Himachal Pradesh High Court
M/S Saboo Tor Private Ltd. vs . M/S on 25 October, 2024
M/s Saboo Tor Private Ltd. Vs. M/s NTC Exim India Private Limited & another OMP No. 492 of 2024 in Civil Suit No. 42 of 2024 Reserved on: 19.9.2024 25.10.2024 Present: Mr. Abhishek Verma, learned counsel for the applicant/plaintiff.
The applicant/plaintiff has filed the present application under Order 38 Rule 5 of CPC for attaching the property and restraining the respondent/defendant from creating any encumbrance or charge over the same. It has been asserted that the applicant/plaintiff is a Company registered on 17.6.2011 under the Companies Act. It is engaged in the manufacturing and trading of iron and steel products. Defendant No.2 is the sole proprietor of M/s NTC Exim India Pvt. Ltd.-
defendant No.1. Defendant No.1 is dealing in the business of supply of raw materials. It was supplying the raw material to the plaintiff.
Defendant No.2 visited the factory premises of the plaintiff at Kala Amb to take an order to supply scrap to the plaintiff. He issued advance payment for the supply of the scrap. He assured the applicant/plaintiff to return the amount in case of failure to supply the raw material. Defendant No.2 failed to supply raw material to the plaintiff and when the plaintiff demanded the money back, defendant No.2 issued a cheque of ₹3,25,88,099/-.
The plaintiff presented the cheque but it was dishonoured with the remarks 'funds insufficient'.
The plaintiff served a notice upon the defendant but the defendant failed to pay the amount despite the receipt of the valid notice of demand. The plaintiff filed a complaint for the commission of an offence punishable under Section 138 of the NI Act which is pending before the learned Chief Judicial Magistrate, District Sirmour at Nahan, H.P. Defendant No.2 handed over the photocopies of the property owned by him. The plaintiff has an apprehension that defendant No.2 would sell the property to escape from the liability. The value of the property is ₹2,50,00,000/-. Hence it was prayed that the present application be allowed and the order of attachment be issued.
2. I have heard Mr. Abhishek Verma, learned counsel for the applicant/plaintiff and gone through the records carefully.
3. It was laid down by the Hon'ble Supreme Court in Raman Tech. & Process Engg. Co.
v. Solanki Traders, (2008) 2 SCC 302 that the power under Order 38 Rule 5 of CPC is drastic and extraordinary. It should only be exercised when the plaintiff establishes that the defendant attempted to remove or dispose of its assets to defeat the decree that may be passed. It was observed: -
"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 of 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 Rules. 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 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.
6. A defendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him. Shifting of business from one premises to another premises or removal of machinery to another premises by itself is not a ground for granting attachment before judgment. A 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 delaying the execution of any decree that may be passed against him, before power is exercised under Order 38 Rule 5 CPC. Courts should also keep in view the principles relating to the grant of attachment before judgment. (See Premraj Mundra v. Md. Manech Gazi [AIR 1951 Cal 156] for a clear summary of the principles.)
4. In the present case, there is no averment in the application that the defendant is removing or disposing of his assets. It has merely been stated that the plaintiff has an apprehension that the defendant may dispose of the property owned by him which is not sufficient to attract the provisions of Order 38 Rule 5 of CPC as laid down by the Hon'ble Supreme Court.
5. The contents of the affidavit show that the application has been verified as correct to the knowledge and belief. It was laid down by Punjab & Haryana High Court in Inder Pal Vs. Desh Pal Singh 2002(1) R.C.R.(Rent) 442 that the person filing the affidavit has to verify the para to the personal knowledge or the information received.
Verification with respect to knowledge and belief is no verification at all. It was observed:
"The affidavit is not verified in accordance with the provisions of Order 19 Rule 3(1) of the Civil Procedure Code. The contents and the verification of the affidavit have to be in consonance with the aforesaid provision of CPC. In this view of mine, I am fortified by a judgment of this Court in the case of Bhupinder Singh v. State of Haryana and others, AIR 1968 (Punj.) 407. In paragraphs 16 and 17 of the aforesaid judgment, it is observed as follows: -
"(16) Order 19, Rule 3(1) of the Code of Civil Procedure requires:
"Affidavits shall be confined to such facts as the deponent is able on his own knowledge to prove except on interlocutory applications, on which statements on his belief may be admitted; provided that the grounds thereof are stated".
