Itc Ltd. v. Shri Sukharta Finance & Leasing Pvt. Ltd.

ORAL JUDGEMENT:-

These motions are by plaintiffs claiming principally the following reliefs:-

NOTICE OF MOTION NO. 727 OF 2002

(a) Disclosure of transactions and documents between defendants and Chitalias;

(b) Deposit by the Defendants in this Court of the various amounts received by them which are the subject matter of claim Nos. I to VI in the plaint;

(c) Disclosure of the present status of the amounts received by the defendants;

(d) Injunction restraining defendants from removing their assets from the jurisdiction of this Hon'ble Court;

NOTICE OF MOTION NO. 1740 OF 2002

(a) Disclosure by defendants of all their assets;

(b) Injunction restraining defendants from dealing with/disposing their assets;

NOTICE OF MOTION NO. 134 OF 2003

(a) Deposit by defendant Nos. 2 to 6 and 8 to 10 of Rs. 2 Crores in this Court in respect of the 15 Sulzer Machine transaction;

2. Plaintiffs as well as contesting defendants made lengthy submissions. Parties have filed number of affidavits and relied upon various documents. Submissions in writing have also been handed in. Reliance is placed on several decisions of Indian as well as English Courts. Therefore, it is necessary to deliver a detailed order.

3. At the outset, Mr. Seervai, learned Senior Counsel appearing for plaintiffs points out that two notices of motion being Nos. 727 of 2002 and 134 of 2003 are being pressed by him. As far as other motions are concerned either they are worked out or the reliefs prayed therein would not survive in the light of the findings and conclusions in these motions. Mr. Dwarkadas, learned Senior Counsel appearing for some of the contesting defendants has also advanced submissions only insofar as reliefs claimed in these motions and is agreeable to the above course of action.

4. At the further outset, it is necessary to clarify that all observations and findings are prima facie and recorded only for the purpose of disposal of these motions. They shall not in any manner influence the Court at the trial of the suit.

5. Mr. Seervai, learned Senior Counsel appearing for plaintiffs submits that the plaintiffs are desirous of claiming further reliefs and are, therefore, not satisfied with the ad-interim orders passed by this Court. He invites me to go into all aspects of the matter and render a decision as to whether plaintiffs have made out a strong prima facie case insofar as above mentioned reliefs, whether balance of convenience is in their favour and whether, not only they, but other creditors would suffer irreparable harm and injury if the aforesaid preventive as well as mandatory orders and directions are not issued by this Court.

5A. Plaintiffs are filing the above suit for and on behalf of:

“i) George E. Mills Jr., who is the Trustee in bankruptcy of the estates of one Suresh Chitalia and one Devang Chitalia, both residents of U.S.A pending before the United States Bankruptcy Court, Middle District of Florida, Orlando Division (hereinafter referred to as “the Bankruptcy Court”).

ii) Leigh R. Meininger who is the Trustee in Bankruptcy of EST Fibers Inc. a Company registered in New Jersey USA, pending before the said Bankruptcy Court;

iii) Gene T. Chambers who is the Trustee in Bankruptcy of Lokman Establishemnt a company registered in Leichtenstein pending before the said Bankruptcy Court.

5B. Defendant No. 1 is a company incorporated under the provisions of the Companies Act, 1956 and allegedly carries on finance and leasing business. The shareholding of defendant No. 1 is held by Suresh Chitalia, Devang Chitalia (the son of Suresh Chitalia), defendant No. 12 (wife of Devang Chitalia) and at the relevant time, by defendant No. 2. Defendant No. 2 is a business associate and friend of Suresh and Devang Chitalia and at the relevant time was a shareholder of defendant No. 1. Defendant No. 2 personally, through his family members and the Companies controlled by him is involved in all the transactions which form the subject matter of the suit. Defendant No. 10 is a company owned by defendant No. 2 and his family/associates. Defendant No. 11 is the father in law of Devang Chitalia and inter alia was involved in the transaction set out herein. Defendant Nos. 2 to 8 all reside and/or carry on business in Mumbai. Defendant No. 12 is the wife of Devang Chitalia.

All defendants have close business and other relations with the Chitalia family and their business concerns and have represented them in various dealings in India.

6. It is emphasised that the present suit is not filed by ITC Ltd. in its corporate capacity but as Trustee in bankruptcy of the Chitalias - Chitalia Companies. It is the case of plaintiffs that they stand in the shoes of the Trustees in bankruptcy of the estates of Chitalia - Chitalia Company.

7. The present suit has been filed to recover the monies for the benefit of the Estates in Bankruptcy of the Chitalias/Chitalia Companies. The present suit was filed in view of the orders dated 8th March 2000 and 12 and 13 February 2002 passed by the United States Bankruptcy Court, Middle District of Florida.

The present suit is in respect of the very same transactions which were found to be entered into by the Chitalias, and for recovering the same amounts which had been found to be secreted away by the Chitalias and the Chitalia companies, as per the said orders of the Bankruptcy Court.

8. The present suit comprises of six claims, which are also the subject matter of the motions before the Bankruptcy Court and the orders passed by the Bankruptcy Court, giving specific leave to the plaintiffs to adopt the above proceedings. The plaintiffs seek to recover the monies covered by the transactions in respect of each of the six claims. Plaintiffs also seek discovery and inspection, from the defendants, of all the dealings between the defendants and the Chitalias from 1st January 1991. In particular, the plaintiffs seek discovery and inspection, from the defendants, of all the papers and documents in respect of each of the said six claims. The six claims in the suit are as follows:-

(1) U.S$ 255,457.21 - Allegedly transferred from EST Fibres Inc. to the defendant No. 2 (purportedly towards share capital of defendant No. 1, at the behest of defendant No. 2)

(2) Rs. 2 Crores - allegedly transferred by the Chitalias to defendant No. 2 and 3 purportedly as fixed deposits;

(3) DM 1,265,625 - deliberately secreted and kept with defendant No. 2.defendant No. 10 in respect of the 15 Sulzer Machine transaction with Modern Suitings;

(4) U.S$ 125,000 - deliberately secreted and kept with defendant No. 2.defendant No. 9 in respect of the 25 Sulzer Machine transaction;

(5) U.S 144,825.26 - deliberately secreted and kept with the defendant No. 2.defendant No. 10 in respect of the Yellow Crude Sulphur transaction;

(6) Aggregate sum of U.S$ 580,289— Allegedly transferred by the Chitalias to defendant No. 2 and Defendant No. 3 to 8 who are family members of defendant No. 2.

9. ITC Limited had obtained a judgement dated 16 February 1999 against the Chitalias and the Chitalia Companies in the District Court of New Jersey, U.S.A in the sum of U.S$ 15,102,853.81. Prior thereto on 26 March 1998, U.S Magistrate Ronald J. Hedges forwarded his report and recommendation containing his Findings of Fact and Conclusions of Law on the proceedings of the amended complaint jointly filed by ITC Limited against the Chitalias. On 2nd July 1998, the U.S District Judge having reviewed de novo the report and recommendation, inter alia, ordered that the report and recommendation is adopted as the opinion of the Court.

10. On 23rd February 1999 just after the judgement, the Chitalias filed voluntary bankruptcy petitions under Chapter 7 of the Bankruptcy Code praying to be discharged as bankrupts and also claiming exemptions in respect of some of their assets. The original judgement was passed against the Chitalias in the State of New Jersey, where they had all along resided and carried on their business. However, the Chitalias filed the bankruptcy petitions in the State of Florida, in view of the favourable environment in Florida for persons seeking protection under its bankruptcy laws. Thereafter, EST Fibres also filed a voluntary bankruptcy petition on 24 February 1999 under Chapter 7 of the Bankruptcy Code. ITC Limited filed an involuntary bankruptcy petition against Lokman Establishment on 4 June 1999. Notices under Chapter 7 of the Bankruptcy Code were issued in respect of the Chitalias and EST Fibres and an order under Chapter 7 was entered in respect of Lokman Establishment on 6 July 1999. The Trustees in Bankruptcy, on whose behalf this Suit has been filed, were appointed. Upon such appointment, all assets of the Chitalias/Chitalia companies, stood vested in the Trustees, as the Estates in Bankruptcy.

11. ITC Limited filed objections to the Chitalias' claim for exemptions. On 8 April 1999, ITC Limited was authorised to examine the Chitalias pursuant to Rule 2004 of the Federal Rules of Bankruptcy. On 25 May 1999, ITC filed a complaint objecting to the Chitalias discharge pursuant to the provisions of the Bankruptcy Code. ITC examined both the Chitalias in May 1999, and thereafter in November 1999. ITC completed the depositions on 19 November 1999.

12. Pursuant to the disclosure made in the course of the said depositions, on 27 January 2000, ITC filed two Motions, one in the estate of Devang Chitalia and the other in the estate of Suresh Chitalia before bankruptcy court in Florida. The motions were filed to pursue and recover the Chitalias' intererst in the defendant No. 1, 2 and 3 on behalf of the Bankruptcy Estates and for the benefit of the creditors of the Estate. The motions set out that the funds obtained from the defendants would be held subject to the orders of the Bankruptcy court for distribution of the funds. The Motions were filed pursuant to the disclosures made by the Chitalias in the course of the bankruptcy proceedings.

13. The bankruptcy court passed two orders dated 8 March 2000 and allowed the Motions filed by ITC Limited. I.T.C Limited applied to the Reserve Bank of India for the requisite permission to commence litigation in India and to incur legal expenses on behalf of the Estates of the Chitalias and the Chitalia companies. The Reserve Bank of India granted permission by a letter dated 3 August 2001.

14. On 4 December 2001, ITC filed four supplemental motions before the Bankruptcy Court for leave to pursue and recover additional assets secreted away by the Chitalias and the Chitalia Companies. These supplemental motions were filed on behalf of the Bankruptcy Estates and for the benefit of the creditors of the estate to pursue and recover the monies secreted away by the Chitalias and Chitalia Companies. These Supplemental Motions were filed after a further review of the papers in the bankruptcy proceedings. The supplemental motions record the actions of the Chitalias and the Chitalia Companies to secrete monies away by entering into various transactions with the defendants with a view to park monies with the defendants. The details and particulars of the said transactions formed part of the supplemental motions, as also the relevant parts of the depositions of the Chitalias. The Supplemental motions also contained the legal arguments based upon which the Trustees of the Bankruptcy Estates were entitled to seek and recover the funds transferred to the defendants.

