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Report No. 178

10. Order 38 Rule 5 and Rule 6: Whether procedure of prior show cause notice to defendant in cases of 'conditional attachment' can result in the final order becoming infructuous.-

Attachment of the defendant's movable or immovable property pending decision in the suit is a device by which the Code of Civil Procedure 1908 protects the interests of a plaintiff in the event of a decree being passed in his favour ultimately. The attachment prevents the defendant from disposing of the whole or part of his property or removing the said property from the jurisdiction of the Court.

The Supreme Court pointed out in Padam Sen v. State of U.P. (AIR 1961. SC 218) that the Court passes such orders to see that the ultimate decree does not become infructuous. Again in Govindram v. Devi; (AIR 1982 SC 989), the Supreme Court observed:

"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."

Attachment before judgment is of two kinds. One is where the Court upon being satisfied that such attachment is necessary, feels that there is no 69 serious urgency and that the defendant may first be asked to show cause why an order should not be passed asking him to furnish adequate security for the suit claim, or to produce and place the property before the Court by a certain date.

The other is where prior notice may indeed enable the defendant to dispose of or remove the property from the jurisdiction of the Court before the Court could receive the defendant's reply to the show cause notice and before it passes an order of attachment before Judgment. This can happen where the property sought to be attached is movable property such as cash, jewellery, furniture, fabrics, machinery not embedded into the earth or which can be easily dismantled.

This may also happen, in certain situations, in the case of immovable property. In the second type of cases, the Court must have the power to pass an immediate order of attachment before judgment which is provisional in nature with a simultaneous notice to the defendant as to why the interim order of attachment should not be confirmed unless adequate security is furnished. This is what is really meant by the words 'conditional attachment' though the word 'conditional' is used to describe an interim or provisional attachment which becomes plenary afterwards.

In Ramanatha Iyer's Law Lexicon (2nd Ed. 1997, p. 164) this distinction is pointed out and the meaning of 'conditional attachment' is explained by referring to a judgment of the Bombay High Court (ILR 5 Bom 643) as follows:

"The expression 'conditional attachment' might mean an attachment to be made conditionally on the security not being furnished nor cause 70 shown by the prescribed day, or it might mean an immediate attachment of a provisional kind conditional to become plenary if security should not be furnished, or cause shown according to the terms of the order. The form at the end of the Code of Civil Procedure Code for a provisional attachment show that the latter was the intention of the legislature"

We shall first extract Order 38 Rule 5 and Rule 6 as they stand today.

Rule 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 intend 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. 71

(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 Attachment where cause not shown or security not furnished.-(1) Where the defendant 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.

It will be seen from Order 38 Rule 5 that the legislature provided in Sub rule (1) of Order 38 Rule 5 for a situation where prior notice is issued before making an order of attachment before Judgment. Sub-rule (3) of Order 38 Rule 5 refers to 'conditional attachment' without mentioning what it actually is. Its meaning can be gathered only from the second part of Form 5 of Appendix F which refers to immediate or provisional attachment being made together with a show cause notice.

The word 'conditional attachment' used in sub rule (3) of Order 38 Rule 5, has given an impression that the attachment is conditional upon 72 security being offered. As pointed out in Ramanath Aiyar's Law Lexicon referring to the Bombay case that that is not the true meaning of the word. In fact, the proper meaning of the word 'conditional' here is 'interim'. In other words, it was intended by sub rule (3) of Order 38 Rule 5 that the Court must have power, in certain cases, to first pass an order of interim attachment so that the property may not be moved outside the jurisdiction of the Court or may not vanish. In such a case, the Court can give a notice simultaneously requiring the person concerned to show cause why interim attachment should not be vacated.

In 1976, sub rule (4) was added in Order 38 Rule 5 to say that any such attachment without prior notice as contemplated by sub rule (1) will be "void". This provision was introduced to resolve the conflict in judgments as to whether, the attachment would be void or voidable, where notice procedure under sub-rule (1) is not followed.

But, in as much as sub rule (4) follows both sub rules (1) and (3), some Courts have interpreted that prior notice under sub rule (1) is necessary even in cases of 'conditional attachment' falling under sub rule (3), i.e. where immediate provisional attachment is necessary. (in the recent judgment of the Supreme Court in Rajinder Singh v. Ramdhan Singh, 2001 (6) SCC 213, the Court merely referred to sub rule (4) of Order 38 Rule 5 but did not have any occasion to go into the question whether even in the case of interim attachment (loosely called conditional attachment in sub rule (3) of Order 38 Rule 5) a prior notice as contemplated by the said sub rule 73 was necessary.

