Supreme Court of India
FOOD CORPORATION OF INDIAversusSUKH DEO PRASAD
- Citation
- 2009 INSC 401
- Decided
- 24 March 2009
- Disposal
- Appeal(s) allowed
- Bench
- R V RAVEENDRAN
Holding
An interim direction to deposit rent is a garnishee order, not an injunction, and therefore an application under Order 39 Rule 2A for contempt is not maintainable; the attachment order is set aside.
Summary
The Food Corporation of India (FCI) was ordered by a trial court to deposit rent payments for a godown it leased from borrowers into the bank’s loan account, an order that the bank sought as an interim direction. The bank later filed a contempt application under Order 39 Rule 2A of the CPC, alleging FCI’s disobedience of that order and seeking attachment of FCI’s assets. The Supreme Court held that the interim direction was a garnishee order, not an injunction, and therefore the contempt provision of Order 39 Rule 2A was inapplicable. It further ruled that the bank had no locus to invoke Order 39 Rule 2A because the order was not made under Rule 1 or 2 of Order 39 and no injunction existed. Consequently, the attachment of FCI’s assets was unlawful. The Court set aside the trial court and High Court orders and allowed FCI’s appeal, dismissing the contempt application.
Issues considered
- What is the legal nature and effect of the interim order dated 27‑May‑1996 – is it an injunction?
- Can the respondent (bank), as the first defendant in the mortgage suit, maintain an application under Order 39 Rule 2A for alleged disobedience of the interim order?
- Was the trial court justified in holding FCI liable for rent arrears for three godowns from Dec 1983 to Mar 1996 and attaching its assets under Order 39 Rule 2A?
- Was the High Court correct in disposing of FCI’s appeal summarily without addressing the maintainability and jurisdictional issues?
Legislation cited
- Code of Civil Procedure, 1908s. Order 21 Rule 46, s. Order 21 Rule 46A, s. Order 21 Rule 46B, s. Order 21 Rule 46C, s. Order 21 Rule 46F, s. Order 38 Rule 11A, s. Order 39 Rule 1, s. Order 39 Rule 2, s. Order 39 Rule 2A
- Contempt of Courts Act, 1971
Subjects
injunctionOrder 39 Rule 2Acontemptgarnisheeexecutionmortgageinterim directionattachmentjurisdictioncivil procedure
Judgment
[2009] 4 S.C.R. 1107
..,. FOOD CORPORATION OF INDIA A
~ v.
SUKH DEO PRASAD
Civil Appeal No. 380 of 2007
MARCH 24, 2009
8
[R.V. RAVEENDRAN AND MARKANDEY KAT JU, JJ.]
Interim order : Interim direction to tenant, in a suit by
)
creditor against landlords/borrowers to deposit arrears of rent
in Court and to continue to deposit the rents in Court with a
condition that tenant would pay interest if rent was not so
c
deposited -Held: Such interim direction cannot be considered
to be injunction order - Such interim direction would not fall
under order 39 Rule 1 CPC as the prayer did not relate to
clause (a), (b) or (c) of the said rule, nor under Order 39 rule 2
t CPC as there was no contract between the creditor and the D
tenant nor any injury caused by tenant to bank - Injunction -
Code of Civil Procedure, 1908 - Or39rr1 and 2.
Code of Civil Procedure, 1908: Or.39 rule 2A -
Application under - Held: Maintainable only when there is
E
disobedience of any injunction granted or order made under
Rule 1 or 2 of Or 39 or breach of the terms on which injunction
~
was granted or the order was made - Direction to pay money
either by way of final or interim order is not an injunction - On
facts, on an application by bank, interim direction to tenant to
F
deposit rents to the loan account of landlord/borrower- Tenant
vacated the tenanted godown - Landlord had no locus to file
application under Or39 r2A alleging disobedience of interim
order - Trial court erred in misinterpreting the interim order
and in allowing the application under Or 39 r 2A.
G
,(
Contempt jurisdiction : Held: Cannot be invoked for
enforcement of money decree or directions/orders for payment
of money - If garnishee who is directed to pay money does
not pay the amount, the remedy is execution and not action
1107 H
1108 SUPREME COURT REPORTS [2009) 4 S.C.R.
A for contempt or disobedience in Or 39 r 2A - Code of Civil ....
~
Procedure, 1908- Or21 r46B, Or39 r2A- Contempt of Courts
Act, 1971.
The respondent-defendant no. 1 and his brother
offered to construct and let out godowns to appellant and
B
for that purpose obtained loan of Rs.1 O lakhs from Bank
for construction of godowns and mortgaged their
properties in favour of Bank. Three godowns were·
constructed by respondent and his brother and let out to
appellant for five years in 1978. On instruction of lessors, '
c appellant credited the rents to the loan account of lessors
with the bank. Appellant vacated the said godowns and
surrendered back possession in December, 1983.
The Bank filed suit against the respondent-
defendants 1 to 3 and their guarantors for recovery of loan
D
amount, by sale of mortgaged properties and balance if ~
any personally from the borrowers and their guarantors.
Respondent contested the claim on the ground that
the loan was obtained for constructing godowns for
E appellant who had agreed to remain in occupation of
those godowns till repayment of entire loan amount and
appellant had vacated the godowns prematurely and
should be made party to the suit and also made liable for ~
payment of the suit claim. The trial court directed
impleadment of appellant as seventh defendant in the suit.
