Execution Court Should Attach The Debt Under Order XXI Rule 46 CPC Before Proceeding Against Garnishee Under Order XXI Rule 46A CPC : Supreme Court

The Supreme Court observed that an Execution Court should attach the debt under Order XXI Rule 46 CPC before proceeding against garnishee under Order XXI Rule 46A of Code of Civil Procedure can be 

In this case, the Bhagyoday Cooperative Bank granted a financial facility to a firm Vimal Traders. Since the amount was not repaid, the proceedings were initated under Gujarat Co-operative Societies Act. The Adjudicatory authority passed an award in favour of the bank. Under Section 103 of the Act, the Award is to be executed in the same manner as a decree of a Civil Court. Therefore the Society filed filed Execution Application before the City Civil Court, Ahmedabad. This application was dismissed for default and later the Bank filed another Execution application. In these proceedings, an application under Order XXI Rule 46A was passed requesting the Court to proceed against Garnishee and this came to be allowed. This order was set aside by the Gujarat High Court.

One of the issues considered in the appeal before the Apex Court was whether Order 21 Rule 46A of CPC proceedings could have been initiated against the Garnishee. The bench of Justices KM Joseph and Hrishikesh Roy, referring to the relevant provisions of the Code, observed:

"It is clear from Order 21 Rule 46A that in the case of debt which must be understood as a debt spoken of in Order 21 Rule 46 of CPC subject to what we will say immediately hereinafter, it is insisted upon by the lawgiver that the debt must have been attached under Order 21 Rule 46. There is a further qualification as regards debt. Order 21 Rule 46A excepts, debt secured by a mortgage or a charge. Once these conditions are fulfilled, then upon an application being made by the 'attaching creditor' a notice may be issued to the garnishee who in the example we have given, is 'A' calling upon him either to pay the debt or so much of it as would be sufficient to satisfy the decree and the cost of execution or show cause as to why he should not do so. Under Order 21 Rule 46B, if the garnishee does not pay the amount forthwith or he does not appear in the case of a show cause, the Court is empowered to order the garnishee to comply with the terms of the notice."

The court noted that, in this case, there is no attachment of the debt in the form of the money lying in deposit and the order which is passed is expressly made under Order 21 Rule 46A. 

"Certainly, this is not the manner in which an order could have been passed within the meaning of Order 21 Rule 46A. There is a definite scheme as already noticed which is clear from the perusal of Order 21 Rule 46 and by the subsequent additions to the law by the amendment of the year 1976 which is contained in Order 21 Rule 46A to Order 21 Rule 46I. It would unerringly point to the provisions being mandatory. Therefore, the High Court appears to be right in its finding that the Execution Court should have first attached the debt under Order 21 Rule 46 before proceeding to pass the order under Order 21 Rule 46A of CPC.", the court noted.

The court therefore observed that the order passed by the Execution Court must be treated as an order by which the attachment has been made under Order 21 Rule 52 of CPC.

Case Details

Bhagyoday Cooperative Bank Ltd. vs Ravindra Balkrishna Patel (D) | 2022 LiveLaw (SC) 1020 | CA 8531-8532 OF 2022 | 16 Nov 2022 | Justices KM Joseph and Hrishikesh Roy

Headnotes

Code of Civil Procedure, 1908 ; Order XXI Rules 46,46A - Execution Court should have first attached the debt under Order 21 Rule 46 before proceeding to pass the order under Order 21 Rule 46A- Order 21 Rule 46A in the case of debt must be understood as a debt spoken of in Order 21 Rule 46 of CPC and the debt must have been attached under Order 21 Rule 46 - Order 21 Rule 46A excepts, debt secured by a mortgage or a charge. Once these conditions are fulfilled, then upon an application being made by the 'attaching creditor' a notice may be issued to the garnishee (Para 27- 28)

Code of Civil Procedure, 1908 ; Order XXI -  The mere dismissal of the first application on the ground of default may not result in the decree holder being precluded from filing a fresh execution petition provided it is within time. (Para 21)

Code of Civil Procedure, 1908 ; Sections 38,39- For the effective working of Section 39 of CPC, in other words, there must be a Court which has passed a decree -  When Sections 38 and 39 of the CPC are not as such applicable, the decree holder may seek to execute the decree in any Court which otherwise has jurisdiction. (Para 24)

Code of Civil Procedure, 1908 ; Order XXI Rules 46,46A - The exception is in regard to 'such other property' which though not in the possession of the judgment debtor, is property deposited or is in the custody of any Court - In regard to such property Order 21 Rule 46 and therefore Order 21 Rule 46A will not apply. (Para 25)

Code of Civil Procedure, 1908 ; Order XXI - Execution Proceedings - The woes of a decree holder begin after obtaining a decree. It is in execution that a decree holder is confronted with an unimaginably large number of obstacles. (Para 1)

Constitution of India, 1950 ; Article 136 - A pure question of law may be permitted to be raised in an appeal generated by the grant of special leave. (Para 22)

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