Research › Search › Judgment

Calcutta High Court · body

2019 DIGILAW 810 (CAL)

Dinesh Kumar Goyal v. Nitin Kumar Yadav

2019-08-17

KRISHNA RAO

body2019
JUDGMENT : Krishna Rao, J. 1. The plaintiff has filed the present application being G.A 3 of 2023 for a direction upon the defendant no. 2 to furnish security by way of bank guarantee for an amount of Rs.8,56,26,173/-. 2. The plaintiff had filed a suit praying for decree against the defendants for an amount of Rs.8,56,26,173/-. 3. After filing of the suit, the plaintiff has filed an application being G.A No. 1631 of 2019 for grant of injunction and for appointment of Special Officer for taking physical possession of the goods lying in the custody of the defendants. 4. By an order dated 21.11.2019, this Court has appointed a Special Officer for the purpose of making inventory of the goods. 5. The Special Officer has visited the place of business of both the defendants and submitted report before this Court. 6. Mr. Shashwat Nayak, Learned Advocate representing the plaintiff submitted that as per report, the defendant no.1 was not available at the place of his business and the defendant no. 2 has informed the Special Officer that the defendant no.1 was the tenant of the defendant no. 2 and without paying the rent and without any notice, the defendant no.1 left the premises to an unknown place. The Special Officer could not find any materials/ goods either at the place of business of the defendant no.1 nor at the place of the defendant no. 2. 7. Mr. Nayak submitted that as per the report of the Special Officer, the defendant no. 2 is the owner of the immovable property comprising land and structure situated at Mughalpura, First Lal School, Moradabad - 244401, Uttar Pradesh and the said land comprising of four storied building occupied by the tenants and residential building occupied by the family of the defendant no. 2. He also submitted that as per report, the defendant no. 2 is also the owner of an immovable property situated at Laxmipur Khatai, District of Moradabad. 8. Mr. Nayak submitted that the defendant no. 2 has admitted the claim of the plaintiff on 12.12.2018 by way of communication through its WhatsApp No. 9412493721 in the WhatsApp No. 9830083393 of the plaintiff. 9. Mr. 2 is also the owner of an immovable property situated at Laxmipur Khatai, District of Moradabad. 8. Mr. Nayak submitted that the defendant no. 2 has admitted the claim of the plaintiff on 12.12.2018 by way of communication through its WhatsApp No. 9412493721 in the WhatsApp No. 9830083393 of the plaintiff. 9. Mr. Nayak submitted that the plaintiff has made several attempts to serve the writ of summons upon the defendant no.1 but the defendant no.1 is avoiding to receive the notices and the whereabouts of the defendant no.1 is not known to the plaintiff. 10. Mr. Nayak submitted that in the first week of December’ 2022, the plaintiff came to know from one Rajesh Mittal that the defendant no.2 is trying to dispose of his immovable property and is also trying to move away from Moradabad along with his family. He Submits that if at this stage, the defendant no. 2 is not directed to deposit the amount as security or to attach his property and if in future any decree is passed, the decree will remain in paper and the plaintiff would not be in a position to execute the decree. 11. Mr. Nayak in support of his case relied upon the Judgement reported in 1951 SCC Online Cal 20 (Premraj Mundra vs. Md. Maneck Gazi & Ors.) and submitted that the case of the plaintiff is fully covered as per the guidelines fixed by the Hon’ble Court in connection with Order 38, Rule 5 and 6 of the Code of Civil Procedure, 1908. 12. Mr. S.K. Mukherjee, Learned Advocate representing the defendant no.2 submitted that there is no contract ever entered between the plaintiff and the defendant no. 2 and he never agreed to carry on business on behalf of the defendant no.1. He submits that the entire allegation of verbal agreement is false and baseless. 13. Mr. Mukherjee submitted that there is no privity of contract between the plaintiff and none of the invoices has been handed over to the defendant no. 2 either physically or through any electronics mode. 14. Mr. Mukherjee submitted that there is no such agreement which was executed between the plaintiff and the defendant no. 2 with regard to any business. 15. Mr. Mukhrejee submitted that the defendant has neither sent any WhatsApp massage by admitting the claim of the plaintiff nor the defendant no. 2 had agreed to pay Rs. 14. Mr. Mukherjee submitted that there is no such agreement which was executed between the plaintiff and the defendant no. 2 with regard to any business. 15. Mr. Mukhrejee submitted that the defendant has neither sent any WhatsApp massage by admitting the claim of the plaintiff nor the defendant no. 2 had agreed to pay Rs. 2.00 Crore to the plaintiff. 16. Mr. Mukherjee submitted that the plaintiff has filed the present case only on the basis of oral agreement and the alleged invoices but there are no documents to show that there is any transaction between the plaintiff and the defendant no. 2. The invoices which the plaintiff is relied upon are in the name of the defendant no.1 and not in the name of defendant no. 2. 17. Mr. Mukherjee submitted that the plaintiff has not made out any case against the defendant no. 2 for furnishing security or attachment of the property of the defendant no. 2 before judgment. 18. Mr. Mukherjee in support of his submissions relied upon the following judgments : “i. 1951 SCC OnLine Cal 20 (Premraj Mundra vs. Md. Maneck Gazi & Ors.). ii. (2008) 2 SCC 302 (Raman Tech. & Process Engg. Co. & Anr. vs. Solanki Traders.). iii. (2009) 17 SCC 657 (Vivek Automobiles Limited vs. Indian INC.).” 19. Heard the learned Counsel for the respective parties, perused the materials on record and the judgment relied by the parties. 20. As per the case of the plaintiff the parties have agreed with the following terms and conditions : “(a) The plaintiff will sell and supply the goods of the aforesaid description as and when the orders would be placed by the first defendant through the second defendant. (b) The physical delivery of the goods shall be effected either from the plaintiff’s aforesaid place of business or from outside as per specification and stipulation of first and second defendants. (c) The bills and requisite tax invoices shall be raised and/or issued from the place of business of the plaintiff, and to be delivered and/or dispatched by either through electronic mall to the first defendant at his place of business as aforesaid or to the second defendants’ place of communication and/or contact as the case may be.” 21. The plaintiff has filed the present application only against the defendant no. 2. The plaintiff has filed the present application only against the defendant no. 2. The plaintiff has filed the present application on the basis of the report of the Special Officer, the invoices issued by the plaintiff to the defendant no.1, WhatsApp messages and affidavit executed by one Rajesh Mittal. 