Attachment Before Judgment: Drastic and Extraordinary Faculty, Envisioned to Succour Justice Dispensation

The attachment before the judgment is an encumbrance preventing the owner of the property to create encumbrance, sale or create charge thereon¹.

 

Order of the Civil Procedure Code, 1908 (“CPC/Code”) embraces an indispensable faculty of courts to pass orders/directions, inter alia, intended to prevent the ends of justice from being defeated by unscrupulous litigant/defendant in a civil suit/proceeding. As per Rule 5 of Order 38 CPC, court is empowered to direct a 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.

However, such order(s)/direction(s) may be passed by court, only on its satisfaction, by an affidavit or otherwise, that the defendant, “with an intent to obstruct or delay the execution of any decree that may be passed against him”, is either about to dispose of the whole or any part of his property or is about to remove the whole or any part of his property from the local limits of jurisdiction of the Court. Significantly, the consequences of defendant’s non-compliance with the orders/directions issued under Order 38 Rule 5 CPC are provided under Rule 6 of the said Order, which may be, inter alia, in the form of attachment of the property of the defendant, as may be specified under the plaintiff’s application/affidavit under Order 38 Rule 5 of the Code. Notably, the Supreme Court in Sardar Govindrao Mahadik v. Devi Sahai², while dealing with the provisions under Order 38 CPC, inter alia, observed: (SCC p. 268, para 58)

 

58. 58. 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.

Similarly, as per the High Court of Bombay³, [t]he object of the provision of Order 38 Rule 5 is to prevent any attempt on the part of the defendant to defeat the realisation of the decree that may be passed against the defendant.

 

Undoubtedly, the safeguards preventing the abuse and mis-employment of the said provisions are inherent and explicit in the wordings thereof. However, notwithstanding the same, the provisions under Order 38 Rules 5 and CPC are, regrettably, often perverted to augment the plight of litigants/defendants, wrongfully entangled in unfair and unjust legal proceedings, on one hand and to obstruct the process of expeditious resolution of disputes on the other hand.

Significantly, one of the crucial safeguards under Order 38 Rule 5 CPC is the requirement of the applicant/plaintiff to explicitly declare on an affidavit, the grounds on which it is believed or apprehended that the defendant is likely to dispose of or remove his property. However, in this regard, the High Court of Calcutta in Premraj Mundra v. Md. Maneck Gazi⁴, cautioned that the,

 

18. 18. (4) … affidavits in support of the contentions of the applicant, must not be vague, and 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, and the grounds for belief should be stated.

 

Additionally, the Hon’ble Court observed that in order for the plaintiff to succeed in getting an order/direction under Order 38 Rule 5 CPC, mere averment and proof of the factum of transfer of property by defendant is insufficient. On the contrary, it was ruled that there must be, “additional circumstances to show that the transfer is with an intention to delay or defeat the plaintiff’s claim”. Notably the Hon’ble Madras High Court in N. Pappammal v. L. Chidambaram⁵ further clarified that a mere mechanical repetition/reproduction of the provisions under Order 38 Rule 5 CPC or the language used therein: (SCC OnLine Mad para 6)

 

6. 6. … without any basic strata of truth underlying the allegation or vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the court totally unsupported by particulars …

 

would not constitute an adequate compliance with the said provision. In fact, the Courts⁶ have persistently avowed that the affidavit filed in support of any such prayer/application by the petitioner must necessarily declare the source of information or apprehension regarding the defendant’s removal/disposition of his property and that, “[u]nless the source is disclosed the Court should not hasten to pass an order under Order 38 Rule 5 CPC.” At the [] same time, Order 38 Rule 5(2) CPC makes it incumbent on the plaintiff to explicitly, specify the property required to be attached and the estimated value thereof, “unless the Court otherwise directs.”

