Bombay High Court
Abraaj Investment Management Limied vs Mr. Neville Tuli on 14 July, 2015
Author: Roshan Dalvi
Bench: Roshan Dalvi
(1) N 131/14
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
Amk
NOTICE NO. 131 OF 2014
IN
EXECUTION APPLICATION NO. 102 OF 2014
IN
CLAIM NO. 2009 FOLIO 1304
AND
CLAIM NO. 2009 FOLIO 1305
BEFORE THE HIGH COURT OF JUSTICE,
QUEENS BENCH DIVISION
COMMERCIAL COURT, STRAND, LONDON WC 2A 2LL
Abraaj Investment Management Ltd. ig .. Claimant
Vs.
Mr. Neville Tuli .. Respondent
Mr. Fredun DeVitre, Sr. Advocate a/w. Vivek Menon, Mr. Wasim Beg &
Durgaprasad Sabnis i/b Lex Firmus for the Claimant.
Mr. Venkatesh Dhond a/w. Mr. Rohan Kelkar, Mr. Vyapak Desai, Mr. Siddharth
Ratho i/b Nishith Desai Associates for the Respondent.
CORAM : MRS. ROSHAN DALVI, J.
Date of reserving the Order : 03.07.2015
Date of pronouncing the Order : 14.07.2015
ORDER
1. The claimant made two separate claims against two defendants Bregawn Jersey Ltd. (Bregawn) and Neville Tuli (Tuli) under the aforesaid folio numbers. The claims were prosecuted together. They have been adjudicated together. The claim against Bregawn was as a contracting party. The claim against Tuli, the director of Bregawn, was as a guarantor to the transaction. The claims were adjudicated under the judgment dated 25.03.2010 which culminated in the order/decree of payment dated 26.03.2010 and the final adjudication of the claim of damages under the judgment/order dated 04.10.2010.
::: Downloaded on - 16/07/2015 23:58:22 ::: (2) N 131/142. The claims were made under a certain purchase agency agreement and a purchase agreement under which certain personal guarantee was given by the respondent Tuli. Upon the service of the claim both the aforesaid parties were represented. Later their solicitor served notice that they would not be acting for them. Despite the notice of the hearing the respondent did not attend it. The claim of the claimant was, therefore, heard in the absence of the defendants (the respondent being one of the defendants) though with notice to them. The judgment dated 25.03.2010 notes the facts and considers the two claims under the agreement of the claimant to provide finance for obtaining certain artwork of Indian, Persian and Islamic arts. The claim was in substance for the return of finance. The learned Judge has set out the initial amount of the loan and the relevant part of the purchasing agency agreement, the personal guarantee and the amendment agreement in the judgment. The judgment further notes the facts that transpired for which the finance was given and the notice issued upon the failure to invoice the funds. The learned Judge has noted the reply of the defendant which accepted and admitted the full title of the claimant to have remained incomplete in respect of unpaid artwork by citing the relevant portion of the reply justifying on the amount that remained unpaid. The learned Judge has observed that the letter did not dispute that the sums were advanced or the fact that the fund was not invoiced as promised. The learned Judge has arrived at the "inescapable" conclusion about the advances made for the artwork which were not passed on to the auctioneers and because of which the auctioneers could not release the artworks resulting in they remaining "unpaid".
3. The judgment further notes the denial of the claim. The learned Judge has rejected the claimant's contention with regard to the entire of the artworks required to be purchased by the respondent. The learned Judge has himself noticed that some of the artworks were delivered to the claimant and has, therefore, concluded that the then present market value of the ::: Downloaded on - 16/07/2015 23:58:22 ::: (3) N 131/14 artwork would be significantly less than the price put by the claimant in doing so. The learned Judge has considered the witness statement relied upon by the claimant filed as per the rules of that Court and has considered each of the aspects of the claim separately and independently, rejecting some and accepting some of them.
4. The price of the artwork as put by the claimant was rejected.
The claim of repayment of the loan of $1.2 million also came to be rejected with reasons as having been cancelled by mutual agreement. However the learned Judge accepted the breach of the purchasing agency agreement by the contracting party Bregawn by failure to apply the funds advanced by claimant for the purchase of the artwork and consequently to provide the "purchasing service". The learned Judge, therefore, concluded that the claimant was thereby unabled to sell the artworks and recover the amount and was hence entitled to a remedy in damages.
