Inspection of Public Records
Both public and private companies incorporated under the company laws applicable in India are required to file statutory reports which declare their financial statements, including annual returns, profit and loss statements, details of charges attached to any company asset and balance sheets which can be accessed from the records of the respective company from Ministry of Corporate Affairs. The web portal https://www.mca.gov.in/content/mca/global/en/home.html is accessible to the public to download all such information for a nominal fee.
The details of the immovable assets of a person can be retrieved from Land Revenue authorities in a specific district where such immovable property is located.
In the event that an insolvency or bankruptcy proceeding has been initiated against a company, the details of proceedings initiated and the status of the proceedings can be accessed online on the portal of Insolvency and Bankruptcy Board of India: https://ibbi.gov.in/en.The services of an investigator or asset tracing agency can also be used.
Information regarding public records, including details of the assets of public officers, can be sought under the Right to Information Act, 2005 by any person.
Court Orders
Under Order XXI Rule 41(2) of the Code of Civil Procedure, 1908 (“CPC”), a court has the power to direct the judgment debtor to file an affidavit of the asset. However, such an affidavit of assets can only be directed upon an application having been filed on behalf of a decree-holder under Order XXI Rule 41(2) of the CPC. Such a direction cannot be passed suo motu by an executing court.
Additionally, Order XXXVIII Rule 5 of the CPC provides for attachment of property while the judicial proceedings are pending. The court can invoke this statute when there is a threat of disposal or removal of assets.
Under Section 151 of the CPC, courts in their inherent power can issue Mareva injunctions on an application where there is a real risk of the defendant's assets being dissipated with an intention to make a judgment against the defendant void and unenforceable.
Judgments and decrees are crucial parts of the justice system. Under the CPC, the judgment is the final decision of the court based on the pleadings and evidence submitted by the parties involved in a case, and the decree is the formal expression of the judgment of the court that sets out the rights and obligations of each party involved in the case. In other words, a judgment is a decision of the court while a decree is a formal enforceable order of the court based on the decision. Execution proceedings can be initiated before the court or any other authority as per the provisions of the CPC to enforce the decree. A decree conclusively determines the rights of each party involved in the case and is binding upon them.
There are different types of judgments and decrees that can be passed by the court. The types of judgments are:
A decree can be preliminary, final or partial under the CPC. A preliminary decree is given when further proceedings are pending before the court. It decides the rights of the parties involved in a case but does not completely dispose of the suit. A final decree is passed after the preliminary decree and gives effect to the same. A partial decree decides some claims and leaves the other claims to be decided at the time the final decree is passed.
The other types of decrees are:
The process for enforcing or giving effect to the decree or judgment of the court is termed “execution”. It is a proceeding that mandates the judgment-debtor to give effect to the decree and enable the decree-holder to recover the costs granted to him by the said decree.
Enforcement proceedings fall within the ambit of Sections 36 to 74 and Order 21 of the CPC. Under Section 38 of the CPC, a decree can be executed either by the court that passed it or by the court to which it is sent for execution. Common methods of enforcement include:
Arrest and detention for up to three months is also possible (Sections 51(c) and 55-59), but this is less common.
The procedure is simple and requires an application seeking execution to be filed before a competent court/authority with jurisdiction within 12 years from the date of the decree. It should necessarily contain information such as the name of the parties and the date of the decree. It is required to be in writing, duly signed and verified by the applicant specifying that the applicant is aware of the facts of the case.
During the course of execution proceedings, a decree-holder can also apply to the court to provide directions to the judgment debtor to disclose any assets and liabilities. If the execution petition is filed within two years from the date of the decree, notice is not mandatory. If the court feels that the issue of notice would defeat the purpose of the execution and cause delay, then a notice is not issued. Otherwise, notice is sent to the judgment debtor to show cause as to why the judgment should not be executed.
An application for execution of a decree other than a decree for mandatory injunction can be filed within 12 years as per Article 136 of the Limitation Act. The limitation for execution of a decree for a mandatory injunction is three years as per Article 135 of the Limitation Act. There is no limitation to executing a decree for a permanent injunction. The period of limitation commences from the date when the decree becomes enforceable, but an exception has been made in respect of the decree for perpetual injunction for which there is no period of limitation, and it can be enforced at any time.
