Andhra Pradesh High Court - Amravati

Muppalla Sambasiva Rao vs Vemula Tirupathi Venkaiah on 16 August, 2022

     IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI

          THE HON'BLE SRI JUSTICE NINALA JAYASURYA

             CIVIL REVISION PETITION NO.164 of 2022

Between:-

Muppalla Sambasiva Rao                                        Petitioner

                                      And

Vemula Tirupathi Venkaiah                                    Respondent


Counsel for the Petitioner        :     Mr.G.Ramesh Babu, Learned
                                        Counsel appearing on behalf of
                                        Mr.T.Janardhana Rao, learned
                                        Counsel for the Petitioner.

Counsel for the Respondent        :      Ms.Sodam Anvesha, Learned
                                         Counsel appearing on behalf of
                                         Mr.S.Dilip Jaya Ram
ORDER:

The present Revision Petition is filed aggrieved by an Order dated

29.12.2021 in I.A.No.718 of 2021 in O.S.No.356 of 2021 on the file of the

Principal Junior Civil Judge, Macherla, Guntur District.

2. The petitioner herein is the defendant in the above said suit.

The respondent/plaintiff filed the suit against the petitioner/defendant

seeking a Decree for Rs.18,96,000/- together with interest, inter alia, on

the premise that the petitioner/defendant borrowed an amount of

Rs.15,00,000/- for his business purposes and failed to repay the same.

Along with the suit, the respondent/plaintiff filed an application under

Order XXXVIII, Rule 5 of the Code of Civil Procedure, seeking to attach the

petition schedule property before Judgment, if the defendant failed to

furnish security for the suit amount. The petitioner/defendant filed counter

to the said application and contested the matter. The learned Trial Court

after formulating the point for consideration, as to whether the plaintiff is

entitled to make the conditional attachment of the schedule property absolute or whether the respondent/defendant is entitled to raise the

attachment, passed an Order dated 29.12.2021, the relevant portion of

which reads as follows:-

"24. In the result, the petition is partly allowed. The interim attachment order dated 22.11.2021 over the part of petition schedule property covered under Doc.No.11675 of 2021 of SRO, Guntur is hereby made absolute. It is needless to mention that the attachment over the rest of the petition schedule property is hereby raised. The office is directed to communicate the same to SRO concerned on payment of process."

Aggrieved by the said Order, the present Revision Petition came to

be filed.

3. The learned counsel for the petitioner, while referring to the various

grounds set out in the Revision Petition, advanced arguments on several

legal and factual aspects to contend that the order under Revision is

wholly unsustainable. It is his submission that even prior to passing of the

Order of attachment, the petition schedule property was gifted by the

petitioner to his wife and the Gift Deed was presented before the

Sub-Registrar's office, Guntur on 20.11.2021 and the same was registered

on 25.11.2021 and in the meanwhile, the interim attachment Order dated

22.11.2021 was passed without following the procedure contemplated

under Order XXXVIII, Rule 5 of CPC. He contends that though the Gift

Deed was registered on 25.11.2021, since the same was presented before

the concerned Sub-Registrar on 20.11.2021 before passing of the interim

attachment Order dated 22.11.2021, the said order would not have any

binding effect. The learned counsel in this regard places reliance on the

Judgment of the Hon'ble Supreme Court in Hamda Ammal vs. Avadiappa Pathar and 3 others1. The learned counsel also made other

submissions with reference to infirmities/non-adherence to the

requirements under Order XXXVIII, Rule 5 of CPC before passing/ordering

conditional attachment and contends that the Revision Petition deserves to

be allowed.

4. On the other hand, learned counsel for the respondent/plaintiff

supported the order passed by the Court below, inter alia, contending that

interim attachment can be granted, while issuing a notice and further that

the petitioner/defendant only with a view to frustrate the claim of the

respondent/plaintiff had sought to gift the property in question to a

person, none other than his wife. The learned counsel also tried to

distinguish the Judgment of the Hon'ble Supreme Court on which reliance

is placed by the learned counsel for the petitioner, inter alia, contending

that the transactions relating to the sale and gift are totally different and

the said Judgment is not applicable to the facts of the present case. The

learned counsel also submitted that there is no material irregularity or

perversity in the order of the Trial Court, in the absence of which, no

inference is warranted by this Court, in exercise of powers conferred

under Article 227 of the Constitution of India.

5. This Court had perused the material on record.

Extensive arguments were advanced by both the learned counsel on

factual as well as legal aspects of the case and in the context of the same,

it would be appropriate to extract the relevant provisions of Law for ready

reference and adjudication of the matter.

(1999) 1 SCC 715

6. Order XXXVIII, Rule 5 of CPC deals with attachment before

Judgement, which reads as follows:-

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, 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 the whole or any portion of the property 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.

7. The above provision of Law provides that if the Court is satisfied

by an affidavit or otherwise that the defendant with an 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 his about to hold any part of his property from the local limits of the

jurisdiction of the Court, it may call upon the defendant within a time

fixed by it, either to furnish security or to appear and show cause why

he should not furnish security.

8. In the above said provision, the consequences of non-compliance

or compliance of the directions issued under Rule 5 of Order XXXVIII of

CPC were not contemplated, but Rule 6 of Order XXXVIII of CPC deals

with the same, which reads thus:

6. Attachment where cause not shown or security not furnished.

(1) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Court, the Court may order that the property specified, or such portion thereof as appears sufficient to satisfy any decree which may be passed in the suit, be attached.