F
In June, 1994, during pendency of suit, appellant took
one godown on month to month lease with a condition to
surrender same without any notice. On 18.1.1996, the
bank filed an application in its suit, seeking an interim
direction to appellant to restrain it from paying the rent
G
for the said godown to lessors and to deposit the rents to ,.
the loan account of defendants 1 to 3 with the bank.
The trial Court allowed the application by order dated
27 .5.1996. It held that when appellant earlier took the
H godowns on rent for five years, the borrowers had
FOOD CORPORATION OF INDIA V 1109
SUKH DEO PRASAD
="'
~ authorized the Bank to receive the rent with the condition A
that if the lease was not continued, the lessors-borrowers
would be liable to pay the loan amount from their own
resources. It further held that bank was authorized under
the loan documents executed by the lessors to receive
the rents in respect of the mortgaged property directly B
from the tenant. It directed appellant to deposit rent
payable to landlords upto 31.3.1996 with the Bank by way
of fixed deposit in the name of lessors. In regard to the
~
rent payable from 1.4.1996, in respect of every 12 months,
the court directed that 2 months rent be paid directly to
lessors and 10 months rent be deposited with plaintiff c
Bank; and that if appellant failed to deposit rent as
directed, it would be liable to pay interest.
Appellant vacated the said godown on 7.2.1997.
Thereafter, the respondent filed an application under
Order 39 r. 2A CPC alleging that appellant disobeyed the. D
order dated 27.5.1996. In the said application respondent
prayed that action be taken against appellant and its
officers for contempt, by seizing and auctioning their
movable and immovable properties and by sending its
four officers to prison for not depositing the rents in terms E
of order dated 27.5.1996. In the said application, the
respondent contended that in view of the interim order
' dated 27.5.1996, appellant became liable to deposit the
rent for the three godowns from 1.12.1983 till 31.3.1996
and also to continue to pay the rents from 1.4.1996. The
application was resisted by appellant and its officers. F
The trial court by order dated 15.12.2004 allowed the
said application. It interpreted the order dated 27 .5.1996
as directing appellant to deposit rent of three godowns
from December, 1983 up to 31.3.1996. Consequently, it
held that appellant was liable to pay the said arrears with G
interest at 13% per annum (Rs. 1, 12, 24, 792/-) and as the
said amount was not deposited, appellant was held liable
under Order 39 Rule 2A CPC for disobedience of the order
dated 27 .5.1996. It also directed that the assets of appellant
should be attached under order 39 Rule 2A CPC. H
1110 SUPREME COURT REPORTS [2009] 4 S.C.R.
A The High Court dismissed the appeal with an
observation that it was not competent to consider the ~ b
validity of the 'injunction order' in an appeal against an
order passed under order 39 Ru'e 2A CPC, for
disobedience of the 'injunction order'. The High Court
B assumed that in the appeal against the order dated
15.12.2004 passed under Order 39 Rule 2A, appellant was
trying to challenge the validity of the 'injunction order'
dated 27 .5.1996. Hence the present appeal.
Allowing the appeal, the Court '
c
HELD: 1.1. The order dated 27.5.1996 was passed
on an application dated 12.1.1996 filed by the plaintiff
bank. It was not filed either under Rule 1 or 2 of Order 39
CPC. In fact, the application did not mention the provision
o of law under which it was filed. The bank did not claim
that appellant had any privity of contract with it, nor
claimed that appellant was a co-obligant. In the
application, the bank specifically stated that the relief
sought by it in the said application for deposit of rent was
E in regard to the godown belonging to defendants 1 to 3
that was taken on rent by appellant during June, 1994.
There is a further clear averment in the application that it
had vacated the godowns earlier taken by it on lease, after ~
the lease period (of 5 years) and that appellant had again '
taken one godown on rent during the pendency of the
F suit and that the application related to that godown. The
order dated 27 .5.1996 did not consider any claim for rent
in regard to the three godowns which were vacated in
December 1983. The court did not hold or direct that
appellant was liable to pay any amount by way of rent or
G otherwise in regard to the three godowns for the period
December, 1983 to 31.3.1996. In fact there was no
reference to the three godowns at all except to the
statement of the bank that appellant had vacated those
godowns after the lease period (in December 1983). Thus
H there was no application for an 'injunction', nor any order
FOOD CORPORATION OF INDIA V. 1111
SUKH DEO PRASAD
_\ of 'injunction' by the court. An interim direction to a tenant A
in a suit by the creditor against the landlords/borrowers,
to deposit the arrears of rent in court and to continue the
deposit the rents in court with a condition that the tenant
would pay interest if the rent was not so deposited, cannot
be considered to be an order of 'injunction'. In a general B
"'
sense, though every order of a court which commands
or forbids is an injunction, but in its accepted legal sense,
an injunction is a judicial mandate operating in personam
"' by which, upon certain established principles of equity, a
party is required to do or refrain from doing a particular c
thing. A direction to pay money either by way of final or
•
interim order, is not considered to be an 'injunction' as
assumed by the courts below. [Para 16] [1121-D-H; 1122-A-G]
. injunctions
Howard C. Joyce - A Treatise on the Law relating to
(1909) S. 1 - referred to. D
1.2. Admittedly the application dated 12.1.1996, on
which.the order dated 27.5.1996 was passed, did not fall
under Rule 1 of Order 39 CPC as the prayer therein did
not relate to any of the three matters mentioned in clauses
E
(a), (b) and (c) of the said rule. It did not also fall under
Rule 2 of Order 39 as admittedly there was no contract
between the bank and appellant nor any allegation that
appellant was committing any injury of any kind to the
bank. Therefore, the order dated 27.5.1996 was riot an
F
order under either Rule 1 or Rule 2 of Order 39 CPC. The
suit itself was for recovery of the amounts due by the
borrowers, by sale of the mortgaged properties belonging
to the borrowers (defendants 1 to 3) and to recover the
.. balance personally from the borrowers and guarantors
(defendants 1 to 6). When appellant was subsequently G
added as seventh defendant at the instance of defendants
1 to 3, no relief was sought against appellant nor was the
prayers amended seeking any decree against appellant.
