Food Corporation of
India Vs. Sukh Prasad [2009] INSC 602 (24 March 2009)
Judgment
Reportable IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.380 OF 2007
Food Corporation of India ... Appellant Sukh Deo Prasad ... Respondent
R.V.RAVEENDRAN, J.
The Food Corporation
of India (`FCI' for short) challenges the order dated 6.3.2006 of the Allahabad
High Court, rejecting its appeal against the order dated 15.12.2004 passed by
the Additional District Judge (Special judge EC), Jhansi ordering attachment of
its properties under Order 39 Rule 2A of the Code of Civil Procedure (Code for
short) to an extent of Rs. 1,12,24,792.99.
Facts of the case :
2. In the year 1976,
the respondent (Sukh Deo Prasad) offered to construct and let out godowns to
FCI. For that purpose, the respondent and his brother V.K.Shukla obtained a
term loan of Rs.10 lakhs from the State Bank of India, Jhansi Branch (for short
`the bank') on 31.8.1977 and as security therefor mortgaged their land (in
Khard village) and house property (at Jhansi) in favour of the Bank by deposit
of title deeds. The repayment of the said loan was also guaranteed by one Raj
Narain Khare and Shri Kishan on 6.10.1977.
In addition, another
sum of Rs.5 lacs was sanctioned by the bank, by way of term loan to the
respondent on 29.8.1977, repayment of which was guaranteed by one Ram Kishore
Gupta and Khachore.
3. Three godowns were
constructed by the respondent and his brother and let out to FCI for a term of
five years in the year 1978. On the instructions of the lessors, FCI credited
the rents to the loan account of the landlords with the bank. FCI vacated the
said godowns and surrendered back possession in December, 1983.
4. The bank filed
Suit No.93/1991 (the court of the Special Judge, E.C. Jhansi) against the
respondent (Defendant No.1), the wife and son of his brother V.K.Shukla
(defendants 2 and 3), Raj Narain Khare (Defendant No.4 - guarantor for the loan
of Rs.10 lacs) and Ram Kishore Gupta and Khachore (defendants 5 and 6 -- guarantors
for the loan of Rs.5 lacs) for recovery of Rs.20,68,120.74 with interest at the
rate of 11% with monthly rents, by sale of the mortgaged properties and for
recovery of the balance amount, if any, personally from the defendants.
5. Defendants 1 to 3
in the suit contested the claim. They inter alia contended that the loan was
obtained for the purpose of constructing godowns for FCI, that FCI had agreed
to continue in occupation of those godowns as tenant until the entire loan due
by them (landlords) to the bank was cleared, that FCI had vacated the godowns
prematurely, and that therefore it should be made a party to the suit and made
liable for payment of the suit claim. Issue No.7 was framed in the suit, as to
whether suit was bad for non-joinder of FCI, and considered as a preliminary
issue. By order dated 18.5.1994, the court directed FCI be impleaded as the
seventh defendant in the suit.
4 FCI was not given
any opportunity to show cause before being impleaded.
6. In June 1994,
during the pendency of the said suit, the respondent and his son Sunil Kumar
offered a fresh lease of one of the three godowns and the appellant took it
temporarily on a month to month tenancy on a rent of Rs.0.50 paise per sq. ft.
The tenancy agreement made it clear that FCI could surrender back the godown
without any notice, whenever the same was not required.
7. On 18.1.1996 the
bank filed an application in its suit, seeking an interim direction to FCI to
restrain it from paying the rent for the said godown to defendants 1 to 3 and
for a further interim direction to FCI to deposit the rents relating to the
godown, to the loan account of defendants 1 to 3 with the bank. In the said
application, the bank averred that FCI had earlier taken the godowns on rent in
the year 1978 and had vacated them on the expiry of the lease period of 5
years; that in June, 1994, FCI had again taken on lease one of the godowns;
that inspite of having agreed that the bank was entitled to receive the rents
from the tenant (FCI), defendants 1 to 3 were collecting the rent in respect of
the said godown directly from FCI 5 with the intention of denying the same to
the bank, and that therefore it was entitled to an interim direction.
