Fimbank P.L.C v (1) Bhatia Tr. Co. LLC (2) Mr Rajeev Suresh Bhatia (3) Mr Suresh Tulsidas Bhatia [2022] DIFC CFI 024 (01 April 2022)

Claim No. CFI 024/2021










UPON the Claimant filing Application No. CFI-024-2021/3 dated 19 December 2021 seeking an Immediate Judgment

AND UPON hearing counsel for the Claimant on 21 February 2022

AND UPON the Defendants failing to appear at the hearing on 21 February 2022

AND UPON reviewing the relevant documents in the case


1. The Application for Immediate Judgment be dismissed.

Issued by:
Nour Hineidi
Date of issue: 1 April 2022
At: 2:30pm


1. The Claimant, FIMBank P.L.C (the“Bank”), is a Maltese registered bank with a branch in the Dubai International Financial Centre (“DIFC”). It provided a purchase factoring facility (the“Facility“) to the First Defendant, Bahtia Tr. Co LLC (the“Company”), a company registered under the laws of the United Arab Emirates with its registered office in Sharjah. Security for the Facility was provided in a number of ways, including by guarantees given by each of the Second and Third Defendants, Mr Rajeev Bhatia and Mr Suresh Bhatia (together, the“Guarantors“). The Guarantors are father and son, and were the Chairman and the Managing Director respectively of the Company.

2. By a Claim Form filed on 17 February 2021, the Bank claimed to recover from the Company and the Guarantors the outstanding indebtedness of the Company under the Facility. The Company was served in accordance with an order for service by alternative means, the service being by sending to email addresses used by the Defendants, and a default judgment was obtained against the Company. This is the Bank’s application for immediate judgment against the Guarantors. The substantive application is supported by the witness statement of Michael Morris dated 14 December 2021, verified on oath, and the affidavit of Mr. Morris affirmed on 3 March 2021 bringing quantum up to date.

3. The Guarantors have not appeared to oppose the application or responded to the proceedings at all.


4. The Facility was granted by a Purchase Factoring Agreement dated 17 May 2018 between the Bank and the Company (the“Facility Agreement”), by cl 11.1 of which the parties thereto agreed to submit it and any “dispute, controversy, proceedings or claim” arising out of or relating to it to the exclusive jurisdiction of the Dubai International Financial Centre Courts (the“DIFC Courts”). As between the Bank and the Company, there was jurisdiction pursuant to Article 5(A)(2) of the Judicial Authority Law, DIFC Law No 12 of 2004 (the“JAL”).

5. The guarantees were given by two Guarantee and Indemnity Agreements also dated 17 May 2018, one between the Second Defendant Mr. Rajeev Bhatia and the Bank and the other between the Third Defendant Mr. Suresh Bhatia and the Bank (the“Guarantee Agreements”). By cl 13.2 of each of the Guarantee Agreements, the guarantor agreed “that the United Arab Emirates Courts have jurisdiction to settle any disputes in connection herewith and accordingly submit to the jurisdiction of such Courts”. While it is a question of construction in each case, the DIFC Courts have on a number of occasions been held to be within the jurisdiction agreed in such terms, seeInvestment Group Private Ltd v Standard Chartered Bank [2015] DIFC CA 004 (19 November 2019) at [140]-[143] andGoel v Credit Suisse (Switzerland) Ltd [2021] DIFC CA 002 (26 April 2021) at [89]-[91]. The Bank submitted that in this case there was an agreement upon the jurisdiction of the DIFC Courts, as a court of the United Arab Emirates, a conclusion in line with the specific agreement on the jurisdiction of the DIFC Courts in the associated Facility Agreement. The submission should be accepted, and there is jurisdiction as between the Bank and the Guarantors pursuant to Article 5(A)(2) of the JAL.

6. However, there is also a more direct route to jurisdiction as between the Bank and the Guarantors. By Article 5(A)(1)(a) of the JAL, this Court has jurisdiction to hear “civil or commercial cases and disputes involving… any of the Centre’s Establishments…”. Traced to its meaning given in the Law of the Dubai International Financial Centre, Law No 9 of 2004, the definition of Centre Establishments is “any entity or business established, licensed, registered or authorised to carry on business or activities in the Centre pursuant to the Centre’s Laws, including Licenced Centre Establishments“. As attested by Mr. Morris in supplementary oral evidence, the Bank is licensed and authorised to carry on business in the DIFC. Accordingly, apart from the Guarantors’ agreement, there is jurisdiction because the proceedings involve the Bank being a Centre Establishment.