15. The Bankruptcy Court, vide its orders dated 12 February 2002 and 13 February 2002 allowed the said supplemental motions. The said orders record that no objections to the said supplemental motions were filed by the debtors, Trustees or any party in interest. The said orders were passed after hearing the parties and after considering the facts and arguments made in the supplemental motions. The attorney of Chitalias was served with the proceedings, attended the proceedings, and did not object to the orders being passed on the supplemental motions.

16. It is in pursuance of the aforesaid orders and proceedings that the present suit has been filed and Mr. Seervai submits that after filing of this suit and an application being made for ad-interim orders in terms of Notice of Motion No. 727 of 2002, this Court directed defendants to furnish on oath full and complete disclosure as regards the present status of the various amounts received by them.

17. Mr. Seervai states that the order passed by this Court was communicated. Instead of complying with the same, the defendants flouted the said orders which compelled filing of subsequent motion. Notice of Motion No. 727 of 2002 was placed before this Court on 9 April 2002 and this Court observed that a prima facie case is made out of nexus between the assets of Chitalia and the defendants and, therefore, ad-interim directions as prayed for in prayer clause (c-i) of the motion can be granted.

18. Mr. Seervai submits that against above order which was ad-interim in nature, defendant Nos. 2 to 6 and 8 to 10 filed appeals and the Division Bench was pleased to reject the same. Under the garb of complying with the said order, these defendants sought extension of time but chose to file a special leave petition, which was dismissed by the Supreme Court on 10 May 2002. The application for extension of time to file affidavits of disclosure was also rejected by the Supreme Court. According to Mr. Seervai, orders passed by the Division Bench and the Supreme Court thus concluded the issue of maintainability of the suit as well as the notice of motion and power of the Court to grant interim relief. He submits that the conduct of defendants is such that at every stage, they avoid compliance with orders and directions of this Court. A very innocuous order of making disclosure of transactions and acts on oath has not been complied with which goes to show that the defendants have indeed assisted the parties to the bankruptcy proceedings in syphoning of monies and bringing them in India.

19. Mr. Seervai has taken me through the affidavits filed from time to time in support of the aforesaid propositions, claimwise.

20. Mr. Seervai contends that as far as claim in respect of Sukhakarta is concerned, it arises out of a transfer by EST of an aggregate sum of U.S$ 255,457.21 (in two tranches of U.S$ 200,000 and U.S$ 55,457.21 respectively) to the defendant No. 2, allegedly for the purchase of shares in the defendant No. 1 by the Chitalias. The transfers were effected at the instance and behest of the defendant No. 2. The shares were purchased in the names of Suresh Chitalia, Devang Chitalia and defendant No. 12 (Devang Chitalias' wife). The purported investment was obviously nominal and sham. In fact, the said amounts have been parked with defendant No. 2, through defendant No. 1, to defraud the bankruptcy estates. Prior to the purported investment, defendant No. 1 had a paid up capital of only Rs. 2000 and did no business. The shares were worthless and had a value of less than zero. Defendant No. 2 in his initial disclosure affidavits, quite characteristically, falsely denied that he had any thing to do with defendant No. 1. This false denial was obviously meant to distance himself from the moneys received by his company from the Chitalias. In their affidavit dated 13 August 2004 the plaintiffs conclusively established that defendant No. 1 was owned, controlled and managed by defendant No. 2 and his friends and associates.

21. Mr. Seervai has taken me through the correspondence and other documents and contended that the entire transaction is a camouflage inasmuch as there is no question of any genuine purchase of shares of a defunct company. The entire investment is sham and bogus.

22. As far as claim No. 2 is concerned, the same pertains to transfer by Suresh and Devang Chitalia of Rs. 1 Crore each to defendant Nos. 2 and 3. Non repartriation undertakings in respect of this sum of Rs. 2 Crores were requested by the defendant No. 2 and were sent by Suresh and Devang Chitalia. These documents have been admitted by the defendants.

23. As far as claim No. 3 is concerned, according to Mr. Seervai, the same arises thus:-

EST Fibers Inc (EST), which is one of the Chitalia Companies, sold 15 Sulzer Machines to Modern Suitings. EST opened a letter of credit in favour of the Italian supplier, one Tessitura Innocenti e Nesi SPA (Tessitura), and paid Tessitura the price of the goods supplied to Modern. EST one of the Chitalia companies, in turn, were to be paid by Modern. The goods were received by Modern. Modern had to pay EST/the Chitalias for the said goods. Modern has admittedly deposited Rs. 2 Crores with the defendant No. 10 towards the purchase price of the goods. The said Rs. 2 Crores is part of the consideration receivable by EST/the Chitalias in respect of the said 15 Sulzer machines. The said sum of Rs. 2 Crores is admittedly, till date, lying with the defendant No. 10. However, the defendants have falsely contended that the transaction was cancelled. Further, the defendants have stated that the said money is lying with the defendant No. 10 in trust for Modern. The 15 Sulzer machines were supplied by EST/the Chitalias to Modern.

24. As far as claim No. 4 is concerned, Mr. Seervai submits that this transaction deals with the sale of 25 Sulzer machines by the Chitalias, through Exim to the defendant No. 9, for a sum of U.S$125,000/-. The said machines were delivered after the same were inspected on three separate occasions. Despite the goods being delivered after repeated inspections, the defendants have contended that the said machines were returned because they did not comply with certain electrical specifications.

25. The fifth claim according to Mr. Seervai is that the Chitalias sold 2500 MT of yellow crude sulphur to the defendant No. 10 for U.S$ 144,825.26. The sulphur was admittedly received by the defendant No. 10. The defendant No. 10 has failed to make payment for the said sulphur to the Chitalias and continues to hold the said sum of U.S$ 1,44,825.26 for and on behalf of the Chitalias. The defendant Nos. 2 and 10 came up with a false story that the sulphur transaction was cancelled because the sulphur was unusable.

26. The last claim according to Mr. Seervai is foreign exchange gifts and FERA immunity scheme transfers. The Chitalias and Chitalia companies transferred an aggregate sum of U.S$ 580,289 to the defendants. The defendants 2 to 6 have on their own admission, received USD 165,015 allegedly under the FERA immunity scheme and US $ 91,792 allegedly as Foreign Exchange gifts from Chitalia companies. These are being sheltered by the said defendants. These monies vest in the plaintiffs and the plaintiffs are entitled to recover the same for the benefit of the estates in bankruptcy. The defendant No. 2 has received three sums of U.S$ 100,000 each (aggregating to U.S$ 300,000/-) It appears that this sum of U.S$ 300,000 has been received by the defendant No. 2 in Zurich. This amount (which is a part of U.S$ 580,289/-) is also liable to be recovered by the plaintiffs for the benefit of the estates in bankruptcy.

27. In the light of the above, Mr. Seervai submits that the suit is a substantive suit filed for recovery of monies belonging to the estates of Chitalia and Chitalia companies. The suit seeks to recover monies which the Chitalias have sheltered with the defendants through a series of nominal, sham and bogus transactions. He submits that these monies at all time belonging to the Chitalia/chitalia companies now vest in the estates in bankruptcy of Chitalia/Chitalia companies and that the defendants have no right, title or interest in them. He submits that the averments in this behalf are set out in paras 4, 40 to 42 based upon which prayers (b) to (e) are claimed. He submits that to the extent that whereabouts of the monies covered by claims in the suit are not known, the suit seeks to pursue, trace and recover them.

28. He submits that neither is the suit for execution nor is it purely an action for tracing. He submits that all contentions of defendants as regards maintainability of the proceedings are erroneous. He submits that as far as maintainability of the proceedings is concerned, this Court will have to proceed on the basis that the averments in the plaint are correct. The pleadings of plaintiffs, therefore, have to be accepted. He submits that the arguments of the defendants on demurer on this aspect cannot be accepted.

29. In support of their submission that the suit is a substantive suit and is maintainable as such, the plaintiffs strongly rely upon the Judgement of this Court in the case of Rotopacking Materials Industry v. Ravinder Kumar Chopra, reported in 2003 (6) BOM C.R 6. The fact situation in this case according to plaintiffs was in many respects similar to the present case. This Court while considering the nature of the suit filed, and whether it was maintainable, held that the suit was a substantive suit and was therefore clearly maintainable. This was, despite the fact that the plaintiffs had chosen to limit the duration of its injunction and also make it dependent upon the outcome of the English proceedings. This Court also saw no difficulty in entertaining the proceedings despite the fact that the breach of trust emanated or commenced outside India and despite the fact that some or even all the parties involved therein resided outside India. Mr. Seervai, in support of his submissions strongly relies upon paras 31, 34, 38, 43, 47, 48, 63 and 64 of the said judgement.

30. Though, the present case is not solely for purposes of tracing, it is submitted on the authority of the unreported judgement of this Court in the case of Standard Chartered Bank v. A.K Menon in Miscellaneous Petition No. 27 of 1994, that even a suit filed solely for purposes of tracing would be maintainable as a substantive suit. This Court discussed the case law on tracing in paras 7 to 12 of the judgement. Significantly, this Court extensively refers to and strongly relies upon the judgement of the House of Lords in the case of Norwich Pharmacal Co. v. Commissioner of Customs and Excise reported in 1973 (2) All E.R 943 and the judgement of the Court of Appeal in the case of Bankers Trust Co. v. Shapira reported in 1980 (3) All E.R 353 in support of its conclusion that an action simplicitor for discovery was maintainable.

31. Mr. Seervai further submits that on the basis of the observations in the above unreported judgement, it is clear that the principles enunciated and applied by this Court are not restricted to the provisions of the Special Courts Act.