5. The indemnity given pursuant to purchase agency agreement was also allowed with reasons as it was seen that the respondent Bregawn has not purchased the artwork in the name of the claimant or from the claimant despite sufficient written demand under letter dated 17.09.2009.
With regard to the breach of the fiduciary duty of the breach of trust the learned Judge saw that the respondent Bregawn had not applied the funds received from the claimant for the payment of the artwork to the auctioneer to get the artwork released for the claimant nor had it stated what it had done with the funds taken from the claimant. Hence the learned Judge has concluded that there was no real prospect of a defence to the claim for breach of fiduciary duty.
The learned Judge has also seen that the purchase for which the funds were advanced was for the acquisition of artwork and for the breach of such duty and trust compensation payable was to be assessed at further hearing.
The learned Judge considered that it was not known what happened ::: Downloaded on - 16/07/2015 23:58:22 ::: (4) N 131/14 to the fund advanced by the claimant to the respondent Bregawn who must account for the funds and for any profit obtained as a result of breach of duty and trust.
The learned Judge rejected the claim of restitution made by the claimant on the basis that respondent Bregawn had been unjustly enriched at the expenses of the claimant.
The learned Judge considered that some artwork had been delivered to the claimant and, therefore, the consideration had not wholly failed and consequently did not consider it an aspect fit for summary judgment as having no real prospect of being defended.
The learned Judge considered the claim for compound interest to be determined at the time of obtaining the money judgment.
The learned Judge granted costs as the purchase agency agreement expressly referred to indemnity "on a full indemnity basis".
6. Hence for those aspects the learned Judge allowed the claim to proceed by way of summary judgment in the application made to the Court under Part 24 of the Civil Procedure Rules (CPR) relating to summary judgments as per the procedure applicable in that Court upon a finding that there was no real prospect of the defence to that claim and no other compelling reason for the Court to determine the issue at a trial.
7. The adjudication of the claim of damages would have to be decided. Hence the learned Judge ordered accounts to be taken for the damages to be assessed at the trial.
8. Hence upon a proper consideration of merits of the claim the judgment has, as aforesaid, accepted some claims and rejected some others and ordered accounts to be taken at trial.
9. With regard to respondent Tuli against whom the decree is ::: Downloaded on - 16/07/2015 23:58:22 ::: (5) N 131/14 sought to be enforced and executed on his personal guarantee, the learned Judge separately considered the claim guaranteed by him for punctual performance of Bregawn upon his obligation under the purchase agency agreement. The learned Judge concluded that the respondent Tuli was in breach of that obligation because the Bregawn had failed to purchase the artwork by failing to pay the price to the auctioneer for the artwork which it bid for. Hence he passed the judgment against the respondent Tuli for breach of his contractual obligation. This was to be in damages to be assessed upon accounts to be taken of the value of the artwork which was delivered.
10. The learned Judge further considered that there had to be a written demand under the contractual terms to be made to the guarantor who indemnifed the claimant in respect of the losses caused by the breach by the guarantor of his obligation and has noted that the letter dated 17.09.2009 was a written demand calling upon the respondent Tuli to purchase the artwork or alternatively to pay for the amounts due to secure the release of the artwork as per the agreement.
11. Consequently though the claimant claimed the entire of the amount of the advance for the purchase of the artwork the learned Judge himself saw from the claim that certain artwork was delivered to the claimant and hence gave credit to that extent to both the respondent Bregawn as well as his guarantor, respondent Tuli.
12. Upon such a judgment on merits the learned Judge kept the case for assessment of damages upon the claims which were accepted under the application for summary judgment. Hence in a claim for damages and indemnity the amount of liability was left to be determined.
13. This judgment has not been appealed by either defendant.
::: Downloaded on - 16/07/2015 23:58:22 ::: (6) N 131/1414. Upon the claim made by the claimant herein, the respondent herein as also Bregawn (shown as defendants) had filed their defence and denied the claims claimed. The defence was not in accordance with the Civil Procedure Rules (CPR). Hence the defendants were allowed to revise the defence by specified dates. These dates came to be extended twice. Yet the defence was not revised. Costs were granted. The costs were not paid and 'unless order' was passed that if the defence was not revised as per the CPR 16.5(1) and 16.5(2) and the costs ordered were not paid, the defence would be struck off. Upon failure of the defendants to comply with either of the above orders, the defence, in fact, came to be struck off under the conditional order. Consequently the assessment of damages for which trial was ordered could not be held and the claimant submitted a draft order upon the defendants' failure to comply with the aforesaid orders for grant of specified sums along with further costs of the claimant. Under the further judgment of the Court the sums properly due and payable by the two respondents were to be assessed.
