Pre-conditions for exercise of power under Order 38, Rule 5 of the C. P. C."

"Order for attachment before adjudication of a claim or calling for security is not a common feature in a litigation. In exceptional circumstances only the drastic action can be taken to safeguard the interest of the plaintiff. Therefore, the first legislative guideline is that the intention of the defendant must be. to obstruct or delay the execution of any decree. Where the effect of some circumstances would lead to delay in execution of a decree or obstruction to it without the intention for the same the power is not available to be exercised. Therefore, the actions of the defendant are to be of voluntary nature from which legitimate inference of the intention to obstruct or delay the execution can be drawn. The second legislative guideline is that with the" said intention the defendant is about to dispose of or remove from the jurisdiction of the court whole or part of his property. Thus both the pre-conditions must be satisfied for the purpose of exercise of power under Order 38, Rule 5 of the C. P. C."1

Orissa High Court

Lt. Col. K.S. Bakshi vs Jagjit Singh Sabharwal on 9 August, 2000

L. Mohapatra, J.

1. This revision arises out of the order dated 11-5-1999 passed by the Civil Judge (Senior Division), Talcher on an application filed by the plaintiff-opposite party under Order 38, Rule 5 of the Civil Procedure Code.

2. Opposite party is the plaintiff in Money Suit No. 18 of 1998 and the present petitioner is the defendant. Suit has been filed claiming damages to the tune of Rs. 13,00,000/- on account of breach of agreement entered into between the parties. The allegations in the plaint are that the opposite party if the exclusive owner of two Tippers engaged under the disposal of the petitioner for the purpose of transporting coal within the Mahanadi Coal Fields Limited at Talcher. The agreement was entered into by the petitioner as Director of M/s, Pawan Putra Hanuman Transport, Ltd. as the first party and wife of the opposite party as the second party. Said agreement was executed on 4-9-1997 as per the terms of which the tippers owned by the plaintiff-opposite party were stipulated to be engaged by the defendant-petitioner until clearance of all the dues of the plaintff-opposite party towards their finance by the Telco. It is further alleged by the plaintiff-opposite party that the defendant-petitioner violated the terms of the agreement by allowing removal of both the tippers from its premises unlawfully. Plaintiff-opposite party filed an application under Order 38, Rule 5 of the C. P. C. on the allegations that after coming to know about the filing of the suit for realisation of Rs. 13 00,000/-, the defendant-petitioner is trying to dispose of all the properties and close the bank accounts and to shift the company to a place beyond the jurisdiction of the court with a view to defraud the plaintiff-opposite party and frustrate the execution of the decree which may be passed in favour of the plaintiff-opposite party.

3. Learned counsel appearing for plaintiff before the trial court submitted that unless the defendant-petitioner is directed to furnish security for the account claimed or unless the bank accounts and its pending bills with the M.C.L. are attached, the defendant-petitioner will shift the company by closing its bank accounts leaving the plaintiff-opposite party with no means of realising of amount, in the event the suit is decreed.

Learned counsel for the defendant-petitioner before the trial court argued that the plaintiff-opposite party has no prima facie case to succeed in the suit and that the defendant-petitioner has neither any property at Talcher nor any bank account, and the suit should have been filed against the company and prayer for attachment of the property of the petitioner-defendant is not tenable. The company in which the defendant-petitioner is the Director has entered into an agreement with the M.C.L. to work for coal transportation for five years with effect from 30-12-1996 and therefore there is no question of closing the business at Talcher. Learned Civil Judge (Senior Division) relying on the affidavit of one Manoranjan Jena issued notice in Form No. 5 of Appendix-F directing the defendant-petitioner to appear and show-cause by 22-6-1999 as to why he should not furnish security for the amount claimed in the suit.

4. Shri S. P. Miabta, learned counsel appearing for the petitioner submits that the suit is not maintainable against the petitioner as the petitioner has not entered into an agreement with the plaintiff-opposite patty and the petitioner being only a Director of the company which has entered into an agreement, the company has to be made a party to the suit and the petitioner as Director of the Company has reliability. He further submitted that on the basis of an affidavit of one Manoranjan Jena no such order could have been passed as source of information of Manoranjan Jena has not been disclosed in the affidavit. He further submitted that the impugned order is not a notice, but an actual order of attachment.

