:1: :1: :1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO. 204 OF 2005 CHAMBER SUMMONS NO. 204 OF 2005 CHAMBER SUMMONS NO. 204 OF 2005 IN IN IN SUIT NO. 535 OF 2000 SUIT NO. 535 OF 2000 SUIT NO. 535 OF 2000 ICICI Ltd (Debenture Trustees) .....Plaintiffs vs. Kothri Industrial Corporation Ltd and Ors. .... Defendants AND Prithviraj Infrastructure P.Ltd, Hyderabad .....Respondents Virag V. Tulzapurkar with C.S. Kapadia and Ms. Rajashree Bhat i/b.M.K. Ambalal and Co. for the plaintiffs. Janak Dwarkadas Sr. Counsel with C. Mody, Mr. Shiva and Ms. S. Kaul i/b. R. Miti Law and Associates for the defendants. J.P. Cama with Vimal Bhabhada i/b. Ms. Laxmi Jasani for purchasers/respondents. Mr. M.H.I. Patel, Representative of Court Receiver present. CORAM: S.U. KAMDAR. J, CORAM: S.U. KAMDAR. J, CORAM: S.U. KAMDAR. J, DATED : 20TH APRIL, 2005. DATED : 20TH APRIL, 2005. DATED : 20TH APRIL, 2005. JUDGMENT : JUDGMENT : JUDGMENT : :2: :2: :2: 1. The present chamber summons is a classic example of how the legitimate claim of a creditor can be defeated by technical and legal wrangles raised by the debtors. The efforts do not end with the passing of the decree but continue even in execution of the decree thereof. 2. In the present case execution of the decree is sought to be obstructed by raising the issue of jurisdiction of this court by relying upon the provisions of sub-section (4) of section 39 of Civil Procedure Code as amended by amending Act of 2002. 3. This chamber summons has been taken out under order 21 rule 89, rule 90 and under section 151 of the CPC. Some of the brief facts which are relevant to determine the issue raised by the judgment debtor are briefly enumerated as under : 4. A suit has been filed by the plaintiffs who are a financial institution known as ICICI Limited in their capacity as Debenture Trustees for the recovery of Rs.6,84,91,000/-. In 1993 the first defendant issued :3: :3: :3: debentures and raised the funds of about Rs.19,00,000/-. The said debentures were secured debentures and to secure the interest of the debentures holders the plaintiff was appointed as a debenture trustee. The total liability in the said defendants thereunder was around Rs.18.97 crores. The defendant company made part payments in discharge of the said liabilities. However admittedly there were defaults by the company to make the payment of the balance amount. From time to time the defendants sought time from the plaintiff to repay the amount which was outstanding under the said debenture trust. However the defendants failed and neglected to make the payment of the balance amount due and payable. Some time in or about January, 2000 a suit was filed for the balance amount with interest accrued thereon. At that time it was around Rs.6 crores. The said suit was filed in this court being Suit no. 535 of 2000. The properties which are mortgaged in favour of the plaintiff under the said debenture trust are situated in the state of Tamil Nadu and in the state of Gujrat. In the said suit on 23.6.2000 consent terms were filed. Under the said consent terms the :4: :4: :4: defendant has admitted the repayment of an amount of Rs.6,85,23,000/- and has also agreed that the said amount will be repaid in certain instalments. Thus by the said consent terms a decree has been passed in favour of the plaintiffs and against the defendants for the aforesaid amount. The consent terms also inter-alia provides that in an event of default in making the payment, the court Receiver High court shall stand appointed without any further orders in execution of the decree and shall have a power to take possession of the properties set out in exhibits to the plaint and will be entitled to sell the same either by public auction or private treaty and the net sale proceeds will be adjusted against the said decree. The said clause-9C of the consent terms reads as under : "9..... (c) The Court Receiver, High Court, Bombay shall without any further order stand appointed by Bombay High Court as Receiver in execution with power to take possession of the properties set out in Exhibit-A1, A-2, A-3, A-4, A-5, B-1, B-2 and C to the Plaint and sell the same either by public auction or private sale and the court Receiver do pay over the net sale proceeds thereof :5: :5: :5: to the plaintiff/Debentureholders towards payment of decretal amount payable by the Defendant no.1 subject to the rights of the other chargeholders." 5. It is an admited position tht the defendants failed to make payment of instalment amount as prescribed under the said consent decree and thuis the said decree became executable as provided under the aforesaid clause 9-C of the consent terms. 6. Thereafter the judges order was taken out being 32 of 2004 for taking forcible possession of the said assets of which court receiver was appointed as a receiver. By order dated 10.2.2004 the learned single judge of this court once again granted indulgence to the first defendant to pay the defaulted amount under the decree on or before the first week of April, 2004. 7. Thereafter the workers union of the company also filed a writ petition in this court being Writ Petition No.823 of 2004. Once again by an order :6: :6: :6: dated 2.4.2004 the matter was adjourned for amicable settlement between the parties but ultimately no settlement was arrived at and thus on 29.4.2004, the said petition was also dismissed. 