EXAMINE THE UTILITY OF ATTACHMENT BEFORE JUDGEMENT
INTRODUCTION:
This
project deals with the ATTACHMENT BEGORE JUDGEMENT. In this project I have
dealt with the various cases of attachment by detailed research and thorough
study from various sources.
I
have included the original cases related to this topic, the bare act and a wide
subject matter for the better understanding of the attachment.
ATTACHMENT:
The seizing of money or property prior to getting
a judgment in court, in contemplation that the plaintiff will win at trial
(usually in simple cases of money owed) and will require the money or property
to cover (satisfy) the judgment. The Supreme Court has ruled that an attachment
may be made only after a hearing before a judge in which both sides can argue
the danger that the party being sued (defendant) is likely to leave the area or
otherwise avoid probable payment. A temporary attachment may be allowed by
court order without both parties being present based on a declaration of the
party wanting the attachment that there is clear proof that the defendant is
going to flee. The court must also require a bond to cover damages to the
defendant if the attachment proves not to have been necessary. Before the hearing
requirement, pre-judgment attachments were common in which automobiles and bank
accounts were held by the sheriff merely upon the person seeking the attachment
posting a bond and the plaintiff getting a writ of attachment.
PURPOSE:
Originally,
the main purpose of attachment was to coerce a defendant into appearing in
court and answering the plaintiff's claim. The court's order pressured the
sheriff to take the defendant's property into custody, depriving the individual
of the right to use or sell it. If the defendant obstinately refused to appear,
the property could be sold by the court to pay off any monetary judgment
entered against him or her. Today, the process of attachment has two functions,
as a jurisdictional predicate and as a provisional remedy.
Attachment
of property within reach of the court's jurisdiction gives the court authority
over the defendant to the extent of that property's value even if the court
cannot reach the defendant personally. For example, a court must have some
connection with the defendant in order to require that person to appear and
defend himself or herself in an action before that court.
A
variety of different facts are sufficient to give the court jurisdiction over
the defendant's person; for example, the defendant's residence within the
state, the defendant's commission of a wrongful act within the state, or the
defendant's doing business within the state.
If none
of these kinds of facts exist to give the court jurisdiction over the
defendant's person, the court may nevertheless assert its authority over
property that the defendant owns within the state. In such a case, the
plaintiff cannot recover a monetary judgment for an amount larger than the
value of the property nor can the individual reach the defendant's property
outside the state, but this sort of jurisdiction, called jurisdiction in rem or
quasi in rem, may be the best the plaintiff can get. Before the court can
exercise jurisdiction over the property, the plaintiff must obtain a writ of
attachment to bring it into custody of the court.
Attachment
may also be a provisional remedy, that is, relief that temporarily offers the
plaintiff some security while pursuing a final judgment in the lawsuit. For
example, a plaintiff who has good reason to believe that the person he or she
is suing is about to pack up and leave the state will want the court to prevent
this until the plaintiff has a chance to win the action and collect on the
judgment. The plaintiff can apply for an order of attachment that brings the
property into the custody of the court and takes away the defendant's right to
remove it or dispose of it.
Attachment
is considered a very harsh remedy because it substantially interferes with the
defendant's property rights before final resolution of the overall dispute. For
this reason, there have been a number of challenges to the attachment
procedures in different states, and the Supreme Court has established standards
that are the least that due process requires. For example, for centuries
attachment of a defendant's property was granted ex parte, that is, without
first allowing the defendant to argue against it. The theory was that any
defendant was likely to leave the state if he or she knew beforehand that his
or her property was about to be attached. This collides with the individual's
right to be free of interference with his or her rights unless the individual
is given notice and an opportunity to be heard in the matter. States,
therefore, now generally provide that notice must be given to the defendant before
the seizure of property whenever practical, and the defendant must be given a
hearing promptly after the seizure. Furthermore, a court cannot sanction a
seizure that is made without a court order of attachment. To obtain the order,
the plaintiff must swear to a set of facts that justify such a drastic
interference with the defendant's property.
