Contributed by: P&A Law Offices
The judgment in “M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Others” passed by the Delhi High Court: In execution proceeding, the Executing Court is duty bound to ascertain the assets and income of the judgment-debtor to determine, whether the judgment-debtor has the means to satisfy the money decree in favour of the decree holder. In this regard, the law provides for a format of an affidavit which illustrates the assets, income, expenditure and liabilities of the judgment-debtor, disclosed at the very threshold of execution proceedings to ascertain the financial status of the judgment-debtor [Form 16A of Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure, 1908]. Notably, Order XXI of the Code of Civil Procedure, 1908 lays down the procedure for the execution of the decree. Hence, execution of a court’s decree cannot be said to be an unchartered territory under Indian law. However, the overall process of execution proceedings has had its fair share of controversy under the law. Execution proceedings are often scrutinized on issues pertaining to unnecessary delays, non-compliances and incomplete and eluding disclosures made by the judgment-debtor, which ultimately obstructs the effective and expeditious disposal of these proceedings and such proceedings linger either for the want or discovery of assets and/ or at the mercy of the judgment-debtor.
Interestingly, one view that has remained constant over the years is the fact that in most cases, obtaining a court decree only proves to be less than half the battle won for the litigant. The Indian courts have time and again laid emphasis on the importance of timely disposal of the execution proceedings. It has been stated that the difficulties of a litigant in India begin once he has obtained a decree in his favour [General Manager of the Raj Durbhunga v. Coomar Ramaput Sing, (1871-72) 14 MIA 605 : 20 ER 912, Privy Council]. As such, courts in India have to be careful to see that the process of the court and the law of procedure are not abused by judgment-debtors in such a manner as to defraud creditors, who have obtained decrees in accordance with their legal rights [Kuer Jang Bahadur v. Bank of Upper India, EX.P. 275/2012 [AIR 1925 Oudh 448 (PC)], Privy Council].
The Hon’ble Supreme Court of India while taking cognizance of this issue has opined that the procedure established under law is meant to advance the cause of justice and not to retard it. The Apex Court was of the view that the difficulty of the decree holder starts in getting possession in pursuance of the decree obtained by him wherein the judgment-debtor tries to thwart the execution by all possible objections [Babu Lal v. Hazari Lal Kishori Lal (1982) 1 SCC 525]. Over the years, the position has not improved and the decree holders still continue to face the same problems. Notably, if there is an unreasonable delay in execution of a decree, the decree-holder would be unable to enjoy the fruits of his success and the entire effort of a successful litigant would be in vain [Satyawati v. Rajinder Singh, (2013) 9 SCC 491].
DECISION PASSED BY THE DELHI HIGH COURT
In a recent decision of the Delhi High Court in the case of M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors [Ex. P. 275/2012 & Ex. P. 276/ 2012], passed on 05 August, 2020; the Delhi High Court addressed the need for pursuing a robust approach while proactively tackling the obstructions, delays and non-compliances in matters pertaining to execution of court decrees. Notably, the Court felt an urgent need to formulate/ modify the existing form of affidavit of assets and income as filed by the judgment-debtor into a more comprehensive and exhaustive one to ascertain all the assets and income of the judgment-debtor and ensure complete transparency and disclosure. This will curb the delay and will expedite the disposal of the execution proceedings.
The Delhi High Court while modifying its directions previously passed vide Judgment dated 05 December 2019 in Bhandari Engineer’s case, has issued new directions with respect to execution proceedings and formats of affidavit of assets and expenditure which are now required to be filed by the judgment-debtors [M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors., Ex. P. 275/2012 & Ex. P. 276/ 2012 (Annexure A1, Annexure B1 and Annexure C1 attached with the judgment)]. Notably, in pending execution cases, if the judgment-debtor has not already filed the affidavit of assets and income, the Executing Court shall direct the judgment-debtor to file the affidavit of his assets and income in terms of this judgment. Further, the directions issued in para 57(vii) and (viii) of the judgment dated 05 December 2019 with respect to power of the Executing Court to restrain the judgment-debtor from leaving the country without permission and to impound the passport of the judgment-debtor, are for the present, recalled. Additionally, through this judgment the Delhi High Court has also directed lower courts to endeavour to decide the execution cases within one year of their institution [M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors., Ex. P. 275/2012 & Ex. P. 276/ 2012].
