Calcutta High Court
Uphealth Holdings Inc vs Glocal Healthcare Systems Private ... on 7 October, 2024
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
OCD-12
ORDER SHEET
IA NO. GA-COM/9/2024
In
AP-COM/490/2024
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
(Commercial Division)
UPHEALTH HOLDINGS INC.
VS
GLOCAL HEALTHCARE SYSTEMS PRIVATE LIMITED & ORS.
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 7th October, 2024.
Appearance:
Mr. Suddhasatva Banerjee, Adv.
Mr. Chayan Gupta, Adv.
Mr. Anand S. Pathak, Adv.
Mr. Vijay Purohit, Adv.
Mr. Shivam Pandey, Adv.
Mr. Anujit Mookherji, Adv.
Mr. Anirudhya Dutta, Adv.
Ms. Shyra Hoon, Adv .
Mr. Siddhant Bajaj, Adv.
Mr. Nav Dhawan, Adv.
Mr. Samkit Jain, Adv.
Mr. Prithish Chandra, Adv.
Ms. Astha Ahuja, Adv.
...for the petitioner.
Mr. Debojyoti Das, Adv.
...for respondent no.1.
Mr. Krishnaraj Thaker, Adv.
Mr. Debashis Karmakar, Adv.
Mr. Dhruv Chaddha, Adv.
Mr. Parikshit Lakhotia, Adv.
...for respondent nos. 2 and 3.
Mr. Sarvapriya Mukherjee, Adv.
Mr. Anindya Chowdhury, Adv.
...for respondent no.6.
The Court: Affidavit of service filed in Court today be kept on record.
The present interlocutory application has been filed seeking reliefs
which can be broadly segregated under two categories. In the first category,
the petitioner has sought attachment of the bank account of respondent
no.1, namely, Glocal Healthcare Systems Private Limited. Under the second
category, certain restraint orders have been sought in respect of bank
accounts of respondent nos. 2 and 3 which the said respondents allegedly
did not disclose in their affidavits of assets filed in connection with the
parent application under Section 9 of the Arbitration and Conciliation Act,
1996.
Learned counsel for the petitioner submits that insofar as Glocal is
concerned, the petitioner is entitled to get an order of injunction in order to
protect the interest of the petitioner with regard to the subject matter of the
arbitral award.
As far as respondent no.3 is concerned, it is argued that despite the
specific direction of this Court on the respondents to disclose the assets of
the respondents, the particular bank account as mentioned in the present
application in Abu Dhabi was suppressed by the respondent no.3 in her
affidavit of assets, thereby creating an apprehension that the respondent
no.3 may dissipate the amounts lying therein in order to frustrate the
award.
Learned counsel insinuates that the respondent no.3 has taken out
certain transactions which go on to indicate that amounts from the said
account are being sent to Turkey to an account of the respondent no. 2,
which was also undisclosed in the affidavits-of-assets. It is contended that
India does not have reciprocity insofar as enforcement of decrees of courts
are concerned with Turkey whereas in Abu Dhabi i.e., UAE (United Arab
Emirates), such reciprocity is available. In the event the money is siphoned
off to Turkey, it may very well be that even if the execution case of the
petitioner is held to be maintainable, the same will be rendered toothless.
Learned counsel appearing for the petitioner cites a judgment of the
Division Bench of the Delhi High Court reported at 2024 SCC OnLine Del
1606 (Shanghai Electric Group Company Limited vs. Reliance Infrastructure
Limited) where the Court, inter alia, took into consideration the conduct of
the respondents therein which, according to the Division Bench of the Delhi
High Court, justified the grant of interim orders in order to protect the
subject matter of the arbitral award.
In paragraph 70 of the said judgment, the Court held that in the
affidavit no commitment was given by the respondents therein that in case
an award was passed in favour of the appellants, there would be assets
available for execution of the award.
Similarly, it is argued that in the present case, no averment has been
made by the respondents in their affidavits to the effect that in the case the
award was held to be enforceable, there would be sufficient assets available
for execution of the award.
Learned counsel appearing for the respondents controverts the
contentions of the petitioner and places reliance on the relevant portions of
the award.
It is argued that since the parent Section 9 application, in connection
with which the present application has been filed, is a post-award
application, the contents of the award acquire relevance. In terms of the
relevant clauses of the award, the directions given on respondent no.1,
Glocal were limited to ensure that control of the said company was vested in
the hands of the petitioner which, again, was in the light of the option given
to the respondents to offer full control of the said company to the
petitioner/award-holder.
