IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.11.2011 CORAM THE HON'BLE MR. JUSTICE VINOD K.SHARMA O.A.Nos.508 and 509 of 2011 and A.No.2726 of 2011 and A.No.3581 of 2011 in O.A.No.509 of 2011 in C.S.No.1039 of 2010 ORDER This order shall dispose off the following four applications: i) O.A.No.508 of 2011: This application, under Order 14 Rule 8 of the Original Side Rules r/w Order 39 Rules 1 and 2 and Section 151 of the Code of Civil Procedure, 1908, has been moved with prayer for issuance of interim injunction restraining the respondents, their men, agents, representatives, servants, assigns or persons acting or any one claiming under them from in any manner encumbering, alienating or dealing with the property morefully described in the Schedule to the application, either by way of sale, lease, mortgage, lien, charge or joint development or otherwise of the said property in favour of any third party or parties, pending disposal of the suit. The parties to the applications are defendants to the suit. ii) O.A.No.509 of 2011: This application, under Order 14 Rule 8 of the Original Side Rules r/w Order 39 Rules 1 and 2 and Order 39 Rule 2A and Section 151 of the Code of Civil Procedure, 1908, has been moved with prayer for issuance of interim injunction restraining the 5th respondent, their men, agents, representatives, servants, assigns or persons acting or any one claiming under them from in any manner encumbering, alienating or dealing with the property morefully described in the Schedule to the application, either by way of sale, lease, mortgage, lien, charge or joint development or otherwise of the said property in favour of any third party or parties, pending disposal of the suit. The property described in schedule is piece and parcel of land and building bearing Shed No.F-11 at Ambattur Industrial Estate, Chennai, situated in Saidapet Taluk and Chingleput M.G.R.District, land measuring an extent of about 9,827 sq.ft with built-up area measuring an extent of about 5,401 sq.ft. comprised in S.No.34 part & 49 part, Mogappair Village, bounded as under: North By : 50 feet Road, East By : First Main Road, South By : F-12 Unit, and West By : F-10 Unit situated within the Sub-Registration District of Konnur and Registration District of Chennai North. It may be mentioned here that the respondent no.5 in this case is not a party to the suit. iii) A.No.2726 of 2011: This application, under Order 14 Rule 8 of the Original Side Rules r/w Order 39 Rule 2-A and Section 151 of the Code of Civil Procedure, 1908, has been moved to declare that the sale deed dated 29.12.2010 pertaining to the property morefully described in the schedule to the application executed by the 1st and 2nd respondents in favour of the 5th respondent and registered Doc.No.1344 of 2011 on the file of the Sub-Registrar, Ambattur, to be null and void. It may be mentioned here again that the respondent no.5 is not a party to the main suit. iv) A.No.3581 of 2011: This application has been moved by the applicant / defendant for vacating the order of injunction granted in O.A.No.509 of 2011 in C.S.No.1039 of 2011 dated 14.06.2011. 2. Mr.N.Balasubramanian has filed C.S.No.1039 of 2010 against Mrs.Madhuri Mathur, Mr.Vivek Mathur, M/s.Power Control and Appliances (Bombay) Pvt. Ltd. and M/s.Sumeet Research and Holdings Pvt. Ltd. for recovery of a sum of Rs.1,18,55,375/- (Rupees One Crore Eighteen Lakhs Fifty Five Thousand and Three Hundred Seventy Five only) with interest at the rate of 18% from the date of filing of the suit till realization. 3. The prayer is also made for permanent injunction restraining the defendants, their men, agents, representatives, assigns or persons acting or any one claiming under or through them from in any manner dealing with, alienating or encumbering the suit schedule mentioned properties either by way of sale, mortgage, lease, joint development, or otherwise. 