Calcutta High Court
Harleen Jairath vs Prabha Surana & Anr on 20 September, 2019
Equivalent citations: AIRONLINE 2019 CAL 695, (2019) 4 CAL HN 412 (2019) 4 ICC 417, (2019) 4 ICC 417
Author: Soumen Sen
Bench: Soumen Sen, Ravi Krishan Kapur
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IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
BEFORE:
The Hon'ble Justice Soumen Sen
and
The Hon'ble Justice Ravi Krishan Kapur
G.A. No.2100 of 2019
A.P.O.T. No. 102 of 2019
With
C.S. No. 165 of 2019
Harleen Jairath
Vs.
Prabha Surana & Anr.
For the Appellant : Mr. Jishnu Saha, Sr. Adv.
Mr. Ishaan Saha, Adv.
Mr. A.K. Mukherjee, Adv.
Mr. Saurabh Prasad, Adv.
For the Respondent : Mr. Surajit Nath Mitra, Sr. Adv.
Mr. Sakya Sen, Adv.
Ms. Anamika Pandey, Adv.
Ms. Amrita Pandey, Adv.
Hearing concluded on : 19.09.2019 Judgment on : 20.09.2019
Soumen Sen, J.:- By consent of the parties, the appeal and the applications are taken together and disposed of by this common order.
The appeal is arising out of an order dated 29th August, 2019 by which the learned Single Judge has refused to pass any ad-interim order in favour of the appellant.
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The appellant filed a suit for recovery of money and cancellation of deed of gift. In the said proceeding, the appellant has filed an application under Order 38 Rule 5 of the Code of Civil Procedure (hereinafter referred to as "CPC") for attachment of certain immovable properties of the respondent no. 1.
Shortly put, the plaintiff has filed a suit for recovery of a sum of Rs. 14,86,00.000/- claimed to have been due and owing by the defendant no.1 to the plaintiff as on 31st March, 2018. The plaintiff claimed that from time to time the defendant no.1 and her husband Shanti Kumar Surana obtained diverse loans and advances from the plaintiff's husband Vikram Jairath. As on 31st March, 2018, a sum of Rs. 5,14,00,000/- remained due and owed by the defendant no. 1 to Vikram Jairath and a sum of Rs. 9,27,00,000/- had remained due and owing by the said Shanti Kumar Surana to the plaintiff. It is stated that the defendant no. 1 have similarly acknowledged the same by different writings. The petitioner has disclosed the balance confirmation statement for the relevant years to show that the defendant no.1 and her husband had acknowledged its liability. It is stated that since the loan had remained outstanding for quite some time, towards the end of December, 2018, Prabha Surana and Shanti Kumar Surana had offered to repay a portion of the same by transferring and/or causing to be transferred all the shares in Middleton Hotels Pvt. Ltd. to the plaintiff and her husband at their face value on the representation that the defendant Prabha Surana and Shanti Surana were the owners of and were in management and control of the said company and the property owned by it. The entire shares of the 3 Middleton Hotels Pvt. Ltd. is owned by Prabha Surana, Shanti Surana, and Mosksh Investors Pvt. Ltd., a company which is also owned and controlled by Prabha Surana and Shanti Surana with 100 shares being owned by one Pawan Surana, the elder brother of Shanti Kumar Surana. It was on the basis of such representation that the plaintiff and her husband had agreed to an adjustment of a part of their dues against the transfer of all shares of Middleton Hotels Pvt. Ltd. at their face value.
In acknowledgement and part payment of the debt, Prabha Surana transferred 50000 and 300233 shares in two separate lots and Shanti transferred 11600 and 81633 shares in two separate lots in favour of the plaintiff and her husband. Moksh Investors Pvt. Ltd. and Pawan Surana had also transferred their existing shareholding. It is alleged that all such transfers are effected by making over and by executing in favour of the plaintiff and her husband duly stamped transfer deeds in respect thereof. However, the persons in ostensible management and control of Middleton Hotels Pvt. Ltd. had refused to allow such transfer and registration of the said shares in the name of the plaintiff and her husband and in the event proper instructions are not given to the company and its managing director to record such transfers the plaintiff and her husband would initiate legal proceedings. In reply to the said letter, Shanti Surana and Prabha Surana, while acknowledging the debt, had contended that the said shares were given as comfort and the blank transfer deeds were executed on 25th July, 2018 and handed over to the plaintiff and her husband in total good faith and trust. It is alleged that despite having acknowledged her debt to the 4 plaintiff, the defendant no.1, however, made no attempt to repay the loan despite repeated demand made by the plaintiff since the middle of June, 2018. The plaintiff claims that in spite of having transferred the Middleton Hotels Pvt. Ltd. to the plaintiff and her husband by transferring the entire shareholding of the defendant no.1 and Shanti Surana in the said company, they had attempted to contend that the shares of Middleton Hotels Pvt. Ltd. were given to the plaintiff by way of comfort. Even after having transferred the entire shareholding of the Middleton Hotels Pvt. Ltd. to the plaintiff and her husband, the defendant no.1 and Shanti Surana thereafter clandestinely executed a deed of sub-lease and had entered into to several development agreements in respect of portions of the said hotels, being a property at nos. 10 and 10A, Middleton Street, Kolkata. It is contended this was done with a view to defeat the decree that is likely to be passed in favour of the plaintiff in the suit in view of indefeasible claim of the plaintiff. It is further contended that the defendant no.1 on 6th August, 2018 made a purported gift of flat nos. 8A and 9A at 6 Queens Park, Kolkata in favour of her daughter, the defendant no. 2, for the purported consideration of natural love and affection.
