CMA/1299/2008 of The New India Assurance Company Limited Vs M/s. Bhagyanagar Ventures Limited on 29 December 2009

1. AIR 1969 J&K 22

2. 1991 (II) ALT 343

3. 1996 (4) ALD 453 (DB)

4. AIR 2003 AP 13

5. 2006 (3) ALT 308 (DB)

6. 1982 (2) ALT 19 (NRC)

THE HON’BLE SRI JUSTICE V.V.S.RAO

AND

THE HON’BLE SRI JUSTICE B.N.RAO NALLA

CIVIL MISCELLANEOUS APPEAL No.1299 of 2008

.12.2009

Between:

The New India Assurance Company Limited

AND

… Appellant

M/s.Bhagyanagar Ventures Limited

THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON’BLE SRI JUSTICE B.N.RAO NALLA

CIVIL MISCELLANEOUS APPEAL No.1299 of 2008

JUDGMENT: (per Hon’ble Sri Justice V.V.S.Rao)

This appeal is against the order dated 30.09.2008 in I.A.No.3218of 2008 in O.S.No.125 of 2008 passed by the Court of I Additional Chief Judge, City Civil Court, Secunderabad, directing theappellant herein to show cause as to why it should not be directed tofurnish security in a sum of Rs.11,79,025.40/-. The parties are referred toas they are arrayed in this miscellaneous appeal.

The respondent herein is the owner of a building with plinth areaof 4,564 square feet. The same was let out to the appellant herein. Thesuit was filed by respondent for eviction, recovery of rents and damagesfor use and occupation quantifyed at Rs.11,79,025.40/-. The interlocutoryapplication under Order XXXVIII Rule 25 of the Code of Civil Procedure,1908 (CPC) was also filed for attachment before Judgment on the pleathat it would be difficult to recover the decree amount as the appellant islikely to shift from the premises. On 30[th] September, 2008, the Courtbelow passed an order under Order XXXVIII Rule 5 of CPC directing theappellant to show cause as to why it should not be directed to furnishsecurity. The said order reads as under.

Whereas the petitioner/plaintiff has made out to thesatisfaction of this Court that the respondent/defendant is due anamount of Rs.11,79,025.40 ps., and the respondent is trying totransfer his all assets to its alternative premises and trying toremove from the local limits of the jurisdiction of this court inwhich case the petitioner/plaintiff company will be put toirreparable loss and injury.

You are hereby directed to furnish security forrs.11,79,025.40 ps and to show cause as to why you shall notbe directed to furnish security for the above said suit amount ofRs.11,79,025.40 ps and if you fail to furnish the security, thepetition schedule property will be attached after five (5) hourstime by 4.11.2008.

Aggrieved by the above order, the present appeal is filed. Thelearned counsel for respondent raised an objection regardingmaintainability of appeal under Order XLIII Rule 1(q) of CPC. Accordingto her, the final order of attachment/arrest under Rule 6 is alone appealable and when the civil Court orders to show cause as to why thedefendant should not be directed to furnish security for the suit amount,an appeal would not lie. Learned counsel for appellant made elaboratesubmissions on this question as well as on the merits of the case. Boththe counsel have relied on Vidhya Devi v Harish Chander[[1]],Yenamala Chandra Reddy v Nuvvula Chandramouli Naidu[[2]],S.P.V.Babu v Varalakshmi Finance Corporation[[3]],Surender SinghBajaj v M/s.Kitty Steels Limited[[4]]and Deepika Constructions,Engineers and Civil Contractors v Garikipati Radha Krishnaiah[[5]].

Whether the appeal against an order of the Court ordering thedefendant to show cause as to why he sould not be directed to furnishsecurity is appealable? An order Under XLIII Rule 1 of CPC specificallyexcludes an appeal against an order of the Court under XXXVIII Rule 5 ofCPC. The consideration of this aspect requires reading of both the Rules

which are as under.

ORDER XXXVIII–ARREST AND ATTACHMENT BEFOREJUDGMENT

Rules 1 to 4 omitted.

5. Where defendant may be called upon to furnish security for production of property

(1) Where, at any stage of a suit, the Court is satisfied, byaffidavit or otherwise, that the defendant, with intent to obstruct ordelay the execution of any decree that may be passed againsthim,- (a) is about to dispose of the whole or any part of hisproperty, or (b) is about to remove the whole or any part of hisproperty from the local limits of the jurisdiction of theCourt, 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 theorder, to produce and place at the disposal of the Court, whenrequired, the said property or the value of the same, or suchportion thereof as may be sufficient to satisfy the decree, or toappear and show cause why he should not furnish security.

(2) The plaintiff shall, unless the court otherwise directs, specifythe property required to be attached and the estimated valuethereof.

(3) The Court may also in the order direct the conditionalattachment of the whole or any portion of the property sospecified.

(4) If an order of attachment is made without complying with theprovisions of sub-rule (1) of this rule such attachment shall bevoid.

6. Attachment where cause not shown or security not furnished

(1) Where the defendant fails to show cause why he should notfurnish security, or fails to furnish the security required, within thetime fixed by the Court, the Court may order that the propertyspecified, or such portion thereof as appears sufficient to satisfyany decree which may be passed in the suit, be attached.(2) Where the defendant shows such cause of furnishes therequired security, and the property specified or any portion of ithas been attached, the Court shall order the attachment to bewithdrawn, or make such other order as it thinks fit.

The power of the Court to order attachment before judgment isattracted only when plaintiff pleads and prima facie proves two conditionsprecedent. These are: that the defendant is about to dispose of whole orany part of his property and defendant is about to remove the propertyfrom local limits of jurisdiction of the Court. Even when such prima faciecase is proved, an order of attachment cannot be straight away issuedwithout following procedure contemplated in Rule 5 of Order XXXVIII ofCPC. The said Rule requires the Court to direct defendant to furnishsecurity in such a sum as may be specified within the time stipulated bythe Court. At the stage of Order XXXVIII Rule 5 of CPC, the order shallbe in Form No.5 of Appendix-F of CPC, which reads as under.