4. The schedule of properties reads as under: Item 1: All that piece and parcel of land and building bearing Shed No.F-11 at Ambattur Industrial Estate, Chennai situated in Saidapet Taluk and Chingleput MGR District, land measuring an extent of of about 9,827 sq.ft with built-up area measuring an extent of about 5,401 sq.ft. comprised in S.No.34 part & 49 part, Mogappair Village, bounded on the North By : 50 feet Road, East By : First Main Road, South By : F-12 Unit, and West By : F-10 Unit and situated within the Sub-Registration District of Konnur and Registration District of Chennai North. Item 2: All that piece and parcel of the property bearing Flat No.3C, 3rd Floor, RAAG DURBAR, measuring an extent of about 1,600 sq.ft along with 729/12143rd share in the land bearing Door No.52-A, Sterling Road, Nungambakkam, Chennai  600 034, the land bounded on the North By : Sterling Road East By : Property bearing No.13-A, Sterling Road, South By : Property belonging to Mrs.Valiammal, and West By : Private passage leading to Mrs.Valiammal's property comprised in Old S.No.351, Re-Survey No.541/2, C.O.No.1165 of 1926, Block No.30 and measuring 166' 6" North to South on the East 44' East to West on the South, 106' 6" East to West on the North and for the extent of 5 Grounds and 143 sq.ft or thereabouts and situated within the Sub- Registration District of Thousand Lights and Registration District of Chennai Central. Item 3: All that piece and parcel of the property bearing Shop No.1, 3rd Floor, Parsn Complex measuring an extent of about 1,800 sq.ft along with 988/46360th undivided share, rights, title and interest in the lands admeasuring 19 Grounds and 759 sq.ft or thereabouts situated at Door No.121, Mount Road, Chennai-600 002 and bearing Part R.S.No.3/1, R.S.3/8, 3/9 and 3/12 of Block No.1 of Mylapore Division, Nungambakkam Village O.S.No.3045 and comprised in Collector's Certificate No.323 situated in the Sub-Registration District of Thyagaraya Nagar and Registration District of Madras South, the land bounded on towards North East by remaining property bearing O.S.No.3/11 belonging to Sri.Balasubramanian on or towards North West by Kodambakkam Road, on or towards the South East by property bearing R.S.No.31/11 belonging to Sri.Balasubramanian and on or towards the South West by property belonging to P.Chitnis, 115 Kodambakkam High Road. Item 4: All that piece and parcel of the property bearing Shop No.2, 3rd Floor, Parsn Complex measuring an extent of about 1,500 sq.ft along with 895/46360th undivided share, rights, title and interest in the lands admeasuring 19 Grounds and 759 sq.ft or thereabouts situated at Door No.121, Mount Road, Chennai-600 002 and bearing Part R.S.No.3/1, R.S.3/8, 3/9 and 3/12 of Block No.1 of Mylapore Division, Nungambakkam Village O.S.No.3045 and comprised in Collector's Certificate No.323 situated in the Sub-Registration District of Thyagaraya Nagar and Registration District of Madras South, the land bounded on towards North East by remaining property bearing O.S.No.3/11 belonging to Sri.Balasubramanian on or towards North West by Kodambakkam Road, on or towards the South East by property bearing R.S.No.31/11 belonging to Sri.Balasubramanian and on or towards the South West by property belonging to P.Chitnis, 115 Kodambakkam High Road. 5. The plaintiff is a Chartered Accountant, engaged in financial consultancy and also undertakes various corporate restructuring assignments. 6. Based on his proficiency and experience in the field of finance, the plaintiff entered into an agreement dated 05.05.2008 with Mrs. Madhuri Mathur and third defendant M/s.Power Control and Appliances (Bombay) Pvt. Ltd., vide which, six properties, belonging to Mr.Vivek Mathur, were to be released from legal entanglements with the consideration to be extended by the plaintiff, and an escrow agreement was also agreed to be entered into between the parties, stipulating that properties were to be sold and sale proceeds were to be distributed in terms of the agreement, executed between the parties. 7. However, no escrow agreement was entered into, as contemplated. The defendants, thereafter, requested the plaintiff to extend financial assistance on simple terms, and undertake the exercise of asset reconstruction. 8. The plaintiff was assured that once the liabilities were settled and cleared with the funds of the plaintiff, the documents of the properties would be taken back from the various creditors, and once the properties were free from all encumbrance, it would be sold and from the sale proceeds, the amount repaid back to the plaintiff, along with interest. 9. The plaintiff agreed to take up the assignments of asset reconstruction without reference to the agreement dated 05.05.2008. The asset reconstruction also included debt reconstruction with the Lakshmi Vilas Bank, to whom the defendants owed more than Rs.7 Crores. The plaintiff, on the assurance of the defendants, agreed to finance money to the defendants from his own sources and also from the sources arranged by the plaintiff. 