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TMI Blog2004 (12) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... that primarily the DH has filed the execution petition in this Court on the basis that a Shareholder Guarantee, containing the arbitration clause had been executed between the parties at New Delhi. (b) that the primary assets of the MWPL are 51% of the shares of the company Spice, having its registered office in New Delhi where the Register of Shares is maintained. (c) that the execution petition is predicated further on the premise that the business of the MWPL is to primarily attend the shareholder's meeting of the Company Spice located at New Delhi. (d) that the demand for payment was also made at the address for service as per the Shareholders Guarantee which is at New Delhi. (e) that the MWPL/JD has its office at 13th Floor, Modi Corp Tower, 98, Nehru Place, New Delhi where all notices and correspondence at the request of the MWPL had been served. 4. There is no averment in the execution petition that there any monies of MWPL are situated in Delhi so as to confer jurisdiction on this Court. The aforesaid basis of the petition for execution as set out in paragraph 3 above does not individually or collectively confer jurisdiction on this Court under Section 47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the JD on Tata International Ltd., Mumbai Vs Trisuns Chemical Industry reported as 2002 A.L.R. 432 wherein the Bombay High Court held that the Court would have no jurisdiction in the absence of the subject matter of the award being within the jurisdiction of this Court to hear and decide the petition. (k) that apart from holding of shares of Spice Communication Co., MWPL does not own any other assets though the DH had contended that the MWPL holds money in bank accounts in New Delhi. (l)that bank accounts which were referred to by DH were at one time held in New Delhi by the JD and held an amount to the tune of ₹ 50,000/- approx but such accounts are no longer within the territorial jurisdiction of this Court as the accounts have already been closed. (m)that the main basis for DH choosing the jurisdiction of this Court is the averment that since MWPL holds 51% of the share of Spice having a registered office in New Delhi and where the Register of Shares has been maintained, this Court has jurisdiction. (n) that the aforesaid plea of the DH is unsustainable as subject matter of the award is not the recovery of the shares of MWPL held in Spice but moneys of MWPL wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the judgment-debtor is a corporation, any officer thereof, to make an affidavit stating the particulars of the assets of the judgment-debtor. (3) In case of disobedience of any order made under sub-rule (2), the Court making the order, or any Court to which the proceeding is transferred, may direct that the person disobeying the order be detained in the civil prison for a term not exceeding three months unless before the expiry of such term the Court directs his release.]'' It is contended that where a decree is for payment of money the judgment debtor can be examined as to his other property etc., and required to state the particulars of his assets. 3. Qua Order XXI Rule 43 which reads as under:- ''43.Attachment of movable property, other than agricultural produce, in possession of judgment-debtor. Where the property to be attached is movable property, other than agricultural produce, in the possession of the judgment-debtor, the attachment shall be made by actual seizure, and the attaching officer shall keep the property in his own custody or in the custody of one of his subordinates, and shall be responsible for the due custody thereof: Provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent debtor, the delivery thereof to the purchaser shall be made by giving notice to the person in possession prohibiting him from delivery possession of the property to any person except the purchaser. (3) Where the property sold is a debt not secured by a negotiable instrument, or is a share in a corporation, the delivery thereof shall be made by a written order of the court prohibiting the creditor from receiving the debt or any interest thereon, and the debtor from making payment thereof to any person except the purchaser, or prohibiting the person in whose name the share may be standing from making any transfer of the share to any person except the purchaser, or receiving payment of any dividend on interest thereon, and the manager, secretary or other proper officer of the corporation from permitting any such transfer or making any such payment to any person except the purchaser.'' It is contended that this indicates when the property sold is a movable property of which actual seizure has been made as per Rule 43, it shall be delivered to the purchaser and Sub-Rule 3 of Rule 79 clearly states that where the property sold is a share in a Corporation, an order prohi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid judgment in Vishwanathan's case (supra) holds that the situs of the share in any question between the Company and the holder is the place of the registered office of the Company:- ''The situs of the shares in any question between the Company and the holders thereof was the registered office of the Company in Bellary [outside the State of Mysore], but the share certificate must, on the case of the plaintiffs as set out in the plain , be deemed to be with the executors and compliance with the decree, if any, passed against the executors for an order of retransfer could be obtained under the Code of Civil Procedure (See Order XXI, rr.31 and 32 Mysore Civil Procedure Code). There is no rule of private international law recognized by the courts in India which renders the Bangalore Court incompetent to grant a decree directing retransfer of the shares merely because the shares have a situs in a dispute between the Company and the shareholders outside the jurisdiction of the foreign court: Counsel for the plaintiffs submitted that the Mysore Court was incompetent to deliver an effective judgment in respect of the shares, but by personal compliance with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd., Saudi Arabia : (1995) 2 SCC 280, the Hon'ble Supreme Court has held that the enforcement of a foreign award can be done wherever the assets of the losing party are located. The award holder has the choice of the country in which to enforce it and may go forum shopping. Reliance in particular has been placed on the following passages of the aforesaid judgment : ''13 . .................................. '' A party seeking to enforce an award in an international commercial arbitration may have a choice of country in which to do so; so it is sometimes expressed, the party may be able to go forum shopping. This depends upon the location of the assets of the losing party. ................ (d) Reliance has also been placed on Fuerest Day Lawson v. Jindal Exports, [2001]3SCR479 , wherein it has been held as follows:- '' 28. Alternatively it was contended that a party holding a foreign award has to file a separate application and produce evidence as contemplated under Section 47 and also satisfy the conditions laid down under Section 48 and it is only after the Court decides ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Madras, the situs of the shares which are moveable --- may normally be the place where they can be effectively dealt with (see Erie Beach Co. v. Attorney-General for Ontario, 1930 A C 161 : AIR 1930 PC 10and Brassard v. Smith, 1925 A C 371. The situs of the shares of the India Sugars and Refineries Ltd. may Therefore be properly regarded as without the territorial jurisdiction of the Mysore Court at the date of the institution of the suit by the plaintiffs...................................... 2. Erie Beach Co. Ltd. v. Attorney General of Ontario AIR 1930 PC 10 In Attorney-General v. Higgins (1) as in Brassard v. Smith (2), duty upon, shares was in question. In Attorney-General v. Higgins (1), Baron Martin held that when transfer of shares in a company must be effect by a change in the register, the place where the register is required by law to be kept determines the locality of the shares .................. 3. Bassard v. Smith (1925) AC 371 It is quite true that in that case the head office as well as the register was in Scotland, but in their Lordship's view it is impossible to hold that in view it is impossible to hold that in that case the position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ''Proclamation of Sales by Public auction --(1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court. (2) Such Proclamation shall be drawn up after notice to the decree holder and the judgment-debtor and shall state the time and place of sale, and specify as fairly and accurately as possible:- (a) the property to be sold, (or, where a part of the property would be sufficient to satisfy the decree, such part) ; (b) the revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government; (c) any encumbrance to which the property is liable; (d) the amount for the recovery of which the sale is ordered; and (e) every other thing which the Court considers material for a purchaser to know in order to judge of the nature and value of the property; Provided that where notice of the date for settling the terms of the proclamation has been given to the judgment debtor by means of an order under Rule 54, it shall not be necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution Petition that it seeks the assistance of this Court to attach and sell the assets set forth in Schedule A which mentions three bank accounts in Delhi and in prayer (b), the Decree Holder has sought attachment and sale of all movable and immovable assets. In paragraph V of the execution petition, it has been specifically averred that the business of MWPL/judgment debtor is conducted at New Delhi. (k) The present action for enforcement and execution of the award is neither against the person of the judgment debtor nor against the title of the shares or retransfer, it is merely an action for attachment and for sale of assets of the judgment debtor and only relevant factor is location of the assets of the property and not the location of the Judgment Debtor. (l) Since it is admitted by the judgment debtor that the situs of the shares held by it in Spice is in New Delhi such assets in the form of shares are Therefore located in Delhi within the territorial jurisdiction of this Court. Each share being a part of the share capital stands located where the registered office of the company is situated i.e. Delhi. (m) Finally the plea that of the Judgment Debtor that the Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available for execution. The Supreme Court in negativing such a plea held that in order not to frustrate and defeat the object of the 1996 Act, the foreign award under the 1996 Act was stamped as a decree. Consequently since the foreign award has been held by the Supreme Court to be akin to the decree and is executable as a decree, this plea is, Therefore, wholly lacking in merit and is thus rejected. 13. The second plea of the judgment debtor is that no bank accounts of the JD or any amount therein existed in Delhi today. It is not in dispute that the bank accounts existed when this execution petition was filed and had about ₹ 50,000/- in them. While in the pleadings an attempt was made by the judgment debtor to obfuscate the issue by pleas which while averring that bank accounts no longer existed in Delhi, nevertheless omitted to give the dates of closure of the accounts, the learned senior counsel for the JD, Shri Andharujina, however, very fairly stated that the bank accounts in Delhi were closed during the pendency of this execution petition. Consequently when at the time of filing of this execution petition, assets of the JD in the form of monies were available in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and the shares of Spice Communications Ltd., owned by the JD and said to be at Delhi and thus the execution petition had sufficient pleadings qua the assets of the JD being at Delhi. 17. Reliance on Order XXI Rule 30 of the Code by the JD is also unsustainable as it is clear that the provision itself permits the attachment and sale of the property of a JD in execution of a decree for payment of money. In the present case the Decree Holder has sought to attach and sell the shares which are undoubtedly the properties of the JD. Similarly the reliance on Order XXI Rule 41 of the Code is also unsustainable because when Order XXI Rule 41 of the Code itself permits the examination of the JD as to his property and in the present case JD itself filed an affidavit disclosing the shares of Spice Communications Pvt. Ltd., owned by it, and, Therefore the plea of applicability of Order XXI Rule 41 is without merit. Similarly Order XXI Rule 43 of the Code provides for actual seizure of immovable property, I fail to see how an attachment and eventual sale of shares of the JD in Delhi held in Delhi is barred by virtue of Order XXI Rule 43 of the Code. Similarly qua Order XXI Rule 46 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) wherein it has been held that a party seeking enforcement of an international award will be able to go forum shopping and locate the assets of the losing party for executing the award. Thus it is open to the DH to locate the assets of the losing party that is the judgment debtor which have been found to be in New Delhi in the form of both bank accounts and shares of Spice Communications Ltd. 21. To sum up the conclusions are: (a) the DH holds a foreign arbitral award against the JD. (b) the award grants a sum of $33 million in favor of the decree holder and against the judgment debtor. (c) the JD had bank accounts in Delhi and held shares of a company having a registered office in Delhi. (d) these amounts and shares are undoubtedly assets of the JD company (e) a foreign award is executable as a decree (f) Order XXI Rule 30 of the Code permits the sale of the property of the JD company in execution of a decree. 22. Accordingly there is no merit in the preliminary plea of the judgment debtor of the maintainability of this execution petition in this Court on account of lack of territorial jurisdiction. This plea of lack of territorial jurisdiction to proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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