As per Sub-Clause (j) of paragraph 423 of the award, in the event the
respondents, at any time prior to September 30, 2024, offered to give the
award-holder/petitioner actual control of the respondent no.1-company, the
award-holder/petitioner was to forthwith elect as to whether to receive such
actual control notwithstanding the diminution of its assets or to recover
from the other respondents than respondent no.1 (respondent nos. 2-6) the
additional damages amounting to USD 80.7 million for the permanent loss
of actual control.
It is submitted by learned counsel for the award-debtors/respondents
that since September 30, 2024 has already elapsed and there has been no
transfer of control of the respondent no.1-company in favour of the
petitioner, there is no further scope of any enforceable award subsisting
against the respondent no.1. The entire claim in terms of the award which
the petitioner can at best obtain is restricted now to additional damages
amounting to USD 80.7 million and certain other ancillary damages which
are available not against Glocal (respondent no.1) but against the other
respondents. As such, no relief can be granted in respect of the respondent
no.1 at all.
Insofar as the reliefs sought in respect of the account of respondent
no.3 is concerned, learned counsel argues that the petitioner is seeking to
have a second bite at the cherry. At the ad interim stage while moving the
parent application under Section 9 of the Arbitration and Conciliation Act,
1996, there was a deemed refusal of a similar, rather, more exhaustive
prayer for injunction in respect of all the assets of the respondents.
As such, the self-same prayer can only, if at all, be urged again at the
final hearing of the Section 9 application but at this stage, which is also an
ad interim stage, the prayer which has already been refused cannot be
reiterated.
It is contended further that the mere allegation of suppression of the
particular bank account belonging to the respondent no.3 situated in a bank
at Abu Dhabi and that of the respondent no. 2 in Turkey cannot be
construed to be a subsequent circumstance or a changed circumstance for
the purpose of reconsidering the grant of the elf-same relief which was
refused at the ad interim stage.
In any event, the transactions with regard to the said accounts which
have been disclosed in the present interlocutory application are all of a pre-
award period and, thus, cannot have any bearing on the alleged change of
circumstance post-award.
Furthermore, although the respondent nos. 2 and 3 are Indians and
residents of India, they have business operations in respect of the
respondent no.1-company in Abu Dhabi as well as in Turkey. Hence, the
transfers which are reflected in the statements of the bank account at Abu
Dhabi were either internal transfers or family transfers designed to maintain
the establishment which is required to be so maintained by the respondent
nos. 2 and 3 in Turkey for the purpose of their business operations from
there.
Thus, there is nothing on record to justify a revisit of the ad interim
prayer of injunction. Insofar as the petitioner is concerned, since it was
refused ad interim injunction at a prior stage of the Section 9 proceeding,
there is nothing to prompt this Court to re-consider such prayer again.
Learned counsel for the respondents further submits that the concept
of reciprocity of decrees of Courts is not available in respect of arbitral
awards, which are ordinarily governed either by the New York Convention or
the Geneva Convention and operate in a different field of jurisprudence than
decrees of Courts and reciprocity thereof.
While controverting in rejoinder arguments the submissions of the
respondents, learned counsel for the petitioner argues that insofar as foreign
awards are concerned, Section 49 mandates that such awards shall have
effect on a similar footing as decrees of this Court. As such, the reciprocity
concept in respect of decrees applies full-fledged in respect of foreign awards
as well.
It is next contended that the very fact of suppression of the bank
accounts by the respondents, coupled with the meager sums lying in the
accounts which are actually disclosed in their affidavits, go on to show the
mala fide conduct of the respondents.
As such, it is reiterated that injunction sought ought to be granted.
Heard learned counsel for the parties at length.
Insofar as the reliefs sought against Glocal are concerned, there is no
question of grant of the same since learned counsel for the respondents is
justified in arguing that after September 30, 2024, even in terms of the
award, no monetary component of the award can be implemented against
Glocal.
However, the bone of contention with regard to the bank accounts of
respondent no.3 at Abu Dhabi and of respondent no. 2 in Turkey still
remains.
The premise of the submission of the respondents to resist the prayer
is two-fold. First, it is argued that after having been deemed to be refused at
the ad interim stage in connection with the Section 9 application, the self-
same prayer cannot be re-considered prior to the final hearing of the Section
9 application. The second aspect is that even from the materials on record,
there is nothing to indicate that the respondents are trying to dissipate of
siphon off the amount lying in the Abu Dhabi account, sufficient to call for
an injunction or an attachment order being passed.
