Bombay High Court
Avitel Post Studioz Limited vs Hsbc Pi Holdings Mauritius Limited on 14 March, 2024
Author: Abhay Ahuja
Bench: Abhay Ahuja
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION NO. 3563 OF 2023
IN
COMMERCIAL EXECUTION APPLICATION NO. 23 OF 2024
HSBC PI Holdings Mauritius Limited ...Applicant
V/s.
Avitel Post Studioz Limited ...Respondent
WITH
INTERIM APPLICATION NO. 8515 OF 2024
IN
COMMERCIAL EXECUTION APPLICATION NO. 23 OF 2024
Mr. Nikhil Sakhardande with Mr. Rohan Rajadhyaksha, Ms. Priyanka
Shetty, Ms. Sherna Doongagi, Mr. Ayush Chaddha, Mr. Dhaval Vora and
Mr. Shanay Shroff i/b AZB and Partners for Applicant in IA 3563 of
2023 and for Respondent No. IAL 8515 of 2024.
Mr. Gaurang Mehta with Mr. Prashant Mishra, Ms. Vidhi Dharia and Mr.
Parab i/b Ms. Priyanka Lokhande for Applicant in IAL 8515 of 2024 and
for Respondents No. 1 to 4 in IA 3563 of 2023.
Mr. Jitendra Bakliwal with Ms. Chaitanya Bhandary i/b Deepak Saxena
Legal Prism for Respondents No. 5 and 6.
CORAM : ABHAY AHUJA, J.
DATE : 14th MARCH, 2024 P.C. : Interim Application (L) No. 16402 of 2023
1. This interim application seeks execution of Foreign Arbitral Award dated 27th September, 2014 passed in SIAC Arbitration No. 88 of 2012. The Foreign Award had been declared to be binding under Section 46 of the Arbitration and Conciliation Act, 1996 (the "Act") Nikita Gadgil 1/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc and enforceable as a decree of this Court under Part II of the Act by a judgment of this Court dated 25th April, 2023, in Arbitration Petition No. 833 of 2015.
2. Earlier, during the pendency of the SIAC Arbitration, the Applicant had filed Petition under Section 9 of the Act before this Court for interim reliefs and by judgment dated 22nd January, 2014, this Court had restrained the Judgment Debtors from withdrawing amounts in their bank accounts held in the Corporation Bank to the extent of USD 60 million. The Judgment Debtors were also directed to deposit any shortfall so as to maintain a balance of USD 60 million, within a period of four weeks from the date of the said order. The said judgment was challenged before the Division Bench of this Court and the Division Bench by its judgment dated 31st July, 2014 upheld the decision of the Single Judge in the Section 9 Order. The decision of the Division Bench was challenged before the Hon'ble Supreme Court and by judgment dated 19th August, 2020, the Hon'ble Supreme Court had upheld the decision of the Division Bench and in paragraph 57 directed the Judgment Debtors to keep aside the principal sum of USD 60 million and essentially directing the respondents no.1 to 4 to (i) refrain from withdrawing amounts retained by them in their Corporation Bank Nikita Gadgil 2/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc Accounts, to the extent of USD 60 million, and (ii) to deposit any shortfall in their Corporation Bank Accounts, so as to maintain a balance of USD 60 million.
3. Thereafter, by letter dated 4th September 2020, the Advocates for the Applicant - Bank wrote to the Advocates of the Judgment Debtors requesting compliance of the decision of the Hon'ble Supreme Court. On 9th September, 2020, the Advocates for the Judgment Debtors replied to the aforesaid letter and disclosed an aggregate amount of approximately Rs. 84,10,08,678/- lying in two accounts viz. Rs. 42,49,33,373/- in Account no. 510101004478291 (Mandvi Branch, Mumbai) and Rs. 41,60,75,305/- in Account No. 510101000358941 (Shivaji Park Branch, Mumbai) of the Judgment Debtor No.1 in the Corporation Bank as on 7th September, 2020.
