Andhra Pradesh HC Sets Aside Order Refusing Interim Arrest Protection As Debtor Was Yet To Be Adjudicated Insolvent

The Andhra Pradesh High Court has recently held said courts must exercise “extreme caution” in matters involving personal liberty even in civil proceedings, while granting relief to a man facing arrest in execution proceedings during the pendency of his insolvency case.

Justice Ravi Cheemalapati observed, "It is relevant here to note that the Constitutional Courts have consistently emphasized that courts must exercise extreme caution when dealing with matters involving personal liberty, even in civil proceedings, as the right to life and liberty under Article 21 of the Constitution is foundational and cannot be lightly curtailed. While personal liberty is primarily protected against State action in criminal cases, civil courts are also bound to ensure that procedural safeguards are not violated, as even civil imprisonment or restrictions can result in 'punitive content' before a final adjudication of guilt or liability.”

The ruling came in a batch of three civil revision petitions filed by P. Purushotham Reddy, who challenged an order of the Senior Civil Judge at Punganur, acting as the insolvency court, refusing interim protection from arrest, as well as fresh arrest warrants issued in pending execution proceedings by the Principal Senior Civil Judge at Madanapalle.

Reddy had approached the Punganur court seeking to be declared insolvent and had sought interim protection from arrest, contending that multiple decree holders had pending execution proceedings seeking his arrest, while one respondent had also initiated cheque dishonour proceedings against him.

The decree holders opposed the plea, arguing that such protection could be granted only after a person is formally declared insolvent and that Reddy was attempting to escape arrest and evade repayment of genuine debts.

The trial court accepted that contention and rejected his application.

Setting aside that order, Justice Cheemalapati noted that the trial court had relied on precedents that no longer held the field and, while referring to the Madras High Court Full Bench ruling that overruled the earlier view, observed: “The Full Bench further held that even before final adjudication, the Insolvency Court has inherent power to pass interim orders, of course, such interim order shall be passed depending upon the facts and circumstances of each individual case and to meet the ends of justice.”

The High Court accordingly set aside the Senior Civil Judge's order, remanded the interim protection plea for fresh consideration within six weeks, and kept the arrest warrants in abeyance pending adjudication of that application.

For Petitioner: Advocate N Pramod

For Respondents: Advocate Ayesha Azma S