TMI Blog2012 (12) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... creating anomalies and irreconcilable situation because of the continuation of two parallel proceedings before two competent courts of jurisdiction of two sovereign states. The case of the plaintiffs is a case of shifting stands as they have taken conflicting stands taken before this court and before the Israel court and thus the plea of the plaintiffs to lift the corporate veil of the defendant companies to unmask the core company which created the web of subsidiary companies for the purposes of tax evasion and also for the purpose of playing with the legitimate rights of their creditors including the plaintiffs, with whom they had entered into the First Consultancy Agreement dated 1.8.2005 and Share Entitlement Agreement dated 17.10.2006, cannot be appreciated as the only judicial forum which was available to the plaintiffs to raise such a plea was the Israel court where for the reasons best known to them they not only failed to implead defendants Nos. 3 to 5 but also failed to raise any such plea in that regard. Suppression of Facts - Held that:- The only disclosure made by the plaintiffs with regard to the order passed by Hon’ble Supreme Court of Israel is that plea of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - CS(OS) 150/2012 - - - Dated:- 16-11-2012 - MR. KAILASH GAMBHIR J. Plaintiffs Through Mr. Anil Airi with Mr. Naveen Kumar Defendants Through Mr. Rajiv Nayyar, Senior Adv. For Defendant nos. 1,2,4,5,6 and Mr. Parag P. Tripathi , Senior Adv. For Defendant no. 3 IA No. 4784/2012 (Order 39 Rule 4 CPC), IA No. 4785/2012 (under Sections 16 to 19 CPC) and IA No. 4786/2012 (Order 7 Rule 11 CPC) in CS(OS) 150/2012 1. This order shall dispose of IA No. 4784/2012 under Order 39 Rule 4, CPC, IA No. 4785/2012 under Sections 16 to 19, CPC and IA No. 4786/2012 under Order 7 Rule 11, CPC filed by the defendants. 2. Before I proceed to decide these applications, a brief narration of the facts of the case as set out by the plaintiffs and germane to the controversy are that the plaintiffs have filed the present suit for perpetual and mandatory injunction, declaration and rendition of accounts against the defendants. The plaintiff no.1 is stated to be a Non Resident Indian based in United Kingdom having expertise in providing consultancy services relating to business setup in the telecom sector all over the world, more particularly in India. The plaintiff no.2 is a Limited Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ites for M/s. Spice Communications Ltd. Under Clause 15 of the said Limited Partnership Agreement, the plaintiffs‟ 7% right in the said business as per the First Consultant Agreement, was secured by creating a trust in the name of a trustee i.e. defendant no.6 herein, for holding 7% of the partnership s capital in trust for the benefit of the plaintiffs. Then sometime in April/ May 2006, the defendant no. 2 incorporated another company in Mauritius i.e. M/s. Tower Vision Mauritius Limited, TVML, defendant no.4 herein and consequently 99.99% shares of the Indian company i.e. defendant no.3 were vested in the said TVML and 1 share (0.01% share) of the said Company was vested in another group company i.e. M/s. Tower Vision Jersey Ltd., TVJL, defendant no. 5 herein. As per the plaintiffs, in a way the entire share capital and control of the defendant no.3, the Indian company rested with the defendant no.1 which was the General Partner of the defendant no.2 partnership. Thereafter, with a view to confirm an absolute and unconditional 7% right/interest in the business of the Limited Partnership in favour of the plaintiffs, a separate Share Entitlement Document dated 17.10.2006 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the said stay application, one Mr. Moshe Shushan, a partner in the defendant no.2 partnership and a shareholder-Director of the defendant nos. 1,3, 4 and 5 companies filed an affidavit dated 27.1.2011, taking a stand therein that the defendants had reduced/diluted the partnership holdings in the Tower Management business of the defendant no.3 to a mere 32% as against their holding of 100% of the business at the initial stage when the plaintiffs were made beneficiary of 7% interest/rights. As per the plaintiffs, the stand taken by the said Director was in gross breach and violation of the Share Entitlement Document dated 17.10.2006, wherein 7% rights of the plaintiffs in the partnership business were preserved in a trust. It is the case of the plaintiffs that on account of the said discovery of fact which came to the knowledge of the plaintiffs through the affidavit dated 27.1.2011 filed by Mr. Moshe Shushan, wherein it was disclosed that the partnership‟s sole asset was the Tower Management business of defendant no.3 in India, the plaintiffs were left with no other option but to approach this court to seek declaration to the effect that the plaintiffs are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the defendant no.3; e. Direct the defendant No.3 to render complete accounts to the plaintiffs in respect of its incorporation, its past and present assets and resources regarding the Tower Management business in India, its share-holding and management since inception, any dilution of shareholding or business in favour of third parties, and of any future transaction relating to sale, transfer, alienation, encumbrance, etc. of the business, shares, assets and/or stakes of the defendant no.3, etc; f. Award pendent lite and future interest @ 12% per annum on the amount that may be found due and payable to the plaintiffs from the defendants; g. Award cost of the suit in favour of the plaintiffs and against the defendants; h. Pass such other further orders in favour of the plaintiffs and against the defendants that this Hon ble Court may deem fit and proper in the facts and circumstances of the case. 3. Along with the present suit, the plaintiffs filed an application under Order 39 Rule 1 and 2 read with