Madras High Court
R.Ramesh vs R.Raveender on 28 February, 2014
Author: R.Mahadevan
Bench: R.Mahadevan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 28.2.2014. CORAM THE HON'BLE MR.JUSTICE R.MAHADEVAN C.M.A.No.2241 of 2013 and M.P.No.1 of 2013 R.Ramesh Appellant vs. R.Raveender Respondent Civil Miscellaneous Appeal against the award passed in I.A.No.203 of 2013 in O.S.No.44 of 2013 dated 18.3.2013 on the file of the Principal District Judge, Tiruppur. For appellant : Mr.R.Sivaprakasam For respondent : Mr.T.Murugamanickam JUDGMENT
This appeal is filed against the fair and decreetal order dated 18.03.2013 passed in I.A No 203 of 2013 in O.S No 44 of 2013 passed by the Principal District Judge, Tiruppur.
2. The suit for recovery of money to the tune of Rs.55,46,000/- was filed by the plaintiff based on promissory note and a dishonoured cheque issued by the appellant. An interim Application under Order XXXVIII Rule 5 and section 151 of of the Code of Civil Procedure was also filed by the plaintiff for a direction to the defendant to furnish security failing which to attach the schedule mentioned property in the application alleging that the appellant was attempting to alienate the property. It appears from the records that an exparte direction was given to the appellant to furnish security for Rs.65,00,000/-. The defendant immediately, upon receipt of the order, seems to have filed a counter questioning the liability and also placing the fact and documents to show that the property was already under mortgage with the Indian Overseas Bank and sought for dismissal of the application. The Trial Court, after hearing the parties, has allowed the application attaching the property of the defendant. Aggrieved, the defendant has filed this appeal.
3. The Learned counsel for the appellant vehemently assailed the orders of the Trial Court contending that unless the respondent establishes with specific references, the property of the appellant cannot be attached. The Counsel further contended that in view of the fact that the properties were mortgaged with Indian Overseas Bank, the appellant cannot dispose of the property without clearing the loan. The counsel further contended that once the defendant appears and shows cause and furnishes reasons with documents in support of his contentions, the court must reconsider its earlier decisions and not mechanically pass orders. The counsel for the appellant has also relied upon the following judgments:-
1. RAMAN TECH & PROCESS ENGG. CO. v. SOLANKRI TRADERS (2008(2) SCC 302)
2. V.K.NATARAJA GOUNDER v. S.A.BANGARU REDDIAR (AIR 1965 Mad 212)
3. A.S.SAMIVEL v. K.ANNAMALAI (2003-4-LW 283)
4. GOPAUL ENVEOPES v. SANTI CORPORATION (2010 (1) MLJ 919)
5. P.MADANAGOPAL & OTHERS v. V.GANGABAVANI ((2004) (2) MLJ 123)
6. SRI PANDURANGA BRICK WORKS v. GURUNAGENDRA FOUNDATIONS PVT LTD. ((2007) 4 MLJ 863)
7. K.VIJAYAVEL v. TAMIL NADU MERCANTILE BANK LIMITED ((2005) (2) MLJ 417)
8. S.NAGALAKSHMI v. R.NAGALINGAM ((2012) 3 MLJ (Crl) 174)
9. KRISHNA JANARDHAN BHAT v. DATTARAYA G.HEDGE ((2008) 1 MLJ (Crl) 1149 SC).
4. Per contra, the learned counsel for the respondent has contended that the Learned Trial Court, after observing that the plaintiff has made out a prima facie case, has rightly attached the property of the appellant. The counsel further contended that in view of the specific findings of the Trial court that the signature in the promissory note is not disputed by the appellant, the order cannot be said to be mechanical. The counsel also placed reliance upon the judgment reported in RAJENDRAN v. SHANKAR SUNDARAM ((2008) 2 SCC 724 to contend that existence of prima facie case alone is sufficient for attaching the property.
5. Heard both sides and perused the original records from the Trial Court. On demand, the counsel for the appellant has also produced a letter from the Indian Overseas Bank and encumbrance certificate before this Court to substantiate that the mortgage continues till date.
6. In the Judgment reported in 2008 (2) SCC 302, the Apex Court has held as follows:
"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 realization 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 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 5CPC. It is well-settled that merely having a just or valid claim or a prima facie case, will not entitle the plaintiff to an order of attachment before judgment, unless he also establishes that the defendant is attempting to remove or dispose of his assets with the intention of defeating the decree that may be passed. Equally well settled is the position that even where the defendant is removing or disposing his assets, an attachment before judgment will not be issued, if the plaintiff is not able to satisfy that he has a prima facie case.
5. The power under Order 38 Rule 5 CPC is drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It Should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilize 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 settlement, 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 bonafide 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 grant of attachment before judgment (See - Prem Raj Mundra v. Md. Maneck Gazi, AIR (1951) Cal 156, for a clear summary of the principles.)"
