Delhi High Court - Orders
Commercial Real Estate Exchange Inc vs Costar Group Inc. & Anr on 19 October, 2023
Author: Dinesh Kumar Sharma
Bench: Dinesh Kumar Sharma
$~30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ C.RULE 3/2023
COMMERCIAL REAL ESTATE EXCHANGE INC.... Petitioner
Through: Mr. Gourab Banerji, Sr. Adv. with
Mr. Arjun Krishnan, Ms. Krutika
Gaur, Mr. Mohit Pandey, Mr. T.S.
Sundaram, Mr. Rakesh Talukdar,
Advs.
versus
COSTAR GROUP INC. & ANR. ..... Respondents
Through: Mr. Rajiv Nayar and Mr. Sudhir
Nandrajog, Senior Advocates with
Mr. Bishwajit Dubey, Advs. for R-1.
Mr. Amit Sibal, Senior Advocate with
Ms. Radhika Dubey, Mr. Faraz Sagar,
Mr. Raunak Dhillon, Mr. Karan
Khanna, Ms.Surabhi Khattar, Ms.
Pallavi Chaudhary, Ms. Angela Dua
and Ms. Ananya Sikri, Advs. for R-2.
Ms. Kirti Mewar, Adv., Local
Commissioner,
Mr. Pranshu Paul, Mr. Divanshu Jain,
Advs. for Witness No.6.
Mr. Sanjeev Kumar, Mr. Abhishek
Kisku, Advs. for Witness No.7.
Mr. Harish Salve, Sr. Adv with Mr.
Anshul Sehgal, Adv. for Witness
No.9.
Mr.Neeraj Kishan Kaul, Sr. Adv. with
Mr. Vijayendra Pratap Singh, with
Mr.Aditya Jalan, Dr.Abhimanyu
Chopra, Ms. Urvashi Misra, Mr.
Aman Chaudhary, Advs. for applicant
C.RULE 3/2023 Page 1 of 15
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in I.A.s 19391-92/2023/
I.A.20942/2023
CORAM:
HON'BLE MR. JUSTICE DINESH KUMAR SHARMA
ORDER
% 19.10.2023 I.A. 20942/2023 in C.RULE 3/2023
1. This is an application filed under Section 151 of the Code of Civil Procedure, 1908 on behalf of Mr. Saurabh Kumar who was appointed as the Court Commissioner by the Madras High Court and the Rajasthan High Court.
2. In the present application, the following relief has been sought;
a) Pass an order restraining the Petitioners and Respondent Nos. 1-2, from receiving and/or providing discovery of documents arising out of or in connection with Applicant's appointments, execution of commissions pursuant to the orders of the Hon'ble High Court of Rajasthan and Hon'ble High Court of Madras in S.B: Civil Writ Petition No. 9384 of 2021 and CS (Comm. Div.) No. 134 of 2022 before the US Court, whether pursuant to the US Court Order or otherwise, pending the adjudication of the present Application;
b) To grant ad-interim relief in terms of prayer (a) above.
c) Pass such other and further order(s) and direction(s) in the interest of justice.
3. Mr. Neeraj Kishan Kaul, learned senior counsel for the applicant submits that the present application has been moved in view of the liberty granted by this Court vide order dated 04.10.2023.
4. Mr. Neeraj Kishan Kaul, learned senior counsel for the applicant C.RULE 3/2023 Page 2 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:07 submits that vide the order passed by the United States District Court, Central District of California, Western Division ("US Court") on 06.10.2023, has allowed the request of the petitioner i.e., (CREXI) herein for discovery concerning CoStar's communication and relationship with the Commercial Real Estate Exchange (CREXI) (petitioner) vendors, commissioners and other third parties including Aregate, Yansh, Neptune, 247 web.
5. Mr. Neeraj Kishan Kaul, learned senior counsel submitted that this order in fact amounts to inflicting collateral damage on the Court Commissioners who were appointed by this Court and other High Courts of this country. Learned senior counsel submitted that this is a very sensitive issue wherein the foreign Court is intruding into the proceedings of this Court. It has been submitted that the Court Commissioners being eyes and ears of the Court, cannot be compelled to be a witness or expose themselves before any foreign Court.
6. Mr. Neeraj Kishan Kaul, learned senior counsel has submitted that even the Special Master vide order dated 09.08.2023, has specifically held inter alia that if a party has an objection to a request for the production of documents/topic, those objections may be raised in the Indian Court at the time of depositions or before the production of documents. Learned senior counsel submitted that pursuant to this, the present finding of the U.S. Court is totally erroneous and is contrary to the international obligations.