8. There were admittedly defaults in repayment of the instalments amount as stipulated in the consent terms. In view thereof the receiver stood appointed and the receiver commenced the proceedings for disposal of the assets. In the course of the said sale on 12.1.2005 on the report of the court receiver dated 4.1.2005 this court once again gave a chance to the defendant to pay the entire decreetal amount on or before 15.2.2005 and the defendant agreed to make payment of Rs.1 crore towards the part payment of the said decreetal amount to show their bonafide. Inspite of the said indulgence being granted the defendant failed to make the payment as agreed upon. 9. Overcoming all these legal wrangles the plaintiff put the said mortgage properties for sale but still the present chamber summons has been taken out to forstall the completion of the said sale. By :7: :7: :7: my ad-interim order dated 7.3.2005 passed in the present chamber summons I directed that all further actions in execution of the said decree shall be subject to the final outcome of the present chamber summons. The matter was thereafter mentioned by both the parties before me and I was requested to take up the matter expeditiously in view of the urgency involved in the present case. Accordingly the present chamber summons is heard. 10. This camber summons is taken out under order 21 rule 89 and order 21 rule 90 read with section 151 of CPC for the reliefs that the sale of the said properties described in Exhibit-1 and 2 to the chamber summons which has been conducted by public auction on 14.12.2004 and confirmed by this court by an order dated 15.2.2005 be set aside and all further proceedings in execution of the said the consent decree dated 23.6.2000 to be declared null and void and set aside. 11. The main contention on the basis of which aforesaid reliefs are sought are the provisions of :8: :8: :8: sub-section (4) of section 39 of the CPC which has been introduced by an Amending Act of 2002. It has been contended that by virtue of amendment to the said provisions of section 39. It is not open for this court to execute a decree against any person or property which is not situated within the local limits of its jurisdiction . It has been contended that in the present case the decree is sought to be executed by this court in respect of the properties which are situated in the State of Tamil Nadu. According to the learned counsel the same is not permissible in view of the aforesaid provision and that the decree must be transmitted to the Court in Tamil Nadu for its execution. According to the learned counsel the said execution of the decree without transmission thereof is without jurisdiction and the same is null and void and bad in law. It is therefore contended that the execution proceeding initiated by the respondent judgment creditor is illegal, unlawful and is liable to be set aside. It has been contended that the appropriate court which has jurisdiction is that within whose local limits the said properties are situated and it is not open :9: :9: :9: for the judgment creditor to execute the decree via the mode of court receiver in contravention of the mandate of law under sub-section 4 of section 39. It has been contended that after the amendment in 2002 to the CPC it is the mandate of law that only the court within whose local limits the said properties are situated alone shall have jurisdiction and no other court. The learned counsel in support of the aforesaid contention has relied upon the provisions of Section 39 and Section 51 of the CPC and it is contended that the provisions of section 51 of the CPC which contemplates different modes of execution to enforce the decree opens with the words "subject to such conditions and limitation as may be prescribed". The words "subject to such conditions and limitations as may be prescribed" according to the learned counsel for the applicant judgment debtor is the limitation prescribed by virtue of the provisions of section 39(4) of the CPC and therefore the decree cannot be executed unless the said conditions as contemplated under sub-section 4 of the said section 39 is complied with. It has been thus contended that execution of the decree by any of the :10: :10: :10: modes prescribed under the section 51 must be comply with the terms and conditions and limitations prescribed in the code and one such condition prescribed is under sub-section 4 of section 39. It is therefore contended that even if the execution has been resorted to via the mode of the court receiver as contemplated under sub-clause (d) of section 51 still it is be to be executed only by the court within whose local limits the properties are actually situated. It is therefore contended that the execution of the decree by the court receivers of this court in the present case without the transmission of the decree to the court where the said properties are situated in the state of Tamil Nadu is bad in law and consequently steps taken thereof are also illegal and without any merits. 