Arun Kumar Jagatramka vs Ultrabluk A/S
2022 Latest Caselaw 1244 Guj

     C/SCA/17965/2021                             CAV ORDER DATED: 04/02/2022




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 17965 of 2021

==========================================================

ARUN KUMAR JAGATRAMKA Versus ULTRABLUK A/S ========================================================== Appearance:

MR VIVEK B GUPTA(5611) for the Petitioner(s) No. 1 MR HARSH N PAREKH(6951) for the Respondent(s) No. 1 ==========================================================

CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE SANDEEP N. BHATT

Date : 04/02/2022

CAV ORDER

(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)

Heard learned advocate Mr.Vikas Gupta for the petitioner and learned advocate Mr.Harsh Parekh for the respondent.

2. By filing this petition, the petitioner has prayed to set aside the order dated 4.10.2021 passed by learned Principal Senior Civil Judge, Jamnagar below Exhibit 94 in Commercial Execution Petition No.161 of 2019.

3. Exhibit 94 application was filed by the respondent decree- holder under Order XXI Rule 40 (b) of the Code of Civil Procedure, 1908. It was prayed to direct the petitioner- judgment-debtor to furnish security by way of cash deposit of Rs.12,89,19,458/-. Allowing the application as per the impugned order, learned Principal Senior Civil Judge passed the following operative portion.

"Pending the conclusion of an inquiry of whether the judgment-debtor has or has had since the

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

date of the decree the means to pay the amount of the decree or some substantial part thereof and refused or neglects or has refused or neglected to pay amount of the decree the judgment-debtor is hereby directed under O.XXI Rule 40(2) of the Code of Civil Procedure to furnish security in the sum of Rs.12,89,19,458/- (Rupees Twelve Crores Eighty Nine Lakhs Nineteen thousand Four hundred Fifty Eight) by way of Cash Deposit with the Registry of this court within a period of six weeks from the date of being provided a copy of the order."

3.1. Noticing the relevant facts, the respondent- Ultrabulk A/S, the company operated under the laws of Denmark is the decree- holder in whose favour stands judgment and decree dated 9.11.2017 passed by the High Court of Justice Queen's Bench Division, Commercial Court of England and Wales, United Kingdom in the matter of Ultrabulk A/S Vs. Arun Kumar Jagatramka for a sum of USD 5,062,462/-, equivalent to more than rupees 32 crores, in addition to interest. The petitioner had executed personal guarantee in Australia in favour of the respondent- decree-holder for the benefit of company called Gujarat NRE Coke Limited for USD 4,259,395/-. The said Gujarat NRE Coke Limited did not pay the entire amount, as a result of which the suit was instituted in the Commercial Court in England. It culminated into judgment and decree dated 9.11.2017 holding the petitioner liable to make payment of USD 4,259,395/-.

3.2 The respondent filed Execution Petition No.4 of 2018 before the Commercial Court at Rajkot for executing the said decree, which proceedings came to be transferred subsequently to the competent court at Jamnagar and came to be renumbered as Commercial Execution No.161 of 2019. The decree passed by the Commercial Court at England has been held to be executable

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

under Section 44-A(1), CPC, 1908 and by virtue of deeming fiction, the said foreign decree has merged into judgment decree.

3.3 It is to be mentioned that in the aforesaid execution proceedings the decree-holder had filed applications Exhibit Nos.54, 56 and 58. The application Exhibit No.54 was against the order whereby the judgment-debtor was required to show cause as to why he should not be committed to civil prison. The said application of the decree-holder was allowed, which order was challenged by the petitioner by filing before this Court Special Civil Application No.1734 of 2021. The petition came to be rejected by judgment dated 18.3.2021. Also filed by the judgment-debtor was application Exhibit 65 questioning the jurisdiction of the executing court. It was stated that the said application came to be dismissed by order dated 4.8.2021 by the executing court against which Special Civil Application No.17399 of 2021 is filed, in which notice is issued and the same stands dismissed as per order passed today.

3.4 It may also be stated for the completion of narration of relevant facts that another application Exhibit 90 came to be filed under Order XXI Rule 13, CPC by the decree-holder for attachment of the house property of the judgment decree which was allowed by the executing Court as per the order dated 4.10.2021. This order is again challenged by the petitioner- judgment-debtor by filing Special Civil Application before this Court in which notice is issued.

