A.P. Ravani, J.
1. What is the remedy of third party in whose hands the property belonging (or alleged to be belonging) to the defendant is attached before judgment and the attachment before judgment and/or prohibitory order is confirmed by the court after hearing the parties? Will it not be open to such 'third party' to file an appeal from order or will he be obliged to file regular appeal treating the order of attachment before judgment and/or order of prohibition as 'decree'. This is one of the main questions which has arisen in these proceedings.
Appeal from Order No. 259 of 1984 has been filed by Canara Bank against the order dated August 7, 1984 passed below Exh. 5 application in Special Civil Suit No. 92 of 1984 by the learned Civil Judge (SD), Jamnagar. Respondent No. 1-Gordhandas Damodar filed the aforesaid suit against respondent No. 2-M/s. Reliable Extraction Industries Private Ltd. having its registered office at Bombay for recovery of an amount of Rs. 13/- lakhs. It is alleged by the plaintiff that the defendant-Company owed the amount which was advanced by the plaintiff to the Company. No date of payment by the plaintiff to the defendant-Company is mentioned in the plaint. Moreover according to the plaintiff, the amount was paid in cash. The plaintiff further alleged that three cheques were issued by the defendant-Company which bore the signatures of two of the directors of the Company, namely, R.D. Modi and V.C. Yagnik. The cheques issued were as follows:
----------------------------------S. No. Date Amount Rs.----------------------------------1. 28-2-1983 Rs. 5/- lakhs2. 1-7-1983 Rs. 4/- lakhs3. 1-8-1983 Rs. 4/- lakhs----------------------------------
According to the plaintiff, these cheques were drawn on Punjab and Sind Bank, Bombay. On December 16, 1983 when the cheques were presented in the Bank, they were dishonoured. The plaintiff filed the suit in the court of Civil Judge (SD), Jamnagar, and prayed for attachment before judgment as well as for garnishee order by filing application Exh. 5. The plaintiff alleged in the application that the business of the defendant-Company was closed for quite some time and its position had become weak and was getting weaker day by day. The plaintiff further alleged that in the Abdul Rehmnan Street branch of Canara Bank, an amount of Rs. 11,69,438/- was lying in the account of the defendant-Company and that was the amount of 'Chikpis' insurance. According to the plaintiff, the amount was received by the Bank from New India Assurance Company. The plaintiff further stated that even if the decree is passed, the plaintiff would not be able to realise the fruits of the decree and further contended that no harm would be caused to the defendant if the property in question was attached before judgment and called for and directed to be produced in court. On this basis the plaintiff prayed that the aforesaid amount lying in the suspense account of the defendant-Company be attached and be ordered to be produced in court. The application was filed on the same day, i.e. on June 18, 1984.
2. The trial court passed an order attaching the property by prohibiting the Bank from making payment to the 'judgment debtor or anyone' with further direction to produce the said amount in court on or before 25-6-1984. The Bank appeared and resisted the application filed by the plaintiff on facts as well as on law points. On behalf of the defendant-Company Shri R.D. Modi, one of the directors of the defendant-Company and who is the real brother of the plaintiff-Shri G.D. Modi, filed an affidavit dated July 19, 1984. He practically supported the case of the plaintiff. Thus, before the trial court, real contest remained between the plaintiff and Canara Bank-the garnishee. The Bank inter alia contended that the court had no jurisdiction to entertain and decide the suit. The amount in question did not belong to the defendant-Company and it belonged to Muslim Bank. London. The Bank also pointed out that the defendant-Company had filed Civil Suit No. 5583 of 1983 in the City Civil Court, Bombay, and obtained an ad interim injunction against the Bank whereby the Bank was prohibited from remitting the said amount to Muslim Bank, London. After hearing the parties, the court overruled the objections raised by the appellant-Bank and passed an order dated August 7, 1984, confirming the order dated June 18, 1984 and gave the following directions:.Garnishee Canara Bank, Bombay, is directed to produce the amount of Rs. 11,69,438/- on or before 14-8-84 failing which Jangam Warrant to issue for recovery and production of the said amount as per provisions and Rules 46(b) and 46(c) of 0.21. C.P. Code.
