Law Web: Under Order 38 Rule 5 CPC, Court can attach debts due to defendant from third party.

The above noticed provisions of sub-section (1) of Section 60 read with the provisions of Rule 7 and 8 of Order 38 CPC clearly shows that even the debts due to the defendants/judgment-debtor from third party falls within the purview of Order 38 Rule 5 CPC and therefore such a debt could be attached under Order 38 Rule 5 CPC. Unfortunately, the provisions of sub-section (1) of Section 60, Rule 7 and 8 of Order 38 CPC were not brought to the notice of the learned Judge in J.Balakrishna's case (supra 1). Therefore, with great respect, we are not persuaded to accept the opinion of the learned Judge as correct law.

The further opinion of the learned Judge in J.Balakrishna's case (supra 1) that the attachment before judgment could be ordered only against the defendant and cannot be ordered against the third party, in my considered opinion, does not seem to be correct proposition of law.

Order 38 Rule 7 CPC provides that the attachment under Order 38 Rule 5 shall be made in the manner provided in the attachment of property in execution decree. It is trite, the attachment envisaged under Order 38 Rule 5 CPC is an attachment before judgment. The restriction found by the learned single Judge that under Order 38 Rule 5, only the properties of the defendant can be attached and not the properties in the hands of garnishee has no statutory support nor the support of any precedent. In Alwar Aiyangar's case (supra 2), the question as to whether a Court attaching a debt either before judgment or in execution can enquire into the truth or the existence of the debt arose. Curgenven,J, speaking for the Madras High Court was pleased to observe : "The attachment in the present instance was made before judgment on an application filed on the same day as the plaint. But I cannot find that it makes any difference whether such an attachment was made before judgment or in execution of the decree, and it appears to me that Rr.7 and 8, O.38, Civil P.C., show that the Court has the same powers in the one case as the other."

The above observation of Curgenven,J also supports our view in a way. Therefore, we hold that in exercise of the power, under Order 38 Rule 5 CPC, the Court can attach the debts due to the defendant from a third party. The attachment of debts due to the defendant from third party could be attached before judgment under Order 38 Rule 5 CPC. In that view of the matter, we hold that the opinion of the learned single Judge in J.Balakrishna's case (supra 1) is not good law and it is accordingly overruled.

Andhra High Court

Surender Singh Bajaj vs M/S.Kitty Steels Limited And ... on 22 April, 2002

I have had the advantage of reading in advance the judgment in draft prepared by my learned Brother CH.S.R.K.PRASAD,J. I am in respectful agreement with my learned Brother that the appeal has to be allowed and the order impugned in the appeal has to be set aside and I.A.No.2957 of 2001 is liable to be dismissed. However, I propose to add comments of my own.

This Civil Miscellaneous Appeal filed under Order 43 Rule 1(q) of CPC is directed against an order and decree dated 29.11.2001 passed in I.A.No.2957 of 2001 in O.S.No.540 of 2001 on the file of the Court of the Chief Judge, City Civil Court, Hyderabad. The appellant in this appeal is the 1st defendant and the respondents in this appeal are the plaintiffs in the suit O.S.No.540 of 2001. The plaintiffs have filed the suit for recovery of a sum of Rs.11,89,340/- with interest and costs from the 1st defendant-the appellant, basing on the debt vouchers signed by the 1st defendant in favour of the plaintiffs. In the said suit, the plaintiffs filed the petition I.A. No.2957 of 2001, under Order 38 Rule 5 CPC to grant attachment before judgment by attaching cash of Rs.4 lakhs lying in deposit with the Court of the Special Judge for Economic Offences, Nampally, Hyderabad in Case No.SWG/REF/ICD/TS/2/97- CUS (SHB) pending disposal of the suit. The material averments in the affidavit filed in support of IA No.2957 of 2001 sworn to by Sri H.S.Sethi, the 2nd petitioner, reads as follows :

"I most humbly submit that the defendant No.1 herein is making all attempts even by attempting to withdraw the deposit amount deposited with the defendant No.2 herein towards surety for grant of bail in case No.F.No.SG/REF/ICD/TS/2/97-Cus (SHB) and if the attachment before judgment is not granted it will be very difficult to recover the dues from the defendant No.1."