On such facts, the plaintiff filed a suit on 19th August, 2019 in which apart from money claim, the plaintiff has also prayed for delivery up and cancellation deed of gift dated 6th August, 2018. Shortly thereafter, on 6th September 2019, an interlocutory application was filed praying, inter alia, for attachment before judgment for all the properties of Prabha Surana and Shanti Surana and an injunction restraining the respondents from 5 alienating their properties. In fact, two suits have been filed against Prabha Surana and Shanti Surana separately in which two separate interlocutory applications have been filed seeking similar reliefs.
The learned Single Judge at the ad-interim stage after hearing the parties had refused to pass any order on the ground that the powers under Order 38 Rule 5 should not be exercised mechanically or merely for the asking in order to convert an unsecured debt into a secured debt. A defendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him. In order to obtain an order for attachment before judgment under Order 38 Rule 5 of the Code, the 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 dealing the execution of any decree that may be passed against him. The learned Single Judge has also relied upon a Single Bench decision of Premraj Mundra v. Md. Manech Gazi reported in AIR 1951 Cal 156 and Sunil Kakrania and Ors. v. M/s. Saltee Infrastructure Ltd. and Anr. reported in AIR 2009 Cal 260.
The learned Single has also observed that the law laid down in Premraj Mundra (Supra) has been fully approved by the Hon'ble Supreme Court in the case of Raman Tech and Process Engineering Co. and Anr. v. Solanki Traders reported in (2008) 2 SCC 302. The learned Judge was of the view that the petitioner/appellant has failed to make out a prima facie for obtaining any ad-interim order at this stage. The order was refused also 6 on the ground that neither in the plaint nor in the petition, the petitioner has disclosed the particulars of the loan transaction to substantiate that the said confirmation of the accounts issued by the respondent no.1 constitute an acknowledgement under section 19 of the Limitation Act. It was further observed that when the petitioner affirmed the averments made in paragraph 9 to 17 of the petition as her respectful submission before this Court, the argument made by the respondents that the petition had not fulfilled the condition with regard to her knowledge or source of information that after filing of the present suit, the respondent no.1 is intending to transfer any of their immovable properties or the ornaments of the respondent as laid down in Premraj Mundra (supra) and approved in Raman Tech (Supra) has not been fulfilled is to be accepted, and hence order of attachment was refused.
It appears from the impugned order that two things principally weighed with the learned Trial Judge in refusing to pass an order for attachment before judgment. Firstly, the particulars of the loan transaction to substantiate the confirmation of the accounts to constitute and acknowledgment under section 19 of the Limitation Act is not fulfilled and secondly, that there is no proper averments with regard to the alienation of the immovable properties out of the jurisdiction of this Court.
Mr. Jishnu Saha, learned Counsel appearing on behalf of the appellant, has submitted that the prayers in the petition are two-fold. It is true that the appellant has prayed for attachment before judgment but at the same time a prayer for injunction over the assets of the respondent have 7 also been prayed for. Mr. Saha has referred to a fairly recent decision of our Division Bench presided over by Justice Jyotirmoy Bhatterjee, our former Chief Justice, in Santosh Promoter Pvt. Ltd. & Ors. v. Intrasoft Technologies Ltd. reported in (2017) 1 CHN 189 (Cal), where distinction between Order 38 Rule 5 and Order 39 Rule 1 (b) of the Code of Civil Procedure has been lucidly explained.
Mr. Saha submits that even if it is assumed for the sake of argument that the appellant has failed to make out a case for attachment before judgment but having regard to the balance confirmation and the subsequent conduct of the respondent no.1 and her husband to create third party interests in properties which exclusively belonged to them prior to the filing of the suit without discharging the debt, it is eminent that unless the remaining properties and assets of the said defendant no.1 and her husband are attached or they are restrained from dealing with and/or encumbering the said assets, the plaintiff and her husband would suffer irreparable loss and prejudice. Mr. Saha submits that the confirmation of accounts clearly acknowledge the debt to be discharged by the defendant no.1 and her husband, and the jural relationship between the parties are evident from the reply of the defendant and her husband in response to the legal notice dated 10th June, 2019 in which both of them had acknowledge that the plaintiff and her husband had lent and advanced money to Shanti Surana and Prabha Surana for their business purposes, allegedly on a long term basis.
