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IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
Century Metal Recycling Private Limited - Plaintiff
Versus
Sachin Chhabra & Ors. - Defendants
CS (COMM) 449 of 2017, IA Nos. 7571, 9948, 9949, 11586, 11587, 11588, 11589 & 11590 of 2017
Decided On : 01-12-2017
Order XXXVII - Recovery of Debt - Code of Civil Procedure, 1908 (CPC) - [Order XXXVII Rule 1(2)(b)(i), Order XXXVII Rule 1(2)(b)(iii), Section 13 of the CPC] - The court discussed the applicability of Order XXXVII of the CPC, the character of a consent judgment as a contract, and the territorial jurisdiction to entertain the suit. The court found that the suit was based on a foreign judgment and not the original cause of action, and as the cause of action had accrued in foreign lands, the court did not have territorial jurisdiction to entertain the suit. The court also highlighted the requirements of Section 13 of the CPC and emphasized that the plaintiff failed to show that the cause of action accrued within the territory of the court or that the defendants resided or carried on business within the court's jurisdiction.
Fact of the Case:
The plaintiff sued under Order XXXVII of the CPC for recovery of a debt from the defendants. The defendants contested the suit, arguing that it did not fall under the classes of suits to which Order XXXVII of the CPC is applicable and that the court did not have territorial jurisdiction to entertain the suit.
Finding of the Court:
The court found that the suit was based on a foreign judgment and not the original cause of action, and as the cause of action had accrued in foreign lands, the court did not have territorial jurisdiction to entertain the suit. The court also emphasized the requirements of Section 13 of the CPC and highlighted that the plaintiff failed to show that the cause of action accrued within the territory of the court or that the defendants resided or carried on business within the court's jurisdiction.
Issues: The issues revolved around the applicability of Order XXXVII of the CPC, the character of a consent judgment as a contract, and the territorial jurisdiction to entertain the suit.
Ratio Decidendi: The court held that the suit was based on a foreign judgment and not the original cause of action, and as the cause of action had accrued in foreign lands, the court did not have territorial jurisdiction to entertain the suit. The court also emphasized the requirements of Section 13 of the CPC and highlighted that the plaintiff failed to show that the cause of action accrued within the territory of the court or that the defendants resided or carried on business within the court's jurisdiction.
Final Decision: The court dismissed the suit with liberty to the plaintiff to approach the Court of appropriate jurisdiction.
1. The plaintiff has sued under Order XXXVII of the Code of Civil Procedure, 1908 (CPC) for recovery of Rs.2,25,64,500/- jointly and severally from the three defendants, namely (i) Sachin Chhabra, (ii) TCC Wireless Inc., and (iii) Tarun Chhabra.
2. The suit was entertained and summons for appearance issued and on the defendants entering appearance, summons for judgment served on the defendants and the defendants have filed separate leave to defend applications and which are listed for hearing today.
3. The counsel for the plaintiff has at the outset drawn attention to the order dated 13th July, 2017, vide which the personal presence of the defendants no.1&3 was directed for 31st August, 2017, and to the order dated 31st August, 2017, when the counsel for the defendants was asked to inform as to when the defendants no.1&3 whose addresses given in the plaint are of United States of America (USA), are coming to India. The counsel for the plaintiff states that the personal presence of the defendants no.1&3 before this Court has to be enforced.
4. I have enquired from the counsel for the plaintiff, the reason for which the personal presence was so directed.
5. The counsel for the plaintiff states, “to furnish security for the suit amount”.
6. I have enquired from the counsel for the plaintiff, whether not once leave to defend applications are heard and if leave is not granted, the plaintiff would be entitled to decree straightaway and the need for directing the defendants to furnish security would also not arise.
7. Else, it prima facie appears, that if the statement under Order X of the CPC were to be recorded of the defendants no.1&3, the suit would inter alia be converted into an ordinary suit and for which the counsel for the plaintiff is not agreeable.
8. The counsels have thus been heard on the leave to defend applications.
9. The plaintiff has sued, pleading-
(i) that the defendant no.2 TCC Wireless Inc. is a company duly registered and incorporated under the laws of USA and the defendant no.3 Tarun Chhabra is the majority shareholder and Director in-charge and responsible for all the affairs and business of the defendant no.2 TCC Wireless Inc.;
(ii) the defendant no.1 Sachin Chhabra is the brother of the defendant no.3 and has executed a personal guarantee in favour of the plaintiff for payment of the amount claimed in the present suit;
(iii) that the defendants no.1&3 have been residing and carrying on business in United States of America but are citizens of India, holding Indian passports;
(iv) that on 5th February, 2016 a summary judgment was passed by the Court of United States District Court for the District of Maryland (Northern Division), in favour of the plaintiff and against Metal Worldwide Inc. in the sum of US$ 7,00,000/- together with interest at 15% per annum from 1st April, 2011 to 5th February, 2016; however the suit was kept pending for decision on other issues; a compromise was entered into between the parties and a joint motion of compromise dated 20th July, 2016 signed between the parties and filed for entry of consent judgment and for withdrawal of remaining un-resolved counts;
(v) that as per the said compromise it was agreed that a judgment be passed in favour of the plaintiff and against the defendant no.2 TCC Wireless Inc. in the sum of US$ 3,50,000/- with the said amount bearing interest in accordance with 28 U.S.C. 1961; it was also agreed that the defendant no.2 TCC Wireless Inc. shall pay attorney’s costs, etc. to the plaintiff;
(vi) it was also mentioned in the joint motion that the defendant no.1 Sachin Chhabra shall furnish his personal guarantee to secure the payment in favour of the plaintiff in terms of joint motion so that the judgment on the basis of consent terms be satisfied;
(vii) that the defendant no.1 Sachin Chhabra in furtherance of the joint motion also submitted his personal guarantee dated 20th July, 2016;
(viii) that despite the consent judgment dated 5th August, 2016 and the persona
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