Allowed

Kawarpal Pihal v. Kanakadurga Chit Funds Private Limited

Telangana HC7 Feb 2025CRP/212/2025

Case brief

AI extract

What is this about?

Judgment debtors challenged a salary attachment order in execution of a chit fund award that would recover more than the awarded amount from each debtor. The High Court set aside the attachment as violative of the Contract Act, Chit Fund Act and binding precedent, and remanded for fresh consideration.

What did the court decide?

Impugned salary attachment order dated 06.04.2024 set aside; E.P.No.84 of 2024 remanded to executing court for fresh orders in accordance with law; no costs.

Kawarpal Pihal Vs Kanakadurga Chit Funds Private… — Execution and Attachment | Telangana HC (2025)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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FRIDAY,THE SEVENTH DAY OF FEBRUARY N/VO THOUSAND AND TWENTY FIVE

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PRESENT

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THE HONOURABLE SRI JUSTICE K.LAKSHMAN

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CIVIL REVISION PETITION NO: 212 OF 2025

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Petition Under Section 115 of CPC against the 06-04-2024 in E.P.No. 84 ot 2024 in ARB.No. 152 ot 202'l on the file of the Hon'ble Spl. J.M.F.C.⁽ Spl. Mobile) cum - lll Additional Junior Civil Judge at Karimnagar.

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Between:

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'1. Kawarpal Pihal, S/o Jailal, aged about 48 years, Occ. Junior Asst O/o ESI Hospital, Sirupur-Kaghaznagar, R/o H No. 1-16-352, ESI Colony, Kaghaznagar, KB Asifabad.

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Babu Mosram, S/o Pocham, aged about 43^years, Occ. Ambulance Cleaner, O/o ES1 Hospital, Sirpur-Kagha2nagar, R/o H No. 2-4-'154, Pochamma Basthi, Kaghaznagar K.B Asifabad. ...PETITIONERS/ JDR 4 & 5

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AND

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1 . Kanakadurga Chit Funds Private Limited, Reg Off. 5-1 1-503 and 504.,^1st Floor, Kandakatla Gateway, K.U.C X Road, Flanamkonda. Rep by it's A.G^M (Legal) Bhagathnagar Branch, P. Raghunandan S/o Lingiah

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";":?.3,::?"",

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Chavariya Rajeshwari, Wo Dharam Singh. Aged about 48^yeears, Occ. House Hold. R/o 1-'1 No. 4-5-29311 , Valmiki Nagar, Karimnagar.^..

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..Respondents/ JDR No.1 / Prl. Borrower

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Janjod Rajesh, S/o Shiva Charan, (died abated) Aged about 49^years,Occ. Sweeper cum thoty. Emp.ld. 1 3251 19, Oio ESI Hospital Sirpur-Kaghaznagar,^K B Asifabad District, R/o Q No. D-4, ESI Colony.

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Pallam Praveen Kumar, S/o Narsaih, Aged about 43 years, Occ. Business, R/o H No.3-48/1. Venkatraopet, Karimnagar District.

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Chavariya Dharam Singh, S/o Chota Singh, Aged about 51^years, Occ. Business, R/o H No. 4-5-29311 , Valmiki Nagar, Karimnagar Dist.^.. (Respondent Nos. 3 ,4 & 5 not necessary party )

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The Superintendent, O/o E S I Hospital, at Sirpur-Kaghaznagar,^Komuram Bheem Asifabad District.

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...Garnishee

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lA NO: 3 OF 2025

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Petition under Section 151 CPC^praying that in the circumstances statedⁱⁿ the affidavit filed in support of the^petition, the High Court may be^{pleased to} stay all the proceedrngs rn EP No. 84 of 2024 including the salary attachment^orders dated0604.2024inEP No 84of 2024in ARBNo. 152of²⁰²¹ , onthefileof the Hon'ble J N4.F.C (Spl lVlobile) Cum lll Addl. Junior Civil Judge, al^Karimnagar, pending disposal of the main CRP^.

