Requirement for passing order of attachment of property before judgment

 The reading of the above provision would make it clear that there are essential requirements which must be proved to the satisfaction of the Court. They are as follows :--

"(i) The defendant is about to dispose of the whole or any part of his property; or

(ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court;

(iii) That the defendant is intending to do so to cause obstruction or delay in the execution of any decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court, unsupported by particulars, would not be sufficient compliance with the rule.

(iv) It is incumbent upon the plaintiff to state the grounds on which he entertains the belief or apprehension that the defendant would dispose of or remove the property, or, to give the source of his information and belief in the matter through an affidavit."

25. Therefore, the jurisdiction of this Court to order attachment before judgment arises only when it is satisfied by the affidavit, supported by the particulars that the defendant is about to dispose of the whole, or any part of his property with the intention to obstruct or delay the execution of the decree that may be passed against him. Hence, the essential requirement for an order of attachment before judgment is the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the decree that may be passed in the suit.

Madras High Court

Renox Commercials Ltd. vs Inventa Technologies Pvt. Ltd. on 2 February, 2000

Equivalent citations: AIR 2000 Mad 213

1. Renox Commercials Limited has filed a suit in C.S. No. 518/99 for recovery of a sum of Rs. 56,23,123/- with future Interest at the rate of 18% per annum against Inventa Technologies Private Limited, Chennai and Allahabad Bank, Main Branch, Chennai the defendants.

2. Pending disposal of the suit, the plaintiff/applicant has filed this application No. 2290 of 1999 praying for a direction to the Inventa Technologies Private Limited, the respondent/first defendant herein, to furnish security for the suit claim failing which, to order attachment before judgment of the immovable property belonging to the first defendant/respondent herein.

3. This application was admitted by this Court on 21-7-1999 and notice was issued to the respondent for furnishing security, returnable by three weeks. On receipt of this notice, the respondent/first defendant filed a counter through the affidavit dated 30-8-1999, sworn to by its Managing Director. The applicant/plaintiff filed a reply affidavit dated 12-1-2000.

4. Mr. R. Thiagarajan, learned counsel appearing for the applicant/plaintiff would submit that the respondent received a loan of Rs. 10 lakhs on 5-10-1993 from the plaintiff company and a sum of Rs. 4 lakhs on the same date from Excel Fincon Private Limited, a sister concern of the plaintiff company which had subsequently merged with the plaintiff Company, that thereafter on 22-5-1995, the plaintiff company advanced a further sum of Rs. 15 lakhs to the first deMobile ViewMadras High Court
Indian Kanoon - http://indiankanoon.org/doc/1720695/
Madras High Court
Renox Commercials Ltd. vs Inventa Technologies Pvt. Ltd. on 2 February, 2000
Equivalent citations: AIR 2000 Mad 213
Author: M Karpagavinayagam
Bench: M Karpagavinayagam
ORDER

M. Karpagavinayagam, J.

1. Renox Commercials Limited has filed a suit in C.S. No. 518/99 for recovery of a sum of Rs. 56,23,123/- with future Interest at the rate of 18% per annum against Inventa Technologies Private Limited, Chennai and Allahabad Bank, Main Branch, Chennai the defendants.

2. Pending disposal of the suit, the plaintiff/applicant has filed this application No. 2290 of 1999 praying for a direction to the Inventa Technologies Private Limited, the respondent/first defendant herein, to furnish security for the suit claim failing which, to order attachment before judgment of the immovable property belonging to the first defendant/respondent herein.

3. This application was admitted by this Court on 21-7-1999 and notice was issued to the respondent for furnishing security, returnable by three weeks. On receipt of this notice, the respondent/first defendant filed a counter through the affidavit dated 30-8-1999, sworn to by its Managing Director. The applicant/plaintiff filed a reply affidavit dated 12-1-2000.

