Maintenance Right Of Wife & Children Overrides Creditors’ Claims Under Sarfaesi/Ibc On Husband’s Assets

Posted On - 30 December, 2024 • By - King Stubb & Kasiva

Summary:

[1]In the present case, the Appellant (husband) challenged the Hon’ble Gujarat High Court’s order, wherein the wife was granted maintenance. Initially, the Family Court awarded a meager sum, however after filing a Revision Application, the wife and children were granted higher maintenance by the High Court. The Appellant showed his financial difficulties and his wife’s self-employment. The Hon’ble Supreme Court duly considered the Appellant’s stand and modified the High Court’s decision and reduced the maintenance by giving preference to rights to maintenance arrears over other financial claims while also addressing the Appellant’s financial setbacks.

Facts:

  • The Appellant filed an appeal against the Gujarat High Court’s order, wherein an amount of Rs. 1,00,000/- was awarded to the wife and Rs. 50,000/- each for the children as maintenance.
  • Initially, the Family Court awarded Rs. 6,000/- per month for the wife and Rs. 3,000/- per month for each child.
  • Thereafter, the wife and children filed a Revision Application in the High Court, seeking higher maintenance.
  • The Hon’ble Gujarat High Court increased the maintenance amount, stating the Appellant’s business background and failure to produce income-tax returns.
  • Subsequently, the Appellant approached the Hon’ble Supreme Court of India, wherein he apprised the Court about his financial difficulties due to business losses and that his wife was self-employed and did not need maintenance.
  • The Supreme Court passed an interim order and stayed the higher maintenance and reduced the interim amount.
  • The Appellant claimed reduced income, seeking a reduction in the maintenance amount.

Issues:

  1. Whether the order passed by the Gujarat High Court was justifiable, considering the Appellant’s financial position and claims of business losses?
  2. Whether the Appellant should be required to pay maintenance at the enhanced rate, or the amount should be reduced due to his claimed financial difficulties?
  3. Whether maintenance arrears should take precedence over the Appellant’s other financial liabilities, including debts owed to secured creditors?

Judgment:

  1. Modification of Maintenance Amount: 

The Supreme Court partially allowed the appeal by reducing the maintenance to Rs. 50,000/- per month for the wife and Rs. 25,000/- per month for each child, effective from the date of the High Court’s order.

  1. Payment of Arrears: 

The Appellant was directed to pay the arrears of maintenance within three months, with the arrears granted preferential rights over the Appellant’s other financial claims, including those of secured creditors and operational creditors, in any recovery proceedings.

  1. Right to Maintenance as Fundamental: 

The Court reaffirmed that the right to maintenance is a part of the fundamental right to sustenance and dignity under Article 21 of the Constitution of India.

  1. Coercive Measures:

The Appellant was duly informed that in case of failure to pay the arrears, it would result in coercive actions which include the auctioning of his immovable assets in order to recover the maintenance arrears.

  1. Priority of Maintenance Over Other Financial Claims: 

The maintenance arrears were explicitly granted preferential treatment over other debts, citing Section 127 of the Cr.P.C., which establishes that maintenance claims take precedence over other financial obligations.

Analysis:

The Hon’ble Supreme Court, while acknowledging the Appellant’s financial difficulties also emphasized the right to maintenance as it is a fundamental right, which guarantees sustenance and dignity. This right is paramount and cannot be subordinated to other financial obligations, including claims from secured creditors. The Court also recognized that claims regarding reduced income were a question of factt that could be addressed under Section 127 of the Cr.P.C. at a later stage. Additionally, the Court clarified that maintenance claims have preferential rights over other debts, reinforcing the constitutional imperative to protect the wife and children’s basic needs. Coercive action was permitted in case of non-payment, underscoring the seriousness of maintaining a dignified life for the dependents.

[1]https://api.sci.gov.in/supremecourt/2022/33223/33223_2022_3_9_57743_Order_10-Dec-2024.pdf

BEFORE THE HON’BLE SUPREME COURT

Apurvo Bhuvanbabu Mandal v. Dolly & Ors

Criminal Appeal Nos.- 5148-5149 OF 2024 (ARISING OUT OF SLP (CIVIL) NO. 10093-10094/2022)

Order dated 10th December 2024