Learned counsel for the opposite party has submitted that as against the affidavit of Manoranjan Jena there was no material available before the trial court or from the side of the present petitioner controverting the said allegations and therefore no illegality can be found in the order passed by the lerned trial court.

5. Shri S. P. Mishra, learned counsel for the petioner has referred to a decision reported in A I.R. 1986 All. 87 (Har Krishan Khosla v. M/s. Alembic Works Company Ltd. and another). In the said decision it was held that where the plaintiff had filed an application for attachment before judgment and in support of that application an affidavit to the, effect that the defendant was about to dispose of the property in order to delay or obstruct execution of a decree was sworn on the basis of information but the source of information was not disclosed in the affidavit, it was held that the affidavit could not be read in evidence and the application could not be allowed on such affidavit. Defendant has to state name and address and sufficiently describe the identity of the person or persons from whom he received such an information. Relying on the said decision Shri Mishra submits that affidavit of Manoranjan Jena does not disclose source of information and cannot be accepted. From the impugned order it appears that said Manoranjan Jena in his affidavit has stated that the present petitioner: expressed before him his intention to transfer the company to some other place and close accounts in different banks after coming to know about the institution of the suit on 26-10-1998. It is further stated in the affidavit that the petitioner expressed before him that the Director was apprehensive about heavy financial loss the company may have to incur in case the plaintiff succeeds in the suit. The said Manoranjan ]ena having sufficiently disclosed the source of information and identity of the person giving such information, the decision cited by the learned counsel for the petitioner has no application to the facts of the case. Shri Mishra has also relied on another decision reported in A.I.R. 1987 Orissa 107 (Tatanagar Transport Corporation and others v. M/s. Ajanta Enterprisers and another). In the aforesaid decision this court has held as follows ;

"Order for attachment before adjudication of a claim or calling for security is not a common feature in a litigation. In exceptional circumstances only the drastic action can be taken to safeguard the interest of the plaintiff. Therefore, the first legislative guideline is that the intention of the defendant must be. to obstruct or delay the execution of any decree. Where the effect of some circumstances would lead to delay in execution of a decree or obstruction to it without the intention for the same the power is not available to be exercised. Therefore, the actions of the defendant are to be of voluntary nature from which legitimate inference of the intention to obstruct or delay the execution can be drawn. The second legislative guideline is that with the" said intention the defendant is about to dispose of or remove from the jurisdiction of the court whole or part of his property. Thus both the pre-conditions must be satisfied for the purpose of exercise of power under Order 38, Rule 5 of the C. P. C."

There is no dispute about the said proposition of law. Only material available before the trial court was the affidavit of Manoranjan Jena before whom it is alleged that the petitioner expressed his intention to transfer the company to some other place and close the accounts in different banks after he came to know about the institution of the suit on the ground that in the event the suit is decreed he shall suffer heavy financial loss. There is no material before the coutt to show that the defendant-petitioner had taken any step to either remove whole or any part of the property belonging to him from the jurisdiction of the court or to dispose of the same. There is no iota of material to indicate that the defendant had taken any step for the aforesaid purpose. Therefore, merely on the basis of the allegations made by the plaintiff supported by an affidavit cannot form the basis of an order under Order 38, Rule 5 of the C; P. C.. Court must be satisfied that action of the defendant is voluntary in nature from which legitimate inference of the intention to obstruct or delay in execution can be drawn and that the defendant is about to dispose or remove from the jurisdiction of the Court whole or part of the property.

6. From the discussions made by the trial court in the impugned order and the materials available on record, the first condition is not satisfied. Allegations made in the affidavit of Manoranjan Jena is not enough by itself and the materials must be placed before the court by the plaintiff to show that the defendant has infact taken step to transfer the company and dispose of whole or part of the properties with intention to obstruct or delay the payment with regard to legitimate claim of the plaintiff. In absence of such materials, no order could have been passed under Order 38, Rule 5 of the C. P. C. I, therefore, allow the revision and set aside the impugned order.

7. Revision allowed.

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