The Jurisprudence of Executions – Past, Present and Future

“The actual difficulties of a litigant in India begin when he has obtained a decree” – Privy Council, 1872

In India during the recent years, all aspects of litigation have gotten faster and better, it may have been because of the introduction of the Commercial Courts Act both for the lower court or the high courts or It may have been because the High Courts have been revising their procedures and regulations such as the newly made Delhi High Court (Original Side) Rules, 2018 (“DHC Rules”) or perhaps it may have been because of introduction of the newer technologies to cut down red tapism by e-filing and services and deliveries by email but what has not changed yet is the aspect of Order XXI – Executions.

Since, 1908 when the Code of Civil Procedure (“CPC”) was formulated there has been a handful judgments which talks about process, procedures and consequences when someone wins a case, the method of such recoveries and the fact what all remedies does a person have if the person who loses (“Judgment Debtor/JD”) delays and makes the person who succeeds (“Decree Holder/DH”) wait for a long period.

The Delhi High Court by way of Justice J. R Midha had taken note of this aspect and vide an order dated 11th January 2016 titled, Bhandari Engineers & Builders Pvt. Ltd. v. Maharia Raj Joint Venture [1] (“First BE”) which was subsequently modified by another order dated 5th December 2019 in Bhandari Engineers & Builders Pvt. Ltd. v. Maharia Raj Joint Venture [2] (“Second BE”) and then modified by an order dated August 5, 2020 in Bhandari Engineers & Builders Pvt. Ltd. v. Maharia Raj Joint Venture [3] “Third BE”) and was yet again modified by another order dated June 24, 2021 in Bhandari Engineers & Builders Pvt. Ltd. v. Maharia Raj Joint Venture [4] (“Fourth BE”) and laid down a slew of guidelines for the recovery of money in cases of execution of decrees/ awards.

Before we dwell into the changes as sought by the BE judgments, it is important to understand the pre and post amended consequences of the aforestated BE judgements.

S NO DISCLOSURES UNDER FORM 16A DISCLOSURES UNDER BHANDARI JUDGMENT
ANNEXURE -1 FORMAT OF AFFIDAVIT OF ASSETS AND INCOME OF THE JUDGMENT-DEBTOR (Individual)
1. Personal particulars of the JD including details concerning employment, trade, profession, trade along with directorship details. Additional Disclosure

  1. Details of all pending litigations, disputes, claims, arbitrations, FIR, complaints etc.
  2. Details of all decided disputes, claims etc.
  3. Details of all unsatisfied decrees/awards.
  4. Details of places of residences where you have resided during the preceding five years
  5. Details of all credit/debit cards, limit and usage
2. Particulars of the dependants. Additional Disclosure
Details regarding occupation, income of the immediate family members in last ten years
3.
  1. Particulars for annual/ monthly/weekly income after paying income tax from
  2. Income from other sources
Additional Disclosure

  1. Details for Monthly income from all sources besides employment, business including vocation, interest, investment, income from properties, assets etc
  2. Details for source of income for the last 5 (five) years
4.
  1. Details of the Residences owned including its value
  2. Annual payment of rent
-do-
5. Particulars regarding :

  1. Banking account,
  2. Stocks and shares
  3. Life and endowment policies
  4. House Property
  5. Other property
  6. Other securities
-do-
6. Particulars of debts, due to JD from

  1. X of Rs. __amounts etc
(i) Garnishee/Trade receivables
7. Is merely sworn before the oath commissioner Seeks a specific declaration as to the information made is accurate, true, complete disclosure under the garb of perjury, false statement, misrepresentation and punishment under jail.
7A. Additional Disclosure
Statement of Assets are comprehensive and specifically ask for

