Case Note & Summary
The appellants, original plaintiffs in Special Civil Suit No. 1437 of 2013, filed an appeal against the order of the Extra Joint Civil Judge Senior Division, Pune, which rejected their application (Exhibit 5) for attachment before judgment under Order 38 Rule 5 of the Code of Civil Procedure, 1908. The plaintiffs had sued the respondents for recovery of Rs. 8.88 Crores, alleging that the defendants were disposing of their properties to defeat the decree. The trial court dismissed the application, leading to the present appeal. The High Court noted that the defendants had not filed an affidavit disclosing their assets despite being directed, and the circumstances suggested an intention to obstruct execution. The court held that the plaintiffs had made out a prima facie case for attachment, as the defendants' conduct indicated they were likely to dispose of assets to avoid recovery. The impugned order was set aside, and the application for attachment was allowed, directing the defendants to furnish security or have their properties attached. The court emphasized that the power under Order 38 Rule 5 is discretionary but must be exercised to prevent abuse of process.
Headnote
A) Civil Procedure - Attachment Before Judgment - Order 38 Rule 5 CPC - Intent to Defeat Creditors - The plaintiffs sought attachment of defendants' properties before decree, alleging that defendants were disposing of assets to avoid recovery. The trial court rejected the application. The High Court held that the defendants' failure to disclose their assets in the affidavit and the circumstances indicated an intention to obstruct execution, warranting attachment. (Paras 3-12)
B) Civil Procedure - Non-Disclosure of Assets - Adverse Inference - Order 38 Rule 5 CPC - The defendants did not file an affidavit disclosing their assets despite the court's direction. The High Court drew an adverse inference that the defendants were attempting to defeat the plaintiffs' claim, justifying attachment before judgment. (Paras 8-12)
Issue of Consideration
Whether the trial court erred in rejecting the application for attachment before judgment under Order 38 Rule 5 CPC despite the defendants' failure to disclose assets and alleged intention to defeat the plaintiffs' claim.
Final Decision
Appeal allowed. Impugned order set aside. Application (Exhibit 5) for attachment before judgment is allowed. Respondents directed to furnish security within four weeks, failing which attachment shall be effected.
Law Points
- Order 38 Rule 5 CPC
- attachment before judgment
- intent to defeat creditors
- non-disclosure of assets
- prima facie case
Case Details
2018 LawText (BOM) (08) 79
Appeal from Order No. 1049 of 2014 with Civil Application No. 1266 of 2014
Mr. Parag M. Tilak for the Appellant, Mr. Chaitanya Bhandarkar a/w. Mr. Siddharth A. Ronghe for the Respondents
Suresh Indulal Shah, Mr. Rashmikant Jayantilal Gandhi, Mr. Sanjay Kiran Jain
M/s. Pratham Project Developers Pvt. Ltd., Mr. Rajiv Yeshwant Bhale, Mr. Vijay Narayan Vichare, Mrs. Vandana Rajiv Bhale
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Nature of Litigation
Civil suit for recovery of money with application for attachment before judgment.
Remedy Sought
Appellants sought attachment of respondents' properties before decree to prevent disposal of assets.
Filing Reason
Appellants alleged that respondents were disposing of properties to defeat the recovery claim of Rs. 8.88 Crores.
Previous Decisions
Trial court rejected the application for attachment before judgment (Exhibit 5) in Special Civil Suit No. 1437 of 2013.
Issues
Whether the trial court erred in rejecting the application for attachment before judgment under Order 38 Rule 5 CPC.
Whether the defendants' failure to disclose assets and alleged intention to defeat creditors justified attachment.
Submissions/Arguments
Appellants argued that respondents were disposing of assets to avoid recovery and had not disclosed their assets despite court direction.
Respondents contended that there was no intention to defeat the decree and that the application was premature.
Ratio Decidendi
Under Order 38 Rule 5 CPC, attachment before judgment can be granted if the court is satisfied that the defendant is about to dispose of property with intent to obstruct execution. Non-disclosure of assets despite direction raises an adverse inference of such intent.
Judgment Excerpts
The appellants-original plaintiffs preferred the present appeal agitating the validity and propriety of the impugned order passed below application (Exhibit 5) in Special Civil Suit No. 1437 of 2013 by the Extra Joint Civil Judge Senior Division, Pune rebuffing the relief of attachment of properties before Judgment as contemplated under Order 38 Rule 5 of the Code of Civil Procedure.
The defendants did not file an affidavit disclosing their assets despite the court's direction. The High Court drew an adverse inference that the defendants were attempting to defeat the plaintiffs' claim, justifying attachment before judgment.
Procedural History
Plaintiffs filed Special Civil Suit No. 1437 of 2013 for recovery of Rs. 8.88 Crores. They filed application (Exhibit 5) for attachment before judgment under Order 38 Rule 5 CPC. Trial court rejected the application. Plaintiffs appealed to the High Court via Appeal from Order No. 1049 of 2014.
Acts & Sections
- Code of Civil Procedure, 1908: Order 38 Rule 5
