BARNES INVESTMENTS LTD. AND ORS.

RAJK. GUPTA AND ORS.

AUGUST 6, 2001

[V.N. KHARE AND MRS. RUMA PAL, JJ.]

Code of Civil Procedure 1908:

Section 151-0rder 21 Rules 54, 55 and 58-0rder of attachment of C immovable property issued in execution of decree against respondent- Modification of attachment by an interim order permitting respondent to construct multi-storey building on the property-Held, modification of attachment order improper.

D Appellants obtained a decree in their favour from Queen's Bench Division of the High Court in England against Respondent l for a sum equivalent to Rs. 3.60 crores in US dollars with interest at 15% per annum from the date of judgment. Appellant filed an execution application in a High Court in India requiring attachment of property and share holding of respondent l in the companies ofrespondents 2 to 7, in execution of the decree.

E As none of the respondents appeared before the High Court on issuing notice, the Court issued orders for attachment of property. Subsequently, an application was filed by respondent l under Order 21 Rule 58 CPC objecting to the attachment of property. Another application was filed by respondent l under Section 151 CPC for recalling the warrants of attachment.

F While these applications were pending, respondent l filed a suit against the appellants in the High Court praying for a declaration that the judgment passed by the Queen's Bench Division in favour of the appellants was void and sought for a permanent injunction restraining the appellants from executing the judgment and decree. An interim order was passed by the High G Court staying the execution of the decree.

Meanwhile, respondent 8 filed an application before the High Court seeking impleadment to the appellant's execution proceedings and also for recalling and setting aside the warrants of attachment. Another application was filed by respondent l under Section 151 CPC seeking same reliefs as H claimed earlier. An interim order was passed by Single Judge of the High 328

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BARNES INVESTMENTS LTD. v. RAJK. GUPTA 329

Court accepting the offer of respondent 8 and modifying the attachment order A subject to the condition that respondent 8 should file an affidavit undertaking not to sell 3000 sq. ft. of the covered area in the multi-storey building, which is proposed to be constructed on the property by respondent 8 and that it shall remain attached till the disposal of the main execution petition. An appeal was filed before the Division Bench of the High Court by the appellants which B was dismissed. • Allowing the appeal, the Court

HELD : I.I. There is nothing on record to show that the prayer of respondent 8 for being impleaded as a party in the execution proceedings had been allowed and yet the Single Judge of the High Court accepted the offer C of respondent 8 and partially allowed the application of the respondent 8 in terms of such offer. By the interm orders, the attachment has been directed to be effected on non-existent property. The building is proposed to be constructed by respondent 8 on the property. It has not been decided whether respondent 8 has any right to construct on the property. According to the D High Court's order, if and when the proposed building is constructed an attachment will be effected of an area of 3000 sq. ft. in an unspecified area of the building. The High Court has, in effect, removed the attachment for the present to be operative at an un-determined point of time in the future on property which is not and may never come into existence. As per Order 21 Rule 54 CPC, pending the determination of the validity of the order of E attachment and ultimate disposal of the execution applications, the High Court should not have allowed the attachment to be rendered infructuous.

(332-C, D, E, F(

1.2. If the High Court thought of lifting the attachment temporarily, it should have at ll'ast secured the decretal amount. In any case, the High Court . could not have passed an interim order virtually granting the final relief in execution applications without any decision on the merits of the case. (333-B]

1.3. Without any determination of the questions under Order 21 Rule

58 sub-Rule (2) CPC, the High Court did not have the jurisdiction to pass G any order varying the orders of the attachmei:it. The Single Judge observed that in the suit filed by respondent 1 an order has been passed staying the execution of the appellants' decree and that the order was still operative. In the circumstances, it was not open to the High Court to proceed with the execution proceedings. As long as the interim order passed in the suit filed by respondent 1 is operative, no further steps can be taken in the execution H

A proceedings. 1333-G; 334-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5042 of 2001.

