Holding

An adverse inference under Section 114 may be drawn only when the record contains no other evidence on the point in issue; here sufficient admissions existed, so the High Court’s reversal of the factual findings was erroneous.

Summary

The appellant, Pandurang Jivajirao Apte, was the garnishee of property attached before judgment in a suit filed by the deceased R. G. Ashtakar for recovery of dues. Apte sold the attached property to Madhusudan Vasudeo Bavdekar under Section 176 of the Indian Contract Act after giving notice, but the sale proceeds were insufficient to satisfy Apte's lien. The decree‑holder sought execution against the property and implored the court to compel Apte and Bavdekar to produce the property, leading to an appeal that was ultimately decided by the High Court, which reversed the lower courts' findings and ordered Apte to deposit the excess amount. The Supreme Court held that an adverse inference under Section 114 of the Evidence Act may be drawn only when there is no other evidence on the issue, and the High Court erred in ignoring the admissions of the decree‑holder and the judgment‑debtor that Apte’s dues remained unpaid. Consequently, the Supreme Court set aside the High Court judgment, restored the decree of the District Judge, and dismissed the decree‑holder’s claim to compel production of the property.

Issues considered

When can an adverse inference be drawn under Section 114 of the Evidence Act against a party for failure to appear in court?
Whether the High Court could overturn the factual findings of the lower courts regarding the validity of the attachment and the sale of the pledged property.
Whether the decree‑holder could compel the garnishee or the purchaser to produce the attached property when the garnishee's lien had not been fully satisfied.

Legislation cited

Code of Civil Procedure, 1908s. Order 38 Rule 5
Indian Contract Act, 1872s. 176
Indian Evidence Act, 1872s. 114

Subjects

adverse inferenceSection 114 Evidence Actattachment before judgmentexecution proceedingsliengarnisheesale under Section 176reversal of findings of fact

Judgment

A 1020

PANDURANG JIVAJ!
v.
RAMCHANDRA GANGADHAR ASHTEKAR (DEAD)
BY LRS. & ORS.
B
October 29, 1981

[A.O. KOSHAL, V. BALAKRISHNA BRAD! AND
R.B. MISRA, JJ.]

c Evidence-Seetion 114 of the Evidenc~ Act-Adverse inference against a
party for his failure to appear in the court, when can arise. -
Respondent R.G. Ashtekar (since dead) flied a regular suit No. 215 of 1959
for the recovery of his dues from Karnla Pictures, Kolhapur of which Bapusaheb
Nara)·anrao Mohite (since dead) was the sole proprietor. On an application for
an order of attachment before judgment under Order 38 Rule 5 of the C.P.C. a
D garnishee order W3s issued to the appellant Apte, the mortgagee of the properties.
As per the directions of the court passed on his objection he exercised his right
under section 176 of the Contract Act and sold 1he property attached to one
Madhusudan Vasudeo Bavdekar, after due IiOtice to plaintiff Ashtekar and also
after a public notice.

The suit was decreed for Rs. 9,000 in favour of the plaintiff, who filed an
E application for execution and in the said proceedings Bavdekar, the purchaser,
was impleaded so as to seek recovery of the properties in his hands by sale.
The application was dismissed holding that the properly was pledged with Apte,
who validly sold it to Bavdekar and that the attachment before judgment
itself was· invalid. A ~.econd appeal before 1he High Court was rejected
by the Chief Justice of Maharashtra but he granted leave to appeal under
letters patent. The High Court reversed the concurrent findings of fact recor-
ded by courts below and in view of the fact that Apte sold the property for
F
Rs. 46,000 as against Rs. 35,000 due to him, the executing court was directed to
ask Apte to deposit the exce.ss amount of Rs. 11,000 in the executing court
in the 1st instance and in case the entire amount of the decree holder was not
satisfied then the executing court would call upon the heirs of Bavdekar to
deposit in court the rema iog amount due to Decree holder or to produce the pro·
perty attached within the time allowed by the Court in the event of this failure,
1he execution court shall order execution against them. Hence the appeal by
appellant after obtaining special leave.

