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Order XXI Rule 41(2) of CPC can only be invoked by an application filed on behalf of the decree holder: High Court of Delhi

Power under Order XXI Rule 41(2) of the CPC can only be invoked by an application only in respect of the judgment debtor. The affidavit of assets can only be directed to be filed upon an application on behalf of the decree holder under Order XXI Rule 41(2) of the CPC. Such a direction cannot be passed suo motu by the Executing Court. These were stated by High Court of Delhi, consisting Justice Amit Bansal in the case of G.S Sandhu & Anr. vs. Geeta Aggarwal [CM(M) 1399/2019] on 14.01.2022.

The facts of the case are that the respondent instituted a suit under Order XXXVII of the Code of Civil Procedure, 1908  for recovery of Rs.13,56,625 against the judgment debtor company. The said suit was decreed in favour of the respondent on 06th July, 2012 for a sum of Rs.6,00,000/- along with interest. 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. 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 were no further assets in the judgment debtor company. Vide the impugned order, 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.

The Counsel for the petitioners contended that the petitioners were neither parties in the suit filed by the respondent, nor were any averments made against the petitioners in the plaint and 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 petitioner. It was further stated that the petitioners, being directors of the judgment debtor company were not parties to the suit which was decreed in favour of the respondent. The 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 under Order XXI of the CPC the directors of the judgment debtor company cannot be asked to file their list of assets.

The Counsel for the respondent contended that only the petitioner no.1 has complied with the order passed by this Court to comply with the direction of the Executing Court however, the petitioner no.2 has failed to comply with the same. Further, it was contended that the petitioner no.1 has falsely stated in his affidavit that judgment Debtor Company does not own any immovable property. Reliance in this regard was placed from the balance sheet of the judgment debtor company and also it was falsely stated in the affidavit of the petitioner no.1 that all movable assets of the judgment debtor company were disposed of through auction and proceeds given to the decree holder. While admitting that the petitioners were not parties in the suit or in the execution proceedings, the counsel for the decree holder contended that specific allegations were made in respect of the petitioners in the application filed on behalf of the decree holder under Order XXI Rule 37 and that the petitioners were guilty of making false statement and fraud.

The High Court of Delhi held that Order XXI Rule 37 does not provide for a judgment debtor or its directors to file their list of assets. A prayer was not made in the aforesaid applications filed on behalf of the decree holder for the petitioners or the judgment debtor company to disclose their list of assets. Therefore, there was no occasion for the Executing Court to pass the impugned order directing the petitioners to file their list of assets under the provisions of Order XXI Rule 37 of the CPC. Further, the power under Order XXI Rule 41(2) of the CPC can only be invoked upon an application filed on behalf of the decree holder and in the present case, admittedly, no application has been filed by the decree holder under Order XXI Rule 41(2) of the CPC. Even in respect of the judgment debtor, the 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 the CPC. Such a direction cannot be passed suo motu by the Executing Court. Therefore, it was observed by the Court that the Executing Court committed an error in issuing direction to the petitioners to file affidavits. In view of the above, the directions contained in the impugned order dated 13th August, 2019 directing the petitioners to file an affidavit disclosing their personal assets could not be sustained and were set aside.

Judgment reviewed by Shristi Suman. Read Judgment

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