9911796707
TMI Blog2024 (6) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ANR. [ 2023 (10) TMI 1394 - SC ORDER] is also a decision on an insolvency proceeding where properties of the corporate debtor in India was sought to be administered by filing a suit. A suit was filed for administration of the assets in India of a corporate debtor or a person against whom insolvency proceeding was going on in a foreign country. In such a suit, an application for rejection of the plaint was filed and the Hon ble Delhi High Court held that the plaint could not be rejected at the very initial stage, upon noting the pendency of an insolvency proceeding in a foreign country. Principle of Comity of Nations and Comity of Courts - HELD THAT:- The conclusion arrived at by the learned trial judge by applying Section 44A and 13 and 14 of the Code of Civil Procedure was with regard to enforcement of foreign decrees and orders of foreign courts with which India did not have reciprocity. However, it cannot be ignored that the principle of Comity of Nations and Comity of Courts had been recognized by the Indian Courts by giving adequate weightage to or considering existence of such order or decree of a foreign court while deciding any proceeding in the domestic court - In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the moratorium order would not be automatically enforceable under Section 44A Code of Civil Procedure. The provisions of Section 13 and 14 of the Code of Civil Procedure, were also not applicable in the present factual matrix because the bankruptcy order was not passed in a proceeding between the parties to the suit. The said order of the learned Trial Judge has been assailed on various grounds. 4. The petitioner/defendant No. 1, appeared and filed an application under Section 45 of the Arbitration and Conciliation Act, 1993. Prayer was made for an order to refer the parties to arbitration. When the suit was at the stage of hearing of the application under Section 45, the petitioner/defendant No. 1, filed the said application and prayed for the following reliefs:- a) A direction to stay further proceedings in the present suit with a liberty to mention, post expiry of the moratorium in the U.S. Bankruptcy Proceedings; or b) In the alternative, adjourn the proceedings in the present Anti-Arbitration Suit for 180 days. c) Costs. d) Pass such further and/or other orders as this Learned Court may deem fit and proper; 5. According to the petitioner/defendant No. 1, the suit should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as if the same was a decree of a foreign court. On such misconception of law, the learned Judge rejected the application by applying Section 44A and Sections 13 and 14 of the Code of Civil Procedure. Neither was the petitioner seeking implementation of the moratorium order, nor did the petitioner suggest that the moratorium order was binding. The petitioner invoked the inherent power of the court for a judicial recognition of the proceedings before the US Bankruptcy Court and the grant of a worldwide stay. As the petitioner was undergoing reorganization under Chapter 11 of the U.S. Bankruptcy Code, under the supervision of a competent foreign court, the suit should have been stayed. The suit with numerous claims against the petitioner, could not proceed. All claims against the petitioner in any legal proceeding, had been stayed by the U.S. Bankruptcy Court. The Chapter 11 proceedings were initiated on September 19, 2023. Immediately, the moratorium under Section 362 came into effect. The petitioner filed a motion before the Bankruptcy Court, seeking restatement of the moratorium under Section 362. This resulted in the order dated October 24, 2023. It was urged that the learned Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be enforced. 10. According to Mr. Mookherji, most transnational bankruptcies in the United States were historically based on the judicial concept of comity. Reference was made to the Advanced Law Lexicon (P. Ramanath Aiyer s 2001 Edition). The term Comity had been defined as courtesy and disposition to accommodate, wherein courts of justice in one province or state would, out of comity, enforce the law of another state, when by such enforcement they would not violate their own laws. 11. It was urged that in Canada, prior to the introduction of a statutory provision, comity was found to be increasingly important in the bankruptcy context as internationalization of trade and commerce had increased. Reference was made to the decision of Roberts v Picture Butte Municipal Hospital (1999) 4 WWR 43. New Zealand also placed significant reliance on the principles of comity in circumstances where its statutory scheme did not apply, prior to the enactment of a specific law for cross border insolvencies. The Belgian courts, in Turners Growers Exporters Ltd. vs The Ship Cornelis Verolme (1997) 2 NZLR 110, also recognized a foreign administrator. 12. Mr. Mookherji submitted that one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for execution of the decree of a Japanese Court. In the opinion of this Court and as stated above, by the way of the present suit, the plaintiff is not seeking execution of the decree of the Japanese Court. The suit has been filed to administer the suit properties of the bankrupt defendant no. 1 towards realization of monies. Therefore, Section 44A of the CPC would have no application. 