Delhi High Court
Mohan Investments And Properties ... vs Sai Aaina Farms Private Limited And Anr on 15 February, 2022
Author: C.Hari Shankar
Bench: C.Hari Shankar
NEUTRAL CITATION NO: 2022/DHC/000716
$~21(Original Side)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP (ENF.) (COMM.) 127/2021, EX.APPL.(OS) 1037/2021
& EX.APPL.(OS) 1254/2021
MOHAN INVESTMENTS AND PROPERTIES PRIVATE
LIMITED ..... Decree Holders
Through: Mr. Neeraj Kishan Kaul, Sr.
Adv., Mr. Jayant K Mehta, Sr.
Adv. with Mr. Hardeep
Sachdeva, Mr. Kamal Shankar,
Mr. Abhishek Awasthi, Mr.
Pradyumna Sharma, Mr.
Ramchandra, Ms. Shilpa Ohri,
Ms. Smiti Verma, Ms. Ira
Mahajan, Ms. Aarzoo Aneja,
Advs.
versus
SAI AAINA FARMS PRIVATE LIMITED AND ANR
..... Judgement Debtors
Through: Mr. Vidit Gupta, with Mr. B.K.
Deka, Advs.
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
JUDGEMENT (ORAL)
% 15.02.2022 (By Video-Conference on account of COVID-2019) EX.APPL.(OS) 1254/2021 (under Order XXI, Rule 23(2), read with Section 141 & 151 of CPC, 1908)
1. This is an application preferred by the respondent/ judgment / award debtors in OMP (ENF)(COMM) 127/2021, which has been filed by the beneficiaries of an arbitral award, dated 23 rd November, 2019, casted consequent to arbitral proceedings between the award holders and the award debtors, who would be referred to, for OMP (ENF.) (COMM.) 127/2021 Page 1 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 convenience, as the petitioners and the respondents respectively.
2. Notice was issued in the present execution petition, by this Court, on 16th August, 2021. On the said date, the respondents were also directed to file affidavits of their assets on the date of cause of action, the date of award, as well as on that date, i.e. 16th August, 2021 in Form 16A, Appendix E under Order XXI, Rule 41(2) of the Code of Civil Procedure, 1908, (CPC), before the next date of hearing.
3. Subsequently, EA(OS) 1037/2021 was filed by the respondents, seeking modification of the order dated 16th August, 2021. In the said application, the respondents categorically objected to the direction, by this Court, to the respondents, to file their list of assets on the date of cause of action, the date of award, as well as on 16 th August, 2021. A modification of the order dated 16th August, 2021, doing away with the aforesaid requirement was, therefore, sought.
4. The respondents also filed the present application EA(OS) 1254/2021, for dismissal of the present execution petition on the ground of want of territorial jurisdiction. Prayer (c) in the present application, specifically seeks that the present application be decided before deciding EA(OS) 1037/2021. Today, too, learned Counsel for the applicant/ respondents has reiterated the request that the present application be taken up first and decided prior to EA(OS) 1037/2021.
5. Accordingly, acceding to the request, this Court has heard learned Counsel for both sides on the present application, i.e. EA(OS) OMP (ENF.) (COMM.) 127/2021 Page 2 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 1254/2021. In view of the specific request by the applicant in this application for deciding this application prior to EA(OS) 1037/2021, which seeks modification of the order dated 16 th August, 2021, passed by this Court, the present application has necessarily to be decided assuming the order dated 16th August, 2021, to be valid and binding.
6. Mr. Vidit Gupta, learned Counsel appearing for the applicant in the present application, submits that these execution proceedings are bad for want of territorial jurisdiction, as the respondents have no asset within the territorial jurisdiction of this Court and are not resident or situated within the said territorial jurisdiction. He has invited my attention to the addresses of the respondents, as provided in the execution petition, which are at Gurgaon. He has also drawn my attention, to Para 9 of the present application, which reads as under:
―9. That it is a Fundamental Principle of law that an Executing Court can entertain an Execution Petition provided either the mortgaged and/or charged properties or the assets, moveable and immovable, the Judgment Debtors are situated within the territorial jurisdiction of this Hon'ble Court. Admittedly, in the present case, neither the Judgement Debtors reside, work for gain nor they have any assets, movable or immoveable within the territorial jurisdiction of this Hon'ble Court.‖
7. Mr. Gupta, drew my attention to Section 39(4) of the CPC, 1908, to support his submission. For ready reference, Section 39 of the CPC, 1908, may be reproduced in its entirety thus:
―39. Transfer of decree - (1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court [of competent jurisdiction],--
(a) if the person against whom the decree is passed actually and voluntarily resides or carries OMP (ENF.) (COMM.) 127/2021 Page 3 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or
(b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or
(c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or
(d) if the Court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.
(2) The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.
(3) For the purposes of this section, a Court shall be deemed to be a Court of competent jurisdiction if, at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed.
(4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction.‖
8. Mr. Gupta also places reliance on Section 32 of the Arbitration and Conciliation Act, 1996, (―the 1996 Act‖), which reads as under:
―32. Termination of proceedings --(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2).
(2) The arbitral tribunal shall issue an order for the OMP (ENF.) (COMM.) 127/2021 Page 4 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 termination of the arbitral proceedings where--
(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.‖
9. Mr. Gupta submits that, in view of Section 32, arbitral proceedings stand terminated with the passing of an award, and, thereafter, execution proceedings have to abide by the discipline of the CPC, 1908. The aspect of territoriality, which attaches to the arbitral proceedings and to the arbitral award cannot, therefore, be relevant in so far as the territorial jurisdiction to deal with execution proceedings for enforcement of the award is concerned.
