2021 (7) TMI 1430 - HC - Indian Laws

Maintainability of appeal - Condonation of delay in filing appeal - whether a claim made by one against the other and controverted by the other, on adjudication thereof, whether by the Court or by the Arbitrator, ceases to be a dispute , for it to be said that the proceedings for execution of adjudication of a commercial dispute, whether by way of a decree or an arbitral award, do not qualify as a dispute ? Maintainability of appeal - HELD THAT - The amendment to Section 13, while splitting up the erstwhile sub-section (1) of Section 13 into two subsections, 13(1) and 13(1A) as aforesaid, did not alter the proviso thereto, and the amended proviso is in pari materia to erstwhile proviso to Section 13(1). Though in Delhi there are no Commercial Courts below the level of the District Judge but since both, Section 13(1) and Section 13(1A) provide for appeals arising from commercial disputes and there being nothing in the proviso to indicate that the same is applicable only to Section 13(1A), it is concluded that the proviso applies to both, Section 13(1) as well as Section 13(1A). The subject matter of arbitration in the present case was a commercial dispute of a specified value, within the meaning of Section 10 of the Arbitration Act. To be fair to the senior counsels for the judgment debtors, they did not seriously controvert the aforesaid. Their contention however was that since this appeal does not arise out of arbitration under the provisions of the Arbitration Act, within the meaning of Section 10(2) of the Arbitration Act, the execution was not within the jurisdiction of the Commercial Division and the appeal thereagainst does not lie to the Commercial Appellate Division, under Section 13 of the Commercial Courts Act. It was further contended that the Arbitration Act is concerned only with the arbitration proceedings and challenge to the arbitral award and is not concerned with execution of the arbitral award, with the Act, in Section 36 merely providing for the award to be executed as a decree of the Civil Court in accordance with the provisions of the CPC. It was contended that the Execution Petition is thus not an application arising out of arbitration under the Arbitration Act, to be entertained by the Commercial Division of this Court - Needless to state, this question also was not raised before and has not been considered by the Commercial Division in any of the orders in the subject execution proceedings. Whether Execution Petitions are applications within the meaning of Sections 10, 12, 6 and 7 of the Commercial Courts Act? - HELD THAT - A claimant in a dispute is not interested merely in adjudication thereof. The claimant is interested in delivery to him, of what he claims to be due and what has been adjudicated to be due to him from the opposite party - To hold that the Commercial Courts/Commercial Divisions would not have jurisdiction over applications for execution of a judgment or decree or for enforcement of an arbitral award, subject matter whereof was a commercial dispute, would in our opinion sound the death knell for the objective behind setting up of the Commercial Courts and the Commercial Divisions. Order XXI Rule 11(2) of the CPC provides that every 'application' for execution of a decree shall be in writing, signed and verified. Thus the CPC, in accordance wherewith an arbitral award is to be executed/enforced, envisages such execution to be by way of an 'application' and since the jurisdiction of the Commercial Courts/Commercial Divisions extends vide Sections 6 and 7 of the Commercial Courts Act extends, besides over suits, also over applications relating to commercial disputes, such jurisdiction would also extend over execution applications - Execution of a decree of the Court, per Section 38 of the CPC, has to be by the same Court which passed the decree. Since the jurisdiction over arbitrations subject matter whereof is a commercial dispute, is of the Commercial Courts/Commercial Divisions, applying Section 38 of the CPC, the jurisdiction for enforcement of awards of arbitration subject matter whereof is a commercial dispute, has to be of the Commercial Courts/Commercial Divisions. It is not as if Order XLIII of the CPC, to orders specified wherein the right of appeal against orders is confined by the proviso after Section 13(1A), does not cater to any orders in the course of an execution. Order XLIII Rule 1(j) and (ja) provide for appeals against orders passed in the course of an execution proceeding. Of course, an order under Order XXI Rule 41 is not covered therein but in view of the dicta of this Court in D H INDIA LTD. VERSUS SUPERON SCHWEISSTECHNIK INDIA LTD. 2020 (3) TMI 1458 - DELHI HIGH COURT , the appeal against such an order would also be maintainable. Applicability of M/S BHANDARI ENGINEERS BUILDERS PVT LTD VERSUS M/S MAHARIA RAJ JOINT VENTURE, M/S YOU ONE MAHARIA (JV) DELHI ORS. 2020 (8) TMI 933 - DELHI HIGH COURT - HELD THAT - The first source of power referred to, is Section 151 of the CPC. Section 151 however merely saves the inherent power of the Court and provides that nothing in the CPC shall be deemed to limit or otherwise affect the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. The exercise of power under Section 151 is however restricted to the facts of a particular case before the Court and does not extend to issuing any general direction, to be abided by all courts in all cases of execution of money decree. Thus, in exercise of power under Section 151, the Court, in Bhandari Engineers Builders Pvt. Ltd. supra, could have made/pass order/s only to meet the ends of justice or to prevent the abuse of the process of Court, in the facts of that case and could not have issued a mandate or direction of a general nature. For the Court/Commercial Division in Bhandari Engineers Builders Pvt. Ltd., to exercise powers under Section 151 of the CPC, it was necessary for the Court/Commercial Division to first hold that there was no provision in the CPC or any other law to meet the exigency which had arisen. Not only did the Commercial Division in Bhandari Engineers Builders Pvt. Ltd. not hold so but has itself in the judgment referred to Order XXI Rule 41 of the CPC and rather identified that also as a source of power to do what has been done therein. Order XXI Rule 41 read with Form 16A in Appendix-E of the CPC and Order XLVIII Rule 3 of the CPC are precisely for the same exigency with which the learned Judge in Bhandari Engineers Builders Pvt. Ltd. was concerned i.e. holder of a money decree being unaware of the assets of the judgment debtor. Order XXI Rule 41 of the CPC enables such a decree holder to apply thereunder to the Court for a direction to the judgment debtor to disclose his assets and further empowers the Court to direct the judgment debtor to disclose his assets in Form 16A in Appendix-E of the CPC. Though Order XLVIII Rule 3 permits the Court to order variation in the forms given in the appendices to CPC but only to the extent as the circumstances of each case may require . Inherent jurisdiction of the Court must be exercised subject to the Rule that if the Code does contain specific provisions which would meet the necessities of the case, such provision should be followed and inherent jurisdiction should not be invoked. Section 151 cannot be invoked where a party has his remedy provided in the Code and has neglected to avail himself of the same. The next Source of power relied upon by the Court in Bhandari Engineers Builders Pvt. Ltd, is Sections 106 and 165 of the Indian Evidence Act. Section 106 provides that where any fact is especially within the knowledge of any person, the burden of proving that fact is upon that person. Section 165 empowers the Court to ask any question at any time to any party about any fact relevant or irrelevant. The powers under the said provisions also, are to be exercised in the facts of a particular case and do not extend to issuing a general direction. The powers under Section 106 and 165 of the Evidence Act have to be construed harmoniously with the provisions of the CPC - The Court, in Bhandari Engineers Builders Pvt. Ltd. has lastly drawn power from Article 227 of the Constitution of India, to issue the directions as issued therein. Article 227 vests in every High Court, the power of superintendence over all Courts and Tribunals throughout its territory, in relation to which it exercises jurisdiction and to make and issue general rules and prescribe format for regulating the practice and proceedings of such Court. Bhandari Engineers Builders Pvt. Ltd., to the extent extends what is laid down therein to execution proceedings pertaining to all money decrees and to all courts executing a money decree, cannot said to be good law. Axiomatically, what is held in Bhandari Engineers Builders Pvt. Ltd. could not have been followed in the execution proceedings from which this appeal arises - Once it is so, the impugned orders have no other reason whatsoever for directing the judgment debtors to file the affidavits and which are liable to be set aside on this ground alone. As per the existing provisions of Order XXI Rule 41 of the CPC, the Commercial Division, in our view erred in issuing direction to judgment debtors to file affidavits and affidavits in a form other than as prescribed in the CPC. The impugned orders do not record that the decree holder had applied therefor, verbally or in writing. A direction under Order XXI Rule 41 could not have been issued without the decree holder applying therefor - No merit is found in the contention of the counsel for the respondent no. 1/decree holder, that the judgment debtors having not challenged the order dated 3rd December, 2019, are not entitled to challenge the subsequent orders. The order dated 3rd December, 2019 stood substituted by the order dated 23rd December, 2019 and not challenging the order dated 3rd December, 2019 which ceased to exist, cannot deprive the judgment debtors from challenging the order dated 23rd December, 2019. The impugned orders, to the extent directing the judgment debtors to file additional affidavits or for that matter affidavits in any form, in exercise of powers under Order XXI Rule 41 of the CPC, are set aside - Appeal disposed off.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Maintainability of the appeal.
3. Merits of the appeal, particularly the direction for filing affidavits of assets by judgment debtors.