12. On the other hand the learned counsel for the plaintiffs as well as the learned counsel for the auction purchaser of the said properties has contended that this court is totally empowered to execute its own decree and it has complete :11: :11: :11: jurisdiction to execute the decree without the transmission thereof to the Court where the properties are situated. It has been contended that the provisions of section 39 of the Act even after amendment do not apply to the execution of a decree through a Court Receiver. It is further contended that it is permissible to execute a decree under sub-clause(d) of section 51 via the receiver and the same can be done by this court which is a court who has passed the decree. In respect of the aforesaid contention the learned counsel has relied upon the provisions of S.37 and S.38 of the CPC and emphasized that the decree can be executed either by the court which has passed the same or the court to which it is has been sent for execution. It has been contended that it is only when the court decides that the decree is required to be sent for execution that the provisions of section 39 are applicable. If not, the court under S.38 is sufficiently empowered to execute its own decree. It has been further contended that there is no change in the position of law after the introduction of amendment which is in 2002 since the said amendment in fact codifies the view held by this :12: :12: :12: court in the case of Sahaba Yeshwant Naik vs Vindel Kumar reported in AIR 1985 Bom.79. 13. It has been further contended by the learned counsel for the respondent that the provisions of order 21 in its entirety do not apply in cases of an execution of a decree by the court receiver. It has been contended that execution of a decree by a court receiver is a totally different mode of execution and provisions of order 40 rule 1 apply and not the provisions of order 21 of the CPC. Alternatively it is contended by the learned counsel for the plaintiff judgment creditor that the present chamber summons should be dismissed because it is barred by the principle of resjudicata a well as it is not maintainable under order 21 rule 89 and order 21 rule 90 of the CPC. It has been further contended that the defendant judgment debtor is estopped from raising the aforesaid objections because he has consented to the execution of a decree by entering into the consent terms wihich interalia provides for mechanism of execution via the court receiver. It is also contended that the judgement debtor is not :13: :13: :13: entitled to raise the aforesaid objection becuase in earlier round of proceedings in execution he has not raised any such objection and in fact consented to the execution of decree by this court by its ommission to raise the objections. The learned counsel for decree holder has also pressed in service the doctrine of constructive resjudicata in the aforesaid facts. Learned counsel for the plaintiff has relied upon section 11 particularly the explanation 3, 4 and 5 and has contended that by virtue of the provisions contained in the said explanation to s.11 of the CPC the defendant judgment debtor is not entitled to raise the said issue. It is alternatively contended that order 21 rule 89 inter-alia contemplate that the objection to the sale must be taken up by the judgment debtor at the earliest point of time and the court must satisfy itself that the applicant has sustained substantial injury due to such material irregularities in conducting the sale of the said properties. It has been firstly contended that the defendant judgment debtor has not been able to show any material irregularity which has resulted in subsequent injury :14: :14: :14: to the respondent judgment debtor. It is contended that there is a substantial delays in approaching this court because the applicant could have taken up the aforesaid issue on or before the date of proclamation of sale and failure on the part of the judgment debtor to do so would disentitled him to raise the said issue at this juncture. 14. Before I deal with the rival contentions it is necessary that the relevant provisions of law as well as authorities cited by the rival parties set out inseratime. The relevant provisions are as under : "38. Court by which decree may be executed- A decree may be executed either by the court which passed it, or by the court to which it is sent for execution. 39. Transfer of decree.-(1) The court which passed a decree may, on the application of the decree holder send it for execution to another court of competent jurisdiction. (a)if the person against whom the decree is passed actually and voluntarily resides or carries on business or personally works for gain, within the local limits of the jurisdiction of such other court, or :15: :15: :15: (b)if such person has not property within the local limits of the jurisdiction of the court which passed the decree sufficient to satisfy such decree and has property within the local limits of jurisdiction of such other court, or (C)if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the court which passed it, or (d) if the court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other court. (2) The court which passed a decree may of its own motion send it for execution to any subordinate court of competent jurisdiction. (3) for the purpose of this section a court shall be deemed to be court of competent jurisdiction,if at the time of making the application for the transfer of a decree to it, such court would have jurisdiction to try the suit in which such a decree was passed. 