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2014 DIGILAW 688 (MAD)

M. Padmini v. M. Anandhan

2014-03-18

S.RAJESWARAN, S.VAIDYANATHAN

body2014
JUDGMENT : S. Rajeswaran, J. 1. This Appeal has been filed against the Order of the 1st Additional District Judge, Erode dated 7.11.2013 made in I.A. No. 116 of 2013 in O.S. No. 37 of 2013. The appellant is the defendant in O.S. No. 37 of 2013. The said O.S. No. 37 of 2013 has been filed by the respondent/sole plaintiff, for recovery of a sum of Rs. 2,87,31,923/- with subsequent interest at the rate of 24% p.a. from the date of Suit till the date of realisation of the Suit amount with cost. 2. For the sake of convenience, the parties herein are stated as per the ranking in the lower Court. 3. A written statement was filed by the appellant/defendant refuting the allegations made in the plaint. Pending suit, an application in I.A. No. 116 of 2013 was filed by the respondent/ plaintiff under Order 38 Rule 5 of Code of Civil Procedure (hereinafter called C.P.C.) for directing the defendant to furnish security to the satisfaction of the Decree amount, failing which to order attachment. The details of the properties are mentioned in the annexure. This petition was opposed by the defendant by filing a Counter. When the matter was posted for orders, an additional affidavit was filed by the plaintiff and on that basis, an Order was passed by the Trial Court on 7.11.2013, attaching the properties 3 to 5 and Item Nos. 7 and 8. Aggrieved over the same, the above appeal has been filed by the defendant. 4. We have heard the learned Counsel for the appellant/defendant and the learned Counsel for the respondent/plaintiff and we have also gone through the documents available on record. 5. The learned Counsel appearing for the appellant/defendant would primarily contend that the Order of Attachment cannot be granted for mere asking and it could only be granted, if it is really warranted. He adds that the respondent failed to aver and prove any such circumstance warranting grant of Order of Attachment. Moreover, the gamut of Order 38 Rule 5, C.P.C. has to be read strictly before applying the same for Order of Attachment. He adds that the respondent failed to aver and prove any such circumstance warranting grant of Order of Attachment. Moreover, the gamut of Order 38 Rule 5, C.P.C. has to be read strictly before applying the same for Order of Attachment. He further adds that when the case was heard on the First Application filed by him in I.A. No. 116 of 2013 for ordering Order of Attachment under Order 38 Rule 5, C.P.C. and the Order was reserved and posted for pronouncing Orders, the plaintiff filed an Application at that point of time, seeking to re-open the case and filed an Additional Affidavit, which was impermissible. However, the Court took it up and decided the case on the basis of the Additional Affidavit filed by the plaintiff. According to him, the lower Court failed to take note of the fact that the mandatory requirement of Order 38 Rule 5 of C.P.C. has not been satisfied by the plaintiff by filing an Application under Order 38 Rule 5, C.P.C. When in the Original Affidavit no averment has been made with regard to the ingredients of Order 38 Rule 5, C.P.C. filing an Additional Affidavit, at a later point of time, that too, when the case was posted for pronouncing Orders, after arguments were heard, for improving the case further and enabling the Court to pass an Order of Attachment under Order 38 Rule 5, C.P.C., is totally unsustainable. Further, he adds that even in the Additional Affidavit filed at a later point of time, nothing has been stated as required under Order 38 Rule 5, C.P.C. There-fore, when there is failure to comply with the mandatory requirement of Order 38 Rule 5, C.P.C. the Order passed by the Court below in passing an Order of Attachment under Order 38 Rule 5, C.P.C. is liable to be set aside in law and on facts. 6. In support of the above contentions, the learned Counsel for the appellant has relied on the following judgments: (i) Pappammal vs. I. Chidambaram, AIR 1994 Mad. 70 (ii) Renox Commercials Ltd. vs. Inventa Technologies Pvt. Ltd. AIR 2000 Mad 213 (iii) M. Ravi vs. R. Vasanthakumari, (2002) 3 MLJ 679 (iv) Raman Tech. & Process Engg. Co. 6. In support of the above contentions, the learned Counsel for the appellant has relied on the following judgments: (i) Pappammal vs. I. Chidambaram, AIR 1994 Mad. 70 (ii) Renox Commercials Ltd. vs. Inventa Technologies Pvt. Ltd. AIR 2000 Mad 213 (iii) M. Ravi vs. R. Vasanthakumari, (2002) 3 MLJ 679 (iv) Raman Tech. & Process Engg. Co. and Another vs. Solanki Traders, (2008) 2 SCC 302 (v) M.K. Hariprasad Sole Proprietor Yehem Agency and Vijaya H. Marla Sole Proprietrix Makers and Marketers vs. Uma Keshav, (2009) 8 MLJ 1027 7. Per contra, learned Counsel for the respondent/plaintiff by referring the Application filed at the