Bombay High Court
Mohideen Mohamed Sheik Dawood vs Sovfracht Jsc And Anr on 30 September, 2021
Bench: G.S. Patel
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Atul
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (l) NO. 18323 OF 2021
IN
SUIT (L) NO. 18314 OF 2021
Mohideen Mohamed Sheikh Dawood ...Plaintiff
Versus
Sovfracht JSC & Anr ...Defendants
WITH
INTERIM APPLICATION (L) NO. 18248 OF 2021
IN
SUIT (L) NO. 18243 OF 2021
ATUL
Chetan Shah ...Plaintiff
GANESH
KULKARNI
Versus
Digitally signed
Sovfracht JSC & Anr ...Defendants
by ATUL
GANESH
KULKARNI
Date: 2021.10.04
11:45:01 +0530
Mr Sharan Jagtiani, Senior Advocate, with Rushabh Sheth, SM
Bodhanwalla, Sakshi Sharma & Danish Merchant, i/b MS
Bodhanwalla & Co., for the Plaintiff-Applicant in both the IAs.
CORAM: G.S. PATEL, J
DATED: 30th September 2021
PC:-
Page 1 of 21
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1.
Heard Mr Jagtiani for the Plaintiffs. The Defendants have
been served by email. They have also been given a link for online
hearing. None appears.
2. This is an ad-interim order in two Interim Applications in two
separate suits. Both IAs seek an anti-Suit injunction. I will turn a
little later in this order to the relevant jurisprudential determinants.
These relate to (i) jurisdiction; and (ii) to the principles to be
applied when considering such an application.
3. I must commend Mr Jagtiani and his juniors for an admirably
concise and precise unravelling of the fairly complex factual
background and a sharply focused delineation of the legal principles.
These have been of very considerable assistance.
4. The two suits seek a perpetual injunction against a Russian
entity, Sovfracht JSC ("Sovfracht") from proceeding with a claim
that it has filed before a what is known as the Arbitrazh Court in
Moscow, Russia. I will come to the details of these Moscow
proceedings shortly.
5. The corresponding IAs seek an interim injunction against
Sovfracht from continuing these Moscow proceedings.
6. At the heart of the dispute is a property at Mount Pleasant
Road on Mumbai's well-known Malabar Hill. This comprises three
distinct immovable properties. There is, first, a freehold property
CTS No. 3/332 of 359.54 sq mtrs ("the freehold plot"). Second,
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there is a leasehold property CTS No. 2/332 (new Survey No.
2/7172) of 987.27 sq mtrs ("the leasehold plot"). The lessor is the
State of Maharashtra. On these two lands there stands a structure
called Marine House ("the Marine House structure"). In this
order, as in the pleadings, the two plots and the structure are
collectively called "Marine House".
7. It begins in June 1969. This was a time when there still existed
the Union of Soviet Socialist Republics, the USSR. One VVO
Sovinflot ("Sovinflot") bought the freehold and leasehold
properties from an Indian company and an Indian national. A few
months later, in August 1969, Sovinflot executed a contract to
construct the Marine House building on these two plots.
8. The scene moves forward a decade. On 29th May 1979,
Sovinflot merged with one VVO Sovfracht pursuant to an order of
the then Soviet Marine Ministry. All assets of Sovinflot stood
transferred to VVO Sovfracht.
9. By December 1991, the USSR had dissolved or disintegrated
into various independent states, a process that began some time in
1988. The Russian Federation was the successor state to the USSR.
After 1991, the Russian Federation brought into effect several
legislations and executive orders privatizing previously State-owned
enterprises, converting these to joint stock companies. Once such a
joint stock company was registered, the assets of the previously
State-owned enterprise stood transferred to the newly-formed joint
stock company. On 12th November 1992, there was such an order
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No. 762-r of the State Committee of the Russian Federation for
Management of State Property. This transformed VVO Sovfracht
(the successor-in-title of VVO Sovinflot) into the Sovfracht Open
Joint Stock Company, that is to say the present 1st Defendant,
Sovfracht. That order also approved the Property Valuation Act,
Privatization Plan and Charter of Sovfracht.
