High Court · 2011

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 25.03.2011CORAMTHE HONOURABLE MRS.JUSTICE R.BANUMATHIANDTHE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAHO.S.A.No.74 of 20111. Perim Janardhana Rao aged about 54 years, Son of Perim raja No.A-501, Raheja Regency, Santhome High Road, R.A.Puram, Chennai – 600 028.2. M/s. Jay AR Enterprises rep. By its kPartner Perim Janardhana Rao, No.7, N.S.Krishnan Street, Eswaran Nagar, Pammal, Chennai – 600 0753. Perim Janardhana Rao aged about 54 years, Son of Perim Raja Partner, M/s. Jay AR Enterpirses, No.A-501, Raheja Regency, Santhome High Road, R.A.Puram, Chennai – 600 028.4. K.Rajendra Reddy, Aged about 48 years, Son of K.Venkatamuni Reddy Raja Partner, M/s. Jay AR Enterprises, Old No.1, New No.17-A, 6th Main Road, R.A.Puram, Chennai – 600 028.Appellants. Vs. https://hcservices.ecourts.gov.in/hcservices/ M.Balaji,aged about 48 years,Son of M.Pushpaiah Naidu,A4-212, Gokulam Complex,Doddakalasandra,Kanakapura Main Road,Bangalore 560 062...RespondentsAppeal filed under Order XXXVI Rule 9 of O.s. Rules read withClause 15 of the Letter Patent against the order dated 4.2.2011made in Application No.6505 of 2010 in C.S.No.941 of 2010Prayer in Application 6505 of 2010:- Application praying thatthis Honourable Court be pleased to direct the respondents tofurnish security for the suit claim amount of Rs.1,21,66,000/-failing which to attach the properties set out in the petition.For Appellants : Mr.S.AnandrajFor Respondents : Mr.K.SridharJUDGMENT (The judgement of the Court was delivered by V.PERIYA KARUPPIAH.,J)This appeal has been directed against the order passed by thelearned single Judge in O.A.No.1203 of 2010 and Application No.6505of 2010 in C.S.No.941 of 2010.2.The brief facts of the case of the plaintiff / applicantis as follows:(i)The plaintiff/applicant has has been doing real estatebusiness since 2002. The first defendant had approached theplaintiff/applicant to purchase the lands at Bangalore in order tosell the same and to make profit. Earlier, the first defendantpurchased 50% of 3 acres of land in Giddanahalli Village, BangaloreRural District and had sold the same and gained huge profit. Thefirst defendant again approached the plaintiff/applicant topurchase some more lands and had entered into agreements in respectof the land at Bidaraguppe Village, Anekal Taluk measuring anextent of 5 acres 22 ½ guntas for which the plaintiff paid heaveadvance to the land owners. The first defendant requested theplaintiff/applicant to get the sale deed registered in his name andpromised to pay the sale consideration as agreed by him. The https://hcservices.ecourts.gov.in/hcservices/ defendants paid the sale consideration out of his own founds andgot the sale deeds executed in the name of the first defendant. Thefirst defendant agreed to purchase the lands at the rate ofRs.46,00,000/- per acre and the total sale consideration comes toRs.2,56,00,000/-, but the first defendant paid onlyRs.1,77,00,000/- to the plaintiff/applicant and he is liable to paya sum of Rs.79,00,000/-. The first defendant issued a cheque for asaid sum of Rs.79,00,000/- drawn on the account of the seconddefendant bearing No.401681 dated 30.10.2007 on ABN Amro bank,Haddows Road, Chennai towards the balance amount due and payable tothe plaintiff/applicant. The said cheque had been dishonoured.Therefore, a complaint was given against the first defendant undersection 138 of the Negotiable Instruments Act before the XVIAdditional Chief Metropolitan Magistrate Court, Bangalore and thesame was pending. The defendants failed to pay the entire dues tothe plaintiff. Hence, a suit was filed for recovery of a sum ofRs.79,00,000/- together with interest at 18% from 30.10.2007 andas on 25.10.2010, the defendants are liable to pay a sum ofRs.1,21,66,000/- to the plaintiff/applicant.(ii)Since the defendants came to know about the steps takenby the plaintiff/applicant to recover the dues, they tried toalienate all their properties, in order to defeat plaintiff'srights. Hence, the plaintiff/applicant prayed this Court to directthe defendants to furnish security for the suit claim amount ofRs.1,21,66,000/- failing which to attach the properties set out inthe petition.