8. The trial court
allowed the said application by order dated 27.5.1996. It found that when FCI
had earlier taken the godowns on rent for five years, the borrowers had
authorized the Bank to receive the rent with the condition that if the lease
was not continued by FCI, the borrowers would be liable to pay the loan amount
from their own resources. It held that bank was authorized under the loan
documents executed by the borrowers to receive the rents in respect of the
mortgaged property directly from the tenant. But as the borrowers were
disputing the amount of liability, it issued the following directions in regard
to the rent for the godown :
(a) FCI shall deposit
the rent payable to defendants 1 and 2 (landlords) up to 31.3.1996 with the
Punjab National Bank by way of a fixed deposit in the name of the defendants 1
and 2.
(b) In regard to the
rent payable from 1.4.1996, in respect of every 12 months rent, 2 months rent
shall be paid directly to defendants 1 and 2 (towards building maintenance) and
balance 10 months' rent shall be deposited with plaintiff Bank, to be invested
in the name of the landlords/defendants 1 and 2 by way of MCC periodical
deposits.
(c) If FCI failed to
deposit the rent as aforesaid, it shall be liable to pay interest @ 13% per
annum on the rent defaulted.
6 (d) The amounts so
deposited will be dealt with in terms of decision on issue No.10 as to the
amount due to the bank, in the final judgment to be rendered.
9. FCI vacated the
said godown taken on rent in June 1994 on 7.2.1997. Before doing so, it issued
a notice dated 31.12.1996 to the landlords (respondent and his son) that
tenancy would stand terminated on expiry of 30 days from the date of service of
the said notice and called upon them to take possession. It informed the
landlords that it had deposited the rents upto December 1996 in the Bank in
terms of the order dated 27.5.1996 and sent the FD receipt to the court. It
also issued a public notice in the Daily Newspaper `Dainik Jagran' dated
18.2.1997 that it had vacated the godown taken on rent on 18.6.1994, on
7.2.1997.
10. The respondent
herein filed an application under Order 39 Rule 2A of the Code (Contempt
Application 31/1996) on 6.11.1996 alleging that FCI had disobeyed the order
dated 27.5.1996 and consequently the District Manager of FCI (Shri Ashraf Ali)
should be sent to civil jail and properties of FCI should be attached and
auctioned. The said application was dismissed for default on 12.11.1997.
7 11. Thereafter the
respondent filed yet another application (Misc. 49/1998) under Order 39 Rule 2A
of the Code against FCI, its Senior Regional Manager and three District
managers. In the said application respondent prayed that action should be taken
against FCI and its officers for contempt, by seizing and auctioning the
movable and immovable properties of FCI and by sending its four officers to
prison for not depositing the rents in terms of order dated 27.5.1996.
In the said
application, the respondent contended that in view of the interim order dated
27.5.1996, FCI became liable to deposit the rent for the three godowns from
1.12.1983 till 31.3.1996 and also continue to pay the rents from 1.4.1996. The
application was resisted by FCI and its officers.
12. The trial court
by order dated 15.12.2004 allowed the said application. It interpreted the
order dated 27.5.1996 as directing FCI to deposit of rent of three godowns from
December, 1983 up to 31.3.1996. Consequently, it held that FCI was liable to pay
the said arrears with interest at 13% per annum. Acting on a calculation sheet
provided by the respondent, it held that a sum of Rs.1,12,24,792.99 was due by
FCI towards such rent and interest; and as the said 8 amount was not
deposited, FCI was liable to be punished under Order 39 Rule 2A of the Code for
disobedience of the order dated 27.5.1996. It therefore directed that the
assets of FCI, both movable and immovable, should be attached under order 39
Rule 2A CPC in respect of the said sum of Rs.1,12,24,792.99.
