Point of Law :
power under Order 38 Rule 5 CPC is a drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt. Any attempt by a plaintiff to utilise the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are not wanting where bloated and doubtful claims are realised by unscrupulous plaintiffs by obtaining orders of attachment before judgment and forcing the defendants for out-of-court settlements under threat of attachment

JUDGMENT :

M.S. RAMACHANDRA RAO, J.

1. This appeal is preferred under Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 1915 r/w. Section 37 of the Arbitration and Conciliation Act, 1996, by the appellant challenging the order dated 26.08.2019 in COP No. 68 of 2018 passed by the Judge, Commercial Court-cum-XXIV Additional Chief Judge, City Civil Court, Hyderabad, in an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 filed by the appellant.

2. On 03.10.2008, the Maharastra State Electricity Distribution Company Limited (MSEDCL) entered into a contract with the 1st respondent for execution of the design, test, supply, transport, construction, erection, testing and commissioning of sub-transmission lines, distribution lines, new sub-stations, augmentation of existing sub-stations, distribution of transformers of varying capacities and other allied works for the works under the Infrastructure Plan Phase-I ( project on ‘Turnkey’ basis under bid package No. CE (Dist)/Infra Plan-I/Mumbai/07-08 for tender No. T-16 for works in Baramati, Kedgaon, and Manchar Divisions under Pune Rural Circle of Pune Zone pursuant to a letter of Award in favour of the 1st respondent granted on 05.09.2008.

3. The total value of the works was Rs. 273.53 Crores and the work was to be executed in 48 months. Later the value of the work was enhanced to Rs. 300.33 Crores.

4. The 1st respondent then sub-contracted some of these works to the appellant under a sub-contract agreement dated 04.11.2011 and the value of the works under the said agreement was Rs. 91.82 Crores. The scope of the work entrusted to the appellant by the 1st respondent as mentioned in the said sub-contract agreement is as under:

“Scope of Work: Subject to approval for sub-contract as also approval to the extension of period for completion by at least about 12 months by the Employer, the Contractor hereby awards the sub-contract to the Sub-Contractor to design, test supply, transport, construct, erect, test and commission sub-transmissions lines, distribution lines, new sub-stations, augmentation of existing sub-stations, distribution transformers of varying capacities and other allied works including provided a two year guarantee (defect liability) period and five years guarantee from the date of commissioning for specified products viz. transformers, Breakers, Conductors etc., for the part of the works as detailed in Annexure-I to this agreement under the Infrastructure Plan Phase-I project on “Turnkey” basis under bid package number CE (Dist)/Infra-plan Phase-I/Mumbai/07-08 for tender No. 16 for Works in Bharamati, Kedgoan and Manchar Divisions under Pune Rural Circle Pune.”

5. Under the terms of the said agreement, the appellant was under an obligation to furnish a Performance Bank Guarantee towards 5% of the Value of the sub-contract awarded to it for a period as stipulated by MSEDCL and the said Bank Guarantee was to be issued by a Scheduled Bank having a branch at Hyderabad (clause f). It was to be irrevocable and unconditional and a right was reserved to the 1st respondent to invoke the said Bank Guarantee for any default of the contractual obligations by the appellant under the agreement by giving a minimum of 15 days prior notice.

6. The sub-contract also contemplated that the 1st respondent shall open a Special Escrow Account with two signing authorities representing each party- one from the appellant and one from the 1st respondent; and that the amount realized from MSEDCL (employer) after all due deductions against each invoice was required to be deposited in the same account with Standing Instructions to the Bank to transfer automatically 4% of the received amount to the 1st respondent’s account and 96% of the received amount to the appellant’s account against an invoice to the 1st respondent by the appellant. It was further stated that any balance due to either by the 1st respondent or the app