The Delhi High Court has held that the expression 'judgment debtor' in Clause (ccc) to the proviso to Section 60(1) of the Civil Procedure Code, as applicable to Delhi, has to be read and understood in the context of the meaning ascribed to the expression 'debtor' in the parent Act, i.e. the Punjab Relief of Indebtedness Act, 1934.
'Judgment debtor' in Clause (ccc) to the proviso to Section 60(1) cannot be understood to mean any 'judgment debtor' as generally understood, the Court has held.
The Judgment was passed by a Division Bench of Justices Vipin Sanghi and Rekha Palli.
One BR Dougall (BRD) was the owner of a property in Civil Lines, Delhi, which he claimed was a self-acquired property. One M/s Atul Food Products Limited obtained a loan from the Union Bank of India (UBI). Amongst others, BRD offered his personal guarantee to secure the said loan.
After the loan was not serviced and repaid in time, UBI initiated recovery proceedings before a Debt Recovery Tribunal (DRT) in Delhi under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act.
The DRT by an ex-parte order allowed recovery against the principal borrower/ debtor M/s Atul Food Products Limited and BRD.
Consequently, a recovery certificate was issued for an amount of Rs.1,07,40,894 along with interest and costs. DRT, subsequently, also restrained BRD and others from creating any third party interest in their properties to the detriment of the lender.
Later, the petitioner, one Sujata Kapoor, intervened in the proceedings and claimed that she was a bonafide purchaser of the Civil Lines property from BRD. She argued that the property was exempted from attachment and sale in terms of clause (ccc) to priviso to Section 60(1) CPC, as applicable to Delhi, on the ground that it was the only residential house of BRD and continued to be the only residential property of the petitioner even now.
The petitioner’s arguments were rejected by the DRT as well as the Debt Recovery Appellate Tribunal and a challenge was preferred before the High Court.
After hearing the parties, the Court upheld the DRT, DRAT orders on the rejection of the petitioner’s claims and stated that if the petitioner felt that she had been defrauded by BRD, it was for her to sue the estate of BRD.
To deal with the application of Clause (ccc) of proviso to Section 60(1) CPC, the Court noted that the provision was extended to Delhi vide a Central Government notification dated 08.06.1956 after the same was introduced to CPC through an amendement to Section 35 of the Punjab Relief of Indebtedness Act, 1934 (PRI Act).
In view of the above, the Court said,
“Aforesaid being the position, in our considered view, the expression 'judgment debtor' used in Clause (ccc) of proviso to Section 60(1) of the Code has to be read and understood in the context of the meaning ascribed to the expression “debtor” in the parent Act, i.e. the PRI Act as amended, and the expression 'judgment debtor' cannot be understood to mean any 'judgment debtor, as generally understood.”
The Court noted that the expressions 'debtor' and 'debt' in the light of the objects of the PRI Act focused on granting relief from indebtedness in Punjab to a particular class of debtors i.e. small agriculturists.
The Court thus opined that the interpretation of Clause (ccc) of proviso to Section 60(1) CPC in a plain and grammatical way, de hors the context behind its introduction would result in debtors occupying extremely large and valuable properties and would get away without discharging their adjudicated liability.
“Such an interpretation would strike at the very foundation of the Rule of Law. It would provide a convenient escape to a person who obtains a loan from a bank, or other financial institution, or person, or otherwise incurs a financial liability, by simply investing the loan amount or the debt due in buying a residential property for himself, while ensuring that he has no other such property, and when the time to repay the same comes, to block the recovery by resort to Clause (ccc) of proviso to Section 60(1) of the Code, even after the liability is determined upon adjudication.”, it added.
It added that the Legislature had carved out exceptions to Section 60(1) in the name of agriculturists, labourers and domestic servants under Clause (c) of proviso to Section60 (1) of the Code. Therefore, other Clauses contained in the Proviso, including clause (ccc), must be interpreted in a similar fashion.
The Court acknowledged the existence of Right to Shelter under Article 21 but added that it was not absolute and could be curtailed in accordance with the procedure established by law.
In view of the above findings, the petitioner's writ petition was dismissed.
The petitioner was represented by Senior Advocate Ravi Gupta with Advocates DK Malhotra, Rajesh Kumar Malhotra, Sachin Jain, Diya Kapoor.
UBI was represented by Standing Counsel Abhay Prakash Sahay with Advocate Suraj Kumar.
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