Sale & Attachment of Property in Execution Decree

Chapter – I Introduction & Research Methodology 1. Introduction: The passing of a decree by a competent court conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit, thus creating substantive rights in favour of the decree-holder. However, lately it has been seen that instead of following the terms and conditions of the decree, judgment-debtors have been placing a number of obstacles in the way of a decree-holder. In fact, such a trend has become so prevalent that it has forced the Supreme Court to opine that ‘the difficulties of a litigant begin when he has obtained a decree’. Conscious of the significance and importance of giving effect to the decree and orders passed by competent courts, the Code of Civil Procedure provides for elaborate rules for the execution of decrees. In an attempt to ensure that a decree-holder is able to realize the benefits out of the decree, the Code of Civil Procedure gives a number of modes for the execution of decrees. One of these modes of execution of decrees is the process of attachment and sale of the properties of the judgment-debtor. Since, a decree holder does not by virtue of the judgment, get a right to the property, he cannot get the right by way of filing a suit but by attachment and sale in execution. While through the process of attachment the court informs the world that the property so ordered to be attached is â€Å"in its view† and â€Å"no existing rights and liabilities should be altered†; through the process of sale of the properties of the judgment-debtor, the Court diverts the money so collected to the decree-holder in satisfaction of his claim. However, by its very nature property may be of different types. Therefore, a judgment-debtor may possess either movable or immovable properties, or both. Thus, keeping in regard the differing characteristics of these two types of properties, the Code of Civil Procedure prescribes different procedures for the attachment and sale of movable and immovable properties. It is the endeavour of this project to examine the process of attachment and sale of movable and immovable property in a money decree and to intellectualize the reasons for the different process for the attachment and sale of movable and immovable property. 2. Research Methodology: The research scheme undertaken by the researcher is comprised of doctrinal study of the books available at the library of the Institute of Law and besides that the researcher has also taken the help of the internet to look into some of the Interpretation of some cases and principle of natural justice and the researcher the also taken in view the various cases which are relevant for the research work. 3. Research Hypothesis: †¢ What are the conditions under which attachment & sale of property becomes necessary, can it be done & how it is done. . Aim of Research: The aim of this project is to find out why sometimes it becomes very much necessary for the attachment of property even after the judgement has been declared & to examine the different ways under Code of Civil Procedure which provide for sale and attachment of property. 5. Scope & Limitation of Research: The scope of this project is limited to the study of the various provisions regarding attachment and sale of property in execution of decrees provided for in the Code of Civil Procedure. Chapter – II Attachment of Property . General: Section 51 (b) empowers the court to order execution of decree by attachment and sale or by sale without attachment of any property. The court is competent to attach the property if it is situated within the local limits of the jurisdiction of the court. [1] It is immaterial that the place of business of the judgement – debtor is outside the jurisdiction of the court. The words attachment and sale in clause (b) of section 51 are to be read disjunctively. Therefore, the attachment of the property is not a condition precedent. Hence, the sale of the property without an attachment is not void or without jurisdiction and does not vitiate the sale. It is merely an irregularity. An order of attachment takes effect from the moment it is brought to the notice of the court. Rule 54 provides for the attachment of immovable property and the procedure for the proclamation of such attachment. The object of Rule 54 is to inform the judgement – debtor about the attachment so that he may not transfer or create encumbrance over the property thereafter. [2] The code enumerates properties to be attached and sold in execution of a decree. 3] Likewise, it also specific properties which are not liable to be attached or sold. [4] It also prescribes the procedure where the same property is attached in execution of decrees by more than one court. [5] The code also declares that a private alienation of property after attachment is void. In Ghanshyam Das v. Anant Kumar,[6] while dealing with the provisions of the Code of Ci vil Procedure relating to the execution of decrees and orders, the Supreme Court had stated that the Civil Procedure Code contains elaborate and exhaustive provisions for dealing with the question of execution of decrees. More specifically, Section 51[8] of the Code of Civil Procedure enumerates in general terms the various modes of execution of a decree, one amongst which is the attachment of the property of the judgment-debtor. Procedure enumerates in general terms the various modes of execution of a decree, one amongst which is the attachment of the property of the judgment-debtor. 