Bombay High Court
Bnp Paribas (Switzerland) Sa vs Atit O. Agarwal And Sharad S. ... on 4 August, 2017
Bench: S.C. Gupte
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO 3578 OF 2011
IN
SUIT NO. 2540 OF 2011
BNP Paribas (suisse) SA ...Plaintiff/Applicant
vs.
Atit Omprakash Agarwal & Anr. ...Defendants
AND
NOTICE OF MOTION NO 314 OF 2013
IN
SUIT NO. 2540 OF 2011
Atit Omprakash Agarwal ...Applicant/Orig.Deft.No.1
In the matter between :
BNP Paribas (suisse) SA ...Plaintiff
vs.
Atit Omprakash Agarwal & Anr. ...Defendants
AND
NOTICE OF MOTION NO 271 OF 2014
IN
SUIT NO. 2540 OF 2011
Sharad Satyanarayan Agarwal ...Applicant/Orig.Deft.No.2
In the matter between :
BNP Paribas (suisse) SA ...Plaintiff
vs.
Atit Omprakash Agarwal & Anr. ...Defendants
Mr.Zal Andhyarujina with Mr.Kunal Dwarkadas, Ms.Mona Bhide,
Mr.Rajesekhar Upadhyaya and Ms.Kanika Gupta I/b. Dave Girish and Co.
for Plaintiff.
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Mr.Mayur Khandeparker with Mr.Dikshat Mehta I/b. Mr.Sanjay Sinha for
Defendant No.1.
Mr.Cherag Balsara with Mr.Devesh Juvekar, Mr.Mayur Shetty I/b. Rajani
Assocaites for Defendant No.2.
CORAM : S.C. GUPTE, J.
4 AUGUST 2017
P.C. :
This is a suit based on a foreign judgment under Section 13 of
the Code of Civil Procedure ("Code"). It seeks a decree in the sum
equivalent to USD 5,00,000 as also court costs in the sum equivalent to CHF
28,960 and attorney costs of CHF 10,000 and interest.
2 Notice of Motion No.3578/2011, which is taken out by the
plaintiff, is in the nature of an application for attachment before judgment.
It seeks, in the first place, a direction to the Defendants to disclose all their
assets, movable and immovable, including bank accounts, with relevant
details and secondly, a temporary injunction restraining the Defendants
from creating inter alia third party rights in, or parting with possession of,
the assets or properties. In pursuance of an exparte ad-interim order passed
by a learned Single Judge of this court on 18 January 2012, the Defendants
were directed to make disclosures in terms of the first prayer, though
restricted to immovable properties of the Defendants. The defendants were
also restrained from disposing of, alienating or encumbering, or creating
any third party rights in their immovable properties. The plaintiff now
presses for further reliefs.
3 Notice of Motion No.314/2013 is taken out by Defendant No.1
for recall of the ex-parte ad-interim order of 18 January 2012 and for
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striking off the name of Defendant No.1 from the array of parties.
4 Notice of Motion No.271/2014 is taken out by Defendant No.2
also for recall of the ex-parte ad-interim order.
5 The parties at the hearing before this court argued Notice of
Motion No.3578/2011 presumably on the footing that it is this motion,
which decides the fate of the other two motions as well.
6 It is the Plaintiff's case that in November 1999, one Southgate
Corporate Holdings Limited (hereinafter for short referred to as
"Southgate") represented by Defendant No.2 herein, who is also the
director of Southgate, opened a bank account with the Plaintiff bank.
Defendant No.2 declared himself to be the beneficial owner of such
account. On 10 September 2001, Defendant No.2 executed a Power of
Attorney in favour of Defendant No.1 for operating the account on behalf of
Southgate. It is the Plaintiff's case that on 18 September 2001, there were
two credits of USD 5,00,000 and USD 4,99,985 in this account. It is the
case of the Plaintiff that the credit of USD 5,00,000 was a mistaken credit,
which was not due. It is submitted that pursuant to this credit, Defendant
Nos.1 and 2 immediately took steps to empty the bank account in great
haste, transferring the funds for their own benefit. In or about September
2003, this error was noticed at the Plaintiff's end by their auditors,
M/s.Deloitte. The Plaintiff thereafter communicated the fact of this
wrongful credit to Defendant Nos.1 and 2 and called upon the latter to
refund the amount. The plaint describes various attempts on the part of the
Plaintiff to sort out the issue through meetings between the parties, which
bore no result. As a result, legal notices were sent by the Plaintiff to the
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Defendants, followed by a criminal complaint filed on 8 November 2006.
