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TMI Blog2018 (3) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... of bad faith, dishonesty, wilful evasion or neglect or indifference to pay or some deliberate or reasonable disposition, arrest and detention cannot be said to violate personal liberty enshrined in Article 21 of the Constitution of India - arrest is not by way of punishment, but to recover the arrears of public money. Petitioner is not a honest person but has deliberately acted with supine indeference and evaded payment. Therefore, he is not entitled to any equitable relief. Whether the High Court, while exercising jurisdiction under Article 226 of the Constitution of India can interfere in recovery proceedings, de hors the availability of appeal remedy under the relevant statute or not? - Held that: - the writ petitioner has not acted in good faith. Even then, he is entitled to a fair procedure and reasonable opportunity. He was served with notice and filed his counter. He was given ample opportunity to effectively contest his case. As per Section 25 and Regulation 35(1) a certified debtor shall be given opportunity to show cause as to why he shall not be arrested and detained in civil prison. The writ petitioner has not proved that he has acted in good faith. The past co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .50 Crores. By letter dated 20.02.2014, the Bank offered to settle the loan for ₹ 237.00 Lakhs under OTS. On behalf of his company, the writ petitioner, sought for confirmation for settlement for ₹ 210 Lakhs, as per the negotiations with the Bank. On 08.09.2014, the Bank accepted the proposal for OTS, for a sum of ₹ 2,15,00,000/- to be paid on or before 07.03.2015. Responding to the same, the writ petitioner acknowledged the confirmation and promised to settle the amount, as per the terms of acceptance and pay the full amount on or before 07.03.2015, as stipulated by the Bank, by his letter dated 15.09.2014. As per the terms agreed, in the event of default, the respondent Bank is entitled to recover the entire dues i.e., a sum of ₹ 4,15,26,878.33 together with future interest . 3. When the original application was pending before the Debts Recovery Tribunal, the respondent Bank has lodged a complaint with Central Bureau of Investigation (CBI) for criminal conspiracy, cheating, forgery against the writ petitioner and for using forged document as genuine and criminal misconduct by public servant, abusing official position by a public servant against unknown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBI. He further submitted that Three Judges Bench of the Hon'ble Supreme Court has categorically held that arrest and detention in execution proceedings is not violative of Article 21 of the Constitution and for the abovesaid reasons, prayed for the dismissal of the writ petition. 7. Heard the rival contentions. 8. The points to be decided in the above writ petition are that; a) Whether the personal liberty enshrined under Article 21 of the Constitution of India is violated by the impugned order, in view of Article 11 of the International Covenants on Civil and Political Rights. b) Whether the International Covenants prevail over Municipal Law. c) Whether the petitioner is a honest judgment debtor and the Bank has proved his means. d) Whether the High Court can interfere in recovery proceedings at the show cause notice stage, more so, when an appeal remedy is available under the statute. 9. Hon'ble Justice V.R.Krishna Iyer in JOLLY GEORGE VARGHESE's case reported in 1980 (2) SCC 360 observed that No one shall be imprisoned, merely on the ground of inability to fulfil a contractual obligation . Revered Lordship further held that, T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, observed as under: 10. Equally meaningful is the import of Art. 21 of the Constitution in the context of imprisonment for non-payment of debts. The high value of human dignity and the worth of the human person enshrined in Art. 21, read with Arts. 14 and 19, obligates the State not to incarcerate except under law which is fair, just and reasonable in its procedural essence. Maneka Gandhi's case as developed further in Sunil Batra v. Delhi Administration, Sita Ram Ors. v. State of U.P. and Sunil Batra v. Delhi Administration lays down the proposition. It is too obvious to need elaboration that to cast a person in prison because of his poverty and consequent inability to meet his contractual liability is appalling. To be poor, in this land of daridra Narayana, is no crime and to 'recover' debts by the procedure of putting one in prison is too flagrantly violative of Art. 21 unless there is proof of the minimal fairness of his wilful failure to pay in spite of his sufficient means and absence of more terribly pressing claims on his means such as medical bills to treat cancer or other grave illness. Unreasonableness and unfairness in such a procedure is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current indigence without intervening dishonesty or bad faith, in liquidating his liability, can be consistent with Article 11 of the covenant, because no detention is permissible under Section 51 of Code of Civil Procedure. 