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TMI Blog2001 (4) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... as loan to one VHEL Industries Limited (thereinafter referred to as VHEL) by way of an inter-corporate deposit. One J.K. Rajgarhia (hereinafter referred to as JKR) executed a deed of guarantee as guarantor for repayment of the said loan by VHEL. On 13-8-1998 the plaintiff filed a suit at Vadodara for recovering the alleged amount from VHEL and JKR. On 11-9-1998 a term of settlement, between the plaintiff and the two defendants in the Vadodara suit, was agreed. A further security for re-payment of the loan was executed through a deed of guarantee by O.P. Rajgarhia (hereinafter referred as to as O.P.R.). On the same date three cheques, covering the entire amount, issued by O.P.R. were handed over to the plaintiff, on the alleged understanding that in the event VHEL or J.K.R. fails to pay, the plaintiff would be entitled to encash the cheques. On presentation by reason of non-payment by VHEL and J.K.R. the cheques were dishonoured. Thereafter on 30-9-1998 a consent decree was obtained in the Vadodara suit, wherein the defendant agreed to pay the entire amount in instalment. On15-10-1999 VHEL was referred to BIFR under SICA. On 23-3-2000 the plaintiff filed a suit (S.S. No. 83 of 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, the appellate authority, where an enquiry under section 16 is pending or a reference scheme under section 17 is being framed or is under implementation or an appeal under section 25 relating thereto is pending. In support of this contention he has referred to the decision in the case of Patheja Bros. Forgings Stamping v. ICICI Ltd. AIR 2000 SC 2553. The Gramophone Co. of India Ltd. v. Mahaboob Production (P.) Ltd. 1993 (1) CLJ 335, Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust AIR 1988 (Guj. 213 and Asian Bearings Tools Corpn. v. Coastal Chemicals Ltd. [1996] 86 Comp. Cas. 590 (AP). According to him, by reason of section 22 sub-section (1) of SICA there was inherent lack of jurisdiction on the part of this Court in proceeding with the suit and decreeing the same during the pendency of the reference before BIFR. He further contends that the plaintiffs objection that the decree was passed in the presence of the learned advocate of O.P.R., therefore, the applications are not maintainable and barred by principle of res judicata , cannot be sustained in view of the fact that the decree was a nullity and was obtained without informing the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This question of maintainability ought to have been taken before the decree was passed. Since it was not taken, therefore, the same is barred by the principles of constructive res judicata or principle analogous thereto. The defendant cannot go into the merits of the case nor it can raise any argument as to the effectiveness or the extent of the guarantee. In the facts and circumstances of the case Order 9 Rule 13 C.P.C. has no manner of application. The guarantee in effect consists of two guarantees contained in one document. In one part O.P.R. guaranteed payment receivable by the plaintiff in the event of default by (1) VHEL or (2) by J.K.R. Thus, there are two distinct defaults. One by VHEL and the other by the J.K.R. The suit is confined only with regard to default by J.K.R. Therefore, it is not an enforcement of a guarantee either against VHEL or against any loan or advance made to VHEL. Section 22 sub-section (1) is attracted to a suit for enforcement of guarantee in respect of any loan or advance granted to a sick industrial company, whereas in the present case the suit is against O.P.R. when it seeks to enforce the guarantee with regard to the guarantee of J.K.R. who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of default by VHEL or J.K.R. it guaranteed payment to the plaintiff in respect of the loan and advance given to VHEL. Three cheques were issued on condition that the same would be encashed if VHEL or J.K.R. defaulted. On presentation the cheques were dishonoured. Before C.S. No. 83 of 2000 was filed by the plaintiff, enquiry under section 16 of SICA was initiated and a reference was made to BIFR in respect of the industrial undertaking of VHEL. The decree was passed in presence of the defendant without informing the Court that a reference to BIFR against VHEL is pending. Now the decree has been sought to be executed. At this stage after change of advocate-on-record the present application has been filed. The guar-antee given by O.P.R. was in respect of default by VHEL or J.K.R. in payment of the loan or advance made to VHEL. 7. In this background now it is to be examined as to ( i ) whether in a suit filed by the plaintiff against the defendant O.P.R. excluding J.K.R. and VHEL the mischief of section 22(1) could be attracted; ( ii ) if attracted could that question be raised by the defendant after the decree was passed in his presence or in other words whether the question is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est . As such, such a decree cannot be enforced. Therefore, there is a lack of initial jurisdiction of the Executing Court to execute such inexecutable decree which is a nullity. Every Court is responsible before assuming jurisdiction to find out as to whether it has jurisdiction to deal with the matter. If the question hits at the root of jurisdiction, the Court cannot assume jurisdiction. In other words the Court being without jurisdiction cannot proceed with the same. Even if an inexecutable decree is executed in the absence of jurisdiction, such execution would be without jurisdiction. Execution of a decree which is a nullity is an exercise in void and as such the execution itself is also a nullity. The Court cannot exercise its jurisdiction when there is void. In other words Court cannot exercise its jurisdiction in void. Therefore, it is the responsibility of the Court to examine whether it has jurisdiction to execute the decree by examining the executability of the decree, in other words to examine as to whether decree is a nullity and the Court would be exercising its jurisdiction in futility or is exercising its jurisdiction in void. In support of the above proposition re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not in dispute that O.P.R. had guaranteed payment in default of VHEL or J.K.R. to pay in respect of loan or advance made to VHEL. Therefore, on this score also the mischief of section 22(1) apparently applies. 