It is against this order that the Bank has preferred this appeal from order and the civil application. Being aggrieved by the order directing the Bank to produce the amount in the trial court at Jamnagar, one of the directors of the defendant-Company Shri K.M. Shah, has filed Civil Revision Application No. 1171 of 1984 which is supported by two other directors also. The Civil Application 3950 of 1984 in Civil Revision Application No. 1171 of 1984 has been filed by Shri R.D. Modi, the relative director, for withdrawal of the civil revision application. (This application is heard together but separate detailed order is passed below the same.) The order passed by the trial court directing the Bank to produce the amount has been stayed by this Court as per the order passed on Civil Application No. 3291 of 1981 in Appeal from Order and as per the order passed on the Civil Revision Application No. 1171 of 1984.
3. In order to avoid controversy I have permitted all the counsels appearing for different parties to make their submissions. Counsel for Shri R.D. Modi, the relative director, who appeared for and on behalf of the defendant-Company in the suit and the counsel for the plaintiff have made submissions which are almost same or similar in substance. (The phrase 'relative director' is used for the sake of convenience only because Shri R.D. Modi, is the real brother of the plaintiff Shri G.D. Modi).
4. It is contended that the provisions of Order 21 Rule 46A to 46H would be applicable in the instant case and therefore, against an order passed under Order 21 Rules 46C, 46D or 46E, a regular appeal would lie. This submission is made in view of the provisions of Order 21 Rule 46H which provides that an order made under Rule 46B, Rule 46C or Rule 46E shall be appealable as a decree. On the basis of the provisions of Rule 46H it is submitted that the impugned order has to be treated as decree. Therefore, only when a properly constituted appeal is filed, merits may be examined. At this stage, as there is no appeal filed by any of the parties, the Appeal from Order and Civil Revision Application are required to be rejected. The Appeal From Order has been filed by the Bank while the Civil Revision Application has been filed by the other directors of the company.
5. The question as to whether a regular appeal would lie or an appeal from order will be maintainable may be examined. For this purpose it may be noted that the provisions of Order 21 relate to execution proceedings in which distinct provision is made for attachment of property through process of execution of the decree. On the other hand. Order 38 makes provision for attachment of property of a defendant during the pendency of a suit. The provision made in Order 38 is with a view to safeguard the interests of the plaintiff in respect of his claim. The object can be achieved by way of attachment of property or by issuing prohibitory order. So far as Order 21 is concerned, its essential purpose is to see that the process of court is not defeated once execution starts.
6. It may be noted that separate provisions have been made in the Code of Civil Procedure for attachment before judgment and attachment in execution proceedings. As far as Order 38 is concerned, it is the self-contained Code and a complete provision by itself. It is only in certain procedural respects, the provisions of Order 21 in relation to attachment are made applicable to the attachment before Judgment. Attachment may be before judgment or it may be after the judgment. Again attachment may be of two types: (1) of the property belonging to the defendant and in possession of the defendant and (2) of the property belonging to the defendant but not in the possession of the defendant and in the hands of the third party. In respect of the latter type of attachment also it is provided in Order 38 that attachment shall be in the manner provided under Order 21. Section 94 read with Order 38 of the Code of Civil Procedure inter alia makes provision for the arrest of the defendant and/or attachment of property belonging to the defendant before judgment. We are cot concerned with Rules 1 to 4 of Order 38 which deal with arrest of the defendant before judgment. Rule 5 of Order 38 makes provision by which the defendant may be called upon (1) to furnish security and (2) it also provides for attachment of the property belonging to the defendant. Rule 6 provides for attachment of property belonging to the defendant where the defendant fails to show cause as to why he should not furnish security or fails to furnish security required as directed by the court. The provision made in Rules 7 and 8 of Order 38 makes the provisions of Order 21 applicable as far as the manner of attachment is concerned. Rule 7 provides that the attachment shall be made in the manner provided for attachment in the execution of a decree, while Rule 8 deals with the adjudication of claim to property attached before judgment. Rule 9 makes provision for the removal of attachment when security is furnished or when the suit is ultimately dismissed. Rule 10 provides that the attachment will not affect the decree holder for applying for sale. In Rule 10 it is provided that after the decree, it will not be necessary to re-attach the property which is attached before judgment. With the rest of the provisions of Order 38 we are not very much concerned in this case.
