Haute Couture (India) vs New Direction Sport Inc. And Anr.
2005 Latest Caselaw 1132 Del

JUDGMENT

Anil Kumar, J.

1. This is an application by the defendants seeking modification of order dated 20th March 2004 The defendant No. 3 seeks discharge from the undertaking given to the Hon'ble Court and for release of title deeds of the property bearing number 253, Udyog Vihar, Phase IV, Gurgaon and also release of original allotment letter of the property belonging to the company of defendant No. 3.

2. In the suit filed by the plaintiff the defendants were not getting served necessitating filing of an application by plaintiff under Order 38 Rules 1, 2, 3, and 4 read with Section 151 of code of civil procedure being IA No. 1657 of 2004 The plaintiff contended that the defendants were avoiding service. The defendant No. 3 who had come to India during this time was staying at Hotel Taj Mansingh, Aurangazeb Road, New Delhi. Plaintiff therefore, filed an application contending that the defendant No. 3 has come to India to dispose of the properties and assets of the business and remove the funds from the banks and leave India. It was stated that in case the defendant No. 3 leaves the country after disposing of the assets of the business, the plaintiff would be deprived to reap the fruits of a decree that may be passed in his favor. A restrain Order against the defendant No. 3 from leaving the country was prayed for.

3. On considerations of the plea of the plaintiff this Court wide Order dated the 15th March 2004 restrained defendant No. 3 from leaving India without the permission of the Court. As a restrain Order had been passed against defendant No. 3 from leaving the country, he moved an application. IA No. 1810 of 2004 which was considered on 19th March,2004 On that day learned counsel for defendants entered appearance on behalf of all the three defendants and stated that he would be filing power-of-attorney on behalf of all the defendants after obtaining the same from United States of America. It was also contended that defendant No. 3 was willing to file title deeds of the property to secure the amount of the decree that may be passed against the defendants and would also be filing an undertaking not to transfer shareholding in the company till further Orders from the Court.

4. Thereafter the matter was taken up on 20 March 2004 on which date the defendant No. 3 filed an affidavit along with annexures and original title deeds in respect of a plot in Udyog Vihar, Guragaon. The original conveyance deed as well as the original transfer letter were taken on record and were Ordered to be retained till further Orders. To secure amount of decree which may be passed it was Ordered that defendant No. 3 shall remain bound by the undertaking given by him in the Court wide Order dated 9th March, 2004 On acceptance of the undertaking of defendant No. 3 the Order dated 15th March 2004 was vacated allowing the defendant No. 3 to leave India. The plea of learned counsel for the defendants was specifically recorded that the undertaking as well as deposit of title deeds by defendant No. 3 was without prejudice to the plea that he was not liable to make payment of the suit amount to the plaintiff. The IA No. 1657 as well as 1810 of 2004 were then disposed of.

5. Thereafter, defendants filed an application for review of Order dated 20th March, 2004 The defendants pleaded that the disposal of the to applications on 20th March, 2005 was due to oversight only because his contentions has not been heard and considered. It was contended that the application of the plaintiffs for attachment before judgment could be disposed of only after hearing the defendants and consequently it was prayed that the Order dated 20th March, 2004 be reviewed and the application for attachment under Order 38 Rules 1 and 2 be heard. The application of the defendants was opposed by the plaintiff on the ground that no ground for review of Order dated 20th March, 2004 was made out and the IA No. 1657/04 and IA.No.1810/04 were finally dispose of in view of the submission, undertaking and securing the amount by depositing the titled deeds by the Defendant No. 3.

6. The application for review being IA No. 2523 of 2004 was disposed of by order dated 27.10.2004 holding that no grounds for review of the order dated 20th March, 2004 was made out and the orders were not passed on account of any mistake nor do they suffer from any error apparent on the face of record. This Court while disposing of the application for review held:-

(Sic) this Court is of the view that no grounds are made out for the review of the orders dated 20th March, 2004 The said order was not passed on account of any mistake nor do they suffer from any error apparent on the face of record. The plaintiff's application under Order 38 of the Code of Civil Procedure was disposed of in view of the offer made by defendant No. 3 to deposit the title deeds in respect of a plot in Udyog Vihar, Gurgaon along with letter of allotment and even undertaking was given by defendant No. 3 by filing an affidavit dated 19th March, 2004 which was accepted. It was nowhere stated by defendant No. 3 that the deposit of title deeds or the undertaking were till the disposal of the plaintiffs application IA. No. 1657/04. Learned counsel for the defendant No. 3 did not state before the court that this arrangement was till the disposal of plaintiff's application only and not till the disposal of the suit. The orders disposing of the plaintiff' application as well is defendant's application IA No 1810/2004 were dictated in the open Court in the presence of counsel for both the parties and as such this Court is unable to hold that there was any mistake or error apparent in order dated 20.3.2004 The application filed by defendant No. 3 therefore is without any merit and is liable to be rejected.

However considering the fact that the orders dated 20 March 2004 were upon the statement only made by the Defendant No. 3 and his counsel and interim orders, the defendant No. 3 is at liberty to move the Court under Section 151 of the Code of Civil Procedure for modification of orders or any changes in the terms and conditions thereof.

