IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH : HYDERABAD MONDAY, THE THIRTEENTH (13TH) DAY OF JUNE, TWO THOUSAND AND ELEVEN Present: HON’BLE SRI JUSTICE G.V.SEETHAPATHY Civil Revision Petition No.4755 of 2010 Between: M/S Shri Shakti Resorts & Hotels Limited, Hyderabad … Petitioner And: M/s Nagarjuna Construction Company Limited, Hyderabad … Respondent HON’BLE SRI JUSTICE G.V.SEETHAPATHY Civil Revision Petition No.4755 of 2010 ORDER: This revision petition is directed against the order dated 04.10.2010 in IA No.3279 of 2010 in OS No.468 of 2010 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad, wherein the said application filed by the respondent herein-plaintiff under Order 38 Rule 5 CPC was allowed directing the petitioner herein-defendant to furnish security for the suit amount, failing which there will be conditional attachment of the petition schedule moveable properties pending disposal of the main suit. 2. Heard both sides. Perused the record. 3. The respondent herein-plaintiff filed suit against the petitioner herein for recovery of a sum of Rs.28,80,000/- and interest at 18% per annum. According to the plaintiff, the Indian Railway Catering and Tourism Corporation Limited (for short ‘IRCTC’), a Government of India Enterprise, came up with a proposal to set up ‘Rail Ratna’ budget hotels at some of the important stations in the country and the defendant, a limited company engaged in the business of resorts and hotels, approached the plaintiff with a request to join the defendant in the said project for developing, operating and maintaining rail ratna brand of hotels and it was agreed that a consortium would be formed for the purpose of bidding for the said project and Memorandum of understanding (MoU) dated 30.11.2006 was executed, wherein, it was inter-alia agreed to bid for 9 stations and in pursuance of MoU, plaintiff paid Rs.15,00,000/- as EMD for three locations by cheques. The plaintiff further pleads that the defendant by their letter dated 21.12.2006 requested the plaintiff to reimburse the additional amount of Rs.14,08,800/- towards his share of expenses incurred and that the plaintiff paid Rs.13,80,000/- by cheque dated 02.01.2007 towards his share of EMD and Rs.28,000/- in cash. Thus according to the plaintiff, they paid total amount of Rs.28,80,800/- to the defendant and IRCTC by cheques. The plaintiff further pleads that the defendant by their letter dated 22.12.2006 clarified that in the event of being unsuccessful in any of the bids, the EMD as and when returned by IRCTC, would be reimbursed to the plaintiff proportionate to the agreed ratio. It is not disputed that the consortium was not successful in the bidding. According to the plaintiff, the defendant by their letter dated 07.11.2008 informed the plaintiff about the receipt of the EMD amount, but however has not returned the amount to the plaintiff, though they received the amount from IRCTC. 4. The defendant would contend that the amounts pertaining to the EMD have not been received back from IRCTC and as per MoU, the plaintiff would be entitled to receive the same only after the defendant receives the said amount from IRCTC and not earlier. The defendant also contends that the letter dated 07.11.2008 addressed by them would not relate to nor does it refer to receipt of any amount from IRCTC by way of refund of EMD. 5. The plaintiff filed IA No.3279 of 2010 under Order 38 Rule 5 CPC seeking attachment before judgment of the moveable properties of the defendant. By impugned order, the learned Additional Chief Judge, directed the defendant to furnish security for the suit amount, with further direction that in default, there shall be conditional attachment of the petition schedule moveable properties. The impugned order, however, does not specify the time granted for furnishing security. 6. Learned counsel for the petitioner would contend that the plaintiff has not established prima-facie case for seeking attachment before judgment under Order 38 Rule 5 CPC. She would further contend that the plaintiff also has not placed any material before the Court to show that the defendant with intent to obstruct or delay the execution of any decree is trying to dispose of the said property. She would also contend that the defendant is having properties of net worth of twenty five crores as reflected by the report of the Auditors and so there is no need for directing the defendant to furnish security. 7. Learned counsel for the respondent-plaintiff on the other hand would contend that the reply notice got issued by the defendant to the plaintiff would disclose that the defendant has received all the amounts due from IRCTC and the defendant in fact pleads discharge by contending that they have paid away to the plaintiff all those amounts received from IRCTC. He would further contend that the plaintiff has made necessary averments in the affidavit filed in support of the application to show that the defendant is trying to dispose of their property to defeat the decree that may be passed against them. 8. Learned counsel for the petitioner-defendant relied upon the decision of the Apex Court in ‘M/s Raman Tech & Process Engg. Co. v. M/s Solanki Traders[1]’, wherein it was held as follows: “The object of order 38 rule 5 CPC in particular, is to prevent any defendant from defeating the realization 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 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 5CPC. 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.” 9. Relying upon the above decision, learned counsel for the petitioner-defendant seeks to contend that as the plaintiff failed to establish prima-facie case, the question of his interest being protected under Order 38 Rule 5 CPC does not arise. 10. Learned counsel for the petitioner-defendant also relied upon the decision in ‘Mandala Suryanarayana @ Babji v. Sri Barla Babu Rao[2]’ where in the Division of this Court held that ‘a civil Court is required to record reasons before ordering issue of warrant of attachment before judgment under Order 38 Rule 6 CPC even in a case where defendant fails to comply with order/notice issued by Court under Order 38 Rule 5 CPC to furnish security within the time stipulated and such recording of reasons by Court is mandatory.’ 