₹100 Crore Defamation Case: Application Under Order 38 Rule 5 Of CPC Cannot Be Filed In Such A Suit- Karnataka HC Rules
The Karnataka High Court while dealing with a Rs. 100 crores defamation case has held that in such type of a suit, an application under Order 38 Rule 5 of the Civil Procedure Code cannot be filed and if filed, should be dismissed.
The Court was deciding a case wherein the petitioners challenged the order passed by the Additional City Civil and Sessions Judge.
A Single Bench of Justice Sreenivas Harish Kumar asserted, “In the light of the principles enunciated in the above rulings, it can be stated that Rs.100 Crores that the respondent has claimed cannot be called a specified sum which has arisen out of a transaction giving rise to existence of a debt or liability or obligation. In a suit of this type, an application under Order XXXVIII Rule 5 CPC cannot be filed; and if it is filed, it should be dismissed in limine.”
The Bench said that obligation or liability does not come into existence till the court passes the decree in favour of the plaintiff and, therefore, such an application under Order XXXVIII Rule 5 CPC cannot be filed at all.
Senior Advocate Udaya Holla and Advocate S. Sammith represented the petitioners while Senior Advocate B.C. Thiruvengadam and Advocate Manik B.T. represented the respondent.
Brief Facts -
The respondent was a partnership firm who claimed damages of Rs. 100 crores with interest at the rate of 12% per annum for slanderous and libelous defamatory statements made by the petitioners and filed an application under Order 38 Rule 5 CPC requesting the court to pass an order attaching the petitioners’ immovable property and bank account before judgment. The petitioners entered caveat, and in the presence of counsel for respondent and the petitioners, the trial court posted the case to January 30, 2023 for orders on the application.
Thereafter, the petitioners filed a writ petition seeking to quash the order dated January 27, 2023. The trial court passed an order directing the petitioners to show cause as to why they should not furnish security for the decree that may be passed in the suit, they have filed an application under Order VI Rule 17 CPC to insert additional prayer in the writ petition for quashing the order.
The High Court in the above context noted, “If the application filed by the respondent under Order XXXVIII Rule 5 CPC is perused, it does not disclose the source of information supplementing the allegation the respondent has made in para 18 of the affidavit, nor the order dated 30.01.2023 indicates application of mind and arriving at a satisfaction based on materials placed before it by the respondent. Therefore the issuance of show cause notice is illegal.”
The Court further observed that on the day when the suit is filed, if the debt or liability or obligation does not exist, the defendant cannot be asked to furnish security on the application filed under Order 38 Rule 5 CPC and in a suit for damages, such a debt or liability or obligation does not arise until the court quantifies the damages.
“The plaintiff may have claimed Rs.100 crores towards damages. Till the court decides whether plaintiff is entitled to damages or not, the claim made by the plaintiff remains a fiction; it is not a specified amount”, said the Court.
The Court relied upon the decision of the Apex Court in the case of Raman Tech. and Process Engineering Company and Another v. Solanki Traders (2008) 2 SCC 302 in which it was held that the purpose of Order 38 Rule 5 is not to convert an unsecured debt into a secured debt and any attempt by a plaintiff to utilize the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged.
Accordingly, the Court allowed the writ petition and dismissed the orders.
Cause Title- Kamalalaya Hiisoft (P) Ltd. & Ors. v. M/s. Sree Venkateswara Developers