Techno Systems Protections vs Supreme Telecommunications
2005 Latest Caselaw 1368 Del

JUDGMENT

Swatanter Kumar, J.

1. By this order, I would dispose of two applications filed by the plaintiff one under Order 39 Rules 1 and 2 read with Section 151 of the CPC being IA No. 4806/2005 and the other under Order 38 Rule 5 read with Section 151 of the CPC being IA No. 5131/2005.

2. The plaintiff filed the present suit for recovery of Rs. 86 lacs against the defendant. The recovery is based on the averments that the plaintiff is having expertise in supply and installation of shelters as required by M/s. Rail Tel Corporation Ltd. The parties negotiated where after the purchase orders were placed on the plaintiff by the defendant. The plaintiff was called upon to make supply and installation of 50 shelters of the total cost of Rs. 80,00,000/- vide order dated 10.5.2002 and still another supply and installation order was placed for supply and installation of 11 shelters vide order dated 6.6.2002 which was subsequently extended to 39 shelters of the total value of Rs. 56,70,000/- Still two other orders dated 11.10.2002 and 20.1.2003 were also placed. According to the plaintiff, it provided the supplies and the defendant had made some payment in respect of the work executed and consequently with a view to satisfy the plaintiff a letter dated 11.11.2003 was also issued to the General Manager of the Rail Tel Corporation of India. In regard to different supplies made, the plaintiff claims that the plaintiff is entitled to recover Rs. 56,87,851/- in respect of the purchase orders issued and executed and a sum of Rs. 10 lacs towards the cost of the material manufactured and a sum of Rs. 45,000/- incurred in relation to the deficiencies and as such, totaling an amount of Rs. 67,32,851/- on account of principal with interest @ 15% p.a. on the arrears.

3. In these circumstances, the plaintiff has filed the suit for recovery of Rs. 86 lacs as afore-noticed.

4. In the application for injunction, it is sated that the defendant has never disputed the supplies of the ordered material and of the principal amount. It is further stated that the Rail Tel Corporation of India Ltd. is going to release the pending payments soon and also the bank guarantees furnished by the defendant in its favor. On this premise, the prayer is that the court may grant ex part injunction restraining the defendant from receiving the payments from M/s. Rail Tel Corporation Ltd. and M/s. Ericsson India Pvt. Ltd. to the extent of Rs. 67,32,851/- during the pendency of the suit.

5. While in the application for attachment before judgment, it is stated that the defendant is taking time to file written statement and reply to the application and in the meanwhile it has diverted and/or disposed of its assets in Delhi so as to take all its properties outside the territorial jurisdiction of this court. It is stated that the notice sent to the defendant was returned to the plaintiff with the remarks 'left'. It is also averred in this application that the defendant is not disputing the liability but is removing its money from the local limits of jurisdiction of this court. Thus, it is prayed that a show cause notice be issued to the defendant as to why it be not directed to furnish security for the amount claimed and it also be directed to renew the guarantee given in favor of M/s. Rail Tel Corporation of India Ltd. and M/s. Ericsson Ltd.

6. Reply has been filed to both these applications. It has been stated in the reply that the applications are not maintainable. No grounds much less sufficient grounds have been made out in the application satisfying the ingredients of Order 38 Rule 5 of the CPC. It is stated the defendant has already filed a counter claim against the plaintiff claiming damages suffered by the defendant for not completing the work satisfactorily to the satisfaction of the end customers. Vide letter dated 10.9.2003 and fax dated 20.3.2003, the defects and delay were pointed out to the plaintiff which have not been corrected despite opportunity and as such the defendant has suffered serious losses. It is further stated that the defendant has not closed its office at Delhi now. The said office was closed as back as in 2004 and the plaintiff had knowledge about the same as the plaintiff had been corresponding with the defendant at the Mumbai Office prior and after 2004. It is also stated that principals of defendant have already levied liquidated damages on the defendant and have encashed the bank guarantee.

7. During the course of hearing, it was stated on behalf of the defendant that the amounts payable by the principals of defendant have already been received and the bank guarantees cannot be directed to be kept alive in favor of third parties as they are not parties to the present suit. There is no previty of contract between the plaintiff and those third parties and as such the rights and obligations between the defendant and the third parties cannot be made subject matter of controversy and determination in the present application. It is vehemently argued while relying upon the judgment of the Supreme Court in United Commercial Bank v. Bank of India and Ors. that the court should be reluctant to grant injunction restraining performance of the contractual obligations arising out of a letter of credit or a bank guarantee between one bank and another.

8. There is no occasion for this court to entertain the request of the applicant that the defendant be restrained from receiving the bank guarantees from its principals. The bank guarantees executed by the defendant in favor of a third party is an independent contract and cannot be adjudicated upon in the present suit. The amounts payable to the defendant by its principals have already been paid. As such, the application for injunction filed by the plaintiff has been rendered infructuous.

9. The learned counsel appearing for the applicant while heavily relying upon a statement annexed to the reply filed by the defendant to the application for attachment before judgment as annexure D1 contended that the amounts shown in the statement clearly indicate that amounts are due to the plaintiff and the defendant is wrongfully retaining the said amounts. While relying upon the documents filed by the defendant, it is also stated that hardly any defects have been pointed out and the defects which were pointed out, have already been corrected by the plaintiff. As such, the defendant should be directed to furnish the security to the extent of the said amount.

