Bombay High Court Orders Oral Examination of Company Director to Enforce Arbitral Award.
27 November 2024
Arbitration Law >> Business & Commercial Law
In recent case of Baja Auto Limited vs Executive Motors Pvt. Ltd. & Others on June 2021, where the Arbitral Tribunal had ordered the original respondent (judgment debtor) to pay Rs. 2,91,84,812 with 10% interest. Despite the award's non-challenge and dismissal of a counterclaim by the judgment debtor, no payment had been received. Consequently, the petitioner filed an execution application under Order XXI Rule 41 of the CPC to enforce the award.
The court noted prior orders requiring disclosure from the judgment debtor and its Chartered Accountant. However, the petitioner highlighted discrepancies in these disclosures, arguing they were inadequate and possibly forged. This led to a request for the oral examination of Mr. Arun Chanda, one of the company’s directors, to determine assets and means to satisfy the decree.
The judgment debtor opposed the request, arguing that merely non-paying is insufficient grounds for examination and that the disclosures already made should suffice. However, the court rejected this, emphasizing that even though a company's directors act as its representatives, requiring a director's presence for oral examination under Rule 41 does not amount to piercing the corporate veil.
The court ultimately directed Mr. Arun Chanda to appear in court on 19th December 2024, at 4:00 PM, with all relevant information, books, and documents related to the judgment debtor’s assets and means of satisfying the decree. The court ordered appropriate notice to be issued, though Mr. Naphade, counsel for Mr. Chanda, waived formal notice and assured compliance.