This complaint alleged an offence on the part of the Defendants and
Southgate under Article 141 bis of the Penal Code (Swiss Penal Code),
which provided for a custodial sentence not exceeding three years or a
monetary penalty for unlawful use of financial assets inadvertently coming
into the possession of the accused. On 21 December 2006, the Plaintiff filed
civil proceedings against the Defendants and Southgate in the District Court
of the Republic and Canton of Geneva (hereinafter for short referred to as
"Swiss Court") for a decree in the sum of USD 5,00,000 along with interest
and costs. The Defendants were duly summoned to appear before the Swiss
Court and served with the summons but refused to accept the service. It is
the Plaintiff's case that the summons were, neverthless, served on the
Defendants and such service amounted to due service under the Swiss Law.
In spite of the court summons, the Defendants failed to appear at the
hearings. An exparte decree was thereupon passed by the Swiss Court
holding the Defendants to be jointly and severally liable to pay a sum of
USD 5,00,000 along with interest of 5% per annum and expenses of CHF
28,906 and attorney fee of CHF 10,000 along with interest at the rate of 5%
per annum from the date of the judgment, i.e. 4 September 2008, till
payment. Based on this judgment, a decree is sought in the present suit
against the Defendants purportedly under Section 13 of the Code. It is the
case of the Plaintiff that the judgment is neither against Indian Law nor
does it fall within any of the exceptions to Section 13 of the Code. It is
submitted that the Swiss Court was competent to pass the judgment and the
same was passed after the court examined the facts and documents
produced before it. It is submitted that this judgment, accordingly, is
conclusive and enforcible against the Defendants, who reside or carry on
business in India within the local limits of the jurisdiction of this Court.
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7 The present notice of motion is taken out, as noted above,
purportedly seeking an injunctive relief against the Defendants, restraining
them from creating third party rights in, or parting with possession of, their
properties, pending the hearing and final disposal of the suit. The relief, it is
not disputed, must be shown to be falling within the four corners of Order
38 Rule 5 of the Code, before this court could grant the same. For any
relief to be granted under Order 38 Rule 5, the plaintiff has to make out,
firstly, a prima facie case on the merits of the claim and secondly, that the
defendant, with intent to obstruct or delay the execution of any decree that
may be passed against him, is either about to dispose of the whole or any
part of his property or to remove the whole or any part of it from the local
limits of the jurisdiction of the court.
8. Let us, therefore, consider, firstly, if the Plaintiff has made out
a prima facie case in support of its claim. The Plaintiff relies on a decree
passed by the Swiss Court, which is obviously a foreign judgment within the
meaning of Section 13 of the Code. The Swiss Court is not a court in a
reciprocating territory within the meaning of Section 44-A of the Code. So
there is no question of execution of the decree passed by the Swiss Court
straightway under Section 44-A of the Code. The question we have to
consider is, whether the judgment of the Swiss Court is conclusive as to any
matter directly adjudicated upon between the same parties by it. There are
six exceptions to treating any foreign judgment as conclusive on any matter
thereby directly adjudicated upon. In the present case, the contest to the
conclusiveness of the foreign judgment is under three exceptions, namely,
exceptions (b), (c) and (f). Exception (b) is a case where the foreign
judgment is not given on the merits of the case, whilst exception (c) is
applied where the foreign judgment appears on the face of the proceedings
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to be founded on a refusal to recognise the law of India in cases in which
such law is applicable. Exception (f) triggers in when the foreign judgment
sustains a claim founded on a breach of any law in force in India. Learned
Counsel for both the Defendants submit that in the present case, the so
called foreign judgment comes within the mischief of each of these three
exceptions.