22. On perusal of the report of the Special Officer, this Court found that the defendant no. 2 had categorically stated that he has been falsely implicated in the instant case. The defendant no. 2 has shown all his properties to the Special Officer for inspection and on inspection, no cooper goods were found in any of the premises. The Special Officer has further noted that one of the premises was taken by the defendant no.1 for his business from the defendant no. 2 but the defendant no.1 has left the said premises without paying the rent to the defendant no.1. 23. The plaintiff has relied upon the invoices on the basis of which the plaintiff is claiming the amount from the defendants. The plaintiff has issued the said invoices in the name of the M/s Mahagun International. As per the case of the plaintiff, the defendant no.1 is the proprietor of the said firm. The invoices raised by the plaintiff are neither addressed to the defendant no. 2 nor any copy of the said invoices were forwarded to the defendant no. 2. 24. The plaintiff has further made out a case that to falsify the claim of the plaintiff, the defendants have fabricated documents being debit notes and e-way bills claiming that the plaintiff has purchased materials from the defendants but the said debit notes and the e-way bills raised by the firm of the defendant no.1 and in the said debit notes, there is no whisper about the defendant no. 2. 25. The plaintiff claims that the defendant no. 2 by way of WhatsApp messages accepted the amount of Rs. 2.00 crore. The said WhatsApp messages does not prove that the said messages is in connection with the same transactions and in the said message it is written that “Mai aapko 2 Cr de dega” though the claim of the plaintiff is Rs.8,56,26,173/-. 26. The plaintiff has submitted an affidavit of one Rajesh Mittal to prove that the defendant no. 2 is trying to dispose of his property at Moradabad. 27. 26. The plaintiff has submitted an affidavit of one Rajesh Mittal to prove that the defendant no. 2 is trying to dispose of his property at Moradabad. 27. In the case of Premraj Mundra (supra), the Coordinate Bench of this Court has fixed the guiding principles to decide the application under Order 38, Rule 5 of the Code of Civil Procedure, 1908 which reads as follows : “18. 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 & 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, & 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, & the grounds for belief should be stated. (5) That a mere allegation that the deft, was selling off & 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 pltf's. claim. (8) That the mere fact of transfer is not enough, since nobody can be prevented from dealing with his properties simply of cause a suit has been filed: There must be additional circumstances to show that the transfer is with an intention to delay or defeat the pltf.'s claim. It is open to the Court to look to the conduct of the parties immediately before suit, & to examine the surrounding circumstances, 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, & to examine the surrounding circumstances, to draw an inference as to whether the deft. is about to dispose of the property, & if so, with what intention. The Court is entitled to consider the nature of the claim & the defence put forward. (9) The fact that the deft, is in insolvent circumstances or in acute financial embarrassment, is a relevant circumstance, but not by itself Sufficient. (10) That in the case of running businesses, the strictest caution is necessary & 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, &/or where he had transferred the major portion of his properties shortly prior to the institution of the suit & 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, & 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 negect, 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 pltfs. claim. The Court must however be very cautious about the evidence on these points & not rely on vague allegations.” 28. In the case of Raman Tech & Process Engg. Co. and Another (Supra), the Hon’ble Supreme Court held that : “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. In the case of Raman Tech & Process Engg. Co. and Another (Supra), the Hon’ble Supreme Court held that : “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 realisation 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. 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. 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 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. 29. The plaintiff has filed the present suit on the basis of the oral agreement between the plaintiff and the defendants. As per the terms and conditions of the agreement, the plaintiff will sell the goods to the defendant no.1 through the defendant no. 2 but other than the said terms there is no evidence that the goods were sent by the plaintiff to the defendant no.1 through the defendant no. 2. Even the invoices raised by the plaintiff are in the name of the defendant no.1 and no copy of the said invoices were forwarded to the defendant no. 2. As per clause (d) of the terms all payments shall be made by the defendant no.1 at the first instance at the place of the business of the plaintiff. 30. The plaintiff has not made any prayer for security and attachment against the defendant no.1 and the present application is filed only against the defendant no. 2. As per the report of the Special Officer no material was found in any place of the defendant no. 2. 31. The plaintiff has filed the present application only against the defendant no. 2 but neither in the plaint nor in the present application, there is any evidence that the defendant no. 2 at any point of time assured that he will pay the said amount as a guarantor. In the terms and conditions with the plaintiff, which he has relied upon does not contain any such clause binding the defendant no. 2 as guarantor. 32. 2 at any point of time assured that he will pay the said amount as a guarantor. In the terms and conditions with the plaintiff, which he has relied upon does not contain any such clause binding the defendant no. 2 as guarantor. 32. In the case of Premraj Mundra (Supra) in clause 13 it is categorically mentioned that “The defendant, 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 Order 38 of the Code”. 33. Considering all the above facts, this Court finds that the plaintiff has not made out any case for passing any order for directing the defendant to furnish security deposit by way of bank guarantee of Rs.8,56,26,173/- or for attachment of the property of the defendant no. 2. 34. In view of the above, G.A. No. 3 of 2023 is thus dismissed.