A single judge bench of the Madras High Court comprising of Justice K. Kumaresh Babu held that a court can exercise extraordinary power to issue an interim order under Order 38 Rules 5 to 13 of the Code of Civil Procedure, 1908 for the attachment of a property before judgment.
However, that can only be exercised when the plaintiff establishes that the defendant was trying to deal with the property and that such dealing of the property was to defeat the right or delay the execution of any decision that may be made against him.
Facts of the Case:
The case of the applicant is that the second respondent herein is a Public Sector undertaking owned by the Government of Tamil Nadu with the responsibility of the shipment of coal along the East Coast of India, had issued a global tender for chartering a vessel of a particular specification to aid in transportation of thermal coal from the Ports of Paradip/Dhamra/Kakinada to Ennore with a capacity of 50000 to 86000.
That the applicant was declared successful bidder as being the lowest bidder having satisfied the technical qualifications. The applicant had originally offered vessel M.V. Prabhu Sumat for carrying out the transportation. As there was some delay in finalizing the contract and the aforesaid vessel being a commercially viable vessel had been engaged for other purposes and hence, the applicant had offered another vessel M.V. Prabhu Puni for a single voyage till M.V. Prabhu Sumat could arrive at the load port. The reason for the swap for the first voyage was due to the prescribed layover in the contract. The said offer was also accepted by the second respondent.
Contentions of the Applicant:
The Applicant contended that the first respondent had challenged the said decision and by misleading this Court, he had obtained an order preventing the second respondent from entrusting transportation of coal to the applicant by a grant of an order of status quo. Immediately, the applicant filed a detailed counter statement and the second respondent herein also filed a detailed counter. This Court after hearing the parties had held that no arbitrariness as claimed by the first respondent was found and that there has been no violation of the tender documents and therefore dismissed the writ petition filed by the first respondent.
The first respondent having lost the tender has been frivolously trying to prevent the applicant from complying with the terms of the tender. The conduct of the first respondent in misleading this Court by obtaining an interim order in the writ petition filed by him had caused a huge loss on various accounts and therefore is liable to compensate the applicant. Hence, he instituted the present suit seeking for claiming damages. The applicant contended that whenever frivolous litigation is initiated by a person and by which it causes damages both to the reputation and money of the other party, then the person who had initiated such frivolous writ petition should be directed to compensate the individual who had suffered the damages.
Contentions of the First Respondent:
The respondents submitted that the suit is seeking for damages that the applicant had suffered based upon an interim order granted by this Court in a writ petition filed by him. He submitted the writ petition filed by him was not frivolous or with an intent to dislodge the applicant. He further submitted that as per the tender conditions, the applicant had indicated a particular vessel to be used for transportation. But, however, by the internal agreement between the applicant and the second respondent, a new vessel was substituted which according to the first respondent does not conform to the tender document. This Court accepting the contentions of the applicant and the second respondent had come to a conclusion that there was no violation of the tender document. This Court in the writ petition had interpreted the conditions of the tender document to come to such a finding. According to him, the Writ Court had not given a finding that the writ petition filed by the first respondent was frivolous, malicious or with an ulterior motive.
Relying upon the judgment of the Hon'ble Apex Court in the case of Vinay Devanna Nayak -vs.- Ryot Sewa Sahakari Bank Ltd. 2008 (2) SCC 305, the respondent submitted that firstly the applicant should prove that he has a prima facie case. In this case, he submitted that the applicant does not have a prima facie case as he would refute the contention that the writ petition filed by the petitioner was frivolous by pointing out the Writ Court had not rejected the claim of the petitioner as being frivolous or malicious. Such an averment would not be sufficient to invoke the provisions of Order 38 Rule 5 by relying upon the aforesaid judgment.
Observations of the Court:
The court analysed the scope of Order 38 Rule 5 which is to safeguard the plaintiff from any damage caused or likely to be caused by the defendant by trying to dispose of the assets with an intention to defeat the decree that may be granted in favor of the plaintiff. The order of attachment before judgment is a punitive remedy as it significantly interferes with the defendant's rights over the property which he is otherwise legally entitled to.
Therefore, the court observed that the burden is upon the plaintiff, firstly to establish his prima facie claim as being substantive and genuine and secondly satisfy the Court that the defendant intended to impede the property by disposing of all or part of his property to delay the execution of any decision that may be made against him. Therefore, it is not only the duty of the plaintiff to establish that the defendant is trying to deal with the property but also to establish that such dealing of property is to defeat the right or delay the execution of any decision that may be made against him. In the present case, as per the court, the applicant was not able to make out a prima facie case and fulfill the aforementioned conditions.
Decision of the Court:
The twin test as enumerated above was not satisfied by the applicant. Hence, the applications were without any merits, and in fine, all the applications were dismissed.
Case Title: MS Sarat Chatterjee & Co. Pvt. Ltd. vs ACS Marine Services Pvt. Ltd. and anr.
Coram: Mr. Justice K. Kumaresh Babu
Case No.: A.Nos.1119, 1423 & 1424 of 2023 in C.S.No.42 of 2023
Advocate for the Applicant: Mr. P.S. Raman
Advocate for the Respondents: Mr. R. Murari
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