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2021 (7) TMI 1430
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....s & Builders Pvt. Ltd. supra and M.L. Gupta Vs. Aerens Gold Souk International Ltd., and being otherwise also of the opinion that the matter required consideration, leaving open the aspect of maintainability of the appeal, notice of the appeal and the applications was issued. 2. The senior counsel for the appellant no. 1 Delhi Chemical and Pharmaceutical Works Pvt. Ltd. and appellant no. 2 Ameet Sharma, the counsel for the respondent no. 1 Himgiri Realtors Pvt. Ltd. and the senior counsel for respondent no. 2 Samir Dev Sharma, were heard on 25th May, 2021, on, the application for condonation of delay in preferring the appeal, maintainability of the appeal as well as on the merits of the appeal, and orders reserved. 3. As far as the delay in preferring the appeal is concerned, the appellants, in the application for condonation of delay, have attributed the same to (i) suspension of the period of limitation during the prevalent Covid-19 pandemic; and, (ii) the appellant no. 2, who is the authorized signatory of the appellant no. 1, being unwell and the old age of his mother. 4. The counsel for the respondent no. 1, which is the only contesting respondent, to be fair to him, did no....
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....n Petition was accompanied with a "Schedule of Properties", wherein the decree holder listed, (i) property no. 4, Ansari Road, Daryaganj, New Delhi and property no. A-8 (Site IV) Link Road, Sahibabad, District Ghaziabad (UP) as the properties of appellant no. 1/judgment debtor, (ii) property no. 66, East Friends Colony, New Delhi and property no. 227, Siddharth Enclave, New Delhi as the properties of appellant no. 2/judgment debtor, and (iii) property no. 66A, East Friends Colony, New Delhi and property no. A-20, New Friends Colony (East), New Delhi as the properties of one Trustline Real Estate Pvt. Ltd. in which the appellant no. 2/judgment debtor held a 95.2% shareholding. 8. It appears that when the Execution Petition came up before the Commercial Division on 30th August, 2019, the Commercial Division, in exercise of powers under Order XXI Rule 41(2) of the CPC, directed the judgment debtors to file affidavits of their assets, in Form 16A, Appendix E of the CPC. The Commercial Division, vide order dated 3rd December, 2019, further directed the judgment debtors to file additional affidavits, as per Annexures to the said order, together with documents required to be furnished in....
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.... pending consideration; (v) the decree holder accepted the arbitral award in toto and had filed OMP(ENF.)(COMM.) No. 140/2019 in execution thereof; (vi) though Order XXI Rule 41(2) of the CPC provides for a direction to the judgment debtor to file affidavit in the form prescribed therein only when the decree for payment of money had remained unsatisfied for a period of 30 days and only on the application of the decree holder, the Commercial Division, in violation thereof had directed filing of affidavits without there being any application of the decree holder therefor and without the decree having remained unsatisfied; (vii) there was thus no justification for the Commercial Division to direct filing of affidavits by the judgment debtors; (viii) that the dicta in Bhandari Engineers & Builders Pvt. Ltd. supra prescribing the form in which the affidavits were to be filed would come into operation only on fulfilment of conditions aforesaid under Order XXI Rule 41(2) of the CPC and not without the said conditions being fulfilled; (ix) the decree holder in the present case was not only well aware of the assets/properties of the judgment debtors, as evident from filing of schedule of th....
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....ourt of Bombay, in United Phosphorous Ltd. Vs. A.K. Kanoria AIR 2003 Bom 97 has opined that examination of judgment debtor under Order XXI Rule 41 is not one of the modes of execution of a decree provided under Order XXI Rule 11(2)(j) of the CPC; Order XXI Rule 41 is merely an aid to the decree holder to enable him to execute the decree by obtaining information which is within the special knowledge of the judgment debtor; (xvi) the High Court of Calcutta also in Srei Equipment Finance Pvt. Ltd. Vs. Khyoda Apik AIR 2016 Cal 293 (DB) has held that Order XXI Rule 41 is to be resorted to only when the decree holder is not aware of the properties of the judgment debtor from which the money decree is to be executed; (xvii) even Bhandari Engineers & Builders Pvt. Ltd. supra holds that if the decree holder is aware of the assets of the judgment debtors, the Court can attach such assets at the very threshold of the execution application; (xviii) Order XLI Rule 1(3) and Rule 5 also provide for opportunity to the judgment debtor to obtain a stay against the decree upon deposit of the disputed amount in the Court; Section 34 of the Arbitration Act also empowers the Court to direct the judgment....