4. Mr. R. Thiagarajan, learned counsel appearing for the applicant/plaintiff would submit that the respondent received a loan of Rs. 10 lakhs on 5-10-1993 from the plaintiff company and a sum of Rs. 4 lakhs on the same date from Excel Fincon Private Limited, a sister concern of the plaintiff company which had subsequently merged with the plaintiff Company, that thereafter on 22-5-1995, the plaintiff company advanced a further sum of Rs. 15 lakhs to the first defendant and that when the plaintiff had been demanding the principal as well as interest amounts, the first defendant was avoiding payment and therefore, the plaintiff sent a legal notice dated 15-4-1997 to the first defendant and received a reply from the first defendant acknowledging the liability, but pleading some adjustment with regard to certain other accounts and that even though the first defendant had admitted and acknowledged the debt and liability, it had not chosen to pay the plaintiff, despite repeated demands and reminders.

5. Learned counsel for the applicant/ plaintiff would further state that the applicant/plaintiff reliably learnt that the first defendant has contemplated to alienate the tangible assets of the Company including the goodwill and plant and machinery. Hence, he filed the suit and the application for furnishing security or attachment before judgment of the immovable property, namely, the factory premises of the first defendant, situate at Ambattur Industrial Estate.

6. Mr. Parthasarathy, learned counsel representing Mr. Sathish Parasaran appearing for the first defendant/respondent herein would vehemently contend that there was no loan transaction between the parties nor is there any material to show that there was an acknowledgment of any liability by the respondent Company in respect of the alleged loan, at any point of time, and nor is there any evidence in support of the applicant's claim even after adjusting payment of interest or principal by the respondent to the applicant company.

7. Learned counsel for the respondent would further state that the respondent has categorically stated in his reply notice dated 10-5-1997, emphatically denying the claim made by the applicant/plaintiff, that there was no loan transaction between the parties.

8. According to the counsel for the respondent, the plaintiff Company as well as its various sister concerns were all closely held private companies under the control and management of Mr. D.C. Surana and Mr. A.K. Baid, who are close relatives. The said individuals are also having control over a public limited company viz., Kalpana Industries Limited. The respondent Company has been engaged in manufacture and supply of machineries and technology to Its customers in the field of plastics. The respondent company has also been dealing with M/s. Kalpana Industries Limited since 1993.

9. In the year 1993, Mr. A.K. Baid, representing Kalpana Industries Limited, approached the respondent Company seeking for the supply of plant and machineries so as to enable the Kalpana Industries Limited to set up a plant at Daman. In that context, Mr. A.K. Baid assured that the funds would be arranged through his group companies and the amounts could be used for purchase of shares in Kalpana Industries Limited. Accordingly, the contract between the respondent and Kalpana Industries Limited along with the German Company came to be executed on 2-11-1993.

10. Pursuant to the contract, Kalpana Industries Limited made purchase orders for plant and machineries to be supplied by the respondent company. Towards the advances, payments were diverted from the plaintiff and other group companies under the control and management of Mr. A.K. Baid and Mr. D.C. Surana, in order to ensure subscription of shares in Kalpana Industries Limited.

11. The letter dated 16-11-1993 and the affidavit of Mr. A.K. Baid, Managing Director of Kalpana Industries Limited dated 11-10-1993 would clearly show that the said amount was diverted from the plaintiff company and other sister concerns. The entire payments that were received from the applicant Company as well as its group companies were immediately invested in Kalpana Industries Limited as agreed by the terms of the contract. The respondent did not retain any money for his personal benefit.

12. After the expiry of lock-in period, the understanding between the parties was that the shares have to be retransferred to applicant's nominees. All these things were put in writing through reply dated 10-5-1997. After lapse of several years, the applicant/ plaintiff has filed the suit and the present application raising a false case against the first defendant. The institution of the frivolous and false suit appears to have been germinated only after the receipt of notice from the Income-tax Department by the applicant company. Since the mandate and requirement of Order 38, Rule 5 of CPC have not been satisfied in this case, the applicant/plaintiff cannot maintain the present application and consequently, the same shall be liable to be dismissed.

