Union Bank of India v. Glory Universal Group Inc and Others

HCA 1218/2019

[2020] HKCFI 3057

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1218 OF 2019

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DECISION

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A.   Introduction

1.On 8 July 2019, the Plaintiff commenced this action against the Defendants for a sum of US$26,364,311.89 together with interest.  In simple terms, the claim against the 1^st Defendant is based on a Facility Agreement and the Plaintiff is pursuing the claim against the 2^nd and 3^rd Defendants pursuant to the guarantees.  

2.By an order dated 27 August 2019, Master Grace Chan granted leave to serve a concurrent writ of summons (the “Writ”) out of the jurisdiction on the 1^st Defendant in Panama and the 2^nd to 3^rd Defendants in India (the “Order”).  

3.There are now before the Court the following applications: -

(1)  The 1^st Defendant’s application by Summons dated 12 November 2019, which essentially seeks to set aside the Order and to dismiss the action on the ground that the Court has no jurisdiction or should not exercise any jurisdiction over the claim or alternatively, the action be stayed on the ground of forum non conveniens.

(2)  The 2^nd and 3^rd Defendants’ application by Summons dated 27 December 2019 seeking essentially the same relief as well as a declaration that the Writ was not duly served on them. 

4.At the hearing, the Defendants’ Counsel ie Mr Kwok indicated that they are no longer pursuing the stay application on the ground of forum non conveniens.  

B.    Background and Parties’ Respective Positions

5.The Plaintiff is a banking corporation incorporated in India.  Through its Hong Kong Branch, the Plaintiff provides banking and financing services.  

6.The Plaintiff’s pleaded case can be summarised as follows: -

(1)  By a facility letter (the “Facility Letter”) dated 12 May 2010, the Plaintiff agreed to grant a term loan facility of up to US$29,200,000 (the “Facility”) to the 1^st Defendant, a Panamanian company, for the purpose of acquiring the vessel M/V “Glory One” (the “Vessel”).  

(2)  The facility documentation also included, inter alia, the Facility Agreement dated 19 July 2010 as amended by the Supplemental Agreement dated 31 August 2012; and the First Preferred Liberian Ship Mortgage dated 27 July 2010 as amended on 12 September 2012.  

(3)  Pursuant to the Facility Letter, the Facility Agreement and the Supplemental Agreement: -

(a)  The Facility was made available to the 1^st Defendant;

(b)  The loan shall be paid to the Plaintiff by 109 consecutive monthly instalments with interest;

(c)  The 2^nd Defendant, an associated company of the 1^st Defendant incorporated in India, as well as, the 3^rd Defendant ie an Indian national and a director of the 1^st Defendant agreed to guarantee the performance of the 1^st Defendant under the Facility Letter and the facility documents; 

(d)  The 1^st Defendant shall, upon default of payment, pay interest at the default rate of interest.

(4)  Each of the Defendants signed on the Facility Letter and the 1^st and 2^nd Defendant also signed the Facility Agreement and the Supplemental Agreement.  

(5)  Pursuant to clause 17.1 of the Facility Agreement, the 2^nd Defendant guaranteed to the Plaintiff punctual performance by the 1^st Defendant of all its obligations under the facility documents; and undertook that whenever the 1^st Defendant did not pay any amount when due, the 2^nd Defendant would immediately on demand pay that amount as principal obligor.  

(6)  The 3^rd Defendant executed a continuing guarantee in favour of the Plaintiff dated 19 July 2010 (the “Continuing Guarantee”) to guarantee all sums of money due to the Plaintiff by the 1^st Defendant. 

(7)  Since about September 2015, the 1^st Defendant has failed or refused to repay all sums due. 

7.The Plaintiff therefore commenced the present claim against the Defendants. 

8.The Defendants’ position is that the claim should not be brought in Hong Kong as the established Order 11 benchmarks have not been met and the Order should be set aside: -

(1)  The Plaintiff only expressly relied on the gateway of Order 11 rule 1(1)(e) ie the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction but there was in fact no breach committed in Hong Kong. 

(2)  The Plaintiff cannot now try to rely on another gateway, namely Order 11 rule 1(1)(d)(i) ie the claim is brought in respect of a breach of contract, being a contract which was made within the jurisdiction.  

