The Himachal Pradesh High Court clarified that the existence of a bank branch in a jurisdiction does not by itself confer territorial jurisdiction for execution proceedings under Order XXI of CPC; execution must be filed where the award debtor’s assets are situated. This judgment upholds existing Supreme Court precedent and serves as binding authority for subordinate courts in similar matters.
Summary
| Category | Data |
|---|---|
| Case Name | EX.P/28/2023 of M/S ESTEEM INDUSTRIES Vs CHHATISGARH MEDICAL SERVICES CORP. LTD AND ANOTHER |
| CNR | HPHC010376052023 |
| Date of Registration | 11-10-2023 |
| Decision Date | 31-10-2025 |
| Disposal Nature | Disposed Off |
| Judgment Author | Hon’ble Mr. Justice Ajay Mohan Goel |
| Court | High Court of Himachal Pradesh |
| Bench | Single (Hon’ble Mr. Justice Ajay Mohan Goel) |
| Precedent Value | Binding on subordinate courts within jurisdiction; persuasive for other High Courts. |
| Overrules / Affirms | Affirms Supreme Court judgment in Sundaram Finance Limited v. Abdul Samad (AIR 2018 SC 965) |
| Type of Law | Civil Procedure — Execution Proceedings, Arbitration (MSME Act) |
| Questions of Law | Whether an execution petition is maintainable in a court’s jurisdiction solely on the ground that the award debtor’s bank has branches there, despite the absence of the debtor’s assets within that jurisdiction? |
| Ratio Decidendi |
The court held that execution petitions can only be filed where the award debtor’s movable or immovable assets are situated. The mere presence of a branch of the debtor’s bank does not confer jurisdiction if the debtor’s account is held at a branch outside the court’s territory. The process envisaged under Order XXI, Rules 46 and 52 CPC does not extend to such circumstances unless the property sought to be attached is within the local jurisdiction. The Supreme Court’s ruling in Sundaram Finance was reaffirmed, guiding that execution be directly sought where the assets exist. |
| Judgments Relied Upon | Sundaram Finance Limited v. Abdul Samad and another, AIR 2018 Supreme Court 965 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Order XXI Rules 46 and 52 CPC, MSME Act, and principles of territorial jurisdiction. |
| Facts as Summarised by the Court | The petitioner sought execution of an arbitral award against a public sector company having its assets and bank accounts only in Chhattisgarh, arguing maintainability based on the presence of Indusind Bank’s branches in Himachal Pradesh; the respondent objected to territorial jurisdiction. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Himachal Pradesh |
| Persuasive For | Other High Courts, given reliance on Supreme Court authority |
| Follows | Sundaram Finance Limited v. Abdul Samad and another, AIR 2018 SC 965 |
What’s New / What Lawyers Should Note
- Reaffirms that execution proceedings must be initiated where the award debtor’s movable or immovable assets are located.
- Mere presence of a bank’s branch is insufficient to confer territorial jurisdiction if the account is not located within that court’s territory.
- Emphasizes that territorial jurisdiction is determined by the location of the debtor’s attachable property, not just a bank’s operational footprint.
- Lawyers should advise clients to file execution petitions before the court having jurisdiction over the location of the award debtor’s assets.
Summary of Legal Reasoning
- The Court noted the uncontested fact that the award debtor had no assets or bank accounts in Himachal Pradesh.
- The petitioner argued jurisdiction based on the existence of Indusind Bank’s branches in the state, referencing the processes under Order XXI, Rules 46 and 52 of CPC.
- The Court analyzed these provisions and held that attachment is permissible where the property (including bank accounts) is situated within the local jurisdiction.
- Reference was made to the Supreme Court decision in Sundaram Finance Limited v. Abdul Samad, which permits filing execution where the decree can be executed, i.e., where the debtor’s assets are present.
- The Court rejected the petitioner’s analogy, distinguishing between the mere presence of a bank branch and the actual presence of the account/property within the local jurisdiction.
- Consequently, liberty was granted to file the execution before a competent court in the state where assets exist.
Arguments by the Parties
Petitioner
- Execution is maintainable in Himachal Pradesh as the award debtor’s bank (Indusind Bank) has branches there.
- Sought the aid of Order XXI, Rules 46 and 52 CPC to attach the bank account, arguing that the property (debt/bank account) is under the custody of a bank having branches in Himachal Pradesh.
Respondent
- Objected to the maintainability of the execution petition due to lack of assets or property (including bank accounts or branch office) within the local jurisdiction of Himachal Pradesh.
- Emphasized that all assets and the relevant bank account of the award debtor are located in Chhattisgarh.
Factual Background
- The petitioner (M/s Esteem Industries) obtained an arbitral award under the MSME Act against Chhattisgarh Medical Services Corp. Ltd.
- The award entitled the petitioner to over Rs. 3.64 crores with costs and interest.
- The award debtor holds assets and its relevant bank account in Chhattisgarh.
- No property, asset, or bank account were located in Himachal Pradesh; the petitioner sought execution in Himachal Pradesh solely due to Indusind Bank’s branch network.
Statutory Analysis
- Order XXI, Rule 46 CPC: Governs attachment of property not in possession of the judgment debtor (such as debts or shares).
- Order XXI, Rule 52 CPC: Relates to the procedure for attachment of property in custody of a court or public officer.
- The court interpreted these rules to require that the property sought to be attached (i.e., the bank account) must actually be within the court’s territorial jurisdiction, not merely associated with a bank that has branches elsewhere.
- Also considered the principles laid down under the MSME Act regarding execution of arbitral awards.
Alert Indicators
- ✔ Precedent Followed