first instance in I.A. No. 116 of 2013 would contend that averments have been made by the plaintiff that the appellant along with husband joining together created some documents and also changed some documents in the Bank with a view to defeat the claim and to cheat them. Therefore, the plaintiff wanted a direction from the Court directing them to furnish security to the satisfaction of the Decree amount and thereafter Order for an attachment. He also referred to the Additional Affidavit wherein the plaintiff had given a specific averment that he was reliably given to understand and believe it to be true that the appellant is negotiating to sell the properties through some real estate brokers, therefore, it was just and necessary for him to approach the Court under Order 38 Rule 5, to pass an Order of Attachment. According to the learned Counsel for the plaintiff only on the basis of the specific averment made in the Additional Affidavit, the Trial Court passed an Order of Attachment dated 7.11.2013. Moreover, he also referred to the judgment of the Hon'ble Supreme Court made in Rajendran and Others vs. Shankar Sundaram and Others, (2008) 2 SCC 724 . 8. We have considered the rival submissions made by both sides carefully along with the facts. 9. Before going into the facts of the case, we would like to refer to the following judgments referred to by both sides: (i) Paragraph No. 6 of the judgment reported in Pappammal vs. I. Chidambaram (supra), which reads as follows:- "6. 8. We have considered the rival submissions made by both sides carefully along with the facts. 9. Before going into the facts of the case, we would like to refer to the following judgments referred to by both sides: (i) Paragraph No. 6 of the judgment reported in Pappammal vs. I. Chidambaram (supra), which reads as follows:- "6. The essential requirements for invoking the power of Court to effect an attachment under Order 38, Rule 5(1), C.P.C. are that the Court must be satisfied that the defendant is about to dispose of the whole or any part of his or her property, or the defendant is about to remove the whole or any part of his or her property from the local limits of the jurisdiction of the Court and the defendant is intending so to do with a view to cause obstruction or delay the execution of any Decree that may be pawed against him or her. It is incumbent that the plaintiff should state precisely the grounds on which the belief or apprehension is entertained that the defendant is likely to dispose of or remove the property. It may even be necessary in some cases to give the source of information and belief. A mere mechanical repetition of the provisions in the Code or the language therein without any basic strata of truth underlying the allegation or vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court totally unsupported by particulars would not be sufficient compliance with the first part of Order 38 Rule 5(1), C.P.C." (ii) Paragraph Nos. 24 to 26 of the judgment reported in Renox Commercials Ltd. vs. Inventa Technologies Pvt. Ltd. (supra), which read as follows: "24. The reading of the above provision would make it clear that there are essential requirements which must be proved to the satisfaction of the Court. They are as follows:- (i) The defendant is about to dispose of the whole or any part of his property. (ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. (iii) That the defendant is intending to do so to cause obstruction or delay in the execution of any Decree that may be passed against him. (ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. (iii) That the defendant is intending to do so to cause obstruction or delay in the execution of any Decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court, unsupported by particulars, would not be sufficient compliance with the rule. (iv) It is incumbent upon the plaintiff to state the grounds on which he entertains the belief or apprehension that the defendant would dispose of or remove the property, or, to give the source of his information and belief in the matter through an affidavit. 25. Therefore, the jurisdiction of this Court to order attachment before judgment arises only when it is satisfied by the Affidavit, supported by the particulars that the defendant is about to dispose of the whole, or any part of his property with the intention to obstruct or delay the execution of the Decree that may be passed against him. Hence, the essential requirement for an Order of Attachment before judgment is the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the Decree that may be passed in the Suit. 26. Before dealing with the said question as to whether those specific allegations supported by materials are available in the present case, let us refer to the guiding principles that can be deduced from the perusal of all the authorities cited by the Counsel on either side as mentioned