10. The Moscow government issued a certificate on 30th
November 1992 incorporating Sovfracht as an Open Joint Stock
Company. Consequently, all assets earlier owned by VVO Sovfracht
(and initially held by the then State-owned Sovinflot), including
Marine House (both plots and the Marine House structure) vested
in and devolved on Sovfracht. On 8th February 1993, the Russian
Federation through its President decreed that, as a State successor
of the USSR, the Russian Federation accepted all rights on
movables and immovable properties of the former USSR located
abroad, as also the performance of all obligations connected with the
use of such properties.
11. Later that year, on 30th July 1993, the Russian Federation
Property Fund issued a certificate specifically in regard to Marine
House. This said that the entire value of the land and building --
Marine House -- was included in the authorized capital of
Sovfracht and was its property in Russian Law. Sovfracht received a
copy of this letter.
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12. On the basis of this certificate, sometime in June 2001,
Sovfracht registered the two declarations in regard to the freehold
and leasehold plots with the Sub-Registrar of Assurances, Mumbai.
13. Thus, by the end of 2001, Marine House vested in its entirety
in Sovfracht, which had absolute title to it.
14. On 18th December 2002, Sovfracht's official auditor certified
that it was entitled according to established procedure not only to
own but also to use and dispose of its movable and immovable
properties, both within the territory of Russia but also those outside
Russia, including properties inter alia in India. It reconfirmed that
the value of Marine House was, in the earlier process of
privatization, included as part of the authorized capital of Sovfracht
and, under Russian Law, was Sovfracht-owned property.
15. We come now to the heart of the dispute. On 30th December
2004, Sovfracht sold the freehold plot and that portion of the
Marine House structure that stood on the freehold plot by a
registered deed of conveyance to the Plaintiff in Suit (L) No. 18314
of 2021, Mohideen Mohamed Sheik Dawood ("Dawood"). The
Plaintiff in the second Suit (L) No. 18243 of 2021, Chetan Shah,
("Shah") is not a party to this transaction, the agreement or the
conveyance.
16. A copy of the deed of conveyance is annexed to both suits. It
is at Exhibit 'L' at page 137 of the Dawood suit and at Exhibit 'A' at
page 45 of the Shah suit. The recitals refer, inter alia, to the 1993
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certificate that Marine House was Sovfracht property, that the
freehold plot and the Marine House structure vested in Sovfracht,
and the declaration (for the freehold plot) registered with the Sub-
Registrar of Assurances at Mumbai. The recitals in the conveyance
also noted that Sovfracht had title to the freehold plot and that
portion of the Marine House structure that stood on it. Another
recital noted that the sale was on an 'as-is-where-is' basis -- and, in
the usual nonsensical form, an 'as-is-what-is' basis -- and subject to
a title search. By that conveyance, as one would expect, Sovfracht
sold, transferred and conveyed the freehold property and the
structure on it to Dawood for US$500,000, at that time
approximately Rs. 2.19 Crores.
17. Then comes an indemnity by Sovfracht as the vendor passing
title to Dawood. This is how it reads:
"AND THAT it shall be lawful for the Purchaser from time
to time and at all times hereafter peaceably and quietly to
hold, enter, upon occupy, possess and enjoy the said
property along with hereby granted, conveyed, transferred
and confirmed with their appurtenances and receive the
rents, issues, and profits thereof and of every part thereof to
and for their own use and benefit without any lawful
eviction interruption claim or demand whatsoever from or
by the Vendor and or from any person or persons lawfully or
equitably claiming or to claim by from under or in trust for
them the Vendor and that free and clear and freely and
clearly and absolutely exonerated and forever discharged or
otherwise by the Vendor well and sufficiently saved,
defended, kept harmless and indemnified of and from and
against all former and other estates, titles charges and/or
encumbrances whatsoever either already or to be hereafter
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had made, executed occasioned or suffered by the Vendor
or by any other person or persons lawfully or equitably
claiming or to claim by, from under or in trust for the
Vendor AND FURTHER..."
This is to be found at page 145 of the Dawood Suit. It has not been
invoked by Sovfracht at any time in legal proceedings.
