State Bank of India & 12 Ors v (1) Vijay Mallya (2) Ladywalk Llp (3) Rose Capital Ventures Ltd (4) Orange India Holdings Sarl (2018)
A judgment of the Bangalore Debt Recovery Tribunal could properly be registered under the Foreign Judgments (Reciprocal Enforcement) Act 1933.
The first defendant applied to set aside an order registering a judgment of the Bangalore Debt Recovery Tribunal (DRT) in favour of the claimants, and to set aside a worldwide freezing order.
In relation to the registration order, the principal issue was whether the DRT judgment could properly be registered under the Foreign Judgments (Reciprocal Enforcement) Act 1933, which applied to India by virtue of the Reciprocal Enforcement of Judgments (India) Order 1958. The first defendant sought in the alternative to set aside the registration order, a stay of enforcement in England of the registration order, or an adjournment of his application to set aside for a sufficient period to enable his extant appeal in India against the DRT judgment, or his related challenge brought in the High Court of Bombay, to be disposed of.
In relation to the worldwide freezing order, the principal issue was whether it should be set aside because there was no risk of dissipation of assets, the claimants had delayed in seeking the order, or the claimants had been guilty of material non-disclosure when applying for the order.
Applications to set aside registration order or stay enforcement - When the DRT made a final order, the presiding officer of the DRT was required to issue a certificate of recovery to the recovery officer for the amount specified in the certificate. The fact that a DRT order could be enforced in India only through the recovery certificate process, which was a separate and exclusive execution process, as opposed to the standard process used for court judgments, did not mean that a DRT order should be regarded as incapable of being "enforced by execution" in India within s.2(1)(b) of the 1933 Act. The recovery certificate was in substance a form of execution for the enforcement of DRT orders. The fact that it was distinct from the ordinary process of execution did not take it outside the scope of s.2(1)(b) of the 1933 Act. The recovery certificate granted powers to the recovery officer to enforce the certificate for the claimant's benefit. However, the rights conferred by the certificate were the rights to receive the sums stated in it, and those rights were vested in the claimant: the recovery officer was merely acting as a collection or enforcement agent on the claimant's behalf (see paras 31, 44-45 of judgment). Further, there was no prohibition under Indian law on a successful DRT claimant seeking the recognition and enforcement abroad of a DRT order. The scope of the powers given to recovery officers to enforce DRT orders, and any question about the territorial or extraterritorial extent of their powers, was irrelevant to the question of recognition under the 1933 Act. The 1933 Act gave effect to a scheme for the international recognition and enforcement that was entirely independent of whatever enforcement powers and processes might exist under the domestic laws and procedures of the participating nations. There was no requirement under the 1933 Act to demonstrate that the foreign judgment sought to be enforced could be enforced extraterritorially by claimants or court officials in the judgment's country of origin. The only requirements were that the foreign judgment satisfied the requirements set out in the 1933 Act itself and the implementing statutory instruments, including the requirement that the judgment be capable of enforcement in the state of origin (paras 54-55). Moreover, the DRT fell within para.4 of the 1958 Order because it had unlimited jurisdiction pecuniary jurisdiction, and therefore it qualified for recognition and enforcement pursuant to the 1933 Act (paras 66-70). The DRT or its presiding officer also did not lack the power or means to make its judgments capable of enforcement under the 1933 Act or the 1958 Order (para.77). It followed that the DRT judgment could properly be registered under the 1933 Act. Further, viewing the matter in the round, the balance fell clearly in favour of allowing the registration order to stand and enforcement to take place. The registration order had been properly made, and it was not appropriate or just either to set it aside (even if the court had power to do so), to stay enforcement, or to adjourn the application to set it aside (paras 101-102).
Applications to set aside worldwide freezing order - The claimants had provided sufficient explanations for what might otherwise be regarded as a delay in applying for the worldwide freezing order. In circumstances where they had obtained restraint orders in India, had not appreciated that an application could be made in England until the DRT Judgment was obtained and could be registered, and applied as soon after that as they could obtain the necessary instructions, any delay did not undermine their case on risk of dissipation or otherwise constitute a ground on which the worldwide freezing order should be set aside. Further, viewing the matter in the round, the claimants had shown solid evidence of a real risk of dissipation of assets that justified the grant and continuation of the worldwide freezing order. It was also not appropriate to discharge the worldwide freezing order on the grounds of material non-disclosure. The claimants had established a good case for continuing the worldwide freezing order, and there were no grounds on which it was just to set it aside (paras 179-180, 196).