7. Mr. Neeraj Kishan Kaul, learned senior counsel has further invited the attention of this Court to the provision in the Code of Civil Procedure (CPC) containing in the order XXVI Rule 9 and 10 which C.RULE 3/2023 Page 3 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 specifically provides that the Commissioner after preparing his report shall submit the same to the Court who has appointed him.
8. Mr. Neeraj Kishan Kaul, learned senior counsel has further submitted that only the Court which has appointed the Commissioner can take the evidence of such Commissioner. Learned senior counsel has further submitted that this is an exceptional case where the immediate exercise of discretion is required to be made as the U.S. Court has directed Respondents No.1 and 2 i.e., (CoStar) to discover certain documents which will prejudice the law of this land as well as expose the Commissioners appointed by this Court to discharge their obligations, to the vexatious proceedings.
9. Mr. Neeraj Kishan Kaul learned senior counsel in support of his contentions has also invited the attention of the Court to the pleadings made by the CREXI before the U.S. Court wherein the CREXI (Defendant in the U.S. Court) has attributed that the Indian Courts has low standards. Mr. Neeraj Kishan Kaul learned senior counsel further submitted that the petitioner herein pleaded before the U.S. Court that the Local commissioners were paid for their work by CoStar (Plaintiff in the U.S. Court) to execute the commission and they worked closely with the CoStar's Attorney and were compensated by CoStar.
10.In support of his contention, Mr. Neeraj Kishan Kaul learned senior counsel has relied upon the judgments of the Hon'ble Supreme Court in Modi Entertainment Network and Another v. W.S.G. PTE. Ltd. (2003) 4 Supreme Court Cases 341. Learned senior counsel submits that this is a fit case where immediate discretion is required to be exercised by this Court. Learned senior counsel has further relied C.RULE 3/2023 Page 4 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 upon the judgment of the Bombay High Court in Anupam Mittal v. People Interactive (India) Pvt. Ltd. 2023 SCC OnLine Bom 1925 and has submitted that any directions of the foreign Court, if amounts to offending public policy of India should not be allowed. Learned senior counsel submitted that it is a settled proposition that if the proceedings are oppressive or vexatious, the injunction should be granted.
11.Mr. Harish Salve, learned senior counsel for Kroll Associates India Private Limited has submitted that the order dated 06.10.2023 of U.S. Court is totally erroneous. Mr. Harish Salve, learned senior counsel has invited the attention of the Court to Order XXVI Rule 19 which specifically provides that the High Court may issue a commission to examine witness only when the High Court is satisfied that a foreign Court situated in a foreign country wishes to obtain the evidence of a witness in any proceedings before it and the proceedings is of civil nature. Mr. Harish Salve, learned senior counsel further submitted that these are not criminal proceedings where their witnesses can be compelled to appear. Mr. Harish Salve, learned senior counsel further submitted that involuntary production of the witnesses is against the principles and propositions of the civil jurisprudence. Mr. Harish Salve, learned senior counsel for Kroll Associates India Private Limited has submitted that, therefore, an appropriate order may be passed by this Court.
12.Mr. Anushul Sehgal, learned counsel has submitted that the further arguments made by Mr. Neeraj Kishan Kaul, learned senior counsel is adopted by Kroll Associates India Private Limited.
C.RULE 3/2023 Page 5 of 15This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08
13.Mr. Amit Sibbal, learned senior counsel for respondent Nos. 1 and 2 i.e., CoStar Inc., has submitted that the proceedings initiated by the Petitioner (CREXI) in the U.S. Court are vexatious and oppressive. Mr. Amit Sibbal, learned senior counsel for respondent Nos. 1 and 2 has submitted that in fact, the letter of the request made by the CREXi/petitioner here is identical to the motion made before the U.S. Court. Mr. Amit Sibbal, learned senior counsel for respondent Nos. 1 and 2 has produced a chart which shows that the documents sought to be recovered before the Indian Court and the U.S. Court are totally identical. Mr. Amit Sibbal, learned senior counsel for respondent Nos. 1 and 2 has submitted that this fact itself makes the proceedings vexatious and oppressive. Mr. Amit Sibbal, learned senior counsel for respondent Nos. 1 and 2 has invited the attention of this Court to the judgments of the Division Bench of this Court in Essel Sports Private Limited V. Board of Control for Cricket India & Ors. ILR (2011) V Delhi 585.