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....s of the judgment debtor qua which only affidavit can be directed to be filed under Order XXI Rule 41 of the CPC; (xxvi) Serial no. 13(i) and (ii) of the annexure to Bhandari Engineers & Builders Pvt. Ltd. supra also require the judgment debtor to furnish information for the previous ten years, when the Income Tax Act, 1961 and the Companies Act, 1956 do not themselves mandate maintenance of records beyond eight years; (xxvii) Serial no. 20 of the annexure formulated by the Court in Bhandari Engineers & Builders Pvt. Ltd. supra also requires information to be given by the judgment debtor, of all the properties which have ever been in the name of the judgment debtor or in which the judgment debtor has ever had any right or interest; it is not humanly possible to give such information and which even otherwise is of no relevance; (xxviii) Serial no. 58 of annexure formulated by the Court in Bhandari Engineers & Builders Pvt. Ltd. supra also requires the judgment debtor to give particulars of credit/debit cards and which particulars also ought not to be made public; the issuing banks themselves use redacted particulars thereof; (xxix) Serial nos. 63 to 66 of the annexure formulated by ....
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....bject arbitral award; and, (xxxviii) the time of the Courts/ Commercial Divisions, in following Bhandari Engineers & Builders Pvt. Ltd., is being wasted, in directing the affidavits as formulated therein to be filed, even when the particulars of the assets of the judgment debtors from which decree could be executed are already before the Court, as in the present case. 12. We would ordinarily not have set out in detail, the pleadings in a memorandum of appeal, but have deemed it apposite to do so in the present case because a reading of the impugned orders does not disclose the issues entailed and because the impugned orders are premised only on Bhandari Engineers & Builders Pvt. Ltd. supra. We were also concerned, that inspite of the Execution Petition pending before the Commercial Division since August, 2019 and inspite of particulars of assets of the judgment debtors being before it, the Commercial Division, instead of proceeding with attachment and sale of the said assets from which the decretal amount could be satisfied, is found to have spent over one year in directing the judgment debtors to file additional affidavits of assets, when, we reemphasize, there was no need for th....
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....h is not in the domain of the Commercial Division as an executing Court; (iii) Order XXI Rules 10 and 11 of the CPC, to contend that an application for execution is prescribed to be made in writing and an oral application for execution is permitted only at the time of passing of the decree when immediate execution thereof is sought; (iv) Order XXI Rule 11(2)(j), to contend that the decree holder, in the application for execution is required to plead one of the specified modes in which the assistance of the Court is required and to again contend that filing of an affidavit is not a prescribed mode of execution; (v) Order XXI Rules 12 and 13, to contend that the application for execution is required to annex thereto the list of the properties of the judgment debtor, attachment and sale whereof in execution of a money decree is sought; (vi) Order XXI Rule 41 of the CPC, to contend, (a) that the same has been placed under the heading/sub-chapter titled "Attachment of Property"; and, (b) that the same does not empower the executing Court to, in every case direct the judgment debtor to furnish an affidavit or affidavits or as laid down in Bhandari Engineers & Builders Pvt. Ltd. supra but....
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....Order XXI Rule 41(3) i.e. of imprisonment upto three months and thus the direction under Order XXI Rule 41 of the CPC is not to be made lightly and only when required in the facts of the case; (v) Bhandari Engineers & Builders Pvt. Ltd. supra, to the extent directs the executing Court to, even in the absence of any application of the decree holder, direct the judgment debtor to file affidavits in the format as also laid down therein, is contrary to the express language of Order XXI Rule 41 of the CPC; (vi) similarly, Bhandari Engineers & Builders Pvt. Ltd. supra, to the extent directs affidavits to be filed in the format laid down therein, is contrary to the CPC inasmuch as CPC, in Appendix-E prescribes the form (Form No. 16A) in which affidavit is to be filed and Order XLVIII Rule 3 permits the Court to make variation in the said form only as per the needs of a particular case; (vii) the Court, in Bhandari Engineers & Builders Pvt. Ltd. supra could not have thus prescribed a form, of general application, other than and in supersession of the form prescribed by the legislature in the CPC and the Court, in Bhandari Engineers & Builders Pvt. Ltd. supra, acted as super legislature and....
