Subodh Kumar Dey Vs. Smt. Ashalata Bhagat - Court Judgment

Excerpt:
- state financial corporations act, 1951 [63/1951]. section 29; [p.k. tripathy, a.k. parichha & n.prusty, jj] discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. -- state financial corporations act, 1951. section 29; discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. - cuttack, for furnishing security by the petitioner, and on failure for attachment of property described in the schedule is tinder challenge in this appeal. it was stipulated that in case of failure to furnish the security, the scheduled property was to be attached under order 33, rule 5, of the code. according to him, th3 fact situation as noticed by the learned subordinate judge clearly shows that even if the plaintiff succeeds in the suit, she will not enjoy the fruit of success. the sole object behind attachment before judgment is to give an assurance to the plaintiff that his decree, if made, would be satisfied. in that view of the matter i think interest of justice would be best served if the matter is remitted back to the learned subordinate judge to reconsider whether assertion that plaintiff intended to transfer the properties was correct, keeping in view the guidelines indicated above.a. pasayat, j.1. direction given by the learned first subordinate judge. cuttack, for furnishing security by the petitioner, and on failure for attachment of property described in the schedule is tinder challenge in this appeal.2. during pendency of a suit (m. s. no. 11 of 1992) before the learned first subordinate judge, cuttack, an application under order 38, rule 5 of the code of civil procedure, 1908 (in short, the 'code') was filed by the plaintiff for attachment of properties mentioned in the schedule belonging to the defendant before judgment. the case of the plaintiff is that she has filed the original suit, out of which the misc. case arose, against the defendant for recovery of rs. 93,241.93 paise which was advanced by her for purchase of the properties described in schedule a of the suit. defendant by mis-representation and by practising fraud, induced her to purchase the properties, and received amounts on different dates from her after granting receipts. she came to know that the defendant is not the sole owner of the properties, and he had no legal right to sell the same, and therefore, she asked for refund of the entire amount taken by the defendant. but the defendant did not return the amount, and therefore, she was compelled to file the suit. the defendant having come to now of filing of the suit, in order to delay and with the intent to obstruct execution of the decree that may be passed against him, is trying to dispose of his only immovable property situated in cuttack town and to leave the jurisdiction of the court to permanently stay at calcutta. with the mala fide intention, he has also negotiated with one chaitanya prasad bhagat to arrange customers for purchase of his half share in the scheduled property if the defendant sells away his only scheduled property, she would suffer irreparable loss and the decree that would be passed in her favour would become infructuous and she will not be in a position to recover the decretal dues from the defendant, and she will not be able to get the fruits of the decree that may be passed against the defendant and in her favour.3. the defendant filed his objection denying the allegations. his case was that he is a permanent resident of cuttack town and is residing here since the time of his great grandfather, having immovable property in cuttack. his entire family members are residing at cuttack, he has neither any landed property nor any relation at calcutta, and he has no intention to go to calcutta, and there was no proposal to sellaway the property which belongs to joint family. he denied the allegation of having entered into any arrangement with others to sell 50%of the scheduled property which is the only residential house. it was asserted that the broker chaitan prasad bhagat is a veteran litigant and at the instance of the plaintiff has sworn a false affidavit.4. the learned subordinate judge on consideration of the rival submissions found that the plaintiff has filed the suit for recovery of more than rs. 90,000/- which was advanced by her to defendant on different dates being advance consideration for specific performance of contract for sale in respect of properties described in schedule a as appended to the suit, and therefore, she demanded return of the amount. the property in question was the only immovable property belonging to the defendant and his brother each having half share. he took note of the allegation that the defendant was trying to leave jurisdiction of the court to settle at calcutta. reliance was placed on the affidavit of shri chaitan prasad bhagat wherein it is stated that the defendant had approached him to arrange purchasers for sale and he has contacted many persons and one peary mohan mohapatra had negotiated for purchase of the property in question. it was noticed that no objection was filed by the defendant to rebut the assertions made by chaitan prasad bhagat, and peary mohan mohapatra. the property was the only property of the defendant. considering these aspects the learned subordinate judge directed the defendant to furnish cash or property security to the extent of rs. 1 lakh. it was stipulated that in case of failure to furnish the security, the scheduled property was to be attached under order 33, rule 