10. Mr. Gupta has placed reliance on the judgments of the Supreme Court in Mohit Bhargava vs. Bharat Bhushan Bhargava1 and Sundaram Finance Ltd. vs. Abdul Samad2, as well as my decision in Matrix Partners India Investment Holdings vs. Shailendra Bhadauria3, and the order of a coordinate Bench of this Court in 1 (2007) 4 SCC 795 2 (2018) 3 SCC 622 3 2021 SCC Online DEL 4917 OMP (ENF.) (COMM.) 127/2021 Page 5 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 Continental Engineering Corporation vs. Sugesan Transport Pvt. Ltd.4. The passages from the said decisions, to which Mr. Gupta alludes, may be reproduced thus:
From Mohit Bhargava vs. Bharat Bhushan Bhargava1
7. There cannot be any dispute over the proposition that the court. Which passed the decree is entitled to execute the decree. This is clear. from Section 38 of the Code which provides that a decree may be executed either by the court which passed it or by the court to which it is sent for execution. Section 42 of the Code indicates that the transferee court to which the decree is transferred for execution will have the same powers in executing that decree as if it had been passed by itself. A decree could be executed by the court which passed the decree so long as it is confined to the assets within its own jurisdiction or as authorised by Order 21 Rule 3 or Order 21 Rule 48 of the Code or the judgment-debtor is within its jurisdiction, if it is a decree for personal obedience by the judgment-debtor. But when the property sought to be proceeded against, is outside the jurisdiction of the court which passed the decree acting as the executing court, there was a conflict of views earlier, some courts taking the view that the court which passed the decree and which is approached for execution cannot proceed with execution but could only transmit the decree to the court having jurisdiction over the property and some other courts taking the view that it is a matter of discretion for the executing court and it could either proceed with the execution ·or send the decree for execution to another court. But this conflict was set at rest by Amendment Act 22 of 2002 with effect from 1-7-2002, by adopting the position that if the execution is sought to be proceeded against any person or property outside the local limits of the jurisdiction of the executing court, nothing in Section 39 of the Code shall be deemed to authorise the court to a proceed with the execution. In the light of this, it may not be possible to accept the contention that it is a matter of discretion for the court either to proceed with the execution of the decree or to transfer it for execution to the court Within the jurisdiction of which the property is situate.4
Judgment dated 10th January, 2022 in OMP(ENF)(COMM) 38/2021 OMP (ENF.) (COMM.) 127/2021 Page 6 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 From Sundaram Finance Ltd. vs. Abdul Samad2
14. We would now like to refer to the provisions of the said Act, more specifically Section 36(1), which deals with the enforcement of the award:
―36. Enforcement.-(1) Where the time for making an application to set aside the arbitral award under Section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 to 1908), in the same manner as if it were a decree of the court."
The aforesaid provision would show that an award is to be enforced in accordance with the provisions of the said Code in the same manner as if it were a decree. It is, thus, the enforcement mechanism, which is akin to the enforcement of a decree but the award itself is not a decree of the civil court as no decree whatsoever is passed by the civil court. It is the Arbitral Tribunal, which renders an award and the tribunal does not have the power of execution of a decree. For the purposes of execution of a decree the award is to be enforced in the same manner as if it was a decree under the said Code.
18. It is in the aforesaid context that the view adopted by the Delhi High Court in Daelim Industrial Co. Ltd. v.
Numaligarh Refinery Ltd. records that Section 42 of the Act would not apply to an execution application, which is not an arbitral proceeding and that Section 38 of the Code would apply to a decree passed by the court, while in the case of an award no court has passed the decree.
From Matrix Partners India Investment Holdings vs. Shailendra Bhadauria3
13. The legal position regarding the appropriate High Court, before which an application for, execution of an arbitral award, could be filed, stands authoritatively exposited by the judgement of the Supreme Court in Sundaram Finance Ltd. v. Abdul Samad. In the said case, the Supreme Court, having ·noticed the conflict of views, among various High OMP (ENF.) (COMM.) 127/2021 Page 7 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 Courts on this aspect, upheld the view - adopted, inter alia, by this Court in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. that execution of an arbitral award could be sought before any Court within whose territorial jurisdiction the assets of the judgement debtor are located. Indeed, Mr. Chandhiok, learned Senior Counsel for the respondents, too, did not dispute this general proposition.
From Continental Engineering Corporation vs. Sugesan Transport Pvt. Ltd.4
12. There is no justification for filing an execution petition before the court within whose jurisdiction the arbitral award was passed, and then seek a transfer to the Court which has jurisdiction over the Judgment Debtor or their properties. Irrespective of the place where the award was passed, it is to be executed by a Court within whose jurisdiction the Judgment Debtor resides, carries on business or his property is situated. Since the Judgment Debtor is admittedly residing within the territorial jurisdiction of the courts at Chennai, such courts would certainly have territorial jurisdiction to enforce the arbitral award. Thus, this Court lacks territorial jurisdiction to entertain the present petition.
11. In view of the law enunciated in these decisions as well as the specific asseverations in the present application to the effect that the respondents have no assets situated within the territorial jurisdiction of this Court, Mr. Gupta submits that the present proceedings are bad on account of want of territorial jurisdiction.
12. I have heard Mr. Neeraj Kishan Kaul and Mr. Jayant Mehta, learned Senior Counsel, by way of response to the submissions of Mr. Gupta.