9. I have advisedly used the word "so called" in the foregoing
paragraph whilst referring to the judgment, since it is the case of the
Defendants that what is produced by the Plaintiff is merely "an excerpt from
the minutes of the record chamber of the District Court of the Republic and
Canton of Geneva"; the entire copy of the foreign judgment has not been
produced; and that the copy of the minutes does not appear to be a copy
certified in any manner by a representative of the Central Government of
the country in which it is stated to have been passed, as contemplated by
Section 86 of the Indian Evidence Act, 1872. Let me at the outset deal with
this issue. What is relied on by the Plaintiff in the present suit is a decree
purportedly passed by the Swiss Court in favour of the Plaintiff and against
the Defendants. Even if what is produced by the Plaintiff is an extract of the
minutes as suggested by the Defendants, what that means is, as of now,
there is no complete evidence of the foreign judgment. There is no
implication as yet that there is no foreign judgment at all. The only
implication is, what is produced is not to be accepted as conclusive evidence
of the judgment. Section 13 provides for conclusiveness of a foreign
judgment. In a suit based on a foreign judgment, the Plaintiff, of course,
will have to prove the foreign judgment. What we are concerned with at
this stage is, whether there is prima facie proof tendered of such foreign
judgment. And that the Plaintiff in the present case certainly has.
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Availability of the entire copy of the foreign judgment, in case the minutes
are not held to be such a copy, as well as the requirement of Section 86 of
the Evidence Act for authenticating such copy, are matters to be considered
as part of the trial. For the purposes of the present application, it is
sufficient that a case of a foreign judgment is prima facie established before
this court.
10 Let us now consider the objections to the presumptive value of
the foreign judgment in the present case under the exceptions provided in
Section 13. As noticed above, it is firstly submitted that the judgment is not
on merits. It is said to be an exparte decree upon noting absence of the
Defendants despite service of court summons. At the outset, it is important
to note that a judgment does not cease to be a judgment on merits simply
because it is passed exparte. If the defendant chooses to remain absent, the
court is bound to proceed in his absence. The Orissa High Court in the case
of Chintamoni Padhan vs. Paika Samal 1, held that a judgment on merits
is one which is entered after a full trial of the issues through pleadings,
presentation of evidence, and arguments by both sides; the expression
"judgment on merits" implies that it must have been passed after contest
and after evidence has been led by both sides. This statement of law by
Orissa High Court was expressly refuted by the Supreme Court in
International Woolen Mills vs. Standard Wool (U.K.) Ltd. 2 as incorrect.
The Supreme Court noted that in a given case it was possible that even
though the defendant had not entered evidence, the Plaintiff might prove
his case through oral and documentary evidence and if after consideration
of such oral and documentary evidence, an exparte decree is passed, it
would be a decree on merits. What is important to see is whether the court
1 AIR 1956 Ori 136 : ILR 1956 Cut 174
2 (2001) 5 SCC 265
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applied its mind to the matter in issue and considered the evidence
produced before it in order that it may be said that there has been an
adjudication upon the merits of the case. Even where the defendant chooses
to remain exparte and to keep out, it is possible for the plaintiff to adduce
evidence in support of his claim, so that the court may consider the matter
on merits after taking into account the pleadings of the Plaintiff and the
evidence before it. It is only where such evidence is dispensed with and a
decree is passed merely on account of default of appearance on the part of
the defendant that the decree can be said to be not on merits. A decision by
way of penalty for default of appearance cannot be termed as a decision on
merits. If a decree is passed after considering the material placed before the
Court and after applying its mind, even though it is passed exparte, it would
still be a decree on merits.
11. Let us now consider if this mandate is satisfied in the present
case. Before we do so, we must note one more argument of the Defendants.