 

At the same time, a perusal of the provisions under Order 38 Rule 5 CPC would make manifestly clear that the order of attachment may be passed by the courts only after issuance of notice to the defendant, inter alia, seeking furnishing of security⁷ or demonstrating the reasons for not complying with such requirement, as envisioned under sub-rule (1) of the said provision. In fact, sub-rule (4) of Order 38 Rule 5 CPC, clearly enunciates that in case an order of attachment is made, “without complying with the provisions of sub-rule (1) of this Rule, such attachment shall be void”. However, sub-rule (3) of the said provision clarify that till the final determination on/conclusion of proceedings of any such application/prayer for attachment, made on behalf of the plaintiff, courts are well within their powers to, “direct the conditional attachment of the whole or any portion of the property”, as specified by the plaintiff-applicant in his application/affidavit/prayer for attachment. Notably, the High Court of Orissa in Sk. Sahid v. Tehera Husna⁸, while dealing with the scope of such conditional order(s) of attachment, inter alia, observed: (SCC OnLine Ori para 11)

 

11. 11. … the conditional order of attachment is not an absolute attachment. This order of conditional attachment would be operative during the intervening time i.e. between issuance of notice and appearance of the defendant.

 

In fact, in the instant case, the Hon’ble Court while acknowledging that the object of the provisions under Order 38 Rule 5(4) CPC is to protect the interest of the defendant, so that no order of attachment can be passed without complying with the provisions under sub-rule (1) thereof, noted: (Sk. Sahid case⁸, SCC OnLine Ori para 11)

11. 11. … at the same time to protect the interest of the plaintiff an order under Order 38 Rule 5 sub-rule (3) can be passed along with issuance of notice under Order 38 Rule 5, sub-rule (1) CPC, otherwise the intention and spirit of Order 38 Rule 5 would be defeated.

 

Accordingly, as per Order 38 Rule 6(1) CPC it is only 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”. In the alternate, where a defendant⁹,

 

6. 6. … shows sufficient cause why he should not furnish security, or if he furnishes security, attachment shall not be ordered and if there is already a conditional attachment under Rule 5, that has to be vacated.

Considerably, while highlighting the exceptional nature of the faculty under Order 38 Rule 5 CPC, it has been recurrently cautioned by courts that the direction/order of attachment before judgment is not a process to be adopted as a matter of course. In fact, it is settled law¹⁰ that while exercising such jurisdiction, “utmost caution and circumspection should guide the Court.” Significantly, the Supreme Court in Raman Tech. & Process Engg. Co. v. Solanki Traders¹¹, while terming the power under the said provision as drastic and extraordinary, urged that the same, “should not be exercised mechanically or merely for the asking. It should be used sparingly and strictly in accordance with the Rule.” The Hon’ble Court, at the same time, opined that the purpose of the provisions under Order 38 Rule 5 CPC is not to convert an unsecured debt into a secured debt. Accordingly, it was ruled that any such attempt by the plaintiff, “to utilise the provisions of Order 38 Rule 5 as a leverage for coercing the defendant to settle the suit claim should be discouraged”. Therefore, in order to ensure that the provisions under Order 38 Rule 5 CPC are not abused¹², “[t]here has to be some prima facie material on the basis of which the Court could satisfy itself that the conditions requisite for making an order of attachment before judgment.” Similarly, in this regard, the High Court of Karnataka in M.R. Lakshmanappa v. Ramachandra Bhat¹³, inter alia, observed: (SCC OnLine Kar para 7)

 

7. 7. … before exercising the power, the court should be satisfied that there is reasonable chance of, a decree being passed in the suit against the defendant. That means, the court should be satisfied that the plaintiff has a prima facie case. It is only after recording that, there is prima facie case, the court has to examine whether the interest of the plaintiff should be protected by exercising the power under Rule 5 of Order 38 CPC.

 

In fact, as per the Hon’ble Court, mere establishment of a prima facie case would not suffice the pursuit of the plaintiff in obtaining an order of attachment before judgment, unless it is also established that the defendant is attempting to remove or dispose of his assets, “with an intention to defeat the decree that may be passed against him”. Clearly, the exercise of jurisdiction under Order 38 Rule 5 CPC necessitates adherence of utmost caution by courts and the powers envisaged therein cannot be exercised in a casual or mechanical manner. At the same time, courts must be cautious of the fact that the order of attachment before judgment does not, automatically, affect¹⁴, “the rights, existing prior to the attachment, of persons not parties to the suit, nor bar any person holding a decree against the defendant from applying for the sale of the property under attachment in execution of such decree”. In [] fact, in this regard, the Supreme Court¹⁵ went on to the extent to hold that a sale deed, executed prior to the attachment before judgment, however, registered subsequently, “will prevail over attachment before judgment.”

