Order XXI Rule 41 CPC | Arrest of Director in Execution Without Opportunity Impermissible: Karnataka High Court

"Invocation of Order XXI Rule 41(3) CPC Permissible Only Upon Established Disobedience", Karnataka High Court delivered a significant ruling delineating the scope of an executing court’s powers under Order XXI Rule 41 of the Code of Civil Procedure, 1908. Justice Pradeep Singh Yerur set aside an arrest warrant issued against a director of a judgment-debtor company, holding that though officers of a corporation are amenable to examination in execution proceedings, coercive detention under Rule 41(3) can be invoked only after affording a meaningful opportunity to comply with Rule 41(2).

The Court clarified that while execution courts possess wide powers to secure disclosure of corporate assets, procedural safeguards cannot be bypassed. The arrest warrant dated 27.01.2026 was set aside, granting the petitioner one week to file an affidavit of assets before the executing court.

The respondent, UM Projects LLP, had obtained an arbitral award against Godalphine India Private Limited. To realise the fruits of the award, execution proceedings were initiated before the Commercial Court at Bengaluru.

The petitioner, Abdul Rasheed, a shareholder and director of the judgment-debtor company, was issued notice in execution proceedings at his Gujarat address. The notice was returned as “refused”. Treating this as valid service, the executing court invoked Order XXI Rule 37(2) CPC and, citing non-disclosure of assets, proceeded to issue an arrest warrant against him under Order XXI Rule 41(3).

Challenging this action, the petitioner approached the High Court contending that he was neither a party to the arbitral award nor arrayed as a judgment debtor in the execution petition, and therefore the issuance of an arrest warrant without prior opportunity was unsustainable.

The principal questions before the High Court were whether a director/shareholder of a company can be subjected to arrest in execution proceedings where the decree is against the company, and whether the procedural mandate under Order XXI Rule 41 CPC had been adhered to before invoking detention.

The Court examined the scheme of Order XXI Rule 41 CPC. Sub-rule (1)(b) expressly provides that where the judgment debtor is a corporation, “any officer thereof” may be orally examined regarding the assets and liabilities of the corporation. Sub-rule (2) empowers the court, after thirty days of unsatisfied decree, to require such officer to file an affidavit disclosing particulars of the assets of the judgment debtor. Sub-rule (3) authorises detention in civil prison in case of disobedience of an order under sub-rule (2).

Justice Yerur observed that sub-rule (3) is a consequence provision. Its invocation presupposes disobedience of an order made under sub-rule (2). The Court emphasised that “Order 21 Rule 41 (2) (3) is of consequences of non obeyance of sub-Rule 1 and violation of sub-Rule 2 leads to the following of sub-Rule 3.”

Thus, while the executing court was empowered to secure the presence of officers of the company and direct disclosure of assets, detention could follow only upon established non-compliance with a specific order directing filing of affidavit.

Refusal of Notice and Due Process

The respondent argued that the petitioner had deliberately refused service and that another director had already appeared and filed an affidavit. It was also contended that the company had earlier undertaken to deposit over Rs.4 crores but had not complied.

The High Court acknowledged that the executing court had proceeded on the basis of refusal of summons and had followed due process to that extent. However, it found merit in the petitioner’s grievance that he had not been afforded a proper opportunity to comply before coercive steps were taken.

The Court held that now that the petitioner had appeared before the High Court and expressed willingness to subject himself to the jurisdiction of the executing court, he must be given an opportunity to show cause and file an affidavit of assets of the judgment-debtor company.

Significantly, the Court clarified that there was “no dispute that the petitioner is the shareholder and one of the directors of the Judgment Debtor- Company,” and therefore he is amenable to examination under Order XXI Rule 41(1). However, it refrained from expressing any opinion on the merits of liability.

Corporate Liability in Execution: Scope of Examination of Directors

The ruling reinforces that although a director is not personally liable merely by virtue of holding office, he can be compelled to disclose assets of the company when the decree is against the corporation. Order XXI Rule 41(1)(b) squarely permits examination of “any officer” of the corporation to ascertain assets available to satisfy the decree.

The Court thus struck a balance: it upheld the executing court’s authority to compel disclosure from corporate officers, yet underscored that detention under Rule 41(3) cannot be automatic or punitive without compliance with procedural safeguards.

Allowing the writ petition, the High Court set aside the impugned order dated 27.01.2026 insofar as it issued an arrest warrant against the petitioner.

The petitioner was directed to appear before the executing court on 03.03.2026. Upon appearance, the executing court shall provide him an opportunity to show cause and furnish details of the assets of the judgment-debtor company. One week’s time was granted to file the affidavit of assets, if so advised.

The Court made it explicit that it had “not expressed any opinion on the merits of the matter,” and left it open to the executing court to proceed in accordance with law thereafter.

The judgment serves as a caution to executing courts that while the objective of securing satisfaction of decrees is paramount, coercive measures such as arrest must strictly adhere to statutory procedure. Order XXI Rule 41 CPC provides a structured mechanism—examination, affidavit, and only upon disobedience, detention. Skipping intermediate safeguards risks judicial correction.

By setting aside the arrest warrant yet directing compliance, the Karnataka High Court reaffirmed both the authority of execution courts and the centrality of due process.

Date of Decision: 02/03/2026