The Bombay High Court held that a pending Section 34 challenge does not bar execution-related disclosure. The Court directed the judgment debtors, including an entity disputing its liability, to disclose assets, bank statements, and income tax returns, reaffirming that executing courts cannot go behind the arbitral award.

Legal Issue 

Whether an executing court can compel a corporate/entity-based Judgment Debtor to disclose assets and provide financial records (ITRs and Bank Statements) when the entity claims it was not a party to the underlying arbitration and a Section 34 challenge is pending.

Brief Facts 

The Applicant (Judgment Creditor) moved to execute an Arbitral Award dated 30 November 2023. During the process, an Interim Application was filed seeking asset disclosure to prevent the Judgment Debtors from stripping their assets. Respondent No. 2, an entity involved in the dispute, argued that the award was a nullity against them as they were never part of the partnership agreement. They sought a stay on execution proceedings pending their Section 34 challenge. 

Court’s Reasoning 

The Court relied on the principle that a Section 34 challenge does not provide an automatic stay on the enforcement of a commercial award under Section 36 of the Arbitration Act. In the context of corporate debt enforcement, the Court held that the "Executing Court cannot go behind the decree." Since Respondent No. 2 was named in the award and had participated in the arbitration, they were bound by its terms at this stage. The Court reasoned that to ensure the award remains enforceable, the Judgment Debtors must maintain financial transparency by disclosing their balance sheets and assets, regardless of their pending challenges. 

Judgment 

The Interim Application was allowed in part. The Court directed Respondent Nos. 1 and 2 to file Affidavits of Disclosure within four weeks, including bank statements for the last year and Income Tax Returns for the last three years. The Court also granted a protective injunction restraining the Respondents from creating any third-party rights or encumbering their assets until further orders.

Subsequent Development 

The refusal to grant a stay on the disclosure order serves as a critical precedent in commercial execution law. It prevents corporate entities from using "jurisdictional objections" as a shield to hide assets during the pendency of set-aside proceedings, thereby securing the interests of the decree-holder during the transition from award to actual recovery. 

Access the full judgement here

Case Title Manjeet Singh T. Anand v. Nishant Enterprises HUF through its Karta & Anr. 

Neutral Citation IA No. 5306 of 2025 in Comm. Execution Application No. 19 of 2025

 Court High Court of Judicature at Bombay (Commercial Division) 

Bench Justice R.I. Chagla