15. The judgment shows the claim for damages for breach of the written agreement, indemnity under the agreement, equitable remedy for breach of trust and a fiduciary duty, restitutionary remedy for unjust enrichment against the respondent Bregawn and a breach of personal guarantee under the guarantee against respondent Tuli, the director of Bregawn. The judgment once again considers the facts of the claimant's case and the respective claims against Bregawn as also Tuli separately. The claim against Bregawn under six heads are specified.
(1) Damages for breach of Clause 2(a) of Purchase Agency Agreement (PAA) - The learned Judge has considered that though the defendants disputed the claimant's claim they had not appealed the judgment dated 25.03.2010. The judgment shows the claims for damages under Clause 15.1, 15.2, 15.3 & 15.4 and has sought to deduct the value of the released artwork ::: Downloaded on - 16/07/2015 23:58:22 ::: (7) N 131/14 from the sum recoverable from the defendants as damages as estimated by the plaintiff though the valuation was disputed by the defendants.
(2) Indemnity under Clause 6(a) of PAA.- The liability to indemnify was accepted. This would arise upon the breach of the aforesaid clause which was seen. The liability was to be ascertained. The defendant disputed the quantum of the heads of loss. Further liability towards legal fees and expenses were claimed which was accepted and noted.
(3) Equitable compensation.- Trial was ordered for determining the amount of equitable compensation which was to be paid for failure to apply the funds advanced by the claimant for the purchase of the artwork. Though the defendants disputed that aspect the judgment dated 25.03.2010 was not appealed. Hence the learned Judge has concluded that the claimant would be entitled to recover the sums claimed by it.
(4) Account of profits.- The defendants were liable to account for the funds advanced to them by the claimant and any profit arising as a result of breach of fiduciary duty and trust. The learned Judge has considered the defence of the defendants that it had applied the entirety of the funds for the purchase of the artworks. However none of the artworks except the released artworks were supplied to the claimant. The learned Judge has noticed the dispute between the parties for the identity and the value of the artworks in respect of this claim.
(5) Sums payable in restitution.- This claim was also ordered to be decided in trial. The claimant sought receipts of the sums of which the defendant was unjustly enriched under the loan agreement and thereafter under the PAA. The total sum is reduced to the value of the released artwork. The learned Judge has noticed that the defendant has disputed the unjust enrichment and the liability to make the restitution.
::: Downloaded on - 16/07/2015 23:58:22 ::: (8) N 131/14(6) Interest.- The interest was also to be determined at the time of the obtaining money judgment. The claimant claimed compound interest in common law and pursuant to statute. The defendants disputed the entitlement the interest.
16. With regard to the claim of the guarantor, the respondent Tuli there were three claims;
(1) Damages of breach of Clause 1(a) of the personal guarantee. - This was the guarantee for punctual performance of the application by Bregawn given by its director Tuli who disputed the claim. (2) The indemnity pursuant to Clause 1(e) of the personal guarantee. - This was also a liability to indemnify the claimant under the personal guarantee which was disputed by Tuli.
(3) Interest - The claimant claimed compound interest under the personal guarantee agreement at common law and pursuant to statute which Tuli disputed.
17. The claimant submitted their third witness statement of its solicitors with regard to the claims made by it as per the procedure of the Court.
18. The learned Judge accepted the claimant's claim in the absence of the appearance of the defendants, who were represented initially by their solicitors and who had filed their written defence, but thereafter failed to appear in Court either personally or through another solicitor after their solicitor no longer sought to appear and informed them as also the claimant of its non appearance.
19. For want of any defence on the computation of damages for the aforesaid aspects the claim of the claimant was granted as claimed.
::: Downloaded on - 16/07/2015 23:58:22 ::: (9) N 131/1420. The aforesaid judgments are sought to be executed. The respondent Bregawn has not been represented and has not challenged the execution. Respondent Tuli has sought to challenge the execution upon the notice issued under Order 21 Rule 22(1)(b) of the CPC to execute the foreign judgment. The respondent contends that the aforesaid judgments cannot be executed in India mainly on the aforesaid grounds.
(1) They are not given on the merits of the cases.
(2) They are obtained by practicing fraud and suppressing material
documents.
(3) They are opposed to natural justice.
(4) They are in breach of the law in India being the Foreign
Exchange Management Act, 1999 (FEMA).
