Morgan Securities and Credits Pvt. Ltd. vs B.K. Modi

V.K. Shali, J.—The question to be decided in this Execution Petition is whether the present execution petition titled Morgan Securities & Credits Private Limited v. B.K. Modi can be permitted to be continued when the SLPs emanating from two connected execution petitions bearing No. 84/2004 and 111/2010 titled as Morgan Securities & Credits Private Limited v. B.K. Modi and Morgan Securities & Credits Private Limited v. Modi Rubber Ltd., respectively, are still pending adjudication before the Supreme Court.

Briefly stated, the facts giving rise to the present execution petition are that on the dispute/differences having arisen between Morgan Securities and M/s. Modi Rubber Limited and others on account of some loan transaction, a retired Judge of this Court was appointed as the sole arbitrator by the High Court. The learned arbitrator passed an award on 06.05.2004 for a sum of Rs. 6,72,63,015/-, which included interest up to the date of reference and thereafter interest at the contractual rate of 21% per annum from the date of reference till the date of award and thereafter interest @ 18% per annum from the date of award till the payment.

The present execution petition was filed on 23.04.2010 for recovery of Rs. 26,52,78,600/- as on that date, by way of attaching and selling the movable as well as the immovable properties of the judgment debtor Dr. B.K. Modi. Notices were issued to the judgment debtors. It was averred in the execution petition that all the three judgment debtors had filed objections against the award dated 06.05.2004 u/s 34 of the Arbitration and Conciliation Act, 1996. The said objections were dismissed by a common order vide order dated 21.10.2009.

Feeling aggrieved by the dismissal of the objections, all the judgment debtor preferred an appeal u/s 37 of the Arbitration and Conciliation Act, 1996 before the Division Bench. The appeal of the present judgment debtor was numbered as FAO(OS) 39/2010. The said FAO(OS) was dismissed as withdrawn vide order dated 19.01.2010. The remaining two appeals of the other two judgment debtors i.e. V. K. Modi and Morgan Securities were dismissed on merits on 09.2.2010.

It has been contended by the learned Counsel for the judgment debtor that the decree may not be executed on account of the fact that against the same award dated 06.05.2004, the borrower i.e., M/s. Modi Rubber Limited as well as one of the guarantor V.K. Modi, who are the judgment debtors respectively in Ex.P. No. 111/2010 & Ex.P. No. 84/2004, have preferred special leave petitions before the Apex Court bearing SLP Nos. 14293/2010 & 21589/2010 respectively arising out of FAO(OS) No. 620/2009 and FAO(OS) No. 75/2010.

It was urged by Mr. Nayyar, learned senior counsel for the judgment debtor in the present execution petition that the Apex Court in SLP No. 21589/2010 has stayed the execution of the decree subject to V.K. Modi depositing the principal amount of Rs. 5 crores, which he has already done. Thus, the principal amount having been deposited the decree is to that extent satisfied or alternatively the interest of the decree holder is secured and he cannot recover the said amount twice over from the present judgment debtor, and, therefore, the present execution petition against Dr. B.K. Modi could not continue.

It is further stated that so far as the SLP bearing No. 14293/2010 filed by M/s Modi Rubber Limited is concerned, the Apex Court has observed and directed the judgment debtor to deposit interest component with the Registrar General of the Supreme Court, which is stated to have been deposited by him. It is also contended by him that the FAO(OS) No. 620/2010 having been dismissed by the learned Division Bench, the Supreme Court in SLP No. 14293/2010 had issued notice to the Respondents namely the decree holder in the present case and in the meantime, it was directed that the Respondent shall not proceed with the execution petition. It was accordingly contended that the execution of the award dated 06.05.2004 having been stayed by the Apex Court on account of the deposit having been made by the two judgment debtors, the present execution petition against Dr. B.K. Modi deserves to be stayed or alternatively, this Court may await the decision in the Special Leave Petition. The learned senior counsel in support of his contention urged, since the interest amount has already been deposited by the principal borrower, i.e., Modi Rubber Ltd. and the principal amount has been deposited by the guarantor i.e. V.K. Modi, therefore, the decree holder cannot be permitted to continue the present proceedings, as it will tantamount to executing the decree twice over. It is on the basis of this submission that both as a matter of law and as a matter of propriety, the execution of decree against Dr. B.K. Modi be kept in abeyance till the time the matter is adjudicated by the Apex Court.

