Under what circumstances can local courts grant an attachment order to preserve assets pending judgment or final order? Are there any alternative remedies?
The parties to a suit can seek an attachment order from the court under Order 38 of the Code of Civil Procedure, 1908 (hereinafter referred to as ‘the Code’), if the plaintiff feels that the realisation of the decree passed against the defendant would be difficult apprehending the defendant would dispose of an impugned property, to prevent the execution of the decree passed against him. (See, Sardar Govindrao Mahadik V. Devi Sahai AIR 1982 SC 989).
Attachment orders are commonly issued by the courts in India. Under Order 38 Rule 13 of the Code, all courts of appropriate jurisdiction can issue orders of attachment other than courts of small causes. The question of fact must be proved to the satisfaction of the Court to issue an order of attachment.
The Court had deduced certain principles in regard to passing of an order of attachment in the case of Premraj Mundra V. Mohd. Maneck Gazi AIR 1951 Cal 156. The Hon’ble Court held that mere allegation of threat of disposal is not sufficient and that particulars of the information must be stated. In addition, it is to be proved beyond doubt to the Court the existence of circumstances of transfer or removal of property from court’s jurisdiction, and that the transfer is with the intention to delay or defeat the execution of the decree issued against the defendant.
An attachment before judgment cannot be obtained against third parties, as they are not parties to the suit as stated under Order 38 Rule 10 of the Code. However, there is an exception under Rule 46-A to Rule 46-I of Order 21 of the Code, where such an order can be obtained against third parties, if such third party is a garnishee.
The grounds on which the court can grant an attachment order are enlisted in Rule 5 of Order 38 of the Code. The said Rule provides that at any stage of a suit, the court may grant an attachment order against the defendant, if, the latter:
(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; and; the court may also order for furnishing security of such sum as may be specified under its discretion (See N. Pappammal V. L. Chidambaram AIR 1984 Mad.70).
Stage of the proceedings
It is not possible to obtain an attachment order before proceedings have started. However, it is such order can be obtained before the ‘final judgment’ or during the course of proceeding. Additionally, Order 38 Rule 5 of the Code provides for such an order to be obtained even after the final judgment/award has been given but before its enforcement, because the main purpose behind granting an attachment order is to prevent the defendant from disposing of the property in question.
There are other remedies available to preserve the assets apart from granting of attachment order under Order 38 of the Code. A party can avail the remedy of temporary injunction which is granted by the court under Order 39 of the Code, to preserve the assets in dispute till the legal rights and conflicting claim of the parties before the Court are adjudicated and disposed off. It is in the nature of protective relief granted in favour of a party to prevent future possible injury. The court may grant a temporary injunction for the purpose of staying and preventing the wasting, damaging, alienation, removal or disposition of property [See Nanda Roy & Other V. Gyanidhi Trust & Ors. (2015)4 CALLT 199(HC)].