(3)  The Plaintiff has not discharged the burden of showing that Hong Kong is clearly the most appropriate forum for the trial of the action.  In particular, the Facility Agreement and other facility documents including the Continuing Guarantee all contained a jurisdiction clause in favour of the courts of England; and the parties’ express agreement that “the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary”. 

(4)  There was material non-disclosure on the part of the Plaintiff in seeking leave to serve the Defendants out of jurisdiction. 

(5)  Additionally, the Writ was not properly served upon the 2^nd and 3^rd Defendants in India as the Plaintiff had bypassed the provisions of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters of 15 November 1965 (the “Hague Convention”).  

C.   Relevant Legal Principles

9.The relevant legal principles were summarised by Ma CJHC (as he then was) in Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd ^[1]:-

(1)  The Court must be satisfied there is a good arguable case that the claim does fall within one of the requisite sub-heads (or “gateways”) under Order 11 rule 1(1).  This test is applicable when there are disputes of fact or issues of mixed law and fact.  Where the dispute is a succinct one of law, this ought to be resolved by the court even at the O 11 stage.^[2]

(2)  It must also be shown that the case is a proper one for the exercise of discretion by the court.  This requirement is mandated by Order 11 rule 4(2).  Questions of jurisdiction and forum (that is, the appropriate forum to hear the dispute) are relevant in the exercise of the court’s discretion in this regard and, in most cases, this is perhaps the most important factor to be considered by the court when deciding whether or not to grant leave to serve out of the jurisdiction.^[3]

(3)  Where, a plaintiff institutes proceedings in Hong Kong not as of right (and the present case is one since leave to serve out of the jurisdiction was required), the approach of the court to questions of forum is quite different.  Although this point will often only be raised by a defendant who seeks to set aside any order granting leave to serve out, the burden will not be on the defendant to demonstrate that there is an alternative forum which ought to entertain the action.  Rather, the legal burden is all along on the plaintiff to show, in seeking to persuade the court to grant an order to serve out, that Hong Kong is clearly the appropriate forum for the trial of the action.^[4]  

10.In this respect, a good arguable case reflects that one side has a much better argument on the material available.  It is the concept of the court being satisfied, or as satisfied as it can be having regard to the limitations which an interlocutory process imposes, that factors exist which allow it to take jurisdiction.^[5]

11.Further, because an application for leave to serve out of the jurisdiction was made on an ex parte basis, the Plaintiff also had to make full and frank disclosure: Wo Fung Paper Making Factory Ltd v Sappi Kraft (Pty) Ltd^[6]  

D.   Whether The Claim Falls Within The Gateway of Order 11

D1.    Order 11 rule 1(1)(e): A Breach Committed in Hong Kong?

12.The Plaintiff expressly relied on the gateway of Order 11 rule 1(1)(e) in seeking leave to serve out of jurisdiction.  It was asserted in the ex parte affidavit evidence that “pursuant to the terms of the Facility Documents, the 1^st Defendant shall make repayment of all or any sums due under the Facility Documents to the Plaintiff in Hong Kong. Thus, the breach of non-repayment is committed in Hong Kong.” 

13.The Defendants rely on Clause 27.1(b) of the Facility Agreement which provided that “payment shall be made to such account in New York with such bank as the Lender specifies”.  The Defendants contend that the performance of the contract ie the contractual obligation to pay was not in Hong Kong but in New York and Order 11 rule 1(1)(e) is therefore not engaged: The Eider.^[7]

14.The Eider was concerned with one single payment of salvage money to a German salvage company but the place of payment was not specified.^[8]  As the contract was worded and framed as to confine the obligation to pay to the German company, the obligation to pay was to be performed in Germany and it was not necessary to hold that the contract to pay might not be discharged by payment elsewhere than where the creditor was.^[9] 

15.In the present case, it is not disputed that the New York account specified is but a nostro bank account in New York.  It was a conduit for the funds in US currency to be received into the bank account with the Plaintiff in Hong Kong.  This is reinforced by the demand letter issued by the Plaintiff dated 15 September 2015 which stated that payment be –

“deposited in the following account;

CORRESPONDENT BANK: JP Morgan Chase Bank, Newyork (SWIFT: CHASUS33)

BENEFICIARY BANK: UNION BANK OF INDIA HONG KONG (UBINHKHK)

BENEFICIARY A/C NO; 793616103.”

