Right to maintenance as fundamental right overrides other claimants under SARFAESI Act, IBC: SC

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Synopsis

SC said the charge of arrears of maintenance, payable to the respondents, shall have preferential right over the assets of the appellant, over and above, the rights of a secured creditor or similar right holders, under any recovery proceedings

The Supreme Court recently observed that the right to maintenance for a woman and her children is equivalent to a fundamental right and will have an overriding effect on claimants encompassed within the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, the Insolvency and Bankruptcy Code, 2016, or similar such laws.

"The right to maintenance is commensurate to the right to sustenance. This right is a subset of the right to dignity and a dignified life, which in turn flows from Article 21 of the Constitution of India," a bench of Justices Surya Kant and Ujjal Bhuyan said.
 
The court explained, in a way, the right to maintenance being equivalent to a fundamental right will be superior to and have overriding effect than the statutory rights afforded to Financial Creditors, Secured Creditors, Operational Creditors or any other such claimants encompassed within the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, the Insolvency and Bankruptcy Code, 2016 or similar such laws.
 
The court maintained the order for tentative maintenance issued on November 7, 2011, for an appellant to pay a monthly sum of Rs 50,000 to his wife and Rs 25,000 each for his two children.
 
The appellant initially challenged the Gujarat High Court's order of September 12, 2022, directing him to pay maintenance in the sum of Rs one lakh to the wife and Rs 50,000 for the two children per month. In the proceedings, his counsel suggested that due to certain setbacks suffered in business, he was not in a position to pay maintenance at the rate as awarded by the High Court. He also submitted that recovery proceedings had been initiated against him.
 
He also claimed the respondent-wife was self-employed and earned her own income and, thus, did not require any maintenance.
 
"It may also be noticed that the maintenance has been awarded by the High Court in the proceedings under Section 125 of the Code of Criminal Procedure, 1973. The appellant’s plea that on account of losses in business, his income has substantially reduced or that the recovery proceedings have been initiated, is essentially a question of fact and it will not be prudent to accept or reject the same at this stage. Suffice to observe that such like factors can be taken into account by the court of competent jurisdiction as and when a party approaches it under Section 127 CrPC," the bench said.
 
The High Court had take notice of the fact that the appellant was a businessman, who owned a diamond factory. It also drew an adverse inference as the appellant failed to produce his Income Tax documents.

Holding the tentative maintenance decided by it previously as "just and fair" for the sustenance of the wife and children, the bench modified the High Court's order to the extent that the respondent-wife was held entitled to maintenance at the rate of Rs 50,000 per month from the date of the order passed by the High Court.

Similarly, both the children are also held entitled to maintenance at the rate of Rs 25,000 per month, each with effect from the date of the High Court order, the court added.
 
They would however, be entitled to arrears of maintenance at the higher rate, awarded by the High Court upto the date the said order was passed by the High Court, the bench said.
 
"In this regard, we direct that the charge of arrears of maintenance, payable to the respondents, shall have preferential right over the assets of the appellant, over and above, the rights of a secured creditor or similar right holders, under any recovery proceedings. Wherever such proceedings are pending, that forum is directed to ensure that the arrears of maintenance are released to the respondents forthwith. No objection of any secured creditor, operational creditor or any other claim shall be entertained opposing the entitlement of the respondents for maintenance," the bench said.
 
The court said in case the appellant failed to pay the arrears of maintenance to the respondents, the Family Court should take coercive action against the appellant and, if so required, may auction the immovable assets for the purpose of recovery of arrears of maintenance.
 
The court also said, "This order shall not be construed such that the enhanced amount of maintenance awarded by the High Court is perceived to be totally erroneous. The view taken by us is only in light of the fact that there was no proper documentary evidence before the High Court to assess the income of the appellant."
 
The court granted the wife and the children liberty to approach the court under Section 127 CrPC to seek suitable amendment in the grant of maintenance, provided they are able to produce some evidence/particulars of the income of the appellant.
 
Case Title: Apurva @ Apurvo Bhuvanbabu Mandal Vs Dolly & Ors