JOLLY GEORGE VERGHESE & ANR. v. THE BANK OF COCHIN

Citation: [1980] 2 S.C.R. 913

Court: Supreme Court of India

Bench: V.R. KRISHNA IYER, R.S. PATHAK

Case summary

Judgment text

JOLLY GEORGE VERGHESE & ANR. A v. THE BANK OF COCHIN February 4, 1980 [V. R. KRISHNA IYER AND R. S. PATHAK, JJ. ] B Code of Civil Procedure-Section 51, Ordet 21, rule 37-Scope of-' Debtor, if could be imprisoned for failure to pay his deb,/~lmprisonment M•hen could be ordered. The appellants were the judgment. debtors while the respondent-bank Wes the decree·holder. In eixecution of the decree a warrant for arrest and detention in c civil prison was issued to the appellants under section 51 and order 21, rule 37 of the Code of Civil Procedure. On an earlier occa. sion there had been a simi· Jar warrant for arrest in execution of the same decree. The decree-holders also proceeded against the properties of the judgment-debtors and in consequence all their immovable properties had been attached for the purpose of sale in dis· charge of the decree-debts. A receiver was appointed by the cxecntion court to manage the properties under attachment.

Even so, the court had issued a warrant D • for the arrest of the judgment-debtors became on an earlier occasion a similar warrant bad already been issued without any in. estigation as regards. the cnrrcnt ability of the judgment-debtors to clear off the debts or their mala-fide refusal, if any, to discharge the debts. On the question whether under such circumstances personal freedom of the ' judgment-debtors can be held to ransom until repayment of the debt. Allowing the appeal, HELD : 1. The words in section 51 which hurt are "or has had since the '} ,, date of the decree the means to pay the amount of the decree. " Superficially ""'-- read this implies that if at any time after the passing of en old decree the judg· ment-debtor had come by some resources and had not discharged the decree he F could be detained in prison even though at that later point of time he was found to be penniless. This is not a sound position, apart from being inhuman i..

going by the stendards of Article 11 of the International Covenant on Civil and ]J Political Rights and Article 21. A simple default to discharge is not enough. There must be some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or alternatively current moons to -\ pay the decree or a substantial part of it. The provision emphasises the need i to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree. Considera· tions of the debtor's other pressing needs Ond straitened circumstances will play ~ prominently. [922E-GJ 2. Unless there be some other vice or mens rea apart from failure to foot the decree, international law frowns on holding. the debtor's person in civil prison, as hostage by the court. India is now a signatory to this Covenant and ',- Article Sl(c) of the Constitution obligates the State to "foster respect for A international law am.

d treaty obligations in the dealings of organised peoples with one another". Even so, until the Municipal Law is changed to accommodate '1 the Covenant what binds the courts is the former not the latter. [918A-Bl 3. Quondom affluence and current indigence without intervening dishonesty or bad faith in liquidating his liability can be consistent with Article 11 of th• Covenant because then no detention is permissible under section 51 of the • B Code of Civil Procedure. [9210] 4. The high value of human dignity and the worth of the human person I enshrined in Article 21, read with Articles 14 and 19, obligates the State not to incarcerate except under law which is fair, just and reasonable in its procedural essence. To cast a person in prison because, of his poverty and come- \_ quent inability to meet his contractual liability is appalling.

To be poor is no c crime and to "recover" debts by the procedure of putting one in prison is flagrantly violative of Article 21 unless there is proof of the minimal fairness of bis 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 inferable from Article 11 of the Covenant But this is precisely the interpretation put on the proviso to section 51 C. P. C. and the lethal blow of Article 21 D cannot strike down the provision as interpreted. [922A-Dl CrvlL APPELLATE JURISDICTION : Civil Appeal No. 1991 of 1979. Appeal by special leave from the Judgment and Order dated 9-7-1979 of the Kerala High Court in C. R. P. No. 1741 of 1979. M. M. Abdul Khader and K. M. K. Nair for the Appellants. K. M. Iyer and V. J. Franci~ for the) Respondent. The Judgment of the Court was delivered by ,.. leave~).. · KRISHNA IYER. J.

