Delhi High Court
Mashreq Bank Psc. vs Navin Khilnani on 27 March, 2009
Author: Shiv Narayan Dhingra
Bench: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: 6.3.2009
Date of Order: 27th March, 2009
EA No. 401 & Ex. P. No. 73/2000
% 27.3.2009
Mashreq Bank psc. ... Decree Holder
Through: Ms. Bharti Badesra, Advocate
Versus
Navin Khilnani ... Judgment Debtor
Through: Mr. S.C.Dhanda, Advocate
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the
judgment? Yes.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
JUDGMENT
Judgment Debtor suffered a decree in the High Court of Justice Queen's Bench Division, United Kingdom (UK) for a total sum of £7,059,589.95. The Decree Holder bank filed an execution of this decree before this Court. Judgment Debtor resisted the execution of this decree in the Indian Court and filed objections against the execution. These objections were decided by the Court on 9th November, 2005 holding that the decree passed by the Division Bench of High Court of UK was a judgment on merits and since this had not been Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 1 of 10 appealed against, the judgment had attained finality and was executable in India. Judgment Debtor also raised objection that decree could not be executed in view of requirement of permission of RBI and in view of provisions of FERA. Notice of this objection was sent to RBI and RBI made a statement in the Court that no permission of RBI was required for execution of the decree and repatriation of money in execution of decree to the Decree Holder bank situated in UK. The Judgment Debtor challenged the order dated 9th November, 2005 of the Single Bench of this Court before Division Bench. However, the Division Bench confirmed the order of the Single Bench and dismissed the appeal of the Judgment Debtor vide order dated 25th May, 2007.
2. The Judgment Debtor was given direction to file a list of his movable and immovable assets. Judgment Debtor filed an affidavit stating that from 1990-96 he was carrying on business in Dubai. Since the English Company of which Dubai company was a subsidiary went into liquidation the business at Dubai came to an end and was closed down and he came to Delhi in 1996. Thereafter, he was made a Director of Munradtech Industrial Generators (P) Ltd., a company set up by his brother. This Indian Company was facing difficulties and he was appointed as an Executive Director of this company though he did not own a share in the company with the sole aim to revive the company and separate its business from its parent English company. This company also failed and was wound up in Company Petition No. CP-144/1998 and all assets of the Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 2 of 10 company were taken over by Small Industries Development Corporation, who had to recover loans. He stated that he was having only one immovable property i.e. his house No. B-22, Geetanjali Enclave, New Delhi and he had no other property anywhere else and he was living along with his mother in the said house, no portion of the house was let out.
3. The Decree Holder pressed for sending Judgment Debtor to civil imprisonment in execution of the decree on the ground that Judgment Debtor was deliberately concealing his income. Judgment Debtor was living a lavish life, he was maintaining a car, using credit cards and was travelling by air. But he was deliberately not discharging his liability under the decree. It was suspected that he was doing some business benami otherwise it was not possible for him to maintain such a luxurious life. This Court vide order dated 12th February, 2007 directed Judgment Debtor to file an affidavit setting out the details of the mobile phone used by him, the bills raised in respect thereof and as to how the same had been paid, the use of credit cards and as to how the electricity and house tax bills of property no. B-22, Geetanjali Enclave were being paid. Copies of the income tax returns of the Judgment Debtor were also directed to be placed on record by the Court. He was also asked to give details of cars owned/operated/used by him and to give details of bank accounts. He was told that his affidavit should cover period from 1997 onwards. He was also asked to file copy of passport showing as to on how many occasions he had travelled Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 3 of 10 abroad and who paid for his travel. Despite directions given by the Court on 12th February, 1997, the affidavit by the Judgment Debtor giving complete information was not filed. The affidavit dated 20.12.2006 filed by the Judgment Debtor is conspicuously silent about the details of mobile phones, credit cards payments, electricity and house tax bills of property no. B-22, Geetanjali Enclave and as to who bore his travelling expenses. He also did not file his passport.
4. The Judgment Debtor had taken the stand that his mother was receiving pension of £500 p.m. and was maintaining him. It was revealed that he had three credit cards. The credit card statements filed by the Judgment Debtor showed that he had incurred expenditure of Rs.30,000/- on making purchases from various shops and eating in restaurants in one month of February, 2003. On enquiry by the court, he had taken the stand that his entire expenditure was being borne by his mother. He was told to file additional affidavit if he has filed any income tax return from 1996-97 onwards and he was also told to give his bank accounts. The Court also recorded statement of his mother. In her statement recorded on 17.9.2008, the mother of Judgment Debtor stated that she had worked in British Airways and was receiving pension from UK. Her pension was £ 500 p.m. (about Rs.45,000/-) from British Airways. He had one car and two servants; she had air conditioners in the house. She was paying Rs.5,000/- to the two servants. Her monthly electricity expenditure was between Rs.10,000/ to 12,000/-. Her monthly medical expenses were between Rs.1500-2000/-. She Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 4 of 10 stated that she herself was not having credit card but her son was having three credit cards as per her knowledge but stated that these credit cards were on her behest because she herself was unable to go for shopping and all bills of credit cards were being paid by her. She could not say the total amount which was debited on account of the credit cards on an average. She also could not tell how much was monthly expenditure on her son. She stated that the car was being maintained by her and was used by her son whenever he had to go out. Her son was associated with a voluntary organization called SPICMACAY wherefrom he did not get any payment except travelling expenses. She was also receiving about £ 200 a month from other investments. She used to take help of her daughter, who was a qualified barrister in UK, whenever she needed additional money. She used to go to UK and in February, 2008 had spent about a month in Singapore. She had a bank account in UK where her pension was deposited and her daughter had authority to operate the said bank account. She receives money in her bank account in India from her account in UK.