13. By way of reply, Mr. R. Thiagarajan, learned counsel for the plaintiff, while repudiating the above submissions made by the learned counsel for the respondent, would make a preliminary objection stating that when there is an order dated 21-7-99, passed by this Court, directing the respondent/first defendant to furnish a security to the value of the suit claim on the strength of the averments made by the applicant in the affidavit, the respondent cannot be allowed to contest the present application without furnishing security as ordered by this Court.

14. In regard to the above submission, the learned counsel for the respondent would submit that the original records of this Court would reveal that there is no order directing the respondent to furnish security and only notice was ordered under Order 38, Rule 5 of CPC and as there is no such direction, respondent is entitled to contest this application on merits.

15. On going through the bundle, it* is clear that no such direction has been given. Only notice was ordered by Hon'ble I. David Christian, J. on 21-7-1999. But, on a perusal of the bundle, it is seen that a memo dated 22-7-1999 has been filed by the counsel for the applicant/plaintiff requesting the First Assistant Registrar (Original Side) to issue and despatch the order to the respondent as Hon'ble I. David Christian, J. was pleased to direct the respondent to furnish security to the extent of the suit claim by an Order dated 21-7-99. This is factually incorrect. I am not able to understand as to why such a memo has been filed by the counsel for plaintiff/applicant, giving the incorrect particulars. However, as indicated earlier, this Court never gave such a direction as claimed by the learned counsel for the applicant/plaintiff. Consequently, the learned counsel for the respondent would be entitled to contest this application.

16. The point at issue in the present application is as to whether the prayer sought for by the applicant/plaintiff, against the respondent, is to be granted or not.

17. According to the affidavit, in paragraph 8, the applicant/plaintiff would state as follows :

"8. I reliably learn and understand that the first defendant is contemplating to alienate the tangible assets of the Company including the goodwill and plant and machinery. Unless some safeguard is made to protect the interest of the plaintiff in respect of the suit claim, the decree that may be passed in favour of the plaintiff in the above suit would become infructuous and the plaintiff will not be in a position to execute the same."

18. In order to make the said prayer formidable and valid, the applicant/plaintiff would specifically state in earlier paragraph that for the legal demand notice dated 15-4-1997, the respondent sent a reply dated 10-5-97 acknowledging the said liability and that even though the respondent/first defendant had admitted and acknowledged the debt and liability, he has not chosen to pay the plaintiff despite repeated demands and reminders.

19. As correctly pointed out by the learned counsel for the respondent, the above assetion by the applicant/plaintiff in the affidavit is factually wrong, as the reply letter dated 10-5-1997 would clearly disclose that the liability was emphatically denied.

20. In the light of the said fact situation, let us now see whether the averments contained in paragraph 8 of the affidavit would be sufficient (o hold that the mandate and requirement of Order 38, Rule 5 of CPC have been satisfied to grant the relief sought for in this application.

21. In this context, with reference to the scope of Order 38. Rule 5 of CPC, various authorities have been cited by the counsel on either side. The learned counsel for the applicant/plaintiff would cite the following authorities :--

" 1. (Govindarao Mahadik v. Devi Sahai).

2. (Padam Sen v. State of U.P.) and

3. (Manohar Singh v. Hind Kumar Kohli)".

22. The learned counsel for the respondent would cite the following authorities :--

"1. (Premraj v. Md. Maneck Gazi),

2. (Nataraja v. Bangaru).

3. (G. Kuppathi Mudaliar v. Murugesan),

4. (Pappammal v. Chidambaram) and

5. (T. Srinivasan v. V. Srinivasan)."

23. Order XXXVIII Rule 5 of CPC deals with 'Attachment before judgment', which reads as follows :--

"(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."