PROCESS:
The process of attachment varies
in detail from state to state, but it is not overly complicated. The plaintiff
submits an application to the court describing the Cause of
Action against the defendant
and the grounds for seeking an attachment. The plaintiff may have to include
documents or other evidence to support the claim that he or she will probably
win the lawsuit, and the individual usually is required to make the application
under oath. States generally require that the plaintiff post a bond or
undertaking in an amount sufficient to secure payment of damages to the defendant
if it turns out that the plaintiff was not in fact entitled to the attachment.
The court issues a writ of
attachment directing the sheriff or other law enforcement officer to serve a
copy of the order on the defendant and to seize property equal in value to the
sum specified in the writ. This is called a levy of attachment. The defendant
then has a right to challenge the seizure or to post bond for the release of
the property, in effect substituting the bond for the property in the court's
custody. The order of attachment is effective only for a limited period, the
time necessary to wind up the lawsuit between plaintiff and defendant or a
specified period intended to permit resolution of the controversy. Provisions
are usually made for special circumstances or extreme hardship.
Not every kind of property owned
by the defendant is subject to attachment. The laws of a state may provide
exemptions for certain household items, clothing, tools, and other essentials.
The defendant's salary may be subject to attachment, but a certain amount is
exempt in order to allow for personal support or for family support. Property
belonging to the defendant but in the hands of someone else, such as salary
owed or a debt not yet paid, may also be seized, but this procedure is usually
called Garnishment rather than attachment.
Courts always have the discretion
to exempt more property than that specified in a statute or to deny the
attachment altogether under the proper circumstances. This may be done, for
example, when the court believes that the property sought to be attached is
worth much more than any judgment the plaintiff could hope to win, or where the
property is an ongoing business that would be destroyed by attachment.
ATTACHMENT BEFORE JUDGEMENT: ORDER 38
RULE 5-12:
NATURE AND SCOPE:
Like arrest before judgement, in
certain circumstances, an attachment before judgement may be ordered by the
court. Rule 5-13 of Order 38 deal with attachment before judgement.
OBJECT:
The primary object of attachment
before judgement is to prevent any attempt on the part of the defendant to
defeat the realisation of the decree that may be passed against him. It thus
prevents any attempt on the part of the defendant to defat realisation of the
decree passes in favour of the plaintiff.
In Sardar Govindrao v. Devi Sahai1, the Supreme
Court observed:
“Attachment
before judgement is levied where the court on the application of the
plaintiffbis satisfied that the defendant, with intent to obstruct or delay the
execution of any decree that may be passed against him,
1.
Sardar Govindrao v. Devi Sahai and Ors. 1982 AIR 989,
1982 SCR (2) 186
(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 judgement is to give an assurance to the plaintiff
that the decree if made would be satisfied. It is sort of a guarantee against
the decree becoming infructuous for want of property available from which the
plaintiff can satisfy the decree.”
GROUNDS:
RULE 5
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 the
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 or show cause why he
should not furnish security.
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 appears sufficient to satisfy any decree
which may be passed in the suit, be attached.
The plaintiff shall, unless the
court otherwise directs, specify the property required to be attached and the
estimated value thereof. The court may also in the order direct conditional
attachment and the estimated value thereof. If an order of attachment is made
without complying with the provisions of Rule 5(1), such attachment shall be
void. The provisions of Order 21 (execution proceedings) will also apply to
attachment before judgement.
PRINCIPLES:
The remedy of attachment before
judgement is an extraordinary remedy and must be exercised sparingly and strictly
in accordance with the laws and with utmost care and caution so that it may not
become an engine of oppression. 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.
An attachment practically takes
away the power f alienation and such a restriction on the exercise of the
undoubted right of ownership 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. A man is not debarred from dealing with his property just
because the suit has been filed against him.