13. Feeling
aggrieved, FCI filed an appeal (FAFO No. 343/2005) before the Allahabad High
Court. The High Court dismissed the appeal by a brief order dated 6.3.2006,
without prejudice to the rights of FCI to challenge the order of injunction,
with an observation that it was not competent to consider the validity of the
`injunction order' in an appeal against an order passed under order 39 Rule 2A
of the Code, for disobedience of the `injunction order'. The High Court assumed
that in the appeal against the order dated 15.12.2004 passed under Order 39
Rule 2A, FCI was trying to challenge the validity of the `injunction order'
dated 27.5.1996. The said order is challenged by FCI in this appeal by special
leave.
Questions for
decision
14. On the contentions
urged, the following questions arise for consideration :
9 (i) What is the
purport and effect of the order dated 27.5.1996 described by the trial court
and the High Court as the `injunction order'.
(ii) Whether the
respondent, who was the first defendant in the mortgage suit filed by the bank,
could maintain an application under order 39 Rule 2A of the Code for the
alleged disobedience by FCI (a co-defendant), of the order dated 27.5.1996 made
in an application filed by the plaintiff bank? (iii) Whether the trial court
was justified in allowing such application under Order 39 Rule 2A of the Code,
holding that FCI was liable to pay the rents for three godowns from December,
1983 to 31.3.1996 and interest thereon and direct attachment of the assets of
FCI to an extent of Rs.1,12,24,792.99? (iv) Whether the High Court was
justified in disposing of FCI's appeal in a summary manner? Re : Question (i) :
15. At the outset it
should be made clear that we are considering only the purport and effect of the
interim order dated 27.5.1996 and not the correctness or validity of the said
order, as what is under challenge is not the order dated 27.5.1996, but the
order dated 15.12.2004 under Order 39 Rule 2A of the Code holding that FCI had
disobeyed the order dated 27.5.1996.
16. The order dated
27.5.1996 was passed on an application dated 12.1.1996 filed by the plaintiff
bank. It was not filed either under Rule 1 or 2 of Order 39 of the Code. In
fact, the application did not mention the provision of law under which it was
filed. The bank did not claim that FCI had any privity of contract with it, nor
claim that FCI was a co-obligant. In the application, the bank specifically
stated that the relief sought by it in the said application for deposit of rent
was in regard to the godown belonging to defendants 1 to 3 that was taken on
rent by FCI during June, 1994. There is a further clear averment in the
application that FCI had vacated the godowns earlier taken by it on lease,
after the lease period (of 5 years) and that FCI had again taken one godown on
rent during the pendency of the suit and that the application related to that
godown. The order dated 27.5.1996 did not consider any claim for rent in regard
the to three godowns which were vacated in December 1983, nor consider the
contention of defendants 1 to 3 in their written statement that FCI had agreed
to continue beyond five years. The court did not hold or direct that FCI was
liable to pay any amount by way of rent or otherwise in regard to the three
godowns for the period December, 1983 to 31.3.1996. In fact there was no
reference to the three godowns at all 11 except to the statement of the bank
that FCI had vacated those godowns after the lease period (in December 1983).
The court was of the view that having regard to the dispute raised by the
defendants/borrowers in regard to the amount claimed by the bank, it will not
be proper to direct FCI to pay the rents directly to the bank.
