This article delves into a recent Hon’ble High Court of Delhi judgment concerning CM(M) 2147/2024, where ARN Infrastructure India Pvt Ltd and one of its directors challenged an order issuing arrest warrants against company directors. The case highlights the critical importance of compliance with court directives during execution proceedings, particularly the appearance of directors when ordered. We explore the High Court’s stern stance on ensuring cooperation in execution petitions and the potential consequences, including arrest warrants, faced by company directors for non-compliance.
1. Brief Facts of the Case
The case originates from a complaint filed by Ms. Tuhina Bhargava and another (Respondents/Decree Holders) against M/s ARN Infrastructure India Pvt. Ltd. (Judgment Debtor Company/Petitioner No.1) before the learned State Commission, Delhi. The State Commission allowed the complaint. The Judgment Debtor Company challenged this order before the learned National Consumer Disputes Redressal Commission (NCDRC), but the appeal was dismissed due to non-compliance with a conditional stay order (payment of 50% of the decretal amount).
Subsequently, the Decree Holders filed an Execution Petition (EA/32/2022) before the learned State Commission. During these proceedings, the Decree Holders sought the issuance of arrest warrants against the Directors of the Judgment Debtor Company and also requested the disclosure of their assets under Section 71 of the Consumer Protection Act, 2019, read with Order XXI Rule 41(2) CPC.
Despite the Judgment Debtor Company filing a reply, the assets were not disclosed. Observing a lack of cooperation from the Directors, the learned State Commission issued warrants of arrest against all six Directors who were serving at the relevant time. This order, dated 19.02.2024, was challenged in the present petition before the Hon’ble High Court of Delhi by ARN Infrastructure India Pvt Ltd and one of its Directors, Mr. Krishan Kumar.
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2. Issues Before the Learned State Commission (During Execution)
While the original complaint issues were decided earlier, the key issues during the execution proceedings (EA/32/2022) leading to the High Court petition were:
Issue |
Decree Holder's (Respondents') Position |
Judgment Debtor Company's (Petitioners') Position/Action |
|---|---|---|
Compliance with the decree
|
Seeking execution of the order dated 15.11.2016.
|
Decree not satisfied.
|
Disclosure of Assets by Directors
|
Filed application under Sec 71 Consumer Protection Act, 2019 & Order XXI Rule 41(2) CPC for disclosure.
|
Filed reply to the application but did not disclose assets.
|
Cooperation of Directors in Execution Proceedings
|
Alleged lack of cooperation from Directors.
|
Implied lack of full cooperation leading to arrest warrants.
|
Appearance and Accountability of Directors for the Company's Liability
|
Sought issuance of warrants of arrest against the Directors.
|
Directors not providing requisite assistance leading to arrest warrants.
|
3. Issues Before the Hon'ble High Court of Delhi
While the original complaint issues were decided earlier, the key issues during the execution proceedings (EA/32/2022) leading to the High Court petition were:
Issue |
Petitioners' (ARN Infrastructure & Director) Version/Prayer |
Respondents' (Decree Holders') Implied Position (as beneficiaries of State Commission order) |
|---|---|---|
Validity of Arrest Warrants against Directors (Order dated 19.02.2024)
|
Challenged the order issuing arrest warrants. Stated no intention to defy court directions. Mentioned change in management.
|
Sought to uphold the State Commission's order to ensure execution of the decree.
|
Cooperation and Appearance of Directors
|
Assured physical appearance of all six Directors and authorised representative of JD company before the State Commission.
|
Seeking compliance and progress in the execution petition.
|
Liability of Company vs. Directors
|
Sought consideration that the decree is only against the company.
|
Impliedly seeking to lift the corporate veil for execution against non-cooperative Directors.
|
4. Hon'ble High Court of Delhi's Findings
The Hon’ble High Court of Delhi, in its judgment dated 09th May, 2025, disposed of the petition [CM(M) 2147/2024] with the following directions:
- All six Directors against whom arrest warrants had been issued by the learned State Commission, along with an authorised representative of the JD Company (ARN Infrastructure India Pvt Ltd), were directed to appear before the learned State Commission on the next date, stated to be 16.05.2025.
- These individuals were granted liberty to move any application(s) as they may be advised before the learned State Commission.
- They are required to provide all requisite assistance and cooperation to the learned State Commission to ensure no further delay in the execution of the decree.
- The learned State Commission was directed to consider the aspect that the decree is primarily against the company and to proceed with the matter in accordance with the law after considering any applications moved by the Directors and after giving due opportunity of hearing to both sides.
- The petition and any pending applications were disposed of in these terms, and the previously scheduled High Court date of 12.09.2025 was cancelled. The application for early hearing (CM APPL. 28381/2025) was also disposed of.
5. Takeaway/Learning for the Parties from this Judgement
5.1 For the Judgement Debtors
- Compliance is Key: The judgment underscores the critical importance of complying with court orders, especially during execution proceedings. Non-cooperation can lead to stringent measures like arrest warrants.
- Personal Appearance When Directed: Directors cannot evade personal responsibility by citing changes in management if they were directors at the relevant time and are specifically ordered to appear or provide information.
- Utilize Given Opportunities: The Hon’ble High Court provided a “last chance.” Such opportunities should be taken seriously to present their case, make necessary compliances (like asset disclosure), and seek relief through proper legal channels (e.g., applications before the State Commission).
- Cooperation Expedites Resolution: Active cooperation with the executing court can prevent harsher measures and potentially lead to a more structured resolution, even if the primary liability rests with the company.
- Address Liability Argument Properly: While the decree is against the company, directors must understand that their actions (or inaction) in frustrating the execution can lead to personal repercussions. They should clearly articulate their position and any limitations on their ability to comply before the appropriate forum.
5.2 For the Decree Holders Respondents:
- Persistence in Execution Pays: The Decree Holders’ persistence in pursuing execution, including seeking directions for asset disclosure and appearance of directors, led to the State Commission’s firm orders and the High Court’s directions ensuring presence.
- Courts Support Rightful Execution: The judiciary, including the Hon’ble High Court, supports the execution of lawful decrees and will intervene to ensure that judgment debtors do not unduly delay or obstruct the process.
- Document Non-Cooperation: Clearly demonstrating the judgment debtor’s non-cooperation (e.g., failure to disclose assets) is crucial for obtaining stricter orders from the court.
- Strategic Legal Steps: Filing appropriate applications (like under Section 71 of the Consumer Protection Act, 2019) can be effective tools in aid of execution.
- Be Prepared for Continued Process: While the Hon’ble High Court has directed appearance, the execution process will continue before the State Commission. The Decree Holders must remain vigilant and actively participate in those proceedings.
Disclaimer: In compliance with the Bar Council of India guidelines, this article is intended for informational purposes only and does not constitute legal advice or a solicitation for legal services.