18. Obviously, this left the leasehold plot and the portion of
Marine House that stood on the leasehold plot to be dealt with. On
the same day, i.e. 30th December 2004, Dawood and Sovfracht
executed articles of agreements, later registered, by which Sovfracht
assigned the leasehold plot and that portion of the Marine House
structure that stood on it to Dawood for another US$ 500,000,
roughly Rs. 2.19 Crores. Again, Shah was not a party to this
agreement.
19. The recitals more or less followed those in the conveyance of
the freehold property. There was then in clause 10 an indemnity by
Dawood to Sovfracht worded in the following terms:
"10. It is agreed and recorded by and between the parties
hereto that in view of (D-1) having received the full
consideration, the (Plaintiff ) shall subject to requisite
statutory permissions be entitled to deal with and/or
dispose off the said property and/or create third party
right, title and interest in respect of the said property
more particularly described in the Schedule hereunder
written as the Plaintiff may deem fit and proper without any
reference and/or recourse to the Vendor herein.
PROVIDED HOWEVER that no liability or obligation
shall be incurred (D-1) due to the aforesaid and the
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Plaintiff doth hereby indemnify, save defend and keep
harmless the (D-1) of from and against the same."
(Emphasis added)
20. It is this indemnity that Sovfracht now seeks to use against
Dawood, and, as we shall see, by some circuitous method, against
Shah in the Moscow proceedings.
21. On 14th September 2005, an audit organization of the Russian
Federation issued an inspection statement purportedly investigating
the "legality" of the transfer of Marine House (both plots and the
structure) by Sovfracht to Dawood. This inspection report said that
Sovfracht had been privatized in accordance with the laws of the
Russian Federation and invited comments and objections to the
transfer to the auditing body within five days. On 14th March 2007,
the Russian Federation's State Federal Property Fund enclosed a
copy of a certificate dated 30th July 1993 that had been issued to
Sovfracht. This is the one that confirmed the vesting in Sovfracht of
the entire Marine House property and which said that these
properties constituted part of Sovfracht's authorized capital.
22. Giving voice to the well-known principle that nothing ever
goes according to plan, even these transactions then found
themselves in Court in 2009. The Russian Federation filed a suit in
this Court against Sovfracht and Dawood among others for a
declaration that it was exclusively entitled to Marine House. It
sought possession of the property. It sought a declaration that
Sovfracht had no rights in Marine House, no right to execute the
agreements with Dawood and, therefore, prayed for a decree that
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the agreements between Sovfracht and Dawood be ordered to be
cancelled. Notably, Shah was not and is not a party to these
proceedings. The suit was filed in 2009. We are in 2021. The suit is
still pending.
23. This Court make several orders in that suit. On 1st September
2016, KR Shriram J appointed a Receiver of the whole of Marine
House. The Court Receiver invited bids from the Russian
Federation and Dawood to be appointed as an agent of the Receiver.
The order was carried in appeal. The appeal failed. It was carried
higher in a Special Leave Petition to the Supreme Court. By an
order of 3rd September 2018, the Supreme Court continued the
order of Receivership, but set aside an order rejecting Dawood's
application under Order 7 Rule 11 of the Code of Civil Procedure,
1908 for rejection of the plaint. On 3rd September 2018, another
Division Bench disposed of Dawood's appeal. The matter came up
before me on 10th September 2018. I appointed Dawood as the
agent of the Court Receiver.
24. Notably, Sovfracht never appeared in those proceedings at
any stage, although it was named as Defendant No. 1. It has not even
entered appearance. This is of considerable significance to what now
follows.
25. While the matter of Receivership was traversing the usual
trajectories in the Indian judiciary, on 17th April 2017, the Russian
Federation brought suit against -- and only against -- Sovfracht.
Neither Dawood nor Shah were made party to these proceedings.
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On 17th April 2017, the 9th Arbitrazh Appellate Court awarded the
Russian Federation US$ 29,739,230 against Sovfracht. A copy of
this order is at Exhibit 'U' at page 576 of the Dawood suit and at
Exhibit 'C' at page 81 of the Shah suit. The claim by the Russian
Federation against Sovfracht alleged an undervaluation in respect of
several properties. One of those was Marine House. The claim was
in damages. The resultant order was only a money decree or award.
