JUDGMENT : (Prayer: This application filed under Order XIV Rule 8 of O.S Rules read with Order 38 Rule 5 of the Code of Civil Procedure, directing the respondent/defendant to furnish security for Rs.5,53,61,330 (five crores fifty three lakhs sixty one thousand three hundred and thirty only) to the satisfaction of this Hon'ble Court failing which grant an order of ordering attachment of the properties of the R2 to R4 scheduled hereunder through DMC Ambur.) 1. This application has been filed under Order 38 Rule 5 of the Code of Civil Procedure seeking a direction to the respondents/defendants to furnish security for a sum of Rs.5,53,61,330/- to the satisfaction of this Court, failing which to grant an order of attachment of properties of the second, third and fourth defendants as stated in the schedule to the Judges Summons. 2. C.S.No. 69 of 2020 has been filed by the plaintiff Indchem Sales Corporation, a partnership firm against the four defendants, namely, Sura Leathers (P) Ltd., a company incorporated under the Companies Act 1956, Satnur Ramchandra Rao Ramprasad and Malallur Sudhindra Sriharsha, who were both partners of the first defendant and are Directors of the fourth defendant and also Supreme Overseas Exports India Private Limited, a Company incorporated under the Companies Act 1956 and which is claimed to be the parent Company of the first defendant, seeking a Judgment and Decree against the second, third and fourth defendants to pay a sum of Rs.5,53,61,330/- together with interest at 24% p.a., on the principal amount of Rs.3,26,23,322/- from the date of the suit till the date of realization and also for costs. 3. In the affidavit filed in support of the present application, it had been stated that the plaintiff had business dealings with the first defendant and owing to such dealings, a sum of Rs.3,26,23,322/- became due by the first defendant. It had been stated that the defendants have not come forward to settle the dues. A Memorandum of Understanding dated 14.07.2017 was entered into and the plaintiff had accepted to claim a sum of Rs.1,50,00,000/-. It was stated that the first defendant was due and payable sums to similarly placed creditors. One of the creditors, Vansun Intermediates Pvt. Ltd., had filed insolvency proceedings against the first defendant in CP.(IB) No: 41/BB/2019 before the NCLT, Bengaluru Bench. The first defendant did not appear and was declared as insolvent. It was stated that the first defendant was due and payable sums to similarly placed creditors. One of the creditors, Vansun Intermediates Pvt. Ltd., had filed insolvency proceedings against the first defendant in CP.(IB) No: 41/BB/2019 before the NCLT, Bengaluru Bench. The first defendant did not appear and was declared as insolvent. It was stated that the first defendant did not have any movable or immovable assets. They are in the individual names of the second and third defendants, who were the partners of the first defendant and are the Directors of the four defendants. It was stated that the second and third defendants had deliberately allowed the first defendant to be declared as insolvent. 4. It was further stated that the plaintiff originally had dealings with the fourth defendant. Thereafter, the second and third defendants introduced the first defendant in the Industry, and it was stated that the plaintiff should have further dealings with the first defendant. The defendants purchased chemicals in the name of the first defendant from various suppliers. It was stated that the amounts cannot be recovered from the first defendant since it had been declared as insolvent. It was therefore stated that to secure the amounts payable, the second, third and fourth defendants should be called upon to furnish security to the value of the suit claim, failing which an order should be passed to attach the properties standing in their names. 5. For further elucidation of the facts, the plaint averment will also have to be stated. Originally, a partnership firm under the name Supreme Overseas, was started by the father of the third defendant/father-in-law of the second defendant and had dealings with the plaintiff from early 1970's. Later, the fourth defendant was incorporated. However, the second and third defendants purchased leather chemicals under the name Supreme Overseas. The plaintiff has been supplying such leather chemicals continuously. They were informed in the year 2011 that the bills should be raised in the name of the first defendant. It was claimed that the defendants were part of the Supreme Group of Companies. It was stated that the first defendant was used as a cloak to defraud creditors. It was stated that amounts fell due from the year 2014 onwards. The first defendant requested the plaintiff to give a discount on the outstanding of Rs.3,26,23,322/- as on 30.09.2016. It was claimed that the defendants were part of the Supreme Group of Companies. It was stated that the first defendant was used as a cloak to defraud creditors. It was stated that amounts fell due from the year 2014 onwards. The first defendant requested the plaintiff to give a discount on the outstanding of Rs.3,26,23,322/- as on 30.09.2016. A Memorandum of Understanding dated 14.07.2017 was entered into