2010 (7) TMI 1220 - HC - Indian Laws

Summary

Issues Involved:
1. Whether in a simple money suit, a Court can restrain the Defendant from transferring or alienating his property during the pendency of the suit.
2. Whether in the absence of averments made in terms of Order 38 Rule 5 of the Code, a Court can grant an order in the form of attachment before judgment or direct the Defendant to furnish security.

Summary:

Issue 1: Restraining the Defendant from Transferring Property in a Simple Money Suit
The Court examined whether it could restrain the Defendant from transferring or alienating his property during the pendency of a simple money suit. The Court referred to Order 39 Rule 1 of the Code, which allows temporary injunctions if the property in dispute is in danger of being wasted, damaged, or alienated. However, the Court found that the plant and machinery in question were not the "property in dispute in the suit" as the subject matter was the recovery of money. Therefore, Clauses (a) and (c) of Order 39 Rule 1 did not apply, and Clause (b) could only apply if there was an intention to defraud creditors, which was not alleged in this case. Consequently, Order 39 Rule 1 was deemed inapplicable.

Issue 2: Attachment Before Judgment and Furnishing Security
The Court also considered whether it could grant an order in the form of attachment before judgment or direct the Defendant to furnish security in the absence of specific averments under Order 38 Rule 5 of the Code. The Court cited the Supreme Court's decision in Raman Tech & Process Eng. Co. v. Solanki Traders, which emphasized that the power under Order 38 Rule 5 is extraordinary and should not be exercised mechanically. The Plaintiff must show that the Defendant is about to dispose of or remove property with the intent to obstruct or delay the execution of any decree. The Court found that the Plaintiff's allegations were vague and did not meet the requirements of Order 38 Rule 5. Therefore, the Court concluded that no order of attachment before judgment or direction to furnish security could be passed.

Conclusion:
The Court allowed the appeal preferred by the Defendant, dismissed the appeal preferred by the Plaintiff, and dismissed the application for injunction filed by the Plaintiff. The Court held that the Plaintiff failed to make out a case for attachment before judgment or for an injunction as prayed for. There was no order as to costs.