I.A.No.2957 of 2001 was opposed by the 1st defendant - the appellant by filing a detailed counter affidavit. Paras (4), (5), (6), (7), (8), (9), (10) read as follows :

4. "I submit that the petitioners have not approached the Hon'ble Court with clean hands and the petitioners filed the above suit and present I.A. by suppressing true and correct facts on the basis of fabricated and tampered documents with ulterior motives which will be detailed in the following paragraphs and hence the petitioners are not entitled for the equitable relief sought in the above I.A. and hence the above IA is liable to be dismissed.

5. I submit that I have not borrowed any amount from the petitioners as claimed by them and similarly the amount of Rs.4.00 lakhs deposited by me as surety in Criminal Court was given by my mother with which either the petitioners or Mr.Daljeet Singh have no concern whatsoever. The entire suit claim is false and bogus and the same is cooked up by fabricating, tampering and creating documents with ulterior motives, which will be detailed in the following paragraphs.

6. I submit that petitioner No.1 is a Limited Company in which I along with my wife holding equity shares numbering about 50,000 with the face vale of Rs.10/- each which are lying in the premises of petitioner No.1 - Company. The mother of the 2nd petitioner is my real sister. I was appointed as Consultant and also authorised signatory of 1st petitioner's company in the year 1996 in order to look after various matters of the company. I use to draw consultancy charges as required exclusive of expenses such as travelling charges, entertainment charges and other expenses incidental to my work as Consultant and also authorised signatory on behalf of petitioner No.1. The original resolution relating to the above is with the petitioners and they are hereby called upon to produce the same.

7. I submit that after I was appointed as Consultant and authorised signatory of petitioner No.1, my signatures were taken on blank letter head sheets of petitioner No.1 - Company and other companies i.e., Ace Builders and Developers (P) Limited, white papers and non-judicial stamp papers stating that the same will be used for and on behalf of the company in case of my absence as and when required. Believing the said representation I have signed the blank letter head sheets, while papers and non judicial stamp paper.

8. I submit that after I was appointed as Consultant and designated as authorised signatory in the year 1996, the following amounts were paid to me under different petty cash or debt vouchers for different purposes.

Sl.No.

