The Calcutta High Court has clarified that an executing court cannot dismiss an execution proceeding or transfer a decree to a foreign jurisdiction solely on the assertion that judgment-debtors have no assets in India. The court must first exhaust all statutory procedures under the Code of Civil Procedure, particularly the examination of judgment-debtors, before concluding that territorial jurisdiction is lacking.
Background & Facts
The Dispute
This execution proceeding arises from a decree dated 15.05.2023 passed by the Commercial Division of the Calcutta High Court in favor of the decree-holder, Dalgreen Agro Private Limited, against seven judgment-debtors, including Shaikh Asadur Rahman and others. The decree awarded a sum of USD 428,500, equivalent to Rs. 9,81,84,205, inclusive of interest. The decree was passed ex parte after judgment-debtors 1 to 3 filed written statements but chose not to participate in the trial.
Key Facts
- The decree was passed on 15.05.2023 for Rs. 9,81,84,205 (USD 428,500)
- Judgment-debtors 1 to 3 are residents and business operators in Bangladesh
- Judgment-debtors 5 and 8 are unrepresented and beyond India’s territorial jurisdiction
- The decree-holder alleged in paragraph 18 of the execution application that judgment-debtors 1 to 3 possess immovable property within the jurisdiction of the Calcutta High Court
- Judgment-debtors 1 to 3 denied this allegation, claiming no assets or residence in India
- No application was filed by judgment-debtors 1 to 3 to set aside the ex parte decree or to appeal it
- The decree has attained finality and crystallized as of 15.05.2023
Procedural History
- 15.05.2023: Decree passed ex parte by the Commercial Division, Calcutta High Court
- 01.01.2025: Execution petition filed under EC-COM/200/2025
- 15.01.2025: Judgment-debtors 1 to 3 filed IA NO. GA-COM/1/2025 seeking dismissal of execution on grounds of lack of territorial jurisdiction
- 05.05.2026: Hearing concluded before Justice Aniruddha Roy
- 05.05.2026: Judgment delivered
The Parties' Positions
- Decree-holder (Dalgreen Agro Private Limited): Argued that the executing court has inherent jurisdiction to examine judgment-debtors under Order XXI Rule 41 CPC to ascertain asset location before deciding on transfer. Contended that judgment-debtors’ non-participation in trial and silence on liability indicate bad faith.
- Judgment-debtors 1 to 3: Argued that under Sections 38 and 39 CPC, the decree must be transmitted to Bangladesh where they reside and hold assets, as no property exists in India. Relied on Smt. Uma Kanoria v. Pradip Kumar Daga and Mohit Bhargava v. Bharat Bhushan Bhargava.
- Judgment-debtor No. 4: Sought and was granted leave to file a supplementary affidavit of assets by 30.06.2026.
Relief Sought
- Judgment-debtors 1 to 3 sought dismissal of the execution proceeding on jurisdictional grounds
- Decree-holder sought continuation of execution proceedings and enforcement of the decree
- Court directed judgment-debtors 1 to 3 to deposit the full decretal amount as a show of bona fides
The Legal Issue
The central question was whether an executing court under the Code of Civil Procedure may dismiss an execution proceeding or transfer a decree to a foreign jurisdiction without first conducting an examination of the judgment-debtors under Order XXI Rule 41 CPC to determine the presence or absence of assets within its territorial limits.
Arguments Presented
For the Appellant/Petitioner
Judgment-debtors 1 to 3 relied on Section 39 of CPC, arguing that since they reside and hold no assets in India, the decree must be transmitted to a competent court in Bangladesh. They cited Smt. Uma Kanoria v. Pradip Kumar Daga (AIR 2003 Cal 162) and Mohit Bhargava v. Bharat Bhushan Bhargava (2007) 4 SCC 795, asserting that where no property exists in the executing court’s jurisdiction, transmission is mandatory. They contended that the decree-holder’s allegation of property within jurisdiction was unsubstantiated and that the court lacked authority to proceed without conclusive evidence.
For the Respondent/State
The decree-holder argued that Order XXI Rule 41 CPC mandates the executing court to examine judgment-debtors to ascertain the location of assets before concluding jurisdictional inadequacy. Citing DVM Construction & Ors v. Srei Infrastructure Finance Ltd. (AIR 2009 Cal 227), the decree-holder emphasized that the court’s duty is to ensure the decree is not rendered a mere paper decree. They distinguished Uma Kanoria on the ground that examination of the debtor had not been initiated in that case, and Mohit Bhargava as involving partnership assets, not a pure money decree.
The Court's Analysis
The Court undertook a detailed statutory interpretation of Sections 38 and 39 of CPC alongside Order XXI Rule 41. It held that while Section 39 permits transmission of a decree to another court, it is not a self-executing provision. The court must first satisfy itself, through the statutory machinery of execution, that no assets exist within its jurisdiction.
"The legislature thought it fit to enact this provision [Order XXI Rule 41] to ascertain the details of the properties and assets, whether movable or immovable of the judgment debtors, upon a detailed enquiry being conducted by way of trial on evidence before the Court so that, the Court can come to its final opinion with regard to the assets and properties of the judgment debtor, whether it will satisfy the subject decree and this enquiry naturally will include whether the assets and properties of the judgment debtors are lying within the local limits of the executing Court or not."
The Court emphasized that the executing court’s authority is not limited to mechanical compliance with Section 39 but includes the duty to explore all available remedies under Order XXI to satisfy the decree. It distinguished Uma Kanoria on the basis that the examination of the judgment-debtor had not been initiated, whereas in the present case, that stage had not even been reached. The Court noted that judgment-debtors 1 to 3 had deliberately avoided trial, allowed the decree to crystallize, and now sought to evade enforcement by raising jurisdictional objections prematurely.
The Court further held that the mere assertion of absence of assets, without corroboration through examination, cannot override the statutory obligation to conduct due inquiry. It rejected the argument that transmission is automatic upon allegation of foreign residence, stating that such a view would encourage forum shopping and render decrees ineffective.
The Verdict
The application by judgment-debtors 1 to 3 was dismissed. The Court directed them to deposit the full decretal amount of Rs. 9,81,84,205 with the Registrar, Original Side, within six weeks from the date of judgment to demonstrate bona fides. The deposit shall be held in a fixed deposit account with the State Bank of India, Kolkata High Court SPB Branch, without prejudice to their rights. Judgment-debtors 1 to 3 shall file their Affidavits of Assets by 15.07.2026, and the matter shall proceed to the stage of examination of judgment-debtors under Order XXI Rule 41 CPC. The point on territorial jurisdiction remains open for consideration after such examination.
What This Means For Similar Cases
Examination of Judgment-Debtor Is Mandatory Before Transfer
- Practitioners must initiate examination under Order XXI Rule 41 CPC before seeking transfer of a decree to another jurisdiction
- Assertion of foreign residence or absence of assets is insufficient without evidentiary record from examination
- Courts cannot bypass statutory procedures under the guise of territorial limitations
Bad Faith Conduct Affects Execution Rights
- Judgment-debtors who avoid trial and allow ex parte decrees to crystallize cannot later use jurisdictional objections to delay enforcement
- Courts may require deposit of decretal amount as a condition to proceed with bona fide inquiry
- Non-participation in trial may be treated as waiver of substantive defenses
Jurisdictional Challenges Must Be Timely and Substantiated
- Jurisdictional objections raised at the execution stage must be supported by affidavits, documents, or evidence
- Allegations of foreign assets require corroboration; mere pleadings are inadequate
- Execution courts retain discretion to proceed with inquiry even if judgment-debtors are non-residents
