INTRODUCTION

This article revolves around the concept of "One Main Residential House", which is exempted from attachment in terms of proviso (ccc) of Section 60(1) of Code of Civil Procedure, 1908 ("CPC"). The relevant section and proviso are reproduced herein below:

"60. Property liable to attachment and sale in execution of decree.

Provided that the following particulars shall not be liable to such attachment or sale, namely:

60(ccc): 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...."

The Hon'ble Division Bench of High Court of Delhi in December 2019, pronounced a judgment with respect to the applicability of proviso (ccc) of Section 60(1) of CPC, in the state of Delhi after it was inserted in the CPC by the way of an amendment. One of the judgments of the Hon'ble Division Bench of the very same Hon'ble High Court of Delhi in the year 1991, had invoked the said provision and answered the applicability and exemption of attachment in affirmative.

Both the judgments have been analyzed in detail below.

V.P. ARORA V. PUNJAB NATIONAL BANK1

In this case, a money decree was passed against one OP Arora, and his son VP Arora was a Judgment Debtor in the capacity of a guarantor. OP Arora died; the execution was carried out and the main residential house of OP Arora was attached. The decree holder (PNB) moved an application against the legal representatives after it came to know of OP Arora's death. Wife of OP Arora, Shanti Devi along with VP Arora were brought on record as LRs. Shanti Devi filed objections claiming defense under proviso (ccc) of Section 60(1) of CPC. Shanti Devi died leaving behind a will, in favour of VP Arora.

VP Arora then became the owner of the house which was once owned by OP Arora. It is pertinent to mention that VP Arora was a party to the proceedings, in the capacity of Judgment Debtor.

The question that arose for consideration before the division bench of Delhi High Court in the case was whether the Judgment Debtor who becomes the owner of a house after passing of decree or attachment, which happens to be his main residential house, can claim the benefit of proviso (ccc) of Section 60(1) of CPC?

After perusing the facts of the case, along with the relevant provisions of Hindu Succession Act which held relevance after the death of OP Arora, and proviso (ccc) of Section 60(1) of CPC, while determining the fate of the suit property; the Court answered the question raised before it and held:

"It hardly matters whether he owned the house when decree was passed, or he comes to own the house at a time when it is sought to be attached or sold. That is why the law framers used the word 'or' between attachment and sale."

Finally, the court came to the conclusion that the house in dispute is not liable to be sold till VP Arora continues to be a Judgment Debtor and continues to possess it as main house.

MS. SUJATA KAPOOR V. UNION BANK OF INDIA AND OTHERS2

In this case, a Writ Petition was preferred by one Ms. Sujata Kapoor as Bonafide Purchaser.

One Shri BR Dougall (BRD in short) had provided guarantee to the proprietor of M/s Atul Food Products Limited to secure his loan obtained from Union Bank of India (UBI in short). Since the loan was not serviced and repaid in time, the UBI initiated recovery proceedings. The DRT passed an ex parte decree against the principal borrower and, inter alia, BRD. Further, BRD was restrained from creating any third-party rights.

The petitioner claimed that BRD had mortgaged the property with Indian Overseas Bank (IOB in short) against a loan his son Vivek had taken for his sole proprietary firm, M/s Vinayak International Inc. IOB initiated recovery proceedings and made an offer for One-Time Settlement. Petitioner's father and brother had offered to buy the property in her name, following the same. IOB agreed for the sale. The petitioner got the said property mutated in her name.

The petitioner claimed that since the suit property is the only main residence available for her, therefore, it shall be exempted from attachment as per the proviso (ccc) of Section 60(1), Civil Procedure Code, 1908.

The learned DRAT observed that the sale in favour of the petitioner had been executed by BRD after the mortgage had been redeemed by making payment to IOB, so the sale transaction between BRD the father-inlaw and the petitioner daughter-in-law could not be said to have been entered into by a mortgager in order to discharge pre-existing contractual liability towards the mortgagee bank. The learned DRAT also noticed the fact that a private sale was made between the father-in-law and the daughter-in-law, who claimed that she had estranged relations with her husband and her in-laws.

"29.....redemption could be by the mortgagor with his own money may be mustered by taking money from the in-laws of his son, as is the case of appellant."

Even if the attachment of the said property is taken to have been ordered on a previous date, it makes no difference, since the same relates back to, and takes effect from the date on which the notice to pay the arrears, issued under the Schedule, was served upon the defaulter (See Rule 51). The said property was attached while the same was in possession of the BRD (CD-3) in his own right. The Recovery Officer has had no occasion to declare the transfer made by the BRD to be void, since the property was already attached even prior to the said transfer. The sale made to the petitioner was illegal and illegitimate and was in breach of Rule 16 of IT Act, read with Rule 51.

The issue before the court for consideration was "the scope and interpretation of the provision, i.e., proviso (ccc) of Section 60(1) of CPC, 1908".

After hearing the parties, the court upheld the DRAT orders on the rejection of the petitioner's claims and stated that if the petitioner felt that she had been defrauded by BRD, it was for her to sue the estate of BRD.

