Mascot Petrochem Pvt. Ltd vs S.B. Construction & Co. & Ors
2024 Latest Caselaw 2095 Cal/2

Calcutta High Court

Mascot Petrochem Pvt. Ltd vs S.B. Construction & Co. & Ors on 18 June, 2024

                 IN THE HIGH COURT AT CALCUTTA
                 (Ordinary Original Civil Jurisdiction)
                       COMMERCIAL DIVISION



Present:

The Hon'ble Justice Krishna Rao



                          IA No. GA 2 of 2021

                                     In

                         CS-COM 228 of 2024

                        (Old No. CS 3 of 2021)



                     Mascot Petrochem Pvt. Ltd.

                                   Versus

                    S.B. Construction & Co. & Ors.




           Mr. Vikas Baisya
           Mr. Sourajit Dasgupta
           Ms. Ranjana Seal
           Mr. Altamas Alim
                                            ... For the plaintiff/petitioner.


           Mr. Ashok Kumar Jena
           Mr. S.K. Omar Sarif
           Mr. Subhankar Das
                                          ... For the defendants/respondents.
                                         2


Hearing Concluded On : 29.04.2024

Judgment on              : 18.06.2024

Krishna Rao, J.:

1. The plaintiff has filed the present application being G.A. No. 2 of 2021

in in CS-COM 228 of 2024 (Old No. C.S. 3 of 2021) praying for an order

directing the defendants to furnish security of Rs.2,23,30,636/- in

default an order of injunction restraining the defendants from operating

its bank account No. 08980200322125 in UCO Bank, Rampurhat

Branch without maintaining an amount of Rs.2,23,30,636/- till the

disposal of the suit.

2. The plaintiff has filed the suit for recovery of money on account of price

of goods sold and delivered to the defendants.

3. As per the request of the defendant during the year 2013 to 2018, the

plaintiff supplied bitumen and emulsion to the defendants for an

aggregate value of Rs.1,76,20,667/- which were duly received by the

defendant and against such supplies, the plaintiff raised invoices along

with consignment documents. Out of the total amount of Rs.

1,76,20,667/-, the defendant has made part payment of Rs.65,79,190/-

thus an amount of Rs.1,10,41,477/- remains outstanding.

4. The defendants failed to pay the amount, accordingly, the defendant is

also liable to pay interest at the rate of 18% per annum, the plaintiff

has also claimed interest along with principal amount.

5. Learned Counsel for the plaintiff submits that the plaintiff apprehends

that the defendants with the intent to obstruct and delay the process of

satisfaction of the decree that may passed by this Court, may dispose of

part of whole the property owned by the defendants, thus it is

necessary to direct the defendants to secure the amount of

Rs.2,23,30,636/- as security till the disposal of the suit.

6. He submits that the defendants are maintaining a Bank Account No.

08980200322125 in UCO Bank, Rampurhat Branch and the plaintiffs

came to know that the defendants are trying to siphon off funds from

the said account to defeat the legitimate claim of the plaintiff to render

the decree infructuous.

7. Counsel for the plaintiff in support of his case relied upon the following

judgments:

i. (2021) 6 SCC 418 (Rahul S. Shah -vs-

Jinendra Kumar Gandhi and Others).

ii. (2008) 2 SCC 724 (Rajendran and Others - vs-

Shankar Sundaram and Others).

iii. 2009 SCC OnLine Cal 2656 (Abheya Realtors Private Limited -vs- SSIPL Retail Limited & Anr).

iv. 2012 SCC Online Cal 11312 (Sourav Ganguly

-vs- Mahuaa Media Pvt. Ltd. and Others).

8. Learned Counsel for the defendants submits that no agreement or

contract entered between the plaintiff and the defendants for supply of

goods but the defendants have verbally placed order to the plaintiff on

different dates for supply of bitumen for construction of road of the

respective department of West Bengal.

9. The defendants says that the plaintiff has supplied below quality of

materials and the defendants by communication dated 30th May, 2018,

intimated about the said fact and also informed that due to below

specification materials against which work has been done on the road

causing damages of the road and the Government department directed

the department to remove the same. The defendants say that even after

receipt of the information, the plaintiff has not given any reply.

