Name of Author-Riya Kore, DES Shri Navalmal Firodia Law College

Edited by – Sulesh Choudhary

ABSTRACT / HEADNOTE

In this case, Jolly George Verghese vs State Bank of Cochin, the petitioner is Jolly George Verghese. He borrowed a loan from Respondent Bank for his property. Later on, the time for its repayment and the petitioner could not repay the debts, a warrant of his arrest was issued.
Here it may be questioned whether the detention of any debtor is prudent under Article 11 of the International Covenant on Civil and Political Rights. The judgment of this case was delivered by Justice Krishna Iyer. This is a landmark case of public international.

The court states that to arrest a debtor for debt recovery without investing whether the non-payment is because of inability or bad intention is unconstitutional. The court said only default in payment of debts is insufficient there should be bad faith or malice intention at the time of default in payment of loan amount.

Keywords: Article 11, Indian constitution, International Covenant on Civil and Political Rights (ICCPR), Supreme Court, Section 51, Civil Procedure Code, Debt recovery, Article 21

CASE DETAILS

INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case Jolly George Varghese vs State Bank of Cochin was judged by the Supreme Court of India. The court referred to section 51 of the civil procedure code, which states that a debtor cannot be imprisoned unless the court is convinced that the debtor is likely to abscond, has committed bad faith, has the means to pay the decree, or is bound in a fiduciary capacity to account for the sum. The court is required to record reasons for detention in writing.

Here Article 21 of the Indian constitution states that every individual has the right to live a life of personal freedom unless and until it is established by law. In the present case, the appellant was imprisoned without any proper investigation of mala fide intention behind the act.      

FACTS OF THE CASE

Procedural Background of the case:

Petitioner borrowed a loan from the respondent bank for his property and later he couldn’t repay the said amount.

Factual Background of the case:

• The warrant of arrest had been issued against the petitioner under section 51, order 21, and rule 37 of the civil procedure code on 6^TH of August,1979.
• The same warrant was issued for the same judicial decree.
• The judgment was against the appellant who suffered an order of Rs 2.5 lakhs to the respondent bank. There are two more orders issued against an appellant total of Rs 7 lakhs payable.
• A receiver was arranged by the court that took the right of the appellant to transfer the property and all other rights related to property.
• This case was raised in the high court and the demand filed by the appellant was kicked out without conscientious study for such arrest to take place.
• There should be a proper set of investigations to know whether the debtor has malice intention present behind the nonpayment of debts.

LEGAL ISSUES RAISED

• Whether it is lawful to detain any debtor under Article 11 of the International Covenant on Civil and Political Rights.
• Whether invasion of the personal freedom of any person till the debtor pays his debt is lawful.

PETITIONER / APPELLANT’S ARGUMENTS

• The appellant states that all the sections and articles that are mentioned in the Indian constitution i.e. right to life and personal liberty are not just, fair, and equal.
• It argued that null and nonpayment of debts will be against Article 21 of the Indian constitution and also Article 11 of the International Covenant on Civil and Political Rights.
• Therefore, it leads to the vitiation of Article 11 of the International Covenant on Civil and Political Rights and Article 21 of the Indian constitution.

RESPONDENT’S ARGUMENTS

• The respondent bank argued that Jolly George Verghese borrowed the loan amount of Rs 2.5 lakh that was attached to the property leading to a default in repayment of the said amount.
• The bank argued that they had the authority to recover the debt amount by taking belongings of the property that was mortgaged as mentioned in the terms of the loan agreement.

RELATED LEGAL PROVISIONS

Section 51 Civil Procedure Code – Powers of Court to enforce execution:

 Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree-

1. by delivery of any property specifically decreed;
2. by attachment and sale or by the sale without attachment of any property;
3. by arrest and detention in prison for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section;
4. by appointing a receiver; or
5. in such other manner as the nature of the relief granted may require;

Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after allowing the judgment-debtor to show cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied-

1. that the judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree-
2. is likely to abscond or leave the local limits of the jurisdiction of the Court, or
3. has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith about his property, or
4. that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or
5. that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to account.

Article 11 of the International Covenant on Civil and Political Rights: No one shall be imprisoned merely on the grounds of inability to fulfil a contractual obligation.

Article 21 of the Constitution: No person shall be deprived of his life or personal liberty except according to procedure established by law.

JUDGEMENT

The decision of the court was in the Favor of Jolly George Varghese. The court held that the International Covenant on Civil and Political Rights is rectified but it has not incorporated, so the municipal court can’t address violation of international law. Therefore, municipal law is binding in nature and international law is not binding. The action of the bank at the time of taking possession of the mortgaged property without any process of law was violative of natural justice.

The court held that mala fide intention or presence of mens rea behind the failure in payment of debts can lead to punishment. If there is not any dishonest intention then the person is not liable for punishment. Therefore, the only failure in payment of debts is insufficient to arrest a person there should be mens rea present. It will not be appropriate to imprison any person without intention if it happens so Article 11 of the International Covenant on Civil and Political Rights and Article 21 of the Indian constitution will be violated.      

CONCLUSION & COMMENTS

The case Jolly George Varghese vs State Bank of Cochin is very significant because it demonstrates India’s supreme court’s use of its power to place in section 51 of the civil procedure code for achieving justice. The court emphasized the importance of just and fair procedure while giving judgment and protecting Varghese’s interest against the bank. The decision of the court was that to imprison a person for their inability to pay debts, there should be wilful nonpayment or malafide conduct.

REFERENCES

• Jolly George Verghese & Anr vs The Bank of Cochin on 4 February 1980.

https://indiankanoon.org/doc/1741605/

• Can a person be imprisoned on the ground that he did not discharge his contractual liability                               

https://www.lawyersclubindia.com/judiciary/can-a-person-be-imprisoned-     on-the-ground-that-he-did-not-discharge-his-contractual-liability-4491.asp

• International Covenant on Civil and Political Rights https://www.ohchr.org/en/instruments-mechanisms/instruments/international-       covenant-civil-and-political-rights
• Code of Civil Procedure, 1908
• Constitution of India.