IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 12-09-2011 Coram THE HONOURABLE MRS. JUSTICE R. BANUMATHI and THE HONOURABLE MR. JUSTICE B. RAJENDRAN O.S.A. No. 198 of 2011 T. Sennakesavan @ Selvam .. Appellant Versus 1. R. Venkatakrishna Reddy 2. M/s. Rail Vikas Nigam Limited (RVNL) Thirumailai Railway Station Mylapore, Chennai – 600 004 .. Respondents Appeal filed under Order XXXVI Rule 9 of Original Side Rules read with Clause 15 of Letters Patent against the Judgment and Decreetal Order dated 14.06.2011 made in O.A.No. 124 of 2011 in C.S. No. 100 of 2011 on the file of this Court. For Appellant : Mr. G. Ilangovan for Mr. R.C. Paul Kanagaraj For Respondents : Mr. Harishankar for Mr. R. Sankaranarayanan for R1 Mr. V.G. Suresh Kumar for R2 JUDGMENT (Judgment of the Court was delivered by B. RAJENDRAN, J) This appeal is filed by the appellant aggrieved by the order dated 14.06.2011 passed by the learned single Judge dismissing the Original Application No. 124 of 2011 in C.S. No. 100 of 2011 filed by him to restrain the second respondent/garnishee from disbursing or releasing any amount payable to the first respondent. 2. According to the plaintiff/appellant, the suit was filed against the first respondent herein for recovery of Rs.1,10,09,558/- together with future interest at the rate of 24% per annum from the date of plaint till realisation. According to the plaintiff/appellant, he was a sub-contractor of the first respondent and he had completed 90% of the work entrusted to him by the first respondent. The contract was originally awarded in favour of the first respondent by the second respondent/Railways and that work was sub-contracted to the plaintiff/appellant by the first respondent. The plaintiff/appellant alleged that the contract work was entrusted by the first respondent orally and he had also completed the work https://hcservices.ecourts.gov.in/hcservices/ entrusted to him by investing huge amount. After completing the work, the plaintiff/ appellant raised bills and the bills raised by the plaintiff/appellant to the first respondent would be paid by the second respondent/railways. However, instead of collecting the money from the second respondent railways and paying it to the plaintiff/appellant, the first respondent failed to pay the amount. The plaintiff/appellant however admits that the bills relating to R.A. Bill Nos. 1 to 11 has been paid and what was due was in respect of the bills relating to R.A. Bill Nos. 11-A, 12, 13 and 14, which were claimed by him in the suit. Pending suit, the plaintiff/ appellant filed two applications, one for attachment of the immovable property belonged to the first respondent situate at Hyderabad and other application praying for an interim injunction restraining the second respondent/Garnishee from releasing or disbursing any amount payable to the first respondent. According to the plaintiff/ appellant, if the amount is released by the second respondent/garnishee to the first respondent, even if he succeeds in the suit, he could not recover the amount from the first respondent or he could not execute the decree. Inasmuch as the plaintiff/appellant had completed the work entrusted to him by the first respondent by spending huge money and the first respondent failed to pay the amount payable to him, he is entitled to recover the amount from the first respondent and therefore, he had filed the suit and the aforesaid two applications. As far as the application praying for attachment of the immovable property is concerned, the learned single Judge only recorded the undertaking given by the first respondent that he will not alienate or encumber the property situate at Hyderabad and based on such undertaking, the application for attachment was closed. As against the said order, no appeal was filed by both sides. However, as against the dismissal of the application praying to restrain the second respondent/garnishee from releasing or disbursing the amount, the present appeal is filed before us. 3. The first respondent would contend that the alleged sub- contract itself is false and incorrect. According to the first respondent, the plaintiff/appellant was only an employee under him and he was permitted to do the work on monthly payment of Rs.25,000/- per month, besides commission of 2% on the total project cost. The first respondent would mainly contend that the entire amount payable to the plaintiff/appellant was paid to him as advance and he had also executed a power of attorney and based on such power of attorney, the amount was advanced to him by the first respondent. Under those circumstance, the plaintiff/appellant can never be called as a Sub- Contractor and the plaintiff/appellant was only an agent of the first respondent. Therefore, the suit claim made by the plaintiff/appellant is illegal. Even as per the documents produced by the plaintiff/appellant namely Form 16-A issued by the first respondent, the enclosure to Form 16-A indicates that the plaintiff/appellant was paid a sum of Rs.3,13,00,000/- which represents more than 90% of the contract work done by the plaintiff/ appellant. From and out of this amount paid to the plaintiff/appellant, he has done the work as power agent of the first respondent. In any view of the matter, as far as the relief sought for by the plaintiff/ appellant for attachment of the immovable property, the first