ARREST AND ATTACHMENT ARREST AND ATTACHMENT BEFORE JUDGMENTBEFORE JUDGMENT

PARIKSHIT KUMARPARIKSHIT KUMAR

ILS LAW COLLEGEILS LAW COLLEGE

REMEDIES PROVIDED UNDER ORDER REMEDIES PROVIDED UNDER ORDER 38 OF CIVIL PROCEDURE CODE38 OF CIVIL PROCEDURE CODE

ORDER 38 Rules 1-13

ARREST OF DEFENDANTBEFORE JUDGEMENT

Rules 1-4

ATTACHMENT OFPROPERTY BEFORE

JUDGMENT Rules 5-13

ESSENTIAL INGREDIENTS OF ORDER ESSENTIAL INGREDIENTS OF ORDER 38 OF CIVIL PROCEDURE CODE38 OF CIVIL PROCEDURE CODE

Scope:Scope: Different from Order 21 which deals with arrest of Different from Order 21 which deals with arrest of debtor and attachment of property after the decree. debtor and attachment of property after the decree.

Object:Object: To secure Plaintiff against any attempt by defendant To secure Plaintiff against any attempt by defendant to defeat execution of decree passed against him. to defeat execution of decree passed against him.

Prima Facie CasePrima Facie Case:: Pertinent to show the existence of the Pertinent to show the existence of the grounds as are specified in the Rules hitherto. grounds as are specified in the Rules hitherto. Selvarathinam v. Rajshekharan NairSelvarathinam v. Rajshekharan Nair AIR 2001 Kerala 1. AIR 2001 Kerala 1.

ARREST BEFORE JUDGMENTARREST BEFORE JUDGMENTRule 1Rule 1: Where at any stage of a suit the Court is satisfied, by : Where at any stage of a suit the Court is satisfied, by Affidavit or otherwise that the Defendant, with the intent to Affidavit or otherwise that the Defendant, with the intent to delay or avoid or obstruct the proceedings of a Court.-delay or avoid or obstruct the proceedings of a Court.- Has absconded or left the local limits of the jurisdiction of Has absconded or left the local limits of the jurisdiction of

the Courtthe Court Is about to do the any of the aboveIs about to do the any of the above Has disposed of or removed from the local limits of the Has disposed of or removed from the local limits of the

jurisdiction of the Court his property or any part thereofjurisdiction of the Court his property or any part thereofOr if Defendant is about to leave India and the circumstances Or if Defendant is about to leave India and the circumstances show reasonable probability that plaintiff may be obstructed or show reasonable probability that plaintiff may be obstructed or delayed in the execution processdelayed in the execution processthe Court may issue a warrant to arrest the defendant and bring the Court may issue a warrant to arrest the defendant and bring him before the Court to show cause why he should not furnish him before the Court to show cause why he should not furnish security, for his appearance. security, for his appearance.

INGREDIENTS OF ARREST UNDER INGREDIENTS OF ARREST UNDER ORDER 38ORDER 38

Grounds:Grounds: Prima Facie Case to the satisfaction of the Court Prima Facie Case to the satisfaction of the Court showingshowing

• AbscondanceAbscondance• Possibility of abscondancePossibility of abscondance• Disposal of PropertyDisposal of Propertythereby Causing obstruction or delay in the execution of a thereby Causing obstruction or delay in the execution of a prospective decree.prospective decree.

Jurisdiction of the CourtJurisdiction of the Court: : Stephen Commerce Pvt. Ltd. v. Stephen Commerce Pvt. Ltd. v. O&P VesselO&P Vessel AIR 1999 Cal 64.AIR 1999 Cal 64.

Bonafide ApplicationBonafide Application

CONTINUEDCONTINUED Reasonable ProbabilityReasonable Probability: Where Defendant is about to leave : Where Defendant is about to leave

India it is sufficient if circumstances proveIndia it is sufficient if circumstances prove• Cause of action which is prima facie unimpeachableCause of action which is prima facie unimpeachable• Existence of a danger that the defendant will leave the Existence of a danger that the defendant will leave the

jurisdiction of the court.jurisdiction of the court. Proviso to Rule 1:Proviso to Rule 1: No arrest if he pays to the Officer No arrest if he pays to the Officer

entrusted with the execution of warrant any sum specified in entrusted with the execution of warrant any sum specified in the warrant.the warrant.

