1. The Appellant has preferred this Appeal challenging the Order passed by the DRT, Bangalore, in AOR-7/2007 in OA-1250/1996, on 16.10.2007.
2. The facts leading to the filing of this Appeal may be set out briefly as under :-
The 1st Respondent Bank instituted proceedings in OA-1250/1996 and obtained a Recovery Certificate against the Appellant and others. Further in pursuance of the Recovery Certificate, the Recovery Officer, DRT, Bangalore, proceeded to attach the property of the Appellant, who was arrayed as Certificate Debtor No.6 in DCP No.1648 on the file of the Recovery Officer, DRT, Bangalore, and the property sought to be attached is a residential house bearing Door No.C-39, Friends Colony East, New Delhi. The Appellant was therefore, constrained to file an Application before the Recovery Officer claiming exemption under Section-60(1) (ccc) of the Code of Civil Procedure (CPC) as amended as per Section-2 of the Union Territories Laws (Act 1950) by the Union Government under a Notification dated 8.6.1956, published in the Gazette of India on 16.6.1956, extending the Punjab Relief of Indebtedness Amendment Act of 1940 and Amendment Act of 1942, affording protection under Section-60(1) (ccc) to the Union Territory of Delhi also. Ld. Recovery Officer after hearing both sides allowed the claim made by the Appellant. As against the said Order passed by the Recovery Officer dated 20.2.2007, the 1st Respondent Bank preferred the Appeal in AOR-7/2007 before the DRT. Ld. PO after hearing both sides and upon perusal of the material records allowed the Appeal preferred by the 1st Respondent Bank with cost. Hence the Appeal.
3. The contentions of the Appellant putforth in the Memorandum of Appeal are briefly as follows :-
The impugned Order passed by the DRT is not sustainable both in law and on facts. The provision under Section-60(1) (ccc) of the Code of Civil Procedure (CPC) is applicable to the property of the Appellant, which is situated within the Union Territory of Delhi, and therefore, since the sole residential house of the Appellant was directed to be attached by the Recovery Officer, the claim made by the Appellant was rightly allowed. Hence the impugned Order passed by the DRT is not sustainable in law. Moreover, the properties of the Appellant was not charged or mortgaged in favour of the 1st Respondent Bank and therefore, the exemption available under CPC is applicable in this case also. Similarly the observation made in the impugned Order that the benefits under Punjab Relief of Indebtedness Act cannot be extended to the Appellant as the property sought to be attached is worth more than Rs.1 Crore, is not in accordance with law. Further the Recovery Officer had not initiated any proceedings to bring the mortgaged property situated in Mumbai for sale and therefore, the 1st Respondent Bank has got a deceitful attitude towards the Appellant, who was only a guarantor to the loan availed by the borrower Company. Further, Articles 245 and 246 of the Constitution of India are very clear regarding the laws enacted by the States as well as by the Union Government. Similarly the finding rendered by the DRT that Section-60 of the CPC is not applicable to the special enactment Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter called as RDDBandFI Act) is not in accordance with law for the reason that the said amendment to Section-60 CPC for Union Territory of Delhi, was also introduced by the Central Act.
4. Heard Ms. Mala Goel, Ld. Counsel appearing for the Appellant and Mr. R. Umasuthan, Ld. Counsel appearing for the 1st Respondent Bank.
5. The points for consideration are as follows :-
1) Whether the Schedule house property situated at Delhi is exempt from attachment as per Section-60(1) (ccc) of the Code of Civil Procedure as amended vide Notification dated 8.6.1956, published in the Gazette of India on 16.6.1956, by the Central Government extending the provisions of the Punjab Relief of Indebtedness Amendment Acts VII of 1940 and VI of 1942, to the then Union Territory of Delhi ?
2) Whether the Order of attachment passed by the Recovery Officer, DRT, Bangalore, in DCP No.1648 dated 19.10.2005, in respect of the Schedule property has to be set aside as prayed for ?
3) Whether the impugned Order passed by the DRT, Bangalore, in AOR-7/2007 has to be reversed as prayed for ?
The Points
6. It is common ground that the Schedule property is the main residential house belonging to Appellant/Certificate Debtor and that the same is situated at Door No.C-39, Friends Colony East, New Delhi. Similarly it is not disputed that the Appellant occupied the Schedule property as his residential premises alongwith his family members and no part of the same is let out on lease or licence to any other person. The admitted case of both parties is that the Schedule property was not mortgaged by the Appellant in favour of the 1st Respondent Bank as a guarantor for the loan advanced by the Bank to the 2nd Respondent Company as one of the Directors of the same.
