Justice Anand Venkatesh rescues the Decree Holders on the Original Side? Narasimhan Vijayaraghavan

Justice Anand Venkatesh rescues the Decree Holders on the Original Side?
Narasimhan Vijayaraghavan

Justice N Anand Venkatesh like his immediate predecessor on the Original Side Justice V Parthiban fears that the Original Side was a well spring to induced litigation. Each suit was not an end in itself. It gave birth to many more and the oft quoted saying , “One Original Side suit well begun and carefully nurtured can feed a few generations in a lawyer’s family”, as well. And while “ the world over it is tough to obtain a decree, in India it was easy. But then it is in executing the decree that litigation begins and so it makes for robust common, legal and logical sense to take what the judgment debtors generously offer, given that creditors as beggars cannot be choosers,” Justice S A Kader advised this irrationally exuberant practitioner, sending home a lesson well learnt., decades ago.

Original Side of the Madras High Court is ‘Original’ in construct. The three Chartered High Courts in Bombay, Calcutta and Madras were vested with the Original Side. It has long been felt the purpose of the Original Side has since been achieved and it is now ‘litigation factory in the justice market,caring possibly for the best interests of the practitioners’ as my senior S Sampathkumaar, who was a colossus on the Original Side, often admitted.

Typifying these precepts and practices, Justice Anand Venkatesh has deep dived into Original Side vis a vis the newly created Commercial Division. He has gone to the rescue of one set of decree holders but spoilt the chances of another by mandating them into a ‘rateable distribution’ of the available assets.

Therefore, triggering for certain, further litigation which may not cease, until it gets a final imprimatur from the supreme law lords. And when that may be, us ordinary mortals ought not to ask. For now Justice Anand Venkatesh has dissected the provisions at play, one too many, and derived mathematical like equations as his conclusions. Thus, made the task easy, if we accept, and easy, if we don’t also.

Now read the abridged version of his verdict for even easier comprehension.

IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HONOURABLE JUSTICE MR.N.ANAND VENKATESH
Application Nos.3605, 3606, 3923 of 2021 in C.S.Nos.401, 403 & 303 of 2017 and E.P.No.69 of 2018 in C.S.No.950 of 2017

The applicants in all the Application and the Petitioner in E.P. No.69 of 2018 have obtained a decree against a common defendant/judgment debtor, M/s. Ind Barath Thermal Power Ltd and seek to realize their decreetal dues by proceeding against the monies deposited into this Court by the garnishee.
Issues raised and answered
i. Whether an application for execution of a decree passed by a Commercial Division of this Court must be heard and disposed of by the Master or by the Commercial Division itself?
Section 4 of the Commercial Court Act states that the Commercial Division, constituted by the Chief Justice, shall consist of a “single judge” of the High Court and to no one else. Hence Commercial Division constituted under Section 4 of the Act cannot be equated with the definition of “Court” occurring in Order 1 Rule 4(2) OS Rules, which comprises of the Judge, the Master and the First Assistant Registrar. Further Section 16(3) of the Commercial Court Act specifically overrides the OS Rules of the High Court, to the extent the latter is inconsistent with the former.

Thus application for execution of a decree passed by the Commercial Division would lie only before the Commercial Division constituted by the Chief Justice, by virtue of Section 4 of the Act, which comprises of the single Judge.

ii. The nature of the Orders passed by the Commercial Division and the character of the money held in security

Garnishee orders passed in favour of the decree have been passed in exercise of powers referable to Order XXXVIII Rules 5 and 11-A read with Order XXI Rule 46 and 46-A to F, CPC.

Order XXXVIII Rule 10, CPC makes it clear that the monies of the defendant attached and deposited into the credit of the suit Court do not cease to become his property and it continues to remain so till the monies are paid over to the decree holders.

Hence the monies attached and deposited into the credit of the three suits pursuant to various orders of the Court continue to remain the property of the judgment debtor, held custodia legis, subject to the orders of the court. These funds, which remain the property of the judgment debtor, can therefore, be proceeded against and attached by third party creditors like decree holder in E.P.No. 69 of 2018 under Section 60, CPC. In so far as the attaching creditors in Application Nos.3605, 3606 and 3923 of 2021 are concerned, since an order of attachment before judgment already operated in their suits, there is no requirement of re-attaching the same in view of the provisions of Order XXXVIII Rule 11 of the Cod

iii. Whether the concept of rateable distribution apply as per Order XXI Rule 52, CPC or the decree holders are entitled to any priority claim by virtue of the attachments before judgment and payments made into the credit of their suits by the garnishee?

