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2008 DIGILAW 559 (AP)

Sports Authority of Andhra Pradesh, Hyderabad v. Regal Sports Company Secunderabad

2008-07-24

P.S.NARAYANA

body2008
ORDER: By the order dated 29.02.2008, this court admitted the civil revision petition and granted interim stay in CRP MP No.1016 of 2008. In CRP MP No.1998 of 2008 in CRP MP No.1016 of 2008 by the order dated 02.05.2008 the said interim stay was made absolute. 2. Sri V.Ch.Naidu, the learned counsel representing the revision petitioner would maintain that the impugned order is self-contradictory. A perusal of the second part of the order shows that there is a direction to furnish security for Rs.17,89,052/- and further it is directed to show cause as to why the revision petitioner shall not be directed to furnish security and that, if the revision petitioner fails to furnish security, there shall be attachment of items 1 to 5 of the schedule after giving five hours time. The learned counsel would also maintain that none of the ingredients to be satisfied under Order 38 Rule 5 of the Code of Civil Procedure, 1908 (for short - 'the Code'), had been satisfied. The learned counsel would also maintain that the revision petitioner is a statutory authority functioning under the Government and hence there is no need to direct the revision petitioner to furnish security. The learned counsel would also maintain that no notice under Section 80 of the Code at least had been given. The learned counsel had taken this Court through the contents of the affidavit filed in support of the application and would maintain that absolutely there are no averments made in the said affidavit filed in support of the application at least just to satisfy the necessary ingredients to be satisfied in relation to Order 38 Rule 5 of the Code. The learned counsel also placed strong reliance on the decision of the Apex Court in RAMAN TECH. & PROCESS ENGG. CO. v. SOLANKI TRADERS1. 3. The learned counsel also placed strong reliance on the decision of the Apex Court in RAMAN TECH. & PROCESS ENGG. CO. v. SOLANKI TRADERS1. 3. On the contrary, Sri D.Madhava Rao, the learned counsel representing the respondent, would maintain that this being an interlocutory order which was made just directing the revision petitioner to furnish security to safeguard the interest of the respondent-plaintiff, such interlocutory order ordinarily not to be interfered with and maintained that in a civil revision petition filed under Article 227 of the Constitution of India, especially in the light of the amended Section 115 of the Code, and also in the light of the decision of the Apex Court in SURYA DEV RAI v. RAM CHANDER RAI AND OTHERS, when the learned Judge exercised the discretion properly while making an order under Order 38 Rule 5 of the Code, such an order not to be interfered with at best the same may be modified by giving further reasonable opportunity or reasonable time to furnish security and nothing beyond thereto. The learned counsel would also maintain that at least a direction may be given to furnish bank guarantee, in the peculiar circumstances of the case. 4. Heard the counsel on record. 5. Sports Authority of Andhra Pradesh represented by its Vice Chairman & Managing Director, the revision petitioner-respondent-defendant, had preferred the present revision petition under Article 227 of the Constitution of India being aggrieved by the order dated 14.02.2008 which was served on 19.02.2008 made in IA No.445 of 2008 in OS No.14 of 2008 by the Hon'ble I Additional Chief Judge, City Civil Courts, Secunderabad. 6. The said order impugned reads as hereunder. "Whereas the petitioner/plaintiff has made out to the satisfaction of this court that the respondent is due an amount of Rs.17,89,052/- and not releasing the payments inspite of several requests and persuasions made by the petitioner and trying to remove the movables in which case it would be difficult to recover the suit claim by the petitioner. You are hereby directed to furnish security for Rs.17,89,052/- and to show cause to why you shall not be directed to furnish security for the above said suit amount and if you fail to furnish the security, there shall be attachment of items Nos.1 to 5 of the schedule after giving five hours time by 19.3.2008." 7. You are hereby directed to furnish security for Rs.17,89,052/- and to show cause to why you shall not be directed to furnish security for the above said suit amount and if you fail to furnish the security, there shall be attachment of items Nos.1 to 5 of the schedule after giving five hours time by 19.3.2008." 7. At the outset, this Court observes that when an order of conditional attachment to be made directing the opposite party to furnish security, reasonable time to be given and this Court is satisfied that granting five hours time may not be just and reasonable. Be that as it may, this Court had given anxious consideration to the averments made in the affidavit filed in support of the application. 8. Order 38 Rule 5 of the Code dealing with 'Where defendant may be called upon to furnish security for production of property' reads as hereunder. " (1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him,-- (a) is about to dispose of the whole or any part of his property, or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security. (2) The plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof. (3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified. (4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule, such attachment shall be void." 9. (3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified. (4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule, such attachment shall be void." 9. At this juncture, it is pertinent to note that in sub-section (1) of Order 38 Rule 5 of the Code it is specified that : "the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him" and further it is pertinent to note that in sub-section (1)(a) of Order 38 Rule 5 of the Code it is specified that "is about to dispose of the whole or any part of his property" and in sub-section (1)(b) of Order 38 Rule 5 of the Code it is specified that is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court' and further, the words 'the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security' would clearly go to show that the discretion to be exercised judiciously. 