13. Mr. Kaul submits that the issues raised by Mr. Gupta, are, for the present, largely irrelevant. He submits that, having defaulted in OMP (ENF.) (COMM.) 127/2021 Page 8 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 complying with the direction, of this Court, to file an affidavit of assets, there can be no question of the respondent seeking to dispute the territorial jurisdiction of this Court to entertain the present execution proceedings on the ground that the assets are situated outside the jurisdiction of this Court.
14. Without prejudice, Mr. Kaul, has drawn my attention to the fact that the Settlement Agreement executed between the parties, which forms, the basis of the award of which execution is sought, specifically confers jurisdiction on this Court to deal with all aspects arising from the Settlement Agreement. That apart, he submits that, without complying with the directions issued by this Court, regarding filing of affidavit of assets, the respondents have, nonetheless, placed on record, an affidavit of Respondent 1 and certain affidavits filed by Respondent 2 in contempt proceedings which are pending in the present Court, which indicate that there are assets of the respondents, within the territorial jurisdiction of this Court. Specifically, Mr. Kaul, has pointed out that, in the affidavit of Respondent 2, he has admitted that, among the movable and other assets in his name, are 99% equity shares in M/s DS Home Construction Private Limited, which is located within the territorial jurisdiction of this Court. He also submits that one of the Bank Accounts which are included by Respondent 2 in his assets, as per this affidavit, is Account No. 00921930011621, which pertains to HDFC Bank at Greater Kailash.
15. On this aspect, Mr. Gupta in rejoinder submits, albeit on telephonic instructions, that, though the said account was originally at OMP (ENF.) (COMM.) 127/2021 Page 9 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 the Greater Kailash Bank, it stands transferred to Gurgaon, however, he submits that he would have to take specific instructions in that regard before he can make a categorical statement.
16. Mr. Kaul further draws my attention to the Statement of Accounts of Respondent 1 which have been placed on record with the present application, and the list of sundry debtors in the Statement of Accounts. He submits that the Debtors at Serial Nos. 23,25, 32, 41, 50, 60, 61, 67, 70, 83, 93, 99 and 104 of the sundry debtors are located at Delhi.
17. In any event, submits Mr. Kaul, there can be no question of this Court, on the material on record, coming to any categorical finding that the present execution petition does not lie before it.
18. Mr. Kaul, thereafter, took me through the circumstances in which the Settlement Agreement came to be executed. He has drawn my attention to order dated 21st November, 2019, passed by a coordinate Bench of this Court in OMP(I)(COMM) 54/2019, which reads as under:
"I.A. No. /2019 (to be registered)
1. The parties have amicably settled their disputes by settlement agreement dated 18th November, 2019. The petitioner is seeking permission to place the settlement dated 18th November, 2019 on record and for disposal of I.A.No.15624/2019 in view of the settlement. The petitioner is also seeking an undertaking from the respondent to abide by the terms of the settlement.
2. The settlement agreement dated 18th November, 2019 OMP (ENF.) (COMM.) 127/2021 Page 10 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 is taken on record. Mr.Alakh Niranjan, respondent No.3 and Mr.Satish Kumar, respondent No.4 present in Court along with their counsel undertake to abide by terms of the settlement agreement dated 18th November, 2019. Their undertaking is hereby accepted.
3. Learned counsel for the respondent submits that the undertaking of Mr. Sikandar Singh shall be filed within one week.
4. This application is allowed and I.A.15624/2019 is disposed of in terms of the settlement agreement dated 18th November, 2019.
5. The respondents shall remain bound by the undertaking given to this Court.
6. The pending application is disposed of.
7. Copy of this order be given dasti to counsel for the parties under the signature of the Court Master.‖.
19. Following the aforesaid order, he submits that the learned arbitral tribunal passed the award dated 23rd November, 2019. He has invited my attention to the following paragraphs from the award which basically merely reproduces the Settlement Agreement between the parties:
―In respect of the disputes between the parties above-mentioned, reference was made to this Tribunal for the adjudication of their disputes under the provisions of the Arbitration and Conciliation Act 1996 . During the pendency of the arbitral proceeding the parties have settled their disputes and have jointly applied to this Tribunal for passing an award in terms of the settlement reached between the parties, the terms whereof have been recorded in the settlement agreement executed by the parties on November 18, 2019.
In the circumstances, the Tribunal, hereby passes an award on agreed terms as are recorded in the Settlement Agreement dated November 18, 2019 produced before this Tribunal duly executed, which is appended to this award as Schedule ‗A' and which shall form an integral part of the award and shall always be so read binding the parties to the settlement.‖ OMP (ENF.) (COMM.) 127/2021 Page 11 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716
20. After passing of the aforesaid award, Mr. Kaul submits that the respondent wrote, to the petitioner, on 31st March, 2020, stating that it was conscious of its obligations entailed under the Settlement Agreement and assuring the petitioner in no uncertain terms that the respondent intended to comply with the Settlement Agreement. Further time to do so was sought. Given the recalcitrance of the respondent in complying with their obligations, Mr. Kaul submits that the petitioner had no option but to terminate the Joint Development Agreement between the petitioner and the respondent on 6th April, 2020.
21. Thereafter, on 28th March, 2021, the petitioner has filed IA 2905/2021 in OMP (I)(COMM) 54/2019, for initiating contempt proceedings against the respondent, for non-compliance with the directions issued by this Court, for filing of affidavit of assets and other such matters. Notice stands issued in the said contempt petition which is pending before a coordinate Bench.