10. The defendants say that the plaintiff has supplied the said materials

only in the year 2018 and has no bearing with the invoices of 2015 to

2017. The defendants say that time to time for each invoices sometimes

either by cash or by cheques for the respective invoices, the defendants

have paid the amount. The plaintiff supplied materials from 14th

December, 2013 to 13th January, 2018 for a total sum of Rs.

1,65,37,595.70/- and the defendants have paid Rs.1,65,38,079.00/-

and thus the defendants have paid excess amount of Rs.483.30/-.

11. The defendants says that the plaintiff has made a false claim as to the

invoices being No. MPPL/489/13-14 for Rs.9,00,417/-, MPPL/843/14-

15 for Rs.5,99,418/- and MPPL/014/17-18 for Rs.3,68,919/- as

neither any invoices were raised nor any materials mentioned in the

said invoices were supplied.

12. The defendants say that the plaintiff has supplied below quantity of

bitumen due to which, the roads were damaged and as per the

directions of the authorities, the defendant had to rectify the defects for

which the defendants have incurred sum of Rs.43,17,342.70/- and

thus the defendants are entitles to get an amount of Rs.54,56,727.40/-.

13. The defendants in support of their case relied upon the judgment

reported in (2008) 2 SCC 302 (Raman Tech. and Process Engg. Co. -

vs- Solanki Traders).

14. Heard the Learned Counsel for the parties, perused the materials on

record and the judgments relied by the parties. The plaintiff claims that

as per the request of the defendants, the plaintiff time to time supplied

bitumen and had raised invoices and out of the total amount of

Rs.1,76,20,667/-, the defendants have paid only Rs.65,79,190/- and

an amount of Rs.1,10,41,477/- is due and payable to the plaintiff.

15. The defendants have denied any agreement or contract between the

parties but have admitted with regard to supply of materials by the

plaintiff. The case made out by the defendants is that the materials

supplied by the plaintiff was below quality due to which the roads

constructed by the defendants were damaged and the defendant had to

rectify the same for which, the defendants have to invest further

amount thus the defendants have not liable to pay any amount but in

contrary, the plaintiff is required to pay the amount to the defendant.

16. The plaintiff has filed the present application under Order XXXVIII,

Rule 5 of the Code of Civil Procedure, 1908, on the ground that the

defendants with the intent to obstruct and delay the process of

satisfaction of the decree that may be passed by this Court, may

dispose of part or whole of the property owned by the defendants and

are making efforts to siphon off funds of account No. 08980200322125

of UCO Bank, Rampurhat Branch belonging to the defendants.

17. Order XXXVIII, Rule 5 of the Code of Civil Procedure, 1908, 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.]"

Learned Counsel for the plaintiff relying upon the judgment of

Rahul S. Shah (supra) submitted that with pragmatic approach and

judicial interpretations, the Court must not allow the judgment-debtor

or any person instigated or raising frivolous claim to delay the

execution of the decree. In suits relating to money claim, the Court,

may on the application of the plaintiff or its own motion using the

inherent powers under Section 151, under the circumstances, direct

the defendant to provide security before further progress of the suit.

In the case of Rajendran and Others (supra), the Hon'ble

Supreme Court held that the Court while exercising its jurisdiction

under Order XXXVIII, Rule 5 of the Code of Civil Procedure, 1908, is

required to form a prima facie opinion at that stage. It need not to go

into the correctness or otherwise of all the contentions raised by the

parties.

In the case of Sourav Ganguly (supra) and Abheya Realtors

Private Limited (supra), the Coordinate Bench of this Court held that:

"24. Two aspects need to be seriously considered. At the time that the Civil Procedure Code came to be made suits would not take years or decades to be brought to trial as is usually the case these days. The strength of the principle that

an apparently good claim would not justify an order for attachment to be made before final judgment is rendered, needs to be seen with reference to the time and place in which such principle was born. The second aspect is that even without a defendant attempting to defraud its creditors or the plaintiff, the vicissitudes of the commercial market may leave the defendant with little to offer as judgment-debtor upon the decree being made. The sheer passage of time between the institution of an action and the trial thereof that has now come to be accepted as par for the course may make the claim irrelevant or even the claimant disinterested. That would result in an erosion of the confidence in the system and lead suitors to undesirable quarters for more effective results. But this may not be the ideal action for such considerations to have a bearing."

