"Delays and difficulties in the execution of decrees/awards erode public confidence and trust in the justice delivery system. Execution jurisdiction deserves special attention and expeditious disposal considering that the decree-holder has already succeeded in the litigation and holds a decree/award in his favour." 1
Order XXI of the Code of Civil Procedure, 1908 ("CPC") lays down the procedure for the execution of a decree. However, execution proceedings are frequently examined on issues pertaining to unnecessary delays, non-compliances and fragmented disclosures made by the judgment-debtor, which ultimately impedes the effective and expeditious disposal of proceedings.
TThe Delhi High Court, through a series of three judgments authored by the recently retired Justice J.R Midha, sought to effectively tackle the menace of delays in the enforcement of decrees, orders and awards. The Court had first taken cognizance of this issue vide its judgment dated December 5, 20192 wherein it laid down the guidelines for execution of the decrees/awards ["Bhandari Engineers-I"]. Further, vide another follow-up judgment dated August 5, 20203, ["Bhandari Engineers-II"], the Court modified the guidelines issued in Bhandari Engineers-I to make them more comprehensive. These directions were issued to all the District Courts across Delhi for forthwith implementation.
The salient takeaways from the aforementioned two orders are enumerated below:
- Attachment of Assets: If the decree/award holder is aware of the assets of the Judgment Debtor ("JD"), the Court can attach such assets at the very threshold of the execution proceedings.4
- Affidavit of Assets: If the decree holder is not aware of the complete assets and income of the JD, the Executing Court can direct the JD to disclose its assets, on affidavit under Order XXI Rule 41(2) of the CPC.
That a detailed format for filing the affidavit of income and assets was prescribed in Bhandari Engineers-I, which was further modified and made more comprehensive in Bhandari Engineers- II where, the JD, in addition to its assets and income, was also required to disclose its expenditure, liabilities as well as the standard of living of the JD and/or its Promoters/Directors.5
- Lifting of Corporate Veil: In the event, the decree-holder/award holder makes out a case for lifting of corporate veil, then the court, may, in its discretion, call upon the Directors or officers in-charge of the JD Company to disclose their personal assets and income in the prescribed format.
- Civil Detention & Perjury:
Timelines: The Delhi High Court has directed all district and civil courts to expedite the disposal of execution proceedings and endeavour to have them completed within one year8.
Disclosures and Inspections: Upon filing of affidavits in the manner stated above, the Executing Court may give liberty to the decree-holder to verify the disclosures made in the affidavits, either by himself or through an independent investigator/commissioner appointed by the Court.
- In case the JD or its Directors/Promoters fail to file the affidavit within the time so directed6, the Executing Courts may pass an order committing the JD (its Director/Promoters) to civil detention for a term not exceeding three months under Order XXI Rule 41(3) of the CPC.
- The Executing Court also has powers to initiate perjury proceedings under the Indian Penal Code, 1860 read with the Code of Criminal Procedure, 1973 in the event the JD has made false depositions in its affidavit.7
In the most recent of the three-part guidelines for enforcement, the High Court further modified the guidelines issued in Bhandari Engineers-II, vide judgement dated 24th June, 2021 [Bhandari Engineers-III]9. A summary of new guidelines is provided below:
- If the decree-holder has disclosed the assets of the JD, the Executing Court shall attach the assets on the very first date of hearing.
- If the decree-holder has not disclosed the assets of the JD, the Executing Court shall issue notice for the attachment of the assets and direct the JD to deposit the decretal amount within 30 days.
- If the decretal amount is not deposited by the JD, then he may be directed to file the additional affidavit of its assets and income within 30 days. In case the decretal amount is deposited then he is not required to file the additional affidavit of its assets.
- If the JD is a Central Government/State Government/ Municipal Corporation/ PSU/Entity of the Central/State Government/ Foreign State, the direction to file the affidavit of assets within 30 days is not necessary in the first instance10.
- If the execution is filed after two years from the date of passing of the decree, notice shall be issued to the JD and the directions relating to the affidavit of assets, attachment and injunction can only be considered after the service of the enforcement petition to the JD, unless the decree-holder makes out a prima facie case for an urgent injunction/freezing of assets i.e., during the first hearing.
The division bench of Delhi High Court in Delhi Chemicals and Pharmaceutical Works Pvt. Ltd. & Anr. v. Himgiri Realtors Pvt. Ltd. & Anr.11 [“Delhi Chemicals”] acknowledged that the intent and rationale behind the Bhandari Engineers’ judgments was laudatory. That being said, the Court also observed that by passing these sweeping directions, the Ld. Single Judge had exceeded its jurisdiction. However, since the Delhi Chemicals’ case was not hearing an appeal arising out of the Bhandari Engineers case, it cannot be said that the directions passed by Justice Midha have been specifically overruled.
Speedy enforcement of decrees and awards is often debated and discussed but the ground reality has been different thus far. Enforcement petitions have been languishing in the courts for many years as our enforcement regime has lacked any teeth.
The judgments passed in the Bhandari Engineers' case, as also Delhi Chemicals' case a are surely a step in the right direction. The Delhi High Court has made it clear that to meet the ends of justice, it is important to put some force behind the wheels of enforcement otherwise the old adage of 'operation successful, patient dead' will continue to haunt the justice delivery system in India.
- M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture & Others EX.P. 275/2012 & EX.APPL.(OS) 221/2018
- EX.P. 275/2012 & EX.APPL. (OS) 193/2020
- EX.P. 275/2012 & EX.APPL.(OS) 221/2018
- id (17)
- EX.P. 275/2012 & EX.APPL.(OS) 221/2018 (42)
- EX.P. 275/2012 & EX.APPL. (OS) 193/2020 (78)
- id (83)
- EX.P. 275/2012 & E.A. 193/2020
- id (60) EFA (OS)(COMM) NO. 4/2021
By - Arush Khanna & Nishtha Kansal