above. The following are the guiding principles:- (1) That an order under Order 38 Rule 5, can be issued only if circumstances exist as are stated therein to the satisfaction of the Court. (2) That the Court would not be justified in issuing an Order for Attachment before judgment, or for security merely because it thinks that no harm would be done thereby or that the defendants would not be prejudiced. (3) That the Affidavit in support of the contentions of the applicant, should not be vague and it must be properly verified. (2) That the Court would not be justified in issuing an Order for Attachment before judgment, or for security merely because it thinks that no harm would be done thereby or that the defendants would not be prejudiced. (3) That the Affidavit in support of the contentions of the applicant, should not be vague and it must be properly verified. Where it is affirmed true to knowledge or information, it must be stated as to which portion is true to knowledge and the source of information should be disclosed and the grounds for belief should be stated. (4) That a mere allegation that the defendant is selling off his properties is not sufficient. Particulars must be stated. (5) An Order of Attachment before judgment is a drastic remedy and the power has to be exercised with utmost care and caution, as it may be likely to ruin the reputation of the party against whom the power is exercised. As the Court must act with the utmost circumspection before issuing an Order of Attachment, the Affidavit filed by the applicant should clearly establish that the defendant, with intent to obstruct or delay the execution of the Decree that may be passed against him is about to dispose of the whole or any part of his property. (6) A mere mechanical repetition of the provisions in the Code or the language therein without any basic strata of truth underlying the allegation or vague and general allegations that the defendant is about to dispose of the property or to remove it beyond the jurisdiction of the Court, totally unsupported by particulars, would not be sufficient compliance with Order 38 Rule 5 of C.P.C. (7) An attachment before judgment is not a process to be adopted as a matter of course. The Suit is yet to be tried and the defence of the defendant is yet to be tested. At the nebulous juncture, the relief which is extraordinary could be granted only if the conditions for its grant as per the provisions of the Code, stand satisfied. This process is never meant as a lever for the plaintiff to coerce the defendant to come to terms. Hence utmost caution and circumspection should guide the Court." (iii) Paragraph No. 5 of the judgment reported in M. Ravi vs. R. Vasanthakumari (supra), which read follows: "5. This process is never meant as a lever for the plaintiff to coerce the defendant to come to terms. Hence utmost caution and circumspection should guide the Court." (iii) Paragraph No. 5 of the judgment reported in M. Ravi vs. R. Vasanthakumari (supra), which read follows: "5. In our view, it is not necessary to go into the larger question as we find from the order under challenge in the Appeal that the appellant herein has readily offered the properties as security. We also find from the perusal of the order of the learned Subordinate Judge that the learned Subordinate Judge has not conducted any independent inquiry as to the valuation of the property offered as security, but rejected the security only on the basis that the sale consideration as shown in the Deed of Sale came to Rs. 1,68,100/- only. It is stated that the Sale-Deed was executed in the year 1977 and it is the common knowledge that there is a steady increase in the value of immovable properties from the year 1977. We are of the view that before rejecting the security offered by the second defendant, learned Subordinate Judge should have conducted an inquiry as to the sufficiency of the security offered and for that purpose, he should have ascertained the market value of the property offered as security and on the basis of inquiry, he should have decided the question whether the security offered would be sufficient to cover the amount claimed in the Plaint. We are also of the opinion that the procedure adopted by the learned Subordinate Judge in straightaway attaching the property without satisfying himself as to the value of the property offered as security is not correct. The second defendant had offered three properties as security in compliance with the orders of learned Subordinate Judge and learned Subordinate Judge should have tested the value of the security and if the security offered was found to be insufficient to cover the amount claimed in the Plaint, he should have given an opportunity to the second defendant to make good the deficiency. The procedure adopted by the learned Subordinate Judge in straightaway rejecting the security and attaching