Allowed

Kishore Kumar v. Stanley Antony, Chalakkudy Taluk

Kerala HC20 Jan 2016FAO/24/2016

Case brief

AI extract

What is this about?

This appeal challenged an attachment before judgment order. The High Court found the order defective because it cited the wrong CPC rule, lacked value details, and failed to consider the defendant's undertaking. The appeal was allowed; the order set aside, and the defendant's undertaking upheld, vacating the attachment if an affidavit is filed within two weeks.

What did the court decide?

Impugned order set aside, undertaking recorded, and conditional direction for defendants to file undertaking to vacate attachment if done within two weeks.

Kishore Kumar Vs Stanley Antony, Chalakkudy… — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE ANTONY DOMINIC

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THE HONOURABLE MR. JUSTICE A.HARIPRASAD

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WEDNESDAY, THE 20TH DAY OF JANUARY 2016/30TH POUSHA, 1937

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FAO.No. 24 of 2016 ()

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AGAINST ORDER IN IA NO.674/2015 IN OS NO.36/2015 OF SUB COURT, KOCHI DATED 08.09.2015

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APPELLANT(S)/RESPONDENT/DEFENDANT:

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KISHORE KUMAR S/O.A.K.RAMAN, AGED 50, ENNARIKKATTIL, THOPPUMPADY DESOM RAMESWARAM VILLAGE, KOCHI TALUK, KOCHI-682 020.

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BY ADV. SRI.R.VENUGOPAL

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RESPONDENT(S)/PETITIONER/PLAINTIFF:

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STANLEY ANTONY, S/O.INIKKAL ANTONY, AGED 51, KUNDOOR DESOM, THIRUMUKKALAM VILLAGE, CHALAKKUDY TALUK, CHALAKKUDY PIN-680 734.

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BY ADV. SRI.M.P..RAMNATH , CAVEATOR

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THIS FIRST APPEAL FROM ORDERS HAVING COME UP FOR ADMISSION ON 20-01-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ANTONY DOMINIC & A.HARIPRASAD, JJ.

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F.A.O.No.24 of 2016

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Dated this the 20^th day of January, 2016

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JUDGMENT

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Hariprasad, J.

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Order passed by the court below purportedly under Order 38 Rule 6 of the Code of Civil Procedure (in short, “Code”) is under challenge. Appellant is the first defendant and the respondent is the plaintiff in O.S.No.36 of 2015. The impugned order is passed in I.A.No.674 of 2015 filed under Order 38 Rule 5 of the Code by the learned Subordinate Judge, Kochi.

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The suit is one for recovery of a sum of `59,80,000/- with future interest. The parties are hereinafter referred to as the plaintiff and defendants for the sake of convenience.

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Plaintiff contended that the property scheduled to the plaint belonged to the deceased mother of the first defendant. A bar hotel was functioning in the property under a licence issued by the concerned authority. Plaintiff and first defendant entered into an agreement on 26.03.2005 wherein the plaintiff was permitted to run the hotel on the terms and conditions stipulated therein. The business at the relevant time was

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FAO No. 24/2016

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conducted by M/s.Samudra Enterprises and there were negotiations between the persons in the said enterprises and the parties to this proceedings. 27,00,000/- was agreed to be paid for discharging their liability. A partnership deed was executed between the plaintiff and the defendants. Term for running the bar hotel was for a period of 12 years. For due performance of the obligations by the plaintiff, an amount of 52,00,000/- was given to the defendants. It was agreed that if there was any obstruction in the running of the business, not attributable to the plaintiff, the amount should be repaid by the defendants. Subsequently, on 01.04.2014, the abkari policy was changed by the State Government and therefore it has become impossible to run a bar hotel in the premises. When the plaintiff demanded `52,00,000/- paid by him to the defendants, they raised untenable objections. Hence the suit is filed for recovery of money. Along with the suit, an application for attachment was also filed. In the attachment petition, it is averred that the defendants were going to alienate the property to defeat the execution of the decree that is likely to be passed in the suit. Therefore, the plaintiff prayed for an order for attachment before judgment and also for an order of conditional attachment.

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Defendants appeared before the court below and filed a counter affidavit in the matter. According to the defendants, there is

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suppression of material facts in the plaint and in the petition for attachment before judgment. On 26.03.2005 itself, another agreement was executed between the plaintiff and the defendants whereby the plaintiff had undertaken to assign the plaint schedule property for a sum of 55,00,000/- in favour of the defendants. According to the defendants, the said amount is shown in the plaint. Apart from that, an amount of 1,25,000/- has to be paid as rent for the building. There is rent arrears for 16 months to a tune of `20,00,000/- outstanding from the plaintiff. In the premises, now a restaurant and lodge is functioning. The plaintiff has no right to claim the amount shown in the plaint. Further, the defendants have undertaken in the counter affidavit that they have no intention to sell away the property sought to be attached. In addition to these contentions, the defendants also challenged the legality and propriety of the averments in the petition for attachment and the order passed by the court below.

