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TMI Blog2022 (3) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution against the person and property of the Award Debtor. The scope of Order XXI Rule 21 CPC was examined in Ram Narayan Bhattad by a Division Bench of this Court, which concluded at paragraph 13 that it does not apply unless simultaneous execution against both the person and property of the judgment debtor is prayed for. Therefore, Order XXI Rule 21 CPC does not apply in this case. In Ram Narayan Bhattad [ 2004 (3) TMI 834 - MADRAS HIGH COURT] , a Division Bench of this Court held that leave should be obtained to simultaneously prosecute two execution petitions: one by the court issuing the decree and the other by the court to which the decree was transferred for execution. However, the said judgment turned on the fact that two courts were involved and, without following the process of obtaining leave, there is likelihood of injustice unless it is clear that the value of the asset, which is within the jurisdiction of the court to which the decree was transferred, was insufficient. By contrast, all three EPs are before this Court and the likelihood of injustice by recovering amounts in excess of the decree is non- existent. In these circumstances, it cannot be said that the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act). By order dated 02.11.2018 in O.P.No.416 of 2018, this Court held that the Foreign Awards are enforceable as a decree of this Court. Pursuant there to, the Award Holder filed E.P.No.40 of 2019 (the First EP) and E.P.No.55 of 2019 (the Second EP) (collectively the Earlier EPs) in relation to the alleged assets of the Award Debtor. Both the Earlier EPs are pending at different stages. The admitted position is that the Award Holder has not realized any money towards part or full satisfaction of the Foreign Awards. By the Third EP, the Award Holder seeks to enforce the decree against the Award Debtor by attaching assets held in the names of Respondents 2-17. 3. Towards such end, an attachment is sought in respect of: (i) a debt of United Arab Emirates Dinar (AED) 6.35 million, which is alleged to be owed by the 4th Respondent/Arif Rahman Buhary to the Award Debtor; (ii) a debt of AED 0.69 million, which is alleged to be owed by the second Respondent/Syed Mohamed Salahuddin to the Award Debtor; (iii) shares allegedly held ostensibly by Respondent 2 in Respondents 9-12 and 14 for the benefit of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company incorporated in Dubai, United Arab Emirates (the UAE), to establish the alleged beneficial interest of the Award Debtor. The validity of these documents should be established as per UAE law. Therefore, the Petitioner should first approach courts in the UAE to establish the existence of beneficial interest in favour of the Award Debtor. Only upon succeeding in legal proceedings in the UAE, would the Petitioner be entitled to approach courts in India. Besides, due to the efflux of time, reliance cannot be placed on these documents. On this issue, Respondents 6-17 relied on the judgment dated 03.08.2018 of the Division Bench of this Court in O.S.A.Nos.220-223 of 2018 and the related batch of cases (Star Health Insurance DB) arising out of an interim order in C.S.No. 33 of 2018. In Star Health Insurance DB, this Court held that the plaintiffs therein were indirectly seeking relief in respect of the decisions of the ETA group and ETA Star Holdings Limited, a Dubai based company, and that proceedings should be instituted before courts in the UAE before seeking consequential relief against Star Health and Allied Insurance Company Limited, which is a company incorporated in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1) of Section 2 of the Benami Act includes the purchaser from the alleged real owner. (ii) Greaves Cotton and Company by Power Agent Baskar Rao, Madras v. J.Jamal Mohammed Abdulla 1992 - 2 L.W. 42(Greaves Cotton) and, in particular, paragraphs 3 and 4 thereof, where the Court concluded that the prohibition in Section 4 of the Benami Act would apply to a decree holder who contends that the judgment debtor is the real owner of the property. (iii) A.Thayammal another v. Kaladevi 1993 - 1 L.W.710 (Thayammal) and, in particular, paragraphs 12,13 and 15 thereof on the ingredients of a Benami transaction under the Benami Act. (iv) Urmila Bala Dasi v. Probodh Chandra Ghosh and another AIR 1989 Cal 283 (Urmila Bala Dasi) for the proposition that the prohibition under the Benami Act would apply both to the institution and continued prosecution of proceedings. (v) Narayanan v. Gangadharan 1988 (2) MWN (Cr) 260. (vi) Ganjhu Upendra Singh v. Ganjhu Meghnath Singh, AIR 1939 Pat 598, that restrictions on alienations are void under Section 10 of the Transfer of Property Act, 1882(the TP Act). (vii) Kandhai Lal v. Sheo Nath, AIR 1936 Oudh 235, on the question of saleable interest. (viii) Nawab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Order XXI Rule 21 of the CPC, these Respondents contended that multiple execution petitions against the same respondents cannot be permitted because it constitutes an abuse of process. In support of these contentions, Respondents 2,4 and 5 relied upon the following judgments: (i) Ram Narayan Bhattad v. Krishna Bai Jhaver and six others 2004 (2) CTC 81 (Ram Narayan Bhattad). (ii) Prem Lata Agarwal v. Lakshman Prasad Gupta and others 1970 (3) SCC 440. (iii) Dr.Vimala v. M/s.Shriram Chits Investments Pvt. Ltd. 1999 (III) CTC 210. (iv) Bulk Trading S.A. v. Dalmia Cement (Bharat) Limited MANU/DE/2945/2005 (Bulk Trading). 10. The next contention on behalf of these Respondents was that Section 89 of CA 2013 was not complied with. In particular, these Respondents relied upon Section 89(8) of the CA 2013 to contend that neither the beneficial owner nor any person claiming through him can make a claim against the person in whose name the shares are registered unless Section 89 is complied with. The next contention was that courts in India cannot decide on the beneficial interest held by a foreign company. In support of this contention, these Respondents relied upon the judgment of the Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the suit; therefore, the judgments are not binding on it. Besides, it was contended that the said findings were rendered in the context of a derivative action by shareholders of a UAE incorporated entity and, therefore, are inapplicable to the present proceeding. As regards the contention on Section 89 of CA 2013, the Award Holder submitted that the obligations of the ostensible owner, beneficial owner and the company are continuing obligations under Section 89. More importantly, it was submitted that the said obligations are not imposed on a third party Award Holder. Therefore, the persons on whom such obligations are imposed cannot benefit from their default in fulfilling the obligations. Even the restriction under Section 89(8) is applicable only to the beneficial owner or a person claiming through him. Hence, such prohibition or restriction does not apply to a third party Award Holder. 