7. Thus it will be clear that it is only by virtue of the provisions of Rules 7 and 8 of Order 38 of Code of Civil Procedure that the provisions of Order 21 are made applicable 'as far as the manner of the attachment and as far as the method of adjudication is concerned'. Some complex questions arise when the property belonging to the defendant is in the hands of the third party. If the property is in the possession of defendant himself, it is not likely to create confusion. In a case where the property is in the hands of the defendant himself one may straightaway refer to the provisions of Order 38 Rules 5 and 6 and decide the questions regarding further remedy available to the defendant. However, what will be the position if the property belonging to the defendant or alleged to be belonging to the defendant is in the hands of the third party and that property is sought to be attached? On determination of the questions qua the property which is in the hands of the third party and alleged to be belonging to the defendant, will the consequences regarding the availability of further remedy to the aggrieved party (i.e. the third party and not the defendant) be the same or will the consequences be different? Answer to this question will determine as to whether the appeal from order is competent or a regular appeal is required to be filed as it is contended by the counsel for the plaintiff and counsel for the relative director.
8. On first principles, it is difficult to comprehend that when the property is in the possession of the defendant and the question is answered by the court at an interim stage, appeal from order will be competent, but when the property is in the hands of the third party and after following the procedure as laid down in Rules 7 and 8 of Order 38 of C.P. Code, the court answers the question, then the third party should be relegated to the remedy of regular appeal. The confusion arises only on account of the fact that in view of the provisions of Rules 7 and 8 of Order 38, the manner of attachment and the adjudication of claims as provided under Order 21, i.e. pertaining to attachment of a property in the execution of a decree is required to be followed. In both the cases, when the property is in the hands of the defendant and when the property of the defendant is (or is alleged to be) in the hands of third party, the provisions of Order 21 of the Code regarding attachment of property are to be applied. But that is all. Once the manner of attachment and the adjudication of rival claims is over, one has got to revert back to the provisions of Order 38. In both types of cases, (1) when the property is with the defendant himself and (2) when the property is with the third party, the decision by the court will be under Order 38 Rule 6 and not under any of the provisions of Order 21. When the property is in the hands of third party, the provisions of Order 21 Rule 46 onwards apply only with regard to the manner of attachment and for the method of adjudication of rival claims. There is nothing in Order 38 to indicate that the third party in whose hand the property is attached and who may be aggrieved by the order of attachment would be relegated to the remedy provided under Order 21 Rule 46H. If it is held that whenever third party feels aggrieved by the decision of attachment before judgment, his remedy will be only by way of regular appeal; it would be objectionable on the following grounds;
(1) That it would put the third party in a disadvantageous position. So much so that at the interim stage as far as the third party is concerned, such interim order would amount to a final decree while on the other hand, it will be an interim order with respect to the defendant himself.
(2) This would amount to passing a final decree without recording evidence and without following the procedure laid down in the Code. It will be discriminatory also. Third party would be faced with a final decree and that too without recording evidence and without proper procedure. On the other hand, the defendant will have further chance at a later stage to contest the suit and then to file regular appeal.
(3) Visualise the situation in which two parts of the property are sought to be attached. One part of the property is in the hands of the defendant himself and another is in the hands of third party which is sought to be attached by the process of garnishee proceedings, as it is popularly known, that is to say, by following the manner and method prescribed in Order 21 Rule 46 and onwards. As far as both the types of property are concerned, the attachment before judgment is granted by the court. If the construction canvassed by the counsel for the plaintiff and the relative director is accepted, the defendant himself would be in a position to file appeal from order, while the third party, who is alleged to be in possession of the property belonging (or alleged to be belonging) to the defendant, will have to file a regular appeal treating the same order as a decree.