  1. Particulars of Immovable Properties
  2. Possession- Whether the possession of the above properties is with the judgment-debtor? If no, give status of the possession?
  3. Title Documents-Whether the title documents of the above properties are with the judgment-debtor? If no, give status of the possession of the title documents
  4. Litigation– Whether any litigation is pending in respect of the above properties. If so, give particulars
  5. Financial Assets/Debts- This includes particulars of all bank in the name of judgment debtor or joint name in the last 10 years and further asks for DEMAT , cash, particulars of debts and liabilities, over draft facility.
  6. Investments in all forms
  7. Particulars of Movable Property
  8. Particulars of Intangible assets
  9. Corporate/Business Interests-Complete details of all the subsidiary Companies, their operations and balance sheets for the past ten years or from the date of beginning of cause of action, whichever is later
  10. Particulars of Disposal and parting away of the properties.-
    1. Particulars of properties transferred/agreed to be transferred or parted with the possession by any mode including sale, gift, relinquishment, General Power of Attorney, Special Power of Attorney, exchange, agreement, family settlement, lease, transfer of shareholding/investment etc. in the past ten years or from the date of beginning of cause of action, whichever is later; name/address of the transferee and the sale consideration received from the transferee(s)
    2. List of properties that have ever been in judgment-debtors‟ name or in which judgment-debtor had any right/ interest
  11. Particulars acquired by the family members of the judgment debtors including movable/immovable properties. Specific details are sought whether the JD contributed to any of funds, properties etc
  12. Inheritance
  13. Existing charges on the assets
    1. Particulars of existing charges on the assets of the judgment-debtor including mortgage, charge, pledge on the assets
    2. Whether the charges are registered, and the present status of the same
  14. Any other assets not itemized above
ANNEXURE -2 FOR JUDGMENT DEBTORS (Companies, Partners , Promoters)
8. N.A Approx. 69 points are sought from the person including

  1. Details of the registration
  2. Particulars of Shareholding
  3. Particulars of the Partners/Directors/Promoters and other key managerial staff with their name, age, designation, length of employment, past employment details of past ten years, complete residence address, their shareholding in the Company, its subsidiaries, its joint ventures and other associated entities
  4. Particulars of all related parties including subsidiary companies, sister concerns, agencies, distributors etc.
  5. Net worth of the Business/Firm/Company
  6. Amount of regular monthly withdrawals or drawings by each of Directors/Promoters/Partners /Proprietor/ Trustee
  7. Particulars of the transactions with the related parties whether in the form of expenses, loans or otherwise from the date of the beginning of cause of action upto the date of the affidavit
  8. Have any Directors/Promoters/Partners /Proprietor/ Trustee taken loan/overdrawn/credit from the judgment-debtor? If so, give particulars.
  9. Has the judgment-debtor transferred any assets to any Directors /Promoters /Partners /Proprietor/ Trustee? If so, give particulars
9. N.A Comprehensive Statement of Assets of the Company/partnership/LLP as Annexure-1 above.
Same as above.
10. N.A Comprehensive Statement of Income of the as mentioned above Company / partnership / LLP as Annexure-1 above.
11. N.A Seeks a specific declaration as to the information made is accurate, true, complete disclosure under the garb of perjury , false statement, misrepresentation.
ANNEXURE- 3 STATEMENT OF EXPENDITURE
12. N.A A Composite Statement of Expenditure is sought for

  1. housing,
  2. household expenditure,
  3. transport,
  4. medical expenditure,
  5. insurance,
  6. entertainment and recreation,
  7. Holiday and vacation,
  8. legal and ligation costs,
    Miscellaneous

A bare perusal of the aforestated table would show the extent of details that are required to be provided and how it vastly differs from the short affidavit as directed by the CPC.

Vide the Fourth BE judgment, directions were also issued to District Courts to implement these guidelines with immediate effect for all execution cases by modifying and substituting the guidelines given below. The following is a summary of these guidelines:-

EXECUTION PROCEEDINGS INSTITUTED WITHIN TWO YEARS OF THE DECREE/AWARD

If the execution is filed within two years of the decree/award and the decree holder has disclosed the assets of the judgment debtor, the executing court shall on the first day of the hearing issue notice to the judgment debtor, attach the assets of the judgment debtor and direct the judgment debtor to deposit the decretal amount within 30 days of the receipt of the notice.