Section 151 of CPC, for the grant of interim stay. Vide ex-parte order dated 20.1.2012, the defendant nos. 2,3 and 4 were ordered not to prejudicially affect 7% share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under the laws of Israel and any dispute relating to trusteeship and the rights of the parties under the trust are governed by the laws of Israel. As per the defendants, the present claim pertaining to the 7% shareholding concerns the defendant No.2, the limited partnership company, which does not hold any shares in defendant No.3 company. According to the defendants, plaintiff no.1 and defendant No.1 had entered into an agreement in terms of which plaintiff No.1 was to provide certain consultancy services to defendant No.1 and in terms of clause 5 of the same, in return defendant No.1 granted plaintiff No.1 a right to purchase shares equivalent to 7% of the issued share capital of defendant No.1 as on the date of execution of the First Consultancy Agreement. It is also the case of the defendants that such an option was exercisable upon occurrence of certain terms and conditions which never got materialized. It is also the case of the defendants that on 26.3.2006, defendant No.1 as General Partner and certain other individuals as Limited partners including defendant No.6, the trustee, entered into a Limited Partnership Agreement constituting defendant No.2 herein and in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed a civil suit No.2192/2008 before the District Court at Tel Aviv, Israel which is equivalent to the High Court in India for the enforcement of their alleged rights for 7% shareholding in defendant No.2 partnership firm. It is also the case of the defendants that the claim made in the present suit is identical to the claim made by the plaintiffs before the Israel court before which defendant nos. 3, 4 5 were not made parties to the suit. It is also the case of the defendants that in January, 2011 the plaintiffs had moved the Israel court to seek an order of restrain against defendant nos. 1, 2, 6 and Mr. Rani Benyamini from transferring any shares or rights in the tower management business in India or from changing the state of assets of the defendants in any manner. It is also the case of the defendants that vide order dated 20.6.2011, the District court of Tel Aviv, Israel had granted interim relief in favour of the plaintiffs by directing the defendants to deposit in trust 7% of any consideration received by any foreign company from any transaction executed by the defendants. It is further the case of the defendants that the said interim order was challenged by the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present suit was filed by the plaintiffs on 17.1.2012, while the judgment by the Supreme Court of Israel was passed on 24.10.2011 and therefore, there was enough time for the plaintiffs to have placed on record the copy of the said judgment with the present suit. Counsel also submitted that plaintiffs herein had filed an application before the District Court of Tel Aviv, Israel for the release of the guarantee, which application of the plaintiffs was received by the District Court on 26.10.2011 and along with the said application, the plaintiffs had also attached the said order of the Supreme Court of Israel dated 24.10.2011, but with the oblique motives and malafide intentions, the plaintiffs have taken a stand before this Court that the copy of the order of the Supreme Court of Israel was not available with them till the filing of the present suit on 17th January, 2012 and even thereafter till March 2012. Counsel thus submitted that this is a clear case of suppression by the plaintiffs by deliberately not placing on record the copy of the order of the Supreme Court of Israel. Counsel further argued that the plaintiffs have also suppressed the fact that the Share Entitlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suit filed by the plaintiffs is neither covered under Section 16 of the CPC nor under Section 19 of the CPC or even under Clause (a), (b) or (c) of Section 20 of CPC. The contention raised by counsel for the defendant was that the plaintiffs alleged claim is based on Partnership Agreement and Share Entitlement Document and both the said documents were executed within the jurisdiction of Israel courts and the parties who had executed the said documents are also located in the jurisdiction of Israel Court. Counsel also submitted that it is an admitted position between the parties that defendant No.2 does not hold any shares in the capital of defendant No.3 as 99.99% of the capital of defendant No.3 is held by defendant No.4 and 0.01% of the capital of defendant No.3 is held by defendant No.5. Counsel also argued that the alleged entitlement of the plaintiffs is only to have a share in the defendant No.2 partnership and such entitlement of the plaintiffs has no nexus whatsoever with the share capital of defendant No.3 and thus defendant No.3 is totally out of picture and its location in Delhi will not confer jurisdiction on this Hon ble Court. Counsel also argued that in terms of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of limitation. Counsel also argued that the plaintiffs were very much aware of the fact of the dilution of the shareholdings in defendant no. 3 company and the same is evident from the fact that the copy of the legal notice dated 16.9.2008 issued by the plaintiffs‟ lawyers in Israel which was addressed to defendant nos. 1, 2, and 3 was also sent to TVML, Defendant no. 4 company. Counsel thus submitted that it is absolutely false on the part of the plaintiffs to allege that such dilution of share capital came to their knowledge recently before filing of the present suit. Based on the above submissions, counsel for the defendants submitted that the present suit filed by the plaintiffs is clearly barred by limitation. Comity of courts 12. Much emphasis was laid by both the counsels representing the defendants on the well-established principle of Comity of Courts for non-maintainability of the present suit. Argument of the counsels for the defendants was that the principle of Comity of Courts demands that this Hon ble Court ought not to interfere with the proceedings pending before the Israel Court based on the same cause of action and seeking same reliefs. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suits are exactly the same and, therefore, the adjudication of the same cannot take place before the competent Courts of different countries. The counsel submitted that the present case is in fact a classic case of re-litigation before this Court while the previous litigation between the parties is pending before another competent Court of jurisdiction. The counsel also invited the attention of this Court to para 17 of the plaint wherein the plaintiffs themselves have taken a stand that the present suit has been filed by them as an abundant precaution and such an averment on the part of the plaintiffs by itself is sufficient to show the ulterior designs of the plaintiffs in filing the present suit. The contention raised by the counsel for the defendants was that there cannot be any suit filed by any party as an abundant precaution. Counsel also argued that if the plaintiffs are allowed to litigate the present suit here in India then later another suit can be filed by them in courts of Mauritius and thereafter, if they fail to get any favourable order there, then in the Courts of Jersey based on the shareholdings of defendant Nos. 4 and 5 in defendant No.3 Company. In support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstly with regard to injunction against the defendants to restrain them from diluting shareholding of defendant No.2 in defendant No.3 company in any manner and secondly, for preserving the 7% shares of the plaintiffs in the Tower Management Business. Counsel also argued that even if it is assumed that the plaintiffs have any claim as such, then the claim can only be made against the trustee, i.e., defendant No.6 but clearly the plaintiffs have no claim or cause of action against defendant nos. 3 to 5 who are the distinct business entities with individual corporate and juristic personalities. Counsel also submitted that so far the defendant No.6 is concerned, claim against him can only be made within the jurisdiction of Israel courts and which infact has been made by the plaintiffs much prior to the filing of the present suit. Based on the above submissions, counsel for the defendants contended that the plaintiffs have no cause of action to invoke the jurisdiction of this court and the suit filed by the plaintiffs merit rejection on this sole ground. 15. Mr. Parag Tripathi, Senior Advocate for the defendant no.3 also submitted that ex-parte order granted by this court is in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the business of the defendant no.3. Counsel submitted that the defendants are group of corporate entities created by a common set of promoters who, after the Indian Government had allowed 100% foreign direct investment in the Telecom Infrastructure Sector, had set up the tower management business in India by incorporating the defendant no.3. Counsel also argued that these independent corporate entities i.e. defendant nos. 1,2, 4 and 5 herein are paper entities which do not have any independent business other than Tower Management Business in India being run through the defendant no.3 company. Counsel further submitted that prior to the incorporation of defendant no.3, only the defendant no.1 (TVL) was in existence and they had engaged the plaintiffs for setting up the business in India in terms of the First Consultant Agreement dated 1.8.2005, wherein the plaintiffs were granted irrevocable stock option i.e. right to purchase 7% of the equity shares of TVL, defendant no.1 herein. Counsel also argued that the plaintiffs had duly performed their obligations in terms of the said Consultant Agreement and it is through the efforts made by the plaintiffs that the defendant no. 1 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of umbilical cord of all these companies is the defendant no.1 and therefore these defendants cannot escape from their liability so as to deprive the plaintiffs of their legitimate right of having 7% share in the business of the defendant no.3 based on the admitted documents, mainly the First Consultant Agreement dated 1.8.2005 and the later document executed on 17.10.2006. Counsel thus submitted that through this case the plaintiffs seek to unravel the true picture of defendant no. 1 which is trying to hide under the facade of multiple entities created so as to defeat the rights of the plaintiffs. 18. Counsel further submitted that it is a settled proposition of law that intention of the parties to the contract has to be gathered from the documents executed between the parties from time to time and also through various e-mails exchanged between them and the defendants cannot be allowed to set up a defense contrary to the written documents which are primary evidence under Section 90/92 of the Evidence Act. Counsel further argued that defendants in order to non-suit the plaintiffs are withholding the best evidence in their power and possession i.e. the e-mails exchanged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said order of the Supreme Court from this court as filing of the separate suit by the plaintiffs before the Israel court does not come in their way of filing the present suit. Counsel further argued that the proceedings pending before the Israel court have not yet culminated in the passing of any final judgment for adjudication of respective rights and obligations of the parties therein and so far the order passed by the Supreme Court of Israel is concerned, the same is merely a interlocutory order and not a conclusive decision based on the merits of the case. Counsel further argued that the observation of the Supreme Court of Israel in the order dated 