Allowing the appeal, the Court

HELD: I :I. The question of drawing an adverse inferenc~ against a
party for his failure to appear in court '"'ould arise only when there is no evidence
H on tbe rec..·ord. Absence of Apte and Bavdekar from the court would matter
poly when there was no evidence on the record on the point in issue.
[1026 G-tt, tQi5Aj
P,J. APTE V. R.G. ASHTEKAR (Misra, 1.) io11
1:2. On the findings of fact recorded by the two courts below, which are A
final and which could not be normally set aside by the second Appellate Court,
the' decree-holder cannot compel Apte or Bavdekar to produce the property as
before the Court or the proceeds of the sale of the property as the amount due
to Apte from judgment-debtor has not still been satisfied. [1026 G-H, 1027A]

The statement of the judgment-debtor, the admission of the decree-holder
in cross-examination also the averments in the agreement make the position B
clear. [1026 A]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2069 of
1970.
*
- Appeal by special leave from the judgment and order dated
the 21st January, 1970 of the Bombay High Court in Letters Patent
Appeal No. 60 of 1964.
c

S. T. Desai and Mrs. J. Wad for the Appellant.
D
A. G. Ratnaparkhi for Respondent No. I.

Ex-parte for Respondents No. 2 & 3.

The Judgment of the Court was delivered by

MISRA, J. The present appeal by special leave arises out of an E

- execution proceeding and is directed against the judgment of the
High Court of Bombay dated 21st of January, 1970 in Letters Patent
Appeal setting aside the order of the Single Judge in Second Appeal.
The appeal came up for hearing on September 24, 1981. After the
conclusion of the arguments of the counsel for the parties, we
- allowed the appeal with costs, set aside the judgment of the High
Court and restored that of the District Judge for reasons to be re-
F
If corded later, in the following terms:

"This appeal is allowed with costs of this Court and
the decree passed by the District Judge is restored. Reasons
will follow later on." G

We now proceed to give the reasons.

Respondent No. I, Ramachandra Gangadhar Ashtekar (since
dead and represented by his legal representatives) filed a regular
H
suit No. 215 of 1959 for the recovery of his dnes from Kamla
1022 stJPlrnME COURt !U!l>Ol\ts [1982] i S.C.R.

A Pictures, Kolhapur of which Bapusaheb Narayanrao Mohite (since
dead and represented by his heirs and legal representatives) was the
sole proprietor. It appears that after filing the suit the plaintiff
applied for attachment of the defendant's properties before judg-
ment under Order 38, rule 5 of the Code of Civil Procedure and the
following properties were attached :
B
(a) Picture negative and sound negative of censored
movie "Anant Fandi".

(b) Rush prints of the above movie.

c (c) Positive prints of the above movie.

(d) Raw positive films.
-
(e) Publicity part-posters, Iitho posters, photos, enlarge-
ments, photo-negatives, bookset blocks etc.

D The actual possession of the defendant's aforesaid properties was
with Pandurang Jivajirao Apte, (for short Apte), the appellant, at
the time of attachment.

The suit was eventually decreed for a sum of Rs. 9,000 and
odd with interest and costs of the suit. The said attachment was
E continued by the decree.
The decree holder sought to execute the decree by the sale of
the property attached. As stated earlier, the property was in
possession of Apte, the appellant. The decree-holder, therefore,
prayed that Apte should be called upon to produce the property in
Court and the same should be sold.
I
Notice was issued to Apte, the garnishee, who appeared and I
filed a written statement. He took up the plea that property had
already been pledged with him by the judgment-debtor for his debt
r
and that the attachment levied at the instance of the decree-holder
was subject to his encumbrance on the property. He also alleged
that he had raised this contention in the suit itself at the time of
attachment before judgment and he was allowed by the Court to
sell the property pledged with him. Accordingly, he exercised his
right under section 176 of the Indian Contract Act and sold the •
property to one Madhusudan Vasudeo Bavdekar (for short Bavdekar)
H after due notice to the judgment-debtor as also after a public notice.
But the proceeds of the same were not sufficient even to satisfy his
P.1. APTE v. R.G. ASHTEKAR (Misra. J.) 1023
own debt. Under the circumstances he was not in a position to A
produce the property in Court.

