Anand Saraswat vs Kailash Soni
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 16.10.2026
Date of Decision: 28.10.2026
Date of Uploading:28.10.2026
# CNR No. DLHC010391752026
+ CM(M) 1850/2026 & CM APPL. 56460/2026
ANAND SARASWAT .....Petitioner
Through: Ms. Swati Surbhi, Adv.
versus
KAILASH SONI .....Respondent
Through: Mr. Vinay Kumar Dubey and
Ms. Vaishnavi Prajapati, Advs.
CORAM:
HON'BLE MR. JUSTICE AJAY DIGPAUL
J U D G M E N T
%
1. Through the present petition, the petitioner assails the order
dated 11.08.2026 passed by the learned District Judge (Commercial
Court-01), Saket Courts, New Delhi, in CS (COMM) 348/2025,
whereby the respondent’s application under Order XXXVIII Rule 5
1
read with Section 151 of the Code of Civil Procedure, 1908 , was
allowed and the petitioner was directed to furnish security of
₹15,00,000/- by way of a fixed deposit receipt (FDR) in the name of
the Court.
2. The brief facts of the present case are as follows.
3. The respondent instituted the underlying suit seeking recovery
of ₹17,47,110/- along with interest at the rate of 18% per annum,
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towards outstanding charges for the petitioner’s stay at the guest house
operated under the name and style of M/s Private Affairs. The
respondent stated that the petitioner had failed to clear the outstanding
dues. In his written statement, the petitioner disputed the claim and
asserted that approximately ₹28,00,000/- had already been paid to the
respondent and the firm owned by the respondent’s son. The
respondent thereafter filed a replication.
4. The respondent filed an application under Order XXXVIII Rule
5 CPC dated 18.10.2025, seeking security for the amount claimed in
the suit. The respondent contended, inter alia , that the petitioner was
likely to remove or dispose of his assets so as to obstruct or delay the
execution of any decree that may be passed in the suit. The petitioner
opposed the application by way of a reply dated 29.10.2025, disputing
the alleged apprehension and contending that no specific material had
been placed on record to establish any attempt to alienate or dispose of
assets.
5. During the proceedings, the learned Trial Court, by order dated
18.04.2026, directed the petitioner to place his complete address on
record by way of an affidavit within one week. The petitioner filed the
affidavit on 23.04.2026.
6. The learned trial court vide the impugned order dated
11.08.2026 allowed the respondent’s application under Order
XXXVIII Rule 5 CPC and directed the petitioner to furnish security of
₹15,00,000/- by way of a fixed deposit receipt in the name of the
Court within two weeks. The learned Trial Court noted that the
1
Hereinafter ‘CPC’
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petitioner had no movable or immovable assets within its territorial
jurisdiction and that the respondent had made out a prima facie
genuine claim. It further observed that the possibility of the petitioner
creating an encumbrance to obstruct execution of a decree could not
be ruled out. Aggrieved by the direction to furnish security, the
petitioner has approached this Court.
7. The learned counsel for the petitioner has submitted that the
impugned order has been passed without satisfying the statutory
requirements of Order XXXVIII Rule 5 CPC. She has submitted that
the power to direct security before judgment is exceptional and can be
exercised only where material exists to show that the defendant is
intending to dispose of or remove his assets with the object of
obstructing or delaying execution of a decree. Reliance has been
2
placed on Raman Tech. & Process Engg. Co. v. Solanki Traders ,
wherein the Supreme Court cautioned that the provision cannot be
invoked mechanically or merely to secure an otherwise unsecured
claim.
8. She has submitted that the application dated 18.10.2025 rests on
a general apprehension that the petitioner may remove or alienate his
assets, without identifying any specific asset or conduct indicative of
an intention to defeat execution. The supporting affidavit, she
contends, does not disclose an independent factual basis for this
apprehension, while the application also fails to provide the particulars
and estimated value of the property sought to be attached, as
contemplated under Order XXXVIII Rule 5(2) CPC. Relying on
2
(2008) 2 SCC 302
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3
Premraj Mundra v. Md. Maneck Gazi , she has submitted that a mere
possibility of obstruction cannot substitute for material establishing
the requisite intention. The absence of assets within the territorial
jurisdiction of the learned Trial Court, or the fact that the respondent’s
claim appeared prima facie genuine, could not by themselves justify
the direction to furnish security.
9. Similarly, she has also submitted that the petitioner has
proactively participated in the proceedings despite being a resident of
Maharashtra. Thus, there was no credible reason for the learned trial
court to demand security to ensure the continuation of proceedings.
10. She further submitted that the learned Trial Court erred in
treating the respondent’s claim as prima facie genuine without
adequately considering the petitioner’s rival claim to the alleged
outstanding liability. She has submitted that the respondent’s claim is
founded on invoices and bills, the veracity of which is also disputed,
and the accruing liability whereunder has been disputed by the
petitioner, who asserts that payments aggregating approximately
₹28,00,000/- were made to the respondent, including a payment of
₹15,00,000/- to the firm of the respondent’s son. She has also
submitted that there are numerous bills with the same numbers which
have been issued by the respondent for the same dates. Thus,
considering that the bills which form the basis of the respondent’s
case are fraudulent and that the petitioner has paid more than the
claimed amount, the learned trial court has erred in treating the
respondent’s case to be genuine and bona fide.