Appeal: Appeal: Order passed under Order 38 Rule 1 is not Order passed under Order 38 Rule 1 is not appealable. However Order passed when defendant fails to appealable. However Order passed when defendant fails to furnish security then such an order is appealable in nature furnish security then such an order is appealable in nature under Order 43 Rule 1 (q)under Order 43 Rule 1 (q)

CONSEQUENCES OF OBTAINING CONSEQUENCES OF OBTAINING ARREST ON INSUFFICIENT GROUNDSARREST ON INSUFFICIENT GROUNDS Section 95 of CPC:Section 95 of CPC: Grounds For filing application under Section 95Grounds For filing application under Section 95

• arrest, attachment or injunction was applied for on arrest, attachment or injunction was applied for on insufficient grounds, orinsufficient grounds, or

• Failure of suit of the Plaintiff and it appears to the Court Failure of suit of the Plaintiff and it appears to the Court that there was no reasonable or probable grounds for that there was no reasonable or probable grounds for instituting the same.instituting the same.

Compensation:Compensation:• Not to exceed fifty thousand rupees, for the expense or Not to exceed fifty thousand rupees, for the expense or

injury (including injury to reputation) caused to himinjury (including injury to reputation) caused to him• Amount not to exceed the limits of its pecuniary Amount not to exceed the limits of its pecuniary

jurisdiction.jurisdiction.

SECURITYSECURITY

Rule 2Rule 2 Failure to show cause. Defendant to deposit in the Failure to show cause. Defendant to deposit in the CourtCourt

• Money Sufficient to Answer the Claim: Money Sufficient to Answer the Claim: as laid down in as laid down in Ellie Goldberg v. SarojiniEllie Goldberg v. Sarojini (1920) 56 Cal 700.(1920) 56 Cal 700.

• Other property Other property sufficient to answer the claim against sufficient to answer the claim against him.him.

• Security For AppearanceSecurity For Appearance

Rateable Distribution: Rateable Distribution:

Appeal:Appeal: Under Order 43 Rule 1 clause (q) an appeal lies Under Order 43 Rule 1 clause (q) an appeal lies from an order passed under this rule.from an order passed under this rule.

PROCEDURE FOR DISCHARGE OF PROCEDURE FOR DISCHARGE OF SURETYSURETY

Application under Application under Rule 3 Rule 3 of Order 38 for being discharged of Order 38 for being discharged from obligation.from obligation.

On such application the Court shall either summon the On such application the Court shall either summon the Defendant to appear or may call for his arrest in the first Defendant to appear or may call for his arrest in the first instance.instance.

Discharge of surety on appearance of defendant in Discharge of surety on appearance of defendant in pursuance of summons or warrant and direction to pursuance of summons or warrant and direction to defendant to find fresh security.defendant to find fresh security.

FAILURE OF DEFENDANT TO FAILURE OF DEFENDANT TO FURNISH SECURITYFURNISH SECURITY

Rule 4:Rule 4: Where Defendant fails to comply with the Where Defendant fails to comply with the provisions of Rule 2 or Rule 3, the Court may commit him provisions of Rule 2 or Rule 3, the Court may commit him to Civil Prison until the decision of the suit or, where a to Civil Prison until the decision of the suit or, where a decree is passed against the defendant, until the decree has decree is passed against the defendant, until the decree has been satisfied.been satisfied.

Time Period: Maximum 6 months and where subject matter Time Period: Maximum 6 months and where subject matter does not exceed Rs. 50, 6 weeks.does not exceed Rs. 50, 6 weeks.

Appeal: Under s. 104, clause (h), though not specified under Appeal: Under s. 104, clause (h), though not specified under O. 43 Rule 1O. 43 Rule 1

IMPRISONMENT FOR ENFORCEMENT IMPRISONMENT FOR ENFORCEMENT OF CONTRACTUAL LIABLITYOF CONTRACTUAL LIABLITY

Whether it is right to enforce a contractual liability by imprisoning a Whether it is right to enforce a contractual liability by imprisoning a debtor in the teeth of Article 21 of the Constitution and Article 11 of debtor in the teeth of Article 21 of the Constitution and Article 11 of the International Covenant on Civil and Political Rights?the International Covenant on Civil and Political Rights?

