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D. Viswanathan And Another Revision v. The Karnataka Bank Ltd. .
Structured Summary of the Provided Legal Opinion
Factual and Procedural Background
The judgment-debtors are the petitioners in a civil revision challenging an order of the learned Subordinate Judge. The impugned order rejected the judgment-debtors' objection to personal execution on the ground that they had no means and it also ordered a warrant against them. The decree is for payment of money and both defendants are jointly and severally liable under the suit document and the decree. Pursuant to notice under Order 21, Rule 37, both defendants filed objections claiming they were not liable to personal execution because they had no means to pay the decree amount. In response, the decree-holder filed an affidavit alleging that the first defendant had a business and income and therefore had means to pay. The first defendant's counter-affidavit denied having income or means, but did not specifically deny having a business. The execution court treated the first defendant's failure to specifically deny the business as grounds for an adverse inference and held he had means; the court also treated the second defendant as a surety and held that a plea of no means was not available to him.
Legal Issues Presented
- Whether the execution court was correct in ordering personal execution (including issuing a warrant) without the decree-holder adducing proof sufficient to satisfy the court of the statutory conditions under Section 51 of the Code of Civil Procedure, when the judgment-debtors had denied having means to pay.
- Whether a judgment-debtor who is alleged to be a surety can be denied the plea of no means (i.e., whether a plea of no means is unavailable to a surety) in the context of ordering personal execution under S. 51 and Order 21, Rule 37.
Arguments of the Parties
Decree-holder's Allegations
- The decree-holder alleged in an affidavit that the first defendant was operating a business and earning income from it, and therefore had the means to pay the decree amount.
First Defendant's (Judgment-debtor's) Position
- The first defendant filed a counter-affidavit stating he had no income and no means to pay the decree debt, and therefore could not be lawfully arrested and detained. He did not, however, specifically deny the existence of a business in that affidavit.
Second Defendant's (Judgment-debtor's) Position
- The second defendant contended that he could not be proceeded against by arrest and detention on the ground of no means. The execution court rejected this contention on the basis that the second defendant was a surety and that a plea of no means was not available to a surety.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court proceeded through a step-by-step analysis confined to the material and law set out in the opinion:
- The court observed that the decree is for payment of money and that the defendants are jointly and severally liable; therefore it is incorrect for the execution court to treat one as a "principal debtor" and the other as a "surety" where the liability is co-extensive under the decree and document.
- The court identified the statutory framework under Section 51 of the Code of Civil Procedure: before ordering detention in prison for execution of a money decree the court must give the judgment-debtor an opportunity to show cause why he should not be committed, and the court must be satisfied for reasons recorded in writing that one of the conditions (a)(1), (a)(2), (b) or (c) in S. 51 exists. The opinion states that only condition (b)—that the judgment-debtor has or had since the date of the decree the means to pay the amount or some substantial part thereof and neglects or refuses to pay—was relevant in the present dispute.
- The court emphasized that when a judgment-debtor denies the decree-holder's allegations justifying personal execution, it is the decree-holder who must satisfy the execution court that the statutory conditions for arrest and detention exist. The burden of providing materials to enable the court to reach the requisite satisfaction rests on the decree-holder. Even if strict proof is not required, the decree-holder must place materials from which the court may, if appropriate, draw inferences and record reasons in writing. Recording the court's satisfaction in writing is a condition precedent to ordering arrest and detention.
- The court criticized the execution court's approach of drawing an adverse inference against the first defendant on the basis that he had not specifically denied the existence of a business. The appellate court held that such an inference was not legally warranted because: (a) denial of income is a denial of means from all sources; (b) absence of a specific denial of business does not establish the profitability of any business or that it yields means sufficient to satisfy the decree; and (c) it is not the judgment-debtor's burden to prove the absence of means. Placing that burden on the judgment-debtor or requiring him to prove the volume or profitability of a business is unsupported by law and contrary to the object and spirit of S. 51 and Order 21, Rule 37.
- Regarding the second defendant, the court rejected the execution court's view that a plea of no means is unavailable to a surety so as to preclude him from opposing personal execution. The opinion explained that where liability is joint and several under the decree, the execution court is concerned only with whether personal execution can be had under the decree against the judgment-debtors; it is not the execution proceeding's role to adjudicate inter se claims (for example, claims by a surety against a principal for contribution) which must be enforced in a different forum.
