Civil PROCEDURE CODE- VIth Semester

Study Material of Unit- V

Teacher- Shagufta Yasmin

Order XXXVIII- Arrest and Attachment Before Judgement

Rule 1 Order XXXVIII of Code of Civil Procedure 1908 "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 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.

Rule 2 Order XXXVIII of Code of Civil Procedure 1908 "Security"

1) Where the defendant fails to show such cause the Court shall order him either to deposit in
Court money or other property sufficient answer the claim against him, or to furnish security for
his appearance at any time when called upon while the suit is pending and until satisfaction of
any decree that may be passed against him in the suit, or make such order as it thinks fit in regard
to the sum which may have paid by the defendant under the proviso to the last preceding rule.
(2) Every surety for the appearance of a defendant shall bind himself, in default of such
appearance, to pay any sum of money which the defendant may be ordered to pay in the suit.

Rule 3 Order XXXVIII of Code of Civil Procedure 1908 "Procedure on application by surety to
be discharged"

(1) A surety for the appearance of a defendant may at any time apply to the Court in which he
became such surety to be discharged from his obligation.

(2) On such application being made, the Court shall summon the defendant to appear or, if it
thinks fit may issue a warrant for his arrest in the first instance.

(3) On the appearance of the defendant in pursuance of the summons or warrant, or on his
voluntary surrender, the Court shall direct the surety to be discharged from his obligation, and
shall call upon the defendant to find fresh security.

Rule 4 Order XXXVIII of Code of Civil Procedure 1908 "Procedure Where defendant fails to
furnish security or find fresh security"

Where the defendant fails to comply with any order under rule 2 or rule 3, the Court may commit
him to the civil prison until the decision of the suit or, where a decree is passed a against the
defendant, until the decree has been satisfied :

Provided that no person shall be detained in prison under this rule in any case for a longer period
than six months, nor for a longer period than six weeks when the amount or value of the subject-
matter of the suit does not exceed fifty rupees:

Provided also that no person shall be detained in prison under this rule after he has complied
with such order.

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

The object underlying these provisions is to enable the plaintiff to realize the amount of decree if
one is eventually passed in his favour and to prevent any atttempt on the part of the defendant to
defeat the execution of such decree passed against him.

The grounds for such an arrest is provided under 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 is effected on the defendant. However, before this
extraordinary power can be exercised, the court must be satisfied about the following two
conditions:
 (a) The plaintiff’s suit must be bonafide 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 reason to believe on adequate material that unless this extraordinary
power is exercised there is a real danger that defendant will remove himself or his
property from the ambit of the powers of the court.

The power to arrest the defendant and that to before the decree in favour of plaintiff is a drastic
action and must be taken after due care, caution and circumspection.

An order passed under Rule 2, 3 or 6 of Order 38 is appealable.

An order of arrest made under Rule 1 of Order 38 can be said to be a “case decided” under
section 115 of the code and is revisable.

Rule 5 Order XXXVIII of Code of Civil Procedure 1908 "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.

Rule 6 Order XXXVIII of Code of Civil Procedure 1908 "Attachment where cause not shown or
security not furnished"
(1) Where the defendant fails to show cause why he should not furnish security, or fails to
furnish the security required, within the time fixed by the Court, the Court may order that the
property specified, or such portion thereof as appears sufficient to satisfy any decree which may
be passed in the suit, be attached.

(2) Where the defendant shows such cause or furnishes the required security, and the property
specified or any portion of it has been attached, the Court shall order the attachment to be
withdrawn, or make such other order as it thinks fit.

Rule 7 Order XXXVIII of Code of Civil Procedure 1908 "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 Order XXXVIII of Code of Civil Procedure 1908 "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.

Rule 9 Order XXXVIII of Code of Civil Procedure 1908 "Removal of attachment when security
furnished or suit dismissed"

Where an order is made for attachment before Judgment, the Court shall order the attachment to
be withdrawn when the defendant furnishes the security required, together with security for the
cost of the attachment, or when the suit is dismissed.

Rule 10 Order XXXVIII of Code of Civil Procedure 1908 "Attachment before Judgment not to
affect rights of strangers, nor bar decree -holder from applying for sale"

Attachment before Judgment shall not affect the rights, existing prior to the attachment, of
persons not parties to the suit, nor bar any person holding a decree against the defendant from
applying for the sale of the property under attachment in execution of such decree.

Rule 11 Order XXXVIII of Code of Civil Procedure 1908 "Property attached before Judgment
not to be re-attached in execution of decree"

Where property is under attachment by virtue of the provisions of this order and a decree is
subsequently passed in favour of the plaintiff, it shall not be necessary upon. an application for
execution of such decree to apply, for a re-attachment of the property.

