2007 (11) TMI 611 - SC - Indian Laws

Whether defendant was attempting to defeat any decree that many be passed by shifting his machinery? Whether plaintiff had failed to make out a prima facie case?

Summary

Issues:
1. Application for security under Order 38 Rule 5 CPC.
2. Consideration of prima facie case for attachment before judgment.
3. Exercise of power under Order 38 Rule 5 CPC by the court.
4. Interference by the High Court in revisional jurisdiction.

Analysis:

1. The plaintiff filed an application under Order 38 Rule 5 CPC seeking security for the suit claim of Rs. 99,200. The trial court dismissed the application as the plaintiff did not provide specific details of dishonored cheques or a prima facie case. The plaintiff challenged this order in revision, highlighting the defendants' attempt to remove machinery. The High Court allowed the revision, directing the defendants to furnish security within four weeks.

2. The purpose of Order 38 Rule 5 CPC is to prevent defendants from obstructing decree realization. The court must be satisfied of a prima facie case before granting attachment before judgment. Mere valid claim is insufficient; the plaintiff must show the defendant's intention to dispose of assets to defeat a future decree. The power under this rule is drastic and should not be used to coerce settlements.

3. Shifting business or machinery alone does not warrant attachment before judgment. The plaintiff must demonstrate a bonafide and valid claim while proving the defendant's intent to obstruct decree execution. The court should adhere to established principles for granting such attachments, ensuring fairness and justice in the process.

4. In this case, the trial court rightly rejected the application due to the lack of a prima facie case. However, the High Court, swayed by the defendants' asset shifting, interfered in revisional jurisdiction. The Supreme Court held that the High Court's interference was unjustified, overturning its decision and reinstating the trial court's order.

This judgment emphasizes the importance of establishing a prima facie case before seeking attachment before judgment under Order 38 Rule 5 CPC. It cautions against misuse of this power and highlights the need for courts to carefully consider all aspects before granting such relief.