M/S Binatone Computers Pvt. Ltd vs M/S Setech Electronics Ltd
2009 Latest Caselaw 3294 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 EA No.436/2008 in Ex.P. No.285/2008

%                                 Date of decision:21.08.2009

M/S BINATONE COMPUTERS PVT. LTD.....Decree Holder

                        Through: Mr. A.K. Thakur with Mr. Rajiv Arora,
                                 Advocates

                               Versus

M/S SETECH ELECTRONICS LTD.                 ...   Judgment Debtor

                        Through: Mr. Mr. Atul Jain, Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

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 the judgment should be reported          Yes
      in the Digest?


RAJIV SAHAI ENDLAW, J.

*

1. Objections under Order 21 Rules 58 & 59 CPC have been

preferred by Mrs. Kusum Lata Jalan and Mr. Prachir Jalan with

respect to the attachment of property No. E-947, Chittranjan Park,

New Delhi, at the instance of the Decree Holder in Execution against

M/s. Setech Electronics Limited. Ex-parte order of attachment was

made by this court on the representation of the Decree Holder that

the said property was the property of the Judgment Debtor and had

been attached in earlier execution petition against the Judgment

Debtor also.

2. The objectors claim to be the owner of the property and have

in support thereof filed before this court photocopies of (i) the lease

deed executed by the President of India with respect to the land

underneath the said property in favour of Mr. Piyush Kanti Sen

Gupta; (ii) the agreements to sell executed by the said Mr. Sen Gupta

in favour of the objectors with respect to the said property; (iii)

receipts executed by the said Mr. Sen Gupta of sale consideration

with respect to the said property from the Objectors; and (iv) the

order dated 10th October, 2001 of the MCD allowing mutation of the

said property in the name of the objectors. The counsel for the

objectors has today in court, as directed earlier given inspection of

the originals of the said documents to the counsel for the Decree

Holder.

3. The Decree Holder has opposed the objections and has

contended that the said property was the address of the registered

office of the Judgment Debtor company and it is further contended

that the objectors are in collusion with the Judgment Debtor.

4. It may be noticed that the counsel for the Objectors also

admits that Objectors are the son and the wife of the brother of Mr.

Kishan Kumar Jalan, one of the Directors of the Judgment Debtor

company.

5. The counsel for the Decree Holder first contended that an

official of the Judgment Debtor had in an earlier proceedings

admitted the said property to be of the Judgment Debtor. Attention

in this regard is invited to order dated 14th December, 2007 in

execution No.143/2007. However all that is contained in the said

order is that till the next date in those proceedings the said property

is attached. Though the presence of the counsel appearing today on

behalf of the Decree Holder as well as of Mr.Kushal Chaturvedi,

representative of the Judgment Debtor is recorded but there is no

statement recorded therein of the said Mr. Kushal Chaturvedi to the

effect that the property belongs to the Judgment Debtor. The

counsel for the Decree Holder however contends that such a

statement was made by Mr. Chaturvedi before the court on that

date. It is so stated in the reply of the Decree Holder to the

objections also. However the said reply is not accompanied by the

affidavit of any person on behalf of the Decree Holder present before

the court on that date. In the absence of anything in the order

recording that such statement was made before the court, no notice

of the same can be taken.

6. As far as the plea of the Decree Holder of the said property

being shown as the registered office of the Judgment Debtor

company is concerned, the same in my opinion does not form a

ground for the Decree Holder to attach the said property or to insist

upon continuing the said attachment. Merely because the registered

office of the Judgment Debtor company existed at the address of the

said property does not lead to any inference that the Judgment

Debtor company has any interest in the said property which could be

attached in execution of a money decree against the Judgment

Debtor company.

7. The counsel for Decree Holder has insisted that since collusion

has been pleaded by the Decree Holder in its reply to the objections,

the procedure for disposal of the objection should be of framing of

issues and putting the matter to trial. It has been inquired from the

counsel for the Decree Holder as to what is the impact, even if any of

the collusion as alleged between the objector and the Decree Holder

is established. No purpose will be served in putting the matter to

trial and continuing with the attachment as sought by the Decree

Holder, if even in the event of collusion being established there is no

effect thereof.

8. In this regard it may be stated that attachment of a property

acts as a clog on the property and interferes in the owner exercising

lawful rights with respect thereto and thereby causes loss/damage to

the objector. Thus wrongful attachment causes loss to the real

owner of the property. This is so recognized in Section 95 CPC also,

providing for compensation for obtaining attachment on insufficient

grounds.

9. The objections can be put to trial not merely because law so

provides, but only when questions requiring trial are made out and

determination whereof is necessary for determination of matter in

controversy. Though the arguments of collusion between Judgment

Debtor and Objectors, who admittedly are closely related, appear

attractive and equitable since the Decree Holder inspite of decree in

its favour is still without its fruits, but I have wondered, so what?

Unless it can be said that if it is established that the Objectors are in

collusion with the Judgment Debtor, the decree against the Judgment

Debtor can be executed against the property of the Objectors, no

purpose will be served in putting the pleas of collusion to trial.

Question has been put to the counsel for Decree Holder in this

regard. No law/legal provision has been cited in this regard.

10. To my mind with respect to a company, the only provisions in

this regard are contained in Section 531 of the Companies Act,1956

and Section 53 of the Transfer of Property Act. With respect to a

company ordered to be wound up, the fraudulent transfers including

of immovable property are invalid; but Judgment Debtor is not being

wound up; so the same is not applicable under Section 531 of

Companies Act; Section 53 of the Transfer of Property Act entitles a

creditor to institute a suit to avoid a transfer on the ground that the

same has been made with intent to defeat or delay the creditors of

the transferor; such suit is to be instituted on behalf of or for the

benefit of all the creditors; this is neither a suit nor is the Decree

Holder representing all creditors of the Judgment Debtor. So

Section 53 of the Transfer of Property Act is also not applicable.