4. Thereafter, since the Judgment Debtors had failed to maintain USD 60 million in the said Corporation Bank Accounts, pursuant to the order of the Hon'ble Supreme Court of August, 2020, in September, 2020, the Applicant filed a contempt petition for disobedience of the said order of the Hon'ble Supreme Court. In its judgment dated 11 th July, 2022, the Hon'ble Supreme Court found the Judgment Debtors Nikita Gadgil 3/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc No. 2 to 4 guilty of deliberate and wilful disobedience and gave one last opportunity to the Judgment Debtors to top up the shortfall. However, since the Judgment Debtors failed to deposit the shortfall and also failed to remain personally present before the Hon'ble Supreme Court, despite directions, the presence of the Judgment Debtors was secured by the Hon'ble Supreme Court by having red corner notice issued against them, after which, the Judgment Debtors were lodged in the Arthur Road Jail.
5. The Hon'ble Supreme Court by order dated 9 th September, 2022 imposed costs on the Judgment Debtors and also clarified that the properties attached by order dated 2nd September, 2022 would remain attached until the disposal of the enforcement petition.
6. On 25th April, 2023, this Court (Coram : Manish Pitale, J.) passed judgment declaring the Final Award to be binding under Section 46 of the Act and enforceable as a decree of this Court under Part II of the Arbitration Act and also directed the Judgment Debtors to disclose on affidavit all their assets and directed continuation of the order of attachment of the Hon'ble Supreme Court against the Judgment Debtors during the pendency of the execution proceedings. Nikita Gadgil 4/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc
7. Mr. Sakhardande, learned Senior Counsel appearing for the Applicant would submit that the Applicant had filed the execution proceedings before the learned Prothonotary and Senior Master of this Court on 12th June, 2023 and which proceedings are underway. Learned Senior Counsel submits that on 4 th March, 2024, the Hon'ble Supreme Court has dismissed the SLP challenging the decision of this Court dated 25th April, 2023, but submits that the reasons are yet to be uploaded. Learned Senior Counsel would submit that considering that the enforcement of the Foreign Award has been upheld by the highest Court of this country, there is no impediment in executing the award dated 27th September, 2014. Learned Senior Counsel submits that the Respondents No.2 to 4 have not only failed to maintain the balance of USD 60 million in the Corporation Bank Accounts but also failed to disclose the details of the other Corporation Bank Accounts including the balance maintained therein. That it is in this context, that the execution application and this interim application have been circulated before this Court. Mr. Sakhardande, would submit that this Application therefore seeks direction to the Respondents to transfer/remit to the Applicant, monies maintained by Judgment Debtor No.1 and currently lying in its Corporation Bank Accounts including (i) Account No.510101004478291 (Mandvi Branch, Mumbai), (ii) Account Nikita Gadgil 5/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc No.510101000358941 (Shivaji Park Branch, Mumbai) as well as monies maintained in account numbers (a) 520101006196310 / INR,
(b) 520101006296325/INR, (c) 520101006182964 / INR mentioned on pages 312, 313 and 314 of the Application.
8. Mr. Sakhardande, learned Senior Counsel would submit that under Rule 46 of Order XXI of the Code of Civil Procedure, 1908 ( the "CPC"), the assets movable as well as immovable as stated in the execution application as well as disclosed before this Court, can be attached. Learned Senior Counsel would submit that therefore, until the uploading of the reasons in the SLP dismissed on 4 th March, 2024, this Court may at least attach the accounts and the amounts lying in the Corporation Bank accounts as mentioned above and disclosed by the Judgment Debtors in their letter dated 9 th September, 2020, as well as other Corporation Bank accounts as mentioned at pages 312, 313 and 314 of the application as above.
9. On the other hand, Mr. Mehta, learned Counsel who appears for the Judgment Debtors would submit that his clients have also taken out an Interim Application lodging no. 8515 of 2024 after the dismissal of the SLP on 4th March, 2024, seeking declaration and direction of this Nikita Gadgil 6/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc Court that the awarded dues denominated in foreign currency in the Foreign Award require to be converted into Indian rupees by applying the exchange rate prevailing as on 11 th May, 2012, being the date of notification of claim by way of the Award Holders advocate's letter dated 11th May, 2012 and that it is only the amounts in Indian rupees arrived as above that can be claimed by the Award Holder in execution proceedings. Mr. Mehta, would, therefore submit that, since the entire amount under the award has not been ascertained till date, this Court cannot hear the Interim Application No. 3563 of 2023 permitting transfer of the amounts lying in the Corporation Bank accounts before hearing Interim Application (L) No. 8515 of 2024 in as much as that would be in breach of the provisions of Order XXI of the CPC.
