Principle Of 'Forum Shopping' Does Not Apply To Proceedings For The Enforcement Of The Arbitration Awards: Delhi High Court
The High Court of Delhi has held that the policy concerns which militate against forum shopping in the context of substantive civil proceedings do not apply to enforcement proceedings, where the award holder is entitled to proceed against the assets of the award debtor in any and every jurisdiction in which such assets are located. The bench of Justice Prateek Jalan held that the...
The High Court of Delhi has held that the policy concerns which militate against forum shopping in the context of substantive civil proceedings do not apply to enforcement proceedings, where the award holder is entitled to proceed against the assets of the award debtor in any and every jurisdiction in which such assets are located.
The bench of Justice Prateek Jalan held that the award holder's right to elect any court within which assets of the award debtor are available, regardless of their diminished value, does not amount to forum shopping.
Facts of the Case
The enforcement proceedings were initiated for a foreign award dated 24.01.2018, arising from a Securities Purchase Agreement (SPA) dated 19.09.2012.
The arbitration was conducted under the Singapore International Arbitration Centre in Singapore.
Submissions by the Parties
Award Debtor's Contention:
- The award debtor challenged the jurisdiction of the court, asserting that it neither resides nor possesses assets within the court's jurisdiction.
- Dr. Amit George, representing the award debtor, argued that the jurisdiction was invoked based on the SPA's execution in New Delhi.
- The award debtor claimed that the debt owed by Himalayan Green Energy Private Limited (HGEPL) had been written off and argued against considering it as an asset.
Award Holder's Counter-arguments:
- Rajiv Nayar and Ashish Dholakia, Senior Counsels, representing the award holders, countered that the debt of HGEPL had not been written off but was treated as "doubtful."
- They argued that the classification of a debt as written off or doubtful does not determine the presence of an asset within the court's jurisdiction.
- The award holders emphasized that HGEPL, despite its financial status, continues to exist, and the debt remains recoverable.
The court, considering past judgments, clarified that the key question for jurisdiction in enforcement proceedings is whether the award debtor possesses any assets within the court's jurisdiction.
The Court rejected the award debtor's argument equating the writing off of debt in accounts with its legal obliteration.
The court cited the Supreme Court's decision in Salim Akbarali Nanji, emphasizing that writing off debt does not render it irrecoverable, and the creditor retains the right to pursue recovery.
The court concluded that HGEPL's debt, though challenged by the award debtor, remains an asset in the hands of the award debtor and forms the basis for jurisdiction in enforcement proceedings.
The Court also held that the principle of forum shopping does not apply to proceedings for the enforcement of the arbitral award. It held that the award holder can file enforcement proceedings anywhere and everywhere the assets of the award holder are located. It also held that an award holder is entitled to elect any Court within which assets of the award debtor are available, howsoever diminished their value may be.
Accordingly, the jurisdiction was affirmed, and the award debtor's objections were dismissed.
Case Title: Taqa India Power Ventures v. NCC Infrastructure Holdings, OMP(EFA)(COMM) 1 of 2018.
Counsel for the Award Holder/Decree Holder: Mr. Rajiv Nayar & Mr. Ashish Dholakia, Senior Advocates with Mr. Shankh Sengupta, Mr. Ketan Gaur & Mr. Arjun Agarwal, Advocates.
Counsel for the Award Debtor/Judgment Debtor: Dr. Amit George, Mr. Jai Sahai Endlaw, Mr. Piyo Harold Jaimon, Ms. Nooreen Sarna, Mr. Rayadurgam Bharat & Mr. Shashwat Kabi, Advocates.