The defence of respondent Tuli must be considered upon the aforesaid judgments.
(1) Re.- Merits of the case:
21. The judgment, as aforesaid, shows that the claim of damages has been initially adjudicated separately under various heads, some of which have been accepted and some rejected both upon giving reasons and after setting out the relevant clauses of the agreement between the parties. The reasoned judgment running into 11 pages considers the merits of the plaintiff's case even in the absence of the defendants who have filed their defence. Though the application of the plaintiff was for summary judgment under part 24 of the CPC, the learned Judge has not granted summary judgment as claimed under various heads which the claimant was called upon to prove in the trial. Thereafter in view of the non-compliance of the 'unless order' passed in respect of the revision of the respondent's defence and the payment of costs the defence itself came to be struck off. Consequently then under Rules of that Court only the claimant's claim would have to be granted. Nevertheless in the later judgment the Court has yet ::: Downloaded on - 16/07/2015 23:58:22 ::: (10) N 131/14 considered the six claims against the respondent Bregawn and the three claims against the guarantor respondent Tuli together with the witness statement of the claimant's solicitor. There was nothing more for the Court to do on merits.
22. To show that the Court did go into the substance of the defence, the claimant has produced and the counsel on behalf of respondent has relied upon the transcript of the proceeding of the Court. The relevant part so relied upon shows the consideration of the Court with regard to the valuation of the released artwork. The Court called upon the claimant to show the schedule of the valuation. It was shown to be appended to the statement of losses. It was prepared by an art expert. The learned Judge has sought to see the rival version appended to the defence which was found to be non- compliant with CPR and which was not re-pleaded. Counsel on behalf of the claimant explained the Court that that was on the basis of what the defendants considered was purchase price of the artworks which were matters of dispute. The learned Judge noted that it was not an independent valuation. Though the defence was struck off, the learned Judge obviously to satisfy his conscious, wanted to see the defence which exhibited the figures put by the defendants of the valuation of the released artworks which were specifically directed by the learned Judge under the earlier order to be accounted for giving credit to that extent. The learned Judge further considered how the claimant showed the total market value of such artworks. The learned Judge has shown the value for the Dubai artworks and the London artworks. The learned Judge considered the defence along with the schedule but without the total of what the defendant showed as the value of the released artworks together with their defence. The learned Judge saw that the valuation did not explain how it was arrived at.
23. Thus seen the Court had little to do except allow claimant's claim giving credit to the respondent for amount of released artworks as ::: Downloaded on - 16/07/2015 23:58:22 ::: (11) N 131/14 valued by the plaintiff's valuer.
24. Upon such facts it has to be adjudicated whether the claim was allowed on merits or not.
25. In the judgment of Division Bench of this Court in the case of ABN Amro Bank NV Vs. Satish Dayalal Choksi (Appeal No. 869/1990 in N. No. 671/89 (DB) what is a case on merits has been considered in paras 9 to 11. The appeal Court allowed additional evidence to be produced under Order 41 Rule 27 of the CPC for the plaintiff/claimant in that case to show how the foreign judgment was on merits. The Court saw an affidavit of the officer of the bank examined before the foreign Court who produced the letter of guarantee from the documents tendered by the bank kept by the bank in the ordinary course of its business and who was put several questions in respect of deed of guarantee. After recording his evidence the judgment/decree in the claim of the bank came to be granted. The appeal Court found that thus seen the judgment was given on merits after evidence was led and the Court examined the merits of the case upon the documents being produced and proved by the bank.
The Court considered the earliest case of the Privy Council in D. T. Keymer Vs. P. Visvanathan Reddi AIR 1916 Privy Council 121 in which upon the defendant having omitted to answer the interrogatories of the plaintiff, the defence came to be struck off and the judgment was entered for the plaintiff which was held not to be on merits since none of the matters raised by the defendant were considered and the subject of adjudication and the suit was treated as though not defended and the judgment was given on that footing.
This would be in contra-distinction with the present judgment in which the learned Judge saw the defence of the defendant in the written statement and the schedule annexed thereto without its total for the credit that had to be given to the defendants in the trial for the released artworks ::: Downloaded on - 16/07/2015 23:58:22 ::: (12) N 131/14 despite the fact that the defence was struck off.
The Division Bench further considered the judgment of Chief Justice Chagla in the case of East India Trading Co., New York Vs. Badat & Co.
Bombay AIR 1959 Bombay 414 where it was held that merely because the judgment is ex parte, it cannot be taken to be not on merits per se.