Otherwise in every case in which a suit is brought against a man if
during the pendency of the proceedings he sells some of his properties that
would be at once a sufficient ground to satisfy the court that he is disposing
his property with intent to defraud the plaintiff. Clearly, there must be
additional circumstances before the court can be satisfied that such an
intention exists. 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. The court must advert to the provisions of the Code in this
regard, advert to and investigate the allegations thrown against the defendant,
satisfy itself that a case for attachment before judgement has been made out
and then pass the requisite order. These principles have come to be recognized
as mandates to the court and if the court acts in breach thereof, such an order
of the court will have to be ignored as the result of dereliction of duty.
In Bharat Tobacco Co. v. Maula Saheb2,
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 the rule but the party seeking the
order must establish by affidavit or otherwise facts which would satisfy the
court that opposite party is dispose of
the whole or any part of his property with a view to obstructing or delaying
the execution of
2.
Bharat Tobacco Co. V. Maula Saheb 1981 GLR 343
the decree that may be passed in
the suit. An order of attachment before judgement is a drastic order and
ordinarily the court would be slow in exercising the power conferred upon it
under Order 38 Rule 5 of Code for the simple reason that, if the power is not
exercised with utmost care and caution, it may ruin the reputation and business
of the party against whom the power is exercised. The court must act with
utmost circumspection before issuing an order of attachment so that the power
vested in the court is not abuse by an unscrupulous litigant as a weapon of
oppression against the opposite party. 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 judgement of
the latter’s’ term.”
The following powerful
observations of Dawson Miller, C.J.
are worth quoting:
“The power given to the court to
attach defendant’s property before judgement is never meant to be exercised
lightly or without clear proof of existence of the mischief aimed at in the
rule. To attach a defendant’s property before a defendant’s liability is
established by a decree, may have a effect of seriously embarrassing him in the
conduct of the defence, as the property could not be alienated even for the
purpose of putting him in funds foe defending the suit, which may eventually
prove to have been entirely devoid of merit. Such a power is only given when a
court is satisfied not only that the defendant is about to dispose of his
properties or to remove it from the jurisdiction of the court, but also his
object in so doing is to obstruct or delay the execution of any decree, that
may be passed against him, and so deprive the plaintiff, successful, of the
fruits of victory”.
Suffice to say that in the leading
case of Premraj Mundra v. Mohd. Maneck
Gazi3, after referring to several authorities, Justice Sinha
had deduced the following principles relating to passing of an order of
attachment before judgement:
(1) That
an order under Order 38, Rule 5 and 6 can only be issued if circumstances
exists are stated therein.
(2)
Whether such circumstances exist is a question of fact
which must be proved to the satisfaction of the court.
3.
Premraj Mundra v. Mohd. Maneck Gazi AIR 1951 Cal 156
(3) The court would not be justified in issuing
an order for attachment before judgement, or for security, merely because it
thinks that no harm would be done thereby or that the defendants would not be
prejudiced.
(4) That
the affidavit 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 that 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 transaction before a
suit cannot be taken into consideration, but the object before judgement must
be to prevent future transaction or alienation.
(7) Where
only a small portion of property belonging to the defendant is being disposed
of, no inference can be drawn in the absence of other circumstances that the
alienation is necessary 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 that 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 been diminished, is not enough.
(11)
Where, however, the defendant starts disposing of his
property 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 embarrassed financial
condition, these were grounds from where the inferences 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 maybe 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 sufficient reason for an order under Order 38 of the Code.
(14)
The sale of properties under gross undervalues, or
benami transfere, is 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.
CONDITIONAL ATTACHMENT:
The court has ample power to
direct conditional attachment, 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 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.
RIGHTS OF THIRD PARTY: RULE 10
An attachment before judgement
does not affect the rights of persons, existing prior to attachment, if they
are not parties to the suit.
ADJUDICATION OF CLAIMS: RULE 8
Rule 8 provides that any claim
preferred to the property, attached before judgement, 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 property in execution. The
provisions of Order 21 applicable to an attachment made in execution of a
decree will also apply to an attachment before judgement continuing after
judgement.
