Century Metal Recycling Private Limited v. Sachin Chhabra & Ors

judgment.

¶27I also find Supreme Court in Badat and Co. Bombay Vs. East India Trading Co. AIR 1964 SC 538 to have been concerned with a foreign judgment based on a foreign award. The question for consideration was, whether the foreign judgment could be enforced against the defendants by instituting a suit on the Original Side of the High Court of Bombay within whose jurisdiction the defendants at the time of institution of the suit were admittedly not residing. It was held by the Division Bench of the High Court of Bombay that the original cause of action having arisen wholly or in part within the limits of the original jurisdiction of the High Court, the suit was maintainable. Supreme Court however held (i) if the plaintiff was suing upon the original cause of action, there would have been no difficulty and the High Court could have granted leave under Clause 12 of the Letters Patent for Bombay to the plaintiff to institute the suit; (ii) however the plaintiff had chosen to sue not on the original cause of action but on the basis of the foreign judgment and the arbitral award; (iii) the judgment furnishes

an independent cause of action; (iv) the question would be, whether the cause of action furnished by it arose between the limits of original jurisdiction of the High Court; (v) the judgment was rendered in New York and therefore the cause of action furnished by it arose at that place and not anywhere else; (vi) this cause of action is really independent of the cause of action afforded by the contract and therefore if advantage was sought to be taken of it, the suit would not lie at Bombay; (vii) the Doctrine of Merger has been consistently held in England not to apply to a foreign judgment, with the result that despite the fact that a plaintiff has obtained a foreign judgment, he may nevertheless sue upon the original cause of action, instead of upon the judgment; (viii) when the plaintiff sues upon the original cause of action, no doubt the Court within whose jurisdiction, the cause of action arose, would be entitled to entertain the suit; (ix) but if on the other hand, the plaintiff chooses to sue upon the judgment, he cannot found jurisdiction for the institution of the suit on the basis of the original cause of action because once he chooses to rest himself on the judgment obtained by him in a Foreign Court, the original cause of action will have no relevance whatsoever, even though it may not have merged in that judgment; (x) since the plaintiff in that case had chosen to sue on the foreign judgment and cause of action whereof did not arise within the limits of the original jurisdiction of the High Court of Bombay, the suit based upon that judgment was beyond the jurisdiction of the Court.

¶28Contrary to what I thought, as per aforesaid dicta, cause of action available to the plaintiff did not merge in the judgment of Courts of USA obtained by the plaintiff on said cause of action and it was open for the plaintiff to again sue on the same cause of action in this Court if the cause of

action had accrued in territorial jurisdiction of this Court and if the suit claim was within time. However the plaintiff herein has not done so.

¶29I have already hereinabove, on a reading of the plaint found that the plaintiff in the present case has sued on the basis of foreign judgment and not on the basis of original cause of action. The same has been the tenor of the arguments of the counsel for the plaintiff. It is for this reason only that the counsel for the plaintiff has invoked Section 13 of the CPC and the plaintiff, while agreeing to the joint terms before the Foreign Court, is also found to have insisted on recording that the requirements of Section 13 of the CPC are fulfilled by the consensual foreign judgment. The plaintiff cannot now, upon the territorial jurisdiction of this Court having been challenged, fall back on the original cause of action.

¶30As far as the plea of the plaintiff, of the permanent place of residence of the defendants being within the territorial jurisdiction of this Court, Section 20 of the CPC permits the defendant to be sued within the jurisdiction of the Court in which the defendant "actually and voluntarily resides" and not within whose jurisdiction the defendant has permanent place of residence. Neither the defendant No.1 nor the defendant No.2 in the present case are pleaded to be actually and voluntarily residing or carrying on business within the territorial jurisdiction of this Court. The words "actually and voluntarily resides" are of some import and do not allow interpretation of Section 20 to vest jurisdiction in Court within whose territorial jurisdiction passport address of the defendant is or within whose territorial jurisdiction the permanent place of residence disclosed by the defendant in any other document, is situated or within whose jurisdiction

property of the defendant is situated.

¶31Supreme Court in Mohannakumaran Nair Vs. Vijayakumaran Nair

(2007) 14 SCC 426, held the Court in Kerala to be not having territorial jurisdiction because the defendant, at the time of institution of suit was residing in Saudi Arabia. It was further held that the subsequent change of the residence of the defendant, to within the jurisdiction of Kerala Court was immaterial as the relevant date is the date of institution of suit. It was further held that plaintiff is the dominus litus, but he can file a suit only in accordance with the CPC and not at any place where he desires. It was yet further held that it is one thing to say that a party has his residence in India but when the party is residing elsewhere, the suit could be filed only where the party is so residing at the time of institution of suit.

