High Court of KeralaSingle Judge2023-12-14Disposed of

CLEARWAY INFRASTRUCTURES INDIA PVT. LTD. vs ERA HOMES AND PROJECTS PVT.LTD

Case / Petition Number:OP(C) No.2692 of 2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: C. Jayachandran
Judgment Date: 2023-12-14
Court Decision / Holding: The Original Petition is disposed of. The High Court holds that a security sufficient to satisfy the decree is the appropriate standard under Order 38 Rule 5(1). It rejects the petitioner's challenge to Ext.P13 and sustains the security of Rs.19,00,000 furnished via fixed deposits, holding it acceptable as security under Order 38 Rule 9. The court clarifies that time fixed under Order 38 Rule 6 does not affect the remedy under Rule 9. It directs the Principal Sub Court, Ernakulam to dispose of O.S. No.33/2020 expeditiously, within eight months from the date of receipt of the judgment. The court further notes that fixed deposits do not automatically defeat the security, absent evidence of liens, and that Ext.P8’s fixation binds the parties. Overall, the petition is disposed of with directions to advance the underlying suit.”,
Final Disposition: Disposed of

Parties to the Case

Appellants / Petitioners

Clearway Infrastructures India Pvt. Ltd.

Respondents

ERA Homes and Projects Pvt. Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• Shilpa Sathish
• A. Sudhi Vasudevan (Sr.)
• Jose Jones Joseph

Counsels for Respondents

• Philip T. Varghese
• Achu Subha Abraham
• V. T. Litha
• K. R. Monisha

Case Synopsis & Summary

This is an original petition (OP(C) No.2692 of 2023) filed by Clearway Infrastructures India Pvt. Ltd. challenging Exts.P8 and P13 in a suit (O.S. No.33/2020) before the Principal Sub Court (Commercial Court), Ernakulam. Ext.P8 directed the respondent to furnish security of Rs.18,39,217 within one month, while Ext.P13 directed lifting of attachment on furnishing security of Rs.19,00,000 through Fixed Deposit Receipts. The petitioner contends Ext.P13 is legally defective for accepting belated security and that the security fixed should be commensurate with the claim as on the date of furnishing security, considering Order 38 Rule 5(1). It also challenges the validity of relying on fixed deposits given potential banks’ lien under Section 171 of the Indian Contract Act. The respondent counters that Ext.P8 is appealable (Order 43 Rule 1(q)), which remedy the petitioner did not exercise, and that the security fixed by the court under Order 38 Rule 5(1) cannot be altered by mounting interest, with the time under Order 38 Rule 6 being independent of Order 38 Rule 9. The High Court, after hearing, holds that a security sufficient to satisfy the decree is the proper measure, that fixed deposits can constitute security, and that the remedy under Order 38 Rule 9 is independent of the time fixed under Rule 6. It grants relief by directing the trial court to dispose of the suit within eight months and disposes of the petition.

Provisions of Law Cited

Order 38 Rule 9Order 38 Rule 6Order 38 Rule 5(1)Order 43 Rule 1(q)Section 171 of Indian Contract Act

Legal Doctrines & Maxims

Remedy under Order 38 Rule 9 is independent of time fixed under Order 38 Rule 6
Security fixed by court under Order 38 Rule 5(1) must be sufficient to satisfy the decree

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner submits that Ext.P13 is bad in law since security was not furnished within one month as mandated by Ext.P8. The court below purportedly accepted belated security. The security of Rs.19 lakh is argued to be insufficient because the plaint claim has grown due to accruing interest; security should be commensurate to the claim as on the date of furnishing security under Order 38 Rule 5(1). It is argued that fixed deposit receipts may not constitute valid security since banks may have a general lien under Section 171 of the Indian Contract Act. It is further contended that Ext.P8 is an appealable order under Order 43 Rule 1(q), and since that remedy was not availed, the petition cannot challenge Ext.P8. Ext.P8, it is urged, fixes Rs.18,39,217 as the security; the court cannot alter this due to interest accrual. The petitioner seeks to protect the right to a security that reflects the actual decree, and highlights the need for expedition in disposal of the monetary claim, given OS 33/2020’s age.