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....e judgment debtor under Order XXI Rule 41 of the CPC is not automatic but subject to the conditions therein being satisfied i.e. of the decree holder making an application and of the decree remaining unsatisfied; thus the question of the executing Court issuing a direction under Order XXI Rule 41 of the CPC, in each and every case, irrespective of whether the decree holder has applied for an order thereunder and/or whether the decree holder has specified the properties of the judgment debtor from attachment and sale whereof execution is sought, is contrary to law; (ii) placed reliance on Anirban Roy Vs. Ram Kishan Gupta n this regard; (iii) the forms laid down by this Court in Bhandari Engineers & Builders Pvt. Ltd. supra, in accordance wherewith the affidavits are to be filed by the judgment debtors, contravene the rights of privacy of the judgment debtors as recognized in K.S. Puttaswamy Vs. Union of India (2017) 10 SCC 1; (iv) drew attention to the forms laid down in Bhandari Engineers & Builders Pvt. Ltd. supra, requiring the judgment debtors to furnish information under as many as 51 heads pertaining to their personal affairs and if Director of a company, to furnish informatio....
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....the decree holder does not learn of the assets or particulars of the judgment debtors, decree holder cannot possibly seek execution thereagainst. 17. This Court, in order dated 27th April, 2021, while issuing notice of the appeal, having also raised doubts as to the maintainability thereof, the senior counsel for the appellants/judgment debtors, on the aspect of maintainability of the appeal, contended that (i) D&H India Ltd. Vs. Superon Schweisstechnik India Ltd. (2020) 268 DLT 15 (DB), lays down that the proviso to Section 13(1A) of the Commercial Courts Act cannot be read as limiting the right to appeal conferred by Section 13(1A) and that the said proviso merely states that, from orders passed by the Commercial Division of the High Court, as are specifically enumerated under Order XLIII of the CPC, an appeal would lie under Section 13(1A) and that the said proviso cannot be read as meaning that no appeal would lie in any other case especially where the order under appeal has not been passed under the CPC at all, but, as in that case, under Rule 5 in Chapter II of the Delhi High Court (Original Side) Rules, 2018; (ii) all arbitrations do not qualify as a commercial dispute with....
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....sequently, pursuant to pronouncement in Bhandari Engineers & Builders Pvt. Ltd. supra, vide order dated 23rd December, 2019 the affidavit in the form prescribed therein was directed to be filed; (vi) the judgment debtors, before the Commercial Division were seeking time to file the affidavits and thus cannot now in appeal challenge the direction for filing of affidavit; (vii) the judgment debtors have not impugned the order dated 3rd December, 2019 directing the affidavit to be filed in terms of annexure thereto and are thus not entitled to challenge the subsequent order dated 23rd December, 2019 which merely modified the form of the affidavit, to as laid down in Bhandari Engineers & Builders Pvt. Ltd. supra; (viii) the property of the judgment debtors in possession of the decree holder in terms of the arbitral award is located at Sahibabad and is not sellable because of dispute with respect thereto pending with Uttar Pradesh State Industrial Development Corporation (UPSIDC) which has cancelled the lease and is reclaiming the land; and, (ix) without the judgment debtors filing the affidavits, the decree holder would not be able to trace the properties of the judgment debtors. 19. ....