(4) Visualise the situation in which the property in the hands of the third party alone is attached and ultimately the suit fails. As provided in Rule 9 of Order 38, the attachment is automatically to be withdrawn. If the order making attachment is to be treated as decree, how such an order, that is to say, 'decree', can be withdrawn and how the provisions of Rule 9 can be reconciled?
(5) There may be cases where the plaintiff and defendant both may be residing within the jurisdiction of the court. But the third party in whose possession the property alleged to be belonging to the defendant is lying, might be residing beyond the territorial jurisdiction of the court. If the interim order is to be treated as a decree, then in such a situation, it would so happen that the court would be assuming the jurisdiction which ordinarily it does not possess. By process of construction of a statute, the court cannot be conferred with the jurisdiction which it otherwise does not possess. That which cannot be done directly, cannot be permitted to be done indirectly. In above view of the matter, the only possible and reasonable construction would be that third party in whose hands the property alleged to be belonging to the defendant is there, should be considered in the position of the defendant for the purposes of consideration of remedies available after the adjudication at the interim stage.
9. The reference to Order 21 Rule 46 onwards is required to be made in view of the provisions of Rule 7 and Rule 8 of Order 38. That should not be construed to mean that all the provisions of Order 21 Rule 46 onwards would be applicable when the court adjudicates upon the questions raised by third party. The court adjudicates the questions essentially between the plaintiff and the defendant. Ultimately, even when the third party, resists the attachment and contests the claim made by the plaintiff for attachment before judgment, the order that may be passed by the court will be an order under Order 38 Rule 6 and therefore appealable under Order 43 Rule l(q) which reads as follows:
An appeal shall lie from the following orders under the provisions of Section 104, namely:
(q) an order under Rule 2, Rule 3 or Rule 6 of Order 38.
In above view of the matter, the contention raised by the counsel for the plaintiff and the counsel for the relative director cannot be accepted and the appeal from order filed by the Bank is held to be maintainable.
10. This brings us to the next contention raised by the counsel for the plaintiff and the relative director that the interim order has merged into the final order in as much as the trial court has passed final decree on August 28, 1984, i.e. after the filing of the appeal from order and the civil revision application. Clause 2 of the consent decree passed by the court mentions that the garnishee order is being confirmed. On this basis it is submitted that the order of attachment before judgment does not survive and therefore, no order should be passed by this Court. The contention overlook's the provision of Order 38 Rules 9 and 11. Rule 11 provides that when the property is under attachment under the provisions of Order 38 and subsequently the decree is passed, in that case, the plaintiff is not required to reattach the property in execution proceedings. Moreover, in view of the provisions of Rule 9, when the suit is dismissed or when the defendant furnishes security the attachment is to be withdrawn by the court itself. In the instant case, both the plaintiffs and defendants very well knew that the appeal from order and civil revision application were pending before the High Court. Both the plaintiffs and defendants filed a pursis Exh. 26, before the trial court to the effect that they would make necessary declaration before the High Court regarding the consent pursis having been filed and the consent decree having been passed. Moreover, the parties/persons who felt aggrieved by the order of attachment and the garnishee order (i.e. direction to Canara Bank to produce the amount in court) were not party to the consent terms. It appears that they were not even present before the court. In such a situation, if the attachment before judgment is ordered to be removed, the only consequence will be that the plaintiffs will have to get the property reattached. Provisions of Rule 11 clearly indicate that even if the decree is passed, the order does not cease to be in existence and it does remain in existence. On account of the fact that this order remains in existence, the plaintiff is relieved from the obligation to re-attach the property. Therefore, the contention that the interim order has ceased to be in existence and therefore the appeal from order has become infructuous, has got to be rejected.