If there was no prayer in the suit against appellant,
obviously no interim relief could have been sought against H
1112 SUPREME COURT REPORTS [2009] 4 S. C.R.
A appellant as a defendant. Even assuming that the final
relief was sought against appellant also, the position is
that appellant was only a 'garnishee defendant' and not a
'principal defendant'. The order dated 27.5.1996 was not
an injunction order, but an interim prohibitory (garnishee)
B order by way of attachment before judgment, in regard to
the rents payable for one godown taken by it on lease in
...
June, 1994. [Para 17] [1122-G-H; 1123-A-D]
2.1. An application under Order 39, Rule 2A CPC is ...
maintainable only when there is disobedience of any
C 'injunction' granted or other order made under Rule 1 or
Rule 2 of Order 39 or breach of any of the terms on which
the injunction was granted or the order was made. T h e
application by the bank, on which the said order dated
27.5.1996 was passed, was neither under Rule 1 nor under
D Rule 2 of Order 39 CPC and none of the ingredients ~
required for an application under either Rule 1 or Rule 2
of Order 39 existed was found in the application by the
bank. Even otherwise, the respondent had no locus to
file an application under Order 39 Rule 2A alleging
E disobedience of the order dated 27.5.1996. The plaintiff
bank which filed the application dated 12.1.1996 on which
the said order dated 27.5.1996 was passed, did not 4
complain of any disobedience or breach of the order dated
27 .5.1996, nor sought any action or relief against appellant
F alleging non-compliance or disobedience of the order
dated 27.5.1996. As the interim order dated 27.5.1996 was
not made on an application made by the respondent and
as the interim order was not intended for the benefit to
the respondent who was the first defendant in the suit,
G he could not be said to be a person aggrieved by the ._
alleged disobedience or breach of the order dated
27.5.1996. [Paras 18, 19] [1123-E-H; 1124-A-C]
2.2. The power exercised by a court under order 39,
Rule 2A CPC is punitive in nature, akin to the power to
H punish for civil contempt under the Contempt of Courts
FOOD CORPORATION OF INDIA V. 1113
SUKH DEO PRASAD
. .. Act, 1971. The person who complains of disobedience or A
breach has to clearly make out beyond any doubt that
there was an injunction or order directing the person
against whom the application is made, to do or desist from
doing some specific thing or act and that there was
disobedience or breach of such order. While considering B
an application under order 39 Rule 2A, the court cannot
construe the order in regard to which disobedience/
__.,
~
breach is alleged, as creating an obligation to do
something which is not mentioned in the 'order', on
surmises and inferences. The power under Rule 2.A should
be exercised with great caution and responsibility. It is
c
shocking that the trial court entertained an application
under Order 39 Rule 2A from a person who was not
entitled to file the application, accepted an interpretation
of the order which does not flow from the order, and
created liability where none existed, resulting in D
attachments of the assets of appellant to an extent of more
than Rs.1.12 crores. The order dated 15.12.2004 cannot
be supported or sustained under any circumstances.
[Para 24] [1127-B-F]
3.1. The garnishee proceedings are governed by E
Rules 46 and 46A to 46F of Order 21 CPC. The amount
~ due by a garnishee, if disputed has to be determined as if
it was an issue in the suit and the court can appropriate
order determine the extent of liability of the garnishee. In
this case, there was no adjudication of the amount payable F
by appellant. Whatever amount that was due in pursuance
of the order dated 27 .5.1996 in regard to one godown
taken on lease in June 1994, was deposited by appellant
and the plaintiff bank at whose instance the order was
made has no complaint or grievance. [Para 20] [1124-D- G
H; 1125-A]
3.2. If a garnishee, or a defendant, who is directed to
pay any sum of money, does not pay the amount, the
remedy is to levy execution and not in an action for
contempt or disobedience/breach under order 39 Rule 2A. H
1114 SUPREME COURT REPORTS [2009] 4 S.C.R.
.A This is evident from Rule 468 of Order 21 read with Rule
11A of Order 38 CPC. Contempt jurisdiction, either under
l -
the Contempt of Court Act, 1971, or under Order 39 Rule
2A of the Code, is not intended to be used for enforcement
of money decrees or directions/orders for payment of
B money. The process and concept of execution is different
from process and concept of action for disobedience/
contempt. [Para 21] [1125-A-C]
.._
4.1. The application dated 12.1.1996 filed by the bank ~-
did not claim or seek a direction for payment of alleged
c arrears of rent relating to three godowns taken on lease
in the year 1978 and vacated in December 1983. In
particular, it did not make any claim for rent, for the period
December, 1983 to 31.3.1996 when appellant was not in
occupation of three godown. The bank stated in its
D application that appellant had vacated those godowns
after completion of the lease period (that is in December,
1983) and that subsequently during the pendency of the
suit the appellant had taken one of those godowns again
on rent in June, 1994. The relief claimed in the application
E was that in regard to the godown taken on rent by
appellant in June, 1994, it should be directed to deposit
the rents in court as the borrowers/debtors were
attempting to collect the said rent and thereby deny the
benefit of rent to the bank even though the borrowers had
F agreed under the loan documents that the rents in regard
to the godowns could be directly received by the bank.