Mr. Saha submits that the letter dated 16th June, 2019 of the respondent no.1 and her husband clearly acknowledged the fact that Shanti 8 Surana and Prabha Surana have taken loan and have been paying interest at the rate of 12 percent per annum since 2011. Mr. Saha submits that the confirmation of accounts clearly establishes that a sum of Rs. 14.88 Crores and 5.14 Crores are due and payable as on 1st April, 2018. Apart from the fact that the balance confirmation accounts is a clear evidence of acknowledgement of debt, the defendant no.1 and her husband have also acknowledged that they were enjoying loan facilities since 2011 and had received sums from time to time in tranches.
Per contra, Mr. Surojit Nath Mitra, learned senior counsel appearing on behalf of the respondent no. 1, has supported the order. Mr. Mitra had submitted that the plaintiff has failed to make out any case for attachment before judgment. It is submitted that stringent conditions have been laid down in the Code of Civil Procedure before the court can exercise its jurisdiction in matters relating to attachment before judgment. The plaintiff has miserably failed to establish all the conditions that are required to be fulfilled in terms of the judgment in Premraj Mundra (supra), which has been approved by the Supreme Court in Raman Tech (supra). Due to such lack of pleading, the plaintiff is not entitled to any relief. The plaintiff has made a money claim. The said claim is disputed. In a money suit, the reliefs claimed in the application cannot be granted as it would convert an unsecured claim to a secured claim. In a money suit merely because the plaintiff has a strong case on merits, a court cannot restrain the defendants from dealing with their properties during the pendency of the suit. Mr. Mitra submits that unless the impugned order is perverse and it appears that the 9 trial court has acted arbitrarily, capriciously or perversely in the exercise of discretion the appellate court will not interfere. Moreover, the gift has taken place in August, 2018 much prior to the filing of the suit. The plaintiff has not been able to make out a prima facie case for interim reliefs. The learned senior counsel in this regard has relied on Seema Arshad Zaheer and Ors. vs. Municipal Corporation of Greater Mumbai and Anr. reported at (2006) 5 SCC 282 (paragraph 30 and 32).
Mr. Mitra has also drawn our attention to a co-ordinate Bench decision in Sunil Kakrania (supra) and submits that the decision in Santosh Promoters (supra) may not be the correct view.
Order 38 has two parts. Order 38 Rules 1 to 4 deal with arrest before judgment and Order 38 Rules 5 to 13 deal with attachment before judgment.
In the instant application, the Court is concerned with attachment before judgment and interim injunction.
The main object of an attachment before judgment is to enable the plaintiff to realise the decreetal sum if one is eventually passed, from the defendant's property. The object is to prevent a decree likely to be passed from becoming illusory or infructuous. In other words, an order of attachment before judgment prevents an unholy attempt by the defendant to defeat fruits of the decree passed in favour of the plaintiff.
The essential requirements which must be proved to the satisfaction of the Court for seeking a relief for attachment are:-
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(i) The defendant is about to dispose of the whole or any part of his property; or
(ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court;
(iii) that the defendant is intending to do so to cause obstruction or delay in the execution of any decree that may be passed against him.
Vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court, unsupported by particulars, would not be sufficient compliance with the rule;
(iv) It is incumbent upon the plaintiff to state the grounds on which he entertains the belief or apprehension that the defendant would dispose of or remove the property, or to give the source of his information and belief in the matter through an affidavit. An attachment before judgment is not a process to be adopted as a matter of course. The suit is yet to be tried and the defence of the defendant is yet to be tested. At the nebulous juncture, this relief which is extraordinary could be granted only if the conditions for its grant, as per the provisions of the CPC, stand satisfied. This process is never meant as a lever for the plaintiff to coerce the defendant to come to terms. Hence utmost caution and circumspection should guide the Court.
There has to be some prima facie material on the basis of which the court could satisfy itself that the conditions requisite for making an order of 11 attachment before judgment exist. Otherwise every plaintiff would rush in with a bald averment and obtain an order from court. The circumstances that a company is in financial strain or that the debtor may be unable to pay the debt do not warrant attachment before judgment.
In Sardar Govindrao Mahadik v. Devi Sahal reported at (1982) 1 SCC 237: AIR 1982 SC 989, the Supreme Court stated that the sole object behind the order levying attachment before judgment is to give an assurance to the plaintiff that his decree if made would be satisfied. It is a sort of guarantee against decree becoming infructuous for want of property available from which the plaintiff can satisfy the decree.
In S. Noordeen v. Thiru Venkita Reddiar reported at (1996) 3 SCC 189: AIR 1996 SC 1293, the Court stated that an attachment before judgment does not create any right, title or interest in favour of the plaintiff seeking such attachment. It merely disables the defendant to create any encumbrance on the said property. It is only when a decree is passed that the property forms part of the decree so as to enable the decree-holder to proceed against the property attached to realise decretal dues.