Date

Nature of Dcoument

Amount

Purpose

14.5.1998

Petty Cash Voucher

Rs. 10,000/-

26.5.1998

Debt Voucher

Rs. 7,000/-

APSEB Electricity

13.4.1999

-do-

Rs. 4,000/-

Santro Servicing & Petrol charges

27.10.1999

-do-

Rs. 2,500/-

Entertainment expenditure

7.3.2000

-do-

Rs. 15,000/-

Self

8.3.2000

-do-

Rs. 9,100/-

HSS Cash

23.2.2000

-do-

Rs. 20,000/-

Personal

6.4.2000

-do-

Rs. 5,000/-

25.4.2000

-do-

Rs. 10,000/-

For Insurance

17.5.2000

-do-

Rs. 50,000/-

Personal

22.6.2000

-do-

Rs. 5,000/-

============

Total Rs.1,42,600/-

=========

9. I submit that the petitioners by tampering some of the debt vouchers detailed hereunder inflated the total amount paid to me as Rs.5,43,600/- and in order to show that the said inflated amount was paid to me towards loan and that I have acknowledged the same, the petitioners by misusing my blank signatures available with them. I submit that I have not received Rs.5,43,600/- from the petitioners as claimed by them. I submit that out of the vouchers filed by the petitioners, the voucher dated 23.3.2000 is cancelled one and the vouchers dated 26.5.1998, 13.4.1999, 27.10.1999, 8.3.2000, 6.4.2000 and 25.4.2000 are fabricated and tampered with by adding words and figures for the purpose of filing the above suit with a malafide intention to prevent me from withdrawing the amount deposited by me as surety. I am reserving my right to take suitable criminal action for tampering the documents as detailed above which is evident from the said documents itself. The petitioners are guilty of tampering the above said documents. I submit that in order to obtain garnishee order by way of attachment before judgment from the Hon'ble Court, the petitioners by misusing my blank signatures available with them fabricated and created letters dated 23.2.1998 and 9.3.2000. I submit that I have not written the letters dated 23.2.1998 and 9.3.2000 claimed by the petitioners but the same were created by the petitioners by misusing my blank signatures available with them. I submit that I have not taken or received any amount much less Rs.4.00 lakhs from the petitioner No.2 through Sri Daljeet Singh. As a matter of fact, the amount of Rs.4.00 lakhs was given to me by my mother for depositing the same into the criminal court as surety for securing the release of petitioner No.2 and others on bail. I submit that I am not due and payable any amount to the petitioners jointly or severally and the entire suit claim is false. As a matter of fact, it is the petitioners who are liable to pay to me towards consultation fee for recovery of which I am reserving my rights to take steps for recovery of the same as per law. Except the tampered, fabricated and created documents and the self serving affidavit of the 2nd petitioner, the petitioners have not placed any material to warrant an order of attachment before judgment.

10. The statement of the petitioner No.2 in his affidavit that I am trying to leave beyond the jurisdiction of this Hon'ble Court is false and baseless and the same is invented for the purpose of filing the above IA to obtain order of attachment before judgment. I submit that I am a permanent resident of Hyderabad and I have no intention to leave the jurisdiction of the Hon'ble Court. I have not tried so far to leave the jurisdiction of the Hon'ble Court. I have not tried so far to leave the jurisdiction of the Hon'ble Court. I submit that the petitioners are in no way concerned with the amount deposited by me as surety with the respondent No.2 herein and the claim of the petitioners for the said amount is false and baseless and the same is invented to prevent me from withdrawing the amount deposited by me as surety. Admittedly I have deposited the amount with the respondent No.2 as surety and under law I am entitled to withdraw from the surety and also withdraw the amount deposited by me. I am under no legal obligation to stand as surety for the petitioner No.2 and others in the criminal case. I submit that due to family disputes with the surety to the petitioners and as such I have filed petition before the Hon'ble Special Judge for Economic Offences, Hyderabad, as provided under law to discharge me from surety in which notice was ordered and having come to know about the applications."

The learned Chief Judge, City Civil Court, on consideration of the rival claims of the parties and since the 1st defendant did not come forward to give security thought it fit to allow the application. Accordingly, the learned Chief Judge by the order and decree impugned in this appeal, allowed the application. Hence this appeal by the defendant.

Sri Raghuveer Reddy, learned counsel for the appellant would contend that (i) the Court below has failed to see that the surety money in the hands of the 2nd respondent - garnishee cannot be attached in exercise of power under Order 38 Rule 5 CPC, unless final decree is passed in the suit; (ii) that the plaintiffs have failed to make out that the conditions precedent for invoking power under Order 38, Rule 5, CPC are absent and therefore, the application should have been dismissed in limine; (iii) that though the movable properties of the judgment-debtor falling within clause (c) of Order 21 Rule 46(1) which are not in the possession of the judgment-debtor can be attached, an exception is made in the case of such movable property if deposited in, or in the custody of, any Court. Sri Raghuveer Reddy, learned counsel for the appellant in support of the 1st contention placed strong reliance on the judgment of a single Judge of this Court in J.Balakrishna v. United Bank of India1.