11. In fact in the present case nothing has been shown that the

aforesaid property at any stage belonged to the Judgment Debtor for

it to be fraudulently transferred to the objectors.

12. Thus, even if there is collusion between the Judgment Debtor

and the Objectors, no case of executing the decree against the

Judgment Debtor from property of the Objectors is made out. The

Judgment Debtor, is a legal entity separate and distinct from its

shareholders and Directors and the decree against/debts, of a

company are not realizable from its shareholders/Directors or their

family members. Of course the corporate veil can be pierced upon

conditions thereof as laid down in Singer India Ltd. Vs. Chander

Mohan Chadha AIR 2004 SC 4368 being made out. However there

is not a whisper in this regard, neither in the execution petition, nor

in the reply to the objections. On the contrary ex-parte order of

attachment was obtained by representing the property to be of

Judgment Debtor. Without a case for piercing corporate veil being

pleaded, no roving trial can be ordered.

13. The counsel for the Decree Holder has next contended that the

agreements to sell of the property in favour of the objectors are un-

registered. The said agreements are of the year 1991. The counsel

for the objectors has contended that the Judgment Debtor company

came to be incorporated thereafter in the year 1993. Even otherwise

prior to the amendment of the Registration Act with effect from

September, 2001 qua Delhi, such agreements to sell of immovable

property whereunder entire consideration was paid and possession

delivered in part performance were not required to be registered.

The Division Bench of this court has in Asha M. Jain Vs. The

Canara Bank 94 (2001) DLT 841 held that judicial notice had to be

taken by the courts of such transactions being prevalent in Delhi and

attachment of property, transacted under such agreements to sell,

was set aside. In this case the agreement to sell is not by Judgment

Debtor in favour of Objectors; even if the agreements to sell was to

be held to be invalid for not being registered, the property would still

fall upon the ownership of Mr. Sen Gupta aforesaid. The counsel for

Decree Holder however contends that in that case Mr. Sen Gupta

should have filed objections before this court and the attachment

should be continued for this reason.

14. Attachment of property can continue only if it belongs to the

Judgment Debtor. Once it is not shown that the property belongs to

the Judgment Debtor, attachment cannot be continued, even if the

property belongs to a person other than the objectors.

15. Thus no case is made out for framing the issues and continuing

the attachment as contended by the counsel for the plaintiff.

16. Before parting with this case it may be noticed that on query

from the counsel for the Decree Holder as to what steps were taken

by the Decree Holder before contending before this court for

obtaining an ex-parte order of attachment that the property belongs

to the Judgment Debtor, it is stated that the Decree Holder itself

being a company, no inquiries could be made. A company cannot

escape responsibility for its actions by contending to be a juristic

person. It thinks and acts through its board of directors. When a

person, be it a company, approaches the court for an ex-parte order

and on whose statement the courts acts, it is expected to be fair to

the court and to the party against whom order is sought. In the

present case it appears that the Decree Holder has not made any

enquiry from the L&DO or the MCD where the records of this

property exist before averring that the property of which attachment

was sought belonged to the Judgment Debtor. Such practice of

obtaining attachments of properties of persons other than Judgment

Debtors, without making any enquiry as to title ought to be

deprecated.

17. I also find that not only did the Decree Holder not make any

enquiry, in the case, but as would be obvious from above, even after

being appraised of the title of the Objectors qua the said property,

persisted in continuing the attachment and argued for the objections

to be put to trial. The reason therefor is obvious. The Decree Holder

thereby wants to coerce the Objectors who are related to the

Judgment Debtor/its Directors. This court ought not to be made

privy to such practices.

18. It is incumbent on a person seeking attachment of any property

to state on oath that the Judgment Debtor has attachable interest

therein. If found otherwise, such person is liable to the person

whose property has been so attached, for wrongful attachment

Section 95 CPC is only qua defendant in a suit. No provision is found

qua a non party to the suit. However, once it is found that wrongful

attachment is actionable, such person cannot be remedyless. In my

view, such remedy ought not to be left to be by way of a separate

proceeding. An injury caused by litigation ought not to be left to be

redressed in a separate litigation and in so far as possible, amends

should be made in the same litigation. Unless it is so done, litigants

would not hesitate in causing such injury to other, secure in the

belief that the other is unlikely to commence another litigation for

such redressal. Courts are meant for adjudication of bonafide

conflicts and not for causing injury to the other by merely involving

in litigation.

19. The privy council as far back as in Kissori Mohan Roy Vs.

Harsukhdas ILR XVII Cal 436 held that no finding of malice or want

of reasonable care is necessary in case where the property of a

person who is not a party to the suit is wrongfully attached. The

same view is taken in Bank of India Vs. Lakshimani Dass (2000) 3

SCC 640. Having found that the Decree Holder in the present case

to have wrongfully obtained attachment of the property of the

Objectors and persisted in the same, the Decree Holder has become

liable.

20. The application/objections are allowed. Attachment earlier

ordered is vacated. For above purposes, Col. J.S. Pental who has

signed and verified the execution and filed the affidavit in support of

the execution is directed to remain personally present before this

court on the next date of hearing.

RAJIV SAHAI ENDLAW (JUDGE) August 21, 2009/j