In view of the stand taken by the appellant, Apte, the decree-
holder filed an application for impleading Bavdekar, the purchaser,
as a party to the execution proceedings. The application for im-
pleadment was allowed and Bavdekar was impleaded as judgment- B
debtor No. 2. No amendment claiming any relief against him was,
however, actually incorporated in the application for execution.
Bavdekar in his turn also filed a written state111ent alleging that the

* property was pledged with Apte who had sold it to him. He was a
bona fide purchaser for value without notice and the purchases being
effected in pursuance of the consent decree passed in Bombay City c
Civil Court in suit No. 1047 of 1959, transfer in bis favour was
valid in law. He was, therefore, not liable in any way for the claim
of the decree-holder.

The executing court came to the conclusion that the attach-
ment before judgment of the property in dispute was invalid and D
that the property being pledged by the judgment-debtor with the
garnishee, Apte, and he having sold it under section 176 of the
Indian Contract Act with the permission of the Court, the same
could not be made available to the decree-holder for satisfying bis
debt. As the only prayer in the application for execution was for
the sale of the property in question, the executing court disposed of E
the application as unsatisfied on the ground that the property was
not available for satisfaction of the decretal debt of the decree-
holder. The decree-holder feeling aggrieved by the order went up
in appeal. The District Judge affirmed the order of the executing
court holding that the pledge of the property in dispute by the
judgment-debtor in favour of the garnishee was proved, that the F
garnishee Apte sold the property to Bavdekar and that the attach-
ment of the property before judgment was invalid.

The decree-holder undaunted by the failures, filed a second
appeal in the High Court. The appeal was summarily rejected on
4th of May, 1963 by the Chief Justice. He, however, granted leave G
to appeal under Letters Patent. The High Court reversed the con-
current finding of fact recorded by the two courts below on making
a fresh appraisal of evidence and came to the following conclusions ;

(I) Apte and Bavdekar had failed to establish that the ff
attachment in question was invalid.
lbi4 SUPREME COURT REPo&ts (!98i.j J S.C.R.

A (2) They also failed to establish the genuineness of the sale
alleged by them.

(3) They also failed to establish that the sale proceeds did
not exceed the amount due to appellant Apte from the
judgment debtor.
ll
(4) From the own admission of Apte the attached pro-
perty was sold for Rs. 46,000 while the charge on the
attached property in favour of Apte was only for
Rs. 35,000 and, therefore, it was open to the executing •
c court to direct Apte to produce in the Court the
amount exceding Rs. 35,000, viz., Rs. 11,000. ....
On these findings the appeal was allowed by the High Court
and the judgments of the two courts below were set aside and the
case was sent back to the executing court with the directions that
O (1) Apte shall deposit in the executing court Rs. 11,000 on or before
!st of March, 1970, (2) that in case the entire amount due 10 the
decree-holder was not satisfied out of this amount of Rs. 11,000,
the executing court shall direct the heirs of Jlavdekar to deposit in
the executing court the remaining amount due the decree-bolder or
to produce in that court the property attached within a reasonable
E time to be fixed by the executing court, and (3) that if Apte and
Bavdekar failed to carry oui the above direction, the executing court
shall order execution against them for the amount indicated above.
Apte bas now come to this Court to challenge the judgment of the
High Court in the Letters Patent Appeal.

F The first contention raised on behalf of the appellant is that
the High Court had no jurisdiction to reverse the concurrent finding
-
t
of fact. This contention was raised before the High Court in
Letters Patent appeal as well but the same was over-ruled on the
ground that the courts below had approached the case from an
erroneous view of law in as much as they failed to raise the necessary
G presumption against Apte and Bavdekar on account of their failure
to appear before the court.