24.10.2011 that the Share Entitlement Document was not binding on the foreign companies cannot be said to be a conclusive decision so as to affect the rights of the plaintiffs in the present suit. Counsel further submitted that it is about a month later from the date of execution of Share Entitlement Document that the defendants sought to amend the same but the said request of the defendant was declined by plaintiff No.1. Counsel also submitted that the alleged negotiations between the parties even as per the defendants own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no territorial jurisdiction to entertain the suit filed by the plaintiffs because some of the defendants are foreign entities and before this court the defendants have again raised an objection with regard to the lack of jurisdiction of this court on false and flimsy grounds. Counsel further submitted that the First Consultancy Agreement dated 1.8.2005 specifically provided that tower management business would be set up in India and accordingly the services of the plaintiffs were engaged in the setting of the said tower management business in India. Counsel stated that further incorporation of entities by defendant No.1, even by changing the share pattern in the subsequent companies will not oust the jurisdiction of this court as indisputably, the services of the plaintiffs were engaged by defendant No.1 under the said consultancy agreement to set up tower management business in India. Counsel thus stated that a substantial part of cause of action has arisen in India and therefore the present suit filed by the plaintiffs is squarely covered within the scope of Section 16(f) as well as under the residuary provision of Section 20 CPC. Counsel also argued that if the corporate veil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendants took a stand that the assets of the defendants are outside the jurisdiction of Israel court and taking into consideration the said stand of the defendants, the Supreme Court of Israel vacated the stay order granted by the District Court of Israel. Counsel also refuted the contention of the counsel for the defendant that vide e-mail dated 5.4.2007, the defendant no. 6 had rejected the plaintiffs entitlement in the business of the partnership as on perusal of the said e-mail, the defendant no.6 had merely shown his inability to act as per the request of the plaintiffs in the absence of any clear instructions from both the parties. Counsel also submitted that till date, the defendants have neither terminated the Share Entitlement Document nor they have dissolved the trust and therefore so long the defendants have not transferred 7% shares/rights in their business in favour of the plaintiffs, the cause of action in favour of the plaintiffs continues. Counsel also argued that the limitation is a mixed question of law and fact and therefore the same cannot be decided by this court at the very threshold of the case without giving an opportunity to the parties to lead evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be rejected. In support of his arguments, counsel placed reliance on the judgment Essel Sports Pvt. Ltd. v. BCCI, 178 (2011) DLT 465 (DB) Forum Shopping 24. Refuting the contention raised by the counsel for the defendants with regard to the principle of forum shopping, counsel for the plaintiffs submitted that the cause of action for filing the present suit by the plaintiffs is separate and independent and the said cause of action in favour of the plaintiffs primarily arose due to the specific objections raised by the defendants before the Israel court, thereby challenging the jurisdiction of Israel court to pass any order with regard to business and assets of the defendant no.3, the same being outside the jurisdiction of the Israel court. Counsel also argued that giving weightage to the said objection raised by the defendants, the Hon ble Supreme Court of Israel declined to protect the interest of the plaintiffs and the imminent threat of the defendants dissipating the entire assets of the defendant no.3 which are in India alone also afforded an independent cause of action to the plaintiffs to approach this court. Counsel also argued that such technical objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of consultancy fee and 7% interest in the tower management business of defendant nos. 1 and 2 has remained undisputed. Counsel further argued that it is a well settled proposition of law that the intention of the parties to the contract has to be gathered as a whole based on the terms of the contract entered into between the parties and subsequent exchange of documents and on careful scrutiny of all these documents one cannot dispute the legitimacy of the claim of the plaintiffs in the present suit and its maintainability with complete disclosure of cause of action. Counsel also submitted that never at any point of time, the plaintiffs had admitted to the creation of the said trust or the alleged trustees‟ right to hold the property on their behalf. Counsel also submitted that the Share Entitlement Document was executed on 17.10.2006 much after the creation of the said trust on 26.3.2006, and therefore the rights of the plaintiffs in the said telecom business of the defendants can neither be defeated nor can be postponed with the creation of the said trust. Based on these submissions, counsel for the plaintiffs submitted that the present suit filed by the plaintiffs cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tower Vision Mauritius Ltd. as defendant no.4. This company was incorporated by defendant nos. 1 and 2 in April/May 2006 for the purposes of routing the resources and finances for the tower management business in India. This company held 99.99% shares in the Indian company and 0.01% shares of the Indian company were vested in another group company i.e. M/s Tower Vision Jersey Ltd. which has been impleaded as defendant no.5 in the present suit. As per the plaintiffs, these three