Therefore when the application itself was only in regard
to the rent for one godown from June, 1994 onwards, the
trial court could not come to the conclusion that the said
G order dated 27.5.1996 directed FCI to deposit the rent for
three godowns for the period December, 1983 to 31.3.1996
and that failure to do so was punishable under Order 39
Rule 2A CPC. The trial court by a convoluted reasoning
based on a baseless interpretation of the order dated
27 .5.1996 held that appellant had not placed any evidence
H
FOOD CORPORATION OF INDIA V. 1115
SUKH DEO PRASAD
-~ in the proceedings under Order 39 Rule 2A that it had A
vacated the three godowns in December, 1983 and
therefore, it continued to be liable to pay the rents for three
godowns from December 1983 onwards. [Para 22~ [1125-
D-H; 1126-A-B]
8
4.2. It is not understandable how in a suit filed in the
year 1991 by the bank against the borrowers for
.enforcement of mortgage, an order made on the bank's
application for deposit of rents relating to a godown taken
in June, 1994, can be interpreted by the court considering
the application under order 39 Rule 2A CPC, as containing C
a direction for deposit of rents in regard to three godowns
vacated in December 1983, for the period December, 1983
to 31.3.1996. [Para 23] [1126-D-F]
5. It is unfortunate that the High Court dismissed the 0
appeal on a wholly baseless and erroneous assumption
that the appellant was trying to challenge only the order
dated 27.5.1996, in the appeal against the order dated
15.12.2004. When a huge liability of Rs.1,12,24,792.99 was
sought to be created on the appellant in a proceedings E
under Order 39 Rule 2A, the High Court did not even
bother to refer to the facts and merits, and chose to sum-
marily dispose of the appeal thereby allowing perpetration
of a patent abuse of process of court by the respondent.
The travails of the appellant could have been avoided if F
the trial court and the High Court had been diligent to
ensure that its process were not misused and abused by
the respondent. [Paras 25, 26] [1127-G-H; 1128-A-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal No.380
~ of2007 G
From the Judgement and Order dated 06.03.2006 of the
High Court of Judicature at Allahabad in FAFO No. 343 of 2005.
P.P. Malhotra, Ajit Pudussery, K. Vijayan, with him, for the
Appellant. H
1116 SUPREME COURT REPORTS [2009] 4 S.C.R.
A S.R. Yadav, Braj Kishore Mishra, Vikram, Tanushree Sinha, •
Aparna Jha, with him for the Respondent.
The Judgement of the Court was delivered by
R.V.RAVEENDRAN, J.
B
1. The Food Corporation of India ('FCI' for short) challenges
the order dated 6.3.2006 of the Allahabad High Court, rejecting
its appeal against the order dated 15.12.2004 passed by the
Additional District Judge (Special judge EC), Jhansi ordering
attachment of its properties under Order 39 Rule 2A of the Code
c of Civil Procedure (Code for short) to an extent of Rs.
1, 12,24,792.99.
FACTS OF THE CASE :
2. In the year 1976, the respondent (Sukh Deo Prasad)
D offered to construct and let out god owns to FCI. For that purpose, •
the respondent and his brother V.K.Shukla obtained a term loan
of Rs.10 lakhs from the State Bank of India, Jhansi Branch (for
short 'the bank') on 31.8.1977 and as security therefor
mortgaged their land (in Khard village) and house property (at
E Jhansi) in favour of the Bank by deposit of title deeds. The
repayment of the said loan was also guaranteed by one Raj
Narain Khare and Shri Kish an on 6.10.1977. In addition, another
sum of Rs.5 lacs was sanctioned by the bank, by way of term
loan to the respondent on 29.8.1977, repayment of which was
F guaranteed by one Ram Kishore Gupta and Khachore.
3. Three godowns were constructed by the respondent and
his brother and let out to FCI for a term of five years in the year
1978. On the instructions of the lessors, FCI credited the rents
to the loan account of the landlords with the bank. FCI vacated ,..
G the said godowns and surrendered back possession in
December, 1983.
4. The bank filed Suit No.93/1991 (the court of the Special
Judge, E.C. Jhansi) against the respondent (Defendant No.1 ),
H the wife and son of his brother V.K.Shukla (defendants 2 and
FOOD CORPORATION OF INDIA V 1117
SUKH DEO PRASAD [RVRAVEENDRAN, J.]
. j 3), Raj Narain Khare (Defendant No.4 - guarantor for the loan of A
Rs.10 lacs) and Ram Kishore Gupta and Khachore (defendants
5 and 6 - guarantors for the loan of Rs.5 lacs) for recovery of
Rs.20,68,120.74 with interest at the rate of 11% with monthly
rents, by sale of the mortgaged properties and for recovery of
the balance amount, if any, personally from the defendants. B
5. Defendants 1 to 3 in the suit contested the claim. They
inter alia contended that the loan was obtained for the purpose
of constructing godowns for FCI, that FCI had agreed to continue
" in occupation of those godowns as tenant until the entire loan
due by them (landlords) to the bank was cleared, that FCI had c
vacated the godowns prematurely, and that therefore it should
be made a party to the suit and made liable for payment of the
suit claim. Issue No.7 was framed in the suit, as to whether suit
was bad for non-joinder of FCI, and considered as a preliminary
'1 issue. By order dated 18.5.1994, the court directed FCI be D
impleaded as the seventh defendant in the suit. FCI was not
given any opportunity to show cause before being impleaded.
