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Peter Beck Und Partner … vs Prakash Industries Limited & Anr. on 3 May, 2023, Delhi High Court.

Facts: The High Court of Justice’s final judgement from April 1, 2022, and accompanying order from May 20, 2022, have been the subject of the present petition. Signature is not authentic Digitally Signature: NEHA Date of Signature: 05.03.2023, 16:11:13 Number of Neutral Citations: 2023:DHC:2986 Commercial Court (QBD)1 of England and Wales’ Business and Property Courts passed in case CL-2019-000527. The Court suggests notifying Prakash Industries Limited, the first respondent, as the “judgement debtor” for the reasons detailed below. The “respondent” will be referred to as the second respondent, Prakash Pipes Limited.  The court requested the judgement debtor/respondent to file their responses as well as an affidavit of assets in accordance with Order XXI Rule 41 of the Code on October 20, 2022.

This was done after taking cognizance of the current petition and taking into account the undeniable fact that the judgement had been rendered by a competent court of a recognised reciprocating territory as contemplated under Section 44A of the Code of Civil Procedure, 19082. The Court ordered the judgement debtor to update the Affidavit of Assets on December 9, 2022, disclosing the value of all accounts, Fixed Deposit Receipts, and movable securities, including their gross value. This was done in accordance with the aforementioned order. On that date, the court also became aware that the judgement debtor had filed EX. APPL. (OS) 3785/2022, an application challenging the court’s authority to hear the current execution petition. As a result, the execution petitioner was given time to submit a response to the aforementioned application. A request to amend the order from December 9th, 2022, as well as a request to have the foreign court code signature not digitally verified Signature: NEHA Date of Signature: 05.03.2023, 16:11:13 The Court resolved the neutral citation 2023:DHC:2986 on December 19, 2022, ordering the disclosures of assets to be placed under sealed cover. The foregoing assertions are refuted by the experienced attorney for the Execution Petitioner, who has informed the Court through the Affidavit of Assets that part of the respondent’s assets do in fact stand positioned within the Court’s geographical jurisdiction.

Furthermore, it was argued that the suit may have been brought before this court because respondent No. 1’s corporate office, which would serve as its place of business, is located within its territorial jurisdiction, making the execution proceedings unquestionably maintainable. Knowledgeable advisors for the Execution When the Court had to adjourn for lunch, the petitioner was still speaking and making his arguments. Therefore, on 14.02.2023, let this petition be reopened. It is also the case of the execution petitioner that the Plastics Pipes Division of the judgement debtor was demerged into an independent entity at or around this time, more specifically on 14 March 2019, and that it is now arraigned in these proceedings as the respondent. On July 3, 2019, a legal notification was subsequently sent to the judgement debtor informing it of the event of default and the execution petitioner’s subsequent right to accelerate the bonds’ maturity. On or around July 23, 2019, the judgement debtor filed a petition with the Foreign Court asking for a ruling that it was not responsible for paying the coupon interest or penalties for late conversions.

The execution petition that was submitted before this court was questioned by the judgement debtor in EX.APPL.(OS) 3785/2022, who claimed that the court lacked the necessary territorial jurisdiction to hear the matter. It is asserted that the judgement debtor’s registered office is located at 15 Km. Stone, Delhi Road, Mayar, Hisar. The judgement debtor claims that although having a corporate office in New Delhi, it does not own the space and instead occupies it under a lease. It bases its argument on Section 39(4) of the Code and claims that the execution petition was improperly filed before the High Court of Delhi because no properties are located within its jurisdictional boundaries. It was claimed that the demerger plan was carried out covertly to undermine the claim of the execution. Signature is not authentic Digitally Signature: NEHA Date of Signature: 05.03.2023, 16:11:13 Neutral Citation: 2023:DHC:2986 the petitioner and to overturn the finally issued judgement. In addition, knowledgeable counsel made an effort to advance the notion of penetrating the corporate veil and argued that because the respondent was a group company and only the judgement debtor’s alter ego, the latter was plainly entitled to have the foreign judgement enforced against the latter as well.