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Counsel for the Petitioner: SRl. VENU CHEGGAM

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Counsel for the Respondent No.1 : SMT. SRILAKSHMI, REPRESENTING SRI N. AMARNATH

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The Court made the following ORDER:

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HON'BLE SRI JUSTICE K. LAKSHMAN

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CryIL REVISION PETITION No.2l2 OF 202s

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ORDER:

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Heard Sri Venu Cheggam, leamed counsel for the petitioners - Judgment Debtor Nos.4 and 5 and Smt. Srilakshmi, learned counsel representing Sri N.Amarnath, leamed counsel for the respondent No. 1. 2. This revision is filed under Section - 115 of the Code of Civil Procedure, 1908, challenging the order dated 06.04.2024 passed in E.P. No.84 of 2024 in ARB. No. 152 of 2021 by the leamed III Additional Junior Civil Judge at Karimnagar

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Respondent had filed an application under Section 64 of the Chit Fund Act, 1982 before the Chit ArbitratorlDeputy Registrar of Chits at Karimnagar against the petitioners herein for recovery of Rs.2,50,1921 with interest at the rate of Rs.18% p.a. from the date of filing of dispute to till the date of realization of the said amount and costs.

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The Deputy Registrar of Chits at Karimnagar, has passed an award dated 16.02.2023 holding that the petitioners herein - J.Drs.4 and 5 and respondents 2,4 and 5 are^jointly and severally liable to^pay

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r.f
KL,J
CRP No I l4 o1 2025

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an amount of Rs.2.50.1921- with interest at l8o/o p.a. to the l't respondent herein..

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I '' respondent has filed E.P.No.S4 of 2024 in ARB No. I 52 of 2021 lbr execulion of the aforesaid Award. Leamed III Additional Junior Civil Judge al Karimnagar, has issued impugned salary attachment order dated 06.04.2024 directing the Disbursing Officer of the petitioners herein/J. Dr.Nos.4 and 5 i.e. The Superintendent, ESI Hospital, Sirpur Kagaznagar District, Komuram Bheem (Asil'abad), to withhold thc sum of Rs.3,69,873/- each from the monthly salary of the petitioners and rernit to the account of the aforesaid EP

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It is also relevant to note that, learned Executing Court has issued similar orders directing the Disbursing Officers of other Judgurent Debtors also to withhold the said amount of Rs.3,69,873/each fiom their salarics as per Section - 60 of CPC after deducting standard deduction plus one thousand and 2Bd of remaining gross salary and shall remit balance l/3'd of salary every month lrom the date of receipt o1- the warant.

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Challenging the said attachment order dated 06.04.2024, the

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petitioners helein filed the present revision

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KL.J CRP No.l I4 ot2025

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Perusal of the afbresaid salary attachment order dated 06.04.2024 issued by the Executing Court in respect of the petitioners would reveal that Executing Court has directed the Disbursing Officer of the petitioners herein to withhold the amount of Rs.3,69,873/-from the salary of the petitioners herein. Learned Executing Court has also passed similar salary attachment orders in respect of the other J.Drs. Thus, the Executing Court directed the Disbursing Officers of the petitioners to deduct and recover an amount of Rs.3,69,873 l- each from their salaries. In fact, the aforesaid execution petition was filed by respondent to execute the award for recovery of Rs.3,69,873/- from the petitioners herein. If the Disbursing Officer withhotd the said amount and remit to the Executing Court, to the account of the aforesaid EP, it amounts to recovery of more than the awarded amount. The same is in violation of the procedure laid down under Contract Act, the Chit Fund Act, 1982 and also the principle laid down by this Court in CRP No.2660 of 2024 dated 18.10.2024. The said aspects were not considered by the Executing Court while issuing impugned salary attachment order.