32. The approach of the Courts to new and modern problems that confront them has been adverted to in some detail by the Supreme Court in the case of M.V.AL Quamar v. Tsavliris Salvage (International) Ltd. reported in A.I.R 2000 S.C 2826. The Supreme Court has dealt with this aspect in paras 49 to 55 of the judgement.

33. It is submitted that the defendants are holding various amounts which are the subject matter of the suit, in a fiduciary capacity, for and on behalf of the respective Estates in Bankruptcy. In this context the plaintiffs submit that the principles contained in Sections 23, 63, 66, 84, 86 and 88 of the Indian Trusts Act, 1882 are relevant and apply to the defendants and to the monies held by the defendants in a fiduciary capacity for and on behalf of the respective Estates in Bankruptcy of the Chitalia/Chitalia Companies. It is submitted on the basis of the case law cited that as the defendants hold the monies in a fiduciary capacity and in trust, the plaintiffs being the Trustees in Bankruptcy of the respective Estates of the Chitalia/Chitalia companies are entitled to recover the same, as also, where necessary, to maintain a tracing action against the defendants.

34. Mr. Seervai submits that when the suit was instituted, the plaintiffs did not have information as to the full extent of the operation of Chitalia/Chitalia companies and their dealings with the defendants. Only limited information was available. That is how, the plaint proceeds. According to Mr. Seervai, he submits that to the extent the information was not available disclosure orders were sought for from this Court and the same were granted. Pursuant to these orders between April 2002 and January 2005, the defendants filed 23 affidavits in all the notices of motions. However, piece-meal disclosure is made. He submits that submissions have been made on the basis of the affidavits and the disclosures made therein. Hence it is false to contend that the original case pleaded in the plaint has been changed in any manner. He submits that the case as pleaded now be taken into account along with averments in the plaint. He submits that all technical arguments canvassed on behalf of defendants with regard to the case set up in the pleadings of the plaintiffs ought to be rejected. He submits that this aspect is clear from the decision of this Court rendered by learned Single Judge (H.L Gokhale, J) in the case of M. Sreenivasulu Reddy v. Kishore Chhabria, reported in 1995 (5) Co. Law Journal 81.

35. Mr. Seervai also places strong reliance upon a judgement in the case of Ei Ajou v. Dollar Land Holdings plc. reported in 1993 (3) All ER 717.

36. Mr. Seervai then submits that as regards the three transactions, namely, of the purchase of Sukhakarta Shares, alleged gifts and the foreign remittances allegedly under the immunity scheme and the deposits of Rs. 2 Crores, the documentary record now before the Court clearly establishes that these transactions were in reality nothing but a devise of the Chitalias, With the active connivance and collusion of the defendants, to secrete their funds to India and park them with the defendants. The receipt of these monies by the defendants constitutes a case of both “knowing receipt” and “knowing assistance”.

37. As regards the other three transactions of 15 Sulzer Machines, 25 Sulzer machines and sale of yellow crude sulphus, it is submitted that there is more than adequate pleading in the plaint and in the subsequent affidavits filed in the several notices of motion which clearly shows fraudulent intent on the part of the defendants, in connivance and collusion with the Chitalias, to retain the monies in India thereby depriving the Estates in Bankruptcy of the Chitalias/Chitalia companies. Fraudulent intent to deprive the creditors of their monies is almost self evident, and certainly does not require more detailed or elaborate pleadings.

38. He submits that there are no lacunaes inasmuch as alleged absence of declaration of invalidity of the 6 transaction in question would not be of any assistance. In any event, there is no question of plaintiffs having to seek such declaration or the suit and the motions failing allegedly on this count. All the three transactions are clearly bogus as demonstrated above. They are a nullity. They are void ab initio. For such transaction no declaration need be claimed. As far as other three transactions are concerned, he submits that the retention of monies in India by defendants on behalf of Chitalia and for the benefit of Chitalias with the intent to defraud creditors in estate in bankruptcy is the impugned act. Therefore, there is no question of the plaintiffs having to seek declaration with regard to these three transactions as well. In any event, the prayers in the plaint are based upon comprehensive submissions and, therefore, it is not open for the defendants to raise any technical pleas. The same are clearly frivolous.

39. I will advert to the other submissions of Mr. Seervai a little later, because they are raised mainly in rejoinder to the submissions of the defendants.

40. Mr. Dwarkadas, learned Senior Counsel appearing for defendants, on the other hand submits that in the present suit, the plaintiffs have prayed for various interlocutory reliefs against the defendants such as:-

i) Disclosure of Assets and their whereabouts;

ii) Disclosure of the documentation;

iii) Orders for injunction;

iv) Orders to deposit various amounts in Court;

He submits that the claim is based upon the averments and contentions that Chitalias had fraudulently secreted their assets to India with a view to defeat recovery action against them in U.S.A and that the monies transferred by Chitalias are held in trust for and on behalf of the estate of Chitalias. Therefore, plaintiffs are not entitled to recover the same.

41. He submits that the aforesaid is the basis of the fraud pleaded by the plaintiffs. However, he submits that plaintiffs have failed to furnish any particulars whatsoever with regard to the alleged fraud such as when it has taken place, who are the perpetrators, the time and place where it took place etc. He submits that the pleadings are vague and cryptic. The plaint is verified by an officer of the plaintiffs who admittedly has no knowledge of facts.

42. Most importantly, it is contended that assuming whilst denying that the plaintiffs are entitled to act on behalf of trustees in bankruptcy proceedings, it is quite apparent from the U.S Bankruptcy proceedings that there is no finding whatsoever rendered by the U.S Bankruptcy court that the monies transferred to the defendants in India were either monies belonging to the Chitalias or that the Chitalias fraudulently transferred the same in order to evade recovery by their creditors. It is respectfully submitted that as in the case of insolvency proceedings or winding up proceedings which may be instituted in an Indian court against an Indian defendant/respondent, it is solely the jurisdiction of insolvency/bankruptcy court of the Country where the insolvency/bankruptcy proceedings are taken, to exercise the power and/or jurisdiction to set aside any completed transfers on the ground of alleged fraud by the bankrupts/insolvents. No such finding has been rendered by the U.S bankruptcy court.

43. Whether there has been any fraud by the Chitalias in order to evade recovery by the creditors of Chitalias in the U.S is a matter governed entirely by U.S law. U.S law being a foreign law is a question of fact, the case of fraud therefore as pleaded by the plaintiff cannot be determined under the Indian law. The plaintiffs have neither pleaded nor let in any evidence whatsoever on the question of facts namely, the U.S law and on the contrary are attempting to have the transactions effected by Chitalias and Exim set aside by applying Indian law, which it is respectfully submitted, is not permissible.

44. In any event, as more particularly set out in the individual claims the plaintiffs have attempted to substitute a case of fraud in the affidavits filed in support of its various notice of motion, from the fraud as pleaded in the plaint.

45. It is also submitted that a charge of fraud must exclude every hypothesis of good faith and honesty, as there is a presumption of honesty that weighs in favour of the person charged with fraud. Further, the standard of proof applicable to a charge of civil/tortious fraud is a standard that is higher than the balance/preponderance of probabilities standard applicable to civil cases generally.

46. As far as the case on Trust and tracing action Mr. Dwarkadas submits that, at the outset, it is the case of the plaintiffs that the monies and assets which form the subject matter of the six claims represent the property and assets of the Chitalias and Chitalia companies and/or that they belong to the estate of the Chitalias. There is however no pleading in the plaint by which a relationship of trustee and beneficiary between the plaintiff and the Chitalia/Chitalia companies can be established. The plaint proceeds on the assumption that Chitalias and Chitalia companies owed a fiduciary duty to the plaintiffs in respect of the dealing between the plaintiffs and the Chitalias/Chitalia companies. There is nothing to substantiate this erroneous assumption.

47. By their very nature, the transactions which resulted in the default judgement have not and cannot be described as creating any relationship of trustee and beneficiary between the plaintiffs/ITC Global Holdings Pte. Ltd. and the Chitalias/Chitalia companies. On the contrary, the transactions, at the most create relationship of debtor and creditor between ITC/ITC Global Pte. Ltd. and the Chitalias. In fact it is not even the plaintiffs case either in the motion taken out in the bankruptcy proceedings or in the plaint that the transactions which formed the subject matter of the default judgement against the Chitalias/Chitalia companies were in the nature of trust or that the monies were impressed with the trust. If this be the position, the relationship of trustee and beneficiary could not and did not exist between the plaintiffs and Chitalias/Chitalia companies. In other words, the Chitalias/Chitalia companies did not owe any fiduciary duty whatsoever to the plaintiffs or to ITC Global Pte. Ltd. at the time when the transaction between ITC and the Chitalias came to be entered into or at any stage whatsoever.

48. The pleadings filed in the present suit also do not explain how or in what manner the defendants can be described as trustees and the plaintiffs as beneficiaries. In the absence of such pleading the question of seeking to recover and/or trace any monies in the hands of the defendants without first establishing the relationship of trustee and beneficiary between the plaintiffs and the defendants must result in dismissal of the suit. If the Chitalias owed no fiduciary duty to the plaintiffs or ITC Global Pte. Ltd., it can never be said that the defendants who admittedly have no privity of contract whatsoever with the plaintiffs could be said to owe any such fiduciary duty to the plaintiff.

49. Mr. Dwarkadas submits that in the facts and circumstances of the present case a fiduciary duty could never arise as it is not even the case of plaintiffs that when they deal with Chitalias, the monies if any, which were owed by Chitalias were held by them in trust for plaintiffs. He submits that if this be the case, the defendants cannot be said to be holders of any monies of plaintiffs. However, each and every transaction which is the subject matter of Claim Nos. I to VI took place between 1991 and 1996 i.e much prior to the plaintiffs being impleaded as a party to the plaint filed in U.S District Court by ITC Global Pvt. Ltd. Therefore, ITC has no right to claim that the monies belonged to them or that these defendants hold them in Trust in the estate of Chitalias. In any event, this being purely commercial transaction, relationship between parties is that of a debtor and creditor and not of a Trustee and beneficiary. Inviting my attention to the details of the amounts received by defendants, Mr. Dwarkadas submits that the last amount received by defendants was in February 1994 whereas the first transaction in respect of which I.T.C Ltd. filed complaint was in May 1992.

