Bombay High Court
MANJEET SINGH T. ANANDversusNISHANT ENTERPRISES HUF THROUGH ITS KARTA BEING RESPONDENT NO.2
- Decided
- Disposal
- DISPOSED OFF
- Bench
- R I CHAGLA
Holding
The seat court (Bombay High Court) retains jurisdiction to enforce the arbitral award and the Karta of the HUF is personally liable, allowing execution against his assets and the grant of interim reliefs.
Summary
The decree holder sought enforcement of a 30‑Nov‑2023 arbitral award of INR 12.52 cr plus interest and costs against Nishant Enterprises HUF (Respondent 1) and its Karta (Respondent 2). The award’s principal sum remained unpaid and the applicant filed an interim application for disclosure of assets, an injunction against disposal of assets and appointment of a court receiver. Respondents objected on two grounds: (i) the Bombay High Court, as the seat court, lacked territorial jurisdiction because the assets were in Thane, and (ii) the Karta could not be held personally liable for the HUF’s debt. The court examined the statutory scheme (Arbitration Act 1996, CPC §§ 38, 39, 47, 51) and a line of precedent affirming that the seat court retains jurisdiction to enforce an award and that a Karta’s liability is personal and unlimited. It rejected both objections, held that the award could be executed in the seat court and that the Karta’s assets could be attached, and granted the interim reliefs, including appointment of a receiver and orders for full disclosure.
Issues considered
- The Bombay High Court’s territorial jurisdiction to entertain execution and interim reliefs when the assets of the award debtor are located outside its jurisdiction.
- Whether the Karta of a Hindu Undivided Family is personally and unlimitedly liable for the unsatisfied arbitral award against the HUF in execution proceedings.
- Whether the applicant is entitled to interim reliefs such as injunction, disclosure of assets and appointment of a court receiver.
Legislation cited
- Arbitration and Conciliation Act, 1996 — s. 2(1)(e), 34, 36, 42
- Code of Civil Procedure, 1908 — s. 38, 39, 47, 51(d)
- General Clauses Act, 1897 — s. 42
Subjects
- Arbitration award enforcement
- Execution of award
- Seat of arbitration
- Hindu Undivided Family
- Karta liability
- Interim relief
- CPC jurisdiction
- Section 36 Arbitration Act
- Disclosure affidavit
- Court receiver
Judgment
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jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION NO.5306 OF 2025
IN
Digitally
signed by
JITENDRA
COMM EXECUTION APPLICATION NO.19 OF 2025
JITENDRA SHANKAR
SHANKAR NIJASURE
NIJASURE Date:
2026.01.08
18:33:35
Manjeet Singh T. Anand …Applicant /
+0530
Petitioner/Judg.
Creditor
Versus
Nishant Enterprises HUF Thru. Its Karta & Anr. …Respondents/
Judg. Debtors
----------
Mr Rashmin Khandekar with Mr. Jamsheed Master with Mr. Anand
Mohan and Mr. Aniket Worlikar for the Decree Holder.
Mr. Prathamesh Kamat (Thru V.C.), with Mr. S.B. Rao i/b. Mr. Gauri
Rao for the Respondent No.1.
Dr. Sanjay Jain, Mr. Nakul Jain, Mr Sankalp Anantwar and Mr.
Ronak Mistry i/b. SMA Law Partners for Respondent No.2 and
Applicant in IA No.2485 of 2024.
----------
CORAM : R.I. CHAGLA J.
Reserved on : 25TH AUGUST, 2025.
Pronounced on : 8TH JANUARY, 2026.
ORDER :
1. By this Interim Application, the Applicant / Decree
Holder has sought interim relief in aid of enforcement of the final
Arbitral Award dated 30th November, 2023 passed by the Sole
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Arbitrator (“the Award”).
2. By the said Award, the Sole Arbitrator has awarded a
principal decretal sum of INR 12,52,53,938/- and interest on the
principal decretal sum at 10% p.a. from the date of the Award (i.e.
30th November, 2023) till actual payment against the Respondent
No.1 and costs of INR 22,25,000/- against the Respondents.
3. The Respondent Nos.1 and 2 have filed a joint /
common Petition under Section 34 of the Arbitration Act
(Commercial Arbitration Petition No.149 of 2025), challenging the
Award. By an Order dated 22nd April, 2025 read with Order dated
29th April, 2025, the execution of the said Award was stayed to the
limited extent of paragraph 176(c) of the Award i.e. to the extent of
“costs” component of the Award of INR 22,25,000/- conditional upon
a 100% deposit of that sum, which deposit was thereafter made.
Resultantly, the amount of INR 14,79,71,228/- under the Award
remains admittedly unsatisfied and outstanding. There is no stay on
recovery of the said amount.
4. This Court by an order dated 21st January, 2025 passed
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in the above Execution Application, directed the Respondent No.1 to
file an Affidavit of Disclosure of assets / income. Respondent No.2
deposing and acting on behalf of Respondent No.1 as its karta, filed
an Affidavit of Disclosure dated 21st February 2025.
5. The Applicant had filed an Affidavit in Reply dated 5th
March 2025 in order to show how the Affidavit filed by Respondent
No.2 (deposing on behalf of Respondent No.1) makes disclosures
which are deliberately selective, insufficient, incomplete and non-
compliant.
6. It is the case of the Applicant that the Affidavit of
Disclosure shows that Respondent Nos.1 and 2 have clearly been
siphoning / dissipating / diverting / stripping Respondent No.1 of
assets / value during the pendency of the legal proceedings with an
intent to defeat the Award, which the Applicant claims highlights its
case for reliefs against Respondent No.1 / 2. Further, the Applicant
claims that Respondent No.1’s Affidavit of Disclosure, even if taken
on face value shows on admission that Respondent No.1 does not
even have assets worth 5% of the decretal sum.
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7. The Applicant has referred to an Order dated 5th May
2022 passed under Section 17 of the Arbitration Act against both
Respondents and by which, the learned Sole Arbitrator had directed
the Respondents to furnish security worth INR 4 Crores. The said
Order was never challenged and in order to comply with the same,
title deeds to immovable properties owned by Respondent No.2
worth about INR 4 Crores came to be voluntarily / jointly deposited
by the Respondents with the learned Tribunal thereby securing the
claim against Respondent No.1 as well as Respondent No.2, to the
extent of about INR 4 Crores. This security was thereafter brought
into this Court pursuant to directions passed vide Order 26th June,
2024 in this very Interim Application. The Applicant claims that the
said property / security is custodia legis lying with this Court and
liable to be proceeded against in execution of the Award.
8. The Applicant has contended that the Award for sum of
INR 14,79,71,228/- remains to be enforced against the Respondents.
Even if the immovable properties lying with this Court as security as
well as Respondent No.1 HUFs disclosed assets are applied towards
recovery of the decretal sum under the Award, there is a clear
shortfall of about Rs.10 Crores, even on a rough and ready
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calculation based solely on admitted facts. The Applicant contends
that from the Respondent No.1’s own case, the Award admittedly,
cannot be satisfied by Respondent No.1’s HUF without recourse to
the Karta i.e. Respondent No.2’s other personal assets. The Applicant
submits that it is trite law that in a situation such as present ad-
interim / interim reliefs in aid of enforcement (viz. disclosure as well
as injunction against both Respondents) are liable to be granted as a
matter of course in a post Award situation to secure the decretal sum
so that the Applicant / Award Creditor is not left holding a mere
paper decree.