additional defendants were impleaded by the plaintiffs in the present suit based on an affidavit dated 27.1.2011 filed by Mr. Moshe Shushan, partner in the defendant no.2 and shareholder director in the defendant nos. 1, 3, 4 5 companies, which affidavit, as per the plaintiffs disclosed various startling and shocking facts and one of them being that the partnership holding in Tower Management Business of the defendant no.3 had reduced to merely 32% as against their initial holding of 100% in the defendant no.3 company thereby resulting in dilution of plaintiffs‟ rights in the said telecom business. It is also an undisputed fact that the plaintiffs have filed an interim application for temporary inj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 15 of the agreement for the establishment of the Partnership, to which we shall refer below, to transfer to the Plaintiff, or to whomever the Plaintiff so orders, the rights owing to him and to which he is entitled in the Partnership. 6.2 To declare that the said rights reflect the Plaintiff s share in the Partnership at a rate of 7% of all of its assets, monies, rights and/or any other right, since its founding, whether held by the Partnership directly or if held through affiliated companies or by any other means and through which the Partnership manages its business, that is to say the substitute entity and/or Tower Vision Mauritius, as shall be detailed in the Statement of Claim below; and also 6.3 The issuing of orders for the providing of accounts in order to determine the value of the rights which are not known by the Plaintiffs, including detailing the assets and the value of the assets held by the Partnership and/or the substitute entity and/or Tower Mauritius, as shall be detailed in this Statement of Claim below. 6.4 The splitting-up of relief with the aim of enabling a claim for monetary compensation for the breach of those undertakings and those damages su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Hon ble Court may deem fit and proper in the facts and circumstances of the case. The reliefs claimed by the plaintiffs in the interim stay application before the Israel court are as under:- 1. To order the Respondents in a temporary injunction order to prevent, jointly and/or severally and/or through any person and / or any other legal entity on their behalf, including other entitles in the chain of ownership of the business (as described below) including Tower Jersey and/or Tower Mauritius and/or Tower India (as shall be described below), from undertaking any act containing one or more of the following:- a. To remove and/or transfer and/or sell and/or pledge assets and/or monies and/or benefits and/or shares held by them and/or by anyone on their behalf and/or by any holder, arising from and/or related to the business of cellular telecommunication towers of the Respondents in India (the Business ), and any assets and/or monies and/or benefits due to them as a result of and/or related to the transaction with respect of the rights in the Business (the Assets), regardless of whether the Assets are located in Israel or overseas; b. To change the state of the Assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First Consultancy Agreement, the plaintiffs were given an irrevocable right to acquire 7% of the shares of the defendant no.1 upon fulfillment of certain terms and conditions mentioned therein. Clause 5 of the First Consultancy Agreement is reproduced as under: 5. STOCK OPTION 5.1 Stock option grant The Company hereby grants SJ an irrevocable right to purchase, or designate one or more persons which are detailed in Annex C attached hereto (each a Designee ) to purchase shares equivalent to 7% of Tower Vision Ltd. s issued share capital at the date of this Agreement, at the exercise price described in Clause 4.3 herein (such right being the Stock Option ), subject to the conditions described in Clause 4.2 herein. 5.2 Mile Stones for exercise of Stock Option SJ may exercise the Stock Option by issuing a written notice to the Company (the Stock Option Notice ) and specifying the number of shares to be purchased from the company (the Option Shares ) at the earlier of: (a) Event One (i) The Company having concluded a joint venture agreement for India; and (ii) The Indian joint venture company having secured contracts for at least 500 sites irrespective of whether suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d partnership (the Partnership ) hereby confirm that you have today an absolute and unconditional interest in 7% of the rights of the Partnership. We further confirm that in case of any structure changes which will result in the partners holding their interests in the Tower Management Business through any other entity. You shall be entitled to receive absolutely and unconditionally 7% of the rights of any such other entity, which will be established by the partners of the Partnership, and which will replace the Partnership in any holding structure related to the Tower Management business of the Partnership. For the avoidance of doubt such Tower Management business of the partnership is today carried out via Tower Vision Mauritius Limited. 2. We will allocate the rights or shares referred to in Section 1 above to your name or to any other entity as instructed in writing by you. 3. Our undertaking herein supersedes any previous undertaking provided to you by us and/or by any related entity in respect of your entitlement to receive any share and/or right in the Partnership s tower management business. Any previous undertaking and/or obligation regarding the subject matter or this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay allocate, at its sole discretion the percentages held by the Trustee, to any third party as the General Partner deems fit and the Trustee will release the percentages held by him in accordance with the General Partner s instructions from time to time. For the avoidance of doubt, it is hereby clarified that should the terms and conditions of the agreement between the Partnership and Messers Sipper and Vargese be fulfilled, the rights to Messers Sipper and Vargese shall be deemed to have been allocated at the establishment of the Partnership and they shall be entitled to all the rights in the Partnership. 