Silpa Projects and Infrastructure (I) Private Limited v. Asten Realtors Private Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **FRIDAY, THE 3[RD] DAY OF DECEMBER 2021 / 12TH AGRAHAYANA,** ## **1943** ## **OP(C) NO. 1163 OF 2021** **CA 1/2021 OF DISTRICT COURT, ERNAKULAM** ## **PETITIONER/S:** SILPA PROJECTS AND INFRASTRUCTURE (I) PRIVATE LIMITED, HAVING ITS REGISTERED OFFICE AT 3RD FLOOR AVENUE, PARAMARA ROAD, KOCHI,PINCODE-682 018, REPRESENTED BY ITS MANAGING DIRECTOR, T.S SANIL BY ADV PRAMOD KOCHUTHOMMEN.E. ## **RESPONDENT/S:** ASTEN REALTORS PRIVATE LIMITED 33/2440E, COMPASS, NH BYEPASS, VYSALI JUNCTION, THAMMANAM P.O., COCHIN,PINCODE-682 032, REPRESENTED BY ITS MANAGING DIRECTOR, MR.SIRAJ MATHER BY ADVS. SUKUMAR NAINAN OOMMEN SHERRY SAMUEL OOMMEN NIDHI JACOB NITISH SATHESH SHENOY **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 02.09.2021, THE COURT ON 03.12.2021 DELIVERED THE FOLLOWING:** O.P.(C) N.1163 OF 2021 -2- ## **JUDGMENT** Dated this the 3[rd ] day of December, 2021 The petitioner, a private limited Company, had entered into an agreement with the respondent for the construction of a residential project styled 'Rajagiri Campus Court' at Kakkanad in Ernakulam. On completion of the work, petitioner raised a bill for Rs.7,18,86,078/-. The respondent having failed to pay the amount, petitioner invoked the Arbitration Clause in the agreement and approached the Commercial Court, seeking attachment of the unsold apartments in the project under construction at Kakkanad. The commercial court passed an ex-parte order of conditional attachment. After entering appearance, respondent filed an interlocutory application for lifting the conditional attachment and offered alternative security in the place of the attached property. By Ext.P3 O.P.(C) N.1163 OF 2021 -3- order, the commercial court accepted the alternative security and lifted the conditional attachment over the apartments at Kakkanad. The petitioner challenged Ext P3 order in appeal. By Ext.P4 order the appeal was also dismissed. Hence, this original petition. 2. Adv.Pramod Kochuthommen, learned Counsel for the petitioner contended that the courts below had committed an illegality in accepting the alternative security offered. In elaboration, it is submitted that the conditional order of attachment was issued with respect to 20 apartments at Kakkanad, belonging to the respondent, which is sufficient security as far as the amount in dispute is concerned. On the other hand, the alternative security offered are apartments constructed by a subsidiary of the petitioner Company at Kanjirappally, the value of which is inadequate to cover the amount in dispute. According to the learned Counsel, of the ## O.P.(C) N.1163 OF 2021 -4- 63 apartments constructed by the subsidiary company, 40 have already been sold and out of the remaining 23, 10 apartments are attached by the petitioner in another proceeding. The value of the balance 13 apartments is nowhere near the amount in dispute. 3. Adv.Sukumar N.Oomen, learned Counsel for the respondent contended that the courts below having concurrently rejected the petitioner's application and appeal, scope for interference in exercise of the power under Article 227 of the Constitution is very limited. In support of the contention, learned Counsel placed reliance on the decisions of the Apex Court in _**Mani Nariman**_ _**Daruwala Alias Bharucha (Deceased) through LRS. and others v. Phiroz N.Bhatena and others [(1991) 3 SCC 141], Laxmikant Revchand Bhojwani and another v. Pratapsing Mohansingh Pardeshi [(1995) 6 SCC 576]** and_ _**Radhey Sham and another v. Chhabi**_ O.P.(C) N.1163 OF 2021 -5- ## _**Nath and others [(2015) 5 SCC 423].**_ 4. Learned Counsel further contended that the power under Order 38 Rule 5 CPC is a drastic and extraordinary power, not to be exercised for the mere asking. To buttress the contention, learned Counsel placed reliance on the decisions in _**Premraj Mundra v. Md.Maneck Gazi and others [AIR 1951 Calcutta 516], Renox Commercials Ltd v. Inventa Technologies Pvt. Ltd [AIR 2000 MADRAS 213], Rajendran and others v. Shankar Sundaram and others [2008(2) SCC 724]**_ . 5. Refuting the factual submissions advanced by the learned Counsel for the petitioner, it is submitted that in another arbitration proceeding between the same parties, petitioner had accepted the valuation of Rs.30 lakhs for each apartment at Kanjirappally offered as alternative security and 25 apartments having been given as security, its value would be much more than the amount in O.P.(C) N.1163 OF 2021 -6- dispute. According to the learned Counsel, at the suggestion of the commercial court and with the tacit approval of the petitioner's Counsel, respondent had produced the draft bond of the alternative security, Board resolution of the subsidiary company, building permit and the approved plan of the 25 apartments offered as security. No dispute was raised by the petitioner at that point of time and it was under such circumstances that the commercial court accepted the apartment at Kanjirappally as security. It is contended that, having acquiesced to the order, it is unethical for the petitioner to assail the order, merely because of the change of Counsel. 