2. Object of Attachment: Execution of a decree takes place by attachment of property of judgment-debtor. In fact, the attachment of the judgment-debtor’s property s the preliminary step to the sale of property in execution proceedings and the underlying object of attachment of the property is to give notice to the judgment-debtor not to alienate his property to anyone and also to the general public not to purchase or to deal with the property of the judgment-debtor attached in execution proceedings. 3. Effect of Attachment: Section 64 of the Code of Civil Procedure makes it manifest that attachment has merely the effect of preventing private alienation to the prejudice of claims under attachment. It conveys no title, charge, lien or priority in favour of the attaching creditor. In fact, in Subbarao v. Official Receiver[7] the Andhra Pradesh High Court while dealing with the involuntary sale of the judgment-debtor’s flat under a decree of a court, stated that an order of attachment does not prevent a transfer by operation of law and nor does it create any interest or lien. 4. Property which can be Attached: Section 60 of the Code of Civil Procedure enumerates the properties, which are liable to attachment in execution of a decree. It states that all saleable property (movable or immovable) belonging to the judgment-debtor or over which or the portion of which he has a disposing power which he may exercise for his own benefit may be attached and sold in execution of a decree against him. More specifically, in State of Punjab v. Dina Nath,[8] wherein the right to officiate at funeral ceremonies was held to be not saleable, it was stated by the Supreme Court that Section 60 of the Code of Civil Procedure is not exhaustive and specific non-inclusion of a particular species of property under Section 60 is therefore, not of any consequence if it is ‘saleable’[9] otherwise. However, regard must be had to the proviso to sub-section (1) of Section 60, which enumerates certain properties such as necessary wearing apparel, cooking vessels, beddings, tools of artisans, implements of husbandry, houses of agriculturalists, wages, salaries, pensions and gratuities, compulsory deposits, right to future maintenance etc. and declares that the properties specified therein are exempt from attachment and sale in the execution of a decree. . Attachment of Movable Property: The attachable property belonging to the judgment-debtor may be either movable or immovable in nature. Rules 43 to 53 of Order 21 of the Code of Civil Procedure lay down the different ways in which the movable property belonging to the judgment debtor is to be attached keeping in regard the nature of the specific movable property sought to be attached. 1. Attachment Of Movable Property (Other Than Agricultural Produce) In Possession Of The Judgment-Debtor: Rule 43 of Order 21 of the Code of Civil Procedure deals with the mode of attachment of all movable property, other than agricultural produce and property not in the possession of the judgment-debtor, for both of which provision is made in Rules 44 to 46 of Order 21 of the Code of Civil Procedure. Under Order 21, Rule 43, the attachment is legally effected only by actual seizure. Significantly, keeping in view the varied nature of the movable properties that may be attached under this rule the Proviso to Order 21, Rule 43 of the Code of Civil Procedure provides that when the property seized is subject to speedy and natural decay, or when the expense of keeping it in custody is likely to exceed its value, the attaching officer may sell it at once. 2. Attachment of Debt, Share & other property not in Possession of Judgement – Debtor: Rule 46 of Order 21 of the Code of Civil Procedure deals with the mode of attachment of debt, share and other movable property not in the possession of the judgment-debtor. Under Order 21, Rule 46 of the Civil Procedure Code the attachment of debts (other than negotiable instruments), shares in a corporation or other movable property not in the possession of the judgment-debtor is legally effected by a prohibitory order, as contradistinguished from the requirement of actual seizure under Order 21, Rule 43. . Attachment of Negotiable Instrument: Rule 51 of Order 21 of the Code of Civil Procedure deals with the mode of attachment of negotiable instruments, which are neither deposited in the court nor in the custody of a public officer. Under Order 21, Rule 51 of the Civil Procedure Code the attachment of negotiable instruments, which are neither deposited in the court nor in the custody of a publ ic officer, is legally effected by actual seizure. As regards negotiable instruments it does not matter whether the negotiable instrument is in possession of the judgment-debtor or not. Furthermore, the actual seizure of the negotiable instrument is necessary as there is always a danger that third parties may bona fide become possessed of the negotiable instrument, and if a prohibitory order is held to be a valid attachment, they would be prejudiced by such an order of which they may know nothing. 