9. The Respondents have resisted the Interim Application
by raising a preliminary objection on lack of territorial jurisdiction of
this Court because none of the assets disclosed by Respondent No.1 –
HUF are situated within Mumbai. Whereas Respondent No.2 (i.e.
Karta of Respondent No.1 – HUF) has raised the preliminary
objection viz. that his personal assets cannot be proceeded against in
execution even for unsatisfied debts of Respondent No.1 – HUF.
10. The first of the preliminary objections raised i.e. of
Respondent No.1 – HUF on lack of jurisdiction is taken up for
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consideration.
11. Mr. Prathamesh Kamat, the learned Counsel appearing
for the Respondent No.1 – HUF has submitted that this Court lacks
the territorial jurisdiction to entertain the present Execution
Application preferred by the Applicant / Judgment Creditor in view
of Sections 38 and 39 of the Code of Civil Procedure (CPC), 1908. He
has referred to these provisions which provide for Court by which the
decree may be executed and transfer of decree respectively. He has
submitted that in the present case the Award is sought to be executed
by invoking Section 36 of the Arbitration Act as it is a deemed decree
by legal fiction. He has submitted that on reading of the provisions of
Sections 38 and 39, for an Executing Court to exercise jurisdiction, it
is imperative that the Respondents against whom execution is sought
to be executed, reside or have assets within the jurisdiction of the
Execution Court.
12. Mr. Kamat has submitted that the Respondents
admittedly reside in District Thane, and the Applicant / Judgment
Creditor wishes to proceed or seek to attach the assets which are also
in District Thane. He has referred to the Affidavit of Disclosure dated
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21st February, 2025 which shows that Respondent No.1 does not own
any immovable property within the jurisdiction of this Court. All
movables and bank accounts disclosed show that they are in
Bhiwandi, District Thane. Thus it is evident that the Respondent No.1
– HUF as well as assets against whom the Applicant / Judgment
Creditor wish to proceed, reside and / or are situated in District –
Thane which is outside the jurisdiction of this Court.
13. Mr. Kamat has submitted that it is the case of the
Applicant / Judgment Creditor that the arbitration was held in
Mumbai, therefore, this court would be the ‘Court’ within the
meaning of Section 2(1)(e) of the Arbitration Act. Further, that this
Court has jurisdiction to entertain the present Execution Application.
He has submitted that these contentions of the Applicant / Judgment
Creditor are utterly fallacious. He has submitted that the Arbitration
Act is in itself a complete code. The word “Court” as defined under
Section 2(1)(e) is not applicable to Execution Proceedings, as after
the Arbitration Award, the proceedings are terminated in terms of
Section 32 of the Arbitration Act and execution is severed and the
umbilical cord is snapped with the passing of the Award by the
Arbitral Tribunal.
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14. Mr. Kamat has submitted that at this stage the status of a
‘decree’ is granted to an Arbitration Award under Section 36 of the
Arbitration Act which says that “to be enforceable in accordance with
the provisions of CPC in the same manner as if it were decree of the
Court” means that once the Arbitration Award becomes a decree, the
execution of the same shall be in terms of CPC, as it becomes a
decree within CPC. Therefore Section 2(1)(e) which defines Court is
irrelevant for the purpose of executing an Award or for the Executing
Court to have territorial jurisdiction. This is evident from the
judgment of the Delhi High Court in Daelim Industrial Co. Ltd. vs.
Numaligarh Refinery Ltd1. He has in particular placed reliance upon
paragraph 17 – 20, 24-28 of the said judgment. He has submitted
that the issue involved in the present case and issue involved in that
case are identical and this is evident from a reading of paragraphs 1,
3, 4, 6 to 9 of the said judgment.
15. Mr. Kamat has also placed reliance upon the judgment of
the Supreme Court in Sundaram Finance Ltd. vs. Abdul Samad &
Anr2., wherein the Supreme Court has categorically upheld the view
taken by the Delhi High Court in Daelim (Supra). He has submitted
1 Delhi High Court, Coram : Justice Rajiv Sahai order dated 13th March, 2009.
2 (2018) 3 SCC 622.
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that paragraph 1 of the said judgment shows that an identical issue
involved in the present case, was an issue which was squarely before
the Supreme Court. He has in particular placed reliance upon
paragraphs 17, 18, 19 and 21 of the said judgment. The Supreme
Court upheld the view of the Delhi High Court in Daelim (Supra) and
the views of the High Courts of Kerala, Madras, Rajasthan,
Allahabad, Punjab and Haryana and Karnataka.
16. Mr. Kamat has placed reliance upon the judgment in the
case of Poonawalla Housing Finance Ltd. vs. Babu and Anr 3, and in
particular paragraphs 1, 3, 4, 5, 6, 8, 9 and 11. In paragraph 8 of the
said judgment, the Supreme Court has relied upon Sundaram
Finance Ltd. (Supra) and held that it is settled principle of law that
Award needs to be executed by such Court within whose jurisdiction
the assets of the award debtor are located. Further, there is no
requirement anymore to obtain a transfer of the decree from the
Court having jurisdiction over arbitral proceedings to the Court
which has jurisdiction over the award debtor or their properties.
17. Mr. Kamat has placed reliance upon the judgment of the
3 (2022) SCC OnLine Cal 4646.
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Calcutta High Court in MSTC Ltd. vs. Krishna Code (India) Ltd4 at
paragraphs 1, 2 and 7. He has also placed reliance upon the
judgment of the Delhi High Court in Continental Engineering
Corporation vs. Sugesan Transport Ltd5, at paragraphs 1, 8 to 14. He
has submitted that similar views were also taken by the Delhi High
Court in Mohan Investment and Properties Pvt. Ltd. vs. Sai Aaina
Farms Pvt. Ltd6, at paragraphs 8, 10, 11 and 38 and in Matrix
Partners Indian Investment Holdings LLC & Ors. vs. Shailendra
Bhadauria and Ors7, at paragraphs 13, 14, 24 to 32. He has
submitted that above quoted judgments have clearly held in favour of
the Respondent No.1 and that the Applicant / Judgment Creditor has
not distinguished or much less dealt with said judgments during the
course of the arguments.
18. Mr. Kamat has submitted that the aforesaid views of the
High Courts of Delhi and Calcutta have been followed by this Court
in Sara Chemicals & Consultants vs. Ogene Systems (I) Pvt. Ltd 8. This
Court has held that if no movable or immovable properties are
4 (2019) SCC OnLine Cal 7293.
5 (2022) SCC OnLine Del 4728.
6 (2022) SCC OnLine Del 592.
7 (2021) SCC OnLine Del 4917.
8 (2020) SCC OnLine Bom 5474.
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situated within the jurisdiction of the Executing Court, the matter
will have to be relegated to the Court where the assets are situated.
He has in particular placed reliance upon paragraphs 3 to 8 of the
said judgment.
19. Mr. Kamat has submitted that this Court vide Order
dated 21st January, 2025, following the principle of the judgment in
Sara Chemicals (Supra) had directed disclosure of assets by
Respondent No.1 to ascertain the issue of jurisdiction. He has relied
upon paragraph 6 of the said Order, wherein it is held that the issue
of jurisdiction to entertain the Execution Application shall be
determined on the next date after considering the Disclosure
Affidavit.
20. Mr. Kamat has submitted that in view of there being no
assets (even post disclosure) being available or held within the
territorial jurisdiction of this Court, it is clear that this Court lacks the
territorial jurisdiction to entertain the present Execution Application.