From the Judgment and Order dated 5.10.98 of the Delhi High Court B in E.F.A. No. 5 of 1998.

Ashok Grover, Davinder Singh, for M/s. JBD & Co., for the Appellants.

R.K. Jain, Manmohan, Sumit Lal and Pradeep Kumar Bakshi for the C Respondents.

The Judgment of the Court was delivered by

RUMA PAL, J. Leave granted.

D The questions raised in this appeal relate to the interpretation of Order 21 Rules 54, 55 and 58 of the Code of Civil Procedure (hereinafter referred to as 'the Code'). All the provisions relate to the attachment of immovable property in execution of a decree.

The decree, in this case, was passed in favour of the appellants against E respondent No. I by the Queen's Bench Division of the High Court in England on 29th November I 990 for a sum of US$ 12,48,415,49 (being the equivalent of Rs. 3,6u,09,821.0I) together with interest@ 15 per cent per annum from the date of the judgment. The decree was put to execution by the appellants by filing an execution application in the original side of the Delhi High Court p on 27th November 1991 requiring the attachment of property, being 20, 3arakhamba Lane, New Delhi- I I 0 00 I and also tlie share holding of the respondent No. I in the companies of respondent Nos. 2 to 7 herein.

Nobody appeared on behalf of the judgment debtors before the Court when the matter was listed on 4th May, 1994. This was recorded by the Court which accordingly issued warrants of attachment with regard to premises No. 22, Barakhamba Lane, New Delhi-11000 I. The matter was made returnable on 31st August 1994. On an application for amendment moved by the appellants, the Court corrected the description of the premises to read as 20, Barakhamba Road, instead of Barakhamba Lane and the returnable date was H extended to 3rd January, 1995.

On 22nd September 1994 an objection was preferred to the attachment A by the respondent No. I under Order 21, Rule 58 of the Code ( EA 278/94).

A second application was also filed by the respondent No. I on the same date under Section 151 of the Code for recalling the warrants of attachment (E.A. 279/94). Neither of these applications appear to have been proceeded with.

While these applications were pending, on 16th January 1995 the B respondent No. I filed a suit against the appellants herein in the High Court of Delhi praying, inter-alia, for a declaration that the judgment passed by the Ql.leen's Bench Division in favour of the appellant was void. The respondent No. I also sought for a permanent injunction restraining the appellants from executing the judgment and decree of the High Court of England (hereinafter C referred to as 'the decree'). An interlocutory application was moved in the respondent No. I's suit and an order was passed on 3rd April, 1995 staying the execution of the decree. It is not in dispute that the interim order is still operative and the suit is pending.

On 17th October 1997, the respondent No. 8 herein, namely, United D Towers India Private Ltd., filed an application (EA No. 343/97) asking for impleadment as a party to the appellants' execution proceedings and also for recalling and setting aside the warrants of attachment dated 4th May 1994.

On the same day, an application (EA No. 344/97) was filed by the respondent No. I herein under Section 151 of the Code of Civil Procedure for seeking E substantially the same relief as had been claimed earlier in the application filed by him under Section 151 on 22nd September 1994.

Both the applications were heard by the Learned Single Judge and an interim order was passed on 3rd February, 1998 accepting the offer of the respondent No. 8 and modifying the attachment order dated 4th May 1994 F subject to the Principal Officer of the respondent No. 8 filing an affidavit undertaking not to sell 3000 sq. ft. of the covered area in the multi-storey building proposed to be constructed on the property by the respondent No.

8. The affidavit was to be accompanied. by a resolution of the Board of Directors of the respondent No. 8 authorising the Principal Officer of the G respondent No. 8 to furnish the undertaking. On the filing of the said affidavit, "the attachment order dated 4th May 1994 shall stand modified to the extent that 3000 sq. ft. of the covered area in the superstructure proposed to be constructed on the land in question shall remain attached till the disposal of the main execution petition''. The Learned Judge also set down EA No. 343/ 97 and EA No. 344/97 for trial on evidence.

