Modified directions for Affidavit of Assets, Income & Expenditure to be filed at threshold of matrimonial disputes

Kusum Sharma Vs Mahinder Kumar Sharma

Delhi HC

06/08/2020

FAO 369/1996

About/from the judgment:

The High Court laid modified directions and affidavit of assets, income and expenditure to be filed by both the parties at the very threshold of a matrimonial litigation. The Court has modified the directions and the format of affidavit already issued in earlier judgments of the Delhi High Court.

These modified directions/guidelines shall apply to all matrimonial cases including cases under Hindu Marriage Act, 1955; Protection of Women from Domestic Violence Act, 2005; Section 125 CrPC; Hindu Adoption and Maintenance Act, 1956; Special Marriage Act, 1954; Indian Divorce Act, 1869; Guardians and Wards Act, 1890 and Hindu Minority and Guardianship Act, 1956.

Earlier directions and affidavit

The directions to be followed while dealing with matrimonial cases were first issued in Kusum Sharma (1) v. Mahinder Kumar Sharma. Further, in exercise of the powers under Section 10(3) of the Family Courts Act, 1984 read with Sections 106 and 165 of the Evidence Act and Article 227 of the Constitution of India, the format of affidavit of assets, income and expenditure was formulated by the Court in Kusum Sharma (2) v. Mahinder Kumar Sharma, and the directions were modified. By its judgment in Kusum Sharma (3) v. Mahinder Kumar Sharma, the Court modified the affidavit formulated in Kusum Sharma (2). Finally, in Kusum Sharma (4) v. Mahinder Kumar Sharma, the directions and the affidavit were further modified. The modified directions in Kusum Sharma (4) have been in effect since 1st January 2018.

Need for modification

The High Court has now modified the earlier affidavit in Kusum Sharma (4) to make it more comprehensive. In the earlier judgments, the High Court considered International Best Practices including 10 affidavits of assets, income and expenditure used in 5 countries. 50 more formats of affidavits of assets, income and expenditure of various countries namely USA, UK, Ireland, Singapore, Canada, Australia and South Africa had now come to the notice of the Court. Thus, the Court was of the view that its judgment in Kusum Sharma (4) warrants modification.

The Bhandari Engineers case connection

In Bhandari Engineers & Builders( P) Ltd. (1) v. Maharia Raj Joint Venture (Ex. P. 275 of 2012, dt. 5-12-2019), the Delhi High Court had formulated an affidavit of assets, income and expenditure to be filed by the judgment-debtor in execution cases. By its decision in Bhandari Engineers & Builders( P) Ltd. (2) v. Maharia Raj Joint Venture (Ex. P. 275 of 2012, dt. 5-8-2020), the Court modified and improved the format of the affidavit to make it more comprehensive and further directions were passed so that the execution cases are decided within a period of 1 year from the date of their institution. In the Court’s opinion, the affidavits formulated in Bhandari Engineers (2) are far more comprehensive than the affidavit formulated by the Court for matrimonial cases. Therefore, the Court considered it appropriate to incorporate the benevolent features of Bhandari Engineers (2) in the format of the affidavits of assets, income and expenditure in matrimonial cases.

Affidavit of Assets, Income and Expenditure in matrimonial cases

The modified affidavit of assets, income and expenditure (“Annexure A2” in the present Judgment) is very comprehensive and is useful to determine the maintenance in matrimonial litigation.

Salaried person

A salaried person is required to disclose the particulars of his employment including salary, DA, commissions, incentives, bonus, perks, perquisites, other benefits, Income tax, etc.

Self-employed person

A self-employed person is required to disclose the nature of business/profession, share in the business, net worth of the business, number of employees, annual turnover/gross receipts, gross profit, Income Tax, net income and regular monthly withdrawal/drawings from the business.

Income from other sources

The parties are further required to disclose income from other sources, namely, agricultural income, rent, interest on bank deposits and other investments, dividends, mutual funds, annuities, profit on sale of movable/immovable assets, etc.

Assets

With respect to the assets, the parties are required to disclose the particulars of the immovable properties, financial assets including bank accounts, DEMAT accounts, safety deposit lockers; investments including FDRs, stocks, shares, insurance policies, loans, foreign investments; movable assets including motor vehicles, mobiles, computer, laptop, electronic gadgets, gold, silver and diamond jewellery, etc.; intangible assets; garnishee(s)/trade receivables; corporate/business interests; disposal and parting away of properties; properties acquired by the family members, inheritance.

Standard of living and lifestyle

The affidavit requires the parties to disclose their standard of living and lifestyle, namely, credit/debit cards, membership of clubs and other associations, loyalty programmes, social media accounts, domestic helps and their wages, mode of travel in city and outside city, category of hotels, category of hospitals for medical treatment, frequency of foreign travel, frequent flyer cards, brand of mobile, wrist watch, pen, expenditure ordinarily incurred on family functions, festivals and marriage of family members, etc.

