ATTACHMENT BEFORE JUDGMENT


INTRODUCTION:-
‘An attachment before judgment is to enable the plaintiff to realize the amount of the decree, supposing a decree eventually made, from the defendant property’. This is the object of the Order 38 rule 5 of The Civil Procedure Code,1908 (herein after referred as CPC). See. Ganu Singh Vs Jangi Lal, 26 C 531. The scope and object of Order 38 rule 5 of CPC and the rules followed thereon merely to protect a plaintiff against loss arising from the defendant making away with his property pending suit. An attachment before judgment is in the nature of an interlocutory order. In Gurunadha Rao v. Gamini Krishnayya, a Division Bench of the Hon’ble High Court of Andhra Pradesh held that to be valid an attachment must be specific and clear in its purport. In Shivaraya and Others Vs. Sharnappa and Others [AIR 1968 Mysore 283], the Hon’ble Single Judge followed Bankim Chandra and Others’ case and Tavvala Veeraswamy’s case which considered such interlocutory orders to have been passed in exercise of the Court’s ancillary powers. His Lordship Dawson-Miller C. J. stated as follows :”The power given to the Court to attach a deft.’s property before judgment, is never meant to be exercised lightly or without clear proof of the existence of the mischief aimed at in the rule. (Ref. AIR 1951 Cal 156).

DIFFERENCE BETWEEN ‘ATTACHMENT PRIOR TO DECREE’ AND ‘ATTACHMENT AFTER DECREE’:
There is some difference between ‘attachment prior to decree’ and ‘attachment after decree’. Of course, if an attachment is ordered before judgment, no need to re attach the same property after decree. I will later on discuss this point of re-attachment in this article. An ‘attachment prior to decree’ is not an attachment for the enforcement of the decree, but it is a step for preventing the debtor from delaying or obstructing such enforcement when the decree subsequently passed is sought to be executed. [See Parur Central Bank Ltd. vs A.C. Chacko (1989); S.P. Vasakumar Pillai vs The Motor Accidents Claims (2008)].An attachment after decree is an attachment made for the immediate purpose of arraying the decree into execution, and if presupposes an applaication on the part of the decree holder to have his decree executed. See Sri Rammanik Vs.Tin Cowri Rai, B.L.R 63,67,68 FB (1869). It is a sort of a guarantee against decree becoming infructuous for want of property available from which the plaintiff can satisfy the decree. ( Ref: Sardar Govindrao Mahadik & Anr vs Devi Sahai & Ors, 1982 AIR 989, 1982 SCR (2) 186 ).

A PLAINTIFF SHOULD SHOW, PRIMA FACIE, THAT HIS CLAIM IS BONA FIDE AND VALID:
A defendant is not debarred from dealing with his property merely because a suit is filed or about to be filed against him. Shifting of business from one premises to another premises or removal of machinery to another premises by itself is not a ground for granting attachment before judgement. A plaintiff should show, prima facie, that his claim is bona fide and valid and also satisfy the Court that the defendant is about to remove or dispose of the whole or part of his property, with the intention of obstructing or delaying the execution of any decree that may be passed against him, before power is exercised under Order 38 Rule 5 C.P.C. Courts should also keep in view the principles relating to grant of attachment before judgment (see Prem Raj Mundra v. Md.Maneck Gazi, AIR (1951) Cal 156, for a clear summary of the principles.)

KEY FACTORS OF ORDER 38 RULE 5 CPC:
i. Where defendant may be called upon to furnish security for production of property
ii. Scope of rule
iii. Application of Order 38, Rule 5 CPC
iv. Property without jurisdiction
v. Call for security
vi. Conditional attachment
vii. Effect of attachment

Order 38, Rule 5 CPC:-
(1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him,-
– (a) is about to dispose of the whole or any part of his property, or
– (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court,
– the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.
– (2) The plaintiff shall, unless the court otherwise directs, specify the property required to be attached and the estimated value thereof.
– (3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified.
– (4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule such attachment shall be void.
Where defendant may be called upon to furnish security for production of property