EFFECT OF ATTACHMENT:
An order of attachment before
judgement is a sort of guarantee against decree becoming infructuous for want
of property available for satisfaction of such decree. The plaintiff, however,
does not get title by effecting attachment before judgement.
REMOVAL OF ATTACHMENT: RULE 9
An order of attachment before judgement will
be withdrawn if the defendent furnishes security or the suit is dismissed.
APPEAL:
An order passed under Order 38
Rule 5 is appealable.
REVISION:
An order granting or refusing
attachment before judgement before judgement is a case decided within the meaning
of Section 15 of the code and is revisable by the High Court.
WRONGFUL ATTACHMENT:
A suit for damages is maintainable
foe 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.
INCIDENTAL PROCEEDINGS-
ATTACHMENT BEFORE JUDGEMENT
One of the important incidental
proceedings is attachment before judgment covered by Order 38, CPC.
As the very nomenclature suggests, the
properties of one side can be attached by the court, at the behest of other
side, whether the properties are movable or immovable.
Like any other interlocutory
applications the application consists of a petition and an affidavit. The
petition contains the long cause title of the parties and the prayer. The
affidavit contains the reasons for the application as well as the prayer.
In Andhra Pradesh, usually, attachments
are not ordered unless the application is accompanied by affidavits from third
parties and the court is convinced that the case was a fit case for ordering
attachment.
There is a plethora of decisions which
points out that attachment before judgment is an extreme step and should be
resorted to only as a last resort.
In Y.
Vijayalakshmamma vs. S. Lakshmiah4 : AIR 1980 A.P. 176, it
was pointed out that power to order attachment of properties before judgment
provided under Order 38 Rule 5 should be sparingly exercised and that the court
should issue order of attachment before judgment only in those few cases where
on cogent material placed they are in a position to prima facie hold that
unless attachment is directed the defendant would escape the process of law and
the decree obtained by the plaintiff would be ineffective.
Order 38 Rule 5 CPC contemplates that if
the court is satisfied that the defendant, with intent to obstruct or delay the
execution of any decree that may be passed against him is either about to
dispose of his property or about to remove the property from the jurisdiction
of the court, the court may direct the defendant to furnish security of such
sum as specified in the order.
In case the defendant does not furnish
security as directed by the court, the court may attach the property.
In general, the court orders conditional
attachment, even "ex parte" directing the defendant to furnish
security within a couple of days ordering that the properties shall stand
attached if the security is not furnished within the given time.
The effect of attachment is that any
alienation made by the owner of the property subsequent to the attachment are
non-est and the court treats the property as if it still belongs to the person
as on the date of attachment.
The object of attachment before judgment
is to safeguard the interest of the plaintiff against unscrupulous defendants
Order 38 also provides for situations
where the property attached did not belong to the party.
Suppose A files a suit against B and
gets property X attached on the ground that it belongs to B and B has been
alienating the same with a view to defeat A's claim in the suit.
In fact the property X belongs
to C or partly to C and partly to B. C may be stranger to B or even B's wife or
son. Nonetheless, C can ask the court to vacate the attachment (Under Order
4. Y.
Vijayalakshmamma v. S. Lakshmiah AIR 1980 A.P. 176
38 Rule 8 CPC) by way of an application,
known as "Claim Petition". If C proves to the court that the property
X is his in whole or in part, the Court vacates the attachment to the extent
that it belongs to C.
