Delhi HC Frames Formats Of Assets And Income For Disclosure Of Judgment Debtor's Financial Capacity, Asks Centre To Consider Incorporating In Statute [Read Judgment]

The Delhi High Court has laid down guidelines for expeditious hearing and disposal of execution cases stating that the delays and difficulties in execution of decree/awards erode public confidence and trust in the justice delivery system and also frustrate the decree holder(s) who are unable to reap the benefits of the decree/award awarded in their favor after a successful litigation. The Court also formulated detailed formats of affidavit of assets, income, expenditure and liabilities to be filed by the judgment-debtor in execution cases on direction of the Executing Court. Moreover, the Court suggested the Central Government to mandate the filing of such affidavit(s) by the judgment debtor at the very threshold of the execution litigation, as is the practice in developed countries. Comprehensive affidavits of disclosure Justice JR Midha stated that a major flaw that leads to delay in execution proceedings is that the Form 16A of Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure under which a judgment debtor is required to disclose his assets in an execution proceeding is not exhaustive to ascertain all the assets and income of the judgment-debtor. The Court stated that "as a result, the execution proceedings keep on lingering at the mercy of the judgment-debtor." The Court after considering the best international practices of mandatory filing and upon receiving suggestions from Courts and the Bar members on its guidelines dated 5th December, 2019 concluded that there is an urgent need to formulate a detailed format of affidavit of assets and income to be filed by the judgment debtor at the very threshold of the execution proceedings to curb the delay and expedite the disposal of execution proceedings. Exercising power 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 and Article 227 of the Constitution of India, the Court has formulated comprehensive formats of disclosure affidavits that give a complete overview of the entire assets, income, expenditure and liabilities as well as standard of living of the judgment-debtor. However, such affidavits are only to be treated as guidelines to determine the true financial capacity/status of the judgment-debtor and an Executing Court may direct a judgment debtor to make more disclosures if it deems them necessary in order to determine the financial capacity/status of the judgment debtor. Restitution for delay The Court acknowledged that the practice of obstructing and delaying execution cases by judgment debtors exists due to the reluctance of Courts to order restitution and serves to the benefit of judgment debtors as they stall execution to either tire-out the decree holders to give up their claims or to coerce them to settle for less. To remedy this, the Court stated in its guidelines "The Executing Court shall pass appropriate order of restitution to reimburse the loss suffered by the decree-holder on account of delay and obstruction in the execution proceedings caused by the judgment-debtor. The Executing Court shall endeavour to place the decree-holder in the same position as he would have had been if the decree had been satisfied soon upon it being passed." Imposition of costs and punishments in false claims In order to control the prevalence of false claims that overburden the Courts, the High Court passed strict guidelines to executing courts to impose costs and initiate prosecutions in all such false cases. The Court stated "The costs imposed by the Courts must be the real costs equal to the deprivation suffered by the rightful person and also considering how long they have compelled the other side to contest and defend the litigation in various courts. In appropriate cases, the Courts may consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings." The Court directed that when Section 340 Cr.P.C. is invoked by a decree holder against a judgment debtor for making a false case before the Court, the Executing Court must not hesitate to prosecute the judgment debtor under it if a prima facie offence under Section 209 IPC for false claim is made out against him. Other guidelines for expeditious hearing and disposal of execution cases The High Court directed all executing courts to make an endeavor to decide execution cases within one year of their institution. With respect of the scope of its guidelines, the court stated that "These modified directions/guidelines shall apply to all execution proceedings, such as the execution proceedings under Section 36 of the Arbitration and Conciliation Act; execution proceedings before Motor Accident Claims Tribunals; execution proceedings before the SDM empowered to execute decree/award as arrears of land revenue; execution proceedings...

Delhi HC Frames Formats Of Assets And Income For Disclosure Of Judgment Debtor's Financial Capacity, Asks Centre To Consider Incorporating In Statute [Read Judgment]

Monisha Purwar

"This Court is of the view that the mandatory filing of the affidavit of assets, income, expenditure and liabilities by judgment-debtor in a detailed prescribed form at the very threshold of execution litigation should be incorporated in the statutes, as in the developed countries"

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