22. Mr. Kaul has, thereafter, taken me through various covenants of the Settlement Agreement including Clause 6.2,which reads as under:
―6.2 Jurisdiction The courts at New Delhi shall have the exclusive jurisdiction in relation to matters arising under this Agreement.‖
23. Mr. Kaul also drew my attention, inter alia, to Clause 1.2 of the Settlement Agreement, which deals with consequence of any delays in payment of settlement amount or breach of the agreement and especially invited my attention to Clause 1.2.1, thereunder which reads OMP (ENF.) (COMM.) 127/2021 Page 12 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 thus:
―1.2.1 Notwithstanding anything contained herein, in the event the Promoter and, or SAFPL fail to pay the Settlement Amounts as per the timelines set out in the Section 1.1.3 and 1.1.4, or there is a delay in payment of any tranche of the Settlement Amounts, for any reason whatsoever, or if there is any breach of this Agreement by the Promoter and, or SAFPL, then:
(i) without prejudice to all other the rights available with the Owner under law or equity, the JDA shall stand automatically lapsed/ terminated and in such event:
a. the Promoter and SAFPL shall be absolutely and irrevocably liable to immediately pay the Owner the entire JDA Consideration Amount along with an interest at the rate of 24% (twenty four percent) per annum calculated from the date on which such payments were originally due and payable under the JDA until the actual date of receipt of the same by the Owner; and the Promoter and, or, SAFPL shall not dispute or challenge their absolute and irrevocable obligation to pay such amounts alongwith interest; and b. without prejudice to the other rights and entitlements of the Owner, the Promoter and SAFPL shall cease any development/ construction on the Subject Land and shall be bound to remove all constructions on the Subject Land immediately and shall be bound to handover the Subject Land back to the Owner; and all amounts paid by the Promoter and SAFPL shall stand forfeited.
(ii) the Owner shall also have the right to initiate appropriate execution proceedings to recover the amounts payable under this Agreement and the JDA by enforcing and seeking the execution of the consent decree for recovery of the amounts against the Promoter and SAFPL or any other rights or entitlements that it may desire to seek against the Promoter and, or SAFPL.‖
24. Mr. Kaul submits that, consequent on breach of the Settlement Agreement, Clause 1.2.1(i)(b) operated to result in reversal of the land forming subject matter of the project in question to the petitioners. He submits that the respondents are seeking to question the territorial OMP (ENF.) (COMM.) 127/2021 Page 13 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 jurisdiction of this Court, to entertain the present proceedings on the basis of the citus of this land which, consequent to the defaults, by the respondents, stand reverted to the petitioners. In so far as the respondents' own assets are concerned, Mr. Kaul reiterates the fact that even as per the affidavit of Respondent 2 filed in the contempt proceedings and also placed on record, in the present case, assets of the respondents do lie within the territorial jurisdiction of this Court.
25. Mr. Kaul also questions the interpretation, being placed by Mr. Gupta, on the judgment of the Supreme Court in Sundaram Finance Ltd. vs. Abdul Samad2 .
26. Mr. Mehta, supplementing to the submissions of Mr. Kaul, has invited my attention to the following paragraphs from the affidavit filed by Respondent 2 in OMP(I)(COMM) 54/2019:
―2. I state that vide order dated 21.11.2019 of this Hon'ble Court, the application bearing No. 15624/2019 was disposed of in terms of the Settlement Agreement dated 18th November 2019 which is already on record. The order dated 21.11.2019 is annexed herewith.
3. I state that in terms of order dated 21.11.2019, I was directed to undertake to abide by the terms of the Settlement Agreement dated 18th November 2019 .
4. I hereby undertake to abide by the terms of the Settlement Agreement dated 18th November 2019 and I shall remain bound by this undertaking given to this Hon'ble Court.‖
27. Mr. Mehta has also drawn my attention to the format prescribed in Form 16A to the CPC, 1908, which reads thus:
OMP (ENF.) (COMM.) 127/2021 Page 14 of 30This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 16A AFFIDAVIT OF ASSETS TO BE MADE BY A JUDGMENT-
DEBTOR [ORDER XXI, RULE 41(2)] In the Court of A.B ......................... Decree-holder Vs. C............................. Judgment-debtor I of State on oath/ solemn affirmation as follows: -
1. My full name is .......................................
(Block Capitals)
2. I live at *3. I am married ___________ single ____________ widower (widow) _____________ divorced
4. The following persons are dependent upon me:--
5. My employment, trade or profession is that of carried on by me at I am a director of the following companies:--
6. My present annual/monthly/weekly income, after paying income-
tax, is as follows:--
(a) From my employment, trade or profession Rs.
(b) From other sources Rs.
7. (a) I own the house in which I live; its value is Rs. I pay as outgoings by way of rates, mortgage, interest, etc., the annual sum of Rs.
(b) I pay as rent the annual sum of Rs.
8. I possess the following:--
(a) Banking accounts;
(b) Stocks and shares;
(c) Life and endowment policies;
(d) House Property;
(e) Other property; Give particulars
(f) Other securities
9. The following debts are due to me:--
(give particulars)
(a) From of
Rs.
(b) From of
OMP (ENF.) (COMM.) 127/2021 Page 15 of 30
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NEUTRAL CITATION NO: 2022/DHC/000716
Rs. (etc.)
Sworn before me, etc.]
28. Mr. Mehta submits that the affidavit filed by the respondents does not contain the information envisaged by Para 6 to 8 of Form 16A. As such, he submits that, at this juncture, it cannot even be said, with certainty, that the respondent has no assets situated within the territorial jurisdiction of this Court, as there is failure, on the part of the respondents, to completely disclose their assets.