In Ganu Singh vs Jangi Lal And Ors5:
It will be observed that the main object of an
attachment before judgment is to enable the plaintiff
to realize the amount of the decree, supposing a decree is eventually made,
from the defendant's property. Section 483 provides that "if at any stage
of any suit the plaintiff satisfies the Court by affidavit or otherwise that
the defendant with intent to obstruct or delay the execution of any decree that
may be passed against him is about to dispose of the whole or any part of his
property," and so on, "the plaintiff may apply to the Court to call
upon the defendant to furnish security to satisfy any decree that may be passed
against him, and, on his failing, to give such security, to direct that any
portion of his property within the jurisdiction the Court shall be attached
until further order of the Court." Section 484 empowers the Court to call
upon the defendant, either to furnish security to produce and place at the
disposal of the Court when required, the property sought to be attached, or
such portion thereof as may be sufficient to satisfy the decree, or to appear
and show cause why he should not furnish security. Section 485 lays down that
in the event of the defendant failing to show causa or to furnish the required
security, "the Court may order that the property specified in the
application, or such portion thereof as appears sufficient to satisfy any
decree which may be passed in the suit, shall be attached. Section 486 provides
that" the attachment shall be made in the manner herein provided for the
attachment of property in execution of a decree for money. Section 487 says:
"If any claim be preferred to the property attached before judgment, such
claim shall be investigated in the manner hereinbefore provided for the
investigation of claims to property attached in execution of a decree for
money." Then we have Section 488, in which it is laid down that,
"when an order of attachment before judgment is passed, the Court which
passed the order shall remove the attachment whenever the defendant furnishes
the security required together with security for the costs of the attachment,
or when the suit is dismissed," clearly indicating that in the event of
the suit not being dismissed but decreed, the attachment shall subsist. Section
489 then provides that
5.
Ganu
Singh v. Jangi lal and Ors (1899) ILR 26 Cal 531
"attachment before judgment shall not affect 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." It would seem
that, save and except in these two classes of cases, the intention of the
Legislature is that an attachment before judgment should be fully operative.
Then we have Section 490 providing that "when property is under attachment
by virtue of the provisions of this chapter, and a decree is given in favour of
the plaintiff, it shall not be necessary to re-attach the property in execution
of such decree."
In
the case of Raj
Chunder Roy v. Isser Chunder Roy6 (1865) Bourke, 0.C, 139, where Mr. Justice Norman,
referring to the provisions of the old Code in regard to attachment before
judgment, expressed the opinion that the process in attachment before judgment
is in all respects the same as in cases of attachment after judgment, and that
the effect, namely, of binding the property so as to prevent private
alienation, is the same in both cases.
O 38 Rule 5 and Rule 6: Whether procedure of prior show cause notice
to defendant in cases of ‘conditional attachment’ can result in the final order
becoming infructuous?
Attachment of the defendant’s movable or
immovable property pending decision in the suit is a device by which the Code
of Civil Procedure 1908 protects the interests of a plaintiff in the event of a
decree being passed in his favour ultimately.
The attachment prevents the defendant from disposing of the whole or part
of his property or removing the said property from the jurisdiction of the
Court.
The Supreme Court
pointed out in Padam Sen vs. State of
U.P. (AIR 1961. SC 218 7 that the Court passes such orders
to see that the ultimate decree does not become infructuous.
6.
Raj Chunder Roy v.
Isser Chunder Roy (1865) Bourke, OC, 139
7.
Padam sen v. State of
U.P. AIR 1961, SC 218
Again in Govindram
vs. Devi; (AIR 1982 SC 989)8, the Supreme Court observed:
“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.”
Attachment before judgment is of two kinds;
One is where the Court upon being satisfied
that such attachment is necessary, feels that there is no serious urgency and
that the defendant may first be asked to show cause why an order should not be
passed asking him to furnish adequate security for the suit claim, or to
produce and place the property before the Court by a certain date.
The other is where prior notice may indeed
enable the defendant to dispose of or
remove the property from the jurisdiction of the Court before the Court could
receive the defendant’s reply to the show cause notice and before it passes an
order of attachment before Judgment.
This can
happen where the property sought to be attached is movable property such as
cash, jewellery, furniture, fabrics, machinery not embedded into the earth or
which can be easily dismantled. This may
also happen, in certain situations, in the case of immovable property. In the second type of cases, the Court must have
the power to pass an immediate order of attachment before judgment which is
provisional in nature with a simultaneous notice to the defendant as to why the
interim order of attachment should not be confirmed unless adequate security is
furnished. This is what is really meant by the words ‘conditional attachment’
though the word ‘conditional’ is used to describe an interim or provisional
attachment which becomes plenary afterwards.
