Jolly George Verghese & ANR Vs.
The Bank of Cochin [1980] INSC 19 (4 February 1980)
KRISHNAIYER, V.R.
KRISHNAIYER, V.R.
PATHAK, R.S.
CITATION: 1980 AIR 470 1980 SCR (2) 913 1980
SCC (2) 360
CITATOR INFO :
RF 1984 SC1213 (7) R 1986 SC 180 (39) RF 1990
SC 605 (20)
ACT:
Code of Civil Procedure-Section 51, Order 21,
rule 37- Scope of-Debtor, if could be imprisoned for failure to pay his
debts-Imprisonment when could be ordered.
HEADNOTE:
The appellants were the judgment-debtors
while the respondent-bank was the decree-holder. In execution of the decree a
warrant for arrest and detention in civil prison was issued to the appellants
under section 51 and order 21, rule 37 of the Code of Civil Procedure. On an
earlier occasion there had been a similar warrant for arrest in execution of
the same decree. The decree-holders also proceeded against the properties of
the judgment-debtors and in consequence all their immovable properties had been
attached for the purpose of sale in discharge of the decree- debts. A receiver
was appointed by the execution court to manage the properties under attachment.
Even so, the court had issued a warrant for the arrest of the judgment-debtors
because on an earlier occasion a similar warrant had already been issued
without any investigation as regards the current ability of the
judgment-debtors to clear off the debts or their mala-fide refusal, if any, to
discharge the debts.
On the question whether under such
circumstances personal freedom of the judgment-debtors can be held to ransom
until repayment of the debt.
Allowing the appeal,
HELD: 1. The words in section 51 which hurt
are "or has had since the date of the decree the means to pay the amount
of the decree." Superficially read this implies that if at any time after
the passing of an old decree the judgment- debtor had come by some resources
and had not discharged the decree he could be detained in prison even though at
that later point of time he was found to be penniless. This is not a sound
position, apart from being inhuman going by the standards of Article 11 of the
International Covenant on Civil and Political Rights and Article 21. A simple
default to discharge is not enough. There must be some element of bad faith
beyond mere indifference to pay, some deliberate or recusant 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.
Considerations of the debtor's other pressing
needs and straitened circumstances will play prominently. [922E-G]
2. Unless there be some other vice or mens
rea apart from failure to foot the decree, international law frowns on holding
the debtor's person in civil prison, as hostage by the court. India is now a
signatory to this Covenant and Article 51(c) of the Constitution obligates the
State to "foster respect for 914 international law and treaty obligations
in the dealings of organised peoples with one another". Even so, until the
Municipal Law is changed to accommodate the Covenant what binds the courts is
the former not the latter. [918A-B]
3. Quondom affluence and current indigence
without intervening dishonesty or bad faith in liquidating his liability can be
consistent with Article 11 of the Covenant because then no detention is
permissible under section 51 of the Code of Civil Procedure. [921G]
4. The high value of human dignity and the
worth of the human person enshrined in Article 21, read with Articles 14 and
19, obligates the State not to incarcerate except under law which is fair, just
and reasonable in its procedural essence. To cast a person in prison because of
his poverty and consequent inability to meet his contractual liability is
appalling. To be poor is no crime and to "recover" debts by the
procedure of putting one in prison is flagrantly violative of Article 21 unless
there is proof of the minimal fairness of his willful failure to pay in spite
of his sufficient means and absence of more terribly pressing claims on his
means such as medical bills to treat cancer or other grave illness.
Unreasonableness and unfairness in such a procedure is inferable from Article
11 of the Covenant.
But this is precisely the interpretation put
on the proviso to section 51 C.P.C. and the lethal blow of Article 21 cannot
strike down the provision as interpreted. [922A-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1991 of 1979.
Appeal by special leave from the Judgment and
Order dated 9-7-1979 of the Kerala High Court in C.R.P. No. 1741 of 1979.
M. M. Abdul Khader and K. M. K. Nair for the
Appellants.
K. M. Iyer and V.J. Francis for the
Respondent.
The Judgment of the Court was delivered by
KRISHNA IYER. J.-This litigation has secured special leave from us because it
involves a profound issue of constitutional and international law and offers a
challenge to the nascent champions of human rights in India whose politicised
pre-occupation has forsaken the civil debtor whose personal liberty is
imperilled by the judicial process itself, thanks to s. 51 (Proviso) and O. 21,
r. 37, Civil Procedure Code. Here is an appeal by judgement-debtors-the
appellants-whose personal freedom is in peril because a court warrant for arrest
and detention in the civil prison is chasing them for non-payment of an amount
due to a bank- the respondent, which has ripened into a decree and has not yet
been discharged. Is such deprivation of liberty illegal? From the perspective
of international law the question posed is whether it is right to enforce a
contractual liability by imprisoning 915 a debtor in the teeth of Art. 11 of
the International Covenant on Civil and Political Rights. The Article reads:
No one shall be imprisoned merely on the ground
of inability to fulfill a contractual obligation.