29. Apropos this contention, Mr. Mehta has invited my attention to an affidavit of Respondent 1 filed under index dated 4 th February, 2022, which may be reproduced in extenso thus:
―1. I say that I am a Director in Respondent Company (now known as ―MAHIRA INFRATECH PRIVATE LIMITED‖, which is in due knowledge of the Petitioner Company, and has its registered office at 302-A, 3rd Floor, Global Foyer Mall, Gold Course Road, Sector-43, Gurugram, Haryana - 122001) for last around 2 years and am aware about the facts of the present case.
2. I say that the Respondent Company preferred an appeal challenging the order dated 14.12.2021 passed in a disposed off petition being O.M.P.(I)(COMM.) No. 54/2019, which was listed before Division Bench of this Hon'ble Court being F.A.O.(O.S.)(COMM.) No. 180/2021which came up for hearing on 20.12.2021.
3. I say that the Respondent Company, without prejudice to its rights and contentions, submitted before Hon'ble Division Bench on 20.12.2021 to pay a sum of Rs 10 Crores to the Petitioner Company on or before 11.01.2022, against total settlement/awarded amount of Rs 68.50 Crores.
4. I further say that the Respondent Company has earlier also made payment of Rs 15 .34 Crores from time to time to the Petitioner Company against total settlement/awarded amount of Rs 68.50 Crores.OMP (ENF.) (COMM.) 127/2021 Page 16 of 30
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NEUTRAL CITATION NO: 2022/DHC/000716
5. I say that in compliance of the above stated directions of Hon'ble Division Bench, one official of the Respondent Company on 11.01.2022 got the two original demand drafts of Rs 5.0 Crores each bearing No. 000318 dated 07.01.2022 and bearing No. 114635 dated 10.01.2022 both issued by Axis Bank in favour of Petitioner Company got delivered to the Petitioner Company, which were duly received/accepted by Sh. Ajay Kumar, Authorized Representative of Petitioner Company (having Mobile No. 9910480435), against receipt dated 11.01.2022.
6. I say that one of the said demand drafts was asked by the Petitioner Company to be replaced as same was illegible and the Respondent Company vide demand draft No. 000111 dated 12.01.2022 has replaced the same and handed over it back to the Petitioner Company which was duly accepted by the Petitioner Company on 12.01.2022.
7. I say that the deponent wants to bring the same to the knowledge of this Hon'ble Court that Respondent Company has duly complied with the order of Division bench of this Hon'ble Court passed on 20.12.2021 in F.A..O.(O.S.)(COMM.) No . .180/2021 and same was also recorded in the order dated 21.12.2021 passed by this Hon'ble Court in O.M.PP.(I)(COMM.) No. 54/2019.
8. I say that the said payment is without prejudice to the rights and contentions of the Respondents in the present case.‖
30. It is quite clear that this affidavit is not in compliance with the directions issued this Court on 16th August, 2021, as it is not in terms of Form 16A, Appendix E to the CPC, 1908. Mr. Gupta, however, submits that, annexed to this affidavit are affidavits filed by the respondents in the contempt proceedings pending before the coordinate Bench which are in accordance with Form 16A. I have, therefore, perused the said affidavits as well. There are two affidavits, to which Mr. Gupta refers. The first is an affidavit stated to be purportedly filed by Respondents 1 and 2. These affidavits, in view of the contention being raised by the parties, be reproduced in full thus:
OMP (ENF.) (COMM.) 127/2021 Page 17 of 30This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 Affidavit of Respondent 1 ―I, Prince Kumar, aged 31 years, S/o Sh. Arvind Kumar, R/o Flat No. 103, Tower-N, Shree Vardhman Mantra, Sector-67, Gurugram- 122102, Haryana, presently m New Delhi, do hereby solemnly affirm and declare as under:
1. I say that I am a Director in Respondent Company for last around 2 years and am aware about the facts of the present case.
2. I say that the Respondent Company has been changed and is now known as ―MAHIRA INFRATECH PRIVATE LIMITED‖, which is in due knowledge of the Petitioner Company, and has its registered office at 302-A, 3rd Floor, Global Foyer Mall, Gold Course Road, Sector-43, Gurugram, Haryana - 122001.
3. That the Respondent Company is engaged in the business of development of real estate projects.
4. That all the .financial information stated in the present affidavit of assets and liabilities of the Respondent Company is based on the audited Balance Sheet as on 31.03.2020. That the audit of the Balance Sheet for the Financial Year 2020-2021 is currently under progress.
5. That the registered office/premises from where the Respondent Company is running its day to day operations is on rent, the annual rent of which 77,85,450/- (Rupees Seventy Seven Lakhs Eighty Five Thousand Four Hundred and Fifty Only).
6. That the following bank accounts are in name of the Respondent Company, the balances of which as on 10.01.2022 are as follows:
S. Bank Account No. Amount
No.
