Valuation of attached property in recovery of dues

Aashima Kakkar

A civil suit is brought against someone who harms the plaintiff in some way. In certain civil cases, the plaintiff, or the individual who was harmed as a result of the defendant’s actions, is paid money. As a result, a civil case may be filed in response to a residential eviction due to a breach of lease, a contract dispute, injuries sustained as a result of traffic accidents, and a variety of other harms or disputes.

Unlike a criminal suit, which focuses on punishing the wrongdoer, the primary goal of a civil suit is to compensate the aggrieved party for the damages they have suffered.

Every civil case goes through three stages. It begins with the filing of a suit, followed by the adjudication of the civil suit, and eventually the execution of the civil suit. The suit’s implementation is the step in which the adjudication’s results are put into action; thus, this stage is known as execution.

The court’s order or judgement is enforced or given effect during this process. It is the execution of the decree, which benefits the decree-holder in whose favour the decree was passed.

Who can carry out the decree is specified in Section 38 of the Code of Civil Procedure, 1908 (hereinafter as the CPC), being that a decree can be carried out by either the court that issued it or the court to which it was sent for execution.

Certain expressions are further explained in Section 37. If the Decree Holder convinces the Court that the Judgment Debtor has sufficient means to satisfy the decree, the Court cannot refuse to order arrest on the grounds that the Decree Holder has an alternative remedy of attachment available to realize the decretal amount.

The CPC specifies several methods for carrying out a decree, each with its own set of conditions and limitations.

Section 51 – Modes of execution of a decree

The following modes of decree execution are provided in this section, subject to any conditions and limitations that may be imposed.

Through the delivery of any property that has been specifically decreed
By attaching property and selling it, or by selling it without attaching it
Arrest and detention in prison for a period that does not exceed the period
In any other manner required by the nature of the relief granted.

Attachment of property is one of the methods used by the court of justice to carry out its orders. If the property is located within the court’s jurisdiction, an executing court has the authority to seize it. It makes no difference where a judgement debtor conducts his business.

What is attachment of property?

Attachment of property is one of the ways a civil suit’s decree can be carried out. A court may order a person (defendant) to pay an amount to the decree-holder in a decree. In the event that the defendant fails to pay the required sum, the court may attach the defendant’s movable and immovable property in order to recover the amount owed through the sale of these assets. There are, however, some assets that cannot be attached in order to recover the debt.

Illustration

‘A’ file a suit for Rs 10,000 against ‘B’ and obtains a decree against him. The decree-holder in this case is A. The amount of Rs 10,000 is the judgement debt or the decretal amount, and B is the judgement debtor. B is obligated to pay Rs 10,000 to A because the decree was issued against him. If B refuses to pay the decretal amount to A despite the decree, A can recover the amount by enforcing the decree through attachment of property or execution proceedings in general.

Properties that can and cannot be attached

The court, at the request of the decree-holder, designates specific property owned by the debtor to be transferred to the creditor or sold for the creditor’s benefit during the attachment process. Attachment of property is dealt with in Sections 60 to 64 and Rules 41-57 of Order 21 of the CPC.

Section 60 states that the property that can and cannot be attached during execution is described in this section. Lands, houses or other buildings, goods, money, banknotes, checks, bills of exchange, hundis, government securities, bonds or other securities, and things on which he has a disposing power are all subject to attachment and sale in the execution of a decree.

Section 60 also specifically mentions certain types of property that cannot be attached and sold in the execution of a decree. Wearing apparel, cooking vessels, beds, artisan’s tools, books of accounts, any right of personal service, wife and children, stipends and gratuities allowed to government pensioners, and many other details are included.

There is a specific mention of particulars that are not subject to attachment or sale. The money decree mentioned in this section does not include a mortgage decree. As a result, it is critical that the property not only belongs to the judgment-debtor, but that he also has the authority to dispose of it.

It was held in M. Balarajan vs. M. Narasamma^[1] that the judgment-debtors house was liable to be sold for execution of the decree because his claim of agricultural produce was denied.