3
AIR 1951 Cal 156
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11. Lastly, she has also submitted that the learned trial court has
erred in relying upon the purportedly vague and evasive denials in the
petitioner’s written statement. The petitioner’s explanation for not
having receipts for each payment is that the transactions took place in
the context of a longstanding relationship of trust between the parties.
She has contended that these are not merely general denials of the
claim, but disputes going to the existence and extent of the alleged
outstanding liability, which require examination of the relevant
evidence. In these circumstances, the learned Trial Court could not
have treated the possibility of a decree in the respondent’s favour as
sufficient, in itself, to direct the petitioner to furnish security.
12. Per contra, the learned counsel for the respondent has
submitted that the respondent had established a bona fide claim for
recovery of ₹17,47,110/- towards outstanding guest-house charges and
that the circumstances of the case gave rise to a reasonable
apprehension that execution of a decree in his favour may be
frustrated. He has submitted that the petitioner was a resident of
Palghar, Maharashtra, beyond the territorial jurisdiction of the learned
Trial Court, and that this circumstance, when considered alongside his
conduct, heightened the apprehension that he may place himself
beyond the reach of the Court. He has further submitted that the
petitioner had left the respondent’s guest house without settling the
outstanding charges, thereby giving rise to the present dispute.
According to him, these circumstances, taken cumulatively, warranted
a direction requiring the petitioner to furnish security to safeguard the
eventual execution of the decree.
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13. The learned counsel has submitted that the respondent’s claim
was supported by room bills and WhatsApp conversations exchanged
between the parties. He has contended that the petitioner’s written
statement contained evasive denials, contrary to the requirements of
Order VIII Rules 3 to 5 of the CPC, and did not specifically traverse
the respondent’s assertions regarding the petitioner’s stay, its duration,
or the premises at which the services were availed. He has submitted
that the petitioner had not disputed the factum of his stay at the
respondent’s property during the relevant period and that the
documentary material in the form of WhatsApp chats and the hotel
bills, read with the pleadings, prima facie substantiated the
respondent’s claim for recovery.
14. He has accordingly submitted that the respondent had placed
sufficient material before the learned Trial Court to establish both the
prima facie merits of the claim and the need to secure its eventual
realisation. He has contended that the respondent’s documentary
evidence supported the claim for outstanding charges, while the
petitioner’s residence outside the territorial jurisdiction of the learned
Trial Court, coupled with his conduct in leaving the guest house
without settling the dues, gave rise to a reasonable apprehension that
execution of a decree may be obstructed. He has submitted that the
direction to furnish security of ₹15,00,000/- was intended to preserve
the efficacy of the proceedings and did not determine the petitioner’s
liability in the suit. The learned counsel has, therefore, submitted that
no interference with the impugned order was warranted in the exercise
of supervisory jurisdiction under Article 227 of the Constitution of
India.
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15. He has also relied on the judgment of the Hon’ble Supreme
4
Court in Rahul S. Shah v. Jinendra Kumar Gandhi & Ors. to
submit that in cases of a suit for money, the trial court may direct the
defendant to disclose his assets on oath and thereafter furnish security.
16. Heard. Perused the records.
17. The question which arises for consideration is whether the
respondent, while seeking a direction for furnishing security under
Order XXXVIII Rule 5 of the Code of Civil Procedure, 1908, placed
any material before the learned Trial Court to show that the petitioner
was about to dispose of or remove his property with the intent to
obstruct or delay the execution of a decree that may be passed against
him. It is trite law that for an application under Order XXXVIII Rule
5, the plaintiff is required to demonstrate, through specific facts and
circumstances, the defendant’s intent to defeat the execution of a
possible decree.
18. In Raman Tech. & Process Engg. Co. v. Solanki Traders
(supra) , the Hon’ble Supreme Court noted that the power under Order
XXXVIII Rule 5 CPC is drastic and extraordinary and must be
exercised sparingly, in strict conformity with the conditions prescribed
therein. A prima facie case in favour of the plaintiff, howsoever bona
fide, does not by itself warrant an order directing the defendant to
furnish security. The plaintiff must place material demonstrating that
the defendant is about to dispose of or remove his property with the
intent to obstruct or delay the execution of a decree that may be
passed. The Division Bench of this Court in KCV Airways Ltd. v. Wg.
4
(2021) 6 SCC 418
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5
Cdr. R.K. Blaggana , likewise emphasised the necessity of
establishing the statutory conditions before such a direction can be
issued. The underlying principle emerging from these decisions is that
the Court must be satisfied, on the basis of pleaded and substantiated
facts, both as to the defendant’s proposed conduct concerning his
property and the intent accompanying such conduct. A mere
apprehension that a decree may remain unsatisfied, or the existence of
a bona fide claim, cannot substitute for this statutory requirement.