21. Mr. Kamat has submitted that the judgments relied upon
by the Applicant / Decree Holder are not applicable. He has
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submitted that the Applicant has relied upon the judgment of Global
Asia Venture Company vs. Arup Parimal Deb and Ors 9. This judgment
though considered the judgment of the Supreme Court in Sundaram
Finance (Supra), it considered the same from the perspective of
Section 42 of the Arbitration Act. Further, this judgment did not
consider the judgment of the Delhi High Court in Daelim (Supra) nor
did it consider the fact that Daelim (Supra) in categorical terms was
upheld by the Supreme Court in Sundaram Finance (Supra). He has
submitted that in any event the view taken in this judgment is
contrary to the view taken by this Court in Sara Chemicals (Supra)
and also not in consonance with the law laid down by the Supreme
Court in Sundaram Finance (Supra).
22. Mr. Kamat has submitted that the judgment of the Full
Bench in Gemini Bay Transcription Pvt. Ltd. Nagpur vs. Integrated
Sales Service Ltd.10, has to be considered holistically. He has referred
to paragraph 14 of the said judgment. He has submitted that the said
paragraph indicates that an Award has to be executed as per the
provisions of the CPC to which provisions of Section 38 and 39 of the
CPC would be applicable. Therefore, for the purposes of Executing
9 (2018) SCC OnLine Bom. 13061.
10 2018 (2) Mh.L.J. 329.
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Court to effectively proceed with execution, it is imperative that the
test under Sections 38 and 39 of the CPC are satisfied. He has
submitted that the judgment of the Full Bench has been misread by
the Applicant to suggest that the Court under Section 2(1)(e) of the
Arbitration Act can in fact be invoked to execute the Award. He has
submitted that this Court held that once an Award had been passed,
the same shall be governed by the provisions of CPC. He has
submitted that on a harmonious reading of the Arbitration Act and
CPC qua the execution proceedings, it is clear that the Execution
Proceedings has to pass the litmus test of territorial jurisdiction and it
nowhere means or is understood to say that the provisions of
Sections 38 and 39 of the CPC would become otiose or meaningless.
He has submitted that the Full Bench contemplates two options, (a)
either to file Execution Application before the Court where the assets
of the debtor is situated or (b) to approach a 2(1)(e) Court first, only
to request the Court to transfer the decree to the Court having
jurisdiction. He has submitted that this is evident from paragraph 18
of the Gemini Bay (Supra).
23. Mr. Kamat has submitted that the judgment of the Delhi
High Court in Gujarat Jhm Hotels Ltd. vs. Rajasthali Resorts and
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Studios Ltd.,11 which has been cited by the Applicant also
contemplates a similar position. This is evident on reading paragraph
46 of the said judgment which reads as “The learned Judge also held
that such a party cannot be compelled to first approach the ‘2(1) (e)
Court’ and thereafter be forced to approach the local Court for
execution of the Award.”
24. Mr. Kamat has submitted that it is trite law that the
judgment of a coordinate bench is binding and there is no conflict of
law, as the Supreme Court has already settled the law in this regard
that for Execution Proceedings post arbitration Award, the same has
to be decided in terms of Sections 38 and 39 of the CPC.
25. Mr. Kamat has placed reliance upon the judgment of the
Supreme Court in Amazon.com NV Investment Holdings LLC vs.
Future Retail Ltd. & Ors12, at paragraphs 82 to 87. He has submitted
that the said judgment shows that the view in Daelim (Supra) is not
disturbed. This causes doubts on the correctness of the other set of
judgments which take a contrary view.
11 2023 SCC OnLine Del 161.
12 (2022) 1 SCC 209.
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26. Mr. Kamat has submitted that the contention of the
Award Debtor that Daelim’s reasoning is based on Section 42 of the
Arbitration Act is a misnomer. He has submitted that the judgments
in Daelim and Sundaram Finance Ltd. inter alia proceed on the basis
that under Section 32 of the Arbitration Act, once an award is passed,
the relationship of Court under Section 2(1)(e) of the Arbitration Act
is snapped.
27. Mr. Kamat has submitted that on a plain reading of the
judgments it is clear that Section 42 of the Arbitration Act was not
the basis for the conclusion in those judgments. Non applicability of
Section 42 was merely an additional point.
28. Mr. Kamat has submitted that the security provided by
Respondent No.2 in the form of title documents of land, is also
situated outside the territorial jurisdiction of this Court. Thus, the
security would not confer jurisdiction as apparently, security and
execution are two different aspects and cannot be overlapped. He has
submitted that in execution under Section 36 of the Arbitration Act,
it has to pass the litmus test of territorial jurisdiction provided under
Sections 38 and 39 of CPC.
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29. Mr. Kamat has submitted that this Court is required to
hold that it has no jurisdiction to entertain the present Execution
Application and the same be relegated to the Court of appropriate
jurisdiction where the assets are situated.
30. In so far as the other preliminary objection which has
been raised by the Respondent No.2 viz. that the personal assets of
Respondent No.2 (i.e. Karta of Respondent No.1 – HUF) cannot be
proceeded against in execution even for unsatisfied debts of
Respondent No.1 – HUF, Mr. Sanjay Jain, the learned Counsel for the
Respondent No.2 has made submissions.
31. Mr. Jain has referred to operative part of the Award of
the learned Sole Arbitrator. He has submitted that learned Arbitrator
has not granted an Award of Rs.12,52,53,938/- against the Karta and
the Co-parcener/s despite specific prayer sought for in the statement
of claim. This part of the Award is only against the Respondent No.1
– HUF. This can be contrasted with the Award of sum of
Rs.22,25,000/- which is by way of costs granted against the HUF and
Karta, described as Respondents.
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32. Mr. Jain has submitted that by the instant Execution
Application, the Applicant seeks to enforce the entire Award against
the Respondent No.1 – HUF as well as Respondent No.2 – Karta on
the basis that for any decree passed against the HUF, the Karta of
such HUF is personally liable to satisfy the Award i.e. it becomes
Karta’s personal liability. He has submitted that the HUF is a
corporate personality. In the eyes of law it is treated / recognized as a
juristic entity / corporate personality as opposed to a partnership
firm, which is treated as a compendium of person.
33. Mr. Jain has submitted that Mitakshara and Dayabhaga
are two primary schools of Hindu Law. These two schools of Hindu
Law govern, inter alia, a range of issues about property inheritance
and succession in Hindus to a significant extent. Mitakshara school is
prevalent in North, West and South. According to Mitakshara school
of Hindu Law, all the property of the Hindu Joint Family is held in
collective ownership by all the Coparceners in a corporate entity. He
has placed reliance upon the judgment in the case of State Bank of
India vs. Ghamandi Ram13, where the Supreme Court has held that a
Coparcenary under the Mitakashara school of law is a creature of law
13 (1969) 2 SCC 33.
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and cannot arise by act of parties except on adoption. The adopted
son becomes a Co-parcener with his adoptive father as regards the
ancestral properties of the latter.
34. Mr. Jain has submitted that the Supreme Court in
Ghamandi Ram (Supra) quoted with approval the observations in the
case of Sundaram Maistri vs. Harasimbhulu Maistri 14, which follows
the observations of this Court in Gasavant Balsavant vs. Narayan
Dhond Savant15. It was held therein that the Mitakshara doctrine of
joint family property is founded upon the existence of an undivided
family and possession of the property by such corporate entity.
35. Mr. Jain has also placed reliance upon the judgment in
the case of Vineeta Sharma vs. Rakesh Sharma & Ors.16, which has
held that the Hindu branch of dharma is influenced by theological
tenets of the Vedic Aryans and what is not modified or abrogated by
the legislation or constitutional provisions still prevails. The Supreme
Court has quoted with approval the judgment in case of Bhagwan
Dayal vs. Reoti Devi17, wherein it held that coparcenary is creature of
14 1901 SCC OnLine Mad 91.