10. Of course, the bare reading of these documents would show that the defendant is reflecting certain amounts due to the plaintiff and as well as there is not great controversy with regard to completion of the work. But equally true is that the defendant in the present case has already filed a counter claim in this suit claiming a sum of Rs. 73,28,360.21/-. This counter claim is based upon the alleged breaches of the contract and unsatisfactory work performed by the plaintiff. At this stage, it is difficult to hold that the plaintiff has prima facie a case wherein he is bound to succeed. Every party to a litigation has a legitimate right to think that the party is likely to succeed in the litigation. The controversies raised in the plaint, written statement and the counter claim have still to be gone into by the court during the course of trial. The provisions of Order 38 of the CPC cannot be invoked in a routine manner. It is obligatory upon the applicant to satisfy the basic ingredients before he can claim relief against the defendant under these provisions. The allegation with regard to removal of the property by the defendant has been specifically denied and disputed. It is stated that the office of the defendant was closed much prior to the institution of the suit and it was a normal business decision taken by the defendant. In order to attract the provisions of Order 38 Rule 5 of the CPC, the applicant has to make definite allegations which at lease prima facie would show that the defendant is intending to delay the passing of the decree and is removing the properties beyond the jurisdiction of the court with an intention to frustrate the decree, if ultimately passed by the court in favor of the plaintiff. In the present case such essential ingredients have not been even specifically pleaded. Vague averments in this regard cannot form basis for passing of an order of attachment before judgment against the defendant. It is an order of serious consequences and the court cannot pass such orders on the mere asking of the applicant and in a routine manner. Reference can be made to the case of M/s. Nagpal Steel Limited and another v. Arjan Dev Verma and another 1998 Vol. 2 PLR 372 where the court held as under:-

5. The provisions of Order 38 Rule 5 of the Code of Civil Procedure are stringent and are exercised normally by the Courts when the applicant is able to make out a prima facie case on the one hand and on the other hand is able to satisfy the ingredients under these provisions. In the present case there are specific allegations made in the application that the defendants are bent upon disposing of the goods as well as the immovable property at Satsang Road, Industrial Area, Ludhiana, to defect the decree which is likely to be passed in their favor. The allegations were vaguely denied and even detailed reply to this application was not filed. May be the provisions are stringent but where the facts and circumstances of the case makes it apparent on record that the intention of the defendant is not bona fide and they are attempting to frustrate the decree which is likely to be passed in favor of the plaintiff and they offend any of the clauses to Order 38 Rule 5, the Court would normally come to the rescue of the applicant for such safeguard. The provisions of Order 38 Rule 5 certainly postulates different orders and it is not necessary that the Court must straight away pass an order of attachment before judgment. In fact sub-rule 1 of Rule 5 of Order 38 provides that where the defendant fails to show cause to the court then the Court would direct him to deposit in the court money or other property sufficient to answer the claim of the plaintiff or to furnish the security. Thus the power of the Court to pass an order of the kind dated 6.6.1997 cannot be called without jurisdiction. The learned counsel appearing for the in the case of Onkar Mal Mittal v. State Bank of Patiala (1991-2) 100 PLR 338, Canara Bank v. Smt. Pushpa Gupta 1995(1) RRR 434, Om Parkash Bansal v. Canara Bank (1995-1) 109 PLR 725, Satpal Singh v. M/s. Sunil Kumar Amit Kumar (1996-3) 114 PLR 693, in support of his contention that the present application ought to have been rejected by the learned trial Court. There can be no doubt to the propositions stated in the judgments that averments satisfying the ingredients of Order 39, Rule 5 should be stated in the application and the court should apply its mind before passing the requisite orders. In the present case, on the averments in the application as noticed above, Court has applied its mind judiciously as is clear from the impugned order. The learned trial Court upon proper appreciation of the controversy before it had come to the conclusion in its order dated 6.6.1997 that it would not be appropriate to direct attachment before judgment at the first instance and thus had directed the present petitioner only to furnish security to the extent of Rs. 10 lacs. It is only as a consequence of default of this order that the trial Court has passed the order for attachment before judgment on 30.7.1997. During that period neither the order dated 6.6.1997 was challenged nor the application for extension of time or for any other proper relief was moved before the learned trial court.

6. The learned counsel for the respondent has placed reliance on the case of V.K. Natraja Gounder v. S.A. Bangaru Reddiar , and Premraj Mundra v. Md. Maneck Gazi and Ors, , to substantiate his contention that the order of the trial Court does not suffer from any jurisdictional error. Keeping in view the facts and circumstances of this case where there is eminent threat of disposal of properties with the intention to frustrate the decree which may be passed seen in the background of the defense which lacks in bonafide and substance. Further more the fact that an unpaid seller has a right over the property sold, it becomes necessary to protect the interest of the plaintiff in the suit. The inadequate facts in reply to the application under Order 38, Rule 5 and the averments being totally vague would lead to an interference which may not be favorable to the petitioner by the court at this initial stage of the suit.

11. Reference can also be made to the case of Ms. Poonam Chanda v. M/s. Takkar Electronics and another 1999 Vol. 1 PLR 382. There might be some documents of the defendant which may help the plaintiff in proving its case and claiming a particular sum against the defendant. But that by itself would be no reason for the court to allow the prayer of the plaintiff of such serious consequences. There is nothing on record which even prima facie could show that the defendant is about to dispose of whole or any part of its property or is about to remove the whole or any part of its property from the local limits of the jurisdiction of the court with an intention to frustrate the decree, if passed in favor of the plaintiff. In fact, a statement was made on behalf of the defendant and even an affidavit was filed that the defendant has not disposed of any of its properties in Delhi. The mere apprehension of the plaintiff/applicant cannot be a ground for directing the defendant to furnish security or attachment before judgment of its properties.

12. For the reasons afore-stated, I find no merit in both these applications and the same are dismissed while leaving the parties to bear their own costs.