In no affidavit, has the petitioner said which part was based on information and which on belief. Nowhere he has divulged the source of his information of the grounds of his belief. Where the matter deposed to is not based on personal knowledge but on information the sources of information ought to be clearly disclosed. The petitioner's several affidavits infringe the provisions of Order 19, Rule 3 when they should have been strictly observed. Such affidavits being violative of the requirements of the mandatory provisions of law, deserve to be ignored. The words that the contents of the affidavit "are true and correct to the best of my knowledge and belief" carry no sanctity, and such a verification cannot be accepted. It has been held over and over again that the affidavits must be either affirmed as true to knowledge or from information received provided the source of information is disclosed, or as to what the grounds for such belief were stated. Such affidavits where the verification lacks the essential requirements, are valueless.
(17) In Padmabati Dasi v. Rasik Lal Dhar, (1910) ILR 37 Cal 259, Jenkins C.J. and Wood Roffe J. observed:-
"We desire to impress on those who propose to rely on affidavits that, in future, the provisions of Order 19, Rule 3 must be strictly observed, and every affidavit should clearly express how much is a statement of the deponent's knowledge and how much is a statement of his belief, and the ground of belief must be stated with sufficient particularity to enable the court to Judge whether it would be sure to act on the deponent's belief."
This enunciation of the principle was endorsed by the Supreme Court in State of Bombay v. Purushottam Jog Naik, AIR 1952 SC 317. There is a catena of decided cases supporting this proposition and among others, reference may be made to Durga Das v. Nalin Chandra Nandan, AIR 1934 Cal 694, Bisakha Rani Ghose v. Satish Chandra Roy, AIR 1956 Cal 496 and Dipendra Nath Sarkar v. State of Bihar, AIR 1962 Pat 101."
16. A similar view has been expressed by a Division Bench of this Court in the case of Workmen of Oswal Weaving Factory, Amritsar, petitioners v. State of Punjab through Secretary to Govt. Punjab Labour Dept., respondent, AIR 1966 Punjab 532 (V 53 C 135). In paragraph 6 of the aforesaid judgment, it is observed as follows:-
"(6) On behalf of the State a written statement dated nil duly verified by the Deputy Labour Commissioner, Punjab has been filed in this Court on or about 7.12.1962. It is noticed with regret that the State has not complied with the requirements of rule 6 of Chapter 4-F(b) of the Punjab High Court Rules and Orders.
Vol. V which requires a written statement to a writ petition under Article 226 of the Construction to be in the form of an affidavit. Affidavits have to be drawn, verified and sworn properly and have to conform to the requirement of rule 3(1) of Order 19 of the Code of Civil Procedure. The return made to the rule in this case is in the form of a written statement prescribed by the Code of Civil Procedure and purports to be verified in the same manner though not even as required by Order 6 Rule 15 of the Code. This does not satisfy the requirements of the law. Strictly speaking, there is no proper return to the rule issued by the court in this case. But in the interest of justice, the written statement is being looked into and has been taken into consideration to avoid further delay. I would, however, like to make it clear that this may not be taken as a precedent for such lapse being condoned in future."
17. The Supreme Court in the case of M/s. Sukhwinder Pal Bipan Kumar and others etc. etc. v. State of Punjab and others, AIR 1982 Supreme Court 65 observed as follows: -
"......In the case of M/s Sukhwinder Pal Bipan Kumar in support of the petition, there is an affidavit of one Raj Kumar, claiming to be a partner, who asserts that the allegations in paras 9 and 12 are correct to the best of my knowledge. To say the least, this is no affidavit at all. Under Order XIX, Rule 3, of the Code of Civil Procedure, 1908, it was incumbent upon the deponent to disclose the nature and source of his knowledge with sufficient particularity. The allegations in the petition are, therefore, not supported by an affidavit as required by law."
6. Allahabad High Court took a similar view in M/S Zasha Electrowaste Recycling Private Limited vs. Union of India (2022) 3 CivCC 680 wherein it was observed:
6. As noticed in paragraph 2 above, the deponent of the aforesaid personal affidavit dated 25.02.2022 has not verified/sworn paragraphs 2 either on personal knowledge or on the basis of information received from others or on the basis of information derived from the documents.
7. Affidavit is a mode of placing evidence before the Court. A party may prove a fact or facts by means of an affidavit before this Court but such affidavit should be in accordance Rules. The Rules enable the Court to find out as to whether it would be safe to act on such evidence and to enable the court to know as to what facts are based in the affidavits on the basis of personal knowledge, information and belief as this is relevant for the purpose of appreciating the evidence placed before the Court, in the form of an affidavit.
