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IN THE HIGH COURT OF DELHI
S. Ravindra Bhat, J.
Jawahar Lal Nehru Hockey Tournament Society through its Secretary Shri Shiv Kumar Varma - Appellants
Vs.
Radiant Sports Management (P) Ltd. through its Managing Director Shri Aushim Khetrapal - Respondent
Execution No. 38/2000
Decided On: 12.03.2008
Attachment - Execution Proceedings - No legal basis - [Arbitration, Civil Procedure Code] - The court discussed the legal provisions related to the attachment and auction of property in execution proceedings, emphasizing the need for a valid legal basis for such actions. The court highlighted the separate legal existence of a company and the requirement for the court to be satisfied about the need to proceed against the personal assets of directors and shareholders before issuing attachment orders. The court concluded that the attachment and subsequent orders directing auction of the property had no legal basis, and vacated the attachment order.
Fact of the Case:
The decree holder invoked an arbitration clause to recover a sum of money from the judgment debtor. The property was attached, and auction proceedings were initiated. Various parties claimed ownership of the property, leading to disputes and appeals.
Finding of the Court:
The court found that the attachment and subsequent auction of the property had no legal basis as the property did not belong to the judgment debtor, and there was no valid acceptance of the undertaking filed by a third party. The court concluded that the auction proceedings could not be sustained and vacated the attachment order.
Issues: Validity of attachment and auction proceedings, ownership of the property, acceptance of third-party undertaking
Ratio Decidendi: The court emphasized the separate legal existence of a company and the need for a valid legal basis before attaching and auctioning property in execution proceedings. It highlighted the lack of evidence connecting the property to the judgment debtor and the absence of acceptance of the third-party undertaking, leading to the conclusion that the attachment and auction had no legal basis.
Final Decision: The court vacated the attachment order and allowed the related applications, directing the auction purchaser to withdraw the deposited amount. The decree holder was ordered to bear the costs of the proceedings and pay additional costs to the applicant in specific applications.
S. Ravindra Bhat, J.
1. The present order will dispose of all pending applications, i.e. EA Nos. 243/2002, 435/2002, 213/2004, 339/2004, 198/2005, 313/2006, 38/2008, 338/2004, 438/2002, 672/2003, 214/2004, 220/2004, 221/2004, 226/2004, 227/2004, 228/2004, 229/2004 and 109/2006.
2. The facts necessary to dispose of these applications are that the decree holder had invoked an arbitration clause in an agreement entered into with one M/s. Radiant Sports Management (P) Ltd. - (Judgment Debtor No. 1 in the present proceedings). An award was made in its favour on 24.8.1998. In terms of the award, decree holder was entitled to recover the sum of Rs. 11,05,000/- and Rs. 5,07,534/- as damages from 24.11.1996 till date of payment; in addition, the Arbitrator awarded interest at the rate of 15% per annum on the amounts payable on due dates till their realization with cost quantified at Rs. 25,000/-. The decree holder preferred the present proceeding, i.e. Execution Petition No. 38/2000 on 14.2.2000. In the body of the execution, the decree holder sought for attachment of immovable property bearing No. S-524, Greater Kailash-I, New Delhi, claiming that it was owned by the judgment debtor.
3. On the strength of the averments and the contentions, this Court by its order dated 16.5.2000 attached the property bearing No. S-524, Greater Kailash-I, New Delhi. Thereafter, a number of occupants in the property had moved the Court, claiming to be owners of different portions.
4. During subsistence of the attachment orders in the present proceedings, one Mr. Aushim Khetrapal appeared in the Court and filed an affidavit on 27.9.2002 along with an application, i.e. EA 438/2002. The said application stated that the judgment debtor had come for want to settle the matter with the decree holder. It further contained the following averments:
5. The judgment debtor in full and final settlement has agreed to pay a sum of Rs. 11,00,000/- in the manner stated hereunder and the decree holder has accepted the same in full and final settlement
i) Rs. 1,54,000/- by way of pay order dated 26/9/02.
ii) Rs. 1,46,000/- by way of Pay Order dated 26/9/02.
iii) Rs. 2,00,000/- by way of cheque dated 30/9/02 bearing No. 515952 drawn on HDFC Bank.
iv) Rs. 2,00,000/- by way of cheque dated 3/10/02 bearing No. 515953 drawn on HDFC Bank.
v) Rs. 2,00,000/- by way of cheque dated 5/10/02 bearing No. 515954 drawn on HDFC Bank.
vi) Rs. 2,00,000/- by way of cheque dated 8/10/02 bearing No. 515955 drawn on HDFC Bank.
6. The judgment debtor further agrees to give the pay orders for the four cheques mentioned above before their due date. If the judgment debtor fails to give the pay order then the decree holder will be entitled to present the cheques on due dates. Further if on presentation the cheques issued by him are dishonoured then the entire decretal sum of Rs. 23,88,565/- along with interest @ 15% p.a. from 10.2.2000 till the date of payment shall become due and payable and the judgment debtor shall be bound by the same.
7. The judgment debtor agrees that the above stated settlement is subject to the condition that the payment schedule stated above would be strictly adhered to by the judgment debtor.
8. It is further agreed that if even one installment is delayed or is not paid then the entire decretal sum in terms of the decree would become due and payable immediately on default and the judgment debtor will be liable to make the payment of the entire sum of Rs. 23,88,565/- along with interest @ 15% p.a. from 10.2.2000 till the date of payment to the decree holder.
9. That the judgment debtor further agrees and admits that till the entire payment in terms of the settlement above is paid to the decree holder he shall not sell, alienate, transfer or part with possession of the premises bearing No. S-524, Greater Kailash-I, New Delhi and till payment of the last installment upto 10/10/02.
5. Paragraph 3 of the above affidavit stated that the deponent would be bound by terms
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