14.Mr. Amit Sibbal, learned senior counsel emphasized that in this case, it was inter alia held that if a party is made to defend the same allegations by the same party in two different jurisdictions is unquestionably oppressive and vexatious. Mr. Amit Sibbal, learned senior counsel has further submitted that in this case, it was inter alia held that the Courts are duty bound to ensure that the end of justice is not parted. Learned senior counsel submits that in such cases an anti- suit injunction should be passed. It was further submitted that legal proceedings by an Indian party in a foreign court in which the prayers predominantly concern another Indian party even whilst a suit on C.RULE 3/2023 Page 6 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 similar allegations was believed to be still pending in an Indian court between the same parties is vexatious and oppressive.
15. Mr. Amit Sibbal, learned senior counsel further submitted that in Essel Sports Private Limited (supra), it was further held that if there is a substantial overlap of two actions there would be a risk of conflicting judgments/orders. Thus, two parallel proceedings on the same issues are allowed to be injuncted, in particular, where the Indian Courts are forum convenience. Mr. Amit Sibbal, learned senior counsel submitted that therefore, an injunction is required to be passed by this court so as to restrain the Respondent No.1 & 2 and the Petitioner from the discovery of the document as directed vide order dated 06.10.2023 by the U.S. Court.
16.Issue notice.
17.Mr. Arjun Krishnan, has accepted the notice on behalf of the non-
applicant/petitioner i.e., CREXI.
18.Mr. Gourab Banerji, learned senior counsel for the petitioner has directly invited the attention of this court to the relief claimed by the petitioner in the petition under Section 78 of the Code of Civil Procedure read with Order XXVI Rule 19 to 22 of the CPC.
19. Mr. Gourab Banerji, learned senior counsel for the petitioner has taken this court to certain background. Learned senior counsel submitted that both the parties i.e. CREXI and CoStar Group which are real estate companies are basically U.S. companies. Learned senior counsel submitted that in 2020 CoStar Group (Respondents herein) filed a suit against CREXI (Petitioner herein) in California. Learned senior counsel submitted that thereafter the CREXI filed a C.RULE 3/2023 Page 7 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 counter claim against CoStar in California, USA. Learned senior counsel for the Petitioner submitted that after this, Respondent No. 1 & 2 i.e., CoStar filed certain suits in the Indian courts i.e., High Court of Delhi, High Court of Rajasthan and High Court of Madras against vendors of the Petitioner. Learned senior counsel submits that in those suits, the respective High courts appointed certain Local Commissioners and those Commissioners who were either advocates or technical experts submitted their reports before the respective High Courts. Learned senior counsel submitted that in those suits Respondents did not implead CREXI. It has been submitted that later on those suits were settled and decreed after compromise.
20.Mr. Gourab Banerji, learned senior counsel for the petitioner submitted that in fact CoStar (Plaintiff in US Court) in the second amended complaint filed before the U.S. Courts mentioned the Local Commissioner's report appointed by the Indian High Courts. Learned Senior counsel submits that in fact the CoStar concealed certain facts in the U.S. courts and there were certain communications behind the scene between CoStar and such Local Commissioners. Learned senior counsel submits that for the production of such documents/communication, the discovery was filed before the U.S. Court by the Petitioner therein i.e., CREXI. Learned senior counsel submits that after hearing both the parties in detail U.S. Court passed a detailed order on 30.08.2023. Learned senior counsel further submits that CoStar filed an appeal against the order dated 30.08.2023 which was dismissed by the superior court in U.S. vide order dated 06.10.2023.
C.RULE 3/2023 Page 8 of 15This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08
21.Learned senior counsel has asserted that the question of the privilege is still open and the Respondent No. 1 & 2/ Co-star (herein) have only been asked to log the documents claiming the privilege and confidentiality. Learned senior counsel submits that if any order is passed by this Court at this juncture, it would amount to sitting in appeal over the orders of the U.S. Courts dated 30.08.2023 and 06.10.2023.
22.Learned senior counsels Mr. Harish Salve, Mr. Neeraj Kishan kaul, Mr. Amit Sibbal, Mr. Gourab Banerji, learned senior counsels for the parties have advanced the detailed arguments.
