V.P. Madhavan Nambiar vs Chaldean Syrian Bank Ltd. and Another

Mack, J.—This is an appeal by V. P. Madhavan Nambiar, second judgment-debtor in E. P. No, 234 of 1951, against an order by the

Principal Subordinate Judge of Kozhikode directing his arrest and commitment to prison, on findings that he dishonestly transferred, concealed or

removed assets after the institution of the suit and furthermore, that he had means to pay at any rate a substantial portion of the decretal amount

since the date of the decree.

The antecedent history is briefly this. The decree-holder is the Chaldean Syrian Bank Ltd., who gave financial accommodation to a concern

called United Merchants which commenced in 1948 and did business in timber, banking and soon. It fell into difficulties and the managing partner

committed suicide in March 1949. The appellant who was one of the partners filed an application, Ex. A. 1, for overdraft accommodation to the

Chaldean Syrian Bank to the extent of Rs. 50,000 on the strength of which the Bank manager of the local branch gave the firm financial

accommodation. According to the evidence of the Secretary of the Bank, P. W. 1, the head office took exception to this and dismissed the Branch

manager from service. The decree under execution by the bank in E. P. No. 234 of. 1951 was in O. S. No. 7 of 1949 for the recovery of Rs.

9,000 which with interest had increased to Rs. 12,600. The bank filed another suit, shortly afterwards, O. S. No. 14 of 1949, for the recovery of

Rs. 36,000 and obtained a decree against the partners. In E. P. No. 420 of 1950 in O. S. No. 14 of 1949 they first sought to arrest three of the

partners including the appellant. That petition was dismissed by the same learned Subordinate Judge on 31 (sic)-G-1951, as he was satisfied on

the material placed before him, that none of the respondents had means to pay off the decree debt or even a substantial portion of it. Despite the

dismissal of that execution petition, the bank pressed for the arrest of the appellant in execution of the smaller decree in O. S. No. 7 of 1949 and

placed more material before the Court. The learned Subordinate Judge quite rightly held that the previous order in E. P. No. 420 of 1951 did not

operate as ''res judicata''.

The appellant in an application to the bank, Ex. A. 1 dated 21-2-1948 said he belonged to a tarwad owning property worth 21/2 lakhs to 3

lakhs. The value of this tarwad property was not disputed, but it was contended that he cannot get a separate share or enforce any partition during

his mother''s lifetime. But under the Madras Marumakatayam Act he was entitled to separate maintenance from the tarwad. The amount, if any, of

such separate maintenance, he did not disclose. He was admittedly living at Kozhikode, away from his tarwad, working as an insurance agent and

said that he was earning about Rs. 110 a month by way of commission. Then in his own application, Ex. A. 1, ho gave particulars of assets valued

at Rs. 50,000. They included fixed deposit in the Town Bank of Rs. 15,000, Rs. 14,500 in the Town Bank ''kuri'' or chit fund and so on. His

explanation for the disappearance of the assets in Ex. A. 1 is merely to the effect that they were withdrawn by him and invested in the business of

United Merchants. Ho was not able, however, to prove by the production of any voucher, receipt or account the fact that he invested these

moneys in this business. The learned Subordinate Judge appears to have quite rightly rejected this unsatisfactory explanation.

The appellant then further admitted that he had his own banking business till the end of 1948 and that the annual outturn was about Rs. 25,000,

but he said that he had never maintained accounts either for this or for a timber business he had previously. Finally the appellant admitted that he

discharged an overdraft account with the Nedungadi Bank upto Rs. 75,000 before March 1948. The teamed Judge made a note in the

examination of the appellant that his demeanour was highly questionable and substantially disbelieved his evidence. In Ex. A. 1 he described himself

as Managing partner of the firm of United Merchants and said that this was correct, belying his previous assertion that he was only a figure head

and that the real management was with one Madhavan who, it is said, committed suicide. These were the main circumstances from which the

learned Subordinate Judge arrived at his two findings on which he directed the arrest and detention of the appellant in prison.