50. Alternatively, Mr. Dwarkadas submits that even if the plaintiffs are entitled in these proceedings to impugn the transaction between Chitalias and defendants, until and unless the plaintiffs plead and prove that there was any fraudulent intent on the part of the Chitalias or Chitalia companies at the time when the transaction between them took place, the plaintiffs cannot succeed. He submits that there is no pleading in this behalf in the plaint. The intent cannot be established in this case. More so, when the transactions were entered into much prior to filing of the bankruptcy proceedings as also the claim filed by ITC against the Chitalias.

51. He submits that the conduct of plaintiffs is such that they are not entitled to the reliefs claimed as aforesaid. Although, depositions are referred to by the plaintiffs, copies of such depositions were not made available to the defendants herein. Assuming that the depositions before U.S Court can be utilised to establish the case set up in the plaint, yet, there is nothing in the cross examination which would constitute an admission on the part of the parties of any fraud, collusion or secreting of monies in India. Mr. Dwarkadas submits that once the plaintiffs are guilty of suppressing the proceedings in the U.S Court, then they are not entitled to any discretionary reliefs.

52. Mr. Dwarkadas also contended that orders passed by the U.S Court in the proceedings before it are contrary to the principles of natural justice and fairplay. They are not enforceable in the light of section 13 of C.P.C He submits that plaintiffs claims are barred by limitation. The transactions are for the period 1991 to 1996 whereas the suit is filed in the year 2002. Plaintiffs have not pleaded as to how bar of limitation in the context of Indian laws gets saved in the instant case. They have also not pleaded limitation under U.S laws to set aside or challenge these transactions.

53. He submits that in the context of U.S Laws, the issue that would arise for consideration is whether the action of Chitalias amounts to fraud or breach of trust and further under U.S Laws, whether there is provision of limitation, which deals with fraud and recovery of monies pursuant thereto.

54. Next, whether money is diverted to defeat the claim of creditors in bankruptcy proceedings can be recovered prior to filing of bankruptcy proceedings and finally, whether U.S Bankruptcy court recognises tracing action. In other words, Mr. Dwarkadas' fundamental contention is that when proceedings for bankruptcy are initiated and are pending in U.S Court and orders and directions are passed in the same, then in the absence of permission or authority to initiate steps to trace and recover the monies under U.S laws, the present suit would not be maintainable.

55. Mr. Dwarkadas has taken me through several aspects of foreign law and how the foreign law ought to be pleaded as fact and proved when orders in the proceedings held abroad are being sought to be enforced in India.

56. He submits that as the law stands today in India, no civil court can grant relief prayed for by the plaintiffs for the simple reason that Chitalias have not been declared as Insolvents by an Indian Court, pursuant to any adjudication in that behalf. Properties of Chitalias do not vest in Official Assignee or Receiver in proceedings in insolvency held in Courts in India. The only person who can initiate steps would be Official Assignee or receiver in India and once it is not open to parties to take any measures as in the instant case, then a suit simplicitor in India on the basis of bankruptcy proceedings held abroad, would not be maintainable. He submits that all transactions of the present nature would necessarily have to be first annulled in India by appropriate proceedings and declaration in the same and only then, the relief sought by the plaintifs can be granted. Without following the mandatory procedure in that behalf laid down in Indian law, straight away filing of a civil suit is, therefore, not maintainable.

57. That apart, Mr. Dwarkadas submits that the present suit is barred for non joinder of necessary parties. It is contended that a company viz., EXIM International, an alleged perpetrator of fraud is not party to the bankruptcy proceedings and has not been made party to the present suit. Even though that company has played a role in three transactions.

58. Similarly, Chitalias/Chitalia companies are also not joined as parties to the present suit. Modern Suitings Ltd. against which reliefs are sought in Notice of Motion No. 134 of 2003 and who is the only respondent to the same is not joined as party to the present suit but admittedly reliefs are sought against it in the present notice of motion.

59. Plaintiffs have also suppressed proceedings filed for consolidation of three entities who are not debtors. He submits that such proceedings filed before U.S Court have failed. He submits that amended plaint in U.S District Court demonstrating that the action was filed by plaintiffs against Chitalias for recovery of monies under transaction of sale of commodity is also suppressed. He submits that this transaction under which monies were received pursuant to immunity granted under the immunity scheme by way of gifts took place even before the first transaction between plaintiffs and Chitalias. Therefore, there is no question of monies secretely transferred to defeat the creditors. Thus, plaintiffs have come to the Court with unclean hands and no discretionary or equitable reliefs can be granted. In the light of the above, he submits that notice of motion be dismissed.

60. In all fairness to Mr. Dwarkadas, it must be stated that he has tendered written submissions with regard to each of the objections noted above. In other words, on the maintainability of the suit as also on merits of each of the claims, apart from other aspects, written submissions have been handed in.

61. Mr. Seervai, learned Senior Counsel appearing for plaintiffs has also handed in written submissions after addressing me on merits of the claims. He has taken me through the correspondence and other documents in detail to establish the link between the proceedings in U.S Courts, the orders and directions issued by it, relationship between Chitalia/Chitalia Companies and defendants herein to substantiate the pleas that a strong prima facie case is made out and the balance of convenience is in favour of plaintiffs. He has further contended that if prohibitory orders and directions as prayed are not granted, the entire suit would be rendered infructuous. In other words, by such orders, the claim in the suit can be secured. On the nature of the action and the reliefs claimed, both sides have handed in detailed written submissions and cited several authorities.

62. Mr. Dwarkadas, learned Senior Counsel appearing for defendants contends that the basis of the submissions on behalf of plaintiffs at an interlocutory stage is that this Court possesses ample powers to direct defendants to secure claims and in regard to some of them, direct payment or deposit in Court of the same otherwise. He submits that as far as civil court in India is concerned, at an interlocutory stage, applications of the present nature should traceable to Order XXXIX Rule 10 of C.P.C read with section 151 thereof. He submits that this provision proceeds on the basis that monies are held by the defendants in trust or they are due to the plaintiffs otherwise. In invoking this provision, it is necessary to establish that the amounts or claims are admitted. If that be not the case, then, this provision cannot be invoked.

63. That apart for invoking them in the facts and circumstances of the present case, plaintiffs have to even prima facie establish that the suit is maintainable. Assuming that the same is maintainable, at an interlocutory stage it is doubtful whether reliefs prayed in the motion can be granted. He also challenges the basis of the claim in the suit by applying section 60 of the C.P.C

64. According to Mr. Dwarkadas, Section 60 of the C.P.C has no application in the facts of the present case, since the plaintiffs are not decree holders as contemplated under section 60 of the C.P.C The expression decree appearing in section 60 must be read in the manner defined under section 2(2) of the C.P.C Unless there is a decree of a reciprocating territory under section 44A the same is not executable under section 60 of C.P.C Assuming that the principles of Section 60 of the C.P.C are applicable, even then, it is submitted that, unless and until the plaintiffs first obtain, a decree of an Indian Court based on a judgement of the foreign court which satisfies the requirements of section 13 of the C.P.C or a foreign decree executable under section 44 A, the property held by the judgement debtor, or by another person, in trust for him or on his behalf, is not attachable, nor is the foreign decree executable. The decree in the present case is, admittedly, not executable under section 4 A of the C.P.C nor does it satisfy the requirements of Section 13 of the C.P.C To apply the principles of section 60 of the C.P.C to such a foreign decree would mean that such a non-executable decree is placed on a higher pedestal than an executable foreign decree or judgement. Whether a judgement of a non reciprocating country can be accorded acceptance/recognition by an Indian Court on the principles of comity, is the issue to be decided, says the learned Senior Counsel. In support of his submissions, he relies upon a judgement of the Supreme Court in the case of Badat & Co. v. East India Trading Co. reported in A.I.R 1964 S.C 538. Therefore, even if the principles of comity are to be applied for a foreign judgement to be accorded international recognition it must fulfill the basic requirements of section 13 of C.P.C which reads thus:-

When foreign judgement not conclusive:- A foreign judgement shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except-

a) where it has not been pronounced by a Court of competent jurisdiction;

b) where it has not been given on the merits of the case;

c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable;

d) where the proceedings in which the judgement was obtained are opposed to natural justice;

e) where it has been obtained by fraud;

f) where it sustains a claim founded on a breach of any law in force in India.

65. He further submits that foreign judgements of the reciprocating countries under section 44 a of the cpc are required to comply with the provisions of section 13 of the C.P.C It is, therefore, axiomatic that even if one were to apply the principles of comity of nations by recognising judgements of non reciprocating countries, the principles analogous to section 13 must necessarily be applied for such a foreign judgement of a non-reciprocating country to be accorded any recognition or acceptance.

66. Mr. Dwarkadas has also relied upon the principles of private international law culled out from the well known works of “Dicey and Morris” - Treatise on the “Conflict of laws.”

67. These submissions of Mr. Dwarkadas have been countered by Mr. Seervai by contending that the defendants are Approbating and Reprobating by subsequently taking mutually contradictory inconsistent legal stands in their attempt to defeat the rights of the plaintiffs, who sue as the Trustees in bankruptcy of the Estates of the Chitalias/Chitalia companies.

68. The plea of the applicability of foreign law is clearly taken as an after thought, after realising that the pleas urged on the basis of Indian law had been of no avail to the defendants, right upto the Supreme Court, in getting the orders dated 14.3.2002 and 14.4.2002 vacated.

69. He submits that all these contentions were taken up in the appeal challenging the ad-interim order passed by this Court and therefore the same were duly considered when the said appeal was argued and eventually dismissed. He submits that order of this Court is confirmed by the Supreme Court. He submits that apart from the fact that these pleas are inconsistent and contradictory, now the defendants are estopped from raising them at the final hearing of this motion. Reliance is placed upon a decision of the learned single Judge of this Court to the effect that observations and findings on issues of law made even at the interlocutory stage are binding and the parties are estopped from reopening them.

