Point of Law: Recovery of amount – Attachment of property – Void as the property subject matter of the suit not standing in the name of the first defendant, as the entire claim in the suit was against the first defendant

JUDGMENT :

1. The submissions were concluded yesterday. Today, the appeal is listed for dictating the judgment.

2. This is an appeal under sub-section (1) of Section 13 of the Commercial Courts Act, 2015 read with clause (q) of Rule 1 of Order XLIII of the Code of Civil Procedure, 1908 (for short, “CPC”).

3. With a view to appreciate the controversy, a brief reference to the facts of the case will be necessary. The appellant is the second defendant. The first respondent is the original plaintiff. The second respondent is the first defendant and the third respondent is the third defendant. For the sake of convenience, we are referring to the parties in the appeal with reference to their status before the Trial Court.

4. The suit is filed for recovery of a sum of Rs.69,37,968/- with interest at the rate of 24% per annum from the date of filing of the suit till realization. The case made out in the plaint is that the first defendant is a builder and developer and the second defendant is claiming to the Managing Director of the first defendant. The allegation is that the first defendant used to purchase building materials from the plaintiff on credit basis. Reliance is placed on the invoices and delivery challans, the details of which have been set out in paragraph 6 of the plaint. The allegation is that the total amount payable by the first defendant under the invoices was Rs.1,31,51,247/-, out of which a sum of Rs.62,20,279/- has been paid. The suit is filed for the recovery of the balance amount.

5. In paragraph 8 of the plaint, there is a specific allegation that the first defendant is the owner of the residential flat/ apartment described therein. It is alleged that the first defendant is also the owner of two commercial buildings described in the plaint.

6. An application for attachment before judgment was filed by the plaintiff, being I.A No.1. The application was allowed by the order dated 23rd October 2019. The said order which grants attachment before judgment notes that the defendants are placed ex parte. An application was made by the second defendant (appellant) invoking sub-rule (4) of Rule 5 of Order XXXVIII of CPC, being I.A No.6. The prayer in the said application was for setting aside the said order of attachment dated 23rd October 2019. The said I.A was opposed by the plaintiff by filing a statement of objections. By the impugned order, the learned Trial Judge has dismissed the said I.A No.6 filed by the second defendant.

7. The learned Senior Counsel appearing for the appellant has taken us through the relevant portion of the pleadings and the impugned order. We must note here that the challenge in this appeal is to both the orders dated 23rd October 2019 and 30th June 2020. The learned Senior Counsel appearing for the appellant firstly submitted that though compliance with sub-rule (1) of Rule 5 of Order XXXVIII of CPC was a condition precedent for passing an order of attachment before judgment, the same is not made. Therefore, by virtue of sub-rule (4) of Rule 5 of Order XXXVIII of CPC the attachment is void. He also pointed out that no satisfaction is recorded by the learned Trial Judge before passing the order of attachment as required by sub-rule (1) of Rule 5 of Order XXXVIII of CPC. He submitted that the Trial Court did not consider the fact that the property subject matter of Schedules - ‘B’ to ‘G’ was owned by the second defendant and there was no pleadings in the plaint as to how the second defendant was liable to pay any amount to the plaintiff. He pointed out that it is pleaded in the written statement filed by the second defendant that Schedule - ‘B’ property has been sold by a sale deed and in respect of the properties at Schedules – ‘C’ to ‘G’, mortgage has been created by the second defendant.

8. Inviting our attention to paragraphs 13 and 14 of the impugned order dated 30th June 2020, the learned Senior Counsel appearing for the appellant submitted that the learned Trial Judge has completely misread th