Wednesday, 5 August 2020

Guidelines of Delhi High court for speedy disposal of application for execution of decree

Conclusion

44. The execution of decrees/awards deserves special attention considering that inordinate delay in execution proceedings frustrates the decree-holder from reaping the benefits of the decree/award.

45. In cases of execution of decrees/awards for recovery of money, the Executing Court shall direct the judgment debtor, at the first instance, to file an affidavit of assets on the date of cause of action, date of the decree/award as well as on the date of the swearing of the affidavit in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within thirty days. The oral prayer/application of the decree-holder for issuance of this direction is sufficient compliance of Order XXI Rule 41(2) of the Code of Civil Procedure.

46. The Executing Court is empowered, at the initial stage itself, to restrain the judgment debtor from transferring, alienating or disposing of or otherwise parting with the possession of any assets to the tune of the decretal/award amount except in the ordinary course of business such as payment of salary and statutory dues. However, the judgment debtor shall not discharge any financial liability, other than the liabilities of Banks/financial institutions, without the permission of the Executing Court.

47. If the judgment debtor fails to appear before the Court upon service of notice, the Executing Court shall ensure his presence initially by issuing bailable warrants and thereafter, by issuing non-bailable warrants.

48. In the event of the default of the judgment debtor to file the aforesaid affidavit within the stipulated time, the Executing Court shall consider detention of the judgment debtor in civil prison for a term not exceeding three months under Order XXI Rule 41(3) of the Code of Civil Procedure by directing the decree-holder to deposit the subsistence allowance @ Rs. 40 per day per person with the Executing Court for detention of the judgment debtor. Upon deposit of the subsistence allowance, the Executing Court shall issue non-bailable warrants against the judgment debtor for his detention.

49. Since Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure is not exhaustive to ascertain all the assets of the decree-holder, the Executing Court shall, in exercise of power under Section 151 and Order XXI Rule 41 of the Code of Civil Procedure read with Section 106 and Section 165 of the Indian Evidence Act, direct the judgment debtor to file an additional affidavit of his assets and income in the format of Annexure-A along with documents mentioned therein within thirty days. If the judgment debtor is a proprietor of a proprietorship firm; partner of a partnership firm; member of an HUF and/or Director of a company, additional affidavits be filed by the judgment debtor in respect of the assets of each firm/HUF/Company, as the case may be, in the format of Annexure-B.

50. After examining Annexure-A, the Court may direct the judgment debtor to file an additional affidavit of his expenditure in the format of Annexure-C.

51. If the judgment debtor is a Firm/Company/HUF/Trust, the Court shall direct the judgment debtor to disclose its assets and income in the format of Annexure-B. This affidavit of the Firm/Company/HUF/Trust shall be sworn by all Partners/Directors (other than independent/non-executive and nominee directors)/Members/Managing Trustee, as the case may be.

52. If any ground for lifting of the corporate veil is made out, then all the Directors (other than independent/non-executive and nominee directors) of the judgment debtor Company be directed to disclose their personal assets and income in the format of Annexure-A.

53. Upon filing of affidavits in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure as well as the additional affidavits namely Annexure-A, B and C, the Executing Court shall give liberty to the decree-holder to verify the disclosures made in the affidavits, either himself or through an Investigator.

54. While formulating the affidavits Annexure-A, B and C, many more questions and documents were considered by this Court which would have complicated the affidavits and caused inconvenience to the litigants. In order to keep the affidavits concise and precise, this Court incorporated only important questions and documents. However, the Courts are at liberty to direct the parties to disclose further relevant facts and documents to determine the true assets and income of the judgment debtor. The Courts are also at liberty to consider the rules and formats of affidavits mentioned in para 37 to develop and further improve the format of the affidavits formulated by this Court.

55. The Courts shall ensure that the filing of the affidavits by the judgment debtor is not reduced to a mere ritual or formality. If the affidavit of the judgment debtor is not in the prescribed format or is not accompanied with the relevant documents, the Court may grant reasonable time to the judgment debtor to remove the defects/deficiencies.

56. The Courts/Arbitral Tribunals are empowered to direct a party to file the aforesaid affidavits in proceedings under Order XXXVIII of the Code of Civil Procedure and proceedings under Sections 9, 17 and 36 of the Arbitration and Conciliation Act.

