Harrington & Charles Trading Company Limited (in liquidation) & Ors v Jatin Rajnikant Mehta & Ors

The court applied the two-stage forum non conveniens test from Spiliada to defendants' application under CPR Part 11 to decline jurisdiction or stay proceedings on the ground that India was the clearly more appropriate forum. The judge held that India was an available forum (the defendants offered undertakings to submit to Indian jurisdiction subject to a permission-to-apply safeguard) but that the defendants had not discharged the heavy burden of showing India was clearly or distinctly the more appropriate forum. Key relevant considerations included: the international character of the alleged fraud and the fact that the claimants are English companies in English liquidation, the likely applicable law to the claimants' substantive causes of action, the location of parties and principal witnesses (many of the defendants and some key witnesses are resident in England), and an Indian insolvency moratorium which weighed against India but did not invalidate its availability. The jurisdiction applications were dismissed and the related strike-out applications remain for future hearing.

This is a first instance hearing of multiple jurisdictional applications under CPR Part 11 brought by the First to Fourth Defendants seeking that the English court decline to exercise jurisdiction or stay claims that form part of an action and related Insolvency Act 1986 applications arising from an alleged international fraud (the "Alleged Fraud"). The claimants are six English-registered companies (and their liquidators) restored to liquidation and represented by licensed English insolvency practitioners. The defendants are principally resident in England (four Mehta family members) and one defendant believed to be in the UAE.

Nature of the application: applications that the court decline or stay jurisdiction (forum non conveniens) under CPR Part 11 in favour of India; the defendants also have outstanding strike-out applications which were not finally determined at this hearing.

Claims in issue: (i) equitable compensation and/or account of profits for alleged shadow-directorship and breach of fiduciary duties; (ii) proprietary constructive trust claims and knowing receipt; (iii) dishonest assistance; (iv) conspiracy; (v) statutory insolvency claims under the Insolvency Act 1986 (sections 212, 213 and 423); and (vi) contribution claims under the Civil Liability (Contribution) Act 1978. The pleaded quantification was approximately US$932,466,942.36 (subject to revision).

Issues framed by the court:

• Whether India is an available forum for resolution of the dispute;
• If available, whether India is clearly or distinctly the more appropriate forum than England (first stage of Spiliada);
• If India is clearly more appropriate, whether there exist circumstances by reason of which justice requires that a stay should nevertheless not be granted (second stage of Spiliada).

Court's reasoning (concise):

• Characterisation: the judge emphasised substance over form and characterised the dispute as two-fold: (a) whether the international Alleged Fraud occurred (misappropriation, defaults and laundering through multi-jurisdictional corporate layers) and (b) whether the English-registered claimant companies/their liquidators have claims against the defendants. The court rejected attempts by each side to narrow the dispute exclusively to India or exclusively to English corporate governance concerns.
• Availability: India was held to be an available forum. The defendants offered undertakings to submit to Indian jurisdiction (with a proposed permission-to-apply safeguard) which addressed their non-residence in India. Other potential availability objections (recognition of English voluntary liquidators in India and an Indian insolvency moratorium) were considered but did not establish that India was not an available forum; the moratorium was important but treated as a factor to be weighed rather than a discrete obstacle to availability.
• Appropriate forum analysis (first stage Spiliada): the defendants bore the heavy burden of showing India was clearly or distinctly more appropriate. The judge weighed connecting factors: the parties' residences (majority resident in England), the matters to be tried (international fraud with significant English elements and English-registered claimants), the existence of Indian proceedings and potential fragmentation (civil/investigation/insolvency/criminal matters in India), the likely applicable law (the claimants' proprietary, equitable and statutory claims pointed towards English law; inbound claims by Indian banks might be governed by Indian law), and witnesses/documents (mixed, with significant materials outside India and key witnesses in England). The Indian moratorium also counted against India. On balance the judge concluded the defendants had not met their burden; England was the more appropriate forum.
• Second stage: because the judge found India not clearly more appropriate, he did not pursue the second stage in depth; he noted the moratorium could be relevant at that stage but had been considered in the first-stage evaluation.

Disposition and consequences: the jurisdiction applications were dismissed. The judge left the unresolved strike-out applications for separate hearing and invited the parties to agree consequential orders. The November judgment (on continuation of the worldwide freezing order) previously remains in force as indicated.

The court dismissed the defendants' jurisdictional applications under CPR Part 11 and refused to decline jurisdiction or stay the proceedings in favour of India. The judge found India to be an available forum (subject to undertakings to submit to Indian jurisdiction coupled with a permission-to-apply safeguard) but concluded the defendants had not carried the heavy burden of proving India was clearly or distinctly the more appropriate forum. Factors informing this included the international character of the alleged fraud, the English incorporation and liquidation of the claimant companies, the residence of key defendants and witnesses in England, choice of law considerations, and the effect of an Indian insolvency moratorium which weighed against transfer to India. The outstanding strike-out applications were left for separate hearing.