Sri V.L.N.G.K.Murthy, learned counsel for the respondents- plaintiffs, on the other hand, would contend that the provisions of Order 38 Rule 7 read with Section 60 CPC clearly show that the debt due to the judgment debtor from the third party falls within the purview of Order 38 Rule 5 and therefore, the sum of Rs.4 lakhs lying in deposit in the Court of Special Judge for Economic Offences, Nampally, Hyderabad, can be attached. Sri V.L.N.G.K.Murthy, learned counsel would contend that the opinion of the learned single Judge of this Court in J.Balakrishna's case (supra 1) without considering the relevant provisions of CPC such as Order 38 Rule 7 and Section 60 CPC is not a correct and good law and it requires to be reconsidered. The learned counsel placing reliance on certain observations of Curgenven,J, in Alwar Aiyangar v. Subramania,2 would contest the correctness of the opinion of the learned single Judge in J.Balakrishna's case (supra 1) that the attachment order under Order 38 Rule 5 CPC cannot be ordered against the third party and that the attachment before judgment can be ordered only against the defendant and not others. The learned counsel would further contend that though the defendant has stated that he did not borrow any amount from the respondents and that sum of Rs.4 lakhs deposited by the defendant in the Court of the Special Judge for Economic Offences, Nampally, Hyderabad was given by his mother, he has admitted the signature on the receipt in the letter dated 23.2.1998, addressed to the 2nd respondent and therefore, the truth of the allegation has to be gone into by the Court below in the course of trial and looking from that angle also, the impugned order made by the learned Chief Judge, City Civil Court, is just, proper and equitable and there is no warrant for this Court to interfere with such order.

If we accept the opinion of the learned single Judge in J.Balakrishna's case (supra 1) as correct law, that will go to the root of the matter and in that event, it should be held that the application filed under Order 38 Rule 5 by the plaintiff is incompetent. In that view of the matter, it becomes necessary for us to first consider whether the above opinion of the learned single Judge is correct law or it requires reconsideration.

In J.Balakrishna's case (supra 1), the plaintiff-1st respondent Bank had instituted a suit against the 2nd respondent therein in O.S.No.164 of 1991 in the Court of the Additional Subordinate Judge, Tirupathi for recovery of certain amounts. During the pendency of the suit, two applications were filed by the plaintiff-1st respondent therein numbered as I.A.No.944 of 1991 and I.A.No.945 of 1991. I.A.No.944 of 1991 was filed under Order 38 Rule 5 CPC for attachment of certain immovable properties of the respondent Nos.2 to 21 therein. The learned trial Judge by his order dated 16.2.1994 made interim attachment absolute which was granted on 2.8.1991. Aggrieved by the said order, CRP No.2097 of 1994 was filed in this Court. Before the learned Judge it was contended that since there was no decree in favour of the 1st respondent, the money in the hands of third party would not have been attached under Order 38 Rule 5 of CPC. Dealing with that contention, the learned Judge was pleased to observe :

"7. ... This Court is of the considered view that the attachment under Order 38, Rule 5 of CPC cannot be ordered against the third party. The attachment before judgment has to be ordered against the defendant only on certain conditions being satisfied. There is no procedure prescribed in impleading the additional parties in both the IAs, when they were not added as parties in the suit.

8. The money in the hands of third party also cannot be attached as a garnishee (debtor's debtor) unless a decree is passed in the suit. Such money can only be attached in execution proceedings and not in pendency of the suit........"

In order to appreciate whether the above opinion of the learned Judge is correct law or not, it is necessary to first notice certain provisions of the CPC which have bearing in the decision-making on the above point. Rule (7) and (8) of Order 38 read as follows :

"Order XXXVIII - Rule 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.

Rule 8 - Adjudication of claim to property attached before judgment - Where any claim is preferred to property attached before judgment, such claim shall be adjudicated upon in the manner hereinbefore provided for the adjudication of claims to property attached in execution of a decree for the payment of money."

The relevant provision of sub-section (1) of Section 60 reads as follows : "60. Property liable to attachment and sale in execution of a decree - (1) - The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf :"

The above observation of Curgenven,J also supports our view in a way. Therefore, we hold that in exercise of the power, under Order 38 Rule 5 CPC, the Court can attach the debts due to the defendant from a third party. The attachment of debts due to the defendant from third party could be attached before judgment under Order 38 Rule 5 CPC. In that view of the matter, we hold that the opinion of the learned single Judge in J.Balakrishna's case (supra 1) is not good law and it is accordingly overruled.