70. Apart from the above, according to Mr. Seervai, it is not the plea of plaintiffs that their case is governed by U.S laws. It is in fact the case of the plaintiffs that this case has to be decided by applying Indian law. The question therefore of the plaintiffs having to plead or prove the relevant U.S law does not arise.

71. He further contends that defendants have merely pleaded that the case is governed by U.S law and would have to be proved in accordance with U.S law. Significantly, the defendants who now submit that the case is governed by U.S law, have not pleaded the relevant U.S law. Having thus pleaded, the defendants have erroneously submitted that it is for the plaintiffs to plead and prove what is the relevant U.S law; and since the plaintiffs have not done so, no relief can be granted to the plaintiffs.

72. The defendants have placed reliance on the judgements of this Court in the case of Rhodia Limited & Ors. v. Neon Laboratories Limited reported in 2005 Vol. 170 (1) BLR 178.

The defendants have also relied on the unreported judgement of this Court (Kamdar, J) dated 18 July 2005 in the case of Dallah Albarakha Investment Co. Ltd. v. M.T Symphony. It is submitted by the plaintiffs that the judgement reported in 2005 (1) BLR 178 (supra) in fact supports the case of the plaintiffs as submitted hereinabove, namely that the burden lies on the party who pleads foreign law and not on a party who does not plead foreign law. The judgement is not an authority for the proposition that in every case it is for the plaintiffs to plead or prove foreign law, or as in the present case that if the defendants plead foreign law, the burden is on the plaintiffs to prove it. As regards the unreported judgement of this Court (Kamdar, J) the same is irrelevant since it has been delivered on facts entirely different from those in the present case. In the first place this judgement has been delivered disposing of the suit itself. It has not been passed in interlocutory proceedings. In the case before Kamdar, J there was an express clause pertaining to the proper law and jurisdiction under which the parties had agreed to submit to the non exclusive jurisdiction of the English Courts. Thus, on the face of it the suit was filed by the plaintiffs in respect of a transaction which was expressly and admittedly governed by foreign law. The judgement does not deal with the question of the onus of proof as to whether foreign law applies or Indian law. This is because that issue did not arise in the case. It was in these circumstances that Kamdar, J. held that it was for the plaintiffs to aver that the suit was governed by foreign law and prove the foreign law.

73. The correct and legal position however, is to be found in Dicey & Morris - The Conflict of Laws (13 Edn.pg.221) Rule 18.

“Rule 18(1) In any case to which foreign law applies, that law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means.

(2) In the absence of satisfactory evidence of foreign law, the court will apply English law to such a case.

Amplifying the Rule, Dicey states: “The general Rule is, if the party wishes to rely on a foreign law he must plead it in the same way as any other fact. Unless this is done, the Court will decide a case containing foreign elements as though it were a purely domestic English case.”

74. Dealing with the Burden of Proof, it is stated by Dicey:- “The burden of proving foreign law lies on the party who bases his claim or defence on it. If that party adduces no evidence, or insufficient information of the foreign law, the court applies English law.

75. The sequitor is that in the absence of foreign law having been pleaded and proved by the defendants, whose contention it is that the case requires to be adjudicated as per the U.S law, the case will have to be decided by this Court in accordance with the domestic law i.e Indian law.

76. Mr. Seervai also places reliance upon Dicey and Morris' Conflict of Law and a decision of House of Lords in the case of Dynamit Actien Gesellschaft (Vor Mals Alfred Nobel Company) v. Rio tinto Co. Ltd. (1918 AC 260).

77. Mr. Seervai has invited my attention to the judgement rendered by learned Single Judge of this Court (V.C Daga, J). in the matter of Rhodia Ltd. v. Neon Laboratories, reported in 2005 107 (1) BLR 178.

78. Thus, according to Mr. Seervai, the burden would lie upon defendants in this case to establish that the matter is governed by a foreign law or there is foreign element involved in it. This question cannot be gone into and adjudicated at an interlocutory stage. According to him, since the plaint proceeds on the basis of Indian law, the matter would have to be considered in that light and till the Court pronounces about the applicable law at an appropriate stage, nothing prevents it from considering the prayer for interlocutory reliefs in terms of the notice of motion.

79. Mr. Seervai submits that it is an admitted position that monies and goods have been received from the Chitalia/Chitalia companies by the defendants viz., allegedly as (a) gifts; (b) foreign remittances allegedly under the immunity scheme; (c) funds for purchase of shares in Sukhakarta (d) 15 Sulzer machines purchased by Modern, towards which payment of Rs. 2 Crores was admittedly received by defendant No. 2/10 on behalf of EST (e) purchase of sulphur by defendant No. 10 through EXIM/EST and for which monies are due to EST.

80. It is submitted that the monies and properties having been received in India by the defendants, who reside in India, carry on business in India and hold these monies in India, establishes that the secretion of funds has been effectuated in India. The recovery of these monies must necessarily be in accordance with the Indian law. The suggestion by the defendants that the plaintiffs' right to recover these monies must be determined exclusively in accordance with the U.S law, is therefore, untenable.

81. As far as maintainability of the suit is concerned, Mr. Seervai submits that the contention of the defendants that for maintaining the suit, it is necessary for the plaintiffs to establish the existence of initial fiduciary relationship, is wholly untenable and misconceived. He submits that the argument proceeds on the basis that there is no pleading to this effect. There is no fiduciary relationship according to defendants between ITC and Chitalia but the relationship between them was that of creditor and debtor. Such a relationship can never be said to be in fiduciary capacity. According to Mr. Seervai, the necessity of establishing initial fiduciary relationship in such cases cannot arise as a straight-jacket formula. He submits that the relationship between ITC and Chitalia is not an issue in this case. It is not relevant in the present case to consider the existence of fiduciary relationship. The present suit is a substantive suit which has been filed by the Trustees in bankruptcy of the assets of Chitalia/Chitalia companies for and on behalf of those assets and their creditors pursuant to final judgement, decrees and orders passed by the U.S bankruptcy court. Mr. Seervai reiterates his earlier contentions and urges that the present suit is not merely a tracing action. It is a suit to recover monies which have already been traced into the hands of the defendants. They have knowingly received the same as monies belonging to Chitalia. To the extent that money has been received but receipt denied, the suit is action of tracing. But as far as the initial requirement urged above is concerned, that the monies are being recovered by trustees would prima facie establish fiduciary relationship. He submits that whether the monies were innocently transferred on account of genuine and bonafide transaction or whether receipt thereof by defendants is “knowing receipt” is the issue. However, if the receipt is known then, the defendants held monies in a fiduciary capacity and are liable to hand them over to the rightful owners i.e the Trustees in bankruptcy. Hence, assuming without admitting that the initial requirement proving fiduciary relationship exists in such case, in the present case, the relationship is clearly established.

82. In support of the aforesaid pleas reliance is placed upon following decisions:-

(a) In El Ajou v. Dollar Land Holding pte. 1993 (3) ALL ER 717;

(b) Westdeutsche Landesbank Girozentrale v. Islington London Borough Council (1996 AC 669)

(c) Foskett v. Mckeown 2001 (1) AC 102

83. To conclude, he submits that there is no question of plaintiffs having to establish any fiduciary relationship, at the initial stage.

84. Alternatively, it is submitted that no court should leave itself open to such a approach. For purposes of argument's sake in the present case it is held that, the existence of an initial fiduciary relationship is absent, on the assumption that such a relationship had to exist between ITC Ltd. and the Chitalias in the course of commercial intercourse, this Court should even so, discountenance any argument that would in the facts and circumstances of the present case, enable the defendants to wrongfully hold on to the monies which admittedly never belonged to the defendants, and which admittedly belonged to the Estates of the Chitalia/Chitalia companies for the benefit of their creditors.

85. In the light of the rival contentions, what I have to consider is whether a strong prima facie case is made out for grant of interlocutory reliefs, in whose favour balance of convenience lies and to whom irreparable harm and injury will be caused in case the aforesaid reliefs are not granted.

86. It must be stated that the notices of motions were argued by the plaintiffs on the basis that this Court is holding a mini trial at interlocutory stage. It is well settled that at an interlocutory stage, it is not permissible to record conclusive finding on merits of the matter. Moreso, when complex issues about maintainability of the action have been raised. The argument of plaintiffs proceed on the basis that existence as well as contents of all documents are admitted and nothing need be proved at the trial. One cannot proceed on this basis at all. More so, in the facts and circumstances of the present case.

87. Prayer clause (a) of the suit seeks a relief that this Court should execute orders and decrees dated 8 March 2001, 12 March 2002 and 13 February 2002 being Annexures G, H. M to P to the plaint. Without prejudice to the existing prayer clause (a) a declaration is sought that various amounts set out in Annexure GG to the plaint have been transferred by Chitalia/Chitalia companies to the defendants in fraud of its creditors and are liable to be refunded. I have adverted to the reliefs in somewhat details because, several contentions have been raised with regard to the nature of the suit and the reliefs claimed in this motion.

88. Initially it is contended that the suit is not filed by ITC Ltd. in its corporate capacity but as Trustees in bankruptcy of Chitalia and Chitalia companies. It is contended that the suit is filed to recover monies for the benefit of the estates in bankruptcy of the Chitalia/Chitalia companies. It is contended that the suit is filed in view of the orders passed by the U.S Bankruptcy court referred to above. In this light, if the first order Annexure G is perused, it is passed in case No. 99-1491-6B7. The order states that it is passed under Chapter VII of U.S Bankruptcy Court in case of a debtor, namely, Suresh Chitalia. The order reads thus:-

“This cause came on for hearing on 15 February 2000 upon Creditor - ITC Ltd known to pursue hidden overseas assets on behalf of the estate”.

“The motion seeks to recover debtor's interest in defendant No. 1 including other transfers further described in the motion and the proceeds of such transfers, on behalf of the estate. The order states that the motion is granted and ITC may seek to recover on behalf of the estate the assets located overseas in Sukhakarta, other transfers described in the motion and the proceeds of such transfers”.

89. The next order at Annexure H is with regard to another debtor Devang S. Chitalia. The order is identical in terms.

90. The third order passed on 12 February 2002 being Annexure M is of the same date and it is in the case of Suresh Chitalia.