15 1883 SCC OnLine Bom 1.
16 (2020) 9 SCC 1.
17 AIR 1962 SC 287.
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Hindu law and cannot be created by an agreement of parties except
in case of reunion and that it is a corporate body.
36. Mr. Jain has also placed reliance upon the judgment of
the Supreme Court in Revanasiddappa and Anr. vs. V. Mallikarjun &
Ors18., where the Supreme Court has held that Mitakashara law is
founded on a community of interest which entails that the ownership
of coparcenary property vests in the whole body of coparceners
jointly, though the interest keeps fluctuating until partition.
37. Mr. Jain has relied upon the judgment of the Supreme
Court in M. Siddiq (Ram Janambhumi Temple – 5 J. ) vs. Suresh
Das19, wherein the concept of Hindu law being corporate entity is
explained. He has in particular placed reliance upon paragraphs 108
to 116, 126 and 127 of the said judgment.
38. Mr. Jain has submitted that in the Statement of Claim,
the Applicant has sought relief against the Respondents as well as
coparcenar/s of the HUF, jointly and severally. He has submitted that
in the Execution Application, though the Award had granted money
18 (2023) 10 SCC 1.
19 (2020) 1 SCC 1.
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award against the Respondent No.1 – HUF for a sum of
Rs.12,52,53,938/- together with interest thereon at 10% pa, the
Applicant has sought to enforce this Award against the HUF as well
as Karta (in his personal capacity) despite the Arbitral Tribunal
having declined the Award against the Karta. He has submitted that
the Applicant thus seeks enforcement of the said Award against the
Karta’s personal assets in absence of a personal decree passed against
the Karta.
39. Mr. Jain has submitted that the principle of res judicata
would apply in the present case. He has submitted that once the
matter is finally decided by the competent Court, no party can reopen
it in a subsequent litigation. Res Judicata serves to prevent
multiplicity of proceedings and to protect parties from being vexed
twice for the same cause. A thing judged cannot be re-opened for
adjudication.
40. Mr. Jain has relied upon judgment of the Supreme Court
in State of U.P. vs. Nawab Husain20 wherein it is held that a cause of
action which results in a judgment must lose its identity and vitality
20 (1977) 2 SCC 806.
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and merges in the judgment when pronounced. It cannot thereafter
survive the judgment, or give rise to another cause of action on the
same facts. This is what is known as the general principle of res
judicata. He has submitted that in the instant case, the cause of
action alleged in the Statement of Claim was against the HUF and the
Karta (jointly and severally), but on publishing of the Impugned
Award against only the HUF, that cause of action against the HUF and
the Karta has been lost and merged into the Award against the HUF
only, thus, the cause of action, if any, doesn’t survive against the
Karta.
41. Mr. Jain has relied upon the judgment of the Supreme
Court in the case of Gulabchand Chhotalal Parikh vs. State of
Gujarat21 wherein the five Judge Bench of the Supreme Court held
that general principles of res judicata can bar the consideration of
matters directly and substantially in issue with those, which had been
earlier and after full contest, decided on merits by a competent court
in any other proceedings. He has also relied upon Hope Plantations
Ltd. vs. Taluk Land Board22. The Supreme Court held that the rule of
res judicata prevents the parties to a judicial determination from
21 AIR 1965 SC 1153.
22 (1999) 5 SCC 590.
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litigating the same question over and over again even though the
determination may even be demonstrably wrong.
42. Mr. Jain has submitted that Section 11 of the CPC
prescribes certain parameters which when met could qualify as res
judicata. Explanation V appended to Section 11 provides that any
relief claimed in the Plaint which is not expressly granted by the
decree, shall, for the purposes of this Section, be deemed to have
been refused. He has submitted that where a relief is sought but not
expressly granted in a proceeding will bar the person from claiming
such relief on the principles of being hit by res judicata.
43. Mr. Jain has submitted that an Arbitral Tribunal is a
private adjudication forum chosen by the parties as distinguished and
opposed to a State administered adjudication system. The result of
adjudication by an Arbitral Tribunal is not a decree that is passed by
the Civil Court i.e. a State administered adjudication system. The
Award passed is treated to be akin to a Decree only for the purposes
of enforcement. He has in this context placed reliance upon the
judgments of the Supreme Court in Md. Army Welfare Housing
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Organization vs. Sumangal Services Ltd23; Amazon.com NV
Investment (Supra); Vidya Drolia vs. Durga Trading Corporation24;
Paramjeet Singh Patheja vs. ICDS Ltd25 and S.V. Samudran vs. State
of Karnataka26.
44. Mr. Jain has submitted that it is improper for the
Applicant to now seek enforcement of the Award against Respondent
No.2 (that too personally) when the Award is against Respondent
No.1 – HUF.
45. Mr. Jain has submitted that the Executing Court cannot
go behind and beyond the decree. The majority of the operative part
of the Award is against the Respondent No.1 – HUF and it is only the
costs which have been awarded against the Respondents (HUF and
Karta). This being the admitted position, the Applicant cannot go
behind / beyond the Award to make the Karta personally liable for
satisfaction of the amounts awarded other than costs. The personal
liability of a person shall not arise in case of absence of personal
decree against such a person. The logic is if there is no decree against
23 (2004) 9 SCC 691.
24 (2021) 2 SCC 1.
25 (2006) 13 SCC 322.
26 (2024) 3 SCC 623.
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a person there is no liability of such person.
46. Mr. Jain has relied upon Vikram Anilkumar Patel vs.
Pravinchandra Jinabhai Patel27, wherein this Court has held that
Section 47 of the CPC has the basic limitation not to travel behind
the judgment and decree. The Executing Court has no right to vary
the terms of the decree, howsoever erroneous it may be. The
Executing Court cannot add or alter the decree and cannot add relief
not granted by the decree.
47. Mr. Jain has place reliance upon Pradeep Mehra vs.
Harjivan Jethwa28, wherein the Supreme Court has quoted with
approval the decision in Dhurandhar Prasad Singh vs. Jai Prakash
University29. The said decision holds as under:
“24. .......... The exercise of powers under Section 47 of the
Code is microscopic and lies in a very narrow inspection
hole. Thus, it is plain that executing court can allow
objection under Section 47 of the Code to the executability
of the decree if it is found that the same is void ab initio
and a nullity, apart from the ground that the decree is not
27 2024 SCC OnLine Bom 1120.
28 2023 SCC OnLine SC 1395.
29 (2001) 6 SCC 534.
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capable of execution under law either because the same
was passed in ignorance of such a provision of law or the
law was promulgated making a decree inexecutable after
its passing”
48. Mr. Jain has also relied upon the judgment of this Court
in Mitsui OSK Lines Ltd. vs. Orient Ship Agency Private Ltd 30,
wherein it was held that by allowing the Award Holder to execute the
Foreign Award against the additional Respondents by making them
personally liable, the Executing Court would indeed be proceeding
behind and / or beyond the decree.
49. Mr. Jain has submitted that the HUF has been treated as
a distinct person under the CPC as well as other statutes. He has
submitted that HUF is a corporate / juristic personality in the eyes of
law. He has placed reliance on Order XXX Rule 10 of the CPC which
provides for a Suit against any “person” carrying on business other
than his own name, or HUF carrying on business under any name,
may be sued in such name or style as it were a firm, and insofar as
the nature of such case permits, Rule 10 Order XXX shall apply. He
has relied upon the judgment of Privy Council in Amar Nath vs. Firm
30 2020 SCC OnLine Bom 217.
