The Supreme Court has ruled that a property which has already been transferred through a valid registered sale deed before the institution of a suit cannot be subjected to attachment before judgment under Order XXXVIII Rule 5 of the Code of Civil Procedure.

A bench of Justices BV Nagarathna and R. Mahadevan set aside the concurrent decisions of the Kerala High Court and the Trial Court which had permitted such attachment. The Court reiterated the well-established principle that attachment before judgment can operate only on assets belonging to the defendant at the time the suit is filed. If ownership has already passed to a bona fide purchaser before that date, such attachment is legally impermissible.

The matter stemmed from an agreement for sale executed in 2002, followed by a registered sale deed in June 2004 in favour of the Appellant-purchaser, who also took possession and began running a guest house on the property. Months later, the Respondent-creditor instituted a money recovery suit in December 2004, and in February 2005 secured an order for attachment before judgment over the same property.

Challenging the attachment order, the Appellant filed a claim petition under Order XXXVIII Rule 8 CPC read with Order XXI Rule 58 CPC. However, the Trial Court dismissed it, holding that the transaction was a fraudulent transfer under Section 53 of the Transfer of Property Act. The High Court substantially concurred, though it remanded the matter on the question of consideration.

Before the Supreme Court, the purchaser argued that since the sale deed pre-dated the suit, the property did not belong to the defendant on the relevant date — defeating the fundamental requirement of Order XXXVIII Rule 5 CPC.

Accepting this contention, Justice Mahadevan, writing for the bench, held that attachment before judgment — being an extraordinary and preventive mechanism — cannot extend to properties already alienated to genuine third-party purchasers before the litigation began. Since the registered sale deed of 28.06.2004 came into effect months before the suit was filed, the defendant had no subsisting right, title or interest at the time of institution. Therefore, the plaintiff’s sole recourse, if alleging fraud, lies under Section 53 of the Transfer of Property Act.

The Court relied on the precedent in Hamda Ammal v. Avadiappa Pathar, (1991) 1 SCC 715, which similarly held that a completed sale prior to suit bars an application under Order XXXVIII Rule 5 CPC.

Clarifying the legal position further, the Court emphasized that allegations of a fraudulent transfer aimed at defeating creditors must be examined exclusively through proceedings under Section 53 TPA, and cannot justify attachment before judgment when the property no longer belongs to the debtor on the suit date.

Accordingly, the Supreme Court allowed the appeal and upheld the maintainability of the claim petition filed by the Appellant-purchaser.

Cause Title: L.K. Prabhu @ L. Krishna Prabhu (Deceased) through LRs v. K.T. Mathew @ Thampan Thomas & Ors.