J.N. Bhatt, J.@mdashShould the claim of appellant-bank to the property under order of attachment before judgment be accepted or not is the question posed before this Court, in this appeal.
2. With a view to appreciating the aforesaid question raised before this Court, a few material facts may be narrated at the outset. The appellant-bank, a third party or a stranger to Special Civil Suit No. 134 of 1979, preferred an application Ex.20, in the trial Court for vacating an order of attachment before judgment passed by the trial Court, contending its claim over the property under attachment. The trial Court partly allowed the claim, holding that the attachment on the machinery exceeding the amount of Rupees 1,50,000/- shall be removed, by modifying the ex parte order granted below Ex. 5 in favour of the plaintiff, respondent No. 1 herein, in the aforesaid Special Civil Suit No. 134 of 1979.
3. The original plaintiff filed the suit for the recovery of an amount of Rs. 1,40,000/-with cost and interest against the defendants. The plaintiff also submitted an application, Ex. 5, along with the suit under Order 39, Rules 1 and 2, and also under Order 38, Rule 5 of the CPC (CPC). The defendants were directed to furnish the security in respect of an amount of Rs. 1,50,000/-and, failing which, the disputed property was ordered to be taken into attachment. The order passed for attachment before judgment passed by the trial Court was sent to the District Judge, Thana, for execution and implementation, which in turn was sent to the Civil Judge (J.D.) at Palghar. The bailiff of the Court reported that the premises were looked and the partners were residing outside and, therefore, an application to break open the lock and take the property under attachment, after making inventory, was preferred. The Security Officer of the appellant-bank resisted the Officer of the Court to break open the lock. However, subsequently, the locks were broken and the premises had been opened by the Nazir, in presence of Panchas and Panchnama of the property was prepared, which was, ultimately, sent to the trial Court with inventory. Thus, the seals of the Court were affixed after locking the premises.
4. The appellant bank appeared and claimed over the property under attachment, inter alia, contending that the original plaintiffs dues are only to the extent of Rs. 1,50,000/-, whereas the properties and the premises under the attachment were valued more than Rs. 10 lakhs, and that the goods stored in the premises were hypothecated with the bank and the bank had the first charge on all the goods and raw materials lying in the premises situate at M.I.D.C. Industrial Area, Tarapore. The bank also contended that the Delhi High Court in Civil Suit No. 39 of 1989, passed an order, on 10-2-1980, restraining the defendant from disposing of the properties in question and appointing M/s Gandhi and Company as an auctioneer. Thus, the appellant-bank contended that the attachment on the disputed property should be removed.
5. While accepting the claim of the bank in part, the trial Court Judge, on 6-5-1981, was pleased to remove the attachment from the disputed property, raw materials and remaining materials except to the tune of Rs. 1,50,000/-. Unfortunately, the trial Court also did not record the charge or the interest of the bank on the machinery to the tune of Rs. 1,50,000/-, which was ordered to be kept under attachment while passing the impugned order.
6. Therefore, the question which arises for consideration and adjudication at this juncture is, as to whether the claim of the bank that the trial Court ought to have mentioned that the attachment is subject to the first charge of the appellant bank, is justified in the circumstances of the case.
7. In order to resolve this controversy, it would be appropriate, at this juncture, first to refer to the relevant provisions of CPC relating to the attachment before judgment. Under Order 38, Rule 5, in a given circumstance, where the defendant fails to furnish security, the Court is competent to pass an order for attachment. The object of this provision is to prevent any attempt on the part of the defendant to defeat the realisation of the decree that may be passed against the defendant.
8. Order 38, Rule 8 provides a provision for adjudication of claim to property attached before judgment. Where any claim is preferred to property attached before judgment, such claim has to be adjudicated upon in the manner provided for the adjudication of claims to the property attached in execution of decree for the payment of money. It is very clear from the provisions of Order 38, Rule 8 that the procedure to be followed in the adjudication of claims under that rules is same as that provided by Order 21, Rule 58 for adjudication of claims to property attached in execution of a decree. The appellant-bank claims charge and interest in the property in dispute and it was required to be adjudicated upon as provided by Order 21, Rule 58 of the CPC. In short, the claimant to property attached before judgment has to show that on the date of the attachment, he had some interest or was possessed of the property attached. In the present case, both these elements are no longer in controversy. The plaintiff had admitted in the affidavit, Ex. 6, that the property sought to be attached by the order of the Court under Order 38, Rule 5 was under first charge of the appellant-bank. It is also not in dispute that the appellant-bank was possessed of the disputed properties and the premises. The trial Court, as such, failed to appreciate the relevant provisions of the CPC and committed serious error in passing the impugned order.
9. The trial Court has committed serious error in holding that the provisions of Rule 10 of Order 38 are not applicable. On the contrary, it is the relevant provision which says that the attachment before judgment under Order 38, Rule 5 shall not affect the rights existing prior to the date of attachment. In fact, the order passed under Order 38, Rule 5 for attachment of property before judgment does not confer any title, charge, lean Or priority in the property in favour of the person attaching it. On the contrary, it is crystal clear from the provisions of Order 38, Rule 10 that, an attachment before judgment docs not, in any way, affect the rights of the persons, in respect of the disputed property, who are not parties to the suit. The appellant-bank is a stranger or a third party who claimed charge and interest in the disputed property, which was not disputed by the plaintiff in view of the affidavit, Ex. 6. Therefore, it was incumbent upon the trial Court to have mentioned in the impugned order that the attachment of the machineries to the tune of Rs. 1,50,000/- under Order 38, Rule 5 of the CPC was subject to the first charge of the appellant-bank. Having not done so, the trial Court committed serious error of law, which requires to be corrected in this appeal.
10. In the result, the appeal is required to be allowed to the aforesaid extent. The impugned order of attachment before judgment in respect of schedule machinery to the extent of Rs. 1,50,000/ - shall be subject to the first charge of the appellant bank. Accordingly, the impugned order is modified. Needless to mention that the aforesaid claim or the right of the appellant-bank shall not be, in any way, prejudiced or affected even if the property in dispute has been sold and the proceeds are deposited in the Court in the course of the proceedings before the trial Court. Appeal stands allowed to the aforesaid extent, with no order as to costs.