Contentions of Respondents

The respondent contends Ext.P8 is an appealable order under Order 43 Rule 1(q) and that the petitioner failed to pursue that remedy. It is argued that once security is fixed under Order 38 Rule 5(1), the court must lift the attachment upon furnishing the security, irrespective of time limits in Rule 6. The security fixed (Rs.18,39,217) should be treated as binding; securing Rs.19 lakhs via fixed deposits is not illegal, provided there is no evidence of a lien by the bank. It is argued that mounting interest cannot alter the fixed security fixed by the court; the remedy under Rule 9 is independent of the time fixed under Rule 6. It is contended that fixed deposits can validly constitute security, and no case has been shown that the respondent owes money to the bank to negate such security. The respondent advocates expeditious trial and disposal of the suit, urging the court to maintain order and proceed in line with the commercial court’s objective of speedy monetary dispute resolution.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Sidharthan v. Praveen Chandran	2008 (1) KLT 136	Positive	The court cites this Division Bench decision to support that the remedy under Order 38 Rule 9 is independent of time fixed under Order 38 Rule 6, and that once security is furnished, the attachment should be lifted.

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Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN THURSDAY, THE 14[TH] DAY OF DECEMBER 2023/23RD AGRAHAYANA,** ## **1945** **OP(C) NO.2692 OF 2023** **AGAINST THE ORDER DATED 30.11.2023 IN I.A.NO.14/2023 IN COMMERCIAL SUIT 33/2020 OF PRINCIPAL SUB COURT/COMMERCIAL COURT, ERNAKULAM** ## **PETITIONER/RESPONDENT/PLAINTIFF:** CLEARWAY INFRASTRUCTURES INDIA PVT. LTD., REPRESENTED BY ITS MANAGING DIRECTOR ASHIL V.P, AGED 35 YEARS, HAVING ITS REGISTERED OFFICE AT SEEMA ONE BUILDING SREEKANDATH ROAD, RAVIPURAM, ERNAKULAM, PIN – 682016. BY ADVS. SHILPA SATHISH A.SUDHI VASUDEVAN (SR.) JOSE JONES JOSEPH ## **RESPONDENT/PETITIONER/DEFENDANT:** ERA HOMES AND PROJECTS PVT.LTD, REPRESENTED BY ITS MANAGING DIRECTOR SRI.ELIAS JOY, A COMPANY INCORPORATED UNDER THE COMPANIES ACT HAVING ITS REGISTERED OFFICE AT S-5, SUNU PLAZA, XVIII/627, KOTTARAM JUNCTION, MARADU P.O, PIN – 682304. BY ADVS. PHILIP T.VARGHESE(K/000576/1991) ACHU SUBHA ABRAHAM(K/001758/1999) V.T.LITHA(K/278/2006) K.R.MONISHA(K/915/2013) **THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **OP(C) No.2692 of 2023** **- 2 -** ## **JUDGMENT** ## **Dated, this the 14[th] December, 2023** **The petitioner herein is the plaintiff in O.S. No.33/2020 pending before the Principal Sub Court (Commercial Court), Ernakulam. The plaintiff is aggrieved by Exts.P8 and P13 orders, the former of which directed the respondent to furnish security to the tune of Rs.18,39,217/- (Eighteen Lakhs Thirty Nine Thousand Two Hundred and Seventeen only), within one month and the latter, lifting the attachment over the immovable property upon accepting the security of Rs.19 lakhs.** **2. Heard Sri.Sudhi Vasudhevan, learned Senior Counsel instructed by Adv.Shilpa, on behalf of the petitioner and Sri.Philip T.Varghese, on behalf of the respondent.** ## **3. Learned counsel for the petitioner submits** **OP(C) No.2692 of 2023** **- 3 -** **that Ext.P13 order is bad in law, inasmuch as the security was not furnished within a period of one month, as enjoined by Ext.P8 order. Even without a formal application for extension of time, the court below had accepted the belated security offered, vide Ext.P13 order. Another aspect, which was highlighted is that acceptance of the security of Rs.19 lakhs was also bad in law, inasmuch as the plaint claim has escalated since then, by way of mounting of interest. Therefore, the security amount should be one commensurate to the claim as on the date of furnishing security, taking into account the language in Order 38 Rule 5(1), that is to say, the security, “sufficient to satisfy the decree”. Another aspect highlighted by the learned Senior Counsel is that the fixed deposit receipts produced by the respondent is not liable to be accepted in law, inasmuch as the banks will have a general lien over such fixed deposits in terms of Section 171 of the Contract Act.