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IN THE HIGH COURT OF DELHI AT NEW DELHI
Amit Bansal, J.
Ocm Singapore Njord Holdings Hardrada Pte Ltd. & Anr. - Appellantss
Versus
Prerit Goel & Ors. - Respondents
Civil Suit (COMM) No. 54 of 2021, I.A. No. 5381, 7811, 8084, 9389, 9578, 9360, 11866 of 2021
Decided On : 06-05-2022
CORPORATE VEIL - PIERCING - JURISDICTION - FOREIGN JUDGMENT - FRAUD - INJUNCTION - DISCLOSURE OF ASSETS - [KEYWORD] - [SUBJECT] - [ACT SECTION LIST] - [SUMMARY]
Fact of the Case:
Plaintiffs, a shipping company, and its disponent owner, entered into a Voyage Charterparty with Defendant 5, a company incorporated in the United Arab Emirates (UAE). Defendant 5 ordered the Vessel to proceed to Fujairah, UAE, and deliver the Cargo to a different receiver than originally agreed upon. A Letter of Indemnity (LoI) was issued by Defendant 5 in favor of the plaintiffs, agreeing to indemnify them for any liability, loss, damage, or expense caused by arrest or detention of the Vessel. The Vessel berthed at the VTTI terminal, UAE, and commenced discharge. Defendant 5 received payment from the buyers but misappropriated the proceeds of the sale, leaving Natixis, the original bill of lading holder, and the plaintiffs exposed to a claim. Plaintiffs filed proceedings in the English Court against Defendant 5, which directed Defendant 5 to furnish security to Natixis. Defendant 5 failed to comply, and the English Court dismissed its application for discharge of the order. Meanwhile, Natixis filed proceedings in the United States District Courts for arrest of the plaintiffs' Vessel. To mitigate their losses, the plaintiffs furnished security in favor of Natixis through Britannia Steam Ship Insurance Association Limited (P&I Club Britannia). The plaintiffs filed the present suit in India against the defendants, seeking, inter alia, piercing the corporate veil of Defendant 5 and holding the individual defendants jointly and severally liable for the admitted liability of Defendant 5.
Finding of the Court:
The Court held that it had territorial jurisdiction to entertain the suit as the defendants were carrying on business within its jurisdiction. The Court also held that the English Court judgments were conclusive and binding on the defendants, as they were not obtained by fraud or in violation of natural justice. The Court further held that the corporate veil of Defendant 5 could be pierced as it was used by the individual defendants to perpetrate fraud and avoid liability. The Court granted an injunction restraining the individual defendants from disposing of their assets and directed them to disclose their assets on affidavit.
Issues: 1. Whether the Court had territorial jurisdiction to entertain the suit. 2. Whether the English Court judgments were conclusive and binding on the defendants. 3. Whether the corporate veil of Defendant 5 could be pierced. 4. Whether an injunction should be granted restraining the individual defendants from disposing of their assets. 5. Whether the individual defendants should be directed to disclose their assets on affidavit.
Ratio Decidendi: 1. The Court has territorial jurisdiction to entertain the suit as the defendants are carrying on business within its jurisdiction. 2. The English Court judgments are conclusive and binding on the defendants as they were not obtained by fraud or in violation of natural justice. 3. The corporate veil of Defendant 5 can be pierced as it was used by the individual defendants to perpetrate fraud and avoid liability. 4. An injunction should be granted restraining the individual defendants from disposing of their assets. 5. The individual defendants should be directed to disclose their assets on affidavit.
Final Decision: The Court allowed the plaintiffs' application for an injunction restraining the individual defendants from disposing of their assets and directed them to disclose their assets on affidavit. The Court dismissed the defendants' applications for return and/or rejection of the plaint.