In Rajendran v. Shankar Sundaram reported at (2008) 2 SCC 724:
AIR 2008 SC 1170, the Court discussed the ambit and scope of Order 38, Rule 5 and stated that while exercising jurisdiction thereunder, the Court is required to form a prima facie opinion at that stage. It need not go into correctness or otherwise of all contentions raised by the parties. If prima facie case has been made out by the plaintiff and the defendant is asked to furnish security, it cannot be said that he is seriously prejudiced.12
In Raman Tech (supra), the Supreme Court highlighted the object of Order 38 Rule 5 as preventing the defendant from defeating realisation of decree that may ultimately be passed in favour of the plaintiff, either by attempting to dispose of, or remove his property from the jurisdiction of the Court.
But it was observed that before exercising such power, the Court must be satisfied that there is a reasonable chance of a decree being passed in the suit against the defendant. The plaintiff must also show that the defendant is attempting to remove or dispose of his assets with the intention of defeating the decree.
A defendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him.
The Court rightly stated:
"The power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely or 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."
In a locus classicus in Premraj Mundra (supra), the High Court of Calcutta after considering several decisions on the point, deduced certain 13 principles which have been consistently followed by all courts including the Supreme Court.
The plaintiff is also required to establish that the defendant is attempting to remove or dispose of his assets with an intention to defeat the decree that may be passed against him. The order of attachment however, cannot affect any right of any third party which existed much prior to the date of attachment order. Any order passed under Order 38 Rule 5 does not confer any title nor any priorities in favour of the plaintiff. It is clear from Order 38 Rule 10 of the Code of Civil Procedure.
Order 39 deals with temporary injunction and interlocutory orders. Temporary or perpetual injunction is in the nature of preventive relief granted to a litigant quia timet, i.e, because he fears future possible injury. An injunction is a judicial proceeding operating in personam where-under a party is required to do, or refrain from doing, any particular act. It is a remedy in the form of an order of the Court addressed to a particular person that either prohibits him from doing or continuing to do a particular act (prohibitory injunction); or orders him to carry out a certain act(mandatory injunction). (See. Food Corporation of India v. Sukh Deo Prasad reported at (2009) 5 SCC 665: AIR 2009 SC 2330).
According to Wade & Forsyth: Administrative Law (2009), injunction is the standard remedy of private law for forbidding the commission of some unlawful act, e.g. a tort or breach of contract. Its sanction is imprisonment or fine for contempt of court, or attachment of property. Historically, it is an equitable remedy, since it derives from the 14 former courts of Chancery, and accordingly it has a discretionary character. Now, even in England, it is statutory. In India, it is statutory in nature.
The need for such protection, however, has to be judged against the corresponding need of the defendant to be protected against injury resulting from exercising his own legal rights. The court must weigh one need against another and determine where the balance of convenience lies and may pass an appropriate order in exercise of its discretionary power. (See. Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd. (1999) 7 SCC 1: AIR 1999 SC 3105).
The discretion of the Court to grant a temporary injunction is subject to the fulfilment of the following considerations as stated in paragraph 30 in Seema Arshad Zaheer (supra) it is stated:
"30. ...... (i) existence of a prima facie case as pleaded, necessitating protection of plaintiff's rights by issue of a temporary injunction; (ii) when the need for protection of plaintiff's rights is compared with or weighed against the need for protection of defendant's rights or likely infringement of defendant's rights, the balance of convenience tilting in favour of plaintiff; and (iii) clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approaches the court with clean hands."15
In the leading case of Polini v. Gray reported at (1879) 12 Ch D 438: 41 LT 143, the principle behind grant of interim relief has been explained succinctly by Cotton, L.J. thus:
"It appears to me on principle that the court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property pending litigation is this, that the successful party is to reap the fruits of that litigation, and not obtain merely a barren success."
While Order 39 Rule 1(a) and 1(c) refer to the property in dispute, Order 39 Rule 1(b) does not put any such restriction as it uses the phrase "to remove or dispose of his property with a view to divert his creditor." The property contemplated under Order 39 Rule 1(b) may not be the property in dispute in the suit. An injunction can also be granted by the court to restrain a threatened removal or disposal of property with a view to defrauding creditors. If the court is satisfied that the defendant intends to remove or dispose of his property and his intention in doing so is to defraud his creditors, injunction under Rule 1(b) can be granted (Padam Sen v. State of U.P. AIR 1961 SC 218). Such property may be movable or immovable. Unlike clause (a) the applicability of clause (b) is not restricted or limited to the "property in dispute in a suit." Hence, clause (b) can be invoked even if the property is wholly outside the subject matter of the suit. (Albert Judah Judah v. Rampada Gupta, AIR 1959 Cal 715). Only thing is that threat or intention to remove or dispose of property to defraud creditors must be supported by sufficient particulars. (Anand Prasad Agarwalla v. Tarkerhwar Prasad, (2001) 5 SCC 568).