¶32Moreover, just like the plaintiff is holding the defendants to be bound by the foreign judgment and by the guarantee furnished in pursuance thereto, so is the plaintiff bound thereby and the plaintiff therein has agreed to enforce the consent terms and the judgment in terms thereof where the assets of the defendants are present. Though the plaintiff realising so has pleaded the asset of the defendants at New Delhi but the counsel for the plaintiff is unable to controvert that the documents placed by the defendants before this Court along with their leave to defend applications unequivocally show the defendant no.1 Sachin Chhabra to be not having any right, title, share or interest in the property at Lajpat Nagar, New Delhi. No other property within the territorial jurisdiction of this Court has been disclosed. Though the counsel for the plaintiff has also argued that the defendants no.1&3 are filing their Income Tax returns in India but on enquiry whether the same disclose

any assets in India has not been able to show any. Without the plaintiff being able to show even prima facie before this Court any assets of the defendant no.1 Sachin Chhabra or the defendant no.2 TCC Wireless Inc. in India, as per the consent terms, the plaintiff cannot enforce the joint motion / consent terms / foreign judgment in this Court and for which purposes the present suit has been filed.

¶33The counsel for the plaintiff has then contended that a perusal of clause "j" supra of the joint motion as reproduced above shows it to be in contemplation of the parties that the judgment may be enforced in India.

¶34Clause "j" of the joint motion as reproduced above is paying lip service to the requirements of Section 13 of the CPC and ensuring that in the event of the plaintiff being entitled to enforce the judgment in India, the plaintiff is not faced with the defences which make a foreign judgment inconclusive in India. However clause "j" cannot be read as a clause pertaining to territorial jurisdiction. If the plaintiff had been able to show any assets of the defendants no.1&2 within the territorial jurisdiction of this Court, the counsel for the defendants also does not dispute that this Court would have territorial jurisdiction (though the view of the Division Bench of Madras High Court is otherwise).

¶35The only two other arguments of the counsel for the plaintiff are that clause "k" of the joint motion as reproduced above also provides that the defendants waive contesting the plaintiff"s enforcement of consent judgment in "any jurisdiction" and that the plaintiff in the plaint has also pleaded that the defendant no.1 Sachin Chhabra is a permanent resident of New Delhi and is carrying Indian passport.

¶36As far as the first of the aforesaid contentions is concerned, the same cannot be read de hors the remaining part of clause "k". In the first part of clause "k" the parties have agreed to enforcement of the consent judgment in jurisdiction where the assets of the defendants are present. In my view, a wholesome reading of clause "k" would not entitle the plaintiff to enforce the consent judgment even in a jurisdiction where the defendants do not have any asset. The words "any jurisdiction" have to be read as meaning any jurisdiction in which the assets of the defendants are present. Not only so, it is the settled principle that by consent, jurisdiction cannot be vested in a Court. Reference if any required may be made to Harshad Chiman Lal Modi Vs. DLF Universal Ltd. (2005) 7 SCC 791.

¶37As far as the second of the aforesaid contentions is concerned, as aforesaid, the words used in Section 20 of the CPC are "where the defendant actually and voluntarily resides or carries on business or personally works for gain" and not the place where the defendant is permanent resident of or the place from where the passport of the defendant is issued. There is no plea that the defendant no.1 Sachin Chhabra actually resides or carries on business within the territorial jurisdiction of this Court. The plaintiff, in the plaint has not pleaded any business of the defendants within the territorial jurisdiction of this Court or even given the place of residence of the defendant no.1.

¶38There is thus no merit in the said contentions either. Moreover, the aforesaid contentions are available only qua the defendant no.1 Sachin Chhabra and not qua the defendant no.2 TCC Wireless Inc.

¶39Though the counsel for the plaintiff has also contended that the

defendants have in their leave to defend applications not disputed their liability for the monies claimed and has called upon this Court to consider the plight of the plaintiff, who for the reason of heavy costs required to be incurred for enforcing the judgment in US or in any other jurisdiction where the defendants have assets is unable to do so but I am afraid the same cannot constitute legal grounds to entertain a suit when this Court is not found to have territorial jurisdiction. I have however called upon the counsel for the defendants to attempt to have the controversy amicably resolved, to prevent further litigation. The counsel for the defendants states that he will communicate the same.