16.Likewise, the 1^st Defendant’s drawdown request dated 21 July 2010 also requested that the proceeds of the loan should be credited to its bank account with DNB NOR BANK ASA, Singapore Branch (SWIFT: DNBASGSG) via the CORRESPONDENT BANK in New York ie BANK OF NEW YORK, NEW YORK (SWIFT: IRVTUS3N).  

17.In other words, there is no serious dispute that the obligation was to repay to the Plaintiff in Hong Kong via the conduit of the nostro account as a matter of international banking practice.  In fact, the 1^st Defendant’s bank account to which partial repayment was made is also maintained with the Plaintiff in Hong Kong and the Defendants do not suggest otherwise.  When payment was not made as agreed, there was a breach committed within Hong Kong where the Plaintiff, and thus, the beneficiary account was located. 

18.For this reason, the Plaintiff also contends to the extent relevant, any contractual obligation to pay to New York was also varied by the course of dealing.  

19.In the circumstances, I am satisfied that the Plaintiff has made out a good arguable case that the claim falls within Order 11 rule 1(1)(e).  

D2.    Order 11 rule 1(1)(d)(i): Contract Made In Hong Kong?  

20.It is not strictly necessary for me to consider the alternative gateway of Order 11 rule 1(1)(d)(i) that the Plaintiff seeks to rely.  Nevertheless, in deference to counsel’s comprehensive submissions, I will deal with the same.  

21.The gateway of Order 11 rule 1(1)(d)(i) was not expressly referred to in the ex parte affidavit evidence.  However, the ex parte affidavit evidence also asserted that “the Facility Documents in this matter were concluded in Hong Kong” and “all major facility documentations (including but not limited to the Facility Letter and the Facility Agreement) in this matter were concluded in Hong Kong”.  

22.First, Mr Kwok is adamant that the Plaintiff is not entitled to try and rely on this alternative gateway not expressly referred to in the ex parte evidence.  This is said to be the law of Hong Kong having been confirmed by the Court of Final Appeal in Kayden Ltd v Securities and Futures Commission^[10] and referred to in Balram Chainrai v Kushnir Family (Holdings) Ltd.^[11] 

23.Mr Luxton acting for the Plaintiff, refers to the Court of the Appeal decision in Kayden Ltd v Securities and Futures Commission^[12] which was not referred to in Balram Chainrai.  As a preliminary matter, it was said that the mere failure to refer to another gateway (ie Order 11 rule 1(1)(c) in that case) was something that could be put right very easily as the SFC was not relying on a new cause of action.  The Court of Final Appeal did not express any comment on this part of the dicta.  Rather, the Court of Appeal decision was overturned by the Court of Final Appeal on a different ground in that the proceedings as instituted pursuant to section 213(2)(c) of the Securities and Futures Ordinance Cap 571 (the “SFO”) were interim in nature and the SFC’s reliance on Order 11 rule 1(1)(b) was undermined.  Further, the amendment sought to include relief under section 213(2)(b) of the SFO was rightly rejected as it was a new case or a different cause of action not sufficiently put forward.  It therefore follows that the parties could not have been duly served under Order 11 rule 1(1)(b) and there was “no live issue” in the proceedings between SFC and Madam Tin such that Kayden might be a “necessary or proper party”.^[13]  On the proceedings as instituted seeking purely interim relief against Madam Tin, there were no live issues as she had agreed to give undertakings in terms of the orders sought. ^[14] 

24.Mr Luxton submits that on a proper reading of the Court of Final Appeal’s decision, what is prohibited is any attempt to set up and rely on a new and distinct cause of action and/or a different set of facts not before the ex parte master.  It does not prohibit reliance on additional or alternative gateway where a plaintiff does not need to rely on a different or new cause of action and does not need to rely on different or additional set of facts not covered in the ex parte affidavit evidence (as in the present case).  I agree.  See also: Fong Chak Kwan v Ascentic Limited & Ors^[15].  

25.Second, whilst Mr Kwok does not dispute that most of the facility documents (including the Facility Agreement) were signed and concluded by the parties in Hong Kong, he submits that the Continuing Guarantee was executed by the 3^rd Defendant in India. 