5. During the statement, the counsel stated that a copy of bank account of mother of the Judgment Debtor in the Indian Branch of Deutsche Bank was filed however the bank account statement of her bank account in UK was not filed.
6. While considering show cause as to why Judgment Debtor should not be sent to civil imprisonment, it transpired that Judgment Debtor was living in Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 5 of 10 a house built on 500 sq. yards in Geetanjali Enclave, one of the posh areas of Delhi. The house itself was worth several cores of rupees and Judgment Debtor had an option to shift to a smaller flat with his mother so that he could discharge a part of his liability by this mode but Judgment Debtor stated that he was not prepared to give up the comfort of living in a bigger house.
7. From the facts of the case it is apparent that Judgment Debtor was living a luxurious life, what was the source of his funds was only known to him. He was living in a palatial house owned by him, having luxury of two servants, a car, air conditioners, use of three credit cards, mobile and landline phones, air travel. His mother, who was getting pension of Rs.45,000/- p.m. approximately was an often visitor to UK and used to spend her holidays with her daughter in U. K. or Singapore. She also had to spend on her ailment. She was keeping two servants for which she was paying Rs.5,000/- Her monthly electricity expenditure was between Rs.10,000/- to 12,000/- . She must be spending some amount on telephone and some amount on her foods and other daily necessities. The style of living which she was enjoying showed that the amount of Rs. 45,000/- would be hardly sufficient to maintain herself. Moreover, she had not disclosed how much money was lying in her UK bank account, where her pension was being credited and details about other savings and interest which used to come to her every month. Non disclosure of these details shows that she could be the shield of concealment of source of earnings of her son and not Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 6 of 10 a source of maintenance of Judgment Debtor, who had pretended that he was being maintained by his mother. Judgment Debtor was having three credit cards, a person, who was doing no work and was dependent on others would not maintain so many credit cards. He has not given details of his mobile phones and his travels abroad and within India. He was owner of a house built on 500 sq. yards in a posh area in Delhi. All this shows that Judgment Debtor was maintaining this luxurious life only from an undisclosed source of income, which he had deliberately not disclosed so as to evade the payment of decreetal amount to the Decree Holder. He was not a poor man with no means.
8. In Jolly George Varghese vs. Bank of Cochin AIR 1980 SC 470, the judgment relied upon by the Judgment Debtor, the Hon'ble Supreme Court observed that to cast a person in prison because of his poverty and consequent inability to meet his contractual liability is violative of Article 21 of the Constitution unless there is proof of his unfairness and his willful failure to pay in spite of his sufficient means and absence of more terribly pressing claims on his means such as medical bills to treat cancer or other grave illness. The Supreme Court further observed that there must exist some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or alternatively current means to pay the decree or a substantial part of it should be there.
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9. Judgment Debtor is visibly acting with malafide intentions. He has made all efforts to resist the execution of decree in India. If Judgment Debtor had been a poor man he would not have been able to engage advocate in high Court; first for filing objections and then for appeal, nor he would have been living a luxurious life as discussed above. The malafide intention of Judgment Debtor is also reflected from the fact that the Judgment Debtor did not agree to the suggestion that let his property B-22, Geetanjali Enclave be put to auction, which itself in even present date recession, was worth around Rs.10 crores and out of amount received from auction he could have with him around Rs.50 lac to purchase a flat and live there and rest of the amount could be utilized for satisfaction of part of the decree. The Judgment Debtor flatly refused to this suggestion saying he was not prepared to give up the comfort of living in a big house. Thus, the attitude of the Judgment Debtor has been "come what may, he will not pay".
10. It is not a case where Judgment Debtor was a poor man who had no means to pay. Judgment Debtor in the present case can easily discharge part of his liability under the decree by simply shifting to a smaller house. Thus, the case of Jolly George (supra) is of no help to the Judgment Debtor as it is a case of deliberate non-payment and not a case of poverty.
11. It is argued by the Counsel for the Judgment Debtor that Decree Holder Bank had appointed some detective agency to find out the means of Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 8 of 10 Judgment Debtor but had not been able to find out the means, therefore there was no concealed income of Judgment Debtor. I consider where a person is bent upon to do benami transactions and to conceal his income, it is very difficult for a detective agency to find out the details of his benami transactions and to find out source of his income. Such secrets are closely guarded secrets and only custodial investigation is sometimes helpful in finding out the real source of income. Decree Holder did not have advantage of custodial investigation therefore, merely because Decree Holder could not find out the concealed source of Judgment Debtor does not mean that Judgment Debtor was having no income. Absence of proof is not a proof of absence. The Court can always draw inference from the style of life, a person is living.
12. The proviso to Section 51 CPC which restricts the power of Executing Court to direct the detention of the Decree Holder in execution of decree for payment of money is meant to protect the indigent and honest debtors. If the conduct of the Judgment Debtor is dishonest and it shows that Judgment Debtor was not prepared to give up his luxurious life and the luxury of living in a bigger house, I consider that the dishonesty is writ large and the Judgment Debtor in such a case is not protected under proviso to Section 51 CPC. There is an element of bad faith in the conduct of Judgment Debtor in this case. He has means to pay as reflected above, but still he refuses to pay even the part of the decreetal amount by disposal of his lavish house and by shifting to Ex. P. No. 73/2000 Mashreq Bank psc.v. Navin Khilnani Page 9 of 10 a smaller house. I, therefore, consider that it is a fit case where Judgment Debtor should be sent to civil imprisonment for execution of the decree. The Judgment Debtor be taken into custody and sent to civil imprisonment for a period of three months. In case he pays the decreetal amount at any time before the expiry of three months, he be released from jail on such payment/deposit of decreetal amount.
March 27, 2009 SHIV NARAYAN DHINGRA, J.
Vn
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