1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. NOTICE OF MOTION NO.1448 OF 2009 IN SUMMARY SUIT NO.2613 OF 1998 Ispat Industries Ltd. ...Plaintiff. Versus Anand Agrochem India Pvt. Ltd. & Anr. ...Defendants. ....... Mr.Shailesh Shah with Ms.Manorama Mohanty i/b. S.K. Srivastava Co. for the Plaintiff. Mr. J. P. Sen with Mr. Rahul Moghe for Defendant No.1. Ms.Jyoti Shinde i/b. Vibha Juris Consult Co. for Defendant No.2. ...... CORAM : DR. D.Y. CHANDRACHUD, J. July 28, 2009. P.C.: In the Summary Suit instituted under Order 37 of the Code of Civil Procedure, 1908, unconditional leave to defend the suit was granted to the Defendants by an order dated 23rd November 2005. The Notice of Motion has been taken out, seeking attachment before judgment under Order 38 Rule 5. The claim in the suit which was instituted in 1998 is to the extent of about Rs. 1.60 crores and is based upon a Bill of Exchange allegedly drawn by the First Defendant on the Second Defendant. The suit came to be instituted upon the Second Defendant dishonouring the bill. One of the defences that 2 was urged when the Summons for Judgment was taken out, was that as a matter of fact, the Defendants had pledged a large volume of shares with the Plaintiff and despite a specific notice by the Defendants to the Plaintiff to sell the shares at the time when the price was appropriate, the Defendants had not done so in accordance with law. As a matter of fact, it subsequently transpired that the Plaintiff had already transferred the shares without notice to the Defendants. Be that as it may, the Learned Single Judge hearing the Summons for Judgment granted unconditional leave to defend the suit. Therefore, at this stage, the Court will have to proceed on the basis that a triable defence has been raised and that the Plaintiff has failed to establish a prima facie case either for making the Summons for Judgment absolute or for that matter, for the grant of even conditional leave to defend the suit. 2. Attachment before judgment has been sought on the basis of the averments contained principally in paragraphs 5 and 6 of the affidavit in support. In those paragraphs it has been stated that the Plaintiff apprehends that the First Defendant is intending to dispose of 3 its assets and properties and that save and except for the properties situated in the District of Aligarh in Uttar Pradesh, no other immovable property is possessed by the First Defendant to the knowledge of the Plaintiff. There is an avernment that in the business circles, it was known that the Plaintiff has to recover a huge amount from the Defendants, “several prospective purchasers have called the Plaintiff enquiring whether the Plaintiff's claim has been settled with the Defendants or whether there is any injunction order running against the Defendants in respect of the said properties.” It has been averred that the First Defendant is likely to dispose of the properties with an intent to defeat the claim of the Plaintiff. 3. No case has been made out for the grant of an order of attachment before judgment under Order 38 Rule 5. Firstly, it is well settled that the mere institution of a suit for recovery of money does not preclude a Defendant from dealing with his properties. An order under Order 38 Rule 5 can be passed only where it is evident before the Court from the averments made in the application that the Defendants are about to dispose of the properties with an intent to 4 delay or defeat the execution of the decree that may be passed. The expression “to obstruct or delay the execution of any decree that may be passed against him” in Rule 5 has been construed by the Supreme Court in Raman Tech. & Process Engg. Co. vs. Solanki Traders,1 to mean that before exercising the power under the 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 that the Plaintiff has a prima facie case. The Supreme Court held thus: “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 that 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 5 CPC.” In the present case, the Plaintiff, as the Court noted, had applied for a decree against the Defendants when the Summons for Judgment was 1 (2008) 2 SCC 302 5 taken out. Evidently, the Court while granting unconditional leave to defend the suit, was of the view that the Defendants have failed to establish a case either for passing a decree at the stage of the Summons for Judgment or for that matter, even for the grant of conditional leave to defend. That is a safe indicator, at this stage, that the Plaintiff has not made out a prima facie case before the Court when the Summons for Judgment came to be heard and disposed of on 23rd November 2005. Judicial discipline requires that this Court at the present stage should form the same view; particularly since no further material is placed for the consideration of the Court. 4. But apart from the absence of a prima facie case, there is merit in the submission which has been urged on behalf of the Defendants that the application for the grant of an order under Order 38 Rule 5 has to be specific. In the leading judgment of the Calcutta High Court in Premraj Mundra vs. Md.Maneck Gazi,2 , it was laid down that the affidavit in support of the contentions of the applicant under Order 38 Rule 5 must not be vague. The source of information should be disclosed and the ground for belief should be stated. In the 2 A,I.R.(38) 1951 Calcutta 156 6 present case, there is a bald averment that it was known in the business circles that the Plaintiff has an outstanding huge claim from the Defendants and that certain purchasers had made enquiries with the Plaintiff. The source of information and who the purchasers were, has not been disclosed. There is absolutely no material for the Court to come to the conclusion that the Defendants are about to dispose of their properties with a view to obstruct and delay the execution of a decree that may be passed against them. That apart, it has been stated on behalf of the Defendants in reply that there is no intention to sell the properties and that the property in question stands mortgaged with the Pradeshiya Industrial Corporation of Uttar Pradesh, a Government of Uttar Pradesh Undertaking. 5. The Learned Advocate appearing on behalf of the Plaintiff submitted that in view of the statement which has been made in paragraphs 5 and6 of the reply, this Court should record the assurance and issue an order of injunction. Such a course of action would not be permissible in law where the Plaintiff has failed to establish a case for the grant of an order of attachment before judgment 7 under Order 38 Rule 5. Merely because the Defendants have indicated their bona fides by stating that as a matter of fact there was no intention to dispose of the property which stands mortgaged, that would be no ground for the Court to convert the said statement into an order of injunction unless a case has been made out for the grant of injunction. 6. For the reasons already indicated, the Plaintiff has failed to establish a case for the grant of relief, under Order 38 Rule 5. The Notice of Motion shall accordingly stand dismissed. .....