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It is relevant to note that Section - 36 of the Arbitration and Conciliation Act, 1996 deals with 'enforcement of award' and the

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Kt-,J CRP No Il4 of2025

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same is relevanl lbr thc' purpose of considering the /rs in the present revisions and it is extracted below

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''Section -J6:-Enforcement. -Where the time lor making an application to set aside the arbitral .Award undcr seclion 34 has cxpired, or such application hal'ing been madc. it has bccn refused, the award shall be enforced undcr thc^('odc olCivil Procedure, 1908 (5 of 1908) in the samc manncr as il.it were a dccree of the Court.

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(2) Whcre an application to set aside the arbitral award has been filed in the Court under section 34. the filing of such an application shall not by itsclf rcnder that award unenforceable. unless thc Court grants an order of stay of the operation ol' the said arbitral award in accordance rvith the pror isions ol' sub-section (3), on a separate application madc lbr that purpose.

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(3) tlpon Iiling o1'an application under sub-section (2) for stav ol the operation of the arbitral award, the Court may, sub.icct to such conditions as it may deem fit, grant stay of thc operation ol'such award lbr reasons to be recorded in rvrit in s:

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Provided that the Court shall, rvhile considering the application lbr grant of stay in the case of an arbitral award for paymenl of rnoney, havc due regard to the provisions for grant ol'stay o1'a mone), decree under the provisions of the Code ol'Civil Procedure. 1908 (5 of 1908)."

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t I

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)

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KL.J CRP No.ll4 of2025

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lt is also relevant to extract Order - XXI, Rules - 1l^(2), 48

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and 48A of the CPC and the same are as under:

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"XXI^Rule 1l^{(2) of CPC-Writtenapplication- Saveas} otherwise provided by sub-rule(l), every application lor the exccution of a decree shall be in writing, signed and verified by the applicant or by some other person proved to the satisfaction ofthe Court to be acquainted with the facts ofthe case, ard shalt contain in a tabular form the following particulars, namely-

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(a) the number of the suit;

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(b) the names of thc parties;

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(d) whether any appeal has been prefened from the decree;

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(e) whether any, and (if any) what, payment or other adjustment of the matter in controversy has been made between the^parties subsequently to the decree;

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(I) whether any, and (if any) what, previous applications have been made for the execution of the decree, the dates of such applications and their results;

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(g) the amount with interest (if any) due upon the decree, or other relief granted thereby, together with particulars of any cross-decree, whether passed before or after the date of the decree sought to bc executed;

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(h) thc amount of the costs (if any) awarded;

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(i) the name of the person against whom execution of the decree is sought; and

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fi)^{thc mode in whichthe assistanceof the Court is required} whether-

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(i) by the delivery ofany property specifically decreed;

I I

KI-,J
CRP No I l4 of2025 t

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(ii) b1 the attaclrment, or by the attachment and szrle, or by the slle rvithoul attachmcnt. ol any pro|eny:

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(iii)b1 thc arrcst and detention in prison ofany person; tivlbr the appointmcnt of a receivcr:

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(r,) orhcruise. as the nafure ofthe relielgranted may requirc."

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"Order XXI^Rule 48 of CPC-Attachment of salary or allowanccs of servant of the Government or railway compan)'or local authority.- (l) Where the property to be attached is the salary or allowances ol a serYant of the Govcmment or of a servant of a railway company or local authoritl or of a scrvant of a corporation engaged in a;ry trade or industn uhich is establishcd by a Ccntral, Provincial or Statc Act. or a^(iovernment compauy as dcfined in section 617 ofthc Companies Act. 1956 ( I of' I 956)l the Court, whether rhc judgment-debtor or the disbursing officer is or is not within thc local lirnits of the Clourt's .iurisdiction. may order that the amount shall. suhject to the provisions of section 60, be witl reld front such salary or allowances either in one payment or by monthly instalmcnts as the Court may direct; and upon notice of the order to such officer as the appropriatc Govemment mal hr notification in the O[licial Gazette appoiut in this behall.-