Since we held that the application filed by the plaintiffs under Order 38 Rule 5 CPC in this case is maintainable, the next question to be considered is whether in allowing the application, the Court below acted legally or not ? It is well settled that an order under Order 38 Rule 5 CPC should not be passed merely for the sake of asking or merely because of the fact that the garnishee has huge sum of money payable to the defendant. The Law in this regard were discussed by this Court in Sripathi Panditarajula Venkanna Babu v. Varalakshmi Finance Corporation, Rajahmundry,3 wherein the steps necessary to be taken before an order is passed were clearly discussed and laid down. Further a Division Bench of this Court in Chairman and Managing Director, R.P.N.Nigam Ltd., New Delhi v. Rambachane Singh,4 dealing with necessary conditions for ordering an application filed under Order 38 Rule 5, CPC was pleased to hold :

".... Such an order is not to be passed in a routine manner merely for the asking for it but that the Court has to be satisfied on tangible materials placed before it that there are attempts at alienation and that the steps are taken so as to delay or obstruct the judgment that may be ultimately passed against the defendant. Before passing an order, the defendant is first of all to be called upon to furnish security in the shape of specific sum to produce and place at the disposal of the Court when required, the property specified by the plaintiff in his petition or such portion of it as may be sufficient to satisfy the decree or call upon him to show cause as to why he shall not furnish security. But such an order can be passed only after the primary satisfaction of the obstructive conduct of the defendant. The ultimate attachment order can be passed only if the defendant either fails to show cause why the security shall not be furnished or fails to furnish the security as required...."

The only allegation made by the plaintiffs in the affidavit filed in support of the application is that the defendant No.2 is "now trying to leave beyond the jurisdiction of the Court" and that "he is attempting to withdraw the money deposited with the defendant No.2 and if the attachment before judgment is not granted it would be very difficult for the plaintiffs to recover their dues from the defendant No.1." That is the only allegation in the affidavit. Therefore, the question to be considered is whether the above allegation of the plaintiffs could constitute necessary conditions precedent to order an application under Order 38 Rule 5, CPC. The above circumstance stated by the plaintiffs in the affidavit, even if true, in itself, in my considered opinion is not sufficient to pass an order under Order 38 Rule 5 CPC unless it is also pleaded that by the impugned conduct of the defendant No.1, he was intending to delay the execution of the decree that may be passed by the Court against him. The satisfaction of the Court that the defendant with an intention to obstruct or delay the execution of the decree that may be passed by it, is 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 the jurisdiction of the Court, is sine qua non for exercising the power under Order 38 Rule 5. This condition is totally absent in the instant case. In the impugned order, nowhere the Court below has recorded such satisfaction. In that view of the matter, the Court below ought not to have ordered the application filed by the plaintiffs under Order 38 Rule 5 CPC.

The application filed by the plaintiffs under Order 38 Rule 5 in the instant case, even otherwise, is liable to be dismissed. The question to be considered is whether the money deposited with the defendant No.2 by the defendant No.1 to stand as surety is a debt and whether that amount could be attached before judgment under Order 38 Rule 5, CPC. It is quite clear from the provisions of sub-Section (1) of Section 60 of the CPC, that a property of the judgment-debtor could be attached only if he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf. In my considered opinion, the 1st defendant does not have disposing power over the sum of Rs.4 lakhs deposited by him with the defendant No.2 while standing as a surety. I say this because, the amount deposited by the defendant No.1 with the 2nd defendant cannot be withdrawn till the 2nd respondent passes an order cancelling the bond and discharging the surety and allows him to withdraw. The power of the defendant No.1 to withdraw the money in deposit depends upon the contingency of what the defendant No.2 would do hereinafter. Therefore, it cannot be said that as on the date of the application under Order 38 Rule 5 CPC, or on the date when the Court below made the order impugned in this appeal, the defendant No.1 had a disposing power as regards the sum of Rs.4 lakhs lying in deposit with the defendant No.2 Court. It is also relevant to notice that the defendant No.2 Court is not holding the sum of Rs.4 lakhs in trust for the defendant No.1. On the other hand, the defendant No.2 Court is holding the said sum of money as security for the appearance of the accused in that case. Looking from that angle also, the application filed by the plaintiffs under Order 38 Rule 5 is liable to be dismissed in limine.