24. The reading of the above provision would make it clear that there are essential requirements which must be proved to the satisfaction of the Court. They are as follows :--

"(i) The defendant is about to dispose of the whole or any part of his property; or

(ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court;

(iii) That the defendant is intending to do so to cause obstruction or delay in the execution of any decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court, unsupported by particulars, would not be sufficient compliance with the rule.

(iv) It is incumbent upon the plaintiff to state the grounds on which he entertains the belief or apprehension that the defendant would dispose of or remove the property, or, to give the source of his information and belief in the matter through an affidavit."

25. Therefore, the jurisdiction of this Court to order attachment before judgment arises only when it is satisfied by the affidavit, supported by the particulars that the defendant is about to dispose of the whole, or any part of his property with the intention to obstruct or delay the execution of the decree that may be passed against him. Hence, the essential requirement for an order of attachment before judgment is the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the decree that may be passed in the suit.

26. Before dealing with the said question as to whether those specific allegations supported by materials are available in the present case, let us refer to the guiding principles that can be deduced from the perusal of all the authorities cited by the Counsel on either side as mentioned above. The following are the guiding principles :--

"(1) That an order under Order 38, Rule 5 can be issued only if circumstances exist as are stated therein to the satisfaction of the Court.

(2) 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 defendants would not be prejudiced.

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

(4) That a mere allegation that the defendant is selling off his properties is not sufficient. Particulars must be stated.

(5) An order of attachment before judgment is a drastic remedy and the power has to be exercised with utmost care and caution, as it may be likely to ruin the reputation of the party against whom the power is exercised. As the Court must act with the utmost circumspection before issuing an order of attachment, the affidavit filed by the applicant should clearly establish that the defendant, with intent to obstruct or delay the execution of the decree that may be passed against him is about to dispose of the whole or any part of his property.

(6) A mere mechanical repetition of the provisions in the Code or the language therein without any basic strata of truth underlying the allegation or vague and general allegations that the defendant is about to dispose of the property or to remove it beyond the jurisdiction of the Court, totally unsupported by particulars, would not be sufficient compliance with Order 38. Rule 5 of CPC.

(7) An attachment before judgment is not a process to be adopted as a matter of course. The suit is yet to be tried and the defence of the defendant is yet to be tested. At the nebulous juncture, the relief which is extraordinary could be granted only if the conditions for its grant as per the provisions of the Code, stand satisfied. This process is never meant as a lever for the plaintiff to coerce the defendant to come to terms. Hence utmost caution and circumspection should guide the Court."

27. In the light of the above principles, if we look at the facts of the case, in my view, the requirements contemplated under Order 38, Rule 5 of CPC, have not at all been satisfied by the applicant/plaintiff herein.

28. As quoted in the various decisions, the mere bald averment as contained in paragraph 8 of the affidavit that the first defendant is contemplating to alienate the tangible assets of the Company including the goodwill and plant and machinery would not at all be sufficient.

29. In this context, it is relevant to point out that the liability of the loan amount has been denied by the first defendant though it is wrongly stated by the plaintiff/applicant in the affidavit that the debt and liability were admitted and acknowledged by the first defendant/respondent herein. When such being the situation, the applicant/plaintiff has to establish through affidavit, supported by the materials, that at least part of the liabilities are admitted or that the first defendant is about to dispose of the properties with the mala fide intention to obstruct or delay the execution of the decree that may be passed against him.

30. As indicated above, the applicant/ plaintiff should clearly establish two essential requisites. They are :-- (i) the defendant is about to dispose of the whole or any part of his property; (ii) that the said disposal is being done with an intention to obstruct or delay the execution of the decree that may be passed against him.

31. Thus, in this case, the sine qua non for an order of attachment before judgment, namely, the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the decree that may be passed in the suit, is conspicuously absent.

32. The mere admission in the counter that the property, which is sought to be attached, is already subjected to the mortgage with the Indian Bank, would not be a ground to hold that the essential requirements for Order 38, Rule 5 of CPC have been complied with.

