AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1612
X X X X Extracts X X X X
X X X X Extracts X X X X
....4, five separate loan agreements were executed between the Bank of Tokyo Mitsubishi UFJ Ltd. (BTMU), a bank incorporated in Japan, and various companies engaged in the business of shipping. (ii) In respect of the aforesaid loan agreements, guarantees were given by the defendant no.1 in favour of BTMU. (iii) Due to failure on the part of the borrowers to repay the loan amounts, an Acceleration Notice dated 10th November, 2015 was issued by BTMU to the defendant no.1 in terms of which the loan amounts were recalled. (iv) The aforesaid notice was duly received by the defendant no.1 on 12th November, 2015. (v) Upon failure of the defendant no.1 to repay his debts, the Tokyo District Court, vide order dated 4th January, 2016 declared the defendant no.1 as bankrupt and appointed the plaintiff as the Bankruptcy Trustee Administrator. (vi) The plaintiff was appointed as a Bankruptcy Trustee in accordance with the provisions of the Bankruptcy Act (Act No. 75 of June 2, 2004) of Japan (hereinafter referred to as the 'Japanese Bankruptcy Act') to recuperate the necessary amounts against the estate of the defendant no.1. (vii) The defendant no.1 challenged the bankruptcy order of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of Japanese Bankruptcy Act define the 'bankruptcy trustee' and the 'bankruptcy estate', respectively, as under: "Article 2(12): The term "bankruptcy trustee" as used in the Act means a person who has a right to administer and dispose of property that belongs to the bankruptcy estate in bankruptcy proceeding; Article 2(14): The term "bankruptcy estate" as used in the Act means a bankrupt's property, inherited property or trust property for which a bankruptcy trustee has an exclusive right to administration over and disposition of in the bankruptcy proceedings;" b) Article 34(1) of the Japanese Bankruptcy Act lays down the following: "Any and all property that the bankrupt holds at the time of commencement of bankruptcy proceedings (irrespective of whether or not it exists in Japan) shall constitute the bankruptcy estate." c) Article 80 of the Japanese Bankruptcy Act lays down the following: "In an action relating to the bankruptcy estate, a bankruptcy trustee shall stand as a plaintiff or defendant."" 4. Based on the aforesaid pleadings, the following reliefs have been sought in the plaint: (i) a decree of declaration in favour of the Plaintiff and against th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... placed on Article 77 and Article 78 of the Japanese Bankruptcy Act. (iii) There is no cause of action to file the present suit as the plaintiff has failed to file the loan agreements, the guarantee agreements and the details of the amounts due in respect of the defendant no.1. In this regard, reliance is placed on the judgment of the Bombay High Court in Marine Geotechnics LLC v. Coastal Marine Construction& Engineering Ltd., 2014 SCC OnLine Bom 309. (iv) Japan is not a reciprocating territory in respect of Section 44-A of the CPC, so there cannot be any proceedings for execution for executing the decree of the Japanese Court. (v) The bankruptcy order passed by the Japanese Court has no evidentiary value in India. (vi) The Indian insolvency regime viz., the Insolvency and Bankruptcy Code, 2016 does not recognize cross border insolvency and the defendant no.1 has not been declared as insolvent in India. (vii) The present suit is barred by limitation. In terms of Article 176 of the Japanese Bankruptcy Act, the prescribed period of limitation is two years. In the present case, the order declaring the defendant no.1 as bankrupt was passed by the District Court in Japan ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e suit is within time. (viii) The plaint cannot be rejected if the issue of limitation is a mixed question of facts and law. 8. I have heard the counsel for the parties. 9. Shorn of any legal niceties, it is evident from the facts narrated above that upon receiving the Acceleration Notice on 12th November, 2015, fearing commencement of bankruptcy proceedings in Japan, the defendant no.1 within six days, executed the SPAs in respect of the suit properties on 17th November, 2015. The defendant no.1, apprehending threat to his properties in India, executed a Gift Deed dated 23rd November, 2015 in favour of the defendant no.2. Immediately upon the defendant no.1 being declared bankrupt by the Tokyo District Court vide order dated 4th January, 2016, the Relinquishment Deed dated 8th January, 2016 was executed by the defendant no.1 and his sisters in favour of their brother, the defendant no.2. Clearly, these appear to be fraudulent and collusive acts done by both the defendants in order to defeat the interest of the creditors in Japan. It is also a matter of record that the aforesaid documents were executed without any consideration. Therefore, on a prima facie view, it appears th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of memorandum of understanding, without reference to nature of the use of the immovable property in trade or commerce as on the date of the suit. Furthermore, the judgment in Soni Dave (supra) was delivered in the context of an agreement to sell in respect of a residential property and the suit was held to not be a commercial suit in terms of Section 2(1)(c)(vii) of the Commercial Courts Act, which is not the case here. 15. Even otherwise, if the suit is not taken to be a commercial suit, this Court has the power to convert a commercial suit into an ordinary suit and proceed to hear the matter. This cannot be a ground for rejection of the suit. The suit has been valued in excess of Rs. 10 crores and ad valorem court fees thereon has been paid by the plaintiff. It is not denied that this Court has the territorial and the pecuniary jurisdiction to hear the present suit, even if it is taken to be an ordinary suit. 16. The next submission made on behalf of the defendants is that there is no cause of action to file the present suit as the plaintiff has failed to produce loan documents as well as the guarantee agreements or the details of outstanding amounts. The present suit has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een 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 1 [India] in cases in which such law is applicable; (d) where the proceedings in which the judgment 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 1 [India]. 