I also find force in the submission of the learned counsel for the appellant that though the movable properties of the judgment-debtor falling within clause (c) of Order 21, Rule 46(1) which are not in the possession of the judgment-debtor can be attached, an exception is made in the case of such movable property if deposited in, or in the custody of, any Court. Order 21, Rule 46, CPC provides for attachment of debt, share and other property not in possession of judgment-debtor. Clause (a) of Rule 46(1) provides for attachment of a debt not secured by a negotiable instrument whereas, clause (b) provides for attachment of a share in the capital of a corporation. Clause (c) provides for attachment of other movable property not in the possession of the judgment- debtor, except property deposited in, or in the custody of, any Court. Therefore, it is quite clear that a movable property not in the possession of the judgment-debtor, if it is deposited in, or in the custody of any Court, cannot be attached by virtue of exclusionary clause in clause (c) of Order 21, Rule 46(1). If that is the rule-position, sum of Rs.4 lakhs which is deposited and which is in the custody of the 2nd defendant Court cannot be attached under Order 38, Rule 5, CPC.

In the result and for the foregoing reasons, this appeal is allowed and the order of the Court below dated 29.11.2001 made in IA No.2957 of 2001 in O.S. No.540 of 2001 on the file of the Court of the Chief Judge, City Civil Court, Hyderabad is set aside and I.A.No.2957 of 2001 is dismissed and attachment is raised. The appellant is entitled to costs of this appeal.

--------------------

S.R.NAYAK,J

Dt : 22.4.2002

Note :

LR Copy to be marked

(b/o)

knk

THE HON'BLE SRI JUSTICE S.R.NAYAK

AND

THE HON'BLE SRI JUSTICE CH.S.R.K.PRASAD

C.M.A.NO.3235 of 2001

JUDGMENT(PER CH.S.R.K.PRASAD,J)

(1) The plaintiffs, who are respondents in the appeal, have filed O.S.No.540 of 2001 before the Chief Judge, City Civil Court, Hyderabad for recovery of an amount of Rs.11,89,340/- with interest on the basis of debit vouchers signed by the appellant being the first defendant in favour of the plaintiffs. During the pendency of the suit, the plaintiffs have presented I.A.No.2957 of 2001 under Order 38 Rule 5 of the Code of Civil Procedure seeking for attachment before judgment by attaching an amount of Rs.4,00,000/- lying with the Special Judge for Economic Officers, Nampally, Hyderabad alleging that the appellant is trying to leave beyond the jurisdiction of the Court and making attempts to withdraw the amount deposited with the Court.

(2) The same is opposed by the appellant herein alleging that the debt IS not true and the documents are fabricated and the entire suit claim is cooked up. It is also contended that the signatures have been taken on blank letterhead papers and has also denied about leaving of the jurisdiction of the Court. It is also contended that the appellant has deposited the amount towards surety and he is entitled to withdraw the suit amount deposited by him and there are no grounds to attach the properties.

(3) After hearing both sides, the learned Chief Judge, City Civil Court passed the following order:

"The petition is allowed and the attachment before judgment of surety amount furnished by the first respondent with the 2nd respondent is ordered to be attached pending disposal of the suit. The interim prohibitory order issued to the 2nd respondent is made absolute."

Aggrieved by the same, the 1st defendant has preferred this appeal. (4) The points for consideration are:

(i) Whether the respondents prima facie made out a case to order attachment before judgment of movables?

(ii) Whether the amount deposited by a person to stand as surety or security is liable to be attached?

(5) The plaintiffs seek attachment before judgment alleging that the 1st defendant being the appellant is trying to leave beyond the jurisdiction of the Court and making attempts to withdraw the deposited amount with the Court. It is mentioned in the counter affidavit by the appellant that the 1st respondent is a limited company and himself and his wife have got equity shares. It is also the contention of the appellant that he was appointed as consultant and authorized signatory of the 1st respondent company and his signatures were taken on blank letterheads of the 1st respondent and other companies. He is not liable to pay any amount to the respondents.

