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2023 DIGILAW 851 (KAR)

Vinod Kumar Jain, S/o Late Mohan Lal Jain v. Shanthilal, S/o Late Lalchand

2023-07-07

H.P.SANDESH

body2023
JUDGMENT : This appeal is filed challenging the order dated 30.01.2023, passed on I.A.No.1 in O.S.No.160/2021, on the file of the Principal Senior Civil Judge, Chikamagalur, dismissing the said application. 2. The factual matrix of the case of the appellants is that the appellants had filed a suit in O.S.No.160/2021 and interalia, sought for an order of attachment before judgment by filing an application under Order 38 Rule 5 of CPC. It is their case that the respondent and one Abdul Khader are the owners of the commercial property bearing number ID 21-2-3-136D/1 and assessment No.18447/12076 measuring 2840.42 sq.mtrs. situated near IDSG College, KM Road, Chikmagaluru. The property totally measures 5680.84 sq.mtrs and was auctioned by Canara Bank, Chikmagalur on 29.10.2010. The respondent and Abdul Khader purchased the entire extent of 5680.84 sq.mtrs. jointly out of which the respondent is the owner of 2840.42 sq.mtrs. Pursuant thereto, the respondent executed an agreement of sale dated 13.01.2014 in favour of appellant No.1 and his late father for the extent of 40% of the property since appellant No.1 had paid the sale consideration to the respondent at the time of purchasing the same from the Bank. 3. It is their case that appellant No.1 had paid the consideration of Rs.46,95,800/-in three installments of Rs.33,22,500/-, Rs.11,07,500/-and Rs.2,65,800/-and the said payments were made via cheques drawn on ING Vysya Bank, MG Road Branch Chikmagalur. Pursuant to the payments, the respondent refused to execute a sale deed in favour of appellant No.1 and hand over the possession of the property and hence a suit is filed in O.S.No.47/2014. During the course of trial, in order to settle the matter, the parties went to Bhootanatheshwara Temple, Volgerahalli and in the presence of elders and committee members of the Temple entered into an agreement attested by witnesses, wherein it was agreed that the respondent would execute a sale deed for 40% of the property subject to withdrawal of the suit. The plaintiff therein being a senior citizen, who is the father of appellant No.1, fearing the stress of litigation, agreed to the condition and withdrew the suit as not pressed as the matter is settled out of Court before the Lok Adalath. However, to the shock and surprise of the appellant No.1, the respondent did not come forward to execute the sale deed despite several requests. However, to the shock and surprise of the appellant No.1, the respondent did not come forward to execute the sale deed despite several requests. After several requests and pleading, the respondent instead of executing a sale deed, offered to pay Rs.1,84,51,000/-to appellant No.1 and his father as a one time settlement. The appellant No.1 and his father had agreed to the offer as the respondent was harassing them repeatedly. In pursuance thereof, the respondent executed a Memorandum Of Understanding (‘MOU’ for short) dated 02.12.2018 in favour of appellant No.1 and in terms of the said MOU, paid a sum of Rs.35,00,000/-in several installments between the years 2018-2020 by way of RTGS and cheque. The respondent failed to pay the balance amount and hence the appellants filed a suit for recovery of money of Rs.2,41,74,838/-and an application was filed under Order 38 Rule 5 of CPC. The Trial Court dismissed the same. Hence, the present appeal is filed before this Court. 4. The main contention of the learned counsel for the appellants before this Court is that the Trial Court committed an error in dismissing the application. The appellants have made out a clear case before the Trial Court showing that the respondent herein is intending to sell his share in the suit schedule property and has approached various buyers. The appellants have established prima facie case that the claim is substantial and genuine and through material evidence have shown the Trial Court that the respondent herein intends to alienate the property. The respondent has been avoiding payment of sum of money owed to appellant No.1 for almost a decade i.e., since 2014 by adopting various illegal means. The respondent though made the payment of Rs.35,00,000/-, thereafter he filed a criminal case as an afterthought only to harass the appellants herein. The Trial Court has held that the plaintiffs have not made out a prima facie case as the proof of information of alienation of the suit schedule property was not sufficiently shown by the plaintiffs by holding that the plaintiffs have not filed the affidavit of Dinesh Kumar, the person who has informed the appellants regarding the sale of a portion of the property and committed an error in making such an observation. The Trial Court committed an error in rejecting the application and ought to have directed to provide security in respect of the claim made by the appellants. The Trial Court committed an error in rejecting the application and ought to have directed to provide security in respect of the claim made by the appellants. The Trial Court while holding that the appellants have not made out a prima facie case, has not set out reasons for the same especially when the plaintiffs have complied with Order 38 Rule 5 of CPC. The learned counsel would contend that if an order of attachment is not passed, there is chance of creating third party right and it is very difficult to recover the amount which has been sued in the suit and the Court has to take note of the conduct of the parties. 