19. Tested against this standard, the respondent’s application dated
18.10.2025 is bereft of material particulars demonstrating any attempt
by the petitioner to dispose of or remove his property with the intent
to obstruct or delay execution. The application proceeds on a
presumption that the petitioner being a resident of Maharashtra would
vitiate the decree, however, it does not set out any specific acts of
alienation, proposed transfer, removal of assets, or other conduct from
which such an intention could reasonably be inferred. Nor does it
disclose cogent reasons necessitating an order for attachment before
judgment.Mere apprehension of disposal along with the defendant’s
primary resident being out of Delhi does not constitute to be valid
grounds for direction of security.
20. The deficiency in the respondent’s application is not cured by
the reasoning adopted in the impugned order dated 11.08.2026. The
learned Trial Court relied upon the petitioner’s allegedly evasive
denials in the written statement and his residence at Palghar,
Maharashtra, beyond its territorial jurisdiction. Neither circumstance,
in the absence of further material, establishes that the petitioner was
5
(1997) SCC Online Del 453
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attempting to deal with his property in a manner intended to obstruct
or delay execution.
21. The adequacy of the petitioner’s pleadings may be examined in
determining the respondent’s claim; it cannot, by itself, establish an
intention to defeat a decree. Furthermore, the petitioner’s ordinary
place of residence outside the territorial jurisdiction of the learned
Trial Court cannot be treated as an independent ground for directing
security. Residence beyond the jurisdiction of the Court does not, in
itself, indicate an intention to evade execution, much less an attempt to
dispose of or remove assets. In the absence of any extraneous material
demonstrating such an attempt, the inference drawn by the learned
Trial Court rests on the petitioner’s place of residence rather than on
conduct satisfying the statutory threshold. Such an inference cannot
sustain an order under Order XXXVIII Rule 5 CPC.
22. Further, the conduct of the petitioner, who is a resident of
Maharashtra, in proactively participating in the proceedings
contradicts the assumption of the learned trial court that he will
frustrate the proceedings and thereby attempt to vitiate the decree. The
proactive participation by the petitioner makes it apparent that he is
interested in pursuing the proceedings, and thus, the assumption of the
learned trial court that the petitioner will evade the proceedings cannot
be sustained.
23. The exceptional nature of the power under Order XXXVIII
Rule 5 CPC requires the Court to apply a correspondingly strict
standard before directing a defendant to furnish security. The
legislative intent behind Order XXXVIII Rule 5 is to ensure that a
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defendant doesn’t dispose of the property, thereby vitiating the decree.
Thus, the intent of the defendant and any consequent overt act to
dispose the property becomes a paramount consideration. The Court
must examine the defendant’s overt acts and determine whether the
material establishes, first, an attempt or an imminent attempt to
dispose of or remove property and, secondly, the specific intent to
obstruct or delay the execution of a decree. These are distinct but
connected requirements: the conduct relied upon must be identified,
and the intent contemplated by the Rule must reasonably arise from
the material placed on record. In the absence of such material, the
power cannot be exercised merely as a precaution against the
possibility that a decree may go unsatisfied.
24. The petitioner’s purported departure from the guest house
without settling the outstanding dues cannot, by itself, be construed as
indicative of any mala fide intent to obstruct or delay execution of a
decree. Such conduct, even if established, cannot be extrapolated to
impute to the petitioner an intention to defeat the process of execution,
absent any material demonstrating that he was attempting to dispose
of or remove his assets with such intent.
25. The respondent has relied on Rahul S. Shah (supra ) , to submit
that the petitioner ought to be directed to disclose his assets and
furnish security. However, the same is inapplicable to the facts of the
present case as there are no demonstrable circumstances warranting
such a direction. The petitioner, despite residing in Maharashtra, has
participated in the proceedings before the learned Trial Court, and his
place of residence, absent any further material, cannot by itself give
rise to an apprehension that he would evade the process of the Court
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or frustrate execution of a decree. A direction to furnish security
cannot be issued as a matter of course, but must be exercised with
circumspection and only where the circumstances so warrant.
26. In view of the above, this Court is of the considered opinion
that the respondent failed to place before the learned Trial Court
material establishing the petitioner’s intent to obstruct or delay
execution of a decree. The impugned order rests on the prima facie
nature of the respondent’s claim, the alleged evasive denials in the
written statement, and the petitioner’s residence outside the territorial
jurisdiction of the learned Trial Court. These considerations do not
satisfy the requirements of Order XXXVIII Rule 5 CPC. The direction
requiring the petitioner to furnish security of ₹15,00,000/- is,
accordingly, unsustainable.
27. The petition is allowed and the impugned order dated
11.08.2026 is set aside. It is clarified that the observations made
herein are confined to the respondent’s application under Order
XXXVIII Rule 5 CPC and shall not prejudice the adjudication of the
parties’ respective claims and defences in the pending suit.
AJAY DIGPAUL, J.
OCTOBER 28, 2026/ AS/sg
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