Dismissed

Hansraj Nayyar Medical India v. Smiths Medical International Limited and Anr.

Bombay HC9 Jul 2014NMS/597/2014

Case brief

AI extract

What is this about?

The Bombay High Court dismissed a suit seeking an anti-suit injunction and damages held without jurisdiction to restrain defendants from English proceedings. The Court ruled that because the English defendant was not amenable to personal jurisdiction in India, the Court could not grant the injunction.

What did the court decide?

The suit seeking anti-suit injunction was dismissed against both defendants; damages claim against the English defendant was dismissed.

Hansraj Nayyar Medical India Vs Smiths Medical International… — Arbitration | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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NOTICE OF MOTION NO. 597 OF 2014 IN SUIT NO. 367 OF 2014

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Hansraj Nayyar Medical India …Applicant / Plaintiff vs. Smith Medical International Limited & Anr. ...Defendants

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Mr.Haresh Jagtiani, Senior Advocate with Mr.Amin Arsiwala, Mr.Parag Sharma, Mr.Mihir Kamdar, Ms.Vandana Mehta i/b. M/s.Udwadia & Udeshi for Plaintiff.

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Dr.Veerandra Tulzapurkar, Senior Advocate with Mr.Simil Purohit, Mr.Raj Panchmatia, Mr.Peshwan Jehangir i/b. M.s.Khaitan & Co. for Defendants.

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CORAM : S.C. GUPTE, J.

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RESERVED ON : 4 JULY 2014

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PRONOUNCED ON : 9 JULY 2014

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JUDGMENT :

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This is a suit filed for anti-suit injunction restraining the Defendants from proceeding before the Commercial Court in England in respect of the claim filed by them against the Plaintiff herein, being Claim No.2013 Folio 1380. The Notice of Motion seeks an interim order of injunction in the same terms.

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2 The Plaintiff is a proprietorship concern engaged in the business of selling and marketing medical products. Defendant No.1 is a company incorporated in England having its registered office at Ashford, Kent. Defendant No.1 is engaged in the business of manufacturing and production of

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pharmaceutical and medicinal preparations. Defendant No.2 is an Indian company, said to be a subsidiary of Defendant No.1.

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3 By an Exclusive Distribution Agreement dated 16 May 2011 (EDA), the Plaintiff was appointed as an Exclusive Distributor for resale of the products of Defendant No.1 in a defined territory, namely, India, Nepal, Bhutan and Maldives. The Plaintiff was to import and distribute the products in the territory so defined during the term of the EDA, which was to be for two years terminable by a written notice of not less than six months. The EDA inter alia provided that the matters relating to interpretation, construction and enforcement of the EDA shall be governed by the laws of England and that the parties to the EDA agreed to submit to the exclusive jurisdiction of the English Courts.

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4 By a tripartite Memorandum of Understanding dated 12 March 2012 (MOU), entered into between the Plaintiff and the Defendants, the parties inter alia agreed to vary the EDA on the terms set out in the MOU. It was inter alia provided in the MOU that notwithstanding anything contained in the EDA, Defendant No.2 shall be entitled to import the products from Defendant No.1, but that the products shall not be sold by Defendant No.2 to any party other than the Plaintiff. The MOU further provided that notwithstanding anything contained in the EDA, the Plaintiff shall buy products from Defendant No.2 with effect from 13 December 2012 ('the effective date') on the same terms and conditions as contained in the EDA and at prices set out in Schedule-1 to the EDA. The MOU provided that the EDA shall remain in full force and effect, save and except that the obligations of Defendant No.1 to supply the products to the Plaintiff under the

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EDA shall cease with effect from the effective date and instead would be performed by Defendant No.2. The MOU specifically provided that save as set out in the MOU, “ the terms and conditions contained in the Exclusive Distribution Agreement, including without limit, those relating to term and termination, shall remain in force. This MOU has to be read and applied in conjunction with the Exclusive Distribution Agreement. ”

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5 By a termination notice issued on 18 April 2013, the EDA, as amended by the MOU, was terminated by the Defendants. Certain dues were claimed as due and payable by the Plaintiff to the Defendants under the EDA.

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6 On 16 October 2013, Defendant Nos.1 and 2 filed a claim bearing No.2013 Folio 1380 in the High Court of Justice, Queen's Bench Commercial Court in England against the Plaintiff for repayment of a debt of £ 32,299 due from the Plaintiff to the Defendants under the EDA.