(6) It is clear from the aforesaid contentions that the appellant is disputing the suit liability. One would expect to get the vouchers marked for perusal of the appellate Court. None of the documents are marked in this case. Only affidavits are filed. They do not specifically refer the debts. The Court has not given any prima facie finding about the debt. It is stated in ALWAR AIYANGAR VS. SUBRAMANIA5 that the Court attaching the debt cannot inquire into the existence of truth of debt, which is sought to be attached. It is clear from the principles laid down in the decision that the Court need not investigate the existence or truth of an alleged debt, which it attaches either before judgment, or in execution. There cannot be any dispute regarding the said principle laid down in the decision. But, the Court has to find prima facie the suit debt. It is well settled and also clearly mentioned under Order 41 Rule 27 of the Code of Civil Procedure that the appellate Court cannot look into the vouchers and documents, which are not marked unless application is made to receive additional evidence. In the absence of marking of documents, this Court is in a handicap to give any finding regarding a prima facie case. It is also clear from the affidavit that it is not mentioned that the attachment is sought as the appellant is making attempts to defeat and delay the execution of the decree. The Court has also not adverted to the same and gives a positive finding about making an attempt to defeat and delay the execution of the decree and with that intention he is attempting to withdraw the amount from the Court. (6) Order 38 Rule 5 of the Code of Civil Procedure reads as follows: "(i) 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, 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.

(7) The learned counsel for the appellant has placed reliance on the principles laid down inJ.BALAKRISHNA V. UNITED BANK OF INDIA6, whereunder it is stated that:

'The money in the hands of third party also cannot be attached as a garnishee (debtor's debtor) unless a decree is passed in the suit. Such money can only be attached in execution proceedings and not in pendency of the suit. Therefore, this Court holds that both the orders in the I.As., are totally illegal and uncalled for. This Court is of the considered view that the learned Judge has not followed the simple legal principles. Hence, both the orders passed in the IAs., are set aside."

(8) The entire law has been summarized in a Division Bench decision of this Court inCHAIRMAN AND M.D., R.P.N. NIGAM LTD., NEW DELHI V. RAMBACHANE SINGH7. Therelevant portion at paragraph No.3 of the said decision reads as follows: "We are afraid that in passing the impugned order, the learned Judge has not kept in view the ingredients of order 38, Rule 5 of the Code of Civil Procedure properly. An order under Order 38, Rule 5 is not to be passed merely for the asking for it and merely because of the fact that the garnishee has huge amount to pay in favour of the appellant. The law in this regard was discussed by this Court in,Sripathi Panditarajula Venkanna Babu V. Varalakshmi Finance Corporation, Rajamundry, 1996 (4) ALD 453 (DB), wherein the steps necessary to be taken before an order is passed were clearly discussed. Such an order is not to be passed in a routine manner merely for the asking for it but that the Court has to be satisfied on tangible materials placed before it that there are attempts at alienation and that the steps are taken so as to delay or obstruct the judgment that may be ultimately passed against the defendant. Before passing an order, the defendant is first of all to be called upon to furnish security in the shape of specific sum to produce and place at the disposal of the Court, when required, the property specified by the plaintiff in his petition or such port5ion of it is as may be sufficient to satisfy the decree or call upon him to show cause as to why he shall not furnish security. But such an order can be passed only after the primary satisfaction of the obstructive conduct of the defendant. The ultimate attachment order can be passed only if the defendant either fails to show cause why the security shall not be furnished or fails to furnish the security as required. From the impugned order in question, we do not find any discussion in that regard. The factors taken into consideration by the Court, as we have referred above, are not germane to passing an order under Order 38, Rule 5 of the Code of Civil Procedure. There is even no satisfaction, before the bank guarantee was called for, that the requisite primary satisfaction was reached and on what materials. The only allegation made by the respondent, as is reflected in Para 7 of the impugned order, is that if the appellants are allowed to take away the amounts from the garnishee, they would leave the jurisdiction of the Court and in such case, it would be difficult for the respondent to realize the amount. This in itself is not sufficient to pass an order under Order 38, Rule 5 of the Code of Civil Procedure unless it is pleaded that by their impugned conduct, they were intending to delay or obstruct the judgment that may be passed."