In our opinion the question of drawing an adverse inference
against Apte and Bavdekar on account of their absence from the
H court would arise only when there was no other evidence on the
P.J. APTE v. R.G. ASHTEKAR (Misra, J.) 1025

record on the point in issue. The first appellate court had relied A
upon the admission of the decree-holder himself and normally there
could be no better proof than the admission of a party. The High
Court, however, has observed in its judgment that the decree-holder
has made no admission in his evidence which would justify refusal
to draw adverse inference for the failure of Apte and Bavdekar to
step into the witness box. B

We have examined the record which was placed befrre us by
the counsel for the appellant and the examination of the record
indicates that the observation made by the High Court that the

- decree-holder has made no such admission is not quite correct. We
may first refer to the deposition of the decroe-holder himself. In
the cross-examination he admitted :
c

"There is an agreement executed between me and
judgment-debtor No. I on 29-12-58. I admit all its con-
tents ... Judgment-debtor No. I had told me that there is D
lien of Apte on the prints and on that basis our agreement
was entered into. It is true t)lat there is an agreement
between us that I am to be paid my ·dues only after dues
of other persons including Apte are satisfied .... It was agreed
between me and Mohite that I was to be given to the film
after dues of Apte were satisfied." E

In face of this clear admission of the decree-holder it does not lie in
his mouth to rny that no amount of Apte was due from the judg-
ment-debtor or that the agreement between Apte and the judgment

-- debtor was a collusive affair. Apart from the admission of the
decree-holder referred to above, the judgment-debtor also stated as
follows :
F

"I had given full idea to decree-holder about Apte's
lien. There is reference to it in our agreement. Decree-
holder is to get amount only after Apte's dues and the debt
G
of other persons is satisfied. Apte's debt could not be
satisfied. I had taken cash amount of Rs. 32,012 from
Apte. I have signed the documents at Exhs. 47/1, 47/4
and 47/7 to 47/13. His dues had come to Rs 39,500-56....
I had told about it to decree-holder. Apte's full dues are
H
. .
µot eve!l now satisfied by sale of the picture to Bavd~~ar
1026 SUPREME COURT REPORTS (1982] 1 S.C.R.

A for Rs. 46.000. The picture was to remain in possession of
Apte till all his dues were satisfied by me."

In view of the statement of the judgment-debtor and the admission
of the decree-holder, there is not the slightest doubt that the dues
of Apte had not been cleared off by the sale of the property in ques-
B tion to Bavdekar. The High Court was not justified in ignoringthe
statement of the judgment-debtor on the wrong assumption that
there was no admission by the decree holder.

In the agreement dated December 29, 1958 between the decree-
•
c holder and the judgment debtor, Ext. 58, there is a clear reference
to the amounts due to Apte from the judgment-debtor and the
decree-holder had full knowledge of the dues of Apte. Apart from
the dues of Apte there were other dues also to be paid by the judg-
-
ment-debtor. If according to the judgment-debtor himself the
amount of Rs. 46,000 whi6h was due to Apte, had not been cleared
off even by the sale of the property to Bavdekar the decree-holder
D
could not proceed against the prop,.ty in the hands of Bavdekar.
The attachment of the property at the instance of the decree-holder
was only subject to the lien of Apte and unless the entire amount
due to Apte was cleared off the decree-holder could not proceed
against the property in the hands of the purchaser, Bavdekar.
Therefore, the conclusion drawn by the two courts below that the
•
E
amount of Rs. 46,000 and odd was due to Apte from the judgment
debtor and the same had not been cleared off even by the sale of
the property under attachment, was based on the materials on the
record viz., the admission of the decree-holder, the admission of the
judgment-debtor and from various letters and receipts Ext. 47/1 to
F Ext. 47/13. All these documents have been lost sight of by the High
Court which has indeed exceeded its jurisdiction in reversing the
finding on the assumption that the courts below had approached the
case with a wrong view of Jaw in not drawing an adverse inference
against Apte and Bavdekar on their failure to appear in court when
the question of loan due to Apte from the judgment-debtor and the
G sale of the properties for Rs. 46,000 has been amply proved by the
evidence on the record. The question of drawing an adverse infer-
ence against a party for his failure to appear in court would arise
only when there is no evidence on the record. .
H On the findings of fact recorded by the two courts below,
which are final and which could not be normally set aside by the
~econd Ap~ellate Court, the decree-holder cannot compel Apte or
P.J. APTB v. R.G. ASHTBKAR (Misra, J.) 1027

Bavdekar to produce the property before the Court or the proceeds A
of the sale of the property as rthe amount due to Apte from judg-
ment-debtor has not still been satisfied.

For the foregoing discussion 'the judgment of the High Court
cannot be sustained.
B
S.R . Appeal allowed.

•

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