13. The next contention of the Award Holder was that it is entitled to indulge in forum shopping by identifying and seeking orders against the assets of the Award Debtor, wherever there may be situated. In this case, the Award Holder relied upon the consolidated financial statements of the Awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. 15. On the existence of saleable interest, the Award Holder relied upon the following judgments: (i) Rahul S.Shah v. Jinendra Kumar Gandhi and Others 2021 SCC Online SC 341. (ii) Samson Maritime Limited v. Hardy Explanation and Ors. 16. With regard to the Benami Act, the Award Holder pointed out that the Benami Act does not apply to the creation of beneficial interest in shares. Besides, it was contended that the relevant property would be liable for confiscation if the Benami Act applied. By drawing reference to Sanjeev Mahajan and Sabita Rajesh Narang, the Award Holder pointed out that Sanjeev Mahajan was not an action instituted by an Award Holder. In Sabita Rajesh Narang, the conclusion of the Court was on the basis that no evidence was adduced. Ramachandar Rao dealt with the purchaser of a property and not an Award Holder. Greaves Cotton was decided on the basis of evidence that the third party is the real owner and not the ostensible owner. By referring to the judgments in Thayammal and Urmila Bala Dasi, the Award Holder submitted that the said judgments are clearly distinguishable on facts. With reference to the judgment in Fargo Freight, the Award Holder submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectors and shareholders, as on 31.12.2013, are set out and this includes sums of AED 0.69 million from Respondent 2 and AED 6.35 million from Respondent 4. With regard to beneficial holding by the Award Debtor, the two relevant paragraphs are set out below: 11. The Company's consolidated financial statements include certain assets (including investment, development and trading properties, available for sale investments, and investments in certain subsidiaries) held in the names of certain shareholders and related parties for the beneficial interest of the Group. These shareholders and related parties have provided the Group with an undertaking that these assets are held by them for the beneficial interest of the Group. We have reviewed these undertakings and confirm that these assets as at 31 December 2013 continue to be held by the shareholders and related parties for the beneficial interest of the Group and therefore it is appropriate to record these assets in the Group's consolidated financial statements. 23. We confirm that the shareholders of the entities listed in Appendix D hold shares in these entities for the beneficial interest of the Group as per the percentages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this is an execution proceeding by an Award Holder seeking attachment and sale of the shares of an Indian company. Thirdly, the Award Holder was not a party to those proceedings. Therefore, the objection on this ground is rejected. 21. The next objection relates to the Benami Act. The Benami Act seeks to prevent the institution of proceedings by a person claiming to be the real owner of property against the person in whose name the property stands. The contesting Respondents relied on Greaves Cotton to contend that the prohibition under Section 4 of the Benami Act would apply even in execution proceedings by a decree holder who seeks to proceed against an asset on the basis that the real owner there of is the judgment debtor. It should be noticed that Greaves Cotton did not deal with shares. In addition, it is evident from paragraph 4 of Greaves Cotton that the learned single Judge concluded that the person in whose name the property stood was the real and not ostensible owner, and this factual position was endorsed by the Division Bench. The Respondents also relied on Thayammal, which also dealt with immovable property and whether Section 45 of the TP Act could be relied on not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (3), without any reasonable cause, he shall be punishable with fine which may extent to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. (6) Where any declaration under this section is made to a company, the company shall make a note of such declaration in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with such fees or additional fees as may be prescribed. (7) If a company, required to file a return under sub- section (6), fails to do so before the expiry of the time specified (therein), the company and every officer of the company who is in default shall be punishable with fine which shall not be less than five hundred rupees but which may extent to one thousand rupees and where the failure is a continuing one, with a further fine which may extent to one thousand rupees for every day after the first during which the failure continues. (8) No right in relation to any share in respect of which a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 CPC is as under: ''21. Simultaneous Execution - The Court may, in its discretion, refuse execution at the same time against the person and property of the judgment- debtor.'' On perusal of Order XXI Rule 21, it is clear that the said provision relates to the initiation of execution proceedings against both the person and property of a judgment/award debtor simultaneously. The Award Holder herein does not seek simultaneous execution against the person and property of the Award Debtor. The scope of Order XXI Rule 21 CPC was examined in Ram Narayan Bhattad by a Division Bench of this Court, which concluded at paragraph 13 that it does not apply unless simultaneous execution against both the person and property of the judgment debtor is prayed for. Therefore, Order XXI Rule 21 CPC does not apply in this case. Moreover, the said provision not only uses the permissive expression 'may' but underscores the non-mandatory nature of the expression 'may' by also using the expression 'in its discretion'. However, whether the institution of multiple execution petitions constitutes an abuse of process is a distinct matter that warrants scrutiny. The Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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