35. As already stated above, Tower Vision India Ltd., which is an Indian company and the defendant no.3 in the present suit was constituted on 27.1.2006 with only two shareholders i.e. defendant no.1 with 99.9% shares and remaining 0.01% share with one Elgadcom Group. Defendant no.4, M/s Tower Vision Mauritius Ltd. TVML was constituted sometime in April/May 2006 for the purposes of routing the resources and finances for the Tower Management Business in India and 99.9% shares of the Indian company were held by the Mauritius company, TVML and 0.01% shares of the Indian company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the subject matter, territorially and as per the pecuniary limits of his claim. The plaintiff, wherever there is any jurisdiction clause in the agreement, has also to give due weightage to such clause to decide the situs of initiating proceedings. The jurisdiction of any court or forum to adjudicate will thus depend upon three important facets; first and foremost that whether it has jurisdiction to decide the particular subject matter of a suit; secondly, whether it has the territorial jurisdiction to try and entertain the suit and; thirdly, whether the suit filed is within the pecuniary limits of its jurisdiction. 39. In the case at hand, the plaintiffs who have based their claim on their 7% rights in the limited partnership business of defendant nos. 1 and 2 under the First Share Consultancy Agreement and after cancellation of the same under the Share Entitlement Document dated 17.10.2006 had preferred to invoke the jurisdiction of the District Court of Tel Aviv, Israel. On a closer look at the averments made in the plaint before the Israel court and the averments made in the plaint before this court, it is clearly discernible that there is not much variation in the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order under Rule 383 of the Rules of Civil Procedure. This Rule originates in English Law, in an order that is called a Mareva injunction. The Rule provides as follows: Subject to the provisions of Article one, Court or the Registrar may order that the Respondent refrain, in person or through any person on his behalf, from removing assets from his or from a holder s possession, from selling, charging or changing their condition or his rights to them, if the Court or the Registrar is satisfied, on the basis of prima facie credible evidence, that there is a reasonable danger that not making the order will make it difficult to execute a judgment . A sub-regulation defines assets in this regulation as including assets located outside the borders of the State . In other words, this is a form of relief that can restrict the use by a litigant of an asset situated outside the borders of Israel. The order that is the subject of the Rule is an order in personam and consequently the location of the asset is of no importance (see Goren, Issues in Civil Law Procedure . 8th Edition, Page 539). The order resembles an attachment order in terms of being intended to ensure the possibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nslation of the Decision for them. Nevertheless, the Decision is not a privileged one and the Applicants cannot be prevented from making use of it, and notifying other parties about it. The applicants may inter alia- as well as the Respondents translate the Decision and send the translation of it to the foreign companies. I find against the respondents for payment of the Applicants costs in respect of the present application of a total sum of NIS 30,000. 41. Feeling aggrieved by the said order of the learned District Court of Tel Aviv, Israel, the defendants therein challenged the same before the Hon ble Supreme Court of Israel and vide order dated 24.10.2011 the Hon ble Supreme Court of Israel vacated the said interim injunction granted by the District Court of Tel Aviv, Israel. In the said decision, the Hon ble Supreme Court of Israel observed that the Share Entitlement Document was signed between the plaintiffs and the defendants therein and the same could not bind the foreign companies. The said Court also observed that the rights of the plaintiffs in the partnership were held secured for them in a trust which should mitigate their concerns of irreversible damage being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disclosure made in the said affidavit would constitute a new cause of action or not, it would be determined by the parameters of what constitutes a Cause of Action . Black s Law Dictionary (8th Edn) defines Cause of Action‟ to mean a situation or state of facts that entitles a party to maintain an action in a court or a tribunal; a group of operative facts giving rise to one or more bases of suing; a factual situation that entitles one person to obtain a remedy in court from another person. In Stroud s Judicial Dictionary a Cause of Action‟ is stated to be the entire set of facts that give rise to an enforceable claim; the phrase comprises every fact which, if traversed, the plaintiff must prove in order to obtain judgment. In "Words and Phrases" (4th Edn.) the meaning attributed to the phrase Cause of Action in common legal parlance is existence of those facts, which give a party a right to judicial interference on his behalf. It is thus a settled law that Cause of Action‟ consists of bundle of facts, which give cause to enforce the legal inquiry for redress in a court of law. In other words, it is a bundle of facts, which taken with the law applicable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on the same cause of action. For better appreciation of this argument, Section 10 of CPC is reproduced as under: Section 10- No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in India having jurisdiction to grant the relief claimed, or in any Court beyond the limits of India established or continued by the Central Government and having like jurisdiction, or before the Supreme Court. Explanation - The pendency of a suit in a foreign Court does not preclude the Courts in India from trying a suit founded on the same cause of action. 