Attachment Before Judgment Not a Mere Procedural Weapon, But a Shield to Secure the Decree: Andhra Pradesh High Court Upholds Pre-Trial Attachment of Developer’s Land

“Prima Facie Claim Plus Threat of Alienation Justifies Attachment”, Division Bench of the Andhra Pradesh High Court, comprising Justice Ravi Nath Tilhari and Justice Challa Gunaranjan, delivered a significant ruling. The Court affirmed the pre-trial attachment of 2.5 acres of land under Order 38 Rules 5 and 6 of the Code of Civil Procedure, 1908, observing that “attachment before judgment is not a tool to coerce, but a shield to ensure that a possible decree is not reduced to a mere paper decree.”

The judgment arises out of a commercial dispute involving alleged dues of ₹3.19 crores pursuant to a failed Memorandum of Understanding (MoU) for the sale and marketing of villas. The High Court dismissed the developer's appeal challenging the attachment, reiterating the well-settled principle that appellate courts will not interfere with a trial court's discretionary orders unless perversity, arbitrariness, or capriciousness is shown.

The dispute emerged from an MoU dated 05.11.2020 between Mohammed Vasee (appellant/defendant), a landowner and developer, and M/s. Alakananda Townships Pvt. Ltd. (respondent/plaintiff), a real estate marketing company. The MoU envisaged the construction of 200 duplex villas by the defendant, to be marketed exclusively by the plaintiff, with a fixed remittance of ₹56,99,999 per villa to the developer.

According to the plaintiff, it had advanced ₹50,00,000 towards refundable deposit and additional sums aggregating to ₹1.86 crores for periodic advances and marketing expenses. However, the developer allegedly breached the MoU by unilaterally increasing prices, slowing down construction, diverting bookings, and subsequently marketing the project independently.

Contending that the defendant was actively alienating land by selling plots instead of villas and deliberately circumventing their contractual obligations, the plaintiff sought pre-trial attachment to secure the potential decree amount.

The Special Commercial Court, upon examining co-relation statements of payments and considering the threat of alienation, ordered conditional attachment on 10.11.2023 and made it absolute on 09.08.2024 after the defendant failed to provide security.

The main legal issue before the High Court was whether the Special Court correctly exercised its discretion in ordering attachment before judgment and whether appellate interference was warranted.

Justice Ravi Nath Tilhari, writing for the Bench, meticulously traced the legal standard under Order 38 Rules 5 and 6 CPC. The Court reiterated the Supreme Court’s dicta in Raman Tech & Process Engineering Co. v. Solanki Traders (2008) 2 SCC 302, that attachment before judgment is an extraordinary remedy reserved for cases where there is a credible threat of frustrating the decree by alienating property, combined with a bona fide prima facie claim.

Dismissing the contention that the Special Court passed a non-speaking order, the Court categorically held:

“Specific reasons have been assigned for passing the order of attachment… the learned Special Court considered the calculation charts filed by the plaintiff and recorded findings that the defendant was actively engaged in alienating the scheduled property in violation of the MoU.”

The Court emphasized the importance of timely objections, observing that the defendant neither contested the calculation memos before the Special Court nor produced counter-statements correlating payments and dues. Critically, the Bench noted:

“If there was something according to the defendant not correct, it ought to have been pointed out to the Special Court by filing objections to the co-relation memo… No fault can be found with the Special Court’s order on grounds belatedly raised in appeal.”

Applying the binding precedent of Wander Ltd. v. Antox India Pvt. Ltd. (1990 Supp SCC 727), the High Court highlighted the limited scope of appellate review under Order 43 Rule 1 CPC. The Court observed:

“The appellate court ordinarily should not substitute its own discretion in an appeal preferred against a discretionary order, except where the discretion has been shown to have been exercised arbitrarily, capriciously, or perversely.”

The Bench further stated:

“The learned Special Court’s decision was not only based on material before it but followed the correct legal principles. This Court finds no perversity or illegality warranting interference.”

The Court dismissed the defendant’s reliance on Sk. Ameer Basha v. Manthana Vani and Mandala Suryanarayana @ Babji v. Barla Babu Rao, holding that unlike in those cases, the Special Court in the present matter furnished adequate reasoning, granted an opportunity to furnish security, and passed a considered order after addressing all relevant factors.

Concluding that the order of attachment was legally sound, the High Court dismissed the appeal but clarified that:

“The appellant is at liberty to approach the Special Court seeking modification of the attachment if fresh circumstances emerge, as already permitted in the impugned order.”

The Court also avoided delving into the factual intricacies of accounting entries, leaving such determinations for the trial stage.

In a judgment that reaffirms the primacy of judicial restraint in appellate review, the Andhra Pradesh High Court underscored the sanctity of procedural safeguards like attachment before judgment when threatened rights of plaintiffs are substantiated. As the Court aptly encapsulated:

“Attachment before judgment is not a tool to pressurize but a mechanism to prevent injustice by ensuring that decrees do not remain theoretical rights.”

The decision strengthens the jurisprudence around attachment before judgment and strikes a balance between securing legitimate claims and respecting the limited scope of appellate scrutiny.

Date of Decision: 09 July 2025