TaxTMI 
TaxTMI 
2022 (3) TMI 1616
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....cution Petition No.52 of 2021 (the Third EP) is filed by Pueblo Holdings Limited, a company incorporated under the laws of the Republic of Marshall Islands. The Petitioner is the Award Holder under Arbitral Awards dated 09.04.2017 and 06.08.2017 (the Foreign Awards) in a foreign seated arbitral proceeding instituted by it against Emirates Trading Agency LLC, which is the first Respondent herein. By the Foreign Awards, an aggregate sum of INR 222,02,22,206.92 was directed to be paid by the first Respondent to the Award Holder. Upon calculating interest thereon, the Award Holder claims that a sum of INR 461,65,63,742.40 is due and payable by the first Respondent to the Award Holder. In addition, the Award Holder claims costs of INR 74,71,854.93. 2. O.P.No.416 of 2018 was filed by the Award Holder before this Court under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act). By order dated 02.11.2018 in O.P.No.416 of 2018, this Court held that the Foreign Awards are enforceable as a decree of this Court. Pursuant there to, the Award Holder filed E.P.No.40 of 2019 (the First EP) and E.P.No.55 of 2019 (the Second EP) (collectively the Earlier EPs) in ....
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....ility is dealt with by this order. 5. Oral submissions were made on behalf of Respondents 6 to 17 by Mr.J.Sivanandaraj, learned counsel, assisted by Ms.Ridhima Sharma; on behalf of Respondents 2,4 and 5 by Mr.P.Giridharan, learned counsel, assisted by Mr.Dominic S David, learned counsel; on behalf of the Respondent 3 by Dr.Fr.A.Xavier Arulraj, learned senior counsel, assisted by Mr.M.Baskaran, learned counsel; on behalf of the Petitioner by Mr.Ratnanko Banerji, learned senior counsel, assisted by Mr.Karthik Sundaram and Mr.Aditya Krishnamurthy, learned counsel. 6. The first contention on behalf of Respondents 6 to 17 was that these Respondents do not owe any money to the Award Debtor. Therefore, they are not garnishees. The second contention was that the Petitioner relies upon financial statements of the Award Debtor, which is a company incorporated in Dubai, United Arab Emirates (the UAE), to establish the alleged beneficial interest of the Award Debtor. The validity of these documents should be established as per UAE law. Therefore, the Petitioner should first approach courts in the UAE to establish the existence of beneficial interest in favour of the Award Debtor. Only up....
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....nable for or on behalf of a person claiming to be a real owner of a property against the benami. Since the Award Holder claims that the Award Debtor is the real owner, it was contended that the Award Holder is claiming through the Award Debtor. Hence, the petition is barred under the Benami Act. The last contention was that the alleged beneficial interest of the Award Debtor in respect of shares held by these Respondents was subsequently relinquished pursuant to the deconsolidation of the ETA group. In this regard, Respondents 6-17 relied upon the financial statement of ETA Star Holdings LLC. 8. In support of these contentions, Respondents 6-17 relied upon the following judgments: (i) P.Ramachandar Rao v. G.Jangaiah & others 1988 (2) APLJ 126 (Ramachandar Rao) for the proposition that the expression 'any other person' in sub-section (1) of Section 2 of the Benami Act includes the purchaser from the alleged real owner. (ii) Greaves Cotton and Company by Power Agent Baskar Rao, Madras v. J.Jamal Mohammed Abdulla 1992 - 2 - L.W. 42(Greaves Cotton) and, in particular, paragraphs 3 and 4 thereof, where the Court concluded that the prohibition in Section 4 of....
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....ection 74 of the Indian Contract Act, 1872. Respondents 2,4 and 5 also alleged that there was collusion between the Award Holder and Award Debtor. In support of these contentions, these Respondents pointed out that the plaint and interim applications filed by the Award Debtor in earlier suits before this Court were filed by the Award Holder in spite of the fact that the Award Holder was not a party to those proceedings. Therefore, it was contended that the Award Holder was set up by the Al Ghurair group. The next contention was that the Award Holder was granted express permission to file only one additional EP by order dated 08.04.2019 in the First EP. Therefore, the Third EP has been filed without obtaining permission from this Court. As regards the First EP, it was submitted that the said petition is pending before the Hon'ble Master for recording evidence and that the order passed in the Second EP is under challenge before the Supreme Court. By drawing reference to Order XXI Rule 21 of the CPC, these Respondents contended that multiple execution petitions against the same respondents cannot be permitted because it constitutes an abuse of process. In support of these contenti....
