Saturday, March 30, 2024

ORDER XXI OF CPC & OBSTACLES IN EXECUTION PROCEEDINGS

 


ORDER XXI of CPC & Obstacles in execution PROCEEDINGS

In the very anvil, it may be apt to refer to observation of Supreme Court in a matter reported as Satyawati v. Rajinder Singh, (2013) 9 SCC 491. While quoting the Privy Council‘s judgment of 1872, the Supreme Court has observed that “difficulties of a litigant in India begin when he has obtained a decree and the position has not improved and the decree-holders still face the same problems. The Supreme Court further observed that 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 successful litigant would be in vain.

The aforesaid observation is not only succinct, but displays the travail and trauma of a successful litigant. After adjudication of suit the other aspect is enforcement of the judgment/decree or order. In case, the judgment/decree/order is not complied with, the successful plaintiff/petitioner/ applicant shall have to prefer execution petition for seeking enforcement of judgment/decree/ award/ order etc. The observation of supreme court in the backdrop of malaise and/or ordeal of successful petitioner could therefore be understood. Ironically, after having succeeded the full dress trial process, when the successful petitioner seeks to reap the fruit of its efforts, the ordeal begins and dilatory tactics and efforts of frustrating decree by the judgment debtor begin. The stumbling block is faced and numerous objections are raised by the judgment debtor with a view to frustrate the judgment/decree and the decree holder is left with a paper decree. The courts, therefore, have onerous duty cast on it to enforce its own judgment/decree. The Executing Court is mandated to ensure that a proper affidavit of assets by the judgment-debtor is filed and it should not be reduced to a mere ritual or formality.

Yet another dimension to the execution of judgment/decree is defence of judgment debtor as regards their insolvency or inability to pay, right or wrong and the courts has to come to the bottom of the case. The Executing courts are empowered to ascertain the assets and income of the judgment-debtor to determine, whether the judgment-debtor has the means to satisfy the money decree. The law mandates a comprehensive format of affidavit of assets, income, expenditure and liabilities to be filed by the judgment-debtor at the very inception of execution proceedings with a view to know the financial means of judgment-debtor.

                 PROVISIONS IN CODE OF CIVIL PROCEDURE

The Order XXI of the Code of Civil Procedure lays down the procedure for the execution of the decree. Order XXI Rule 1(b) of the Code of Civil Procedure enables the judgment-debtor to directly pay the decretal amount to the decree-holder. Order XXI Rule 1(a) of the Code of Civil Procedure gives an option to the judgment-debtor to deposit the decretal/award amount with the Executing Court and give the notice of deposit to the decree-holder under Order XXI Rule 1(2) of the Code of Civil Procedure.

There are Form 16A of Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure to ascertain all the assets, income, expenditure and liabilities of the judgment-debtor. However, this may not be exhaustive.

The stage of execution arises, only, when, the judgment-debtor does not satisfy the decree/award. The decree-holder is thus, often compelled to initiate the execution proceedings. If the decree-holder is aware of the assets of the judgment debtor, the Executing Court can attach the assets of judgment debtor in the very beginning of the execution proceedings and the attached properties could be sold in realization of decree. However, if the decree-holder is not aware about the assets and income of the judgment-debtor, the Executing Court is required to direct the judgment-debtor to disclose its assets in Form 16A of Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure. It may however be noted that Form 16A of Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure may not be exhaustive in itself in ascertaining all the assets and income of the judgment-debtor. This causes delay. The Delhi High Court after perusing have assimilated the best Practices adopted by the developed countries while laying down the guidelines for expeditious execution proceedings.

                 ROLE OF EXECUTING COURT

The Executing Court is empowered to restrain the judgment-debtor from transferring, alienating or disposing of or otherwise parting with the possession of any assets to the tune of the decretal/award amount except in the ordinary course of business. The Executing Court may also restrain the judgment-debtor from discharging any financial liability, other than the statutory liabilities without the permission of the Executing Court. The Executing Court may adopt the aforesaid measure in the very initial stage itself.