11. The last contention that it does not lie in the mouth of other directors who have filed civil revision application to contend that the impugned order passed by the trial court be quashed and set aside. They are the directors of the company. They cannot act against the interests of the company. It would not be proper for them to contend that the order of attachment be set aside. In fact, the defendant-Company cannot in any way be said to be aggrieved by the impugned order. Therefore the civil revision application at the instance of other director/s of the defendant-Company cannot be entertained and the same has got to be rejected. It is also contended that if at all they want to challenge the order they have got to file regular appeal and civil revision application is not maintainable. This contention cannot be accepted. It is more clear that the directors feel aggrieved by that part of the order by which the Bank is directed to produce the amount in court at Jamnagar. The directors who have preferred the revision application have no grievance against the order of attachment. However, this question pales into insignificance and becomes academic when the appeal from order filed by the Bank is held to be maintainable (and for the reasons which follow, it is being allowed.). On behalf of the directors who filed and supported the civil revision application, it is submitted that in case the court comes to the conclusion that the civil revision application is not maintainable and appeal from order is required to be filed, permission to convert the civil revision application into appeal from order be granted. Even if the matter is treated as civil revision application, I would have certainly exercised the revisional jurisdiction and quashed and set aside the direction given to the Bank by the trial court to produce the money in trial court at Jamnagar. The trial court has no powers to attach the property beyond its jurisdiction and straightaway give prohibitory direction to third parties. In the facts and circumstances of the case and particularly when appeal from order filed by the Bank is being allowed entirely, conversion of civil revision application into appeal from order becomes a matter of mere form and therefore it is not necessary to take this exercise.
12. Now the legality and the propriety of the impugned order be tested. Admittedly the property sought to be attached and directed to be produced before the court is lying outside the territorial jurisdiction of the court. The impugned order is passed by the court of Civil Judge (SD), Jamnagar and the property is lying at Bombay. If such property is sought to be attached then provisions of Section 136 of the Code of Civil Procedure are required to be followed. The relevant part of Section 136 which will be applicable reads as follows:
Procedure where person to be arrested or property to be attached is outside district.
136(1) Where an application is: made that any person shall be arrested or that any property shall be attached under any provision of this Code not relating to the execution of decrees, and such person resides or such property is situate outside the local limits of the jurisdiction of the Court to which the application is made, the Court may, in its discretion, issue a warrant of arrest or make an order of attachment and send to the District Court within the local limits of whose jurisdiction such person or property resides or is situate a copy of the warrant or order together with the probable amount of the costs of the arrest or attachment.
(2) and (3) xxxx xxxx(4) Where a person to be arrested or immoveable property to be attached under this section is within the local limits of the ordinary original civil jurisdiction of the High Court of Judicature at Fort William in Bengal or at Madras or at Bombay, the copy of the warrant of arrest or of order of attachment, and the probable amount of the costs of the arrest or attachment, shall be sent to the Court of Small Causes of Calcutta, Madras or Bombay, as the case may be, and that Court, on receipt of the copy and amount, shall proceed as if it were the District Court.
Admittedly, in this case, attachment order has not been sent to the Court of Small Causes at Bombay. The attachment is sought to be effected directly by the order passed by the Court of Civil Judge (SD), Jamnagar.
13. If an attachment is effected in this manner, the attachment would be highly irregular and illegal because prima facie the court has no jurisdiction to attach the property which is not lying within its jurisdiction. The property which is lying outside the jurisdiction of the court can be attached only in the manner provided in the Code and that manner has not been followed in this case. Therefore, it is clear that the order by which the trial court directed the appellant to produce the amount in question and failing which directed to issue Jangam Warrant for recovery and production of the amount is invalid and would be required to be reversed and set aside.
14. Similar view is taken in the case of Firm Surajbali Ram Harakh v. Mohar Ali and Ors. reported in : AIR1941All212 , wherein it. is held that an attachment of property or prohibitory order in respect of property outside the jurisdiction of court would be unauthorised and invalid. In the case of Balal Kumar Sarkar v. Bimal Kumar Sarkar and Ors. reported in : AIR1978Cal340 , it is held that order of attachment of property outside jurisdiction of the court without complying with the provisions of Section 136 of the Code of Civil Procedure is bad.