respondent had given an undertaking before the https://hcservices.ecourts.gov.in/hcservices/ learned single Judge that he will not alienate or encumber the property situate at Hyderabad, which is worth about Rs.1,65,00,000/-, even though the said property was subjected to mortgage and only a sum of Rs.36 lakhs is due and payable to the mortgagee/Bank, therefore this property is sufficient to satisfy the suit claim. The first respondent also contends that the property was offered as a security without prejudice to his right and contentions to be raised in the suit. Under those circumstances, the learned single Judge is justified in dismissing the application to restrain the second respondent/ garnishee from disbursing any amount, much less Rs.1,10,00,000/- payable to the first respondent. If such an order is granted in favour of the plaintiff/ appellant, it will prejudice the first respondent from carrying on his business. The plaintiff/appellant has not adduced any valid reason to withhold such a huge sum especially when the plaintiff/appellant had pleaded that the contract between the parties was an oral contract. Further, even at the time of filing the suit, in the absence of any material to show that the first respondent might evade to make the payment to the plaintiff/appellant in the event of the suit being decreed, especially when the first respondent had given an undertaking not to alienate or encumber the property owned by him at Hyderabad as due security of the amount, if at all it is due and payable by the first respondent, the application filed by the plaintiff/appellant against the order of dismissal of the application to restrain the second respondent/garnishee from disbursing huge amount payable to the first respondent by the second respondent is not sustainable. 4. We have heard the counsel for both sides and perused the materials produced. 5. (i) The plaintiff/appellant has filed the present appeal against the order of dismissal passed by the learned single Judge, declining to restrain the second respondent/garnishee from disbursing any amount payable to the first respondent. The plaintiff/appellant has filed the suit against the first respondent for recovery of the amount allegedly due by the first respondent towards the completion of contract work entrusted to him. According to the plaintiff/appellant, he had completed 90% of the work entrusted to him by the first respondent as a sub-contractor. The main contention of the plaintiff/appellant was even though it was an oral contract, the entire contract work was over and the second respondent/Railways is ready to pay the amount to the first respondent and if the amount is paid directly to the first respondent, it would be difficult for him to recover the amount payable to him by the first respondent. According to the plaintiff/appellant, he had completed his part of the work and raised bills for the work completed, but the first respondent evaded and avoided to make the payment. (ii) So far, the RA Bill Nos. 11-A, 12, 13 and 14 were not paid to to the appellant by the first respondent. As a sub- contractor, when he had completed the work entrusted to him by the first respondent and the payment was evaded, he is entitled to file the suit for recovery of the money against the first respondent. The Plaintiff/appellant also contends that he had made out a prima facie case and the balance of convenience was in his favour, but without considering the same, the learned single Judge refused to restrain the second respondent/garnishee from making the payment to the first https://hcservices.ecourts.gov.in/hcservices/ respondent. The Plaintiff/appellant further contends that in Form 16-A relating to Income Tax TDS Certificate issued by the first respondent in favour of the plaintiff/appellant, it was categorically mentioned that the Plaintiff/appellant was a sub-contractor. The word 'Sub-contractor' is also used in the said Form 16-A. The learned single Judge, without considering the same had merely recorded the undertaking given by the first respondent not to alienate or encumber the property owned by him at Hyderabad and closed the applications filed by him. (iii) The learned single Judge failed to take note of the fact that the property offered as Security by the first respondent was subjected to mortgage and there is a charge over that property by the State Bank of Hyderabad towards a loan for Rs.95,00,000/- received by the first respondent, out of which the first respondent had paid Rs.92,63,000/- and still there is a balance of Rs.36 lakhs payable by the first respondent together with interest to redeem the mortgage. When the property offered by the first respondent as security was already mortgaged with the bank, such a property will not satisfy the suit claim of Rs.1,10,00,000/- made by the plaintiff/appellant in the suit. Therefore, he prayed for setting aside the order passed by the learned single Judge and to direct the second respondent/garnishee not to disburse any amount to the first respondent so as to safeguard his right to recover the amount during the pendency of the suit. 5. The learned counsel for the first respondent would contend that there is a legal dispute with regard to the fact as to whether the plaintiff/appellant is entitled for the suit claim from the first respondent when the plaintiff/appellant was only an agent who was paid a sum of Rs.25,000/- per month besides a commission of 2% of the total project value. When the first respondent had denied his liability to pay any amount to the plaintiff/appellant, the suit itself is not maintainable. In any event, the claim made by the plaintiff/ appellant can only be examined at the time of trial of the suit and he prayed for dismissal of the appeal. 