8. It is only on the basis of verification;
that it is possible to decide the genuineness and authenticity of the allegations and the deponent can be held responsible for the allegations made in the affidavit. It is, therefore, necessary that the person making averments in the affidavit must disclose as to what facts are true to his personal knowledge, what facts are true on the basis of information received from others which he believed to be true and what facts are based on information derived from documents. Full particulars of the document need to be stated and the deponent has to verify that the information is believed to be true. An affidavit which does not comply with the aforesaid provisions of the Allahabad High Court Rules/CPC has no probative value and is liable to be rejected.
9. In the case of Bharat Singh and others Vs. State of Haryana AIR 1988 SC 2181, Hon'ble Supreme Court laid down the law that how in Writ Petition or Counter Affidavit the facts need to be pleaded and proved. The relevant portion of the judgment of the Hon'ble Supreme Court in the case of Bharat Singh(supra) is reproduced below:-
'In our opinion, when a point which is ostensibly a point of law is required to be substantiated by facts, the party raising the point, if he is the writ petitioner, must plead and prove such facts by evidence which must appear from the writ petition and if he is the respondent, from the counter-affidavit. If the facts are not pleaded or the evidence in support of such facts is not annexed to the writ petition or the counter, affidavit, as the case may be, the court will not entertain the point. In this context, it will not be out of place to point out that in this regard there is a distinction between a pleading under the Code of Civil Procedure and a writ petition or a counter-affidavit. While in a pleading, that is, a plaint or a written statement, the facts and not evidence are required to be pleaded, in a writ petition or the counter- affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it.' (Emphasis supplied by us)
10. In the case of State of Bombay Vs. Purushottam Jog Naik AIR 1952 SC 317 a Constitution Bench considering the importance of verification of an affidavit observed (at p.319 of AIR) :
"We wish, however, to observe that the verification of the affidavits produced here is defective. The body of the affidavit discloses that certain matters were known to the Secretary who made the affidavit personally. The verification however states that everything was true to the best of his information and belief. We point this out as slipshod verification of this type might well in a given case lead to a rejection of the affidavit. Verification should invariably be modelled on the lines of Order XIX, Rule 3, of the Civil Procedure Code, whether the Code applies in terms or not. And when the matter deposed to is not based on personal knowledge the sources of information should be clearly disclosed."
11. In the case of Smt. Savithramma Vs. Cicil Naronha & Anr. AIR 1988 SC 1987 (para 2) Hon'ble Supreme Court considered the importance of verification of affidavit and rejection of affidavit in the absence of proper verification and held as under: -
'......Affidavit is a mode of placing evidence before the Court. A party may prove a fact or facts by means of affidavit before this Court but such affidavit should be in accordance with Order XI Rules 5 and 13 of the Supreme Court Rules. The purpose underlying Rules 5 and 13 of Order XI of the Supreme Court Rules is to enable the Court to find out as to whether it would be safe to act on such evidence and to enable the Court to know as to what facts are based in the affidavit on the basis of personal knowledge, information and belief as this is relevant for the purpose of appreciating the evidence placed before the Court, in the form of an affidavit. The importance of verification has to be judged by the purpose for which it is required. It is only on the basis of verification, it is possible to decide the genuineness and authenticity of the allegations and the deponent can be held responsible for the allegations made in the affidavit. In this Court evidence in support of the statements contained in writ petition, special leave petitions, applications and other miscellaneous matters is accepted in the form of affidavit filed by the parties concerned. It is therefore necessary that the party stating facts must disclose as to what facts are true to his personal knowledge, information or belief. If the statement of fact is based on information the source of information must be disclosed in the affidavit. An affidavit which does not comply with the provisions of Order XT of the Supreme Court Rules has no probative value and it is liable to be rejected. In a matter where allegations of mala fides or disobedience of the Court's order are made against a person or party, it is all the more necessary that the person filing the affidavit in this regard must take care to verify the facts stated in the affidavit strictly in accordance with the Rules 5 and 13 of Order XI of the Supreme Court Rules.
12. Since the aforesaid personal affidavit filed on behalf of respondent no.2 by Sri Pradyumn Tripathi, Additional Director General, DGGI, Meerut Zonal Unit, Meerut, does not apply with the provisions of Rule 12 of Chapter IV of the Allahabad High Court Rules/Order XIX Rule 9 C.P.C., therefore, it is liable to be rejected and accordingly, it is rejected."
7. The verification in the present case is also defective and will not assist the plaintiff in establishing his case that the defendants are trying to dispose of the property owned by them justifying the issuance of an order before the attachment.
8. In view of the above, there is no reason to issue an order of attachment before judgment.
Consequently, the present application fails and the same is dismissed.
9. The observation made hereinabove shall remain confined to the disposal of the application and will have no bearing, whatsoever, on the merits of the case.
(Rakesh Kainthla) Judge 25th October, 2024 (Chander)