The Division Bench, therefore, held in para 11 of the judgment that an ex parte order can be held to be not on merits only in cases when the judgment is delivered on the ground of limitation or want of jurisdiction or where the defence is struck off in the case before the Privy Council. In such cases the Court declines to examine the merits. However if the Court examines the merits of the plaintiff's claim, the defendant cannot be permitted to claim that the decree is not on merits and take advantage of its own wrong in not defending the suit.
It is seen that in the aforesaid judgment the plaintiff's claim is determined on merits. For the part of the claim with which summary judgment was rejected and the trial was ordered the plaintiff showed its claim. Upon seeing the defendant's defence the claim was allowed. Hence the merits were considered even in the absence of the defendant.
26. In the case of Dallah Albaraka Investment Co. Ltd. Vs. Ajitabh Bachchan 2000(2) Mh.L.J. 417 the learned Single Judge of this Court considered the aforesaid Privy Council case as also various other cases and held in para 12 of the judgment that the Court must consider the judgment and not the reasons for judgment. That was the case of judgment on admission under Order 27 of the Supreme Court Practice in England. The judgment debtors were given notice whether they wanted to contest the plaintiff's claim. They answered that they did not propose to contest the plaintiff's claim. Hence there was no issue to be decided by the Competent Court and the Court had to pass the order in terms of the Order 27 of the Supreme Court Practice. It was held that merely because this proceeding would proceed ex parte it did not mean that the plaintiff was entitled to ::: Downloaded on - 16/07/2015 23:58:22 ::: (13) N 131/14 judgment without proving his claim. The defendant could still cross-examine the plaintiff and the plaintiff must prove his claim. It was observed that similarly where the defence was struck off the plaintiff was not entitled to judgment until he proves his claim. Hence it was held that if the judgment reflected that issues arising before the Court has been answered, that is a judgment on merits. In the case of an admission by the defendant there would not be an issue but the judgment on admission could not be stated to be the judgment not on merits.
Similarly in this case though the defence was struck off and the defendant failed to appear, the judgment for the plaintiff was given after the plaintiff/claimant proved its claim not only upon the statement submitted by the plaintiff but upon satisfying the Court that the statement in the schedule to the written statement given by the defendant could not be accepted.
The Court acted as per the procedure followed in that Court. That was the procedure for summary judgment under Para 24 of the CPR.
27. In the case of Bank of Baroda Vs. Manubhai Jethabhai Patel 2000(1) Bom. C.R. 325 the learned Single Judge of this Court has held that if the practice and procedure of a Court which passed the judgment was followed, the judgment cannot be treated as one not on merits. In that case Rule 14 of the Supreme Court of England Rules was complied with. The writ of summons was issued, served, acknowledged and the notice of intention to defend was given by the defendant. The defendant filed his defence through his solicitor. Leave to defend was refused. Thereafter the decree holder applied for judgment under the summary procedure. The solicitors of the defendant were given notice. The inter parte hearing took place. The judgment on merits was pronounced. The judgment debtor/defendant did not take any steps to set aside the ex parte judgment by preferring an appeal. The decree holder had complied with the requirement of Order 14 Rule 2 of the Supreme Court of England Rules. It was held that the judgment was passed after compliance of the rules of the reciprocating country and hence it ::: Downloaded on - 16/07/2015 23:58:22 ::: (14) N 131/14 cannot be held that the judgment was not on merits and that the mere absence of the defendant could not prevent a judgment to be given from being the one on merits because then there would be every incentive for the defendant to be absent when the matter came up for disposal in the country where the suit was filed and then contend that the judgment was not on merits.
The judgments in the above claim have considered the case of the respondent under various heads including the defence relating to the return artworks. The learned Judges have followed the procedure as per rules of that country in both the judgments. The judgments are, therefore, on merits.
28. In the case of International Woollen Mills Vs. Standard Wool (U.K.) Ltd. (2001) 5 SCC 265 the Supreme Court considered also what would be on merits. In paras 17 to 32 of the judgment considering various earlier cases, the decision of which it upheld, it accepted that the analogy to consider the merits is whether the Court had gone through the case made out by the plaintiff and taken the evidence of the witnesses put up by the plaintiff or whether the decree was passed without going into the merits and without taking evidence by the foreign Courts. The Supreme Court accepted the holding in the case of Middle East Bank Ltd. Vs. Rajendra Singh Sethia AIR 1991 Cal 335 that only if the Court had not gone through and considered the case of the plaintiff and taken the evidence of the witness, the judgment or decree would not be on merits.