5, of the code.5. the learned counsel for the appellant has strenuously urged that harsh step of attachment as directed by the learned subordinate judge is not warranted in the facts and circumstances of the case. it is submitted that the plaintiff has not made out a case for exercise of powar under order 33, rule 5 of the code. further, the learned subordinate judge has committed an error of record by stating that there was no objection filed there was a specific assertion that at no point of time, defendant had asked chaitan to arrange customers.6. mr. dey by way of clarification stated that the affidavits were filed after the objection was filed by the defendant. according to him, th3 fact situation as noticed by the learned subordinate judge clearly shows that even if the plaintiff succeeds in the suit, she will not enjoy the fruit of success.7. the main obfect of attachment before judgment is to enable the plaintiff to realise the amount of decree if one is eventually passed against the defendant's property. that is not the end of the matter. the object seems jo be to prevent the decree that may be passed from being rendered infruotuous. the sole object behind attachment before judgment is to give an assurance to the plaintiff that his decree, if made, would be satisfied. it is a sort of guarantee against the decree becoming infructuous for want of property for its satisfaction. (see sardar govindrao mahadik and anr. v. devi sahai and ors. : air 1982 sc 989). the power to attach is not to be exercised very lightly on the mere asking of the plaintiff, and without clear proof of the mischief aimed at. attachment before judgment is an extraordinary remedy and the court should grant the same with utmost cars and caution. the mere fact that the defendant had left the place or was proposing to alienate the property would not be sufficient for attachment unless it is further established that the same was done with the intent to defeat or delay execution of the decree. the sine qua non for an order under order 38, rule 5 of the code for demanding security before judgment is that the defendant is disposing or is about to dispose of his property with the dishonest intention to defeat or delay execution of the possible decree in the suit. intention is an internal fact and has to be determined having regard to all circumstances. action by attach- ment is preventive and not punitive. before exercising the power under order 38, rule 5 of the code, the court has to examine; (i) what property is about ro be disposed of or removed ?, (ii) whether the same is the property of the defendant ?, (iii) whether it is the whole or part of the property ?, and (iv) what is the intention of the defendant even if all the points are answered in favour of the plaintiff, the court is not bound to exercise the power if it finds that the same may not factually have the effect of obstructing or delaying the execution of the decree,8. there can be no doubt that the passing of an order under order 38, rule 5 of the code is of very harsh, nature, and as indicated above has not to be merely exercised , unless the circumstances are so compelling as to necessitating passing of an order in that regard. there is dispute as to whether the defendant really wanted to sell away the property. affidavits were filed by the broker, and one of the alleged purchasers. the learned subordinate judge being of the view that there was no counter affidavit to the affidavits filed by the broker and the alleged intending purchaser, drew adverse inference. the defendant appellant's submission is that in fact objection was filed and alter filing of the objection the affidavits were fiied, and therefore, the defendant had no effective opportunity to file any objection thereafter. at this stage it is necessary to refer to few dates which are relevant. the application was filed on 7-1-1992; objection was filed on 29-2- 1992; the affidavits of chaitan and peary mohan were filed on 23-3- 1992 and the matter was disposed of by order dated 6-4-1992. obviously the affidavits of chaitan prasad and peary mohan have been filed after the objection was filed; the defendant's case is that in the original application there was no reference to peary mohan. the only statement was regarding alleged talk with chaitan prasad, which was specifically denied by the defendant. in this background, i feel that the question whether there was relly any intention to dispose of the property has not been properly adjudicated. it is case of allegation and denial. the affidavits of chaitan prasad and peary mohan were filed after the objection was filed. in such an event the learned subordinate judge should have granted a specific opportunity to the defendant to have his say with regard to the affidavits. in that view of the matter i think interest of justice would be best served if the matter is remitted back to the learned subordinate judge to reconsider whether assertion that plaintiff intended to transfer the properties was correct, keeping in view the guidelines indicated above. till disposal of the matter afresh, interim order passed by this court on 6-5-1992 shall operate. it is stated that an undertaking has been filed by the defendant-appellant not to transfer the property sought to be attached, and not to create any encumbrances in respect of the said property without specific order of this court, early disposal of the suit will be in the interest of all concerned.the miscellaneous appeal is accordingly disposed of.