16
However, there is a distinction between the attachment and injunction. According to dictionary meaning, "attachment" means "act of attaching", "state of being attached". In law, it is seizure of property or person by legal authority, especially seizure of defendant's property to prevent its dissipation before trial. [Oxford Webster's Encyclopedic Unabridged Dictionary, (1994), p. 95; Justice C.K. Thakker:
Encyclopaedic Law Lexicon, (2009)].
The word "attachment" has been defined as:
"taking into custody of law a person or property of one already before the Court, or of one whom it is sought to bring before it; a writ issued at the institution or during the progress of an action, commanding the sheriff or other proper officer to attach the property, rights, credits or effects of the defendant to satisfy the demands of the plaintiff." (Justice C.K. Thakker, P. R. Aiyar, ibid). The said distinction was discussed by the Division Bench of this Court in case of Boeing Company vs. R.M. Investment & Trading Co.
Pvt. Ltd. reported at (1994) 99 CWN 1: 1994 (2) Cal L.T. 300 in paragraphs 13 and 14 of the said report which read:-
"13. Attachment -
The word "attachment" in statute authorizing an attachment of property omitted from assessment meant a specific attachment, Commercial Credit Co. v. Martin, 122 S.W. 2d. 135, 136 275 Ky. 548.
The purpose of "attachment", generally, is to take defendant's property into legal custody, so that it may be applied when defendant's debt to plaintiff was established. John Decre Flow Co. of St. Louis v. L.D. Jennings. Inc. 27 S.E. 2d 571, 572, 203 SC 426.17
"Attachment' is in nature of a preliminary execution against property to afford satisfaction of plaintiff's claim, and attachment laws are legal modes of acquiring title to property by operation of law, Chinnis v. Cobb, 185 SE 638, 642, 210 NC 104.
"14. In fact, Injunction is different from Attachment. The Code of Civil Procedure has provided two different provisions for the same. An attachment is a proceeding to collect and enforce a lien. It is a remedy for the collection of an ordinary debt. Whereas Injunction restrains the disposition of property, it is not an attachment of property. Injunction does not constitute a lien on the property. It could be granted only when equity, justice and good conscience of the party needs it."
There is distinction between the provisions of Order 38, Rule 5 and Order 39, Rule 1(b) in that the former is intended to prevent a decree that may be passed being rendered infructuous while the latter is invoked where the defendant threatens to dispose of his property with a view to defraud creditors.
In decision of a Division Bench decision of our Court in Santosh Promoters (supra), the relative scope of both the sections have been lucidly discussed. It is stated:-
"Let us now try to find out the distinction between the provisions under order 39 Rule 1(b) of Civil Procedure code and the provision contained in Order 38 Rule 5 of the Code of Civil Procedure. At the very outset, we like to mention here that that those two provisions operate in different fields altogether. Order 38 Rule 5 of the Civil Procedure Code contemplates post decree consequences. While dealing with such an application, the Court is required to find out first as to whether there is strong possibility of passing a money decree in favour of the plaintiff. If the court is satisfied that there is every possibility of passing a money 18 decree in favour of the plaintiff, then only the court can pass any order of attachment before judgment provided the Court is satisfied that the defendant is either trying to dispose of whole or any of his property or is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, with an intent to obstruct or delay the execution of any decree that may be passed against him. Reading the said provision as a whole, we are of the view, that order of attachment before judgment cannot be passed by any Court unless the Court is satisfied about the conditions as mentioned above.
Simultaneously if we consider the provisions contained in Order 39 Rule 1(b), of the Civil Procedure Code we find that while passing an order of injunction, the Court is not required to find out as to whether there is every possibility of passing a decree in favour of the plaintiff in the suit. While considering the application for temporary injunction, the Court is only required to ascertain as to whether a prima facie case has been made out by the plaintiff in the suit. Prima facie case means an arguable case meaning thereby that a reasonable dispute is raised before the Court which the Court is required to resolve ultimately in the suit. A prima facie case is distinguishable from a full-proof case. When the Court finds that a prima facie case is made out by the plaintiff then the Court passes an order of injunction so that the ultimate relief which is claimed by the plaintiff in this suit is not frustrated and the decree which may be passed in the suit will remain unexecutable.
Apart from making out a prima facie, the plaintiff is also required to prove that if the balance of convenience and inconvenience is weighed, that will be in favour of grant of injunction, and if injunction is not granted, the plaintiff will suffer irreparable loss and injury.
Again the order of attachment before judgment will continue even after the suit is decreed in favour of the plaintiff and re-attachment of the attached property in execution is not needed in view of Order 38 Rule 11 & 11A of the Civil Procedure Code. However, the order of 19 attachment before judgment will stand withdrawn on furnishing security by the defendant or with the dismissal of the suit as per the provision contained in Order 38 Rule 9 of the Civil Procedure Code.
Order of temporary injunction is essentially different from the order of attachment before the judgment as it losses its force with the disposal of the suit, be it decreed or dismissed. Its operation cannot be extended beyond the disposal of the suit.