51. Powers of court to enforce execution-Subject to such conditions and limitations as may be prescribed the court may, on the application of the decree holder order execution of the decree (a) by delivery of any property specifically decreed. (b) by attachment and sale or by sale without attachment of any property (c) by arrest and detention in prison :16: :16: :16: (for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section]; (d) by appointing a receiver, or (e) in such other manner as the nature of the relief granted may required; [Provided that, where the decree is for the payment of money, execution debtor an opportunity of showing cause why he should be not be committed to prison, the Court, for reasons recorded in writing, is satisfied.- (a) that the judgment debtor with the object or effect of obstructing or delaying the execution of the decree. (i) is likely to abscond or leave the local limits of the jurisdiction of the court, or (ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property or committed any other act of bad faith in relation to his property, or (b) that judgment debtor has or 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, or (c) that the decree is for a sum for which the judgment debtor was bound in a fiduciary capacity to account. Explanation- In the calculation of the means :17: :17: :17: of the judgment debtor for the purposes of clause (b) there shall be left out of account any property, which by or under law or custom having the force of law for the time being in force, is exempt from attachment in execution of the decree.] 89. Application to set aside sale on deposit- (1) Where immovable property has been sold in executinof a decree any person claiming an interest in the property sold at the time of the sale or at the time of making the applicaiton or acting for or in the interest of such person,] may apply to have the sale set aside on his depositing in Court- (a)for payment to the purchaser, a sum equal to five per cent of the purchase money and (b)for payment to the decree holder, the amount specified in the proclomation of sale as that for the recovery of which the sale was ordered less any amount which may, since the date of such proclomation of sale, havwe been received by the decree holder. (2) Where a person applies under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule. (3) Nothing in this rule shall relieve the judgment debtor from any liability he may be under in respect of costs and interest not covered by the procolamation of sale. 90. Application to set aside sale on ground of irregularity or fraud- (1) Where any immovable property has been sold in execution of a decree, the decree holder, or the :18: :18: :18: purchaser, or any other person entitled to share in a rateable distribution of assets, or whose interests are affected by the sale, may apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it. (2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud. (3)No application to set aside a sale under this rule shall be entertained upon any ground which the applicant could have taken on or before the date on which the proclomation of sale was drawn up. Explanation-The mere absence of, or defect in, attachment of the property sold shall not, by itself, be a ground for setting aside a sale under this rule." 15. Mr. Tulzapurkar appearing for the plaintiff judgment creditor in support of his contention has relied upon the judgment of the apex court in the case of Tarinikamal Pandit and Ors vs. Perfulla Tarinikamal Pandit and Ors vs. Perfulla Tarinikamal Pandit and Ors vs. Perfulla Kumar Chatterjee reported in AIR 1979 SC 1165 Kumar Chatterjee reported in AIR 1979 SC 1165 Kumar Chatterjee reported in AIR 1979 SC 1165 particularly para-16 of the said judgment which reads particularly para-16 of the said judgment which reads particularly para-16 of the said judgment which reads as under : as under : as under : :19: :19: :19: "16. The second question the learned counsel raised was that the suit is barred under section 66 of the Civil Procedure Code. The trial court overruled the plea on the ground that although the sale in question is a court sale it is not according to the rules prescribed by the Civil Procedure Code but only according to the Rules of the Calcutta High Court on the Original Side. The learned counsel submitted that the purpose of Section 66, Civil Procedure Code, applies equally to the court sales conducted under Rules of Civil Procedure Code as well as those conducted under the High Court Rules. Reliance was placed on a decision of the Privy Council in Bishun Dayal v. Kesho Prasad AIR 1940 PC 202, where the only case pleaded by the plaintiff was that the person through whom he claimed derived his right to half of the village from the auction purchase having been made in part on his behalf by the auction purchaser, it was held that the claim was barred by Section 66, Civil Procedure Code, inasmuch as no case independent of auction purchase and basing title upon such subsequent plaint. Section 66 of the Civil Procedure Code run as follows :- "66.(1) No suit shall be maintained against any person claiming title under a purchase certified by the court in the manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims. (2) Section 66 prohibits any person claiming that a purchase certified by the court in such manner as may be prescribed in favour of a person was made on behalf of the plaintiff. In order to invoke the prohibition it is necessary to establish that the person against whom the suit cannot be maintained is a person claiming title under a purchase certified by the :20: :20: :20: court in such manner as may be prescribed. A certificate by the court