(iii)The first respondent has filed a counter to theabove application stating that apart from the dishonoured chequeand the judgment of the Criminal Court, the plaintiff has no pieceof evidence to establish the liability of the defendants to thesuit claim. A dishonoured cheque and a conviction by the CriminalCourt alone is not sufficient to presume a prima-facie case infavour of the plaintiff for recovery of money. According to thefirst respondent, the plaintiff was guilty of fraud andmisappropriation of his funds, in collusion with a person by nameKrishnamoorthy, who was appointed as his Power Agent by the firstdefendant. The first defendant has already lodged a criminalcomplaint for fraud, misappropriation etc., and a charge sheet hasbeen laid on the file of the Judicial Magistrate, Poonamallee.Therefore, According to the first respondent, there is no basis forthe suit claim and hence the interim direction for furnishingsecurity cannot be ordered.3.The learned single Judge has considered the submissionsmade by both sides before him and had come to a conclusion ofdirecting the appellants / respondents to furnish security to an https://hcservices.ecourts.gov.in/hcservices/ extent of a sum of Rs.79,00,000/- within a period of three weeksfrom the date of receipt of a copy of the order and that in defaultof furnishing security within the said time, the immovableproperties morefully set out in the schedule to Judge's summonsshall stand automatically attached and the same shall remain underattachment until further orders of this Court.4.Aggrieved by such an order passed by the learned singleJudge, the appellants have preferred the present appeal.5.The appellants are the defendants in the suit andrespondents in the application in A.No.6505 of 2010 filed beforethe learned single Judge. For convenience sake, the rank of theparties in the suit are maintained in this judgment also.6.Heard Mr.S.Anandraj, learned counsel for the appellants /defendants and Mr.S.Sridhar, learned counsel for the respondent /plaintiff.7.The learned counsel for the appellants / defendants wouldsubmit in their arguments that the suit was filed by the plaintiffagainst the appellants for recovery of a sum of Rs.1,21,66,000/-with subsequent interest at 18% p.a on the principle sum ofRs.79,00,000/- said to have been due from the defendants to whichthe defendants are seriously contenting in the suit. He wouldfurther submit in his arguments that the plaintiff had based hisclaim for the sum of Rs.79,00,000/- as the balance amount payabletowards the sale consideration in respect of the property purchasedby the defendants through the plaintiff by virtue of three saledeeds dated 19.03.2004 and one sale deed dated 11.04.2005. Hewould further submit that the plaintiff has no prima-facie case forthe suit claim since all the considerations arising out of foursale deeds would be only to an extent of approximatelyRs.89,00,000/- and the plaintiff's case was that the defendantshave paid a sum of Rs.1,79,00,000/- towards sale consideration andtherefore there could not be any balance amount payable by thedefendants to the plaintiff. He would further submit in hisarguments that the learned single Judge has not understood the saidpoint that the plaintiff has no prima-facie case, but had orderedfor furnishing security to an extent of Rs.79,00,000/-as if it wereprima facie found to be due from the defendants. He would furthersubmit that the sale agreement stated to have been the cause ofaction in between the parties was in between the plaintiff andthird party and it would not bind the defendants and it lost sightwhile passing the judgment by the learned single Judge. He wouldalso submit that the defendants' case was that they have issued thecheque signed blank and it was utilised for raising a claim ofRs.79,00,000/-. He would also submit that the plaintiff had also https://hcservices.ecourts.gov.in/hcservices/ pursued his remedy through Criminal Court by filing privatecomplaint under Section 138 of Negotiable Instruments Act and thesame was convicted against the defendants and the appeal has beenfiled against the said judgment, but the learned single Judge hadrelied upon the judgment of the Criminal Court to find out a prima-facie case against the defendants which is not correct. He wouldalso submit that the Criminal Court judgment is not binding uponthe civil court and the said judgment is also subject to theappeals preferred by the defendants and therefore, there cannot beany prima-facie case for passing an order of directing thedefendants to furnish security. He would draw the attention ofthe Court to a judgment of Hon'ble Apex Court reported in (2008) 2SCC 302 (Raman Tech. & Process Engg. Co. and another ..vs.. SolankiTraders) for the principle that no order could be passed underOrder 38 Rule 5 CPC without the satisfaction of reasonable chanceof a decree being passed in the suit against the defendants. Hewould further submit that the order of furnishing security by thelearned single Judge has to be set aside for want of prima-faciecase and the appeal filed by the defendants may be allowed.8.The learned counsel for the respondent / plaintiff wouldsubmit in his arguments that the learned single Judge has correctlycome to the conclusion of directing the defendants to furnishsecurity for