Thus, we hold that the Court's power to grant temporary injunction cannot be treated at par with its power to pass an order of attachment before judgment under Order 38 Rule 5 of the Code of Civil Procedure. Thus, while passing an order of temporary injunction, post decree consequences need not be considered by the Court, but while passing an order of attachment before judgment, the Court has to consider the post decree consequences. As such the standard of proof in case of attachment before judgment is higher then the standard of proof necessary to be discharged in case temporary injunction is sought for."
We are unable to accept the submission of Mr. Mitra, the learned Counsel appearing on behalf of the respondents, that the decision in Santosh Promoters (supra) is per incurium and the decision in Sunil Kakraria (supra) has laid down the correct interpretation of law. In Sunil Kakraria (supra), one of the two questions that had fallen for determination was whether in a money suit merely because the plaintiff has a strong case on merits, a court can restrain the defendants for transfer or alienating their movable or immovable properties during the pendency of the suit. In paragraph 21 of the decision, the Division Bench held that the Order 39 Rule 1(b) may be applicable provided the condition mentioned therein is 20 present. It was found that the condition precedent for applicability of the said provision was absent as there was not averments in the plaint or the application for injunction that the defendant intended or threatened to remove or dispose of his property with a view to defrauding his creditors. In the instant case, there are averments in paragraph 11, 12 and 13 of the interlocutory application that the defendants are intending to transfer or alienate their movable or immovable properties. We do not find any conflict between the said two decisions. The judgment in Sunil Kakraria (supra) does not assist the respondents.
In issuing temporary injunctions, the tests to be applied are (i) whether the plaintiff has a prima facie case, (ii) whether the balance of convenience is in favour of the plaintiff, and (iii) whether the plaintiff would suffer an irreparable injury if his prayer for temporary injunction is disallowed. The interlocutory remedy is intended to preserve in status quo the rights of parties which may appear on a prima facie case.
At the stage of deciding the application for temporary injunction, the Court is not required to go into the merits of the case in detail. What the Court has to examine is (i) the plaintiff has a prima facie case to go for trial;
(ii) the protection is necessary from that species of injuries known as irreparable before his legal right can be established; and (iii) that the mischief of inconvenience likely to arise from withholding injunction will be greater than what is likely to arise from granting it.
At this stage we find that there is no explanation offered for the two confirmation of accounts followed by the letter dated 16th January, 2019 in 21 which the defendant no.1 and her husband has clearly acknowledged that the plaintiff and her husband "from time to time" had "lent and advanced money" to Shanti Surana and Prabha Surana for their business purposes on a long term basis with interest at the rate of 12 percent per annum and since 2011, several sums of money have been lent and advanced allegedly without any security in several tranches and the respondents claimed to have been regularly paid interest on the said sums. The said letter clearly establishes jural relationship before the parties. The confirmation of the accounts for the relevant years also clearly shows that more than 20 crores are outstanding. The plaintiff has disclosed documents to show that third party interest have been created with regard to the Middleton Road property after the legal notice and two days after the reply dated 16th June, 2019 from Shanti Surana and Prabha Surana to Vikram Jayrath on 18th June, 2019. The development agreement has been disclosed. Even if it is accepted for the sake of argument that the shares were given for comfort, the fact remains that when the loan was recalled, the amount was not repaid on specious plea that the loans were taken on a long term basis and interest have been paid regularly.
The learned senior counsel for the defendants was unable to show that any interest was paid for the subsequent period that is from 1st April 2018 to 31st March, 2019, which also runs to few crores. Moreover, the defendant no.1 just prior to the pendency of the proceeding has executed a deed of gift in favour of her daughter. The defendants on the one hand are not repaying the loan and not even the interest accrued on the loan but on 22 the other hand are encumbering their assets. In Premraj Mundra (supra), the learned Single Judge has merely given the guidelines to be followed and it does not show that in a given facts and circumstances all the conditions are required to be fulfilled. Paragraph 18 of the said report which refers to the guiding principles are only for the purpose of the court to assess in a given situation whether facts and circumstances exists to pass an order under Order 38 Rule 5 and 6 of the Code of Civil Procedure. The said guiding principles cannot be read as a statute or interpreted to mean that unless all 14 conditions are fulfilled the court should not pass an order in attachment before judgment. The Learned Single Judge has very advisedly used the expression "guiding principles" as opposed to "conditions" and has not stated that unless all the 14 guiding principles are fulfilled, the court should not exercise such jurisdiction.
The law is required to be interpreted and applied in a manner so that no injustice is caused to the rightful claimant. The law cannot be a lame duck. The situation in the 1950s and the situation in 2019 are completely different. The commercial world has changed. Recent developments all over the world have shown that commercial morality has remained merely as a concept. It is "more honoured in breach than in observance" (Hamlet, Shakespeare). The modus operandi to make a decree otiose and illusory by an unscrupulous litigant apprehending that a decree is imminent by adopting devious and clandestine means are well known and law courts are every now and then facing such situations. Should a court faced with an unimpeachable claim wait for an unscrupulous litigant to deliver its defence 23 and the luxury of a trial by which time the chance of recovery would be lost forever?