14. Presumption as to foreign judgments. -The Court shall presume, upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction." 21. In Alcon Electronics Private Limited v. Celem S.A. of FAO 34320 Roujan, France and Another, (2017) 2 SCC 253, while analysing the aforesaid provisions, the Supreme Court has observed as under: "14. A plain reading of Section 13 CPC would show that to be conclusive an order or decree must have been obtained after following the due judicial process by giving reasonable notice a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovided in Section 13 above. On the face of it, the aforesaid judgment fulfils the requirement of due process and was passed after noting the various contentions raised on behalf of the defendant no.1. Therefore, the aforesaid judgment would be conclusive as to the defendant no.1 being declared bankrupt in Japan and the plaintiff being appointed as the bankruptcy trustee to administer the estate of the defendant no.1, even outside Japan. The plaintiff, who is the bankruptcy trustee, in the present proceedings is not seeking to execute the aforesaid judgment in terms of Section 44A of the CPC, but is acting in furtherance of the said judgment so as to administer the estate of the defendant no.1, who has been adjudicated as being bankrupt in Japan. There is no bar under the provisions of the IBC against filing such a suit. Therefore, there is no merit in the contention that the plaintiff does not have the locus standi to file the present suit. 24. The Supreme Court in Alcon Electronics Private Limited (supra) has recognized the principles of comity of nation so as to respect the decisions of foreign courts. In this regard, reference may be made to the following paragraphs: "19. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be respected by the Indian Courts, unless the same are shown to be falling under the limited exceptions provided in Section 13 of the CPC. The Plaintiff, being the Bankruptcy Trustee appointed by the Japanese court, is seeking the assistance of the courts in India, to administer assets of defendant no. 1 in India. There is no reason why a person who has been declared bankrupt by a foreign court in terms of the law applicable to that jurisdiction, should be afforded protection by the Indian Courts on technical objections being raised with regard to the validity of the foreign judgment. In the modern times of globalization, foreign creditors cannot be treated differently from domestic creditors. 27. Finally, the defendants have placed reliance on various provisions of Japanese law to submit that (i) present suit is time barred; and, (ii) the requisite permissions that were required to be taken in respect of filing the present suit have not been taken. 28. At the stage of deciding an application under Order VII Rule 11 of the CPC, the Court cannot take into account the various provisions of foreign law. The issues involved would also be in respect of whether provisions of Japanese l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgement, including foreign judgement. It is not the case of the defendants that the present suit is time barred under the Indian laws of limitation. The judgment of the Supreme Court in Bank of Baroda (supra) was in the context of limitation for the execution of a foreign decree under Section 44A of the CPC. It was in that context that the Supreme Court gave a finding that the issue of limitation is a matter of substantive law and not procedural law. 32. Therefore, the present suit cannot be rejected on the ground of limitation at the present stage. Accordingly, the judgment cited on behalf of the defendants in Raghwendra Sharan Singh (supra) will not be applicable in the facts and circumstances of the case. 33. In view of the aforesaid discussion, there is no merit whatsoever in the application of the applicant/defendant no.2 under Order VII Rule 11 of the CPC. It has been filed only to delay the proceedings in the suit. The same is dismissed with costs of Rs.1,00,000/- payable by the defendant no.2. 34. Needless to state any observations made herein are only for the purposes of deciding the present application and would have no bearing on the final adjudication of the suit. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s which additional documents are required to be filed within 30 days of filing of the suit. Under sub-rule (5) of Rule 1 of Order XI, the plaintiff shall not be allowed to rely on documents which were in the plaintiff‟s power, possession, control or custody and not disclosed along with the plaint or within the extended period save and except by leave of the Court which leave can be granted only if the plaintiff establishes reasonable cause for non-disclosure along with the plaint. The language used in the sub-rule (5) is that the plaintiff is required to show "a reasonable cause" and not a "sufficient cause" as is ordinarily provided in other provisions. 14. While dealing with Order XIII Rule 2 CPC wherein the words used are: "unless good cause is shown", the Supreme Court in the decision reported as (2002) 1 SCC 535 Madanlal v. Shyamlal, noted the distinction between "good cause" and "sufficient cause" and held that "good cause" requires a lower degree of proof as compared to "sufficient cause" and thus the power under Order XIII Rule 2 CPC should be exercised liberally. Sub-Rule (5) of Rule 1 of Order XI of the Commercial Courts Act, 2015 uses the phrase "reasonable caus....