91. The plaint avers that on or about 23 February 1999, the Chitalia and their group companies inter alia filed bankruptcy petition in the bankruptcy Court, U.S praying to be discharged as bankrupts and also claimed exemption in respect of some of their assets.

The details of bankruptcy petition are as under:-

a) Suresh Chitalia - Case No. 99-01491-6B7 filed on 23.02.1999;

b) Devang Chitalia - Case No. 99-01490-6B7 filed on 23.02.1999;

c) EST Fibers Inc. - Case No. 99-01545-6B7 filed on 24.2.1999

Plaintiffs filed bankruptcy petition in respect of Lokman Establishment. It is contended that a Trustee in bankruptcy of the estate came to be appointed. The details pertaining to them are set out in paras 6 and 7 of the plaint.

92. It is contended that the bankruptcy petitions and claims registered in the bankruptcy proceedings reveal that out of the total debts owed by the Chitalias/Chitalia companies amounting to approximately U.S$ 19 million, the plaintiffs have to receive around U.S$ 15.25 million. The balance, according to plaintiffs, is due to 100% subsidiary of the plaintiffs viz., I.T.C Global Holdings Pte. Ltd.

93. Once the petitions were filed and notices were issued by plaintiffs as creditors, they were also informed that all recovery actions stood stayed. The bankruptcy petition filed by Lokman Establishments was allowed on 6 July 1999. The U.S Bankruptcy Code has been specifically referred to and the plaintiffs have stated in the plaint that they crave leave to refer to the said provisions when produced.

94. On the objections filed to the claim of exemptions by Chitalia and their companies, it is the case of the plaintiffs, that oral examination on oath was conducted and depositions were recorded. It is contended that in response to the objections number of documents have been produced. Obviously the depositions are before the U.S Court.

95. It is on the basis of the depositions and the disclosures made in the bankruptcy proceedings, that the plaintiffs took out two motions before the bankruptcy court to pursue certain assets of the Chitalias hidden in India. On these motions orders were passed, which, as stated above, are annexed to the plaint at Exhs. G, H and M. Plaintiffs aver that some offers were made in the bankruptcy petitions by the Chitalias but the plaintiffs refused to accept them and, therefore, their objections to the exemption claimed by Chitalia remained on file. There is amendment made to the offer made earlier and this offer was accepted. The pleadings in that behalf are in paragraph 14 of the plaint. Upon permissions being granted by RBI, it is contended that a review was undertaken of depositions and additional documents produced in the bankruptcy proceedings and they reveal additional assets of the Chitalias and their group companies. According to plaintiffs, they have been transferred out of U.S.A and other places to India in order to defeat recovery by the creditors.

96. It is on the basis of these records, supplemental motions were taken out before Bankruptcy Court and the bankruptcy court granted these supplemental motions and those orders are annexed as Annexures M, N, O and P to the plaint. Copies of the supplemental motions are annexed as Annexures I, J, K and L. In this behalf, it is pertinent to note that while earlier motions deal with individual debtor's assets hidden in an Indian Company (defendant No. 1 - Sukhakarta), now the individual debtors used transactions with business associate residing in Mumbai i.e J.R Mehta and Co. to siphon funds from U.S to India in an attempt to frustrate their creditors in the U.S The details of the transactions are then set out in the motion and after relying upon the depositions, it is contended that the additional assets belonged to debtors. The motion is based on the same three principles underlying the January 27 motion. It is contended that it is impracticable for the Trustees to pursue these assets and thefore, Court must authorise ITC to pursue these assets on behalf of estate. As to how the estate is entitled to pursue the claims is then contended and reliefs sought from the U.S Court on that basis.

97. Plaintiffs thereafter proceed to rely upon the orders passed on this motion including supplemental motions and set out the details of hidden assets of Chitalias and their companies. These are transactions through which the amounts have been secreted, according to plaintiffs to the defendants in India. Reliance is placed on the depositions and after setting out the details in the plaint it is contended that amounts under each of six claims have been fraudulently moved by Chitalias in India and parked/deposited with defendants herein. These monies are held in trust, according to plaintiffs, and, therefore, they are liable to recover the same. It is also contended that defendants are bound and liable to disclose the particulars and details of the transactions and the plaintiffs are entitled to trace and follow the said amounts into the hands of the holder of the said monies. Aforementioned are the pleadings in the plaint from paras 28 to 38.

98. As far as the investment with defendant No. 1 is concerned, in para 40 it is contended that it has been made with fraudulent motive of sheltering Chitalias' monies. Defendant No. 1 shares office with other defendants and, according to plaintiffs, it is controlled/managed by defendant No. 2. Thus it is an artificial entity and used as vehicle for secreting funds for Chitalias. The extent of the sheltering of monies, according to plaintiffs, is not ascertainable. Therefore, it is prayed that the corporate veil of first defendant be pierced in order to establish true position in the matter. In para 41 and 42 of plaint, this is what is stated:-

“41. The plaintiffs further submit that the said Chitalias have used the defendants as vehicles to fraudulently shelter large amount of monies equivalent to millions of dollars in India. The plaintiffs have been able to set out some instances as stated above. However, the full extent of the operation of the Chitalias and their dealings with the defendants are not known to the plaintiffs, who are, therefore, not fully aware of all such monies and assets which have been transferred and secreted to India and are being held by the defendants. Unless the defendants are directed to disclose their financial dealings between 1 January 1991 to date with each other as well as with Chitalias and their various group companies the plaintiffs will be deprived of any effective recourse or means to recover the same.”

“42. The plaintiffs further submit that in order to able to trace and follow the assets of the Chitalia group held by the defendants, it is absolutely necessary for the plaintiffs to be given full disclosure of the accounts maintained by the defendants as regards the Chitalias and the Chitalia Group of companies as well as with each other for the period 1 January 1991 to date. The plaintiffs submit that having regard to the facts of the case disclosure of all the aforesaid information/documents is absolutely necessary for the plaintiffs to trace/follow their assets and adopt effective recovery proceedings for the same.”

99. In para 43A which has been introduced after amendment, it is contended that alternatively and without prejudice to the prayer to execute the orders passed by the U.S Court, this Court should declare that the amounts which are set out in Annexure GG to the plaint have been transferred by the bankrupts to the defendants in fraud on their creditors and are, therefore, liable to be refunded.

100. I have adverted to the plaint averments in detail with a view to appreciate the submissions of Mr. Seervai on the nature of the suit and the reliefs prayed therein. In my view, in the present case, it is difficult, at this stage, to hold that the suit is maintainable either as execution proceeding or as a substantive action to trace the monies held in trust by defendants on behalf of bankrupts in U.S.A Additionally, it is not possible to hold straightway that the monies are liable to be refunded to the plaintiffs as claimed in the alternative on the ground that fraud is perpetrated by bankrupts on their creditors. All these matters require deeper probe and investigation. There is a serious dispute about the maintainability of the suit and the power of this Court to grant reliefs as prayed.

101. If the claim proceeds on the basis that the U.S Court has concluded that amounts have been transferred from various places to India in order to defraud the creditors of the bankrupts before it, then, whether these orders can be executed in and enforced in India is something which cannot be gone into and adjudicated conclusively at the interlocutory stage. More so, when admittedly, proceedings in bankruptcy are inconclusive and pending in U.S Court. It is difficult to proceed on the basis that orders on the supplemental motions passed by U.S Court could straightaway be enforced and executed. The nature of the orders on the notices of motions in pending bankruptcy proceedings would require a deeper scrutiny. Both sides have not produced before me the relevant provisions of U.S Bankruptcy Code. I am not aware of the powers conferred upon a bankruptcy court in U.S.A Assuming that the U.S Court has exercised jurisdiction conferred upon it by the code and permitted the plaintiffs to go ahead and recover these monies, even then, when the plaintiffs themselves describe them as creditors of Chitalias and Chitalia companies, then at their instance, present action could be initiated, is something which I cannot adjudicate and decide conclusively at this stage.

102. Further, it is doubtful as to whether in a suit claiming enforcement and execution of orders passed by the U.S Court unless and until it is held that they are capable of being enforced and executed any interlocutory reliefs in aid thereof can be granted. In other words, the enforceability and executability of the orders being yet to be determined by interlocutory orders and directions, can I give effect to them and implement them is something which is not clear to me at all. More so, when serious issues have been raised by defendants about their enforceability and executability. Once this aspect is placed in the forefront, it will not be proper to rely upon proceedings in U.S Court and orders passed therein and grant interim reliefs in favour of plaintiffs herein. It is not as if requirement of proof of documents and depositions before U.S Court can be dispensed with by me. In fact, no such plea is raised. Indian Law of Evidence cannot be by-passed when a civil suit is filed in India. Therefore, enforceability apart, the depositions, documents and orders of the U.S Court have to be proved before they are read in evidence and can be relied upon. In the present case, it is difficult to accept that this Court should proceed on the basis of averments in the plaint and grant interlocutory reliefs without deciding the issue of applicable law. More so, when the plaint itself has alternate case pleaded and relief claimed on that basis. In my view, at an interlocutory stage, it is not possible to apply the presumption as urged by Mr. Seervai.

103. The contention raised by Mr. Dwarkadas is that the orders passed by U.S Court are contrary to the principles of natural justice and fairplay. They are not enforceable in view of section 13 of the C.P.C He submits that unless there is decree of reciprocating territory under section 44a of c.p.c, the same is not executable under section 60 of the C.P.C Assuming therefore, that the principles underlying section 60 are applicable, even then, unless and until, the orders passed by U.S Court satisfy the requirement of section 13 of the C.P.C or section 44A of the C.P.C properties and assets of the defendants cannot be touched.

104. In my view, the contentions of Mr. Dwarkadas cannot be brushed aside merely on a technical plea of Mr. Seervai that they were raised earlier in the Memo of Appeal to challenge the ad-interim order passed. Such issues and questions cannot be given finality, when deeper probe and investigation is called for and the same has not been undertaken as yet. This contention assumes significance in the context of law applicable in this case, viz., Indian or U.S Law.