11. In the present case, the specific case of the plaintiff is that the defendant having received back the EMD amounts from IRCTC has not chosen to return the same to the plaintiff as undertaken in the MoU and wrongfully with-held the same. Before filing the suit, the plaintiff addressed a letter dated 26.11.2008 calling upon the defendant to refund their portion of amount of Rs.28,80,000/- since the tender was not successful and the EMD amounts were refunded by IRCTC. Though, it was specifically stated in the said letter that the amounts were refunded by IRCTC, defendant has not issued any reply refuting the said allegations. As the defendant did not respond to the said letter, the plaintiff got issued a registered notice dated 1.10.2009 calling upon the defendant to pay a sum of Rs.28,80,000/- with interest at 18% per annum. In the said notice also it was reiterated that the defendant has received the said refund of the EMD amount from IRCTC and therefore, they are obligated to refund the same to the plaintiff. It was further alleged in the said notice that since the date of refund by IRCTC, defendant has been enjoying the benefit of the said amount and therefore they are liable to pay the same with interest to the plaintiff. The defendant got issued a reply dated 08.10.2009 wherein they merely stated that they are not liable to pay any amounts to the plaintiff as they have returned all the amounts. It was further stated in the reply notice that by letter dated 07.11.2008, the defendant have returned the bank guarantees and other amounts refunded by IRCTC to the plaintiff under their acknowledgment and thus, no amounts are payable to the plaintiff. The defendant further alleged that the claim made by the plaintiff is false and imaginary. Significantly, the defendant has no where stated in the said reply that they have not received the amount of EMD from IRCTC. On the other hand they pleaded that they have paid away all the amounts to the plaintiff and no further amounts are due and payable. Thereafter, the plaintiff got issued a statutory notice dated 04.02.2010 under Section 433(e) read with 434(1) of the Companies Act, reiterating their demand for return of Rs.28,80,000/- within 21 days, failing which necessary action would be initiated for winding up of the defendant company. The defendant got issued reply notice dated 24.02.2010 merely reiterating the contents of their earlier reply notice to the effect that all the amounts have already been paid away to the plaintiff. In the said reply notice also, there is no specific denial as to receipt of EMD amount from IRCTC. 12. Thus, a perusal of the contents of the notices exchanged between the parties would disclose that the plaintiff has been repeatedly asserting that the amount of Rs.28,80,000/- was received by the defendant from IRCTC, but is wrongfully withheld by the defendant, whereas the defendant has been stating that all the amounts have been paid away to the plaintiff and no further amount is due. Learned counsel for the petitioner-defendant would contend that reference to payment of all the amounts in the reply notice is in respect of those amounts received from IRCTC, but not to the EMD which has not been received from IRCTC. There is, however, no specific averment in any of the two reply notices issued by the defendant stating that the EMD amount has not been received from IRCTC. Thus the averments in the reply notices are to the effect of pleading discharge by alleging that all the amounts due are paid away to the plaintiff and no further amount is due. 13. Even according to the defendant, IRCTC has not returned EMD amount. Significantly, the defendant has not taken any steps nor issued any notice demanding return of the said amount from IRCTC. The questions as to whether or not the defendant has received the EMD amounts from IRCTC and whether or not the defendant failed to repay the said amount to the plaintiff and whether or not the plea of discharge put forward by the defendant is true, are all matters to be considered by the trial Court on evidence during the course of trial, without in any way being influenced by any of the observations made in this order. 14. However, for the purpose of considering the application under Order 38 Rule 5 CPC the material on record certainly discloses a prima-facie case in favour of the plaintiff. When once the plaintiff is able to establish prima-facie case pertaining to his claim they are certainly entitled to seek protection of their interest by taking resort to the provisions under Order 38 Rule 5 CPC. In the affidavit filed in support of the application, the plaintiff has duly averred about their apprehension over the disposal of the property by the defendant. It is specifically alleged in the affidavit that the defendant is not performing well in the market and is heavily indebted and is trying to dispose of its assets and if the defendant is successful in alienating all its properties, the plaintiff will not be in a position to recover suit amount, even if a decree is passed. It is further alleged that there is imminent threat that the defendant would alienate its properties to third parties, and therefore if the schedule properties are not attached, the plaintiff would be put to irreparable loss and injury. 15. The trial Court based on the said averments exercised its jurisdiction under Order 38 Rule 5 CPC and on being satisfied that there is prima-facie case in favour of the plaintiff and that their interest is liable to be protected, directed the defendant to furnish security for the suit amount. It is not as though the schedule properties of the defendant were directed to be attached straightaway. The trial Court merely directed the defendant to furnish security for the suit amount and only in the event of defendant failing to furnish security, conditional attachment of the schedule property was ordered. The trial Court, however, erred in omitting to fix the time limit before which the security is to be furnished. 16. In the circumstances, the impugned order of the trial Court, which is passed on due consideration of the material available on record and duly furnishing reasons for exercising jurisdiction under Order 38 Rule 5 CPC, does not call for interference in exercise of the revisional jurisdiction. As the trial Court has duly recorded its satisfaction about the existence of prima-facie case and also necessity to protect the interest of the plaintiff, it cannot be said that the Court has committed any illegality or irregularity in exercise of its discretionary power in ordering the defendant to furnish security for the suit amount. The impugned order does not therefore, call for any interference by this Court. The defendant is directed to furnish security for the suit amount, within a period of two weeks from the date of receipt of the copy of this order and on their failure to do so, the impugned order directing conditional attachment would take effect. 17. In the result, the civil revision petition is dismissed. No order as to costs. __________________ G.V.SEETHAPATHY, J Date: 13.06.2011 bss [1] 2008(2) SCJ 381 [2] 2010(2) ALT 839 (D.B.)