6. In June 1994, during the pendency of the said suit, the
respondent and his son Sunil Kumar offered a fresh lease of
E
one of the three godowns and the appellant took it temporarily
on a month to month tenancy on a rent of Rs.0.50 paise per sq.
~ ft. The tenancy agreement made it clear that FCI could surrender
back the godown without any notice, whenever the same was
not required.
F
7. On 18.1.1996 the bank filed an application in its suit,
seeking an interim direction to FCI to restrain it from paying the
rent for the said godown to defendants 1 to 3 and for a further
interim direction to FCI to deposit the rents relating to the
~
godown, to the loan account of defendants 1 to 3 with the bank. G
In the said application, the bank averred that FCI had earlier
taken the godowns on rent in the year 1978 and had vacated
them on the expiry of the lease period of 5 years; that in June,
1994, FCI had again taken on lease one of the godowns; that
inspite of having agreed that the bank was entitled to receive
H
1118 SUPREME COURT REPORTS [2009] 4 S.C.R.
A the rents from the tenant (FCI), defendants 1 to 3 were collecting ..
l
the rent in respect of the said godown directly from FCI with the
intention of denying the same to the bank. and that therefore it
was entitled to an interim direction.
8. The trial court allowed the said application by order
B
dated 27.5.1996. It found that when FCI had earlier taken the
godowns on rent for five years, the borrowers had authorized
the Bank to receive the rent with the condition that if the lease
was not continued by FCI, the borrowers would be liable to pay
the loan amount from their own resources. It held that bank was "
c authorized under the loan documents executed by the borrowers
to receive the rents in respect of the mortgaged property directly
from the tenant. But as the borrowers were disputing the amount
of liability, it issued the following directions in regard to the rent
for the godown :
D
(a) FCI shall deposit the rent payable to defendants 1
and 2 (landlords) up to 31.3.1996 with the Punjab
National Bank by way of a fixed deposit in the name
of the defendants 1 and 2.
E (b) In regard to the rent payable from 1.4.1996, in respect
of every 12 months rent, 2 months rent shall be paid
directly to defendants 1 and 2 (towards building
-i
maintenance) and balance 10 months' rent shall be
deposited with plaintiff Bank, to be invested in the
F name of the larJdlords/defendants 1 and 2 by way of
MCC periodical deposits.
(c) If FCI failed to deposit the rent as aforesaid, it shall
be liable to pay interest @ 13% per annum on the
G
(d)
rent defaulted.
The amounts so deposited will be dealt with in terms
,.
of decision on issue No.10 as to the amount due to ···
the bank, in the final judgment to be rendered.
9. FCI vacated the said godown taken on rent in June 1994
H on 7.2.1997. Before doing so, it issued a notice dated
FOOD CORPORATION OF INDIA V. 1119
SUKH DEO PRASAD [R.V.RAVEENDRAN, J.]
31.12.1996 to the landlords (respondent and his son) that A
tenancy would stand terminated on expiry of 30 days from the
date of service of the said notice and called upon them to take
possession. It informed the landlords that it had deposited the
rents upto December 1996 in the Bank in terms of the order
dated 27.5.1996 and sent the FD receipt to the court. It also B
issued a public notice in the Daily Newspaper 'Dainik Jagran'
dated 18.2.1997 that it had vacated the godown taken on rent
on 18.6.1994, on 7.2.1997.
10. The respondent herein filed an application under Order
39 Rule 2A of the Code (Contempt Application 31/1996) on C
6.11.1996 alleging that FCI had disobeyed the order dated
27.5.1996 and consequently the District Manager of FCI (Shri
Ashraf Ali) should be sent to civil jail and properties of FCI should
be attached and auctioned. The said application was dismissed
for default on 12.11.1997. D
11. Thereafter the respondent filed yet another application
(Misc. 49/1998) under Order 39 Rule 2A of the Code against
FCI, its Senior Regional Manager and three District managers.
In the said application respondent prayed that action should be E
taken against FCI and its officers for contempt, by seizing and
auctioning the movable and immovable properties of FCI and
by sending its four officers to prison for not depositing the rents
in terms of order dated 27.5.1996. In the said application, the
respondent contended that in view of the interim order dated
27.5.1996, FCI became liable to deposit the rent for the three F .
godowns from 1.12.1983 till 31.3.1996 and also continue to pay
the rents from 1.4.1996. The application was resisted by FCI
and its officers.
12. The trial court by order dated 15.12.2004 allowed the G
said application. It interpreted the order dated 27.5.1996 as
directing FCI to deposit of rent of three godowns from
December, 1983 up to 31.3.1996. Consequently, it held that
FCI was liable to pay the said arrears with interest at 13% per
annum. Acting on a calculation sheet provided by the respondent, H
1120 SUPREME COURT REPORTS [2009] 4 S.C.R.
A it held that a sum of Rs.1, 12,24, 792.99 was due by FCI towards
.
such rent and interest; and as the said amount was not
deposited, FCI was liable to be punished under Order 39 Rule
2A of the Code for disobedience of the order dated 27.5.1996.
It therefore directed that the assets of FCI, both movable and
B immovable, should be attached under order 39 Rule 2A CPC in
respect of the said sum of Rs.1, 12,24,792.99.
