Concealed Bank Account: Delhi HC Upholds Arrest of Company Representative

The Delhi High Court has upheld arrest warrants against an authorised representative of a judgment-debtor company for failing to disclose a company bank account in asset affidavits filed during execution of an arbitral award. In Syed Farhan Ali v. M/s ABB India Limited [CM(M) 1689/2026 & CM APPL. 50213/2026], decided on September 18, 2026, the Court held that an officer can face consequences under Order XXI Rule 41(3) of the Code of Civil Procedure, 1908 (CPC), for not complying with a direction to disclose the company’s assets under Rule 41(2), even where he is not personally liable for the award.

The case arose from an arbitral award dated February 28, 2019, directing Techno Aircon Industries Private Limited to pay ABB India Limited ₹92,29,230, with interest at 9% from November 1, 2021, until payment, and costs of ₹3,75,000. The company’s challenges to the award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and before the Supreme Court failed, and execution continued.

The petitioner, Syed Farhan Ali, the company’s authorised representative, filed asset affidavits on February 1 and December 17, 2024. The affidavits disclosed an HDFC Bank account but did not mention an ICICI Bank account. When the second affidavit was filed, the executing court asked whether the company maintained any bank accounts in Delhi, to which the petitioner said no. The ICICI account came to light only when bank statements were filed on February 3, 2025, on the court’s directions, showing a balance of ₹65,27,798.37 as on February 1, 2025. It was closed on July 23, 2025, after 13 withdrawals totalling ₹12,51,719 on July 17, 2025.

ABB India, the decree-holder, sought civil imprisonment of the petitioner under Order XXI Rule 30 read with Rule 41(3) CPC. On May 11, 2026, the executing court allowed the application and issued arrest warrants against the petitioner. They went unserved, so fresh warrants were issued on July 23, 2026. The petitioner challenged that order under Article 227 of the Constitution, arguing that he was only the company’s authorised representative, was not a party to the arbitral or execution proceedings, and could not be proceeded against personally without lifting the corporate veil.

Order XXI CPC governs execution of decrees. Rule 30 provides that a money decree may be executed by detaining the judgment-debtor in civil prison, by attaching and selling his property, or both. Rule 41(2) applies where a money decree has remained unsatisfied for thirty days: the court may, on the decree-holder’s application, require the judgment-debtor or, where the judgment-debtor is a corporation, any officer of it, to file an affidavit stating the particulars of the judgment-debtor’s assets. Under Rule 41(3), disobedience of that order can lead to detention in civil prison for up to three months, unless the court orders earlier release.

The High Court rejected the petitioner’s argument. It said he was not being treated as the judgment-debtor, and the decree was not being enforced against his own assets. The proceedings concerned his own failure to comply with the disclosure direction. The Court also noted that he had not claimed the company gave him inadequate or inappropriate information. The company’s separate legal personality, it held, could not excuse an officer from an obligation he had personally taken on under a judicial direction.

On the affidavits, the Court said that an asset affidavit is not a mere formality. One that withholds material particulars, particularly information within the officer’s knowledge, is not substantive compliance with Rule 41(2) and can attract punishment under Rule 41(3). The ICICI account was still operating when the affidavits were filed, yet it was not disclosed. The executing court could reasonably read the omission, along with the later withdrawals, as an attempt to frustrate or impede execution. The High Court found no error in the executing court’s exercise of discretion under Rule 41(3).

The Court also reiterated that its jurisdiction under Article 227 is supervisory, not appellate. Interference is warranted where an order suffers from perversity, patent illegality or manifest jurisdictional error. The petitioner relied on a 2023 bank closure letter, but the bank’s subsequent records showed that the account remained operational until July 23, 2025. The Court declined to reappraise the material as though hearing an appeal and found no ground to interfere. The petition was dismissed.

The ruling concerns an officer’s failure to comply with an asset-disclosure direction. The Court did not treat him as the judgment-debtor or hold him liable to satisfy the company’s award.