10. Without prejudice to the above, Mr. Mehta, opposes the aforesaid submissions on behalf of Mr. Sakhardande and Interim Application (L) No. 3563 of 2023 filed on behalf of the Applicant, firstly submitting that the execution is being sought beyond the period of two years from the date of the award and despite that there is neither any notice under Order XXI Rule 22 of the CPC issued till date nor is there any prayer seeking dispensation thereof. Secondly, Mr. Mehta, would submit that multiple modes of execution have been sought in the execution Nikita Gadgil 7/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc application and it is not clear by which mode the Applicant is seeking execution and therefore, the execution application is not maintainable and ought to be rejected.
11. I have heard the learned Counsel and considered the rival contentions.
12. The facts narrated on behalf of the Applicant are not in dispute. It is not in dispute that a sum of Rs. 42,49,33,373.11 is lying in account no. 510101004478291 of the Corporation Bank, Mandvi Branch, Mumbai and a sum of Rs. 41,60,75,304.63 is lying in account no. 510101000358941 of the Corporation Bank, Shivaji Park Branch, Mumbai, on which there has been a restraint by the Hon'ble Supreme Court continued by this Court till the execution which order has statedly been upheld by the Hon'ble Supreme Court. It is also not in dispute that all the challenges until upto the Hon'ble Supreme Court on behalf of the Judgment Debtors have been dismissed. That the Foreign Award dated 27th September, 2014 has been finally upheld as enforceable by the highest Court of this country. The execution proceedings are underway in this Court. The application for execution seeking warrants of attachment of the disclosed and undisclosed assets in Order XXI Rules 43, 46 and 54 of the CPC is pending in this Court. Nikita Gadgil 8/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc
13. In the case of Vijay Karia and Others vs. Prysmian Cavi E Sistemi Srl and Others1 the Hon'ble Supreme Court while considering the enforcement of a foreign award has clearly observed that the object of Section 48 of the Act is to enforce foreign awards subject to certain well defined narrow exceptions. That awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section
48. That, a foreign award must be read as a whole, fairly and without nit-picking and if read as a whole, the said award has addressed the basic issues raised by the parties and has in substance decided the claims and counter-claims of the parties, enforcement must follow. This Court has been informed that the challenge to the arbitral award under Section 48 of the Act has been dismissed by the Hon'ble Supreme Court on 4th March 2024. Therefore, in my view, enforcement/ execution of the award must follow.
14. In Rahul S. Shah vs. Jinendra Kumar Gandhi and Others 2 the Hon'ble Supreme Court while considering the provisions of Order XXI has observed that the remedies provided for preventing injustice are 1 (2020) 11 SCC 2 (2021) 6 Supreme Court Cases 418 Nikita Gadgil 9/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc actually being misused to cause injustice, by preventing a timely implementation of orders and execution of decrees. Citing the decision of the Privy Counsel in The General Manager of the Raja Durbhunga v. Maharaja Coomar Ramaput Sing 3 the Hon'ble Supreme Court has observed that the actual difficulties of a litigant in India begin when he has obtained a decree. It is not in dispute that the arbitral award has been held to be enforceable as a decree of this Court. The Hon'ble Supreme Court has also opined that the Law Commission or the Parliament must give effect to appropriate recommendations to ensure such amendments in the Code of Civil Procedure, 1908, governing the adjudication of a suit, so as to ensure that the process of adjudication of a suit be continuous from the stage of initiation to the stage of securing relief after execution proceedings. The execution proceedings which are supposed to be a handmaiden of justice and subserve the cause of justice are, in effect, becoming tools which are being easily misused to obstruct justice. Lamenting that there is a steady rise of proceedings akin to a retrial at the time of execution causing failure of realisation of fruits of decree and relief which the party seeks from the courts despite there being a decree in their favour, the Hon'ble Supreme Court observed that experience has shown that various objections are filed 3 (1871-72) 14 Moo IA 605 Nikita Gadgil 10/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc before the Executing Court and the decree-holder is deprived of the fruits of the litigation and the judgment debtor, in abuse of process of law, is allowed to benefit from the subject matter which he is otherwise not entitled to. The Hon'ble Supreme Court has observed that the general practice prevailing in the subordinate courts is that invariably in all execution applications, the Courts first issue show cause notice asking the judgment debtor as to why the decree should not be executed as is given under Order XXI Rule 22 for certain class of cases. However, this is often misconstrued as the beginning of a new trial. That this is antithesis to the scheme of Civil Procedure Code, which stipulates that in civil suit, all questions and issues that may arise, must be decided in one and the same trial and that the object is to of avoid multiplicity of proceedings.