4. Attachment of Salary or Allowance: Rules 48 and 48-A of Order 21 of the Code of Civil Procedure deal with the mode of attachment of salary of the judgment-debtor. Under Order 21, Rules 48 and 48-A of the Civil Procedure Code the attachment of judgment-debtor’s salary or allowance is legally effected by issuing a prohibitory notice to the dispersing officer but if such prohibitory notice is not served to the dispersing officer, the order of attachment will have no effect. Furthermore, the territorial jurisdiction is not considered in this case, and wherever the judgment-debtor is working his salary can be attached. 5. Attachment of Immovable Property: The attachable property belonging to the judgment-debtor may also be immovable in nature. Rule 54 of Order 21 of the Code of Civil Procedure lays down the directions as to the mode of attachment of immovable property, which are mandatory in nature and not merely directory. Under Rule 54 of Order 21 of the Code of Civil Procedure the attachment of immovable property is legally effected by the issuance of an order by the Court prohibiting the judgment-debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge. Such an order is to be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the Court-house. Also, where the property to be attached is a land paying revenue to the Government, a copy of the order is to be affixed in the office of the Collector of the District in which the land is situate and, where the property is land situate in a village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village. Chapter – III Sale of Property 3. 1. General: A decree may be executed by attachment and sale or by sale without attachment of any property. Sections 65 to 74 and Rules 64 to 106 of Order 21 of the Code of Civil Procedure deal with the material provisions relating to sale and delivery of properties. 3. 2. Power of Court: Rule 64 of Order 21 of the Code of Civil Procedure states that any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same. However, it must be noted that in Desh Bandhu v. Anand,[10] wherein the Court, while confronted with the twin issues of sale of properties situated outside the territorial jurisdiction of the Executing Court and the failure of the judgment-debtor to take objection in time, it was opined that: â€Å"The term â€Å"may† in this rule does not confer a discretion on the Court to order or refuse to order a sale; it is obligatory on it to do so when a valid application for such order and a valid attachment has been made. † 3. 3. Sale by Whom Conducted and How Made: Rule No. 65 of Order 21 of the Code of Civil Procedure enacts that every sale in execution of a decree shall be conducted by an officer of the Court or by such person as the Court may appoint in this behalf, in a public auction. 3. 4. Proclamation of Sale: A proclamation of sale is necessary for providing information to the intending purchasers. Thus, Rule 66 of Order 21 of the Code of Civil Procedure enacts that the Court shall cause a proclamation of the intended sale to be made in the language of the Court. Such a proclamation is to be drawn up after the notice to the decree-holder and the judgment-debtor. An absence of a notice causes irremediable injury to the judgment-debtor and sale without such a notice will be a nullity. 3. 4. 1. Purpose of a Proclamation: It has been stated that a proclamation of sale is meant for the information of intending purchasers and not of the judgment-debtor. However, in Narayanappa v. Akkulappa,[11] it was stated that the purpose of issuing a proclamation is two-fold: (a)  Ã‚  Ã‚   it protects the interests of the intending purchasers by giving them all material information regarding the property to be sold; and (b)  Ã‚   it protects the interests of the judgment-debtor by facilitating the fetching of proper market price for his property and by preventing it being knocked down at public auction for a price much below the market price. 3. 4. 2. Contents of the Proclamation: Rule 66 (2) of Order 21 of the Code of Civil Procedure enacts that the proclamation, which is to be drawn up shall state the time and place of sale, and specify as accurately as possible, the following particulars – (a)  Ã‚  Ã‚   the property to be sold, or, where a part of the property would be sufficient to satisfy the decree, such part; (b)  Ã‚   the revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government; (c)  Ã‚  Ã‚   any encumbrance to which the property is liable; (d)  Ã‚   the amount for the recovery of which the sale is ordered; and (e)  Ã‚  Ã‚   every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property. 3. 4. 