(9) It is clear from the aforesaid decision that the Court has to find prima facie case. The petitioner who is seeking attachment has to satisfy by affidavit or otherwise that the person whose debt is due to him is making attempts to leave the jurisdiction of the Court or take away the amount with an intention to defeat and delay the execution of the decree. The affidavit furnished by the petitioner did not make specific mention that he was disposing of the whole or any part of the property or removing the whole or any part of his property from the local limits of the jurisdiction of the Court with an intention to obstruct or delay the execution of the decree. Obviously, in this case, he was not disposing of any property. The Court cannot act on mere mentioning about the removing the whole or any part of his property from the local limits of the jurisdiction of the Court. More over, the amount is lying with the Court and the Court has not yet passed an order permitting him to withdraw the same. We state that in view of the principles laid down by the aforesaid decision of a Division Bench of this Court, it cannot be said that the decision in J.BALAKRISHNA V. UNITED BANK OF INDIA (2 supra) places correct law as it has not considered order 38 Rule 7 of the Code of Civil Procedure and Section 60 of the Code of Civil Procedure. Now it is to be seen whether the amount in the hands of the third party cannot be attached unless a decree is passed in the suit. We are of considered opinion that money in the hand of third party can be attached before judgment in view of the principles laid down under order 38 Rule 7 of the Code of Civil Procedure and we have no hesitation to state that it does lay the correct law.

(10) Coming to the aspect of attachment, Section 60 of the Code of Civil Procedure reads as follows:

"The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf."

(11) Can the Court attach the amount towards debt, which was deposited, to stand as surety. It is clear from the provisions of Section 60 of the Code of Civil Procedure that the property can be attached only when a person has got disposing power over the money. That disposing power may be exercised for his own benefit. It is also stated that when it is held in the name of the judgment debtor by any other person in trust for him it can be done. Before ordering attachment of movable or immovable property it has to be seen whether it belonged to the judgment debtor. It has also to be seen whether he has the power to dispose of it. The amount is deposited in a Court as a surety and cannot be withdrawn till the Court passes an order cancelling the bond and discharge the surety and allow him to withdraw. It cannot be said that he has got power of disposing of the money. The Criminal Court is not holding the amount in trust for him. It is holding the amount as surety or security towards the accused in that case. Viewed through this angle, it can never be said that the appellant has got power to dispose of the amount. (12) In view of the interpretation put on to Section 60 of the Code of Civil Procedure, we are of considered opinion that amount lying and deposited before a Criminal Court towards security cannot be attached when execution of the decree unless and until the Court orders return of the amount. No such thing has happened in this case except assertions made before the Court by either parties. Those things are not sufficient for ordering attachment. (13) To sum up, we find that documentary evidence is not made available by marking them for perusal of the appellate Court. In the absence of marking of documents, the appellate Court cannot look into them. No request is make to treat them as additional evidence by presenting an application under order 41 Rule 27 of the Code of Civil Procedure. We also find that the appellant has no disposing power to deal with the amount lying and furnished by way of surety unless and until the Criminal Court accords permission and it is not attachable in view of the bar under Section 60 of the Code of Civil Procedure. We also find that prima facie finding is not given regarding the suit debt before having a resort to the attachment proceedings. It is also a case where the defendant refuses to furnish security.

(14) For all the above reasons, this Court cannot, but set aside the orders passed by the Chief Judge, City Civil Court, in I.A.No.2957 of 2001 in O.S.No.540 of 2001 and dismiss the same.

(15) In the result, the appeal is allowed and the order passed in I.A.No.2957 of 2001 is set aside and I.A. No.2957 of 2001 is dismissed. Attachment is raised. The appellant is entitled to costs.

?1 1999(4) ALD 22

2 AIR 1932 Madras 169

3 1996(4) ALD 453 (DB)

4 AIR 1998 AP 127

5 AIR 1932 Madras 169

6 1999 (4) ALD 22

7 AIR 1998 A.P. 127

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Sunday 10 November 2013

Under Order 38 Rule 5 CPC, Court can attach debts due to defendant from third party.

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