Mr. Maninder Singh, learned senior counsel appearing for the decree holder, has refuted the contention made by Mr. Nayyar. It is contended that it is open to the decree holder as against whom he would like the decree to be executed. For this purpose, the learned senior counsel has placed reliance on State Bank of India Vs. Messrs. Indexport Registered and others, . In the aforesaid judgment, it has been held that for the purpose of execution of a decree, it is not necessary that the decree holder must first execute the decree against the principal borrower and thereafter run after the guarantor only in the event the decree remains unsatisfied.

It has been further contended by Mr. Singh that there is no legal impediment in execution of the decree against Dr. B.K. Modi. In this regard, it has been stated that the judgment debtor had not only filed the objections which were rejected by the learned Single Judge vide order dated 21.10.2009 in OMP No. 277/2004 but even the appeal bearing FAO(OS) No. 39/2010 which was filed by him was also dismissed as withdrawn. It is further contended that even the passing of the orders by the Apex Court in the two connected execution petitions where the judgment debtor V. K. Modi and the principal borrower have been put to terms by directing them to deposit a sum of Rs. 5 crores and the interest component ipso facto does not result in staying the execution of the decree in the present case. It is contended, on the other hand, that after the orders having been passed by the Apex Court, the judgment debtor filed an application bearing CM No. 17037/2010 in appeal bearing FAO(OS) No. 39/2010 for recalling the earlier order of withdrawal of his appeal on the ground that the judgment debtor being one of the co-guarantors must be dealt with, on equal footing with the principal borrower as well as the co-guarantor V.K. Modi who are enjoying the stay against the execution of the decree. It is further stated that not only his application was rejected by the Division Bench but even the SLP filed by the judgment debtor against the dismissal order of the Division Bench was dismissed by a Bench headed by the same Hon''ble Judge of the Apex Court which had issued notices in the other connected SLPs, therefore, no advantage can be drawn from the same.

Having gone to the Apex Court against the reopening of his matter, and seeking the recall of the order of withdrawal, it was contended that so far as the award in question against the present judgment debtor Dr. B.K. Modi is concerned, the same having attained finality, it is not open to Mr. B.K. Modi to contend that the Petitioner must wait for the outcome of the Special Leave Petition. It was further contended that the decree may be executed against Dr. B.K. Modi and so far as the deposit of money made by the other two co-judgment debtors is concerned, he has no objection in case the said money is returned back to them. It was also contended by the learned senior counsel for the decree holder that in pursuance to the directions passed by this Court, the judgment debtor has filed an affidavit wherein he has disclosed that he owns the following three immovable properties:

(i) Property bearing No. 36, Amrita Shergil Marg, New Delhi-110003.

(ii) Flat at Panchkula

(iii) Prithvi Raj Road, New Delhi

It was contended that according to Section 60(1)(c) Code of Civil Procedure, one of the dwelling unit or the house of the judgment debtors, cannot be attached. If that be so, it is contended by Mr. Singh, learned senior counsel that it is not open to the judgment debtor to contend before this Court as to which of the dwelling unit/house must be attached and which must be exempted. On the contrary, it is urged that it is open to the decree holder to contend as to which of the property belonging to the judgment debtor deserves to be attached and then auctioned so that there can be maximum retrieval of the decrial amount.

In the light of the aforesaid submissions, it has been contended by Mr. Singh that the judgment debtors are only adopting dilatory tactics and the Court may attach any of the immovable properties, so that as on date, the liability of more than Rs. 70 crores against the judgment debtor is satisfied.

I have carefully considered the submissions made by the learned senior counsel for the parties and perused the record.

So far as the question of execution of the decree against the judgment debtor Dr. B.K. Modi is concerned, I am of the considered opinion that the legal position is very clear with regard to the execution of the decree against the guarantors. It is not necessary that the decree holder must run after the principal borrower in the first instance to realize his decree and it is only when the decree is not satisfied against the principal borrower that he should seek the execution of the decree against the guarantors. Reliance in this regard can be placed on State Bank of India (supra).

