Mondaq:UAE Notified As A Reciprocating Territory Under Section 44A Of Civil Procedure Code

29 March 2020:  INTRODUCTION : The purview of this article is the impact of addition of United Arab Emirates to the notification dated 17th January 2020 G.S.R 38 (E) issued by Ministry of Law and Justice. This notification allows filing of an execution proceeding under the Civil Procedure Code 1908 of a decree passed by UAE Courts in India.

When a certified copy of a decree of any Superior Court of UAE has been filed in a District Court in India, the Decree may be executed as if it had been passed by the District Court in India. As opposed to filing of a fresh suit prior to the notification coming into force. The amendment ensures cooperation between the laws of two sovereign states. UAE becomes the 11th country to be notified as reciprocating territory.

It all started with India entering into a bilateral Agreement with UAE in October 1999 on Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commission, Execution of Judgements and Arbitral Awards (the “1999 Agreement”) which would enhance the cooperation between the states which is inevitably necessary for various Indian businesses that are based in UAE.

The notification provides for the following Courts in UAE to be Superior Courts:

(1) Federal Court-

(a) Federal Supreme Court;

(b) Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah;

(2) Local Courts-

(a) Abu Dhabi Judicial Department;

(b) Dubai Courts;

(c) Ras Al Khaimah Judicial Department;

(d) Courts of Abu Dhabi Global Markets;

(e) Courts of Dubai International Financial Center.

A decree passed by a State which is a non- reciprocating territory shall not be executed directly by the Indian Courts. In such cases a fresh suit has to be filed on the basis of the judgement, which shall be considered as the cause of action for the said suit. In the said suit wherein the judgement of a non- reciprocating territory is construed as the cause of action, the decree passed by a non- reciprocating territory shall be treated as another piece of evidence.

REQUIREMENTS OF CIVIL PROCEDURE CODE 1908:Irrespective of the decree being reciprocating or non- reciprocating, the decree must comply with the requirements set out in Section 13 of the Civil Procedure Code.

Section 13 reads as under: A foreign judgment 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 jurisdication;

(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 2 [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 2 [India].

Under the Civil Procedure Code, 1908 direct enforceability of a foreign decree requires compliance of Section 13, 14(1) and 44A of the Code.

Section 14(1) reads as under: 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.

Section 44A reads as under:

(1) Where a certified copy of a decree of any of the superior Courts of 3 *** any reciprocating territory has been filed in a District Court, the decree may be executed in 4 [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 purposes 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.

Under the provisions of Section 44A of the Civil Procedure Code, a decree passed by the superior court of a reciprocating territory can be enforced, only after the same is notified by the Central Government.

Pursuant to Explanations under Section 44-A of the Civil Procedure Code, 1908 a “reciprocating state” means any country or territory outside India which the Central Government may, by notification in the Official Gazette declare to be a reciprocating territory for the purposes of this section ; and “superior courts” with any reference to any such territory, means such Courts as may be specified in the said notification.

(a) UAE decrees are now distinguished from non-reciprocating decrees (which require starting afresh by filing a suit in India). In the case of Marine Geotechnic LLC v/s Coastal Marine Construction and Engineering Ltd.([2014]183CompCas438(Bom), the Bombay High Court held that there are two types of decrees i.e. reciprocating and non-reciprocating decrees. Decrees from territories which the Central Government has notified as ‘reciprocating’ under Section 44A of CPC are decrees from reciprocating territory all other decrees are decrees from non-reciprocating territories.

(b) There will be an increase in the number of UAE court cases seeking recovery of funds from Indians.

(c) Considerable reduction in time for executing the decrees passed.

(d) The decree holder shall only be burdened to satisfy the courts in India about the test under Section 13 of the Civil Procedure Code.

(e) Recovery of the amount due in a faster way.

(f) The limitation period under the Limitation Act would be extended upto 12 years as opposed to the limitation of 3 years for filing a fresh suit.

(g) Transgression of the comprehensive procedure laid down under the Civil Procedure Code, 1908 of filing a fresh suit.

Reportedly as on date the UAE banks have to recover Rs. 50,000 crores from Indians who have defaulted in repaying the banks. One of the options available for recovery of debt is under Insolvency and Bankruptcy Code, 2016 but recently in Usha Holdings LLC. Vs Francorp Advisors Pvt Ltd (Company Appeal (AT) (Insolvency) No. 44 of 2018) the National Company Appellate Tribunal held that NCLT shall not be the proper authority in deciding whether the foreign decree is valid or not.