between the plaintiff and the defendants. The amount due was crystalised to Rs.1,50,00,000/-. It was stated that the said amount would be cleared by the defendants in three installments, payable on 15.07.2017, 15.08.2017 and 15.102017. It was stated that if the amounts were not so cleared then the plaintiff can lay a claim for the actual amount due, namely, Rs.3,26,23,322/-. It was stated that the amounts as agreed were not paid. In the meanwhile, the first defendant was declared insolvent by the Bengaluru Bench of NCLT. It was stated that the second, third and fourth defendants deliberately permitted the first defendant to be declared as insolvent. It was stated that the defendants had purchased chemicals on credit basis from the plaintiff for a considerable period of time and the transactions were maintained in the ledger of the plaintiff's company and also in the accounting software. A Legal notice was issued on 20.05.2019. A reply was sent on 30.05.2019. Thereafter, several E-mail communications were also sent as reminders. It was stated that the defendants are due and liable to pay to the plaintiff the amount claimed in the suit. 6. A counter had been filed on behalf of the third defendant, who also filed the same on behalf of the fourth defendant. In the counter, it had been stated that material facts have been suppressed. It was stated that the plaintiff supplied chemical to the first defendant between 2012-2016 and each transaction was independent and there was no running account. The claim for Rs.3,26,23,322/- was disputed. It was stated that the Memorandum of Understanding dated 14.07.2017 is legally unenforceable. 7. It was stated that the second and third defendants had retired from partnership of the first defendant in April 2019. It was stated that the moratorium period is in effect and therefore, the suit is not maintainable and is barred by law. It was stated that the Memorandum of Understanding dated 14.07.2017 is legally unenforceable. 7. It was stated that the second and third defendants had retired from partnership of the first defendant in April 2019. It was stated that the moratorium period is in effect and therefore, the suit is not maintainable and is barred by law. It was stated that the second and third defendants had transacted with the plaintiff in the capacity of Directors of the first defendant. It was stated that the fourth defendant had no business transaction with the plaintiff. It was stated that the suit is an abuse of process of Court. It was stated that the item Nos. 1 and 3 in the schedule were mortgaged to the State Bank of India and are also subject matter of the Corporate Insolvency Proceedings. It was stated that the third defendant was not the owner of the property in Item No.6. It had been disposed long prior to the filing of the suit. It was stated that the application should be dismissed. 8. An additional counter was also filed by the third defendant also on behalf of the fourth defendant. In the additional counter, it was stated that the NCLT, Bengaluru Bench had also appointed the second defendant as Interim Resolution Professional and an order of moratorium was declared and prohibitions have been imposed under Section 14 of the Insolvency and Bankruptcy Code, 2016. It was stated that subsequent to the institution of the suit, the second defendant had been appointed as Liquidator of the first defendant and liquidation had also been ordered. It was stated that the suit is not maintainable and has to be rejected. 9. It was stated that the plaintiff had approached the second defendant seeking claim of Rs.5,34,95,097/-. The second defendant had admitted the claim only to a sum of Rs.1,10,00,100/-. 10. It was further stated that the properties mentioned in the schedule were purchased by the father of the third defendant between the years 1990-1997 and thereafter, certain properties were allotted in a family arrangement. It was stated that the third and fourth defendants would suffered great loss if a direction is given to furnish security. It was stated that the application should be dismissed. 11. Heard Mr.R.Vasudevan, learned counsel for the plaintiff and Mr.B.Tilak Narayanan, learned counsel for the third and fourth defendants. 12. It was stated that the third and fourth defendants would suffered great loss if a direction is given to furnish security. It was stated that the application should be dismissed. 11. Heard Mr.R.Vasudevan, learned counsel for the plaintiff and Mr.B.Tilak Narayanan, learned counsel for the third and fourth defendants. 12. For sake of convenience, the parties will be termed as plaintiff and defendants. 13. The plaintiff is a partnership firm. They are suppliers of Leather Chemicals. They have been supplying Leather Chemicals originally to a partnership firm Supreme Overseas which was started by the father of the third defendant/father-in-law of the second defendant. The second and third defendants were the partners of the first defendant. The fourth defendant was then incorporated. The second and third defendants are the Directors of the fourth defendant. The plaintiff continued to supply Leather chemicals to the fourth defendant. Thereafter, it is claimed that the plaintiff was directed to raise bills in the name of the first defendant. Leather chemicals were supplied and the bills were raised in the name of the first defendant. The second and third defendants were the partners of the first defendant. The amounts due to the plaintiff increased. The first defendant did not make any payment. One of the creditors Vansun Intermediates Pvt. Ltd., had filed insolvency proceedings against the first defendant in CP.