There is no impediment in law or otherwise which can be said to be coming in the way of the decree holder to get the decree executed against Dr. B.K. Modi but the question which arises for consideration is as to whether it will be just, fair and proper to execute the decree against the judgment debtor especially when against the said award, the matter is pending before the Apex Court and there is a stay at least in one of the matters on account of the judgment debtor having deposited a sum of Rs. 5 crores (refer to the SLP bearing No. 21589/2010 of V. K. Modi).

I feel that since the award was common, there ought to have been common objections filed on behalf of all the three judgment debtors. But judgment debtor No. 1, the company of which judgment debtors No. 2 & 3 namely V.K. Modi and Dr. B.K. Modi were the directors, choose to file separate objections while as all the objections were dismissed by a common order dated 21.10.2010 but the appeals preferred by all the three met separate fate. The appeal filed by Dr. B. K. Modi bearing FA(OS) No. 39/2010 was dismissed as withdrawn on 09.01.2010, while as the other two appeals were dismissed on merits on 09.02.2010. In the SLP preferred by Mr. V. K. Modi bearing SLP No. 21589/2010 there was an order that he shall deposit a principal amount of Rs. 5 crores with the Registrar General of the Supreme Court and the Respondent shall not continue his execution proceedings.

The argument of Mr. Nayyar, the learned senior counsel that the word used in the order is proceedings which is plural and that means the Respondent shall not continue with any of his execution proceedings meaning thereby that all the execution proceedings by the decree holder irrespective of the fact whether the other judgment debtor has gone to Apex Court or not, or whether their objections have been dismissed or not is not acceptable because the word ''proceedings'' is no doubt a plural word but it refers only to those proceedings out of which the SLP is arising and not that of others because if the argument of Mr. Nayyar, the learned senior counsel is accepted then the question would be what the sanctity of the decree having attained finality is? Dr. B.K. Modi''s SLP has already been dismissed and that too by Hon''ble Judge of the Apex Court which had passed the earlier order in the other two SLPs of the remaining two judgment debtors. Same analogy in my view, would apply to the submission of Mr. Nayyar, the learned senior counsel with regard to the deposit of the interest component by way of guarantee. It may be pertinent here to mention that the order of deposit of interest component by the judgment debtor i.e. M/s Modi Rubber was not in the SLP arising out of the dismissal of the appeal on merits but it was against another order passed in the Execution Petition against the said judgment debtor. Anyhow, even if the principal and the interest component have been deposited by the judgment debtor V.K. Modi and M/s Modi Rubber, with the Apex Court, the money has not come to the decree holder.

According to Order 21 Rule 1 (1)(a) Code of Civil Procedure, all money payable under a decree shall be paid, by deposit in the Court whose duty it is to execute the decree. Thus, a decree is satisfied only on the money being deposited in the executing Court and not any other Court. So far as the orders of the Apex Court in one SLP of V.K. Modi of stay of execution are concerned that could not be treated as a general stay against all Execution Petitions filed by the decree holder.

I, accordingly, consider the plea purported to be raised by the judgment debtor that the decree cannot be executed qua him as totally bereft of any merit and accordingly, the same is disallowed and the execution petition must continue.

The judgment debtor has filed an affidavit and has given the list of three immovable properties, one at Panchkula and two in Delhi. The two properties in Delhi are the properties in Prithvi Raj Road, which is stated to be mortgaged to a bank and being used as a dwelling house. According to Section 60(1)(c) Code of Civil Procedure, one dwelling unit cannot be attached, therefore, this property is exempted prima facie from attachment. The third property is stated to be a property at 36, Amrita Shergill Marg, which is stated to be in the name of a company but no documents of title or photocopies thereof are attached. The decree holder has also sought attachment of the said property. In absence of the documents of title of this property at Amrita Shergil Marg, the said property is attached. However, liberty is given to the judgment debtor to seek modification, vacation or variation of this order in case the documents of title indicating the ownership of company is shown in respect of this property.

List for further proceedings on 6th April, 2011.