10. The plaintiff along with the defendant no.2 participated in the reconstruction process, who was acting on behalf of the defendant no.1 as also defendant nos.3 and 4. Subsequently, the defendant nos. 1 & 2, vide letter dated 22.05.2008 gave their mandate to the plaintiff for the exercise of reconstructing the Sumeet Group. The plaintiff, under the said agreement, paid a sum of Rs.79,00,000/- (Rupees Seventy Nine Lakhs only), that the defendant no.2 confirmed that the amount of Rs.79,00,000/- (Rupees Seventy Nine Lakhs only) has been disbursed by the plaintiff and the defendants also mentioned in the said letter how the funds were utilized by them. 11. An assurance was also given that on the sale of properties, the plaintiff's dues would be cleared out of the sale proceeds. It is also pleaded that thereafter, April-May, 2009, the defendants confirmed that the amount of Rs.94,00,000/- (Rupees Ninety Four Lakhs only) was due to the plaintiff. The plaintiff requested the defendants to create a security for repayment of amount due to him. The defendant no.2 also addressed a letter to The Lakshmi Vilas Bank, Chennai, confirming that Rs.79,00,000/- (Rupees Seventy Nine Lakhs only) was given as loan to the plaintiff and it was mutually agreed that a sum of Rs.94,00,000/- (Rupees Ninety Four Lakhs only) would be paid as full and final settlement. The Lakshmi Vilas Bank had the first charge over the immovable property and a request was made to the Bank not to release the documents unless Rs.94,00,000/- (Rupees Ninety Four Lakhs only) was paid to the plaintiff. 12. This letter was addressed by the defendant no.2 on behalf of the defendant no.3. Thereafter, the plaintiff advanced another sum of Rs.11,50,000/- (Rupees Eleven Lakhs Fifty Thousand only). The case of the plaintiff is that the plaintiff came to know through reliable sources that similar mandate was given by the defendants for asset reconstruction to a company name M/s.PARAS (Pridhvi Asset Reconstruction and Securitisation Co. Ltd) of Hyderabad, who paid loan due to The Lakshmi Vilas Bank and the documents from the Bank were taken away by the said company on the instruction of the defendants. 13. The Officials of the Bank are said to have acted hand in glove with the defendants and M/s.PARAS Co. Ltd., in releasing the documents without notice to the plaintiff. 14. The plaintiff, thus, alleges a breach of trust against the defendants and also claims that he was in the process of initiating suitable criminal proceedings against the defendants. On account of later development, the plaintiff requested the defendants to repay the amount. 15. The defendants, thereafter, issued a letter dated 12.05.2010 and also issued two post dated cheques for Rs.32,00,000/- (Rupees Thirty Two Lakhs only), drawn over Indian Overseas Bank and it was communicated to the plaintiff to deposit the cheques after written communication from the defendants. It was in July, 2010, the defendant no.2 directed the plaintiff to deposit the cheques for Rs.32,00,000/- (Rupees Thirty Two Lakhs only, but the same was returned dishonored with the remarks 'Exceeds Arrangement'. The plaintiff was also requested not to deposit other two cheques on the assurance that the amount would be settled. 16. The defendants, thereafter, issued another cheque, drawn on Indian Overseas Bank for Rs.1,14,00,000/- (Rupees One Crore Fourteen Lakhs only) towards total payment payable to the plaintiff, including interests. The plaintiff was asked to deposit the cheque on 09.08.2010, but he was informed that there was not sufficient fund in the Bank and the cheque was also returned for want of sufficient funds. 17. However, in view of the relationship between the parties, criminal proceedings were not initiated. In September 2010, the plaintiff was again approached for further financial assistance, but the plaintiff, being not convinced with the project, did not advance any loan. The plaintiff, thereafter, came to know that the properties at Bombay had been sold and dues of M/s. PARAS was cleared. 18. The plaintiff, further pleaded that the third floor, Gala Complex at Bombay was sold, though the defendants created a second charge over the said property at Bombay and the same was also intimated to The Lakshmi Vilas Bank in writing. 