The Supreme Court held that a property transferred through a registered sale deed prior to the filing of a suit cannot be subjected to attachment before judgment under Order XXXVIII Rule 5 of the Code of Civil Procedure (CPC). “It is well settled that attachment before judgment cannot extend to properties which have already been alienated prior to the institution of the suit…the property sought to be attached must belong to the defendant on the date of institution of the suit; property already transferred prior to the suit cannot be attached under this provision (Order 38 Rule 5 CPC).”, observed a bench of Justices BV Nagarathna and R Mahadevan while overturning the concurrent findings of the Kerala High Court and the Trial Court, which had entertained an application for attachment before judgment under Order XXXVIII Rule 5 CPC despite the fact that the property no longer belonged to the defendant on the date of the application, having already been sold to a bona fide purchaser through a registered sale deed. Aggrieved by the High Court’s decision, the purchaser approached the Supreme Court, contending that once the defendant had already transferred the property to them through a registered sale deed prior to the filing of the suit, it was impermissible for the respondent to seek attachment before judgment. They argued that the essential condition under Order XXXVIII Rule 5 CPC, that the property must belong to the defendant at the time of the application, was not satisfied.
The Court observed since “the registered sale deed in favour of the original applicant was executed on 28.06.2004 i.e., several months prior to the institution of the suit…Consequently, at the time of filing of the suit, the property stood transferred and was no longer in the possession or ownership of Defendant No. 3. In such circumstances, the essential condition for invoking attachment before judgment under Order XXXVIII Rule 5 CPC – that the property belongs to the defendant on the date of institution of the suit – is absent. The plaintiff’s remedy, if any, lies exclusively under Section 53 of the T.P. Act, which provides for setting aside a transfer made with intent to defraud creditors.”
The Court rejected the Respondent’s argument that the transfer was fraudulent, intended to defeat Respondent creditors and unsupported by genuine consideration, stating that “the scope of Rule 5 is confined to securing the plaintiff’s prospective decree by preventing the defendant from frustrating execution through alienation or concealment of his property during pendency of the suit. The essential condition, however, is that the property sought to be attached must belong to the defendant on the date of institution of the suit; property already transferred prior to the suit cannot be attached under this provision. In cases where such prior transfer is alleged to be fraudulent, the remedy lies under Section 53 of the T.P. Act and not under Order XXXVIII Rule 5 CPC.” According, the appeal was allowed, holding that claim petition filed by the Appellant-original applicant before the trial court to be sustainable. (Sources)
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