Service of the Claim Form

7. The last recorded address for the Guarantors was an address in Mumbai in India. By Rule 9.54 of the Rules of the DIFC Courts (the“RDC”), service out of the DIFC or Dubai may be by any method permitted by the law of the place in which it is to be served. From the affidavit of Mr. Aniesh Jadhav, an Indian legal practitioner, affirmed on 11 March 2021, he served the Claim Form and the Particulars of Claim with their exhibits, together with a covering letter, in two ways in accordance with Indian law. One was by hand delivery of packages containing the documents to the Guarantors’ address on 3 March 2021, where a security guard told him that he had been instructed to accept the packages “but refused to acknowledge receipt of the same”. The other was by courier delivery on the same date, with on-line tracking showing that the packages were delivered to the address. A third way undertaken by Mr. Jadhav, service by registered post, was unsuccessful, the response from the postal service being “Door Locked“. I am satisfied that by the first two ways the Guarantors were duly served in accordance with Indian law.

8. The Guarantors have not filed an Acknowledgement of Service and, as noted above, have not participated in the proceedings at all.

Permission to Apply for Immediate Judgment

9. By RDC 24.4, a Claimant may not apply for immediate judgment until the Defendant against whom the application is made has filed an acknowledgment of service or a defence, unless (inter alia) the Court gives permission. On the Bank’s application, on 27 July 2021 Justice Wayne Martin granted permission pursuant to Part 24 to file the application for immediate judgment against the Guarantors.

10. It may be observed that Justice Martin must have been satisfied as to service of the Claim Form and Particulars of Claim upon the Guarantors.

Service of the Application

11. The orders of Justice Martin did not deal with the service of the application on the Guarantors. From the further affidavit of Mr. Jadhav affirmed on 24 January 2022, on 4 January 2022 he attended the Guarantors’ address to serve packages containing the Application Notice, the witness statement of Mr. Morris and exhibits, and a draft order, together with a covering letter; after being told by the security guards to wait he was informed by “a representative/caretaker” that the Guarantors had instructed him not to accept the packages and refused to acknowledge receipt. Packages with the same documents were also served by courier, with an online report confirming delivery on 5 January 2022. However, the third method of service by registered post received the same response that the door was locked.

12. The Rules do not make specific provision for service out of the DIFC or Dubai of an application where a party has not given an address for service: RDC 9.54, permitting service by any method permitted by the law of the place in which it is to be served, refers only to service of a claim form. RDC 9.64 contemplates service of an application notice out of the DIFC and Dubai, but does not state a permitted means of service. However, RDC 9.53 requires compliance with the rules regarding service of the place of service, and from that Rule and by analogy with RDC 9.45 service of an application notice by a method permitted by the law of the place in which the application notice is served will suffice. I am satisfied that the Guarantors were duly served, by the courier service if not also by delivery to the address.

Notice of the Hearing

13. As is customary, the date for the hearing of the application was not fixed when the Application Notice was issued. By RDC 24.6, it was necessary that the Guarantors be given at least 14 days notice of the date fixed for the hearing and the issues which it was proposed that the Court would decide at the hearing.

14. Mr. Javhad’s affidavit affirmed on 19 February 2022 described his attempts to serve a copy of the Registry’s email confirming the listing for hearing on 21 February 2022 and instructions for joining the hearing online or by telephone, together with a covering letter and a copy of the Bank’s skeleton argument. When attending at the address, he was told by the security guard that the Guarantors were no longer at the address and the premises were vacant; the courier returned the packet, having been told that the Guarantors were not available to accept delivery; and the response to service by registered post was as before. However, on 27 January 2022, the Bank’s lawyers sent the same information concerning the hearing date to email addresses previously used by the Guarantors, being the email addresses used for the service on the Company by alternative means. A read receipt was received showing that the email to his email address had been read by Mr. Suresh Bhatia.