23.The reply to this application is yet to come. However, since detailed arguments have been made and an urgency has been pressed by the learned counsel for the applicant and learned counsel for Respondent Nos. 1 and 2, this Court considers that certain directions are required to be passed till the pleadings in this application are complete.
24.First and foremost, it is necessary to recapitulate the prayers made in the main petition by the petitioner which is as under;
a) Issue a commission for recording statements of Mr. Ritesh Jaiswal on the subjects appended to the Letter of Request dated 22.08.2023 ("Document No. 513" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
b) Issue a commission for recording statements of Mr. Ajit Saxena on the subjects appended to the Corrected Letter of Request dated 25.08.2023 ("Document No. 528" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
C.RULE 3/2023 Page 9 of 15This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08
c) Issue a commission for recording statements of Mr. R. Abhishek on the subjects appended to the Letter of Request dated 22.08.2023 ("Document No. 512" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
d) Issue a commission for recording statements of Ms. Kirti Mewar on the subjects appended to the Letter of Request dated 22.08.2023 ("Document No. 510" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
e) Issue a commission for recording statements of Mr. Saurabh Kumar and the corporate representative of FTI Consulting Private Limited in possession of information related to the present dispute, on the subjects appended to the Letter of Request dated 22.08.2023 ("Document No. 508" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
f) Issue a commission for recording statements of Mr. Shailendra Singh; Mr. Arun Vermani and the corporate representative of Kroll Associates India Private Limited in possession of information related to the present dispute, on the subjects appended to the Letter of Request dated 22.08.2023 ("Document No. 511" before the US Court) and for production of certain documents as provided in the Letter of Request and in the manner as provided in the said Letter of Request;
g) Pass an order providing for the following procedures regarding the taking of testimony including that:
(i) The testimony should be given orally and transcribed verbatim, or in shorthand and later transcribed, with both the questions and the answers being transcribed;
(ii) Video recording of the testimony shall be made and C.RULE 3/2023 Page 10 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 transmitted to the US Court along with the report of the commissioner, evidence recorded, documents obtained and any other relevant material;
(iii) Counsel for Petitioner and Respondents, including their attorneys and representatives in the United States shall be allowed to attend the oral examination in person or by video conference facility, preferably Zoom;
(iv) The examination of the witness shall be carried out by counsel for Petitioner and Respondents, and both counsels may ask questions that can be asked in cross examination to the witnesses, and show or confront the witnesses with documents;
(v) No ex parte communication shall be permitted between the parties or their Counsel and any Court appointed commissioner,
c) Pass such other or further order(s) as this Hon'ble Court may deem fit and proper in the circumstances of the present case.
25.It is also necessary to briefly look into the order dated 30.08.2023 passed by the U.S. Court. Hon'ble Suzanne H. Segal, (REP) (retired), special Master inter alia held that;
"The Motion regarding vendor and third party discovery identified in request nos. 175, 176, 178, 179, 180, 181, 183, 183, 185,186, 188, 189, 190, 191, 192 is GRANTED, except as to any documents or information over which CoStar asserts a privilege or "immunity" argument. Documents or information that CoStar has withheld as privileged or "immune" shall be addressed by the Special Master at the close of briefing on the privilege issue. During the hearing, CREXi's counsel requested a privilege log for documents withheld from responses to these requests. The Special Master initially agreed with CoStar that a log was not required at this time.
However, upon further reflection, the Special Master has altered her position on the request for a privilege log. A log would allow the parties and the Special Master to have a better C.RULE 3/2023 Page 11 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 understanding of the subject matter, authors, dates, and communication purposes of the disputed documents. The act of creating the log would enable CoStar to better address the volume of documents involved. While counsel indicated that preparing a log might "slow down" the briefing process, the Special Master is hopeful that preparing a log might have the opposite impact- i.e., by preparing the log, CoStar could decide whether or not responsive documents truly qualify as privileged. Some documents might be voluntarily produced once they are evaluated for privilege. Moreover, the log would provide the Special Master and the parties a better understanding of the nature of the documents in dispute.
The Special Master notes that, without deciding whether there is or is not a privilege governing the disputed "settlement negotiation" documents or the Commissioner documents, those documents must be logged if withheld by CoStar as privileged or withheld as "immune" from discovery. Given the relevance of these documents to the allegations of the Second Amended Complaint, any assertion of privilege over these communications with third parties in the possession of CoStar's counsel (Indian or U.S.) should be logged. While CoStar has raised burdensomeness as an objection, it is unclear how many documents are involved and why a limited set of documents would create a substantial burden. The Special Master DENIES the burdensomeness objection and ORDERS that CoStar prepare a privilege log of communications or documents responsive to RFP Set Nos. 4 & 6 that CoStar has withheld on privilege or "immunity" grounds."
