After Corporate Veil Was Lifted, Delhi HC Lets Directors Raise Company's Objections To Arbitral Award

The Delhi High Court has held that directors of International Print O Pac Ltd., against whom execution proceedings were initiated after the corporate veil of the company was lifted, can raise all objections available to the company, including a plea that the arbitral award sought to be enforced is a nullity.

A Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar set aside a Saket Commercial Court order rejecting objections filed by directors Amila Singhvi and another against enforcement of an arbitral award of ₹82.39 lakh in favour of Nitin Gupta, proprietor of Tirupati Paper Corporation.

The dispute arose out of arbitration proceedings initiated by Gupta for recovery of outstanding dues. The invoices exchanged between the parties contained a clause stating, "All disputes are subject to P.M.A. Delhi and jurisdiction of Delhi Courts."

The company participated in the arbitral proceedings, which culminated in an award dated March 26, 2022 directing it to pay ₹82,39,537.88.

During execution proceedings, the Commercial Court lifted the corporate veil of International Print O Pac Ltd. on February 16, 2026 and held the directors to be the alter ego of the company and liable to satisfy the award. Non-bailable warrants were subsequently issued against them. Both orders are separately under challenge before a Single Judge of the High Court.

The directors thereafter filed objections under Section 47 CPC and Order XXI Rules 58 and 59 CPC, contending that there was no valid arbitration agreement, that the arbitrator had been appointed unilaterally, and that the award was therefore void. They also challenged the attachment and proposed sale of a residential property.

The Commercial Court rejected the objections, holding that an executing court could not go behind the award and finding no material to show that the attached property was the directors' only residential house.

Allowing the appeal, the High Court held that once the corporate veil had been lifted, the directors stepped into the shoes of the judgment debtor company and could press every ground available to it in execution proceedings.

“In our opinion, the appellants, who are Directors of the Judgment Debtor i.e. M/s International Print O Pac Limited, are within their rights to raise any objection including the award/decree being nullity as a part of objections to the attachment order because they have now stepped into the shoes of the company as the corporate veil has now been lifted vide an order dated 16.02.2026 by the Executing Court. Therefore, they can press all the grounds, which the company was entitled to raise in Execution Petition,” the Court ruled.

The bench noted that settled law permits a judgment debtor to raise a plea that an award is a nullity even at the execution stage. It found that the executing court had failed to examine questions such as whether the invoice clause constituted a valid arbitration agreement, whether the company was bound by the arbitration mechanism of the Paper Merchants Association, Delhi, and the effect of the alleged unilateral appointment of the arbitrator.

The Court also held that the executing court ought to have conducted an inquiry into whether the attached property was the directors' only residential house and therefore exempt from attachment under Section 60(1)(ccc) of the CPC.

Setting aside the impugned order, the High Court remanded the matter to the executing court for fresh adjudication of the directors' objections. The bench clarified that it had expressed no opinion on the merits of those objections or on the separate challenges to the orders lifting the corporate veil and issuing non-bailable warrants.

For Appellants ( Amila Singhvi & Anr.): Advocates Tanmay Mehta, Swapnil Gupta and Sajal Jain.

For Respondent (Nitin Gupta): Senior Advocate Ashish Mohan with Advocates Shreshth Jain, Aurito Mukherjee, Neha Buttan and Nadeem Malik.