Point of Law : Provisions of Order XXXVIII Rule 10 CPC, an attachment before judgment will not in any way affect the rights of the persons in respect of disputed persons.

ORDER :

IA No. 9782/2020 in CS(COMM) 469/2020

1. Applicant/plaintiff is a firm of professional Chartered Accountants duly registered under the Chartered Accountants Act, 1949, who has filed the present suit against the defendants, defendant No.1-being a private limited company and defendant No.2-Managing Director of defendant No.1, seeking recovery of Rs.2,71,59,605/-for providing financial assistance such like drafting the MIS system, preparing monthly accounts, handling Income tax matters etc. from September, 2014 to April, 2018.

2. The plaintiff has filed the present application under the provisions of Order XXXVIII Rule 5 r/w Section 151 CPC seeking attachment of property being Plot No. 352, DLF City, Phase-I, Sector 28 Gurgaon, Haryana, which is valued at approximately Rs.300,00,00,000/-for recovery of amount of Rs.2,71,59,605/-, i.e. the principal amount claimed in the present petition.

3. At the hearing, learned senior counsel appearing on behalf of applicant/ plaintiff submitted that the services of the plaintiff-Firm were engaged by defendant No.1-company in September, 2014 and besides furnishing financial assistance such like drafting the MIS system, preparing monthly accounts, handling Income tax matters etc. and representing defendant No.1 before the Income Tax Authorities with regard to income tax scrutiny assessments and other tax related issues. Further, on instructions of defendant No.2, plaintiff /firm also participated in the consortium meetings of the bankers for obtaining loan of Rs.160 crores, finalisation of balance sheet of the company, preparation of tax audit information, which were provided to the statutory auditors of the company at the request of the defendants. It was next submitted by learned senior counsel that the plaintiff also attended issues related to the company law matters, bonus issue of shares, meeting the advocates and legal consultants of defendant No.1-company and for all the professional services rendered from September, 2014 till April, 2018, plaintiff is entitled to receive Rs.2,71,59,605/-from defendants.

4. To submit that keeping a prima facie view of the matter, defendant No.1 is liable to furnish a security for the suit amount, reliance was placed upon Hon’ble Supreme Court’s decision in Rahul S. Shah Vs. Jinendra Kumar Gandhi (2021) SCC OnLine 341. To submit that provisions of Order XXXVIII Rule 10 CPC, an attachment before judgment will not in any way affect the rights of the persons in respect of disputed persons, reliance was placed upon a decision of High Court of Gujarat in Syndicate Bank Vs. National Wire Products & Ors. AIR 1994 Guj 2.

5. Lastly, learned senior counsel for plaintiff submitted that defendants have even failed to file reply to the present application and therefore, they have no right to object to this application and to secure the interest of plaintiff, the present application deserves to be allowed.

6. On the contrary, learned counsel appearing on behalf of defendant No.1 drew attention of this Court to judgment dated 24.08.2021 passed by the Division Bench of this Court in FAO (OS) COMM 107/2021, wherein it has been observed that by filing application under Order XXXVIII Rule 5 and Order XXXIX CPC, plaintiff cannot convert its unsecured debt into a secured debt. Learned counsel submitted that plaintiff is not only required to show a prima facie case but is also required to demonstrate that defendant is trying to dispose of the assets with the intention of defeating the decree. In support of this submission, learned counsel placed reliance upon Hon’ble Supreme Court’s decision in Raman Tech. & Process Engg. Co. and Anr. Vs. Solanki Traders (2008) 2 SCC 302.

7. It was submitted that the claims raised by the plaintiff are not based upon any fee schedule / agreement executed between the parties and no cogent reasons have been provided for raising invoices at such a belated stage. It was further submitted on behalf of defendant that plaintiff had infact raised claim