105. The defendants have set out various grounds in support of their pleas that the orders passed by the U.S Court referred to above, cannot be enforced. Their contention is that documents and depositions of Chitalias and their companies on the basis of which the orders have been passed by the U.S Court are proceedings to which they have not been joined as parties. They had no opportunity, therefore, of participating in them. They have raised another substantial plea inasmuch as depositions recorded by the U.S Court based upon which certain documents are also read in evidence, cannot be produced on record of this Court straightway. In other words, before they are read in evidence in the present suit, the defendants must have an opportunity to challenge and test their veracity and truth. This submission is the extension of the pleas that such opportunity was not available to the defendants as all these depositions were recorded and documents accepted in their absence. These pleas are raised in addition to the contention that the orders of the U.S Court are not rendered on merits. My attention is invited to the decision of the Supreme Court in the case of National Woollen Mills v. Standard Wool (U.K) Ltd., reported in 2001 (5) S.C.C 265.

106. It is also contended that the order passed in the present proceedings is not executable under section 44-A inasmuch as it is not delivered by a Court in a reciprocating territory. In that behalf, my attention is invited to a decision of the Supreme Court reported in A.I.R 1964 S.C 538. Further, my attention is also invited by Mr. Dwarkadas that de hors provisions of section 13 read with section 44-A of the Code of Civil Procedure courts in India will not invoke any principle of comity of nations for the recognition and enforcement of foreign judgements. In this context, reliance is placed on a passage from Cheshire and Norths' Private International Law, 13 Edn. page 5 and another commentary on Private International Law by Paras Diwan. The submission based on the Supreme Court judgement reported in A.I.R 1962 S.C 1737 is that the orders passed by U.S Bankruptcy Court cannot be recognised or enforced by this Court.

107. Mr. Seervai has tried to meet this contention by urging that the orders passed by the U.S Court are on merits of the case and he invites my attention to decisions of this Court about when a foreign judgement can be said to be rendered on the merits of the case.

108. In my view, this is not an aspect which could be conclusively decided at this stage. It would not be fair and proper, at this stage, to hold that the orders passed by the U.S Bankruptcy court, based upon which reliefs are claimed in the plaint, are enforceable and executable. For deciding this aspect, not only would it be necessary to go into the pleas raised before U.S bankruptcy court but also the materials relied upon by the U.S bankruptcy court. Even if it is held that this Court can give effect to these orders, yet, it will have to be considered as to whether the requirements stipulated by section 13 are complied with. Further assuming that section 13 is inapplicable, as suggested by Mr. Seervai, is it necessary to take a fresh look and adopt any modern approach based on respect and commity to judgements and orders rendered by Courts outside India. whether that principle should be extended and applied in the facts and circumstances of the present case must be decided at a later stage.

109. This aspect can be gone into once all other pleas raised by the defendants about maintainability of the action and the nature of the reliefs claimed have been considered. It is not as if these pleas are liable to be rejected straight away. Some of them, for example, position of the plaintiffs (Trustee and/or Creditor), bar of limitation, in the context of U.S and Indian Law, applicability of the principles emerging from various provisions of trust act etc. are such as would necessitate enquiry and investigation into factual aspects. So also, the objection, that after disclosures were made on oath the plaintiffs have made submissions based on them without laying any foundation in heir pleadings, is also substantial. Therefore, unless this hurdle is crossed by the plaintiffs, it will not be possible to grant the reliefs based upon the orders passed by the U.S Bankruptcy Court. It is expecting too much, at this interlocutory stage, from the Court. I will have to give prima facie findings on all or some of the above claims and that would necessitate meticulously going through all documents and depositions. Scanning them as if they are admitted by parties is not permissible at this stage.

110. I have noted the above aspects with a view to appreciate the submissions of Mr. Seervai about the nature of the action/suit. He submits that the suit can be treated as substantive suit filed for recovery of monies belonging to the estates of Chitalia and Chitalia companies and/or monies which the Chitalias have sheltered with the defendants through a series of nominal, sham and bogus transactions. It is contended that these monies at all times were belonging to the Chitalias and companies and now vest in the estate of bankruptcy. The plea raised is defendants have no right, title and interest in these monies. Once again, all these are final reliefs. At this stage, it cannot be said that the defendants have no right, title or interest in these monies and properties, more so, when some of the defendants are admittedly not before the U.S Court. So also, the transactions are pretty old and spread over a long period. The claims are raised now. Therefore, it is not as if that the delay is of no consequence. If transactions are concluded much prior to the filing of the suit, then some explanation is required for this enormous delay. On this aspect, the proceedings and orders of U.S Court are no answer.

111. Mr. Dwarkadas points out that the consolidation motions filed in the U.S Court by plaintiffs have been rejected. It is brought to my notice that applications were made by plaintiffs to consolidate the proceedings but the U.S Court did not pass orders on the same. This is also one of the important aspect which must be considered. It cannot be brushed aside totally as is suggested by Mr. Seervai.

111A. In this behalf Mr. Dwarkadas invites my attention to the following dates and events.

28/1/2000 Plaintiffs file a substantive consolidation motion in U.S Bankruptcy court seeking substantive consolidation of three entities that are not debtors in the case but which the plaintiffs allege are alter egos of, and are controlled by, the Chitalias, namely Garoma Antsalt, Exim International Anstalt (Exim) and Usena Foods (Usena). Exhibit “F” of Affidavit in suport of Notice of Motion No. 3694. This fact has been suppressed by plaintiffs.

15/2/2000 The Chitalias opposed ITC's substantive consolidation motion. The oppositions raised by the Chitalias were inter alia, as under:-

a) consolidation is not necessary and no substantial benefit will be realised thereon.

b) To date ITC has failed to demonstrate, other than through vague and baseless allegations, that these companies are alter egos of the individual DEBTORS. (Exh.F - Response of the Chitalia to the consolidation motion annexed to Affidavit of Mr. B. Bihar dated 3/7/2003) Till date ITC has not produced any evidence to show that these companies (including Exim) are the alter egos of the Chitalias.

c) 5/5/2000 U.S Court rejects the application of the plaintiffs for substantive consolidation of the three entities (Affidavit in support of Notice of Motion No. 3694). As a result, the Bankruptcy cases were not consolidated and the assets and liabilities of each bankruptcy estate were administered separately. In addition, the non-debtor entities viz., EXIM, Garoma and Usena were not brought into the jurisdiction of Bankruptcy Court (see Brian Behar's affidavit, annexed to affidavit in support of Notice of Motion No. 3694.

112. I have noted the contentions of Mr. Seervai that Chitalias are not Necessary Parties to the suit and in their absence suit cannot be dismissed. However, these submissions are based upon the provisions of U.S Bankruptcy laws and power, authority and jurisdiction of the U.S Bankruptcy Court. They proceed on the basis that trustees have been appointed to represent the estate in bankruptcy. In the context of U.S law it is contended that the trustees can maintain proceedings for and on behalf of the estate in bankruptcy court or sue on its behalf. In other words, the only necessary party qua estate in bankruptcy are the Trustees. My attention is also invited to a judgement of this Court, reported in 1914 (39) I.L.R Bom. 568. However, that decision is rendered in the backdrop of insolvency laws in India. There it is held that the first defendant is being wrongly sued. The Official Assignee was before the Court and therefore it was wholly unnecessary to join first defendant. Vesting has taken place admittedly in the context of Indian laws and, therefore joinder of Official Assignee was considered as enough compliance with the laws pertaining to array of parties. However, as to when estate vests in the Trustees in the context of the bankruptcy laws of U.S has not been pointed out to me. On the other hand, it is seriously contended by defendants that the estate has not vested because proceedings in bankruptcy are still pending. Therefore, it would not be safe to pronounce upon the submissions of Mr. Seervai about the nature of the action at this stage. At this stage, it is not proper to hold that the defendants have no right, title and interest in the monies.

113. From the above discussion, I am of the view that it is not necessary to consider the documents brought to my notice claimwise. First of all, these documents are produced after the suit was filed. Contents of these documents are yet to be proved. It may be true that some of them are letters addressed by defendants. However, it is equally true that some letters are addressed by Chitalia/Chitalia companies. The nexus between them, their concerns and companies and the defendants having not been established conclusively, it will not be fair to rely upon these documents and direct either payment of monies in court or issue other injunctive and prohibitory orders.

114. There is a serious issue as far as claims being within limitation. It is not as if this plea can be brushed aside. In this behalf, in the plaint, plaintiffs have averred in para 58 as under:-

“58. This plaint is being filed by the plaintiffs, pursuant to the orders dated 8 March 2000, 12 and 13 February 2002 of the Bankruptcy Court and the suit is filed within limitation and the plaint is verified by Shri Pratap Kumar Misra, District Manager of the plaintiffs who is conversant with the facts of the case and is able to depose to the same.”

115. Now the claim is sought to be saved on the basis that the orders by the U.S Court are dated 8 March 2000 and February 2002. However, as far as the declaration that the transactions are fraudulent and therefore amounts which are transferred by the Chitalias/Chitalia company to the defendants are liable to be refunded, it is not pointed out to me as to how the claim is within limitation. All that Mr. Seervai would urge is that the trustees have filed the suit within three years of their gaining knowledge of the fraud. However, Mr. Dwarkadas submits that the transactions are of the year 1991 onwards and some of them have been concluded by plaintiffs as creditors. Therefore, between 1991 to 1996 the transactions having concluded the suit filed in the year 2002 cannot be said to be straight away within limitation. Diverse reliefs having been claimed and not just enforcement of the orders of U.S Court, plea of limitation as raised will have to be decided on production of further materials. Therefore, even this reason is sufficient enough not to grant further reliefs, over and above ad-interim orders and directions already issued.