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of Hukam Chand – Nathu Mal31 (also referred as “Gokal Chand
case”). He has submitted that in the Gokal Chand case, one of the
members of HUF took up occupation as a member of the Indian Civil
Service and the question before the Privy Council was whether the
salary of the member could be considered as part of assets of the
HUF. The Privy Council held in the affirmative on the reasoning that
the occupation was not on a ‘science’ or ‘specialized education’.
50. Mr. Jain has submitted that statutory recognition of
nature and complexities of HUF is found in the Statement of Objects
and Reasons to the Indian Partnership Act, 1932, which effectively
recognizes that the Legislature does not intend to get involved into
the path of litigation against the HUF. He has in particular placed
reliance upon Clauses 14 and 15 of the Statement of Claim.
51. Mr. Jain has also placed reliance upon the Twenty-
Seventh Report of the Law Commission of December, 1964, where
two amendments were suggested in context of HUF into the CPC.
These suggestions were incorporated into CPC by amendment in
1976. To avoid conflict of decisions if ‘person’ under original Rule 10
31 1921 SCC OnLine PC 8.
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would include HUF, Rule 10 of Order XXX of CPC was amended to
separately include HUF. The amendments made it clear that ‘HUF’
and ‘a person carrying on business in a name or style other than his
own name’ are different persons.
52. Mr. Jain has referred to Rule 50 of Order XXI of CPC,
wherein it is clarified that this Rule would not apply to a decree
passed against the HUF by virtue of provisions of Rule 10 of Order
XXX. He has submitted that though ‘person’ is not defined under the
Arbitration Act, ‘person’ under Clause (42) of Section 2 of the
General Clauses Act, 1897, is defined as “person” shall include any
company or association or body of individuals, whether incorporated
or not”. In Salmond’s Jurisprudence, Salmond defines 'person' as
'any being whom the law regards as capable of rights and duties' or
as 'a being, whether human or not’, of which rights and duties are the
attributes. He has referred to Ramanlal Bhailal Patel v. State of
Gujarat32, wherein the Supreme Court was dealing with the
interpretation of ‘person’ under the Gujarat Agricultural Lands
Ceiling Act, 1960 and has applied Salmond’s Jurisprudence. He has
in particular placed reliance upon paragraphs 16 and 17 of the said
32 (2008) 5 SCC 449
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judgment.
53. Mr. Jain has submitted that there are numerous statutes,
in the Indian legal system which recognize the HUF as a distinct
personality unless provided expressly. This is also inferred from
Section 464 of the Companies Act, 2013, which carves out a HUF
carrying on business irrespective of the number of members. Section
464(1) operates as an overarching provision of law prohibiting
association or partnership exceeding prescribed number with the
result being such persons could only operate by incorporation of a
company. However, this provision is not applicable to HUF.
54. Mr. Jain has submitted that the Supreme Court in
Kapurchand Shrimal vs. Tax Recovery Officers33 had dealt with the
warrant / recovery certificate issued by the Income Tax against the
Karta for a tax default committed by the HUF. In this case, the Court
observed that the HUF is treated and recognized as a distinct entity
which is distinct from its members and the Karta is not liable for
penalty for the default of the HUF. The Supreme Court further
observed that legislature did not make any provisions for making the
33 1969 72 ITR 623.
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Karta liable for the liability of the HUF unlike Section 179 of the
Income Tax Act, 1961 which makes a special provision rendering the
Directors of a company in liquidation jointly and severally liable for
tax dues.
55. Mr. Jain has distinguished the judgments relied upon by
the Applicant in support of their case that the Karta is also personally
and un-limitedly liable for the Decree passed against the HUF as well
as on jurisdiction of this Court to entertain or try the instant
Execution Application. He has submitted that a ratio of the judgment
is something it decides on the basis of the facts involved in that case.
Even a fact which is different from the facts of the judgment cited
would make a world of a difference and will render the case cited
inapplicable. He has submitted that the Star Judgment cited by the
Applicant is of the Delhi High Court in A. Khandelwal & Sons (HUF)
vs. Saradar Mall Ashok Kumar (HUF) 34. He has submitted that the
Delhi High Court ascertained that the HUF in question is not merely
HUF, but a firm. In this context, the Delhi High Court noticed that as
regards the legal settled position i.e., a decree against the HUF ( not a
HUF firm) is only executable against the assets of the HUF and not
34 2009 (107) DRJ 583.
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personal liability of the Co-parcener of the HUF. The Court then
framed that the question as to what would be the position if the HUF
is carrying on business / trade what is commonly known as a “HUF
Firm”. The Delhi High Court held that in a decree passed against the
HUF firm which exhibits itself as a partnership firm, all constituents
of a trading HUF Firm are liable personally for the decree passed
against the Firm i.e., HUF firm. He has submitted that in the present
case it is not Applicant’s case that that Karta’s HUF is a firm or that
the Karta has represented the HUF to be a trading / business firm.
Thus, the judgment in the case of A. Khandelwal (Supra) is of no
assistance to the Applicant.
56. Mr. Jain has also distinguished the judgment cited by the
Applicant in Shiv Bhagwan Moti Ram Saraogi vs. Omkarmal Ishar
Dass and Ors35, in particular paragraphs 34, 35 and 40. He has
submitted that observations of the Court in the judgment is based on
the premise that the nature of the Karta’s role being in the
partnership firm switches from Karta of the HUF to a Partner of the
partnership firm and on account of the provisions of the Indian
Partnership Act, 1932, the liability of the partners in respect of a
35 (1951)SCC OnLine Bom 122.
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Decree passed against the partnership firm is also personal decree
against the partners. The Court considered the position of holding
out of the co-parceners in the context of a HUF firm in business /
trading and observed that the liability of such HUF Firm extends
personally to the Karta. He has submitted that thus, the ratio of this
decision will not apply in any case.
57. Mr. Jain has also distinguished the other judgments cited
by the Applicant viz. Yeshvant Dattaraya vs. Shripad Sadashiv36;
Kishan Gopal vs. Surajmal37 and Khairati Ram vs. Firm Balak Ram
Mehr Chand38, on facts as in those cases the decree had already been
passed against the Karta. He has submitted that this common thread
is missing in the instant case. There is no personal decree against
Respondent No.2 – Karta. Absence of this aspect makes all the
judgments inapplicable to the facts of the instant case. He has
submitted that what is deciphered from the judgments cited is that if
personal liability is sought against the Karta of a HUF, there should be
a personal decree passed against the Karta, in absence thereof, the
HUF itself being a juristic entity / corporate entity is capable of a
36 1945 SCC OnLine Bom.108.
37 Rajasthan Law Weekly (RLW) 1964.
38 Vol XIII ILR dated 21st August, 1959.
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decree being enforced against it.
58. Mr. Jain has also distinguished the judgment cited by the
Applicant in the case of Mulgund Co-Operative Credit Society vs.
Shidlingappa Ishwarappa Mavi39. He has submitted that the ratio of
this judgment is in fact against what is argued by the Applicant in the
present case. The Court has differentiated between a Decree passed
against the manager of a joint family representing the estate and a
personal decree passed against the manager. The question whether
the decree against the Manager of the joint family would bind its
coparcener or not had been decided in that case. The ratio of that
case is not applicable in the present case.
