Full Judgment Text
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CASE NO.:
Appeal (civil) 5042 of 2001
PETITIONER:
BARNES INVESTMENTS LTD. & ORS.
Vs.
RESPONDENT:
RAJ K. GUPTA & ORS.
DATE OF JUDGMENT: 06/08/2001
BENCH:
V.N. Khare & Ruma Pal
JUDGMENT:
RUMA PAL, J.
Leave granted.
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 respondent No. 1 by the Queens Bench
Division of the High Court in England on 29th November 1990 for
a sum of US$ 12,48,415,49 (being the equivalent of
Rs.3,60,09,821.01) 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 on 27th November 1991
requiring the attachment of property, being 20, Barakhamba
Lane, New Delhi 110 001 and also the share holding of the
respondent No. 1 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 110001. 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 extended to 3rd January, 1995.
On 22nd September 1994 an objection was preferred to the
attachment by the respondent No. 1 under Order 21, Rule 58 of
the Code ( EA 278/94). A second application was also filed by
the respondent No. 1 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
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1995 the respondent No. 1 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 Queens Bench
Division in favour of the appellant was void. The respondent
No.1 also sought for a permanent injunction restraining the
appellants from executing the judgment and decree of the High
Court of England (hereinafter referred to as the decree). An
interlocutory application was moved in the respondent No. 1s
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 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. 1
herein under Section 151 of the Code of Civil Procedure for
seeking 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 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 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.
The appellants preferred an appeal from the order dated 3rd
February, 1998 before the Division Bench. The Division Bench
affirmed the order of the Single Judge on 5th October, 1998
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 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 wrong in modifying the order of
attachment dated 4th May 1994,
First, there is nothing on record to show that respondent
No. 8s prayer for being impleaded as a party in the execution
proceedings had been allowed and yet the learned Single Judge
accepted the respondent No.8s offer and partially allowed the
application of the respondent No. 8 in terms of such offer.
Secondly, by the impugned orders the attachment has been
directed to be effected on non-existent property. The building is
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proposed to be constructed by respondent No. 8 on the property. It
has not been decided whether the respondent No.8 has any right to
construct on the property. According to the High Courts 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.
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 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
(a) the amount decreed with costs and all
charges and expenses resulting from the
attachment of any property are paid into
Court, or
(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, 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 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 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
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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 (1) 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.1 in
1994. The High Court has not addressed its mind to this
aspect before entertaining the applications filed by respondents
Nos. 1 and 8.
Finally, the learned Single Judge himself observed that in
the suit filed by respondent No. 1, an order has been passed
staying the execution of the appellants decree and that that order
was still operative. In the circumstances, it was not open to the
Court to proceed with the execution proceedings. As long as the
interim order passed in respondent No. 1’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 the High Court but without any order as to costs.
J.
(V.N. Khare)
..J
(Ruma Pal)
August 6, 2001