13. But the question remains as to whether it would be attracted even where the VHEL and J.K.R. are not parties to the proceedings. In other words whether the direction provided in section 22(1) of SICA could be available to a guarantor of a guarantor. Mr. Chatterjee had sought to point out that O.P.R. is guarantor or J.K.R. It has nothing to do with the principal debtor, O.P.R. had guaranteed payment in default of J.K.R. He had tried to distinguish the said question on various grounds. But the endeavour of Mr. Chatterjee was an attempt or exercise in futility, in view of the terms of guarantee given by O.P.R. Even if we describe the same as counter guarantee or even if we described O.P.R. as a guarantor of J.K.R. a guarantor, still then the question remains to be examined having regard to the terms of guarantee executed by O.P.R. read with the provisions of section 22 sub-section (1). The guarantee specifically mentions that O.P.R. agreed to guarantee payment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the borrower and Shri J.K.R. to honour its obligation and in payment of the dues of HMCL. It is further irrevocably agreed by the guarantor that the guarantor shall not stop payment of the said cheques or countermand payment under any circumstances. 4. This guarantee shall be continuing and shall continue until the dues payable to HMCL by the borrower and Shri J.K.R. is paid in full satisfaction of HMCL. 5. This guarantee shall not be revoked until full payment by the borrower and Shri J.K.R. to HMCL. 6. This guarantee will not stand discharged by reason of any settlement between HMCL and the borrower and Shri J.K.R. or by any act or omission of HMCL, the legal consequence of which is the discharge of the borrower and Shri J.K.R. or when HMCL compounds with gives time to or agrees not to sue the borrower/Shri J.K.R. or otherwise due to extension of time to the borrower and Shri J.K.R. for payment or forbearance to sue on the part of HMCL, the borrower and Shri J.K.R. or otherwise enforce any other remedy against the borrower and Shri J.K.R. 7. That this guarantee has been furnished with full knowledge and consent by the surety and even if any of the co-surety do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erjee cannot be sustained. 14. Admittedly the object of SICA is to protect the assets of the Industrial Undertaking as was held in Index Port Registered s case ( supra ). Mr. Chatterjee contended relying on the said decision that SICA does not protect the assets of the guarantor. But this contention cannot be sustained in the facts and circumstances of the case in view of the decision in Patheja Bros. Forgings Stamping (supra) . When the language of the section is clear and unambiguous and there is no scope for a different interpretation, then the Court is not supposed to consider the consequences. But then the law having been declared by Apex Court in Patheja Bros. Forgings Stamping s case ( supra ), by reason of Article 141 of the Constitution little scope is left to the High Court. 15. Whether the guarantee was without consideration of (sic) not need to be gone into. 16. Now let us examine that how far the guarantee could be protected or is hit by the mischief of section 22(1). As soon as the guarantee is in respect of loan or advance given to the industrial company, it is protected and the mischief of section 22(1) is attracted, even if such guarantee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the decree is inexecutable, this Court cannot proceed to execute the decree and can very well drop the execution proceedings and recall the orders passed in the execution proceedings. At the same time if the Court finds that the decree is a nullity, in that event it can very well declare the decree to be a nullity and inexecutable. If a decree is nullity, it is not necessary to recall the said decree or dismiss the suit since the suit did not lie at all. The declaration of nullity is sufficient to render the necessary relief to a party since by reason of such declaration the decree cannot be executed. In other words, the declaration of nullity has the same effect of dismissing the suit or recalling of the decree. At the same time it can also be said that if the Court had no jurisdiction to entertain the suit and to pass the decree, in that event, whenever it is brought to the notice of the Court, even at the stage of execution, the Court can examine the same and pass appropriate order. 19. In this respect I am supported by the decision, as rightly cited by Mr. Mukherjee, in the case Patheja Bros. Forgings Stamping ( supra ), the Gramophone Co. of India Ltd. s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order 9 rule 13, CPC required to be examined. When the question is that of a nullity, whenever it is brought to the knowledge and notice of the Court, the Court is supposed to examine as to whether it had jurisdiction to pass the decree or whether the decree is a nullity even at the stage of execution. It is immaterial as to how the said question is brought to the notice of the Court. It is well within the scope of section 47 of the Code of Civil Procedure to oppose the execution of a decree and raise the question of executability of the decree in such an application. The nomenclature of an application is only a procedural aspect of the matter. Procedures are hand-maids of justice. It cannot stand in the way of dispensing justice. If the Court had no justification and had lacked inherent jurisdiction and the decree is a nullity, it can look into it, even at the stage of execution and decline execution, if on examination the Court finds it so. The Court cannot sit idle with its eyes closed, nor can it avoid its responsibility by reason of technicalities. When it come to its notice that the Court had been led to assume jurisdiction when it had none and to pass a decree with inherent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty thereof, in other words, the question of nullity of the decree can be gone into by the Executing Court. Therefore, the technical point raised by Mr. Chatterjee cannot be sustained. 22. The question of res judicata as raised by Mr. Chatterjee also cannot be sustained. Inasmuch as if the Court lacked inherent jurisdiction, its decision being a nullity, there is no decision in the eye of law and as such it cannot operate as res judicata. Section 11 of C.P.C. provides principles of res judicata where an issue is decided. Court can decide an issue provided it has jurisdiction to decide such issue. If an issue is decided when the Court lacked inherent jurisdiction, then such decision being a nullity is non est and there is no decision in the eye of law. If there is no decision in the eye of law, there is no question of decision on an issue attracting the principle of res judicata . If the principle of res judicata cannot be attracted, there is no scope for constructive res judicata. Inasmuch as in the absence of lack of inherent jurisdiction the question even though not raised cannot be deemed to have been raised and decided, attracting the principle of constructive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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