59. Mr. Jain has submitted that the judgment relied upon by
the Applicant viz. K.R. Arumugam and Ors. vs. Semmalar and Ors 40,
is rendered under Section 100 of the CPC. It is observed that joint
HUF is a patriarchal organization and the head of the family is
known as Karta. He has submitted that he is the senior most member
and head of the family and that Karta enjoys immense powers in
respect of management of affairs of the family and its property. In
39 1941 Bom. ILR 682.
40 2019 SCC OnLine Mad 8924.
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this context the Court observed the Karta incurs unlimited liability
and is representative of the family in all affairs. He has submitted
that this case has remotely nothing to do with the question involved
in this Execution Application i.e. in absence of a personal decree
against the Karta, can the decree against the HUF executed against
the Karta in his personal capacity.
60. Mr. Jain has submitted that the Applicant has during the
concluding argument sought and pressed for appointment of Court
Receiver in respect of the property as more particularly mentioned in
Exhibit “B” to the Interim Application. He has submitted that the title
documents in respect of the properties mentioned hereinabove were
deposited before the learned Arbitrator at the interim stage by
Respondent No.2. However, the learned Arbitrator after adjudication
of the Applicant’s claim has not granted any substantial award
against Respondent No.2 in his personal capacity. The only award
granted against Respondent No.2 was an amount of Rs.22,25,000/-
(Rupees Twenty Two Lakhs Twenty Five Thousand Only) to be paid
by Respondent Nos.1 and 2 jointly towards cost of arbitral
proceedings and which Respondent No.2 has already deposited as
directed by the learned Arbitrator in the Award dated 30th
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November, 2023 with this Court in Interim Application (L) No. 18885
of 2024 (I.A. No. 2726 of 2025) in Comm. Arbitration Petition No.
149 of 2025 preferred by the Respondents under Section 34 of the
Arbitration and Conciliation Act, 1996. Therefore, no case has been
made out for appointment of Court Receiver in respect of the
properties mentioned in Exhibit “B”.
61. Mr. Jain has accordingly submitted that the personal
assets of the Respondent No.2 – Karta cannot be proceeded against in
execution, particularly, when there is no decree / award against the
Respondent No.2 in his personal capacity other than, the costs
awarded against the Respondents, which Respondent No.2 has
deposited in this Court.
62. Mr. Rashmin Khandekar, the learned Counsel for the
Applicant has dealt with the preliminary objections. There is much
merit in his submission. With regard to the first of the preliminary
objections which has been raised by Respondent No.1 viz. to the
maintainability of this proceedings on the ground that there are no
assets shown to be situated within this Court’s jurisdiction, it would
be pertinent to note that the Applicant has sought execution of an
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award passed by the Arbitral Tribunal. This Court is undisputedly the
‘seat’ Court under Section 2(1) (e) (i) of the Arbitration Act and
being the Seat Court cannot be divested of jurisdiction regardless of
where the assets are located. The Respondents have also admitted in
paragraph 9 of the common Section 34 Petition that this Court is the
Seat Court within the meaning of Section 2(1) (e) (i) of the
Arbitration Act, and within whose jurisdiction the arbitral
proceedings have been held and the Award passed. Further, the
Respondents have never disputed either in pleadings or in oral
arguments the factual position that the seat of arbitration is Mumbai
or that this Court is the “Seat” Court.
63. It is settled law that merely because the Award Creditor
has an option/ choice to also file execution proceedings directly
before a Court where the assets of the Award Debtor may be located,
does not in any way take away the Award Creditor’s right to
approach the Seat Court seeking execution and / or interim reliefs in
aid of execution. This has been laid down in the judgment of the Full
Bench of this Court in Gemini Bay (Supra), wherein it has been held
that an Award made under Part 1 of the Arbitration and Conciliation
Act, 1996 can be executed not only by the Court as defined by
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Section 2(1)(e)(i) but also by the Court to which it is sent for
execution under Sections 38 and 39 of the CPC. Thus, the Award
Creditor is vested with an additional option to directly execute the
Award where the assets are located.
64. The Full Bench decision has taken note of the judgment
of the Supreme Court in Sundaram Finance Ltd. (Supra) at
paragraph 28, wherein it is held that there is no requirement for
obtaining a transfer of the decree from the Court which would have
jurisdiction over the arbitral proceedings. The Respondents’ argument
is on the misconceived premise that the Supreme Court’s observation
in Sundaram Finance Ltd. (Supra) that there is “no requirement” of
first filing in the Seat Court, means that Award Creditor can no
longer file for execution / reliefs in aid of execution in the Seat Court
at all. This is completely contrary to the express language of the
Supreme Court in Sundaram Finance Ltd. (Supra) and also contrary
to the Full Bench decision which holds that the Award Creditor has
option to file for execution not only before the “Seat” Court but also
before any Court where the assets may be located.
65. The jurisdictional objection raised by the Respondent
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No.1 herein was considered and emphatically rejected by the learned
Single Judge of this Court in Global Asia Venture Company (Supra)
after applying the Full Bench’s view in Gemini Bay (Supra) and after
specifically considering the purport of the Supreme Court judgment
in Sundaram Finance Ltd. (Supra). Further, an attempt had been
made on behalf of Respondent No.1 to suggest that the judgment of
the Supreme Court in Amazon.com NV Investment Holdings LLC
(Supra) has diluted ratio of Global Asia (Supra). This argument is
misconceived since in Amazon.com (Supra), the Supreme Court
clarified that it is not commenting one way or another on the law laid
down in Global Asia (Supra) because the entire line of Sundaram
Finance Ltd. / Gemini Bay / Global Asia did not concern the issue
under consideration in Amazon.com (Supra) at all. This is apparent
from paragraphs 86 and 87 of Amazon.com (Supra). It has been held
in paragraph 87 that Global Asia (Supra) inter alia dealt with
proceedings filed under Section 36 of the Arbitration Act, and no
opinion on their correctness has been expressed.
66. The jurisdictional objection of the Respondents has
therefore been squarely considered and rejected by several Courts
since at least 2018 including the Full Bench of this Court in Gemini
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Bay (Supra) which applied / interpreted the view of the Supreme
Court in Sundaram Finance Ltd. (Supra) and as upheld / expounded
upon thereafter by this Court in Global Asia (Supra).
67. The judgment of the Delhi High Court in Daelim (Supra)
relied upon by Respondent No.1 has been appropriately explained by
the subsequent judgment of Delhi High Court in Gujarat Jhm Hotels
Ltd. (Supra). The Delhi High Court in the subsequent judgment has
clearly upheld the Gemini Bay / Global Asia interpretation. This is
evident from paragraphs 15, 45 – 47 of the said judgment. The Delhi
High Court has accepted the view that the “Seat” / 2(1) (e) (i) Court
is never divested / denuded of jurisdiction even post-award and that
Daelim / Sundaram Finance rulings intended to offer more choices to
the Award Creditor for smooth / expeditious enforcement – without
in any way taking away the right / option of approaching the “Seat”
Court for enforcement / reliefs in aid of enforcement. The judgment
in Gujarat Jhm (Supra) had been thereafter followed by the Delhi
High Court in Ravi Sawhney vs. Ramesh Kohli41. This has also
followed the view of this Court in Global Asia (Supra) as regards the
continuing jurisdiction of the Seat Court in execution.
41 Ex. Appl. (OS) 461 of 2021 dated 31st January, 2023.
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68. In the judgment relied upon by the Respondent No.1 viz.
