Vijaya Fabricators Rtd. Engineering Works Kakinada v. State Bank of India, Treasury Branch kakinada
2004-02-06
P.S.NARAYANA
body2004
DigiLaw.ai
( 1 ) HEARD Sri Satyanarayana, counsel representing the revision petitioner- defendant and Sri Madan Mohan Rao, counsel representing the respondent- plaintiff. ( 2 ) THE simple question in controversy is whether the order passed in I. A. No. 1068 of 2002 in O. S. No. 388 of 2002 on the file of the ii Additional Senior Civil Judge, Kakinada prohibiting the respondent from withdrawing amount due to him from the south Central Railway be sustained or the same is liable to be set aside or disturbed in any away by this Court. ( 3 ) THE respondent-State Bank of India, treasury Branch, Kakinada, filed a suit o. S. No. 388 of 2002 on the file of II Additional senior Civil judge, Kakinada for passing a preliminary decree, declaring that the suit amount 3,58,088-63 paise due to the plaintiff from the defendant and for the sale of plaint schedule property for realization of the suit amount and subsequent interest at contract rate of 12% and for costs and also for such other suitable reliefs. ( 4 ) IN the said suit an application LA. No. 1068 of 2002 was moved by the State bank of India, Treasury Branch, Kakinada praying for a direction to the respondent to furnish adequate additional security for the suit amount, costs and interest within the time specified by the Court and in the meanwhile, order conditional attachment before judgment of the amount laying with the garnishee the Accounts Officer. South central Railway, Secunderabad under agreement No. 21/sr. DEN/co. Ord/hyd, dated 09-01-2002. ( 5 ) SEVERAL allegations wee made in the affidavit filed in support of the application and counter also was filed. Ex. A-1 to A-21 and Ex. B-1 and B-2 were marked. On appreciation of the respective contentions of the parties, the learned judge came to the conclusion that a prohibitory order relating to withdrawal of the amount due to him from South Central Railway has to be made in the facts and circumstances of the case. Aggrieved by the same the present Civil revision Petition is preferred. ( 6 ) SRI Satyanarayana, learned counsel representing the revision petitioner- defendant Vijaya Fabricators and engineering works, Kakinada would contend that in as much as the suit itself is based on mortgage and a preliminary decree was prayed for, there is sufficient security and hence, the prohibitory order cannot be sustained.
( 6 ) SRI Satyanarayana, learned counsel representing the revision petitioner- defendant Vijaya Fabricators and engineering works, Kakinada would contend that in as much as the suit itself is based on mortgage and a preliminary decree was prayed for, there is sufficient security and hence, the prohibitory order cannot be sustained. The learned counsel also submitted that in view of the order 38 rule 5 (4) of the Code of Civil Procedure, the impugned order is void and hence, the same cannot be sustained. The learned counsel also pointed out that even otherwise Ex. B-l valuation report givenby Sunder Associates, kakinada in respect of the mortgaged property would go to show that sufficient security is available to the respondent- plaintiff bank and hence, there is no need to issue such prohibitory order preventing the revision petitioner from withdrawing the amounts due to him from the South Central railway. The learned Counsel also placed reliance on Ankinapalli Obul Reddy v. Dadibathina China Gurava Reddy and others and Sripathi Panditarajula Venkata Babu v. Varalashmi Finance Corporation, Rajahmundry in this regard. ( 7 ) ON the contrary Sri Madan Mohan Rao, the counsel representing the respondent- plaintiff would contend that State Bank of india had advanced the term loan and the cash credit working capital limit with certain specific conditions and the revision petitioner had furnished immovable property security of 31 cents and subsequent there to in the first week of December, 2001, the revision petitioner represented that he got a work order worth about Rs. 3,80,614/- fromsouth central Railway and requested for temporary enhancement of cash credit limit towards working capital and the respondent bank granted the enhancement on temporary basis on the said work on condition of the defendant executing power of attorney in favour of the plaintiff bank authorizing to collect bill amount from the South Central railway, Secunderabad. ( 8 ) THE learned counsel also would maintain that the security given by the defendant is not enough and the enhanced limit was granted relying upon the representation of the defendant that the amount covered by the work order of South central Railway would be credited to the plaintiff.
( 8 ) THE learned counsel also would maintain that the security given by the defendant is not enough and the enhanced limit was granted relying upon the representation of the defendant that the amount covered by the work order of South central Railway would be credited to the plaintiff. ( 9 ) THE learned counsel also had pointed out that even on security given, certain encumbrances were made and in the light of the same, taking all the facts and circumstances into consideration a just and equitable order was made by the learned judge. The learned counsel also would maintain that it cannot be said that the impugned order is a void order, in-as-much as no ex parte order as such was made but the said order was passed after inviting counter from the other side and hence, the same cannot be disturbed on the said ground. The learned counsel also submitted that the amounts had been credited, and the respondent-plaintiff moved an application i. A. No. 1068 of 2002 in O. S. 388 of 2002 on the file of II Additional Senior Civil Judge, kakinada under 38 Rule 5 praying for direction to the respondent defendant to furnish adequate additional security to the suit amount and in the mean while order conditional attachment before judgment of the amount lying with the garnishee the accounts Officer, South Central Railway, secunderabad under Agreement No. 21/ cr. Den/co. /ord/hyd, dated 09-01-2002. ( 10 ) HEARD both the counsel. ( 11 ) IT is not in controversy that the suit itself is based on the strength of mortgage and preliminary decree was prayed for on the strength of the mortgage security. No doubt there is some controversy between the parties relating to the nature of the security and the stand taken by the bank is that initially the security was given only to the term loan of Rs. 60,000/- and apart from it, the encumbrance shows that there was an alienation and definitely this creates a very serious doubt that the security furnished is not at all sufficient to realize the amount and in such circumstances, the relief was prayed for. No doubt the learned judge had recorded reasons in detail while making the order.