13. Feeling aggrieved, FCI filed an appeal (FAFO No. 343/
2005) before the Allahabad High Court. The High Court
dismissed the appeal by a brief order dated 6.3.2006, without
C prejudice to the rights of FCI to challenge the order of injunction,
with an observation that it was not competent to consider the
validity of the 'injunction order' in an appeal against an order
passed under order 39 Rule 2A of the Code, for disobedience
of the 'injunction order'. The High Court assumed that in the
D appeal against the order dated 15.12.2004 passed under Order
39 Rule 2A, FCI was trying to challenge the validity of the
'injunction order' dated 27 .5.1996. The said order is challenged
by FCI in this appeal by special leave.
E QUESTIONS FOR DECISION
14. On the contentions urged, the following questions arise
for consideration ·
(i) What is the purport and effect of the order dated
27 .5.1996 described by the trial court and the High
F Court as the 'injunction order'.
(ii) Whether the respondent, who was the first defendant
in the mortgage suit filed by the bank, could maintain
an application under order 39 Rule 2A of the Code
G for the alleged disobedience by FCI (a co-defendant),
of the order dated 27 .5.1996 made in an application
filed by the plaintiff bank?
(iii) Whether the trial court was justified in allowing such
application under Order 39 Rule 2A of the Code,
H holding that FCI was liable to pay the rents for three
FOOD CORPORATION OF INDIA V. 1121
SUKH DEO PRASAD [RVRAVEENDRAN, J.]
godowns from December, 1983 to 31.3.1996 and A
interest thereon and direct attachment of the assets
of FCI to an extent of Rs.1,12,24,792.99?
(iv) Whether the High Court was justified in disposing of
FCl's appeal in a summary manner?
B
RE : QUESTION (I) :
15. At the outset it should be made clear that we are
considering only the purport and effect of the interim order dated
27 .5.1996 and not the correctness or validity of the said order,
as what is under challenge is not the order dated 27 .5.1996, C
but the order dated 15.12.2004 under Order 39 Rule 2A of the
Code holding that FCI had disobeyed the order dated
27.5.1996.
16. The order dated 27 .5.1996 was passed on an D
application dated 12.1.1996 filed by the plaintiff bank. It was
not filed either under Rule 1 or 2 of Order 39 of the Code. In fact,
the application did not mention the provision of law under which
it was filed. The bank did not claim that FCI had any privity of
contract with it, nor claim that FCI was a co-obligant. In the E
application, the bank specifically stated that the relief sought by
it in the said application for deposit of rent was in regard to the
godown belonging to defendants 1 to 3 that was taken on rent
by FCI during June, 1994. There is a further clear averment in
the application that FCI had vacated the godowns earlier taken F
by it on lease, after the lease period (of 5 years) and that FCI
had again taken one godown on rent during the pendency of
the suit and that the application related to that godown. The order
dated 27.5.1996 did not consider any claim for rent in regard
the to three godowns which were vacated in December 1983,
nor consider the contention of defendants 1 to 3 in their written G
statement that FCI had agreed to continue beyond five years.
The court did not hold or direct that FCI was liable to pay any
amount by way of rent or otherwise in regard to the three
godowns for the period December, 1983 to 31.3.1996. In fact
there was no reference to the three godowns at all except to the H
1122 SUPREME COURT REPORTS [2009] 4 S.C.R.
A statement of the bank that FCI had vacated those godowns after
the lease period (in December 1983). The court was of the view
that having regard to the dispute raised by the defendants/
borrowers in regard to the amount claimed by the bank, it will
not be proper to direct FCI to pay the rents directly to the bank.
B As the bank had stated that FCI had not paid the rent for the
godown which it had taken on lease in June, 1994, for non-
fulfilment of the formalities by the landlords, the court directed
FCI to deposit the rents in regard to that godown up to 31.3.1996
and the same be kept in a fixed deposit with some other
c nationalized bank. It also directed that in regard to the rent
accruing in regard to that godown from 1.4.1996 from out of
rent payable during every year, two months rent in a year should
be paid to defendants 1 and 2 towards repairs and maintenance
and remaining 10 months rent should be deposited with the bank,
0 for being invested in a MCC deposit. It also directed that in the
event of non-payment of such rent by FCI, it shall pay interest at
13% per annum. Thus there was no application for an 'injunction',
nor any order of 'injunction' by the court. An interim direction to
a defendant-tenant in a suit by the creditor against the landlords/
E borrowers, to deposit the arrears of rent in court and to continue
the deposit the rents in court with a condition that the tenant will
have to pay interest if the rent was not so deposited, cannot be
considered to be an order of 'injunction'. In a general sense,
though every order of a court which commands or forbids is an
injunction, but in its accepted legal sense, an injunction is a
F judicial mandate operating in personam by which, upon certain
established principles of equity, a party is required to do or
refrain from doing a particular thing [see Howard C. Joyce -A
Treatise on the Law relating to injunctions (1909) S. 1 at 2-3].
A direction to pay money either by way of final or interim order,
G is not considered to be an 'injunction' as assumed by the courts
below.