6. It is argued that the property over which the attachment was originally effected is owned by the Sacred Heart Province, Kalamassery. Moreover, the respondent has availed loan from M/s.Piramel Capital and Housing Finance Ltd by mortgaging the properties and thus, a charge has O.P.(C) N.1163 OF 2021 -7- been created with over the properties. As such, the civil court's jurisdiction is ousted in view of Sections 2 (zf) and 13(1) r/w 34 of the SARFAESI Act. Further, the respondent has entered into agreements for sale of the apartments and hence, continuance of the attachment will cause extreme loss to the respondent. On the other hand, absolutely no prejudice is being caused to the petitioner by the alternative security being accepted, its value being more than sufficient to offset the disputed amount. 7. It is settled law that courts would not be justified in issuing orders of attachment before judgment or for security merely because no harm would be done thereby or the defendants would not be prejudiced. Before issuing an order of attachment, the court should be satisfied that there is some basis to the apprehension that the defendant may alienate the properties to defeat the decree that may be passed. The legal position O.P.(C) N.1163 OF 2021 -8- has been succinctly explained by the Madras High Court in _**Renox Commercials Ltd**_ and by the Calcutta High Court in _**Premraj Mundra.**_ Of course, as held in _**Rajendran and others**_ , while exercising the jurisdiction under Order 38 Rule 5 of CPC, court is only required to form a _prima facie_ opinion and need not go into the correctness or otherwise of all contentious raised by the parties. 8. Herein, the respondent not having challenged the order of attachment, this Court is not expected to enquire whether the requisite averments are made in the application for attachment. The question is only whether the court below was justified in accepting the alternative security offered by the respondent. Order 38 Rule 5 empowers the court to direct the defendant, to either furnish security as may be sufficient to satisfy the decree or to appear and -9- ## O.P.(C) N.1163 OF 2021 show cause why he should not furnish security. As per Order 38 Rule 6(2), if the defendant furnishes the required security, court shall order the conditional attachment to be withdrawn, or make such order as it thinks fit. Here, the court had ordered conditional attachment over the apartments at Kakkanad. On being satisfied with the security furnished by the respondent, the attachment order was withdrawn and the 25 apartments at Kanjirappally accepted as security. The court below having exercised its discretion and the appellate court having affirmed that order, I see no reason to interfere with the impugned orders. 9. The power under Article 227 is one of judicial superintendence, which cannot be used to upset conclusions of facts, however erroneous those may be, unless such conclusions are so perverse or so unreasonable that no court could ## O.P.(C) N.1163 OF 2021 -10- ever have reached them. As held in _**M.M.Amonkar**_ _**and others v. S.A.Johari [(1984) 2 SCC 354]**_ , the reasons for giving a ruling on a point or for rejecting an application may be wrong or disclose a non-judicious exercise of discretion and may be open to correction in appeal, but no motive of a non-judicial approach or bias or partiality could be attributed unless, the reasons given are moonshine or so flimsy or irrational that they are unreal. The High Court can set aside the findings of fact of an inferior court only if there is no evidence to justify such a conclusion and if no reasonable person could have come to such a conclusion or in other words, if it is a finding which is perverse in law. 10. From a reading of Ext. P3 order, it is evident that sufficient documents had been produced by the respondent to establish its ownership over the apartments offered as security O.P.(C) N.1163 OF 2021 -11- and its value, which, in fact, has been accepted by the petitioner in another case. The order also reveals that all relevant aspects were considered by the commercial court before accepting the security. For the aforementioned reasons, I refrain from interfering with the concurrent findings of the courts below. In the result, the original petition is dismissed. Sd/- ## **V.G.ARUN** **JUDGE** Scl/ O.P.(C) N.1163 OF 2021 -12- ## **APPENDIX OF OP(C) 1163/2021** ## PETITIONER EXHIBITS Exhibit P1 THE TRUE PHOTOSTAT COPY OF THE APPLICATION IN C.M.A (ARB) NO.452 OF 2020 BEFORE COMMERCIAL COURT (PRINCIPAL SUB COURT, ERNAKULAM) Exhibit P2 THE TRUE PHOTOSTAT COPY OF THE OBJECTION FILED BY THE RESPONDENT IN C.M.A (ARB) NO.452 OF 2020 BEFORE COMMERCIAL COURT (PRINCIPAL SUB COURT, ERNAKULAM) Exhibit P3 THE TRUE PHOTOSTAT COPY OF THE ORDER DATED 14.12.2020 PASSED IN C.M.A (ARB) NO.452 OF 2020 BEFORE COMMERCIAL COURT (PRINCIPAL SUB COURT, ERNAKULAM) Exhibit P4 THE TRUE PHOTOSTAT COPY OF THE JUDGMENT DATED 09.04.2021 PASSED BY THE 1ST ADDITIONAL DISTRICT COURT, ( IN CHARGE OF PRINCIPAL DISTRICT COURT & COMMERCIAL APPELLATE COURT) ERNAKULAM IN COMMERCIAL APPEAL NO.1 OF 2021