Mr. Nambiar has strenuously urged that the decree-holder bank has not discharged the onus placed upon them u/s 51 proviso (a)(2) that after

the institution of the suit the judgment-debtor has dishonestly transferred, concealed or removed any part of his property, and under proviso (b)

that he has or has had since the date of the decree the means to pay the amount of decree or some substantial part thereof and refuses or neglects

to do so. It is true that in this case the decree-holder has not been able to point precisely to any particular dishonest transfer or concealment, or to

specific money in possession of the judgment-debtor out of which he could have paid the decretal amount since the date of the decree. If Courts

were to insist on specific evidence of this description, which amounts to positive proof, it would mean that judgment-debtors by skilful concealment

of their assets and resourceful evasion will defeat decrees against them.

The liberal provisions of Section 51 in favour of the judgment-debtor were enacted in Act 9 of 1935. As stated in the Objects and Reasons,

that Bill was the outcome of the recommendations, of the Royal Commission on Labour in India to the effect that in the case of industrial workers

in receipt of less than Rs. 100 a month, arrest and imprisonment for debt should be abolished, except where the debtor has been proved to be

both able and unwilling to pay. The Bill sought to amend the CPC of 1908 so as to protect honest debtors of all classes, and not of the industrial

worker class only, from detention in civil prison and to confine such provision to debtors proved to be recalcitrant or fraudulent. The Act therefore

applied to all judgment-debtors; nor was the protection restricted only to small debtors. If the extreme view urged by Mr. Nambiar is to be

accepted that before a judgment-debtor can be committed to prison a decree-holder is bound to establish by strict evidence and proof that there

has been a dishonest transfer by a registered document, or a concealment of assets in some other manner, or that the judgment-debtor had in his

actual possession in his own house a sum of money out of which he could have paid or discharged a substantial portion of the decree, a premium

would be put on evasion by judgment-debtors, rendering decrees obtained at great cost and expense nullified, and the pendulum will so swing in a

direction in favour of judgment-debtors that legislation for the protection of decree-holders may have to be introduced.

In my view it is perfectly open to a Court to apply a judicial corrective to the extreme lengths to which the onus which Act 9 of 1935 casts on

decree-holders is sought to be taken by adopting the view that it is perfectly open to an executing Court-on all the material placed before it to

come to an inference as regards the statutory findings required by provisos (a)(2) and (b) of Section 51, Civil P. C. It is no doubt true that the onus

rests on the creditor to prove the debtor''s ability to pay, and mere disbelief of the latter''s statement that he had no means to pay is not sufficient.

Where, however, there, is sufficient material shown to warrant an inference, as in the present case, that the judgment-debtor has actually been in

the possession of substantial assets a few months prior to suit, an inference is perfectly justifiable that he has since the institution of the suit

dishonestly concealed them, and furthermore, that he has since the date of the decree means to pay a substantial portion of it from assets he is

concealing from the Court. This is a case in which the appellant appears to be the only partner in this business venture which failed who appears to

be in a position to pay something towards this decree. We can find no real grounds for setting aside the findings of the learned Subordinate Judge

on the material placed before him.

The recognised practice in England in appropriate cases, as laid down in -- ''Barefoot v. Clark'', 1949 2 KB 97 (A) and -- ''In re a Judgment-

debtor'', 1935) 51 TLR 524 (B) is not to make an order of committal to prison on the first application but to order payment by installments. I can

see no impediment in this practice being adopted, in suitable cases u/s 51, Civil P. C. read with Order 21, Rules 39 and 40, although they do not

specifically direct an order for installments first. The fixation of installments after an enquiry into the means and the ability of the judgment-debtor to

pay in many cases is much fairer to the judgment-debtor who, whilst not being in a position to discharge the decree in full, can certainly pay

something towards its discharge. The fixation of installments helps to bridge the wide gulf between the dismissal of an execution petition for arrest

on a decree-holder failing strictly to discharge the onus resting on him under the proviso to Section 51, and the commitment to prison of a

judgment-debtor who while in a position to pay something simply, cannot discharge the decree in full as he has no immediate means to do it. After

the installments have been fixed by the Court, then a failure to comply with the court order would immediately justify arrest and commitment to

prison. In our view this procedure would be perfectly admissible under proviso (b) to Section 51. It is equitable both to decree-holder and

judgment-debtor and only sends to prison a judgment-debtor who refuses or neglects to pay towards the decree something which the Court has

found after, hearing him to be within his means to pay.

We do not however think this a suitable case in which this equitable procedure can or should be adopted and confirming the findings of the

learned Sub-Judge dismiss the appeal with costs.