5. The learned counsel for the appellants in support of his arguments relied upon the judgment of this Court in the case of ASHISH KRISHNASWAMY v. MONEY FOCUS INFRASTRUCTURE PRODUCTS PRIVATE LIMITED reported in LAWS (KAR) 2021-2-61 and brought to the notice of this Court paragraph No.12 of the judgment, wherein the Apex Court’s judgment in the case of RAMAN TECH. AND PROCESS ENGG. CO. AND ANOTHER v. SOLANKI TRADERS reported in (2008) 2 SCC 302 was relied upon and paragraph No.4 of the said judgment was extracted. The Apex Court observed in the said paragraph that 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 CPC. The learned counsel also brought to the notice of this Court paragraph No.14 of the judgment of this Court, wherein it is observed that the power under Order 38 Rule 5 of CPC should be used sparingly and strictly in accordance with Rule and the purpose of Rule 5 of Order 38 of CPC is not to convert an unsecured debt into a secured debt. Invoking Order 38 Rule 5 of CPC is to protect the interest of the plaintiff and if he succeeds in the suit if Order 38 Rule 5 of CPC is not invoked, the chances of recovery is very less. 6. Invoking Order 38 Rule 5 of CPC is to protect the interest of the plaintiff and if he succeeds in the suit if Order 38 Rule 5 of CPC is not invoked, the chances of recovery is very less. 6. The learned counsel also relied upon the judgment of the Apex Court in the case of KERALA STATE FINANCIAL ENTERPRISES LTD. v. OFFICIAL LIQUIDATOR, HIGH COURT OF KERALA reported in (2006) 10 SCC 709 and brought to the notice of this Court paragraph No.11 of the judgment, wherein discussed with regard to the word “attachment” would only mean “taking into the custody of the law the person or property of one already before the Court, or of one whom it is sought to bring before it”. The learned counsel also brought to the notice of this Court paragraph No.14, wherein an observation is made that, there, indisputably, exists a distinction between attachment before judgment in terms of Order 38 of CPC and attachment for execution of a decree under Order 21 thereof. 7. The learned counsel also relied upon the judgment of the Apex Court in the case of V.G. QUENIM AND ANOTHER v. BANDEKAR BROTHERS (P) LTD. reported in (2002) 10 SCC 513, wherein an observation is made with regard to invoking of Order 38 Rule 5 of CPC. The two sets of orders ought not to have been passed simultaneously. 8. The learned counsel also relied upon the judgment of the Apex Court in the case of RAJENDRAN AND OTHERS v. SHANKAR SUNDARAM AND OTHERS reported in (2008) 2 SCC 724 , wherein the Apex Court held that the Court while exercising its jurisdiction under Order 38 Rule 5 of CPC is required to form a prima facie opinion at that stage. It need not go into the correctness of otherwise of all the contentions raised by the parties. 9. Per contra, the learned counsel for the respondent/defendant would contend that earlier suit is filed in O.S.No.47/2014 based on the alleged document of sale agreement and the same was withdrawn as settled out of Court. A specific contention is taken in O.S.No.160/2021 that the document of MOU is fabricated and forged and earlier complaint is given and case is registered and criminal petition is filed before this Court and the same has been stayed. A specific contention is taken in O.S.No.160/2021 that the document of MOU is fabricated and forged and earlier complaint is given and case is registered and criminal petition is filed before this Court and the same has been stayed. The learned counsel brought to the notice of this Court the copy of the petition filed before this Court, wherein they have categorically stated that it is only a commercial transaction and not stated anything about the sale transaction and hence it is clear that the transaction is a commercial transaction. The learned counsel would contend that the MOU is disputed and stamp duty is paid only four days before filing of the suit. Both the plaintiffs and the defendant are admittedly doing cloth business. In the written statement it is stated with regard to the payment of Rs.35,00,000/-towards cloth business and there is no any transaction and the documents are created. The learned counsel would contend that the principles laid down in the judgments relied upon by the learned counsel for the appellants are not applicable to the facts of the case, since they have not made out any prima facie case. It is also settled law that while granting the order under Order 38 Rule 5 of CPC, they have to make out a prima facie case. The learned counsel would contend that when the suit was filed earlier, the same was withdrawn by stating that the matter is settled out of Court. Once the earlier suit was withdrawn as settled out of Court, the other contention that a promise was made to pay the amount is nothing but a story is created. The learned counsel submits that the MOU came into existence in 2018 according to the plaintiffs and withdrew the suit in 2016 and it is only a speculative suit and the Court cannot invoke Order 38 Rule 5 of CPC. The learned