a sum of Rs.79,00,000/- and in default to attach theproperties scheduled in the Judges Summons. He would also submitin the Court that the Criminal Case filed by the plaintiff beforethe Judicial Magistrate under Section 138 of Negotiable InstrumentsAct was convicted and the defendants were sentenced to pay acompensation of Rs.89,00,000/- and the said judgment of CriminalCourt can be taken as a piece of evidence for ascertaining theprima-facie case, since the said judgment has not been varied orset aside. He would further submit in his arguments that thedefendants have issued a cheque for the sum of Rs.79,00,000/-,the amount being the balance sale consideration of four sale deedsthrough them the defendants purchased the properties with thirdparties with the help of the plaintiff and the cheque issued by thedefendants were supported by consideration and the same wasreturned by the defendants and was handed over. The said issuanceof the cheque itself would be proving prima-facie case underSection 118 and 139 of Negotiable Instruments Act by drawing thepresumption. The said presumptions were found not rebutted by thedefendants in the Criminal Case and therefore, they were convicted.He would therefore, submit that the Criminal Court judgment is afinding that the defendants are liable to pay the said sum ofRs.79,00,000/- with subsequent interest. He would further submitthat the defendants had not paid any amount thereafter andtherefore, the suit claim is still outstanding and it cannot besaid that the amount has been paid by the defendants to the https://hcservices.ecourts.gov.in/hcservices/ plaintiff. He would also submit that the learned single Judge wasright in coming to the conclusion that there is a prima-facie casefor ordering security. He would further submit in his argumentsthat the first defendant has though stated in his counter onbehalf of all the defendants that they are not taking steps toalienate the schedule mentioned property, they have executed powerdeeds and the Power Agents have alienated several items ofproperties. He would also submit that finding fault with thePower Agents, the defendants cannot take umbrage from violatingtheir own undertaking since they are the principals of the PowerAgents and the acts of Power Agents will bind the defendants asPrincipal. He would further submit in his arguments that thedefendants have admittedly alienated the properties even after thefiling of the suit and after passing the order of furnishingsecurity and therefore, the defendants cannot ask for vacating theorder of furnishing security nor evade from the same. He wouldalso submit that the learned single Judge had given reasons for thedirection passed against the defendants to furnish security andtherefore the said order passed by the learned single Judge neednot be disturbed. He would therefore request the Court to dismissthe appeal.9.We have given anxious consideration to the argumentsadvanced on either side.10.According to the submissions made by both sides, we couldunderstand that a cheque was stated to have been furnished by thedefendants in favour of the plaintiff for a sum of Rs.79,00,000/-payable to the plaintiff towards the balance consideration foreffecting the sale deeds in favour of the defendants from thirdparties through the plaintiff. The said sale deeds are stated tobe executed by (1) One Chennakesavan to the defendants and oneKrishnamoorthy for a sum of Rs.3,00,000/- dated 19.03.2005; (2) oneSriramaiah in favour of the defendants and Krishnamoorthy for a sumof Rs.26,00,000/- dated 19.03.2005; (3) One Lakshminarayanan infavour of the defendants and Krishnamoorthy for a sum ofRs.24,00,000/- dated 19.03.2005; and (4) one Narayanappa in favourof the defendants and Krishnamoorthy for a sum of Rs.36,40,000/-dated 11.04.2005. The defendants have denied the payment by sayingthat the total amount of the four sale deeds would only effectaround Rs.89,00,000/- and therefore the sum of Rs.79,00,000/-stated to have been due payable to the plaintiff by the defendantscannot be a true one. Further, it has been brought to the noticeof this Court that the defendants have executed the documentavailable at Page 64 of the typed set on 15.04.2006 through theirgeneral Power Agent Krishnamoorthy. In the said document, it hasbeen categorically mentioned that a sum of Rs.79,00,000/- is dueout of the total amount of Rs.2,56,00,000/- towards sale of 5 acres https://hcservices.ecourts.gov.in/hcservices/ 22-1/2 guntas at the rate of Rs.46,00,000/- per acre. The veracityof the said document cannot be gone into at this stage. But thetruth, genuineness and the validity of the said document can bedecided only during the full-fledged trial.11.Apart from that, it is an admitted fact that a criminalcomplaint has been launched