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2015 DIGILAW 450 (CAL)

Swapan Guha v. Pratima Bagchi

2015-05-15

HARISH TANDON

body2015
JUDGMENT : Harish Tandon, J. 1. This revisional application is directed against an order no. 23 dated July 24, 2014 passed by the learned Judge, Small Causes Court at Sealdah in Money Suit No. 17 of 2013 by which an application under Order 38, Rule 5 of the Code of Civil Procedure praying for attachment before judgment is rejected. 2. The plaintiff/petitioner filed the aforesaid suit in the Civil Judge (Senior Division), Sealdah for recovery of a Sum of Rs. 18,16,730/- together with the interest as per the Interest Act and permanent injunction restraining the defendant/opposite party from transferring, alienating and/or handing over the flats to any person or persons in the multistoried building described in Schedule 'B' thereto. The plaintiff says that the defendant being the proprietors of a partnership firm entered into a development agreement with one Jyoti Prakash Row Chowdhury who is admittedly the owner of the several holdings comprising an area of 9 Cottahs 5 Chittacks together with the two storied old brick building on May 27, 2005. The opposite party engaged a contractor for construction of the said project and incurred substantial amount after taking loan from the different persons. Because of the financial stringency and difficulty in completing the project, the plaintiff/petitioner was approached to finance the project and to provide liquid resources to complete the same. 3. By virtue of an agreement dated November 25, 2008, the petitioner alleged that it had agreed to liquidate the liability of the opposite party no. 1 to the tune of Rs. 20,00,000/- from time to time and as per Clause 8 of the said agreement is entitled to receive Rs. 125/- per square feet from the total saleable area of the developer under the development agreement with the original owner. It is further alleged that the opposite party no. 1 issued two cheques of Rs. 10,00,000/- each covering the amount paid to meet out the outstanding liabilities of the different lenders but were dishonored because of insufficient funds. A proceeding under Section 138 of the Negotiable Instrument Act has been initiated which is pending before the Additional Chief Judicial Magistrate at Kakdwip. In Paragraph 11 of the plaint, it is asserted that the total area with the opposite party no. 1 is entitled under the development agreement is 14885.83 sq. ft. A proceeding under Section 138 of the Negotiable Instrument Act has been initiated which is pending before the Additional Chief Judicial Magistrate at Kakdwip. In Paragraph 11 of the plaint, it is asserted that the total area with the opposite party no. 1 is entitled under the development agreement is 14885.83 sq. ft. and, therefore, as per Clause 8 of the said agreement, the plaintiff is entitled to receive a sum of Rs. 18,60,730/-. Since the opposite party no. 1 have not paid the said amount in terms of the said agreement, the plaintiff further claims an interest on the said amount as per the Interest Act. 4. In the written statement, the opposite party no. 1 admitted the execution of the agreement dated November 25, 2008, but disputed the payment of a sum of Rs. 20,00,000/-. It is clearly averred that the plaintiff made a finance to the project to the tune of 8 lakhs but subsequently refused to provide further money for smooth running of the project. So far as the issuance two cheques covering the said sum of Rs. 20,00,000/- are concerned, it is stated that those were obtained by practicing fraud and pressure through other persons for which a proceeding has been initiated under Section 156 (3) of the Code of Criminal Procedure before the Additional Chief Judicial Magistrate at Sealdah. In Paragraph 11 of the written statement, the opposite party no. 1 says that out of the said sum of Rs. 8 lakhs, a sum of Rs. 3 lakhs were returned to the plaintiff/petitioner but the moment, the plaintiff/ petitioner claimed the said sum of Rs. 20,00,000/-, the remaining balance of Rs. 5000/- was withheld. 5. In the backdrop of the aforesaid stands of the parties, the petitioner took out two applications namely an application for injunction restraining the opposite party no. 1 from transferring, alienating and handing over the flat to any persons in the multistoried building and an application under Order 38, Rule 5 of the Code for attachment before judgment. By the impugned order, the Court rejected the application for attachment before judgment and it further reveals that by an order no. 27 dated September 18, 2014, the Trial Court also rejected an application for injunction. 6. By the impugned order, the Court rejected the application for attachment before judgment and it further reveals that by an order no. 27 dated September 18, 2014, the Trial Court also rejected an application for injunction. 6. It is a matter of record that the order, by which an application for injunction is rejected, is appellable one and, therefore, the petitioner have approached the Appellate Court. So far as the order rejecting an application for attachment before judgment is concerned, the same is impugned in this revisional application and, therefore, the determination by this Court would be confined to the said application. 