K.C.V. Airways Ltd. vs R.K. Blaggana

K.S. Gupta

(1) This appeal is directed against the order dated 19/12/1996 of a learned Single Judge passed in I.A. No. 4782/96 filed under Order xxxvIII, Rule 5 and Section 151, Indian Penal Code directing the defendants-appellants to furnish security to the tune of Rs. 8.50 lacs on or before 31/01/1997.

(2) Facts giving rise to the present appeal lie in a narrow compass. Wg. Cdr. R.K. Blaggana, plaintiff-respondent, filed Suit against the appellants for recovery of Rs. 8,36,049 .00, etc. which is being contested by the appellants. In the suit I.A. No.4782/96 which was filed by the respondent and paras 7 and 8 thereof which are relevant read thus:

"That it is learnt that defendant No. 2, who runs the one-man show of the defendant Company and who floated the defendant No. 1 Company, is a person of dubious character and has been avoiding appearance before the Court and is likely to siphon off all the funds of defendants'' Company to avoid payment of their liabilities towards various creditors and claimants. That the plaintiff has made out a good prima facie case against the defendants and is most likely to succeed in the suit but a considerable delay likely to take place in the adjudication of the suit of the plaintiff and by that time defendant No. 2 is likely to siphon off all the funds of defendant No. 1Company. It is also learnt that defendant No. 2 is also making efforts to sell off the defendant No. 1-Company. As a consequence the whole effort of the plaintiff for getting a decree in his favor "or his legitimate dues would become in fructuous "

(3) Para 11 of the application which too is material runs as under :

"A.0FFICESwith machines, equipments, fixtures and fittings at the following places: That the defendant No. 1 -Company owns and/or has interest in the following properties:(a) Operational office at Delhi Airport.(b) Registered office at 311 and 312, Suneja Towers-1, District Centre, Janakpuri, New Delhi-110058.(e) Corporate office at 0-111-27 and 41 Palam Vyapar Kendra, PalamVihar, Gurgaon (Haryana).(d) Dornier-228-202 aircraft on lease from the German Company, presently under care and custody of Dgca lying at Delhi Airport."

(4) It was prayed that on order of attachment in respect of the properties detailed in para 11 and other properties which is owned, whether partially or fully, by the defendant-Company or any property in which defendants have any interest may be passed until the disposal of the suit in support of the allegations made in the application ,affidavit of the respondent dated 15/02/1996, was filed.

(5) In the reply appellants alleged that the application does not state that the appellants intend to obstruct or delay the decree, nor is there any material brought on record to infer such an intention on the part of the appellants. Appellants have not disposed of whole or any part of the properties owned by appellant No. 1 nor have they removed it from the local limits of the jurisdiction of this Court. Even the allegations that have been made in the application are vague, unsubstantiated, vague and general in nature, without disclosing their source. It was further alleged that affidavit filed Along with the application has not been verified in accordance with law and the application and the affidavit as they stand do not make out the ingredients of Order xxxviii, Rule 5, CPC. It was stated that the respondent intentionally omitted to give the estimated value of the properties sought to be attached ,as required by law. Dernier aircraft alone values Rs. 10 crores, which is more than 100 times the value of the claim of the respondent. K.C.V. Airways-appellant No. 1 is a public limited Company with shareholders all over India. It was further alleged that the Delhi Airport Office is the property of National Airport Authority of India while the office at 311-312. Suneja Towers-I, District Centre, Janakpuri, are rented properties. Appellants do not have any office at O-III-27 and41, Palam Vyapar Kendra, Palam Vihar, Gurgaon. Dernier 228-202 aircraft is not owned by appellant No. 1, and is on lease with it. In support of the averments made in the reply affidavit of appellant No. 2-CV, Madan, Chairman-cum-Managing Director of appellant No. 1 was filed.

(6) We have heard the learned Counsel for the parties.

(7) Rule 5 of Order xxxviii, CPC under which the impugned order was passed reads:

"5(1)Where at any stage of a suit, the Court is satisfied by affidavit or otherwise ,that the defendant, with intend to obstruct or delay the execution of any decree that may be passed against him- 329(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."

(8) Needless to say that Rule 5 of Order xxxviii, CPC is an extraordinary remedy and if the ingredients for invoking it are lacking in the application and the affidavit filed in support thereto attachment before judgment order cannot be ordered .Claim for attachment before judgment on the averments has been mainly set out in paras 7 and 8 reproduced above of the application in question and a bare reading thereof reveals that it was not pleaded therein that the appellants with intent to obstruct or delay the execution of the decree that may be passed against them ,(a) are about to dispose of the whole or any part of the property, or (b) are about to remove the whole or any part of the property from the local limits of the jurisdiction of this Court. Affidavit filed Along with the application contains no statement except an assertion that the respondent has gone through the application and the facts stated therein are correct to the best of his knowledge and information received .That be so on the basis of the averments as they stand made in the application and the affidavit in question the appellant could not have been legally asked to furnish security in the sum of Rs. 8.50 lacs.

(9) Further as noticed earlier, details of the properties sought to be attached are noted in para 11 of the application. However, neither in that para nor any other Para estimated value thereof has been disclosed as required by Rule 5(2), Centre, Janakpuri, CPC.

(10) Contention advanced by Mr. Alok Kumar appearing for the appellants was that not only the application in question and the affidavit filed therewith lack the ingredients required to be pleaded under Rule 5(1) of Order xxxviii, CPC but the learned Single Judge also failed to record his satisfaction about the existence of these ingredients at the time of the passing of the impugned carder. To appreciate the contention it is necessary to refer to the relevant para 3 of the impugned order:

"I have heard the learned Counsel for the parties. The defense taken by the learned Counsel for the defendants is that the plaintiff had abandoned the service whereas the case of the plaintiff is that his services were terminated without following the procedure prescribed by law. Therefore, I Am satisfied that the plaintiff has made out a strong case for a direction to the defendants to furnish the security. Accordingly the defendants shall furnish the security to the tune of Rs. 8.50 lacs on or before 31.1.1997. The defendants shall file particulars regarding the financial status of the Company and also the financial status of the second defendant on or before 31.10.1997."

(11) Obviously, the impugned order was passed only taking into consideration the respective pleas taken by the appellants and the respondent. Learned Single Judge has not at all recorded his satisfaction about the existence of the twin conditions as laid down in Order xxxviii, Rule 5(1), CPC that the appellants with intent or obstruct or delay the execution of the decree that may be passed against them, (a) are about to dispose of the whole or any part of the properties ,or (b) are about to remove the whole of any part of the properties from the legal limits of the jurisdiction of this Court. Under Sub-rule (4) of the said order that an order of attachment is made without complying with the provision of Sub rule (1) such as attachment is rendered void. Thus, the impugned order is also bad in the eye of law on the said score.

(12) For the foregoing discussion the appeal is accepted and the impugned order dated 19/12/1996 is set aside. I.A. No. 4782/96 is dismissed. Under the circumstances no order is made as to costs.