26.However, the Continuing Guarantee was also executed and signed by the Plaintiff in Hong Kong.  The question is therefore one of degree.  Where the facility documents were entered into by parties including those outside Hong Kong, the fact that one or two of such documents were executed by a party outside Hong Kong should be of little significance.  In the present case, the facility documents were also prepared in Hong Kong by the Plaintiff or its Hong Kong solicitors and were also coordinated from Hong Kong. By all indications, the Plaintiff has made out a good arguable case that the same were concluded in Hong Kong and the claim falls within Order 11 rule 1(1)(d)(i).  

E.    Whether This Is A Proper Case For Service Out: Forum Conveniens

27.As Mr Kwok is no longer pursuing the stay application, the burden remains on the Plaintiff to satisfy this Court that Hong Kong is clearly the appropriate forum.  There is no obligation on the part of the Defendants to formally identify a more appropriate alternative forum: Robin Hargreaves v Taian Insurance Co Ltd.^[16]  

28.Nevertheless, Mr Kwok submits that England is more appropriate than Hong Kong because the parties expressly chose England as the forum for resolving any dispute between them by reason of the jurisdiction clause contained in the facility documents.  

29.Clause 36.1 of the Facility Agreement provided that: -

“36.1 Jurisdiction of English Court

(a) Subject to paragraph (c) below, the courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including any dispute relating to non-contractual obligation arising from or in connection with this Agreement and any dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”)

(b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c) This Clause 36.1 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.”

30.Likewise, Clause 30 of the Continuing Guarantee provided that: -

“This guarantee, and all non-contractual obligations arising from or in connection with this guarantee, shall be governed by the law of England in all respects and the Guarantor hereby submits to the non-exclusive jurisdiction of the courts of England. Nothing in this guarantee precludes you [the Lender] from bringing any suit, action or proceedings (“Proceedings”) in any other jurisdiction nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.”

31.Both Clause 36.1 of the Facility Agreement and Clause 30 of the Continuing Guarantee are asymmetric jurisdiction clauses.  They are a long established and practical feature of international financial documentation.  The purpose of which is that the borrower and guarantors are bound to commence any proceedings in the specified jurisdiction (in this case, the courts of England), but the lender is not so bound: Commerzbank AG v Liquimar Tankers Management Inc.^[17]

32.These principles were accepted in Industrial and Commercial Bank of China (Asia) Limited v Wisdom Top International Limited.^[18]  It was held that the lender was not required to bring proceedings in the specified court, but could proceed in any court of competent jurisdiction.  The clause is an exclusive choice of court agreement only if the borrower is the party instituting the action.  

33.Mr Kwok seeks to rely on the comments made in Industrial and Commercial Bank of China (Asia) Limited.^[19]  He submits that the Plaintiff is nonetheless subject to Clause 36.1(b) of the Facility Agreement which “conclusively determines” that the English courts are the most appropriate and convenient forum.  According to Mr Kwok, the only potential exception for the Plaintiff to sue the Defendants outside of England, in breach of Clause 36.1(d), would be if the Defendants had assets in Hong Kong.  

34.With respect, I am unable to accept Mr Kwok’s submission: -

(1)  Industrial and Commercial Bank of China (Asia) Limited is not a case concerning with setting aside leave for service out or stay of proceedings on the ground of forum non conveniens. The comments expressed therein were obiter.  

(2)  In construing a very similar worded asymmetric jurisdiction clause, the court in Ourspace Ventures Ltd v Kevin Halliwell^[20] held that the net effect of clauses (b) and (c) is that only the defendant [the Guarantor] is bound by clause (b).  This is so despite clause (b) provided that “the parties agree” as opposed to “the defendant agrees”.  The defendant’s construction would mean that the first sentence in clause (c), ie this clause is for the benefit of [the claimant] only, would either have no meaning at all, or have the pointless function of reiterating that only the claimant has the right to serve a Litigation Notice.  As a result of which, the defendant’s application for a declaration that the English court does not have (or should not exercise) jurisdiction in respect of the claim was dismissed.  

(3)  A fortiori, to construe Clause 36.1(b) of the Facility Agreement in the way as suggested by Mr Kwok would simply defeat the very purpose of Clause 36.1(c) and/or the asymmetric jurisdiction clauses in general ie to confer complete freedom on the Plaintiff to bring proceedings in any country which would otherwise have jurisdiction. 

