Bedanand Rai and Others vs Nabokumar Singh and Others

Varma, J.—This appeal is directed against) an order of the learned Subordinate Judge of Purnea, dated 14th December 1936, under Order 38, Rule 6, Civil P.C., attaching before judgment the properties of the defendants. The plaintiff instituted a suit on the basis of a handnote executed by defendant 1 on 26th February 1934 for a sum of Rs. 16,300, The plaint in the suit was filed on 18th July 1936 and the petition for attachment before judgment was made on the same day stating that certain transfers had been made by defendant 1 and that the plaintiff had heard from Ram Parsad Singh of Sapni that the defendant was prepared "to alienate through collusive sale and benami rehan etc his remaining properties in the names of his creatures." Notices were served upon the defendants, evidence was gone into, and the learned Judge in the Court below has discussed the evidence adduced by both the parties.

The learned Judge an the evidence of the witnesses has come to the conclusion that major portion of the properties has been transferred and says: "For the purpose of disposing of the present petition, it has to be taken that the transactions are real" and unless an attachment is made the plaintiff will not be able to realize his dues. He ultimately finds:

There are sufficient circumstances in this case as above pointed out which would lead one to suspect that the defendants had an intention of disposing of their properties. It is important in this connexion to mention come of the transfers that had taken place. The transfers referred to in the evidence of the witnesses are: (1) a sale deed dated 22nd September 1935; (2) a rehan deed dated 27th May 1936; (3) another rehan deed dated 28th May 1936. From the dates it will appear that all the transactions took place before the suit was instituted. At this stage I had better refer to Order 38, Rule 5, Civil P.C., to see the conditions that are to be satisfied before an attachment before judgment under Rule 6 of that Order can be made. Rule 5 of Order 38 provides (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.

If the defendants before us failed to satisfy the Court, then an order for attachment before judgment could be passed under Order 38, Rule 6. Now, in this case the evidence discloses that the three transfers mentioned above took place before the date of the suit. On the question as to what the future intention of the defendants was with regard to the alienation, there is only a statement in the affidavit which refers to an information received from Ramprasad Singh that the defendant was going to transfer the property.

The plaintiff in his evidence says that he learnt about the said transfers and about the intention of the defendants to transfer from one Ramprasad Singh. He says: "He spoke to my cousin Gogindra Nath Ghosh who in turn spoke to me. I sent for Ram Prasad and had it confirmed". In cross-examination he says:

Ram Prasad told me before suit, that the sale deed in favour of the wife of defendant 1 had already been executed and that the other transfers were going to be effected in course of 2 to 4 days. He said that the rehan hoods were to be executed in the name of the man-relation of the defendants, but he did not give the name nor did I enquire about it. I enquired from him which properties had been transferred and which properties were going to be transferred. He said he did not know so much. I did not make enquiry in the Registry Office for I had no time to lose regard being had to the suspicion in my mind.

It is clear that the evidence on this point is vague. The plaintiff does not say what properties were going to be transferred, to whom they were going to be transferred and under what circumstances. One of the important conditions that the alienation should take place or that the intention of the defendants should be to alienate the property after the suit is filed has not been satisfied, still less satisfied is the second condition which is that it must be with the object of obstructing the plaintiff from realizing his dues.

In Chandrika Prashad Singh and Others Vs. Hira Lal and Others, it was held that the power under Order 38, Rule 5, Civil P.C., should be exercised only when the Court is satisfied, not only that the defendant is about to dispose of his property or to remove it from the jurisdiction of the Court but also that his object in so doing is to obstruct or delay the execution of any decree that may be passed against him and so deprive the plaintiff, if successful, of the fruits of victory.

In Nowroji Pudumji v. Deccan Bank Ltd. A.I.R.1921. Bom 69 it was held that a mere agreement to sell property was not sufficient to prove intent to defraud; and similarly in Durgadas v. Nalinchandra A.I.R.1932. Cal. 694 it was held that the Court must be thoroughly satisfied that the defendants had the intention of obstructing or delaying the execution of any decree, which might be passed against them, or with such intent, were about to dispose of their property, and it was further emphasized that mere vague allegations of fraud were not sufficient.

In the Allahabad High Court also in Badri Prasad Vs. Chokhey Lal, Walsh, J. said:

Cases in which either an attachment or an injunction ought to be issued before judgment are extremely rare. The plaintiff ought to be able to satisfy the Court of the practical certainty of his success, and of the existence of grave danger, and of a real fear that a dishonest defendant, undoubtedly liable, is making away with the probable fruits of the judgment.

Reading the provisions of Order 38, Rule 5, Civil P.C., I have no doubt in my mind that before the provisions of this rule would come into play, the Court has to be satisfied that transfers were going to be made by the defendant after the suit had been filed and that such transfers were with the object of obstructing the plaintiff if he won the suit in executing the decree; and that mere allegations to this effect were of no avail but the facts must be positively proved by satisfactory evidence.

Mr. Natai Chandra Ghosh on behalf of the respondents urges that the conduct of the parties before the institution of the suit can be taken into account for the purpose of coming to a conclusion whether the intention of the defendant was fraudulent or not. For this proposition he relies upon the decision in McGregor v. Cawnpore Sugar Works Ltd. (1910) 11 C.L.J. 19 where their Lordships of the Calcutta High Court held:

It is open to the Court to look to the conduct of the parties immediately before the suit and to examine also the surrounding circumstances and from these to draw an inference as to whether the defendant is about to dispose of his property, and, if so, with what intention.

The previous transaction according to this decision may be referred to for the purposes of finding out the intention with which the subsequent transactions were going to be entered into. But that there must be a transaction subsequent to the filing of the suit is also clear from this decision.

In my opinion in view of the reasons that I have given, namely that the Court below has not found all the circumstances under which Order 38, Rules 5 and 6, Civil P.C., comes into play, the order of the Court below should be set aside and the appeal allowed with costs.

Wort, J.

I agree.