(Emphasis added) An apercu of Art. 21 of the
Constitution suggests the question whether it is fair procedure to deprive a
person of his personal liberty merely because he has not discharged his
contractual liability in the face of the constitutional protection of life and
liberty as expanded by a chain of ruling of this Court beginning with Maneka
Gandhi's case.
Article 21 reads:
21. Protection of life and personal
liberty.-No person shall be deprived of his life or personal liberty except
according to procedure established by law.
A third, though humdrum, question is as to
whether, in this case, s. 51 has been complied with in its enlightened
signification. This turns on the humane meaning of the provision.
Some minimal facts may bear a brief narration
sufficient to bring the two problems we have indicated, although we must
candidly state that the Special Leave Petition is innocent of these two issues
and the arguments at the bar have avoided virgin adventures. Even so, the
points have been raised and counsel have helped with their submissions. We
therefore, proceed to decide.
The facts. The judgment-debtors (appellants)
suffered a decree against them in O.S. No. 57 of 1972 in a sum of Rs. 2.5
lakhs, the respondent-bank being the decree-holder.
There are two other money decrees against the
appellants (in O.S. 92 of 1972 and 94 of 1974), the total sum payable by them
being over Rs. 7 lakhs..In execution of the decree in question (O.S. 57 of
1972) a warrant for arrest and detention in the civil prison was issued to the
appellants under s. 51 and o.21, r. 37 of the Civil Procedure Code on
22-6-1979. Earlier, there had been a similar warrant for arrest in execution of
the same decree. Besides this process, the decree-holders had proceeded against
the properties of the judgment-debtors and in consequence, all these immovable
properties had been attached for the purpose of sale in discharge of the decree
debts. It is averred that the execution court has also appointed a Receiver for
the management of the properties under attachment. In short, 916 the enjoyment
or even the power to alienate the properties by the judgment-debtors has been
forbidden by the court direction keeping them under attachment and appointing a
Receiver to manage them. Nevertheless, the court has issued a warrant for
arrest because, on an earlier occasion, a similar warrant had been already
issued. The High Court, in a short order, has summarily dismissed the revision
filed by the judgment-debtors against the order of arrest. We see no
investigation having been made by the executing court regarding the current
ability of the judgment-debtors to clear off the debts or their mala fide
refusal, if any, to discharge the debts. The question is whether under such
circumstances the personal freedom of the judgment-debtors can be held in
ransom until repayment of the debt, and if s. 51 read with O. 21, r. 37, C.P.C.
does warrant such a step, whether the provision of law is constitutional.
tested on the touchstone of fair procedure under Art. 21 and in conformity with
the inherent dignity of the human person in the light of Art. 11 of the
International Covenant on Civil and Political Rights. A modern Shylock is
shacked by law's humane hand-cuffs.
At this stage, we may notice the two
provisions.
Section 51 runs thus:
51. 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;
(d) by appointing a receiver; or (e) in such
other manner as the nature of the relief granted may require.
Provided that, where the decree is for the
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 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 917 (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 the
judgment-debtor has, or has had sine 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
of the judgment-debtor for the purposes of clause (b), there shall be left out
of account any property which, by or under any law or custom having the force
of law for the time being in force, is exempt from attachment in execution of
the decree.
(Emphasis added) We may here read also order
21 Rule 37:
37. (1) Notwithstanding anything in these
rules, where an application is for the execution of a decree for the payment of
money by the arrest and detention in the civil prison of a judgment-debtor who
is liable to be arrested in pursuance of the application, the Court shall,
instead of issuing a warrant for his arrest, issue a notice calling upon him to
appear before the Court on a day to be specified in the notice and show cause
why he should not be committed to the civil prison:
Provided that such notice shall not be
necessary if the Court is satisfied, by affidavit, or otherwise, 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.
(2) Where appearance is not made in obedience
to the notice, the Court shall, if the decree-holder so requires, issue a
warrant for the arrest of the judgment-debtor.
Right at the beginning, we may take up the
bearing of Art. 11 on the law that is to be applied by an Indian Court when
there is a specific provision in the Civil Procedure Code, authorising
detention 918 for non-payment of a decree debt. The Covenant bans imprisonment
merely for not discharging a decree debt.
Unless there be some other vice or mens rea
apart from failure to foot the decree, international law frowns on holding the
debtor's person in civil prison, as hostage by the court. India is now a
signatory to this Covenant and Art. 51 (c) of the Constitution obligates the
State to "foster respect for international law and treaty obligations in
the dealings of organised peoples with one another". Even so, until the
municipal law is changed to accommodate the Covenant what binds the court is
the former, not the latter.