Household expenditure, etc.

The affidavit further requires the disclosure of expenditure on housing, household expenditure, maintenance of dependents, transport, medical expenditure, insurance, entertainment, holiday and vacations, litigation expenses, discharge of liabilities, etc.

Modified Directions

The modified directions laid down by the Court in the present decision in Kusum Sharma (5) are delineated below:

(1) The Court has to ascertain the financial capacity/status of the parties for determining the maintenance and permanent alimony. A comprehensive affidavit of assets, income and expenditure of both the parties is necessary to determine their financial capacity/status.

(2) Upon completion of the pleadings in the maintenance application, the Court shall fix the date for reconciliation and direct the parties to simultaneously file the affidavits of their assets, income and expenditure. The Court shall also direct the party seeking maintenance to produce the passbook of his/her savings bank account in which maintenance can be directly deposited/transferred by the opposite party.

(3) The Court shall simultaneously take on record the affidavit of assets, income and expenditure of both the parties. The simultaneous filing of the affidavit by the parties is very important and should be strictly adhered to. The simultaneous filing of the affidavit by the parties would avoid any undue advantage to the party who files his/her affidavit later. It is clarified that the affidavit of assets, income and expenditure is not to be filed along with the petition/application or written statement/reply.

(4) If a party is carrying on the business as proprietor of proprietorship concern/partner of a partnership concern/director of a company/member of a HUF/trustee of a trust/ member of a society or in any other form/entity, the Court may consider directing the party to file an additional affidavit with respect to the assets of the proprietorship concern/partnership concern/ company/society/HUF/Trust, as the case may be, in the format of Annexure B1 attached to Bhandari Engineers (2).

(5) In pending maintenance cases, if the parties have not already filed the affidavit of their assets, income and expenditure, the Court shall direct the parties to file their affidavit in the format of Annexure A2.

(6) If the reconciliation fails, the Court shall grant an opportunity to the parties to respond to the affidavit of the opposite party and list the maintenance application for hearing.

(7) The Courts shall ensure that the filing of the affidavits by the parties is not reduced to a mere ritual or formality. If the affidavit of the party is not in the prescribed format or is not accompanied with all the relevant documents, the Court may take the affidavit on record and grant reasonable time to the party to remove the defects/deficiencies.

(8) In appropriate cases, the Court may direct a party to file an additional affidavit relating to his assets, income and expenditure at the time of marriage and/or one year before separation and/or at the time of separation.

(9) If the party does not truly disclose all his assets and income, the opposite party is at liberty to serve the interrogatories under Order 11 CPC and/or seek production of relevant documents from the party filing the affidavit.

(10) In appropriate cases, Court may order interrogatories, discovery, inspection, production of any document and/or order any fact to be proved by affidavit under Section 30 CPC.

(11) The Court shall, thereafter, consider whether the oral examination of the party is necessary under Section 165 of the Evidence Act. If so, the Court shall proceed to examine the party to elicit the truth. The principles relating to the scope and powers of the Court under Section 165 of the Evidence Act have been summarised in Ved Parkash Kharbanda v. Vimal Bindal, 2013 SCC OnLine Del 994, which may be referred to.

(12) If the admitted income of the parties is on record, such as, in the case of a salaried employee whose salary slip is on record, the Court may fix ad-interim maintenance on the basis of the admitted documents pending filing of the affidavit of the assets, income and expenditure by both the parties. The Court may record the statement of the parties, if considered necessary for fixing the ad-interim maintenance.

(13) If any party delays in filing of the affidavit of assets, income and expenditure or the affidavit filed by a party is not in terms of these directions or a party delays the disclosure of further information/documents and the delay is causing hardship, the Court is at liberty to fix ad-interim maintenance after hearing the parties.

(14) If the statements made in affidavit of assets, income and expenditure are found to be incorrect, the Court shall consider its effect by drawing an adverse inference or imposing additional cost, while fixing the maintenance. However, an action under Section 340 CrPC is ordinarily not warranted in matrimonial litigation till the decision of the main petition unless the Court, for the reasons to be recorded, considers it expedient in the interest of justice, to deal with it earlier.

(15) At the time of issuing notice on the petition for dissolution of marriage, the Court shall consider directing the petitioner to deposit such sum, as the Court may consider appropriate for payment to the respondent towards interim litigation/part litigation expenses; except in cases, such as, divorce petition by the wife who is unable to support herself and is claiming maintenance from the respondent husband.

(16) The interim litigation expenses directed by the Court at the stage of issuing notice, does not preclude the respondent from seeking further litigation expenses incurred by the respondent at a later stage. The Court shall consider the respondent‘s claim for litigation expenses and pass an appropriate order on the merits of each case.