JUDGMENT
amit Bansal, J. - I.a. No. 1540/2021 (u/O.XXXIX R.1 & 2 of CPC), I.a. No. 1541/2021 (u/S.151 of CPC), I.a. No. 8073/2021 (of the defendants no. 1 to 4 u/O.VII R.10 & 11 of CPC) & I.a. No. 9321/2021 (of the defendant no. 5 u/O.VII R.10 & 11 of CPC)
1. By this order, I propose to decide the I.a. No. 1540/2021 filed by the plaintiffs under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (CPC) and I.a. No. 1541/2021 filed by the plaintiffs under Section 151 of the CPC, seeking a direction to the defendants no. 1 to 4 for disclosure of assets of the defendants no. 1 to 5 on affidavit. Further, I shall decide I.a. No. 8073/2021 filed by the defendants no. 1 to 4 under Order VII Rules 10 and 11 of the CPC and I.a. No. 9321/2021 filed by the defendant no. 5 company under Order VII Rules 10 and 11 of the CPC.
BRIEF FaCTS
2. Brief facts relevant for deciding the present applications, as given the plaint, are set out below:
(i) The plaintiff no. 1, OCM Singapore Njord Holdings Hardrada Pte Ltd., is a company incorporated in Singapore and carries on business as ship owners. The plaintiff no. 1 is the registered owner of the vessel 'Torm Hardrada' (hereinafter, referred to as the 'Vessel'). The plaintiff no. 2, Torm a/S, is a company incorporated under the laws of Denmark and is one of the leading tanker carriers of clean oil products. The plaintiff no. 2 is the disponent owner of the Vessel.
(ii) The defendant no. 5, Gulf Petrochem FZC, is a Company incorporated under the laws of the United arab Emirates (UaE). The defendants no. 1 to 4 are or were at the material time, the owners and promoters and also the key managerial personnel of the defendant no. 5 company.
(iii) The defendant no. 5 company had voyage chartered the Vessel from the plaintiff no. 2 vide a Voyage Charterparty dated 8th May, 2020.
(iv) Under the aforesaid Voyage Charterparty, the Vessel loaded 40,533.05 metric tonnes of Jet aviation Fuel (hereinafter, referred to as the 'Cargo') on 20th May, 2020 and a bill of lading was issued by the master of the Vessel, which was consigned to the order of Natixis, France, a French bank for delivery at Rotterdam.
(v) On 6th June, 2020, the defendant no. 5 company ordered the Vessel to proceed to Fujairah, UaE and deliver the Cargo to Vitol Bahrain E.C. as receivers, when originally, the Cargo was to be delivered to the port of Rotterdam.
(vi) In this regard, a Letter of Indemnity (hereinafter, referred to as the 'LoI') was issued on 9th June, 2020 on behalf of the defendant no. 5 company, in favour of the plaintiffs, in terms of which the defendant no. 5 company agreed to indemnify the plaintiffs in respect of any liability, loss, damage, or expense caused by arrest or detention or threatened arrest of the Vessel.
(vii) On the basis of the aforesaid LoI, the Vessel berthed at the VTTI terminal, UaE and commenced discharge on 10th June, 2020. The Vessel completed discharge the following day i.e., on 11th June, 2020.
(viii) In the ordinary course, the buyer would have paid the defendant no. 5 company, who would have used the sale proceeds to repay the Natixis. In this way, Natixis would have released the original bills of lading to the defendant no. 5 company or to their buyers Vitol Bahrain E.C., who would in turn have presented them to the plaintiffs. However, this did not happen. although the defendant no. 5 company received payment from the buyers, the defendant no. 5 company did not pay Natixis and misappropriated the proceeds of the sale. Natixis was, therefore, left holding the bill of lading and the plaintiffs were exposed to a claim by Natixis.
(ix) On 11th august, 2020, the plaintiff no. 2 received a legal notice on behalf of the Natixis, alleging mis-delivery of the Cargo by the plaintiff no. 2 and demanded the delivery of the Cargo to Natixis, or in the alternative, damages in the sum of USD 11,099,611/-, expressly reserving Natixis' right to arrest the Vessel.
(x) On 17th august, 2020, the plaintiffs, through the
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