17. Admittedly the application dated 12.1.1996, on which
the order dated 27.5.1996 was passed, did not fall under Rule
H 1 of Order 39 as the prayer therein did not relate to any of the
FOOD CORPORATION OF INDIA V. 1123
SUKH DEO PRASAD [R.V.RAVEENDRAN, J]
three matters mentioned in clauses (a), (b) and (c) of the said A
t
rule. It did not also fall under Rule 2 of Order 39 as admittedly
there was no contract between the bank and FCI nor any
allegation that FCI was committing any injury of any kind to the
bank. Therefore, the order dated 27.5.1996 was not an order
under either Rule 1 or Rule 2 of Order 39 of the Code. The suit B
itself was for recovery of the amounts due by the borrowers, by
sale of the mortgaged properties belonging to the borrowers
(defendants 1 to 3) and to recover the balance personally from
the borrowers and guarantors (defendants 1 to 6). When FCI
was subsequently added as seventh defendant at the instance c
of defendants 1 to 3, no relief was sought against FCI nor was
the prayers amended seeking any decree against FCI. If there
was no prayer in the suit against FCI, obviously no interim relief
could have been sought against FCI as a defendant. Even
assuming that the final relief was sought against FCI also, the D
\
position is that FCI was only a 'garnishee defendant' and not a
'principal defendant'. The order dated 27 .5.1996 was not an
injunction order, but an interim prohibitory (garnishee) order by
way of attachment before judgment, in regard to the rents
payable for one godown taken by it on lease in June, 1994.
E
RE : QUESTION (II)
~ 18. An application under Order 39, Rule 2A of the Code is
"' maintainable only when there is disobedience of any 'injunction'
granted or other order made under Rule 1 or Rule 2 of Order 39
F
or breach of any of the terms on which the injunction was granted
or the order was made. We have already noticed that the
application by the bank, on which the said order dated 27.5.1996
was passed, was neither under Rule 1 nor under Rule 2 of Order
39 CPC and none of the ingredients required for an application
~ under either Rule 1 or Rule 2 of Order 39 existed was found in G
the application by the bank. As the order dated 27 .5.1996 was
neither under Rule 1 or 2 of Order 39, the application under
Rule 2A of Order 39 was not maintainable.
19. Even otherwise, the respondent had no locus to file an
H
1124 SUPREME COURT REPORTS [2009] 4 S.C.R.
A application under Order 39 Rule 2A alleging disobedience of
the order dated 27 .5.1996. The plaintiff bank which filed the
application dated 12.1.1996 on which the said order dated
27.5.1996 was passed, did not complain of any disobedience
or breach of the order dated 27.5.1996, nor sought any action
B or relief against FCI alleging non-compliance or disobedience
of the order dated 27.5.1996. As the interim order dated
27 .5.1996 was not made on an application made by the
responaent and as the interim order was not intended for the
benefit to the respondent who was the first defendant in the suit,
c he could not be said to be a person aggrieved by the alleged
disobedience or breach of the order dated 27 .5.1996.
20. The garnishee proceedings are governed by Rules
46 and 46A to 46F of Order 21 of the Code. Sub-para (1) of
Rule 46 A provides that in the case of a debt (other than a debt
D secured by a mortgage or a charge) which has been attached
under Rule 46, upon the application of the attaching creditor,
the court may issue notice to the garnishee liable to pay such
debt, calling upon him either to pay into court the debt due from
debtor or to appear and show cause why he should not do so.
E Rule 468 provides that where the garnishee does not forthwith
pay into court the amount due from him to the debtor and does
not appear and show cause in answer to the notice, the court •
may order the garnishee to comply with the terms of such notice,
and on such order, execution may issue as though such order
F were a decree against him. Rule 46C provides that where the
garnishee disputes liability, the court may order that any issue
or question necessary for the determination of liability shall be
tried as if it were an issue in a suit, and upon the determination
of such issue shall make such order or orders as it deems fit. It
G would thus be seen that the amount due by a garnishee, if
disputed has to be determined as if it was an issue in the suit
and the court can appropriate order determine the extent of
liability of the garnishee. In this case, there was no adjudication
of the amount payable by FCI. Whatever amount that was due
H in pursuance of the order dated 27 .5.1996 in regard to one
FOOD CORPORATION OF INDIA V. 1125
SUKH DEO PRASAD [R.V.RAVEENDRAN, J]
>
godown taken on lease in June 1994, was deposited by FCI A
and the plaintiff bank at whose instance the order was made
has no complaint or grievance.
21. At all events, if a garnishee, or a defendant, who is
directed to pay any sum of money, does not pay the amount, the
8
remedy is to levy execution and not in an action for contempt or
disobedience/breach under order 39 Rule 2A. This is evident
from Rule 46B of Order 21 read with Rule 11A of Order 38 of
" the Code. Contempt jurisdiction, either under the Contempt of
Court Act, 1971, or under Order 39 Rule 2A of the Code, is not
intended to be used for enforcement of money decrees or C
directions/orders for payment of money. The process and
concept of execution is different from process and concept of
action for disobedience/contempt.
RE : QUESTION (Ill) D
22. The application dated 12.1.1996 filed by the bank did
not claim or seek a direction for payment of alleged arrears of
rent relating to three godowns taken on lease in the year 1978
and vacated in December 1983. In particular, it did not make
any claim for rent, for the period December, 1983 to 31.3.1996 E
when FCI was not in occupation of three godown. As noticed
above, the bank stated in its application that FCI had vacated
those godowns after completion of the lease period (that is in
December, 1983) and that subsequently during the pendency
of the suit the appellant had taken one of those godowns again F
on rent in June, 1994. The relief claimed in the application was
that in regard to the godown taken on rent by FCI in June, 1994,
it should be directed to deposit the rents in court as the
borrowers/debtors were attempting to collect the said rent and
thereby deny the benefit of rent to the bank even though the G
borrowers had agreed under the loan documents that the rents
in regard to the godowns could be directly received by the bank.