(17) At the time of passing a decree of divorce, the Court shall bring to the notice of the party concerned, as the case may be, that he/she can claim permanent alimony without prejudice to his/her right to challenge the decree of divorce and if the party seeks permanent alimony, at that stage, for which an oral prayer/application is sufficient, the Court shall fix the permanent alimony on the basis of the affidavits of assets, income and expenditure, after hearing both the parties. However, if the affidavits have not been filed at the stage of fixing the permanent alimony, the Court shall direct the parties to file the same before fixing the permanent alimony.

(18) In Bhandari Engineers & Builders( P) Ltd. (2) v. Maharia Raj Joint Venture (Ex. P. 275 of 2012, dt. 5-8-2020) the Delhi High Court has laid down comprehensive guidelines and has formulated affidavit of assets, income and expenditure to be filed by the judgment-debtor in execution proceedings, which may be considered in execution cases of the maintenance order apart from following the specific statutory provisions such as Sections 125 to 127 CrPC.

(19) The affidavit of assets, income and expenditure is to be treated as guidelines to determine the true financial capacity/status of the parties. The Courts are at liberty to determine the nature and extent of information/documents necessary and to direct the parties to disclose relevant information and documents to determine their financial capacity/status. The Courts are at liberty to pass appropriate directions as may be considered necessary to do complete justice between the parties and in appropriate cases, such as, the cases belonging to the lowest strata of the society or case of a litigant who is a permanently disabled/paralytic, the Court may, for reasons to be recorded, dispense with the requirement of filing of the affidavit or modify the information required.

(20) These modified directions/guidelines shall apply to all matrimonial cases including cases under Hindu Marriage Act, 1955; Protection of Women from Domestic Violence Act, 2005; Section 125 CrPC; Hindu Adoption and Maintenance Act, 1956; Special Marriage Act, 1954; Indian Divorce Act, 1869; Guardians and Wards Act, 1890 and Hindu Minority and Guardianship Act, 1956.

(21) Matrimonial jurisdiction deserves a special attention and the maintenance applications should be decided expeditiously.

(22) The Courts below shall expedite the maintenance proceedings and shall make an endeavour to decide them within the prescribed time. The Family Courts shall send the list of all pending maintenance cases which are more than one year old, through the Principal Judge, Family Court. The list shall contain the name of the case; date of institution; number of hearings that have taken place; and the reasons for such delay. List be prepared according to the seniority, i.e. the oldest case shall be mentioned first. The Principal Judge, Family Court shall compile the lists of all Family Courts and shall send them to the Registrar General of the Delhi High Court by 31st December 2020 for being placed before the High Court.

Ancillary directions and suggestions

(a) The amici curiae submitted that the matter be kept pending for seeking feedback/comments of the Family Courts after implementation of the modified directions/guidelines. The matter is to be listed on 18th December 2020.

(b) The Court was of the view that the mandatory filing of the affidavit of assets, income and expenditure by the parties in a detailed prescribed form should be incorporated in the statutes, as in the developed countries. The Court was of the view that this suggestion be considered by the Central Government. Copy of the present judgment along with Annexure A2 is directed to be sent to Chetan Sharma, ASG, for taking up the matter with Ministry of Law and Justice.

(c) The modified directions and format of affidavit of assets, income and expenditure (Annexure A2) is directed to be uploaded on the website of the District Court (in .pdf format) to enable the lawyers/litigants to download the same.

(d) Copy of the present judgment and modified format of the affidavit of assets, income and expenditure (Annexure A2) is directed to be sent to the Registrar General of this Court who shall circulate it to the District Judge (Headquarters) and Principal Judge, Family Courts (Headquarters) for being circulated to all the concerned courts.

(e) Copy of the judgment along with the modified format of the affidavit of assets, income and expenditure (Annexures A2) is directed to be sent to the Delhi Judicial Academy to sensitise the judges about the modified directions laid down by the High Court.

(f) National Judicial Academy is reporting the best practices of the High Courts on their website (www.nja.nic.in) under the head of Practices & Initiatives of various High Courts. Copy of the present judgment along with Annexure A2 is directed to be sent to National Judicial Academy.

Note of appreciation

The Court appreciated the assistance rendered by Sunil Mittal, Senior Advocate and Anu Narula, Advocate as amici curiae. The Court also appreciated the extensive research on corresponding law in other countries by Akshay Chowdhary, Law Researcher, attached to the Delhi High Court.

Read the Judgment

Knowledge and content of about almost all their respective descriptions are borrowed from law-related blogs and websites, we, therefore, wish to give proper credit to all the respective law-related blogs and websites like LiveLaw, Bar and Bench, LatestLaws, PathLegal, FirstLaw, Lawctopus, IndianKanoon, Manupatra, LegallyIndia etc.. Many of the judgments are also taken from them websites of Hon'ble Supreme Court and other respective Hon'ble High Courts!

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