There was no order against the property. There could not have
been.
26. On 29th October 2020, Sovfracht moved the Moscow
Arbitrazh Court against Dawood and Shah, although neither of
them were parties to the Russian Federation's claim against
Sovfracht. This is what the papers before me called the Moscow
proceedings. In its statement of claim, Sovfracht confirmed that it
had entered into these sale and assignment transactions regarding
Marine House. Shah was sought to be arrayed as a Defendant on the
ground that he was the "actual beneficiary" of the agreements while
Dawood was only a "nominal" party. Specifically, it was alleged that
during the execution of the agreements, Dawood had authorized
employees of a company that Shah controls, Ashapura Minechem
Ltd, to effect registration and to use Ashapura Minechem's office
for correspondence. Second, it was contended that Dawood was an
employee of Ashapura Minechem. Third, it was alleged that Shah
had conducted negotiations with Sovfracht in 2017 to settle the
claims raised in Sovfracht's arbitral claim.
27. The statement of claim is interesting for another reason. At
page 587 of the Dawood suit is an English translation. Sovfracht
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inter alia admits that the two agreements in question are 'subject to
India Law due to their close connection with this jurisdiction'. Later
on the same page, it invokes Sections 124 and 125 of the Indian
Contract Act.
28. What Sovfracht invokes is an indemnity clause which releases
Sovfracht from liability, damnifies it and holds it harmless against
damages. The statement of claim specifically acknowledges that the
Russian Federation had sued Sovfracht for an alleged unlawful
disposal of Marine House and that the Russian Federation's claim
was granted in arbitration for US$ 29,739,230, as noted earlier. It
goes on to say that the value of the Marine House on a valuation was
US$ 11,194,989.37. Consequently, Sovfracht claims in the Moscow
proceedings that it is entitled to recover US$ 10,194,989.37 from
Dawood and from Shah under the indemnity clause 10 that I have
extracted above in relation to the assignment of the leasehold
property. According to Sovfracht, the agreements contained no
provision for dispute resolution. There is also a mention of UAE
where Dawood resides. According to Sovfracht, there are no other
treaties that govern matters of jurisdiction,. I note that Article 16 of
the 3rd October 2010 treaty between the Russian Federation and
India for Mutual Legal Assistance in Civil and Commercial Matters
says that the Courts of a contracting party have competence to give
judgments on civil and commercial matters if the defendant resides
in its territory.
29. On 10th March 2021, the Moscow Arbitrazh Court granted
Sovfracht's Motion to notify Dawood and Shah of the hearing of the
Moscow proceedings. A Case Management Conference was
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scheduled on 6th September 2021 and has been adjourned further
since.
30. Let me now consider at the broadest level the applications
before me. I will then turn to the law on anti-suit injunctions.
31. The law on anti Suit injunctions is comprehensively set out in
an eight-page note that Mr Jagtiani has tendered. I will summarize
the relevant portions of it.
32. An anti-suit injunction is an order by a court restraining the
defendant before it from prosecuting or instituting against the
plaintiff a case in another court, including a foreign court. The court
asked to grant the anti-suit injunction must determine, first, that the
defendant sought to be interdicted is amenable to the court's
jurisdiction; and, second, whether the plaintiff has made out a case
for the grant of such a relief, one that is always discretionary and
equitable.
33. The law on jurisdiction is well-established. Where a
defendant is within the local jurisdiction, the court certainly has
jurisdiction over it. But physical presence within jurisdiction is not a
determinant; jurisdiction will not fail if the defendant is outside the
local court's jurisdiction. Instead, the court will adopt the test of
'sufficient minimum contact' -- perhaps a cousin of the 'long-arm'
jurisdiction principle -- over a defendant beyond local jurisdiction.
This analysis is framed as an examination of whether the court
asked to grant an anti-suit injunction is (i) the 'natural forum' for the
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resolution of the dispute; and (ii) a determination -- even prima
facie -- that the proceedings in the foreign court are oppressive or
vexatious. I have already answered the second aspect.