While deciding on the issue the NCLAT referred to its judgement in Binani Industries Limited vs Bank of Baroda & Anr. (Company Appeal (AT) (Insolvency) No. 82 of 2018) wherein it clearly articulated the objective of IBC i.e. maximising the value of the corporate debtor and not recovery of debt.

The said notification was a desired impetus which was required since last 20 years to actually enforce the bilateral agreement between the countries that took place in 1999. Furthermore, this would be a welcoming change for the legal industry in the country as this notification would bring with it a wave of foreign litigation based on the decrees by the Superior Courts in UAE. This is a change that would flourish, strengthen the ties and bring in strategic investments between the two countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

As reported on Mondaq

B&B: Period of lockdown to be excluded from timeline under IBC if activity in relation to CIRP could not be completed due to the lockdown

29 March 2020:The period of lockdown imposed in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process under the Insolvency & Bankruptcy Code, 2016.

To this effect, in exercise of the powers conferred by section 196(1)(t) read with section 240 of the Insolvency and Bankruptcy Code, the Insolvency and Bankruptcy Board of India has introduced Regulation 40C by way of an amendment to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The amendment introducing Regulation 40C, called the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2020, shall come into force on March 29, 2020.

The Notification shall be published in the Gazette of India as soon as the Government Press accepts the same for publication.

As reported on B&B

FE: DHFL claims cross Rs 1 lakh crore

24 March 2020: The amount claimed by creditors of troubled Dewan Housing Finance Corporation (DHFL) has crossed Rs 1 lakh crore, sources told FE. The sources added that 70,913 creditors “have claimed Rs 1,00,064 crore from DHFL till now.” Financial creditors, including bondholders, have claimed Rs 86,469 crore from DHFL.

India’s largest lender State Bank of India, including SBI Singapore, is the lead creditor with a claim of Rs 10,083 crore, followed by Bank of India, which has claimed Rs 4,126 crore. Canara Bank has claimed Rs 2,682 crore, National Housing Bank (NHB) has claimed Rs 2,434 crore, Union Bank of India `2,378 crore and Syndicate Bank Rs 2,229 crore, among other lenders.

The total amount also includes claims of Rs 2,500 crore from promoter entity of Wadhawan Global Capital (WGC). The claim relates to the exercising of a put option by Wadhawan Global Capital (WGC) and was filed by Dheeraj Wadhawan on behalf of the group company.

The troubled lender is undergoing a resolution process under the Insolvency and Bankruptcy Code, 2016, after the Mumbai bench of the National Company Law Tribunal (NCLT) admitted the case on December 2, 2019. DHFL is evaluating expression of interests received for the company. FE reported earlier that lenders discussed the revised evaluation matrix of bidders in the CoC meeting held on March 12. During the meeting, it was decided that 5% more weightage will be given to net present value (NPV) compared with the previous plan. The new evaluation criteria gives 40% weightage to NPV, 30% weightage to cash upfront, 10% for capital infusion, 5% to equity stake and remaining 15% evaluation will be done based on qualitative parameters.

FE has learned that 24 applicants have submitted expressions of interest (EoIs) for DHFL. The company had given the option to bidders to bid for the whole company or in parts. Under Option I, suitors were invited to submit EoIs for the entire business of DHFL. Under Option II, prospective resolution applicants were invited to submit EoIs for one or more groups or a combination of any assets in isolation across different groups of DHFL. The bids for the bankrupt mortgage lender are to be invited across three areas – retail, non-retail and slum rehabilitation authority (SRA) loans.

Source: Financial Express reported

TS:OVID-19: NCLT benches to remain close till March 31, 2020; Chennai NCLT to take up urgent cases on intimation through Email [Read Circular]

23 March 2020: In order to curb the outbreak of Coronavirus ( COVID-19 ), all the benches of the National Company Law Tribunal  (NCLT ) will remain closed till March 31, 2020. The Chennai bench of National Company Law Tribunal (NCLT) will take up only urgent cases on intimation through Email. In the view of the lockdown announced by several state government and central government, the National Company Law Tribunal (NCLT) on March 22, 2020 issued a notice in the name of Registrar, Mr. Shiv Ram Bairwa. The notice was given assent by the Acting President of the  National Company Law Tribunal (NCLT).

The subject matter of the notice pertains to the closure of all the benches of National Company Law Tribunal (NCLT) from March 23 to March 31. However, in cases of the urgent unavoidable matters the aggrieved party can file an application through Email to the Registry of the Chennai National Company Law Tribunal (NCLT).