15. Giving notice as required by RDC 24.6 is not the same as service. While ordinarily notice will be given in documentary form, that is not necessary, nor do the Rules prescribing ways of service apply. The question is whether what was done was sufficient to draw to the Guarantors’ notice the hearing date and the issues to be decided so that they could join the hearing and participate in the decision of the issues. In my view, due notice was given, being more than the stipulated 14 days notice. Mr. Suresh Bhatia read the email sent to his address, which told him the hearing date and provided the means for joining and participating if he so desired; and while it did not specifically deal with the issues to be decided, it was to be read together with the Application Notice, the witness statement of Mr. Morris and the draft order, from which it was plain that the Bank claimed recovery of the Company’s indebtedness and the reasons why. While there was not a read receipt showing that Mr. Rajeev Bhatia had read the email sent to his email address, nor had the email “bounced back”, it is not necessary to show that he read it any more than it is necessary to show that a party personally served with (say) a claim form has read it. It may be inferred that he and Mr. Suresh Bhatia, as co-guarantors and father and son, shared knowledge of the Bank’s communications, but even without that Mr. Rajeev Bhatia had through the email, as an ordinary means of communication, the means of knowledge of the hearing date and the issues to be decided and was thereby given notice of them.

Immediate Judgment

16. By RDC 34.1, immediate judgment may be given against a Defendant if the Court considers that the Defendant has no real prospect of successfully defending the claim and there is no other compelling reason why the case should be disposed of at a trial. The principles on which the Court acts are well established, and it is sufficient to refer, without setting the passages out, toGFH Capital v Haigh [2014] DIFC CFI 020 (10 November 2016) at [9], since adopted on a number of occasions, and their restatement by the Deputy Chief Justice, Sir David Steel, inThe estate of Christos Papadopoulos [2017] DIFC CFI 004 (20 February 2018) at [16]. In a case such as the present, it is appropriate to note the further principle, also taken from the reasons of Lewison J inEasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 at [15] and accepted in these Courts, that it is not uncommon for an application to give rise to a short point of law or construction:

“… and if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he would in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined the better.“

The Guarantee Agreements

17. The Guarantee Agreements are expressed to be “governed by and construed in accordance with the United Arab Emirates Laws“ (cl 13.1).

18. Each Guarantee Agreement provides by cl 2.1:

“2.1 In consideration of the Bank granting the Facility and other banking facilities to the Borrower, the Guarantor as duly authorised, without proof of liability or evidence and as primary obligor, hereby jointly and severally with the Borrower, unconditionally and irrevocably guarantee [sic] to the Bank the payment of, and undertake [sic] on first demand in writing made by the Bank on the Guarantors [sic], to pay the Indebtedness to the Bank or any balance thereof at any time due or owing to the Bank.“

19. By cl 2.2, a maximum liability of USD 5 million, apart from interest and costs and expenses, is stipulated. Clause 2.3 then provides:

“2.3 As a separate and independent stipulation, the Guarantor agrees to indemnify the Bank on demand for any damages, losses, costs and expenses arising from any failure on the part of the Borrower to perform any obligations arising out of or in connection with the Facility and the Guarantor so agrees to indemnify the Bank even in the event that any obligation of the Borrower and towards the Bank ceases to be valid and enforceable against the Borrower for any reason of whatsoever including, but without limitation, any legal limitation or any disability or incapacity of the Borrower. In such an event the Guarantor shall be liable towards the Bank as if that obligation was fully valid and enforceable and as if the Guarantor were the principal debtor in respect thereof and shall pay all sums due to the Bank within five (5) days of a demand in writing by the Bank.”

20. Clause 10.1 provides further as to demand:

“10.1 All the Indebtedness shall be due by the Guarantor under this Guarantee as a debt, certain, liquidated and due on the fifth (5th) day following the Bank’s first written demand to the Guarantor to pay. All demands shall be sent to the address or facsimile or other numbers as are stated above as the same may be changed by notice in writing by one party to the other”.

21. The addresses stated for the Guarantors are addresses in Sharjah; however, as appears above, at a later time, the Mumbai address became their last known address.

22. Clause 10.2 is a conclusive evidence clause, in the terms:

“10.2 The statement by the Bank of the amount due under this Guarantee shall be binding on the Guarantor and shall be conclusive evidence of the sum due, saving only manifest error”.

The Indebtedness

23. “Indebtedness” as referred to in cl 2.1 is widely defined in the Guarantee Agreements and would catch the amount claimed by the Bank as the Company’s indebtedness. It is not necessary to consider the effect on ascertaining the amount of either “without proof of liability or evidence” in cl 2.1 or the default judgment obtained against the Company, and the Bank did not rely on the conclusive evidence clause. Such a clause would be effective under English law, see for exampleNorth Shore Ventures Ltd v Anstead [2012] Ch 31; perhaps the Bank did not wish to enter upon its effectiveness under UAE law.

