2003 (3) TMI 539

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.... has been filed by the Garnishee for the relief afore-stated. 3. The main contention raised before this Court is that the day on which Warrant of Attachment was issued i.e., on 16th August, 2002, no amount was due and payable by the Garnishee, either to the applicants or to the respondents and, in such a situation, order for Warrant of Attachment could not have been passed in exercise of powers under Order XXI, Rule 46 of the Code of Civil Procedure. 4. On the other hand, according to the applicants, the Warrant of Attachment has been rightly issued because the amount of about Rs. 2.60 crores was liable to be paid to the applicants by the Garnishee in terms of the Circular issued by the SEBI dated 9th July, 1999. It is contended that as soon as the Award was passed on 31st December, 2001, the Garnishee was required to keep the Award sum in a separate account to be paid to the applicants subsequently. It is submitted that the fact that the respondents have been declared as defaulters on 25th February, 2002 and the amount was not kept in the separate account would make no difference to the entitlement of the applicants to get the Award amount from the Garnishee. 5. On considering ....

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....' Committee (other than the amount paid by the Governing Board to the Defaulters' Committee pursuant to Rule 16A in respect of the consideration received by the Governing Board for exercising the right of nomination in respect of the defaulter's erstwhile right of membership) and all other assets and money of the defaulter in the Exchange or the market including the money and securities receivable by him from any other member, money and securities of the defaulter lying with the Clearing House or the Exchange, credit balances lying in the Clearing House, security deposits, any bank guarantees furnished on behalf of the defaulter, fixed deposit receipts discharged or assigned to or in favour of the Exchange, Base/Additional Capital deposited with the Exchange by the defaulter, any security created or agreed to be created by the defaulter or any other person in favour of the Exchange or the Defaulter's Committee for the obligations of the defaulter to the following purposes and in the following order of priority, viz. :-- (i)First - to make any payments, required to be made under Bye-laws 391 and 394; (ii)Second - the payment of such subscriptions, debts, fines, fees, charges and o....

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....l have been admitted by the Governing Board; provided that if the amount available be insufficient to pay and satisfy all, such debts, liabilities, obligations and claims in full they shall be paid and satisfied pro rata; (viii)Eighth - the balance, if any, shall be paid into the Exchange's Customers' Protection Fund to the extent of any and all amounts paid out of the Customers' Protection Fund towards the obligations or liabilities of the defaulter and interest thereon at the rate of 2.5% per month (or such other rate as the Governing Board may specify) from the date of payment out of the Customers's Protection Fund to the date of repayment to the Fund; and (ix)Ninth - the surplus, if any, shall be paid to the defaulter. Clarification : It is clarified that this Bye-law 400 does not apply to the amount paid by the Governing Board to the Defaulters' Committee pursuant to Rule 16A in respect of the consideration received by the Governing Board for exercising the right of nomination in respect of the defaulter's erstwhile right of membership as the same does not belong to the defaulter and the defaulter has no claim, right, title or interest therein." I find force in this submis....

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....iod, the respondents came to be declared as Defaulters on 25th February, 2002. Obviously, there was no question of making any payment to the applicants till this date i.e. 25th February, 2002. Whereas, as soon as the declaration that the respondents were defaulters, was issued, by virtue of Bye-Law 326, all the amounts standing in the accounts of the respondents towards securities deposited by him, stood vested in the Defaulters' Committee and that amount could be disbursed only in terms of Bye-Law No. 400 and not otherwise. 7. The argument of Mr. Kadam for the applicants is that the Garnishee was obliged in law to keep the Award sum in a separate account and since the Garnishee failed to comply with that requirement, it cannot enure to its benefit. I find no substance in this argument. Moreover, it is seen from the record that the Garnishee declared the respondents as defaulters on the basis of the materials made available before it, in particular, letter dated 8th February, 2002 given by the respondents along with the list of other creditors, which would indicate that the liability of the respondents was to the extent of about Rs. 19.68 crores, far exceeding the claim of the app....