7. The Trial Court observed that the documents in support of the alleged statements that the opposite party no. 1 is trying to deal with the flats pertain to the Year 2007-2009 and suit having filed in the Year 2012, does not fulfil the criteria required for passing an order of attachment before judgment. It is further observed that an application for injunction is also pending and, therefore, mere apprehension of the disposal of the flats do not warrant an order under Order 38, Rule 5 of the Code of Civil Procedure. 8. Mr. Sabyasachi Bhattacharya, the learned Senior Advocate appearing for the petitioner submits that the Court can pass the attachment before judgment at any stage of the suit if the defendant intends to obstruct or delay the execution of any decree that may be passed against him if he is about to dispose of the whole or any part of his property. He further submits that several agreements have been executed by the defendants/opposite party no. 1 for sale of the several flats from the developer's allocation and is further contemplating to dispose of 4 (four) flats which have not been conveyed as yet. He vehemently submits that the agreement between the parties would show that his client is entitled to a sum calculated Rs. 125/- per sq. ft. from the developer's allocation which has not been denied by the other side. He thus submits that the ingredients for attachment before judgment has been fulfilled and in absence of any specific denial, the Court ought to have inferred from the conduct of the opposite party no. 1 that he is trying to dispose of the left out flats with an intend to obstruct the decree that may be passed against him. 9. He thus submits that the ingredients for attachment before judgment has been fulfilled and in absence of any specific denial, the Court ought to have inferred from the conduct of the opposite party no. 1 that he is trying to dispose of the left out flats with an intend to obstruct the decree that may be passed against him. 9. By referring Paragraph 15 of the written objection, Mr. Bhattacharya would contend that the execution of the agreements have not been specifically denied except the statement that the premises is still under construction and has not been completed. He refers the decision rendered in case of Premraj Mundra v. Md. Maneck Gazi & Others, reported in AIR 1951 Cal 156 to contend that the object of attachment before judgment is to prevent the future transaction or alienation and if from the conduct of the parties, it appears that he is about to dispose of the property with an intend to frustrate the decree that may be passed against him, the Court should pass an order for attachment. The reliance is further made to a judgment of the Apex Court rendered in case of Raman Tech. & Process Engg. Co. and Another v. Solanki Traders, reported in (2008) 2 SCC 302 in support of the aforesaid proposition of law. 10. Mr. Biswajit Basu, the learned Advocate for the opposite party no. 1 submits that the suit is bad under the Bengal Money Lenders Act, 1940 as the petitioner does not hold an effective license. In support of the aforesaid submissions, Mr. Basu relies upon the averments made in the plaint that the entire claim is based on the loan advanced to his client and the monetary relief is claimed along with an interest. He audaciously submits that his client has not transferred and conveyed the flats to any intending purchasers as the project is still incomplete. By referring the observations made by the Trial Court in an application for temporary injunction, Mr. Basu would contend that it has been found that the plaintiff/petitioner has failed to establish the allegation that his client is trying to dispose of in the suit flat to a third party. By referring the observations made by the Trial Court in an application for temporary injunction, Mr. Basu would contend that it has been found that the plaintiff/petitioner has failed to establish the allegation that his client is trying to dispose of in the suit flat to a third party. Lastly he submits that the application for attachment before judgment is bereft of necessary averments and there is no intention on the part of his client to frustrate and/or obstruct the decree if passed in the said suit. He thus submits that the allegation pertaining to the disposal of the flats are vague in nature and not sufficient to invoke the provisions of Order 38, Rule 5 of the Code and placed reliance upon the Division Bench judgment of this Court in case of Kohinoor Steel Private Limited v. Pravesh Chandra Kappor, reported in 2010 (94) AIC 556 (Cal) : 2010 (3) CHN 448 . 11. It is undisputed that an agreement was entered into between the petitioner and the opposite party no. 1 on November 25, 2008. The intention, which could be gathered from the said agreement, is that the opposite party no. 1 was facing a financial problem in executing the development work and approached the petitioner to provide the financial resources. The Clause 4 of the said agreement clearly stipulates that the petitioner shall bear all costs of construction and shall also liquidate the outstanding liabilities of the first party. The opposite party disputes the handwritten portion of the said agreement and says that the same was inserted and/or interpolated by the petitioner himself for some illegal gains. Apart from the said clause, this Court does not find that there is any dispute on the other clauses of the