34. The 'sufficient minimum contact' jurisprudence is often
traced to International Shoe Co v Washington,1 widely regarded as a
landmark. The US Supreme Court held that an out-of-state
defendant is subject to the jurisdiction of a court if the defendant
has minimum contact with the state where the court is located. The
defendant should be found to have 'purposefully directed' its
activities towards the domestic forum state, or otherwise
'purposefully availed' of the privilege of conducting activities in the
forum state. Sovfracht meets this standard.
35. The minimum contact jurisdiction has been explained in later
decisions. There is now a three-part test that is normally applied: 2
(1) Has the defendant done some act or consummated
some transaction within the forum (domestic) state, or
done some act by which he purposefully availed himself
of the privilege of conducting activities within the
forum?
(2) Do the proceedings before the forum state arise from
these forum-related activities of the defendant? And
1 326 US 310 (1945). Cited in Banyan Tree Holding (P) Ltd v A Murali
Krishna Reddy, 2009 SCC OnLine Del 3780, ¶ 11.
2 Cybersell Inc v Cybersell Inc and Ors, 130 F.3d 414 (9th Cir. 1997);
Panavision International LP v. Dennis Toppen, 141 F.3d 1316 (91, Cir. 1998); cited
in (India TV) Independent News Service Pvt Limited v India Broadcast Live LLC
and Ors, (2007) ILR 2 Delhi 1231 : 2007 SCC OnLine Del 965.
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(3) Is the exercise of personal jurisdiction over the
defendant 'reasonable'?
36. Indian courts have adopted this approach: see: (India TV)
Independent News Service Pvt Limited v India Broadcast Live LLC and
Ors.3
37. In England, the leading decision is that of Société Nationale
Industrielle Aérospatiale v Lee Ku Jak & Anr.4 The Privy Council was
asked to restrain proceedings in Texas regarding a Brunei resident
killed in a helicopter crash in Brunei. There were proceedings in
both Brunei and Texas. The Privy Council that an English court
would, generally speaking, only restrain a party from pursuing
proceedings in a foreign court if that foreign court action was shown
to be oppressive or vexatious. That, in turn, the Privy Council said
posits that either the English court or the Brunei court must
conclude that it is the 'natural forum' for the trial of the action.
38. But what is the 'natural forum'? This is the subject of the
House of Lords decision in Spiliada Maritime Corp v Cansulex Ltd.5
It considered the factors that would justify a stay of proceedings on
the ground of forum non-conveniens. That discussion turned to the
question of a 'natural forum'. The House of Lords held it to be the
forum that had the 'most real and substantial connection' with the
dispute. Mere convenience or expense would not be determinative
factors. But other factors, such as, notably the law governing the
3 (2007) ILR 2 Delhi 1231 : 2007 SCC OnLine Del 965
4 [1987] AC 871.
5 [1986] UKHL 10 : [1987] AC 460 : [1986] 3 All ER 843.
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transaction, and the place where the parties respectively reside or
carry on business would greatly influence the decision.
39. In India, our Supreme Court accepted the Spiliada
formulation in Modi Entertainment Network & Anr v WSG Cricket
Pte Ltd.6
40. It seems to me clear from any rational reading of this treaty
that no proceeding could have been brought by Sovfracht in Russian
jurisdiction at all. Neither of the defendants to the Moscow
proceedings -- the two Plaintiffs before me -- are in Russia. The
property is in Mumbai. The transactions were in Mumbai. They
were registered with the Sub-Registrar here. They are controlled by
Indian law. Sovfracht transacted with the property while Sovfracht
was in Mumbai. The only thing that happened in Russia was that
Sovfracht was successfully sued there by the Russian Federation for
an award or decree in damages. That cannot possibly give the
Russian Federation's Arbitrazh Court jurisdiction of any kind
whatsoever over either of these disputes or over the subject matter
of the disputes, that is to say either the Marine House property, or
its value, or the contracts under which the property was transacted.