** **OP(C) No.2692 of 2023** ## **- 4 -** **4. Per contra, these submissions were seriously assailed by the learned counsel for the respondent. It was pointed out that Ext.P8 order was an appealable order under Order 43 Rule 1(q), which remedy has not been availed by the petitioner herein, wherefore, the instant attempt to assail Ext.P8 order, cannot be sustained in law. The contention that the security, which is contemplated under Order 38, Rule 9 will undergo enhancement due to mounting of interest, is also not liable to be recognised, since Order 38, Rule 9, employs the language “security required”, which has to be read and understood as the security, which has been fixed by the court in exercise the powers under Order 38 Rule 5(1). It was also pointed out that in resorting to the remedy under Order 38, Rule 9, the time stipulated in the order passed under Order 38, Rule 6 is of no consequence. Once the security is furnished, the court has no option, but to lift the attachment, as could be seen from the** **OP(C) No.2692 of 2023** **- 5 -** **language employed “shall”, in support of which proposition, learned counsel relied upon a Bench decision of this Court in Sidharthan v. Praveen Chandran [2008 (1) KLT 136].** **5. Having heard the learned counsel appearing on both sides, this Court finds little merit in the instant Original Petition. This Court will first refer to the reliefs sought for in this Original Petition, especially relief no.2, which is extracted here below:** _**“(ii) Modify only the direction of the Commercial Court (Principal Sub Court) Ernakulam in Ext.P8 order, regarding the furnishing of security, obligating the respondent to furnish security having value equivalent to the property under attachment.”**_ **6. Having perused the relief extracted above, this Court is of the opinion that the petitioner has no right to seek furnishing of security equivalent to the property under attachment.** **OP(C) No.2692 of 2023** ## **- 6 -** **Instead, the petitioner's right is to seek security, which may be sufficient to satisfy the decree. Secondly, this Court endorse the submission made by the learned counsel for the respondent that the petitioner cannot now challenge Ext.P8 order, the same being passed under Order 38 Rule 6, which is an appealable order, under Order 43 Order Rule 1(q). Having failed to avail that remedy, it is not open for the petitioner now, to challenge Ext.P8 order.** **7. Once Ext.P8 has become binding to the parties and Ext.P8 fixes the security amount to be furnished as Rs.18,39,217/-, then the security for the purpose of Order 38, Rule 9 can only be the said amount. The same cannot undergo any change on account of the mounting of interest, which yardstick, if taken into account, will keep on changing by efflux of time. This Court also finds that merely because one month's time stipulated in Ext.P8 order to furnish security** **OP(C) No.2692 of 2023** ## **- 7 -** **had elapsed, the remedy under Order 38, Rule 9 is not lost or affected. This remedy under Order 38, Rule 9 is independent of the time fixed under Order 38, Rule 6 and once the security is furnished, it is the duty of the court to lift the attachment as held by the Division Bench of this Court in Sidharthan supra.** **8. In the instant case, as against 18,39,217/-, the security furnished is Rs.19 lakhs by way of fixed deposit receipts. In such circumstances, this Court cannot find anything illegal in Ext.P13 order, which accepts the security and directs the attachment to be lifted.