In the alternative, if the decree holder has not disclosed the assets of the judgment-debtor, the executing court shall issue notice, attach assets and direct the judgment debtor to deposit the decretal amount with 30 days of the receipt of the notice.

In such a case, if the judgment debtor does not deposit the decretal amount, the judgment debtor shall file the affidavit of assets on the date of cause of action, date of the decree/award as well as on the date of swearing of the affidavit in Form 16A of Appendix E under Order XXI Rule 41(2) of the CPC within 30 days of the receipt of notice [5] and the judgment debtor shall file an additional affidavit in the format of Annexure A1/B1 along with the documents mentioned therein within 30 days of the receipt of the notice [6].

In case of the judgment debtor is a Central Government/State Government/ Municipal Corporation/ PSU/ Entity of Central/State Government/ Foreign State, the direction to file the above is not necessary. The only thing required is that the judgment debtor should disclose its bank account in which there is sufficient amount to the satisfy the decree/award, on affidavit within 30 days of the receipt of the notice.

If the judgment debtor is a Foreign State, the court shall follow the principles laid down KLA Const Technologies Pvt. Ltd. Vs. The Embassy of Islamic Republic of Afghanistan [7]. In KLA Const [8], the High Court had laid down various principles of law such as:-

  1. That prior consent of Central Government is not necessary under Section 86(3) of the CPC to enforce an arbitral award against a Foreign State.
  2. A Foreign State cannot claim Sovereign Immunity against enforcement of an arbitral award arising out of a commercial transaction.
  3. Section 36 of the Arbitration and Conciliation Act treats an arbitral award as a “decree” for the limited purpose of enforcement of an award under the Code of Civil Procedure which cannot be read in a manner which would defeat the very underlying rationale of the Arbitration and Conciliation Act namely, speedy, binding and legally enforceable resolution of disputes between the parties.
  4. Section 86 of the CPC [9] is of limited applicability and the protection would not apply to cases of implied waiver since an arbitration agreement in a commercial contract between a party and a Foreign State is an implied waiver by the Foreign State so as to preclude it from raising a defence against an enforcement action premised upon the principle of Sovereign Immunity.
  5. Foreign State cannot seek Sovereign Immunity for the purpose of stalling execution of an arbitral award rendered against it as soon as a Foreign State opts to wear the hat of a commercial entity, it would be bound by the rules of the commercial legal ecosystem and cannot be permitted to seek any immunity, which is otherwise available to it.
  6. As Arbitration is a consensual and binding mechanism of dispute settlement, it cannot be contended by a Foreign State that its consent must be sought once again at the stage of enforcement of an arbitral award against it, while ignoring the fact that the arbitral award is the culmination of the very process of arbitration which the Foreign State has admittedly consented to.

EXECUTION PROCEEDINGS INITIATED AFTER TWO YEARS OF THE DECREE/AWARD

If the execution proceedings are initiated after two years of the decree/award, the executing court shall issue notice to the judgment debtor to show cause as to why the decree should not be executed against him.

RESTRAINT AGAINST JUDGMENT-DEBTOR FROM TRANSFERRING ITS ASSETS

The Court is also empowered to make an order restraining the Judgement Debtor from transferring, alienating, or disposing of, or otherwise parting with the possession of, any assets, to the tune of the decretal/award amount with a limited exception of (a) in the ordinary course of business such as payment of salary and statutory dues, and (b) discharging liabilities of Banks/financial institutions.