Insofar as the first aspect is concerned, it has to be considered
whether there has been a "change of circumstance" after the ad interim
refusal of injunction by the Section 9 Court.
The only change of circumstance is the fact of discovery of a bank
account of respondent no.3 in Abu Dhabi and a similar account of
respondent no. 2 in Turkey, which were not disclosed in the affidavit of
assets of the respondent nos.2 and 3. The respondents have sought to
justify such non-disclosure on the specious ground that they were under the
impression, from the tenor of the order of the Court, that only the assets of
the respondents within the territorial jurisdiction of India were required to
be disclosed.
However, there is nothing in the ad interim order passed on the
Section 9 application to justify such pretext. In a Section 9 application, the
subject-matter to be considered spans over all the assets of the respondents
lying anywhere in the world and there is no justifiable reason to assume
that the disclosure of assets sought would be qualified to be within the
territory of India only. Hence, it is evident that the suppression of the Abu
Dhabi account by the respondent no.3 was deliberate and not the product of
any ignorance or misunderstanding. The question which arises is whether
the pre-award transactions reflected from the account are sufficient reason
to grant an injunction at the post-award stage, without there being anything
to show that the respondents have transacted from the said account
substantially after the award or after the initial refusal of ad interim
injunction by the Section 9 Court.
The Section 9 Court, like a Civil Court taking up an injunction
application under Order XXXIX of the Code of Civil Procedure, is primarily
an equity Court. Thus, equity plays a major role in the outcome of the
litigation before such Courts.
The very fact that the respondents have deliberately suppressed their
Abu Dhabi account and Turkey account, the amounts lying in which are
substantially more than the meagre amounts lying in the accounts in India
which have been disclosed in the respondents' affidavits of assets, goes on to
show the mala fide intention of the respondents to suppress such accounts
from the Court.
The direction of the Section 9 Court at the ad interim stage was
unqualified. Prayers were granted in terms of reliefs (c) and (d) of the Notice
of Motion. A mere perusal of the said reliefs shows that the respondents
were to file affidavits of assets relating to their fixed, moveable, tangible,
intangible and other assets, properties including intellectual properties,
bank accounts and receivables. Thus, the prayers were couched in as wide a
language as can be. Hence, the very fact that the respondents chose not to
disclose the accounts in question, which carry substantially more amounts
than that lying in the disclosed bank accounts, indicates sufficiently that
the respondents might very well have the intention of transferring such
amounts to the territorial jurisdiction of countries where there might be lack
of reciprocity of arbitral awards, which under Indian law have the force of a
Court's decree.
Without going into the question as to whether Turkey has reciprocity
with India, the suppression by the respondents of the accounts in question
at Abu Dhabi and Turkey eats into the confidence of the Court in the bona
fides of the respondents, which itself justifies the apprehension of the
petitioner that the respondents might have other tricks up their sleeves
which are not disclosed before the Court. The equity Court is to balance the
conduct of the parties as well as their actual actions. As such, even if there
is nothing on record to show that the respondents have still other accounts
which have been suppressed from the Court and/or that they have actually
made transactions designed to siphon off the amount lying in the Abu Dhabi
account, the very fact of suppression justifies a restraint order as prayed for
in respect of the said accounts in order to protect the subject-matter of the
award at least till the Section 9 application is heard out and/or subject to
the outcome of the execution case.
Hence, the respondents are directed to file their affidavits in respect of
GA-COM/9/2024 within November 14, 2024. Reply thereto, if any, be filed
by November 21, 2024.
The matter shall be listed for hearing on November 25, 2024.
The respondent no.3 shall remain restrained from dealing with,
transferring and/or alienating the funds lying in the bank account of the
respondent no.3 at Abu Dhabi Commercial Bank PSJC, with Originator ID
AE680030012219182920001 at Abu Dhabi, United Arab Emirates till
disposal of GA No.9 of 2024.
Furthermore, the respondent no.2 shall also remain restrained from
operating, transferring, alienating and/or encumbering the amount lying in
respondent no. 2's bank account at Vakif Katilim Bankasi A.S., with
Beneficiary ID TR740021000000071707000101 at Istanbul, Turkey, also till
disposal of the application.
(SABYASACHI BHATTACHARYYA, J.)
spal