Upon considering the case of Ram Chand Vs. John Bartlett (1909) 3 IC 523, the Supreme Court accepted that if the defendant did not choose to appear and defend the plaintiff's claim, the judgment passed by the Court in the plaintiff's favour would nonetheless be a judgment on merits because it was not founded upon detailed evidence which the plaintiffs might have produced had the defendant entered an appearance and contested the claim.
The Supreme Court accepted the passage in Sir William Rattigan's Private International Law (1895) at Pages 234-235 that if the plaintiff ::: Downloaded on - 16/07/2015 23:58:23 ::: (15) N 131/14 obtained the judgment simply on the non appearance of the defendant who had been duly served and without adducing evidence whatever in support of his claim, the plaintiff would not be entitled to sue upon the judgment in the English Court as it would be contrary to the fundamental principles of the law of England. The Supreme Court accepted the passage as correct law applicable in India too. The supreme Court considered that after the summons was served the Court had to consider the case of the plaintiff on merits by looking into the evidence led and the document produced before it as per its rules. Once that is done the decree would be on merits.
The Supreme Court dissented from the ruling in the case of Chintamani Chintamoni Padhan Vs. Paika Samal AIR 1956 Ori 136 : ILR 1956 Cut 174 that only after a full trial, pleadings, presentation of evidence and arguments by both sides can a judgment be considered a judgment on merits. The Supreme Court held that it was possible even if the defendant had not entered evidence that the plaintiff may prove its case through oral and documentary evidence and if that was considered the decree would be a decree on merits.
The test is that the Court had applied its mind to the matter before it, considered the evidence available and allowed the case which could be accepted and not only passed the decree because the defendant was absent.
The final conclusion of the Supreme Court is in the passage quoted from the case of Abdul Rahman Vs. Mohd. Ali Rowther AIR 1928 Rang 319 : ILR 6 Rang 552 thus :
'A decision on the merits involves the application of the mind of the Court to the truth or falsity of the plaintiff's case and therefore though a judgment passed after a judicial consideration of the matter by taking evidence may be a decision on the merits even though passed ex parte, a decision passed without evidence of any kind but passed only on his pleadings cannot be held to be a decision on the merits.' and in the case of Wazir Sahu Vs. Munshi Das AIR 1941 Pat 109:ILR 20 Pat 144 thus:
'An ex parte decision may or may not be on the merits. The mere fact of its being ex parte will not in itself justify a finding that the ::: Downloaded on - 16/07/2015 23:58:23 ::: (16) N 131/14 decision was not on the merits. That is not the real test. The real test is not whether the decision was or was not ex parte, but whether it was merely formally passed as a matter of course or by way of penalty or it was based on the consideration of the truth or otherwise of the plaintiff's claim.'
29. In the case of Marine Geotechnics LIC Vs. Coastal Marine Construction & Engineering Ltd. 2014(2) Bom. C. R. 769 learned Single Judge of this Court considered a default summary judgment by way of procedure of a foreign Court as to whether it constituted a judgment on merits upon settled law that if the judgment considered the plaintiff's case and assessed his evidence it would be on merits notwithstanding that it was ex parte. The Court held that a summary disposal of a case under some special statutory provisions that obviated examination on merits of taking evidence, the decree would not be enforceable in India. The illustration was given by the learned Judge was an immediate default summary judgment only on account of defendant's failure to appear and without any examination of the material or the evidence. Such a judgment would not be enforceable in India.
The aforesaid judgments are not such. Despite the summary procedure under Rule 24 which the Court followed as per the procedure of that Court the procedure did not enjoin or require an immediate default summary judgment. A summary judgment under part 24.2 of the CPR was a judgment to be passed when the Court considered that the defendant had no real prospect of successfully defending the claim and there was no compelling reason why the issue should be disposed of at the trial. The summary procedure is, therefore, not an immediate default summary judgment only because of the non-appearance of the defendant. The summary judgment is to be passed without trial when the claim can be adjudicated without trial. It may be a claim upon law or upon admitted facts or upon interpretation of documents. The Court must consider why it could be summarily tried without trial. In the above judgments the Court has considered each of the plaintiff's claim to decide which should go to trial and ::: Downloaded on - 16/07/2015 23:58:23 ::: (17) N 131/14 which should not with reasons. The Court has, therefore, considered the merits of the claimant's claim after due consideration of the evidence instead of dispensing with the consideration and giving a decree merely upon default of the appearance of the defendant. The proof of the pudding of whether or not the judgments in this case were considered on merits is in para 6(viii) of the affidavit-in-reply of the respondent Tuli which runs thus:
viii. Crucially, the English Court (at paragraph 16 of the Judgment) noticed that one of the arguments Bregawn had earlier raised in its defence was that some of the artwork in question had in fact been delivered up to Abraaj. Consequently, when the Court came to hold that Bregawn (and by extension I) was liable in damages, it recorded (at paragraph 23) that "I will therefore give judgment in damages for breach of Bregawn's failure to provide "the Purchasing services", such damages to be assessed. Account will have to (be) taken of the value of artwork delivered up to Abraaj."