1. Induslnd 201000786873 16,698.46/-
Bank
2. Punjab 4542002900000020 1,45,82,637.29/-
National
Bank
3. PNB RERA 4542002100005630 72,353.06/-
A/c
4. PNB Utility 4542002100005649 1,51,928.59/-
A/c
6. HDFC 50200031565443 3,95,070.45/-
Bank
7. RERA 259999993999 -OMP (ENF.) (COMM.) 127/2021 Page 18 of 30
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NEUTRAL CITATION NO: 2022/DHC/000716 Escrow A/c
8. Punjab 4542002100005436 5,270.80/-
National Bank
7. That the Respondent Company does not possess any stocks or shares of any other Company.
8. That the Respondent Company possesses the following other properties and details thereof are provided in the Audited Balance Sheet of Respondent Company as on 31.03.2020:
S. No. Particulars Amount 1. Fixed Deposits Rs 2,93,22,241/- 2. Tangible Assets Rs 3,02,42,685.91/- 3. Inventory Rs 1,33,51,08,311.74/-
9. That the following debts are due to the Respondent Company details thereof are provided in the Audited Balance Sheet of Respondent Company as on 31.03.2020:
S. No. Particulars Amount
1. Sundry Debtors Rs 5,65,08,523.34/-
10. That the following liabilities/ debts are due from the Respondent Company details thereof are provided in the Audited Balance Sheet of Respondent Company as on 31.03.2020:
Sl. Particulars Amount
No.
1. Secured Loans Rs 53,55,653.36/-
2. Unsecured Loans Rs 65,00,000/-
3. Sundry Creditors Rs 1,04,46,176.23/-
4. Other current liabilities Rs. 2,08,10,53,012/-
11. 1 say that the Respondent Company does not own any other immovable and same is the position since 2019.
12. That the contents of this Affidavit have been drafted by my counsel under my instructions. I have read the same and the same are true and correct and nothing material has been concealed therefrom.‖ Affidavit of Respondent 2 OMP (ENF.) (COMM.) 127/2021 Page 19 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 ―I, Sikandar Singh, aged about 35 years, S/o Sh. Dharam Singh R/o A- 2/15, DLF, Phase - I, Gurugram, Haryana - 122001,presently at New Delhi, do hereby solemnly affirm and declare as under:
1. I say that I am a Promoter of the Respondent Company. I am aware about the facts of the present case and therefore I am competent to depose the present affidavit. I have been arrayed as Respondent No. 2 in the application being I.A. No. 2975/2021, though I was not a party to the present petition which was disposed off vide order dated 08.05.2019 by this Hon'ble Court.
2. I say that the name of Respondent Company has been changed to the Petitioner Company's knowledge and is now known as ―MAHIRA INFRATECH PRIVATE LIMITED‖, having its registered office at 302-A, 3rd Floor, Global Foyer Mall, Gold Course Road, Sector-43, Gurugram, Haryana - 122001.
3. I say that the present affidavit is being filed in pursuance of orders of this Hon'ble Court in I.A. No: 2975/2021 in aforesaid petition.
4. I say that the parties to the main petition entered into Joint Development Agreement dated 18.08.2017 w.r.t. land measuring 6.1125 acres falling in the residential Sector-68 situated in the revenue estate of the Village Badshahpur, Tehsil and District Gurgaon, Haryana.
5. I say that subsequently due to disputes having arisen between the parties to the main petition w.r.t. aforesaid Joint Development Agreement dated 18.08.2017, Petitioner Company invoked the provisions of Section 9 of Arbitration and. Conciliation Act, 1996 and filed petition before this Hon'ble Court being O.M.P.(I)(COMM.} No. 54/20 19. Said petition was disposed off vide order dated 08.05.2019 by this Hon'ble Court.
6. I say that the parties to the petition were referred to Ld. Arbitral Tribunal wherein at the initial stage, parties entered into Settlement Agreement dated 18.11.2019. It is pertinent to note that despite the fact, the deponent was neither party to the Joint Development Agreement nor to the arbitration proceedings, was made a party to the Settlement Agreement.
7. I say that the deponent has immovable and movable assets available in his name which are as follows:OMP (ENF.) (COMM.) 127/2021 Page 20 of 30
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 a. Deponent has no Immovable property/asset in his name;
b. Deponent has certain movable and other assets in his name which are as follows:
i The registered trademark of the word/brand ‗MAHIRA' ii Two cars; one being Range Rover, having registration no.
HR 26 EP 8248, having approximate value of Rs 2.44 Crores, having loan of approx. Rs. 2.35 Crores. Another car, being Lexus, having approximate value of Rs 2.65 Crores, having loan of approx. Rs. 1.86 Crores.
iii 99% Equity Shares of Mahira Homes Private Limited;
iv 99.9% Equity Shares in D. S. Home Construction Pvt. Ltd.;
v Deponent has four bank accounts, two of them being maintained with HDFC Bank, Gurugram Branch, having account No. as 00921930011621 & 50100062343843; third being maintained with AXIS Bank, Gurugram Branch, having account No 920010074773787 and fourth being maintained with PNB Bank, Gurugram Branch, having 454200010003981;
vi Deponent is director in the companies, namely, M/s D.S. Home Construction Pvt. Ltd.; M/s D.S. Homes Pvt. Ltd.; M/s Czarr · Buildtech Pvt. Ltd.; M/s Czarr Infratech Pvt. Ltd. and M/s Mahira Automotive Pvt. Ltd.;
vii Deponent draws a monthly salary of Rs.25,00,000/- from the Company namely M/s D.S. Home Construction Pvt. Ltd.;
viii Deponent has 2 life insurance policies, both in PNB Metlife, having Policy No. 22844139 with sum assured of Rs 5 lakhs and Policy No. 22956368 with sum assured of Rs 25 Crores.
8. I declare that I have made accurate, true and complete disclosure of my income and assets from all sources. I further declare that I have no assets, income or financial resources other than those set out in this affidavit.OMP (ENF.) (COMM.) 127/2021 Page 21 of 30
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716
9. I understand that any false statement and misrepresentation in this affidavit may constitute an offence under Section 199 read with Sections 191 and 193 of the Indian Penal Code, 1860 punishable with imprisonment upto seven years and fine, and Section 209 of the Indian Penal Code, 1860 punishable with imprisonment upto two years and fine. I have read and understood Sections 191, 193, 199 and 209 of the Indian Penal Code, 1860.