6. When we analyse the TDS certificate issued by the first respondent in favour of the plaintiff/appellant, no doubt, the word used was 'Sub-contractor'. When we see the annexure, which is appended to the TDS Certificate, we see that during the relevant period between 01.04.2008 and 31.03.2009, a total amount of Rs.3,18,22,165/- was paid by the first respondent to the plaintiff/appellant and towards this, as per the works contract, 1% tax was deducted, which is reflected in the TDS Certificate. According to the first respondent, this amount represents nearly 90% of the total contract value awarded to him by the second respondent. It is also seen that the first respondent had given power of attorney in favour of the plaintiff/appellant and the plaintiff/appellant was treated as an agent to execute the works in Tamil Nadu as the first respondent was in Andhra Pradesh. The learned counsel for the plaintiff/appellant also taken us through the documents in the typed set of papers to establish that there was a valid sub-contract in favour of the plaintiff/appellant. 7. Now it is necessary for us to consider whether it is necessary to withhold the amount of Rs.1,10,00,000/- which is https://hcservices.ecourts.gov.in/hcservices/ admittedly payable by the second respondent/garnishee to the first respondent on completion of the contract work. The plaintiff/appellant has to satisfy this Court that he has a prima facie case for grant of an interim injunction restraining the garnishee from disbursing the amount and that the balance of convenience is also in his favour. In this connection, it has to be pointed out that in order to safeguard the right of the plaintiff/appellant during the pendency of the suit, the learned single Judge recorded the undertaking given by the first respondent to the effect that he will not alienate or encumber the property owned by him at Hyderabad. However, as admitted by the first respondent himself, the property at Hyderabad was mortgaged with the State Bank of Hyderabad and there is a charge over that property. It is also seen from the records that the State Bank of Hyderabad disbursed a loan in favour of the first respondent repayable in 20 years. It is also seen that the first respondent had repaid substantial amount of Rs.92 lakhs out of Rs.95 lakhs towards the loan and only a sum of Rs.36 lakhs remains to be repaid, which is evident from the certificate issued by the State Bank of Hyerabad. Therefore, even though the property owned by the first respondent at Hyderabad was offered as a security, in view of the fact that it was subjected to mortgage and there is a charge over that property, there is a little bit of cloud in the property which was offered as a security. As there is a charge over the property to the tune of Rs.36 lakhs and taking into consideration that the plaintiff/appellant had made out a prima facie case inasmuch as word 'Sub-contract' is mentioned in the TDS Certificate issued by the first respondent, without dwelling deep into the matter or without expressing any opinion on merits, as the matter has to be decided only in the trial, we hold that instead of directing the second respondent/garnishee not to disburse the entire amount of Rs.1,10,00,000/- payable to the first respondent, it is sufficient if the second respondent/garnishee is directed not to disburse a sum of Rs.35 lakhs alone to the first respondent out of Rs.1,10,00,000/- so that interest of both the parties will be protected. Therefore, we direct the second respondent/Garnishee not to disburse a sum of Rs.35 lakhs out of Rs.110 lakhs payable to the first respondent, however, the remaining amount can be disbursed to the first respondent. The second respondent/garnishee is further directed to deposit the sum of Rs.35 lakhs by means of a fixed deposit drawn in the name of Registrar General, High Court, Madras in any one of the nationalised banks so that interest will accrue periodically during the pendency of the suit and it will be beneficial to both the parties. On such deposit, the Registrar General, High Court, Madras is directed to keep the fixed deposit receipt for a sum of Rs.35 lakhs till the disposal of the suit. The fixed deposit will be initially for a period of three years, with an interest cumulative option for renewal till the disposal of the suit. It is needless to state that the undertaking already given by the first respondent in so far as the property at Hyderabad will continue till the disposal of the suit. https://hcservices.ecourts.gov.in/hcservices/ 8. Accordingly, the appeal filed by the plaintiff/appellant is partly allowed. No costs. Sd/- Asst. Registrar /true copy/ Sub Asst. Registrar. rsh To 1. The Sub Asst. Registrar, Original Side, High Court, Madras 104. 1 cc To Mr.R.C.Paul Kanagaraj, Advocate Sr 56247 1 cc To Mr.V.G.Suresh Kumar, Advocate Sr 56320 1 cc To Mr.R.Sankara narayana, Advocate Sr 56564 OSA No. 198 of 2011 ksk[co] gp/20.9. https://hcservices.ecourts.gov.in/hcservices/