33. With the above observations, the application is dismissed with costs.fendant and that when the plaintiff had been demanding the principal as well as interest amounts, the first defendant was avoiding payment and therefore, the plaintiff sent a legal notice dated 15-4-1997 to the first defendant and received a reply from the first defendant acknowledging the liability, but pleading some adjustment with regard to certain other accounts and that even though the first defendant had admitted and acknowledged the debt and liability, it had not chosen to pay the plaintiff, despite repeated demands and reminders.

5. Learned counsel for the applicant/ plaintiff would further state that the applicant/plaintiff reliably learnt that the first defendant has contemplated to alienate the tangible assets of the Company including the goodwill and plant and machinery. Hence, he filed the suit and the application for furnishing security or attachment before judgment of the immovable property, namely, the factory premises of the first defendant, situate at Ambattur Industrial Estate.

6. Mr. Parthasarathy, learned counsel representing Mr. Sathish Parasaran appearing for the first defendant/respondent herein would vehemently contend that there was no loan transaction between the parties nor is there any material to show that there was an acknowledgment of any liability by the respondent Company in respect of the alleged loan, at any point of time, and nor is there any evidence in support of the applicant's claim even after adjusting payment of interest or principal by the respondent to the applicant company.

7. Learned counsel for the respondent would further state that the respondent has categorically stated in his reply notice dated 10-5-1997, emphatically denying the claim made by the applicant/plaintiff, that there was no loan transaction between the parties.

8. According to the counsel for the respondent, the plaintiff Company as well as its various sister concerns were all closely held private companies under the control and management of Mr. D.C. Surana and Mr. A.K. Baid, who are close relatives. The said individuals are also having control over a public limited company viz., Kalpana Industries Limited. The respondent Company has been engaged in manufacture and supply of machineries and technology to Its customers in the field of plastics. The respondent company has also been dealing with M/s. Kalpana Industries Limited since 1993.

9. In the year 1993, Mr. A.K. Baid, representing Kalpana Industries Limited, approached the respondent Company seeking for the supply of plant and machineries so as to enable the Kalpana Industries Limited to set up a plant at Daman. In that context, Mr. A.K. Baid assured that the funds would be arranged through his group companies and the amounts could be used for purchase of shares in Kalpana Industries Limited. Accordingly, the contract between the respondent and Kalpana Industries Limited along with the German Company came to be executed on 2-11-1993.

10. Pursuant to the contract, Kalpana Industries Limited made purchase orders for plant and machineries to be supplied by the respondent company. Towards the advances, payments were diverted from the plaintiff and other group companies under the control and management of Mr. A.K. Baid and Mr. D.C. Surana, in order to ensure subscription of shares in Kalpana Industries Limited.

11. The letter dated 16-11-1993 and the affidavit of Mr. A.K. Baid, Managing Director of Kalpana Industries Limited dated 11-10-1993 would clearly show that the said amount was diverted from the plaintiff company and other sister concerns. The entire payments that were received from the applicant Company as well as its group companies were immediately invested in Kalpana Industries Limited as agreed by the terms of the contract. The respondent did not retain any money for his personal benefit.

12. After the expiry of lock-in period, the understanding between the parties was that the shares have to be retransferred to applicant's nominees. All these things were put in writing through reply dated 10-5-1997. After lapse of several years, the applicant/ plaintiff has filed the suit and the present application raising a false case against the first defendant. The institution of the frivolous and false suit appears to have been germinated only after the receipt of notice from the Income-tax Department by the applicant company. Since the mandate and requirement of Order 38, Rule 5 of CPC have not been satisfied in this case, the applicant/plaintiff cannot maintain the present application and consequently, the same shall be liable to be dismissed.