¶40Having found this Court to be lacking territorial jurisdiction to entertain the suit, not only are the defendants no.1&2, against whom only the suit claim lies, are entitled to leave to defend but the suit is also dismissed with liberty to the plaintiff to approach the Court of appropriate jurisdiction.

No costs.

RAJIV SAHAI ENDLAW, J.

DECEMBER 01, 2017 "pp"/bs.. (corrected & released on 28th December, 2017)

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 1st December, 2017. + CS(COMM) 449/2017, IA No.7571/2017 (under Order XXXIX Rules 1&2 CPC), IA No.9903/2017 (under Order XXXVII Rule 3(4) CPC), IA No.9948/2017 and IA No.9949/2017 (both for exemption), IA No.11585/2017 (under Order XXXVII Rule 3(5) CPC), IA No.11586/2017 (under Order XXXVII Rule 7 CPC), IA No.11587/2017 (under Order XXXVII Rule 3(5) CPC), IA No.11588/2017 (under Order XXXVII Rule 7 CPC), IA No.11589/2017 (under Order XXXVII Rule 3(5) CPC) and IA No.11590/2017 (under Order XXXVII Rule 7 CPC) CENTURY METAL RECYCLING PRIVATE LIMITED .....Plaintiff Through: Mr. Rahul Gupta and Mr. Shekhar Gupta, Advs. Versus SACHIN CHHABRA & ORS ..... Defendants Through: Mr. Manik Dogra and Mr. Aditya Goyal, Advs. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The plaintiff has sued under Order XXXVII of the Code of Civil Procedure, 1908 (CPC) for recovery of Rs.2,25,64,500/- jointly and severally from the three defendants, namely (i) Sachin Chhabra, (ii) TCC Wireless Inc., and (iii) Tarun Chhabra. 2. The suit was entertained and summons for appearance issued and on the defendants entering appearance, summons for judgment served on the defendants and the defendants have filed separate leave to defend applications and which are listed for hearing today. 3. The counsel for the plaintiff has at the outset drawn attention to the order dated 13th July, 2017, vide which the personal presence of the defendants no.1&3 was directed for 31st August, 2017, and to the order dated 31st August, 2017, when the counsel for the defendants was asked to inform as to when the defendants no.1&3 whose addresses given in the plaint are of United States of America (USA), are coming to India. The counsel for the plaintiff states that the personal presence of the defendants no.1&3 before this Court has to be enforced. 4. I have enquired from the counsel for the plaintiff, the reason for which the personal presence was so directed. 5. The counsel for the plaintiff states, "to furnish security for the suit amount". 6. I have enquired from the counsel for the plaintiff, whether not once leave to defend applications are heard and if leave is not granted, the plaintiff would be entitled to decree straightaway and the need for directing the defendants to furnish security would also not arise. 7. Else, it prima facie appears, that if the statement under Order X of the CPC were to be recorded of the defendants no.1&3, the suit would inter alia be converted into an ordinary suit and for which the counsel for the plaintiff is not agreeable. 8. The counsels have thus been heard on the leave to defend applications. 9. The plaintiff has sued, pleading (i) that the defendant no.2 TCC Wireless Inc. is a company duly registered and incorporated under the laws of USA and the defendant no.3 Tarun Chhabra is the majority shareholder and Director in-charge and responsible for all the affairs and business of the defendant no.2 TCC Wireless Inc.; (ii) the defendant no.1 Sachin Chhabra is the brother of the defendant no.3 and has executed a personal guarantee in favour of the plaintiff for payment of the amount claimed in the present suit; (iii) that the defendants no.1&3 have been residing and carrying on business in United States of America but are citizens of India, holding Indian passports; (iv) that on 5th February, 2016 a summary judgment was passed by the Court of United States District Court for the District of Maryland (Northern Division), in favour of the plaintiff and against Metal Worldwide Inc. in the sum of US$ 7,00,000/- together with interest at 15% per annum from 1st April, 2011 to 5th February, 2016; however the suit was kept pending for decision on other issues; a compromise was entered into between the parties and a joint motion of compromise dated 20th July, 2016 signed between the parties and filed for entry of consent judgment and for withdrawal of remaining un-resolved counts; (v) that as per