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....other questions. Firstly, we had drawn attention to Section 13(1A) of the Commercial Courts Act, which uses two expressions i.e. "judgment or order" and to the proviso thereto, which restricts appeals against "orders" to only the orders enumerated in Order XLIII of the CPC; we had enquired, whether notwithstanding the proviso, appeals against orders qualifying as a "judgment" remain maintainable under Section 13(1A) of the Commercial Courts Act. Secondly, we had enquired from the counsels, whether the proviso after Section 13(1A) regulates both, Section 13(1) as well as Section 13(1A) or only Section 13(1A). 24. As far as our first query aforesaid is concerned, D&H India Ltd. supra considered three earlier judgments, also of Division Benches of this Court i.e. HPL (India) Limited Vs. QRG Enterprises (2017) 238 DLT 123 (DB), Samsung Leasing Ltd. Vs. Samsung Electronics Co. Ltd. (2017) 242 DLT 608 (DB) and Rahul Gupta Vs. Pratap Singh (2014) 206 DLT 188 (DB). In HPL (India) Ltd. supra, it was held that, (i) Section 13 is the sole repository qua appeals pertaining to commercial disputes and there can be no appeals against judgments/orders/decisions in the said disputes, other than as....
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....peal conferred under Section 13(1) and Section 13(1A) or as meaning that no appeal would lie in any other case especially where the order under appeal had not been passed under the CPC at all but under Rule 5 in Chapter II of the Delhi High Court (Original Side) Rules, 2018; the Division Bench further gave reasons why the need to refer the question to a larger bench was not felt. 25. Though we, with due deference to the members of the Division Bench in D&H India Ltd. supra, entertain doubts as to the correctness of the view taken in D&H India Ltd. but do not, in the facts of the present case, feel the need to make a reference of the question to a larger bench; the reason is, that Bhandari Engineers & Builders Pvt. Ltd. supra, on which the impugned orders are based, while laying down the law laid down therein, also directs all Courts to abide thereby, resulting in plethora of similar challenges as made herein and it is deemed expedient to settle the law in that regard and which would remain pending if the question of maintainability of the appeal were to be referred to a larger bench. 26. However before proceeding to the merits of the matter, we have to also deal with, (A) the con....
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....ied value, all applications or appeals arising out of such an arbitration under the provisions of the Arbitration Act that have been filed on the original side of the Court shall be heard and disposed of by the Commercial Division, where such Commercial Division has been constituted in the High Court. It is not in dispute that the subject matter of the arbitration, award whereof is under execution, was of the specified value. The arbitration concerned adjudication of rights and obligations arising between the decree holder and the judgment debtors from agreements entered into between them with respect to an industrial plot of land at Sahibabad. While it was the contention of the decree holder that it was an agreement for sale of the said land by the judgment debtors to the decree holder, the judgment debtors contended the agreement to be a Collaboration Agreement whereunder the decree holder had agreed to raise construction on the land of the judgment debtors for the consideration of sharing a portion of the constructed area. The arbitral award negates the contention of the decree holder, of the agreement being of sale and has held the decree holder to be only entitled to reimburse....
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.... for execution of the decrees passed in the said suits or over enforcement of awards passed in the said arbitrations. The question which arises is, whether a claim made by one against the other and controverted by the other, on adjudication thereof, whether by the Court or by the Arbitrator, ceases to be a "dispute", for it to be said that the proceedings for execution of adjudication of a commercial dispute, whether by way of a decree or an arbitral award, do not qualify as a "dispute". 33. Section 2(1)(i) of the Commercial Courts Act defines "Specified Value" in relation to a commercial dispute, as the value of a subject matter in respect of a suit as determined in accordance with Section 12. Reference therein is thus expressly to a "suit", as distinct from an "execution". Section 12 however refers to the specified value of the subject matter of the commercial dispute in a suit, appeal or application. Thereby, the ambit of specified value is increased, from that in Section 2(1)(i), with reference to a "suit" alone, to an appeal or an application also. Finally, Sections 6 and 7, while prescribing the jurisdiction of Commercial Courts and Commercial Divisions, prescribe the said j....
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....f high value commercial disputes and their early resolution. The resolution of a commercial dispute is not complete, till the fruit thereof is in the hands of whosoever is found to be entitled thereto. Supreme Court also recently in Rahul S. Shah Vs. Jinendra Kumar Gandhi has lamented on the troubles of the decree holder, in not being able to enjoy the fruits of litigation on account of inordinate delay caused during the process of execution of the decree and has referred to the observations in a judgment of 1872 vintage of the Privy Council in the General Manager of the Raja Durbhunga Vs. Maharaja Coomar Ramaput Singh, that the actual difficulties of a litigant in India begin when he has obtained a decree. This being the state of affairs, to hold that the jurisdiction of the Commercial Courts/Commercial Division does not extend to execution but ends with adjudication, would defeat the very purpose and object of the Commercial Courts Act i.e. of speedy disposal and resolution of commercial disputes of a specified value. To hold that the Commercial Courts/Commercial Divisions would not have jurisdiction over applications for execution of a judgment or decree or for enforcement of an....
