Supreme Court Dismisses Aspek Media Plea Against Delhi HC Order Impleading Directors In Arbitral Award Execution

The Supreme Court has recently dismissed a special leave petition filed by Aspek Media Pvt. Ltd. and others against Entertainment City Limited, declining to interfere with a Delhi High Court order in an arbitration matter.

A Bench of Justices J.K. Maheshwari and Atul S. Chandurkar said:

“After hearing learned counsel, we see no reason and ground to interfere with the order impugned. Accordingly, the special leave petition is dismissed.”

The SLP arose from execution proceedings before the Delhi High Court in which Entertainment City Limited, the decree-holder, had moved an application under Section 151 of the Code of Civil Procedure seeking lifting of the corporate veil of the judgment-debtor, Aspek Media Pvt. Ltd., and impleadment of its directors.

Entertainment City alleged incorrect disclosures in the company's affidavits of assets and diversion of funds to related parties.

The High Court had appointed Pipara and Co. LLP as a forensic auditor to verify the disclosures made in the affidavits of assets dated May 27, 2022, and October 11, 2022.

The forensic audit reports recorded, among other findings, diversion of funds through unsecured loans and advances to group companies, incorrect disclosure of trade receivables, and transfer of tax refund amounts to related entities.

A subsequent report dated August 5, 2024, rejected the objections of Aspek and noted questionable agreements and incorrect reporting of receivables before the court.

Justice Jasmeet Singh held that there were “clear findings of diversion of funds” by the directors and distinguished earlier precedents relied upon by the judgment debtor.

The Court allowed the application, directed the impleadment of Harish Choudhary and Dharamvir Choudhary, Directors of Aspek Media Pvt. Ltd., and ordered them to file affidavits of assets from financial year 2014-15 onwards in terms of Order XXI Rule 41(2) CPC.