Section 61 states that the state government may declare any piece of agricultural land for the purpose of due cultivation of land and support of the Judgement-debtor and his family until the next harvest season for the purpose of due cultivation of land and support of the Judgement-debtor and his family, exempt that property from being attached or sold in execution of the decree by general or special order published in the Official Gazette.

Section 62 deals with property seizure in the case of a dwelling house. After sunset and before sunrise, no one enforcing the code will enter the premises of a dwelling house. No door of such a dwelling house can be broken without the Judgement-debtors knowledge. When a woman lives in such a house and is not permitted to go out in public.

The person carrying out the execution must give her notice that she is free to withdraw, as well as a reasonable amount of time to do so. He has the authority to enter the premises once she leaves.

Section 63 states that if property is attached in the execution of a decree in several courts, the final decision of the court of higher grade will prevail, and if the courts are of equal grade, the court where the case of attachment was filed first will have a higher value.

Modes of attachment of property

Rules 41 to 57 of Order 21 in CPC discuss the procedure or manner in which various assets or properties are to be attached, while Rules 44 and 45 of the same order discuss the attachment of agricultural produce.

Rule 46 also states that if the movable property is debt, the attachment should be made by prohibiting the debtor from making any payments or recovering the debt, and if the movable property is a share in a corporation, the attachment should be made by prohibiting the shareholder from receiving any dividends. In the case of other movable property, the attachment should be made by prohibiting the owner of the property from giving it to the judgement debtor.
When the judgement-debtor owns a co-share in movable property, the attachment should be made by giving the judgement-debtor notice prohibiting him from delivering or transferring his or her share or interest.
When a negotiable instrument is present, it must be attached by actual seizure and presented to the appropriate court.
Attachment of a partnership firm’s property is covered by Rules 49 and 50.
If the property is immovable, Rule 54 states that the attachment should be made through an order prohibiting any delivery or charge on the property or asset.

Effect of attachment

It does not create a title to the property for the decree-holder, nor does it create a charge on the property for the amount owed to the decree-holder.
The attached property is always enjoyed by the judgement debtor.
Private transfer is prohibited by all attachments, and no individual can profit from the attached property.

In the case of Ashutosh v. the State of Rajasthan^[2], the court ruled that a firm’s creditor can collect debt from any one or more of the partners. And, according to the Supreme Court, execution under Rule 49 of Order 21 will be granted only after the firm has been found guilty.

Valuation/ Determination of attachment

The status of the attachment at a given time is referred to as determination or valuation. The court will direct the status of the attachment, that is, whether the attachment will continue or cease to exist, in cases where the property has been attached but the court later passes an order dismissing such an execution. If the court does not issue a clear directive, it is assumed that the attachment has been terminated.

The circumstances under which the attachment is determined under the Code are explained in Order XXI Rules 38-55.

Where the decretal amount is paid or is satisfied
Where the decree is reversed or set aside
Where the court highlights an objection against the attachment and makes an order for releasing the property
Where after the attachment the application for execution is dismissed
Where the judgment holder withdraws the attachment
Where the decree-holder fails to do what he was required to do under the decree
Where the suit of the plaintiff is dismissed
Where the attachment is ordered before the judgement and the defendant furnishes necessary security
Where there is an agreement or compromise made between the parties
Where the creditor abandons the attachment.

Conclusion

In a civil suit, the decree-holder, as opposed to the judgment-debtor, has the benefit of deciding the mode of execution of a court-issued decree. The judgement-creditor has a variety of options from which to choose in the Code. The court or anyone else cannot force or persuade him to choose a particular mode.

The process of attachment is the first step in the execution process, and the process of attachment will be followed by the sale of the property. The sale can sometimes be completed without the property being attached as well. This does not imply that the sale is out of the ordinary. Attachment, followed by the sale of the property, is, of course, the proper procedure to follow.

One of the modes of execution of a decree is attachment of property, which recognizes the decree-holder’s right. The Code has been amended to protect the interests of both the judgement-debtor and the judgement-creditor.

M. Balarajan vs. M. Narasamma Civil revision Petition 2965/1994 decided on 24^th June 1997 ↑
Ashutosh v. the State of Rajasthan Appeal (Civil) 5345/2005 ↑

References –

Next Read: RAJ KUMAR SINGH »