Scope of rule:-
The Scheme of Order 38 and the use of the words `to obstruct or delay the execution of any decree that may be passed against him’ in Rule 5 make it clear that before exercising the power under the said Rule, the court should be satisfied that there is a reasonable chance of a decree being passed in the suit against the defendant. This would mean that the court should be satisfied the plaintiff has a prima facie case. If the averments in the plaint and the documents produced in support of it, do not satisfy the court about the existence of a prima facie case, the court will not go to the next stage of examining whether the interest of the plaintiff should be protected by exercising power under Order 38 Rule 5CPC. . (See the Hon’ble Supreme Court’s ruling in the CASE NO.: Appeal (civil) 6171 of 2001, Raman Tech. & Process Engg. Co. & Anr. Vs.Solanki Traders, DATE OF JUDGMENT: 20/11/2007; 2008 (2) SCC 302).

The Hon’ble Apex Court held in the case of Raman Tech. & Process Engg. Co. & Anr the power under Order 38 Rule 5 CPC is drastic and extraordinary power. Such power should not be exercised mechanically or merely for the asking.
Application of Order 38, Rule 5 CPC:-
Where the property is the property in suit, an injunction should be obtained :- Where the property is the property in suit, an injunction should be obtained under O.XXXIX r.1, Clause (a), which may be enforced under r.2 of that Order by imprisonment or attachment, And where the property is not that in suit, an alternative is given under r.1 of the same Order, Clause (b), where the words ‘Property’ is not confined to property within the jurisdiction, or property which is in dispute in the suit. [ Raja Goculdas Vs. Jankibai, 5 Bom. L.R. 570, at p.574 (1903), where it is pointed out that Joy narain Geeree Vs. Shibpershad,6 W.R. Misc. 1 (1866) is not applicable as Sec. 93 of the Code of 1859 was expressly limited to the property in dispute.].
No attachment on light grounds:- In 1866, in the case of Gamble Vs Bholgir [2 BHCR 146,161], it was observed that the jurisdiction to attach before judgment should be exercised with great discretion, and no court should grant such an attachment on light grounds or unless it is perfectly satisfied with trustworthy evidence that the defendant is about to dispose of his property or to remove it from the jurisdiction of the Court.
Where the most perfect good faith is wanting, the application should be rejected:- In all applications for attachment before judgment, there must be uberrina fides on the part of plaintiff, and where the most perfect good faith is wanting the application should be rejected. Ref. Ahmed Ali Vs. Gladstone Wyllie, 7 W.R 508 (1867).
Any stage of the suit :- The application can be made at any stage of the suit, but can be entertained only so long as the suit is pending. See Sri Rammanik Vs.Tin Cowri Rai, B.L.R 68 FB (1869).
Intention to obstruct or delay the execution of any decree which might be passed:- The facts mentioned in clauses (a) and (b) must have been done with the intent mentioned in the first paragraph, namely, to obstruct or delay the execution of any decree which might be passed. Ref: Ram Narain Vs. Levy, 2 Hyde, 183 (1864).
The words, ‘ about to dispose of ’:- Clause (a) says, is ‘ about to dispose of ’,etc., therefore the section does not apply where the defendant has actually parted with the properties. Ref: Soorjee Kumar Vs. Issur Chunder, Bourke, 243 (1865).
It does not refer exclusively to movable properties:- The Section does not refer exclusively to movable properties but applies to immoveable properties also. Ref: Bishambar Vs. Sukhdesi, 16 A 186 (1894).
Attachment of property covers its profits:- As has been held in Ram Coomar Vs. Gobindnath, 12 W.R. 391 (1869), attachment of property covers its profits. But if the owner is allowed to enjoy them the profits cease to be specifically liable.
In Govindrao Mahadik v. Devi Sahai, , the Hon’ble Supreme Court held at para 58 of its judgment as follows: “Attachment before judgment is levied where the Court on an application of the plaintiff is satisfied that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him (a) is about to dispose of the whole or any part of his property, or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. The sole object behind the order levying attachment before judgment is to give an assurance to the plaintiff that his decree if made would be satisfied. It is a sort of a guarantee against decree becoming infructuous for want of property available from which the plaintiff can satisfy the decree.”
– In the case of Mamidala Suresh Babu And Ors. vs Tirumalasetti Krishnamurthy and … 2006 (3) ALD 605, 2006 (3) ALT 250, the Hon’ble High Court of Andhra Pradesh, it was held that the sine qua non for an order of attachment before judgment or for an order demanding security before judgment is that the defendant is disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the possible decree in the suit. The merits of the claims of the contending parties are merely ancillary factors for consideration by the Court in arriving at a conclusion with regard to the essential requirements of Order 38, Rule 5, C.P.C. [Also See. Nowroji Pudumjee v. Deccan Bank Ltd., A. I. R. (8) 1921 Bom. 69].