46. As would be seen from the bare reading of the said provision, it starts with a non-obstante clause and clearly prohibits trial of any suit by a court in which the matter in issue is also directly and substantially issue in a previously instituted suit between the same parties or between the parties under whom they or any of them claimed to be litigating. The rigour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court is thus not persuaded to accept the same and allow the perversion of the said provision. 47. Now coming to the principle of comity of courts, the argument actuated by the counsel for the defendants was that the principle of comity of courts would require this court to refrain from passing any order in favour of the plaintiffs. Simply stated, this principle refers to the concept that the courts should not act in a way that demeans or in any way undermines the jurisdiction, laws or judicial decisions of another jurisdiction. The court has to give thus due credit to the justice dispensation of the court of another jurisdiction. The concept of comity of courts as explained in the book Conflict of laws by Dicey, Morris Collins (14th Edn,Vol I), describes it to be of wider acceptance between the courts of different countries to mutually respect the territorial integrity of each other s jurisdiction. The principle of comity of courts would require the courts to give due regard to the orders passed by foreign courts. This principle of comity of courts has been well recognized and accepted by the Indian courts in various judgments. Here it would be relevant to quote the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower of mostly common law courts to refuse to hear a case that has been brought before it. The Courts may refuse to take jurisdiction over matters where there is a more appropriate forum available to the parties. In the present case, having regard to the scope and spirit behind Article 19 of the Agreement we feel that arbitration proceedings in Singapore or the courts at Singapore are appropriate forum even for the purpose of seeking interim measure. 49. The doctrine of comity of courts thus requires that the court should gauge the effect of the proceedings instituted in a foreign court on the proceedings instituted before itself and let the decision in a previously instituted suit in a foreign country determine the effect on the proceedings before it. Our codified law in the form of the statute of the Code of Civil procedure also gives due regard to this principle as it would be evident that under Section 13 of the Code of Civil Procedure,1908 judgments given by the foreign courts have been held to be binding and conclusive until and unless they fall in any of the exceptions as spelled out in clause (a) to (f) of the same. Under section 14 of CPC, there is a presumption of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was held as an abuse of the process of the court and contrary to the principles of justice and public policy. The Apex Court also placed reliance on the English decision reported in the case of Greenhalgh v. Mallard, (1947) 2 All ER 255. In that case, the appellants had resorted to two parallel proceedings, one under the Arbitration Act and the other by way of a suit. When the order of interim injunction obtained by the appellants was vacated in arbitration proceedings, they obtained an injunction in the suit. The issues in the two proceedings were identical and the suit was substantially to set aside the award and the court took a view that if the plaintiff has chosen to put his case in one way he cannot thereafter bring the same transaction before another court to put his case in an another way and say that he is relying on a new cause of action and held that the proceeding by way of a suit was an abuse of the process of court since it amounted to litigating the same issue in a different forum through different proceedings. Relevant paras of the said judgment are extracted below: 43. One of the examples cited as an abuse of the process of court is re-litigation. It is an ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other party cannot satisfy the strict rule of res judicata or the requirement of issue estoppel. 51. In another recent judgment of the Hon ble Apex Court, M. Nagabhushana v. State of Karnataka and Ors., AIR 2011 SC 1113, the same view was reiterated in the following paras:- 21. Therefore, any proceeding which has been initiated in breach of the principle of Res Judicata is prima-facie a proceeding which has been initiated in abuse of the process of Court. 22. A Constitution Bench of this Court in Devilal Modi v. Sales Tax Officer, Ratlam and Ors. AIR 1965 SC 1150, has explained this principle in very clear terms: But the question as to whether a citizen should be allowed to challenge the validity of the same order by successive petitions under Article 226, cannot be answered merely in the light of the significance and importance of the citizens' fundamental rights. The general principle underlying the doctrine of res judicata is ultimately based on considerations of public policy. One important consideration of public policy is that the decisions pronounced by courts of competent jurisdiction should be final, unless they are modified or reversed by appellate authorities; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount to overreaching the order passed by the Hon ble Supreme Court of Israel which has already declined to grant interim relief as has been claimed by the plaintiffs in the present suit. Any indulgence by this court will result in causing serious interference with the process of justice of the foreign court. In fact passing of any order by this court can be in serious conflict with the orders passed by the Israel courts and such a situation would be in clear transgression of the principle of comity of courts and will result in creating anomalies and irreconcilable situation because of the continuation of two parallel proceedings before two competent courts of jurisdiction of two sovereign states. 