As the financial year is about to end, for the purpose of the administrative work the skeletal staff has to attend the office whenever required as per the directions given by the Head of the Department (HOD). Apart from Skeletal staff, the other staff will stay at home and work from home. The other staff is directed to stay on the phone regularly.

The notice excluded Insolvency and Bankruptcy Code (IBC)-16 Matters extension of time, approval of plan and liquidation from being called as an urgent matter. These matters will be taken when the bench will resume its ordinary course of work, until then no such application will be entertained as an urgent matter.

Even in the case of urgent matters the parties will not be allowed to enter into the premises of the National Company Law Tribunal (NCLT) for the purpose of making the oral submission

Source: Tax Scan

BS: Rs 750 cr paid by JAL was towards obligation of Jaypee Infratech: NCLT

6 March 2020: The NCLT Delhi bench on Tuesday approved the bid of state-owned NBCC to acquire debt-laden JIL through an insolvency process and complete around 20,000 pending flats over the next three and half years

The Rs 750-crore deposited by Jaypee Infratech’s (JIL) parent firm Jaiprakash Associates with the Supreme Court registry was a payment towards obligation of the debt-ridden firm and should be treated as the asset of the corporate debtor, the NCLT has observed while approving the bid of NBCC for JIL.

The NCLT Delhi bench on Tuesday approved the bid of state-owned NBCC to acquire debt-laden JIL through an insolvency process and complete around 20,000 pending flats over the next three and half years.

The court also ordered that the Rs 750 crore deposited by Jaypee Infratech’s parent firm Jaiprakash Associates Ltd (JAL) with the registry of the Supreme Court would be part of the resolution plan.

In the written order uploaded on its website on Thursday, the NCLT said that as JAL is not under further obligation to complete construction of homes, and it cannot be assumed that if this money returned then it would be utilised to settle the debt of creditors of Jaypee Infratech Ltd (JIL).

“Since JAL is not under further obligation to complete construction of homes, there is no occasion to assume that if this money go back to JAL, it would be utilised for the cause of the creditors of the corporate debtor, in view of thereof, we hereby dispose all CAs related to Rs 750 crore issue by holding that this money is to be treated as the asset of the corporate debtor,” the NCLT order said.

“Though it has not been explicitly explained that JAL paid on behalf of JIL, the matter pending before the Supreme Court being with regard to homebuyers of JIL, when money was asked to be deposited towards refund of JIL homebuyers and the same being paid by JAL, now it is not open to JAL to say that it is JAL’s money,” it said.

NCLT also rejected the submissions that Rs 750 crore has not gone into the books of JIL, therefore it cannot be treated as the assets of JIL.

“Since JAL has without any objection or condition paid to the home buyers of JIL on behalf of JIL, it has to be treated that the payments is towards the obligation of JIL,” said NCLT in its 115-page-long order.

According to NCLT, In this case, the homebuyer’s money has been lying with the corporate debtor and JAL, it is the admitted fact that money come from the homebuyers has gone to JAL in the name of construction.

“It is not the case of the JAL that JIL money has not come for construction. Moreover JAL, by the time it has desposited, was aware that it was depoisting that money towards the obligation owned to JIL homebuyers,” the order saod.

“Here there could not be any assumption or presumption to say that JAL depoisted this money before the Supreme Court with an assumption that it would come back to it in the event this money has not been utilised for the distribution of it to the homebuyers of JIL,” it said.

“As long as the Supreme Court has not stated that this money has to be returned to JAL, it has to be construed that Supreme Court has conciously retained the money within the custody of it and thereafter transferred this money to NCLT with a direction that the parties shall abide by the directions of NCLT,” said NCLT adding ” Had the Supreme Court has felt that it should go back to JAL, the Supreme Court would have returned it to JAL, but but has not been done.”

NCLT further said: “Whenever any payment is made towards any liability, it has to be treated as a payment made towards that liability. It does not matter who paid the money, it matters as whether it has been paid towards an obligation or not.”

Jaypee Infratech went into insolvency process in August 2017 after the NCLT admitted an application by an IDBI Bank-led consortium.

NBCC’s proposal was approved by the lenders in the third round of bidding process to find a buyer for Jaypee Infratech.

In its bid, NBCC had proposed to complete over 20,000 pending flats in housing projects launched by Jaypee Infratech in Noida and Greater Noida (Uttar Pradesh).

Homebuyers’ claim amounting to Rs 13,364 crore and lenders’ claim worth Rs 9,783 crore were admitted.

NBCC offered 1,526 acres of land to lenders under a land-debt swap deal.

Source : Business Standard