Detailed Analysis:

1. Condonation of Delay:
The appellants attributed the delay of 346 days in filing the appeal to the suspension of the period of limitation during the Covid-19 pandemic and the illness of appellant no. 2. The respondent no. 1 did not seriously contest the application for condonation of delay. The Supreme Court had suspended the period of limitation vide orders dated 23rd March 2020 and 8th March 2021. Therefore, the application for condonation of delay was allowed, and the appeal was considered on merits.

2. Maintainability of the Appeal:
The appeal was filed under Section 13(1A) of the Commercial Courts Act, 2015. The senior counsel for the appellants argued that the Commercial Division's orders were inconsistent with the provisions of the CPC and that the appeal was maintainable. The court considered the arguments and the relevant provisions of the Commercial Courts Act and the CPC. It was concluded that the appeal was maintainable, as the orders were not in accordance with the prescribed procedure under Order XXI Rule 41 of the CPC.

3. Merits of the Appeal:
The main contention was the direction to the judgment debtors to file additional affidavits of assets. The appellants argued that:
- The Commercial Division issued directions without any application from the decree holder and without the decree remaining unsatisfied for 30 days, as required under Order XXI Rule 41(2) of the CPC.
- The decree holder was already aware of the assets of the judgment debtors, and the arbitral award secured the decree holder by allowing possession of an immovable property until payment.
- The affidavits required by the Commercial Division contained extensive and confidential information, infringing on the judgment debtors' right to privacy.

The court found merit in the appellants' arguments and noted that the Commercial Division had spent over a year directing the filing of additional affidavits instead of proceeding with the attachment and sale of the assets. The court emphasized that the direction for filing affidavits should be issued only when necessary and in accordance with the specific provisions of the CPC.

The court also addressed the correctness of the dicta in Bhandari Engineers & Builders Pvt. Ltd., which was the basis for the impugned orders. It was concluded that the directions in Bhandari Engineers & Builders Pvt. Ltd. could not be applied universally to all execution proceedings for money decrees, as they were beyond the scope of the court's powers under Section 151 and Order XXI Rule 41 of the CPC.

Conclusion:
The impugned orders directing the judgment debtors to file additional affidavits were set aside. The Commercial Division was directed to proceed with the execution of the decree in accordance with the law. The appeal was disposed of with no costs.