GUJARAT NATIONAL LAW UNIVERSITY

Attalika Avenue, Knowledge Corridor, Koba, Gandhinagar-382007.

PROJECT REPORT: CODE OF CIVIL PROCEDURE

Title of the Report: Arrest/Attachment before Judgement: Order XXXVIII

Submission Date: 6th October 2018

Name of the Faculty: Mr. Sanjeev Kumar Chaudhary

Assistant Professor of Law

Gujarat National Law University.

Submitted by:

Venkata Supreeth Kesapragada (17B175)

Rohan Gopal (17B125)

Semester III, Section-B

Batch of 2017-2022.

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Contents
ARREST BEFORE JUDGEMENT.................................................................................................4
Conditions for application of Rule.1........................................................................................5
Security: Rules 2-4:....................................................................................................................6
ATTACHMENT BEFORE DECREE: RULE 5-13........................................................................7
A PLAINTIFF SHOULD SHOW, PRIMA FACIE, THAT HIS CLAIM IS BONA FIDE AND
VALID:........................................................................................................................................7
Order38,Rule5CPC:-...............................................................................................................10
Scope of rule.............................................................................................................................10
APPLICATION OF ORDER XXXVIII RULE 5-........................................................................11

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 INTRODUCTION

Rule 1 of Order 38 of the Code of Civil Procedure lays grounds for arrest of a defendant to a suit
pending before judgement. The object underlying these provisions is to enable the plaintiff to
realize the amount of the decree if one is eventually passed in his favor and to prevent any
attempt by the defendant or defeat or delay the execution of such decree passed against him.

Generally a creditor having a claim against his debtor has first to obtain a decree against him and
execute the said decree by having him arrested, or his property attached in execution under the
provisions of Order 21.

Under special circumstances however the creditor can move for the arrest of his debtor for the
attachment of the property even before the judgement.

An attachment before judgment is to enable the plaintiff to realize the amount of the decree,
supposing a decree eventually made, from the defendant property’. This is the object of the
Order 38 rule 5 of The Civil Procedure Code, 1908. The scope and object of Order 38 rule 5 of
CPC and the rules followed thereon merely to protect a plaintiff against loss arising from the
defendant making away with his property pending suit.

The said authority granted to the courts by this provision in Civil Procedure must be exercised
with caution, care and circumspection. Before a court acts under this rule there must be a
compelling reason to believe on adequate material that unless the power is exercised there is a
real danger that the defendant will remove himself or his property from the jurisdiction of the
court

Such power can neither be used as a lever to coerce the defendant into settlement nor to secure
an easy execution of the decree.

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 ARREST BEFORE JUDGEMENT

Order 38 Rule 1. Where defendant may be called upon to furnish security for appearance

Where at any stage of a suit, other than a suit of the nature referred to in section 16, clauses (a)
to (d), the Court is satisfied, by affidavit or otherwise,-

(a) that the defendant, with intent to delay the plaintiff, or to avoid any process of the Court
or to obstruct or delay the execution of any decree that may be passed against him,-
(i) has absconded or left the local limits of the jurisdiction of the Court, or
(ii) is about to abscond or leave the local limits of the jurisdiction of the Court, or
(iii) has disposed of or removed from the local limit soft the jurisdiction of the Court his
property or any part thereof, or
(b) that the defendant is About to leave  9[India] under circumstances affording reasonable
probability that the plaintiff will or may thereby be obstructed or delayed in the execution
of any decree that may be passed against the defendant in the suit,

the Court may issue a warrant to arrest the defendant and bring him before the Court to
show cause why he should not furnish security for his appearance

     Provided that the defendant shall not be arrested if he pays to the officer entrusted with the
execution of the warrant any sum specified in the warrant as sufficient to satisfy the plaintiffs
claim; and such sum shall be held in deposit by the Court until: the suit is disposed of or until
the further order of the Court.

