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Sohanraj Ganeshmal Shah Vs. Gulabrao B. Kate and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberA.F.O. No. 50 of 1971
Judge
Reported inAIR1972Bom377; (1972)74BOMLR107; ILR1972Bom792; 1972MhLJ373
ActsCode of Civil Procedure (CPC), 1908 - Order 38, Rules 5 and 6
AppellantSohanraj Ganeshmal Shah
RespondentGulabrao B. Kate and anr.
Appellant AdvocateK.J. Abhyankar, Adv.
Respondent AdvocateJ.E. Shinde, Adv. for ;A.G. Sabnis, Adv.
Excerpt:
.....with intent to defraud and defeat his creditors. but in cases in which it is found that the defendant was not disposing of any part of his property or removing the same from jurisdiction of the court with intent to defraud his creditors, order directing the defendant to furnish security can never be made. - - 4 -5. this bond is dated july 25, 1969, and the relevant part thereof reads as follows :x x x x x i do hereby enter into an agreement with the hon'ble court that should the defendant fail to act upon any order that may be passed hereafter x x x x x then i and my heirs, executors, assigns or legal representatives shall bring and pay into court, in cash, the sum of rs......namdeo laxman bibave was not liable for payment of the amount due to the plaintiff under the surety bond dated july 25, 1969, and that the surety stood discharged.2.mr. abhyankar for the plaintiff has contended that the learned judge erred in thinking that the application ex. 4 for an order of attachment before judgment had not been already disposed of completely by the prior order dated july 24, 1969, and by the execution of the surety bond dated july 25, 1969, in pursuance of the above prior order dated july 24, 1969. the impugned order has been made on the wrong footing that the application ex. 4 for order of attachment before judgment had still remained outstanding for disposal. the order is entirely misconceived and not sustainable. mr. shinde for the surety namdeo laxman.....
Judgment:

1. This is an appeal on behalf of the original plaintiff from the order dated October 22, 1970, dismissing the plaintiff's application for attachment before judgment and directing that the surety Namdeo Laxman Bibave was not liable for payment of the amount due to the plaintiff under the surety bond dated July 25, 1969, and that the surety stood discharged.

2.Mr. Abhyankar for the plaintiff has contended that the learned Judge erred in thinking that the application Ex. 4 for an order of attachment before judgment had not been already disposed of completely by the prior order dated July 24, 1969, and by the execution of the surety bond dated July 25, 1969, in pursuance of the above prior order dated July 24, 1969. The impugned order has been made on the wrong footing that the application Ex. 4 for order of attachment before judgment had still remained outstanding for disposal. The order is entirely misconceived and not sustainable. Mr. Shinde for the surety Namdeo Laxman Bibave has denied these contentions made by Mr. Abhyankar. He has submitted that the application Ex. 4 had remained outstanding to be disposed of and the finding in the impugned order that the defendant had not disposed of any of his properties to defraud his creditors is correct. The application for attachment before judgment has accordingly been rightly dismissed.

3 In connection with these rival contentions, the following are relevant facts :-

On or about July 17, 1969, the plaintiff instituted the present suit for recovering Rs. 10,165/-, interest and costs from the defendant. By application Ex. 4 filed on June 17, 1969, the plaintiff applied for attachment before judgment on the ground that the defendant was not the owner of any immovable property situated within the jurisdiction of the Court and the defendant was involved in heavy debts. The defendant had with ulterior and fraudulent intention to deceive his creditors sold away his Fiat motor - car and transferred a truck of his ownership in the name of a third party. The defendant owned the motor truck bearing No. BYL 5937, though he had purchased it in the name of his wife. The plaintiff applied for an order of attachment before judgment in respect of the above truck. On that application, an ex parte order for attachment before judgment was issued on June 20, 1969. The order directed attachment but stated : 'If the defendant gives solvent security of Rs. 12,000/-, the attachment shall not be made. Notice; pay emergent process'. It is clear that the warrant of attachment containing the above directions attaching the above truck was duly effected. The defendant thereupon filed his say by the affidavit dated July 24, 1969, Ex. 13. By this affidavit, the defendant denied the various allegations made by the plaintiff in the application Ex. 4 but he stated that without prejudice to these denials he was prepared to give an undertaking not to sell or dispose of any of his properties pending the hearing. His wife would also give such an undertaking. He, therefore, applied for raising of the attachment and delivery and/or return of the truck free of attachment. Upon the filing of this affidavit Ex. 13, the trial Court heard the pleaders of the parties and directed that the truck be released from attachment 'if the defendant gives solvent security for Rs. 12,000/-'. This order was made on July 24, 1969 and the submission of Mr. Abhyankar has been that this is the final order whereby the plaintiff's application Ex. 4 for attachment before judgment was completely disposed of. The effect of the order was that attachment of the truck was confirmed subject, however to the option given to the defendant to get the attachment raised upon furnishing solvent security for Rupees 12,000/-. The defendant accepted the correctness of the above order as appears from the Nazir's report and the surety bond dated July 25, 1969. The Nazir reported that the defendant had produced surety of Rs. 12,000/-. The surety had agreed to produce solvency certificate. The attachment on the truck stood raised. I have no doubt that the truck was released from attachment upon execution of the surety bond by the present respondent.