While considering the proviso (ccc) to Section 60(1) of CPC, the Court noted that the said provision was borrowed from Punjab Relief of Indebtedness Act, 1934 (PRI in short) vide a Central Government notification dated 08.06.1956 through an amendment to Section 35 of PRI Act.

In light of the same, the Court analysed the expressions "judgement debtor" and "debt" used in Clause (ccc) of proviso to Section 60(1) of CPC. While doing so, Court opined that the two terms have to be read in light of the parent legislation, viz., PRI Act.

After perusal of Statement of Object and Reasons of PRI Act, the Court was of the view:

"82. Aforesaid being the position, in our considered view, the expression "judgment debtor" used in Clause (ccc) of proviso to Section 60(1) of the Code has to be read and understood in the context of the meaning ascribed to the expression "debtor" in the parent Act, i.e. the PRI Act as amended, and the expression "judgment debtor" cannot be understood to mean any "judgment debtor", as generally understood."

After placing reliance on a Supreme Court judgment, Surana Steels Pvt. Ltd, Vs. Deputy Commissioner of Income Tax and Others3, the Court opined that:

"86. Thus, clause (iv) was read and understood in the context of Section 205 of the Companies Act, 1956. Similarly, the expression "judgment debtor" used in Clause (ccc) of proviso to Section 60(1) of the Code has to be read and understood in the context of the expression "debtor" used in the PRI Act, lest it leads to wholly unintended benefits being showered upon "debtors" for whose benefit the said clause was not introduced, and causes injustice to creditors against whom it was never intended to be used as a shield."

Therefore, finally stating that the clause in the parent Act was introduced to protect the small agriculturalists, domestic servant etc., and hence should be interpreted in the same fashion even after being incorporated in CPC, otherwise it would render benefit to the higher income group people who are likely to exploit the provision to suit their own needs.

The Court, however, refused to place reliance on 2 other judgments being relied on by the petitioner, wherein it was claimed that the Statement of Objects and Reasons of the PRI Act cannot be looked into for the purpose of construing the scope of the amendment introduced in the Code by Section 35 of PRI Act.

"94... The interpretation sought to be canvassed by the petitioner in respect of Clause (ccc) of proviso to Section 60(1) of the Code would encourage fraudulent contrive by debtors to evade their liability which, certainly, would not be conducive to the preservation of the Rule of Law. Therefore, in our view, reliance placed by the petitioner on the aforesaid decisions in Gurudevdatta VKSSS Maryadit (supra) and Ashwini Kumar Ghose (supra) is misplaced."

The Court while admitting the petitioner's claim for Right to Shelter, provided for by Article 21 of the Constitution held that:

"99....... The basic need of all human beings, inter alia, of shelter, does not mean that debtors, irrespective of their background, can be granted blanket protection under Clause (ccc) of proviso to Section 60(1) of the Code...........Thus, even this fundamental right is not absolute, and in accordance with the procedure established by law it may be curtailed. The Legislature, in its wisdom, sought to carve out exceptions to Section 60(1) only in exceptional cases of agriculturists, labourers and domestic servants (under Clause (c) of proviso to Section 60(1) of the Code) ........."

Pursuant to the said discussion, the writ petition filed by the petitioner was dismissed.

CONCLUSION

It is relevant to point out that judgment titled as "Sujata Kapoor Vs. Union Bank of India"4 does not take into account the previous reported precedent i.e. judgment titled as "V.P.Arora vs. Punjab National Bank"5, while deciding the said case. Furthermore, the judgment titled as "Sujata Kapoor Vs. Union Bank of India"6, has been rendered by the Hon'ble Division Bench in the peculiar facts and circumstances which itself becomes clear from the Para 97 of the said judgment as the said property was already attached while the same was in possession of BRD (CD-3) in his own right. The Recovery Officer has had no occasion to declare the transfer made by the BRD (CD-3) to be void, since the property was already attached even prior to the said transfer. It means that the Original Owner was not claiming the benefit of exemption in terms of Proviso (ccc) of Section 60 of CPC, 1908 but the Bonafide Purchaser i.e. Ms. Sujata Kapoor/Petitioner was claiming the benefit as a Bonafide Purchaser from the erstwhile owner, namely BRD(CD-3) who was already under the legal impediment as the property was under attachment by the Recovery Officer.

Lastly, we cannot also lose sight of the principle of Article 141 of the Constitution of India, by referring to reported judgment titled as "Kiran Bala Vs. Surinder Kumar"7, where the Hon'ble Supreme Court gave the benefit of exemption of one main residential house to the Judgment Debtor and was pleased to observe that the said house cannot be attached or put to sale in execution of the decree.

Footnotes

1 1992 (48) DLT 367

2 W.P(C) 2404/2019, decided on 12.12.2019

3 (1999) 237 ITR 777

4 Supra Note 2

5 1992 (48) DLT 367

6 Supra Note 2

7 1996(4)SCC372

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.