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7 By a Demand Notice dated 31 October 2013, the Defendants demanded a sum of US $ 30,444 due by the Plaintiff to Defendant No.1 and a sum of INR 79,011,746 due by the Plaintiff to Defendant No.2 under various invoices raised under the EDA as varied by the MOU. The demand was resisted by the Plaintiff inter alia on the ground that the Plaintiff has already initiated proceedings before this Court, being Suit (Lodging) No.918/2013, seeking specific performance of C&F Agreement purportedly entered into between the Plaintiff and the Defendants and that the demand raised by the Defendants was an afterthought and an attempt for defeating its legitimate claims. (Incidentally,

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the Plaintiff's application for ad-interim reliefs in this suit was rejected by this Court.)

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8 Subsequent to this Demand Notice, the Defendants had their claim amended before the High Court of Justice, Queen's Bench Division Commercial Court in England.

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9 The Plaintiff filed the present suit on 12 March 2013 claiming inter alia that the action in the English Court initiated by the Defendants was an oppressive and vexatious proceeding initiated before the Court which lacked jurisdiction in the matter. Prayer clause (a) seeks an anti-suit injunction against the Defendants, whereas prayer clause (b) seeks a decree of damages on the same cause of action.

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10 The Plaintiff's application for ad-interim reliefs in the present Notice of Motion was rejected by this Court by its order dated 20 March 2014. This Court noted that an intimation of proceedings before the English Court was admittedly received by the Plaintiff from the Defendants on 3 February 2014 and that according to the Rules of that Court and orders passed therein, the Plaintiff was required to file its affidavit to contest the jurisdiction of the English Court on or before 1 April 2014. This Court rejected the Plaintiff's application moved for adinterim relief on 20 March 2014 observing inter alia that the Plaintiff shall appear in the Court in England to contest the jurisdiction of that Court without prejudice to the rights and contentions in the present suit.

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11 By an order dated 15 April 2014, this Court framed a preliminary issue under Section 9A of the Code of Civil Procedure, 1908 in the suit herein concerning jurisdiction of this Court to entertain and try the present suit. The parties did not desire to lead any evidence for determination of this issue. The preliminary issue is now being heard and decided by this order. In the meantime, it needs to be noted that the English Court has since ruled on its jurisdiction rejecting the Plaintiff's objection to its jurisdiction and calling upon the Plaintiff to answer the application for summary judgment moved in Claim No.2013 Folio 1380.

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12 It is submitted by Dr.Tulzapurkar, the learned Senior Counsel appearing for the Defendants that there is an exclusive jurisdiction clause contained in the agreement between the parties, namely, EDA as amended by the MOU. The learned Counsel submitted that Defendant No.1 is a foreign entity not amenable to the personal jurisdiction of this Court, by reason of not having submitted to such jurisdiction. The learned Counsel submitted that the cause of action of Defendant No.1 in the proceeding filed before the English Court was intricately connected with the cause of action of Defendant No.2, such cause of action having arisen under the EDA, as modified by the MOU, and that in the premises, this Court has no jurisdiction to grant the anti-suit injunction claimed against both Defendant Nos.1 and 2.

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13 On the other hand, it is submitted by Mr.Jagtiani, the learned Senior Counsel appearing for the Plaintiff that there was a complete novation of suit agreement, namely, the EDA by virtue of the MOU executed between the Plaintiff

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and both the Defendants. The learned Counsel submitted that from a cross border agreement, which it originally was, the agreement between the parties has become a purely domestic agreement by virtue of the MOU. It is submitted that all invoices under this MOU were expressly subject to Bombay jurisdiction. It is submitted that the transactions between the parties after the MOU being purely Indian transactions, having no connection with the territorial jurisdiction of the English courts, the proceedings filed by the Defendants in the English Court were purely vexatious and oppressive and filed before a forum non-conveniens and that this Court accordingly had jurisdiction to issue an anti-suit injunction against the Defendants.