As the bank had
stated that FCI had not paid the rent for the godown which it had taken on
lease in June, 1994, for non-fulfilment of the formalities by the landlords,
the court directed FCI to deposit the rents in regard to that godown up to
31.3.1996 and the same be kept in a fixed deposit with some other nationalized
bank. It also directed that in regard to the rent accruing in regard to that
godown from 1.4.1996 from out of rent payable during every year, two months
rent in a year should be paid to defendants 1 and 2 towards repairs and
maintenance and remaining 10 months rent should be deposited with the bank, for
being invested in a MCC deposit. It also directed that in the event of
non-payment of such rent by FCI, it shall pay interest at 13% per annum. Thus
there was no application for an `injunction', nor any order of `injunction' by
the court. An interim direction to a defendant-tenant in a suit by the creditor
against the landlords/borrowers, to deposit the arrears of rent in court and
to 12 continue the deposit the rents in court with a condition that the tenant
will have to pay interest if the rent was not so deposited, cannot be
considered to be an order of `injunction'. In a general sense, though every
order of a court which commands or forbids is an injunction, but in its
accepted legal sense, an injunction is a judicial mandate operating in personam
by which, upon certain established principles of equity, a party is required to
do or refrain from doing a particular thing [see Howard C. Joyce - A Treatise
on the Law relating to injunctions (1909) S. 1 at 2-3]. A direction to pay
money either by way of final or interim order, is not considered to be an
`injunction' as assumed by the courts below.
17. Admittedly the
application dated 12.1.1996, on which the order dated 27.5.1996 was passed, did
not fall under Rule 1 of Order 39 as the prayer therein did not relate to any
of the three matters mentioned in clauses (a), (b) and (c) of the said rule. It
did not also fall under Rule 2 of Order 39 as admittedly there was no contract
between the bank and FCI nor any allegation that FCI was committing any injury
of any kind to the bank. Therefore, the order dated 27.5.1996 was not an order
under either Rule 1 or Rule 2 of Order 39 of the Code. The suit itself was for
recovery of the amounts due by the borrowers, by 13 sale of the mortgaged
properties belonging to the borrowers (defendants 1 to 3) and to recover the
balance personally from the borrowers and guarantors (defendants 1 to 6). When
FCI was subsequently added as seventh defendant at the instance of defendants 1
to 3, no relief was sought against FCI nor was the prayers amended seeking any
decree against FCI. If there was no prayer in the suit against FCI, obviously
no interim relief could have been sought against FCI as a defendant. Even
assuming that the final relief was sought against FCI also, the position is
that FCI was only a `garnishee defendant' and not a `principal defendant'. The
order dated 27.5.1996 was not an injunction order, but an interim prohibitory
(garnishee) order by way of attachment before judgment, in regard to the rents
payable for one godown taken by it on lease in June, 1994.
Re : Question (ii)
18. An application
under Order 39, Rule 2A of the Code is maintainable only when there is
disobedience of any `injunction' granted or other order made under Rule 1 or
Rule 2 of Order 39 or breach of any of the terms on which the injunction was
granted or the order was made. We have already noticed that the application by
the bank, on which the said order dated 27.5.1996 was passed, was 14 neither
under Rule 1 nor under Rule 2 of Order 39 CPC and none of the ingredients
required for an application under either Rule 1 or Rule 2 of Order 39 existed
was found in the application by the bank.
As the order dated
27.5.1996 was neither under Rule 1 or 2 of Order 39, the application under Rule
2A of Order 39 was not maintainable.
19. Even otherwise,
the respondent had no locus to file an application under Order 39 Rule 2A
alleging disobedience of the order dated 27.5.1996. The plaintiff bank which
filed the application dated 12.1.1996 on which the said order dated 27.5.1996
was passed, did not complain of any disobedience or breach of the order dated
27.5.1996, nor sought any action or relief against FCI alleging non- compliance
or disobedience of the order dated 27.5.1996. As the interim order dated
27.5.1996 was not made on an application made by the respondent and as the
interim order was not intended for the benefit to the respondent who was the
first defendant in the suit, he could not be said to be a person aggrieved by
the alleged disobedience or breach of the order dated 27.5.1996.
20. The garnishee
proceedings are governed by Rules 46 and 46A to 46F of Order 21 of the Code.