57. The decree-holder is at liberty to serve the interrogatories and seek production of relevant documents from the judgment debtor.

58. The Executing Court shall, thereafter, consider whether the oral examination of the judgment debtor is necessary under Section 165 of the Evidence Act. If so, the Executing Court shall proceed to examine the judgment debtor.

59. Sections 51(b), 60 to 64 and Order XXI Rules 41 to 57 of the Code of Civil Procedure contain the provisions for attachment of properties in execution of decrees. Before attaching a property, the Executing Court shall ensure that the property does not fall in the list of properties which are exempt from attachment/sale under the Proviso to Section 60(1) of the Code of Civil Procedure. The Executing Court shall ensure the compliance of Sections 60 to 64 and Order XXI Rules 41 to 57 of the Code of Civil Procedure with respect to the attachment of properties in execution of decrees.

60. When the Executing Court finds that the judgment debtor is not satisfying the decree/award despite having means/capacity to pay, the decree-holder is at liberty to file an application for detention of the judgment debtor whereupon the Executing Court shall issue a show cause notice to the judgment debtor to show cause as to why he should not be committed to civil prison. The Court shall, upon being satisfied that the judgment debtor has means to pay the decretal amount or substantial part thereof and has refused or neglected to pay the same, pass an order for detention of the judgment debtor in civil prison for a period not exceeding three months in terms of Section 58(1)(a) of the Code of Civil Procedure. Even after release from detention, the judgment debtor shall remain liable to satisfy the decree/award in terms of Section 58(2) of the Code of Civil Procedure. However, the judgment debtor who has no means to satisfy the decree/award, cannot be detained in civil prison. The Court shall follow the procedure laid down in Sections 51(c), 55 to 59 and Order XXI Rules 37 to 40 of the Code of Civil Procedure for detention of the judgment debtor.

61. In appropriate cases, the Executing Court may (i) issue notice and direct the Garnishee(s) to deposit in Court the amount due to the judgment debtor as per law; (ii) permit the decree-holder to inspect all the assets and the records of the judgment debtor in the presence of the Local Commissioner to be appointed by the Court; (iii) direct the auditor of the judgment debtor company to submit a report with respect to the affairs of the judgment debtor; (iv) permit the decree-holder to serve interrogatories on the auditors of the judgment debtor; (v) permit the decree-holder to inspect the records of the judgment debtor with the Income Tax and the other authorities to verify the disclosures made by the judgment debtor; (vi) in extreme cases, appoint a Chartered Accountant as a Local Commissioner to inspect all the records of the judgment debtor and submit a report to the Court with respect to the affairs of the judgment debtor; (vii) restrain the judgment debtor from leaving the country without the permission of the Court; and (viii) impound the passport of the judgment debtor.

62. If the judgment debtor has made any misrepresentation, concealment or false statement in the affidavits, the decree-holder is at liberty to invoke Section 340, Cr.P.C. Reference be made to the principles laid down in Sanjeev Kumar Mittal v. State, MANU/DE/3134/2010 : 174 (2010) DLT 214 and H.S. Bedi v. National Highway Authority of India, MANU/DE/0154/2016 : 227 (2016) DLT 129.

Directions to the District Courts

63. The District Courts shall implement these guidelines with immediate effect by directing the judgment debtor to file the affidavit of assets and income on the date of the cause of action, date of decree/award and on the date of the swearing of the affidavit in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure as well as additional affidavits in the format of Annexure-A or Annexure-B, as the case may be, within thirty days.

64. Delhi High Court Rules for execution of decrees [Volume I of High Court Rules and Orders, Part C, Chapter 12 - Part A - 'General'] provides for expeditious disposal of the execution cases by District Courts. Rule 2 provides at least one day every week to be reserved for execution work to ensure expeditious disposal. Rules 4 and 5 provide for close supervision and control of the execution cases by the District Judge and report to the High Court in the event of any delay in the disposal of execution cases.

IN THE HIGH COURT OF DELHI

Ex. P. 275/2012, Ex. Appl. (OS) 221/2018 and Ex. P. 276/2012

Decided On: 05.12.2019

 Bhandari Engineers & Builders Pvt. Ltd. Vs.  Maharia Raj Joint Venture and Ors.


Hon'ble Judges/Coram:
J.R. Midha, J.

Citation:  MANU/DE/4601/2019.
Read full judgment here: Click here
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