Article 11 of the Covenant states that “No one shall be imprisoned Article 11 of the Covenant states that “No one shall be imprisoned merely on the ground of inability to fulfill a contractual obligation.” merely on the ground of inability to fulfill a contractual obligation.”

The Central Law Commission’s fifty fourth report: Upheld the The Central Law Commission’s fifty fourth report: Upheld the validity of Section 51 (which includes arrest and detention) read with validity of Section 51 (which includes arrest and detention) read with O.21 and did not recommend further changes in the position of law. O.21 and did not recommend further changes in the position of law.

However, it said that if the debtor once had the means but now has However, it said that if the debtor once had the means but now has not, or if he has money now on which there are other pressing claims, not, or if he has money now on which there are other pressing claims, it is violative of the spirit of Article 11 to arrest and confine him in it is violative of the spirit of Article 11 to arrest and confine him in jail so as to coerce him into payment.jail so as to coerce him into payment.

CONTINUEDCONTINUED

Jolly George Varghese v. Bank of CochinJolly George Varghese v. Bank of Cochin AIR 1980 SC 470AIR 1980 SC 470

Krishna Iyer J. while delving with the provisions laid down in Krishna Iyer J. while delving with the provisions laid down in CPC saidCPC said

““The simple default to discharge is not enough. There The simple default to discharge is not enough. There must be some element of bad faith beyond mere must be some element of bad faith beyond mere

indifference to pay, some deliberate or recusant indifference to pay, some deliberate or recusant disposition in the past or, alternatively, current means to disposition in the past or, alternatively, current means to pay the decree or a substantial part of it. The provision pay the decree or a substantial part of it. The provision emphasizes the need to establish not mere omission to emphasizes the need to establish not mere omission to pay but an attitude of refusal on demand verging on pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree.”dishonest disowning of the obligation under the decree.”

ATTACHMENT BEFORE JUDGMENTATTACHMENT BEFORE JUDGMENT

Sub Rule 1of Sub Rule 1of Rule5Rule5 provides for Furnishing of security, or provides for Furnishing of security, or production of property or its equivalent value where any of production of property or its equivalent value where any of the grounds mentioned in the sub rule are satisfied.the grounds mentioned in the sub rule are satisfied.

Sub rule 2Sub rule 2 of this Rule provides that the property and the of this Rule provides that the property and the estimated value thereof needs to be specified unless the estimated value thereof needs to be specified unless the Court directs otherwise.Court directs otherwise.

Sub rule 3Sub rule 3 provides for conditional attachment of the whole provides for conditional attachment of the whole or any part of the specified property.or any part of the specified property.

Sub rule 4 Sub rule 4 provides that any attachment made without provides that any attachment made without complying with the provisions in sub rule 1 of this rule shall complying with the provisions in sub rule 1 of this rule shall

be void.be void.

SCOPE AND OBJECT OF RULE 5SCOPE AND OBJECT OF RULE 5

Realisation of decretal amount if one is eventually passed Realisation of decretal amount if one is eventually passed from defendant and to prevent the decree from becoming from defendant and to prevent the decree from becoming infructuousinfructuous..

Essential Grounds Essential Grounds

Disposal of whole or part of the property.Disposal of whole or part of the property. Removal of property or part of it from local limits of the Removal of property or part of it from local limits of the

jurisdiction exercised by the Court. jurisdiction exercised by the Court. Intention of causing obstruction or delay in the Intention of causing obstruction or delay in the

proceedings proceedings

GUIDING PRINCIPLES FOR GUIDING PRINCIPLES FOR ATTACHMENT BEFORE JUDGMENTATTACHMENT BEFORE JUDGMENT

Rule 5 of Order 38 of CPC: if the ingredients for invoking it Rule 5 of Order 38 of CPC: if the ingredients for invoking it are lacking in the application and the affidavit filed in are lacking in the application and the affidavit filed in support thereto attachment before judgment order cannot be support thereto attachment before judgment order cannot be ordered. ordered. KCV Airways Ltd. v. RK Blaggana KCV Airways Ltd. v. RK Blaggana AIR 1998 Del AIR 1998 Del 7070