said agreement. The disputed clause i.e. Clause 4 contains two figures i.e. Rs. 8,00,000/- and Rs. 20,00,000/-. So far as, a sum of Rs. 8,00,000/- are concerned, the opposite party no. 1 admits to have received the said amount in the written statement with further story of repayment of a sum of Rs. 3,00,000/- and retention of Rs. 5,00,000/- on the plea that since the petitioner claimed the hefty sum of Rs. 20,00,000/-, the same was not refunded. The Clause 8 of the said agreement relates to the entitlement of the petitioner to receive an amount calculated on the basis of Rs. 125/- per sq. ft. 3,00,000/- and retention of Rs. 5,00,000/- on the plea that since the petitioner claimed the hefty sum of Rs. 20,00,000/-, the same was not refunded. The Clause 8 of the said agreement relates to the entitlement of the petitioner to receive an amount calculated on the basis of Rs. 125/- per sq. ft. of the total saleable area of the developer against financing of the project. Clause 5 restricts the booking of the flats by the opposite party no. 1 alone but such booking shall be done with the joint decision of both the parties. 12. The claim made in the suit is not based the said sum of Rs. 20,00,000/- as alleged by the plaintiff but on the basis of Clause 8 of the said agreement. It is, therefore, not a suit simpliciter for recovery of the loan given to the opposite party no. 1 by the petitioner but for the entitlement to have a share in the profits at the fixed sum for providing the financial resources and equal participation in the project. Furthermore, it does not appear from the written statement that an exception is taken by the opposite party on the locus of the petitioner as money lender and it is only for the first time, such plea is taken at the bar. A plea which has no foundation cannot be allowed to be agitated at the bar if it requires some factual aspect to be gone into. 13. So far as the application under Order 38, Rule 5 of the Code is concerned, the petitioner have categorically and in unequivocal terms have disclosed the name of the intending purchasers with whom, the opposite party no. 1 has entered into an agreement for sale of the different flats and in support of the aforesaid allegation produced the copy of the said agreement as Annexure thereto. The attachment before judgment is not claimed in respect of those flats for which an agreement for sale had already been entered into but in respect of the 4 flats on the first floor of the multi-storied building which are not alienated by the opposite party no. 1. Curiously enough, there is no specific denial in the written objection filed to the said application. The only defence put forth to those assertions is that the building is constructed in part and is still incomplete. 14. 1. Curiously enough, there is no specific denial in the written objection filed to the said application. The only defence put forth to those assertions is that the building is constructed in part and is still incomplete. 14. In case of Premraj Mundra (supra), this Court summarised the scope of Order 38, Rule 5 of the Code in Paragraph 10 thereof which is reproduced as under: "10. From a perusal of all the authorities, I think that the following guiding principles can be deduced: (1) That an order under O. 38, Rr 5 and 6, can only be issued, if circumstances exist as are stated therein. (2) Whether such circumstances exist is a question of fact that must be proved to the satisfaction of the Court. (3) 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 defts. would not be prejudiced. (4) That the affidavits in support of the contentions of the applicant, must not be vague, and must be properly verified. Where it is affirmed true to knowledge or information or belief, it must be stated as to which portion is true to knowledge, the source of information should be disclosed, and the grounds for belief should be stated. (5) That a mere allegation that the deft. was selling off and his properties is not sufficient. Particulars must be stated. (6) There is no rule that transactions before suit cannot be taken into consideration, but the object of attachment before judgment must be to prevent future transfer or alienation. (7) Where only a small portion of the property belonging to the deft is being disposed of, no inference can be drawn in the absence of other circumstances that the alienation is necessarily to defraud or delay the plaintiff's claim. (8) That the mere fact of transfer is not enough, since nobody can be prevented from dealing with his properties simply because a suit has been filed: There must be additional circumstances to show that the transfer is with an intention to delay or defeat the plaintiff's claim. It is open to the Court to look to the conduct of the parties immediately before suit, and to examine the surrounding circumstances, and to draw an inference as to whether the deft. It is open to the Court to look to the conduct of the parties immediately before suit, and to examine the surrounding circumstances, and to draw an inference as to whether the deft. is about to dispose of the property, and if so, with what intention. The Court is entitled to consider the nature of the claim and the defence put forward. (9) The fact that the deft. is in insolvent circumstances or in acute financial embarrassment, is a relevant circumstances, but not by itself sufficient. (10) That