7. In the above circumstances, Ld. Counsel Ms. Mala Goel, appearing for the Appellant has drawn the attention of this Tribunal to the provision under Section-60(1) (ccc) of the Code of Civil Procedure as applicable to Delhi, which reads as under :-
“One main residential-house and other buildings attached to it (with the material and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to a judgment-debtor other than an agriculturist and occupied by him;
Provided that the protection afforded by this clause shall not extend to any property specifically charged with the debt sought to be recovered.”
In view of the said provision of law, Ld. Counsel for the Appellant has strenuously contended that since the property is situated in Delhi, inasmuch as it is the sole residential house belonging to the Appellant/Certificate Debtor, the same is exempted from attachment and that therefore, the impugned Order passed by the DRT has to be set aside. She has placed reliance on the decisions AIR 1982 Punjab and Haryana 275 (K.L. Bawa (deceased by L.R.) Vs. M/s. Basant Textiles, Meerut), AIR 1974 Delhi 205 (Matu Ram and Sons Vs. Elgin Mills Co. Ltd.), AIR 1937 Lahore 200 (Balwant Singh Vs. Jagdish Saran), and (1996) 4 SCC 372 (Kiran Bala Vs. Surinder Kumar), in support of her argument that the claim of the 1st Respondent Bank over the Schedule property on the basis of the Recovery Certificate issued by the DRT, Bangalore, cannot be sustained.
8. In this context, Mr. R. Umasuthan, Ld. Counsel for the 1st Respondent Bank has distinguished the facts of the cases AIR 1982 Punjab and Haryana 275, AIR 1974 Delhi 205, on the ground that the question in that case was with reference to the execution proceedings taken out both in Chandigarh and New Delhi, where the said Petition under Section-60(1) (ccc) was specially made applicable under separate amendment Acts. Similarly with reference to the decision AIR 1937 Lahore 200, Ld. Counsel for the 1st Respondent Bank has submitted that the revision against the finding of the executing Court that the Judgement debtor was entitled to exemption from attachment of the Schedule property under Section-60(1) (c), C.P.C. was allowed on the basis that as on the date of the Order of attachment, the law was not extended to the province of Delhi so as to claim exemption from attachment and therefore, he has urged that the territorial operation of the Amendment Act, which extended the provision under Section-60(1) (ccc) to the Union Territory of Delhi, cannot be made applicable to any decree or claim beyond the territory for which the enactment was made.
9. In the case of Kiran Bala Vs. Surinder Kumar (1996) 4 SCC 372 cited above, the decree passed by the Civil Court in Punjab was executed by attachment of the property situated in that State itself and therefore, this Tribunal is of the considered opinion that in view of the Punjab Relief of Indebtedness Amendment Act, it was held that the residential house in question in that case was liable for exemption under Section-60(1) (ccc) of the Code of Civil Procedure as applicable to the State of Punjab by State amendment. Hence it follows necessarily that the ratio of the said decisions do not apply to the facts of the present case.
10. The next contention of the Ld. Counsel for the Appellant is that under Section-28 Sub-Section (2) of the RDDBandFI Act, 1993, the property of the Appellant is liable to be exempted and therefore, the execution of the Recovery Certificate ry Officer under the said provision of law is not legally permissible in view of the said amendment under Section-60(1) (ccc) of CPC. In this context, she has further adverted the attention of this Tribunal to Rule-10 of the Second Schedule to the Income-tax Act, and contended further that under the said Rule also the Schedule property is exempted from attachment as per the amended provision Rule-60(1) (ccc) of the CPC. In answer to such argument, Ld. Counsel for the Respondent Bank has argued that Section-60(1) (ccc) of the CPC as applicable to Karnataka State where the impugned proceedings were initiated, does not contain similar provision like the one under Section-60(1) (ccc) as amended by the Union Government by notification as applicable to the Union Territory of Delhi, and that therefore, the said provisions under Section-28(2) of the RDDBandFI Act, 1993, and Rule-10 to the Second Schedule of the Income-tax Act would in all force be applicable in the present case so as to enable the Recovery Officer attach the property of the Certificate Debtor namely the Appellant herein, though it is situated in Delhi. He has urged further in his argument that the RDDBandFI Act being the Central enactment applicable throughout the country by virtue of Section-1 Sub-Section(2) cannot be limited in its operation to the entire country by means of the special enactment extending the applicability of the exemption under Section-60(1) (ccc) of the CPC exclusively to the Union Territory of Delhi.
