1998 (10) TMI 539 - HC - Indian Laws

Objection petition dismissed, interim orders confirmed on property alienation.

Formosa Plastic Corporation Ltd. Versus Ashok Chauhan and Ors.

The court dismissed the objection petition and confirmed the interim orders restraining the respondents from alienating, disposing of, or otherwise ... - Issues Involved:1. Enforceability of the Texas Court judgment in India.2. Allegation that the judgment was not given on merits.3. Allegation that the judgment was obtained by fraud.4. Allegation that the judgment was in violation of natural justice.5. Applicability of Mareva injunction in execution proceedings.6. Ownership and attachment of properties not directly owned by the judgment-debtor.Detailed Analysis:1. Enforceability of the Texas Court Judgment in India:The primary issue was whether the judgment passed by the Texas Court could be enforced in India. The court noted that the USA has not been declared a 'Reciprocating Territory' by the Central Government, making its decree/judgment non-executable in India. However, England has been declared as such, and its judgment/decree is executable under Section 44-A of the Code of Civil Procedure (CPC).2. Allegation that the Judgment was Not Given on Merits:The objector contended that the judgment of the Texas Court was not given on merits. The court examined the facts and found that the Texas Court had considered documentary and affidavit evidence and that the defendants had failed to raise any substantial triable issues. The court concluded that the judgment was given on merits, noting that the defendants were given full opportunity to appear and raise a defense but voluntarily refrained from doing so. This plea was also barred by the rule of res judicata under Section 11 of the CPC.3. Allegation that the Judgment was Obtained by Fraud:The objector claimed that the judgment was obtained by fraud, alleging that the claim included supplies made to entities independent of the principal debtor, which were not guaranteed by Chauhan. The court found that this plea was not raised before the American or English Courts and was considered and rejected by the English Appellate Court as belated and not bona fide. The court held that this plea was barred by the rule of res judicata and could not be retried in these proceedings.4. Allegation that the Judgment was in Violation of Natural Justice:The objector argued that the judgment was in violation of natural justice, claiming that there was no oral hearing in the Texas Court. The court noted that this plea was not raised in the written submissions and was considered and rejected by the High Court of Justice, London, which found that the absence of an oral hearing did not constitute a breach of natural justice. The court held that this objection had no merit and was also barred by the rule of res judicata.5. Applicability of Mareva Injunction in Execution Proceedings:The objector contended that Mareva injunction is an interim relief that can only be granted when a suit is pending. The court found that the English Court had granted leave to enforce the decree to the extent of obtaining Mareva relief, which is intended to preserve the properties of the judgment-debtor from being alienated or dissipated. The court held that such an order could be made under the inherent power of the court under Section 151 of the CPC.6. Ownership and Attachment of Properties Not Directly Owned by the Judgment-Debtor:The objector argued that the properties in question did not belong to Chauhan and that there was no decree against respondents No. 2, 3, and 4 or the independent trusts. The court held that the question of ownership and whether the properties were acquired fictitiously in others' names could be decided after evidence was led. The court noted its power to lift the corporate veil to pass appropriate orders to do justice between the parties concerned.Conclusion:The court dismissed the objection petition and confirmed the interim orders restraining the respondents from alienating, disposing of, or otherwise encumbering the properties in question. The case was listed for further directions.