Under Order 38 Rule 1 of the Code the court, if satisfied by affidavit or otherwise, that the
defendant was about to leave India under circumstances affording reasonable probability that
the plaintiff would or might thereby be obstructed or delayed in the execution of any decree that
might be passed against the defendant in the suit could issue a. warrant to arrest the defendant
and bring him before the court to show cause why he should not furnish security for his
appearance. The proviso says that defendant shall not be arrested if he pays to the officer
entrusted with the execution of the warrant any sum specified in the warrant as sufficient to
satisfy the plaintiff’s claim; and such sum shall be held in deposit by the court until the suit is

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disposed of or until further order of the court as held in M/s Chelska Mills .Mothers v. Chorus
Girl Inc

Under different rules of this Order 38, vast powers have been vested in the Court in relation tothe
defendant as well as the property in suit, or both. Attachment before judgment is one of the
known concepts as held in Sony India Ltd. v. Commissioner of Income Tax and Addl.
Commissioner of Income Tax, Range-9

Under this Order, at any stage of the suit where the Court is satisfied that the defendants with an
intention to delay or to avoid any process of Court or obstruct or delay the decree that may
be passed against the defendant, the defendant has absconded or left the limitations of the jurisdi
ction of the court, is about to do so or has disposed of or removed his property or any part thereof
under the jurisdiction of the Court, the court could issue a warrant of arrest with a direction that
such defendant be brought before the Court and be directed to furnish security subject to such
terms and conditions as the court may deem fit and proper. Under Order 38, Rule 1 an
extraordinary relief is given to the plaintiff, namely, in appropriate case where the court finds a
strong prima facie case in favor of the plaintiff and if the Court is satisfied that the defendant is
likely to defeat the decree in future as and when it is passed, then the Court shall grant
attachment before judgment even before final adjudication of the claim of the plaintiffs, hence it
is an extraordinary relief given to the plaintiff by the Court as held in Vareed Jacob v. Sosamma
Geevarghese

Conditions for application of Rule.1:

An application for arrest may be made by the plaintiff at any time after the plaint is presented
even before the service of summons and is effected on the defendant. However two conditions
must be met before the exercise of this power.

a. The plaintiff’s suit must be Bona Fide and his cause of action must be Prima Facie
unimpeachable subject to his proving the allegations in the plaint and
b. The court must have a reason to believe on adequate materials that unless this
extraordinary power is exercised there is a real danger that the defendant shall remove
himself and the property from the court’s ambit.

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Security: Rules 2-4:

Where the defendant fails to show cause why he should not furnish security for appearance, the
court shall order him either to deposit in court any money or property sufficient to answer the
claim against him or furnish security for his appearance at any time when called upon. The court
has the discretion as too the manner and amount of the security.

According to rule.3: Where the defendant fails to furnish security or to find surety, the court may
commit him to civil prison until the decision of the suit, or where a decree is passed against him,
until the decree has been executed.

The following are the conditions where arrest before judgement cannot be obtained:

 In any suit for land or immovable property specified in clauses (a) to (d) of section 16 of
CPC
 To convert an unsecured debt to a secured one
 To ensure easy execution of the decree.

Where in any suit there has been an arrest before judgement on insufficient grounds, or where
the plaintiff’s suit fails on lack of reasonable grounds, upon application made by the defendant
the plaintiff may be ordered to pay as compensation, such amounts not exceeding fifty thousand
rupees for the expense of injury, including damage to reputation as per section 95 of the Code.

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 ATTACHMENT BEFORE DECREE: RULE 5-13

There is some difference between ‘attachment prior to decree’ and ‘attachment after decree’. Of
course, if an attachment is ordered before judgment, no need to re attach the same property after
decree. I will later on discuss this point of re-attachment in this article. An ‘attachment prior to
decree’ is not an attachment for the enforcement of the decree, but it is a step for preventing the
debtor from delaying or obstructing such enforcement when the decree subsequently passed is
sought to be executed as held in Parur Central Bank Ltd. v. A.C. Chacko 1 and S.P. Vasakumar
Pillai v. The Motor Accidents Claims2. An attachment after decree is an attachment made for the
immediate purpose of arraying the decree into execution, and if presupposes an application on
the part of the decree holder to have his decree executed as held in Sri Rammanik v..Tin Cowri
Rai3. It is a sort of a guarantee against decree becoming infructuous for want of property
available from which the plaintiff can satisfy the decree as held in Sardar Govindrao Mahadik &
Anr v. Devi Sahai & Ors,4

A PLAINTIFF SHOULD SHOW, PRIMA FACIE, THAT HIS CLAIM IS BONA FIDE AND
VALID:
A defendant is not debarred from dealing with his property merely because a suit is filed or about
to be filed against him. Shifting of business from one premises to another premises or removal of
machinery to another premises by itself is not a ground for granting attachment before
judgement. A plaintiff should show, prima facie, that his claim is bona fide and valid and also
satisfy the Court that the defendant is about to remove or dispose of the whole or part of his
property, with the intention of obstructing or delaying the execution of any decree that may be
passed against him, before power is exercised under Order 38 Rule 5 C.P.C. Courts should also
keep in view the principles relating to grant of attachment before judgment.

