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IN THE HIGH COURT OF DELHI AT NEW DELHI
AMIT BANSAL, J.
G.S Sandhu & Anr. – Appellant
Versus
Geeta Aggarwal - Respondent
CM(M) 1399 of 2019 & CM No.42217 of 2019 (for Stay)
Decided on : 14-01-2022
Constitution of India, 1950 - Article 227 - Code of Civil Procedure, 1908 - Order XXI and Order XXI - Rule 37 – Suit for recovery of amount - Discretionary power to permit judgment-debtor to show cause against detention in prison - Execution of decree - Whether directors of a company can be directed to file affidavits of their assets in an execution petition - Respondent instituted a suit under Order XXXVII of Code of Civil Procedure, 1908 for recovery of Rs.13,56,625/- against judgment debtor company - Said suit was decreed in favour of respondent for a sum of Rs.6,00,000/- along with interest - Petitioners being directors of ‘judgment debtor company’ have been directed to file affidavits of assets in pursuance of judgment of this Court.
Finding of the Court :
Sub-rule (1)(b) of Order XXI Rule 41 provides that where a money decree is against judgment debtor which is a corporation, decree holder may apply to court for an officer of said corporation to be orally examined to determine quantum of debts that are owed by judgment debtor and whether judgment debtor has means of satisfying decree. Order XXI Rule 41(2) provides that on an application of a decree holder court has power to require the judgment debtor or where judgment debtor is a corporation, any officer to file an affidavit stating particulars of assets of judgment debtor. Order XXI Rule 41(3) provides that in case of disobedience of any order made under Order XXI Rule 41(2), court may direct civil imprisonment of person disobeying the said order - There is no requirement under Order XXI Rule 41(2) for a direction to be passed against the officers of the judgment debtor company to file their personal list of assets. Even in respect of judgment debtor, affidavit of assets can only be directed to be filed upon an application having been filed on behalf of the decree holder under Order XXI Rule 41(2) of CPC. Such a direction cannot be passed suo motu by the Executing Court - only vague and general averments with regard to fraud have been made by the decree holder against petitioners in their application filed under Order XXI Rule 37 of CPC and that by itself cannot be a ground for piercing of corporate veil - Impugned order directing petitioners to file an affidavit disclosing their personal assets cannot be sustained and are set aside.
Result: Petition is allowed
JUDGMENT :
AMIT BANSAL, J.
1. The present petition under Article 227 of the Constitution of India impugns the order dated 13th August, 2019 passed by the District Judge, Patiala House Courts in Execution No.5359/2016, whereby the petitioners, being the directors of M/s. Silver Fern Hotels Private Limited [hereinafter ‘judgment debtor company’] have been directed to file affidavits of assets in pursuance of the judgment of this Court in Bhandari Engineers and Builders Pvt. Ltd. Vs. Maharia Raj Joint Venture and Ors., 227 (2016) DLT 302.
2. The issue involved in the present petition was formulated by this Court in the order dated 20th September, 2019 while issuing notice in the present petition, viz., whether directors of a company can be directed to file affidavits of their assets in an execution petition. Pursuant to directions passed by this Court, written submissions have been filed on behalf of the petitioners and the respondent/decree holder.
3. Brief facts to the extent relevant for deciding the present petition are set out below:
3.2 On 12th August, 2013, execution proceedings were initiated by the respondent against the judgment debtor company seeking execution of the decree.
3.3 Thereafter, on 19th August, 2013, warrants of attachment were issued against the judgment debtor company.
3.4 On 20th January, 2014, auction sale was conducted in respect of the movable property of the judgment debtor company, which resulted in Rs.5,00,000/- being recovered by the decree holder.
3.5 On 05th August, 2014, the decree holder moved an application under Order XXI Rule 37 of the CPC seeking detention of the petitioners, being the directors of the judgment debtor company. The said application was contested by the petitioners by filing a reply, stating that the judgment debtor company had become defunct after attachment of its movable assets and there are no further assets in the judgment debtor company.
3.6 Vide the impugned order dated 13th August, 2019, the Executing Court directed the petitioners to file affidavits of assets in pursuance of the judgment of this Court in Bhandari Engineers and Builders Pvt. Ltd. (supra).
4. Counsels appearing on behalf of the petitioners have contended that (i) the petitioners were neither parties in the suit filed by the respondent, nor were any averments made against the petitioners in the plaint; (ii) even in the application filed by the decree holder under Order XXI Rule 37 of the CPC, no specific allegations have been made against the petitioners; (iii) the petitioners, being directors of the judgment debtor company, were not parties to the suit which was decreed in favour of the respondent; (iv) decree was passed only against the judgment debtor company and not the petitioners but the petitioners were also made parties to the execution petition filed on behalf of the decree holder; and (v) under Order XXI of the CPC the directors of the judgment debtor company cannot be asked to file their list of assets.
5. Reliance has also been placed by the counsels for the petitioners on the judgments of Anirban Roy and Ors. Vs. Ram Kishan Gupta and Ors, 2017 SCC OnLine Del 12867; Gurmeet Satwant Singh and Ors. Vs. Meera Gupta and Ors., 2019 SCC OnLine Del 9505; and, Delhi Chemical and Pharmaceutical Works Pvt. Ltd. and Ors. Vs. Himgiri Realtors Pvt. Ltd. and Ors., 2021 SCC OnLine Del 3603.
6. Per contra, counsel appearing on behalf of the respondent contends that (i) only the petitioner no.1 has complied with the order dated 20th September, 2019 passed by this Court to comply with the direction of the Executing Court; (ii) however, the petitioner no.2 has failed to comply with the direction of the Executing Cour
Order XXI Rule 37 of CPC provides that when an application is filed in execution proceedings for payment of money seeking arrest and civil imprisonment of judgment debtor, court would issue a notice ....
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The court established that in money recovery suits, defendants may be required to disclose their assets on oath even before the settlement of issues, as a measure to secure potential decrees and prev....
Power of review can be exercised for correction of a mistake but not to substitute a view. Such powers can be exercised within the limits of the statute dealing with the exercise of power.
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