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14 A foreign resident carrying on business or working for gain in India is amenable to the jurisdiction of Indian Courts whether the cause of action arises within or outside India. But a non – resident foreigner not so carrying on business or working for gain cannot be sued in any Court in India, in respect of a cause of action which arises outside India. In the present case, Defendant No.1 is admittedly a foreign entity. The question is, can it be said to carry on business in India. Learned Counsel for the Plaintiff submits that Clause 12 of Letters Patent, which deals with jurisdiction in personam on the basis of place of residence or business of the defendant has three different aspects. The first aspect is the residence of the defendant; the second aspect is carrying on business of the defendant; the third aspect is the defendant personally working for gain. The learned Counsel submits that what is relevant is not the existence of the business within the jurisdiction or the ownership of the business or even interest in the business that is emphasized; what is really emphasized is the fact of the business

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being carried on by the defendant. The business may even be carried on through an agent or a manager or through a servant. The learned Counsel submits that Defendant No.1 carries on business in India through its subsidiary – Defendant No.2. The learned Counsel relies upon the judgment of the Supreme Court in Enercon (India) Ltd. vs. Enercon GMBH¹ , and our Court in the case of Shiv Bhagwan Moti Ram Saraoji vs. Onkarmal Ishar Dass² , in this behalf.

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15 Whether or not Defendant No.1 carries on business in India through Defendant No.2 is a question of fact, which can be answered only with reference to the pleadings of the parties. No such plea is raised by the Plaintiff in the plaint. On the other hand, the Plaintiff has filed an application for Leave of this Court under Clause 12 of Letters Patent, on the basis that Defendant No.2 does not carry on business in India and obtained such Leave and presented this suit on that basis. Even at the hearing of the preliminary issue of jurisdiction, no attempt is made by the Plaintiff to lead any evidence on this aspect. In the premises, the plea that Defendant No.1 carried on business in India, through Defendant No.2 or otherwise, is not available to the Plaintiff.

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16 It is, however, submitted by the Plaintiff that the cause of action in the present suit has accrued within the jurisdiction of this Court and therefore, upon Leave being granted, this Court has jurisdiction to entertain and decide the suit. The basis of an anti-suit injunction is prosecution of proceedings which are oppressive or vexatious or in a forum non-conveniens. The cause of action in an anti-suit injunction matter arises where such proceedings, which are said to be

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1 (2014) 5 SCC 1

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2 1951 Bomvbay Law Reporter Vol. LIV Page 330

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oppressive or vexatious, are filed. Learned Counsel for the Plaintiff submits that the cause of action arises at the place where such proceedings are sought to be served on a plaintiff seeking an anti-suit injunction. No principle or authority was cited by the learned Counsel for this proposition. It is not possible to accept the proposition without such principle or authority.

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17 In fact, in every case where vexatious or oppressive proceedings or proceedings before a forum non-conveniens are sought to be taken, the cause of action would arise outside the jurisdiction of the court where an anti-suit injunction is sought. That is why, in every such matter, the Court insists on the amenability of the Defendant, against whom an injunction is sought, to the personal jurisdiction of the Court. The Supreme court in Modi Entertainment Network vs.

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W.S.G. Cricket Pvt.Ltd.³ held as follows:

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“ 23. From the above discussion the following principles emerge :

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(1) In exercising discretion to grant an anti-suit injunction the Court must be satisfied of the following aspects :-

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(a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the Court;

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(b) If the injunction is declined the ends of justice will be defeated and injustice will be perpetuated; and

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(c) the principle of comity – respect for the Court in which the commencement or continuance of action / proceeding is sought to be restrained – must be borne in mind.”

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3 AIR 2003 SC 1177

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18 Having regard to the fact that Defendant No.1 is not amenable to the personal jurisdiction of this Court, this Court has no jurisdiction to grant the anti-suit injunction claimed.

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19 The proceeding filed by the Defendants before the Commercial Court in England in respect of Claim No. 2013 Folio 1380 being a joint proceeding, the cause of action pleaded wherein being jointly arising in favour of the Defendants, the prayer for anti-suit injunction cannot be considered even against Defendant No.2. There is no question of splitting of the proceeding. Even the Commercial Court in England, before whom the proceeding is pending, has held that Court has jurisdiction to entertain and decide the proceeding as filed.

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20 The other submissions of the Plaintiff concerning the lack of jurisdiction of the English Court on account of novation of agreement between the parties, converting the same into a purely domestic agreement or the English Court being a forum non-conveniens, really concern the merits of the present suit and fall for consideration only in the event of this Court having jurisdiction in the suit.

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21 In this view of the matter, the preliminary issue is decided against the Plaintiff as regards prayer clause (a) fully and as regards prayer clause (b) to the extent it seeks a decree against Defendant No.1.

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22 Accordingly, the following order is passed:

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(i) The suit in so far it seeks relief in terms of prayer clause (a) is dismissed against both the Defendants;

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(ii) The suit in so far as it seeks a decree against Defendant No.1 in terms of prayer clause (b) is dismissed;