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Subsequent to the filing of the counter affidavit, the plaintiff has

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filed a detailed reply affidavit refuting the allegations raised by the defendants in the counter affidavit.

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Heard the learned counsel for the plaintiff and the defendants. We have perused the impugned order. At the outset, we may observe that although the order is purported to be one passed under Order 38 Rule 6 of the Code, it falls short of the required standards. Court below, after

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considering the merits of the matter, passed the order in following terms:

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“In the result, this petition is allowed accordingly. The respondent is directed to furnish security for an amount of 60 lakhs within one month from today and in the meanwhile the property scheduled herein is conditionally attached. Intimate to SRO concerned.”

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On a reading of Order 38 Rule 5 of the Code, it can be seen that the operative portion of the order is in fact in accordance with the stipulations in the above said provision. Order 38 Rule 5 of the Code shows that where at any stage of a suit, if court is satisfied, by affidavit or otherwise, that defendant, with intent to obstruct or delay the execution of any decree that may be passed against him, is about to dispose of whole or any part of his property or is about to remove the whole or any part of his property from

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the local limits of the jurisdiction of the court, then it may direct the defendant to furnish security in such sum as may be specified in the order or to appear and show cause why he should not furnish security. The operative portion of the impugned order shows that the court below has directed the defendants to furnish security which is not in accordance with Order 38 Rule 6 of the Code.

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Learned counsel for the defendants contended that the property sought to be attached is about 56.55 cents in Palluruthy, which is

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many times valuable than the plaint claim. The entire property is now under attachment, which is not the prescription of law. That apart, in the schedule to the attachment petition, value of the property sought to be attached was not shown to mislead the court. Since the order of attachment was made without complying with the provisions under Order 38 Rule 5(1) of the Code, it is contended by the defendants that the attachment itself is void.

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Per contra, learned counsel for the plaintiff contended that the stand taken by the defendants in the counter affidavit clearly shows that they are in a mode of denial of their liability. Plaintiff will be left with no remedy, if the defendants are allowed to alienate the property pending disposal of the suit. It is further contended that the matter can be decided only after an elaborate trial and till then the defendants should offer sufficient security for satisfying the decree.

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We have considered the matters in detail. We are of the view that the impugned order does not conform to the legal standards for two reasons. Firstly, there is no mention about the value of the property in the schedule to the attachment petition. Secondly, the court had not applied its mind as to whether the entire property is to be attached for securing the claim made in the plaint. That apart, as mentioned above, the final order passed under Order 38 Rule 6 of the Code is not in the correct form. In

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addition to that, we are of the view that the undertaking given by the defendants in the affidavit filed in answer to the attachment petition could have been considered by the court below.

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Learned counsel for the defendants relying on various decisions contended that the court below should have denied the relief of attachment before judgment since the legal prescriptions in Order 38 Rule 5 of the Code are violated. When a defendant in such a petition undertakes that he will not alienate or encumber the property pending trial of the matter, it is normally sufficient for securing the interest of the plaintiff. It is well settled that an undertaking given to the court is as forceful as an order of injunction passed by the court. Flouting an order of undertaking will not only visit the petitioner with penal consequences, but the court gets the power to undo the mischief.

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Learned counsel for the plaintiff raised an apprehension that interest of third parties may set in if the defendants are allowed to alienate the property pending the suit. They may get an opportunity to raise a claim that they are bonafide purchasers for value. It is, therefore, submitted that the fact of making an undertaking may be intimated to the Registrar's office concerned. Considering the submissions at the Bar and the materials on record, we are of the view that the impugned order is unsustainable. However, to strike a balance in the rights of the parties, we hereby make

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the following directions:

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Appeal is allowed. The impugned order is set aside. The undertaking made by the defendants in the counter affidavit is recorded. We further direct that the defendants should file an additional affidavit before the court below undertaking that they will not alienate or encumber the property pending disposal of the suit. The court below shall communicate the factum of undertaking given by the defendants to the Registrar's office concerned. If the affidavit is filed within a period of two weeks, the order of attachment will stand vacated.

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All pending applications will stand closed.

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ANTONY DOMINIC, JUDGE.

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A. HARIPRASAD, JUDGE.

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cks

Kishore Kumar v. Stanley Antony, Chalakkudy Taluk

Case brief

What is this about?

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Kishore Kumar v. Stanley Antony, Chalakkudy Taluk

Case brief

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