the property is not correct. Accordingly, we are unable to uphold the Order of the learned Subordinate Judge. The procedure adopted by the learned Subordinate Judge in straightaway rejecting the security and attaching the property is not correct. Accordingly, we are unable to uphold the Order of the learned Subordinate Judge. Hence, we set aside the Order of the learned Subordinate Judge and direct him to conduct de nova inquiry regarding the value of the property offered as security and determine whether the security offered is sufficient for the amount claimed in the Plaint. In the view we have taken, it is not necessary to consider the decisions referred to by the learned Counsel for the appellant." (iv) Paragraph Nos. 4, 5 and 6 of the judgment reported in Raman Tech. & Process Engg. Co. vs. Solanki Traders (supra), which read as follows: "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, C.P.C. 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 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, C.P.C. 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. The power under Order 38 Rule 5, C.P.C. is 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 realised by unscrupulous plaintiffs by obtaining Orders of Attachment before judgment and forcing the defendants for out of Court settlement, 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 pan 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, C.P.C. Courts should also keep in view the principles relating to grant of attachment before judgment (Premraj Mundra vs. Md. Maneck Gazi and Others, AIR 1951 Cal. 156 , for a clear summary of the principles)." (v) Paragraph Nos. 9 and 10 of the judgment reported in M.K. Hariprasad vs. Uma Keshav (supra), which read as follows: "9. It is not that whenever any claim for recovery of money is made before a Court of Civil law, every Application filed for attachment before judgment should be ordered. It is well settled proposition of law that in a given case, asking for a direction to the defendants to furnish security and in default an Order of Attachment is an extraordinary remedy. It is well settled proposition of law that in a given case, asking for a direction to the defendants to furnish security and in default an Order of Attachment is an extraordinary remedy. It is also settled proposition of law that in a given case if the allegations are bald, the Court has no option than to deny the relief. What is all mentioned in Paragraph 11 of the Affidavits in support of the Applications is as follows:- "11. I reliably understand that the 2nd respondent herein is making hectic efforts to dispose of the land to keep it out of the reach of the creditors and particularly me. I have come to understand that the real estate agents in the area have been pressed into service for the purpose and this fact is known to the people stationed locally. If the second respondent is allowed to sell the property, I would be left with no remedy to recover my Suit claim and any Decree that may be passed would only be on paper, incapable of execution. This would lead to great hardship and loss and could well result in serious miscarriage of justice also." 10. The very reading of the above would clearly indicate that the allegations are bald. There is no specific averment or allegation made. In the absence of any specific allegation, it is well settled by the Apex Court and also by this Court that this extraordinary remedy should not be granted. It is true that the Court is vested with powers to exercise under Order 38 Rule 5 of C.P.C. But, it remains to be stated that if it is a fit case, it should be exercised. The learned Single Judge in order to dismiss the Applications fortified the decision of the Apex Court reported in Raman Tech. & Process Engg. Co. and Another vs. Solanki Traders (supra) wherein the Apex Court has held as follows:- "5. The power under Order 38 Rule 5, C.P.C. is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be vised sparingly and strictly in accordance with the Rule. & Process Engg. Co. and Another vs. Solanki Traders (supra) wherein the Apex Court has held as follows:- "5. The power under Order 38 Rule 5, C.P.C. is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be vised 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 utilise 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 realised 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, C.P.C. Courts should also keep in view the principles relating to grant of attachment before judgment (Premraj Mundra vs. Md. Maneck Gazi and Others, AIR 1951 Cal. 156 , for a clear summary of the principles)." And, Paragraph Nos. 10 and 12 of the judgment cited by the learned Counsel for the respondent-plaintiff reported in Rajendran and Others vs. Shankar Sundaram and Others (supra), which read as follows: "10. Concededly, the amount of loan was advanced by a cheque. The