Court Must be satisfied: Court Must be satisfied: Mere Mechanical repetition Mere Mechanical repetition without any truth underlying the statement is not sufficient. without any truth underlying the statement is not sufficient. Satisfaction of the Court lies not only in directing the Satisfaction of the Court lies not only in directing the Defendant to furnish security but also in directing the Defendant to furnish security but also in directing the Defendant to show cause as to why he should not furnish Defendant to show cause as to why he should not furnish security. security. Rajpal Cloth House v. Fancy Textiles Rajpal Cloth House v. Fancy Textiles 66(1997) 66(1997) DLT 842DLT 842 ; ; Renox Commercials v. Inventa TechRenox Commercials v. Inventa Tech. AIR 2000 . AIR 2000 Mad 213Mad 213

CONTINUEDCONTINUED Affidavit:Affidavit: An affidavit based on Information not directly An affidavit based on Information not directly

obtained must reveal the source of the information. obtained must reveal the source of the information. Harkishan v. Alembic ChemicalsHarkishan v. Alembic Chemicals AIR 1986 All 87 AIR 1986 All 87 (Amendment by Allahabad High Court)(Amendment by Allahabad High Court)

Notice To Defendant:Notice To Defendant: The Order of attachment must be The Order of attachment must be passed after notice to Defendant in Form No. 5 in Appendix passed after notice to Defendant in Form No. 5 in Appendix D. An order passed without compliance with the provisions D. An order passed without compliance with the provisions of Rule 5(1) is void. of Rule 5(1) is void. Rajender Singh v. Ramdhar SinghRajender Singh v. Ramdhar Singh AIR AIR 2001 SC 2220 2001 SC 2220 KCV Airways Ltd. v. RK BlagganaKCV Airways Ltd. v. RK Blaggana AIR 1998 AIR 1998 Del 70.Del 70.R 5(4) is a protective measure for defendant to invalidate R 5(4) is a protective measure for defendant to invalidate order passed against him without notice. order passed against him without notice. N Pappamal v. L N Pappamal v. L ChidambaramChidambaram AIR 1986 Mad 70. AIR 1986 Mad 70.

CONTINUEDCONTINUED Intention to dispose of the propertyIntention to dispose of the property: Sine qua non for order : Sine qua non for order

of attachment or an order demanding security before of attachment or an order demanding security before judgment is the dishonest intention to dispose of the judgment is the dishonest intention to dispose of the

property. property. : : Mala Kumar Engineers Pvt. Ltd. V. B. Seenaiah Mala Kumar Engineers Pvt. Ltd. V. B. Seenaiah

and Co. (Projects) Ltdand Co. (Projects) Ltd.. 2005 (1) ARBLR 264 (Delhi) 2005 (1) ARBLR 264 (Delhi)

Rateable DistributionRateable Distribution

Security: Security:

TRANSFER OF PROPERTY DURING TRANSFER OF PROPERTY DURING ATTACHMENTATTACHMENT

Section 64 of CPC:Section 64 of CPC: Provides that when property is attached Provides that when property is attached in execution of decree any private transfer contrary to the in execution of decree any private transfer contrary to the attachment shall be void as against all claims enforceable attachment shall be void as against all claims enforceable under the attachment. Same principle to apply for under the attachment. Same principle to apply for Attachment before Judgment provided the decree was Attachment before Judgment provided the decree was passed in favour of the Plaintiff at whose instance decree passed in favour of the Plaintiff at whose instance decree was made. was made.

But when a sale deed has already been executed prior to the But when a sale deed has already been executed prior to the institution of the suit but has not been registered it shall be institution of the suit but has not been registered it shall be held to be valid. held to be valid. Hamda Ammal V Avadiappa PatharHamda Ammal V Avadiappa Pathar (1991) (1991) 1 SCC 715.1 SCC 715.

CONTINUEDCONTINUED Whether property can be transferred when after attachment Whether property can be transferred when after attachment

of property suit is dismissed and appeal is pending?of property suit is dismissed and appeal is pending?

Rule 9 of the said order states that when Defendant Rule 9 of the said order states that when Defendant furnishes security or the suit is dismissed then the order for furnishes security or the suit is dismissed then the order for Attachment before judgment shall be withdrawn.Attachment before judgment shall be withdrawn.

