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2022 (2) TMI 1394 - HC - Indian LawsDirection to furnish security by way of cash deposit - money decree - the judgment-debtor has since date of the decree though had means to pay the amount of the decree for substantial part thereof has neglected to pay the same - Order XXI Rule 40(b) CPC - HELD THAT - The present decree is money decree. The court below has noticed the conduct of the judgment-debtor reflecting his unwillingness to satisfy the decree. On the basis of the factual material before it, the conclusion is drawn by the court below that though the judgment-debtor has means to satisfy the decree but has neglected in discharging his obligation. Upon assessing the facts and conduct of the judgment-debtor the Executing Court has duly found that they are indicative of unwillingness and avoidance on part of the judgment-debtor to pay the decreetal amount despite availability of means with him to pay. The Court has considered therefore that order for furnishing security deserved to be passed. The view taken by the court below is reasonable on facts and in law. When there are circumstances suggesting that despite possessing the means, the judgment-debtor has neglected and refused to pay the decreetal amount, furnishing of security by judgment-debtor is warranted. The security is considered proper to be solicited by the judgment-debtor to ensure that the rights of the decree holder are not defeated. In exercise of powers Order XXI Rule 40(b) of the Code of the Civil Procedure, 1908, requires the judgment debtor to furnish security and sum of Rs. 12,89,19,458/- which is the equivalent amount to the worth of the book value of shares in the four Australian companies held by the judgment-debtor. The impugned order is proper and reasonable in law as such in directing the judgment-debtor in furnish security - while no ground exists to interfere with the said order requiring the judgment-debtor to furnish the security to the aforesaid extent, what becomes conspicuous in the impugned order that the said security is directed to be furnished by way of cash deposit with the Registry of this Court. While maintaining the impugned order as well as the reasons supplied by the Court in so far it requires the judgment-debtor to furnish security, the direction in the order is modified to the limited extent that the judgment-debtor petitioner herein may furnish the security for the sum of Rs. 12,89,19,458/- by way of bank guarantee equal to the said amount - Application dismissed.
Issues Involved:
1. Legality of the order dated 4.10.2021 passed by the Principal Senior Civil Judge, Jamnagar. 2. Execution of foreign decree under Section 44-A(1) of the CPC, 1908. 3. Requirement for the judgment-debtor to furnish security under Order XXI Rule 40(b) of CPC. 4. Validity of the judgment-debtor’s claims regarding inability to pay the decreetal amount. 5. Modification of security furnishing method from cash deposit to bank guarantee. Detailed Analysis: 1. Legality of the Order Dated 4.10.2021: The petitioner sought to set aside the order dated 4.10.2021 by the Principal Senior Civil Judge, Jamnagar, which directed the judgment-debtor to furnish security by way of a cash deposit of Rs. 12,89,19,458/- pending the conclusion of an inquiry under Order XXI Rule 40(2) of the CPC. 2. Execution of Foreign Decree: The respondent, a decree-holder from Denmark, obtained a judgment from the High Court of Justice Queen’s Bench Division, Commercial Court of England and Wales, against the petitioner for USD 5,062,462/-. This foreign decree was held executable under Section 44-A(1) of the CPC, 1908, and was merged into a judgment decree in India. The decree-holder filed Execution Petition No. 4 of 2018 in Rajkot, which was later transferred to Jamnagar and renumbered as Commercial Execution No. 161 of 2019. 3. Requirement for the Judgment-Debtor to Furnish Security: The decree-holder filed Exhibit 94 application under Order XXI Rule 40(b) CPC, claiming that the judgment-debtor had the means to pay the decreetal amount but neglected to do so. The court directed the judgment-debtor to furnish security of Rs. 12,89,19,458/- by way of a cash deposit. The judgment-debtor’s assets, including shares in four Australian companies, were valued at Rs. 12,89,19,458/- as per his affidavit dated 12.2.2020. The court noted the judgment-debtor’s financial capacity and his neglect to satisfy the decree. 4. Validity of the Judgment-Debtor’s Claims: The judgment-debtor contended that the foreign decree was not enforceable in India, claimed residence in Kolkata, and cited COVID-19 as a reason for being unable to travel. He admitted ownership of property in Jamnagar but claimed the realizable value of his shares was less than the book value. The judgment-debtor offered to transfer shares worth Rs. 12.89 crores to the decree-holder in satisfaction of the decree. 5. Modification of Security Furnishing Method: The court found the judgment-debtor’s conduct indicative of unwillingness to satisfy the decree despite having the means. The court deemed the order for furnishing security reasonable but modified the method from a cash deposit to a bank guarantee to avoid arbitrariness and unreasonableness. The judgment-debtor was directed to furnish a bank guarantee equal to Rs. 12,89,19,458/-. Conclusion: The Special Civil Application was dismissed, with the order modified to allow the judgment-debtor to furnish a bank guarantee instead of a cash deposit. The execution of the foreign decree was upheld, and the judgment-debtor’s claims of inability to pay were found unconvincing. The modification was stayed for six weeks to enable the petitioner to challenge the order before a higher court.
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