NEVILLE TULI Vs. AABRAAJ INVESTMENT MANAGEMENT

JUDGEMENT

(1.) This intra court appeal arises from an order of the learned Single Judge, dated 14/07/2015 granting the prayers made in for making the judgment of the Foreign Court absolute after holding that none of the defences to the execution of the Foreign Court order/judgment could be allowed.

(2.) The respondent no. 1 Abraaj Investment Management Limited (hereinafter referred as 'Abraaj' for the sake of brevity) had filed a claim against Bregawn Jersey Limited (hereinafter referred as "Bregawn") and the present appellant in the High Court of Justice, Queen's Bench Division Commercial Court in United Kingdom for a sum of 22 Million U.S. A purchasing agency agreement was executed between Bregawn and Abraaj under which art work was to be purchased by Bregawn acting on behalf of Abraaj for a purchase price of 19 million US . Bregawn was to, in turn sell the purchased art work to the India Asia Arab Art Fund Limited (hereinafter referred as 'IAAAF') for which the appellant was the guarantor. The purchase agreement between IAAAF and Abraaj was executed and under the said agreement the art work owned by Abraaj and invoiced for sale to IAAAF was to be sold by Abraaj and purchased by IAAAF. The appellant had provided the personal guarantee to Abraaj wherein he undertook the guarantee for performance of the obligations of Bregawn and IAAAF under the purchasing agency agreement and the purchase agreement respectively. The total invoice amount for the art work purchased by the appellant was equal to 22 Million and 571 US . After the execution of the agreements, Bregawn did not perform the part of his agreement, as a result of which the paintings could not be sold to IAAAF before the stipulated date. Abraaj therefore, filed the claim against Bregawn and the appellant in the High Court of Justice, Queen's Bench Division Commercial Court in United Kingdom. The claim was made by Abraaj on about 6 heads of claims. Justice Teare passed a preliminary order granting some claims on summary basis and rejecting some of them. It was held by Justice Teare that there was no dispute in regard to the claims made, but for the quantification, a trial was directed so as to assess the value of the art work that was returned. The trial proceedings came up before Justice Burton. Since the defence of Bregawn and the appellant was not in accordance with the Civil Procedure Rules, as were applicable to the proceedings in the High Court of Justice, time was granted on several occasions to amend the defence. Bregawn and the appellant however, did not make compliance. In the summary proceedings before Justice Teare, an order was passed against Bregawn and the appellant to pay costs. Though the costs were quantified, the same were not paid by Bregawn and the appellant. Since the costs were not paid and the defence was not amended, the defence of the appellant and Bregawn was struck off. The trial was proceeded in the Court of Justice Burton and on an appreciation of the material on record, by the judgment dated 01/10/2010 the claim of Abraaj was partly granted and Bregawn and the appellant were directed to pay a sum of US 23,086,151.97 with interest at the rate of 8%. Since Bregawn and the appellant failed to pay the amount to Abraaj, a suit was filed by him in this Court for the execution of the judgment and decree of the Foreign Court. was filed in the said proceedings asking the appellant to show cause why the orders passed by the High Court of Justice, Queen's Bench Division Commercial Court, United Kingdom, dated 25/03/2010 and 05/10/2010 should not be executed against the appellant. The learned Single Judge has by the order dated 14/07/2015 allowed the prayer made in after observing that none of the defences to the execution of the two orders were acceptable. The order of the learned Single Judge is appealed against in this intra court appeal.

(3.) Shri. Gaurav Joshi, the learned senior counsel appearing for the appellant submitted that the Foreign judgment and order could not have been executed in the instant case in view of the exceptions to the provisions of section 13 of the Code that the Foreign judgment shall be conclusive as to any matter directly adjudicated upon between the parties. It is submitted that the orders passed by the Foreign Court cannot be executed as the order of Justice Burton, dated 01/10/2010 was not given on the merits of the case. It is submitted that the provisions of Section 13 (b) would apply and to substantiate the submission, the learned senior counsel has referred to certain observations in the judgment of Justice Burton dated 01/10/2010, specially in paragraph nos. 6, 7 & 8 there of. It is submitted that the judgment is a default judgment. It is submitted that the defence of the appellant and Bregawn was struck off and the judgment was rendered in default as could be noted from the observations made by Justice Burton in paragraph 7 of the judgment. It is submitted that the quantification is made by Justice Burton solely on the basis of the affidavit filed by the solicitor in support of the claim for damages. It is submitted by referring to the transcript of the proceedings in the court of Justice Teare and Justice Burton that the schedule was prepared by an art expert which Abraaj had instructed and therefore, the affidavit of the solicitor based on the schedule prepared by an art expert ought not have been accepted for quantifying the damages. It is submitted that though a reference is made to the valuation tendered by the appellant in the proceedings, the same was not duly considered either by Justice Teare or Justice Burton before passing the orders that are sought to be executed. It is submitted that the evidence in the form of the affidavit of a solicitor would be no evidence in the eye of law for quantifying the damages. Certain paragraphs in the order/judgment of Justice Burton and certain part of the transcripts are referred to by the learned senior counsel to substantiate the submission that the judgment rendered by the Foreign Court was not on merits and was only a default judgment. Reliance is placed on the judgment reported in 1970 Privy Council 342 to submit that when the judgment is based on the defence being struck off, the same would not be on the merits of the case. It is submitted that the facts of the matter before the Hon'ble Supreme Court and the facts involved in the instant case are similar. Reliance is also placed on the judgment reported in 2009 (5) Mh.L.J. 652 to substantiate the submission that when a decree is passed after the defence is struck off, the decree would not be based on consideration of evidence.