In a significant ruling of Drive India Enterprises Solutions Ltd. v/s Haier Telecom (India) Pvt. Ltd. & Another concerning the execution of a civil decree, a court has directed the garnishee to deposit a sum of Rs. 17,40,82,984/- (approximately Rs. 17.4 crore) into the court, as part of the ongoing enforcement of a judgment dated September 10, 2018. The ruling highlights the application of provisions under Order XXI of the Civil Procedure Code (CPC), addressing the enforcement of decrees and the role of garnishees in such matters.
Background:
The applicant, who was the judgment creditor, sought the court's intervention against the respondent, the garnishee, to enforce the decree following the judgment debtor's failure to comply with the payment obligations. The judgment debtor had been directed to pay an outstanding amount of Rs. 64,11,78,970.50, plus interest of Rs. 9,63,32,603.43, with further interest at 12% per annum from September 11, 2018. However, despite several attempts to enforce the decree, including orders compelling the judgment debtor to make disclosures, the required payments were not made.
In a key development, the applicant discovered through an affidavit filed by the judgment debtor that an amount of Rs. 17,40,82,984/- had been advanced to the respondent by the judgment debtor. This was confirmed in the judgment debtor's financial records for the fiscal years 2017-2020, as well as through oral testimony from the director of the judgment debtor, Mr. Rajesh Duggal, during his cross-examination in September 2021. These financial disclosures established the respondent as a garnishee owing the said amount.
Legal Proceedings:
The applicant's counsel, Mr. Bharucha, argued that the respondent's obligation to repay the amount was clearly supported by the judgment debtor’s balance sheets and the respondent’s own financial statements, which corroborated the debt owed. Mr. Bharucha cited the ruling of the Supreme Court in Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal (2021), emphasizing that an acknowledgment of liability in a balance sheet could be considered a valid acknowledgment of debt.
Further, Mr. Bharucha contended that the respondent had not provided any valid dispute regarding the debt. He referenced the legal principle that when a garnishee fails to dispute a debt substantively, the court is empowered to order the attachment and deposit of the sum in question, as per the provisions of Order XXI Rule 46 and Rule 46-A of the CPC. He also highlighted the interconnected ownership and management between the judgment debtor and the respondent, both controlled by the same individual, Mr. Arun Khanna. This, Mr. Bharucha argued, further underscored the lack of bona fide dispute, suggesting that the transfer of funds was intended to evade payment of the judgment debtor’s debt.
The Respondent’s Defense:
In defense, the respondent’s counsel, Mr. Rebello, denied owing any money to the judgment debtor, asserting that the amount had already been paid to HT Media for share subscription back in 2012. Mr. Rebello argued that the entries in the financial statements were merely book entries with no actual financial transaction underlying them. He further claimed that the dispute raised by the respondent regarding the payment made to HT Media was valid and substantive, meriting trial.
Additionally, Mr. Rebello brought up the claim that the respondent was itself owed a sum of Rs. 3,13,98,220/- by the applicant, and legal proceedings were underway to recover the amount. However, the court found the respondent’s objections to be without merit, given that the alleged transaction with HT Media was from 2012, while the financial statements in question were for the years 2020 and 2023, with no adjudicated dispute between the parties.
Court’s Ruling:
After considering the arguments, the court concluded that the respondent had failed to provide a valid dispute regarding the debt. It noted that the financial statements from both the judgment debtor and the respondent clearly recorded the outstanding amount of Rs. 17,40,82,984/- as a liability. The court rejected the respondent’s argument that the entries in the financial statements were merely book entries, as there was no challenge to the authenticity of these records. Furthermore, the court held that the respondent’s claim of initiating separate legal proceedings to recover a debt from the applicant did not justify delaying the payment owed to the judgment debtor.
The court also found that the respondent’s objections were without substance and based on frivolous claims. Accordingly, it ordered the attachment and deposit of Rs. 17,40,82,984/- into the court within six weeks, in accordance with the provisions of the CPC. The applicant was granted the liberty to withdraw the amount after it was deposited.
Conclusion:
This ruling reaffirms the court's ability to enforce decrees effectively and its power to direct garnishees to deposit amounts owed when no legitimate dispute exists. It also underscores the importance of financial statements as valid evidence of debt and liability. The case serves as a reminder of the stringent enforcement mechanisms available to judgment creditors under the Civil Procedure Code, particularly in instances where debtors attempt to delay or evade payment through procedural defenses.
Code of Civil Procedure, 1908