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(a) uhcrc such salary or allowances are to be disbursed within the local limits to which this Code for the time being extentls. the ofhcer or other person whose duty it is to disbursc the sarnc shall withhold and remit to the Court the arnount due under the order. or thc monthly instalments, as thc case mav be,

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(b) rvhcrc such salary or allowances are to be disbursed beyond the said limits, thc olficer or other person within

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I I \ ) I

KL,J CRP No l11 of2025

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t, t'I f+ *

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those limits whose duty it is to^{instruct the disbursing} authority regarding the amount of the^{salary or allowances} to be disburscd shall remit to the Court^{the amount due} under the order, or the monthly instalments,^{as thecasemay} be, and shall direct the disbursing authority to^{reduce the} aggregate of the amounts from time to time, to^{be disbursed} by the aggregate of the amounts from^{time to timeremitted} to the Court.

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(2) Where the attachable propo(ion of such salary or^allowances is already being withheld and remitted to^a Court^{in pursuance} of a previous and unsatished order^{of attachment,the officer} appointed by the appropriate Goverunent^{in thisbehalfshall} forthwith return the subsequent order to^{the Court issuing it with} a full statement ofall the^particulars ofthe^{existingattachment.}

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(3) Every ordcr made under this rule, unless it is retumed in accordance with the provisions of sub-rule^{(2) shall, without} further notice or other^proccss, bind the^{appropriate Govemment} or the railway company or local authority or^{corporationof} Govemment company, as the case may^be, while^{the judgment-} debtor is within the local limits to which this^{Code forthe time} being extends and while he is^{beyond thoselimits, if he is in} receipt of any salary or allowances^payableout of^the Consolidated Fund of India or the Consolidated^{Fund of the} State or the funds of a railway company or^{local authority or} corporation or Govemment company in^{India; and the} appropriate^(iovemment or the^{railwaycompany or local} authority or corporation or Govemment^{company, as the case} may be, shall be liabte for any sum^paid in^{contraventionof this} rule.

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xl-,J CIIP \o I l4 of2025

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L.splanation.-In this rule, "appropriate Govemment" means.-

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(i) As respects an] person in the service of the Central (iovemnrent. or an), servant of a railway administration or of a cantonment authoritl, or of the port authority of a major port. or any servant ol a corporation engaged in any trade or industry u'hich is establishcd by a Central Act. or any scrvant of a Ciovemnrent company in which any part of the share capital is held bl thc Central Govemment or by more than one State Ciovemments or partly by the Central Government and partly by one or nlorc State Governments, the Central^(iovemment,

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(ii) As respects anr other servant of thc Govemment, or a scrvant of any other local or othcr authority. or any sen.ant of a corporalion engaged in any trade or industry which is cstablished by a I'rovincial or State act, or a servant of any othcr Governmcnt company, the State Governmcnt."

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"Order^- XXI, Rule -^48A. Attachmcnt of salary or allowances of private employees.- (l) Wherc lhe property to bc attached is the salarl or allowances of an employee other than an cmployee to whom rule 48 applies, thc Court, where thc disbursing officer of the employec is within the local Iimits of thc C'ourt's^{jurisdictron,} may order than the amount shall. subject to the provision of soction 60, be withhcld lronr such salary or alkrwances either in onc payment or by monthly instalments as thc Courl may dircct: and upon notice of the ordcr to such disbursing officer. such disbursing officcr shall rcmit to thc court the amount duc under the ordcr. or the monthll, instalments, as the casc may be.

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KL,J CRP No.l l4 of2025

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(2) Where the attachablc portion of such salary or allowances is already being withheld or remitted to the Court in^pursuance of a previous and unsatisfied order of attachment, the disbursing officer shall forthwith retum the subsequent order to the Court issuing it with a full statement of all the particulars of^the existing attachment.