A. H. Robertson in "Human Rights-in
National and International Law" rightly points out that international
conventional law must go through the process of transformation into the
municipal law before the international treaty can become an internal law.
From the national point of view the national
rules alone count.. With regard to interpretation, however, it is a principle
generally recognised in national legal system that, in the event of doubt, the
national rule is to be interpreted in accordance with the State's international
obligations.
The position has been spelt out correctly in
a Kerala ruling on the same point. In that case, a judgment-debtor was sought
to be detained under O. 21, r. 37 C.P.C. although he was seventy and had spent
away on his illness the means he once had to pay off the decree. The
observations there made are apposite and may bear exception:
The last argument which consumed most of the
time of the long arguments of learned counsel for the appellant is that the
International Covenants on Civil and Political Rights are part of the law of
the land and have to be respected by the Municipal Courts.
Article 11, which I have extracted earlier,
grants immunity from imprisonment to indigent but honest judgment-debtors.
The march of civilization has been a story of
progressive subordination of property rights to personal freedom; and a
by-product of this subordination finds noble expression in the declaration that
"No one shall be imprisoned merely on the ground of inability to fulfill a
contractual obligation." This revolutionary change in the regard for the
human person is spanned by the possible shock that a resuscitated Shylock would
suffer if a modern Daniel were to come to judgment 919 when the former asks the
pound of flesh from Antonio's bosom according to the tenor of the bond, by
flatly refusing the mayhem on the debtor, because the inability of an
impecunious oblige shall not imperil his liberty or person under the new
dispensation proclaimed by the Universal Declaration of Human Rights. Viewed in
this progressive perspective we may examine whether there is any conflict
between s. 51 CPC and Article 11 of the International Covenants quoted above.
As already indicated by me, this latter provision only interdicts imprisonment
if that is sought solely on the ground of inability to fulfill the obligation.
Section 51 also declares that if the debtor has no means to pay he cannot be
arrested and detained.
If he has and still refuses or neglects to
honour his obligation or if he commits acts of bad faith, he incurs the
liability to imprisonment under s. 51 of the Code, but this does not violate
the mandate of Article
11. However, if he once had the means but now
has not or if he has money now on which there are other pressing claims, it is
violative of the spirit of Article 11 to arrest and confine him in jail so as
to coerce him into payment..........
The judgment dealt with the effect of
international law and the enforceability of such law at the instance of
individuals within the State, and observed:
The remedy for breaches of International Law
in general is not to be found in the law courts of the State because
International Law per se or proprio vigore has not the force or authority of
civil law, till under its inspirational impact actual legislation is
undertaken. I agree that the Declaration of Human Rights merely sets a common
standard of achievement for all peoples and all nations but cannot create a binding
set of rules. Member States may seek, through appropriate agencies, to initiate
action when these basic rights are violated; but individual citizens cannot
complain about their breach in the municipal courts even if the country
concerned has adopted the covenants and ratified the operational protocol. The
individual cannot come to Court but may complain to the Human Rights Committee,
which, in turn, will set in motion other procedures. In short, the basic human
rights enshrined in the International Covenants above referred to, may at best
inform judicial institutions and inspire legislative action within
member-States;
but apart from such deep reverence, remedial
action 920 at the instance of an aggrieved individual is beyond the area of
judicial authority.
While considering the international impact of
international covenants on municipal law, the decision concluded:
Indeed the construction I have adopted of s.
51, CPC has the flavour of Article 11 of the Human Rights Covenants. Counsel
for the appellant insisted that law and justice must be on speaking terms-by
justice he meant, in the present case that a debtor unable to pay must not be
detained in civil prison. But my interpretation does put law and justice on
speaking terms. Counsel for the respondent did argue that International Law is
the vanishing point of jurisprudence is itself vanishing in a world where
humanity is moving steadily, though slowly, towards a world order, led by that
intensely active, although yet ineffectual body, the United Nations
Organisation. Its resolutions and covenants mirror the conscience of mankind
and insominate, within the member States, progressive legislation; but till
this last step of actual enactment of law takes place, the citizen in a world
of sovereign States, has only inchoate rights in the domestic Courts under
these international covenants.
While dealing with the impact of the Dicean
rule of law on positive law, Hood Phillips wrote-and this is all that the
Covenant means now for Indian courts administering municipal law The
significance of this kind of doctrine for the English lawyer is that it finds
expression in three ways. First, it influences legislators. The substantive law
at any given time may approximate to the "rule of law", but this only
at the will of Parliament.
Secondly, its principles provide canons of
interpretation which express the individualistic attitude of English courts and
of those courts which have followed the English tradition. They give an
indication of how the law will be applied and legislation interpreted. English
courts lean in favour of the liberty of the citizen, especially of his person:
they interpret strictly statutes which purport to diminish that liberty, and
presume that Parliament does not intend to restrict private rights in the
absence of clear words to the contrary.