Property without the jurisdiction:-

It was held under the last Code both that the section did not and did apply where the property sought to be attached was beyond the jurisdiction of the Court in which the suit was pending. A Court which cannot attach primarily in execution of its decree cannot attach in anticipation of it. It was therefore held, even under the Code of 1859, that a Court of Small Causes could not attach immoveable property under this section. It was held that the Court had jurisdiction where the property was a chose in action due from the Collector who, like the judgment-debtor, resided within the jurisdiction of the attaching court. See. Ravji Moreshwar Vs. Narayan Ballal, 3 Bom. L.R. 462 (1901).

Effect of attachment:-
If we go through the ruling of the Hon’ble Supreme Court in the case of Sardar Govindrao Mahadik & Anr vs Devi Sahai & Ors, 1982 AIR 989, 1982 SCR (2) 186, we can find answer to this question.
What is the effect of attachment before judgment ? Attachment before judgment is levied where the court on an application of the plaintiff is satisfied that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him (a) is about to dispose of the whole or any part of his property. Or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. The sole object behind the order levying attachment before judgment is to give an assurance to the plaintiff that his decree if made would be satisfied. It is a sort of a guarantee against decree becoming infructuous for want of property available from which the plaintiff can satisfy the decree. The provision in section 64 of the Code of Civil Procedure provides that where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to. such attachment, shall be void as against all claims enforceable under the attachment. What is claimed enforceable is the claim for which the decree is made. Motilal’s suit was for a money claim. It finally ended in a decree for Rs. 500 by High Court and in between the 1st appellate court had dismissed Motilal’s suit in entirety. There is nothing to show that the attachment which would come to an end on the suit being dismissed would get revived if a second appeal is filed which ultimately succeeds. In fact, a dismissal of the suit may terminate the attachment and the same would not be revived even if the suit is restored and this becomes manifestly clear from the newly added provision in sub rule (2) of rule 11 A of order XXXIII, C.P.C. which provides that attachment before judgment in a suit which is dismissed for default shall not be revived merely because by reason of the fact that the order for the dismissal of the suit for default has been set aside and the suit has been restored. As a corollary it would appear that if attachment before judgment is obtained in a suit which ends in a decree but if in appeal the decree is set aside the attachment of necessity must fail. There should be no difficulty in reaching this conclusion. (See 1982 AIR 989; 1982 SCR (2) 186; 1982 SCC (1) 237; and 1982 SCALE (1)191; and S. Noordeen vs S. Thiru Venkita Reddiar & Ors: 1996 AIR 1293, 1996 SCC (3) 289 for more knowledge as this aspect.)

– To know the effect of Order XXXVIII Rules 5, and 7 of the Code of Civil Procedure; and section 136 of the Code of Civil Procedure, it is better to go through the following rulings: Rajender Singh vs Ramdhar Singh And Ors (2001) (CASE NO.: Appeal (civil) 4394 of 1991), Bansropan Singh and Others v. Emperor, AIR (1937) Patna 603, AIR (1963) Allahabad 320,Haji Pahim Bux and Sons and Others Vs Firm Samiullah, MG. Brothers v. Shah Talchand Parswachand & Co., AIR (1963) Mys. 147, Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and another, [1990] 3 SCC 291 and the Hon’ble Apex Court approved the views expressed in Paparaju Veeraraghavayya v. Killaru Kamala Devi. AIR (1935) Mad; 193; Veerappa Thevar v.. C.S Venkatarama Aiyar, AIR (1935) Mad. 872 and Angu Pillai v. M.S.M, Kasiviswanthan Chettiar, AIR (1974) Mad. 16 followed by Rango Ramachandra Kulkarni v. Gurlingappa Chinnappa Muthal, AIR (1941) 198; Yesvant Shatikar Dunakhe V. Pyaraji Nurji Tambol, AIR (1943) Bom 145 and Kochuponchi Varughese v. Ouseph Lonan, AIR (1952) TC 467