-This litigation has secured special F from us because it involves a profound issue of constitutional and international law and offers a challenge to the nascent champions of human rights in India whose politicised pre-occupation has fort saken the civil debtor whose personal liberty is imperilled by the judicial process it&elf, thann to 1. 51 (Proviso) and O. 21, r. 37, G Civil Procedure Code. Here is an appeal by judgment-debtors-the appellants-whose personal freedom is in peril because a court ( warrant for arrest and detention in the civil prison is chasing them for non-payment of an amount due to a bank-the respondent, which ha~ ripened into a decree and has not yet been discharged. Is such deprivation of liberty illegal? B From the perspective of international Jaw the questiQn posed is whether it is right to enforce a contractual liability by imprisoning . / , J. G. VERGHESE v. BANK OF COClllN (Krishna Iyer,!. ) 915 a debtor in the teeth of Art.

11 of the International Covenant on A Civil and Political Rights. The Article reads: No one shall be imprisoned merely on the ·ground of inability to fulfil a contractual obligation. (Emphasis added) • B An apercu of Art. 21 of the Conslitutiou suggests the question whether it is fair procedure to deprive a person of his personal liberty merely because he has not discharged tds contractual liability in the face of the constitutional protection of He and liberty as expounded and expanded by a chain of rulings o[ this Court beginning with Maneka Gandhi's case. (') Article 21 mads: c 21. Protection of life and personal liberty. -No person shall be deprived of his life or :personal lib bserved: 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 actnal F 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 G 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, will set in motion other procedures. In short, the basic human rights enshrined in the International Covenants above referred to, may at best inform judicial institutions and inspire legislative action within member-States; but apart from such deep reverence, remedial action at the instance of an aggrieved individual is beyond the area of judicial anthority.

While considering the international impact of international covenants on municipal Jaw, the decision concluded : Indeed the construction I have adopted of s. 51, CPC has • the flavour of Article 11 of the Human Rights Covenants. Counsel for the appellant insisted that law and justice must be on speaking terms-by justice he meant, in the present case )' 1 that a debtor unable to pay must not be getained in civil prison. But my interpretation does put law and justice on speaking terms. Ccunsel for the respondent did argue that International Law is the vanishing point of jurisprudence is itself vanishing in a world where humanity is moving steadily, though slowly, towards a world order, led by that intensely active, although yet ineffectual body, the United Nations Organisation.

Its resolutions and covenants mirror the conscience of mank4id and insominate, within the member States, progressive legislation; but till this last step of actual enactment of law takes • place, the citizen in a world of sovereign States, has only inchoate rights in the domestic Courts under these international covenants. While dealing with the impact of the Dicean rule of Jaw on pCJi;itive law, Hood Phillips wrote--and this is all that the Covenant means now for Indian courts administering mnnicipal Jaw Cl The significance of this kind of doctrine for the English lawyer is that it finds expression in three ways. First. it influences legislators. The substantive law at any given time may approximate to the "rule of Jaw'', but this oniy at the will of Parliament. Secondly, its principles provide canons of interpretation which express the individualistic attitude of English courts and of those courts which have followed the English tradition.

They give an indication of how the Jaw will be applied and legislation interpreted. English courts lean in favour of the liberty of the citizen, especially of his person : they interpret strictly statutes which purport to diminish that liberty, and presume that Parliament does not intend to restrict private rights in the absence of dear words to the contrary. (1) O. Hood Phillips' Constitutional and Administrathc lc:'v 6th Edn. p. 40. The positive commitment of the States Parties ignites legislative action at home but does not automatically make the Covenant an enforceable part of the corpus juris of India. Indeed, the Central Law Commission, in its Fifty Fourth Report, 1 did cognise the Covenant, while dealing with s. 51 C. P. C.