Therefore, prima facie, the Moscow Arbitrazh Court can have no
jurisdiction whatsoever over these transactions. If Sovfracht wishes
to sue Dawood or Shah or both, the only place that it can do it is in
India and indeed the only Court in which it do it is this Court. No
other Court has jurisdiction over these matters. Whether or not
6 (2003) 4 SCC 341.
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Sovfracht can move against Dawood because he is in UAE is a
question I need not address.
41. There can be no doubt that it is Indian courts that have not
just the most real and substantive connection with the dispute, but
are the only courts that have any connection. The Russian court's
jurisdiction is invoked only because Sovfracht is there. That is no
ground. On the other hand: Marine House is in Mumbai; the
transactional documents were executed in Mumbai; the
consideration was paid here; the document was assessed to
stamped, and the stamp duty paid, here; the documents were
registered here; the defendants to the Moscow proceedings are
Indians. But there is more: Sovfracht admits that the agreements are
governed by India law and mentions "the close connection to
[India]". That should end it. But then Sovfracht cites Sections 124,
125(1), and 42 of the Indian Contract Act, 1872 as the legal basis for
its claim. In fact, the Moscow proceedings show that there is
absolutely no connection with Moscow -- except Sovfracht; and,
once it is conceded that Indian law applies, the residence or location
of the plaintiff that can never furnish a ground to invoke
jurisdiction.7
42. The Moscow proceedings give short shrift to a binding
international treaty between India and the Russian Federation.
Article 16 parallels to some extent Section 20 the Code of Civil
Procedure, 1908: it allows either courts in either jurisdiction to
exercise jurisdiction if the defendant resides in its territory.
7 Special jurisdictional provisions under the Trade Marks Act, 1999 or the
Copyright Act, 1957 stand apart.
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43. Aérospatiale also outlines the contours of the words
'oppressive' and 'vexatious' in this context. Neither ought to be
restricted to lexical definition, at least not so as to circumscribe the
discretion of the court. Instead, the general principle would apply: a
court will step in when there is vexation and oppression, and it will
do so to prevent justice and its administration being perverted
towards an unjust end. What, therefore, is a foreign 'vexatious' or
'oppressive' proceeding is fact-dependent. Dicey and Morris on the
Conflict of Laws8 gives us some instances:
subjecting the party to oppressive procedures in foreign
court, especially a party with no substantial connection
with that jurisdiction; bad faith in the institution of
proceedings; institution of proceedings which are bound
to fail; multiplicity of actions, especially where the foreign
action might spawn further consequential litigation which
might not be reconcilable with the foreign decision;
bringing proceedings which interfere with or undermine the
control of the English court of its own process; bringing
proceedings which seek to undermine or frustrate the
enforcement of an English judgment given in proceedings in
which the Respondent played a full part; bringing
proceedings which seek to undermine or hamper the
enforcement of an English arbitral award; bringing
proceedings which could and should have formed a part
of an English action brought earlier; bringing
proceedings for no good reason in a court which will
disregard an express choice of English law.
(Emphasis added)
8 15th Ed.,
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44. A recent decision of C Hari Shankar J of the Delhi High
Court in Interdigital Technology Corporation & Ors v Xiaomi
Corporation & Ors9 discusses some instances of cases found to be
'oppressive' to the plaintiff in India seeking an anti-suit injunction.
Where, for instance, a plaintiff seeking an anti-suit injunction would
be placed in an inextricable situation in the foreign proceedings, or
where the Indian litigant would be compelled to defend the same
cause of action in both courts (the Dicey & Morris formulation of
'multiplicity of proceedings'), the necessary restraint would be
granted.
45. The other question is an assessment of whether there is any
merit at all in Sovfracht's claim in the Arbitrazh Court in Moscow.
Necessarily, this requires an assessment of the nature of Sovfracht's
claim as laid in its statement of claim in the Moscow proceedings
against Dawood and Shah. The only basis of that claim is the
indemnity clause 10 extracted above. Prima facie it appears to me
that the invocation by Sovfracht is not only incorrect but is illogical,
exactly in reverse and borders on the nonsensical.
