- 1 - COMAP No.238 of 2024 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE19H DAY OF AUGUST, 2024 PRESENT THE HON'BLE MRS JUSTICE ANU SIVARAMAN AND THE HON'BLE MR JUSTICE G BASAVARAJA COMMERCIAL APPEAL NO.238 OF2024BETWEEN: M/S SGK AGENCIES PRIVATE LIMITED A COMPANY REGISTERED UNDER THE COMPANIES ACT, 2013, HAVING ITS REGISTERED OFFICE AT: SURVEY No.41, 42 AND43 PATTANAGERE, BEHIND VRL, MYSORE ROAD, BENGAULRU-560059 REPRESENTED BY ITS DIRECTOR, MR. K. S. GEORGE. …APPELLANT (BY SRI. P.K. SHRIKARA AND SRI. ANIKETH B.C., ADVOCATES.) AND: M/S BREMELS RUBBER INDUSTRIES PRIVATE LIMITED, A COMPANY REGISTERED UNDER THE COMPANIES ACT, 2013, HAVING ITS OFFICE AT: PLOT NO127 128 AND129 3RD PHASE, PEENYA INDUSTRIAL AREA, BENGALURU - 560058 REPRESENTED BY ITS DIRECTORS.-. 2 - COMAP No.238 of 2024 1. MR NISCHIT B. SHETTY SON OF MR. BHASKAR R. SHETTY AGED ABOUT43YEARS, R/AT NO115A, 9TH MAIN, RMV EXTENSION, SADASHIVANAGARA, BENGALURU - 560080.
2. MR. ADITH B. SHETTY SON OF MR. BHASKAR R. SHETTY, AGED ABOUT39YEARS RESIDING AT: NO115A, 9TH MAIN, RMV EXTENSION, SADASHIVANAGAR BENGALURU - 560080 …RESPONDENT (BY SRI. MADHUKAR M.DESHPANDE, ADV. AND SRI. B.S. VENKATANARAYANA, ADV. FOR RESPONDENT) THIS COMMERCIAL APPEAL IS FILED UNDER SECTION131A) OF THE COMMERCIAL COURTS ACT, 2015 PRAYING TO SETTING ASIDE THE ORDER
DATED1006.2024 PASSED ON I.A. No.II IN COM. O.S. NO.237/2023 PENDING BEFORE THE COURT OF THE LXXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, (COMMERCIAL COURT), BENGALURU (CCH-86) (VIDE ANNEXURE A) AND CONSEQUENTLY ALLOW I.A. No.II FILED UNDER ORDER
XXXIX RULE5READ WITH SECTION151OF THE CODE OF CIVIL PROCEDURE, 1908 BY THE APPELLANT ETC. THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON1208.2024 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, BASAVARAJA J., PRONOUNCED THE FOLLOWING: - 3 - COMAP No.238 of 2024 CORAM: HON'BLE MRS JUSTICE ANU SIVARAMAN and HON'BLE MR JUSTICE G BASAVARAJA CAV JUDGMENT
(PER: HON'BLE MR JUSTICE G BASAVARAJA) Order on maintainability of the appeal:
1. This is plaintiff's appeal against the order passed on IA.2 filed under Order XXXVIII Rule 5 read with Section 151 of the Code of Civil Procedure in OS No.237 of 2023 on the file of District and Sessions Judge (Commercial Court-86), Bengaluru (for short hereinafter referred to as the "trial Court").
2. For the sake of convenience, the parties herein are referred to with their status and rank before the trial Court.
3. Brief relevant facts leading to filing of this appeal are that the appellant/plaintiff instituted Com.OS No.237 of 2023 against the respondent before the trial Court for recovery of money of Rs.8,04,59,495/- with interest at the rate of 12% per annum from the date of filing the suit till its realisation. Along with the suit, the - 4 - COMAP No.238 of 2024 plaintiff had filed an Interlocutory Application under Order XXXVIII Rule 5 read with Section 151 of Code of Civil Procedure, 1908 praying for direction to the respondent to deposit or furnish sufficient security for a sum of Rs.8,04,59,495/- with interest at the rate of 12% per annum, so as to completely satisfy the main relief, failing which, to pass an order of attachment before the judgment attaching the properties of the defendants as described in the schedule property to the application, in favour of the plaintiff.
4. The trial Court granted exparte order on 20th February, 2023 by creating charge over the suit schedule property till the next date of hearing.
