RAMAN TECH. & PROCESS ENGG. CO. & ANR. v. SOLANKI TRADERS

Citation: [2007] 12 S.C.R. 409

Court: Supreme Court of India

Bench: R.V. RAVEENDRAN, P. SATHASIVAM

Case summary

RAMAN TECH. & PROCESS ENGG. CO. & ANR. v. SOLANKI TRADERS.pdf

Judgment text

>. r-- RAMAN TECH. & PROCESS ENGG. CO. & ANR. v. SOLANKI TRADERS NOVEMBER 20, 2007 ... [R. V. RAVEENDRAN AND P. SATHASIVAM, JJ. ] -4 Code a/Civil Procedure, 1908: Or. 38 r. 5-Direction to defendant to furnish security for suit claim-HELD: Power under Or. 38 r. 5 is a drastic and extraordinary power-Such power should not be exercised mechanically-It should be used sparingly and strictly in accordance with Rule-Purpose of Or. 38 r. 5 is not to convert an unsecured debt into a secured debt- ~ . Any attempt by aplaintiffto utilizeprovisions ofOr. 38 r. 5as aleverage ~ for coercing defendant to settle the suit claim shouldbe discouraged- -<{ Beforepower is exercisedunder Or. 38 r.

5, plaintiffshouldshow, prima facie, that his claim is bonafide and valid and also satisfy the court that defendant is about to remove or dispose ofwhole or part ofhis property, with intention ofobstructing or delaying execution ofany decree that may be passed against him-Courts should also keep in view the principles relating to grant ofattachment beforejudgment*- A defendant is not debarred. fi'om 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 or removal of machinery to ~ another premises by itself is not a ground for granting attachment beforejudgment-Onfacts, particulars ofclaim in the plaint were not specific-Trial court had rejected application on ground thatplaintiff had failed to make out a prime facie case-It did not, therefore, examine the question whether defendant.

by shifting his machinery, was attempting to defeat any decree that may be passed-High Court ·~ ignored absence ofa prima facie case andought not to have interfered with order rejecting application-Order ofHigh Court is set aside and that oftrial court restored. *Prem RajMundra v. Afd. Maneck Gazi, AIR 1951 Cal 156, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6171 of 2001. From the final Judgment and Order dated 30. 10. 2000 ofthe High .. Court ofJudicature, Andhra Pradesh at Hyderabad in C. R. P. No. 3377/ '" 2000. D. Mahesh Babu for the Appellant. The following Order ofthe Court was delivered by ORDER 1. The appellants are the defendants in O. S. No. 143/2000 on the file ofthe Civil Judge Junior Division, Medchal, filed by the respondent . for recovery ofRs. 99200/- towards supply ofmaterial. "' . ,. 2.

The plaintiffmoved an application under Order 38 Rule 5 CPC praying for a direction to defendants to furnish security for the suit claim and ifthey 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 ofthe bill amounts were dishonoured, it had neither disclosed the particulars of the said cheques, nor the dates of dishonour. It was ofthe view that merely making a bald statement that ' Rs. 99,200/- was due from the defendants was not sufficient to make out primafacie case, when defendants had denied the suit claim. i.. 3. The said order was challenged in revision by the plaintiff. Before the High Court, the plaintiffpointed out that the trial court had ignored its averment that defendants had removed their name board and were removing their machinery from the jurisdiction ofthe 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 oftheir assets from their business premises to another premises. The High Court allowed the revision petition by order dated 13. 10. 2000, being of _,_ RAMAN TECH. & PROCESS ENGG. CO. v. SOLANKI 411 TRADERS ~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 ofthe 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 ofreceivers) is to prevent the ends ofjustice being defeated.

The object of order 38 rule 5 CPC in particular, is to prevent any defendant from defeating the realization ofthe decree that may ultimately be passed in favour ofthe plaintiff, either by attempting to dispose of, or remove from the jurisdiction ofthe court, his movables. The Scheme of Order 38 and the use ofthe 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 plaintiffhas aprimafacie case. Ifthe averments in the plaint and the documents produced in support ofit, do not satisfy the court about the existence ofaprimafacie case, the court will not go to the next stage ofexamining whether the interest ofthe plaintiffshould be protected by exercising power under Order 38 Rule 5CPC.

It is well-settleq that merely having ajust or valid claim or aprimafade case, will not entitle the plaintiff to an order ofattachment before judgment, unless he also establishes that the defendant is attempting to remove or dispose of his assets with the intention ofdefeating the decree that may be passed. Equally well settled -1 is the position that even where the defendant is removing or disposing his assets, an attachment before judgment will not be issued, ifthe plaintiffis not able to satisfy that he has aprima 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 fpr the asking. It Should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to conve11 an unsecure:g:debt into a secured debt.

Any attempt by a plaintiff to utilize the prova·~ions ofOrder 38 Rule 5as 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 ofattachment before judgment and forcing the defendants for out ofcourt settlement, under threat of attachment. 6. Adefendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him. Shifting ofbusiness ~ from one premises to another premises or removal ofmachinery to another premises by itselfis not a ground for granting attachment before judgment.

plaintiffshould show, primafacie, that his claim is bonafide and valid and also satisfy the court that the defendant is about to remove or dispose ofthe whole or part ofhis 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 ofthe 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 ofthe claim in the plaint were not specific. The trial court had rejected the application on the ground that plaintiffhad failed to make out aprimafacie 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 ofprimafacie case. It granted relief under Order 38 rule 5, in exercise ofrevisional 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 ofthe High Court and restore the order ofthe trial court. \-c RP. Appeal allowed.