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2014 DIGILAW 843 (CAL)

LAXMI PAT BOTHRA v. INNOVISION COMPONENTS LTD.

2014-09-01

SOUMEN SEN

body2014
JUDGMENT : This is an application for attachment before judgment. The plaintiff has filed a suit for recovery of USD 58208.61 as the defendants have failed to supply the equipments. 2. It appears that in terms of the contract entered into between the plaintiff and the defendants, the defendants have supplied some of the equipments but have failed to supply equipments worth USD 58208.61. The fact that the said defendants have failed to supply the said equipments to the plaintiff is not in dispute. 3. Mr. Sarathi Dasgupta the learned counsel for the said defendants submits that the said supply could not be effected as the manufacturer of the said equipments was unable to supply the said equipments to the defendants and in turn the defendants could not supply the said equipments to the plaintiff. The defendants were acting as the commission agent and/or broker. 4. The plaintiff has also taken out an application for judgment upon admission. Although directions were given to file affidavits, but the defendants did not file any affidavit. However, the learned counsel for the defendants referred to the averments made in the application for judgment upon admission and submitted that even assuming that the statements made in the application for judgment upon admission are true and correct, no order could be passed for attachment before judgment. The learned counsel has referred to a decision of our Division Bench in the case of Rashmi Cement –vs- Trafagura Beheer B.V., reported at AIR 2011 Calcutta 37. The said judgment was cited for the proposition that unless the plaintiff is able to make out a case for attachment before judgment, no order should be passed. The learned counsel has referred to the pleadings from paragraph 33 onwards to show that such pleadings are insufficient to invoke the jurisdiction of the Court for attachment before judgment. 5. In spite of opportunities being given to the defendants to file their affidavit in the application for judgment upon admission, no such affidavit has been filed. It cannot be said that the defendants have been denied any opportunity to controvert the statements made in the petition. The indebtedness of the defendants is prima facie established. It is not in dispute that the defendants have received USD 58208.61 but have failed to supply the equipments. It cannot be said that the defendants have been denied any opportunity to controvert the statements made in the petition. The indebtedness of the defendants is prima facie established. It is not in dispute that the defendants have received USD 58208.61 but have failed to supply the equipments. It is also not in dispute that the defendants have agreed to enter into a terms of settlement and although the plaintiff has agreed to the terms in order to put an end to the dispute. The defendants did not come forward and execute the terms of settlement. 6. The decision cited by the learned counsel for the defendants to resist the claim for attachment before judgment has to be read in the facts and circumstances of each case. In Rashmi (supra) the suit was for breach of an agreement to supply iron by way of export. The learned single judge on being satisfied that a strong prima facie case was made out, passed an order directing export of the goods within a stipulated time failing which the appellant was directed to furnish security by way of bank guarantee of the value of 20% of the sale price. The appellant contended that the claim sounds in damages of unquantified amount. The interim measure passed by the learned single judge was challenged in the appeal. The said order was passed in an application under section 9 of the Arbitration and Conciliation Act, 1996. In such context, the Hon’ble Division Bench observed: “11. In the case before us, the dispute between the parties being one of breach of agreement for supply of goods for exportation, the remedy of the respondent now lies in getting damages, if its allegations are found to be correct. In our opinion, the learned Single Judge erred in law in passing a direction for deposit of bank guarantee on the appellant merely on a prima facie finding on merit, in the absence of any finding that the appellant was either transferring or alienating his property to avoid payment of money that may be awarded against it or that it was threatening or intending to remove or dispose of his properties with a view to defrauding his creditors. At this stage, we may advantageously refer to the following observations of the Supreme Court in the case of Raman Tech & Process Eng. Co. At this stage, we may advantageously refer to the following observations of the Supreme Court in the case of Raman Tech & Process Eng. Co. v. Solanki Traders reported in (2008) 2 SCC 302 while considering a case of grant of relief of attachment before judgment: “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 utilise the provisions of Order 38, Rule 5 as 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 CPC. Courts should also keep in view the principles relating to grant of attachment before judgment. (See Premraj Mundra v. Md. Manech Gazi for a clear summary of the principles.)” (Emphasis given by us) 12. The principles mentioned above squarely apply to the proceedings under Section 9(ii) of the act and a Court before passing any direction in the nature of attachment before award should follow those principles. The learned Single Judge, as it appears from the order impugned, totally ignored the above mentioned principles.” 7. In the instant case, the defendant no.1 is a foreign party. The indebtedness of the defendants is established. No explanation has been offered for not executing the terms of settlement. The learned Single Judge, as it appears from the order impugned, totally ignored the above mentioned principles.” 7. In the instant case, the defendant no.1 is a foreign party. The indebtedness of the defendants is established. No explanation has been offered for not executing the terms of settlement. Prima facie, the defendants appear to be in an impecunious situation. The law is required to be interpreted and applied in a manner so that no injustice is caused to the rightful claimant. No law cannot be a lame duck. The impecunious situation of the defendants coupled with the averments made in the petition clearly establish that unless some protective order is passed in favour of the plaintiff, the decree that may be passed in a suit would be illusory. There is failure of considerations. The facts are disclosed in the petition. I am satisfied that there is a reasonable chance of a decree being passed against the defendants. The failure to execute the terms of settlement is another factor which has persuaded me to pass this order. The situation in the 1950s and the situation in 2014 are completely different. The modus operandi to make a decree otiose and illusory by litigants apprehending an order to be passed against them are quite in genuine. Such litigants in order to avoid the jurisdiction of the Court in respect of the assets which can be attached in execution of a decree would indulge in unscrupulous methods to make the order nugatory. The law has to be applied considering the facts and circumstances of each case. This Court is of the view that the interest of the plaintiff is required to be protected, more so when the defendants have admitted their liability and have agreed to execute the terms of settlement which ultimately they did not do apparently without any jurisdiction. 8. In view of the aforesaid, the defendants are restrained from operating their bank accounts in India without keeping therein a balance sum equivalent to USD 58208.61. 9. The affidavit in opposition in G.A. No.1323 of 2013 shall be filed within three weeks from date; reply thereto, if any, be filed on or before October 31, 2014. Let this matter appear under the heading “motion adjourned” in the monthly list of November 2014. 10. On the prayer of Mr. 9. The affidavit in opposition in G.A. No.1323 of 2013 shall be filed within three weeks from date; reply thereto, if any, be filed on or before October 31, 2014. Let this matter appear under the heading “motion adjourned” in the monthly list of November 2014. 10. On the prayer of Mr. Dasgupta, time to file the affidavit in opposition in G.A. No.1489 of 2014 is extended by three weeks from date. G.A. No. 1489 of 2014 shall also appear along with G.A. No. 1323 of 2013 in the monthly list of November 2014 as “adjourned motion”. The affidavit in reply in G.A. No.1489 of 2014 shall be filed in the meantime. 11. Urgent certified website copies of this order shall be supplied to the parties on urgent basis subject to their compliance with all the requisite formalities.