 

Undoubtedly, the provisions under Order 38 Rules 5 and 6 CPC place no embargo on courts to direct attachment of property, located only with the jurisdiction of courts where such application/prayer is made on behalf of the plaintiff. In fact, it is trite law¹⁶ that an order to attachment before judgment could be of any property; within or without the jurisdiction of the Court. However, where an order of attachment of properties located outside the jurisdiction of a particular court is passed, in terms of the provisions of Section 136¹⁷ read with Order 38 Rule 7¹⁸ CPC, such orders are usually transmitted to the District Court within the local limits of whose jurisdiction such an order is sought to be executed. However, the Hon’ble Supreme Court in Rajender Singh v. Ramdhar Singh¹⁹ clarified that the failure, if any, on the part of the court which issued the attachment order in sending the attachment order and the connected papers to the District Court and instead sending the same to the subordinate court/Judge, directly, within whose jurisdiction the property sought to be attached is situated, will not invalidate the attachment order as such. As per the Hon’ble Court: (SCC p. 220, para 13)

 

13. 13. … Section 136 only lays down the procedure in case the property is situate outside the territorial jurisdiction of the court. The District Court to which such order of attachment is sent is only effecting the attachment and the power under Order 38 Rule 5 is not as such exercised by that court.

 

Accordingly, it was clarified that in case any objection is raised regarding the non-compliance with the procedure under Section 136 CPC, inter alia, regarding the transmission of attachment order to/through the District Magistrate at jurisdiction concerned, “the court can issue appropriate direction to cure the defect in the procedure. [However, in case] such an objection was not raised within a reasonable time, we do not think that the attachment order itself could be treated as invalid.”

 

Remarkably, while passing an order/direction in terms of Order 38 Rules 5 and 6 CPC, courts must be cognizant of the fact that such order pertains to the attachment before judgment, which is in stark variance to an order passed by an executing court in terms of the provisions under Order 21 Rule 54 [] CPC. In this regard, the Hon’ble Supreme Court in Kerala State Financial Enterprises Ltd. v. Official Liquidator²⁰, while noting the incongruity in the said provisions, inter alia, observed: (SCC p. 714, para 14)

 

[a]n order of attachment before judgment passed under Order 38 seeks to safeguard the interests of the plaintiff so that in the event a decree is passed, the same stands satisfied. On the other hand, the essential parties (sic purpose) of Order 21 is to see that the process of court is not defeated once execution starts, …

 

Similarly, as per the High Court of Kerala²¹: (M.K. Govindankutty Menon case²¹, SCC OnLine Ker para 6)

[a]ttachments before judgment are issued with the objective of preserving the property belonging to the defendant concerned so that in the event of a positive decree being passed in favour of the plaintiff, he will be able to proceed against that property for securing the fruits of the decree. While issuing such attachments, the Court only ensures that the defendant does not dispose of the property pending suit. … On the contrary, attachment in execution is a step in execution and such attachments are often readily granted and such attachments are not liable to be lifted on furnishing security.

 

Pertinently, even prior to the said decisions, the High Court of Punjab and Haryana in Bhagwan Dass v. Santokh Singh²², noted: (SCC OnLine Ker para 4)

4. 4. … attachment before judgment cannot be an attachment in execution of a decree which does not exist. It can only become an attachment in execution of a decree after that decree has been passed and after an application to execute such a decree has been made.

 

Understandably, the distinction in these two species of attachments lies not only in relation to the purposes thereof, rather, also at the stages at which these orders may be passed by the courts.