Differing Opinions of High Courts when Suit dismissed for Differing Opinions of High Courts when Suit dismissed for Default is restoredDefault is restored

Allahabad Allahabad : : If a suit is dismissed for default, the attachment If a suit is dismissed for default, the attachment comes to an end even if there is no order made for comes to an end even if there is no order made for withdrawing it and even if the suit is afterwards restored. withdrawing it and even if the suit is afterwards restored. Abdul Ahmad v. Karim BuxAbdul Ahmad v. Karim Bux AIR 1973 All 67 AIR 1973 All 67

CONTINUEDCONTINUED Travancore-Cochin( Now Kerala High Court) Full Bench Travancore-Cochin( Now Kerala High Court) Full Bench

Decision:- Contrary view taken – Where an order Decision:- Contrary view taken – Where an order dismissing the suit is reversed and the decree is passed in dismissing the suit is reversed and the decree is passed in favour of the plaintiff an attachment before judgment would favour of the plaintiff an attachment before judgment would revive as on the date passed. revive as on the date passed. Mohd. Abdul Khadir v. Mohd. Abdul Khadir v. PadmanabhaPadmanabha AIR 1952 Tr-Coch 414 AIR 1952 Tr-Coch 414

Madras: Similar view was taken in Madras: Similar view was taken in Nayudamma v. Sivaraju Nayudamma v. Sivaraju AIR 1943 Mad 515 AIR 1943 Mad 515 Conflict Resolved through insertion of Amendment Act of Conflict Resolved through insertion of Amendment Act of 19761976Sub rule 2 of Rule 11A provides that an attachment made Sub rule 2 of Rule 11A provides that an attachment made before judgment in a suit which is dismissed for default is before judgment in a suit which is dismissed for default is not to be revived merely because of the fact that the order not to be revived merely because of the fact that the order for the dismissal of the suit for default has been set aside for the dismissal of the suit for default has been set aside and the suit has been revived.and the suit has been revived.

CONTINUEDCONTINUED Govindrao Mahadik v. Debi SahaiGovindrao Mahadik v. Debi Sahai AIR 1982 SC 989 AIR 1982 SC 989

The Supreme Court while delving into the issue has The Supreme Court while delving into the issue has observed as follows:-observed as follows:-

““In fact, a dismissal of the suit may terminate the In fact, a dismissal of the suit may terminate the attachment and the same would not be revived even if attachment and the same would not be revived even if the suit is restored and this becomes manifestly clear the suit is restored and this becomes manifestly clear from the newly added provision in Sub-rule (2) of Rule from the newly added provision in Sub-rule (2) of Rule 11-A of Order 38, CPC” 11-A of Order 38, CPC”

Conclusion: Conclusion: Sale and other transfer is valid even if, after the Sale and other transfer is valid even if, after the attachment order made before judgment, the suit is attachment order made before judgment, the suit is dismissed and an appeal is pending as the order is not dismissed and an appeal is pending as the order is not revived merely on the restoration of a suit.revived merely on the restoration of a suit.

PROPERTY SITUATED OUTSIDE PROPERTY SITUATED OUTSIDE JURISDICTIONJURISDICTION

Where the property sought to be attached is outside the local Where the property sought to be attached is outside the local limits of the jurisdiction of the Court, the proper course to limits of the jurisdiction of the Court, the proper course to follow is to transmit the order for Attachment to the District follow is to transmit the order for Attachment to the District Court in whose jurisdiction the property is situated under Court in whose jurisdiction the property is situated under Section 136 of the CPC.Section 136 of the CPC.

The failure on the part of the Court which issued the The failure on the part of the Court which issued the Attachment order in sending the order and the connected Attachment order in sending the order and the connected papers to the District Court will not invalidate the papers to the District Court will not invalidate the attachment order as such. attachment order as such. Rajender Singh v. Ramdhar SinghRajender Singh v. Ramdhar Singh AIR 2001 SC 2220.AIR 2001 SC 2220.It is only a matter of procedure and if objection is raised to It is only a matter of procedure and if objection is raised to the effect that the procedure was not complied with , the the effect that the procedure was not complied with , the Court can issue appropriate direction to cure the same.Court can issue appropriate direction to cure the same.