(2) Where the defendant shows such cause or furnishes the required security, and the property specified or any portion of it has been attached, the Court shall order the attachment to be withdrawn, or make such other order as it thinks fit.

9. A conjoint reading of the above provisions of Law would make it

clear that though an Order passed by the competent Court refers to

Order XXXVIII, Rule 5 of CPC pursuant to an application filed under the

said provision, it is traceable to Rule 6 of Order XXXVIII of CPC, even

though it is not specifically mentioned in the Order. Non-mentioning of

the provision, it is settled Law is not fatal, more particularly, when the

power exists. Order XXXVIII, Rule 6 of CPC empowers the competent

Court to make an Order of attachment absolute, when there is failure

to comply with the directions under Order XXXVIII, Rule 5(1)(b) of CPC.

10. In Union Bank of India, Visakhapatnam vs. M/s Andhra

Technocrat Industries2, a Division Bench of the erstwhile High Court

of Andhra Pradesh at Hyderabad had an occasion to examine as to

whether an Order dismissing the application under Order XXXVIII, Rule

5 of CPC seeking attachment before Judgment is appealable. It is a

(1982) 2 ALT (NRC) 19 case, wherein the Union Bank of India filed a suit for recovery of

money against the defendant M/s Andhra Technocrat Industries and

moved an application under Order XXXVIII, Rule 5 of CPC for

attachment of Rs.3,00,000/- lying with the Director General, Naval

Project, Visakhapatnam. The said application was dismissed on contest.

Aggrieved by which, the Union Bank of India preferred an appeal under

Order 43, Rule 1(q) of CPC. The Division Bench after referring to the

relevant provisions of Law at Paras 5 and 6 held as follows:-

"5. The dominant object of R. 5 is to prevent the decree that may be passed against the defendant from being rendered unfruitful. The provisions of R. 5 can only be invoked when the Court is satisfied at any stage of the suit that the defendant has done or is about to do any act with intent to obstruct or delay execution of any decree that may ultimately be passed against him. The Court may issue, on the application, notice to the defendant to appear and furnish security or show cause why he should not furnish security for the satisfaction of the decree. The Court may also pass by the same order, immediately ordering attachment of the whole or any portion of the property specified by the defendant. Rule 6 contemplates orders of two kinds in an application under R. 5: (1) Where the defendant fails to show cause on an application under R. 5 why he should not furnish security, or fails to furnish the security required. Within the time fixed by the Court, the Court may make an unconditional order of attachment, (2) Where the defendant appears and shows cause or furnishes the required security in pursuance of the notice issued under R. 5 and the specified property or any portion of it has been attached under sub-rule (3) of Rule 5, the Court shall order the attachment to be withdrawn.

6. Now O. 43, R. 1 (q), C. P. C. makes both these orders under R. 6 appealable. The other orders are not appealable. An order dismissing an application under O.38, Rule 5 is not appealable. An order under Rule 5 merely directing the defendant to furnish security or to appear and show cause why security should not be furnished is not appealable. Only an order allowing an application under Rule 5 and an order withdrawing the attachment made under sub-rule (3) of Rule 5 any cause being shown by the defendant, are appealable."

11. In the said Judgment the Hon'ble Division Bench referred to the

views expressed by the Hon'ble High Court of Calcutta in Hara

Gobinda Das vs. Bhur and Co., I.L.R.3, wherein it was held that

"an Order passed in an application under Order XXXVIII, Rule 5 of CPC

is appealable only when it comes under Order XXXVIII, Rule 6 of CPC.

Sub-rule (1) of Rule 6, Order XXXVIII covers all cases where the

applications under Order XXXVIII, Rule 5 are eventually granted.

Sub-rule (2) of Rule 6, Order XXXVIII, however which deals with cases

where applications under Order XXXVIII, Rule 5 are dismissed, does

not cover all such cases but includes only those cases where a

conditional order of attachment is made under Order XXXVIII, Rule 5."

12. In New India Assurance Co. Ltd., vs. M/s Bhagyanagar

Ventures Ltd., 4 another Division Bench of erstwhile High Court of

Andhra Pradesh following the decision of the earlier Division Bench in

Union Bank of India's case reiterated the legal position. It was

dealing with a matter, wherein on an application filed under Order

XXXVIII, Rule 5 of CPC, the Trial Court passed an Order directing the

defendant to show cause, why he should not be directed to furnish

security. After referring to the relevant provisions of Law and the Forms

provided in Appendix-F of CPC, the Hon'ble Division Bench while

holding that the appeal is not maintainable, at Para 7 of the Judgment

inter alia opined as follows:-

"....., there cannot be any doubt that the exercise of power by the Civil Court in the matter of attachment of property and direction to furnish security is in two stages. In the first stage, the defendant is asked to show cause. If after receiving the said show cause notice within the time stipulated in Form No.5 proceedings, the defendant fails to appear before the Court or appears and fails to satisfy the Court, the Court can issue an Order in Form No.7 directing attachment of property. The law contemplates appeal only at the second stage actually attaching the property and not at the stage of show cause notice."