If the judgment-debtor fails to appear before the Court upon service of notice, the Executing Court may secure his presence by issuing bailable warrants and and/or non-bailable warrants as per law. In case of delay in filing the prescribed aforesaid within the stipulated time, the Executing Court is empowered to send the judgment debtor to civil prison for the term not exceeding three months under Order XXI Rule 41(3) of the Code of Civil Procedure. In such an event, though, the decree-holder is required to deposit the subsistence allowance with the Executing Court for detention of the judgment-debtor. Once, the subsistence amount is deposited, the Executing Court shall issue non-bailable warrants against the judgment-debtor for his detention.

The powers under Sections 30 and 151 and Order XXI Rule 41 of the Code of Civil Procedure read with Sections 106 and 165 of the Indian Evidence Act could be used and in case of High Court, even power under Article 227 of the Constitution of India could be used.

Affidavit of assets and income of the judgment- debtor;  Affidavit of assets and income of a proprietorship firm / partnership firm / HUF / company / trust as a judgment-debtor; and affidavit of expenditure of the judgment debtor are contemplated for realization of debt. The aforesaid affidavits are to be very comprehensive and are useful to determine whether the judgment-debtor has the means to satisfy the decree/award and the judgment debtor is required to disclose in the affidavits, his 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.

Arrest and Detention of the Judgment-Debtor

The Order XXI Rule 37 contains provision for show cause notice to the judgment-debtor against detention in the civil prison; Order XXI Rule 38 contains the provision relating to warrants of arrest to the judgment-debtor; Section 57 and Order XXI Rule 39 contains the provisions relating to subsistence allowance for the judgment-debtor and Order XXI Rule 40 contains the provision relating to proceedings on appearance of the judgment-debtor. Sections 51(c), 55 to 59 and Order XXI Rules 37 to 40 of the Code of Civil Procedure prescribe the procedure to be followed for detention of the judgment-debtor in the civil prison.

Section 60 gives the list of properties which are liable to attachment and sale whereas the Proviso to Sub-Section (1) of Section 60 gives the list of properties which are exempted from attachment or sale. Section 60 of the Code of Civil Procedure is reproduced hereunder: ―

Section 60 - Property liable to attachment and sale in execution of decree.

(1) The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a corporation and save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf: Provided that the following particulars shall not be liable to such attachment or sale, namely:—

(a) the necessary wearing-apparel, cooking vessels, beds and bedding of the judgment-debtor, his wife and children, and such personal ornaments as, in accordance with religious usage, cannot be parted with by any woman;

(b) tools of artisans, and, where the judgment-debtor is an agriculturist, his implements of husbandry and such cattle and seed-grain as may, in the opinion of the Court, be necessary to enable him to earn his livelihood as such, and such portion of agricultural produce or of any class of agricultural produce as may have been declared to be free from liability under the provisions of the next following section;

(c) houses and other buildings (with the materials and the sites thereof and the land immediately appurtenant thereto necessary for their enjoyment) belonging to an agriculturist or a labourer or a domestic servant and occupied by him;

(d) books of account;

(e) a mere right to sue for damages;

(f) any right of personal service;

(g) stipends and gratuities allowed to pensioners of the Government or of a local authority or of any other employer, or payable out of any service family pension fund notified in the Official Gazette by the Central Government or the State Government in this behalf, and political pensions;

(h) the wages of labourers and domestic servants, whether payable in money or in kind;

(i) salary to the extent of the first one thousand rupees and two-thirds of the remainder in execution of any decree other than a decree for maintenance.

In appropriate cases, the Executing Court may issue any of the following directions:-

(i)          Issue notice and direct the Garnishee(s) to deposit in Court the amount due to the judgment-debtor as per law;

(ii)        (ii) 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;

(iii)      Direct the auditor of the judgment-debtor company to submit a report with respect to the affairs of the judgment-debtor company;

(iv)      Permit the decree holder to serve interrogatories on the auditors of the judgment debtor;

(v)        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;

(vi)       Appoint a receiver in respect of the attached properties of the judgment debtor; and

(vii)     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.