Rule 11A Order XXXVIII of Code of Civil Procedure 1908 "Provisions applicable to
attachment"
(1) The provisions of this Code applicable to an attachment made in execution of a decree shall
so far as may be, apply to an attachment made before Judgment which continues after the
Judgment by virtue of the provisions of rule 11.

(2) An attachment made before Judgment in a suit which is dismissed for default shall not
become revived merely by reason of the fact that the order for the dismissal, of the suit for
default has been set aside and the suit has been restored.

Rule 12 Order XXXVIII of Code of Civil Procedure 1908 "Agriculture produce not attachable
before Judgment"

Nothing in this order shall be deemed to authorise the plaintiff to apply for the attachment of any
agriculture produce in the possession of an agriculturist, or to empower the Court to order the
attachment or production of such produce.

Rule 13 Order XXXVIII of Code of Civil Procedure 1908 "Small Cause Court not to attach
immovable property"

Nothing in this order shall be deemed to empower any Court of Small Causes to make an order
for the attachment of immovable property.

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.
An attachment before judgment is in the nature of an interlocutory order. In Gurunadha Rao v.
Gamini Krishnayya, 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 Vs.
Sharnappa and Others, 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
“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”.

In 1866, in the case of Gamble Vs Bholgir, 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.

The application can be made at any stage of the suit, but can be entertained only so long as the
suit is pending.

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.”

the following guiding principles can 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 defendant
would not be prejudiced.

(4) That the affidavits in support of the contentions of the applicant, must not be vague, & must
be properly verified. Where it is affirmed true to knowledge or information or belief, it must be
stated as to which portion is true to knowledge, the source of information should be disclosed, &
the grounds for belief should be stated.

(5) That a mere allegation that the deft. was selling off & his properties is not sufficient.
Particulars must be stated.

(6) There is no rule that transactions before suit cannot be taken into consideration, but the object
of attachment before judgment must be to prevent future transfer or alienation.

(7) Where only a small portion of the property belonging to the deft. is being disposed of, no
inference can be drawn in the absence of other circumstances that the alienation is necessarily to
defraud or delay the plaintiff’s claim.

(8) That the mere fact of transfer is not enough, since nobody can be prevented from dealing with
his properties simply because a suit has been filed: There must be additional circumstances to
show that the transfer is with an intention to delay or defeat the plaintiff’s claim. It is open to the
Court to look to the conduct of the parties immediately before suit, & to examine the surrounding
circumstances, & to draw an inference as to whether the deft. is about to dispose of the property,
& if so, with what intention. The Court is entitled to consider the nature of the claim & the
defence put forward.

(9) The fact that the deft. is in insolvent circumstances or in acute financial embarrassment, is a
relevant circumstance, but not by itself sufficient.
(10) That in the case of running businesses, the strictest caution is necessary & the mere fact that
a business has been closed, or that its turnover has diminished, is not enough.

(11) Where however the deft. starts disposing of his properties one by one, immediately upon
getting a notice of the plaintiff’s claim, &/or where he had transferred the major portion of his
properties shortly prior to the institution of the suit & was in an embarrassed financial condition,
these were grounds from which an inference could be legitimately drawn that the object of the
deft. was to delay and defeat the plaintiff’s claim.

(12) Mere removal of properties outside jurisdiction, is not enough, but where the deft. with
notice of the plaintiff’s claim, suddenly begins removal of his properties outside the jurisdiction
of the appropriate Court, & without any other satisfactory reason, an adverse inference may be
drawn against the defendant. 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.

Order XL- Appointment of Receiver

In Court proceedings, when the subject matter of dispute includes property of such nature, that
its possession cannot be with any of the parties, or a property that has been submitted to the
Court, the Court under section 151 read with Order 40 can appoint a receiver for the same.
Power to appoint includes the power to suspend, remove or terminate him. In civil litigation, a
receiver plays an important role in assisting the court. The Receiver is considered to be an officer
of the court who helps the court to protect and preserve the subject matter of suit till the time the
court decides the matter.

The term is not defined in the Civil Procedure Code, 1908. Dictionary meaning of a Receiver is a
person who gets or accepts something that has been sent or given to them. In legal language, "A
receiver is an impartial person who is appointed by the court to collect and receive the rents,
profits of land during the pendency of proceedings when it does not seem reasonable to the court
that either party should hold it." Black’s law dictionary defines a “receiver” as “A disinterested
person appointed by a court, or by a corporation or other person, for the protection or collection
of property that is the subject of diverse claims”.
Under order 40 of CPC, The Receiver is an independent and impartial person who is appointed
by the court to administer/manage, that is, to protect and preserve a disputed property involved in
a suit.