26.It is also necessary to note the observations of the U.S. Court in order dated 06.10.2023, wherein it was inter alia held as under:
"By its Motion to Compel, CREXi seeks discovery concerning CoStar's communications and relationship with CREXi's vendors, Commissioners, and other third parties, including Aregate, Neptune, Yansh, and 247Web. The Special Master granted CREXi's Motion to Compel, in part on the basis that CoStar placed the findings of the Commissioners' reports in C.RULE 3/2023 Page 12 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 India directly at issue in the present litigation by including those reports and findings as factual allegations in the SAC. CoStar objects to the Special Master's August 30 Order on the basis that it contravenes Judge Sagar's and this Court's prior Orders denying CREXi's "Motion to Compel Discovery Regarding CoStar's Settlement with Aregate." CoStar further objects on the basis that no circumstances have changed to justify deviating from those orders and that the Hague Convention is the appropriate method for seeking discovery related to the cases in İndia. Judge Sagar's Order denying CREXiS Motion to Compel and this Courts Order affirming Judge Sagar's, Order are set forth in detail in the Special Master's August 30 Order and can be found at docket number 364 and 426, respectively. (DKT. No. 540-1) However, as the Special Master found, Judge Sagar's Order denying CREXi's Motion to Compel was limited to documents involving only the Aregate settlement.
Moreover, the Court agrees that the circumstances since the filing of the SAC have changed such that this case has become centered upon evidence procured from the cases in India that involve CREXi's vendors. In its First Amended Complaint, CoStar pled that CREXi contracted with one offshore third- party agent --Aregate. (Dkt. No. 33.) In its Second Amended Complaint, CoStar alleges that CREXi employed approximately forty third-party agents, four of which CoStar has sued.
(Dkt. No. 337.) Notably, CoStar's Motion for Leave to Files a Second Amended Complaint rested almost entirely on information discovered from its lawsuits in India against CREXi's third-party agents-Aregate, Neptune, Yansh, and 247 Web. Id. CoStar relied on this information in adding over one hundred paragraphs of detailed allegations in its Second Amended Complaint. Id. In addition, in June 2023, CoStar amended its Rule 26(a)(1) initial disclosures to include Arcgate, Yansh, 247 Web, and Neptune. Thus, as the Special Master found, by CoStar placed the proceedings in India directly at issue in this litigation. These issues and facts were C.RULE 3/2023 Page 13 of 15 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 21/10/2023 at 00:10:08 neither before Judge Sagar when she denied CREXi's Motion to Compel, nor before this Court when it adjudicated CREXi's Motion for Review of Judge Sagar's Order. Thus, CoStar's arguments based on relevance and the "law of the case"
doctrine are without merit. Finally, the procedures set forth by the Hague Convention do not preclude CREXi from using the Federal Rules of Civil Procedure to seek discovery within CoStar's "possession, custody, or control.
The Court concurs with and adopts the findings and conclusions of the Special Master as set forth in the August 30, 2023 Order. Accordingly, the Court DENIES CoStar's Motion for Review and orders that the Special Master's August 30 Order remains in full force and effect."
27.I consider that prima facie that there is substance in the arguments of the learned senior counsel for the petitioner i.e., CREXI. This Court considers that if any order is passed at this stage, it would amount to sitting in appeal over two concurrent orders of the U.S. Court. This Court also considers that at present only discoveries are being sought with the issue of privilege and confidentiality being left open, prima facie there would be no collateral damage as the "privilege" and "confidentiality" have duly been protected and yet to be settled. The view taken by this Court at this stage is only tentative, as pleadings are yet to be completed.
28.With these, I do not find any prima facie case at this stage in favour of the applicant nor does this Court consider that there would be an irreparable loss or injury. The balance of convenience also does not lie in favour of applicant at this stage.
29.Let a reply be filed within a week with an advance copy to the opposite parties.
C.RULE 3/2023 Page 14 of 15This is a digitally signed order.
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30.List the matter on 02.11.2023, the date already fixed.
DINESH KUMAR SHARMA, J CTOBER 19, 2023 Pallavi/SJ C.RULE 3/2023 Page 15 of 15 This is a digitally signed order.
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