15. The observation of the Delhi High Court was upheld by the Hon ble Apex Court. Mr. Mookherjee contended that the ratio of the decision was that, judgments passed by foreign courts had to be respected by Indian courts, unless the same was shown to have fallen under the limited exceptions of Section 13 of the Code of Civil Procedure. The proceedings before the US Bankruptcy Court was a proceeding in rem and binding on all. In modern times of globalization, foreign creditors could not be treated differently from domestic creditors. Referring to the decision in M/ s. Alcon Electronic Pvt. Ltd. v Celem S.A. OF Fos 34320 Roujan, France Anr., it was submitted that the Hon ble Apex Court executed an order of an English Court and directed payment of interest on cost, despite deletion of Section 35 (3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It had been held that Rules of Comity may not be departed from in certain cases, for the purpose of necessary protection to the citizens or to enforce some paramount rules of public policy, The laws of one country as a general principle, would by whatever term be recognized and executed in another, where the rights of individuals were concerned. Further reliance was placed on the decisions of Hilton vs Guyot reported in 159 U.S. 113, Y. Narasimha Rao and Ors. vs. Y. Venkata Lakshmi and Anr. reported in (1991) 3 SCC 451, N.P.A.K.Muthiah Chettiar (died) and ors. Vs K.S.Rm. Firm Shwebo, Burma, by its partner and Receiver K.S.Rm. Vr.Rm Veerappa Chettiar and Ors. decided in A.A.O No. 85 of 1951, Swiss Ribbons Pvt. Ltd. and Anr. vs Union of India and Ors. reported in (2019) 4 SCC 17, and Felixstowe Dock and Railway Co. vs. United States Lines Inc. and related applications reported in (1988) 2 All ER 77, to substantiate that the doctrine of comity conveyed something more than courtesy or good will. 19. Mr. Abhrajit Mitra, learned Senior Advocate appearing on behalf of the plaintiffs/opposite parties submitted that Section 9 of the Code of Civil Procedure, would be applicable in case of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of Commerce, International Court of Arbitration, USA and the proceedings were continuing at the instance of the petitioner. Such proceedings were challenged in the suit with the relevant prayers that the Arbitration proceedings were barred by law. 22. Mr. Mitra further submitted that the decision of NCLT Chandigarh in Re, SEL Manufacturing Co. Ltd., was passed in a corporate insolvency proceeding and not in a civil suit for declaration and injunction. Distinguishing the decision in in Re Sel Manufacturing Co. Ltd., Mr. Mitra, submitted, that all that was decided was that the Indian proceeding was a foreign proceeding under Section 11 of the U.S. Code, but no moratorium had been granted by the U.S. Court. 23. Distinguishing the decision of Y. Narasima Rao (supra), Mr. Mitra, urged that paragraph 11 of the said judgment would indicate that the Hon ble Apex Court held that no country could sacrifice its internal unity, stability, tranquillity for the sake of uniformity of rules and Comity of Nations. Reliance was placed on the decision of N.P.A.K. Muthiah Chettiar (supra), in which it was held that as Burma ceased to be a reciprocating territory, Section 44A of the Code of Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff filed the anti-Arbitration suit and prayed for declarations and permanent injunctions. The reliefs claimed for were as follows :- The Plaintiffs therefore pray for dispensation with the requirement of pre suit mediation under Section 12A of the Commercial Court Act, 2015 for filing the present suit and claim: a. Declaration that the Agreement for Arbitration embodied in clause 14 of the Share Purchase Agreement dated 30th October 2020 (ANNEXURE - D ) is barred by law; b. Direction that the Agreement for Arbitration embodied and/or contained in clause 14 of the Share Purchase Agreement dated 30th October 2020 (ANNEXURE - D ) be delivered up and cancelled; c. Declaration that disputes arising out of and/or in any manner touching and/or concerning the management, administration, shareholding, and control of the Plaintiff No. 4 company, is non-arbitrable. d. Declaration that the initiation, prosecution, conduct and continuation of arbitration proceedings against the Plaintiffs [pursuant to the alleged Notice of Arbitral Dispute dated 24th October 2022 (ANNEXURE A/31 ), Request for Arbitration dated 4th November 2022 (ANNEXURE- A/48 ), and Statement of Claim dated 22 June 2022 (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or award made in the pending arbitration proceedings before the International Chamber of Commerce being Case No. 27329 PDP is illegal, void ab initio, non-est, null and void; k. Declaration that the order dated 16th November 2022 passed by the Emergency Arbitrator in Case No. 27329 PDP (EA), International Chamber of Commerce (ANNEXURE A/37 ) is invalid, void ab initio, non-est, illegal, null and void and the same does not in any manner whatsoever bind or affect the plaintiffs; l. Declaration that the International Chamber of Commerce and / or the Arbitral Tribunal has no jurisdiction to suo moto and / or unilaterally extend the timeline agreed upon by the parties and that the said Case No. 27329 PDP is in any event barred by expiration and efflux of time m. Permanent injunction restraining the defendant No. 1 and/or their men, servants and agents or anyone claiming through and under it, from performing, giving effect to and/or acting in terms of and/or in furtherance of the alleged Agreement for Arbitration embodied and/or contained in clause 14 of the Share Purchase Agreement dated 30th October 2020 (ANNEXURE - D ); n. Permanent injunction restraining the defendant No. 1 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd decrees of some reciprocating countries such as the UK and Singapore, no recognition has been accorded to foreign proceedings, particularly with regard to insolvency proceedings such as reorganizations. 