18. In the case of Raman Tech & Process Engg. Co.(supra), the Hon'ble

Supreme Court held that :

"4. The object of supplemental proceedings (applications for arrest or attachment before judgment, grant of temporary injunctions and appointment of receivers) is to prevent the ends of justice being defeated. The object of Order 38 Rule 5 CPC in particular, is to prevent any defendant from defeating the realisation of the decree that may ultimately be passed in favour of the plaintiff, either by attempting to dispose of, or remove from the jurisdiction of the court, his movables. The scheme of Order 38 and the use of the words "to obstruct or delay the execution of any decree that may be passed against him" in Rule 5 make it clear that before exercising the power under the said Rule, the court should be satisfied that there is a reasonable chance of a decree being passed in the suit against the defendant. This would mean that the court should be satisfied that the plaintiff has a prima facie case. If the averments in the plaint and

the documents produced in support of it, do not satisfy the court about the existence of a prima facie case, the court will not go to the next stage of examining whether the interest of the plaintiff should be protected by exercising power under Order 38 Rule 5 CPC. It is well settled that merely having a just or valid claim or a prima facie case, will not entitle the plaintiff to an order of attachment before judgment, unless he also establishes that the defendant is attempting to remove or dispose of his assets with the intention of defeating the decree that may be passed. Equally well settled is the position that even where the defendant is removing or disposing his assets, an attachment before judgment will not be issued, if the plaintiff is not able to satisfy that he has a prima facie case.

5. The power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilise the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are not wanting where bloated and doubtful claims are realised by unscrupulous plaintiffs by obtaining orders of attachment before judgment and forcing the defendants for out-of-court settlements under threat of attachment."

19. In the present case, it is admitted by the defendants that the plaintiff

has supplied bitumen but as per the contention of the defendants, the

plaintiff has supplied the materials for a total sum of

Rs.1,65,37,595.70/- and have paid an amount of Rs.1,65,38,079/- i.e.

excess of Rs.483.30/-. The contention of the plaintiff that the plaintiff

has supplied the materials for a total sum of Rs.1,76,20,667/-, the

defendant has made part payment of Rs.65,79,190/- thus an amount of

Rs.1,10,41,477/- remains outstanding. The defendants have relied

upon cash receipts for a total amount of Rs.91,13,150/-. The further

contention of the defendants that the materials supplied by the plaintiff

by two invoice Nos. MPPL/078/17-18 for Rs.5,38,864.70/- and

MPPL/085/17-18 for Rs.5,47,520/- have been rejected by the

Government and those amount has been credited.

20. The defendants have relied upon two documents i.e. letter dated 9th

February, 2018, issued by the Executive Engineer, Birbhum Highway

Division-I wherein the authorities have directed to the defendants to

rectify the defects of the work executed by the defendants and the letter

dated 30th May, 2018, the defendants have informed the plaintiff with

regard to the supply of below specification materials due to which the

work executed by the defendants have been damaged.

21. The plaintiff filed this present application on the apprehension that the

defendants may dispose of part or whole of the property owned by the

defendants and the defendants are making efforts to siphon off fund

from their bank account maintaining with the UCO Bank, Rampurhat

Branch. The plaintiff has made only a bold statement but has not filed

any documents with regard to the said contentions.

22. The defendant has made out a specific case that the defendant has paid

the total amount. The defendant has relied upon certain documents

which are required to be adjudicated during trial. No evidence is

brought on record to prima facie satisfy that the defendants are

alienating their property and siphoning off funds from their bank

account.

23. In the case of Raman Tech. & Process Engg. Co. (supra), the Hon'ble

Supreme Court held that:

5. The power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilise the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are not wanting where bloated and doubtful claims are realised by unscrupulous plaintiffs by obtaining orders of attachment before judgment and forcing the defendants for out-of-court settlements under threat of attachment."

24. This Court considered the judgment relied by the plaintiff but finds that

the said judgments are distinguishable from the facts and

circumstances of this case. In this case, the plaintiff has not made out

any prima facie case to get an order in terms of the provisions of Order

XXXVIII, Rule 5 of the Code of Civil Procedure, 1908.

25. In view of the above, G.A. No. 2 of 2021 is dismissed.

(Krishna Rao, J.)