- The court noted the limited exception in the proviso to Order 21, Rule 37 permitting the court to issue a warrant without notice where it is satisfied the judgment-debtor is likely to abscond, but stressed that even in such cases actual commitment to custody requires that the decree-holder satisfy the court of the statutory circumstances permitting arrest and detention.
- Applying these principles to the facts before it, the court recorded that both defendants had denied the existence of the statutory condition in Section 51(b) (i.e., that they had means to pay and refused or neglected to pay), and that the decree-holder had not adduced any evidence to demonstrate the existence of those conditions. On that basis, the execution court's findings were held to involve material irregularity and to have resulted in prejudice.
Holding and Implications
Holding: The civil revision petition is allowed; the impugned order is set aside and the matter is remanded for fresh disposal on the merits. The order is set aside without costs.
Implications:
- The direct effect of the decision is to undo the execution court's order rejecting the no-means objections and ordering warrant/arrest, and to require rehearing of the execution objections in conformity with the principles stated in this opinion.
- The court confirmed that (i) when judgment-debtors deny they have means the burden is on the decree-holder to place materials enabling the execution court to be satisfied of the statutory conditions under Section 51, and (ii) a judgment-debtor who may be described as a "surety" under some accounts is not automatically precluded from raising a plea of no means where liability under the decree is joint and several. The execution court must record written reasons before ordering arrest and detention.
- The opinion does not purport to establish any broader precedent beyond the application of the statutory requirements (S. 51 and O. 21, R. 37) to the facts before it; its practical consequence is to require stricter adherence by execution courts to the statutory burden and to disallow adverse inferences that improperly shift the burden onto judgment-debtors to prove absence of means.
Petition allowed.
1. Judgment-debtors are the revision petitioners. Revision is directed against an order rejecting their objection to personal execution on the ground of no means and ordering warrant against them.
2. Decree is for payment of money. First defendant is said to be the principal debtor and second defendant the surety. But it is undisputed that under the suit document as well as under the provisions of the decree they are jointly and severally liable.
3. Pursuant to notice under O. 21, R. 37 both of them filed objection stating that they are not liable to personal execution because they have no means to pay the decree amount or any portion of it. In the affidavit filed by the decree-holder there was an allegation that first defendant is having a business and income from it and hence he has means to pay the decree amount. In the counter-affidavit the first defendant did not specifically say that he has no business but said he has no income and means to pay the decree debt and therefore he is not liable to be arrested and detained.
4. Without calling upon the decree-holder to adduce evidence or taking or considering any evidence from him the learned Subordinate Judge said:
“In allegation of the petitioner that the first respondent is having a business is not specifically denied. That means, the first respondent is having a business and if the first respondent is having a business, it is up to him to prove the volume of business. That having been not done, an adverse inference will have to be drawn against him. Thus as far as the first respondent is concerned his plea of no means falls to the ground. I, therefore hold that the first respondent is possessed of sufficient means to pay the decree debt”.
The objection of the second defendant was disposed of on the following terms:
“The first respondent is the principal debtor and second respondent is the surety. It is well settled proposition of law that plea of no means to a surety is not available. Plea of no means is, therefore, unavailable to a surety and that being so, the contention of the second respondent that he cannot be proceeded with by arrest and detention in civil prison cannot be countenanced with”.
5. These “well settled propositions of law” came from a senior civil judicial officer. In the first place when the decree is for payment of money jointly and severally against two or more defendants there is no question of one being a principal debtor and the other a surety. Both are equally liable for the entire amount and the decree-holder is entitled to realise the amount from any of them. Even on the basis of the document creating liability the creditor need not be concerned with who is the principal debtor and who is the surety so long as the liability is co-extensive. There cannot be any discrimination between them in the matter of liability, of course depending on the terms of the document of transaction creating liability. If in this case second defendant has any claim against the first defendant on account of payment of the decree amount that is not a matter arising in execution and it has to be enforced elsewhere. I am not aware and I was not shown any “well settled proposition of law” that in a money decree personal execution could be ordered against a person without affording him an opportunity to show cause why he should not be committed to the civil prison and when he shows cause, without the requisite satisfaction, simply on the ground that he is a surety. From where the execution court got the inspiration of the “well settled proposition of law” is not known. If such a legal proposition is accepted the position of a surety must be taken to be worse than that of the principal debtor. In preference to the principal debtor it may be in favour of the surety that Courts may in deserving case be inclined to show some equity.
