Back
2012 Supreme(Bom) 2341
High Court of Judicature at Bombay
ANOOP V. MOHTA, J,
Abraaj Investment Management Ltd.
Versus
Neville Tuli
NOTICE OF MOTION NO. 53 OF 2011 IN INSOLOVENCY NOTICE NO 28 OF 2011
Decided on : 17-12-2012
For the Creditor:Kishore Jain a/with C.D. Mehta, Ms. Sandhya Tolat & Ms Nisha Parmar, Ms. Vrinda Daga i/by Dhruva Liladhar & Co., Advocates.
For the Debtor:V.R. Dond, Sr. Advocate a/with Rohan S. Kelkar, Gaurav Shah, Ms. Shreevardhini Parchure, Ms. Jyoti Sinha i/by, Negandhi Shah & Himayatullah, Advocates.
Headnote:Presidency Towns Insolvency Act (1909), Ss. 2, 9(2), 9(3), 9(4), 9(5), 9(6) - Civil P.C. (1908), Ss. 2, 13, 14, 44A - Territorial jurisdiction -- No provisions in CPC or Act whereby any person can invoke directly the Insolvency Act based upon foreign exparte judgment - It is subject to procedural filtration and challenge - Insolvency proceedings based on foreign decree would be illegal and without jurisdiction. (Paras 18, 24, 25, 27, 28, 30, 31, 35)
The legal document discusses the jurisdictional and procedural aspects of initiating insolvency proceedings based on foreign judgments or decrees. The key points are as follows:
-
The Insolvency Act explicitly defines the "court" as the Indian court exercising jurisdiction under the Act, and the term "foreign court" as a court situated outside India not established or continued by the authority of the Central Government (!) (!) .
-
The Act does not provide for direct invocation of insolvency proceedings based solely on foreign judgments or decrees without following the prescribed procedural filtration, testing, or challenge processes (!) (!) .
-
The execution of foreign judgments in India is governed by specific provisions that require compliance with filtration processes, including recognition under the Civil Procedure Code (CPC), and cannot be directly used as a basis for initiating insolvency proceedings (!) (!) (!) .
-
The concept of "decree" or "order" under the CPC is tied to judgments passed by Indian courts, and the Act does not extend this to foreign judgments or decrees for the purpose of initiating insolvency proceedings (!) (!) (!) (!) .
-
The Act’s provisions emphasize that insolvency proceedings are distinct from execution proceedings, and the initiation of such proceedings cannot be based solely on foreign judgments or decrees without proper testing and adherence to procedural requirements (!) (!) .
-
The territorial jurisdiction of the court is strictly defined and limited to Indian courts exercising jurisdiction under the Act. Foreign judgments or decrees do not automatically confer jurisdiction to initiate insolvency proceedings in Indian courts (!) (!) .
-
The interpretation of statutory provisions must be based on the plain language and scheme of the law. Enlarging the definition of "court" or "decree" beyond what is explicitly provided is impermissible (!) (!) .
-
The initiation of insolvency proceedings based on foreign judgments or decrees without following the prescribed legal procedures is considered illegal and without jurisdiction (!) .
-
The procedural safeguards and filtration processes are essential to prevent unwarranted or extraterritorial insolvency actions, ensuring that proceedings are initiated only within the scope of the law and jurisdictional boundaries (!) (!) .
-
The overall conclusion emphasizes that the insolvency proceedings cannot be validly initiated solely on the basis of foreign judgments or decrees without proper procedural compliance and jurisdictional authority, and such proceedings are liable to be set aside if initiated improperly (!) (!) .
1. The Judgment Debtor has taken out this Notice of Motion for the following reliefs:
(a) that it be declared that Insolvency Notice No. N/28 of 2011 dated 1st November, 2011, which was served on the Judgment Debtor on 2nd November, 2011 is patently illegal, without jurisdiction and null and void ab initio;
(b) that Insolvency Notice No. N/28 of 2011 dated 1st November, 2011 be annulled and/or set aside;
(c) that pending the hearing and final disposal of this Notice of Motion, Insolvency
Notice No. N/28 of 2011 and all proceedings and/or actions and/or steps pursuant thereto or in furtherance thereof or based/premised thereon be stayed;
2. The relevant events/ background in this case is as under:
That on 05.10.2009, two Claim Forms [No. 2009 Folios 1304 & 1305 (the “foreign proceedings)] were issued out of the Commercial Court in London (the “foreign court”), on separate actions brought by the Judgment Creditor (“Abraaj”) against one Bregawn Jersey Limited (“Bregawn”), a Channel Islands Company and the Judgment Debtor [(“Mr. Tuli”) as Guarantor]. Essentially, these were for :
(a) Payment from Mr. Tuli of amounts allegedly due and owing under a Purchasing Agency Agreement dated 12.06.08 (the “PAA”), between Abraaj and Bregawn, relating to the purchase of works of art originating from the Indian subcontinent, Asia and the Arab world;
(b) Payment from Mr. Tuli of amounts allegedly due and owing under a Purchase Agreement of the same date between Abraaj and one India Asia Arab Art Fund Ltd., [also a Company for which Mr. Tuli stood Guarantor (the “IAAAF”)], also relating to the said purchase of art-works;
(c) Alleged damages for breach of guarantee;
(d) Indemnities; and
(e) interest and costs.
3 On 04.11.2009, the foreign proceedings were served on Mr. Tuli. On 11.12.2009, Mr. Tuli’s English Solicitors wrote to Abraaj’s Solicitors, noting the amended Claim Form and requesting an extension of time for service of Mr. Tuli’s defence. On 15.12.2009, Abraaj’s Solicitors replied to the letter, recording their intention in spite of the request, to file applications for summary Judgment. On 21.12.2009, the applications for Summary Judgment were filed under Part 24 of the English CPR. Thereafter, Mr. Tuli’s English Solicitors ceased to act for him. This, he says, was after he failed in fulfilling their fee requirements of about £50,000. No defence on his behalf had yet been filed. On 12.03.2010, Mr. Tuli was finally able to file a Notice of change of solicitors. He was then required to act in person. On 17.03.2010 Mr. Tuli's erstwhile Solicitors informed Abraaj's solicitors of the above change. On 17.03.2010, ignoring the change, Abraaj's Solicitors served its skeleton argument (written submissions) on Mr. Tuli's erstwhile Solicitors and notified them of a deadline for Mr. Tuli's defence (which would expire in a matter of hours). On 19.03.2010 Abraaj's applications for Summary Judgment were heard exparte and on 25.03.2010 the applications were allowed exparte and Summary Judgment passed. On 26.03.2010 by its order, the Foreign Courte entered Judgment for Abraaj in all its claim, exparte. Mr. Tuli was summarily ordered further to pay Abraaj's costs for its application of £ 22,000. Abraaj was told to file its Statement of Claim (for quantification of its claims (allowed ex parte) by 11.05.2010. On 21.05.2010 Abraaj filed its Statement of Claim of Remaining Issues. In the month of July, Bregawn and Mr. Tuli filed their Defence to Abraaj's Statement of Claim of Remaining issues.
4. On 02.08.2010, the foreign court once again passed an exparte Order, directing that unless Mr. Tuli paid the costs (as earlier ordered), his defence would be struck out “without further order”. Upon such payment of costs, Mr. Tuli was given seven days to repeal his defence to comply with the rules of procedure of the foreign court, on failing to do which once again, his defence would be struck out “without further order”. On 11.08.2010, Bregawn addressed a