31. While the IBC 2016 presents opportunities for improving the domestic insolvency system in the country, India has not yet come up with a comprehensive framework dealing with cross-border insolvency under the Code. 32. In the decision of the Surya Vadanan vs State of tamil Nadu and Ors. reported in (2015) 5 SCC 450 , it was held that the principle of Comity of Court was essentially a principle of self-restraint. Thus, if an order was passed in a earlier proceeding by a foreign court, by adopting the principle of judicial discipline and self-restraint, the domestic court should recognize and should follow such orders and apply them as far as possible. The decision recognized the first strike principle. The relevant paragraphs are quoted below:- 46. The principle of the comity of courts is essentially a principle of self-restraint, applicable when a foreign court is seized of the issue of the custody of a child prior to the domestic court. There may be a situation where the forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aughter was 10 years of age and the younger daughter was around 6 years of age. They lived in the UK throughout their lives. In a petition for issuance of a writ of habeas corpus, the Court directed return of the girls to the UK also because of the order passed by the court of competent jurisdiction in the UK to produce the girls before that Court. The husband had succeeded in getting that order even before any formal order could be passed on the petition filed by the wife in Coimbatore Court seeking a divorce from the appellant husband. That order was followed by another order of the UK Court giving peremptory direction to the wife to produce the two daughters before the UK Court. A penal notice was also issued to the wife. The husband then invoked the jurisdiction of the Madras High Court for issuance of a writ of habeas corpus on the ground that the wife had illegal custody of the two daughters of the couple and that they may be ordered to be produced in the Court and to pass appropriate direction thereafter. The said relief was granted by this Court. After the discussion of law in paras 46 to 56 of the reported decision, on the basis of precedents adverted to in the earlier par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests and welfare of the child. Further, a pre-existing order of a foreign court can be reckoned only as one of the factor to be taken into consideration. We have elaborated on this aspect in the earlier part of this judgment. 63. As regards the fourth factor noted in clause (d) of para 56, Surya Vadanan case [ Surya Vadanan v. State of T.N., (2015) 5 SCC 450 : (2015) 3 SCC (Civ) 94], we respectfully disagree with the same. The first part gives weightage to the first strike principle. As noted earlier, it is not relevant as to which party first approached the court or so to say first strike referred to in para 52 of the judgment. Even the analogy given in para 54 regarding extrapolating that principle to the courts in India, if an order is passed by the Indian Court is inapposite. For, the Indian Courts are strictly governed by the provisions of the Guardians and Wards Act, 1890, as applicable to the issue of custody of the minor within its jurisdiction. 64. Section 14 of the said Act plainly deals with that aspect. The same reads thus: 14. Simultaneous proceedings in different courts. ( 1) If proceedings for the appointment or declaration of a guardian of a minor are taken in more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the question on merits bearing the welfare of the child as of paramount importance and consider the order of the foreign court as only a factor to be taken into consideration. While considering that aspect, the court may reckon the fact that the child was abducted from his or her country of habitual residence but the court's overriding consideration must be the child's welfare. 34. It is also important to mention here that the present suit was a prior suit and an application had been filed by the petitioner/defendant No. 1 under Section 45 of the Arbitration and Conciliation Act, 1996. During the hearing of the said application, the moratorium order was passed by the U.S. Court on October 24, 2023. It was also not a pre-existing order of a foreign court. All that was required by the suit court was to take note of such proceeding in the U.S. Bankruptcy Court. 35. Toshiaki Aiba (supra) is also a decision on an insolvency proceeding where properties of the corporate debtor in India was sought to be administered by filing a suit. A suit was filed for administration of the assets in India of a corporate debtor or a person against whom insolvency proceeding was going on in a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch decree, if it is shown to the satisfaction of the court that the decree falls within any of the exceptions specified in clauses (a) to (f) of Section 13. Explanation 1. Reciprocating territory means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and superior courts , with reference to any such territory, means such courts as may be specified in the said notification. Explanation 2. Decree with reference to a superior court means any decree or judgment of such court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect to a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or judgment. 21. As far as the explanation with regard to reciprocal territory is concerned, there is no dispute that England is a reciprocating territory for the purpose of above section. Section 44-A CPC indicates an independent right conferred on a foreign decree-holder for enforcement of a decree/order in India. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conjoint reading of decree , judgment and order from any angle, the order passed by the English Court falls within the definition of order and therefore, it is a judgment and thus becomes a decree as per Explanation to Section 44-A(3) CPC. In this case, the Court at England, after following the principles of natural justice, by recording reasons and very importantly basing on the application of the appellant itself, has conclusively decided the issue with regard to jurisdiction and passed the order coupled with costs. Hence in our considered opinion, the order passed by the foreign court is conclusive in that respect and on merits. Hence executable as a decree and accordingly the issue is answered. 37. The conclusion arrived at by the learned trial judge by applying Section 44A and 13 and 14 of the Code of Civil Procedure was with regard to enforcement of foreign decrees and orders of foreign courts with which India did not have reciprocity. However, it cannot be ignored that the principle of Comity of Nations and Comity of Courts had been recognized by the Indian Courts by giving adequate weightage to or considering existence of such order or decree of a foreign court while decid ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