Relying on the decisions of Madras High Court in Ramanathan Chettiar v Chidambaram Chettiar, (1933) 65 MLJ 347, Krishnaswamy Mudaliar v. The Official Assignee, (1903) 13 MLJ 278 and Sewdut Roy v. Sree Canto Maity, 1906 SCC OnLine Cal 14, it was held that the object of an attachment before judgment is simply to safeguard the property and it does not create charge or interest in the property. The decree holders cannot lay a preferential claim to the monies belonging to the judgment debtor lying to the credit of these suits.

iv. Whether the applicants are entitled to rateable distribution based on the payment out applications filed by them or be driven to institute multiple execution petitions to realize their share of the monies?

Section 73, CPC, stipulates the manner in which the proceeds of execution sale must be rateably distributed amongst various decree holders. Admittedly the decree holders obtained attachment before judgment which continues post the passing of the decree in view of Order XXXVIII Rule 11 of the Code. If Section 73, CPC applies, then it must follow that the decree holders in C.S.Nos.303 of 2017, 401 of 2017, and 403 of 2017 will be entitled to a rateable distribution of the monies lying to the credit of those suits along with the decree holder in C.S.No. 450 of 2017 in E.P.No.69 of 2018. Thus if the decree holders are to institute separate execution petitions, the very purpose of Section 73, CPC which is to avoid multiplicity of execution petitions by several persons against the very same judgment debtor would be defeated.

It was held therefore that the decree holders in C.S.Nos. 303 of 2017, 401 of 2017, and 403 of 2017 will, be entitled to rateable distribution of the monies along with the decree holder in E.P.No. 69 of 2018 in C.S.No.950 of 2017 and the same was ordered.

For the first of the findings, now Execution Petitions from the Commercial Division ought to be heard by the learned judges’ themselves. Not the Masters, as in other ordinary original civil suits. Now that makes it tougher to execute not easy. And likely to be far more time consuming than the present ‘snail paced eternity’ as Nani Palkhivala put it on pendency.

What could the poor judge do? (avoided aligning as poor learned judge- lest it read as poorly learned judge- this man is a well learned one). He could not play around with semantics as the definition of ‘ Judge’ was walled in or ring fenced strongly.

One recalled a challenge by a cunning and crafty litigant ( rather, counsel, one could say) challenging the vires of the Original Side provisions delegating the hearing of Execution Petitions before the learned Master as constituting excessive delegation. This was in execution proceedings from a ‘compromise decree’! Imagine the plight of the decree-holder.

In a master stroke the Division Bench, on reference, posted the EP of this litigant before Justice M Srinivasan , literally allowing his prayer. And completely checkmating the judgment debtor instead of wasting time, hearing the vires’ challenge which was but, what else an apology of a ruse to delay the inevitable. Well, Justice M Srinivasan saw through the game and crushed the effort with an iron fist with an iron glove, not velvet. So, one hopes that this order to vest the Judges with executing power in commercial division, is a good augury for the long waiting queue of decree holders before the Original Side. Or else….

The lingering doubt is Sec.7 of the Commercial Courts Act,2015 allied with other provisions of Original Side could give rise to a doubt whether Commercial Division had supplanted the Original Side practices or supplemented it. The Judge has gone the route of ‘supplanting’ in the faculty of execution petitions. That is an ‘arguable’ proposition. Of course, we lawyers can argue even over what 2 plus 2 is and bamboozle the litigants with our conclusions. ‘Law and Court are part of the Maya’ as the impish Vedantham Srinivasan would say, on whether litigants got what they came looking for, in the portals of the courts.

As for the rest of the orders, they have flown out of a liberal construction of the provisions, to demystify and help the cause of decree holders. And ‘rateable distribution’ is a socialist device so that commercial division lot of decree holders did not run away with the booty, in exclusivity. Makes good sense.

All in all, a tricky issue, well sorted out. Has it solved the problem? Nope. We, the practitioners have further grist to grind on the Original Side and our families to feed with it. Even this very order may be a sumptuous meal for the practitioners’ in appeal. Watch this space.

In the meanwhile, the poor little decree holders of all hues, may kindly please wait patiently in serpentine queues, until WE ( judiciary – comprising lawyers and judges) decide among ourselves, finally, as to who gets what, if at all.

As to WHEN they would ever get that WHAT, you can as well throw the dice?

( Author is practising advocate in the Madras High Court)