In Abheya Relators Private Limited vs. SSOPL Retail Limited & Anr. reported in 2010 (2) CHN (CAL) 203 it is stated:
"24. Two aspects need to be seriously considered. At the time that the Civil Procedure Code came to be made suits would not take years or decades to be brought to trial as is usually the case these days. The strength of the principle that an apparently good claim would not justify an order for attachment to be made before final judgment is rendered, needs to be seen with reference to the time and place in which such principle was born. The second aspect is that even without a defendant attempting to defraud its creditors or the plaintiff, the vicissitudes of the commercial market may leave the defendant with little to offer as judgment-debtor upon the decree being made. The sheer passage of time between the institution of an action and the trial thereof that has now come to be accepted as par for the course may make the claim irrelevant or even the claimant disinterested. That would result in an erosion of the confidence in the system and lead suitors to undesirable quarters for more effective results. But this may not be the ideal action for such considerations to have a bearing."
In Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal reported at AIR 1962 SC 527 it was observed: "that courts have inherent jurisdictions to issue temporary injunctions in circumstances which are not covered by the provisions of Order 39 CPC... It is well settled that the provisions of the Code are not exhaustive, for the simple reason that the legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them ... The court exercises its inherent jurisdiction only when it considers it 24 absolutely necessary for the ends of justice to do so." Even prior thereto in two Calcutta decisions namely Bhagat Singh Bugga vs. Dewan Jagbir Sawhney reported at AIR 1941 Cal 670 and Chinese Tannery Owners' Association and Ors. v. Makhan Lal and Ors. reported at AIR 1952 Cal 560, the said principles have been clearly stated. In Bhagat Singh Bugga (supra), the High Court held that the law cannot make express provisions against all inconveniences and the court, therefore, had inherent power to act ex debito justitiae where the circumstances of the case required. The Court held that the balance of convenience enabled the court to pass the interim order of injunction. The relevant extracts are provided below -
"In Durga Dihal Das v. Anoraji ('94) 17 All 29 at page 31, it was said by Blair J., that the Code is not exhaustive, there are cases which are not provided for in it, and he declined to believe that the High Court must fold its hands and allow injustice to be done.
These words were adopted by Woodroffe J., in Hukum Chand Baid v. Kamalanand Singh at p. 931 and he added that the law cannot (as pointed out by Sir Barnes Peacock C. J.) make express provisions against all inconveniences, and that the Court had, therefore, in many cases where the circumstances warranted it, and the necessities of the case required it, acted upon the assumption of the possession of an inherent power to act ex debito justitice and to do that real and substantial justice for the administration of which it alone exists.
These observations were adopted and followed in Manohat Lal v. Jai Narain ('20) 7 AIR 1920 Lah 436, Dhaneshwar Nath v. Ghanshyam Dhar and Bichchharam Baburam v. Baldeo Sahai Surajmal.
In the present case the balance of convenience is all one way and I have no doubt about the orders which I ought to make, or that I have power to make them."25
In Chinese Tannery Owners' Association (supra) the Calcutta High Court was examining an interim order of injunction that had been granted in favour of the plaintiff in a suit for money decree. The defendant appellant raised the plea that the provisions of order 39 Rule 1 of the Code was not applicable and the Civil Court could not have invoked its inherent power under Section 151 of the Code. The Division Bench held that the mere fact that there are certain provisions as regards the issue of injunctions in Order 39 of the Code does not debar the Court from passing temporary injunctions for doing justice in the exercise of its power under Section 151 of the Code. The relevant paragraphs are:
"3. It is necessary to consider first the point taken by Mr. Sen on behalf of the appellants that it is not open to the Court to pass any order of injunction in the exercise of its inherent jurisdiction under Section 151, Civil P. C. His argument is that where the Code has clearly and fully dealt with a matter, there is no scope for any action under inherent jurisdiction. He further argues in this connection that a reading of Section 94 of the Code makes it clear that the provisions of Order 39, Civil P. C. were intended to be exhaustive as regards this matter of temporary injunction. For this proposition he has relied upon the decisions in the case of 'HEMENDRALAL ROY v. INDO SWISS TRADING CO. LTD.', 24 Pat 496. and in the case reported in NAGABHUSHAN REDDY v. NARASAMMA, (1950) 2 Mad L J 482. Quite clearly an opposite view was taken in the Allahabad case of 'DHANESHWAR NATH v. GHANSHYAM DHAR', ILR (1940) All 201.
4. Notice must also be taken of an observation by Mookerjee J in the case of 'NIRODE BARANI DEBI v. CHAMATKARINI DEVYA,' 19 Cal W. N.