10. That the contents of this Affidavit nave been drafted by my counsel under my instructions. I have read the same and the same are true and correct and nothing material has been concealed therefrom.
31. Mr. Mehta submits that Paras 6 to 8 of the affidavit of Respondent 1 are not in compliance with Form 16A. He submits that there are no details regarding the bank accounts of Respondent 1, provided in Para 6 of the affidavit, which merely mentions the bank account numbers and the amounts lying in the accounts. There is no reference, in the said paragraph. Mr. Mehta points out that, apropos the other property held by Respondent 1, Para 8 merely sets out the value of tangible assets at ₹3,02,42,685.91/-, the details of the properties are not forth coming. Nor is there any recital.
32. In so far as the affidavit of Respondent 2 is concerned, Mr. Mehta, even while reiterating his submission that Para 6 to 8 of the said affidavit, are also not in terms of Form 16A, points out that Para 7 discloses the fact that Respondent 2 owns 99.9 per cent equity shares in a company which is situated within the jurisdiction of this Court. However, the fact that the said company is situated within such jurisdiction, he points out, is also concealed in the affidavit.
33. At a bare glance, I am not satisfied that the affidavits which OMP (ENF.) (COMM.) 127/2021 Page 22 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 have been placed on record by the respondents, are not in compliance with Form 16A or are sufficiently candid regarding the assets of the said respondents. Prima facie, it appears that the respondents are not being forthcoming with respect to the position of their assets, for reasons best known to them.
34. That apart, Mr. Mehta questions the veracity of the affidavits filed by the respondents. He submits that the affidavit conceal material to which the petitioners have become privy, such a Hypothecation Deed dated 31st January, 2021, which indicated that all assets of Respondent 2 stand hypothecated. He points out that this Hypothecation Deed has been placed on record by the petitioners with their response to the present application and, the right of the respondent to file rejoinder thereto having been forfeited, owing to repeated default in that regard committed by the respondents, the said assertion has to be treated as admitted.
35. By way of rejoinder to the submissions of Mr. Kaul, and Mr. Mehta, Mr. Gupta submits that the reference to the covenants of the Settlement Agreement executed between the parties is completely irrelevant as jurisdiction cannot be conferred by agreement between parties. Least of all, he submits that jurisdiction in respect of execution proceedings be conferred by covenants contained in the Settlement Agreement. He also questions the taking on record of the Settlement Agreement in OMP (I)(COMM) 54/2019, even after it was disposed of.
OMP (ENF.) (COMM.) 127/2021 Page 23 of 30This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716
36. Apropos Clause 1.2.1 of the Settlement Agreement, to which Mr. Kaul had invited my attention, Mr. Gupta submits that the said clause is actually bad in law and cannot be enforced.
37. I have heard learned Counsel for the parties, and have applied my mind to the rival contentions advanced at the Bar and the material on record.
38. In the first place, I fail to understand how, without filing an affidavit of assets before this Court, as directed by the Court as far back as on 16th August, 2021, the respondent can at all seek to contend that the present execution petition is bad for want of territorial jurisdiction, on the ground that no part of its assets are located within the jurisdiction of this Court. Learned Counsel for the respondent insisted on the present application being heard before EA(OS) 1037/2021. That being so, the order dated 16th August, 2021, binds the respondent, for the purposes of the present application. That order specifically directed filing of affidavit in terms of Form 16A, Appendix E, under Order XXI, Rule 41(2) of the CPC, 1908. No affidavit, subscribing to and precisely in Form 16A Appendix E, under Order XXI, Rule 41(2) of the CPC, 1908, has been placed on record by the respondents. As Mr. Mehta correctly points out, the affidavit belatedly filed by Respondent 1 is not in compliance with Form 16A.
39. Without filing an affidavit of assets as directed by this Court, and a clear breach of the said directions, I am of the opinion that the right of the respondents to question the territorial jurisdiction of this OMP (ENF.) (COMM.) 127/2021 Page 24 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 Court on the ground that the respondents do not have assets within such territorial jurisdiction, is itself debatable.
40. As things stand today, this Court is not aware of the exact details of all assets of the respondents. It cannot, therefore, be said that the respondents do not have assets within the territorial jurisdiction of this Court. Mr. Gupta, learned Counsel for the respondents, has merely sought to place reliance on Para 9 of the present application. The said paragraph, is at the least, non-committal in nature all that it contains, with regard to any recital regarding the assets of the respondents is a statement that, ―......admittedly in the present case neither the judgment debtors reside, work for gain, nor they have any assets, moveable or immovable within the territorial jurisdiction of this Hon'ble Court‖. There is no such admission, on the part of the petitioners. In the absence of a precise affidavit, placing on record, the details of all their assets, such a statement is entirely insufficient to constitute a ground to seek dismissal of the present petition on the ground for want of territorial jurisdiction.
41. The judgments on which Mr. Gupta relies themselves allow execution proceedings to be preferred where the assets of the judgment debtors are located, same and except for the aforesaid bald statement that the judgment debtors do not have assets within the territorial jurisdiction of this Court, the respondents have not condescended to place on record their complete statement of assets in Form 16A to the CPC, 1908, despite specific directions in that regard passed by this Court. The averments in the present application, OMP (ENF.) (COMM.) 127/2021 Page 25 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 therefore, do not make out a case for dismissal of the execution petition for want of territorial jurisdiction, on the ground that the respondents do not have assets within the territorial jurisdiction.
