Pratap Shah vs Indian Overseas Bank

Srinivasan, J.—The defendant, who is aggrieved by the order passed in Application No. 4458 of 1992, directing him to furnish a bank

guarantee to the extent of Rs. 4,00,000 within eight weeks from the date of the order, has preferred this appeal. The suit is filed by the respondent-

bank for recovery of a sum of Rs. 49,03,518.21. Along with the suit, the respondent filed Application No. 4458 of 1992, for a direction to the

defendant to furnish a bank guarantee for the suit claim. In paragraph 10 of the affidavit filed in support of the application, the following averment is

made :

As stated earlier, the respondent is now doing a very profitable real estate business and owning properties in the city of Madras as seen from the

letters.

There is no other averment in the affidavit to the effect that the defendant is trying to alienate his properties or attempting to do any other thing by

which the execution of the decree may be defeated or delayed. The prayer in the application is only for a direction to furnish a bank guarantee to

the extent of the suit claim. In the course of his order, the learned judge has observed as follows :

I asked the respondent''s counsel whether his client owns any property. He fairly admits that his client does not posses any property. When the

respondent does not possess any property, there is no point in arguing that Order 38, rule 5 has not been complied with. These provisions have to

be followed in proper cases. When it is admitted that the respondent has no property at all, then there is no question of any plea under Order 38,

rule 5.

I am of the view that this is only a technical objection without any sense of reality. Hence, taking into consideration the entire circumstances and the

admission of the respondent dated March 9, 1983, I think it will be reasonable to direct the respondent to furnish a bank guarantee for a sum of

Rs. 4 lakhs pending the suit.

With respect, we are unable to accept the proposition laid down by the learned judge. Just because the defendant is a man without any

immovable property, it does not lead to the position that the provision of Order 38, rule 5 of the Code of Civil Procedure, 1908, are complied

with. Order 38, rule 5 of the Code of Civil Procedure, 1908, to the extent to which it is relevant, reads as follows :

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...

Neither of the conditions mentioned in Order 38, rule 5 of the Code of Civil Procedure, 1908, is satisfied in this case. As pointed out earlier,

there is not even an averment in the affidavit to that effect. In the circumstances there is no justification whatever for passing any order under Order

38, rule 5 of the Code of Civil Procedure, 1908. Moreover, the claim is for Rs. 49 lakhs and the learned judge has fixed Rs. 4,00,000 for which

the defendant is directed to furnish bank guarantee. There is no reason or rhyme for such an order. Even on the face of the averments contained in

para 10 of the affidavit filed in support of the application, the same should have been dismissed.

In the result, the appeal is allowed. The order of the learned judge is set aside. Application No. 4458 of 1992 is dismissed. There will be no

order as to costs.