13. By way of reply, Mr. R. Thiagarajan, learned counsel for the plaintiff, while repudiating the above submissions made by the learned counsel for the respondent, would make a preliminary objection stating that when there is an order dated 21-7-99, passed by this Court, directing the respondent/first defendant to furnish a security to the value of the suit claim on the strength of the averments made by the applicant in the affidavit, the respondent cannot be allowed to contest the present application without furnishing security as ordered by this Court.

14. In regard to the above submission, the learned counsel for the respondent would submit that the original records of this Court would reveal that there is no order directing the respondent to furnish security and only notice was ordered under Order 38, Rule 5 of CPC and as there is no such direction, respondent is entitled to contest this application on merits.

15. On going through the bundle, it* is clear that no such direction has been given. Only notice was ordered by Hon'ble I. David Christian, J. on 21-7-1999. But, on a perusal of the bundle, it is seen that a memo dated 22-7-1999 has been filed by the counsel for the applicant/plaintiff requesting the First Assistant Registrar (Original Side) to issue and despatch the order to the respondent as Hon'ble I. David Christian, J. was pleased to direct the respondent to furnish security to the extent of the suit claim by an Order dated 21-7-99. This is factually incorrect. I am not able to understand as to why such a memo has been filed by the counsel for plaintiff/applicant, giving the incorrect particulars. However, as indicated earlier, this Court never gave such a direction as claimed by the learned counsel for the applicant/plaintiff. Consequently, the learned counsel for the respondent would be entitled to contest this application.

16. The point at issue in the present application is as to whether the prayer sought for by the applicant/plaintiff, against the respondent, is to be granted or not.

17. According to the affidavit, in paragraph 8, the applicant/plaintiff would state as follows :

"8. I reliably learn and understand that the first defendant is contemplating to alienate the tangible assets of the Company including the goodwill and plant and machinery. Unless some safeguard is made to protect the interest of the plaintiff in respect of the suit claim, the decree that may be passed in favour of the plaintiff in the above suit would become infructuous and the plaintiff will not be in a position to execute the same."

18. In order to make the said prayer formidable and valid, the applicant/plaintiff would specifically state in earlier paragraph that for the legal demand notice dated 15-4-1997, the respondent sent a reply dated 10-5-97 acknowledging the said liability and that even though the respondent/first defendant had admitted and acknowledged the debt and liability, he has not chosen to pay the plaintiff despite repeated demands and reminders.

19. As correctly pointed out by the learned counsel for the respondent, the above assetion by the applicant/plaintiff in the affidavit is factually wrong, as the reply letter dated 10-5-1997 would clearly disclose that the liability was emphatically denied.

20. In the light of the said fact situation, let us now see whether the averments contained in paragraph 8 of the affidavit would be sufficient (o hold that the mandate and requirement of Order 38, Rule 5 of CPC have been satisfied to grant the relief sought for in this application.

21. In this context, with reference to the scope of Order 38. Rule 5 of CPC, various authorities have been cited by the counsel on either side. The learned counsel for the applicant/plaintiff would cite the following authorities :--

" 1. (Govindarao Mahadik v. Devi Sahai).

2. (Padam Sen v. State of U.P.) and

3. (Manohar Singh v. Hind Kumar Kohli)".

22. The learned counsel for the respondent would cite the following authorities :--

"1. (Premraj v. Md. Maneck Gazi),

2. (Nataraja v. Bangaru).

3. (G. Kuppathi Mudaliar v. Murugesan),

4. (Pappammal v. Chidambaram) and

5. (T. Srinivasan v. V. Srinivasan)."

23. Order XXXVIII Rule 5 of CPC deals with 'Attachment before judgment', which reads as follows :--

"(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."

24. The reading of the above provision would make it clear that there are essential requirements which must be proved to the satisfaction of the Court. They are as follows :--

"(i) The defendant is about to dispose of the whole or any part of his property; or

(ii) The defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court;

(iii) That the defendant is intending to do so to cause obstruction or delay in the execution of any decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property or remove it beyond the jurisdiction of the Court, unsupported by particulars, would not be sufficient compliance with the rule.