3.5 Now in present application, Exhibit 94 filed under Order XXI Rule 40(b) CPC, the decree-holder pleaded certain facts to base his claim that the judgment-debtor has since date of the

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

decree though had means to pay the amount of the decree for substantial part thereof has neglected to pay the same. On such basis the prayer made,

"Pending the conclusion of the inquiry of whether the Judgment Debtor that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same; this Hon'ble Court be pleased to pass an order under Order XXI, Rule 40 (b) of the CPC directing the Judgment Debtor to furnish security of by way of a cash deposit of Rs.12,89,19,458 (Rupees Twelve Crores Eighty- Nine lakhs nineteen thousand four hundred and fifty-eight) with the Registry of this Hon'ble Court within a period of 6 weeks."

3.5.1 In paragraph No.3 of the application it was stated that the judgment-debtor claimed to be residing in Kolkata in the address mentioned, however, three post consignments were returned on account of change of address of the decree-holder. It was suggested that the decree-holder had not been residing at Kolkata and his presence was noticed in Gujarat in Gandhinagar on particular day. It was further stated that the judgment-debtor in his affidavit of assets dated 11.1.2020 stated in paragraph No.6(a) that "I own the following House Properties in my name

(a) House Property named NRE House, at 45 A Saru Section Road, Jamnagar, 361008." It was stated that in the said affidavit he valued his cumulative assets both in India and abroad to the approximately 23.82 crores as on 15.12.2019.

3.5.2 The decree-holder stated that the value of assets of the judgment-debtor comprising of his own and the persons in near trust is much higher than 23.82 crores, averring as under.

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

"This is inter alia evident from the fact that even as on date the judgment-debtor is prosecuting Civil Appeal No. 9664 of 2019 before the Hon'ble Supreme Court of India in which he is seeking approval of a Composite Scheme of Compromise and Arrangement between the judgment-debtor and the Creditors and Shareholders of Gujarat NRE Coke Limited (In Liquidation) under sections 230 to 232 of the Companies Act, 2013 in which the judgment- debtor is the Applicant and which inter alia provides "The applicant would bring in towards Promoter's contribution an amount of Rs. 25 crores within 30 days from the date of implementation of the Scheme. The applicant shall further bring in additional Promoter's contribution of Rs. 25 crores within. 6 months thereafter."

3.5.3 It was further pleaded that the judgment-debtor in his affidavit dated 12.2.2020 has shown the book value of shares in four Australian companies, that is Wollongong Coal Limited, Goldrich Resources Limited, Shree Minerals Limited, Gujarat NRE Private Limited and are worth Rs.12,89,19,458/- as on 15.12.2019. It was therefore submitted that despite having assets in larger value which the judgment-debtor has since the date of decree and thus he has the amount available to satisfy the decree or substantial part of the decree, he has refused and neglected to pay. It was contended that the judgment-debtor does not have a bona fide intention of honouring the decree.

3.5.4 The decree-holder in his application Exhibit 94 also stated about pending look out circular against the judgment- debtor and pleaded certain facts and circumstances seeking to demonstrate that the judgment-debtor has been neglecting to pay the decreetal amount. It was submitted that the judgment- debtor is one of the richest individuals in India having assets worth Rs.2,080 crores, that he has been part of the business

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

delegations of Government of India going abroad. It was further submitted that the judgment-debtor has been trying to dishonour, transfer, conceal or remove his personal assets. It was contended that in light of the past proclivity, tendency and conduct of the judgment-debtor who has been acting in bad faith in relation to his property, there is a grave and imminent possibility of the judgment-debtor alienating his shareholdings in four Australian companies.

3.6 The judgment-debtor in his reply to the application of decree-holder inter alia contended that the decree held by the decree-holder of the English Court was not enforceable in India. It was claimed that the judgment-debtor was permanent resident of Kolkata and did not change his address and that due to COVID-19 situation he could not travel to Kolkata and was stuck in Ahmedabad. He admitted that he had property at Jamnagar but did not reside in the said property. It was contended that the value of assets to the extent of 23.82 crores has in it the major portion of value consist of investment and shares and that the actual realizable value of the shares is less than the book value. It was claimed by judgment-debtor that as such he did not have the means to satisfy the decree.