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....f the senior counsels for the judgment debtors, that Commercial Courts/Commercial Divisions do not have jurisdiction over executions because there is no specified value of the execution applications also stands negated vide Section 38 of the CPC which provides for jurisdiction for execution to be of the same Court which passed the decree. The "specified value" has been defined in Section 2(i) of the Commercial Courts Act, of the commercial dispute and an application for execution, as aforesaid, arises therefrom. 41. We are thus unable to accept the arguments of the senior counsels for the judgment debtors that the application for execution of an arbitral award subject matter whereof was a commercial dispute does not lie before the Commercial Court or the Commercial Division and lies before the ordinary original civil court and this appeal would thus not be governed by the provisions of Section 13 of the Commercial Courts Act. 42. During the hearing, we had also wondered whether holding that the appeals arising from orders made in the course of execution proceeding to be also governed by Section 13 of the Commercial Courts Act would result in no appeal whatsoever lying from any or....
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....be issued; if the same were to be permitted, it would nullify Order XXI Rule 11(2)(j) which requires such particulars to be furnished and Order XXI Rule 22 of the CPC which does not mandate notice of execution to be issued when applied for within two years of the date of the decree; issuing of such notice leads to avoidable delays. 45. As aforesaid, challenge to the merits of the impugned orders would require us to deal with Bhandari Engineers & Builders Pvt. Ltd. supra. (pronounced on 5th December, 2019) as well as judgments/orders therein, dated 11th January, 2016, dated 5th February, 2019, and dated 5th August, 2020. Having gone through all the four, we cull out hereunder the conclusions and the law laid down in the four judgments. 46. In the first judgment dated 11th January, 2016, it was held, "in cases of execution of decree for recovery of money, it would be appropriate to direct the judgment debtor, at the initial stage itself, to file the affidavit of assets as on the date of institution of the suit as well as of the current date i.e. the date of swearing the affidavit in Form 16A, Appendix-E under Order XXI Rule 41(2) of the Code of Civil Procedure along with statement ....
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....oceedings. Though the Court, in the earlier part of the judgment had noted that the need for directing such affidavit to be filed would arise only when the decree holder was not aware of the assets of the judgment debtor, but in the concluding portion of the judgment, the Court proceeded to issue a direction to all courts executing a decree for recovery of money, to, in the first instance direct the judgment debtor to file the affidavit in the form as drafted by the Court and directed the copy of the said judgment to be circulated to all the Courts and others concerned. Vide the third judgment dated 5th December, 2019, certain modifications were carried out in the format devised in the preceding judgments. Finally, in the last judgment dated 5th August, 2020, after receiving the suggestions from Trial Courts and Members of the Bar, the guidelines laid down in the earlier judgments were further modified and made comprehensive. 47. We will first deal with the sources in law, from which the learned Judge authoring Bhandari Engineers & Builders Pvt. Ltd. supra drew power, to draft and prescribe the format of the affidavit and to mandate all courts dealing with proceedings for executio....
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....n. 49. Not only did the Commercial Division in Bhandari Engineers & Builders Pvt. Ltd. supra not hold so but has itself in the judgment referred to Order XXI Rule 41 of the CPC and rather identified that also as a source of power to do what has been done therein. Order XXI Rule 41 read with Form 16A in Appendix-E of the CPC and Order XLVIII Rule 3 of the CPC are precisely for the same exigency with which the learned Judge in Bhandari Engineers & Builders Pvt. Ltd. supra was concerned i.e. holder of a money decree being unaware of the assets of the judgment debtor. Order XXI Rule 41 of the CPC enables such a decree holder to apply thereunder to the Court for a direction to the judgment debtor to disclose his assets and further empowers the Court to direct the judgment debtor to disclose his assets in Form 16A in Appendix-E of the CPC. Though Order XLVIII Rule 3 permits the Court to order variation in the forms given in the appendices to CPC but only to the extent "as the circumstances of each case may require". Thus, under Order XLVIII Rule 3 of the CPC, as rightly contended by the senior counsels for the judgment debtors, the Court, though is empowered to, in a particular case dir....