Held: Insofar as the lifting of the corporate veil principle is concerned, suffice it to say that there is no basis for the use of such defence in the execution petition. It should be highlighted that in order to prove an allegation that the corporate veil had been used to avoid liabilities, a claim for piercing the corporate veil must inevitably be supported by sufficient evidence. The response correctly emphasised the lack of even a basic foundation in support of the aforementioned petition. “ The Court also finds itself unable to accept the contention that Majmudar, J. in M.V. Al Quamar did not accept or adopt the reasoning assigned by Banerjee, J. It must be noted at the very outset that Majmudar, J. in the introductory part of the supplementing judgment categorically records His Lordship’s agreement with the conclusions recorded by the other Honourable member of the Bench. As is manifest from the introductory passages of that opinion, the supplementing opinion was penned by Majmudar, J. in light of the importance and significance of the issues which stood raised. His Lordship went on then to succinctly enunciate in paragraph 60 of the Signature Not Verified Digitally Signed By:NEHA Signing Date:03.05.2023 16:11:13 Neutral Citation Number: 2023:DHC:2986 report the pre-conditions which must be satisfied by a decree holder in terms of Section 44A as under:-

―60. A mere glance at that provision, read with relevant explanations, shows that before it is invoked by any decree-holder, he must satisfy the following conditions:

1. A decree-holder who seeks execution must be armed with a money decree passed by any of the superior court of any reciprocating territory, being any foreign country or territory which the Central Government may, by notification in the Official Gazette, has declared to be a reciprocating territory for the purpose of the section.

2. Such an execution petition can be entertained by the executing court in India being the District Court that will be clothed with the legal fiction as if the said foreign decree was passed by itself and whose aid and assistance are required for executing such a decree.

3. Such a decree can be put for execution before a District Court in India being the Principal Civil Court of original jurisdiction and which will include the local limits of the original civil jurisdiction of a High Court.

4. Once such execution petition is filed before the appropriate District Court the entire machinery of Section 47 for execution of Indian decrees would automatically get attracted.

5. In such execution proceedings, the judgment-debtor of a foreign court decree will be entitled to satisfy the executing court in India that the foreign decree cannot be executed against him as it is hit by any of the exceptions specified in clauses (a) to (f) of Section 13 CPC.‖

His Lordship held that an execution petition in respect of a foreign judgment can be entertained by any District Court in India and which court would stand statutorily empowered by virtue of the legal fiction to exercise powers of an executing court as if the foreign decree had been passed by that court itself. Of equal significance are the observations appearing in paragraph 63 of the report and where the arguments founded on Sections 39 and other provisions of the Code Signature Not Verified Digitally Signed By:NEHA Signing Date:03.05.2023 16:11:13 Neutral Citation Number: 2023:DHC:2986 were categorically negated. It was observed that Section 44A can by no means be interpreted to postulate that the District Court before which a petition for execution of a foreign decree is filed must be a court which could otherwise have been competent to pass a decree in the first instance. Those observations clearly debunk the adoption of tests embodied in Section 37 of the Code. Majmudar, J. went on further to articulate and explain the legal position in paragraph 65 holding that once a decree of a foreign superior court is filed before a District Court and thus an Indian court duly empowered by virtue of the legal fiction embodied in that provision, no further question of ―competency‖ would survive.”

A reading of Section 44A would make clear that the process outlined therein can be used to legitimately execute a judgement issued by a foreign court in India. The following requirements must be completed, according to Section 44A, for a foreign judgement to be carried out in India. Prior to seeking execution on a decree, there must first be a superior court order located in the corresponding territory. A certificate as described in subsection (2) must unavoidably be included with the petition for execution of such a foreign judgement. The status of an instrument conclusively proving the entry of the foreign judgement and any satisfactions or adjustments that may have been made in conjunction therewith is given to that certificate.  The Court derives support from the concise explanation of the legal situation in Oakwell Engineering while coming to the conclusion that the arguments based on the principles of territoriality and cause of action are obviously misconceived. It goes without saying that the judgement for which execution is sought was issued by a court located in a reciprocating territory. The certificate of conclusivity required by Section 44A is also included to the execution petition. In view of the legal argument made in Signature Not Verified Digitally Signed By:NEHA, this Court Date of Signature: 05.03.2023, 16:11:13 Number of Neutral Citations: 2023:DHC:2986 The M.V. Al Quamar would have the authority and qualifications to assess the present petition and carry out the foreign judgement.

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Judgment Reviewed by Kushala Simha