said cheque was drawn in the name of the partnership firm. Concededly again, the appellants were the partners thereof at the relevant time, although an endeavour was made before the learned Single Judge to show that they ceased to be so. Concededly, the amount of loan was advanced by a cheque. The said cheque was drawn in the name of the partnership firm. Concededly again, the appellants were the partners thereof at the relevant time, although an endeavour was made before the learned Single Judge to show that they ceased to be so. Having regard to the fact that they purported to have retired from the partnership firm in the year 2001 and the transaction herein between the parties are of the year 2000, prima-facie the liability of the appellants could not have been ignored. 12. The Application for attachment before judgment was filed by the plaintiff so as to protect his interest in the event the Suit is decreed. The Court exercises, in such a situation, jurisdiction under Order 38 Rule 5 of the Code of Civil Procedure. The Division Bench of the High Court merely directed the appellants herein to furnish security within the time specified thereunder. It was directed that only on their failure to do so, an Order of Attachment of the 2nd item on the schedule to the Petition shall be issued." 10. Admittedly, in this case, in the Suit for recovery for money filed by the plaintiff, the plaintiff filed an Application pending Suit in I.A. No. 116 of 2013 under Order 38 Rule 5, seeking for attachment of the properties before judgment. But, a reading of the Affidavit filed at the first instance on 28.2.2013, under Order 38 Rule 5, would show that no specific allegation or averment has been made to the effect that the defendant was making arrangement to dispose of the whole or any part of the property. If that be so, in the absence of any specific allegation, it cannot be stated that Order 38 Rule 5, ingredients have been made out. Perhaps that was the reason that when Orders were about to be pronounced and the matter was posted for pronouncing judgment, an Additional Affidavit was filed on 31.0.2013 i.e. after 5 months of the filing of the First Affidavit, bringing out certain allegations stating that he is reliably given to understand and believe it to be true that the appellant/respondent is negotiating to sell the properties through some real estate brokers. Therefore, he sought for an Order of Attachment of the immovable properties mentioned in the Petition in I.A. No. 116 of 2013. 11. Therefore, he sought for an Order of Attachment of the immovable properties mentioned in the Petition in I.A. No. 116 of 2013. 11. To appreciate the contentions put forth on either side, we are inclined to extract Order 38 Rule 5, C.P.C. hereunder: "Order 38 Rule 5 of C.P.C: Attachment before judgment:- (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. (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." 12. It is a trite proposition of law that merely making a bald allegation that the plaintiff is given to understand that the defendant is going to sell the property through real estate agents may not be sufficient and there must a specific averment or allegation made. In the absence of any specific allegation it is well settled by the Hon'ble Apex Court as well as by this Court that extraordinary remedy should not be granted. It is true that the Court is vested with powers to exercise power under Order 38 Rule 5, C.P.C. But, it remains to be stated that if it is a fit case, it should be exercised. It is an extraordinary power and such power should not be exercised mechanically. It is true that the Court is vested with powers to exercise power under Order 38 Rule 5, C.P.C. But, it remains to be stated that if it is a fit case, it should be exercised. It is an extraordinary power and such power should not be exercised mechanically. The Courts have held that it must be used strictly in accordance with the rules. The purpose of Order 38 Rule 5, is not to convert an unsecured debt into a secured debt. 13. Therefore, in the light of the above facts and law, we are satisfied that the respondent/ plaintiff has not satisfied the ingredients of Order 38 Rule 5, C.P.C. in order to obtain an Order of Attachment. In the result, we do not find any merit in the Miscellaneous Petition filed by the respondent/plaintiff. The learned Judge has passed an Order not appreciating the contentions raised and legal provision under Order 38 Rule 5, C.P.C. In our considered opinion, the impugned Order dated 7.11.2013 in I.A. No. 116 of 2013 in O.S. No. 37 of 2013 passed by the 1st Additional District Judge's Court at Erode, which is challenged in this Civil Miscellaneous Appeal is unsustainable, both in law and on facts. 14. Therefore, the impugned Order is set aside and the Civil Miscellaneous Appeal is allowed. No costs. Connected Miscellaneous Petition is closed.