19. It is the case of the plaintiff in the suit that again in the last week of September 2010, the plaintiff was assured that the amount would be paid and that there was no encumbrance over two shops at Parsn Complex and the dues payable to the Central Excise Department stood paid. It was represented to the plaintiff that these properties were worth several crores of rupees. The request of the plaintiff to deposit the title deeds of these properties with him was not agreed. The plaintiff was only assured that his money would be repaid back. 20. It is pleaded that the properties set out in the schedule were the only properties standing in the name of the defendant no.1. The plaintiff, therefore, claimed an amount of Rs.1,14,00,000/- (Rupees One Crore Fourteen Lakhs only) along with interest at the rate of 18%. 21. The plaintiff also prays for injunction on the facts pleaded therein above. 22. The reading of the pleadings, referred to above, shows that the plaintiff claims that he had the second charge over the property, belonging to the defendants at Bombay. For the reasons best known, the plaintiff has not sought to enforce the mortgage, but this suit is only for recovery of the amount. 23. In a suit for recovery, the prayer for interim injunction, restraining the defendants from alienating the property, cannot be prayed for, as the remedy with the plaintiff / applicant, can at best be for attachment of property, by invoking the provisions of Order 38 Rule 5 of the Code of Civil Procedure. The property, which is not subject matter of lis, cannot be subjected to interim directions. 24. All the applications are, therefore, required to be disposed off in terms of the suit, as framed by the plaintiff. 25. The Order 38 Rule 5 of the Code of Civil Procedure reads as under: "5. Where defendant may be called upon to furnish security for production of property (1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him, (a) is about to dispose of the whole or any part of his property, or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security. (2) The plaintiff shall, unless the court otherwise directs, specify the property required to be attached and the estimated value thereof. (3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified. (4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule such attachment shall be void." 26. A perusal of the above provision would show that the Court has been cloaked with the power to call upon the defendant to furnish security for production of property, even before the judgment, in case the Court is satisfied that the defendant, with an intent to obstruct to delay the execution of any decree that may be passed against him, is about to dispose of the whole or any part of his property or is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. 27. Further still, Hon'ble Supreme Court of India in the case of M/s. Raman Tech & Process Engg. Co. v. M/s.Solanki Trader, 2008 (2) SCC 302, has observed as under: "The power under Order 38, Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38, Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilize the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are not wanting where bloated and doubtful claims are realised by unscrupulous plaintiffs, by obtaining orders of attachment before judgment and forcing the defendants for out of court settlements, under threat of attachment." 28. In light of the express provisions of Order 38, Rule 5 CPC and the observations of the Hon'ble Supreme Court in the matter of M/s. Raman Tech & Process Engg. Co. v. M/s.Solanki Trader, supra, the position of law that emerges is as under: (i)The Court, before calling upon the defendant to furnish security for production of property, has to be satisfied that the defendant, with an intent to obstruct or delay the execution of any decree that may be passed against him, is about to dispose of the whole or any part of his property or is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. This satisfaction of the Court has to be objective and not subjective in as much as there has to be a positive and definite material before the Court to enable the Court to come to a prima facie conclusion that the defendant is about to dispose of the whole of part of his property with an intention to obstruct or delay the execution of any decree that may be passed against him. Merely because a suit is filed or about to be filed against him, the defendant is not debarred from dealing with his property. Accordingly, mere fact that some material is placed before the Court showing that defendant has disposed of some of his properties would by itself not be sufficient for the Court to exercise the powers conferred upon it under Order 38, Rule 5 CPC without their being further material on record to show that the property is being disposed off by the defendant with an intention to frustrate the probable decree that may be passed