Call for security:-

          For form of order calling for security, see Sched.I., App., F., No.5. As to whether property beyond the jurisdiction can be attached under this rule. Cause can be shown after security has been furnished to avoid attachment. Section 145 CPC applies to surieties under this rule. An appeal lies under the present section. (see O.XLIII, R.1 (q)). The words ‘produce and place at the disposal of the Court’ in Order 38, Rule 5 refer only to such property as is capable of being produced in Court.
Conditional attachment:-
It might mean an attachment to be made conditionally on the security not being furnished or cause shown by the prescribed day, or it might mean an immediate attachment of a provisional kind conditioned to become plenary if security should not furnished or cause shown according to the terms of the order. (See. Lotlikar Vs. Lotlikar at p.644)

Conclusion:-
Let me conclude this article referring to the conditions to grant attachment before judgment. In the case of Premraj Mundra vs Md. Maneck Gazi And Ors.: AIR 1951 Cal 156, the following principles are given in para 10 as to attachment before judgment.
– From a perusal of all the authorities, I think that the following guiding principles can be deduced :
– (1) That an order under Order 38, Rules 5 & 6, can only be issued, if circumstances exist as are stated therein.
– (2) Whether such circumstances exist is a question of fact that must be proved to the satisfaction of the Court.
– (3) That the Court would not be justified in issuing an order for attachment before judgment, or for security, merely because it thinks that no harm would be done thereby or that the defts. would not be prejudiced.
– (4) That the affidavits in support of the contentions of the applicant, must not be vague, & must be properly verified. Where it is affirmed true to knowledge or information or belief, it must be stated as to which portion is true to knowledge, the source of information should be disclosed, & the grounds for belief should be stated. (5) That a mere allegation that the deft. was selling off & his properties is not sufficient. Particulars must be stated.
– (6) There is no rule that transactions before suit cannot be taken into consideration, but the object of attachment before judgment must be to prevent future transfer or alienation.
– (7) Where only a small portion of the property belonging to the deft. is being disposed of, no inference can be drawn in the absence of other circumstances that the alienation is necessarily to defraud or delay the pltf’s claim.
– (8) That the mere fact of transfer is not enough, since nobody can be prevented from dealing with his properties simply because a suit has been filed: There must be additional circumstances to show that the transfer is with an intention to delay or defeat the pltf.’s claim. It is open to the Court to look to the conduct of the parties immediately before suit, & to examine the surrounding circumstances, & to draw an inference as to whether the deft. is about to dispose of the property, & if so, with what intention. The Court is entitled to consider the nature of the claim & the defence put forward.
– (9) The fact that the deft. is in insolvent circumstances or in acute financial embarrassment, is a relevant circumstance, but not by itself sufficient.
– (10) That in the case of running businesses, the strictest caution is necessary & the mere fact that a business has been closed, or that its turnover has diminished, is not enough.
– (11) Where however the deft. starts disposing of his properties one by one, immediately upon getting a notice of the pltf.’s claim, &/or where he had transferred the major portion of his properties shortly prior to the institution of the suit & was in an embarrassed financial condition, these were grounds from which an inference could be legitimately drawn that the object of the deft. was to delay and defeat the pltfs’. claim.
– (12) Mere removal of properties outside jurisdiction, is not enough, but where the deft. with notice of the pltfs’. claim, suddenly begins removal of his properties outside the jurisdiction of the appropriate Court, & without any other satisfactory reason, an adverse inference may be drawn against the deft. Where the removal is to a foreign country, the inference is greatly strengthened.
– (13) The deft. in a suit is under no liabilty to take any special care in administering his affairs, simply because there is a claim pending against him. Mere negect, or suffering execution by other creditors, is not a sufficient reason for an order under Order 38 of the Code.
– (14) The sale of properties at a gross undervalue, or benami transfers, are always good indications of an intention to defeat the pltf’s. claim. The Court must however be very cautious about the evidence on these points & not rely on vague allegations.
– In the judgment reported in 2005 (2) MLJ 417, the Hon’ble Madras High court has held as follows:
– “16. O.38, Rule 5, C.P.C. is a drastic order, which interferes with the right of the parties to deal with his property/money. Before passing an order of attachment before judgment, the Court must be satisfied on the compliance ofO.38, Rule 5, C.P.C. by readingO.38, Rule 5, C.P.C., it is clear that the essential requirements must be proved to the satisfaction of the Court as pointed out in the decision reported in Renox Commercials Limited. v. Inventa Technologies Private Limited Renox Commercials Limited. v. Inventa Technologies Private Limited Renox Commercials Limited. v. Inventa Technologies Private Limited A.I.R. 2000 Mad.213:,
– (i) the defendant is about to dispose of his property or is about to remove the property from the jurisdiction of the Court, and
– (ii) the defendant is intending to do so with a view to causing obstruction to, or delaying the execution of any decree that may be passed against the defendant; and
– (iii) The plaintiff should state precisely the grounds on which the belief or apprehension can be entertained, that the defendant is likely to dispose of, or remove the property.
– Thus, the plaintiff precisely state the grounds on which plaintiff bank has entertained the plea or apprehension that the defendant is likely to dispose or remove the property.” (This was observed by the the Hon’ble Madras High court in 2014 in the case of R.Ramesh vs R.Raveender.)