3. Mode of making Proclamation: In order to protect the judgment-debtors and for the purpose of ensuring that the properties of such persons shall not be put to s ale unless due publicity is given to the fact that a sale is to be held and a proper opportunity is afforded to bidders to attend the sale after notice is given’ Rule 67 of Order 21 has been incorporated in the Code of Civil Procedure. Rule 67 of Order 21 of the Code of Civil Procedure provides that every proclamation shall be made and published in the manner prescribed by Order 21, Rule 54 (2) for attachment for immovable property, i. e. , a copy of it shall be affixed on a conspicuous part of the property, and then of the Court house, and in the Collector’s office, in the case of revenue paying land. Also, if the Court so directs, it shall also be published in local Official Gazette, or in a local newspaper, or in both. 3. 5. Time for Sale: Rule 68 of Order 21 of the Code of Civil Procedure provides that there shall be an interval of fifteen days in the case of immovable property and seven days in the case of movable property between the date of sale and the date of affixing the copy of the proclamation in the Court-house. However, it should be noted that the seven days rule does not apply to a sale of movables subject to speedy and natural decay. 3. 6. Sale of Movable Property: Rules 74 to 81 of Order 21 of the Code of Civil Procedure provide for specific provisions for the sale of movable properties. 3. 6. 1. Place of Sale of Movable Properties: Sale of all movable properties in execution of a decree should ordinarily be held at some place within the jurisdiction of the court ordering such sale. In the case of Lakshmibai v. Santappa,[12] where certain ornaments were attached in Banaras and the judgment-debtor urged that they should be directed to be sold at Bombay on the ground that they would probably fetch a better price and it was found by the Court that a fair price could be had on the spot, it was held that there was no good and sufficient reason to depart from the usual practice. 3. 6. 2. When Sale Becomes Absolute in Movable Properties: Sub Rule 2 of Rule 77 of Order 21 of the Code of Civil Procedure enacts that the sale of a movable property becomes absolute as soon as the purchase money is paid to the officer or other person holding the sale and no order of Court is necessary as in the case of the sale of immovable property. 3. 6. 3. Sale of Agricultural Produce: Rule 74 of Order 21 of the Code of Civil Procedure makes special provision for the sale of agricultural produce. It provides that in case of agricultural produce, the sale shall be held on or near the land on which the crop is standing or where the crop has been harvested, at or near the place where the crop is lying. It is also pertinent to note that Sub Rule 2 of Rule 74 of Order 21 states that such a sale can be postponed, if the court feels: (i)  Ã‚  Ã‚  Ã‚   that the fair price is not offered; and (ii)  Ã‚   the owner thereof applies for such postponement. 3. 6. 4. Sale of Negotiable Instruments and Shares in Corporations: Rule 76 of Order 21 of the Code of Civil Procedure makes special provision for the sale of negotiable instruments and shares in corporations. It provides that in case of negotiable instrument or a share in corporation, the court has power to order sale through a broker instead of by public auction. It is pertinent to note here that this rule is only permissive. A court is not bound to authorize the sale of negotiable instrument or share in a corporation through a broker. 3. 6. 5. Effect of Irregularity on Sale of Movable Property: Rule 78 of Order 21 of the Code of Civil Procedure stipulates that even in case of irregularity in publishing or conducting of sale, the sale of moveable property in execution decree cannot be said aside. Thus, the sale does not ipso facto become void for reason of violation of provisions relating to the sale. However, a person sustaining any injury by reasons of irregularity in the sale at the hand of any other person may sue such a person for compensation, or, if such a person is the purchaser, for recovery of the specific property and for compensation in default of such recovery. 3. 7. Sale of Immovable Property: Rules 82 to 96 of Order 21 of the Code of Civil Procedure provide for specific provisions relating to the sale of immovable properties. 3. 7. 1. Courts Competent to Order Sale: Rule 82 of Order 21 of the Code of Civil Procedure stipulates that except the small cause court, any other court can give the order of sale of immovable property. 3. 7. 2. Postponement of Sale: In order to prevent the sale of the immovable property of the judgment-debtor in cases where the decree can be satisfied by private alienation of such property, Rule 83 of Order 21 has been incorporated into the Code of Civil Procedure. It provides that on an application by the judgment-debtor, the court in its discretion may give the judgment debtor some more time, to try and alienate the property in order to raise the requisite some of money. 3. 7. 