Attachment before judgment requires proof of intent to defeat execution; accepted undertakings and status quo protection were sufficient.

Attachment before judgment under Order 38 Rule 5 CPC is a drastic remedy available only on a prima facie showing that the defendant is about to dispose of or remove assets to obstruct or delay execution. In a dispute arising from default on foreign currency convertible bond repayment/redemption, the court noted prima facie non-payment but accepted the defendants' undertakings to maintain status quo over identified assets, investments and escrow monies. As the defendants had not disposed of assets after suit and the undertakings sufficiently protected the claim, coercive ad-interim security or attachment was declined and interim restraint orders were maintained.

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Issues: Whether further ad-interim security or attachment before judgment should be directed against the defendant's assets, or whether acceptance of undertakings and status quo arrangements would sufficiently protect the plaintiff's claim.

Analysis: The claim arose out of default in repayment/redemption of the foreign currency convertible bonds, and the Court accepted that there was prima facie default and that the defendants had, after the sale of the business, not paid anything towards the bond liability. However, relief under Order 38 Rule 5 of the Code of Civil Procedure, 1908 is a drastic and extraordinary measure, available only where the defendant is shown to be about to dispose of or remove property with the intent to obstruct or delay execution. The Court applied the settled principles governing attachment before judgment and noted that the defendants had not disposed of assets after institution of the suit and had themselves offered undertakings to maintain status quo over identified assets, investments and escrow monies, with limited liberty for business exigencies and future applications if rights in escrow funds were asserted.

Conclusion: Further ad-interim security by way of coercive attachment was not granted. The defendants' undertakings were accepted, and the application was disposed of with interim protection in the form of status quo and restraint orders.

Final Conclusion: The plaintiff obtained protective interim safeguards, but not the full security or attachment sought under Order 38.

Ratio Decidendi: Attachment before judgment can be ordered only on a prima facie showing that the defendant intends to obstruct or delay execution by disposing of or removing assets, and the court may decline such relief where accepted undertakings adequately safeguard the claim.

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