ATTACHMENT BEFORE JUDGMENT: ORDER 38 RULES 5-12
1. What is the object of the interim order of attachment before Judgment? 2. What are the grounds necessary for issuing the order of attachment before Judgment? When can such order be passed? Whether the court has ample power to direct conditional attachment?
3. What is the mode of attachment? Which properties, if any, are exempted from attachment? 4. Whether rights of persons, existing prior to the attachment, are affected by attachment, if they are not parties to the suit?
5. Whether it is necessary to apply for fresh attachment of the property in execution where the property is under attachment, and a decree is subsequently passed in favour of the plaintiff? 6. What would be the effect of such attachment?
7. Can attachment be withdrawn at any stage?
8. Whether order of attachment before judgment is appealable or revisable? 9. What is the remedy for wrongful attachment?
RULES 5-13 OF ORDER 38 deal with attachment before judgment. The primary object of attachment before judgment is to prevent any attempt on the part of the defendant to defeat the realisation of the decree that may be passed against him. (Sardar Govindraov. Devi Sahai, (1982) 1 SCC 237: AIR 1982 SC 989.]
GROUNDS: RULE 5
Where, AT ANY STAGE OF A SUIT, the court is satisfied, by AFFIDAVIT OR OTHER WISE, 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, of 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. [R. 5(1).
Where the defendant fails to show cause why he should not furnish security, or fails to furnish the security required, within the time fixed by the court, the court may order that the property specified, or such portion thereof as appears sufficient to satisfy any decree which may be passed in the suit, be attached. [R.6(1).]
The plaintiff shall, unless the court otherwise directs, specify the property required to be attached and the estimated value thereof. [R.5(2).]
The court may also in the order direct CONDITIONAL ATTACHMENT and the estimated value thereof .[R.5(3).]
If an order of attachment is made without complying with the provisions of Rule 5(1), such attachment shall be void. .[R. 5(4).
The provisions of Order 21 (execution proceedings) will also apply to attachment before judgment. [R.11 -A.]
PRINCIPLES
1. The remedy of attachment before judgment is an EXTRAORDINARY REMEDY and must be exercised SPARINGLY AND STRICTLY in accordance with law and with utmost care and caution so that it may not become an engine of oppression.
2. Before an order of attachment can be made, the court must be satisfied about the following two conditions:
i. that the defendant is about to dispose of the whole or any part of his property; and
ii. that the disposal is with the intention of obstructing or delaying the execution of any decree that may be passed against him.
3. An order of attachment ought not to be imposed upon an individual except upon clear and convincing proof that the order is needed for the protection of the plaintiff.
4. This process is never meant as a weapon for the plaintiff to coerce the defendant to come to terms. Hence, utmost caution and circumspection should guide the court.
5. In BHARAT TOBACCO CO. V. MAULA SAHEB, [AIR 1980 Guj 202: (1981) 22 Guj LR 343.] the High Court of Gujarat has rightly observed, "In order to invoke the jurisdiction of the court under Order 38 Rule 5 of the Code, it is not sufficient to reproduce the language of that rule but the party seeking the order must establish by affidavit or otherwise facts which would satisfy the court that the opposite party is about to dispose of the whole or any part of his property with a view to obstructing or delaying the execution of the decree that may be passed in the suit. It is the duty of the court to take care to see that it is not used as an instrument to coerce the opposite party to settle the matter with the party armed with an order of attachment before judgment on the latter's terms! [Bharat Tobacco Co. v. Maula Saheb, AIR 1980 Guj 202 at p. 204: (1981) 22 Guj LR 343 at p. 345.] Important judgement -Chandrika Prashad Singh v. Hira Lal, AIR 1924 Pat 312: 73 IC 721.] are worth quoting:
In the leading case of PREMRAJ MUNDRA V. MOHD. MANECK GAZI, [AIR 1951 Cal 156: 87 Cal LJ 41.] Justice Sinha had deduced the following principles relating to passing of an order of attachment before judgment:
1. That an order under Order 38, Rules 5 and 6 can only be issued if circumstances exist as are stated therein.
2. Whether such circumstances exist is a question of fact which 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 de fendants would not be prejudiced.
4. That the affidavits in support of the contentions of the applicant must not be vague, and must be properly verified. Where it is affirmed as 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, and the grounds for belief should be stated.
5. That a mere allegation that the defendant was selling off his properties is not sufficient. Particulars must be stated.
