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2009 Supreme(Del) 924

IN THE HIGH COURT OF DELHI

Honble Judge: Rajiv Sahai Endlaw, J.
Binatone Computers Pvt. Ltd. – Appellants
Vs.
Setech Electronics Ltd. – Respondent
EA No. 436/2008 in Ex.P. No. 285/2008
Decided On: 21.08.2009

Advocates appeared:
For Appellant/Petitioner/Plaintiff: A.K. Thakur and Rajiv Arora, Advs.
For Respondents/Defendant: Atul Jain, Adv.

Wrongful attachment of property and liability of the Decree Holder for obtaining attachment of the property of the Objectors.

Headnote:

Objections - Order 21 Rules 58 & 59 CPC - Section 95 CPC, Section 531 of the Companies Act, 1956, Section 53 of the Transfer of Property Act - The court discussed the wrongful attachment of property, the impact of collusion, and the legal provisions related to attachment of property in execution of a money decree against a company. The court emphasized that attachment of a property acts as a clog on the property and interferes in the owner exercising lawful rights, and highlighted the provisions for compensation for obtaining attachment on insufficient grounds under Section 95 CPC. The court also discussed the applicability of Section 531 of the Companies Act, 1956 and Section 53 of the Transfer of Property Act, and emphasized that the property of a company is separate and distinct from its shareholders and directors.

Fact of the Case:

Objections under Order 21 Rules 58 & 59 CPC have been preferred by Mrs. Kusum Lata Jalan and Mr. Prachir Jalan with respect to the attachment of property No. E-947, Chittranjan Park, New Delhi, at the instance of the Decree Holder in Execution against M/s. Setech Electronics Limited.

Finding of the Court:

The court found that the attachment of the property was wrongful and vacated the attachment earlier ordered. The court held the Decree Holder liable for wrongfully obtaining attachment of the property of the Objectors and persisted in the same.

Issues: The issues revolved around the ownership of the property, impact of collusion, and the wrongful attachment of property.

Ratio Decidendi: The court emphasized that attachment of a property acts as a clog on the property and interferes in the owner exercising lawful rights, and highlighted the provisions for compensation for obtaining attachment on insufficient grounds under Section 95 CPC. The court also discussed the applicability of Section 531 of the Companies Act, 1956 and Section 53 of the Transfer of Property Act, and emphasized that the property of a company is separate and distinct from its shareholders and directors.

Final Decision: The application/objections were allowed, and the attachment earlier ordered was vacated.

JUDGMENT

Rajiv Sahai Endlaw, J.

.1. Objections under Order 21 Rules 58 & 59 CPC have been preferred by Mrs. Kusum Lata Jalan and Mr. Prachir Jalan with respect to the attachment of property No. E-947, Chittranjan Park, New Delhi, at the instance of the Decree Holder in Execution against M/s. Setech Electronics Limited. Ex-parte order of attachment was made by this Court on the representation of the Decree Holder that the said property was the property of the Judgment Debtor and had been attached in

.earlier execution petition against the Judgment Debtor also.

2. The objectors claim to be the owner of the property and have in support thereof filed before this Court photocopies of (i) the lease deed executed by the President of India with respect to the land underneath the said property in favour of Mr. Piyush Kanti Sen Gupta; (ii) the agreements to sell executed by the said Mr. Sen Gupta in favour of the objectors with respect to the said property; (iii) receipts executed by the said Mr. Sen Gupta of sale consideration with respect to the said property from the Objectors; and (iv) the order dated 10th October, 2001 of the MCD allowing mutation of the said property in the name of the objectors. The counsel for the objectors has today in court, as directed earlier given inspection of the originals of the said documents to the counsel for the Decree Holder.

3. The Decree Holder has opposed the objections and has contended that the said property was the address of the registered office of the Judgment Debtor company and it is further contended that the objectors are in collusion with the Judgment Debtor.

4. It may be noticed that the counsel for the Objectors also admits that Objectors are the son and the wife of the brother of Mr. Kishan Kumar Jalan, one of the Directors of the Judgment Debtor company.

5. The counsel for the Decree Holder first contended that an official of the Judgment Debtor had in an earlier proceedings admitted the said property to be of the Judgment Debtor. Attention in this regard is invited to order dated 14th December, 2007 in execution No. 143/2007. However all that is contained in the said order is that till the next date in those proceedings the said property is attached. Though the presence of the counsel appearing today on behalf of the Decree Holder as well as of Mr. Kushal Chaturvedi, representative of the Judgment Debtor is recorded but there is no statement recorded therein of the said Mr. Kushal Chaturvedi to the effect that the property belongs to the Judgment Debtor. The counsel for the Decree Holder however contends that such a statement was made by Mr. Chaturvedi before the court on that date. It is so stated in the reply of the Decree Holder to the objections also. However the said reply is not accompanied by the affidavit of any person on behalf of the Decree Holder present before the court on that date. In the absence of anything in the order recording that such statement was made before the court, no notice of the same can be taken.

6. As far as the plea of the Decree Holder of the said property being shown as the registered office of the Judgment Debtor company is concerned, the same in my opinion does not form a ground for the Decree Holder to attach the said property or to insist upon continuing the said attachment. Merely because the registered office of the Judgment Debtor company existed at the address of the said property does not lead to any inference that the Judgment Debtor company has any interest in the said property which could be attached in execution of a money decree against the Judgment Debtor company.

7. The counsel for Decree Holder has insisted that since collusion has been pleaded by the Decree Holder in its reply to the objections, the procedure for disposal of the objection should be of framing of issues and putting the matter to trial. It has been inquired from the counsel for the Decree Holder as to what is the impact, even if any of the collusion as alleged betwe

















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