 

FALSE AFFIDAVIT BY JUDGMENT D$EBTOR: EFFECT

If the judgment-debtor makes a false claim/statement in his/her affidavit, the decree-holder is at liberty to invoke Section 340 Cr.P.C for prosecution of the judgment-debtor under Section 209 of IPC. If a false claim is made before a Court, in the first instance, the court may issue a show cause notice to the judgment-debtor as to why a complaint be not made under Section 340 Cr.P.C. for having made a false claim under Section 209 of the Indian Penal Code? The court may proceed to make a complaint under Section 340 Cr.P.C. The Court need not order a preliminary inquiry, however, in case of strong suspicion, , the Court may order a preliminary inquiry and can direct the State agency to investigate and file a report along with such other evidence that they are able to gather. Once it prima facie appears that an offence under Section 209 IPC has been made out, the court can make a complaint under Section 340 Cr.P.C. (Ref: Sanjeev Kumar Mittal v. State, 174 (2010) DLT 214). The reference may be have to H.S. Bedi v. National Highway Authority of India, 2016 (227) DLT 129 for principles relating to Section 209 IPC.

             Probing of judgment debtor by executing court

The Executing Court may also examine the judgment-debtor under Section 165 of the Indian Evidence Act to elicit the truth. The principles relating to it are illustrated in Ved Parkash Kharbanda v. Vimal Bindal, (2013) 198 DLT 555.

In Mohanlal Shamji Soni v. Union of India, 1991 Supp (1) SCC 271, the Supreme Court observed that the presiding officer of a Court should not simply sit as a mere umpire at a contest between two parties and declare at the end of the combat who has won and who has lost. The presiding officer has a legal duty of his own, independent of the parties, to take an active role in the proceedings in finding the truth and administering justice.

In Chandra Shashi v. Anil Kumar Verma, (1995) 1 SCC 421, the Supreme Court observed that to enable the Courts to ward off unjustified interference in their working, those who indulge in immoral acts like perjury, pre-variation and motivated falsehoods have to be appropriately dealt with, without which it would not be possible for any Court to administer justice in the true sense and to the satisfaction of those who approach it with the hope that truth would ultimately prevail. People would have faith in Courts when they would find that truth alone triumphs in Courts.

In Zahira Habibullah Sheikh v. State of Gujarat, (2006) 3 SCC 374, the Supreme Court observed that right from the inception of the judicial system it has been accepted that discovery, vindication and establishment of truth are the main purposes underlying existence of Courts of justice.

In Himanshu Singh Sabharwal v. State of Madhya Pradesh, (2008) 3 SCC 602, the Supreme Court held that the trial should be a search for the truth and not about over technicalities.

In Maria Margarida Sequeria Fernandes v. Erasmo Jack de Sequeria, (2012) 5 SCC 370, the Supreme Court again highlighted the significance of truth and observed that the truth should be the guiding star in the entire legal process and it is the duty of the Judge to discover the truth to do complete justice. The Supreme Court further stressed that the Judge has to play an active role to discover the truth and he should explore all avenues open to him in order to discover the truth.

                              CONCLUSION

The Executing Courts are conferred with powers of very wide amplitude and the wherewithal is accorded to the courts to deal with the delinquent judgment debtors, who takes all steps with a view to frustrate the decree holder from reaping the fruit of its success obtained after full dress trial. It is consistently held by the Supreme Court that efforts should be made to ensure that decree in the hand of decree holder shall not be a mere paper decree. This is essential for re-imposing and reinforcing the trust of common people in the courts of law and its prowess and ability in getting enforced the orders passed by it. The courts are equipped with comprehensive powers under Order XXI and rules framed thereunder, besides courts may also invoke the power in sync with evolving laws. It is no doubt true that the judgment debtors, firstly tires the claimant/plaintiff by exhausting his efforts in contesting the suit or a lis, and the tyranny of the decree holder does not abate then, since, another round of efforts in execution proceedings shall await him. The mere plea of judgment debtor  “no means to pay”  should be stringently probed and in case of wrong and mala fide assertion of “no means” exemplary punitive measure within short time frame shall be the need of the hour so as to deter the delinquent judgment debtor.

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                              Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com

 

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