6. There is no rule that transactions before a 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 defendant 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 plaintiff'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 plaintiff's claim. It is open to the court to look to the conduct of the parties immediately before the suit and to examine the surrounding circumstances and to draw an inference as to whether the defendant is about to dispose of the property, and if so, with what intention. The court is entitled to consider the nature of the claim and the defence put forward.
9. The fact that the defendant 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 and the mere fact that a business has been closed, or that its turnover has diminished, is not enough.
11. Where, however, the defendant starts disposing of his properties one by one, immediately upon getting notice of the plaintiff's claim, and/or where he had transferred the major portion of his properties shortly prior to the institution of the suit, and was in an embarrassed financial condition, these were grounds from which an inference could legitimately be drawn that the object of the defendant was to delay and defeat the plaintiff's claim.
12. MERE REMOVAL OF PROPERTIES OUTSIDE the jurisdiction of the court concerned is not enough, but where the defendant, with notice of the plaintiff's claim, suddenly begins removal of his properties outside the jurisdiction of the appropriate court, and without any satisfactory reason, an adverse inference may be drawn against the defendant. Where the removal is to a foreign country, the inference is greatly strengthened.
13. The defendant in a suit is under no liability to take any special care in administering his affairs, simply because there is a claim pending against him. Mere neglect 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 benamitransfers, are always good indications of an intention to defeat the plaintiff's claim. The court must, however, be very cautious about the evidence on these points and not rely on vague allegations. [Premraj Mundra v. Mohd. Maneck Gazi, AIR 1951 Cal 156 at p. 160-61: 87 Cal LJ 41.]
CONDITIONAL ATTACHMENT
The court has ample power to direct conditional attachment. [R.5(3).] No prior notice is necessary in such cases. It is, however, open to the defendant and his right to show cause against attachment has not been affected. Conditional order of attachment, however is not by itself attachment. Unless the property is actually attached in accordance with the procedure prescribed by the Code, the order is ineffective and no attachment can be made of property.
MODE OF ATTACHMENT: RULE 7
Rule 7 enacts that attachment shall be made in the manner provided for ATTACHMENT OF PROPERTY IN EXECUTION OF A DECREE.
EXEMPTION FROM ATTACHMENT: RULE 12
The court cannot order attachment or production of any AGRICULTURAL PRODUCE IN POSSESSION OF AN AGRICULTURIST. [R. 12.]
RIGHTS OF THIRD PARTY: RULE 10
An attachment before judgment does not affect the rights of persons, existing prior to the attachment, if they are not parties to the suit.[R. 10.]
ADJUDICATION OF CLAIMS: RULE 8
Rule 8 provides that any claim preferred to the property, attached before judgment, shall be adjudicated upon in the manner provided for adjudication of claims to property attached in execution of a decree for the payment of money.
REATTACHMENT IN EXECUTION: RULE 11
Where the property is under attachment, and a decree is subsequently passed in favour of the plaintiff, it is NOT NECESSARY to apply for fresh attachment of the property in execution.[R. 11.]
The provisions of Order 21 applicable to an attachment made in execution of a decree will also apply to an attachment before judgment continuing after judgment. [R. 11-A.]
EFFECT OF ATTACHMENT
The plaintiff, however, does not get title by effecting attachment before judgment. [Sardar Govindraov. Devi Sahai, Firm Amin Chand Hakatn Chand v. Noshah' Begum, AIR 1954 Punj 235.]
WITHDRAWAL OF ATTACHMENT: RULE 9
An order of attachment will be withdrawn if the defendant furnishes security or the suit is dismissed.[R. 9.]
APPEAL
An order passed under Order 38 Rule 5 is appealable. [Or. 43 R. l(q).]
REVISION
An order granting or refusing attachment before judgment is a case decided within the meaning of Section 115 of the Code and is revisable by the High Court. [International Air Transport Assn. v. Hansa Travels (P) Ltd., AIR 1998 Ker 80.]
WRONGFUL ATTACHMENT
A suit for damages is maintainable for wrongful attachment of property.
ATTACHMENT ON INSUFFICIENT GROUNDS: SECTION 95
Where in any suit in which an order of attachment of the property of a defendant has been obtained on insufficient grounds by the plaintiff, or where the suit of the plaintiff fails and it appears to the court that there was no reasonable or probable ground for instituting it, on application being made by the defendant, the court may order the plaintiff to pay as compensation such amount, not exceeding fifty thousand rupees, as it deems reasonable to the defendant for the expense or injury including injury to reputation caused to him. [S. 95]