3.6.1 About the scheme of compromise and arrangement, it was stated that the same was proposed by the judgment-debtor as a shareholder and promoter of Gujarat NRE Coke and that the proposal to inject sum of Rs.50 crores had been made on behalf of all the shareholders in order to revive the company and this amount has nothing to do with personal assets of the judgment- debtor. It was again claimed that even the book value of the shares highlighted by the decree-holder was meaningless since the current market value is in minuscule. It was stated that the

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

judgment-debtor has not transferred any assets.

3.6.2 About the value of investments in the shares of four Australian companies, the judgment-debtor made this averment in paragraph No.10 of his reply, "If the decree-holder believes that the value of investment in shares of these 4 Australian companies is 12.89 crores the judgment-debtor is happy to transfer all these shares to the decree-holder for a sum of Rs.12.89 crores in satisfaction of his claim and to the decree if wishes to do so." On such contentions, the prayer for furnishing security was opposed.

4. Order XXI deals with the execution of decrees and orders and also payment under decrees. Rule 40 is about proceedings of appearance of judgment-debtor in obedience to notice or after arrest.

"(1) When a judgment-debtor appears before the Court in obedience to a notice issued under rule 37 or is brought before the Court after being arrested in execution of a decree for the payment of money, the Court shall proceed to hear the decree-holder and take all such evidence as may be produced by him in support of his application for execution and shall then give the judgment-debtor an opportunity of showing cause why he should not be committed to the civil prison.

(2) Pending the conclusion of the inquiry under sub-rule (1) the Court may, in its discretion, order the judgment-debtor to be detained in the custody of an officer of the Court or release him on his furnishing security to the satisfaction of the Court for his appearance when required.

              (3)    Upon the conclusion of the inquiry
              under sub-rule (1) the Court may, .....





      C/SCA/17965/2021                             CAV ORDER DATED: 04/02/2022

Provided that in order to give the judgment- debtor an opportunity of satisfying the decree, the Court may, before making the order of detention, leave the judgment-debtor in the custody of an officer of the Court for a specified period not exceeding fifteen days or release him on his furnishing security to the satisfaction of the Court for his appearance at the expiration of the specified period if the decree be not sooner satisfied.

              (4)       A judgment-debtor released .....
              (5)       When the Court ....."

4.1      Thus, Sub rule (2) of Rule 40 provides that pending the

conclusion of the inquiry under sub-rule (1) the Court may, in its discretion, order the judgment-debtor to be detained in the custody of an officer of the Court or release him on his furnishing security to the satisfaction of the Court for his appearance when required.

5. The court considered the facts of the case, attendant aspects and the submissions raised by both the sides.

5.1 The executing court in passing the impugned order inter alia took note of the following aspects pleaded by decree-holder in paragraph No.17 of the order.

5.2 With regard to the aspect of the judgment-debtor owning the shares of the Australian companies, referring to the affidavit dated 12.2.2020 of the judgment-debtor, it was noted that book value of the shares in the Wollongong Coal Limited, Goldrich Resources Limited, Shree Minerals Limited, Gujarat NRE Private Limited and are worth Rs.12,89,19,458/-. The aspect was also noted by the court below that the judgment-debtor was being examined in interrogatories regarding the debts as well as the

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

property owned by him for the purpose of satisfaction of the foreign decree in question.

5.3 The affidavit dated 12.2.2020 of the judgment-debtor is referred to to state that therein the book value of the shares in four Australian companies, as above, are worth Rs.12,89,19,458/- as on 15.12.2018. The aspect is noted that the decree-holder is granted leave to deliver interrogatories for the examination of the judgment-debtor as to any information or what debts are owned by the judgment-debtor and what other property and means the judgment-debtor has, to satisfy the decree.