While passing these modified directions the Court has relied upon “Best International Practices” and examined the format of affidavits filed in execution cases in United Kingdom, United States of America, Canada, Ireland, Australia, Singapore, New Zealand and South Africa. However, the Hon’ble Court has incorporated only important questions and documents to keep the formats concise and precise. As such, liberty has been granted to lower courts to consider the formats used in these countries while directing the judgment-debtor to disclose further relevant facts and documents as may be considered necessary to determine the assets, income, expenditure and liabilities of the judgment-debtor. It is pertinent to note herein that these formats give a complete overview of the entire assets, income and liabilities as well as the standard of living of the judgment debtor and as such, the Hon’ble Delhi High Court was of the view that the mandatory filing of the affidavit of assets, income, expenditure and liabilities by the judgment-debtor in a detailed prescribed form, at the very threshold of execution litigation, should be incorporated in statutes, as in the developed countries. This suggestion is left to be considered by the Central Government. The substantial highlights of the modifications brought about by the Hon’ble Delhi High Court are as follows:
The revised affidavits disclose the judgment-debtor’s occupation and income from all sources in the last five years; particulars of immovable properties in his name as well as joint names; financial assets including all bank accounts, DEMAT accounts, safety deposit lockers; investments including FDRs, stocks, shares, insurance policies, loans, foreign investments; movable assets including motor vehicles, mobiles, computer, laptop, electronic gadgets, gold, silver and diamond jewellery etc.; intangible assets; garnishee(s)/trade receivables; corporate/business interests; disposal and parting away of properties; properties acquired by the family members, inheritance. A salaried judgment-debtor has to disclose the particulars of his employment including salary, D.A., commissions, incentives, bonus, perks, perquisites and other benefits, Income Tax, pension and retirement benefits etc. A self-employed judgment-debtor has to disclose the nature of business/profession, share in business/profession, net worth of the business, number of employees, amount of regular monthly withdrawals, Income Tax, net income, annual turnover/gross receipts, gross profits etc. The judgment-debtor is also required to disclose the income from other sources, namely, agricultural income, rent, interest on bank deposits and investments, dividends, profit on sale of movable/immovable assets, mutual funds, annuities etc. The judgment-debtor is also required to disclose whether he has ever been arrested or kept in detention; whether any Court has issued bailable/ non-bailable warrants against him; whether he has ever been released on bail/anticipatory bail; whether he has ever been prosecuted and/or convicted; whether he has ever been declared as proclaimed offender/proclaimed person; particulars of all pending litigations, decided/ disposed off litigations as well as unsatisfied decrees/ awards. The judgment-debtor is further required to disclose his standard of living and lifestyle, namely, credit/ debit cards, membership of clubs and other associations, loyalty programmes, social media accounts, domestic helps and their wages, mode of travel in city and outside city, category of hotels for stay, category of hospitals for medical treatment, frequency of foreign travel, frequent flyer cards, brand of mobile, wrist watch, pen, expenditure ordinarily incurred on family functions, festivals and marriage of family members, etc. Annexure C1 requires the disclosure of expenditure on housing, household expenditure, maintenance of dependents, transport, medical expenditure, insurance, entertainment, holiday and vacations, litigation expenses, discharge of liabilities etc. [M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors., Ex. P. 275/2012 & Ex. P. 276/ 2012]
Justice is the ideal to be achieved by law. Justice is the goal of law. ‘Law as it is‘, may fall short of 'Law as it ought to be' for doing complete justice in a cause [J.S. Verma, former Chief Justice of India, in his lecture titled “New Dimensions of Justice”, (1997) 3 SCC J3]. The gap between the two gives an occasion to the Court to develop the law by evolving juristic principles for doing complete justice according to the current needs of the society [M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors., Ex. P. 275/2012 & Ex. P. 276/ 2012].
People would have faith in courts when they find that truth alone triumphs in Courts [Chandra Shashi v. Anil Kumar Verma, (1995) 1 SCC 421]. As such, the Judge has to play an active role in discovering the truth and he should explore all available avenues to discover the whole truth [Maria Margarida Sequeria Fernandes v. Erasmo Jack de Sequeria, (2012) 5 SCC 370]. It is a settled principle of law that no one can take advantage of his own wrong. Unless the courts disgorge all benefits that a party availed by obstruction or delays or non-compliance, there will always be incentive for such non-compliance [Indian Council for Enviro-Legal Action v. Union of India, (2011) 8 SCC 161; A. Shanmugam v. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam, (2012) 6 SCC 430]. Notably, the principle of restitution has to be fully applied in a pragmatic manner in order to do real and substantial justice [Ramrameshwari Devi v. Nirmala Devi, (2011) 8 SCC 249].
Delays and difficulties in execution of decrees/arbitration awards erode public confidence and trust in the justice delivery system. Execution jurisdiction deserves special attention and expeditious disposal considering that the decree-holders have already succeeded in the litigation and hold a decree/ award in their favour. Furthermore, inordinate delay in execution proceedings would frustrate the decree holders from reaping the benefits of the decrees/ awards [M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors., Ex. P. 275/2012 & Ex. P. 276/ 2012]. Notably, law's finest hour is not in meditating on abstractions but in being the delivery agent of full fairness [Krishna Iyer, J. in Jasraj Inder Singh v. Hemraj Multanchand, EX.P. 275/2012 (1977) 2 SCC 155].
In view of the above, the directions passed by the Hon’ble Delhi High Court in the case of M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Ors. will play a vital role to meet the ends of justice, ensure speedy satisfaction of decrees/arbitration awards and vain attempts made by the judgment-debtors to evade disclosure of their/ its assets and/or cause any obstruction, which is the need of the hour.
Contributed by: P&A Law Offices
The above article has been authored by Mr. Gaurav Mahajan(Associate Partner) and Mr. Saksham Babbar(Associate) from P&A Law Offices, New Delhi.
The views expressed are solely those of the authors and should not be attributed to the author’s firm or its clients, or any other organization.