13. The view of Law Commission, in its 54th report on Section 51(b) has been extracted, in the judgment by a three Judges Bench in RAM NARAYAN AGARWAL AND OTHERS VS. STATE OF UTTAR PRADESH AND OTHERS [1983 (4) SCC 276] as under: Situation in Section 51 (b)- 1-E. 12. Perhaps, it could be argued that imprisonment of the judgment-debtor in the situation in section 51, proviso, clause (b) causes hardship. That clause applies where the judgment-debtor (i) has the means and refuses or neglects to pay or (ii) has had the means and has refused or neglected to pay. The essential condition in either case is the possession of means, coupled with contemporaneous failure or neglect to pay, Imprisonment, if it follows in such cases, is not based on mere non-payment nor on mere inability to pay, but is confined to cases where a person is able to pay and dishonestly makes default in payment. 1-E.13. It will, thus. be seen that the provisions as to arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RGE VARGHESE's case (cited supra) had also discussed the effect of International Law and enforceability, as held by the Kerala High Court in XAVIER VS. CANARA BANK LTD., [1969 KLT 927] has held under: The judgment dealt with the effect of international law and the enforceability of such law at the instance of individuals within the State, and observed: The remedy for breaches of International Law in general is not to be found in the law courts of the State because International Law per se or proprio vigore has not the force or authority of civil law, till under its inspirational impact actual legislation is undertaken. I agree that the Declaration of Human Rights merely sets a common standard of achievement for all peoples and all nations but cannot create a binding set of rules. Member States may seek, through appropriate agencies, to initiate action when these basic rights are violated; but individual citizens cannot complain about their breach in the municipal courts even if the country concerned has adopted the covenants and ratified the operational protocol. The individual cannot come to Court but may complain to the Human Rights Committee, which, in turn, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other immovable property, will it make him a person of no means, much less a honest person ?. At the first instance, income tax returns and balance sheets produced by him to woo the bank and the income tax returns filed present to show that he has no means except his salary to the tune of One Lakh speaks volumes on his conduct. 19. Be that as it may, the contention of the petitioner that he had offered to pay ₹ 30,000/- per month from his salary to discharge the debt does not augur well, for the said amount will not even satisfy a portion of interest chargeable by the banks for an outstanding of around 4 crores in 2015. 20. Further, the writ petitioner had offered for One Time Settlement (OTS), ever since the filing of the recovery proceedings in DRC No.209/2012, much less from 22.11.2013. Finally, Bank has agreed to settle the matter at ₹ 237 Lakhs, which was accepted by the writ petitioner and after negotiation, it was reduced to ₹ 215 Lakhs. Even after confirmation, the writ petitioner failed to comply with his promise. The Company owned by him is the asset to enter into settlement / negotiations. But, a person, who had offered to settle the dues on or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 24. Relevant regulation of Debts Recovery Tribunal - II, Chennai Regulations, 2015 is as under: 35. Arrest and detention in Civil Prison ( 1) Whether the amount of R.C. is sought to be recovered by arrest and detention of a C.D. in the civil prison, the Recovery Officer shall issue show cause notice in Form - 17 calling upon him to appear before him on the date specified in the notice and show cause why he should not be committed to the civil prison; Provided that such notice shall not be necessary if the Recovery Officer is satisfied, by affidavit or otherwise, that, with the object or effect of delaying the recovery, the C.D. is likely to abscond or leave the local limits of the Tribunal. 25. As per the regulation, the Recovery Officer, by his adjudication dated 30.01.2016 has ordered notice, to show cause in person as to why he shall not be arrested and detained in civil prison. 26. As held by the Hon'ble Supreme Court, the Tribunal has not passed any order to impose punishment but adhered to the procedure laid down by the statute, in conformity with the principles of natural justice. At this juncture, it is open to the writ petitioner to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise entitled to in law. When appeal remedy is available, the High Court cannot interfere with the proceedings. 28. It only remains to be decided as to whether the petitioner is entitled to the second part of the prayer, to direct the Tribunal to number the appeal filed by him. As discussed above, we find that the writ petitioner has not proved that he has acted in good faith. The past conduct and serious allegations in fudging the accounts with an ulterior motive, precludes us from granting the equitable relief, in favour of the petitioner. If at all the petitioner is aggrieved over the return of the appeal for non-compliance of statutory requirement, he would have bonafidely approached this Court with appropriate, independent petition. Seeking a prayer under the pretext of challenging the order, does not reveal any bonafide on the other hand it lacks bonafide . 29. In the light of the above discussion, we are of the view that the writ petitioner is not deprived of his personal liberty enshrined under Article 21 of the Constitution of India, as the action taken, is in accordance with due procedure of law. The petitioner lacks bonafides and therefore, not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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