Narendra Kr. Agarwal and Others vs Rajendra Sharma and Others

R.S. Chauhan, J.—The petitioners-defendants are aggrieved by the order dated 22.1.2014 passed by the Additional District Judge No. 17, Jaipur Metropolitan by which an application filed under Order 38 Rule 5 CPC by the respondent-plaintiff has been accepted.

The brief facts of the case are that the respondent No. 1-plaintiff filed a suit for recovery and permanent injunction against the petitioners-defendants and the respondents No. 2 to 5-defendants. The respondent-plaintiff No. 1 claimed that he and the petitioners-defendants had formed a partnership firm. Later on, it was agreed between the parties that the plaintiff shall retire from the partnership. In case he were to retire from the partnership, he shall be paid a sum of Rs. 64,50,000/- by the petitioners-defendants. The said understanding was reduced into an agreement dated 4.8.2009 which was duly registered. In order to pay the aforementioned amount, seven cheques were issued by the petitioners-defendants in favour of the respondent-plaintiff. However, when the respondent-plaintiff tried to have four of these cheques encashed, they were dishonored on the ground that the petitioners had stopped payment of the cheques. Therefore, a decree for recovery of a total sum of Rs. 20,46,000/- was sought for. Alongwith the suit, the plaintiff also filed an application under Order 38 Rule 5 CPC. The petitioners-defendants filed reply to the application. By order dated 22.1.2014, the learned trial court allowed the said application, and directed the petitioners-defendants to submit a bank guarantee within a period of one month, failing which, their FDRs which are lying with the Railways, were directed to be attached. Hence, this petition before this court.

Mr. U.C. Upadhyay, the learned counsel for the petitioners, has vehemently raised the following contentions before this court: firstly, relying on the case of Cosmopolitan Trading Corporation Vs. Engineering Sales Corporation and Others, , he has contended that before passing an order for attachment, the court is required to see the practical certainty of the plaintiff''s success and the grave danger, or the fear that the dishonest defendant may run away or may create obstacles in execution of the decree. Therefore, according to the learned counsel, the application filed under Order 38 Rule 5 CPC cannot be allowed on mere apprehension of the plaintiff that the defendant may prevent execution of the decree.

Secondly, in the application filed by the respondent-plaintiff, he merely narrates that he has been threatened by the petitioners-defendants that they will dispose of their property in Jaipur, would close the business and would disappear. Hence, the application is based on merely apprehension.

Thirdly, according to the respondent-plaintiff himself, the said threat was given in the year 2010, yet the application has been allowed in 2014. Thus, the entire application has been allowed on mere possibility that, too, a possibility which arose four years ago.

Lastly, by allowing the said application, the learned Judge has placed an onerous burden on the petitioners-defendants of either submitting a bank guarantee, or getting the fixed deposit attached. Thus, according to the learned counsel, the learned Judge has erroneously passed the impugned order in clear violation of requirements of Order 38 Rule 5 CPC.

On the other hand, Mr. Manish Sharma, the learned counsel for the respondent-plaintiff, has contended that the fact of the case is that both the petitioners-defendants and the respondent-plaintiff had formed a partnership. It was agreed between the parties that the plaintiff shall retire from the partnership. In case he were to retire from the partnership, he would be paid a sum of Rs. 64,50,000/-. The said understanding was reduced into an agreement which was duly registered. In order to pay the aforementioned amount, seven cheques were issued by the petitioners-defendants in favour of the respondent-plaintiff. However, when the respondent-plaintiff tried to have four of these cheques encashed, they were dishonored on the ground that the petitioners had stopped payment of the cheques. Thus, it is obvious that the petitioners-defendants have not kept their word that they will make payment to the respondent-plaintiff.

Secondly, even in the application which was filed alongwith the plaint, the respondent-plaintiff had clearly mentioned that the petitioners have a house, namely Plot No. 10/34, situated in Malviya Nagar, Jaipur which they were likely to dispose off. According to the learned counsel, the subsequent sale of the said house was not within the knowledge of the respondent-plaintiff when the application under Order 38 Rule 5 CPC was argued. But subsequently he has discovered that the said house, in fact, has been sold off. Thus, according to the learned counsel, it is a glaring proof of the fact that the defendants are trying their level best to dispose off their property which may be attached under a decree in case the plaintiff were to succeed in his suit.