24. By cl 1 of the Facility Agreement, the Bank granted the Facility up to an amount of USD 5 million, to be utilised by the Company solely to pay invoices issued by any of a number of identified entities “or any supplier acceptable to the Bank and approved by the Bank“. Subject to some conditions, the Company could request the Bank to finance invoices issued by these suppliers, the principal amount financed to be paid within 120 days (cl 2.1 (vi)). Interest was payable on the principal amount financed at LIBOR (90 days) + 4% per annum, and on any amount outstanding under the Facility at a default rate of an additional 3% over the LIBOR + 4% rate (cl 2.1 (viii)). On a number of eventualities, including that the Company failed to pay any amount due and payable, the Bank could terminate the Facility, declare the amount outstanding immediately due and payable, and apply the default rate of interest (cl 10.1).

25. On five occasions in August and October 2019, the Company drew down under the Facility a total of USD 2,709,521.99. No repayments were made on the various repayment dates. The security for the Facility included cash collateral of USD 500,000 and an entitlement to debit the Company’s call account with the Bank (cl 2 .2 and 5.2.7, cl 5.2.3 and Letter of Undertaking/Declaration). The total amount of USD 523,757.25 thus available was applied against two of the invoices, liquidating one of them, and there remained outstanding USD 2,185,764.74.

26. The Company’s indebtedness was not disputed at the time. On 17 December 2019, Mr. Rajeev Bhatia advised of “a temporary challenge on hand with receivables being stuck in our key export markets”, stretching cash flow, and referred to “focused collection efforts” and the family injecting additional funds. On 22 December 2019, he said he was working on getting additional equity into the company. He proposed successive payment plans. Nothing came of this, and it appears that the Company was then left to its fate.

27. The default judgment obtained against the Company was for the aforesaid amount of USD 2,185,764.74, plus interest at 7% per annum from the dates on which the invoice amounts were due for repayment and legal costs to be assessed by the Registrar. Interest at the combined LIBOR + 4% and additional 3% rates is a little more than 7%: it does not appear from the materials before me why the rate of 7% was taken in the default judgment.

28. According to Mr. Morris’s affidavit, from the Bank’s automated accounting system interest on the USD 2,185,764.74 to 19 March 2022 at the combined rate is USD 260,405.90. The amount of the Indebtedness as of 19 March 2022 is, therefore, USD 2,446,170.64. Nothing appears whereby there is a reasonable prospect of defending the claim against the Guarantors in relation to the amount of the Indebtedness.

The Guarantors’ Liability

29. Subject to the question of demand, either limb of cl 2 of the Guarantee Agreements would oblige the Guarantors to pay the amount of the Indebtedness to the Bank. Perhaps not fully recognised in the Bank’s skeleton argument for the hearing on 21 February 2022, demand is an issue, and I invited and have had the benefit of supplementary written submissions. The issue is twofold: is demand upon the Guarantors necessary in order to succeed in the claim against them, and if so, was demand made?

(a)Is Demand Necessary?

30. It should be recalled that the Guarantee Agreements are to be governed by and construed in accordance with UAE law. In the supplementary submissions, an ingenious argument was put to the effect that neither UAE Federal Law No 18 of 1993 Concerning the Commercial Transaction Law (the“Commercial Code“) nor UAE Federal Law No (5) of 1985 Concerning Civil Transactions Law (the“Civil Code“) contains provisions informing the interpretation of the Guarantee Agreements; that the general principles of contractual interpretation which they prescribe therefore applied, which include provisions for reliance on commercial custom; that the relevant custom was that existing between commercial parties in the DIFC; and that DIFC custom “as informed by English and common-law banking practice”; therefore provided the conditions by which the Guarantee Agreements are to be interpreted.

31. The Bank did not dispute, as I understand it, that demand was necessary to enliven the indemnity in cl 2.3 of the Guarantee Agreements; the debate was over cl 2.1. The Bank submitted that in cl 2.1 the Guarantors accepted liability as primary obligors, and that their liability as primary obligors could be enforced without a prior demand notwithstanding the words “on first demand in writing”. It relied onM S Fashions Ltd v Bank of Credit and Commerce International SA (in liq) [1993] Ch 425 (“M S Fashions”). In that case, Mr. Ahmed had agreed to guarantee to pay and/or discharge upon written demand all liabilities of the company, and had also declared “as a separate and independent obligation hereunder” that the company’s liabilities “shall be recoverable by you from me as principal debtor and/or by way of indemnity and shall be re-paid by me on demand made in writing …”. It was held that he was liable under the independent obligation even though the word “demand” had been used, because he had undertaken liability as principal debtor, referring in particular toRowe v Young(1820) 2 Bli. 391 where Bayley J said (at 465) that “where a man engages to pay upon demand what is to be considered his own debt, he is liable to be sued upon that engagement, without any previous demand….”.