15. From the above facts, it is emerges that the Judgment Debtors are somehow or the other making unsuccessful attempts to deprive the Decree Holder of the fruits of the litigation and one more such attempt cannot certainly be permitted to delay the execution of an enforceable award. In my view, therefore, both of Mr. Mehta's arguments one with respect to there being no notice issued under Order XXI Rule 22 of the CPC or no prayer seeking dispensation of the said notice or the other Nikita Gadgil 11/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc that the execution application is not maintainable deserve to be rejected and are hereby rejected.
16. As can be seen, the Judgment Debtors have been represented at every stage of the proceedings. This is a Foreign Award seeking enforcement in this Court after having survived challenges at various level and the challenges having been rejected, it would not in my view, in the facts and circumstances of the case and also considering the conduct of the Judgment Debtors, be necessary, in execution of this Foreign Award to have the notice under Order XXI Rule 22 issued. Order XXI Rule 22 (2) of the CPC is pertinent in the context and is usefully quoted as under:-
"(2) Nothing in the foregoing sub-rule shall be deemed to preclude the Court from issuing any process in execution of a decree without issuing the notice thereby prescribed, if, for reasons to be recorded, it considers that the issue of such notice would cause unreasonable delay or would defeat the ends of justice."
17. As can be noted from the facts above, and as recorded in the orders of the Hon'ble Supreme Court, issuance of such notice would cause unreasonable delay and would also defeat the ends of justice. Nikita Gadgil 12/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc
18. Further, as far as the objection with respect to the various modes by which execution has been sought, that in my view is permissible under the provisions of Order XXI of the CPC itself, as there is no such prohibition in the CPC and the Judgment Creditor cannot be denied availing any of the modes, more particularly by Judgment Debtors, who have unsuccessfully assailed the arbitral award. The Hon'ble Supreme Court has concluded in its decision dated 19 th August 2020 that in case the Applicant HSBC was to enforce the foreign final award in India in accordance with Section 48 of the said Act, irreparable loss would be caused to it, unless atleast the principal sum were kept aside for the purposes of enforcement of the award in India. As on date, as noted above, the challenge to the award under Section 48 of the Act has been rejected on 4th March 2024.
19. Therefore, in view of the finality of the final arbitral award dated 27th September 2014, this Court requests the learned Prothonotary and Senior Master to issue warrants of attachment, attaching the Account No. 510101004478291 of the Judgment Debtor No.1 in Corporation Bank (Mandvi Branch, Mumbai) and Account No. 510101000358941 of the Judgment Debtor No.1 in Corporation Bank (Shivaji Park Branch, Mumbai) as well as the amounts lying therein as well as the account Nikita Gadgil 13/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::
915.IA 3563-23 in COMEX 23-24 @ IAL 8515-24.doc Nos. 520101006196310 / INR, 520101006296325 / INR and 520101006182964 / INR mentioned at pages 312, 313 and 314 of the Application and the amounts lying therein.
20. List on 25th April, 2024, when this Court will also consider the other prayers in Interim Application (L) No. 3563 of 2023 as well as the submissions of Mr. Mehta, in Interim Application (L) No. 8515 of 2024, filed on behalf of the Judgment Debtors. Liberty to mention after the uploading of the reasons of the order dated 4 th March, 2024, of the Hon'ble Supreme Court.
(ABHAY AHUJA, J.) Nikita Gadgil 14/14 ::: Uploaded on - 18/03/2024 ::: Downloaded on - 30/03/2024 19:46:49 :::