Industrial And Commercial Bank of China Ltd, Mumbai Branch v Ambani

When a defence has a real prospect of success but success is improbable, the court may make a conditional order requiring payment into court. The defendant bears the burden of proving, on the balance of probabilities, that the condition cannot be met without stifling the defence. That inquiry may include funds available from owners, relatives, business associates or other closely connected persons, and must address the realities of the defendant’s financial position. The order must be proportionate and effective. The court may require a substantial payment even where it would be inappropriate to require payment of the whole claim.

The Bank sought summary judgment on a guarantee allegedly executed on behalf of Mr Ambani. Summary judgment was refused, but the court made a conditional order under paragraph 4 of Practice Direction 24, requiring consideration of what sum should be paid into court. Mr Ambani contended that he was unable to pay or raise any sum and that a payment-in order would stifle his defence. The issue was whether he had proved that inability, and, if not, what payment would be proportionate and effective.

1. The application concerned the second stage of a conditional-order inquiry. Under Practice Direction 24, a payment-in order may be made where the defence may succeed but is improbable. The court must not impose a condition which it is likely to be impossible for the defendant to meet, since that would effectively give judgment despite an issue requiring trial.
2. The burden rested on Mr Ambani to establish, on the balance of probabilities, that he could not comply. That required evidence not only about his own resources but also about whether funds could be made available by relatives, business associates or other closely associated persons. The court was entitled to examine the underlying realities rather than accept general assertions at face value.
3. The principles were highly fact-sensitive. The relevance of the defendant’s lifestyle, corporate interests, prior financial assistance and alleged inability to raise funds depended on the evidence in the individual case. Anglo-Eastern Trust Ltd v Kermanshahchi [2002] EWCA Civ 198 did not establish a general prohibition on considering funds available from third parties.
4. Mr Ambani’s evidence contained significant omissions, inconsistencies and an admitted falsehood concerning personal guarantees. His use of corporate assets and his family’s previous financial assistance undermined his assertion that no resources were available. The possibility of future recoveries in RCom’s insolvency proceedings was irrelevant to the conditional payment inquiry.
5. The court declined to order payment of the full $700 million claimed, but ordered $100 million into court. That sum was proportionate and effective: it provided security to the Bank and served as an earnest of Mr Ambani’s intention to pursue his defence. The application was therefore granted to that extent.