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2024 Supreme(Online)(KER) 23374
HIGH COURT OF KERALA
Kauser Edappagath, J
DR SUYAMBU P – Appellant
Versus
A.I POTHEN – Respondent
OP(C) 865/2024
Defendants in a civil suit are entitled to withdraw attachment by furnishing adequate security as stipulated under CPC, regardless of delays in providing the security.
Headnote:
CPC - Order XXXVIII Rules 5 & 9 - The court clarified the conditions for withdrawal of attachment before judgment under CPC, emphasizing the defendants' entitlement to seek withdrawal upon furnishing security that meets the statutory requirements.
Fact of the Case:
The petitioners, trustees of an educational trust, challenged a trial court order that denied their request to lift an attachment on property pending a suit for a substantial monetary claim. They offered a bank guarantee and affirmed they would not alienate the property.
Finding of the Court:
The court found that the trial court's dismissal of the application to withdraw the attachment was erroneous. The bank guarantee was adequate under CPC rules, and the timing of its provision was not a valid ground for denial.
Issues: Whether the petitioners met the requirements under Order XXXVIII Rule 9 to withdraw the attachment by providing sufficient security.
Ratio Decidendi: The court determined that as long as the bank guarantee remains valid and the petitioners offered adequate security, they are entitled to withdraw the attachment. The lapse of time before providing security did not invalidate their claim.
Final Decision: The court set aside the trial court's order and lifted the attachment on the property.
Ext.P9 order passed by the Sub Court, Pathanamthitta (for short 'the trial court') in a petition filed under Order XXXVIII Rule 9 of the Code of Civil Procedure (for short the CPC) is under challenge in this original petition.
2. The petitioners are the defendants 1 and 2 and the respondents are the plaintiffs and the other defendants in O.S.No.1/2023 on the files of the trial court. The defendants are the trustees of the PSN Educational and Charitable Trust. The suit was one for realisation of a sum of ₹17,73,90,179/-. Along with the plaint, the plaintiffs filed I.A.No.1/2023 under Order XXXVIII Rule 5 of the CPC to attach the petition schedule property belonging to the Trust. The trial court passed an order under Order XXXVIII Rule 5 and directed the defendants to furnish security for the sum of ₹17,73,90,179/- or to show cause why they shall not furnish security. A conditional order of attachment was also issued and the attachment was effected.
Thereafter, the petitioners herein filed application under Order XXXVIII Rule 9 of the CPC to withdraw the attachment furnishing bank guarantee for ₹17,73,90,179/- issued by the Indian Bank, Thirunelveli Branch. The petitioners also undertook by filing Ext.P7 affidavit that they will not alienate the petition schedule property till the disposal of the suit. The trial court after hearing both sides dismissed Ext.P5 as per Ext.P9 order. It is challenging the said order, the petitioners are before us.
3. I have heard Sri. Kurian George Kannanthanam, the learned Senior Counsel for the petitioners instructed by Sri.
Saneer P.M. and Sri. Arun Krishna, the learned counsel for the respondents.
4. As per Order XXXVIII Rule 9 of the CPC, when an order is made for attachment before judgment, the Court shall order the attachment to be withdrawn when the defendant furnishes the security required, together with security for the costs of the attachment, or when the suit is dismissed. As stated already, the petitioners herein have produced bank guarantee for the plaint claim. They have also filed an affidavit undertaking that the plaint schedule property will not be alienated till the disposal of the suit. The trial court dismissed the application mainly on two grounds. (1) The petitioners have furnished security after a long gap of one year and (2) The special clause in the bank guarantee indicates that it becomes inoperative from 25.2.2025.
5. The petitioners have produced the bank guarantee along with the application under Order XXXVIII Rule 9 of the CPC. The defendants against whom an order of attachment is passed has every right to seek withdrawal of the said attachment on furnishing security so long as the attachment subsists during the subsistence of the suit. In other words, the defendants against whom the attachment order has been passed is entitled to invoke Order XXXVIII Rule 9 before the suit is disposed of.
Therefore, the finding of the trial court that the petitioners furnished security after a long gap of one year cannot be sustained. So far as the second ground is concerned, I perused Ext.P6 copy of bank guarantee. In the bank guarantee it is stated that the bank has expressed its willingness to stand guarantor for the defendants for the sum of ₹17,73,90,179/- which shall be for an initial period of one year and shall remain in force until final disposal of I.A.No.1/2023 in O.S.No.1/2023 being renewed every year thereof. In the 4th paragraph of the bank guarantee, the bank undertook in specific terms that the guarantee shall remain in force until final disposal of the suit or until further orders are passed by the Sub Court, Pathanamthitta and that the bank guarantee shall not be encashed until the final orders of the Sub Court, Pathanamthitta. Thus, it is clear that the bank guarantee shall remain in force until the disposal of the suit. Hence, the second reason stated by the trial court also cannot be sustained.
6. The learned counsel for the respondents submitted that the Trust
