Choudhary & Ors v Bhatter & Ors

This is an application for security for costs in respect of an appeal that is going to be heard in, I would think, the third week of May, so the matter has had to come on as an urgent application. Mr Donaldson has made an order in the Chancery Division restraining the first respondent to the application, Mr Damodar Prasad Bhatter, from doing any act in relation to the management of the third defendant’s business and affairs otherwise than as directed or authorised by the first and second applicants or as directed by a court appointed in the jurisdiction of India, and restraining him also from convening any meeting of the company or procuring a decision of the directors to alter either the composition of the board of directors or the shareholdings of the company. It will be apparent from that order that the dispute which has arisen is in relation to the control of the company, a company which was incorporated in 1872 under the Companies Act of 1862 to carry on the business of manufacturing jute at a mill in Bangalore near Calcutta. The company has remained an English company despite India’s independence. Its registered office is still in London and the members’ register is kept in England. The judge observed that the company was thus a barely surviving relic of past empire.

The company has not been doing too well, but it is now surviving through a committee of management despite the fact that there was originally an order in October of 1987 that it should be wound up. The disputes were summarised by the judge in paragraphs eight, nine, ten and 11 of his judgment, and I need say no more about that than that the first and second claimants, who are directors and, currently, subject to the dispute, the only directors of the company, appointed Mr Bhatter as a co-director, and that since then things have happened which may or may not mean that other directors have been appointed, that some of the claimants’ shares have been forfeited, that other shares have been allotted to the defendants and there will at some stage have to be a trial of those sort of questions. There has been a jurisdictional objection to the issuing of proceedings, but Mr Donaldson said that the claimants were entitled to issue and serve proceedings pursuant to article 22 of the relevant EC Regulation. Stanley Burnton LJ has given permission to appeal against the decision of the judge, and of course if it were to be held that for any reason there was no jurisdiction to bring proceedings against the defendants, then the injunction would arguably fall.

If there is jurisdiction, as I understand it, it is still said that the injunction ought not to be granted but that no doubt would be a rather more difficult argument. The present application is that there should be security for costs of this appeal. It is only Mr Bhatter who is subject to the order. It is only Mr Bhatter therefore who has the right to appeal and the application is made against Mr Bhatter. It is said that he is resident in India, out of the jurisdiction, and that in the circumstances of the case it will be just to order security against him. As against that I have been referred to Nasser v Bank of Kuwait [2001] EWCA Civ 556, which warns the court of the danger of discrimination against foreign appellants as opposed to national appellants, and I have in mind in particular paragraph 62 of the judgment of Mance LJ in that case where he says this:

“In so far as impecuniosity may have a continuing relevance, it is not on the ground that the claimant lacks apparent means to satisfy any judgment, but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad, or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad.”

It is said by Mr Russen on behalf of the respondents to the appeal seeking security for costs that he can come within at any rate the second limb of that because he says that the evidence, such as it is, is that Mr Bhatter is impecunious and that he is not being upfront with the money that is needed to resource this litigation and that that shows that if he has any assets, which Mr Russen doubts, that he will make it difficult to enforce in India and in any event that he would take advantage of any available opportunity to avoid or hinder such enforcement It seems to me on that part of the argument that the evidence is not such that I can infer that Mr Bhatter will seek to hinder or prevent enforcement. It may be that if he has assets he will seek to oppose any order for costs in India which would be enforceable under the 1933 Foreign Judgments (Reciprocal Enforcement) Act, but it seems to me it would be comparatively easy to get any relevant order and that there would be a danger of discrimination against Mr Bhatter compared to an English appellant; if I now order security for costs of the appeal.

I am somewhat reinforced in my conclusion that this would not be an appropriate case to order security for costs of the appeal by the oddity of the case as I see it at the moment. It is true that the company is a registered company and it is true that the register of members is here, and, if Mr Donaldson is right, which for present purposes I assume, it is also truethat the claimants are entitled to proceed in this country against Mr Bhatter and may well be entitled to have an order in the terms of the injunction. Nevertheless the connection with this country is remote, and it seems to me that, in a case where the connection with this country is remote, and there are arguments which are genuine arguments because Stanley Burnton LJ has granted permission to appeal, that the jurisdiction of this court should not be exercised against a foreigner; there is a certain element of luxuriousness in the invocation of this jurisdiction by the claimants in this case. They may well be entitled to invoke it, but one asks oneself why it would not be sufficient for the injunctive relief that has so far been obtained to have been obtained in India, and indeed why the case as a whole could not more conveniently proceed in India. That is not of course an answer to the jurisdiction point because convenience, it is said by Mr Donaldson, and no doubt rightly, is irrelevant to any question of invocation of jurisdiction under the Regulation, but as I say it does seem to me that, if the claimants wish to have the luxury of litigating these matters in England, that there is a certain injustice in requiring Mr Bhatter, who has a legitimate appeal, to put money up front to secure the costs of the appeal.

So for those two reasons I have decided that, as a matter of my discretion, while the jurisdiction may well exist to order security for costs in this case, not to exercise that jurisdiction.