7. In the judgment reported in AIR 1965 MAD 212, this court has held as follows:
4. The learned City Civil Judge, after summarising the allegations contained in the respective affidavits of the parties, reached the strange conclusion that the fourth defendant should deposit half the suit amount. There is no finding by the learned Judge that the appellant is intending to alienate his properties with a view to defeat or delay creditors and that unless he is prevented from alienating the properties, the plaintiff will be prejudiced in realising he decree which he may ultimately obtain in the suit. The learned Judge observes that the fourth defendant is not living within the jurisdiction of the City Civil Court, that he is not possessed of any property within the said jurisdiction and that the plaintiff has got "apprehensions" in his mind. I wish to set out the conclusion reached by the court below in the words of the learned Judge himself only to point out that it is in utter disregard of the provisions of the Civil Procedure Code. The learned Judge states-
"In view of the allegations made in the counter affidavit and taking into consideration the allegations that the fourth defendant is a well-to-do person and also the apprehensions in the mind of the plaintiff, as an interim measure without ordering any attachment of any properties it is directed that the fourth defendant to deposit into court in two seeks' time cash security of half of the suit claim amount to be kept in deposit without prejudice to his contentions,"
The learned City Civil Judge does not appear to have borne in mind the relevant provisions of the Civil Procedure Code in making this order. The remedy of an attachment before judgement is certainly extraordinary. If granted, it casts an obligation on the party against whom it is made, even before he is heard in defence to the suit. The purpose of the rule is to safeguard the right of the plaintiff in the event of his getting a decree in his favour and to prevent a fraudulent defendant from defeating the decree. It is clear that the court has to act with the utmost circumspection and with maximum care and caution before issuing an order of attachment. Otherwise, it would become a weapon of oppression in the hands of unscrupulous plaintiffs.
5. ... The essential requirements which must be proved to the satisfaction of the court are: (1) the defendant is about to dispose of the whole or any part of his property; or (2) the defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the court, and (3) 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. 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. This is really settled law on the subject. Senaji Kapurchand v. Pannaji Devichand, ILR 46 Bom 431: (AIR 1922 Bom 276); Bedanand Rai v. Nabo Kumar Singh, AIR 1938 Pat 161; Durga Das v. Nalim Chandra, 38 Cal W N 771: (AIR 1934 Cal 694). A verbatim copy of the provisions of the Code in the affidavit in support of the application, or a mechanical repetition of the language of the Code without an iota or substratum of truth underlying the allegation, would be merely colourable and would constitute an abuse of process of court. The court must insist upon the strict proof of the said allegation. Any order of the court without a proper investigation whether the allegations are well-founded or not, would constitute a gross dereliction of duty."
8. In the Judgment reported in 2003 (4) LW 283 this court has held as follows:
There should be some concrete material by way of acceptable evidence placed before the Court, so that the Court can satisfy itself about passing an order of attachment before judgment is not a mere formality and such order cannot be passed in a haphazard or cavalier manner since such an order casts an obligation on the party against whom it is made even before he is heard in defence to the suit.
9. In the judgment reported in 2005 (2) MLJ 417, this court has held as follows:
"16. O.38, Rule 5, C.P.C. is a drastic order, which interferes with the right of the parties to deal with his property/money. Before passing an order of attachment before judgment, the Court must be satisfied on the compliance ofO.38, Rule 5, C.P.C. by readingO.38, Rule 5, C.P.C., it is clear that the essential requirements must be proved to the satisfaction of the Court as pointed out in the decision reported in Renox Commercials Limited. v. Inventa Technologies Private Limited Renox Commercials Limited. v. Inventa Technologies Private Limited Renox Commercials Limited. v. Inventa Technologies Private Limited A.I.R. 2000 Mad.213:,
(i) the defendant is about to dispose of his property or is about to remove the property from the jurisdiction of the Court, and
(ii) the defendant is intending to do so with a view to causing obstruction to, or delaying the execution of any decree that may be passed against the defendant; and
(iii) The plaintiff should state precisely the grounds on which the belief or apprehension can be entertained, that the defendant is likely to dispose of, or remove the property.
Thus, the plaintiff precisely state the grounds on which plaintiff bank has entertained the plea or apprehension that the defendant is likely to dispose or remove the property."
10. The other judgments relied upon the by the counsel for the appellant are also on the same lines. The judgments reported in MLJ (Crl) are relied upon by the counsel for the appellant to contest that mere issuance of a cheque will not create any presumption of guilt and it is the duty of the complainant to prove that the debt is legally enforceable.
11. With regard to the judgment relied upon by the respondent in 2008 (2) SCC 724, this court is of the opinion that the same is not applicable to the present facts of the case and the settled proposition of law that prima facie case alone is not sufficient for grant of an order of attachment.