counsel would contend that while withdrawing the suit also, no right is reserved in Lok Adalath and not stated anything about earlier documents. Only in order to bring the suit, the documents are created. The learned counsel submits that the MOU is not admitted and the suit itself is not maintainable. The learned counsel would contend that while withdrawing the suit also, no right is reserved in Lok Adalath and not stated anything about earlier documents. Only in order to bring the suit, the documents are created. The learned counsel submits that the MOU is not admitted and the suit itself is not maintainable. The learned counsel submits that no application is filed under Order 39 Rules 1 and 2 of CPC before the Trial Court, but the appellants in an indigenous method filed the application under Order 39 Rules 1 and 2 of CPC and obtained the interim order. The Trial Court has given the reasoning while rejecting the application filed under Order 38 Rule 5 of CPC that no prima facie case is made out. 10. In reply to the arguments of the learned counsel for the respondent, the learned counsel for the appellants would contend that no complaint is filed in respect of the alleged MOU though they contend that the same is created and fabricated. The learned counsel would submit that one of the witness filed the affidavit before the Trial Court in terms of document No.13 and inspite of it, the Trial Court committed an error. 11. Having heard the learned counsel for the appellants and the learned counsel for the respondent, the points that arise for the consideration of this Court are: (i) Whether the Trial Court has committed an error in dismissing the application filed under Order 38 Rule 5 of CPC? (ii) What order? Point No.(i): 12. Having perused the plaint averments, it is the case of the plaintiffs that they have paid the amount to purchase the property to respondent No.1 and also executed an agreement of sale to that effect. When the respondent did not execute the sale deed, a suit is filed for the relief of specific performance. Admittedly, the suit was withdrawn before the Lok Adalath. To that effect, the document is produced before the Court i.e., order sheet. Having perused the order sheet, it is clear that the suit was withdrawn as settled out of Court and there was no any reference in the said order sheet that the parties have entered into an agreement for settlement of issues between the parties. The learned counsel for the appellants relied upon the document of agreement dated 31.01.2015 and typed copy is produced before the Court. The learned counsel for the appellants relied upon the document of agreement dated 31.01.2015 and typed copy is produced before the Court. According to him, in view of the said settlement, the suit was withdrawn. It is important to note that the plaintiffs also relied upon one more document of the year 2018 and based on the said document No.6 i.e., preliminary MOU, the suit is filed. The said document is disputed by the respondent stating that the same is created and fabricated. The learned counsel for the respondent brought to the notice of this Court that the same is not on any stamp paper, but stamp duty is paid four days prior to filing of the suit. When the suit is filed based on the preliminary MOU and the suit is also for recovery of money and when the document is disputed, the Court cannot come to the conclusion that the said document is a prima facie document to invoke Order 38 Rule 5 of CPC. No doubt, furnishing of security invoking Order 38 Rule 5 of CPC is nothing but security for enforcing the decree. 13. In the judgment relied upon by the learned counsel for the appellants in the case of Ashish Krishnaswamy (supra), this Court held that 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 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 judgments, 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. 14. 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. 14. In the case on hand, the question before this Court is whether the appellants have made out a prima facie case. I have already pointed out that the suit is based on a preliminary MOU and the same is disputed and the defendant also contend that the same is created and concocted. It is important to note that earlier a suit was filed and the same was withdrawn and there was no any condition while withdrawing the same and the defendant was not a party to the said withdrawal and only based on the settlement stated by the plaintiff, permitted to withdraw and it is also specifically mentioned that the matter is settled out of Court, but here they claim that in terms of the settlement not executed the document. If both the parties are parties to the said settlement and filed any document before the Trial Court, then there would have been force in the contention of the learned counsel for the plaintiffs and no such joint memo is filed before the Lok Adalath and suit is withdrawn only on the say of the plaintiff before the Trial Court that the matter has been settled. No doubt, the plaintiffs’ counsel relies upon the document dated 31.01.2015 and the same is not stated while withdrawing the suit that already there was a settlement between the parties in terms of the said document, the suit is withdrawn and when such being the case, the plaintiffs have not made out any prima facie case. It is settled law that the power under Order 38 Rule 5 of CPC 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 of CPC is not to convert an unsecured debt into a secured debt. Any attempt by the plaintiff to utilize the provisions of Order 38 Rule 5 of CPC as a leverage for coercing the defendant to settle the suit claim should be discouraged. The purpose of Order 38 Rule 5 of CPC is not to convert an unsecured debt into a secured debt. Any attempt by the plaintiff to utilize the provisions of Order 38 Rule 5 of CPC 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 realized by unscrupulous plaintiffs by obtaining orders of attachment before judgment and forcing the defendants for out of Court settlements under threat of attachment. 