205. While it is true that the Court was not, in this case, directly dealing with the point whether an injunction could be granted and the observation therein might be considered obiter, there can be no doubt as 26 to what the learned Judges thought in the matter. Their view clearly was that in a suitably case the Court could give an order of injunction in the exercise of its jurisdiction under Section 151; Civil P. C. even though the provisions of Order 39, C. P. C. might not give it any authority to do so.
5. The principles that .underlie a decision of the question whether on a certain matter there are certain provisions in the Code that bar the exercise of powers under Section 151, Civil P. C. were considered by this Court in the Full Bench case of ABDUD KARIM ABU AHMAD KHAN GHAUZNAVI v. ALLAHABAD BANK LTD,' 44 Cal. 929. Dealing with the argument similar to what has been addressed to us here Woodroffe J. observed:
"......Doubtless this exercise of inherent jurisdiction must be exercised with care subject to the general legal principles and to the condition that the matter is not one with which the Legislature has so specifically dealt as to preclude the exercise of inherent power. But it is argued here that the Court has dealt with the subject of remand and has therefore indicated that it is not to be ordered except in the one! specific instance mentioned in Order 41, Rule 23. I am not prepared to hold this, the more so that Section 564 of the previous Code has not been re-enacted. The mere fact that Section 107 deals with remand does not exclude the Court's inherent jurisdiction to make orders of remand in cases other than those covered by Order 41, Rule 23. I am of opinion, therefore, that the powers of the appellate Court as regards remand are not limited to the specific case mentioned in Order 41, Rule 23 and that the Court, under its inherent jurisdiction, may order a remand to do what is right and necessary in cases other than those covered by that order if justice so requires it. Whether justice does require a Court to invoke its inherent jurisdiction, must be determined by that Court with reference to the particular facts of the case and the 27 rule of law that a Court cannot invoke an inherent jurisdiction where there is a provision in the Code, whether by way of remand or otherwise: which, if applied, will meet the justice of the case."
6. I respectfully agree with the principle as laid down in these words. Applying this principle to the case before us, we are clearly of opinion that the mere fact that there are certain provisions as regards the issue of injunction in Order 39, Civil P. C. does not debar the Court from passing orders of temporary injunction for doing justice in the exercise of its powers under Section 151, Civil P. C. It cannot in our opinion reasonably be argued that the provisions of Order 39, Civil P. C. were intended by the Legislature to be exhaustive.
There cannot be an absolute proposition that in a money claim no order of injunction or attachment or receiver could be made. Order 38 to Order 40 of the Code of Civil Procedure does not restrict the power of the court to pass any order that a court is empowered to pass just because it is a money claim. We have already discussed the circumstances when the court can exercise any of such power.
If there were doubts about exercising power under any of the aforesaid provisions, it can be safely stated that the court has inherent power to pass an order of injunction or attachment upon an unimpeachable liquidated claim being demonstrated and upon it being established that the respondents are taking steps to improperly deny the realization of the claim. When a huge sum of money is claimed and the plaintiff prima facie establishes such amount he would be entitled to secure his interest keeping in view the amount involved in the suit. (See. Rajendran & Ors. v. Shankar Sundaram & Ors. reported at 2008 (2) SCC 724 (paragraphs 12 28 and 13) and Sourav Ganguly v. Mahuaa Media Pvt. Ltd. reported at 2015 (4) CHN (Cal) 509 (paragraph 43)) We have no doubt in our mind that in the instant case in exercise of power under Order 39 Rule 1(b), an order of injunction can be passed against the respondents.
The plaintiff has been able to establish at the ad-interim stage all the conditions required to be fulfilled for an order of injunction.
The law has to be applied considering the facts and circumstances of each case.
On the basis of the aforesaid facts and circumstances, we are of the view that interest of the plaintiff is required to be protected more so when the defendants prima facie appear to have admitted their liability and in spite of acknowledgment of liability did not even repay the interest which according to the own admission of the defendants were to be regularly paid. In fact, it appears to have been paid for the year 1st April, 2017 to 31st March, 2018. Moreover, we find that the defendants are encumbering their assets soon after the notice of demand was issued by the plaintiffs. The balance of convenience is also in favour of the plaintiff having regard to the fraudulent conduct of the respondents. The assets are insufficient to secure the claim of the plaintiff. Under such circumstances there shall be an order of injunction restraining the respondents and each of them from dealing with disposing off, alienating and/or parting with possession of Flat nos. 5A and 6A, at Metro Plaza Apartment at 1, Ho Chi Minh Sarani, Kolkata and 29 Flat nos. 8A and 9A, 6 Queens Park, Kolkata-19 till the disposal of the interlocutory application.
The appeal and the applications are allowed. The order of the learned Single Judge is set aside.
The learned Single Judge shall decide the prayer for attachment before the judgment after the affidavits are exchanged.
We, however, make it clear that the learned Single Judge shall decide the matter uninfluenced by the observations made in this order.
There shall, however, be no order as to costs.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties on an usual undertaking.
(Soumen Sen, J.) I agree.
(Ravi Krishan Kapur, J.)