. H

A The appellants preferred an appeal from the order dated 3rd February, l 99S before the Division Bench. The Division Bench affirmed the order of the Single Judge on 5th October, l 99S holding that he had not committed any illegality "by modifying the order of attachment but at the same time protecting the interest of the decree holder by requiring United Towers to file undertaking B not to sell 3000 sq. ft. of the covered area in the multi-storeyed building proposed to be constructed at 20, Barakhamba Road". The appeal was accordingly dismissed. Hence this appeal.

It is not necessary for us to go into the merits of the respective cases of the parties as we are of the view that the High Court was clearly procedurally C wrong in modifying the order of attachment dated 4th May 1994,

First, there is nothing on record to show that respondent No. S's prayer for being impleaded as a party in the execution proceedings had been allowed and yet the learned Single Judge accepted the respondent No. S's offer and partially allowed the application of the respondent No. S in terms of such D offer.

Secondly, by the impugned orders the attachment has been directed to be effected on non-existent property. The building is proposed to be constructed by respondent No. S on the property .. It has not been decided whether the respondent No.S has any right to construct on the property. According to the E High Court's order, if and when the proposed building is constructed an attachment will be effected of an area of 3000 sq. ft. in an unspecified area of the building. The High Court has in effect removed the attachment for the present to be operative at an un-determined point of time in the future on property which is not and may never come into existence.

F Thirdly, Order 21, Rule 54 in terms prohibits the judgment debtor from transfer or charging property attached in any way and all persons from taking any benefit from such transfer or charge. As long the order of attachment is operative, no third party rights can be created. Pending the determination of the validity of the order of attachment and ultimate disposal of G EA 343/97 and EA 344/97, the Court should not have allowed the attachment to be rendered infructuous.

Order 21, Rule 55 indicates situations where an attachment order may be withdrawn, namely, where

H "(a) the amount decreed with costs and all charges and expenses

resulting from the attachment of any property are paid into Court, or A

(b) satisfaction of the decree is otherwise made through the Court or certified to the Court, or

( c) the decree is set aside or reversed".

If the Court was minded to lift the attachment temporarily, it should, B therefore, have at least secured the decretal amount.

In any case the Court could not have passed an Interim order virtually granting the final relief in EA 343 and EA 344 without any decision on the merits of the case. This is fortified by Order 21, Rule 58 which has been C substituted in the Code by the Amendment Act, 1976. Sub-rule 2 of Rule 58 provides:

"(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication D of the claim or objection, shall be .determined by the Court dealing with the claim or objection and not by a separate suit."

It is only upon determination of the questions referred to in sub-Rule

(2) that the Court, in accordance with such determination may, either

(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or

(b) disallow the claim or objection; or

( c) continue the attachment subject to any mortgage, charge or .other interest in favour of any person; or

( d) pass such order as in the circumstances of the case it deems fit."

Without any determination of the questions referred to in sub-Rule (2), the Court did not have the jurisdiction to pass any order varying the orders of attachment.

The appellant has also raised a.preliminary issue as to the maintainablity

of EA 343/97 and EA 344/97. Under Order 21, Rule 58 sub-Rule (I) no claim or objection shall be entertained where the Court considers that the claim or objection was designedly or unnecessarily delayed. That the attachment order had been issued was known at least to the respondent No. I H

A in 1994. The High Court has not addressed its mind to this aspect before entertaining the applications filed by respondents Nos. I and 8.

Finally, the learned Single Judge himself observed that in the suit filed by respondent No. I, an order has been passed staying the execution of the appellants' decree and that that order was still operative. In the circumstances, B it was not open to the Court to proceed with the executicn proceedings. As long as the interim order passed in respondent No. l's suit is operative, no further steps can be taken in the execution proceedings.

We, therefore, allow this appeal and set aside the impugned orders of C the High Court but without any order as to costs.

B.S.

Appeal allowed.