Modista Resortwear vs LA Calypso Hotels Pvt. Ltd.

F.M. Reis, J.—Heard Shri A. R. Kantak, learned Counsel appearing for the appellant. The above appeal challenges the order passed by the learned Civil Judge Senior Division, at Mapusa, in Special Civil Suit No. 98/2009/C whereby an application for temporary injunction filed by the appellant restraining the respondent inter-alia from alienating the property belonging to the respondent came to be rejected.

The appellant has filed a suit for decree of money on the ground that the appellant had rendered services to the respondent for construction of tourist sheds. It is further their case that in view of the fact that the respondent had not cleared the amount payable to the appellant, the suit came to be filed to claim a specific sum of money of about Rs.28 lakhs from the respondent.

On being served with the summons of the said suit, the respondent filed their written statement along with counter claim and put forward the claim against the appellant of Rs.1,95,60,000/-. The appellant filed an application for temporary injunction on the ground that the appellant had apprehension that the respondent may dispose of the property belonging to the respondent situated at Calangute, Bardez Goa. The learned Judge upon hearing the parties and on perusal of the records, came to the conclusion that the suit was merely for recovery of money and taking note of the fact that the claim of the appellant itself was under dispute, the learned Judge found that the question of granting any interim injunction at this stage was not justified. The learned Judge upon appreciating the evidence on record and considering the submissions of both the parties prima facie came to the conclusion that the appellant was not entitled for temporary injunction as prayed for. Being aggrieved by the said order dated 20.1.2011, the appellant preferred the present appeal.

Shri A. R. Kantak, learned counsel appearing for the appellant has assailed the impugned order essentially on the ground that as per the statement of accounts filed by the respondent, the appellant is being shown as creditor of the respondent. The learned Counsel has taken me through the statement of accounts for the year 2007-2008 and pointed out that there are figures mentioned therein to the effect that the appellant was creditor of the respondent. The learned Counsel has taken me through the statement of accounts of the appellant and pointed out the figures mentioned with regard to the debtors of the appellant disclose that the respondent is a debtor of the appellant. The learned counsel as such submitted that the fact that the appellant is a creditor of the respondent has been prima facie established. The learned Counsel further pointed out that though the figures shown in the statement of accounts is a sum of Rs.39 lakhs nevertheless, according to him, subsequently some of the amount has been paid and the amount due from the respondent at the time of the filing of the suit is around Rs.28 lakhs. The learned Counsel has further taken me through the provisions of Order 39 Rules 1 and 2 of CPC and pointed out that the Court has powers to stay alienating of immovable property pending hearing of the suit. The learned Counsel further pointed out that there are ample powers on the Court also to restraint alienating of the property in cases in which the properties are sold to the detriment of the creditors and as such the learned Counsel submits that considering the provisions of Order 39 Rules 1 and 2 of the Civil Procedure Code, the learned Judge was not justified to refuse the application for temporary injunction. In support of his submissions, the learned Counsel has relied upon the judgments of this Court reported in Jagdish Balwantrao Abhyankar and Others Vs. State of Maharashtra and Others, and CDJ 2012 Bombay High Court 099 in the case of Swan Mills Ltd. & Anr. V/s Dhirajlal @ Dhirubhai Babaria & Others. The learned Counsel as such submits that even assuming the Court was not inclined to grant the injunction in terms of the provisions of Order 39 Rules 1 and 2 of CPC nevertheless the Court could have exercised its powers under Order 38 Rule 5 of the CPC to attach the property before judgment.

Having heard the learned Counsel and on perusal of the records, it is well settled that the appeal against an order of temporary injunction is an appeal against a discretion order. On perusal of the impugned order, I find that the learned Judge on perusal of the material on record has exercised its discretion in refusing the application for temporary injunction. The learned Judge has taken note of the fact that the suit filed by the appellant is for a money decree. Hence, the question of restraining on alienating the property when prima facie evidence that any such exercise is being done to defraud the creditors has not been adduced would not arise. The learned Judge has also noted that the apprehension of the appellant has not been established and that the respondent have denied their intention to dispose of the property. Hence, the contention of the learned Counsel appearing for the appellant to the effect that the Court has powers to grant an injunction to restraint alienation of the property cannot be accepted unless prima facie evidence is brought on record to the above effect. The suit is merely for recovery of money and as such the relief under the provisions of Order 39 Rule 1 of CPC to obtaining such an injunction would not arise. The learned Judge has rightly exercised the discretion in refusing the application for temporary injunction.

With regard to the next contention of the learned Counsel appearing for the petitioner to the effect that the Court could have exercised its powers under Order 38 Rule 5 of CPC and passed an order of attachment before judgment, I find on the basis of material on record there is nothing to suggest prima facie that any action has been initiated by the respondent which would necessitate such relief. This aspect could be dealt with only in case the petitioner advanced submissions on that count before the learned Judge. Nevertheless, considering that the suit is for money decree and the claim put forward by the petitioner is disputed by the respondent, the question of granting any injunction to secure the liability of the respondent at this stage would not arise.

The Apex Court in the judgment reported in Raman Tech. and Process Engg. Co. and Another Vs. Solanki Traders, has held at paras 4, 5 and 6 thus :

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 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.

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 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 utilise 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 settlements under threat of attachment.

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 grant of attachment before judgment. (See Premraj Mundra v. Md. Maneck Gazi for a clear summary of the principles.)

Considering the judgment of the Apex Court in the case of Raman Tech. & Process Engg. Co. ( supra), I find it appropriate that the question of granting relief as claimed by the learned Counsel appearing for the appellant under Order 38 Rule 5 of the CPC in the above proceedings, would not be justified. Such application would have to be considered on its own merits in the light of the observations made by the Apex Court as referred to herein above.

Be that as it may, it is always open to the petitioner to file an application under Order 38 Rule 5 of CPC for attachment before judgment and in case any such application is filed, the learned Judge shall dispose of such an application after hearing the parties in accordance with law on its own merits. The question of now converting application filed by the petitioner to be one under Order 38 Rule 5 of Civil Procedure Code, in the facts and circumstances of the case would not be justified. Hence, the judgments relied upon by the learned Counsel appearing for the petitioner are not applicable to the facts and circumstances of the present case. In view of the above, I find no justification to interfere in the impugned order passed by the learned Civil Judge Senior Division, at Mapusa. Hence, the appeal stands dismissed.