 

Simultaneously, while exercising their jurisdiction for passing an order of attachment before judgment, courts must also be cognizant of the variance in the scope of their powers under Order 38 Rules 5 and 6 and that under Order 39 of the Code. Though, a perusal of the said provisions would strikingly demonstrate that variance in the object and reasons for the exercise of jurisdiction in the said to provisions, however, regrettably, incertitude, more often than not, surfaces in their employment/invocation by courts. In this regard, the Supreme Court in Vareed Jacob v. Sosamma Geevarghese²³, unquestionably declared, “[t]he scheme of Order 38 is different from Order 39 or Order 40”. Further, the Hon’ble Calcutta High Court in Prabha Surana [] v. Jaideep Halwasiya²⁴, while noting the distinction between the said provisions, inter alia, observed: (SCC OnLine Cal paras 8-9)

8. 8. … Order 39 Rule 1 contemplates temporary relief to a petitioner on an imminent risk to the property in dispute in the suit being wasted by certain acts of the respondent. … the Court is empowered to pass orders to prevent the property from being dealt with in such manner or in any way which is prejudicial to the petitioner until the suit is disposed of or until further orders are passed by the Court. …
9. 9. Order 38 Rule 5 applies at a later stage in a suit where the petitioner seeks to execute a decree. The section, by its very description, applies to an order which lends finality to the suit and aims at preserving the state of affairs after the interim stage in the suit is over.

 

At the same time, as per the Hon’ble Court, the distinction under the provisions under Order 38 Rule 5 and Order 39 Rule 1 CPC also lies in the nature of property involved, being the property of the defendant in the former case, in variance with, the property under dispute in the latter case. However, it may be noted that this “so-called” distinction in the nature of the properties involved in under Order 38 and Order 39 CPC, seems to be premised only on an appreciation of sub-rules (a)²⁵ and (c)²⁶ of Order 39 Rule 1 CPC and fails to take into consideration the provision under sub-rule (b)²⁷ of the said provision. Notably, perusal of sub-rule (b) would explicitly demonstrate that the property envisaged therein is the property of a defendant, which may not always be the property under dispute. Relevantly, the said distinction was noted by the Hon’ble Calcutta High Court in one of its earlier decision²⁸, inter alia, under an observation: (Harleen Jairath case²⁸, SCC OnLine Cal para 35)

 

35. 35. While Order 39 Rules 1(a) and 1(c) refer to the property in dispute, Order 39 Rule 1(b) does not put any such restriction as it uses the phrase ‘to remove or dispose of his property with a view to divert his creditor.’ The property contemplated under Order 39 Rule 1(b) may not be the property in dispute in the suit. An injunction can also be granted by the court to restrain a threatened removal or disposal of property with a view to defrauding creditors.

 

However, even under such circumstances, the Hon’ble Court while appreciating the variance in the language/terms used under Order 38 Rule 5²⁹ [] and Order 39 Rule 1(b)³⁰, held: (Harleen Jairath case²⁸, SCC OnLine Cal para 38)

38. 38. There is distinction between the provisions of Order 38 Rule 5 and Order 39 Rule 1(b) in that the former is intended to prevent a decree that may be passed being rendered infructuous while the latter is invoked where the defendant threatens to dispose of his property with a view to defraud creditors.

 

Conclusively, the jurisdiction of court to pass an order/direction in the form of attachment before judgment serves a sacrosanct purpose of ensuring the ultimate decree which may be passed in favour of the plaintiff does not transmute into mere words on paper. In fact, the provisions under Order 38 CPC tend to curb the tendency of devious litigants from playing foul with the aggrieved party and courts/law, alike. Therefore, while exercising its jurisdiction under Order 38 Rule 5 CPC, it becomes extremely important that a court is vigilant of the scope and degree to which such jurisdiction may be exercised. Needless to reiterate, the provisions under Order 38 CPC equip the courts with ample safeguards to prohibit its misuse by disreputable litigants. At the same time, there is no dearth of precedents wherein the courts have painstakingly scrutinised and enumerated the scope, manner and form of courts’ exercise of jurisdiction under Order 38 Rules 5 and 6 of the Code. Consequently, it is only upon the courts to be cognizant of law and precedents while delving into any such prayer/request made before them and post harmonising the conflicting claims/contentions of parties to pass appropriate orders, to succour justice dispensation.