Learned counsel for the defendants submitted that any consideration of
merits must be reflected in the judgment itself. The foreign judgment is
Exhibit-Y to the plaint and English translation thereof is produced at
Exhibit-Z. The judgment indicates the matters considered by the Swiss
Court before passing its judgment. The first of such matters is the 'payment
demand'. Learned Counsel for the Defendants argued that it is merely the
demand of payment of USD 5,00,000, which is considered by the court in
this behalf. Prima facie that does not appear to be the case. It is the plaint as
a whole, which appears to have been termed as "payment demand". Such
payment demand not only indicates the parties before the court and the
facts of the case, but the applicable law including the laws of territorial
jurisdiction and limitation, the examination of the facts in the light of these
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laws, the joint and several liability of the three defendants before the court
including the Defendants herein, are all matters forming part of this
payment demand. It ends with prayers in the form of a conclusion. On a
prima facie view of the matter, therefore, it does appear that all these
aspects, which form part of the plaint, are considered by the Swiss Court,
when it says it has rendered the judgment after considering the payment
demand. Secondly, the judgment considers the absence of the defendants at
the introduction of the hearings. It notes that the defendants have been
absent though duly summoned and served with the summons to appear
before the court. It also considers notifications of hearings delivered to the
defendants at their address in India. It considers whether, in the
circumstances of the case, the summons for hearing issued to the
Defendants herein can be treated as valid service. It further considers
Article 78, 79 al.1 and 176, al.1 LPC. These Articles form part of the Swiss
Law applicable to the dispute. These have been referred to and explained in
the evidence of Christian Luscher, who is a qualified lawyer practicing law
in Switzerland and a partner of the law firm CMS VON ERLACH PONCET
having offices at Zurich and Geneva. The deponent, who was the lawyer
who appeared at the hearings before the Swiss Court, has explained the
meaning and purport of the various articles. The procedure laid down in the
articles referred to in this behalf, is explained by the Plaintiff in its plaint.
Under this procedure, the court has to examine inter alia whether the
prayers / reliefs sought are not in gross contradiction with the statements
of facts and evidence submitted and after considering the same pass the
judgment. Of course, since these are matters of foreign law, a proof will
have to be tendered of this law, may be in the form of an affidavit of a
person who is conversant with such law. As of now, there is nothing
brought out by the Defendants that there is no such law in Switzerland or
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that the law there is any different. We can safely proceed whilst considering
the merits of the Plaintiff's case from a prima facie standpoint that this is the
law in Switzerland and that this law was applied by the Swiss Court when it
rendered its judgment.
12. The foregoing discussion sufficiently indicates that the foreign
judgment we are concerned with in the present case is not a judgment given
simply on the ground of absence of the Defendants either as a penalty or
otherwise. It is a judgment which is rendered by the court after applying its
mind to all the germane aspects of the matter. All these aspects were laid
bare in the plaint, and the reliefs claimed therein were not in contradiction
with the statement of facts in the plaint and the evidence submitted before
the court. The foreign judgment, thus, does not come within the exception
provided for in clause (b) under Section 13.
13. The next objection to the conclusiveness of the foreign
judgment is on the basis of the exception provided under clause (c) of
Section 13, which covers a judgment founded on a refusal to recognize the
law of India. Learned Counsel for the Defendants submits that at least two
provisions of Indian law are ignored or refused to be recognised by the
Swiss Court. The first, of course, is the provision of limitation. It is
submitted that the Indian law provides for limitation of three years for
recovery of money paid under mistake. Insofar as the Swiss Court has
entertained the present claim beyond three years, it has clearly disregarded,
it is submitted, the Indian law on the point. In the first place, a refusal to
recognise Indian law can be the basis of an objection under clause (c) only
in cases in which such law is applicable. It is an established principle of
International Private Law, and it is very much recognised as such by the
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Indian law, that insofar as the period within which a suit or an application
is to be brought before the court is concerned, it is the local law of the
country in which such suit or application is brought which covers the
subject. In other words, it is the lex fori which governs the matter of
limitation. The suit having been brought before the Swiss Court, it is the
law of Switzerland which fixes the period of limitation and not the Indian
law. The Swiss law appears to have been fairly applied to the claim brought
before the Court. The plaint explains how the Swiss Law of Limitation
makes the suit against the defendants herein and Southgate maintainable.