42. That apart, the facts of the present case are distinct and not similar to the facts in any of the judgments to which Mr. Gupta alludes. In the present case, OMP(I)(COMM) 54/2019, preferred by the petitioners under Section 9 of the 1996 Act, was initially filed before this Court. The arbitral proceedings commenced while OMP (I)(COMM) 54/2019 was pending before this Court. The order dated 21st November, 20195, specifically notes the fact that the parties amicably settled their disputes vide the Settlement Agreement dated 18th November, 2019.
43. The respondents ,who were present in court, undertook to abide by the terms of the Settlement Agreement. The undertaking was accepted. Additionally, the respondents submitted that a formal written undertaking of Mr. Sikander Singh, Respondent 2, would be filed within a week. Para 5 of the order specifically records the submission of the respondent that they would remain bound by the undertaking given to this Court - which, naturally, would include the undertaking to be filed by Mr. Sikander Singh, as per Para 3 of the order.
44. Mr. Sikander Singh, went to file an undertaking before this Court in the form of an affidavit placed on record in OMP(I)(COMM) 5 Refer Para 18 supra OMP (ENF.) (COMM.) 127/2021 Page 26 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 54/2019. Para 2,3 and 4 of the affidavit6, record the undertaking of Respondent 2 to abide by the terms of the Settlement Agreement dated 18th November, 2019. Para 4 reiterates the undertaking that Respondent 2 would abide by the Settlement Agreement and would remain bound by the undertaking given to this Court.
45. Two days after the passing of the aforesaid order dated 21st November, 2019 by this Court in OMP(I)(COMM) 54/2019, the learned arbitral tribunal passed award dated 23 rd November, 2019. The award merely records the terms of the Settlement Agreement, as has been passed in terms thereof. The award also binds the parties to the Settlement Agreement.
46. Clause 6.2 of the Settlement Agreement specifically confers exclusive jurisdiction of this Court in relation to matters arising under this agreement. The words, ―in relation to matters under this agreement‖, are of wide and comprehensive nature. The expression, ―in relation to‖ has come up for judicial consideration on several occasions.
47. The present execution petition has been necessitated because of the default, on the part of the respondents in complying with their obligations under the Settlement Agreement, and, consequently, the award dated 23rd November, 2019, which came to be passed in terms thereof. In view of Clause 6.2, it is not possible for this Court to hold, at this stage, that the present execution proceedings would not lie 6 Refer Para 26 supra OMP (ENF.) (COMM.) 127/2021 Page 27 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 before this Court. In fact, the very aspect of the relevance of the locus of assets of the respondents, in fact, in the face of Clause 6.2 of the Settlement Agreement may be debatable.
48. Having said that, as I have already observed hereinabove, even on merits, it is not possible to hold that the respondent has made out a clear case for dismissal of the present execution petition, for want of territorial jurisdiction on the ground that its assets are located outside the territorial jurisdiction of this Court.
49. The respondent has been remis in complying with the direction issued by this Court on 16th August, 2021, to file an affidavit of assets in terms of Form 16A, Appendix E to the CPC, 1908. The complete details of the assets of the respondent are, therefore, not forthcoming and it is not possible for this Court to hold, positively, at this stage that the respondents do not have assets within the territorial jurisdiction of this Court. The respondents cannot, on the one hand, demur from complying with the directions issued by this Court - for which they are already having facing contempt action - on the other hand, seek dismissal of the execution petition on the ground that the respondents do not have assets within the territorial jurisdiction of this Court. This would amount to no less than playing ducks and drakes with the Court and capitalising on non-compliance with the directions issued by this Court which no court of law can tolerate.
50. There is also, prima facie, substance in the contentions of Mr. Kaul and Mr. Mehta that the material that the respondents have OMP (ENF.) (COMM.) 127/2021 Page 28 of 30 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 condescended to place on record, in fact, prima facie, that the respondents may have assets which are within the territorial jurisdiction of this Court, in as much as the Respondent 2 holds 99.9 per cent equity shares in M/s DS Home Construction Private Limited, which is situated within the jurisdiction of this Court and several of the sundry debtors in the bank balance sheet of Respondent 1 are also situated within such jurisdiction.
51. In view of the aforesaid discussion, it is not necessary for me, for deciding the present application, to express any opinion regarding the judgments which, Mr. Gupta, has sought to place reliance or their applicability to the facts of the present case.
52. The application is accordingly dismissed.
EA (OS) 1037/2021 (under Section 151 of CPC, 1908- for modification)
53. In view of the observations contained in the judgment passed today in EA(OS) 1254/2021, Mr. Gupta, learned Counsel for the respondents, seeks three weeks' time to place on record, affidavits in compliance with Form 16A, Appendix ‗E' to the CPC, 1908, as directed on 16th August, 2021. He is given a last opportunity to do so. Within the said period, the respondent is also permitted to file reply to the execution petition, with advance copy to learned Counsel for the petitioner, who may file rejoinder before the next date of hearing.
54. Re-notify on 23rd March, 2022.
OMP (ENF.) (COMM.) 127/2021 Page 29 of 30This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000716 OMP (ENF.) (COMM.) 127/2021
55. Re-notify on 23rd March, 2022.
C.HARI SHANKAR, J FEBRUARY 15, 2022 SS OMP (ENF.) (COMM.) 127/2021 Page 30 of 30 This is a digitally signed Judgement.