'Poverty Not An Offence', Judgment Debtor With No Source To Pay Can't Be Sent To Prison Merely Citing Money Decree Against Him: MP High Court

Recently, Madhya Pradesh High Court iterated that a judgment debtor cannot be sent to civil prison merely based on the money decree against him if he is devoid of any property/source of pay.

The single-judge bench of Justice Dwarka Dhish Bansal also held that the inability to pay decretal amount due to poverty is not an offence.

“In view of the aforesaid decision of Hon'ble Supreme Court it is clear that merely because there is a money decree in favour of respondent/D.H., the petitioner/J.D. who has no property or source to pay the decretal amount, cannot be sent to civil prison because poverty is not an offence…”, the bench sitting at Jabalpur.

The court had reproduced an excerpt from the apex court's decision in Jolly George Varghese & Anr v. Bank of Cochin (1980) to support its observations. In Jolly Varghese, the apex court noted that, “To be poor, in this land of Daridra Narayan (land of poverty) 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…”.

The single-judge bench also pointed out that the executing Court has failed to comply with the provisions contained in Section 51 and Order 21 Rules 37 and 40 of CPC. The court added that when the executing court issues a show cause notice against detention in civil prison to the judgment debtor, the procedure laid down in Rule 40(1) of Order 21 must be followed.

The said rule stipulates that after issuance of Order 21 Rule 37 notice, the executing court is expected to hear the decree-holder and all the evidence adduced in support of his execution application. Thereafter, the executing court is further required to grant an opportunity of hearing to the Judgment Debtor, allowing him to convince the court as to why he shouldn't be sent to civil prison.

However, in the case at hand, the executing court has made a flagrant violation of the aforementioned rules by not conducting a proper enquiry as contemplated in Clause (1) of Rule 40 of Order 21. The court has also ignored the necessity of complying with the conditions in the proviso to Section 51 CPC or recording the reasons made out for sending the debtor to civil prison, Justice Bansal opined.

After taking note of the above reasons, the bench sitting at Jabalpur set aside the lower court's order of committing the judgment debtor to civil prison. The court also directed the executing court to decide the decree holder's application afresh in strict compliance with Order 21 Rule 37 CPC.

Background

In this miscellaneous petition, the petitioner/judgment debtor was challenging the order passed by 3rd Civil Judge Class-I, Tikamgarh. In this order, the executing court simultaneously issued a show cause notice to the JD, and asked the Decree Holder/Respondent to specify the period for which the latter wants to send JD to civil prison.

The petitioner/judgment debtor submitted before the High Court that the respondent/decree holder himself had conceded in the execution application that the former has no property of his own. According to the application, the entire property already stood transferred to the wife and children of the Judgment Debtor. In the reply filed by the Judgment Debtor before the executing court, he denied that he had transferred any property to his wife and sons.

JD also contended that he had already shut down his business and could only pay the decretal amount in instalments using the salary from his job. In these circumstances, the executing court erred in hastily sending the JD to prison when he had not even given an explanation pursuant to the impugned order, it was submitted by the counsel for the petitioner/JD.

Further Observations

After analysing the lower court records, High Court found that the executing court had not bothered to determine via an inquiry whether the petitioner possessed any property or he had sold/transferred the property in the name of his wife and sons during the pendency of the suit. In the absence of such an inquiry, it cannot be said the petitioner refused to pay the decretal amount despite having sufficient means, the court underscored.

“…on the other hand, in earlier part of same paragraph, (executing court) has recorded finding to the effect that as petitioner/J.D. has no property for recovery of decreetal amount, he deserves to be sent to civil prison. From the impugned order it is also not clear that before passing order of sending the petitioner into civil prison, petitioner had ever tried to escape from his liability under the decree passed against him for recovery of money”, the High Court further added about the discrepancy in the executing court's order

Advocate Shrikant Srivastava appeared for the petitioner. Advocate D.C Malik represented the respondent.

Case Title: Sadkik Akaram v. Kuldeep

Case No: Misc. Petition No.7452 of 2023

Citation: 2024 LiveLaw (MP) 31

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