The intention the plaintiff must show, the evidence that supports an application, related remedies and the consequences of the order.
A decree is of little use if the defendant has meanwhile disposed of the assets that would satisfy it. The Code of Civil Procedure, 1908 therefore allows a court, in limited circumstances, to attach a defendant's property before judgment. The remedy is exceptional, and courts apply the conditions strictly. This note explains what must be shown and how an application is prepared. It is general information, not advice on a particular suit.
The provision
Order XXXVIII Rule 5 permits the court to direct a defendant to furnish security, or to attach property, where it is satisfied that 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, or is about to remove the whole or any part of his property from the local limits of the court's jurisdiction. The court may order the defendant to show cause why he should not furnish security, and if he fails to do so, it may attach the property specified by the plaintiff. Rule 6 deals with the attachment, and Rule 7 provides for its removal if security is given.
What the court requires
In Raman Tech & Process Engineering Co. v. Solanki Traders (2008), the Supreme Court stressed that attachment before judgment is a drastic measure, which should not be granted lightly, and that the plaintiff must establish a prima facie case and also show the intention described in Rule 5. A bare apprehension that the defendant may not pay is not enough, nor is the fact that the defendant is in financial difficulty. The plaintiff must plead specific facts, not conclusions, and the application should be supported by an affidavit.
Material that supports an application
- Transactions in progress. Sale agreements, advertisements for sale, changes in the title records, or transfers to relatives or related companies shortly after the claim arose.
- Removal of assets. Evidence that stock, machinery or funds are being moved out of the jurisdiction.
- Conduct of the defendant. A history of evasion, a refusal to give security when asked, or statements showing an intention to avoid payment.
- A schedule of assets. The property sought to be attached must be specified with enough detail to identify it, and it should be proportionate to the claim.
- The strength of the claim. Documents that make the case on the merits plain.
Related remedies
Attachment is not the only way to protect the claim. An injunction under Order XXXIX may restrain a defendant from alienating a specific asset where a legal right in it is asserted. A receiver may be appointed under Order XL. In arbitration, interim measures are sought under Section 9 of the Arbitration and Conciliation Act, 1996. Where the claim is against a company in financial distress, the Insolvency and Bankruptcy Code may offer another route. The choice depends on the nature of the claim and of the assets.
After the order
An attachment before judgment does not give the plaintiff a charge over the property, and it does not defeat the rights of third parties who held an interest before it was made. It takes effect as an order restraining the defendant from dealing with the property. If the plaintiff succeeds, the attachment continues until the decree is executed. If the suit fails, or the plaintiff has applied without sufficient grounds, the court may award compensation for any loss caused by the attachment, under Section 95 of the Code.
The prospects of an application depend on the quality of the evidence. A short, specific application, supported by documents, is more likely to succeed than a long one that rests on suspicion.
This note is general information on the law at the date of publication. It is not legal advice, and it should not be relied on without advice on the facts of a particular matter.