Sara Chemicals (Supra), it has been held by this Court that any
Executing Court must first pass immediate interim reliefs of
injunction and disclosure in a post-award situation as a matter of
course in order to protect the decretal interest of the Award Creditor,
notwithstanding potential objections to jurisdiction which can only
be adjudicated upon a full disclosure by all Respondents. Further, this
Court in Sara Chemicals (Supra) has neither noticed the binding
decision of Gemini Bay and Global Asia nor have these decisions been
discussed. It is only been held in that case that the parties would be
heard on the jurisdictional objection after the appropriate disclosure
Affidavit is made. Thus, the Respondents attempt to portray the said
decision in Sara Chemicals (Supra) as taking anything but a pro-
enforcement stance is entirely without merit.
69. I find no merit in the jurisdictional objection of
Respondent No.1 as this Court possesses jurisdiction to pass reliefs in
view towards / in aid of execution as sought herein. Accordingly, this
jurisdiction objection is rejected.
70. The jurisdictional objection raised by Respondent No.2
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i.e. on the ground that the Respondent No.2 being Karta of
Respondent No.1 – HUF, his personal assets cannot be proceeded
against in execution even for unsatisfied debts of the HUF is now
taken up for consideration.
71. It is pertinent to note that there is no dispute whatsoever
and it is in fact an unequivocally admitted case that Respondent No.2
is the Karta of the Respondent No.1 – HUF. Further, Respondent No.1
is an HUF that carries on business, and in that sense is a trading HUF.
The learned Sole Arbitrator has recorded the fact that “The
Respondents are engaged in undertaking and executing construction
works contracts”. This observation of the learned Sole Arbitrator is
pertinent in view of the defence taken by Respondent No.2 that a
Karta has personal liability only when the HUF is a “trading” HUF
which carries on business. While it is trite law that Respondent No.2
Karta’s liability is unlimited regardless of whether or not the
Respondent No.1 HUF is a trading HUF / HUF which carries on
business, this enquiry in the present case is irrelevant / academic
because in the present case it is an admitted position that the
Respondent No.1 – HUF is one that carries on business of
construction works contracts.
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72. Further, it is settled law that the Karta’s liability for
unsatisfied debts or dues of the HUF is “personal” and “unlimited”.
The contention on behalf of the Respondents that Respondent No.2 -
Karta has no liability save and except for the costs component of the
Award is ex-facie without merit and merely a brazen attempt to ring-
fence Respondent No.2’s assets from being applied to enforcement of
the Award so that the Applicant is left holding a mere paper decree.
73. The authorities cited by the Respondent No.2 in support
of their submission that an HUF is a “separate entity’ or akin to a
‘body corporate’ are in the context of ordinary coparceners. The
entire discussion on HUF being a ‘separate entity’ or akin to a ‘body
corporate’ for some limited purposes comes into the picture only for
purposes of taxation or at most where liability beyond even the Karta
i.e. extending to ordinary coparceners is sought to be affixed. This
would not be applicable in the present case where the execution of
the Award is sought against Karta in his personal capacity.
74. Further, the Respondents contention of issue of
estoppel / res judicata are also without merit. The Respondent No.2
has contended that the claim was made against both the Respondents
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in the arbitration but granted only against Respondent No.1 and
therefore rejected against Respondent No.2. This has not been
discussed in the Award and in any event, the issue of whether a
Karta’s assets can be reached in execution by virtue of operation of
principles of Hindu Law was never and could never even arise for
consideration before the Arbitral Tribunal.
75. It has been held by this Court in Mulgund Co-Op-Credit
Society (Supra) that once it is admitted as a matter of fact that the
Respondent is Karta, the decree can be enforced against the assets of
the Karta. Further, in Shiv Bhagwan Moti Ram Saraogi (Supra),
Division Bench of this Court noticed the law laid down in Mulgund
Co-Op-Credit Society (Supra) and proceeded to clearly recognize the
“personal” as well as “unlimited” liability of a Karta, by virtue of the
unique / special status of the Karta in the HUF which is unlike other
ordinary coparceners. This is evident from the paragraph 34 of the
said judgment. The Division Bench discussed a further aspect i.e.
situations where personal liability could be extended even beyond
that of the Karta and also to other ordinary coparceners, where a
partnership is entered into between the HUF / Karta on the one hand
and a stranger / outsider on the other. While in the present case,
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there is no need to go into the further aspect, except to note that, the
Court was conscious of applying of the principles which stem from
the special status of the Karta under Hindu Law to the question of
which assets may be “reached” in execution. The Court was careful in
repratedly drawing a distinction between the special status of the
Karta and that of other / ordinary coparceners by pointing out that
the liability of the former is personal, whereas the latter is generally
only to the extent of their share in the coparcenary property.
76. The Delhi High Court in A. Khandelwal & Sons (Supra)
has held that it is settled position of law that the Karta’s liability is
always personal. The Karta always remains liable even to the extent
of personal assets and the only question to be looked into on facts is
when this personal liability could also be extended to other ordinary
coparceners. This is evident from paragraph 12 of the said judgment.
The Delhi High Court has placed reliance upon Mulgund Co-Op-
Credit Society (Supra) and Shiv Bhagwan Moti Ram Saraogi (Supra)
at paragraph 19 of the said judgment.
77. The Respondent No.2’s attempt to distinguish the
judgment of the Delhi High Court on the ground that the Delhi High
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Court was considering a HUF firm which is a separate entity is
misconceived. A reading of the judgment in A Khandelwal (Supra)
clearly shows that the term “HUF Firm” is merely used by the Court
to refer to the circumstance of an HUF “carrying on business” as
opposed to an HUF which does not carry on any business.
78. In any event, in the present case, it is evident that the
Respondent No.1 HUF can be considered as an HUF Firm carrying on
business. Respondent No.2’s entire argument attempting to
distinguish the said judgment is not only misconceived in law, but
also false on facts.
79. The Applicant has also relied upon the judgment of the
Madras High Court in K. Arumugam and Ors. (Supra) which also
supports the position that Karta’s position is ‘unique’ and his liability
‘unlimited’ as is evident from paragraphs 31 and 32 of the said
judgment.
80. The Respondent No.2 has not been able to show a single
authority which contradicts the settled law laid down by the various
Courts viz. that the Karta of the HUF is personally liable to satisfy the
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Award made against the HUF. The Respondent No.2 has misread the
judgments relied upon by the Applicant which supports the
Applicant’s case and the attempt to distinguish these judgments is
demonstrably incorrect, on the ground that they concern HUF Firm,
is misconceived, particularly, in view of the HUF firm being nothing
but a HUF carrying on business which in any event in the present
case, the Respondent No.1 – HUF is such a HUF firm.
81. The judgments cited by Respondent No.2 have no
reference to Karta at all and do not discuss or notice (let alone
distinguish or contradict), the clear law on the special status /
liability of Karta cited by the Applicant.
82. The judgments which have been relied upon by
Respondent No.2 are not relevant to the present case as no legal
principle has been shown to have been laid down in any of
Respondent No.2’s cases which in any way either applies to this case,
or deals with the specific aspect of a Karta’s liability for unsatisfied
debts of a HUF. The judgment in Ram Janmabhoomi (Supra) upon
which the Respondent No.2 has relied has no application to the issue
of Karta’s liability in execution. The constitutional Bench in the
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judgment had sounded a clear word of caution against any over-
broad or general proposition of rights / liabilities being inferred
merely because terms such as ‘juristic personality’ or ‘legal
personality’ may attach to an entity under Hindu Law in certain
contexts. The Court has emphasized the importance of context in
deciding rights / liabilities, and in paragraph 127, has categorically
held that “conferral of juristic personality does not automatically
grant an ensemble of legal rights”.