Therefore when the application itself was only in regard to the
rent for one godown from June, 1994 onwards, we fail to
understand how the trial court could come to the conclusion that H
1126 SUPREME COURT REPORTS [2009] 4 S.C.R.
A the said order dated 27.5.1996 directed FCI to deposit the rent
for three godowns for the period December, 1983 to 31.3.1996
and that failure to do so was punishable under Order 39 Rule
2A of the Code. The trial court by a convoluted reasoning based
on a baseless interpretation of the order dated 27 .5.1996 held
B that FCI had not placed any evidence in the proceedings under
Order 39 Rule 2A that it had vacated the three godowns in
December, 1983 and therefore, it continued to be liable to pay
the rents for three godowns from December 1983 onwards. ..
23. The obvious question that ought to have been posed
C is if rents were payable from December, 1983 onwards by FCI,
why the respondent as landlord, did not take any action to recover
the same; and if the bank was entitled to receive the said rents,
why the bank did not take action to recover the same. Obviously
any claim for rent against the defendant in regard to any period
D beyond three years would be barred by limitation, in the absence
of any acknowledgement or payment on account. It is un-
understandable how in a suit filed in the year 1991 by the bank
against the borrowers for enforcement of mortgage, an order
made on the bank's application for deposit of rents relating to a
E godown taken by FCI on rent from the borrower in June, 1994,
can be interpreted by the court considering the application under
order 39 Rule 2A of the Code, as containing a direction for
deposit of rents in regard to three godowns vacated in
December 1983, for the period December, 1983 to 31.3.1996.
F The absurdity, perversity and arbitrariness of the order dated
15.12.2004 becomes evident from the following :
(i) FCI is held liable for payment of rent of
Rs.1, 12,24,792/99 in a collateral supplemental
proceedings under Order 39 Rule 2A of the Code,
G initiated by a person who was not a 'person
aggrieved'.
...
(ii) Such liability is created in respect of a time barred
claim for rent by the landlord.
H (iii) FCI is made liable for the said sum without the
FOOD CORPORATION OF IND/A V. 1127
SUKH DEO PRASAD [R.V.RAVEENDRAN, J.]
landlords filing a suit for recovery of rents and without A
adjudication of the claim for such rent;
(iv) Such liability is inferred by interpreting a garnishee
order obtained by the landlord's creditor in regard to
a different lease relating to a different period.
B
24. The power exercised by a court under order 39, Rule
2A of the Code is punitive in nature, akin to the power to punish
for civil contempt under the Contempt of Courts Act, 1971. The
person who complains of disobedience or breach has to clearly
make out beyond any doubt that there was an injunction or order c
directing the person against whom the application is made, to
do or desist from doing some specific thing or act and that there
was disobedience or breach of such order. While considering
an application under order 39 Rule 2A, the court cannot construe
the order in regard to which disobedience/breach is alleged, D
as creating an obligation to do something which is not mentioned
in the 'order', on surmises suspicions and inferences. The power
under Rule 2A should be exercised with great caution and
responsibility. It is shocking that the trial court had entertained
an application under Order 39 Rule 2A from a person who was E
not entitled to file the application, has accepted an interpretation
of the order which does not flow from the order, and has created
an liability where none existed, resulting in attachments of the
assets of FCI to an extent of more than Rs.1.12 crores. The
order dated 15.12.2004 cannot be supported or sustained F
under any circumstances.
RE : QUESTION (IV)
25. FCI filed an appeal contending that the order of the
trial court dated 15.12.2004 under Order 39, Rule 2A of the Code
directing attachment of its assets to an extent of Rs. G
1,12,24,792.99 was erroneous, without jurisdiction and liable
to be set aside. In that context it raised contentions about the
scope and ambit of the order dated 27.5.1996. It also incidentally
mentioned that the 27.5.1996 being a garnishee order was
patently erroneous and without jurisdiction, in a mortgage suit. H
1128 SUPREME COURT REPORTS [2009] 4 S.C.R.
A The High Court however assumed that FCI was not challenging t
the order dated 15.12.2004 passed by the trial court under Order
39 Rule 2A but was only challenging the 'injunction order' dated
27.5.1996 for disobedience of which the application under Order
39 Rule 2A was filed. As a consequence, it dismissed the
B appeal of FCI without examining the several contentions raised
by the FCI as to the maintainability of the application under Order
39 Rule 2A or the jurisdiction of the trial court to pass such an
order under Order 39 Rule 2A and the errors and perversities
pointed out in such order.
c 26. It is unfortunate that the High Court has failed to even
refer to these aspects and has dismissed the appeal on a wholly
baseless and erroneous assumption that the appellant was
trying to challenge only the order dated 27.5.1996, in the appeal
against the order dated 15.12.2004. We feel dismayed that
D when a huge liability of Rs.1, 12,24,792.99 was sought to be
created on the FCI in a proceedings under Order 39 Rule 2A,
the High Court did not even bother to refer to the facts and merits,
and chose to summarily dispose of the appeal thereby allowing
perpetration of a patent abuse of process of court by the
E respondent. The travails of the FCI could have been avoided if
the trial court and the High Court had been diligent to ensure
that its process were not misused and abused by the
respondent.
F CONCLUSION
27. We therefore allow this appeal with costs of Rs.25,000/
- payable by respondent, set aside the order of the High Court
and the trial court and dismiss the application filed by the
respondent under Order 39 Rule 2A of the Code.
G·
D.G. Appeal allowed.
H
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "injunction"Sign in to search