5.4 In paragraph No.17, it was stated and observed by the Court as under.

"17. The evidence on record goes to show that while on one hand the JD has declared in his affidavit dated 11th January 2020 and subsequent affidavit dated 12th February 2020 that the value of his cumulative assets (both in India and abroad) as on 15th December 2019 is approximately 23.82 crores on the other hand he has formulated Gujarat NRE Scheme which is a Composite between Scheme of Compromise and Arrangement the judgment-debtor and the Creditors and Shareholders of Gujarat NRE Coke Ltd. (In Liquidation) under Sections 230- 232 of the Companies Act, 2013 pursuant to which he has undertaken to inject a sum of Rs.50 crores into Gujarat NRE Coke Ltd. Cause IIIC (d) (i) of the Gujarat NRE Scheme provides that 'The applicant would bring in towards Promoter's contribution an amount of Rs.25 Crores within 30 days from the date of implementation of the Scheme. The applicant shall further bring in additional Promoter's contribution of Rs.25 Crores within 6 months thereafter".

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

5.5 The Executing Court observed that the judgment-debtor has the financial capacity to satisfy the deemed decree passed by the court but has deliberately chosen and failed to do so. It was also noted that the court has not granted permission to the judgment-debtor and his immediate family members to travel out of India.

5.6 The Court below observed about the conduct of the judgment-debtor,

"The extent to which the judgment-debtor has gone is also indicated by the fact that inspite of the knowledge of the orders of the court the judgment-debtor has not obeyed them. This makes it clear that the party who was absolutely no regard for the orders of the court must be made to bear the consequences of his own action. The judgment-debtor has chosen to wilfully and blatantly flout the orders passed against him in the present execution proceedings from the vey inception thereof."

5.7 The present decree is money decree. The court below has noticed the conduct of the judgment-debtor reflecting his unwillingness to satisfy the decree. On the basis of the factual material before it, the conclusion is drawn by the court below that though the judgment-debtor has means to satisfy the decree but has neglected in discharging his obligation. Upon assessing the facts and conduct of the judgment-debtor the Executing Court has duly found that they are indicative of unwillingness and avoidance on part of the judgment-debtor to pay the decreetal amount despite availability of means with him to pay. The Court has considered therefore that order for furnishing security deserved to be passed. The view taken by the court below is reasonable on facts and in law.

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

5.8 In view of all the above facts and background and when there are circumstances suggesting that despite possessing the means, the judgment-debtor has neglected and refused to pay the decreetal amount, furnishing of security by judgment-debtor is warranted. The security is considered proper to be solicited by the judgment-debtor to ensure that the rights of the decree- holder are not defeated.

5.9 It is in on such premise of facts and reasons, the impugned order, as above, in exercise of powers Order XXI Rule 40(b) of the Code of the Civil Procedure, 1908, requires the judgment- debtor to furnish security and sum of Rs.12,89,19,458/- which is the equivalent amount to the worth of the book value of shares in the four Australian companies held by the judgment-debtor. The impugned order is proper and reasonable in law as such in directing the judgment-debtor in furnish security.

6. In view of the above discussion, while no ground exists to interfere with the said order requiring the judgment-debtor to furnish the security to the aforesaid extent, what becomes conspicuous in the impugned order that the said security is directed to be furnished by way of cash deposit with the Registry of this Court. The direction to furnish the security by way of cash deposit is in a way arbitrary in as much as requiring deposit of cash to the above extent would not be cumbersome but also unreasonable. The security to the aforesaid sum could be solicited by directing the judgment-debtor to furnish the bank guarantee of the equivalent amount. The impugned order is required to be interfered with to be modified to the said and such limited extent.

6.1 As a result, while maintaining the impugned order as well

C/SCA/17965/2021 CAV ORDER DATED: 04/02/2022

as the reasons supplied by the Court in so far it requires the judgment-debtor to furnish security, the direction in the order is modified to the limited extent that the judgment-debtor- petitioner herein may furnish the security for the sum of Rs.12,89,19,458/- by way of bank guarantee equal to the said amount.

7. The present Special Civil Application is dismissed subject to modification in the order to the above extent.

(N.V.ANJARIA, J)

(SANDEEP N. BHATT,J)

Further Order:

At this stage, learned advocate Mr.Vivek Gupta for the petitioner requests the Court that the aforesaid modification directed in this order may be stayed for six weeks to enable the petitioner to challenge the same before the higher court. Leaned advocate for the respondent Mr.Aditya Krishnamurthy has opposed the prayer.

In the totality of facts and having regard to the nature of request, it is provided that the present order modifying the impugned order of the Commercial Court shall remain stayed for a period upto 7.3.2022.

(N.V.ANJARIA, J)

(SANDEEP N. BHATT,J) Manshi