15. In the case on hand, I have already pointed out that while withdrawing the suit, there is no any averments with regard to the document dated 31.01.2015, which the plaintiffs relies upon and while withdrawing the suit, it is stated that the matter is settled out of Court. I have already pointed out that the defendant is not a party while withdrawing the suit, but claims that subsequently MOU came into existence in 2018 and the suit was withdrawn in 2016 itself. Hence, the plaintiffs have not made out any prima facie case. In order to invoke Order 38 Rule 5 of CPC, the plaintiffs have to make out a prima facie case. In the Apex Court’s judgment relied upon by the learned counsel for the appellants in the case of Kerala State Financial Enterprises (supra) in paragraph No.14, it is held that, there, indisputably, exists a distinction between attachment before judgment in terms of Order 38 of CPC and attachment for execution of a decree under Order 21 thereof. The judgments which have been relied upon by the learned counsel for the appellants do not come to the aid of the appellants/plaintiffs. The Apex Court in its judgment in the case of Rajendran (supra) held that the Court while exercising its jurisdiction under Order 38 Rule 5 of CPC is required to form a prima facie opinion at that stage. 16. Having perused the material available on record, I do not find making out of any prima facie case. No doubt, the Trial Court while passing the order made an observation that affidavit is not filed and the learned counsel for the appellants brought to the notice of this Court that an affidavit is filed by one Dinesh Kumar. But mere filing of the affidavit itself is not enough unless a prima facie case is made out. No doubt, the Trial Court while passing the order made an observation that affidavit is not filed and the learned counsel for the appellants brought to the notice of this Court that an affidavit is filed by one Dinesh Kumar. But mere filing of the affidavit itself is not enough unless a prima facie case is made out. The Trial Court while considering the material on record, taken note of the question of entering into MOU and his liability to make payment in paragraph No.10 and also taken note of the fact that the defendant has denied the MOU dated 02.12.2018 and taken note of the order sheet in O.S.No.47/2014, wherein the plaintiffs have got dismissed the suit as not pressed stating that the matter is settled out of Court. Hence, comes to the conclusion that the plaintiffs have not satisfied at this stage that there is reasonable chance of decreeing the suit against the defendant. 17. The other contention of the learned counsel for the appellants is that in terms of MOU the payments are made and the same is denied by the defendant stating that he has not deposited any amount in terms of the MOU. In the written statement, the respondent has categorically taken the contention that the MOU is fabricated and signature is forged and also contend that the payments which have been made are with regard to business of cloth. The learned counsel for the appellants also brought to the notice of this Court the statement of accounts, wherein some payments are made. It is the specific case of the defendant that the said payments are made in connection with cloth business. Hence, I do not find any material to come to the conclusion that the plaintiffs have made out a prima facie case to exercise the power Order 38 Rule 5 of CPC. It is also settled law that Order 38 Rule 5 of CPC should not be exercised mechanically and merely for the asking. It should be used sparingly and strictly in accordance with the Rule and the purpose of Order 38 Rule 5 of CPC is not to convert an unsecured debt into a secured debt. It is also settled law that Order 38 Rule 5 of CPC should not be exercised mechanically and merely for the asking. It should be used sparingly and strictly in accordance with the Rule and the purpose of Order 38 Rule 5 of CPC is not to convert an unsecured debt into a secured debt. Having considered the material on record and the documents relied upon by the plaintiffs, I do not find any prima facie case made out by the plaintiffs and the same has been considered by the Trial Court while rejecting the application filed under Order 38 Rule 5 of CPC. Hence, I do not find any merit in the appeal to set aside the order of the Trial Court and to allow the application filed under Order 38 Rule 5 of CPC. Hence, I answer point No.(i) in the negative. Point No.(ii): 18. In view of the discussions made above, I pass the following: ORDER The appeal is dismissed.