For example, in a dispute between A and B for an immovable property, if the court thinks that it
is in the best interest of both the parties that possession should be taken from B and given to an
independent person, the court may appoint a receiver who can manage the property till the time
the suit is being decided. Such a receiver appointed by the court would be responsible for the
maintenance of the property. He can collect the income accruing like rent or any other profits
and utilize it to maintain the property. After deducting the expenses incurred in maintenance
from the income received from the property, the receiver will have to submit the remaining
income, if any, in the court.

Rule 1 Order XL of Code of Civil Procedure 1908 "Appointment of Receivers"

(1) Where it appears to the Court to be just and convenient, the Court may by order-

(a) appoint a receiver of any property, whether before or after, decree;

(b) remove any person from the possession or custody of the property;

(c) commit the same to the possession, custody or management or the receiver; and

(d) confer upon the receiver all such powers, as to bringing and defending suits and for the
realization, management, protection, preservation and improvement of the property, the
collection of the rents and profits thereof, the application and disposal of such rents and profits,
and the execution of documents as the owner himself has, or such of those powers as the Court
thinks fit.

(2) Nothing in this rule shall authorise the Court to remove from the possession or custody of
property any person whom any party to the suit has not a present right so to remove.

Hence, this rule also implies that a receiver has to be appointed for the property which is under
dispute on the grounds that its value may be under damage by the current possessor of the
property against whom the parties under dispute have a right to remove. On the contrary, the
Court under the purview of this rule cannot remove the person under whose possession or
custody the property is at present and appoint a receiver in place of that person. The honourable
Supreme Court in the seminal case of Maharwal Khewaji Trust (Regd.) Faridkot v. Baldev Dass
was of the opinion that, “unless and until a case of irreparable loss or damage is made out by a
party to the suit, the court should not permit the nature of the property to be changed, which may
include alienation or transfer thereof leading to loss or damage been cause to the party who may
ultimately succeed and which would as well lead to multiplicity of proceedings. Judicial
discretion has to be disciplined by jurisprudential ethics and can by no means conduct itself as an
unruly horse.”
Further, the courts are of the opinion that the receiver so appointed is for the benefit of all the
concerned parties since he stands as a representative of the court and of all parties interested in
the litigation where is he is appointed.

Rule 2 Order XL of Code of Civil Procedure 1908 "Remuneration"

The Court may by general or special order fix the amount to be paid as remuneration for the
services of the receiver.

It is also important to note that such receiver appointed by the Court derives all its powers from
the Court itself regarding protection, preservation, improvement, management and disposition of
the property under dispute. Even the remuneration for the receiver for such delivery of services is
decided by the Court by means of passing a general or a special order

Rule 3 Order XL of Code of Civil Procedure 1908 "Duties"

Under order 40 rule (3), duties of a receiver are provided as follows:

Every receiver so appointed shall

(a) furnish such security (if any) as the court thinks fit, duly to account for what he shall receive
in respect of the property;

(b) submit his accounts at such periods and in such form as the Court directs;

(c) pay the amount due from him as the Court directs; and

(d) be responsible for any loss occasioned to the property by his wilful default or gross
negligence.

The receiver has to fulfil all the duties and responsibilities entrusted to him by the court.
Otherwise, the court can take action against him and make him personally liable for any loss
which might occur due to his negligence or wilful failure to protect and preserve the property.

Rule 4 Order XL of Code of Civil Procedure 1908 "Enforcement of receiver's duties"

Where a receiver-

(a) fails to submit his accounts at such periods and in such form as the Court directs, or

(b) fails to pay the amount due from him as the Court directs, or

(c) occasions loss to the property by his willful default or gross negligence,

the Court may direct his property to be attached and may sell such property, and may apply the
proceeds to make good any amount found to be due from him or any loss occasioned by him, and
shall pay the balance (if any) to the receiver.
Rule 5 Order XL of Code of Civil Procedure 1908 "When Collector may be appointed receiver"

Where the property is land paying revenue to the Government, or land of which the revenue has
been assigned or redeemed, and the Court considers that the interests of those concerned will be
promoted by the management of the Collector, the Court may, with the consent of the Collector,
appoint him to be receiver of such property.

the receiver plays an important role whenever the court requires the receiver to manage the
subject matter in a suit to protect and preserve it till the time, the court decrees the suit.

The receiver is an officer of the courts and the subject matter managed by him is considered to be
in custody of the law. The court appoints a receiver when the court is of the opinion that neither
of the party should manage the property till the time the matter is decided. Any person can
become a receiver provided they fulfil the requirements set by the court.

A receiver should be of impartial, independent and indifferent character who has no stake in the
subject matter and can manage the property just as a prudent man will do with his own property.
Court have vested certain powers and responsibilities on the receiver which he should use to
manage the property in the best way possible.

The receiver should be careful while making an important decision related to the subject matter
as he is personally liable for any damage to it. He can seek the permission of the court before
making such decisions to be safe.