83. In the Full Bench decision of the Punjab and Haryana
High Court in Khairati Ram & Anr. (Supra) it has been held that
although the HUF is included in the expression ‘person’ as defined in
the Indian Income Tax Act, it is not a juristic person for all purposes.
The Karta counts as one person. He himself is liable to the extent of
his coparcenary property as well as his personal property but the
other members of the family are liable only to the extent of their
coparcenary share. Thus, the Full Bench clearly recognizes that a
Karta is personally liable for unsatisfied debts of an HUF by virtue of
his sui generis status and that an HUF is a juristic person only in
certain contexts and in a limited sense, such as for the purpose of
taxation.
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84. In Yeshvant Dattaraya (Supra), this Court has held that
the ordinary rule of Hindu Law is that it is only the manager or the
managing member of the joint family business who is personally
liable with regard to the debt contracted for that particular joint
Hindu Family business. Paragraph 4 of the said judgment reads as
under:-
“4. The distinction between a partnership
firm and a joint family business is too well,
known and too fundamental to need any
repetition or emphasis; whereas one arises
from contract, the other is the result of
status. Whereas in the case of a contractual
partnership each partner is the agent of the
other and each partner is personally liable, in
the case of a joint family business, as I have
just said, ordinarily only the managing
member is personally liable. Further it has
got to be remembered that in the case of a
joint Hindu family business, the karta has the
right without consulting the other
coparceners to contract debts on behalf of
the business and to be in complete control of
the business and the other coparceners are
bound by these acts on the part of the karta.
Therefore it can be well understood why
Hindu law has restricted the liability of the
coparceners other than that of the manager
only to their interest in the joint family assets
and has not foisted upon them a personal
liability. The manager is personally liable
because it is his contract and he is in charge
of the business and is in control of it. This
principle has been very well enunciated in a
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recent decision of the Madras High Court in
I.L.R. (1940) Mad. 10122. In that case
Wadsworth, J. and Patanjali Sastri, J. came
to the conclusion that a coparcener could not
be made personally liable except on the
ground of implied partnership or estoppel by
holding out or ratification; and whether an
inference can be drawn as to implied
partnership or estoppel must depend upon
the nature and extent of the participation of
the coparcener in the business.[…]”
85. Further, in the Division Bench of the Rajasthan High
Court in Kishan Gopal (Supra) reference has been made to Chennana
Gowd vs. Official Receiver, Bellary 42 where it was laid down that in
the joint Hindu Family business those members who do not partake
in the direction of a joint family business will not be personally liable
for the debts of those members who actually conduct the business
and that only those members are personally liable who are in control
and management of it.
86. The argument of Respondent No.2 on res judicata and
issue estoppel (on the basis that reliefs were sought but not granted
against Respondent No.2 in the arbitration) are totally without merit.
Neither res judicata nor issue of estoppel have any applicability in the
present case at all. The present proceedings are execution
42 AIR 1940 Mad. 241.
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proceedings unconcerned with the affixing of any contractual
liability. Further, the issue of Respondent No.2’s liability as Karta of
the Hindu Family by operation of Hindu Law for unsatisfied debts of
the Respondent No.1- HUF was never raised before the learned
Arbitrator and the learned Arbitrator never had occasion to consider
the issue of whether Respondent No.2 is personally liable as Karta of
Respondent No.1 – HUF in execution of the resulting award when the
Respondent No.1 HUF was unable to satisfy the Award. Respondent
No.1 – HUF is admittedly unable to satisfy the Award. This issue is
unique / peculiar to the post-award and execution stage, and hence it
could never have been a question in the arbitration. The two
proceedings are totally different in substance as well as form.
Accordingly, the contention of Respondent No.2 based on issue
estoppel / res judicata / constructive res judicata are liable to be
rejected.
87. The Respondent No.2’s contention based on Order XXX
Rule 10 and Order XXI Rule 50 are clearly without merit since they
entirely rely upon the artificial distinction drawn between “HUF” and
“HUF Firms” which as already held is misconceived / irrelevant and
in any event an academic question in the present case where the
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Respondent No.1 – HUF admittedly is one that carries on business. In
any event, this Court has inherent power as a Court of record and
equity, as also power under Section 47 of the CPC to determine all
questions arising between the parties “relating to the execution,
discharge or satisfaction of the decree”. This includes the question of
law as to whether under Hindu Law, a Karta has personal / unlimited
liability in execution when the Respondent No.1 – HUF is admittedly
unable to satisfy the decretal debt. The answer to this issue is in the
affirmative as evident from the clear line of authorities.
88. Accordingly, there is no merit in this preliminary
objection raised by the Respondent No.2 in resisting the Interim
Application.
89. In these circumstances, the Interim Application is liable
to be allowed.
90. Regarding the immovable properties / securities already
lying custodia legis as common security for the Respondents’ liability,
in respect of which reliefs are required to follow as a matter of
course, it would be necessary to appoint a Court Receiver to secure
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possession and thereafter for sale of the immovable properties to
which title deeds are already deposited in this Court under Order
dated 26th June, 2024. This Court as Executing Court has the power
under Section 51(d) of the CPC to do so.
91. In these circumstances, there shall be grant of prayer
Clause (b) of the Interim Application. Accordingly, the Court Receiver
of this Court is appointed as receiver of the immovable properties
whose title deeds are deposited in this Court in order to secure the
Applicants claim with all powers under Order XL Rule 1 of the CPC
including the powers to take physical possession thereof and to sell
the said properties on such terms as this Court may deem fit and
proper and deposit the proceeds of the same to the credit of the
Execution Application. At present the Court Receiver shall take
physical possession of the immovable properties whose title deeds
have been deposited in this Court and shall file a report to that effect
within a period of four weeks from uploading of this Order.
92. In addition, there shall be grant of prayer Clause (e) of
the Interim Application. The Respondent Nos.1 and 2 are directed to
disclose by way of Affidavits of Disclosure all assets i.e. movable and
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immovable held by the Respondent Nos.1 and 2. Respondent No.1
though having filed Affidavit of Disclosure is yet to make full and
complete disclosure and shall do so. There shall be also a grant of
prayer Clause (f) by restraining the Respondents / Judgment
Debtors, their servants, agents, co-parceners, assigns or any other
person acting for and on behalf of the Judgment Debtors from in any
manner, directly or indirectly dealing with or disposing of, alienating,
selling, transferring, assigning, encumbering, parting with possession
of or creating any third party right in respect of any of its movable
and / or immovable property and any other assets including
properties disclosed in the Affidavit(s) by the Judgment Debtors.
93. Prayer Clause (g) of the Interim Application is at this
stage premature, considering that the Respondent No.2 has yet to
disclose their assets and liberty is granted to the Applicant to renew
this prayer in fresh Interim Application depending on disclosure
made by the Respondent No.2.
94. The Respondents are in addition to the above disclosure
which have been directed to be made shall in terms of Prayer Clause
(h) disclose in their Affidavits of Disclosure, their income tax returns
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for the last three financial years along with bank statements for last
one year.
95. The Affidavits of Disclosure as directed shall be filed by
the Respondent Nos.1 and 2 within a period of four weeks from the
uploading of this Order.
96. The present Interim Application is accordingly disposed
of. There shall be no order as to costs.
[ R.I. CHAGLA J. ]
97. After pronouncement of the Order, the learned Counsel
for the Respondent No.2 has applied for stay of this Order.
98. Considering that award had been passed way back on
30th November, 2023 which is being executed, the application for
stay is rejected.
[ R.I. CHAGLA J. ]
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