M/s. Raja Holdings vs N. Kanthimathi

C.S. Karnan, J.—The plaintiff has filed original suit in O.S. No. 51 of 2013, on the file of Principal District Judge, Thanjavur, against the defendants stating that the first and second defendants have jointly executed pronotes and received loan amount on interest basis on various dates. As such, the defendants are liable to pay a sum of Rs. 3,98,20,200/-. For the said loan, the third and fourth defendants stood as guarantors and also executed an undertaking letter as guarantors. Therefore, the suit was initiated against all the defendants for recovery of the said amount. The plaintiff further stated that the first and second defendants own immovable properties worth about Rs. 10 Crores at Kumbakonam and commercial buildings worth about Rs. 20 Crores at Chennai and they are getting an annual income of Rs. 5 Crores. As such, the defendants are not entitled to receive any benefits under the Tamil Nadu Debt Relief Act. Further, the plaintiff has filed three interlocutory applications along with the suit and filed I.A. No. 87 of 2013, seeking an order of injunction restraining the defendants 3 and 4 not to alienate the properties mentioned in the accompanying petition till the disposal of the suit. In another application in I.A. No. 88 of 2013, the plaintiff has sought a direction to direct the second defendant, viz., Mrs. N. Kanthimathi to furnish security for a sum of Rs. 5 Crores for the purpose of satisfying the decree amount, that may be passed in favour of the plaintiff within a time to be fixed by Court and in default, attach the petition mentioned properties and if after such attachment, the second defendant fails to comply with the same, order of interim attachment by precept should be made absolute. The plaintiff has also filed another application in the same suit in I.A. No. 89 of 2013, to furnish the security for a sum of Rs. 5 Crores, for the purpose of satisfying the decree, that may be passed in favour of the plaintiff within the stipulated time failing which, the petition mentioned properties are to be attached.

All the three interlocutory applications have been resisted by the defendants after filing a counter statement. The learned Judge, after considering the averments of the parties and on hearing the arguments of the learned counsels on either side and on perusing the documents filed by the plaintiff dismissed all the interlocutory applications and passed separate orders and decreetal orders in the said supplementary applications.

The above C.R.P. arises from order and decreetal order passed in I.A. No. 89 of 2013 in O.S. No. 51 of 2013, filed by the plaintiff.

The highly competent counsel for the petitioner/plaintiff vehemently argued that the first and second defendants had not denied their liabilities to pay the loan amount to the plaintiff. Further, the third and fourth defendants are the son-in-law and daughter of the first and second defendants and they had jointly and duly executed an undertaking letter, as guarantors, on 15.11.2012 in favour of the plaintiff. The plaintiff has also annexed 28 vital documents with the plaint in order to prove the case against the defendants for recovery of the said loan amount. As such, the plaintiff has made out a prima-facie case. Therefore, the plaintiff has filed three interlocutory applications and sought interim relief to furnish security in order to secure the loan amount given by him. Further, if the security is furnished by the defendants, the defendants would not be put into irreparable loss and if the defendants do not furnish the security, the plaintiff will be put into hardship and irreparable loss, if the plaintiff obtains the decree of recovery against the defendants. The highly competent counsel has further submitted that the balance of convenience Rests on the side of the plaintiff since all the defendants had openly admitted their liability in their respective counters and written statements and besides this, they have jointly executed several instruments for obtaining the said loan from the plaintiff. As such, the plaintiff has complied with all the three principles, in order to get the interim order, before the trial Court. However, the learned Judge, erroneously dismissed all the three applications which have been filed Order 38 Rule 5 and Section 161 of C.P.C. The defendants are capable persons to pay the said amount since they own immovable properties at Kumbakonam and Chennai, which are highly valuable properties. The interim order is not a final order and as such, the defendants will not be prejudiced, if it is granted. Even if the security is furnished by the defendants or even if attachment order is passed by the trial Court, the said security or attachment of property will be under the Court custody until disposal of the main suit. As such, both the parties will not be prejudiced, if interim order is passed in all the supplementary applications. Hence, the learned counsel entreats the Court to allow the above revision and in support of his contentions, he has cited the below mentioned judgments:-

(i) K. Jayalakshmi Vs. S.M. Muthaier,

...... With a view to safeguard the interest of a plaintiff during the interregnum between the filing of the application for an order of attachment and the service of notice on the defendant and his or her appearing in response to that with reference to matters mentioned in the notice and showing cause, etc., the Court is empowered under Order 38, Rule 5(1), Civil Procedure Code, to direct a conditional attachment of the whole or any portion of the property specified in the application for attachment. In this, connection, the language of Order 38, Rule 5(3), Civil Procedure Code, should also be borne in mind.

(ii) Nagpal Steel Limited and Another Vs. Arjun Dev Verma and Another,

The provisions of Order 38, Rule 5 of the CPC are stringent and are exercised normally by the Courts when the applicant is able to make out a prima facie case on the one hand and on the other hand is able to satisfy the ingredients under these provisions. In the present case there are specific allegations made in the application that the defendants are bent upon disposing of the goods as well as the immovable property at Satsang road. Industrial Area, Ludhiana to defeat the decree which is likely to be passed in their favour. The allegations were vaguely denied an even detailed reply to this application was not filed. May be the provisions are stringent but where the facts and circumstances of the case makes it apparent on record that the intention of the defendant is not bona fide and they are attempting to frustrate the decree which is likely to be passed in favour of the plaintiff and they offend any of the clauses to Order 38, Rule 5, the Court would normally come to the rescue of the applicant for such safeguard.

