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PERS Enterprises Private Limited, Represented by its Authorised Signatory B. Anandakrishnan v/s Aavanor Systems Private Limited, Represented by its Managing Director M. Vennimalai

    OSA (CAD) Nos. 75 & 76 of 2019 & CMP Nos. 14634 & 14637 of 2021

    Decided On, 24 September 2021

    At, High Court of Judicature at Madras


    For the Appellant: Satish Parasaran, Senior Advocate, S. Vijayan, Advocate. For the Respondent: H. Karthick Seshadri, Advocate.

Judgment Text

(Prayer: Appeals filed under Section 13 of the Commercial Courts Act, 2015 read with Section 37 of the Arbitration and Conciliation Act, 1996 against the order dated 12.08.2021 passed in A.Nos.2640 and 2641 of 2021 in A.No.1414 of 2021 in C.S.No.128 of 2021.)

Common Judgment

Sanjib Banerjee, CJ.

1. These appeals are directed against an order for furnishing security.

2. An initial order was made on June 30, 2021 at the ex parte stage requiring security to be furnished in the sum of Rs.1,04,52,423/- on or before July 23, 2021. The order also indicated that an attachment could be issued, if the security was not furnished within the relevant time.

3. When the matter was taken up next on July 23, 2021, the defendant was represented. However, the trial court noticed that the security had not been furnished and, as such, passed an order in the nature of attachment. The matter was next taken up on August 12, 2021 and the present appellant’s prayer for lifting the order of attachment was declined.

4. The principal contention of the appellant is that an order of attachment or even for furnishing security, for that matter, should not be lightly passed and the court should first ascertain the nature of the claim and the material in support thereof before passing a tall order as an attachment.

5. Ordinarily, an order requiring security to be furnished or an order of attachment may not be made unless the court examines the claim and finds all or a substantial part thereof to be unimpeachable. The court has next to consider whether it is necessary to make an order in the nature of attachment upon noticing the conduct of the defendant.

6. Merely because a money claim has been filed would not imply that an order for security would be made or an order of attachment would follow. However, when the claim is found to be unimpeachable, an order for security or in the nature of attachment may be passed.

7. There is a dispute between the parties as to the quantum payable by the appellant to the respondent on account of the software produced by the respondent at the behest of the appellant. Though the plaintiff submits that its claim is as per the bills submitted and there has been no demur or protest despite receipt of such bills, the defendant-appellant says that it has instituted a previous suit, suggesting thereby that the plaintiff was not entitled to the sum that the plaintiff had claimed.

8. The initial order of the trial court required security to be furnished to the extent of Rs.1.04 crore. The order dated August 12, 2021 requires security to the tune of Rs.51.50 lakh to be furnished, covering approximately 50 per cent of the suit claim. It would sub-serve the ends of justice if a sum of Rs.25 lakh be furnished by way of security by the appellant within a week from date. The money should be deposited in any nationalised bank having its branch within the vicinity of this court in the name of the Registrar-General of this court in a short term auto-renewable fixed deposit. A copy of the receipt of the deposit should be made over to advocate for the plaintiff simultaneously with the original receipt being handed over to the Registrar-General. The order dated August 12, 2021 is modified to such

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extent. The matter will appear before the trial court for a fresh consideration on the application for attachment before judgment. The parties may approach the trial court for inclusion of the matter in its list by citing this order. 9. OSA (CAD) Nos.75 and 76 of 2021 are disposed of without any order as to costs. CMP Nos.14634 and 14637 of 2021 are closed.