DETENTION OF THE JUDGMENT DEBTOR FOR FAILURE TO FILE THE AFFIDAVIT OF ASSETS

The Executing Court can also consider detention of the Judgment Debtor in civil prison for a term not exceeding three months under Order XXI Rule 41(3) of the CPC by directing the decree-holder to deposit the subsistence allowance @ Rs. 40 per day per person [10] with the Executing Court for detention of the Judgment Debtor. Upon deposit of the subsistence allowance, the Executing Court shall issue non-bailable warrants against the Judgment Debtor for his detention.

It is pertinent to note in terms of Section 56 [11] of the CPC, a woman cannot be arrested and/or detained in relation to the execution proceedings. However, it is interesting to note that if a woman does an act of Perjury [12] then the offence as laid under Section 199 [13] read with Section 191 [14], 193 [15] and 209 [16] Indian Penal Code will still be applicable.

VERIFICATION OF ASSETS OF THE JUDGMENT DEBTOR

Upon filing of affidavits in Form 16A, Appendix E under Order XXI Rule 41(2) of the CPC, as well as the additional affidavits namely Annexure-A1, B1 and C1, the Executing Court [17] shall give liberty to the decree-holder to verify the disclosures made in the affidavits, either himself or through an Investigator.

SERVICE OF INTERROGATORIES ON THE JUDGMENT DEBTOR

The decree-holder is also at liberty to serve the interrogatories and seek production of relevant documents from the Judgment Debtor. The Executing Court shall, thereafter, consider whether the oral examination of the Judgment Debtor is necessary under Section 165 [18] of the Evidence Act. If so, the Executing Court shall proceed to examine the Judgement Debtor. The Principles relating to the scope and powers of the court under Section 165 of the Indian Evidence Act have been summarized in a Delhi High Court Judgment which the Fourth BE has relied and referred to [19].

ATTACHMENT OF ASSETS

Section 51(b), 60 to 64 and Order XXI Rules 41 to 57 of the CPC contain the provisions for attachment of properties in execution. Before attaching the property, the executing court shall ensure that the property does not fall in the list of properties which are exempt from attachment/sale under the Proviso to Section 60(1) of the CPC. The executing court shall further ensure that the compliance of Section 60 to 64 and Order XXI Rules 41 to 57 of the CPC with respect to the attachment of properties in execution of decrees/awards.

If the Judgment Debtor does not voluntarily satisfy the decree/award, the Decree Holder is compelled to initiate execution proceedings. If the Decree Holder is aware of the assets of the judgment debtor, the Court can attach such assets at the very threshold of the execution proceedings [20]. The Executing Court shall, thereafter, initiate proceedings for sale of the attached assets of the judgment debtor, if the judgement debtor does not satisfy the decree/award. Interestingly, the DHC Rules under Chapter XXIII, Rule 10 [21] now allows the cost of prosecuting the Judgment Debtors to the Decree Holders. In a recent ruling , the DHC has allowed the Decree Holder to be reimbursed for all legal costs for execution of its decree against the Judgment Debtor.

POWERS OF EXECUTING COURT

In appropriate cases, the Executing Court may:

  1. issue notice and direct the Garnishee(s) to deposit in Court the amount due to the Judgment Debtor as per law [23];
  2. permit the decree-holder to inspect all the assets and the records of the Judgment Debtor in the presence of the Local Commissioner to be appointed by the Court;
  3. direct the auditor of the Judgment Debtor company to submit a report with respect to the affairs of the Judgment Debtor;
  4. permit the decree-holder to serve interrogatories on the auditors of the Judgment Debtor;
  5. permit the decree-holder to inspect the records of the Judgment Debtor with the Income Tax and the other authorities to verify the disclosures made by the Judgment Debtor;
  6. appoint a receiver in respect to the attached properties of the judgment debtor; and
  7. in extreme cases, appoint a Chartered Accountant as a Local Commissioner to inspect all the records of the Judgment Debtor and submit a report to the Court with respect to the affairs of the Judgment Debtor;

RESTITUTION OF THE DECREE HOLDER FOR THE LOSS(ES) ON ACCOUNT OF DELAY AND OBSTRUCTION IN EXECUTION PROCEEDINGS

The executing court shall pass appropriate order of restitution to reimburse the loss suffered by the decree holder on account of delay and obstruction in the execution proceedings caused by the judgment debtor. The executing court shall endeavour to place the decree holder in the same position as he would have had been if the decree had been satisfied soon upon it being passed.