6. Under S. 51 of the Code of Civil Procedure when the decree is for payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to civil 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 (1) is likely to abscond or leave the local limits of the jurisdiction of the Court, or (2) 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 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 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. We are not concerned with contingencies (a)(1) and (2) or (c) because there is no such case for either side. The dispute is whether condition (b) exists or not. In relation to Cls. (b) and (c) the object or effect of obstructing or delaying execution of the decree is not relevant.
7. Whether the first defendant was the original debtor and whether second defendant has only stood surety for him, the execution court is concerned only with the liability under the decree and see whether personal execution could be had against them. It is the decree-holder who wants personal execution. When his allegations for that purpose are denied it is for him to satisfy the court that conditions for ordering personal execution are there. Even in cases where the judgment-debtor did not come forward to oppose personal execution the satisfaction of the conditions by the Court is necessary and that satisfaction has to be provided by the decree-holder by affidavit or otherwise. In the absence of the satisfaction of the court he is the person who suffers by refusal of personal execution. Personal execution is not by way of penalty for non-payment of the decree amount. It is to enforce payment of the decree. By sending a penniless man, who did not do any act of dishonesty, to civil prison, no purpose is going to be served and the only result is that the decree-holder could shell out good money after bad money and have the satisfaction that his debtor is sent to civil prison. When denied, the burden of providing that the circumstances as are applicable under S. 51, exist is on the decree-holder. Strict proof may not be required. On the materials placed the execution court may be entitled to draw an inference as regards the statutory requirements. Anyhow such materials, whatever be the nature and scope, will have to be supplied by the decree-holder in order that the execution court gets the requisite satisfaction which has to be recorded in writing with the reasons. That is a condition precedent to execution by arrest and detention.
8. Under the proviso to O. 21, R. 37, even without issuing a notice the court can issue warrant and bring the judgment-debtor if it is satisfied that with the object or effect of delaying the execution of the decree, the judgment-debtor is likely to abscond or leave the local limits of the jurisdiction of the court. That is only to procure his otherwise impossible presence. Even in such a case actual commitment to civil prison is only when the decree-holder satisfies the court of the existence of the circumstances permitting arrest and detention in execution of the decree. The view taken by the execution court that the second defendant is foreclosed from raising any objection regarding means and proof of the existence of the statutory conditions as against him is not required by reason of himself being a surety cannot be accepted.
9. Both defendants denied existence of the statutory conditions alleged as against them by the decree-holder for personal execution and the decree-holder has not adduced any evidence also. So far as this case is concerned, what is required to be proved is that the judgment-debtors have or had since the date of the decree, the means to pay the decree amount or some substantial portion of it and they refused or neglected to pay. The question is not whether first defendant is having a business or not. When he completely denies means it is means from all sources. What the court is concerned is whether he is having the capacity. When he denies that capacity it is to be proved by the decree-holder. The attitude taken by the execution court that the business was not specifically denied and therefore he must be held to have a business from which he is having income is not a practical approach in consonance with the object and spirit of S. 51 and O. 21, R. 37 which are intended to see that judgment-debtors not possessed of sufficient means who did not commit any acts of mala fides envisaged in these provisions should not be detained in prison. It is too much for the execution court to say that judgment-debtor has to prove the volume of his business and its income. Solely for the reason that the business was not specifically denied even when he totally denies his income from any source. Such a burden of proof is unknown to law. The adverse inference drawn by the execution court is further more ridiculous. Even taking for granted that omission to deny existence of the business is capable of raising an inference that first defendant is having a business, does it automatically follow that the business is profitable and there is means. Can there be a presumption that all businesses are profitable and is it possible on that “basis to shift the burden which is on the decree-holder? The answers must be in the negative. Placing burden on the judgment-debtor to prove no means is unknown to law.
The order suffers from material irregularity in the exercise of the jurisdiction and it resulted in prejudice also. The civil revision petition is allowed and the order set aside without costs. The matter is remanded for disposal afresh on the merits in the light of what is stated above.
Petition allowed.
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