may subsequently be ordered to appear or in the case of such third or other person not appearing when ordered, the Court may pass such order as is hereinbefore provided, or make such other order as it thinks fit, upon such terms, in all cases with respect to the lien, charge or interest, if any, of such third or other persons as may deem fit and proper.” Order XXI Rule 46-F reads as follows : “Payment or delivery under order to be a valid discharge - Payment or delivery made by the garnishee on a notice under rule 46-A or under any such order as aforesaid shall be valid discharge to him as against the judgment-debtor and any other person ordered to appear as aforesaid, for the amount paid, delivered or realised, although such order or the judgment may be set aside or reversed.” ESA 1/02 7 10. A reading of the above provisions would show that when the garnishee discloses the names of third persons to whom the judgment debtor owes amounts, those persons have to be heard. The other persons, who too have claims against the judgment-debtor may also be heard. After hearing them, the court has to pass appropriate orders. Order XXI Rule 46-F, which has already been extracted above, would show that when the court passes an order under Order XXI Rule 46-E and that is complied with, the garnishee stands discharged. 11. It is interesting to note that there are two types of adjudications contemplated by Order XXI Rule 46-B, C, D,E, & F. A reading of Order XXI Rule 46-B & C show that in a situation where the garnishee does not appear or dispute the liability, the court concerned has to adjudicate on that issue or issue such directions as are found necessary. 12. On the other hand, when persons other than the decree holder, the judgment-debtor or the garnishee are involved, the garnishee is to provide the details of those persons, who have a claim against the judgment-debtor to the ESA 1/02 8 court as enjoined by Order XXI Rule 46-D and E. A hearing of all the parties, who have an interest in the amount retained by the garnishee is contemplated and the court is to pass orders thereon. It is important to notice that it is the obligation on the part of the garnishee to bring to the notice of the executing court that there are third persons interested and involved, so that the court can adjudicate the issue. One must recall that any payment made on the basis of such adjudication absolves the garnishee to that extent with reference to the claim concerned. The Articles and Memorandum of Association of the Cochin Stock Exchange may not have much relevance in this context. 13. It is seen that the court below has missed the real issue involved and has directed the garnishee to deposit the amount. At the time of hearing, it was represented that the FD receipt had been handed over to the court and it is in the custody of the executing court. Whatever that be, a fresh adjudication of the matter under Order XXI Rule 46-D, E & F is necessary. Hence this appeal is allowed. The impugned orders are set aside and the matter is remanded to the executing court for disposal afresh ESA 1/02 9 after hearing both sides in accordance with law and in the light of what has been stated herein above. The parties shall appear before the court below on 18.07.2009. The court below shall dispose of the matter as early as possible, at any rate, within three months from the date of appearance of the parties before it. P.BHAVADASAN, JUDGE sta ESA 1/02 10