Home Information Cases SMAY Investments Ltd & Ors v Yogendra Sachdev & Ors (2003)

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SMAY Investments Ltd & Ors v Yogendra Sachdev & Ors (2003)

Summary

Where India rather than England was the natural forum for the resolution of a dispute about the ownership of, and investment in, an Indian company, a freezing order against the defendant was discharged and the claimants action in the UK stayed.

Facts

Interpartes application by the claimants SMAY and Bachchan ('B') to continue a the freezing order against the first defendant ('Sachdev') and defendant's applications for a stay of the UK proceedings and for orders setting aside service on the third ('RSIL') and fourth ('Manasvi') defendants. In 2001 B had entered an agreement (the Guildford agreement) with Sachdev to provide financial assistance to an Indian company, RSIL. Both parties were already shareholders in RSIL. The purported effect of this agreement was that B acquired voting control of RSIL. Prior to the Guildford agreement there had been in 1996 an alleged tripartite agreement between B, RSIL and the Manasvi. The terms and the reasons for this agreement were disputed by the parties. Sachdev alleged that B's adopted method of investment in RSIL had been to avoid tax, while B had alleged that the agreement did not exist. B had brought an action to protect the value of its investments in RSIL by seeking compensation from Sachdev. B alleged that Sachdev had breached his fiduciary duty to RSIL. Alternatively, B sought recovery of the investment in the event that the court ruled in favour of Sachdev on the tripartite agreement and the right of Manasvi to a transfer of B's shares. In 2002 B had obtained a without notice worldwide freezing order against Sachdev and permission to serve the claim form upon RSIL and Manasvi outside the jurisdiction pursuant to CPR 6.20(3). Sachdev had been served with the proceedings within the jurisdiction and RSIL and Manasvi had served in Bombay. The defendants sought to stay the action on the basis of forum non convenniens.

Held

(1) India rather than England was clearly the appropriate forum for the resolution of the dispute about the ownership of, and investment in, an Indian company. (2) The fact that the Guildford agreement had been made in England was not of itself sufficient to allow for a different conclusion. (3) The Undertakings of Sachdev not to: (i) deal with or dispose of assets without giving prior notice to B; (ii) submit to the jurisdiction of the Indian Court in relation to the derivative and personal claims presently being made by the claimants; and (iii) to abide by the rules made from time to time by the Indian Court were to be accepted and on that basis a stay ordered of the UK action. (4) Any further interim relief would be a matter for the Indian Court. (5) The freezing order would be discharged. In the light of the decision on the application for a stay, the service of the proceedings on RSIL and Manasvi out of the jurisdiction as necessary parties had to be set aside. (6) B's applications to continue the freeing order and for permission to bring the derivative claim would be refused. (7) B's application to continue the Indian proceedings commenced in breach of their earlier undertaking to the court would be permitted.

Claim allowed in part.

Chancery Division
Patten J
Judgment date
14 March 2003
References

​LTL 25/3/2003 : Times, April 1, 2003 : [2003] EWHC 474 (Ch)

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