35.In the circumstances, where the claim herein is commenced by the Plaintiff, the Defendants cannot rely on Clause 36.1(b) of the Facility Agreement to suggest that the Plaintiff is bound to sue in England or that England must be the most appropriate and convenient forum.  

36.I am also satisfied that the Plaintiff has discharged the burden in showing that Hong Kong is clearly the most appropriate and convenient forum.  

37.First, the Plaintiff being the lender is in Hong Kong and most of the facility documents were concluded in Hong Kong.  The proceeds of the loan were disbursed from the Plaintiff in Hong Kong and repayment was to be made to the Plaintiff in Hong Kong.  

38.Second, the documentary evidence including the balance reports, records of disbursements, and repayments are kept by the Plaintiff in the Hong Kong branch. 

39.Third, the Defendants has raised that some witnesses of the Plaintiff might have been rotated back to India and all of the Defendants’ witnesses live in India.  

40.The Plaintiff however contends that the relevant responsible staff members could be rotated back in Hong Kong in due course.  In any case, the Plaintiff’s position is that their necessary witnesses are currently based in Hong Kong. 

41.More importantly, the Defendants have not identified any defence to the claim at all.  Whilst this is not a case on stay and the need to outline a defence may not apply in all its vigour for the Defendants to challenge that this is not a “proper case for service out” in terms of the Order 11 rule 4(2) discretion, the absence of a bona fide defence should be taken into account: Intex Recreation Limited v Tony Liu^[21].  

42.On the Plaintiff’s case, this is a straightforward claim for recovery of loan.  The factual issues advanced in the documents are likely to be decisively affected by discovery.  They are matters upon which oral evidence may or may not be required in due course: Wo Fung Paper Making Factory Ltd v Sappi Kraft (Pty) Ltd^[22].  In the absence of even an outline of a defence, the court will assume the trial will involve no more than the Plaintiff trying to make out its case.  I am, thus, unable to seriously assess the Defendants’ assertions that “their witnesses and documentary evidence are all in India” in terms of the Order 11 rule 4(2) discretion.  

43.Against the aforesaid factors, the fact that English law is the governing law of the Facility Agreement per se simply does not assist the Defendants.  In particular, the Defendants also suggested that India (without pointing to any specific court of India) is nevertheless a more appropriate jurisdiction than Hong Kong to try the claim and it would be extremely difficult for the 3^rd Defendant to travel from India to Hong Kong. 

F.    Whether There Was Material Non-Disclosure

44.Initially, the Defendants only complained that the Plaintiff failed to adequately refer to Master Grace Chan that Clause 36.1(c) of the Facility Agreement was invalid in the light of Clause 36.1(b) and/or the undertaking relating to jurisdiction at Clause 36.1(b).  

45.Mr Kwok did not seriously pursue this purported ground of material non-disclosure.  There can be no complain for material non- disclosure on this ground: -

(1)  As a matter of fact, the entirety of Clause 36.1 of the Facility Agreement as well as Clause 30 of the Continuing Guarantee had been set out in the ex parte affidavit evidence.  

(2)  As a matter of law, the Defendants’ construction or contention in respect of Clause 36.1 cannot stand.  

46.At the hearing, Mr Kwok further relied on the non-disclosure of Clause 27.1(b) of the Facility Agreement ie payment shall be made to such account in New York with such bank as the Lender specifies.  

47.The Court of Appeal in Wo Fung Paper Making Factory Ltd v Sappi Kraft (Pty) Ltd ^[23] emphasised it is important to make sure that the court does not get itself in a position of what might be called “counter-abuse”.  Disputed issues of facts simply go to the need for trial and are of very little value indeed in deciding whether a good arguable case has been made out.  Further, the point of non-disclosure has to be tested by looking at the substance and the court should start with the question whether a good arguable case was shown at the inter partes stage. 

48.Given that the Plaintiff had shown a good arguable case that the claim falls within Order 11 rule 1(1)(e), Clause 27.1(b) of the Facility Agreement did not detract from the fact that repayment had to be made to the Plaintiff in Hong Kong albeit via the nostro account in New York.  Looking at the ex parte affidavit evidence as a whole, it cannot be said that the effect of the failure to refer to Clause 27.1(b) was material such that the Court would be misled in any material respect concerning its jurisdiction: BP Exploration (Libya) Ltd v Hunt^[24].  