12. The relevant provisions of Civil Procedure Code are extracted as under:
"Order XXXVIII Rule 5: Attachment before judgment
5. Where defendant may be called upon to furnish security for production of property (1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him,
(a) is about to dispose of the whole or any part of his property, or
(b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.
(2) The plaintiff shall, unless the court otherwise directs, specify the property required to be attached and the estimated value thereof.
(3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified.
1[(4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule such attachment shall be void.]"
Order XXXVIII Rule 6:- 6. Attachment where cause not shown or security not furnished (1) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Court, the Court may order that the property specified, or such portion thereof as appears sufficient to satisfy any decree which may be passed in the suit, be attached.
(2) Where the defendant shows such cause of furnishes the required security, and the property specified or any portion of it has been attached, the Court shall order the attachment to be withdrawn, or make such other order as it thinks fit."
13. A reading of the above provisions would make it clear that the court is empowered to either direct the defendant to furnish security or show cause as to why such direction should not be given. If only the defendant fails to show cause or furnish security, attachment can be ordered exercising the powers granted under Rule 6. But attachment is not automatic. The word may employed in Sub-clause (1) of Rule 6 would imply that the Trial Court is bound to conduct an enquiry and apply its mind before ordering attachment. The powers conferred under Order XXXVIII Rules 5 and 6 to direct the defendant to either furnish security or order attachment is a discretionary relief. The discretion has to be carefully exercised. The court must take into account not only the statement in the affidavit but also consider the possibility of the correctness of the statement in corroboration with specific particulars in the affidavit or documents filed in support of the affidavit. When the allegations in the affidavit that the defendant is attempting to alienate the whole or portion of the property or that the defendant is attempting to remove the property from the jurisdiction of the court are vague, unspecific and not supported by any proof, the courts must be hesitant in attaching the property of the defendant.
14. In the present case, the Trial court seems to have been carried away with the fact that the appellant, instead of furnishing security, has filed the counter and sought for the dismissal of the application. It is the right of a defendant to file a counter and point out that the contentions in the affidavit are false. The affidavit filed by the respondent in support of the application reads as under:
3. I submit that the Respondent herein is having only immovable property detailed in the petition. I state that the Respondent is making hurried attempts to dispose off the property detailed in the Petition to the third parties with a view to defeat and deprive off my right as well the decree that may be passed in my favour, against the Respondent/defendant. If the Respondent succeeds in his attempt to dispose off the property detailed in the petition, I will be left with no other relief whatsoever to recover the huge amount outstanding from the Respondent.
4. Unless this Hon'ble Court is pleased to direct the Respondent to furnish the adequate security for the suit claim, failing which order the attachment of the property detailed in the petition, I will be put to irreparable loss and hardships.
15. The Trial court has allowed the application by giving the following findings:
But in the absence of any oral evidence we cannot say that the case of the respondent is correct. On the other hand the signature of this respondent in the promissory note filed by the petitioner has not been disputed by this respondent. The respondent has also not furnished any security for the suit amount as directed by this Court. So this court is satisfied that there is prima facie case for ordering attachment before judgment of the scheduled mentioned property for Rs.65,00,000/= (being the suit amount with subsequent interest)
16. This court is of the opinion that averments in the affidavit does not satisfy the requirements of Order XXXVIII Rule 5. The respondent has not given any particulars in the affidavit whatsoever regarding the purported alienation. The Trial court has totally failed to consider that in view of the mortgage, the appellant could not alienate the property. The Trial court also failed to see that the property was mortgaged even prior to the date of alleged transaction with the plaintiff. There is not even a finding by the Trial court regarding any attempt or proposal by the appellant to alienate the property to defeat the interest of the respondent. There cannot be any mechanical attachment even if security is not furnished. Therefore, the order of the Trial court is totally devoid of merits and is not in accordance with the law. Hence the order of the Trial Court in I.A No 203/13 in O.S No 44/13 is hereby set aside. However considering the facts and circumstances, the appellant shall not create further mortgages and ensure that status quo is maintained with regard to the property pending the suit. The order of status quo will not prevent the appellant from discharging the loan with the bank. Considering the fact that the lis is still at large before the Trial court, the Learned Judge is directed to dispose the suit within three months from the date of receipt of copy of this order.
In the result, the civil miscellaneous appeal is disposed of. No costs. The connected miscellaneous petition is closed.
28.2.2014.
Index: Yes.
Internet: Yes.
ssk.
To
1. The Principal District Judge, Tiruppur.
2. The Section Officer, V.R. Section, High Court, Madras.
R.MAHADEVAN, J.
Ssk.
JUDGMENT IN C.M.A.No.2241 of 2013 Delivered on 28.2.2014.