2014 (6) TMI 1070 - HC - Indian Laws

Attachment of property of immovable properties - seeking an order of interim injunction restraining the Respondent/Defendant his men servants agents or anyone acting on his behalf or claiming under him from in any manner alienating or encumbering his immovable properties - HELD THAT - When the Respondent/Defendant has created Equitable Mortgage with the Appellant/Plaintiff by means of deposit of title deeds (which fact is denied by the Respondent/Defendant) then this Court is of the considered view that the Appellant/Plaintiff cannot invoke either the ingredients of Order 38 Rule 5 of the Civil Procedure Code or the ingredients of Order 39 Rule 1 and 2 of the Civil Procedure Code because of the simple reason that the Respondent/Defendant cannot be prevented from dealing with his property just because the suit is filed. As a matter of fact the provisions of Order 38 Rule 5 of the Civil Procedure Code and Order 39 Rule 1 and 2 of the Civil Procedure Code are not to be resorted to either as a matter of routine or in a mechanical way. Suffice it for this Court to point out that the aim of Order 38 Rule 5 C.P.C. is not to convert an Unsecured Debt is a Secured Debt. Furthermore when the Respondent/Defendant is said to have created Equitable Mortgage in favour of the Appellant/ Plaintiff then this Court is of the considered view that the Appellant/Plaintiff is not entitled to claim reliefs under Order 38 Rule 5 C.P.C. and Order 39 Rule 1 and 2 C.P.C. Appeal dismissed.

Summary

Issues Involved:
1. Attachment Before Judgment of immovable properties.
2. Interim injunction to restrain alienation or encumbrance of immovable properties.

Issue-wise Detailed Analysis:

1. Attachment Before Judgment of Immovable Properties:

The appellant filed O.S.A. No. 337 of 2013 against the order dated 02.01.2013, which dismissed the application seeking an order of Attachment Before Judgment of the respondent's immovable properties. The Learned Single Judge observed that the amount was secured by equitable mortgage and no overt act by the defendant to dispose of the property to defeat the decree was shown. The application was deemed a misuse of the court process and filed with ulterior motives.

The appellant contended that the respondent could not have purchased the properties without embezzling the appellant's funds and that without security or attachment, the respondent would sell the properties, leaving the appellant with nothing to execute the decree. The appellant argued that the Learned Single Judge failed to appreciate the pleadings, contentions, and documents, and erred in linking the deposit of title deeds with the potential disposal of properties.

The respondent argued that the appellant was in illegal possession of the sale deeds and that the power under Order XXXVIII Rule 5 CPC is drastic and should not be exercised without specific averments. The court emphasized that before exercising jurisdiction under Order 38 Rule 5 CPC, there must be concrete proof of the defendant's dishonest intention to defeat or delay a possible decree.

The court concluded that the appellant could not invoke Order 38 Rule 5 CPC because the respondent had created an equitable mortgage. The allegations of siphoning funds were yet to be tried and established conclusively in the main suit. Thus, the appeal for attachment before judgment was dismissed.

2. Interim Injunction to Restrain Alienation or Encumbrance of Immovable Properties:

The appellant filed O.S.A. No. 291 of 2013 against the order dated 02.01.2013, which dismissed the application seeking an interim injunction to restrain the respondent from alienating or encumbering his immovable properties. The Learned Single Judge noted that the suit property was not the subject matter of the suit and that the equitable mortgage secured the amount, making the invocation of Order XXXIX Rule 5 CPC unnecessary.

The appellant argued that the Learned Single Judge erred in not appreciating that Order XXXIX Rule 1 and 2 CPC can be invoked in suits for recovery of money, and that the schedule property need not be the subject matter of the suit. The appellant claimed that the respondent purchased the properties using embezzled funds and that an injunction was necessary to preserve the properties and prevent third-party interests.

The respondent countered that the appellant was coercing the respondent to settle the suit claim by misusing the provisions of Order XXXIX Rule 1 and 2 CPC. The court highlighted that the relief of injunction is preventive and should be granted based on equity. The court must consider the prima facie case, balance of convenience, and irreparable loss.

The court reiterated that when the respondent had created an equitable mortgage, the appellant could not invoke Order 39 Rule 1 and 2 CPC. The allegations of embezzlement were yet to be tried in the main suit, and the appellant's claims were not sufficient to warrant an interim injunction. Consequently, the appeal for an interim injunction was dismissed.

Conclusion:

The High Court dismissed both appeals, stating that the appellant could not invoke the provisions of Order 38 Rule 5 CPC or Order 39 Rule 1 and 2 CPC due to the existence of an equitable mortgage and the pending trial of the main suit. The court emphasized that the drastic and extraordinary powers under these provisions should not be exercised without concrete proof and specific averments. The connected miscellaneous petition was also closed.