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....ed and inherent jurisdiction should not be invoked. Section 151 cannot be invoked where a party has his remedy provided in the Code and has neglected to avail himself of the same. 52. The High Court of Bombay, as far back as in Bachubai Manjrekar Vs. Raghunath Ghanshyam Manjrekar held that except in very exceptional circumstances the Courts should never make an order under Order XXI Rule 41 of the CPC, without in the first instance giving notice to the party against whom an order is sought. We respectfully concur therewith. In view of the said express provision in the CPC, as aforesaid, in exercise of powers under Section 151 no direction in contravention thereof could have been issued. 53. The next Source of power relied upon by the Court in Bhandari Engineers & Builders Pvt. Ltd. supra, is Sections 106 and 165 of the Indian Evidence Act. Section 106 provides that where any fact is especially within the knowledge of any person, the burden of proving that fact is upon that person. Section 165 empowers the Court to ask any question at any time to any party about any fact relevant or irrelevant. The powers under the said provisions also, are to be exercised in the facts of a partic....
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.... in individual Judges presiding over different benches as per the roster allocation by Hon'ble the Chief Justice. Though, in dealing with the cases in their roster, the individual Judges presiding over separate benches are empowered to exercise powers vested under Article 227 in the facts of that case but are not empowered to lay down any general direction for all matters of a particular kind or to be abided by all Courts. Such power can be exercised only by the Full Court and not by individual Judges. If Article 227 were to be interpreted as enabling individual Judges of the High Court to issue general Rules and prescribe forms for regulating the practice and proceedings of the Court, the same would be fraught with difficulties, with different benches of the High Court issuing contradictory directions relating to the same matter, thereby defeating rather than serving the purpose of Article 227 of the Constitution of India. 55. In this regard, we may also mention that Part X titled "Rules" comprising of Sections 121 to 130, of the CPC, vide Section 122 empowers the High Court to, after previous publication, make Rules regulating their own procedure and the procedure of the Civ....
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.... be made in Order XXI Rule 41 or in Form 16A in Appendix-E, with all due respect, could not have proceeded to do the same himself and was required to refer the same to Hon'ble the Chief Justice, to, if so deemed fit, place the matter for consideration, first by the Rules Committee, which is a statutory committee as aforesaid, and thereafter by the Full Court. The aforesaid provisions having prescribed the procedure for formulating Rules and/or for making changes in Orders I to LI and Appendix A to H to the CPC, Rules/changes could not be made without following the said procedure. 56. We may notice that the Supreme Court, in Rahul S. Shah supra also, though has felt the need for changes in the procedure for execution, has only directed the High Courts to reconsider and update the Rules in exercise of powers under Article 227 read with Section 122 of the CPC. 57. We are thus of the view that Bhandari Engineers & Builders Pvt. Ltd. supra, to the extent extends what is laid down therein to execution proceedings pertaining to all money decrees and to all courts executing a money decree, cannot said to be good law. Axiomatically, what is held in Bhandari Engineers & Builders Pvt. L....
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....ebtors, was not entitled to proceed with the execution, is concerned, no merit is found therein. Being in possession of one of the properties of the judgment debtors and which property is a plot of land, does not put the monies found due to the decree holder under the arbitral award, in the pocket of the decree holder. The decree holder cannot be expected to sit quiet till the judgment debtor opts to take possession of the said property. 62. As per the existing provisions of Order XXI Rule 41 of the CPC, the Commercial Division, in our view erred in issuing direction to judgment debtors to file affidavits and affidavits in a form other than as prescribed in the CPC. The impugned orders do not record that the decree holder had applied therefor, verbally or in writing. A direction under Order XXI Rule 41 could not have been issued without the decree holder applying therefor. Such direction could not have been issued without, inspite of taking steps and owing to obstruction by the judgment debtor, the decree remaining unsatisfied. No reason whatsoever has been given in the impugned orders as to why the directions as issued were called for in the facts of the case or why affidavit in ....