Some important judgments of the Hon’ble High Court of Andhra Pradesh as to the subject matter of ‘Attachment before Judgment’.
1) Katari Ratna Rani vs Velagapudi Rama Rao And Ors, 2003 (6) ALT 79.
2) Mamidala Suresh Babu And Ors. vs Tirumalasetti Krishnamurthy, 2006 (3) ALT 250
3) State Of A.P. vs Prakash, 2007 (1) ALD 133, 2007 (1) ALT 383
4) Sri Laxmi Cloth Stores, … vs Ratna And Co., Machilipatnam, 1999 (6) ALT 681
5) Rama Murthy And Ors. vs Srinivas Corporation General , AIR 1989 AP 58
6) S.P. V. Babu v. Varalakshmi Finance Corporation, 1996 (4) ALD 453,
7) Union Bank Of India, Visakapatnam’s case, AIR 1982 AP 408
8) Duvvuru Siva Kumar Reddy vs Malli Srinivasulu, 2006 (1) ALT 570
9) Allu Appa Rao vs Siriki Bapu Naidu And Ors, 2006 (5) ALD 240
10) Gosu Venkata Sesha Reddy And Anr. vs Valluru Krishnaiah, 2005 (4) ALT 238
11) Ananthula Buchiramulu vs Sakinala Janaki Ramaiah, 2004 (2) ALD 730
12) Pasupulati Seshanna vs Epparala Balaiah (Died) Per Lrs, 2006 (3) ALD 511

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3 Comments (+add yours?)

  1. Y Vittal
    Feb 10, 2016 @ 11:53:46

    thankyou

    On Sun, Oct 18, 2015 at 10:51 PM, Articles On Law wrote:

    > Author Y.Srinivasa Rao Judge posted: “INTRODUCTION:- ‘An attachment before > judgment is to enable the plaintiff to realize the amount of the decree, > supposing a decree eventually made, from the defendant property’. This is > the object of the Order 38 rule 5 of The Civil Procedure Code,1908 (he” >

    Reply

  2. Kanimozhi
    Apr 20, 2016 @ 09:49:37

    A very well written article. It was very useful for me, a practising advocate, for a case of mine. Thank you very much, Keep up the good work.

    Reply

  3. Trackback: ATTACHMENTS IN EXECUTION PROCEEDINGS | Articles On Law

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