IMPOSITION OF COSTS ON THE JUDGMENT DEBTOR

The court in Fourth BE has directed the courts that the cost should be equal to the benefits derived by the litigants, and the harm and deprivation suffered by the rightful person so as to check frivolous litigations and prevent people from reaping a rich harvest of illegal acts through Court. It further stated that the cost imposed by the courts must be the real costs equal to the deprivation suffered by the rightful person and also considering how long they have compelled the other side to contest and defend the litigation in various courts.

In appropriate cases, the court may also consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings.

A similar view in relation to the pendency of the executions across various forums was taken by the Supreme Court [24], where it was also compelled to exercise its jurisdiction under the available framework of the law, to streamline execution proceedings in public interest. The apex court in exercise of its jurisdiction under Article 142 read with Article 141 and 144 of the Constitution of India has issued mandatory directions to all courts dealing with suits and execution of decrees. While the directions are many, the most relevant ones are set out below-

  1. The executing court shall dispose of execution proceedings within six months from the date of filing, which may be extended if reasons for the delay are recorded in writing;
  2. In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath to the extent that he is being made liable in a suit. The Court further held, that at any stage, in appropriate cases during the pendency of the suit, use powers under Section 151 CPC, demand security to ensure satisfaction of any decree.
  3. In a money suit, the court shall always resort to Order XXI Rule 11 to ensure immediate execution of decree for payment of money on oral application;
  4. In a suit for payment of money – before settlement of issues, the defendant may be required to disclose his assets on oath to the extent that he/she is liable in the suit;
  5. when possession is not in dispute and not a factual question for adjudication, in appropriate cases, the Court may appoint a commissioner to assess the status of the property;
  6. In appropriate cases where the resistance or objection is found to be frivolous or malafide the court must grant compensatory costs.
  7. The High Courts were also directed to update their rules on Execution of Decrees within one year.

POST SCRIPT

This piece was originally planned to be released on the date of the superannuation of the author of the BE batch of judgments as his au revoir to the legal profession. However, recently the Division Bench of the Delhi High Court in the matter of Delhi Chemical and Pharmaceutical Works Pvt. Ltd. & Anr. Vs. Himgiri Realtors Pvt. Ltd. & Anr [25] in a detailed judgment held, “that the Second BE as far it extends to execution proceeds pertaining to all money decree to all courts extending a money decree, cannot said to be good law and could not have been followed in the execution proceedings in that appeal.

Since, this piece is not specifically related to only Second BE, the authors have decided to write a second part to this article to discuss the implications of Delhi Chemical [26] in the execution jurisprudence in India and its impact to the various BE’s.

Watch out this space for further development and part 2 of this article.

[1] (2016) 227 DLT 302

[2] EX.P. 275/2012 & EX.APPL.(OS) 221/2018.

[3] EX.P. 275/2021 & EX.APPL.(OS) 193/2020.

[4] EX.P. 275/2021 & E.A. 193/ 2020

[5] The oral prayer/application of the decree-holder for issuance of such direction shall be considered sufficient compliance of Order XXI Rule 41(2) of the CPC.

[6] If the decretal amount if deposited within 30 days of the receipt of the notice, the judgment debtor is not required to file the affidavit/additional affidavit before the Court.

[7] OMP(ENF)(COMM) 82/2019, judgment dated June 18, 2021.

[8] Supra

[9] Suits against foreign Rulers, Ambassadors and Envoys.

[10] Also see DHC Original Sides, Chapter XXIV, Rule 11- Deposit with warrant of arrest—With every application for warrant of arrest, before or after judgment, a sum of Rs.10,000/- shall be deposited with the Registrar for the intermediate subsistence of the judgment-debtor, pursuant to Order XXI, Rule 39(1) to (4) of the Code.