The relevant articles of the Swiss Law clearly support the plaintiff's case on
limitation. This also takes care of the argument under clause (f) of Section
13 that the judgment sustains a claim founded on a breach of the law of
limitation in force in India. It is very much an Indian law in the matter of
limitation for filing of a civil suit that lex fori is the deciding factor. If a
foreign court entertains a civil suit based on the law of limitation applicable
in that country, the judgment it renders is neither founded on a refusal to
recognise the law in India within the meaning of clause (c) nor on a breach
of law in force in India within the meaning of clause (f).
14. Learned counsel for the defendants relies on the judgment of
Gauhati High Court in the case of California Pacific Trading Corporation
Vs. Kitply Industries Ltd.3 and contends that a foreign decree which is
passed in a suit filed beyond the period of limitation provided under the
Indian Limitation Act is against the public policy of India. With great
respect to the learned Judge of the Gauhati High Court, the judgment does
not appear to state the correct law. As I have noted above, insofar as the
fundamental policy of Indian Law concerning a foreign decree is concerned,
it recognizes the rule of private international law that the matters of 3
3 (2011) 3 Com.L.J. 518 (Gau.)
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limitation are governed by lex fori and if the foreign suit is within time
provided by that law, the decree is executable in India, if covered by Section
44A of the Code, or is otherwise conclusive under Section 13 of the Code so
as to sustain a suit in India. This is stated in the clearest of terms by a
Division Bench of our Court in the case of Nabibhai Vazirbhai vs.
Dayabhai Amulakh4. The Division Bench stated the law as follows :
".... suits and applications must be brought within the period
prescribed by the local law of the country within which the suit
or the application is brought, that is to say, it is the lex fori
which governs."
15. The second provision of Indian law, which is said to be
breached, is the provision of Section 230 read with Section 182 of the
Contract Act. The submission is that the Defendants can at best be described
as agents of Southgate, who is the principal. The principal in this case is
clearly a disclosed principal and accordingly, there is no presumption that
there is any contract to the contrary making the agent personally liable on
contracts entered into by him on behalf of his principal. The definition of
"agent" under Section 182 includes within it any person employed to do
any act for another or represent such other in dealing with a third person. It
is submitted that both these Defendants, Defendant No.1 being an
authorised signatory of the company Southgate and Defendant No.2 being
a director, are merely engaged to do acts for, or represent, Southgate in its
dealings with the Plaintiff and their principal having been disclosed in the
present case, there is no presumption of a contract to the contrary. The
argument suffers from a basic fallacy. The Defendants herein are not
arraigned as party defendants to the Swiss suit on the ground that they are
agents of Southgate. The case against them is on the footing that they are
co-conspirators with Southgate in what the Swiss Law terms as "a criminal
4 AIR 1916 Bom. 200.
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conspiracy". Article 50 of the Swiss law provides for liability of several
persons, who jointly cause damage, whether as instigators, principals or
accessories. In case of any damage jointly caused, they are jointly and
severally liable to the damaged party. The judge is, of course, given a
discretion to determine whether and to what extent they may have a right
of recourse against one another but as between them on the one hand and
the damaged party on the other, they are jointly and severally liable. Article
52 provides that if several persons are liable to the damaged person for the
same damage based on different legal grounds, whether in tort or in
contract or as a result of a legal requirement, then the provision regarding
recourse among persons who have jointly caused damage shall be applied
accordingly. The plaint termed as "payment demand" has discussed in detail
this aspect of the case, which, in turn, the court has considered, as I have
noted above. So much for the second objection on the ground of refusal to
recognise Section 230 read with Section 182 of the Contract Act. Again, if
the objection has no force under clause (c) of Section 13, then it equally has
no force under clause (f) of Section 13.
16. In sum, the Plaintiff has clearly made out a prima facie case on
merits. The Plaintiff's suit is based on a foreign judgment, which is a
judgment rendered on merits and which does not involve refusal to
recognise, or breach of, any Indian law. If that is so, prima facie the
judgment is conclusive of the matters stated therein, namely, the liability
owed by the Defendants to the Plaintiff. What is sought to be enforced in
India by means of filing of the present suit is not the original claim for
money paid under mistake but the foreign judgment decreeing the dues of
the Defendants owed to the Plaintiff. The applicable Article under the
Limitation Act, 1963 will, accordingly, be Article 101 which provides for a
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period of limitation of three years from the date of the foreign judgment.