11. Under such circumstances, Ld. Counsel Mr. R. Umasuthan, for the 1st Respondent Bank has pointed out with reference to the Articles 245 and 246 of the Constitution of India in support of his further contention that even though the amendment referred to above with reference to Section-60(1) (ccc) was made by the notification issued by the Union Government extending the Punjab Relief of Indebtedness Amendment Act, to the Union Territory of Delhi also, such amendment cannot have the effect of a legislation extra-territorially by virtue of Article 245(2). For the purpose of appreciating the arguments advanced on either side, it is essential to extract Articles 245 and 246 of the Constitution of India hereunder :-
“245. Extent of laws made by Parliament and by the Legislatures of States. – (1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.
(2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.
246. Subject-matter of laws made by Parliament and by the Legislatures of States. – (1) Notwithstanding anything in clauses, (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the “Union List”).
(2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the “Concurrent List”).
(3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the ‘State List’).
(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.”
12. In this context, this Tribunal considers that it is appropriate to cite the decision rendered by the full Bench of the Hon’ble Supreme Court in State of Bihar Vs. Charusila Dasi [1959 Supp (2) SCR 601] to clarify the position of law on this point. The ratio laid down therein regarding the Statutes’ territorial applicability reads as under :-
“The doctrine of territorial connection or nexus is applicable to income-tax legislation, sales tax legislation and also to legislation imposing a tax of gambling, sufficiency of the territorial connection involved a consideration of two elements, namely: (a) the connection must be real and not illusory, and (b) the liability sought to be imposed must be pertaining to that connection.”
13. In Paragraphs 15 and 16 therein, the Apex Court laid the principles of law while distinguishing the decision in Commissioner of Wakfs, Bengal Vs. Narasingh Chandra Daw and Co., with reference to Section-70 of the Bengal Wakf Act that the Bengal Act did not apply to Assam as the said provision of law stood in a different category from other Sections of the Bengal Act. Similarly while deciding the implications under the United Provinces Encumbered Estates Act, 1934, the Hon’ble Supreme Court further held that the word “Creditor” in Section-10 of the said Act must be limited to those of them who would have to enforce their rights through such Courts alone. Therefore, it was held that the decree of a Special Judge under the U.P. Encumbered Estates Act, 1934, should be deemed to be the decree of a Civil Court of competent jurisdiction even beyond the territorial jurisdiction of the State Legislature. Moreover, in Paragraph-16 of the said decision, it was further reiterated by the Apex Court by way of obiter dicta that the provisions of the Bombay Public Trusts Act, 1950, could have no application to the math situated in Banares or to any of the properties or places of worship appurtenant to that math and hence provisions of the Bombay Act, could have no application to any religious institution situated outside the State territory.
14. Having considered carefully the above facts and circumstances of the case in the light of the dictum of law laid down in the said decision rendered by the Hon’ble Supreme Court, this Tribunal is of the considered view that the applicability of the provision under Section-60(1) (ccc) of CPC as extended to the property situated in Delhi can be made applicable only to the debts enforceable on the basis of decrees passed by the Courts within that province, namely Union Territory of Delhi and therefore, it follows that the contentions raised by the Ld. Counsel for the Appellant cannot have any legal force. On the contrary, as has been rightly pointed out by the Ld. Counsel for the 1st Respondent Bank, there is no illegality pointed out by the Appellant in the impugned Order passed by the DRT, Bangalore, so as to interfere with the same.
15. For the reasons stated above, this Tribunal finds that the Schedule property belonging to the Appellant herein cannot be exempted from attachment by virtue of Section-60(1) (ccc) of the Code of Civil Procedure, as extended to the Union Territory of Delhi, and that therefore, the impugned Order passed by the DRT, Bangalore, has to be confirmed. Thus these points are answered accordingly.
16. In the result, this Appeal is dismissed with cost of Rs.5000/- and consequently the impugned Order passed by the DRT, Bangalore, in AOR-7/2007 in OA-1250/1996 dated 16.10.2007, is confirmed. Cost of Rs.5000/- is directed to be paid to the Indian Red Cross Society (K), No.26, Red Cross Bhawan, 1st Floor, Race Course Road, Bangalore-560 001. Cost Memo is directed to be filed within two weeks.