against him The intention of the defendant to remove or dispose of the whole or part of his property, with a view of obstructing or delaying the execution of any decree that may be passed against him is sine qua non before the power under Order 38, Rule 5 can be exercised by the Court. However, it may also be observed here that the question of ascertaining the intention of the defendant is a vexed question having no easy solution and precise mathematical tests. The true intention of the defendant in disposing of the whole or part of his property would thus, have to be determined by the Court having regard to the particular facts and circumstances of each case. (ii) The Plaintiff- Applicant is required to satisfy the Court that all the ingredients specified in Order 38, Rule 5(1) CPC exist before the application filed by the Plaintiff-Applicant can be allowed. The same is evident from the reading of Clause 4 of the Order 38, Rule5. Merely because the defendant will not be prejudiced cannot be a ground in itself for the Plaintiff- Applicant to argue that the power under Order 38, Rule 5 CPC should be exercised by the Court. Accordingly, the Plaintiff-Applicant is required to place sufficient material before the Court so as to enable the Court to form a prima facie opinion that the defendant, with an intent to obstruct or delay the execution of any decree that may be passed against him, is about to dispose of the whole or any part of his property. In order to do so, the Plaintiff-Applicant may be required to swear an affidavit in support of his application detailing the name, address and sufficiently describing the identity of the person or persons from whom he has received the information about the attempts of the defendant to dispose of the whole or any part of his property with an intent to obstruct or delay the execution of any decree that may be passed against him. (iii) As the matter with regard to the power of the Court to call upon the defendant to furnish security for production of property, even before the judgment, has been detailed and expressly provided in Order 38, Rule 5 CPC, the Court cannot resort to its inherent powers under Section 151 CPC and call upon the defendant to furnish security for production of property in case the ingredients of Order 38, Rule 5(1) CPC are not fulfilled. Reference in this regard can be made to the judgment of the Hon'ble Supreme Court in the matter of Nahar Industrial Enterprises Ltd v. Hong Kong & Shanghal Banking Corporation, 2009 (8) SCC 646, wherein it has been held that where a matter has expressly been provided for in the CPC, inherent power cannot be resorted to. 29. The remedy with the plaintiff in a suit for recovery to secure the decree to be passed is one provided under Order 38 Rule 5 of the Code of Civil Procedure. The Court, on being satisfied on the condition stipulated therein, can always order attachment of the properties, pending disposal of the suit, but certainly no injunction can be granted as claimed in the suit. In view of settled law, applications are decided as under: O.A.No.508 of 2011: i) In the affidavit filed by the applicant, it has been stated that on 1st March, 2011, this Court allowed A.No.7419 of 2010, and ordered attachment of the property described in schedule to Judge's Summons in the said application. O.A.No.1329 of 2010 was closed in view of the attachment of the property. It is also pleaded that while attaching the properties, this Court had observed that the notice was served on the respondents and that their names were printed in the cause list, but respondents have not entered appearance, through counsel and the defendant no.1 had chosen not to contest the application. In A.No.7420 of 2010 where the petitioner seeks interim decree, notice was issued by this Court. ii) It is also pleaded case of the applicant that three properties in Chennai were attached by the Bailiff attached to this Court and the concerned Sub-Registrar was also duly intimated. Whereas with regard to other property, the order was communicated to the District Munsif's Court, Ambattur, which was also subsequently attached by the Bailiff attached to the said Court and the concerned Sub-Registrar was duly intimated. iii) The case of the applicant is that when encumbrance certificate was claimed, it came to his notice that the property at Plot No.F-11, Ambattur Industrial Estate, Chennai, was sold on 29.12.2010 to M/s.Surana Corporation Ltd and registered as Document No.1344 of 2011 on the file of the Sub- Registrar, Ambattur.