Sub-para (1) of Rule 46 A provides that in the case of a debt (other than a
debt secured by a mortgage or a 15 charge) which has been attached under Rule
46, upon the application of the attaching creditor, the court may issue notice
to the garnishee liable to pay such debt, calling upon him either to pay into
court the debt due from debtor or to appear and show cause why he should not do
so. Rule 46B provides that where the garnishee does not forthwith pay into
court the amount due from him to the debtor and does not appear and show cause
in answer to the notice, the court may order the garnishee to comply with the
terms of such notice, and on such order, execution may issue as though such
order were a decree against him. Rule 46C provides that where the garnishee
disputes liability, the court may order that any issue or question necessary
for the determination of liability shall be tried as if it were an issue in a
suit, and upon the determination of such issue shall make such order or orders
as it deems fit. It would thus be seen that the amount due by a garnishee, if
disputed has to be determined as if it was an issue in the suit and the court
can appropriate order determine the extent of liability of the garnishee. In
this case, there was no adjudication of the amount payable by FCI. Whatever
amount that was due in pursuance of the order dated 27.5.1996 in regard to one
godown taken on lease in June 1994, was deposited by FCI and the plaintiff 16
bank at whose instance the order was made has no complaint or grievance.
21. At all events, if
a garnishee, or a defendant, who is directed to pay any sum of money, does not
pay the amount, the remedy is to levy execution and not in an action for
contempt or disobedience/breach under order 39 Rule 2A. This is evident from
Rule 46B of Order 21 read with Rule 11A of Order 38 of the Code.
Contempt
jurisdiction, either under the Contempt of Court Act, 1971, or under Order 39
Rule 2A of the Code, is not intended to be used for enforcement of money
decrees or directions/orders for payment of money. The process and concept of
execution is different from process and concept of action for
disobedience/contempt.
Re : Question (iii)
22. The application
dated 12.1.1996 filed by the bank did not claim or seek a direction for payment
of alleged arrears of rent relating to three godowns taken on lease in the year
1978 and vacated in December 1983. In particular, it did not make any claim for
rent, for the period December, 1983 to 31.3.1996 when FCI was not in occupation
of three godown. As noticed above, the bank stated in its 17 application that
FCI had vacated those godowns after completion of the lease period (that is in
December, 1983) and that subsequently during the pendency of the suit the
appellant had taken one of those godowns again on rent in June, 1994. The
relief claimed in the application was that in regard to the godown taken on
rent by FCI in June, 1994, it should be directed to deposit the rents in court
as the borrowers/debtors were attempting to collect the said rent and thereby
deny the benefit of rent to the bank even though the borrowers had agreed under
the loan documents that the rents in regard to the godowns could be directly
received by the bank. Therefore when the application itself was only in regard
to the rent for one godown from June, 1994 onwards, we fail to understand how
the trial court could come to the conclusion that the said order dated
27.5.1996 directed FCI to deposit the rent for three godowns for the period
December, 1983 to 31.3.1996 and that failure to do so was punishable under
Order 39 Rule 2A of the Code. The trial court by a convoluted reasoning based
on a baseless interpretation of the order dated 27.5.1996 held that FCI had not
placed any evidence in the proceedings under Order 39 Rule 2A that it had
vacated the three 18 godowns in December, 1983 and therefore, it continued to
be liable to pay the rents for three godowns from December 1983 onwards.
23. The obvious
question that ought to have been posed is if rents were payable from December,
1983 onwards by FCI, why the respondent as landlord, did not take any action to
recover the same;
and if the bank was
entitled to receive the said rents, why the bank did not take action to recover
the same. Obviously any claim for rent against the defendant in regard to any
period beyond three years would be barred by limitation, in the absence of any
acknowledgement or payment on account. It is un-understandable how in a suit
filed in the year 1991 by the bank against the borrowers for enforcement of
mortgage, an order made on the bank's application for deposit of rents relating
to a godown taken by FCI on rent from the borrower in June, 1994, can be
interpreted by the court considering the application under order 39 Rule 2A of
the Code, as containing a direction for deposit of rents in regard to three
godowns vacated in December 1983, for the period December, 1983 to 31.3.1996.