10. On a careful reading of the averments made in the affidavit filed in support of the application, while ordering a conditional attachment before judgment, the ingredients of Order 38 Rule 5 of the Code are to be satisfied. Before making an order of conditional attachment before judgment, the court should have satisfied on the material viz., the affidavits or otherwise which may be placed before it, and that prima facie to safeguard the interests of the plaintiff such conditional attachment order need to be made. Unless the ingredients of Order 38 Rule 5 of the Code are made prima facie, an order of attachment before judgment by way of conditional attachment or otherwise cannot be made in a mechanical and routine way. The courts are expected to be careful and cautious while exercising the power under Order 38 Rule 5 of the Code. 11. Unless the ingredients of Order 38 Rule 5 of the Code are made prima facie, an order of attachment before judgment by way of conditional attachment or otherwise cannot be made in a mechanical and routine way. The courts are expected to be careful and cautious while exercising the power under Order 38 Rule 5 of the Code. 11. In RAMAN TECH. & PROCESS ENGG. CO. v. SOLANKI TRADERS (1st cited supra) the Apex Court held "4. The object of supplemental proceedings (applications for arrest or attachment before judgment, grant of temporary injunctions and appointment of receivers) is to prevent the ends of justice being defeated. The object of Order 38 Rule 5 CPC in particular, is to prevent any defendant from defeating the realization of the decree that may ultimately be passed in favour of the plaintiff, either by attempting to dispose of, or remove from the jurisdiction of the court, his movables. The scheme of Order 38 and the use of the words" to obstruct or delay the execution of any decree that may be passed against him" in Rule 5 make it clear that before exercising the power under the said Rule, the court should be satisfied that there is a reasonable chance of a decree being passed in the suit against the defendant. This would mean that the court should be satisfied that the plaintiff has a prima facie case. If the averments in the plaint and the documents produced in support of it, do not satisfy the court about the existence of a prima facie case, the court will not go to the next stage of examining whether the interest of the plaintiff should be protected by exercising power under Order 38 Rule 5 CPC. It is well settled that merely having a just or valid claim or a prima facie case, will not entitle the plaintiff to an order of attachment before judgment, unless he also establishes that the defendant is attempting to remove or dispose of his assets with the intention of defeating the decree that may be passed. Equally well settled is the position that even where the defendant is removing or disposing his assets, an attachment before judgment will not be issued, if the plaintiff is not able to satisfy that he has a prima facie case. 5. Equally well settled is the position that even where the defendant is removing or disposing his assets, an attachment before judgment will not be issued, if the plaintiff is not able to satisfy that he has a prima facie case. 5. The power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilize the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are not wanting where bloated and doubtful claims are realized by unscrupulous plaintiffs by obtaining orders of attachment before judgment and forcing the defendants for out-of-court settlements under threat of attachment. 6. A defendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him. Shifting of business from one premises to another premises or removal of machinery to another premises by itself is not a ground for granting attachment before judgment. A plaintiff should show, prima facie, that his claim is bona fide and valid and also satisfy the court that the defendant is about to remove or dispose of the whole or part of his property, with the intention of obstructing or delaying the execution of any decree that may be passed against him, before power is exercised under Order 38 Rule 5 CPC. Courts should also keep in view the principles relating to grant of attachment before judgment. (See Premraj Mundra v. Md. Manech Gazi [ AIR 1951 Cal 156 ] for a clear summary of the principles.)" 12. In the light of the averments made in the affidavit filed in support of the application under Order 38 Rule 5 of the Code and the grounds of this revision and the ingredients of Order 38 Rule 5 of the Code, this Court is thoroughly satisfied that the impugned order was made in a mechanical way, without proper application of mind, and without exercising the discretion in proper perspective and so such order cannot be allowed to stand. 13. 13. Accordingly, the impugned order is hereby set aside and the civil revision petition is allowed. No order as to costs. However, at this stage, a request is made by D.Madhava Rao, the learned counsel representing the respondent, that inasmuch as this is a suit for recovery of money, appropriate directions may be given for early disposal of the suit itself. Let the learned I Additional Chief Judge, City Civil Courts, Secunderabad, expedite the disposal of the suit.