[O.38 R.5 CPC] Plaintiff Can't Use Provision As Tool For Coercion Or Easy Execution Of Decrees: J&K High Court

In a judgment passed by Justice Javed Iqbal Wani, the court emphasized that this provision is an extraordinary remedy that should be exercised sparingly and strictly in accordance with the law.

“.. The provisions of Order 38 Rule 5 being stringent in nature are to be construed strictly without being used as a lever for a plaintiff to coerce a defendant to come to terms or to convert unsecured debt into a secured debt or to be used as a tool or mechanism for easy execution of a decree”, Justice Wani remarked.

The case involved the Jammu and Kashmir Bank Ltd. as the petitioner and Golden Globe Impex Private Limited along with its directors as respondents. The petitioner sought quashment of an order passed by the trial court, which dismissed their application under Order 38 Rule 5 CPC for attachment before judgment.

The petitioner, a banking company, had filed a suit for recovery of a substantial amount against the respondents, alleging default on a loan/cash credit facility. They applied for attachment before judgment concerning a residential property owned by the respondents. However, the trial court dismissed the application, prompting the petitioner to appeal.

Justice Wani, after meticulously examining the application, the affidavit filed by the bank, and the objections raised by the directors, observed that the bank's application was speculative. He found no credible material to support the bank's suspicion that the directors were planning to dispose of the property.

“A deeper and closer examination of the application as also the affidavit annexed thereto would prima facie show that the application has been speculative based on a mere suspicion without there being any substantial credible material to support the said suspicion”, the bench remarked.

Crucially, Justice Wani reiterated that Order 38 Rule 5 is a stringent provision and should not be misused for the following purposes:

• Coercing a defendant into settling the case
• Converting unsecured debt into secured debt
• Facilitating easy execution of a decree

The bench further cited the precedent set in the case titled "Raman Tech & Process Engg. Co. & Anr. Vs Solanki Traders" (2008) where the Supreme Court had established similar principles regarding the application of Order 38 Rule 5.

In consonance with the said principles the court found the J&K Bank's application lacking in merit and hence dismissed the petition filed by the bank.

Case Title: The Jammu and Kashmir Bank Ltd Vs Golden Globe Impex Private Limited

Citation: 2024 LiveLaw (JKL) 79

Mr. Abhinav Sharma, Sr. Advocate with Mr. Abhirash Sharma, Advocate represented the bank while Mr. Sunil Sethi, Sr. Advocate with Ms. Zoya Bhardwaj, Advocate represented the respondents.

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