In Ramanatha Iyer’s Law Lexicon9 (2nd
Ed. 1997, p. 164) this distinction is pointed out and the meaning of
‘conditional attachment’ is explained by referring to a judgment of the Bombay
High Court (ILR 5 Bom 643) as follows:
8.
Ramantha Iyer’s Law
Lexicon, 2nd Edition 1997, p. 164
“The
expression ‘conditional attachment’ might mean an attachment to be made
conditionally on the security not being furnished nor cause shown by the
prescribed day, or it might mean an
immediate attachment of a provisional kind conditional to become plenary if security
should not be furnished, or cause shown according to the terms of the
order. The form at the end of the Code
of Civil Procedure Code for a provisional attachment show that the latter was the
intention of the legislature”
We shall first extract O 38. R 5 and R 6 as
they stand today.
Rule5. Where defendant may be called upon to furnish
security for production of property.-
(1)
Where, at any stage of a suit, the Court is satisfied, by affidavit or
otherwise, that the defendant, with intend 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.
Rule.6
Attachment where cause not shown or security not furnished.-
(1)
Where the defendant 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.
(2)
Where the defendant shows such cause or furnishes the required security, and
the property specified or any portion of it has been attached, the Court shall
order the attachment to be withdrawn, or make such other order as it thinks
fit.
It will be seen from O 38 R5 that the
legislature provided in Sub rule (1) of O 38 R 5 for a situation where prior
notice is issued before making an order of attachment before Judgment. Sub-rule (3) of O 38 R5 refers to
‘conditional attachment’ without mentioning what it actually is. Its meaning can be gathered only from the
second part of Form 5 of Appendix F which refers to immediate or provisional
attachment being made together with a show cause notice.
The word ‘conditional attachment’ used in sub
rule (3) of Order 38 Rule 5, has given an impression that the attachment is
conditional upon security being offered.
As pointed out in Ramanath
Aiyar’s Law Lexicon9 referring to the Bombay case
that that is not the true meaning of the word.
In fact,
the proper meaning of the word ‘conditional’ here is ‘interim’. In other words, it was intended by sub rule (3)
of Order 38 Rule 5 that the Court must have power, in certain cases, to first
pass an order of interim attachment so that the property may not be moved
outside the jurisdiction of the Court or may not vanish. In such a case, the Court can give a notice simultaneously
requiring the person concerned to show cause why interim attachment should not
be vacated.
In 1976, sub rule
(4) was added in O 38 R 5 to say that any such attachment without prior notice
as contemplated by sub rule (1) will be “void”.
This provision was introduced to resolve the conflict in judgments as to
whether; the attachment would be void or voidable, where notice procedure under
sub-rule (1) is not followed.
9.
Ramnath Aiyer’s Law
Lexicon
But, in as much as sub rule (4) follows both
sub rules (1) and (3), some Courts have interpreted that prior notice under sub
rule (1) is necessary even in cases of ‘conditional attachment’ falling under sub
rule (3), i.e. where immediate provisional attachment is necessary. (in the recent judgment of the Supreme Court
in Rajinder Singh v. Ramdhan Singh10,
2001 (6) SCC 213, the Court merely referred to sub rule (4) of Order 38
Rule 5 but did not have any occasion to go into the question whether even in
the case of interim attachment (loosely called conditional attachment in sub
rule (3) of Order 38 Rule 5) a prior notice as contemplated by the said sub
rule was necessary. The Commission is of
the view that the Supreme Court, in the above case had not laid down any
principle that even in the case of interim attachment a prior notice as
contemplated by sub rule (1) of Order 38 Rule 5 is necessary. On the other hand, High Courts have clearly
laid down the view that sub rule (4) does not apply to cases of conditional
attachment under sub rule (3) and that in such cases, a post decisional
opportunity is provided by sub rule (2) of O 38 R 6 which enables the defendant
to show cause and permits the Court to withdraw the conditional attachment (see
N.R.Thiruvengadam Vs. Kaliannan11
AIR 1984 Mad 112).