 

---

**The article has been published with kind permission of Eastern Book Company. Cite as (2021) 7 SCC J-43

^† Advocate, Supreme Court.

¹ S. Noordeen v. V.S. Thiru Venkita Reddiar, (1996) 3 SCC 289, p. 292, para 5.

² (1982) 1 SCC 237.

³ Subhash Bhimashankar Kalase v. SBI, 2004 SCC OnLine Bom 700, para 16: (2005) 2 Mah LJ 878.

⁴ 1951 SCC OnLine Cal 20, para 18: AIR 1951 Cal 156.

⁵ 1983 SCC OnLine Mad 151 : AIR 1984 Mad 70.

⁶ See, Palghar Rolling Mills (P) Ltd. v. Visveswarayya Iron and Steel Ltd., 1985 SCC OnLine Kar 288 : ILR 1985 Kar 3989.

⁷ See, Onkar Mal Mittal v. State Bank of Patiala, 1991 SCC OnLine P&H 748 : AIR 1992 P&H 104.

⁸ 2000 SCC OnLine Ori 72 : AIR 2001 Ori 6.

⁹ See, Vasu v. Narayanan Nambooripad, 1961 SCC OnLine Ker 42, para 6: AIR 1962 Ker 261.

¹⁰ See, Renox Commercials Ltd. v. Inventa Technologies (P) Ltd., 2000 SCC OnLine Mad 94 : AIR 2000 Mad 213.

¹¹ (2008) 2 SCC 302.

¹² See, Saraswat Coop. Bank Ltd. v. Chandrakant Maganlal Shah, 2001 SCC OnLine Bom 583, para 24: AIR 2002 Bom 203.

¹³ 2008 SCC OnLine Kar 14 : ILR 2008 Kar 1157.

¹⁴ See, Order 38 Rule 10 CPC.

¹⁵ Hamda Ammal v. Avadiappa Pathar, (1991) 1 SCC 715.

¹⁶ See, Kanhya Ram v. Firm Dina Nath Hardial Mall, 1926 SCC OnLine Lah 77 : AIR 1926 Lah 330.

¹⁷ Section 136 CPC provides the procedure where person to be arrested or property to be attached is outside district. Further, refer to Mohit Bhargava v. Bharat Bhushan Bhargava, (2007) 4 SCC 795 wherein, the Supreme Court noted: (SCC p. 800, para 8)

8. … Section 136 of the Code provides for an order of attachment in respect of a property outside the jurisdiction of the court and sending the order of attachment to the District Court within whose local limits the property sought to be attached is situate, as provided for therein.

¹⁸ 7. Mode of making attachment.—Save as otherwise expressly provided, the attachment shall be made in the manner provided for the attachment of property in execution of a decree.

¹⁹ (2001) 6 SCC 213.

²⁰ (2006) 10 SCC 709.

²¹ M.K. Govindankutty Menon v. Reena, 2007 SCC OnLine Ker 50 : AIR 2007 Ker 254.

²² 1968 SCC OnLine P&H 43 : AIR 1968 P&H 461.

²³ (2004) 6 SCC 378.

²⁴ 2021 SCC OnLine Cal 2480, HMJ Moushumi Bhattacharya.

²⁵ 1. (a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree.

²⁶ 1. (c) that the defendant threatens to dispossess the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit.

²⁷ 1. (b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors.

²⁸ Harleen Jairath v. Prabha Surana, 2019 SCC OnLine Cal 2372 : (2019) 4 ICC 417.

²⁹ See, the use of words, “defendant, with an intent to obstruct of delay…” under Order 38 Rule 5(1) CPC.

³⁰ See, the use of words, “defendant threatens, or intents to remove…. with a view to defraud his creditors,” under Order 39 Rule 1(b) CPC.

²⁸ Harleen Jairath v. Prabha Surana, 2019 SCC OnLine Cal 2372 : (2019) 4 ICC 417.