The execution proceedings will entail costs including court fees, advocate's fees, and other miscellaneous expenses which may be recoverable from the judgment debtor. The CPC does not set time limits for the execution of either domestic or foreign decrees. Execution proceedings could take anywhere between one month to several years from the date of filing the execution petition, depending on a number of factors including service of notice to the judgment debtor, the nature of the objections raised by the judgment debtor, the nature of interim relief sought, the caseload of the executing court, the quantum of costs and, most importantly, type of assets involved. However, in the case of Rahul S Shah v Jinendra Kumar Gandhi & Others, reported in (2021) 6 SCC 418, the court held that the executing court must dispose of the execution petitions within six months, from the date of filing, which may be extended only by recording reasons in writing for such delay.
Under Order XXI Rule 41(2) of the CPC, the court has the power to direct the judgment debtor to file an affidavit of assets. However, such an affidavit of assets can only be directed to be filed upon an application having been filed on behalf of the decree-holder under Order XXI Rule 41(2) of the CPC. Such a direction cannot be passed suo motu by the executing court.
A defendant may challenge the enforcement of a judgment on the various following grounds in an appeal:
Additionally, while the appeal proceedings are pending, the party may seek a stay on the effect of the judgment as there is no automatic stay on the enforcement under Order 41, Rule 5(1), CPC. A specific stay must be obtained either from the court that granted the judgment, or an appellate court, and such a stay can be granted only on sufficient cause being shown. In some cases, the court may grant a stay of execution proceedings on terms such as the deposit of security (Order 21, Rule 29, CPC).
All types of judgments are enforceable in India. These include money judgments, summary judgments, ex-parte judgments, and default judgments. Subject to the judgment being conclusive (that is, not subject to any appeal/stay), there is no judgment that cannot be enforced.
The details of all judgments are available on the respective court’s official website. Certified copies of judgments can also be applied for and obtained from the court’s registry.
A judgment-debtor cannot apply to remove or expunge a judgment from the registry once it has been satisfied. Instead, any judgment debtor who has satisfied a judgment debt should apply to the court for satisfaction to be recorded.
Pertinent legal issues which arise while enforcing a foreign judgment in an Indian jurisdiction are as follows:
The jurisdiction’s approach to enforcement for different types of judgments is treated the same, regardless of the variety of judgments.
Foreign judgment is not enforced when not given on merits, opposed to natural justice, obtained by fraud, or in cases of default judgments, and if given on exceptions (a) to (f) mentioned under Section 13 of the CPC. In these circumstances, it is held to be unenforceable in India.
There is no formal process for recognition of a foreign judgment.
Reciprocating Territory
The decree holder must file an application for execution of the foreign judgment or decree in the competent Indian court. A certified copy of the decree and a certificate from the superior court of the foreign country stating the amount, if any, that has been satisfied under the decree must also be submitted. Following the application, the executing court will call on the judgment debtor to show cause against the execution of the decree. At this stage, the judgment debtor has the right to object to enforcement on the grounds that the judgment offends any of the conditions specified in Section 13 of the CPC.
The various stages in an execution proceeding instituted in India to enforce a decree under Section 44A of the CPC are stated as follows.
Non-reciprocating Territory
The judgment holder must file suit on the foreign judgment or decree with a limitation period. Only once the suit is allowed and decreed can it be executed as a domestic decree in terms of Order 21 of the Code of Civil Procedure, but it also has to pass the test laid down under Section 13 of the CPC.
If the foreign judgment or decree is not contested, the entire process may take about one to two years. If enforcement of the foreign judgment or decree is contested, it could take anywhere between two and three years. However, the time taken to enforce varies from one jurisdiction to another, depending on the complexity of the case and the workload of the court.
The defendant can challenge the recognition and enforcement of a foreign judgment by disputing that the judgment falls within the exceptions set out in Section 13 of the CPC. For instance, the defendant may object on the following grounds:
In India, arbitral awards are categorised as two main types based on the location of the arbitration and the parties involved: domestic arbitral awards and foreign arbitral awards.