921 The positive commitment of the States
Parties ignites legislative action at home but does not automatically make the
Covenant an enforceable part of the corpus juris of India.
Indeed, the Central Law Commission, in its
Fifty Fourth Report, did cognise the Covenant, while dealing with s. 51 C.P.C.:
The question to be considered is, whether
this mode of execution should be retained on the statute book, particularly in
view of the provision in the International Covenant on Civil and Political
Rights prohibiting imprisonment for a mere non-performance of contract.
The Law Commission, in its unanimous report,
quoted the key passages from the Kerala ruling referred to above and endorsed
its ratio. 'We agree with this view' said the Law Commission and adopting that
meaning as the correct one did not recommend further change on this facet of
the Section.
It is important to notice that,
interpretationally speaking, the Law Commission accepted the dynamics of the
changed circumstances of the debtor :
However, if he once had the means but now has
not, or if he has money now on which there are other pressing claims, it is
violative of the spirit of Article 11 to arrest and confine him in jail so as
to coerce him into payment.
This is reiterated by the Commission:
Imprisonment is not to be ordered merely
because, like Shylock, the creditor says:
"I crave the law, the penalty and
forfeit of my bond." The law does recognise the principle that "Mercy
is reasonable in the time of affliction, as clouds of rain in the time of
drought." We concur with the Law Commission in its construction of s. 51
C.P.C. It follows that quondom affluence and current indigence without
intervening dishonesty or bad faith in liquidating his liability can be
consistent with Art. 11 of the Covenant, because then no detention is
permissible under s. 51, C.P.C.
Equally meaningful is the import of Art. 21
of the Constitution in the context of imprisonment for non-payment of debts.
The high 922 value of human dignity and the worth of the human person enshrined
in Art. 21, read with Arts. 14 and 19, obligates the State not to incarcerate
except under law which is fair, just and reasonable in its procedural essence.
Maneka Gandhi's case as developed further in Sunil Batra v. Delhi
Administration, Sita Ram & Ors. v. State of U.P. and Sunil Batra v. Delhi
Administration lays down the proposition. It is too obvious to need elaboration
that to cast a person in prison because of his poverty and consequent inability
to meet his contractual liability is appalling. To be poor, in this land of
daridra Narayana, is no crime and to 'recover' debts by the procedure of
putting one in prison is too flagrantly violative of Art. 21 unless there is
proof of the minimal fairness of his wilful failure to pay in spite of his
sufficient means and absence of more terribly pressing claims on his means such
as medical bills to treat cancer or other grave illness. Unreasonableness and
unfairness in such a procedure is inferable from Art. 11 of the Covenant. But
this is precisely the interpretation we have put on the Proviso to s. 51 C.P.C.
and the lethal blow of Art. 21 cannot strike down the provision, as now
interpreted.
The words which hurt are "or has had
since the date of the decree, the means to pay the amount of the decree".
This implies, superficially read, that if at any time after the passing of an
old decree the judgment-debtor had come by some resources and had not
discharged the decree, he could be detained in prison even though at that later
point of time he was found to be penniless. This is not a sound position apart
from being inhuman going by the standards of Art. 11 (of the Covenant) and Art.
21 (of the Constitution).
The simple default to discharge is not
enough. There must be some element of bad faith beyond mere indifference to
pay, some deliberate or recusant 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. Here considerations of the debtor's other pressing needs and straitened
circumstances will play prominently. We would have, by this construction,
sauced law with justice, harmonised s. 51 with the Covenant and the
Constitution.
The question may squarely arise some day as
to whether the Proviso to s. 51 read with O. 21, r. 37 is in excess of the
Constitutional 923 mandate in Art. 21 and bad in part. In the present case
since we are remitting the matter for reconsideration, the stage has not yet
arisen for us to go into the vires, that is why we are desisting from that
essay.
In the present case the debtors are in
distress because of the blanket distraint of their properties. Whatever might
have been their means once, that finding has become obsolete in view of later
happenings; Sri Krishnamurthi Iyer for the respondent fairly agreed that the
law being what we have stated, it is necessary to direct the executing court to
re- adjudicate on the present means of the debtors vis a vis the present
pressures of their indebtedness, or alternatively whether they have had the
ability to pay but have improperly evaded or postponed doing so or otherwise
dishonestly committed acts of bad faith respecting their assets. The court will
take note of other honest and urgent pressures on their assets, since that is
the exercise expected of the court under the proviso to s. 51. An earlier adjudication
will bind if relevant circumstances have not materially changed.
We set aside the judgment under appeal and
direct the executing court to decide de novo the means of the judgment- debtors
to discharge the decree in the light of the interpretation we have given.
P.B.R. Appeal allowed.
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