Attachment before judgment is an extraordinary protective remedy under Order 38 Rules 5 to 13 CPC to stop the defendant from defeating the future decree by disposing of or removing property.
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14. Perusal of the law relevant for the purpose as contained in Rule 5 of Order 38 of the Code, is felt relevant. Therefore, the said provision is quoted hereinabove:--
"Attachment before Judgment
R. 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, 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." {Para 14}
15. The said Rule 5 is under the heading Attachment before judgment. It appears from the said provision that Court was entitled to exercise the power for attachment before judgment only when 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 from the local limits of the jurisdiction of the Court. It appears from the impugned order that the said aspects were not at all taken into consideration and no satisfaction in that respect was recorded by the trial Court as appears from the impugned order. Law in this regard as settled in the case of Premraj Mundra (supra) is relevant and in paragraph 10 of the said judgment, guiding principles have been noted as follows :--
"10. From a perusal of all the authorities, I think that the following guiding principles to be deduced :
(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 defts. would not be prejudiced.
(4) That the affidavits in support of the contention 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, and 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 transaction before suit cannot be taken into consideration, but the subject 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 pltf.'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 transferrer is with an intention to delay or defeat the plft.'s claim. It is open to the Court to look to the conduct of the parties immediately before suit, and to examine the surrounding circumstances, and to draw an inference as to whether the deft, is about to dispose of the property, and if so, with what intention. The Court is entitled to consider the nature of the claim and 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 and the mere fact that a business has been closed, or that its turnover had diminished, is not enough.
(11) Where however the deft, starts disposing of his properties one by one, immediately upon getting a notice of the plft.'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 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 plft.'s claim.
(12) Mere removal of properties outside jurisdiction, is not enough, but where the deft. with notice of the plft.'s. claim, suddenly begins removal of his properties outside the Jurisdiction of the appropriate Court, and 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 deft. 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. Here 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 plft.'s claim. The Court must however be very cautious about, the evidence on these points and not rely on vague allegations."
IN THE HIGH COURT OF CALCUTTA
R.M.A.T. No. 1388 of 2003
Decided On: 16.07.2003
R.B.M. Pati Joint Venture Vs. Bengal Builders
Hon'ble Judges/Coram:
A. Chakrabarti and Sadhan Kumar Gupta, JJ.
Citation: AIR 2004 Calcutta 58,(2003) CALHN 569, MANU/WB/0220/2003.
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