** ## **9. The last limb of the contention is that** **fixed deposits cannot be considered as sufficient security for the purpose of Order 38, Rule 9, on the supposed reason that, banks will have a general lien over the fixed deposits, in respect of amounts due to the bank. This Court** **OP(C) No.2692 of 2023** **- 8 -** **can only frown upon such contention. Nothing has been brought on record to show that the bank, which issued fixed deposit receipts, have any right to recover any amount from the respondent herein; nor it is established that the respondent owe any money to the said bank.** **10. In such circumstances, merely because a general lien is contemplated under Section 171 of the Contract Act or for reason of the general mercantile lien available to the banks, it cannot be found that fixed deposits are not sufficient for the purpose of security under Order 38 Rule 9.** **11. The learned Senior Counsel made a final submission that a direction be issued to the learned Sub Judge to dispose of the suit, as expeditiously as possible. Having regard to the purpose of establishment of Commercial Courts, which call for expediency in the matter of** **OP(C) No.2692 of 2023** **- 9 -** **disposal of monetary claims and also in view of the fact that the suit is of the year 2020, this Court directs the Principal Sub Court, Ernakulam to try and dispose of the suit, O.S. No.33/2020, as expeditiously as possible, at any rate, within a period of eight months from the date of receipt of copy of this judgment.** **Accordingly, this Original Petition is** **disposed of.** ## **Sd/-** ## **C.JAYACHANDRAN, JUDGE** ww **OP(C) No.2692 of 2023** ## **- 10 -** ## **APPENDIX OF OP(C) 2692/2023** PETITIONER'S EXHIBITS: - EXHIBIT P1 A TRUE COPY OF THE PLAINT DATED 13.02.2020 FILED BY THE PETITIONER IN CS 33/2020 BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P2 A TRUE COPY OF THE WRITTEN STATEMENT DATED 14.12.2021 FILED BY THE RESPONDENT HEREIN IN THE ABOVE CS. - EXHIBIT P3 A TRUE COPY OF THE AFFIDAVIT AND ACCOMPANYING PETITION BEARING IA NO. 6/2022 IN CS 33/2020 DATED 20.08.2022 FILED BY THE PETITIONER BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM, ALONG WITH THE SCHEDULE FOR ATTACHMENT. - EXHIBIT P4 A TRUE COPY OF THE COUNTER AFFIDAVIT DATED 14.09.2022 FILED BY THE RESPONDENT HEREIN IN IA 6/2022 IN CS 33/2020 BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P5 A TRUE COPY OF THE AFFIDAVIT AND THE ACCOMPANYING PETITION BEARING IA NO.7 OF 2022 IN CS 33/2020 FILED BY THE PETITIONER BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM, ALONG WITH THE SCHEDULE FOR ATTACHMENT. - EXHIBIT P6 A TRUE COPY OF THE COUNTER AFFIDAVIT DATED 24.09.2022 FILED BY THE RESPONDENT HEREIN IN IA 7/2022 IN CS 33/2020 BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P7 A TRUE COPY OF THE REJOINDER DATED 05.11.2022 FILED BY THE PETITIONER IN IA 6 AND 7 OF 2022 IN CS 33 OF 2020 BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. **OP(C) No.2692 of 2023** ## **- 11 -** - EXHIBIT P8 A TRUE COPY OF THE ORDER DATED 14.03.2023 PASSED IN IA 6 AND 7 OF 2022 IN CS 33/2020 PASSED BY THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P9 A TRUE COPY OF THE PETITION BEARING IA NO.14 OF 2023 IN CS 33/2020 FILED BY THE RESPONDENT BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P10 A TRUE COPY OF THE FIXED DEPOSIT RECEIPT NO.C.I.F NO.77107375759-6 DATED 09.11.2023 FOR RS. 19,00,000/ISSUED IN THE NAME OF THE RESPONDENT BY THE STATE BANK OF INDIA KUNDANOOR BRANCH MARADU P.O ERNAKULAM. - EXHIBIT P11 A TRUE COPY OF THE COUNTER AFFIDAVIT DATED 29.11.2023 FILED BY THE PETITIONER IN IA 14/2023 IN CS 33/2020 BEFORE THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM. - EXHIBIT P12 A TRUE COPY OF THE BALANCE SHEET OF THE RESPONDENT AS ON 31.03.2022 DATED 20.09.2022. - EXHIBIT P13 A TRUE COPY OF THE ORDER DATED 30.11.2023 PASSED IN IA 14/2023 IN CS 33/2020 BY THE COMMERCIAL COURT (PRINCIPAL SUB COURT) ERNAKULAM.