[11] Prohibition of arrest or detention of women in execution of decree for money.- Notwithstanding anything in this part, the court shall not order the arrest or detention in the civil prison of a woman in execution of a decree for the payment of money.

[12] Supra Pt. 3

[13] 199. False statement made in declaration which is by law receiva­ble as evidence.-Whoever, in any declaration made or subscribed by him, which declaration any Court of Justice, or any public servant or other person, is bound or authorised by law to receive as evidence of any fact, makes any statement which is false, and which he either knows or believes to be false or does not believe to be true, touching any point material to the object for which the declaration is made or used, shall be punished in the same manner as if he gave false evidence.

[14] 191. Giving false evidence.-Whoever, being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration upon any subject, makes any statement which is false, and which he either knows or be­lieves to be false or does not believe to be true, is said to give false evidence.

[15] 193. Punishment for false evidence.-Whoever intentionally gives false evidence in any stage of a judicial proceeding, or fabri­cates false evidence for the purpose of being used in any stage of a judicial proceeding, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine, and whoever intentionally gives or fabricates false evidence in any other case, shall be punished with imprisonment of either de­scription for a term which may extend to three years, and shall also be liable to fine.

[16] 209. Dishonestly making false claim in Court.-Whoever fraudu­lently or dishonestly, or with intent to injure or annoy any person, makes in a Court of Justice any claim which he knows to be false, shall be punished with imprisonment of either descrip­tion for a term which may extend to two years, and shall also be liable to fine.

[17] Supra

[18] 165. Judge’s power to put questions or order production.-The Judge may, in order to discover or to obtain proper proof of relevant facts, ask any question he pleases, in any form, at any time, of any witness, or of the parties, about any fact relevant or irrelevant; and may order the production of any document or thing; and neither the parties nor their agents shall be entitled to make any objection to any such question or order, nor, without the leave of the Court, to cross-examine any witness upon any answer given in reply to any such question: Provided that the Judgment must be based upon facts declared by this Act to be relevant, and duly proved: Provided also that this section shall not authorize any Judge to compel any witness to answer any question, or to produce any document which such witness would be entitled to refuse to answer or produce under sections 121 to 131, both inclusive, if the questions were asked or the documents were called for by the adverse party; nor shall the Judge ask any question which it would be improper for any other person to ask under section 148 or 149; nor shall he dispense with primary evidence of any document, except in the cases hereinbefore excepted.

[19] Ved Parkash Kharbanda Vs. Vimal Bindal (2013) 198 DLT 555

[20] id.

[21] Costs after taxation.—The Court may allow, after preparation and signing of decree, only such costs as it deems fit and appropriate incurred by a party for effecting transmission of the decree to another court. In addition, the Court executing the decree/ the executing court may also award costs of execution as it considers fit and appropriate, in accordance with these Rules/ rules applicable to the executing court.

[22]Skechers U.S.A Inc. v. Pure Play Sports; Delhi High Court vide order dated 14.10.2019 in Ex P. 81 of 2018

[23] Daiichi Sankyo Company Ltd. v. Malvinder Mohan Singh; Delhi High Court vide order dated 11.10.2019 in O.M.P (EFA) (Comm) 6 of 2016; Also see Skechers U.S.A Inc. v. Pure Play Sports; Delhi High Court vide order dated 19.11.2019 in Ex P. 81 of 2018

[24] Rahul S Shah Vs. Jinendra Kumar Gandhi and Ors., Civil Appeal No. 1659-1660 of 2021, judgment dated April 22, 2021

[25] EFA (OS) (COMM) No. 4/2021, Judgment dated July 5, 2021

[26] Supra

Authors:
Abhimanyu Chopra, Partner
Aishwarya Modi, Associate

Date: July 17, 2021