(iii) M/s. Lingam & Co. Vs. Unknown, C.M.A. (MD) No. 1137 of 2009, dated 03.02.2011

The respondent had contested the petition. While denying the allegations, the respondent had given an undertaking before the trial Court saying that he would not alienate the schedule mentioned property at any time before the disposal of the suit.

(iv) Fathima Saw Mill Vs. B.G. and Sons and Others

Civil Procedure Code - Order 38 Rule 5 - Suit for recovery of a sum for goods sold - Two applications filed for interim injunction, and attachment before judgment - Interim injunction granted not to alienate property - Defendants filed application to vacate interim order - Single Judge dismissed both injunction application and application filed under Order 38 Rule 5 - Plaintiff filed appeals � Held - After passing order of ad interim injunction, defendants sold 14 cents - Plaintiff filed contempt application - Undertaking given by the defendants not to alienate rest of properties - Such conduct itself sufficient to pass an order of attachment - Single Judge should have taken into consideration subsequent conduct of defendants - Fit case for ordering attachment - In view of order of attachment, interim injunction application need not be considered.

The highly competent counsel for the defendants vehemently argued that the third and fourth defendants have not executed any pronote or any other instrument to receive the loan amount from the plaintiff. The plaintiff has alleged in the plaint that the third and fourth defendants are son-in-law and daughter of the first and second defendants and they have stood as guarantors. Before passing decree, the plaintiff cannot seek any interim order against the guarantors. Further, the suit is not maintainable, as per the ingredients of the plaint, against the third and fourth defendants. The plaintiff has stated in his plaint that the first and second defendants have jointly executed pronotes and received loan amount and as such, the third and fourth defendants are not necessary parties in the suit, but they have been impleaded as parties, which is a mis-joinder. Therefore, the suit is not maintainable under law and the suit has to be dismissed in-limini. Once the suit is not maintainable, the issue of grant of interim order does not arise in the instant case. The very competent counsel has further submitted that the plaintiff have filed three applications seeking security from the second defendant for a value of Rs. 10 Crores, which is much higher than the suit value amount. As such, the interlocutory application in I.A. Nos. 89 of 2013 and 88 of 2013 is not maintainable. Further, in I.A. No. 87 of 2013, the plaintiff has sought an order of injunction restraining the third and fourth defendants from alienating the properties mentioned in the petition, which is not maintainable since the suit is not maintainable against the third and fourth defendants. The guarantor can be pulled by the plaintiff for recovery of the said amount, only after the plaintiff obtains the decree against the first and second defendants and if they are unable to satisfy the decree amount, only then, the plaintiff can seek relief of recovery of the said amount from the third and fourth defendants. As such, the plaintiff cannot seek any interim relief against the third and fourth defendants. Therefore, all the Interlocutory Applications were dismissed by the trial Court, which is appropriate and there is no shortcomings in the impugned order. The learned counsel has further submitted that the schedule mentioned properties have been mortgaged with the Union Bank of India, Kumbakonam and the plaintiff also is well aware of the same. As such, there is encumbrance over the property. Therefore, attachment before judgment is ruled out in this case.

From the above discussions, this Court is of the view that:-

(i) The third and fourth defendants had not executed any pronote or instrument to repay the said principal loan amount with interest to the plaintiff, but they have only stood as guarantors. Therefore, the suit for recovery of money is not maintainable against them. The guarantor will only come liable, if the decree is passed against the first and second defendants in the said money suit. As such, the interim direction sought for against the third and fourth respondents to not alienate the property is not permissible.

(ii) Further, the first and second defendants mortgaged the title deeds of the suit mentioned property in favour of City Union Bank, Kumbakonam. As such, it is seen that there is an encumbrance over the petition mentioned property. The judicial order cannot be applied on the encumbered immovable properties.

(iii) The defendants have filed written statements and the case is to be tried.

(iv) The plaintiff stated in the plaint that the defendants 1 and 2 own immovable properties worth about Rs. 10 Crores at Kumbakonam and commercial buildings worth about Rs. 20 Crores. As such, it is seen that they are financially stable. Therefore, the plaintiff can recover the said amount from them, if he obtains the decree from the trial Court.

On considering the facts and circumstances of the case and arguments advanced by the very competent counsels on either side and on perusing the order and decreetal order passed in I.A. No. 89 of 2013 in O.S. No. 51 of 2013 and this Court''s view mentioned above, this Court does not find any shortcomings in the impugned order passed by the learned judge. Hence, the above revision does not have any merits to allow it. Considering the nature of case, a speedy trial is absolutely necessary. Hence, this Court directs the learned Principal District Judge, Thanjavur to dispose the main case in O.S. No. 51 of 2013, on his file on the topmost priority basis, without being influenced by the discussions of this Court, on merits. In the result, the above revision is dismissed. Consequently, the order and decreetal order passed in I.A. No. 89 of 2013 in O.S. No. 51 of 2013, on the file of the Principal District Judge, Thanjavur, dated 29.08.2013 is confirmed. There is no order as to costs. Consequently, connected petitions are closed.