15. Before I part with this judgment and order it would be necessary to refer to certain salient features of these proceedings. Date or dates of payment of amount in question to the defendant-Company has/have not been mentioned in the plaint. From the address given and from the circumstances of the case, it appears that the plaintiff belongs to Bombay and seems to be residing at Bombay. The defendant-Company has its registered office at Bombay. Shri R.D. Modi, Managing Director, who appeared in the suit for and on behalf of the defendant-Company, is the real brother of the plaintiff Gordhandas D. Modi. The cheques alleged to have been issued by the Company are between the period commencing from June 20, 1983 and August 1, 1983. All the cheques are alleged to have been dishonoured on December 16, 1983, i.e. after a period of four to six months. The suit was filed on June 18, 1984. On the same day an application for attachment before judgment and for garnishee order, i.e. praying for direction to call for the amount lying with Canara Bank at Bombay was made. The trial Court without following the procedure laid down under Section 136 of the Code of Civil Procedure, passed the order as prayed for. The trial court knowing fully well that the proceedings by way of appeal from order and civil revision application were pending before the High Court has entertained the application Exh. 24 for taking up the matter on board. The civil revision application was filed in this High Court on August 16, 1984 and the appeal from order was filed in this High Court on August 17, 1984. In both the matters interim directions were given on August 18, 1984. Writ of this High Court has been sent to the trial court. The trial court also knew that the order by which the direction was given to the Bank to produce the amount in trial court was stayed by the High Court. It was obvious that the real contest was between the Bank and the plaintiff. It would also not require great enterprise to understand that prima facie there was collusion between the plaintiff and the defendant. The defendant company was represented by the real brother of the plaintiff. When the matters arising out of interim orders were pending before the High Court, it is not understood what impelled the trial court to put an end to the matter and declare that the garnishee order was being confirmed.
16. The trial court must have realised that the very validity of the interim order was under challenge before the High Court, the trial court cannot be absolved of its duty simply by insisting upon the plaintiff and the defendant that they would make necessary declaration before the High Court. It is unfortunate that despite the writ having been sent by this Court and despite these two matters having been adjourned from time to time, neither the plaintiff nor the defendant made necessary declaration. They did not carry out the express assurance given by them before the trial court as per pursis, Exh. 26, as far back as August 28, 1984. All the aforesaid circumstances clearly lead to one conclusion that the manner and method in which the trial court has acted is highly irregular and improper and the conduct of both the advocates representing the plaintiff as well as the defendants, i.e. Shri G.D. Modi and Shri R.D. Modi, is also not free from comments. There appears to be deliberate attempt to suppress certain material facts from the High Court and there appears to be deliberate attempt to snatch a decree in such a way so as to affect the rights and interests of third parties.
17. In the result, the appeal from order filed by the Bank is allowed. Thefe shall be no order as to costs. The order dated 7-8-1984 passed by the trial court below Exhibit 5 application in Special Civil Suit No. 92 of 1984 is reversed and set aside. As far as the civil revision application is concerned, the prayer of the defendant-Company represented by one of the directors Shri K.M. Shah is limited to the extent that the order directing the Canara Bank to produce the amount in Court be quashed and set aside. The prayer is granted and Rule is made absolute accordingly with no order as to costs. For the reasons stated in the detailed order passed below Civil Application No. 3590 of 1984 filed by the relative director for withdrawal of the civil revision application, the same is ordered to be rejected. In view of the order passed on the appeal from order, Civil Application No. 3291 of 1984 does not survive. Rule discharged with no order as to costs.
18. The counsel for the plaintiff requests that the Bank be directed not to transfer the amount lying in the suspense account of the defendant-Company to the Muslim Bank, London, or to any other person other than the defendant. The counsel for the Bank has no objection if the request of the counsel for the plaintiff is granted. Hence the appellant-Bank is directed not to transfer the amount to the Muslim Bank, London, or to any other person other than the defendant-Company for a period of four weeks from today.