State Bank Of India & Ors v Mallya & Ors

A judgment of a foreign tribunal may be registered under the Foreign Judgments (Reciprocal Enforcement) Act 1933 if it is enforceable by the statutory execution process in the country of origin. It need not be enforceable abroad by the claimant or foreign enforcement officer.

Requirements concerning a seal showing unlimited pecuniary jurisdiction may be satisfied by reading the judgment and an accompanying sealed document together. A pending appeal for the purposes of section 5 requires a valid appeal which has been lodged in time, or permission for a late appeal. A separate action which might supersede the judgment is not an appeal against it.

A freezing order requires solid evidence of a real risk of dissipation. Contempt findings, unjustified asset transfers, delay in pursuing an appeal, and complex asset structures may cumulatively establish that risk.

The claimant banks obtained a judgment from the Bangalore Debt Recovery Tribunal concerning sums due under guarantees given in connection with Kingfisher Airlines. The judgment and amended Recovery Certificate were registered in England under the Foreign Judgments (Reciprocal Enforcement) Act 1933.

Dr Mallya applied to set aside or stay the Registration Order. He argued that the DRT judgment was not enforceable by execution in India or outside India, that the DRT lacked the required sealed indication of unlimited pecuniary jurisdiction, and that he had an appeal in India and related proceedings in the Bombay High Court.

He also sought discharge of a worldwide freezing order on the grounds that there was no real risk of dissipation, that the claimants had delayed, and that they had failed to make full and frank disclosure. The central issues were whether registration was permissible and whether the Registration Order and freezing order should remain in force.

1. Registration. The DRT’s final order was a judgment within section 11 of the Foreign Judgments (Reciprocal Enforcement) Act 1933. The Recovery Certificate procedure was a special statutory form of execution. Its distinct character did not prevent the judgment from being enforceable by execution in India for the purposes of section 2(1)(b).
2. The 1933 Act created an international recognition regime independent of the domestic enforcement powers available to claimants and enforcement officers in the state of origin. The absence of an Indian procedure for direct enforcement abroad did not prevent registration in England.
3. The requirement in paragraph 4(d) of the Reciprocal Enforcement of Judgments (India) Order 1958 was satisfied. The DRT judgment stated that the tribunal had exclusive jurisdiction over bank recovery claims, and the relevant page was sealed. In any event, the Presiding Officer’s sealed letter expressly confirmed that the DRT had no upper pecuniary limit. The judgment, Recovery Certificate and letter were properly read together.
4. Section 5 did not apply to Dr Mallya’s proposed DRAT appeal. No valid and timely appeal was pending, and he was not entitled to appeal while the appellate period had expired without an appeal or permission to appeal being granted. The Bombay proceedings were separate proceedings, not an appeal against the DRT judgment. Even if the discretion arose, the weak prospects of the proposed appeal, the jurisdiction clause, the apparent res judicata objection and the balance of prejudice favoured enforcement.
5. The freezing order was continued. The applicable test required solid evidence of a real risk that a judgment would go unsatisfied because assets would be dissipated or dealt with unjustifiably. The relevant evidence included the Indian contempt findings, the pre-arranged transfer of US$40 million to trusts, the disposal of the Tipu Sultan sword, Dr Mallya’s departure from India, the proceedings concerning alleged money laundering, and the complex asset-holding structures. Together these matters established the required risk.
6. Delay did not defeat the freezing order. It was a factor relevant to the overall discretion, but the claimants had given sufficient explanations and Dr Mallya had not shown material prejudice.
7. The alleged non-disclosures did not justify discharge. Although foreign attachment orders should ordinarily be drawn specifically to the court’s attention on a without-notice application, the matters omitted were not material in the circumstances and were not sufficiently culpable.
8. Dr Mallya’s applications were dismissed. The Registration Order remained in force, enforcement was not stayed or adjourned, and the worldwide freezing order continued.