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(3) Every order made under this rule, unless it is. returned in accordance with the provisions of sub-rule (2), shall, without further notice or other process, hind the employer while the judgmenrdebtors, is within the local limits to which this Code for the time being extcnds and while he is beyond those-limits, if he is in receipt of salary or allowances payable out of the funds of an employer in any part of India, and the employer shall be liable for any sum paid in contravention of this rule."

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I I . It is also relevant to extract Section - 7l of the Chit Fund

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Act, 1982 and the same is as under:

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"71.^{Moneyhow recovcred.-Everyorder passed by the} Registrar or the nominee under section 68 or section 69 and every order passed by the State Govemment in appeal under section 70 for payment ofany money shall, ifnot carried out,-

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(a) on a certificate issued by the Registrar, be deemed to be a decree of a Civil Court, and shall be executed in the same manner as a dccree of such Court, or

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(b) be executed in accordance with the provisions of any law for the time being in force for the recovery of amounts as arrears of land revenue: Provided that no application for execution under clause (b) shall be made after the expiry of three^years from the

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t t.,J CRlt \o I l4 of2025

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(-)

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datc tlred in the order. and if no such datc is fixed. from the datc ofthc ordcr."

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It is also relevant to extract Sections - 126, 128 and 146 of

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the Indian Contract Act, 1872 and the same is as under

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"126. "Contract of guarantee", "sure[", "principal debtor" and "creditor". -A "contract of guarantee" is a contract l.o perfomr the promise. or dischargc the liability, of a third person in casc of his default. The person who gives the guarantee is callcd thc ''surety"; the person in respect of whose dcfault the guarantee is given is called the "principal debtor". and thc person 1o whorn the guarantec is given is called the "creditor". A grraranle e ma1.' be either oral or rwitten."

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"128. Sureh''s liability.-The liability of the suretv is coertensivc uith that of the principal debtor, unless it is otheruisc providcd bv the contract."

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"146. (lo-surctics liable to contribute equally.-Where two or more pcrsons are co-sureties for the samc debt or duty, either jointly or severally, and whether under the same or diflercnt contr.rcts. and wtelher with or without the knowledge of each other- thc co-sureties, in the absence ol' any contract to thc contrar). are liable, as betwecn themselves, to pay each an equal sharc o1'thc rrhole debt, or of that part of it which remains unpaid br thc principal debtor."

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Thus, the liability of the co-surety is co-extensive rvith that

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of principal debtor unless it is otherwise provided by the contract.

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KL,J CRP No I 14 of2025

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The said principle was also laid down by a Division Bench of the High Court of Judicature for the States of Telangana and Andhra Pradesh at Hyderabad in Punyamurthula Venkata Viswa Sundara Rao v. M/s. Margadarsi Chit Fund Pvt. Ltd.r

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The aforesaid relevant provisions would reveal that for realization of the amount covered under the arbitration award, respondent No. I - decree holder has to file an application under Section - 36 of the Arbitration and Conciliation Act, 1996, and Order - XXI Rule 11 (2) of CPC. Accordingly, respondent No.1 had filed the aforesaid execution petition vide E.P.No.84 of 2024.

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15 In Punyamurthula Venkata Viswa Sundara Raor, the

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Division Bench on consideration of the contentions advanced by the parties, framed the following two (02) points for consideration:

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whether the decree holder has to proceed against all the judgment debtors, rvho are guarantors, by claiming proportionate amount decreed.

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ll. whether the execution Courts in which E.Ps. were filed against the present judgrnent debtors, who are revision petitions herein, have jurisdiction to entertain the execution petitions.

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r. 20 l7 (3) ALT 82 (D.8.)