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....spondent as a party in the arbitral proceedings if the Award Holder intended to attach the assets of this Respondent. The third Respondent referred to and relied upon the following judgments: (i) Mitsul OSK Lines Ltd, (Japan) v. Orient Ship Agency Pvt. Ltd 2020 SCC Online Bom 217 for the proposition that the corporate veil cannot be lifted in execution proceedings. (ii) Sabita Rajesh Narang v. Sandeep Gopal Raheja of Mumbai and others 2015 SCC Online Bom 4802. (iii) Sanjeev Mahajan v. Aries Travels Pvt. & others, order dated 04.02.2020 in CS(OS) No.46 of 2020. (iv) Ahmed Abdulla Ahmed Al Ghurair (through their power of attorney holder Bartholomew Kamya) and another v. Star Health and Allied Insurance Company Limited and others (2019) 13 SCC 259 (Star Health Insurance SC). (v) R.Viswanathan and others v. V. Gajambal Ammal & Another AIR 1963 SC 1. 12. These contentions were refuted by the Award Holder. With regard to the reliance on Star Health Insurance DB and SC, it was submitted that the Award Holder was not a party to the suit; therefore, the judgments are not binding on it. Besides, it was contended that the said findings were rend....
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....ions, it was submitted that Order XXI Rule 21 CPC deals with an execution petition against both the person and property of a judgment debtor. Without prejudice, it was contended that the said provision confers a discretion on the court concerned. On this issue, the Award Holder distinguished the judgments in Bulk Trading and Ram Narayan Bhattad on the ground that the former dealt with two execution petitions at two levels of the same Court and the latter dealt with the necessity for an application for permission to prosecute, simultaneously, one execution petition before the court to which the decree was transferred and another before the court issuing the decree, whereas the execution petitions, in this case, are before the same Court and that such Court is fully aware that the decree was not satisfied. On the issue of forum shopping, the Award Holder relied upon Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd., Saudi Arabia and Ors. 1995 Supp (2) SCC 280 (Brace Transport) and contended that forum shopping is permissible in execution proceedings. 15. On the existence of saleable interest, the Award Holder relied upon the following judgments: ....
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.... non-compliance with Section 89. It was reiterated that the saleable interest criterion in Section 60 CPC is not satisfied. Mr.Giridharan further submitted that the present EP constitutes an abuse of process and that the documents on record establish collusion between the Award Holder and the Al Ghurair group. 19. These contentions raise several issues relating to the maintainability of this petition. At the outset, it should be noticed that this Court held by order dated 02.11.2018 that the Foreign Awards dated 09.04.2017 and 06.08.2017 are enforceable. Therefore, these Foreign Awards are deemed to be a decree of this Court under Section 49 of the Arbitration Act. Before delving into the contentions and counter contentions, the evidence on which the Award Holder has filed the Third EP should be examined. The consolidated financial statement of the Award Debtor, Emirates Trading Agency LLC, for the year ended 31.03.2013 is the sheet anchor of the Award Holder's case. In particular, the Award Holder relied on the Report of the Board of Directors. In paragraph 12 of such Report, receivables from Directors and shareholders, as on 31.12.2013, are set out and this includes sums o....
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.... sale of the shares of an Indian company by asserting that the Award Debtor has beneficial interest therein. Being shares of an Indian company, CA 1956 or CA 2013 would apply depending on when such beneficial interest was allegedly created. To put it differently, a court in the UAE cannot decide whether beneficial interest was created in the shares of an Indian company. Secondly, Star Health Insurance DB and SC were pronounced in a suit filed as a derivative action by shareholders of a company incorporated in the UAE on the basis that the company concerned failed to act to protect its interest. In such context, both the Division Bench of this Court and the Hon'ble Supreme Court held that such shareholders should institute proceedings in courts in the UAE. From paragraph 6.15 of Star Health Insurance DB it is clear that the Division Bench concluded that it is a fight between two groups of shareholders of a company incorporated in the UAE. Likewise, paragraphs 48, 54 and 55 of Star Health Insurance SC contain findings that a derivative action cannot be maintained in India as regards a company incorporated in the UAE. In contrast, this is an execution proceeding by an Award Holder....
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....ial interest in such shares, such person shall make a declaration with in such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares.'' (2) Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. (3) Where any change occurs in the beneficial interest in such shares, the person referred to in sub-section (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. (4) The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section. (5) If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or sub-se....
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....es held by some of the Respondents herein are beneficially owned by the Award Debtor. Therefore, the Petitioner is clearly not a person on whom any obligation is imposed by Section 89. Turning to sub-section (8) of Section 89, the said sub-section imposes a prohibition on the assertion of any rights over shares by the beneficial owner or a person claiming through or on his behalf. While it was contended that the Award Holder is claiming through the Award Debtor, such contention is untenable for the reason that the interest of the Award Holder is in conflict with and not aligned with that of the Award Debtor. This may be compared and contrasted with a purchaser from an award/judgment debtor who would clearly be a person claiming through the latter. Consequently, the Award Holder cannot be said to be claiming through or on behalf of the Award Debtor. Hence, the prohibition under sub-section (8) of Section 89 does not apply to the Award Holder. On this issue it should be noticed that the Division Bench of this Court in its order Second EP also arrived at the same conclusion in paragraph 52 there of. 23. The fourth objection is on the ground that multiple execution petitions w....