7. The grounds for modification in the present application are that the application under Order xxxviii Rule 5 was moved by the plaintiff immediately after the service was not effected on the defendants which was also on account proper steps being not taken by the plaintiff. The defendant No. 3 has also alleged that he is a mere employee of defendant No. 1 concern and the liability of alleged dues of the plaintiff cannot be passed onto him. His other plea is that the application under Order xxxviii Rule 5 was not disposed of on merits. The applicant prays that the undertaking given by him be discharged and title deeds of the property given by him of his company named M/s. Surya Fashion Crafts Ltd. and the original allotment letter be given back as theme are required for mortgaging with the bank and the financial institutions.

8. The plaintiff/non-applicant has strongly opposed the application contending that defendant Nos.1 and 2 are settled in USA having an established business in readymade garments there. The defendant No. 3 also gave an undertaking in order to get the order of restrain directing him not to leave the country, modified. After availing the order and thereafter without securing the amount of the decree which may be passed in favor of the plaintiff, neither the undertaking of the defendant No. 3 can be allowed to be withdrawn nor the title deeds of the property and the letter of allotment can be released.

9. I have given the careful consideration to the application and the reply filed by the plaintiff and the submissions made by the counsels as well as the orders dated 15.03.2004; 19.03.2004; 20.03.2004 and 27.10.2004 While disposing of the application for review of order dated 20.03.2004 in IA No. 2523 of 2004, this court categorically held that there were no grounds for review of order dated 20.03.2004 nor the said order was passed on account of any mistake nor suffers from any error apparent on record.

10. Though by order dated 27.10.2004, the liberty was granted to the defendant to approach the Court for modification of the order or any change in the terms and conditions thereof, however, considering the entire tenor of the order, it is apparent that it liberty was for change of terms and conditions and not to review the order. The defendant No. 3 has secured the amount of decree which may be passed, by depositing the title deeds and the original letter of allotment. On his undertaking along with the deposit of title deeds and letter of allotment, he was allowed to go abroad again and the restrain order against him was modified. The defendants can seek change in terms and conditions by securing the amount of the decree which may be passed against them by some other property or by giving any other security or bank guarantee, however, the order cannot be changed or modified so as to release the title deeds of the property and the letter of allotment and discharge the undertaking of defendant without having any alternative security.

11. The plea by the defendant that he wants to secure loans from the bank and the title deeds of the property are required for mortgaging the same with the bank can also be not a ground to release the property nor the terms and conditions can be changed and the defendant No. 3 can be released from his undertaking. In case the said property is mortgage, the charge of the plaintiff on the said property in case a decree will be passed, will become secondary. On this plea the order can not be modified so as on release the property and release the defendant No. 3 from his undertaking.

12. The counsel for the defendant has relied on , K. C. V. Airways Ltd. v. Wg. Cdr. R.K. Blaggana and , Dr. Sukhdev Singh Gambhir v. Shri Amrit Pal Singh and Ors. to contend that order xxxviii Rule 5 is an extraordinary remedy and the full ingredients for invoking it are lacking in the application and the affidavits in support thereto of plaintiff under Order 38 Rule 5, therefore, attachment before judgment order cannot be ordered. The legal proposition a carved out in the said judgments cannot be denied but it is apparent that they are not applicable to the facts and circumstances inasmuch as the defendants are living abroad and there is a distinct possibility of defendant No. 3 leaving the country and not returning at all.

13. The order whereby title deeds and undertaking of the defendant No. 3 was taken also can not be varied on the ground that the defendant No. 3 has also filed a counter claim. In case the defendants dispose of the property and leave the country, the plaintiff will be rendered remediless. The court had passed the restrain order taking into consideration all these facts which was subsequently modified at the instance of the defendant No. 3. The defendant No. 3 has already availed the benefit of the order by going out of the country.

14. The defendants have already sought a review of the said order, which was categorically declined by the order dated 27.10.2004 holding that the application under Order xxxviii Rule 5 was disposed of in view of the offer made by the defendant No. 3 and the orders were not passed on account of any mistake nor do they suffer from any error apparent on the face of record. The plea of the defendant that the applications were disposed of by mistake, was also considered and declined.

15. The plea of the defendant No. 3 that he is an employee of defendant Nos.1 and 2 where the defendant No. 2 is the President and Director of defendant No. 1 and defendant No. 1 is a company, will also not entitle him from the release of his undertaking and for the release of the title deeds of the properties at Udyog Vihar, Phase IV, Gurgaon. Whether the defendant No. 3 is liable or not is yet to be determined. Though defendants 1 and 2 have been served, however, the fact remains that they are not staying in India and there is a distinct possibility of defendant No. 3 may also not return to this country. In any case, all these pleas and submissions have been considered and the application for review has already been declined.

16. The defendant No. 3 has not tendered any alternative security for release of the title deeds of the properties of defendant Nos.1 and 2 nor there are grounds in the facts and circumstances for releasing the defendant No. 3 from the undertaking and releasing the documents.

17. Consequently, I hold that the application is without any merit and the same is dismissed.