G.   Validity of Service On the 2nd and 3rd Defendants In India

49.The 2^nd and 3^rd Defendants also contend that the Writ was not properly served upon them in India for the following reasons: -

(1)  The Plaintiff sought to serve the Writ on them though a private person or agent instructed by the Plaintiff and not via the Hague Convention. 

(2)  The service was attempted at another address as opposed to the addresses specified in the Order. 

(3)  The Plaintiff’s private agent hand delivered the Writ to an authorised person of the 3^rd Defendant as opposed to the 3^rd Defendant himself. 

50.Insofar as the first ground of complaint is concerned, the starting point is Order 11 rule 6(2A) which relevant provides that: -

“Where in accordance with these rules, a writ is to be served on a defendant in any country which is a party to the Hague Convention, the writ may be served: -

(a) through the authority designated under the Convention in respect of that country; or

(b) if the law of that country permits-

(i) through the judicial authorities of that country, or

(ii) through a British consular authority in that country.”

51.There is no dispute that the 2^nd and 3^rd Defendants were not served in India in accordance with the Hague Convention.  However, it is common ground that the methods of service provided in that sub-rule are not exclusive.  Service may be effected by private means provided always that nothing is done in the country where service is to be effected which is contrary to the law of that country as prohibited under Order 11 rule 5(2).^[25]  

52.Indeed, Article 19 of the Hague Convention also provides that “[t]o the extent that the internal law of a Contracting State permits methods of transmission, other than those provided for in the preceding Articles, of documents coming from abroad, for service within its territory, the present Convention shall not affect such provisions.” 

53.It is therefore not a must that the 2^nd and 3^rd Defendants had to be served in accordance with the Hague Convention.  The pertinent question is whether service by private means in India is contrary to the law of India.  

54.In this respect, the Plaintiff relies on the legal opinion by Mr Purrey Appa Rao and contends that it does not contravene the law of service in India to effect service of the Writ on the 2^nd and 3^rd Defendants respectively by personal service at its office and the authorised individual/person.  

55.On the other hand, the 2^nd and 3^rd Defendants rely on the legal opinion of Mr Karun Mehta to say otherwise.  

56.It appears common ground between Mr Rao and Mr Mehta that the method of service used by the Plaintiff (ie via private means) is not specifically outlawed by India ie positively illegal or unlawful.

57.However, the local law of India specifically provides for a manner in which foreign process is to be served.  Both Mr Rao and Mr Mehta referred to section 29 of the Code of Civil Procedure, 1908 (the “Code”).  It is further said that the Notification of the Indian Ministry of Law and Justice dated 12 January 2009 extended the applicability of section 29(c) of the Code to all countries who are parties to the Hague Convention.  

58.Without elaboration and exhibiting the Code or any authorities, Mr Rao simply relied on section 29 of the Code and contended that service of foreign summons and other process on a defendant by personal service has been made permissible under Indian law and therefore confirmed that the same does not contravene Indian law.  

59.Section 29 of the Code provides that: -

“29. Service of foreign summonses – Summonses and other process issued by-

(a) any Civil or Revenue Court established in any part of India to which the provisions of this Code do not extend; or

(b) any Civil or Revenue Court established or continued by the authority of the Central Government outside India, or

(c) any other Civil or Revenue Court outside India to which the Central Government has, by notification in the Official Gazette, declared the provisions of this section to apply,

may be sent to the Courts in the territories to which this Code extends, and served as if they were summonses issued by such Courts.

60.Mr Mehta therefore agreed that the applicability of section 29(c) extends to foreign courts which are civil courts in the countries which are parties to the Hague Convention such as the High Court of Hong Kong Special Administrative Region.  

61.Although the wording used is “may be sent” and I would have thought it should not be taken in a mandatory or obligatory sense, Mr Mehta is adamant that: -

(1)  In order to effect service of foreign process in India, the foreign originating process or summons must be sent to the court in India, who will thereafter arrange for service of the same in India in accordance with Indian law as if it were issued by the Indian court itself.  

(2)  Indeed, service of domestic summons are arranged by the Indian court itself unless the court otherwise directs.  Rule 9(1) Order V of the Code provides that summonses shall, unless the court otherwise directs, be delivered or sent either to the proper officer to be served by him or one of his subordinates or to such courier services as are approved by the court.  The “proper officer” is a court officer employed by the Indian court.  