The Form 5 of Appendix F to the Code which
gives the format for ‘attachment before judgment’ refers in the first Part to
‘attachment before judgment’ and in the second part to ‘conditional attachment’. The combination of both in a single form has
also created considerable confusion.
The Commission is of
the view that in cases where immediate attachment is felt necessary by the
Court, if it is laid down that prior notice to the defendant under sub rule (1)
of Order 38 Rule 5 is necessary, there is every likelihood that the ultimate
order of attachment that man may be made may become infructuous and the ultimate
decree may also be rendered useless. The
Commission is of the view that in such cases, the Court must have powers to
pass an order of ‘interim attachment’ coupled with a notice to show cause why
the interim attachment should not be confirmed unless security is
furnished. In case sufficient cause is
shown as to why the interim attachment should not be confirmed or where adequate
security is furnished, the interim attachment can be withdrawn by the
Court. As in cases of ex parte interim injunction under O 39 R 1, a
procedure for ex parte attachment before judgment followed by
- Rajinder Singh
v. Ramdhan Singh, 2001 (6) SCC 216
- N.R.
Thiruvengadam v. Kaliannan AIR 1948 Mad 112
a notice
to furnish security or to show cause is perfectly consistent with principles of
due process and natural justice. Post decisional
opportunity is permissible under our natural justice jurisprudence.
It is, therefore, proposed to recast O 38 R 5
and R 6 and introduce Form 5 and Form 5A in Appendix F, the former to cover
cases of attachment before judgment with prior notice and the latter to deal
with interim attachment first and opportunity thereafter.
For
achieving the above object, it is not necessary to amend sub rule (1) or (2) of
Order 38 Rule 5, but it is necessary to omit the existing sub rule (3) of Order
38 Rule 5 and instead bring in the existing sub rules (1) and (2) of Order 38
Rule 6 as sub rules (3) and (4) of Order 38 Rule 5. Thereafter sub rule (4) of Order 38 Rule 5
can be re-designated as sub-rule 5 of Order 38, Rule 5.
We can
then have a separate rule 6 of Order 38 which deals exclusively with attachment
before judgment.
With the
above changes, Order 38 Rule 5 and Rule 6 will read as follows:
“5. Where defendant may be called upon to
furnish security for production of property –
(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, or 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)
Where the defendant fails to show cause or, as the case may be, 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.
(4)
Where the defendant shows such cause or furnishes the required security, and
the properties specified or any portion of it have been attached, the Court
shall order the attachment to be withdrawn, or make such other order as it
thinks fit. (5) If an order of attachment is
made without complying with the provisions of sub rule (1) of this rule,
such attachment shall be void.”
We proposed a separate rule as far as interim
attachment is concerned as rule 6 of Order 38.
It will read as follows:
Interim attachment before judgment:
6. (1) Where the court is satisfied, at any
stage of a suit, by affidavit or otherwise that the conditions referred to in
sub-clauses (a) or (b) of sub-rule (1) of rule 5 are satisfied and that there
is likelihood of the property or part thereof being immediately disposed of or
removed from the local limits of the jurisdiction of the court in case the procedure
under sub rule (1) of rule 5 is to be followed, the court may, for brief
reasons to be recorded, pass an order of interim attachment without following
the said procedure and shall
simultaneously issue a notice to the defendant ,to show cause why the order of interim attachment should
be withdrawn altogether or upon furnishing security..
(2)
Where the defendant shows cause or furnishes the required security within time
fixed by the Court, the Court shall direct that the order of interim attachment
shall stand withdrawn or make such other order as it may think fit.