For the damages to be assessed and account to be taken the Court would see the statement of the claim of the claimant and the statement in the schedule of the defendant and accept either as per the facts of the case.
Such acceptance would be on merits and such merits would not be in the domain of the executing Court to go into in India.
30. The contention of the respondent that he could not afford the fees of his solicitors which resulted in the discharge of solicitors due to his financial difficulties so that he could not defend the plaintiff's claim cannot be accepted as the defendant was free to choose another solicitor or to appear in person and point out to Court the falsity, if any, in the plaintiff's claim. The extensions applied for and granted to the defendants to resubmit their defence, which was not done, is stated to be because respondent Tuli was "struck down by a bout of Malaria which also cannot shield or embolden him not to defend the action in the Court and plead non consideration of the claim on merits.
"Mere draft orders" submitted by the claimant's attorney of the executing amount of the damages claimed by the plaintiff would not also ::: Downloaded on - 16/07/2015 23:58:23 ::: (18) N 131/14 make the claim as having been considered not on merits. The actual total of the damages granted upon rejecting the defence of the defendant in the schedule annexed to the written defence would not require the Court to make arithmetical calculations. It would, therefore, require to be made as per the draft order which would be allowed upon the acceptance of the claimant's claim on merits.
31. Hence the contention of respondent Tuli that the judgment was passed in the routine mechanic manner without hearing the respondent and without giving any reason for the same cannot be accepted. Despite the acceptance of the amount quantified by the claimant for the credit which had to be given to the respondent for the released artwork.
(2) Judgment obtained by fraud:
32. The respondent's contention is that the judgment was obtained by suppressio veri. The suppression was of material documents and placing false evidence before the English Court. It is thus that the aforesaid orders are stated to be obtained by fraud.
33. Nothing prevented the respondent from defending the claimant's claim. The written defence was filed though it was not in consonance with the CPR. It is seen that had the respondent appeared in Court either personally or through any solicitor and pointed to Court the fraud, if any, practiced by the claimant and the false evidence, if any, given by the claimant, that Court would have considered the same. The suppression of material documents, if any, could have been shown in the written defence itself which was obviously not shown. The executing Court cannot go behind the decree/judgment.
34. In the case of Masterbaker Marketing Ltd. Thru Mr. Mukund Venkataraman Vs. Noshir Mohsin Chinwalla 2015 SCC Online Bom 559 ::: Downloaded on - 16/07/2015 23:58:23 ::: (19) N 131/14 the defence that the foreign judgment was obtained by fraud, was amongst other defences, taken. The defendant claimed that he had paid for the amount to the plaintiff prior to the filing of the civil action which fact was suppressed by the plaintiff and hence the judgment was obtained by fraud.
The Court observed that such would be a fraud perpetrated at the time of the filing of the action and before the judgment was given. It could have been brought to the notice of the Court by way of defendant's defence. The defendant failed to appear and hence his merit of his defence could not be brought to the Court's notice. The fraud which was allegedly perpetrated by the plaintiff was prior to the obtaining of the judgment. The Court, upon considering the Supreme Court in the case of Sankaran govindan Vs. Lakshmi Bharathi MANU/SC/0406/1974 which considered the principles of fraud for impeaching foreign judgments upon the case of Abouloff (Sic) Vs. Oppenheimer, 1882, 10 Q B D 295 which was cited therein, observed that if such a defence was allowed it would mean a new trial on merits. The Court observed that if such a defence was not taken in the claim/suit itself it would not have been an issue between the parties and could never been decided by the foreign Court. It was, therefore, held that such an issue cannot be considered by the executing Court as such a Court would not retry any issue.
