TMI Blog1998 (10) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... n for new trial. Motion of KOA was disallowed and Chauhan's was allowed. Chauhan disputed the claim and also filed a counter-claim. Counter-claim of Chauhan was separated and his objections were dismissed and a decree was passed. Appeal filed before the Appellate Court of Texas has been dismissed on 11th June, 1998. 2. In the meantime, Formosa sought execution of the decree before the High Court of Justice Chancery Division, London against Chauhan. Chauhan filed objections which were dismissed and a judgment/decree was passed on 24th October, 1997 by the High Court. Appeal filed was subsequently dismissed by the Appellate Court on 6.4.98. 3. In the meantime, the High Court of Justice, London vide order dated 30.1.1998 gave leave to Formosa to enforce the decree passed on 241.10.1997 in India to the extent of seeking relief in the nature of Mareva relief. 4. On the basis of judgment dated 24.10.1997 Formosa filed an application before this Court impleading Chauhan, his wife, son and brother as respondents No. 1 to 4 and sought injunction for restraining the latter from transferring by sale or otherwise certain properties including Bank accounts, trust properties and som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. However, England has been so declared and its judgment/decree is executable under this provisions. 12. Section 13 of the Code provides as under : 13. A foreign judgment shall be conclusive as to any matterthereby directly adjudicated upon between the same parties orbetween parties under whom they or any of them claim litigatingunder the same title except - (a) where it has not been pronounced by a Court of competentjurisdiction; (b) where it has not been given on 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 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 India. 14. Facts and material which gave rise to passing of the decree by the Texas Court are available on record. These facts have also been noticed in the judgment dated June 11, 1988 of the Fourteenth Court of Appeals, of the State of Texas, as under: In the early 1990 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond motion for new trail, and the trial judge overruled both motions. Final judgment was entered against both defendants, joint and severally, for damages in excess of $ 20 million. 18. There was relevant material including documentary evidence and also affidavit evidence in support of the petitioner's claim before the Trial Court of Texas. KOA did not appear to contest the suit and default judgment was given against it and its motion for retrial was rejected. 19. Before the Appellant Court two contentions were raised on behalf of KOA: (1) It had a meritorious defense to Formosa's cause of action andits failure to answer was not the result of conscious indifference; and (2) The doctrine of res judicata barred Formosa's claims. The Appellate Court did not find any merit in the fist contention. 20. The second contention was not pleaded and raised before the Trial Court. The Appellate Court held that it could not be allowed to be raised in appeal on the ground of waiver. On merit also, it did not find any merit in this plea. 21. KOA thus did not raise any triable issue before the Trial Court of Texas. In the circumstances, it cannot be said that ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money was due. The defendant was served with certain interrogatories to be answered; on his omission to answer them his defense was struck off and judgment entered for the plaintiff. Plaintiff then filed another suit against defendant in Madras on the basis of this judgment. The defendant again took the same pleas denying his liability. The question that arose was whether the judgment on which suit was based was given on merits of the case within the meaning of Clause (b) of Section 13 of the Code. It was held that this clause refers to those cases where for one reason or another, the controversy raised in the action has not, in fact, been the subject of direct adjudication by the Court and in that case because the defendant refused to answer the interrogatories his defense was struck off and the merits of the case were not investigated. And it was held that as the decision was not given on merits, it was not enforceable under Clause (b) of Section 13 of the Code. Obviously that judgment was given without going into merits of the case but by way of a penalty on mere default. 27. Learned Senior Counsel for the decree holder on the other hand has contended that this judgment in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Texas Court or by the English Court has not been given on merits of the case. This plea has obviously been taken for the first time in this Court. Section 13 of the Code provides that foreign judgment is conclusive between the parties. This means that foreign judgment is res judicata between the parties. This plea is barred by rule of res judicata under Section 11 of the Code also. 30. The second contention raised is that the judgment in question is opposed to natural justice. This ground falls under Clause (d) of Section 13 of the Code. Though this point was raised during oral arguments here, however, thereafter the written submissions have been filed but this plea has not been raised in those submissions. Chauhan has not raised this plea before the Appellate Court of Texas. Chauhan had filed objections against the enforceability of the judgment of Texas Court before the High Court of Justice, London. Initially he had not taken the objection that the judgment of the Texas Court was in breach of natural justice. However, subsequently he sought to take the plea that he was not given an opportunity to appear and make oral submissions in the Texas Court. Chauhan did not appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is respect is that the claim made by Formosa before the Texas District Courts pertains to the supplies made to, (i) Formosa Plastics Corporation Louisiana (FPC - Louisiana) amounting to US $ 6,747,071.94; (ii) Formosa Plastics Corporation Texas (FPC - Texas) amounting to US $ 13,139,323.99 plus an additional entry of US $ 49,743.75 of FPC -Texas; that these two companies are separate entities and independent of KOA and the defendant Chauhan had never undertaken their liability as guarantor. This fact was concealed and the decree is obtained by fraud; tht he had no document when the case was pending in Texas Court and that it was only after Texas judgment that first defendant could arrange part of the document from Germany by which he came to know of the fraud played by the plaintiff . It is not specifically mentioned when the alleged fraud was actually discovered. In reply, this plea is refuted and inter alia it is contended that: (i) on these allegations, no fraud is disclosed; (ii) this plea was considered by the American Courts but was not found proper and rejected; (iii) this plea was also considered and rejected by the English Courts; (iv) this Court is not sitting in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal in England had approved of the making of an injunction restraining the defendants from removing or disposing out of the jurisdiction monies standing to the credit of the defendants at a London Bank until trial of the action or further order. The plaintiffs were shipowners and the defendants voyage charterers; they had received payment for the freight into that account but had not paid the hire due to the plaintiffs. The scope of this remedy has since been widened and this remedy by way of injunction may be granted to a plaintiff with a proper claim in any case where there are grounds for fearing that the defendant may defeat justice by transferring assets abroad or by concealing them in that country. 39. This principle has now received the recognition and approval of Parliament and has been enacted in Section 37(3) of the S.C.A., 1981. 40. The Mareva injunction is now an established feather of English Law which could be granted where it appears likely that the plaintiff will recover judgment against the defendant for a certain or approximate sum and there are reasons to believe that the defendant has assets within the jurisdiction to meet the judgment, wholly or in part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and as such these properties could not be attached and sold in this decree and for that matter no injunction restraining their transfer could also be passed. 46. The question whether the assets and the properties in question are owned and/or possessed by Chauhan and/or the names in which they may have been acquired are fictitious or fraudulent or merely cloaks can be decided after parties have led evidence. The Court has always the power of lifting the corporate veil or mere cloaks where device is employed and the properties have been acquired fictitiously in others names for the purpose of committing illegalities or for defrauding others so as to enable it to pass appropriate orders to do justice between the parties concerned. (See DDA Vs. Skipper Construction Co. (P) Ltd., . 47. In view of this discussion, the objection petition of respondents being EA No. 206/98 has no merit and the same is hereby dismissed and interim orders dated February 17, 1998 (in EA No. 78/98) and February 19, 1998 (in EA No. 80/98)are hereby confirmed. 48. EAs No. 78/98, 80/98 and 206/98 stand disposed of accordingly. This case may now be listed before the appropriate Bench for directions on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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