4 - 5. This bond is dated July 25, 1969, and the relevant part thereof reads as follows :-

'x x x x x I do hereby enter into an agreement with the Hon'ble Court that should the defendant fail to act upon any order that may be passed hereafter x x x x x then I and my heirs, executors, assigns or legal representatives shall bring and pay into Court, in cash, the sum of Rs. 12,000/-x x x x x at any time the Hon'ble Court may order so. x x x x x'.

6 The suit was heard and disposed of by the final judgment and decree dated October 22, 1970. The plaintiff obtained decree for Rs. 10, 165/- and interest and costs as appearing in the judgment. Apparently, the defendant having been ordered to pay the above decretal amount to the plaintiff the present respondent as surety had become liable to pay the decretal debt under the above surety bond. an order to that effect should have been made by the trial Court. The trial Court, however, in my view, entirely wrongly proceeded to pronounce the impunged order along with its judgment in the suit on October 22, 1970. On the footing that the issues raised by the affidavit Ex. 13 by denial of the allegations in application Ex. 4 were outstanding to be decided, the trial Court proceeded to hold that the plaintiff's application for attachment before judgment was not sustainable. It found that the defendant had not transferred any of his properties fraudulently with intent to defeat his creditors. The trial Court, therefore, pronounced that the surety was not liable for payment of any amount to the plaintiff under the above surety bond. In the main judgment in the suit, in discussing the issue No. 6, the trial Court referred to the above application Ex. 4 and stated : 'I have passed the orders on the application for attachment before judgment to day and I have held that the surety would be discharged and there would thus be no liability on the surety, but that only the defendant would be liable for the amount'. In that very paragraph the trial Court noticed that the defendant had filed his own insolvency petition. The trial Court was aware that the defendant was likely to be adjudged insolvent and that the plaintiff was not in a position to recover the decretal debt from the defendant.

7.I have found it extremely difficult to appreciate the reasons why the trial Court proceeded to pronounce its findings on the issues raised on the application Ex. 4 by the denials in the affidavit Ex. 13 by the impugned order dated October 22, 1970. It is difficult to understand why these issues should not have been considered as completely heard and disposed of by the order dated July 24, 1969. The matter of the application for attachment before judgment under O. 38, R. 5 of the Code of Civil Procedure is in normal circumstances disposed of much prior to the hearing of the suit in which such application is made. The initial order that the Court makes under the above Rule 5 is a direction to the defendant to furnish security in the sum mentioned by the Court as may be sufficient to satisfy the decree or to appear and show cause why the defendant was not bound to do so. The order of attachment is thus initially issued under the last part of Clause (1) of Rule 5 in the above manner. After the order of the above nature is made the final hearing of the application under Rule 5 takes place in accordance with the provisions in Rule 6 which runs as follows :-

'6. (1) Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the Court, the Court may order that the property specified, or such portion thereof as appears sufficient to satisfy any decree which may be passed in the suit, be attached.

(2) Where the defendant shows such cause of furnished the required security, and the property specified or any portion of it has been attached, the Court shall order the attachment to be withdrawn, or make such other order as it thinks fit'. I have no doubt that the Order dated July 24, 1969, is the order in accordance with the provisions in Rule 6. By that order, after hearing parties, the direction given was that the attachment of the truck should be raised on the defendant giving solvent security for Rs. 12,000/-. Such an order can only be made in cases in which the plaintiff's application for attachment before judgment is found sustainable under the above Rule 5. In cases in which it is found that the defendant was not disposing of any part of his property or removing the same from jurisdiction of the Court with intent to defraud his creditors, order directing the defendant to furnish security as made by the present order dated July 24, 1969, can never be made. In other words, order under Rule 6 confirming the attachment and in the alternative giving option to the defendant to furnish security can only be made in cases in which the Court holds that the defendant was disposing of his properties or removing the same from jurisdiction of Court with intent to defraud and defeat his creditors. It is abundantly clear that the order dated July 24, 1969, directing that attachment should be raised only if the defendant furnishes security in the sum of Rs. 12,000/- must be held to the order made upon the final hearing of the application Ex. 4. The order was complete disposal of that application. The order dated July 24, was made under Rule 6. It is difficult to appreciate why the learned Judge did not apply his mind to the contents of Rules 5 and 6 and considered the matter of the application Ex. 4 once again on the footing that it was completely disposed of by the order dated July 24, and by execution of the surety bond by the present respondent on July 25. The question of the application Ex. 4 was not liable to be once again considered at any subsequent stage. The learned Judge made the impugned order by reconsidering the application Ex. 4 after it had been disposed of on July 24, 1969. The submissions made by Mr. Abhyankar are correct and are accepted. The learned Judge's observations in connection with the release of the respondent in this application from the surety bond as contained in the impugned order and the paragraph 8 of his judgment are contrary to law. The order and the above observations are accordingly set aside. The respondent is bound to discharge the decretal debt. The plaintiff will be accordingly entitled to enforce the surety bond in accordance with law. The respondent will pay costs of this appeal. The order dated October 22, 1970 , is set aside.

8. Order accordingly.


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