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2023 Supreme(Kar) 938
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
Sreenivas Harish Kumar, J.
M/s. Kamalalaya Hiisoft (P) Ltd. & Ors. - Appellant
Vs.
M/s. Sree Venkateswara Developers Represented by its Managing Partner Mr. Adithya Reddy - Respondent
Writ Petition No. 2385 Of 2023 (GM-CPC)
Decided On : 07-03-2023
Advocate Appeared:
For the Appellant :Sri Udaya Holla, Senior Advocate for Sri S.Sammith S., Adv.
For the Respondent:Sri B.C.Thiruvengadam, Senior Advocate for Sri Manik B.T., Adv.
IMPORTANT POINT
The main legal point established in the judgment is that a claim for damages does not constitute a specified sum arising from a transaction between the parties, and the power under Order 38 Rule 5 should not be used to convert an unsecured debt into a secured debt.
Headnote:
Attachment before Judgment - Defamation - Order XXXVIII Rule 5 CPC - [Order XXXVIII Rule 5 CPC, PALGHAR ROLLING MILLS PVT. LTD. Vs VISVESVARAYA IRON AND STEEL LIMITED AND ANOTHER [AIR 1985 Kant 282], M/s. Greenhills Exports (P) Limited and Others Vs. Coffee Board [ILR 2001 KAR 2950], Raman Tech. and Process Engineering Company and Another vs Solanki Traders [(2008) 2 SCC 302]] - The court discussed the legal provisions of Order XXXVIII Rule 5 CPC and emphasized the mandatory essentials of the rule, the need for the court's subjective satisfaction, and the requirement for a specific debt or liability to arise from a transaction between the parties. The court also highlighted the principles that a claim for damages does not constitute a specified sum and that the power under Order 38 Rule 5 should not be used to convert an unsecured debt into a secured debt.
Fact of the Case:
The respondent, a partnership firm, filed a suit claiming damages for slanderous and libelous defamatory statements made by the petitioners. The respondent also sought an order attaching the petitioners' immovable property and bank account before judgment. The petitioners filed a writ petition seeking to quash the order for attachment before judgment.
Finding of the Court:
The court found that the orders for attachment before judgment were to be quashed as the essential ingredients specified in Order XXXVIII Rule 5 CPC were not met, and the claim for damages did not constitute a specified sum arising from a transaction between the parties.
Issues: The issues revolved around the validity of the orders for attachment before judgment under Order XXXVIII Rule 5 CPC, the satisfaction of the court, and the nature of the claim for damages in the context of seeking attachment before judgment.
Ratio Decidendi: The court emphasized the mandatory essentials of Order XXXVIII Rule 5 CPC, the need for the court's subjective satisfaction, and the requirement for a specific debt or liability to arise from a transaction between the parties. The court also highlighted the principles that a claim for damages does not constitute a specified sum and that the power under Order 38 Rule 5 should not be used to convert an unsecured debt into a secured debt.
Final Decision: The writ petition was allowed, and the impugned orders for attachment before judgment were set aside.
ORDER :
The writ petitioners are defendants 1 to 3 in O.S.No.662/2023, on the file of XXXIX Additional City Civil Judge (CCH-40), Bengaluru. The respondent is the plaintiff and it, being a partnership firm, has claimed damages of Rs. 100,00,00,000/- (Rupees One hundred Crores) with interest at the rate of 12% per annum for slanderous and libelous defamatory statements made by the petitioners. The respondent also filed an application under Order XXXVIII Rule 5 CPC requesting the court to pass an order attaching the petitioners’ immovable property and bank account before judgment. The suit was filed on 27.01.2023, and on the same day the suit was posted before the court for consideration of I.A.No.1 filed under Order XXXVIII Rule 5 CPC. The petitioners had entered caveat, and in the presence of counsel for respondent and the petitioners, the trial court heard on
I.A.1 and posted the case to 30.01.2023 for orders on the application. On 28.01.2023, the petitioners filed this writ petition seeking to quash the order dated 27.01.2023 produced at Annexure A. Since on 30.01.2023, the trial court passed an order directing the petitioners to show cause as to why they should not furnish security for the decree that may be passed in the suit, they have filed an application under Order VI Rule 17 CPC to insert additional prayer in the writ petition for quashing the order dated 30.01.2023, produced at Annexure A1. The application for amendment requires to be allowed.
2. I have heard Sri Udaya Holla, learned senior counsel appearing for Sri S.Sanmith learned counsel for the petitioners, and Sri B.C.Thiruvengadam, learned senior counsel appearing for Sri B.T.Manik for the respondent.
3. It was the argument of Sri Udaya Holla that the orders at Annexures A and A1 were to be quashed for two reasons, firstly that the petitioners had entered caveat, and when the suit was posted before the court for the first time on 27.01.2023, the caveators’ counsel was very much present before the court and prayed for time to file statement of objections. But without giving time, the court posted the case for orders, thus the petitioners who had entered caveat were denied of an opportunity to file their statement of objections.
3.1. His second line of argument was that the affidavit filed along with application for attachment before judgment does not contain essential ingredients specified in Order XXXVIII Rule 5 CPC, and in the absence of the same, the court cannot issue show cause notice also and therefore orders at Annexures A and A1 are to be quashed.
4. Sri B.C.Thiruvengadam replied that the caveators’ counsel was heard on 27.01.2023 and only thereafter the case was adjourned to 30.01.2023 for orders. In regard to issuance of show cause notice, he argued that the respondent’s suit is for damages of Rs.100,00,00,000/- (One hundred Crores) in connection with defamatory statements made by the petitioners against the respondent. The respondent has documentary evidence to prove its claim. In para 18 of the affidavit, it is clearly stated that the petitioners are trying to alienate the property and will disappear without meeting the suit claim, and in that event the suit will become infructuous. Therefore, only on being satisfied that ingredients of Order XXXVIII Rule 5 CPC are present, the court directed the petitioners to show cause for the claim made in the plaint. Absolutely there is no infirmity in the order and hence writ petition is to be dismissed.
5. Now it may be stated that once caveat is filed, no interim order can be passed without hearing the caveator; and if the caveator wants to file statement of objections, reasonable time must be granted or otherwise, the very purpose of filing the caveat would be defeated. However, if the party approaching the court makes out an extraordinary circumstance in the presence of caveator requiring intervention of the court to pass an interim order, the court may pass appropriate order to be in force for a limited period t
