Full Judgment Text
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CASE NO.:
Appeal (civil) 6171 of 2001
PETITIONER:
Raman Tech. & Process Engg. Co. & Anr.
RESPONDENT:
Solanki Traders
DATE OF JUDGMENT: 20/11/2007
BENCH:
R.V. RAVEENDRAN & P. SATHASIVAM
JUDGMENT:
JUDGMENT
ORDER
1. The appellants are the defendants in O.S. No. 143/2000 on the file of
the Civil Judge Junior Division, Medchal, filed by the respondent for
recovery of Rs.99200/- towards supply of material.
2. The plaintiff moved an application under Order 38 Rule 5 CPC praying for
a direction to defendants to furnish security for the suit claim and if
they failed to do so, for attachment before judgment. The Trial Court by
its order dated 4.8.2000 dismissed the said application. It noted that
though the plaintiff alleged that two post dated cheques given by the
defendants towards payment of the bill amounts were dishonoured, it had
neither disclosed the particulars of the said cheques, nor the dates of
dishonour. It was of the view that merely making a bald statement that
Rs.99,200/- was due from the defendants was not sufficient to make out
prima facie case, when defendants had denied the suit claim.
3. The said order was challenged in revision by the plaintiff. Before the
High Court, the plaintiff pointed out that the trial court had ignored its
averment that defendants had removed their name board and were removing
their machinery from the jurisdiction of the court. The plaintiff also
produced a copy of the writ petition (WP No. 11855/2000) filed by the
defendants to restrain the police from interfering with the shifting of
their assets from their business premises to another premises. The High
Court allowed the revision petition by order dated 13.10.2000, being of the
view that the trial court ought to have taken note of the fact that
defendants were trying to remove the machinery. It directed defendants to
furnish security for the suit amount to the satisfaction of the court
within four weeks. The said order is challenged in this appeal by special
leave.
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
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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 this case, the suit claim was Rs. 99200/- The notice issued before
filing the suit related to dishonour of two cheques for Rs.
22487/-. The particulars of the claim in the plaint were not specific. The
trial court had rejected the application on the ground that plaintiff had
failed to make out a prima facie case. It did not, therefore, examine the
question whether defendant was attempting to defeat any decree that many be
passed by shifting his machinery. On the other hand, the High Court ignored
the absence of prima facie case. It granted relief under Order 38 rule 5,
in exercise of revisional jurisdiction, swayed by the fact that the
defendants had shifted their assets to another premises.
8. On the facts and circumstances, the High Court ought not to have
interfered with the order rejecting the application. We, therefore, allow
this appeal and set aside the order of the High Court and restore the order
of the trial court.