116. Section 63 of the Trust Act and other provisions have been pressed into service.

Section 63 provides for following Trust Property in to the hands of third persons. A plain reading of this provision makes it abundantly clear that if the said provision is to apply, then:-

a) the property must be trust property;

b) it must come into the hands of a third person inconsistent with the Trust;

c) the beneficiary may require him (third person) to admit formally; or

d) may institute a suit for declaration that the property is comprised of in the Trust;

117. The latter part of this provision deals with a case where the trustee has disposed of trust property and the money or other property which he has received therein can be traced in his hands or the hands of his legal representatives or legatee. This provision also speaks of the rights of beneficiary in respect of the original trust property and it is, therefore, clear that in the money or other property which the trust has received, the rights of beneficiary have to be as nearly as may be the same therein as in respect of original trust property. The Supreme Court has held that this section no doubt provides for remedies which are available to the beneficiary but it cannot be treated as exhaustive of the subject. The illustrations below this provision are also of assistance in appreciating the scope of the provisions.

118. In the present case, therefore, all the ingrediants of the aforesaid provisions must be established and further before the doctrine of tracing can be applied, it will have to be established that the Trust money and properties have come into the hands of defendants which they are liable to account for and refund. However, before this it will have to be necessarily proved that the property was trust property and it was held by Chitalia/Chitalia companies as trustees and further that obligation continues even so far as present defendants are concerned. The first part of section 63 is following trust property into the hands of third person. While the latter part deals with disposal of trust property by trustee and tracing the money or other property which he has received therein. The commentary on Indian Trust Act by renouned author N. Suryanarayan Iyer, elaborately explains this provision.

119. In my view, if Mr. Seervai's submissions are to be accepted and interlocutory reliefs granted, I will have to presume firstly that the plaintiffs are suing in their capacity as Trustees in bankruptcy of Chitalia and Chitalia companies. Secondly, I will have to presume that monies which are in the hands of the defendants are for the benefit of the estates in bankruptcy of Chitalia/Chitalia companies. Thirdly, these monies are hidden overseas which have come into the hands of defendants and are thus traceable and recoverable from them. Lastly, the above presumptions flow from proceedings and orders of the U.S bankruptcy court. Further all such presumptions and assumptions are on the basis that the documents including correspondence conclusively establish the nexus and link between Chitalia/Chitalia companies and the defendants. Assuming further that the link and nexus is established, the underlying transactions pursuant to which monies have come into this country are ficticious, sham and bogus and entered into with intent of syphoning of funds and monies into this country. Therefore, fraud has been perpetrated on the creditors of Chitalia and Chitalia companies abroad and the same having been unearthed and established conclusively by the proceedings and orders abroad, there is no necessity of independent proof with regard to the same.

120. It is difficult to accept the pleas of plaintiffs based on the abovementioned presumptions and assumptions. The criticism of Mr. Dwarkadas that we are in the realm of conjectures and surmises is not without any substance.

121. If the aforesaid conclusion is reached, then, save and except the ad-interim order already passed and direction issued, no further reliefs can be granted. Pursuant to the ad-interim orders and directions, the affidavits have been filed and certain disclosures are made. Mr. Seervai submits that they are not complete and truthful. On the other hand, Mr. Dwarkadas submits that the statement and disclosures are made without prejudice to the contentions about the maintainability of the suit and genuineness of the transaction. The version of plaintiffs based upon the documents disclosed as well as that of the defendants is before me. Version of plaintiffs is based on certain letters and documents. For the link and nexus to be established wholly and the property being impressed with trust, in my view, this much is not enough but oral evidence would necessarily have to be led. That would complete the chain. Merely because documents are annexed to the affidavits and contents thereof are to be read with the depositions recorded by the U.S Court, would not mean that the ingrediants as set out above are satisfied and fraud stands conclusively proved. More so, in the light of law of pleadings on “Fraud” and “Fraudulent Intent” applicable in India. All that can be said is that the version of the plaintiffs is supported by further materials. However, much more is required to be gone into and adjudicated upon. Until then, it will not be possible to grant further reliefs.

122. If I accept pleas of Mr. Seervai and grant further interlocutory reliefs and ultimately the suit fails, then, grave loss and injury will be caused to the defendants. On the other hand, by ad-interim orders and directions materials in the form of affidavits and documents being placed on record interest of justice is sufficiently protected. With the assistance of this and further material, plaintiffs can now prove their case at the trial. If they find them inadequate, then, proceedings for further disclosures can be resorted to, if permissible in law. However, without following this course of action if I proceed to allow the motion, then parties before the U.S court as well as defendants would be seriously prejudiced.

123. Thus, the balance of convenience also is not in favour of further orders and directions. Therefore, these motions are disposed of in terms of the orders and directions issued till date.

124. Notice of Motion No. 134 was already before this Court and relief prayed for by Mr. Seervai was not granted earlier. Mr. Seervai submitted that there are changed circumstances and that this court was misled into passing earlier order. However, in the light of the aforesaid facts and circumstances, it will not be proper to hold that despite orders passed earlier this motion can be allowed.

125. At the end what remains is the plea raised on the basis of judgement of a learned Single Judge of this Court (S.J Vazifdar, J) reported in 2003 (6) B.C.R 6 (Roto Packing Materials Industry v. Ravindar Kumar Chopra.)

126. The argument there was, merely because breach of trust emanated or commenced outside India and some or even all parties involved therein residing outside India, this Court would have no jurisdiction to try the suit. This Court negatived this plea and relied upon Clause XII of the Letters Patent. Therefore, as far as this aspect is concerned, in the present case, this judgement is of no assistance.

127. Reliance is then placed upon the reasoning of the learned Single Judge when he grants injunction in favour of the plaintiffs therein. Here, it is necessary to bear in mind that the plaintiffs' notice of motion No. 885 of 2001 under consideration of the learned Single Judge sought interim reliefs in aid of the final reliefs claimed in Suit No. 4320 of 2001. Plaintiffs sought permanent injunction against first defendant in that suit restraining him from transferring, disposing of alienating, encumbering, parting with possession of, removing from India or dealing with his assets including the amounts lying to the credit of the plaintiff in certain bank accounts until hearing and final disposal of a suit filed in the English court by the plaintiff. Further, injunction was prayed until full satisfaction of the decree, if any, that may be passed against first defendant. The notice of motion before the learned Single Judge was for interim reliefs in terms of the abovementioned final reliefs. The learned Judge noticed the factual aspects and then considered the submissions of the learned Counsel appearing for both sides. Paragraphs 31, 34, 38 and 41 are relevant for appreciating the conclusions which the learned Judge records on the basis of the applicability of section 51, 63, 66 and 88 of the Trust Act. If one peruses the aforesaid paragraphs, then conclusions at prima facie stage recorded in paragraphs 44 to 47 had to follow and which in fact followed.

128. This judgement does not lay down any principle of law that whenever any proceedings are pending in courts abroad and orders are passed by that court, this court must lend its assistance and aid. In the matter before the learned Single Judge, proceedings in English courts were pending and limited injunction was sought. It is not as if that the plaintiff therein wanted to execute and implement the order passed by the English court. On the other hand, substantive reliefs were claimed on the basis of the order passed by the English court, in India and with regard to the right of the opposite party to deal with his assets in India. The applicability of Indian law was not in doubt. The request was not to permit removal of assets from India. When proceedings have been instituted in India, without complete reliance on the orders and directions of English court and in addition materials are placed to establish a strong prima facie case, then depending upon other aspects such orders can be passed, is all that is laid down.

129. It is pertinent to note that the submissions canvassed before the learned Single Judge on applicability of section 44-A of the C.P.C are rejected and the observations are to be found in paras 54 and 60 of the judgement.

“54. What the plaintiff has however chosen to do is to limit the duration of this injunction until the hearing and final disposal of the suit filed in the English Court and until the satisfaction in full of the decree, if any, passed against defendant No. 1. The plaintiff has thus chosen to limit the duration of its injunction and also make it dependent upon the outcome of the English proceedings. If the plaintiff succeeds in the English court in obtaining the decree against defendant No. 1, it would be entitled to enforce the same under section 44-A of the Code of Civil Procedure, 1908. In that sense, the plaintiff has actually sought in this suit a relief less than it is entitled to seek.”

“60. Ms. Sethna submitted that the plaintiff ought to apply for an injunction in the English proceedings and enforce the same, if granted under section 44-A of the Code of Civil Procedure. Section 44-A of the C.P.C read thus:-

“44-A: Execution of decrees passed by courts in reciprocating territory:-

(1) Where a certified copy of a decree of any of the superior courts of any reciprocating territory has been filed in a District Court, the decree may be executed in (India) as if it had been passed by the District Court;

(2) Together with the certified copy of the decree shall be filed a certificate from such superior court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purpose of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment;

(3) The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the district court shall refuse execution of any such 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.”

“A plain reading of section 44—A of the C.P.C indicates that it does not contemplate an enforcement of interlocutory orders. I asked Ms. Sethna if she was willing to make a statement that in the event of the plaintiff obtaining an interim order against defendant No. 1 before the English court, defendant No. 1 would abide by the same qua the money lying in his account with defendant No. 2. On taking instructions, she said that defendant No. 1 was not willing to make such a statement.”

130. Properly analysed and considered, this judgement must be confined to the facts and circumstances brought to the notice of the learned Single Judge. In the peculiar facts and circumstances brought to his notice, observations have been made and reliefs granted by this Court. This judgement would not be of assistance in holding that the present suit is maintainable straightway, that nothing needs to be further established and that the inference of fraud must, therefore, be drawn and interlocutory reliefs in terms of final prayers be granted.

131. All other decisions brought to my notice by both sides are final judgements and decrees in suits and appeals. After the trial concludes and entire evidence is appraised, the principles laid down therein have been culled out. Therefore, facts and circumstances of each case are necessarily to be considered.

132. Accordingly, following order:-

ORDER

NOTICE OF MOTION NO. 727 OF 2002 AND NOTICE OF MOTION NO. 134 OF 2002

i) As far as prayers pressed viz., (C)(ii), d(i), (d)(iii) andd(xi), they cannot be granted in the light of the reasons mentioned above. Ad-interim orders as far as these motions are concerned, stand confirmed. In addition, the common order passed on 18 July 2002 in Notice of Motion No. 1740 of 2002 and Notice of Motion No. 1832 of 2002 is confirmed.

ii) In the light of the aforesaid Notice of Motion No. 678 of 2005 and Notice of Motion No. 3694 of 2003 will not survive and the same are disposed of accordingly.