Domestic Arbitral Awards
A domestic arbitral award is an award made in an arbitration that takes place within India. It involves disputes between parties that are both based in India or where the subject matter of the dispute is within India. The arbitration is governed by the provisions of the Arbitration and Conciliation Act, 1996 (ACA).
Enforcing domestic arbitral awards
Domestic arbitral awards are enforced under Part I of the ACA. After receiving the award, a party can apply to the appropriate court for the enforcement of the award. The court has the authority to pass a decree in terms of the award, making it legally binding and enforceable.
Foreign Arbitral Awards
A foreign arbitral award is an award made in an arbitration conducted outside India. It involves disputes where at least one of the parties is based in a country other than India or where the subject matter of the dispute is located outside India. Foreign arbitral awards can be further categorised based on whether the award falls under the New York Convention or the Geneva Convention.
Awards under the New York Convention
Awards falling under the New York Convention are awards made in the territory of a country that is a party to the New York Convention. India is a party to the New York Convention.
Awards under the Geneva Convention
Awards falling under the Geneva Convention are awards made in the territory of a country that is a party to the Geneva Convention. India is a party to the Geneva Convention.
Enforcing foreign arbitral awards
Foreign arbitral awards are enforced under Part II of the ACA. A party seeking to enforce a foreign arbitral award in India needs to file an application for enforcement before the appropriate court. The court will then determine whether the award meets the requirements for recognition and enforcement under the relevant convention and Indian law. If the court is satisfied, it will pass a decree, making the foreign award enforceable in India as if it were a domestic award.
India is a party to both the New York Convention and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 (Geneva Convention). However, an award is only enforceable if it was made in the territory of another state that is identified by the Government of India in the Official Gazette as being bound by either convention.
Domestic and Foreign Arbitral Awards
Pertinent legal issues which are witnessed while enforcing an arbitral award in India, whether domestic or foreign can broadly be categorised in the following ways.
Award beyond the scope of reference
The reference of a dispute under an agreement defines the limits of the authority and jurisdiction of the arbitrator. If the arbitrator had assumed jurisdiction not possessed by him, the award to the extent to which it is beyond the arbitrator’s jurisdiction would be invalid and liable to be set aside.
Illegality of arbitral procedure
Failure to adhere to the established procedure or the procedure outlined in the relevant Act constitutes procedural misconduct. If the arbitral tribunal handles a matter that is evidently beyond its authorised scope, it would be considered misconduct by the arbitrator. A decision in which the arbitrator intentionally strays from the defined terms of reference and arbitration agreement will be seen as misconduct by the arbitrator.
Notice not given to parties
An award’s enforceability may be challenged if either of the parties did not get appropriate notice of the arbitrator’s appointment, arbitral procedure or was unable to present his case.
Award against public policy
Enforceability of an award which is against the public policy of India may be challenged.
Incapacity of parties
If one of the parties involved in the arbitration lacks the capacity to safeguard their own interests and is not represented by someone who can advocate on their behalf, the resulting award will not be legally binding on them and may be invalidated upon their request.
Patent Illegality of the Award
This condition only applies to domestic awards. If the award is suffering from patent illegality prima facie, such an award is not enforceable.
Approaches to enforcement of arbitral awards are the same, regardless of the different types of arbitral awards.
Domestic and foreign awards may be unenforceable if they:
In addition, domestic awards that are in conflict with the public policy of India may also be unenforceable.
The steps involved in enforcing an arbitral award in India are as follows.
There is no set procedure or timeline for decisions on the challenge; the actual time generally varies from six months to three years. The costs involved at each level are the attorneys’ fees and other legal expenses. Courts usually grant costs to the successful party; however, these costs are generally notional and not commensurate with the actual costs.
The grounds for challenging a domestic award are enumerated under section 34 of the Arbitration and Conciliation Act, 1996, while the grounds for challenging a foreign award are laid down under section 48 for awards arising out of the New York Convention, whereas awards arising from the Geneva Convention can be challenged under section 57 of the Act.
The following are the grounds for challenging the enforceability of an award which are common to all the sections mentioned above:
The following grounds for challenging the enforceability of an arbitral award are stipulated under Section 34 (for domestic awards) and under Section 48, but not under Section 57 of the Act:
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