32. Whether the Guarantors accepted liability as primary obligors/principal debtors is a question of construction of the Guarantee Agreements; but even if they did,M S Fashionsdoes not dictate that (assuming English law applies) demand prior to action is therefore unnecessary. As was said by Dillon LJ, with whom Nolan and Steyn LJJ agreed, at 447 of that case:

“Essentially, however, the question is one of the construction of the contract: seeN Joachimson v Swiss Bank Corporation [1921] 3 KB 110, 129, where Atkin LJ said:

‘The question appears to me to be in every case, did the parties in fact intend to make the demand a term of the contract? If they did, effect will be given to their contract,whether it be a direct promise to pay or a collateral promise, though in seeking to ascertain their intention the nature of the contract may be material‘.” (emphasis added).

33. InN Joachimson v Swiss Bank Corporation [1921] 3 KB 110 to which Dillon LJ referred, the question was whether demand was necessary before the customer could recover from its bank money held on current account; the question arose because if it was not, so that the customer could have sued its bank at any time, the customer’s action was barred by a limitation period. It was held that, although generally a debt could be recovered when it fell due without demand – the debtor had to seek out the creditor and make payment – the debtor/creditor relationship between bank and customer carried with it an implied necessity for demand before the bank was obliged to make payment. It was in that context that Atkin LJ explained that debtor and creditor could contract for demand even in the case of a “direct promise to pay”, as his Lordship’s brethren also accepted at 117 ( Bankes LJ) and 125 (Warrington LJ).

34. So also, whether the Bank and the Guarantors contracted for demand, even if the Guarantors accepted liability as primary obligors, is a question of construction of the Guarantee Agreements, and their construction will determine whether demand is necessary before the Bank can recover the Indebtedness from the Guarantors. I do not explain the Bank’s argument for the application of English law in more detail, or express any view on it. Whether the parties intended to make demand a term of their contracts is to be ascertained from the terms of the Guarantee Agreements, read as a whole, and the task of construing the English language agreements is the same whether under UAE law or English law.

35. The liability accepted by the Guarantors is in the terms, “guarantee to the Bank the payment of, and undertake on first demand in writing made by the Bank on the Guarantors, to pay the Indebtedness to the Bank”. The punctuation is awry, but the words run together a guarantee of payment, in the nature of a “see to it” obligation as described inMoschi v Lep Air Services [1973] AC 331 at 347, and an undertaking to make payment. This liability is said to be accepted “without proof of liability or evidence and as primary obligor… jointly and severally with the Borrower“. There is incongruity in this: the “see to it” obligation of guarantee of payment is neither a primary obligation nor a joint and several obligation with the Guarantor, and the clause is a rather thoughtless throwing together of disparate forms of words. There is not, as is often found, a guarantee and then a clearly separate undertaking as principal debtor, and the contrast with clearly stated separate obligation in cl 2.3 indicates that one source only of liability was intended. I do not think the reference to a guarantee of payment was intended as a separate source of liability; rather, it was an (incorrect) expression of the nature of the real liability, the undertaking to pay on demand: the undertaking to pay on demand is how the guarantee of payment is to be put into effect.

36. That liability is said both to be a liability to pay on demand, and a liability as primary obligor and jointly and severally with the Borrower. There is a conflict to be resolved. It must be asked whether the parties made demand a term of their contract even if the Guarantor’s liability was as primary obligor and jointly and severally with the Borrower.

37. The Guarantee Agreements must be construed as a whole, and the answer is provided by cl 10.1. It makes the Indebtedness “due by the Guarantor under this Guarantee…due on the fifth (5th) day following the Bank’s first written demand to the Guarantor to pay“. Demand is an essential step in enlivening the Guarantor’s obligation to make payment: nothing is due from the Guarantor until a stated period after demand is duly made. Consistently with this, cl 2.3 providing for indemnity (which usually is expressed as and results in a primary obligation) is also made subject to demand from the Bank, also with payment “within five (5) days of a demand in writing by the Bank”. On the construction of the Guarantee Agreements read as a whole, demand is a condition to liability, and is necessary even if the Guarantors be regarded as primary obligors/principal debtors.

