1. Challenging conditional garnishee order before judgment in a commercial suit for money recovery. (Para 1 , 2 , 7 , 8 )
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2023 Supreme(Online)(KER) 44666
HIGH COURT OF KERALA
C.S. Dias, J
T. Shaji – Appellant
Versus
Rajan M.V. – Respondent
OP(C) NO. 1929 OF 2022|I.A NO.1/2022 IN CS 9/2022
Advocates:
For the Appellants/Petitioners: Manu Vyasan Peter, P.B. Krishnan, Sabu George
For the Respondents: Santheep Ankarath, S Unikrishnan
For the Appellants/Petitioners: Manu Vyasan Peter, P.B. Krishnan, Sabu George
For the Respondents: Santheep Ankarath, S Unikrishnan
A conditional order of attachment before judgment under Order 38 Rule 5 of the CPC is not inherently erroneous if the defendant is given an opportunity to show cause and file objections before the order is made absolute.
Headnote:(A) Civil Procedure - Attachment Before Judgment - Order 38 Rule 5 - Direction to third parties (garnishees) to not release funds due to the defendant - Whether such a conditional order is sustainable before the defendant has filed objections. (Para 7, 9)
(B) Supervisory Jurisdiction - Article 227 - Scope - Where a conditional order of attachment is passed and the defendant has subsequently filed objections, the appropriate course is to relegate the parties to the trial court to decide the application on merits. (Para 11)
Issues: Whether the conditional order of attachment directing third parties not to release funds to the defendant under Order 38 Rule 5 of the CPC was erroneous.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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commercial suits
- attachment before judgment
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commercial suits
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civil procedure
Table of Contents
2. Garnishee order under Order XXI Rule 46 inapplicable on original side; property of third party cannot be attached. (Para 4 , 5 )
3. Conditional order passed before objections; parties relegated to show cause and decide final attachment. (Para 9 , 10 , 11 )
4. Court can pass conditional attachment before judgment; objections to be heard before making order absolute. (Para 9 )
5. Matter remanded to Commercial Court to decide application after hearing both sides within one month. (Para 11 )
6. Can a garnishee order be passed before judgment in a commercial suit?
Yes, a court can pass a conditional garnishee order before judgment under Order XXXVIII Rule 5 of CPC, directing third parties not to release amounts to the defendant. (Para 4 , 7 , 9 )
7. Can property of a third party be attached before judgment under Order XXXVIII Rule 5 CPC?
The court noted the respondent's argument that there is no embargo to attach a third party's property before judgment, but the attachment can only be finalised after the decree. (Para 5 )
8. What is the procedure when a conditional attachment order is passed before judgment?
The defendant must show cause against the conditional order; the court then decides whether to make the attachment absolute after hearing both sides. (Para 9 )
THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 01.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Dated this the 1st day of March, 2023
JUDGMENT
The original petition is filed challenging Ext.P3 order passed in I.A. No.1/2022 in C.S.No.9/2022 by the Commercial Court, Ottappalam. The petitioner is the defendant and the first respondent is the plaintiff. The respondents 2 to 5 are not parties to the suit, but have been impleaded in the status of garnishee.
2. The relevant background facts leading to Ext.P3 order, are:-
(i) The first respondent has filed the above suit against the petitioner for recovery of money.
(ii) Along with the suit, the first respondent had filed I.A. No.1/2022 (Ext.P2), to direct the petitioner to furnish security for the suit claim and to order the respondents 2 to 5 not to disburse the funds that are payable to the petitioner.
(iii) The court below, by the impugned Ext.P3 order, has directed the respondents 2 to 5 not to release any amount due to the petitioner. Ext.P3 order is erroneous and unsustainable in law. Hence, the original petition.
3. Heard, Sri.P.B.Krishnan, the learned counsel appearing for the petitioner, Sri. Santheep Ankarath, the learned counsel appearing for the first respondent and the learned Government Pleader appearing for the respondents 2 to 5.
4. Sri.P.B. Krishnan, vehemently contended that the court below has gone wrong in passing Ext.P3 order, because the order is akin to a proceedings under Order 21 Rule 46 of the Code of Civil Procedure (in short Code’), which is not applicable on the original side under Order 38 Rule 5 of the Code. He also contended that even if the provision is found applicable a garnishee order can only be passed by the court having territorial jurisdiction as per the law laid down in Bulkeesu Beegum V. Gonzago [1961 KHC 230]. According to him, the court below has failed to appreciate the point that only the property of the defendant can be attached invoking Order 38 Rule 5 of the Code and not that of third party strangers.
5. The above submissions were assiduously countered by Sri.Santheep Ankarath, who placed on the decisions of this Court in Greater Cochin Development Authority v. Harrisons Malayam Ltd. [2002 KHC 206] and that of the Andhra Pradesh High Court in Surender Singh Bajaj v. M/s Kitty Steels Ltd and Another [2003 KHC 3079], to fortify his contentions that there is no embargo to attach a property of a third party before judgment, but the same can only be finalised and released after the decree. Moreover, the petitioner has rushed to this Court even prior to the filing a counter affidavit to Ext.P2 application. Therefore, the impugned Ext.P3 order is legal and justifiable, and not liable to be interfered with by this Court. Hence, the original petition may be dismissed.
6. The short question is, whether there is any error in Ext.P3 order.
7. On an appreciation of the pleadings and materials on record, it can be gathered that Ext.P2 application has been filed under Order 38 Rule 5 of the Code, to direct the petitioner to furnish security for an amount of Rs.1,28,67,950/- and to order the respondents 2 to 5 not to disburse the amounts payable to the petitioner as mentioned in the schedule attached to the application.
8. Admittedly, the petitioner has not filed his objection to Ext.P2 application.
9. The court below, by the impugned Ext.P3 order, has only passed a conditional order of attachment by directing the respondents 2 to 5 not to release any amount to the petitioner until further orders. Therefore, it is upto the petitioner to show cause against the conditional order.
10. Sri.P.B. Krishnan submitted that the petitioner has now filed his objections to Ext.P2 application.
11. In the above factual scenario, without expressing anything on the merits of the rival submissions, I am of the view that it would be upto the court below to decide whether Ext.P3 conditional order of attachment is to be made absolute or not after adv
