Enforcement Of Foreign Arbitral Award, Repeated Non-Compliance; Rajasthan High Court Sentences Director Of Company Civil Imprisonment
The Rajasthan High Court bench of Dr. Justice Nupur Bhati has ordered the director of a company to one month of civil imprisonment for failing to disclose its assets in the enforcement of a foreign arbitral award. The High Court with its prior judgment ordered the foreign award to be enforceable and executable as a decree of the court. For the enforcement and execution of...
The Rajasthan High Court bench of Dr. Justice Nupur Bhati has ordered the director of a company to one month of civil imprisonment for failing to disclose its assets in the enforcement of a foreign arbitral award.
The High Court with its prior judgment ordered the foreign award to be enforceable and executable as a decree of the court. For the enforcement and execution of this decree, Mamta Hygiene Products Pvt Ltd (Respondent) was directed to disclose its assets by filing an affidavit within four weeks from the date of the judgment. Additionally, Emeraldstone Management Sia (Applicant) was granted liberty to seek further directions for the enforcement and execution of the foreign award strictly in accordance with the law.
The Applicant submitted that despite the court's direction, the Respondent didn't disclose its assets through an affidavit within the prescribed four-week period. Despite several occasions where the Respondent was granted time to comply with this judgment, no effective steps were taken by the respondent. The Co-ordinate Bench of the High Court issued further directions to the Respondent yet it failed to comply with these directions.
The High Court noted that the Respondent consistently failed to comply with the judgment. The Respondent neither disclosed its assets through an affidavit nor submitted the required financial documents and deposit as directed.
The bench noted that:
“from perusal of the various order-sheets, it is apparent that the respondent-company has failed to comply with the judgment dated 26.09.2023 as has not disclosed its assets by way of filing an affidvit within a period of four weeks from the date of passing of the said judgment and further has not complied with the directions passed by this Court dated 22.03.2024 as has not placed on record its Income-tax return along with the audited balance sheet of last five financial years by the next date as directed vide order dated 22.03.2024 and has also failed to deposit the amount of Rs.50,00,000/- in the bank account of the applicant-company as directed in the order dated 22.03.2024.”
Given this blatant disobedience, the High Court found it necessary to invoke the provisions of Order 21 Rule 41, CPC. The Superintendent of Police, Bhilwara, was directed to detain Sanjay Rathi the Director of Mamta Hygiene Products Pvt Ltd in civil prison for a period of one month.
Case Title: Emeraldstone Management Sia vs Mamta Hygiene Products Pvt Ltd
Case Number: S.B. Arbitration Application No. 40/2020
Advocate for the Petitioner: Mr. Vinay Kothari Mr. Ayush Goyal
Advocate for the Respondent: Mr. Nishank Madhan
Date of Judgment: 19/07/2024