(IB) No: 41/BB/2019 before the NCLT, Bengaluru Bench. The said Bench declared the first defendant as insolvent. The second defendant was appointed as Interim Resolution Professional. He was later appointed as Liquidator. Order of liquidation was passed against the first defendant. The plaintiff laid a claim for Rs.5,34,95,097/- before the second defendant/liquidator, who admitted a sum of Rs.1,10,00,100/-. 14. The plaintiff claimed that a Memorandum of Understanding had been reached with the defendant on 14.07.2017 wherein the outstanding amount was crystallised to a sum of Rs.1,50,00,000/- and a commitment was made under the Memorandum of Understanding to clear the said sum within a specified period and if it was not so cleared, the plaintiff can claim the actual amount due. The actual amount due was Rs.3,36,23,322/-. The amount agreed under the Memorandum of Understanding was not paid by the first defendant. 15. The fact that the plaintiff supplied leather chemicals to the first defendant is not denied by the defendants. The actual amount due was Rs.3,36,23,322/-. The amount agreed under the Memorandum of Understanding was not paid by the first defendant. 15. The fact that the plaintiff supplied leather chemicals to the first defendant is not denied by the defendants. The fact that the second and third defendants were Partners of the first defendant is also not denied. As a matter of fact, the third defendant had filed a counter also on behalf of the fourth defendant. The first defendant alone has been declared as an insolvent. The plaintiff had supplied materials and invoices had been raised only in the individual name of the first defendant. 16. But it is the case of the plaintiff that the first defendant was only a cloak and the materials were actually received by the second and third defendants on behalf of the fourth defendant. This is an issue which the plaintiff will have to establish during trial. A moratorium has been laid so far as seeking any relief against the first defendant is concerned. The fact whether the first, second, third and fourth defendants are one group of companies and whether the first defendant was used only as a cloak to screen away creditors by obtaining an order of being declared as insolvent are issues to be decided during trial. 17. The burden is on the plaintiff to establish the facts pleaded in the plaint, namely, that the first defendant was only a cloak created by the second and third defendants tot defraud the creditors and that the leather chemicals were actually utilised by the second and third defendants on behalf of the fourth defendant. At this stage, it will be futile to give any finding on the said statements in the absence of any evidence recorded. Whether the suit of the plaintiff is maintainable or not can be examined only after the defendants filed their written statement. 18. The suit had been filed under Order 37 Rules 1 & 2 of the Code of Civil Procedure. The defendants will have to seek leave to defendant the suit. At this stage, I hold, without going any further on the facts, that the plaintiff having approached the Liquidator who had admitted a claim for Rs.1,10,00,000/- will have to establish the claim for the balance amount only during trial. The defendants will have to seek leave to defendant the suit. At this stage, I hold, without going any further on the facts, that the plaintiff having approached the Liquidator who had admitted a claim for Rs.1,10,00,000/- will have to establish the claim for the balance amount only during trial. The issue of limitation, the issue of maintainability of the suit, the issue whether the first defendant is only a cover created by the second and third defendants to defraud creditors by the plaintiff are all issues which cannot even be considered at the present stage. The jurisdiction of this Court also can not be decided in the absence of any contra pleadings. 19. The learned counsel for the plaintiff called upon the Court to lift the corporate veil and examine the issues further. Again this is not the stage to venture into such an exercise. 20. The primary requirement under Order 38 Rule 5 CPC is that there should be averments that the defendants are about to dispose of the properties. Here the properties mentioned are agricultural properties. The plaintiff will have to establish the claim during trial by adducing evidence. One authority, the Liquidator had admitted the claim to the extent of Rs.1,10,00,000/-. As stated, the plaintiff will have to establish the balance claim only during trial. 21. In view of these facts, I hold that the plaintiff, having instituted the suit under Order 37 CPC will will necessarily have to establish the claim before any order calling upon the defendants to provide security is passed. 22. Accordingly, the application is dismissed. No costs.