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KL,J (lltP No I l4 of2025

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On consideration of the provisions of the Chit Fund Act and the CPC, the Division Bench held that the course that has to be followed by thc decree holder is to make an application to the Registrar fbr execution, to be forwarded to the proper authority at the option o1'the decree holder and the Registrar shall himself issue the certif-rcate and f<rrward the said application to the Court or revenue authority. as chosen by the decree holder. The decree holder has an option to proceed against either the principal debtor or any of the guarantors or against all of them. Referring to Section - 128 of the Indian Contract Act, the Division Bench held that the liability of a surety is co-extensive rvith that of the principal debtor unless it is otherwise provided by the contract

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In Madamanchi Anill Kumar v. Margadarshi Chit Fund

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Pvt. Limited,' Division Bench of the High Court of Andhra Pradesh at Hyderabad considering the said principle laid down by the Division Bench in Punvamurthula Venkata Viswa Sundara Raor, held that the liability of tho sureties is joint and severai. The Division Bench also negatived the contention raised by the petitioner therein that a Recovery Certiflcate issued by the Deputy Registrar of Chits cannot

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t. c.Rlp. N<).:::g .)f 20ll,i. decided on 05- I 1.20 t 8

KL,J CRP No I l4 of2025

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I ! l.i

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l I t h

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be acted upon, as^per Rule - 55 of the Andhra Pradesh Chit Fund Rules, 2008 and that an execution is maintainable only if the recovery certificate has been issued by the Registrar of Chits to the competent Civil Court.

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On consideration of the aforesaid provisions and on examination of the facts of the case therein, in Prattipati Srinivasa Rao v. M/s. Shriram City Union Finance Limited3, this Court held that respondent No.l - decree-holder cannot recover double the awarded amount from the petitioners -^judgment debtors, and it is entitled for the decretal amount and interest as claimed by it from the judgment debtors.

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As discussed above, the Award was passed for recovery of Rs.2,50,1921- along with interest @ 18% per annum on the principal amount of Rs.2,05,7 62l-, and the petitioners are^jointly and severally liable to pay the said amount. 1't respondent has filed the aforesaid execution petition against the petitioners and the respondent Nos.2,4 and 5 herein to recover the aforesaid amount of Rs.2,50,192l- with interest at 18%o p.a. each from their salaries. Without considering the aforesaid aspects, more particularly, Sections - 128 and 146 of the r. Common Order in CRP Nos.l33 & l5l of 2023, decided on 02.03.2023

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KL,J CRP No Il4 o12025

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provisions of the Indian Contract Ac and Section -71 of the Chit Fund Act and also the principle laid down in Punyamurthula Venkata Viswa Sundara Raor, Madamanchi Ahill Kumar2 and Prattipati Srinivasa Raor. the lJxecuting Court issued the impugned salary attachment order dated 06.04.2024 in E.P. No.84 Ol'2024. Thus, by virtue of the said salarl, attachment, there would be recovery of more than the arvarded amount which is impermissible under law. Ihe same is in violation of the procedure laid down under Contract Act, Chit Fund Act, l87l and also the principle laid down by this Courl in CRP No.2660 of 101.1 dated 18.10.2024. The said aspects u,ere nor considered by. thc llxecuting Court while passing the impugned order dated 06.04.2024 in E.P. No.84 of 2024. Therefore. rhe said order is liable to be set aside.

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The present Clivil Revision Petition is accordingly allowed. The impugned ordcr dated 06.04.2024 in E.P. No.84 of 2024 in ARB No. I 52 of 2021 passed by leamed lll Additional Junior Civil Judge, at Karimnagar, is sct aside. The matter is remanded back to the Executing Court rvith a direction to consider the said E.p.No.84 of 2024 in ARB No.l52 of 2021 afresh and pass appropriate orders in accordance with larv including the aforesaid provisions and principle

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KL,J Cltl' No 114 of2025

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laid down by this Courl.^In the^{circumstancesof the case,thereshall}

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be no order as to costs.

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As a sequel thereto, miscellaneous^petitions, if any,^pendingin