September 30, 2022

How a third party can challenge the attachment order in CPC?

Section 58 give power to the court dealing with claim or objection, to determine all questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, and not by a separate suit.

ADJUDICATION OF CLAIMS

Civil procedure Code gives right to decree holder to choose any option given by the code, for the execution of his decree. One of these ways is attachment and sell the property of judgment debtor. But if decree holder has chosen this way of attachment and sell, any other person other than judgment debtor, who has claim over that property may prefer an application to the court regarding the same.

Rule 58 and 59 of Order 21 deals with Adjudication of Claims.

The provisions for adjudication of claims has been added by the Amendment Act, 1976 after the recommendation of law commission in its 27th report.

Before the amendment, the executing court used to deal with investigation of claims and objections “summarily”. The scope of such inquiry was very limited and confined to possession, and it was open to the aggrieved party to institute a suit. (Sawai Singh Nirmal Chand v. Union of India, AIR 1966 SC 1068)

But after the amendment act, Section 58 give power to the court dealing with claim or objection, to determine all questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, and not by a separate suit. (Rule 58(2))

And after the determination, the court shall, in accordance with such determination-

  • allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or
  • disallow the claim or objection; or
  • continue the attachment subject to any mortgage, charge or other interest in favour of any person; or
  • pass such order as in the circumstances of the case it deems fit.

 

WHEN CLAIM CAN BE DENIED BY THE COURT? (PROVISO TO RULE 58(1))

A claim preferred against the attachment of property can be denied by the court in following circumstances-

  • where, before the claim is preferred or objection is made, the property attached has already been sold; or
  • where the Court considers that the claim or objection was designedly or unnecessarily delayed.

INSTITUTION OF SUIT WHEN PROPERTY HAS ALREADY BEEN SOLD

Sub rule (5) of Rule 58 declares that where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute; but if court also denies to entertain claim in such suit, such order shall be conclusive.

DISTINCTION BETWEEN SECTION 47 AND RULE 58 OF ORDER 21

Section 47 also provide that all question arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.

Rule 58 provides that All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit.

  • Both provisions are related to execution proceeding and bar separate suits.
  • But while section 47 applies to question between the parties or their representatives, Rule 58 applies to third parties (or their representatives).
  • Section 47 bars an appeal against the order of the court, but Rule 58 allow to appeal against the order. (Rule 58(4))

STAY OF SALE (RULE 59)

Where before the claim was preferred or the objection was raised, the property attached has already been advertised for sale, the Court may,

  • if the property is movable, postpone the sale; or
  • if the property is immovable make an order that the property shall not be sold or that it may be sold but the sale shall not be confirmed.