The High Court of Andhra Pradesh, in a significant pronouncement on the scope of appellate jurisdiction, has dismissed a Civil Miscellaneous Appeal challenging an order of attachment before judgment. A Division Bench comprising Justice Ravi Nath Tilhari and Justice Challa Gunaranjan, in its judgment dated July 9, 2025, held that an appellate court should not interfere with a trial court’s discretionary order unless it is proven to be arbitrary, capricious, or perverse.
The Court upheld the order passed by the Special Judge for Commercial Disputes, Visakhapatnam, which had made absolute the attachment of property belonging to a defendant in a suit for recovery of over ₹3.19 crores.
Background of the Case
The legal dispute arose from a Commercial Original Suit (COS) No. 14 of 2023, initiated by M/s. Alakananda Townships Pvt. Ltd. (plaintiff/respondent) against Mohammed Vasee (appellant/defendant). The plaintiff sought the recovery of ₹3,19,75,543, alleging that the defendant had defaulted on a Memorandum of Understanding (MOU) dated November 5, 2020.
According to the plaint, the parties had entered into the MOU for the plaintiff to market 200 duplex houses that the defendant was to construct on his Ac.10.1212 cents of land. The plaintiff paid a refundable advance of ₹50,00,000. It was alleged that the defendant subsequently breached the MOU by unilaterally increasing the price of the villas, mismanaging the project, failing to secure necessary statutory approvals, and proceeding at a slow pace, which led to booking cancellations and financial loss for the plaintiff.
Fearing that the defendant was attempting to alienate the property as vacant plots to defeat any potential decree, the plaintiff filed an interlocutory application (I.A.No.458 of 2023) under Order 38 Rule 5 of the Code of Civil Procedure (CPC) for attachment before judgment.
The defendant, in his written statement, denied the allegations, claiming the MOU was not binding and had been orally dissolved. He contended that the advance of ₹50,00,000 had been refunded through adjustments.
The Special Court, after directing the defendant to furnish security for the suit claim and his subsequent failure to do so, ordered the attachment of 2.5 acres of the defendant’s land. In its final order dated August 9, 2024, the Special Court made this attachment absolute, finding that the plaintiff had established a prima facie case and that there was evidence of the defendant’s intent to alienate the property. This order was challenged in the High Court.
Arguments of the Parties
Sri M. R. S. Srinivas, counsel for the appellant (defendant), argued that the plaintiff had failed to establish a prima facie case and that the trial court’s finding was erroneous and based on incorrect calculation tables. He contended that an attachment order could not be passed merely for failure to furnish security if the underlying claim was not prima facie established.
Conversely, Sri V. V. Saketh Roy, counsel for the respondent (plaintiff), defended the trial court’s order as legal and proper. He asserted that a prima facie case was clearly made out through documentary evidence and that the threat of alienation was real, justifying the attachment.
The Court’s Analysis
The High Court framed the central issue as whether the trial court’s order of attachment suffered from any illegality that would warrant interference in its appellate jurisdiction.
The Bench began its analysis by examining the principles of Order 38 Rule 5 CPC, citing the Supreme Court’s decision in Raman Tech. & Process Engg. Co. v. Solanki Traders, which described the power of attachment before judgment as a “drastic and extraordinary power” that “should not be exercised mechanically or merely for the asking.” The Court reiterated that two conditions must be met: the plaintiff must establish a prima facie case, and it must be shown that the defendant is attempting to dispose of assets with the intent to defeat a potential decree.
The High Court found that the Special Court had properly recorded its satisfaction on both counts, based on the material before it, including calculation memos to which the defendant had not filed objections at the trial stage.
The judgment then delved into the limited scope of its appellate jurisdiction under Order 43 Rule 1 of the CPC. The Bench placed heavy reliance on the Supreme Court’s judgment in Ramakant Ambalal Choksi v. Harish Ambalal Choksi, which followed the landmark case of Wander Ltd. v. Antox India P. Ltd. The High Court quoted the established principle from Wander Ltd.:
“In such appeals, the appellate court will not interfere with the exercise of discretion of the court of the first instance and substitute its own discretion, except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely, or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions… If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court’s exercise of discretion.”
Applying this principle, the High Court concluded that the Special Court had exercised its discretion reasonably and judicially. It found no grounds to suggest that the decision was arbitrary, perverse, or in violation of settled legal principles.
Decision
Finding no illegality in the order passed by the Special Judge for Commercial Disputes, the High Court dismissed the Civil Miscellaneous Appeal. The Court did, however, reiterate the liberty already granted by the trial court to the appellant to file an application for modification of the attachment order, which, if filed, would be decided in accordance with the law. No order was made as to costs.