(3)
Where the defendant fails to show cause or fails to furnish the security within
the time fixed by the court, the court may confirm the interim attachment of
the property specified or such portion thereof as appears sufficient to satisfy
any decree which may be passed in the suit.
(4) The
order of interim attachment shall not be deemed to be void on the ground that
no prior notice to show cause as contemplated by sub rule (1) of Rule 5 has
been issued before such an order of interim attachment was passed.” (D) In
Appendix F, for Form No.5, the following Forms shall be substituted, namely:-
“No. 5
ATTACHMENT BEFORE JUDGMENT AFTER PRIOR NOTICE
CALLING FOR SECURITY FOR FULFILLMENT OF DECREE
(Order XXXVIII r. 5)
To
The Baillif of the Court,
Whereas …..has proved to the satisfaction of
the Court that the defendant in the above suit……………;
These are to command you to call upon the said
defendant …… on or before the….day of…..200 , either to furnish security for
the sum of Rs…….. or to produce and place at the disposal of this court when
required……..or the value thereof, or such portion of the value as may be
sufficient to satisfy the decree that may be passed against him; or to appear
and show cause why he should not furnish security; and you are further
commanded to return this warrant on or before the ………day of …….20…with an endorsement
certifying the date on which and the manner in which it has been executed, or
the reason why it has not been executed;
Given
under my hand and seal of the Court this……day of
……..20….
……….
Judge”
No. 5A
INTERIM ATTACHMENT BEFORE JUDGMENT WITH
SIMULTANEOUS NOTICE TO SHOW CAUSE.
(Order XXXVIII r. 6)
“To
The defendant
Whereas …… has proved to the satisfaction of
the Court that the defendant in the above suit ………..;
You are hereby commanded, by way of interim
attachment, until further orders of the Court, to produce and handover the
following movable property referred to in the Schedule hereto annexed to the
Bailiff to enable him to keep the property under safe and secure custody [and/or
You are hereby prohibited and restrained, by way of interim attachment
until further orders of the Court, from transferring or charging the immovable
property referred to in the Schedule hereto annexed by sale, gift or otherwise
and that all persons be, and that they are prohibited and restrained from
receiving the same by purchase, gift or otherwise,]
And you
may show cause on or before ……day of….. 20…..why this interim order of
attachment should not be withdrawn altogether or upon furnishing security for a
sum of Rs……
Given under my hand and seal of the Court,
this …..day of……20…..
Judge”
CONCLUSION
The order of attachment is effective
only for a limited period, the time necessary to wind up the lawsuit between
plaintiff and defendant or a specified period intended to permit resolution of
the controversy.
Courts always have the
discretion to exempt more property than that specified in a statute or to deny
the attachment altogether under the proper circumstances. This may be done, for
example, when the court believes that the property sought to be attached is worth
much more than any judgment the plaintiff could hope to win, or where the
property is an ongoing business that would be destroyed by attachment.
Rule 5-13 of Order 38 deal with
attachment before judgement
The primary object of attachment before
judgement is to prevent any attempt on the part of the defendant to defeat the
realisation of the decree that may be passed against him.
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 appears sufficient to satisfy any
decree which may be passed in the suit, be attached.
The plaintiff shall, unless the court
otherwise directs, specify the property required to be attached and the
estimated value thereof. The court may also in the order direct conditional
attachment and the estimated value thereof. If an order of attachment is made
without complying with the provisions of Rule 5(1), such attachment shall be
void.
The remedy of attachment
before judgement is an extraordinary remedy and must be exercised sparingly and
strictly in accordance with the laws and with utmost care and caution so that
it may not become an engine of oppression. Before an order of attachment can be
made, the court must be satisfied about the following two conditions:
That the defendant is about
to dispose of the whole or any part of his property; and
That the disposal is with
the intention of obstructing or delaying the execution of any decree that may
be passed against him.
An attachment practically takes away the
power f alienation and such a restriction on the exercise of the undoubted
right of ownership 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.