1
Parur Central Bank Ltd. v. A.C. Chacko, 1990 (1) KLJ 294.
2
S.P. Vasakumar Pillai vs The Motor Accidents Claims AIR 2009 Ker 36
3
Sri Rammanik v..Tin Cowri Rai, B.L.R 63 FB (1869)
4
Sardar Govindrao Mahadik & Anr v. Devi Sahai & Ors, 1982 AIR 989, 1982 SCR (2) 186 ).

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 Justice Sinha in the case of Prem Raj Mundra v. Md.Maneck Gazi5, briefly outlined the
principles that courts ought to follow in exercise of the power conferred by Order 38 of the
Code:

(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 defendant 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 defendant 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 defendant 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.

5
Prem Raj Mundra v. Md.Maneck Gazi, AIR (1951) Cal 156

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(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 & the mere fact that
a business has been closed, or that its turnover has diminished, is not enough.

(11) Where however the defendant 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 defendant was to delay and defeat the plaintiff's claim.

(12) Mere removal of properties outside jurisdiction, 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, & 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 Court must however be very
cautious about the evidence on these points & not rely on vague allegations.

An attachment before judgment is in the nature of an interlocutory order. In Gurunadha Rao v.

Gamini Krishnayya6, a Division Bench of the Hon’ble High Court of Andhra Pradesh held that to
be valid an attachment must be specific and clear in its purport. In Shivaraya and Others v.
Sharnappa and Others7, the Hon’ble Single Judge followed Bankim Chandra and Others’ case
and Tavvala Veeraswamy’s case which considered such interlocutory orders to have been passed
in exercise of the Court’s ancillary powers. His Lordship Dawson-Miller C. J. stated as follows:

6
Gurunadha Rao v. Gamini Krishnayya, 1955 (1) An.WR 684
7
. In Shivaraya and Others v. Sharnappa and Others AIR 1968 Mysore 283

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”The power given to the Court to attach a defendant’s property before judgment, is never meant
to be exercised lightly or without clear proof of the existence of the mischief aimed at in the
rule”

Order38,Rule5CPC:-
(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.
Where defendant may be called upon to furnish security for production of property\

Scope of rule:-

The Scheme of Order 38 and the use of the words `to obstruct or delay the execution of any
decree that may be passed against him’ in Rule 5 make it clear that before exercising the power
under the said Rule, the court should be satisfied that there is a reasonable chance of a decree
being passed in the suit against the defendant. This would mean that the court should be satisfied
the plaintiff has a prima facie case. If the averments in the plaint and the documents produced in
support of it, do not satisfy the court about the existence of a prima facie case, the court will not
go to the next stage of examining whether the interest of the plaintiff should be protected by
exercising power under Order 38 Rule 5 CPC.

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 APPLICATION OF ORDER XXXVIII RULE 5-

Where the property is the property in suit, an injunction should be obtained :- Where the property
is the property in suit, an injunction should be obtained under O.XXXIX r.1, Clause (a), which
may be enforced under r.2 of that Order by imprisonment or attachment, And where the property
is not that in suit, an alternative is given under r.1 of the same Order, Clause (b), where the
words ‘Property’ is not confined to property within the jurisdiction, or property which is in
dispute in the suit. Raja Goculdas v. Jankibai8, where it is pointed out that the precedent laind
down in Joy Narain Geeree v. Shibpershad9, is not applicable as Sec. 93 of the Code of 1859 was
expressly limited to the property in dispute.

No attachment on light grounds: - In 1866, in the case of Gamble v. Bholgir [2 BHCR 146,161],
it was observed that the jurisdiction to attach before judgment should be exercised with great
discretion, and no court should grant such an attachment on light grounds or unless it is perfectly
satisfied with trustworthy evidence that the defendant is about to dispose of his property or to
remove it from the jurisdiction of the Court.

Where the most perfect good faith is wanting, the application should be rejected: - In all
applications for attachment before judgment, there must be uberrimae fides on the part of
plaintiff, and where the most perfect good faith is wanting the application should be rejected.