54. The plaintiffs are themselves conscious of their ingenuity in approaching this court as in the plaint itself they have averred that the present suit has been filed by them as an abundant precaution and during the course of arguments also their stand was that at best the present suit can be considered as an extension of the earlier suit filed by them before the Israel court. How there can be an extension of a suit filed before a court of one sovereign state by the suit filed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate cluster of companies engaged in separate activity. The applicants argue that directors of all subsidiary companies were appointed by the respondents, and the evidence of this is- that the directors of the parent company- the partnership, are office holders in the subsidiary company of the ventures. The partnership is the operating brain of the business and it is the partnership that employed the applicants as advisers and experts in respect of the activity of the Indian subsidiary. Control is exercised by the partnership which directs all the activity of the subsidiaries. 56. Thus it is apparent from above that the case of the plaintiffs is a case of shifting stands as they have taken conflicting stands taken before this court and before the Israel court and thus the plea of the plaintiffs to lift the corporate veil of the defendant companies to unmask the core company which created the web of subsidiary companies for the purposes of tax evasion and also for the purpose of playing with the legitimate rights of their creditors including the plaintiffs, with whom they had entered into the First Consultancy Agreement dated 1.8.2005 and Share Entitlement Agreement dated 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, the plaintiffs sought an interim injunction against the defendants from selling/ alienating the partnership business in any of the countries, like Mauritius, Jersey and/or India. The defendants opposed the said application of the Plaintiffs also on the technical ground that the said businesses and entities were outside the territorial jurisdiction of the courts in Israel. The said plea of the defendants was also accepted by the appellate court in Israel and it was observed that such an order cannot be passed by the Israel courts, more so because the foreign companies were not parties to the said suit. 58. As would be seen from the aforesaid paras of the plaint, the only disclosure made by the plaintiffs with regard to the order passed by Hon ble Supreme Court of Israel is that plea of defendants was also accepted by the appellate court in Israel and it was observed by the said court that such an order cannot be passed by the Israel courts, more so when the foreign companies were not parties to the present suit. Counsel for the defendants however took a stand that these very plaintiffs themselves filed a copy of the said judgment before the District Court Israel on 26.10.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould he guilty of playing fraud on the court as well as on the opposite party. 59. Counsel for the plaintiffs placed reliance on the judgment of the Apex Court in the case Arunima Baruah Vs. UOI Ors.,(2007)6SCC120 to support his argument that suppression must be of a material fact and if facts suppressed are not material for determination of lis between the parties then the court may not refuse to exercise its discretionary jurisdiction. The said judgment cited by the plaintiffs would not come to their rescue although there can be no quarrel with the legal position enunciated therein. For the purposes of the present adjudication, the order of the Hon ble Supreme Court is a material fact as it is an order of the highest court of another state adjudicating the same matter in issue. Thus, in my considered view, any order passed by any judicial forum between the parties to the suit with regard to the controversy or disputes involved between the parties is a material fact and any suppression or withholding of such an order from any court is an act of suppression on the part of such a party. It is a principle which forms the edifice of the justice dispensation system, that he who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s becoming commonplace. This graphically described practice of forum hunting or forum shopping indubitably leads not only to the multiplicity of proceedings but also of the abuse of the process of the court. The courts have to discourage such practice with a heavy hand. Judicial propriety and discipline do not permit to give a free hand to the plaintiffs to manoeuvre the process of the court for its own self conceited designs. The present case thus clearly tantamounts to forum shopping; to take a chance before the Indian courts after having not succeeded before the Hon ble Supreme Court of Israel which is the highest court of land of another sovereign state. 61. Section 151 of the Code of Civil Procedure recognises the inherent powers of the court to make such orders as may be necessary for the ends of justice or to prevent the abuse of the process of the court. It acknowledges the powers of the court to do what is right and undo what is wrong, that is, to do all things necessary to secure the ends of justice and prevent abuse of its process. As the provisions of the Code are not exhaustive, Section 151 recognises and confirms that if the Code does not expressly or impliedly co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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