: ( ) The question to be considered is, whether this mode of execution should be retained on the statute book, particularly in view of the provision in the International Covenant on Civil and Political Rights prohibiting imprisonment for a mere non-performance of contract. Tue Law Commission, in its unanimous report, quoted the key passages from the Kera/a ruling referred to above and endorsed its ratio. 'We agree with this view' said the Law Commission and adopting that meaning as the correct one did not recommend further change on this facet of the Section. It is important to notice that, interpretationally speaking, the Law Commission accepted the dynamics of the changed circumf stances of the debtor :(') I> 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.

This is reiterated by the Commission : Imprisonment is not to be ordered merely because, like 8 Shylock, the creditor says : ( ) "I crave the law, the penalty and forfeit of my bond. " The law does recognise the principle that "Mercy is reasonable in the time of affliction, as clouds of rain in the time 4 of drought. " ( ) .. We concur with the Law Commission in its construction of s. 51 C. P. C. It follows that quondam afiluence and current indigence without intervening dishonesty or bad faith in liquidating his liability can be consistent with Art. 11 of the Covenant, because then no detention is permissible under s. 51, C. P. C. Equally meaningful is the import of Art. 21 of the Constitution in ; ~ntext of imprisonment for non-payment of debts. The high (l) p, 38. (2) ibid p, 41. R (3) Merchant of Venice, Act, 4, Scene l. (4) Ecclesiasticus, 35 ·20. value of human dignity and the worth of the human person en. shrined 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 1 procedural essence. Maneka Gandhi's case( ) as developed further in Sunil Batra v. Delhi Administration('), Sita Ram & Ors. v. State 3 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 con&equent 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 inferable from Art. 11 of the Covepant.

But this is precisely the interpretation we have put on the Proviso to s. 51 C. P. C. and the lethal blow of Art. 21 can'not strike down the provision, as now interpreted. The words which hurt are "or has had since the date of the decree, • the means to pay th~ amount of the decree". This implies, superficially read, that if at any time after the passing of an old decree the judgment-debtor had come by some resources and had ,not discharged f the decree, he could be detained in prison even though at that later point of time he was found to be penniless. This is not a sound position apart from being inhuman going by the standards of Art. 11 (of the Covenant) and Art. 21 (of the Constitution). The . simple default to discharge is not enough. There must b~ some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or, alternatively, current means to pay the decree or a substantial part of it.

The provision emphasises the need to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree. Here considerations of the debtor's other pressing needs and straitened circumstances will play prominently. We would have, by this construction, sauced Jaw with justice, harmonised s. 51 with the Covenant and the Constitution. The question may squarely arise some day as to whether the Proviso to s. 51 read with 0. 21, r. 37 is in excess of the Constitutional (I) [1978] I S. C. R. 248. II (2) [1978] 4 s. c. c. 494. (3) [19791 2 S. C. R. 1085. (4) [1980] 2 S. C. R. 557. mandate in Art. 21 and bad in part. In the present case since we are remitting the matter for reconsideration, the stage has not yet arisen for us to go into the vires, that is why we are desisting from that essay. In the present case the debtors are in distress because of the blanket distraint of their properties.

Whatever might have been their means once, that finding has become obsolete in view of later happenings; Sri Krishnamurthi Iyer for the respondent fairly agreed that the law being what we have stated, it is necessary to direct the executing court to re-adjudicate on the present means of the debtors vis a vis the present pressures of their indebtedness, or alternatively whether they have had the ability to pay but have improperly evaded or postponed doing so or otherwise dishonestly committed acts of bad faith respecting their assets. The court will take note of other honest and urgent pressures o'n their assets, since that is the exercise expected of the court under the proviso to s. 51. An earlier adjudication will bind if relevant circumstances have not materially changed. • We set aside the judgment under appeal and direct the executing court to deciile de novo the means of the judgment-debtors to discharge the decree in the light of the interpretation we have given. ) P. B. R.

Appeal allowed.