60,000/- and apart from it, the encumbrance shows that there was an alienation and definitely this creates a very serious doubt that the security furnished is not at all sufficient to realize the amount and in such circumstances, the relief was prayed for. No doubt the learned judge had recorded reasons in detail while making the order. It is brought to my notice that initially a restraint order was made exercising powers under order 39 of the Code of Civil Procedure and subsequent there to an order in detail was made after counter was filed by the other side. In the decision referred (1 supra) it was held:"the Court has to satisfy itself that the defendant with an intention to obstruct or delay execution of any decree that may be passed against him is in the process of disposing of the whole or any part of the property, then only after recording such satisfaction, it shall call upon the petitioner to furnish security stipulating certain time and if he does not furnish sufficient security, it is open for the Court to order attachment before judgment. But as canbe seen from order the lower Court only extracted contentions of the petitioner as well as the 1st respondent-plaintiff, but did not record the satisfaction as to whether the petitioners is likely to dispose of the whole or any part of his property, which is a mandatory requirement and if this requirement is not followed the entire attachment becomes void under sub- rule (4) of Rule 5 of Order XXXVIII. There is no such discussion in the order. Therefore, Court is satisfied that the lower Court failed to comply with the conditions stipulated in Order XXXVII rule 5 of C. P. C. "a Division Bench of this Court in the decision (2) held as hereunder:-"an order of attachment before judgment affects the right of the owner of the property to deal with the same even before any verdict is available against him as regards the claim of the plaintiff. Such an order is not to be passed merely for the asking on in the routine manner. There must be cogent, prima facie materials to lead the Court to the conclusion that there have been attempts by the defendant to dispose of the property with a view to defeat the decree.
Such an order is not to be passed merely for the asking on in the routine manner. There must be cogent, prima facie materials to lead the Court to the conclusion that there have been attempts by the defendant to dispose of the property with a view to defeat the decree. Mere satisfaction that there has been an attempt to dispose of the property is in itself not sufficient and there must be further conclusion, again prima facie, that the attempt to alienate is to delay or defeat the decree. For reaching such satisfaction, there has to be before the Court some tangible material than the mere statement without giving any particulars and without disclosing the source of the information of attempted alienation. The learned Subordinate Judges should have been alert to the fact that there was actually no third party affidavit as the second affidavit was only of the Clerk of the respondent-firm who was under its control as an employee. The affidavits in themselves do not disclose as to when at attempt was made to alienate, what type of alienation was intended to be made and to whom the alienation was being desired to be made and who gave such information. The learned subordinate Judge did not make any such enquiry before passing the order which grossly and adversely affected the appellant. " ( 12 ) THOUGH the order was made under order 39 of the Code of Civil Procedure the stand taken by the learned counsel representing the revision petitioner is that in as much as application was moved under order 38 Rule 5 and Section 151 of the Code of Civil Procedure, such an order could not have been passed without issuing notice and calling upon the opposite party to furnish security and hence the sair. e is bad in law. It is no doubt true that Ex. B-1 valuation report given by Sundar Associates, Kakinada in relation to mortgaged property had been relied upon to show sufficient security is available for realization of the amount. It is pertinent to note that in the counter the revision petitioner had admitted the execution of all the documents including undertaking to pay the amount due from south Central Railway. No doubt the other allegations were denied. It is no doubt true that several documents Ex. A-1 to A-21 also were marked apart from Ex. B-l and Ex.
It is pertinent to note that in the counter the revision petitioner had admitted the execution of all the documents including undertaking to pay the amount due from south Central Railway. No doubt the other allegations were denied. It is no doubt true that several documents Ex. A-1 to A-21 also were marked apart from Ex. B-l and Ex. B-2 - Acceptance of temporary loan limit of rs. 3,00,000/- by the plaintiff bank to the respondent, also had been pointed out. Ex. A-13 is dated 18-12-2001 agreement of hypothecation (Special Hypothecation advances) executed by the revision petitioner. It is needless to say the State Bank of India- respondent in the Civil Revision Petition- plaintiff in the suit, is interested only in safeguarding its interest in realization of the amount due to the said bank and nothing more and for that purpose only the relief was also carefully prayed for praying for a direction to respondent to furnish adequate additional security for the suit amount costs and interest within the time specified by the court and in the meanwhile order conditional attachment before the judgment of the amount lying with garnishee South Central railway, Secunderabad. The main grievance ventilated by the revision petitioner is that even now he is ready and willing to furnish additional security and despite the same without affording proper opportunity to furnish additional security, giving a direction of this nature would be unjust. In the light of the prayer prayed for by the respondent bank taking into consideration all the facts and circumstances of the case, this Court makes the following order. ( 13 ) THE revision petitioner shall furnish adequate additional security to the satisfaction of the learned II Additional Senior judge, Kakinada to the suit amount, costs and interest within a period of four weeks from today and in default it is need less to say that the impugned order stands. The learned ii Additional Senior Civil Judge, Kakinada also shall consider the sufficiency of additional security furnished in this regard after hearing both the parties, taking into consideration the documentary evidence already available on record or the additional security, which would be furnished afresh. ( 14 ) THE order made by the learned ii Additional Senior Civil Judge, Kakinada is hereby modified to the said extent only. Accordingly the Civil Revision Petition is disposed of. No order as to costs.