TaxTMI 
TaxTMI 
2018 (3) TMI 196
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....are the issues to be decided. 2. Admittedly, the writ petitioner and his wife, Directors of the Company have suffered a decree in O.A.No.61 of 2011 dated 17.10.2012 on the file of the Debts Recovery Tribunal, Chennai. The decree passed on merits, after contest has become final, and no appeal has been preferred. The respondent Bank sought to execute the decree in DRC No.209/2012. During the pendency of the recovery proceedings, the writ petitioner offered for a One Time Settlement (OTS) by a letter dated 22.11.2013 and 17.12.2013, for 1.50 Crores. By letter dated 20.02.2014, the Bank offered to settle the loan for Rs. 237.00 Lakhs under OTS. On behalf of his company, the writ petitioner, sought for confirmation for settlement for Rs. 210 Lakhs, as per the negotiations with the Bank. On 08.09.2014, the Bank accepted the proposal for OTS, for a sum of Rs. 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 even....
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....ppeal, without insisting on pre-deposit. 6. Per contra, the learned counsel for the respondent Bank would contend that the writ petition is not maintainable against a show cause notice. Even if the notice ordered to show cause in not conformity with the regulations, there is an alternative remedy of appeal, available under the statute. The petitioner is not entitled to any relief, as he has indulged in fudging the accounts and cheated the Bank. A criminal complaint is also pending against him, on the file of 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 petit....
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....nd detained. If he has and still refuses or neglects to honour his obligation or if he commits acts of bad faith, he incurs the liability to imprisonment under s. 51 of the Code, but this does not violate the mandate of Article 11. However, if he once had the means but now has not or if he has money now on which there are other pressing claims, it is violative of the spirit of Article 11 to arrest and confine him in jail so as to coerce him into payment.......... 10. 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....
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....ty shall not be taken away. In cases, where there is some other vice or mens rea, apart from failure to foot the decree, International Covenant on Civil and Political Rights will not apply. 12. Hon'ble Justice V.R.Krishna Iyer in JOLLY GEORE VARGHESE's case (cited supra) also concurred with the construction of Section 51 of Code of Civil Procedure, which deals with the modes of execution of a decree, that quondam difference and 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 a....
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....ment 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. Larger Bench has declared that, arrest is not by way of punishment, but to recover the arrears of public money. 16. Justice V.R.Krishna Iyer in JOLLY GEORGE 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. M....
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....as claimed by him, is an innocent, honest person having no means to pay is an important issue to be discussed. The past conduct of the writ petitioner, as claimed by him in voluntarily settling his immovable property in favour of another creditor, namely Canara Bank, who had the charge over the property, had left him without means. Even assuming that the petitioner has no 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 Rs. 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 ag....
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....e 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. 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 n....