against the defendants under section138 of Negotiable Instruments Act for the dishonour of the chequeissued by the defendants for a sum of Rs.79,00,000/- and the saidcase was also taken on file and trial was conducted before theJudicial Magistrate, Bangalore and judgment was rendered withconviction against the defendants. Further, it has been made knownto the Court that the appeal has been preferred against the saidjudgment of conviction and sentence. However, a competent Courthas gone into the facts and circumstances of the case and decidedthat the issuance of the cheque was true and it had been bounced onpresentation before the Bank. The said factum of coming to theconclusion about the truth and genuineness of the cheque can betaken for ascertaining the prima-facie case in favour of theplaintiff. Moreover, the cheque issued by the defendants wasadmitted, but it was stated to be a blank cheque. No doubt, thesignature of the defendants have been admitted and in the saidcircumstances, the presumption as to its genuineness can be foundby virtue of Section 118 of Negotiable Instruments Act. When aproceedings has been initiated under section 138 of NegotiableInstruments Act and the signature of the cheque has also beenadmitted the presumption under Section 139 of NegotiableInstruments Act is also available in favour of the plaintiff. Allthese prima-facie case can be shown as not correct only in thecourse of a full-fledged trial. Till then, the presumption willhold good and the plaintiff is prima-facie found entitled to thesaid amount of Rs.79,00,000/- as mentioned in the cheque issued bythe defendants.12.Therefore, the plaintiff has established prima-facie casefor the purpose of passing an interim order in his favour. Asregards the provisions of Order 38 Rule 5 CPC, we have to see thereasons enunciated in the said role. According to Rule 5(1) ofOrder 38 of CPC, if the defendants are with an intention toobstruct or delay the execution of any decree that may be passedagainst them or about to dispose the whole or any part of hisproperty or is about to remove the whole or any part of hisproperty from the local limits of the jurisdiction of the Court,the Court can pass suitable orders of furnishing security and indefault to attach the property. Therefore, any one of the twocontingencies mentioned in Order 38 Rule 5(1) CPC should be presentfor passing an order of furnishing security. As regards this case,the plaintiff had furnished in his affidavit that the defendants https://hcservices.ecourts.gov.in/hcservices/ are selling the property in order to evade payment of the decreeamount likely to be passed in this case. It is also fairlyadmitted that the Power Agents of the defendants are doing all themischieves and it has to be verified by the defendants as towhether all the properties sold are part of the propertiesmentioned in the schedule of Judges Summons and thereafter only theremaining schedule of property unencumbered may be furnished to theCourt. In the said circumstances, the Court can presume that thedefendants through their Power Agents cannot control the sale ofthe property as it was executed by the Power Agents themselves andtherefore, the properties belonging to the defendants are beingsold even after filing of the suit. If all the properties of thedefendants have been sold nothing would be available for the decreeamount likely to be passed and this case will be defeated. In thefacts and circumstances of the case, we can find a prima-facie caseregarding the sustenance of the suit claim and the compliance ofthe provisions of Order 38 Rule 5 CPC have been satisfied and theopportunities given to the defendants have not been availed andtherefore, it has become necessary for this Court also to confirmthe order passed by the learned single Judge in directing thedefendants to furnish security for the principal sum ofRs.79,00,000/-. Accordingly, the order passed by the learnedsingle Judge is confirmed and the appeal is liable to be dismissed.However, the time limit granted by the learned single Judge tofurnish security has been lapsed since the appeal has beenpreferred. Therefore, we are inclined to grant three weeks timefor furnishing security as per the direction of the learned singleJudge from the date of receipt of a copy of this order.13.With the aforesaid observation, we confirm the judgmentof the learned single Judge passed in A.No.6505 of 2010 and theappeal preferred by the appellants / defendants is dismissedwithout costs. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.vsi / mra https://hcservices.ecourts.gov.in/hcservices/ ToThe Sub Assistant RegistrarOriginal Side, High Court, Madras1 cc to M/s. K. Sridhar associates, Sr. 218242 ccs to M/s. S. anand Raj, Sr. 21673O.S.A.No.74 of 2011RB (CO)kk 7/4