5. In response to the summons, the respondent appeared before the trial Court and filed his written statement and also filed statement of objections to the application. Having heard the arguments on both sides, the trial Court dismissed IA.2 filed by the plaintiff under Order XXXVIII Rule 5 of Code of Civil Procedure. Being aggrieved by the said order, the plaintiff/appellant has - 5 - COMAP No.238 of 2024 preferred this appeal under Section 13(1A) of the Commercial Courts Act, 2015 read with Order XLIII Rule 1(r) of Code of Civil Procedure, 1908. Statement of Objections is also filed on behalf of the Respondents.
6. Sri P.K. Shrikara along with Sri Aniketh B.C., learned counsel appearing for the appellant/plaintiff submitted that the order impugned is arbitrary, capricious, unreasonable and suffers from non-application of mind and cannot be sustained. It is submitted that the trial Court has not exercised its jurisdiction in a reasonable and judicious manner. He has also reiterated the averments made in the memorandum of appeal and submitted that the trial Court has committed an error in dismissing IA.2. Further, he would submit that since the trial Court has dismissed IA.2 filed under Order XXXVIII Rule 6, the appeal lies under Order XLIII Rule 1(q) of Code of Civil Procedure, 1908. On all these grounds, he sought to allow the appeal.
7. As against this, learned counsel appearing for respondents submitted that appellant/plaintiff had filed an application under Order XXXVIII Rule 5 of Code of Civil - 6 - COMAP No.238 of 2024 Procedure to attach the schedule property. The trial Court has not passed any attachment order as required under Rule XXXVIII Rule 5 of Code of Civil Procedure, 1908 and it is only after filing statement of objections by the defendants, the trial court has rightly rejected the application. The trial Court has also not passed any order under Order XXXVIII Rule 6 of Code of Civil Procedure. Hence, the order impugned is not appealable under Order XLIII Rule 1(q) of Code of Civil Procedure. Since the appeal is not maintainable as against the order impugned, the question of considering the merit/demerit of the order impugned does not arise by this Court. The learned Counsel would further submit that the Court has not issued the attachment order in Form 5 and 6 of Code of Civil Procedure, 1908 and hence the appeal filed under Order XLIII Rule 1(q) is not maintainable. On all these grounds sought to dismiss the appeal. He has also placed reliance on the following judgments:
1. PALGHAR ROLLING MILLS (P) LTD. v. VISVESWARAYYA IRON AND STEEL LTD. [ILR1985KAR. 3989].; - 7 - COMAP No.238 of 2024 2. H.R.M. NARAYANA RAO v. SMT. KASTURI AND OTHERS [1978 MYLJ497 8. Having heard the arguments on both sides and on perusal of appeal papers, the following points would arise for our consideration:
1. Whether appeal is maintainable against the impugned order passed on IA.2 filed by the plaintiff under Order XXXVIII Rule 5 read with Section 151 of the Code of Civil Procedure, 1908?.
2. What Order?.
9. Our answer to the above points are: Point No.1: in the negative; Point No.2: as per final order. Regarding Point No.1
10. We have examined the material placed before this Court. It is not in dispute that the plaintiff had filed a suit for recovery of an amount of Rs.8,04,59,595/- with interest at the rate of 12% per annum from the date of institution of suit till its realisation. It is also not in dispute - 8 - COMAP No.238 of 2024 that the plaintiff had filed application under Order XXXVIII Rule 5 read with Section 151 of Code of Civil Procedure to attach the schedule property. On 20th February, 2023, the trial Court has passed the following order:
"Charge is created in respect of other items of the plaint schedule properties except the properties already sold by the defendant under 2 different sale deeds dated 30.12.2022 and 09.01.2023 till next date. Intimate defendant in this regard in accordance with law. Issue suit summons through court, RPAD and also email on main suit and on IA.2. Returnable by 20.03.2023. Office to follow up the notice/summons issued through RPAD and put up either acknowledgment or tract consignment details when the matter listed on 20.03.2023 to avoid unnecessary delay.
11. Perusal of the order dated 20th February, 2023, makes it clear that the trial Court has not passed any order as to the attachment of schedule property as required under Order XXXVIII Rule 5 read with Section 151 of Code - 9 - COMAP No.238 of 2024 of Civil Procedure. In view of the submissions advanced by both the learned counsel and keeping in mind, the provisions of Order XLIII Rule 1(q) of the Code of Civil Procedure, it is appropriate to mention here as to the decision of the Full Bench of High Court of Kerala at Ernakulam in the case of K. SADASIVAN v. SURENDRADAS rendered in FAO No.47 of 2019 decided on 12th October, 2020 wherein the Court has held as under:
"33. On a conjoint reading of Sub-rules (1) and (3) of Order XXXVIII Rule 5, it can be seen that the court has power, in an appropriate case, to pass an order of conditional attachment along with issuing directions to the defendant as provided in Rule 5(1). Argument raised on the appellant's behalf, that court cannot issue an order of conditional attachment later, if it did not do so alongside issuing a direction under Rule 5(1), is fallacious. What is obligatory under Rule 5(4) is that at or before issuing an order of conditional attachment under Rule 5(3), the statutory mandate under Rule 5(1) should have been complied. In other words, if the defendant is not directed to furnish security or show cause why he should not furnish security as provided under Rule 5(1) of Order XXXVIII, then an order passed behind his back under Rule 5(3) attaching his property will - 10 - COMAP No.238 of 2024 be legally improper. However, opening sentence of Order XXXVIII Rule 5(1) shall not be ignored. It says "Where at any stage of a suit, the Court is satisfied, by affidavit or otherwise ................."
