1951 (1) TMI 48 - HC - Indian Laws

Summary

Issues Involved:
1. Application under Order 38, Rules 5 & 6, Civil Procedure Code (CPC) for security and attachment before judgment.
2. Allegations of defendants disposing of properties to obstruct or delay execution of decree.
3. Defendants' defense and credibility of their claims.
4. Legal principles governing attachment before judgment.

Issue-wise Detailed Analysis:

1. Application under Order 38, Rules 5 & 6, CPC for security and attachment before judgment:
The plaintiff filed an application under Order 38, Rules 5 & 6, CPC, seeking an order for the defendants to furnish security for the plaintiff's claim. In default, the properties listed in the schedule annexed to the petition should be attached before judgment. The application also included a prayer for a Receiver, which was not pressed.

2. Allegations of defendants disposing of properties to obstruct or delay execution of decree:
The plaintiff alleged that the defendants, who are businessmen, had stopped their business in India and started a small business in Pakistan. It was claimed that they approached a landholder to sell their immovable properties with the intention of migrating to Pakistan. This was supported by an affidavit from the landholder, who confirmed the defendants' intention to sell their properties and move to Pakistan. The plaintiff argued that the defendants were trying to dispose of their properties to obstruct and delay the execution of any decree that might be passed against them.

3. Defendants' defense and credibility of their claims:
Defendant 1 filed an affidavit with a defense that he had lent his godown to the plaintiff for storing goods and signed credit vouchers merely to witness the quantity of articles stored. He claimed nothing was due from him and that he was entitled to a commission for storing the goods. The court found this defense incredible, especially in light of the 'Credit Memo' signed by the defendant, which evidenced the sale. The court noted that while it could not make a final decision on the merits of the defense at this stage, it could assess the evidence to determine if the defense was bona fide and if the defendants had a reasonable chance of success at trial.

4. Legal principles governing attachment before judgment:
The court recapitulated the law under Order 38, Rules 5 & 6, CPC, emphasizing that the mere disposal or removal of property by the defendant is insufficient. Such actions must be with the intention to obstruct or delay the execution of any decree. The court highlighted the necessity for cautious application of these provisions to avoid oppression of defendants and to protect the interests of creditors. The court referred to several precedents to establish guiding principles, including the need for clear and convincing proof, proper verification of affidavits, and the consideration of the defendant's conduct and surrounding circumstances.

Application of Principles to the Case:
The court applied these principles to the facts of the case and found that the defendants had closed their business in India, started a business in Pakistan, and attempted to sell their entire property at an inadequate price. The court believed the evidence provided by the plaintiff, including the affidavit from the landholder, over the mere denial by Defendant 1. The court concluded that the plaintiff had made out a case for the orders sought.

Conclusion:
The court ordered the defendants to furnish security for the plaintiff's claim within a fortnight. In default, the right, title, and interest of the defendants in the properties listed in the schedule would be attached before judgment. The ad interim injunction would continue until the attachment was made effective. The costs of the application were to be costs in the cause.