Directors of a company cannot be directed to file affidavits of their assets in an execution petition unless a decree has been passed against them or there is a specific finding of fraud against them.

CM(M) 1399/2019

Page 1 of 15

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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Judgment Reserved on : 07^th January, 2022

Judgment Delivered on : 14^th January, 2022

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CM(M) 1399/2019 & CM No.42217/2019 (for Stay)

G.S SANDHU & ANR.

..... Petitioners

Through:

Ms. Shalini Kapoor, Ms. Sukriti

Mago and Mr. Sangram Singh

Kheechi, Advocates for petitioner

No.1.

Mr.

Sameer

Nandawani

and

Ms.Pratibha Singh, Advocates for

petitioner No.2.

versus

GEETA AGGARWAL

..... Respondent

Through:

Mr. Rajesh Manchanda, Advocate

CORAM:

HON'BLE MR. JUSTICE AMIT BANSAL

JUDGMENT

AMIT BANSAL, J.

1.

The present petition under Article 227 of the Constitution of India

impugns the order dated 13^th 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.

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/000162

CM(M) 1399/2019

Page 2 of 15

2.

The issue involved in the present petition was formulated by this

Court in the order dated 20^th 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:

3.1

The respondent instituted a suit under Order XXXVII of the Code of

Civil Procedure, 1908 (CPC) on 16^th January, 2012 for recovery of

Rs.13,56,625/- against the judgment debtor company. The said suit

was decreed in favour of the respondent on 06^th July, 2012 for a sum

of Rs.6,00,000/- along with interest.

3.2

On 12^th August, 2013, execution proceedings were initiated by the

respondent against the judgment debtor company seeking execution

of the decree.

3.3

Thereafter, on 19^th August, 2013, warrants of attachment were issued

against the judgment debtor company.

3.4

On 20^th 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 05^th 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

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/000162

CM(M) 1399/2019

Page 3 of 15

attachment of its movable assets and there are no further assets in the

judgment debtor company.

3.6

Vide the impugned order dated 13^th 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 dec