. So, in a given case, if the court has issued only a direction under Rule 5(1) and not an order under Rule 5(3) at the institution of the proceedings, still we find no fetter in the court's power to pass an order of conditional attachment under Rule 5(3), if it is satisfied by affidavit or otherwise about the malafides of the defendant. Take a case where the defendant, after receiving notice under Section Rule 5(1), goes on seeking time for filing counter statement, at the same time he takes steps to alienate his property to defeat the plaintiff. Then the court can pass an order under Rule 5(3), if it is satisfied about the malafide intention of the defendant. If the above view is not taken, the words "at any stage of a suit" occurring in Rule 5(1) of Order XXXVIII will be rendered otiose. So, we reject the appellant's contention that the court is powerless to pass an order of conditional attachment under Order XXXVIII Rule 5(3) if it was not passed alongside the direction issued under Rule 5(1). Such an order can be passed at any stage of a suit as clearly stated in Rule 5(1).
12. The Full Bench categorically held that appeal is maintainable against an order dismissing an interlocutory application under Order XXXVIII, Rule 5 if only there was - 11 - COMAP No.238 of 2024 an order of conditional attachment passed in the interlocutory application, which was withdrawn under Rule 6(2) thereof.
13. It is also appropriate to mention here the decision of the co-ordinate Bench of this Court in the case of H.R.M. NARAYANA RAO (supra) wherein it is held that when an appeal does not lie against the order made under Order XXXVIII Rule 5 of Code of Civil Procedure, the appellate Court has no jurisdiction to go into the correctness or validity of that portion of the order. It is also pertinent to mention here the decision of the Co- ordinate Bench of this Court in PALGHAR ROLLING MILLS (P) LTD. (supra) wherein it is held that appeal against the order passed under Order XXXVIII Rule 5 of Code of Civil Procedure, is not maintainable under Order XLIII Rule 1 of Code of Civil Procedure.
14. In the instant case, plaintiff, along with the plaint, had filed an application under Order XXXVIII Rule 5 read with Section 151 of the Code of Civil Procedure seeking attachment of the schedule property. The trial - 12 - COMAP No.238 of 2024 Court has passed an order on 20th February, 2023 creating charge over the schedule property till the next date of hearing. No attachment order is passed as required under Order XXXVIII Rule 5 of Code of Civil Procedure, 1908. After filing statement of objections having heard the arguments on both sides, the trial Court has dismissed the application filed under Order XXXVIII Rule 5 of Code of Civil Procedure. On a plain reading of Rule 1(q) of Order XLIII of Code of Civil Procedure, an appeal shall lie only against the order passed under Rules 2, 3, or 6 of Order XXXVIII of Code of Civil Procedure, 1908. Additionally, the Full Bench of the High Court of Kerala, has elaborately discussed as to the provisions of Order XLIII Rule 1 and also Order XXXVIII Rule 5 of Code of Civil Procedure and held that the appeal is not maintainable against the order passed under Order XXXVIII Rule 5 of Code of Civil Procedure.
15. In the light of the judgments of the Full Bench of High Court of Kerala and the judgment of the Co- ordinate Bench of this Court stated supra, the appeal against the order impugned is not maintainable under - 13 - COMAP No.238 of 2024 Order XLIII Rule 1(q) of the Code of Civil Procedure since there was no order of attachment under Order XXXVIII Rule 5 of Code of Civil Procedure. Accordingly, we answer point No.1 in the negative. We have not expressed any opinion on the merits or demerits of the case. Regarding Point No.2:
16. For the aforestated reasons and discussions, we proceed to pass the following: ORDER
1 Appeal is dismissed as not maintainable; 2. It is made clear that the appellant is at liberty to work out his remedy in a legal and proper manner. Sd/- (ANU SIVARAMAN) JUDGE Sd/- (G BASAVARAJA) JUDGE lnn