3. Deposit and Payment of Price: Rule 84 to 87 of Order 21 of the Code of Civil Procedure deal with the deposit and payment of price in cases of sale of immovable property. Immediately after the sale of immovable property, the purchaser must deposit 25 percent of purchase money, unless such requirement is dispense with by the court. The purchaser must pay the balance of the purchase-money within fifteen days of sale. In case of a failure on the part of the purchaser to deposit the amount, the advance may be forfeited and fresh sale ordered, after the issuance of a fresh notification. Explaining the ambit and the scope of the provisions of Rules 84 to 86 of Order 21 of the Code of Civil Procedure, the Supreme Court in the case of Manilal Mohanlal v. Sayed Ahmed,[13] has stated that: â€Å"Having examined the language of the relevant rules and the judicial decisions bearing upon the subject we are of the opinion that the provisions of the rules requiring the deposit of 25 per cent of the purchase-money immediately, on the person being declared as a purchaser and the payment of the balance within 15 days of the sale are mandatory and upon non-compliance with these provisions there is no sale at all. The rules do not contemplate that there can be any sale in favour of a purchaser without depositing 25 per cent of the purchase-money in the first instance and the balance within 15 days. When there is no sale within the contemplation of these rules, there can be no question of material irregularity in the conduct of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity. † 3. 7. 4. Setting aside of Sale: Rule 89 to 92 of Order 21 of the Code of Civil Procedure deal with the setting aside of sale. They provide that when a property is old in execution of a decree, an application for setting aside sale may be made under these provisions by the persons and on the grounds mentioned therein. 3. 7. 5. Confirmation of Sale: In contrast with the provisions relating to the sale of movable properties, â€Å"no sale of immovable property shall be come absolute until it is confirmed by the Court. † Also, Rule 92 of Order 21 of the Code of Civil Procedure, which deals with the procedure for confirmation of sale, provides that where no application to set aside the sale is made under Rules 89, 90 or 91 or where such application is made and is disallowed by the Court, the court shall make an order confirming the sale, and thereupon the sale shall become absolute. Chapter – IV Conclusion It has been said that the difficulties of a litigant â€Å"begin when he has obtained a decree. The execution process, which commences with the filing of an application for execution, aims at the enforcement of a decree by a judicial process. Aware of the fact that a number of obstacles are placed in the way of a decree-holder, who seeks to execute his decree against the property of the judgment-debtor, the Code of Civil Procedure provides for elaborate rules and procedures for the execution of decrees. In an attempt to enable the decree-holder to realize the fruits of the decree passed by the competent court in his favour, the Code of Civil Procedure allows for the attachment and sale of the properties of judgment-debtor as one amongst the various modes of executing a decree. However, the nature of the properties of judgment-debtor liable for attachment is usually varied. The properties belonging to the judgment-debtor, which are sought to be attached and sold, may be movable or immovable. Since, movable and immovable properties by nature have differing rights; there are different legal regimes governing these two types of properties, and therefore the court has to cater to these different rights and proceedings. Thus, in an attempt to ensure that attachment and sale of the property of the judgment-debtor remains a viable and effective mode of execution of decrees the Code of Civil Procedure has prescribed different procedures for the attachment and ale of movable and immovable properties in execution of money decrees. This is best illustrated in the prescription of actual seizure of the property in cases of attachment of movable property, as in these cases a very real threat exist that the property might escape the jurisdiction of court. Chapter – V Bibliography 1. Basu’s , ‘The Code of Civil Procedure’, Ashok Law House, New Delhi, 10th Edn. , Vol. 2, 2007. 2. Majumdar’s, ‘Commentary on the Code of Civil Procedure, 1908’, Orient Publishing Company, 6th Edn. , Vol. 1, 2010. 3. Justice Nandi & Gupta Sen, ‘The Code of Civil Procedure’, Kamal Law House, Kolkata, Vol. 1, 2009. 4. Rao’s V. J. ‘The Code of Civil Procedure, 1908’, ALT Publication’s, 5th Edn. , Vol. 1, 2008. 5. Jain, M. P. , â€Å"The Code of Civil Procedure†,2nd Edn. , Lexis Nexis ButterWorths Wadhwa,Nagpur. 2008. 6. Prasa, B. M. , & Sarvaria, S. k. , â€Å"Mulla The Code Of Civil Procedure†,14th Edn. , Lexis Nexis ButterWorths Wadhwa,Nagpur, 2011. ———————– [1] Raoof v. Lakshmipathi, AIR 1969 Mad 268. [2] Desh Bandhu v. N. L. Anand, (1994) 1 SCC 131. [3] S. 60(1). [4] Proviso to S. 60(1). [5] S. 63. [6] AIR 1991 SC 225 1. [7] AIR 1965 A. P. 52 [8] (1984) 1 SCC 137 [9] ‘Saleable’ means saleable by auction under the orders of a Court [10] (1994) 1 SCC 131 [11] AIR 1965 A. P. 215 [12] AIR 1964 Bom 342 [13] AIR 1954 SC 349