Any stage of the suit: - The application can be made at any stage of the suit, but can be
entertained only so long as the suit is pending as held in Sri Rammanik v.Tin Cowri Rai10

8
Raja Goculdas v. Jankibai, 5 Bom. L.R. 570, (1903),
9
Joy Narain Geeree v. Shibpershad, 6 W.R. Misc. 1 (1866)
10
Supra. Note 3

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Intention to obstruct or delay the execution of any decree which might be passed: - The facts
mentioned in clauses (a) and (b) must have been done with the intent mentioned in the first
paragraph, namely, to obstruct or delay the execution of any decree which might be passed.

The words, ‘about to dispose of ’:- Clause (a) says, is ‘about to dispose of ’, etc., therefore the
section does not apply where the defendant has actually parted with the properties.

It does not refer exclusively to movable properties: - The Section does not refer exclusively to
movable properties but applies to immoveable properties also as held in Bishambar v. Sukhdesi11
Attachment of property covers its profits: - As held in Ram Coomar v. Gobindnath12, attachment
of property covers its profits. But if the owner is allowed to enjoy them the profits cease to be
specifically liable.
In  Govindrao Mahadik v. Devi Sahai, , the Hon’ble Supreme Court held at para 58 of its
judgment as follows: “Attachment before judgment is levied where the Court on an application
of the plaintiff is satisfied 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 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.”
In the case of Mamidala Suresh Babu & Ors. v. Tirumalasetti Krishnamurthy13, the Hon’ble
High Court of Andhra Pradesh, it was held that the sine qua non for an order of attachment
before judgment or for an order demanding security before judgment is that the defendant is
disposing of or about to dispose of his property with the dishonest intention of defeating or
delaying the possible decree in the suit. The merits of the claims of the contending parties are
merely ancillary factors for consideration by the Court in arriving at a conclusion with regard to
the essential requirements of Order 38, Rule 5, CPC. as held in Nowroji Pudumjee v. Deccan
Bank Ltd14.

11
Bishambar v. Sukhdesi, 16 A 186 (1894).
12
Ram Coomar v. Gobindnath, 12 W.R. 391 (1869),
13
Mamidala Suresh Babu & Ors. v. Tirumalasetti Krishnamurthy 2006 (3) ALD 605.
14
Nowroji Pudumjee v. Deccan Bank Ltd, AIR. (8) 1921 Bom. 69.

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The power under order 38 rule 5 CPC is drastic and extraordinary power. Such power should not
be exercised mechanically or merely for the asking. It should be used sparingly and strictly in
accordance with the Rule. The purpose of Order 38 Rule 5 is not to convert an unsecured debt
into a secured debt. Any attempt by a plaintiff to utilize the provisions of order 38 rule 5 as a
leverage for coercing the defendant to settle the suit claim should be discouraged. Instances are
not wanting where bloated and doubtful claims are realized by unscrupulous plaintiffs by
obtaining orders of attachment before Judgment and forcing the defendants for out of court
settlement, under threat of attachment. A defendant is not debarred from dealing with his
property merely because a suit is filed or about to be filed against him. Shifting of business from
one premises to another premises or removal of machinery to another premises by itself is not a
ground for granting attachment before Judgment. A plaintiff should show, prima facie, that his
claim is bona fide and valid and also satisfy the court that the defendant is about to remove or
dispose of the whole or part of his property, with the intention of obstructing or delaying the
execution of any decree that may be passed against him, before power is exercised under order
38 rule 5 CPC. Courts should also keep in view the principles relating to grant of attachment
before Judgment, as held in Raman Tech & Process Engg. Co. v. Solanki Traders15. In this case,
the suit claim was 99200 Rupees. The notice issued before filing the suit related to dishonor of
two cheques for 22487 Rupees. The particulars of the claim in the plaint were not specific. The
trial court had rejected the application on the ground that plaintiff had failed to make out a prima
facie case. It did not, therefore, examine the question whether defendant was attempting to defeat
any decree that may be passed by shifting his machinery. On the other hand, the High Court
ignored the absence of a prima facie case. It granted relief under Order 38 Rule 5, in exercise of
revisional jurisdiction, swayed by the fact that the defendants had shifted their assets to another
premises. The Court ruled that attachment before the Judgment is considered a very harsh
remedy because it substantially interferes with the defendant’s property rights before the final
resolution of the overall dispute.

15
Raman Tech & Process Engg. Co. v. Solanki Traders, (2008) 2 SCC 302

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