35. The fraud, if any, alleged by the defendant to stall an execution of a decree even of a foreign Court must be a fraud which was discovered by the defendant since the date of the foreign judgment and, therefore, not before the judgment was passed [See. Syal Vs. Heyward (1948) 2 All E R 576 cited in the case of Masterbaker (supra). Hence the Supreme Court held in the case of Sankaran (supra) that to successfully prevent the foreign judgment from being executed the judgment debtor must show a case of fraud not on the defendant but a fraud practiced upon the Court and to see that the Court was deceived thereby.
The Supreme Court, therefore, held that such fraud should be extrinsic ::: Downloaded on - 16/07/2015 23:58:23 ::: (20) N 131/14 or collateral and not merely fraud from the alleged false statement made at the trial.
Thus seen the defendant would be estopped from contending that any statement in the claim was false when he did not show at the trial that it was false. If however there were some new and material facts which were not pleaded before the Court and which could not have been defended by the defendant, he would be entitled to show it at the time of the execution upon his claim that the judgment was obtained by fraud. Hence if there was an intrinsic fraud in the plaintiff's claim which would be known to the defendant and which could be shown by the defendant to Court it cannot be gone into by the executing Court.
The case of respondent Tuli that the judgment was obtained by misrepresenting the facts and hence tantamounted to fraud would, therefore, not fall within the parameters of fraud which would vitiate the judgment and make it in-executable. Respondent Tuli must thank himself for not defending the claimant's claim to show misrepresentation, if any.
(3) Breach of Natural Justice:
36. The respondent Tuli would contend that since he could not pay his attorneys fees which were prohibitive and oppressive and could not revise his defence and could not pay the costs ordered to be paid due to his financial difficulties. The trial proceeded without his defence and in his absence. He would contend that his absence would result in violation of natural justice and/or effective due process.
37. It should not take the Court long to reject this untenable contention. It is for each defendant to defend the action as best he can. It can be defended with or without his solicitors. It must be defended at least by personal appearance. The Court would be ready and willing to consider the case of the defendant who appears before it. No party who fails to appear before any Court after being given due notice can contend that he ::: Downloaded on - 16/07/2015 23:58:23 ::: (21) N 131/14 was not heard when he had nothing to say. That respondent Tuli was unable to defend himself because of the 'unless order' which he could not comply does not make it a violation of natural justice as not giving him an opportunity to defend as the minimum standard prescribed under Indian Law.
(4) Breach of Indian Law:
38. The defendant would contend that as a guarantor guaranting or indemnifying the claimant for the amount payable by the contracting party, respondent Bregawn, the defendant had to take permission of the Reserve Bank of India which he had not taken and which would render the guarantee void. In the case of ABN Amro Bank (supra) the Divison Bench of this Court held in para 12 that permission of Reserve Bank of India or the Central Government as contemplated under Section 47(3)(b) of the Foreign Exchange Regulations Act, 1973 (the predecessor of the Foreign Exchange Management Act, 1999) under a guarantee was not in breach of any law in India as there was no prohibition to institute legal proceedings to recover such a debt and that Section 26 of FERA did not make blanket ban. The Court observed that the respondent who did not take prior permission of Reserve Bank of India could not raise such a contention and take advantage of his own wrong. The Court considered the ambit of the expression "permission" which was required to be taken by the Reserve Bank of India. The Court held that under Section 21 of the FERA only leave to do some acts were required to be obtained which but for the leave would be illegal.
39. The case of SRM Exploration Pvt. Ltd. Vs. N & S & N Consultants S.R.O. 2012 (129) DRJ 113 (DB) considered the provisions of FEMA alongside FERA and held that the prohibition in Section 3 of FEMA did not prevent legal proceedings being brought in India for recovery of sums due and that the legislative intent of the section was not to render such provisions void. The Court considered that under Section 43(3) of FERA ::: Downloaded on - 16/07/2015 23:58:23 ::: (22) N 131/14 there was a prohibition enter to into a contract without the permission of the Reserve Bank of India which was no longer in FEMA.
40. In any event the permission could be obtained even ex post facto. Hence lack of permission of the Reserve Bank of India would not constitute a breach of FEMA.
41. It is seen that none of the defences to the execution of the above judgment in the above claims is acceptable. The execution is, therefore, allowed to proceed. The Notice is made absolute as prayed.
This order is stayed for 2 weeks.
(ROSHAN DALVI J.) ::: Downloaded on - 16/07/2015 23:58:23 :::