The Bombay High Court held that a Karta can be personally proceeded against to satisfy an arbitral award where HUF assets are insufficient, and clarified that the court at the seat of arbitration retains execution jurisdiction even if assets lie outside its territorial limits.
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MUMBAI: The Bombay High Court has held that the karta of a Hindu Undivided Family (HUF) can be personally proceeded against in execution of an arbitral award where the HUF’s own assets are insufficient. The Court further clarified that the court at the seat of arbitration retains jurisdiction to entertain execution and grant interim enforcement reliefs even if the judgment-debtor’s assets are located outside its territorial limits.
The ruling was delivered by Justice R.I. Chagla while deciding an interim application in a commercial execution arising from an arbitral award dated 30 November 2023.
The arbitral award was passed in favour of the decree-holder, Manjeet Singh T Anand, against Nishant Enterprises HUF and its karta. The award directed payment of:
- approximately ₹12.52 crore as principal,
- interest at 10% per annum, and
- costs of ₹22.25 lakh.
While execution of the costs component was stayed subject to deposit, a sum of about ₹14.79 crore remained unsatisfied, and there was no stay operating on recovery of this decretal amount.
The decree-holder accordingly filed an interim application seeking relief in aid of execution.
The HUF objected to execution proceedings before the Bombay High Court on the ground that:
- All disclosed immovable properties and bank accounts were located in Bhiwandi, Thane district, and
- Under Sections 38 and 39 of the Code of Civil Procedure, 1908, only the court within whose jurisdiction the assets were located could execute the award.
Rejecting this objection, Justice Chagla held that the Mumbai court, being the seat court under Section 2(1)(e)(i) of the Arbitration and Conciliation Act, 1996, cannot be divested of jurisdiction merely because the assets are situated elsewhere.
The Court observed that:
“An award under Part I of the Arbitration Act can be executed both by the court under Section 2(1)(e) and by a court where the judgment-debtor’s assets are situated.”
The Court reiterated that decisions such as Sundaram Finance Ltd. v. Abdul Samad only give the award-creditor an additional forum to execute the award and do not restrict or oust the jurisdiction of the seat court.
A second preliminary objection was raised by the karta, contending that:
- The operative monetary direction in the arbitral award was only against the HUF, and
- The karta had been made jointly liable only in respect of costs,
- Therefore, his personal assets could not be attached in execution.
The Court rejected this contention and held that under settled principles of Hindu law, the karta’s liability for HUF debts is personal and unlimited, particularly where the HUF is carrying on business.
Justice Chagla clarified that:
“The liability of the karta arises by operation of law and operates at the stage of execution. It need not be expressly recorded in the arbitral award.”
The Court noted that recognition of an HUF as a juristic entity is confined to limited statutory contexts such as taxation and does not displace the traditional rule that the karta’s personal assets may be proceeded against where the HUF estate is insufficient.
The Court further held that the silence of the arbitral award on personal liability does not preclude the executing court from determining what assets can be reached to satisfy the decree. Questions relating to the manner of execution and the assets against which the decree may be enforced fall within the jurisdiction of the executing court.
Both preliminary objections raised by the HUF and the karta were therefore found to be without merit.
Allowing the decree-holder’s interim application, the Court granted protective reliefs to secure enforcement of the award, including:
- Appointment of the Court Receiver over immovable properties whose title deeds had earlier been deposited as security, with power to take physical possession, and
- An injunction restraining the HUF and the karta from dealing with, transferring, or encumbering any movable or immovable assets.
Appearance:
For Anand: Advocates Rashmin Khandekar, Jamsheed Master, Anand Mohan and Aniket Worlikar
For Nishant Enterprises HUF: Advocates Prathamesh Kamat, SB Rao and Gauri Rao
For the karta: Advocates Sanjay Jain, Nakul Jain, Sankalp Anantwar and Ronak Mistry i/b. SMA Law Partners
Case Title:
Manjeet Singh T Anand v. Nishant Enterprises HUF through its Karta & Anr.
INTERIM APPLICATION NO.5306 OF 2025
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