Thirdly, relying on the case of Rajendran and Others Vs. Shankar Sundaram and Others, , the learned counsel has contended that the court while exercising its jurisdiction under Order 38 Rule 5 CPC is merely required to form a prima facie opinion at that stage. It need not go into the correctness or otherwise of all the contentions raised by the parties. Since the suit relates to the fact that certain amount of money is due, since the petitioners-defendants have already stopped the payment, since the petitioners-defendants have already sold part of their property, obviously, a prima facie case does exist against them.

Lastly, the learned Judge has passed a reasonable order as the learned Judge has given two options to the petitioners-defendants, i.e. that they can either submit a bank guarantee within a period of one month, and failing which their FDRs, which are lying with the Railways, will be attached. Relying on the case of Rajendran & Ors. (supra), the learned counsel has submitted that in a similar situation, the learned Supreme Court has observed that such an order does not vitiate the case.

Heard the learned counsel for the parties and perused the impugned order, and considered the case laws cited at the Bar.

Order 38 Rule 5 CPC is as under:--

"R.5. (1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him,--

(a) is about to dispose of the whole or any part of his property, or

(b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court,

the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.

(2) The plaintiff shall, unless the Court otherwise directs, specify the property required to be attached and the estimated value thereof.

(3) The Court may also in the order direct the conditional attachment of he whole or any portion of the properly so specified.

[(4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule, such attachment shall be void.]"

Obviously, the aim of Rule-5 is to ensure that a litigant is neither too smart, nor too clever to circumvent the final decree which may be passed by a court and to defeat the very purpose of filing of the suit. Therefore, a discretionary power has been vested in the courts that if the court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him, is about to dispose of the whole or any part of his property, or is about to remove the whole or any part of his property from the local limits of the jurisdiction of the court, in such circumstances, the court may direct the defendant either to furnish security, or to produce and place the property at the disposal of the court. The discretionary power has to be exercised keeping in mind the aim and object of Rule-5. It is in this light that in case of Rajendran & Ors. (Supra), the Hon''ble Supreme Court has opined that the court while exercising its jurisdiction under Order 38 Rule 5 CPC, is required to form a prima facie opinion at that stage. It need not go into the correctness or otherwise, of all the contentions raised by the parties.

The application filed by the respondent-plaintiff does not merely talk about a threat, but also expresses his bona fide apprehension that a specific property belonging to the petitioners-defendants is likely to be sold of. The apprehensions which were entertained by him seem to have come true during pendency of the proceedings. For, in the sale deed that has been produced before this court, the seller happens to be the petitioner No. 1 himself. The sale deed also relates to Plot No. 10/34, Malviya Nagar, Jaipur. Thus, it is obvious that during pendency of the proceedings before the civil court, the process of disposing off the property has already commenced.

Moreover, the learned Judge was well aware of the fact that the respondent-plaintiff is trying to recover an amount which is allegedly due to him under an alleged MOU, and for which although four cheques were given, but all of them were stopped. Therefore, this court is of the opinion that the learned Judge has legally and correctly appreciated the facts of the case and passed a valid order.

A bare perusal of the impugned order also clearly reveals that the learned Judge has given two options to the petitioners of either furnishing a bank guarantee, or getting the FDRs attached. In the case of Rajendran & Ors. (supra), the Hon''ble Supreme Court dealing with a case of similar factual matrix has opined as under:--

"11. The application for attachment before judgment was filed by the plaintiff so as to protect his interest in the event the suit is decreed. The court exercises, in such a situation, jurisdiction under Order 38 Rule 5 of the Code of Civil Procedure. The Division Bench of the High Court merely directed the appellants herein to furnish security within the time specified thereunder. It was directed that only on their failure to do so, an order of attachment of the second item on the schedule to the petitioner shall be issued.

The appellants, in our opinion, are not seriously prejudiced thereby. The court while exercising its jurisdiction under Order 38 Rule 5 of the Code of Civil Procedure is required to form a prima facie opinion at that stage. It need not go into the correctness or otherwise of all the contentions raised by the parties..."

The same facts are before this court.

Thus, even according to this court, no serious prejudice is caused to the petitioners-defendants by the two options given by the learned Judge.

For the reasons stated above, this court does not find any illegality or perversity in the impugned order. This petition being devoid of any merit is, hereby, dismissed. The stay application also stands dismissed. No costs.