MODE OF MAKING ATTACHMENTMODE OF MAKING ATTACHMENT Rule 7Rule 7 provides for manner in which the Attachment before provides for manner in which the Attachment before

judgment shall be made. It provides for the judgment to be judgment shall be made. It provides for the judgment to be made in the same manner as attachment in execution and made in the same manner as attachment in execution and renders fresh attachment unnecessary.renders fresh attachment unnecessary.

Prohibitory order must be published in the manner as Prohibitory order must be published in the manner as provided under provided under Order 21 Rule 54Order 21 Rule 54..

Attachment would not be held null and void even if there Attachment would not be held null and void even if there were irregularities in effecting it. were irregularities in effecting it. Ratha Harijan v. Ratha Harijan v. NarasinghaNarasingha AIR 1961 Orissa 22. AIR 1961 Orissa 22.

ADJUDICATION OF CLAIMSADJUDICATION OF CLAIMS Rule 8 Rule 8 provides for adjudication to be in the same manner provides for adjudication to be in the same manner

as provided in Order 21 Rule 58.as provided in Order 21 Rule 58. Adjudication of Claims: Adjudication of Claims: The Court upon hearing such claim The Court upon hearing such claim

maymay• Allow the claim and release property from attachment Allow the claim and release property from attachment

either wholly or to such extent as it thinks fit.either wholly or to such extent as it thinks fit.• Disallow claim or objection.Disallow claim or objection.• Continue the attachment subject to any mortgage, charge Continue the attachment subject to any mortgage, charge

or other interest or favor of any person.or other interest or favor of any person.• Pass any other order.Pass any other order.

EFFECT OF ATTACHMENT ON EFFECT OF ATTACHMENT ON RIGHTS OF THIRD PERSONS RIGHTS OF THIRD PERSONS

Rule 10:Rule 10: Attachment shall not affect the rights, Attachment shall not affect the rights, existing prior to the attachment, in the following existing prior to the attachment, in the following cases-cases-

Rights of persons not parties to the suit.Rights of persons not parties to the suit. Attachment before judgment not to bar rights of Attachment before judgment not to bar rights of

other decree holders.other decree holders. Sale of property prior to attachment ( as explained Sale of property prior to attachment ( as explained

before)before) Agreement to Sell: It creates an obligation as Agreement to Sell: It creates an obligation as

regards the ownership of the property.regards the ownership of the property.

RE-ATTACHMENT OF PROPERTY RE-ATTACHMENT OF PROPERTY AFTER PASSING OF DECREEAFTER PASSING OF DECREE

Rule 11Rule 11: Where property is under attachment and then a suit : Where property is under attachment and then a suit is decreed in favour of the plaintiff, it shall not be necessary is decreed in favour of the plaintiff, it shall not be necessary for the plaintiff upon an application for execution of the for the plaintiff upon an application for execution of the property to apply for re-attachment of the property. property to apply for re-attachment of the property.

Application for execution of decree is necessary as Application for execution of decree is necessary as indicated by the words, “Upon an application for execution”indicated by the words, “Upon an application for execution”

Limitation period of 3 years is prescribed for an execution Limitation period of 3 years is prescribed for an execution petition of attachment before judgment after a decree is petition of attachment before judgment after a decree is passed.passed.

MISCELLANEOUS PROVISIONSMISCELLANEOUS PROVISIONS Rule 12Rule 12: Agricultural produce shall not be attachable before : Agricultural produce shall not be attachable before

judgment: “Agricultural produce” denotes judgment: “Agricultural produce” denotes • Growing crop standing on the field orGrowing crop standing on the field or• Crop lying on the threshing floor orCrop lying on the threshing floor or• Fodder stockFodder stock

Grain separated from chaff is agricultural produce within Grain separated from chaff is agricultural produce within this rule. this rule. Bhabhoot Singh v. Ghan Shyam Bhabhoot Singh v. Ghan Shyam AIR 1962 Raj 82.AIR 1962 Raj 82.

Rule 13Rule 13 : Small Cause Court shall not be empowered to : Small Cause Court shall not be empowered to attach immovable propertyattach immovable propertyThis Rule was added by the Amending Act 1 of 1926 and as This Rule was added by the Amending Act 1 of 1926 and as that Act was declaratory by nature, the section is that Act was declaratory by nature, the section is retrospective in nature.retrospective in nature.

END OF PRESENTATIONEND OF PRESENTATION

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