The suit is thus, within time under Indian law.
17. That brings us to the question as to whether the Plaintiff has
made out any case for relief in the nature of an attachment before
judgment. There is clearly an averment made in the affidavit in support of
the notice of motion that the Defendants are likely to deal with, transfer,
dispose of, or create third party rights in their assets with a view to defeat
the decree that may be passed in the plaintiff's favour and that, accordingly,
it is just and convenient that pending the hearing and final disposal of the
suit, the Defendants be restrained by an interim injunction from making any
transfer of or creating any third party rights in or parting with possession of
the assets. The question is, has the Plaintiff made out any basis for making
such averment. Learned Counsel for the Defendants submits that neither
the plaint nor the affidavit in support of the motion indicates the basis for
making such averments. The question simply is this: Are the facts before the
court sufficient to warrant an inference of such likelihood? Let us consider
the facts before this court. In the first place, there is a clear mistaken
payment, on which there is not even a statable defence as of now. Neither is
any such defence in fact stated. The second aspect is that the Defendants
prima facie appear to have clearly tried to evade the process of the Swiss
Court and even after service of the writ of summons, failed to present
themselves before the Swiss Court. The third aspect is that having failed to
present themselves before the Swiss Court and suffered a decree, they are
now trying to make a virtue of their absence before the Swiss Court and on
that basis, are contesting the Plaintiff's application before this court. (Of
course, they are within their right to do so. This aspect is considered here
merely to assess the likelihood of the defendants transferring their assets
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out of the local limits of the jurisdiction of this court.) Fourthly, and most
importantly, though they have addresses in Mumbai in India, the
Defendants actually hold passports of other countries. Defendant No.1 holds
the passport of Belize, whilst Defendant No.2 holds the passport of
Grenada. In other words, we are considering here the case of defendants,
who have a place of business in India but who hold passports of Belize and
Grenada and who have opened an account with the Plaintiff in Switzerland
and having mistakenly received monies in that account, wiped off that
account in Switzerland. Can such defendants be seen as likely at least at
this prima facie stage to shift their assets out of India to defeat the decretal
dues payable to the plaintiff ?
The answer seems to me to be in the positive.
18. This court, by its order dated 18 January 2012, has already
directed the Defendants to disclose their immovable assets and bank
accounts and restrained the Defendants from disposing of, alienating,
encumbering or creating third party rights in respect of, their immovable
properties. There is a clear case for continuation of that ad-interim relief.
The Defendants, as noted above, have taken out two separate notices of
motion, namely, Notice of Motion Nos.314/2013 and 271/2014, seeking
recall of the exparte ad-interim order. In pursuance of the oral directions
issued in these two motions, though the Defendants have made disclosures,
such disclosures are contained in sealed envelopes. It is necessary to open
the sealed envelopes and take the affidavits of disclosure on record, with
copies being furnished to the Plaintiff. It is necessary to restrain the
defendants from disposing of any of these assets pending the hearing and
final disposal of the suit.
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19. Accordingly, all three motions are disposed of in terms of the
following order :
(I) Notice of Motion No.3578/2011 is allowed by
restraining the Defendants from disposing of, alienating,
encumbering or creating third party rights in, the property
disclosed in the affidavits earlier filed before this court in
sealed envelopes;
(II) Prayer clause (b) of the Notice of Motion is
deferred, to be heard along with the suit;
(III) The sealed envelopes be opened and the affidavits
be taken on record and copies be furnished to the Plaintiff;
(IV) Notice of Motion Nos.314/2013 and 271/2014 are
dismissed; and
(V) Costs to be costs in the cause.
20. At the request of learned Counsel for Defendant No.1, it is
ordered that the seal envelopes shall not be opened for a period of four
weeks from today.
(S.C. GUPTE, J.)