The Commission is of the view that the Supreme Court, in the above case had not laid down any principle that even in the case of interim attachment a prior notice as contemplated by sub rule (1) of Order 38 Rule 5 is necessary. On the other hand, High Courts have clearly laid down the view that sub rule (4) does not apply to cases of conditional attachment under sub rule (3) and that in such cases, a post decisional opportunity is provided by sub rule (2) of Order 38 Rule 6 which enables the defendant to show cause and permits the Court to withdraw the conditional attachment (see N.R.Thiruvengadam V. Kaliannan AIR 1984 Mad 112).

The Form 5 of Appendix F to the Code which gives the format for 'attachment before judgment' refers in the first Part to 'attachment before judgment' and in the second part to 'conditional attachment'. The combination of both in a single form has also created considerable confusion.

The Commission is of the view that in cases where immediate attachment is felt necessary by the Court, if it is laid down that prior notice to the defendant under sub rule (1) of Order 38 Rule 5 is necessary, there is every likelihood that the ultimate order of attachment that man may be made may become infructuous and the ultimate decree may also be rendered useless. The Commission is of the view that in such cases, the Court must have powers to pass an order of 'interim attachment' coupled with a notice to show cause why the interim attachment should not be confirmed unless security is furnished.

In case sufficient cause is shown as to why the interim 74 attachment should not be confirmed or where adequate security is furnished, the interim attachment can be withdrawn by the Court. As in cases of ex parte interim injunction under Order 39 Rule 1, a procedure for ex parte attachment before judgment followed by a notice to furnish security or to show cause is perfectly consistent with principles of due process and natural justice. Post decisional opportunity is permissible under our natural justice jurisprudence.

It is, therefore, proposed to recast Order 38 Rule 5 and Rule 6 and introduce Form 5 and Form 5A in Appendix F, the former to cover cases of attachment before judgment with prior notice and the latter to deal with interim attachment first and opportunity thereafter.

For achieving the above object, it is not necessary to amend sub rule (1) or (2) of Order 38 Rule 5, but it is necessary to omit the existing sub rule (3) of Order 38 Rule 5 and instead bring in the existing sub rules (1) and (2) of Order 38 Rule 6 as sub rules (3) and (4) of Order 38 Rule 5. Thereafter sub rule (4) of Order 38 Rule 5 can be re-designated as sub-rule 5 of Order 38, Rule 5.

We can then have a separate rule 6 of Order 38 which deals exclusively with attachment before judgment.

With the above changes, Order 38 Rule 5 and Rule 6 will read as follows:

"5. Where defendant may be called upon to furnish security for production of propert.- (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 hi.-

(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, or 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) Where the defendant fails to show cause or, as the case may be, 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.

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

(5) If an order of attachment is made without complying with the provisions of sub rule (1) of this rule, such attachment shall be void."

We proposed a separate rule as far as interim attachment is concerned as rule 6 of Order 38. It will read as follows:

"6. Interim attachment before judgmen.- (1) Where the court is satisfied, at any stage of a suit, by affidavit or otherwise that the conditions referred to in sub-clauses (a) or (b) of sub-rule (1) of rule 5 are satisfied and that there is likelihood of the property or part thereof being immediately disposed of or removed from the local limits of the jurisdiction of the court in case the procedure under sub rule (1) of rule 5 is to be followed, the court may, for brief reasons to be recorded, pass an order of interim attachment without following the said procedure and shall simultaneously issue a notice to the defendant ,to show cause why the order of interim attachment should be withdrawn altogether or upon furnishing security.

(2) Where the defendant shows cause or furnishes the required security within time fixed by the Court, the Court shall direct that the order of interim attachment shall stand withdrawn or make such other order as it may think fit.

(3) Where the defendant fails to show cause or fails to furnish the security within the time fixed by the court, the court may confirm the interim attachment of the property specified or such portion thereof as appears sufficient to satisfy any decree which may be passed in the suit.

(4) The order of interim attachment shall not be deemed to be void on the ground that no prior notice to show cause as contemplated by sub rule (1) of Rule 5 has been issued before such an order of interim attachment was passed."



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