Attachment of Property before Judgement

Object of attachment before judgement

The precise object of attachment before judgement is to prevent any attempt by the defendant to defeat the realisation of the decree that may be passed against him. The attachment aims to prevent the attempt of the defendant to dispose of or remove from the jurisdiction of the court, his immovable property.

The preventive remedy of attachment must be exercised sparingly and with utmost care, caution, and circumspection. By order of attachment the court takes defendant’s property in to the legal custody so that it may be acted upon when the defendant’s debt is established at the conclusion of the case.

Provisions governing attachment

The Sections 60 to 64, Order XXXVIII Rules 5 to 13, and the Order XXI, of the Code of Civil Procedure, 1908 (CPC) are the provisions that deal with attachment before judgement.

The Section 60 & 61 speaks about the property that shall not be liable to attachment. Section 64 of the CPC deals with illegality of alienating property under attachment.

The Order XXI is about execution of a decree and it provides for the attachment as part of the execution of property but its rules are applicable to attachment before judgement as well. The Order XXXVIII Rule 7 says the attachment must be made in the manner provided for attachment of property in execution of a decree.

Attach only when property would be disposed of

An attachment takes away the power of alienation of property. Such a power can be exercise only when the court is fully satisfied that the defendant is about to dispose of his properties or to remove it from the jurisdiction of the court with that intend to defraud the plaintiff but also, when the court believes that the plaintiff would possibly get an order in his favour.

That means before exercising the power of attachments, the court must be satisfied that there is a reasonable chance of a decree being passed in the suit against the defendant.

Order of attachment does not affect any prior rights

The order of attachment would not apply to a transaction of sale taking place prior to the institution of the suit or done as part of a prior existing contractual obligation (Section 64 of the CPC).

That means an attachment before judgement does not affect the rights of persons existing prior to the attachment, if they are not parties to the suit [ Hamda Ammal v Avadiappa Pathar & Others ].

Conditional attachment can be ordered

Conditional attachment means an immediate attachment of a provisional nature if security in the form of specified sum of money is not furnished or the cause is not shown for not providing security after his appearance in the court, in compliance with the order.

The power to make an order directing the defendant either to give security or to appear and show cause why he should not furnish security, carries with it the incidental or ancillary power to direct conditional provisional attachment. The court has, under Order 38 Rule 5(3) of the CPC, power to direct conditional attachment. No prior notice is necessary at that stage of issuing conditional attachment.

Conditional order can be made absolute

A conditional order can be made absolute under Order 38 Rule 6 if no cause is shown why, it should not be made absolute.

When the court makes an order of conditional attachment that would be termed to be vacated as soon as the defended furnishes security. The attachment order would stand vacated the moment such security is furnished.

If an order of attachment is made without complying the provisions of Order XXXVIII of the CPC, the attachment shall be void.

An attachment does not create any title

An attachment before judgement does not create any right, title, or interest in favour of the plaintiff but it merely disables defendant to create any encumbrance on the property.

SC Guidelines on attachment before judgement

In a landmark case (Premraj Mundra v Md. Maneck Gazi & Ors : AIR 1951 Cal 156), the Supreme Court (SC) laid down 14 guidelines/principles after referring to number of authorities, for the exercise of jurisdiction under Order XXXVIII Rule 5 & 6 of the CPC.

The Guidelines are as follows: –

  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 defendant. 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 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 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 plaintiff’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 plaintiff’s claim.
  12. Mere removal of properties outside jurisdiction, is not enough, but where the deft. with notice of the plaintiff’s 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 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 benami transfers, are always good indications of an intention to defeat the plaintiff’s claim.

The SC says that the court must however be very cautious of the evidence on these points & should not rely on vague claims or allegations.

Additional reading

  1. Premraj Mundra v Md. Maneck Gazi & Ors [AIR 1951 Cal 156]
  2. Hamda Ammal v Avadiappa Pathar & Others [ (1991) 1 SCC 715]
  3. The Code of Civil Procedure, 1908 (CPC)