(3)  Any attempted service arranged by the parties or their own lawyers instead of service arranged by the court is not proper service under Indian law unless leave to do so is expressly granted under Rule 9A Order V of the Code.  

62.There is no dispute that the Writ was not sent to the court in India for service to be arranged or effected on the 2^nd and 3^rd Defendants.  

63.In view of Mr Mehta’s opinion and which Mr Rao has not pointed to other legal provisions or authority to suggest the contrary, I am not in a position to doubt that the foreign jurisdiction ie India has provided for a mandatory method of service of foreign process and the Plaintiff did not comply with the same.  

64.In relation to the 2^nd and 3^rd Defendants’ other grounds of complaint regarding service, I will briefly deal with the same as follows: -

(1)  Whilst the service was attempted at another address as opposed to the addresses specified in the Order, the Order expressly provided that the Plaintiff do have leave to serve a sealed copy of the concurrent writ of summons on the specified addresses of the 2^nd and 3^rd Defendants or elsewhere in the Republic of India.  In other words, the relevant defendants may but not must be served and service elsewhere within the relevant jurisdiction will be good. See also: Mattel Inc v Tonka Corp. ^[26]

(2)  Whilst the Writ was not personally served on the 3^rd Defendant, the same was served on a Mr Sunil Kamania who was said to be the 3^rd Defendant’s authorised person or agent.  Mr Rao referred to Rule 13 Order V of the Code.  Whilst Mr Mehta took issue that the same only applies in a case that a defendant is residing outside of the local jurisdictional limits of a particular Indian court, it is at least not contrary to Indian law for such service to be effected.  In this respect, it has not been disputed in the affidavit evidence filed by the 2^nd and 3^rd Defendants that Mr Kamania was not such an authorised person or agent of the 3^rd Defendant.  

65.Mr Luxton also invites the Court to cure any irregularities regarding service pursuant to Order 2 rule 1 insofar as it is necessary.  In particular, there is no dispute that the Writ was brought to the attention of both the 2^nd and 3^rd Defendants.  They are now represented by the same Hong Kong firm of solicitors as that of the 1^st Defendant and there is no prejudice caused to them. 

66.On the other hand, Mr Kwok relies on Deng Minghui v Chau Shuk Ling ^[27] and Bank of China (Hong Kong) Ltd v Regal Link Investment Ltd^[28] and submits that such discretion should not be exercised in favour of the Plaintiff.  

67.Defective service of proceedings, however gross the defect, and even a total failure to serve, where the existence of the proceedings is nevertheless known to the defendant, is an irregularity which can be cured by the court by the exercise of discretion under Order 2 rule 1.^[29]

68.Having regard to the objectives under Order 1A rule 1 and all relevant circumstances, I am satisfied that this is a strong case for discretion to be exercised under Order 2 rule 1 so as to allow the service on the 2^nd and 3^rd Defendants to stand: -

(1)  In the present case, unlike the two cases relied upon by Mr Kwok, leave for service out had been properly obtained.  

(2)  Whilst the method of service used (ie via private means) was contrary to the mode of service provided in India law which required the writ to be sent to the court in India, the same is not positively illegal or unlawful. 

(3)  Though service of the writ on the 2^nd and 3^rd Defendants were irregular, they were fully aware of the proceedings and have not been prejudiced by such irregularities.  

See: Yanfull Investments Limited v Datuk Ooi Kee Liang.^[30]

H.   Conclusion

69.For the above reasons, I make an order that the 1^st Defendant’s Summons dated 12 November 2019 and the 2^nd and 3^rd Defendants’ Summons dated 27 December 2019 be dismissed. 

70.There is no reason why costs should not follow the event.  I make a costs order nisi that the 1^st to 3^rd Defendants do pay the Plaintiff’s costs of and occasioned by the two Summonses.  Such costs are to be taxed if not agreed with certificate for counsel.  

71.The costs order nisi shall become absolute in the absence of any application to vary the same within 14 days as from the date of this Decision.  

72.It remains for me to thank counsel for their able assistance.  

Mr Nick Luxton instructed by Holman Fenwick Willan for the Plaintiff

Mr Eugene Kwok instructed by Lau, Horton & Wise LLP for the Defendants