in the case of running business, the strictest caution in necessary and the mere fact that a business has been closed, or that its turnover has diminished, is not enough. (11) Where however the deft. starts disposing of his properties one by one, immediately upon getting a notice of the pltf.'s claim, and/or where he had transferred the major portion of his properties shortly prior to the institution of the suit, and was in an embarrassed financial condition, these were grounds from which an inference could be legitimately drawn that the object of the deft. was to delay and defeat the pltfs' claim. (12) Mere removal of properties outside jurisdiction, is not enough, but where the deft. with notice of the pltfs' claim, suddenly begins removal of his properties outside the jurisdiction of the appropriate Court, and without any other satisfactory reason, an adverse inference may be drawn against the deft. Where the removal is to a foreign country, the inference is greatly strengthened. (13) The deft. in a suit is under no liability to take any special care in administering his affairs, simply because there is a claim pending against him. Mere neglect, or suffering execution by other creditors, is not a sufficient reason for an order under O.38 of the Code. (14) The sale of properties at a gross undervalue, or benami transfers, are always good indications of an intention to defeat the pltf's claim. The Court must however be very cautious about the evidence on these points and not rely on vague allegations." 15. The ratio which could be culled out from the above report in the context of present scenario is that mere transfer of the flats is not enough unless it is shown that such transfer is intended to delay or defeat the claim. The ratio which could be culled out from the above report in the context of present scenario is that mere transfer of the flats is not enough unless it is shown that such transfer is intended to delay or defeat the claim. Such intention can be gathered not only from the documents but the conduct of the party both at pre and post suit stages. 16. The reference can be conveniently made to the judgment of the Supreme Court in case of Raman Tech. & Process Engg. Co. (supra) wherein it is held that if it is evident from the conduct of the parties that the disposal of the property is made with an intent to defeat and/or delay the claim, it satisfies the requirements of Order 38, Rule 5 of the Code. 17. In case of Kohinoor Steel Private Limited (supra), the Division Bench noticed the judgment rendered in case of Premraj Mundra (supra) and Raman Tech. & Process Engg. (supra) and held that merely on vague allegation, the Court should not invoke the extraordinary provisions of attachment before judgment unless the conditions stipulated therein are proved to the satisfaction of the Court. There is no quarrel to the aforesaid proposition of law laid down in the above report. 18. Undoubtedly the petitioner disclosed the agreements having entered into with several persons manifesting the intention to dispose of the flats which has not been denied in the written objection. The observation of the Court that those transactions pertains to the Year 2007-2009 is unacceptable as the conduct of the opposite party no. 1 at pre-suit stage is one of the relevant factor to gather the intention to obstruct or frustrate the decree that may be passed against him. Once the parties have not disputed the execution of an agreement and Clause 8 therein specifically provides that the petitioner is entitled to share of profit @ Rs. 125 per sq. ft. on the saleable area of the developer, at this stage, this Court cannot conclusively say that the suit is otherwise bad and it is unlikely that it would be decreed. When there is a definite allegation that the opposite party no. 1 intended to dispose of the property in order to delay or defeat the claim of the petitioner, it would necessarily infer that the opposite party no. When there is a definite allegation that the opposite party no. 1 intended to dispose of the property in order to delay or defeat the claim of the petitioner, it would necessarily infer that the opposite party no. 1 could not establish that there was no such attempt for alienation. 19. Since the conduct of the opposite party no. 1 who entered into an agreement for sale with the intending purchaser even at the pre-suit stage has been reasonably proved and there is no denial that the flats are being disposed with the clear intention to deprive the petitioner from realising its claim. 20. This Court is of the view that the requirements of Order 38, Rule 5 of the Code is satisfied. The order impugned is thus set aside. The opposite party no. 1 is directed to furnish the security to the amount of the petitioners claim within fortnight from the date of this order. In default, the right, title and interest in the opposite party no. 1 in the property mentioned in Schedule 'C' of an application under Order 38, Rule 5 of the Code be attached before judgment. 21. The Trial Court is requested to make efforts to dispose of the suit as expeditiously as possible without granting unnecessary adjournments to either of the parties. 22. The revisional application is thus disposed of. 23. Urgent photostat certified copy of this order, if applied for, be given to the parties on priority basis. Application disposed of.