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2024 Supreme(Mad) 2629

IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.B. BALAJI, J.
Ozone Homes Private Limited – Appellant
Versus
P. Krishna Gandhi S/o K. Ponnusamy – Respondent 
CRP (PD) No. 1457 of 2019, CMP No. 9471, 9474 of 2019
Decided On : 06-12-2024

Advocates Appeared:
For the Appellant : R. Venkatraman
For the Respondent: D. Kanagasundaram

The plaintiff retains a charge over the suit property even with subsequent sales to innocent purchasers, emphasizing the need for adherence to procedural mandates in attachment proceedings.

Headnote:(A) Code of Civil Procedure, 1908 - Order 37 and Section 151 - Revision Petition against attachment order for failure to furnish security - Appellant contends improper communication of attachment order to Sub Registrar under Order 38 Rule 11(b) - Validity of the Joint Development Agreement and its implications on property attachment discussed. (Paras 1, 4, 12)

(B) Attachment of property - The plaintiff's entitlement to a charge over suit property affirmed even with subsequent sales to innocent third parties - Interest must be protected while acknowledging the buyer's rights. (Paras 13, 14)

(C) Legal principles regarding protection of interests in attachment proceedings and the necessity of compliance with procedural requirements emphasized.

Facts of the case:
The plaintiff filed a suit for recovery of Rs.23,00,000 against the defendant concerning property subject to a Joint Development Agreement, leading to an attachment order due to the defendant’s failure to furnish security.

Findings of Court:
The attachment order was modified to restrict to two specific flats, safeguarding the plaintiff's interests while also considering the rights of innocent third party purchasers.

Issues: The central issues were the effect of non-compliance with communication requirements in attachment proceedings and the impact of the Joint Development Agreement on the attachment.

Ratio Decidendi: The court found that the plaintiff retains a charge on the property despite subsequent sales, emphasizing the need to balance interests of original parties and innocent purchasers while adhering to procedural mandates for the attachment to be effective.

Result: The Civil Revision Petition is partly allowed, modifying the attachment order.

Table of Content
1. fact summary of the case and proceedings (Para 1 , 3)
2. arguments for revision petitioner (Para 4 , 5 , 6)
3. arguments for first respondent (Para 7 , 8)
4. court's analysis and observations on attachment (Para 9 , 10 , 11 , 12 , 13)
5. modification of attachment order (Para 14)
6. conclusion and directions to trial court (Para 15)

ORDER :

1. Aggrieved by an order of attachment passed under Order 37 read with Section 151 of the Code of Civil Procedure, 1908 (CPC), the proposed defendant, the developer of the property is before this Court, by way of the present Revision.

2. I have heard Mr.R.Venkatraman for M/s. TATVA Legal, learned counsel for the revision petitioner and Mr.D.Kanagasundaram, learned counsel for the first respondent.

3. The brief facts of the case that has led to the present revision petition are as follows:

The first respondent herein as plaintiff filed a suit in O.S. No.5046 of 2018, against the second respondent in this revision, for recovery of a sum of Rs.23,00,000/-, together with interest and costs. Along with the suit, the plaintiff also took out an I.A. No.12056 of 2018 to direct the second respondent, that is, the defendant in the suit to furnish security for the suit claim of Rs.23,00,000/-, failing which, sought for attachment of the property belonging to the second respondent. After enquiry, the said Interlocutory Application came to be allowed, initially directing the defendant to furnish security for the suit claim by an order dated 27.09.2018 and since the defendant, that is the second respondent herein, failed to furnish any security as directed by the Court, a consequential order of attachment of the property was ordered by the Trial Court on 26.02.2019. Aggrieved by the said order, the revision petitioner has come up by way of the present Revision Petition.

4. According to Mr.R.Venkatraman, learned counsel for the revision petitioner, the order of attachment dated 26.02.2019, was not communicated to the Sub Registrar concerned and therefore, it is a clear violation of the mandate under Order 38 Rule 11(b) CPC and on this limited ground itself, he would contend that the attachment would have to be raised.

5. Further, Mr.R.Venkatraman would submit that no doubt the property was belonging to the second respondent, but the revision petitioner had entered into a Joint Development Agreement with the second respondent as early as on 19.11.2010, to develop the property, in and by which, the second respondent would only be entitled to a share in the profits and he was not entitled to any constructed area. The learned counsel would further submit that the suit has been filed long after the Joint Development Agreement and much water has flown in the interregnum period and therefore, the order of attachment has to be raised, considering the subsequent developments viz., sale of several flats to innocent third party purchasers.

6. He further contended that pending the revision, all the flats have been sold, except for two flats, over which there is a subsisting attachment order at the hands of the Income Tax Department. The learned counsel would also furnish a copy of a statement showing details of all the flats sold and two flats which have been attached for income tax dues of the second respondent. The learned counsel for the revision petitioner would therefore pray for the Civil Revision Petition being allowed and the attachment order being raised.

7. Per contra, Mr.D.Kanagasundaram, learned counsel for the first respondent would submit that the attachment order was passed on 26.02.2019 and immediately, the revision petitioner has filed an impleading Application before the Trial Court on 25.03.2019 and soon thereafter, on 08.04.2019 filed the above Civil Revision Petition where an interim order was also granted. Therefore, according to the learned counsel for the first respondent, there was effectively no time available to the first respondent /plaintiff to communicate the order of attachment t

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