46. In any such transaction, there is certainly one indemnity, and
possibly two. The first is the vendor's indemnity, in this case,
Sovfracht. It was Sovfracht that was passing title to Dawood. It was,
therefore, Sovfracht that would have to indemnify Dawood against
any claims that were made on title. That would necessarily include a
claim regarding an alleged undervaluation of the property. It is
inconceivable that a purchaser would ever be required to indemnify
9 2021 (86) PTC 533 (Del) : 2021 SCC OnLine 2424.
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a vendor against a claim on title. It is the purchaser who is taking
title. The Moscow proceedings do not impeach the passing of title.
The Russian Federation in its proceedings against Sovfracht only
obtained a money claim in damages. Indeed, that was all it could do,
if at all. That would not be a claim justifying in law (or even common
sense) an indemnity from Dawood, the purchaser. It was only if an
order was made against Dawood that Dawood could seek an
indemnity from Sovfracht. It could never be the other way around.
This is rudimentary in any immovable property transaction. It is the
party who is passing title who indemnifies the party taking title
against claims affecting title that is being passed.
47. But this is -- correctly -- not the 'indemnity' invoked against
the present Plaintiffs in the Moscow proceedings. Instead, what is
invoked is the second indemnity, the one by Dawood, in clause 10,
extracted earlier.
48. The indemnity that Dawood gave Sovfracht in clause 10 was
in respect of what Dawood could and would do with the property
after having acquired the title. For instance, if Dawood created
further rights or did further development, none could make a claim
against Sovfracht in that regard, and any such claim could only be
made against Dawood, who would then necessarily be indemnifying
Sovfracht. Logically, this clause necessarily means that good, full
and proper title did in fact pass to Dawood and that Sovfracht
accepts this. Now no one has made a claim against Sovfracht on
account of anything Dawood did with the property. That is the only
circumstance in which Sovfracht could invoke the indemnity. That
situation has not arisen. Consequently, there is simply no basis for
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the invocation of the Clause 10 indemnity by Sovfracht against
Dawood. As against Shah, there seems to be no case at all.
49. That the proceeding is also vexatious is evident from the
preceding discussion. One determinant is whether the proceeding is
bound to fail.10 On any reading of Clause 10, there is no cause of
action at all. It has been wholly wrongly invoked.
50. Viewed from either perspective, therefore, the claim that
Sovfracht now seeks to pursue in the Moscow proceedings cannot
but be described as utterly misconceived, mischievous and
thoroughly vexatious.
51. Sovfracht invokes an indemnity in a contract or document
executed in India and governed by Indian law. Apart from the fact
that this immediately makes this Court the 'natural forum' based on
any such cause of action, it is also in itself a reason to hold that the
proceeding is oppressive.
52. Importantly, there is even yet pending in this very court a
proceeding by the Russian Federation against both Sovfracht and
Dawood. In itself, that answers every single question or factor: that
this court is the natural forum, that the Moscow proceedings are
vexatious and that they are ex facie oppressive.
10 Dicey & Morris, supra.
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53. In view of this discussion, there will be an injunction in both
the Interim Applications in terms of prayer clause (a). I am
reproducing this prayer from the Dawood suit. It reads thus:
"(a) Pending the hearing and final disposal of the present
Suit, the Applicant be granted an Interim / temporary
injunction restraining Respondent No. 1 or any other
person on his behalf in any manner from prosecuting or
continuing with the Moscow proceedings filed by
Respondent No. 1 against the Applicant herein before the
Moscow Arbitrazh Court being A40-201344/20-35-1411;"
54. Liberty to the Plaintiffs to place an authenticated, certified or
digitally signed copy of this order before the Arbitrazh Court in
Moscow but without submitting to its jurisdiction. A mere
transmission of this order to that Court will not constitute a
submission by the Plaintiffs to that jurisdiction.
55. Affidavit in Reply is to be filed and served by 20th December
2021. Affidavit in Rejoinder is permitted to be filed and served by
26th April 2022.
56. List the IAs for hearing and final disposal thereafter.
57. All concerned will act on production of a digitally signed copy
of this order.
(G. S. PATEL, J)
30th September 2021