No. 5

Attachment before Judgment, with Order to Call for Security for Fulfilment of Decree (O. 38, R. 5)

(Title)

ToThe Bailiff of the Court.

Whereas ......... has proved to the satisfaction of the Court that thedefendant in the above suit.........; ..................

These are to command you to call upon the said defendant......... on orbefore the ............. day of......... 19 ......... either to furnish security forthe sum of rupees ........ to produce and place at the disposal of thisCourt when required ......... for the value thereof, or such portion of thevalue as may be sufficient to satisfy any decree that may be passedagainst him; or to appear and show cause why he should not furnishsecurity; and you are further ordered to attach the said......... and keepthe same under safe and secure custody until the further order of theCourt; and you are further commanded to return this warrant on or beforethe ......... day of......... 19..., with an endorsement certifying the date onwhich and the manner in which it has been executed, or the reason whyit has not been executed.

Given under my hand and the seal of the Court, this......... day of.........19...

Judge

After issuing notice/order of attachment before judgment in FormNo.5 calling for security from defendant for fulfillment of the decree thatmay be passed against him, the Court has to necessarily wait till the timefixed thereon is completed. If the defendant furnishes security, the Courthas to pass an order withdrawing order/notice issued in Form No.5

earlier. In case of failure on the part of the defendant to show cause tothe satisfaction of the Court as to why he should not furnish security orfails to furnish security, the Court may then under Order XXXVIII Rule 6 ofCPC issue order of attachment before judgment in Form No.7 ofAppendix-F of CPC, which reads as under.

No. 7

Attachment before Judgment, on Proof of Failure to FurnishSecurity(O. 38, R. 6)

(Title)

ToThe Bailiff of the Court.

Whereas .......... the plaintiff in this suit, has applied to the Court to callupon ........ the defendant, to furnish security to fulfil any decree thatmay be passed against him in the suit, and whereas the Court hascalled upon the said ......... to furnish such security, which he has failedto do; these are to command you to attach .......... the property of thesaid .......... and keep the same under safe and secure custody until thefurther order of the Court, and you are further commanded to return thiswarrant on or before the ........ day of......... 19 ......... with anendorsement certifying the date on which and the manner in which it hasbeen executed, or the reason why it has not been executed. Given undermy hand and the seal of the Court, this ......... day of........ 19....

Judge

Therefore, there cannot be any doubt that the exercise of power bythe civil Court in the matter of attachment of property and direction tofurnish security is in two stages. In the first stage, the defendant is askedto show cause. If after receiving the said show cause notice, within thetime stipulated in Form No.5 proceedings, the defendant fails to appearbefore the Court or appears and fails to satisfy the Court, the Court canissue an order in Form No.7 directing attachment of property. The lawcontemplates appeal only at the second stage actually attaching theproperty and not at the stage of show cause notice. In public law,ordinarily, a petition for judicial review would not lie against show causenotice. This aspect of the matter directly fell for consideration before aDivision Bench of this Court in Union of India v M/s.Andhra

Conclusion

Technocrats Industries[[6]]. The full text of the Judgment is also placedbefore this Court. In the said case, Union of India filed a suit for recoveryof money. They also filed an application under Order XXXVIII Rule 5 ofCPC for attachment of Rs.3,00,000/- lying with Director General, NavalProject, Visakhapatnam, payable to first defendant therein. Notice wasordered. In the said notice, there was no condition attached. After thedefendant appeared and resisted the application, learned SubordinateJudge, Visakhapatnam dismissed the application. Aggrieved by theorder, Union of India preferred A.A.O.No.200 of 1980 which was resistedinter alia on the ground of maintainability of the appeal. The plea wasupheld. In the reported Judgment, the Division Bench laid down asunder.

An order dismissing an application under Order 38 Rule(5) is not appelable. An order under Rule 5 merely directing thedefendant to furnish security or to appear and show cause whysecurity should not be furnished is not appealable. Only an orderallowing an application under Rule 5 and an order withdrawingthe attachment made under sub-rule (3) of Rule 5 on causebeing shown by the defendant, are appelable. ….. In this case,there was no interim order of attachment passed under sub-rule(3) of Rule 5. Only an order was passed by the Court under sub-rule (1) of Rule 5 directing issue of notice to the defendant toshow cause why he should not furnish security and on thedefendant appearing and showing cause in answer to the noticeto the Court, dismissed the application. There was no interimattachment passed under sub-rule (3) of Rule 5. Therefore, theorder passed by the Court below does not fall within sub-rule (2)of Rule 6. Therefore, the order passed by the lower Court is notappelable.

Similar view was taken in Vidhya Devi (supra) relied on by therespondent herein. The decisions relied on by learned counsel for theappellant do not deal with the question and have no bearing.

In the result, for the above reasons, the appeal is not maintainableand is accordingly dismissed, giving liberty to the appellant to availappropriate remedies under law. No costs.

_________________

(V.V.S.RAO,J)

.12.2009plnNote: LR copy be marked. (By order) pln ____________________(B.N.RAO NALLA, J)

[1]AIR 1969 J&K 22

[2]1991 (II) ALT 3431991 (II) ALT 343

[3]1996 (4) ALD 453 (DB)1996 (4) ALD 453 (DB)

[4]AIR 2003 AP 13

[5]2006 (3) ALT 308 (DB)2006 (3) ALT 308 (DB)

[6]1982 (2) ALT 19 (NRC)1982 (2) ALT 19 (NRC)