The absurdity, perversity and arbitrariness of the order dated 15.12.2004
becomes evident from the following :
19 (i) FCI is held
liable for payment of rent of Rs.1,12,24,792/99 in a collateral supplemental
proceedings under Order 39 Rule 2A of the Code, initiated by a person who was
not a `person aggrieved'.
(ii) Such liability
is created in respect of a time barred claim for rent by the landlord.
(iii) FCI is made
liable for the said sum without the landlords filing a suit for recovery of
rents and without adjudication of the claim for such rent;
(iv) Such liability
is inferred by interpreting a garnishee order obtained by the landlord's
creditor in regard to a different lease relating to a different period.
24. The power
exercised by a court under order 39, Rule 2A of the Code is punitive in nature,
akin to the power to punish for civil contempt under the Contempt of Courts Act,
1971. The person who complains of disobedience or breach has to clearly make
out beyond any doubt that there was an injunction or order directing the person
against whom the application is made, to do or desist from doing some specific
thing or act and that there was disobedience or breach of such order. While
considering an application under order 39 20 Rule 2A, the court cannot
construe the order in regard to which disobedience/breach is alleged, as
creating an obligation to do something which is not mentioned in the `order',
on surmises suspicions and inferences. The power under Rule 2A should be
exercised with great caution and responsibility. It is shocking that the trial
court had entertained an application under Order 39 Rule 2A from a person who was
not entitled to file the application, has accepted an interpretation of the
order which does not flow from the order, and has created an liability where
none existed, resulting in attachments of the assets of FCI to an extent of
more than Rs.1.12 crores. The order dated 15.12.2004 cannot be supported or
sustained under any circumstances.
Re : Question (iv)
25. FCI filed an
appeal contending that the order of the trial court dated 15.12.2004 under
Order 39, Rule 2A of the Code directing attachment of its assets to an extent
of Rs. 1,12,24,792.99 was erroneous, without jurisdiction and liable to be set
aside. In that context it raised contentions about the scope and ambit of the
order dated 27.5.1996. It also incidentally mentioned that the 27.5.1996 21
being a garnishee order was patently erroneous and without jurisdiction, in a
mortgage suit. The High Court however assumed that FCI was not challenging the
order dated 15.12.2004 passed by the trial court under Order 39 Rule 2A but was
only challenging the `injunction order' dated 27.5.1996 for disobedience of
which the application under Order 39 Rule 2A was filed. As a consequence, it
dismissed the appeal of FCI without examining the several contentions raised by
the FCI as to the maintainability of the application under Order 39 Rule 2A or
the jurisdiction of the trial court to pass such an order under Order 39 Rule
2A and the errors and perversities pointed out in such order.
26. It is unfortunate
that the High Court has failed to even refer to these aspects and has dismissed
the appeal on a wholly baseless and erroneous assumption that the appellant was
trying to challenge only the order dated 27.5.1996, in the appeal against the
order dated 15.12.2004. We feel dismayed that when a huge liability of
Rs.1,12,24,792.99 was sought to be created on the FCI in a proceedings under
Order 39 Rule 2A, the High Court did not even bother to refer to the facts and
merits, and chose to summarily dispose 22 of the appeal thereby allowing
perpetration of a patent abuse of process of court by the respondent. The
travails of the FCI could have been avoided if the trial court and the High
Court had been diligent to ensure that its process were not misused and abused
by the respondent.
Conclusion
27. We therefore
allow this appeal with costs of Rs.25,000/- payable by respondent, set aside
the order of the High Court and the trial court and dismiss the application
filed by the respondent under Order 39 Rule 2A of the Code.
..........................J.
(R V Raveendran)
New
Delhi;
.........................J.
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