(iv) It is incumbent upon the plaintiff to state the grounds on which he entertains the belief or apprehension that the defendant would dispose of or remove the property, or, to give the source of his information and belief in the matter through an affidavit."

25. Therefore, the jurisdiction of this Court to order attachment before judgment arises only when it is satisfied by the affidavit, supported by the particulars that the defendant is about to dispose of the whole, or any part of his property with the intention to obstruct or delay the execution of the decree that may be passed against him. Hence, the essential requirement for an order of attachment before judgment is the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the decree that may be passed in the suit.

26. Before dealing with the said question as to whether those specific allegations supported by materials are available in the present case, let us refer to the guiding principles that can be deduced from the perusal of all the authorities cited by the Counsel on either side as mentioned above. The following are the guiding principles :--

"(1) That an order under Order 38, Rule 5 can be issued only if circumstances exist as are stated therein to the satisfaction of the Court.

(2) 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 defendants would not be prejudiced.

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

(4) That a mere allegation that the defendant is selling off his properties is not sufficient. Particulars must be stated.

(5) An order of attachment before judgment is a drastic remedy and the power has to be exercised with utmost care and caution, as it may be likely to ruin the reputation of the party against whom the power is exercised. As the Court must act with the utmost circumspection before issuing an order of attachment, the affidavit filed by the applicant should clearly establish that the defendant, with intent to obstruct or delay the execution of the decree that may be passed against him is about to dispose of the whole or any part of his property.

(6) A mere mechanical repetition of the provisions in the Code or the language therein without any basic strata of truth underlying the allegation or vague and general allegations that the defendant is about to dispose of the property or to remove it beyond the jurisdiction of the Court, totally unsupported by particulars, would not be sufficient compliance with Order 38. Rule 5 of CPC.

(7) An attachment before judgment is not a process to be adopted as a matter of course. The suit is yet to be tried and the defence of the defendant is yet to be tested. At the nebulous juncture, the relief which is extraordinary could be granted only if the conditions for its grant as per the provisions of the Code, stand satisfied. This process is never meant as a lever for the plaintiff to coerce the defendant to come to terms. Hence utmost caution and circumspection should guide the Court."

27. In the light of the above principles, if we look at the facts of the case, in my view, the requirements contemplated under Order 38, Rule 5 of CPC, have not at all been satisfied by the applicant/plaintiff herein.

28. As quoted in the various decisions, the mere bald averment as contained in paragraph 8 of the affidavit that the first defendant is contemplating to alienate the tangible assets of the Company including the goodwill and plant and machinery would not at all be sufficient.

29. In this context, it is relevant to point out that the liability of the loan amount has been denied by the first defendant though it is wrongly stated by the plaintiff/applicant in the affidavit that the debt and liability were admitted and acknowledged by the first defendant/respondent herein. When such being the situation, the applicant/plaintiff has to establish through affidavit, supported by the materials, that at least part of the liabilities are admitted or that the first defendant is about to dispose of the properties with the mala fide intention to obstruct or delay the execution of the decree that may be passed against him.

30. As indicated above, the applicant/ plaintiff should clearly establish two essential requisites. They are :-- (i) the defendant is about to dispose of the whole or any part of his property; (ii) that the said disposal is being done with an intention to obstruct or delay the execution of the decree that may be passed against him.

31. Thus, in this case, the sine qua non for an order of attachment before judgment, namely, the mala fide intention and the conduct of the defendant in disposing of or about to dispose of his property with the dishonest intention of defeating or delaying the decree that may be passed in the suit, is conspicuously absent.

32. The mere admission in the counter that the property, which is sought to be attached, is already subjected to the mortgage with the Indian Bank, would not be a ground to hold that the essential requirements for Order 38, Rule 5 of CPC have been complied with.

33. With the above observations, the application is dismissed with costs.

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