(b)Was Demand Made?

38. The Bank again cited English authority to the effect that a demand need not be formal although it must be clear and unconditional:Financial Institutions Services Ltd v Negril Negril Holdings Ltd [2004] UKPC 40 at [40] and other cases, all referring to the judgment of Walker J inRe Colonial Financial Mortgage Investment & Guarantee Corporation Ltd(1905) SR NSW 6 at 9 in relation to an on demand guarantee:

“…. there must be a clear intimation that payment is required to constitute a demand; nothing more is necessary, and the word ‘demand’ need not be used; neither is the validity of a demand lessened by its being clothed in the language of politeness; it must be of a peremptory character and unconditional, but the nature of the language is immaterial provided it has this effect.”

39. The cases includedSlowikowska v Rogers [2021] EWHC 192 (Ch) (“Slowikowska”), in which it was held that an email to the company director/guarantor stating “you owe me” was a demand upon both the company and the guarantor. I am content to assume that UAE law would take the same approach to the requirement of a demand in the English language Guarantee Agreements. However, I am unable to agree that there was demand in this case.

40. I have made brief reference, at [26] above, to correspondence on which the Bank relied, and go to it in more detail. The correspondence in evidence began with an email on 17 December 2019 from Mr. Rajeev Bhatia to Mr. Shailesh Bhala of the Bank, referring to the cancellation of a meeting and continuing:

“As discussed, we have a temporary challenge on hand with receivables being stuck in our key export markets. This has stretched the cash flows.

We are working on a dual strategy of focused collection efforts and we as a family injecting additional funds into the business. We are working on this and we expect the funds to be mobilised imminently.

I request your cooperation in extension of the dues and I assure that we are fully committed to repaying the same at the earliest.”

41. Mr. Bhala replied on the same day. He said that Mr. Bhatia’s email “will not assist us in obtaining the extension requested from the risk team”, and listed things needed “to obtain internal approval”. He said that “the continuous overdue situation with FIM will affect the facility”, and that swift feedback was awaited “to obtain internal approval to hold the repayment cheque”. I infer that this was a reference to a cheque given as part of the security for the Facility.

42. A follow-up email from Mr. Bhala on 18 December 2019 asked that Mr. Bhatia “treat the [earlier email] on priority as we need to get the internal approvals to hold the cheques”. Mr. Bhatia replied on 21 December 2019, saying that “[m]y team is working in compiling the required data and I shall send you the same by midday tomorrow”.

43. Some of the materials were sent on the next day, 22 December 2019, Mr. Bhatia saying, “I’m working on getting additional equity into the company, I shall keep you updated on the further developments”. This was not well received. Within the hour, Mr. Bhala replied:

“Our email, conversation and text messages are very clear on the date upto [sic] when extension is requested.

Also I have highlighted its impact on the facility.

Please immediately provide us the date when the repayment will be made“.

44. After another reminder from Mr. Bhala, saying that “if we do not receive the feedback today, our operations team will send the cheques in tomorrow’s clearing”, late on 22 December 2019 Mr. Bhatia emailed with a payment plan in the terms, “We will settle 25% by 31 December 2019, another 25% by 7 January 2020 and the balance 50% by 15 January 2020”. There is then a gap in the correspondence, with another payment plan proposed on 2 January 2020, in the terms, “We will be paying…”. Mr. Bhala promptly replied that the plan was for the “outstanding which was due on 19 December 2019” and asking for a “consolidated repayment plan”.

45. A consolidated repayment plan was provided late on 2 January 2020, but there the correspondence in evidence ends: presumably, the risk team did not agree to an extension.

46. The Bank accepted that there was not an express call upon the Guarantee Agreements, or explicit reference to the separate obligations of the Guarantors as distinct from that of the Company. It submitted, however, that where the point of contact with the Company was through the directors who were the Guarantors, and it was a family business with funds to come from the family, the clear requirement of repayment was a demand for repayment under all obligations, both the Company’s obligation under the Facility Agreement and the Guarantors’ obligations under the Guarantee Agreements.

47. One difficulty is that the correspondence was with Mr. Rajeev Bhatia alone, but in any event, I do not think it can be seen as requiring repayment from the Guarantors as well as the Company. Mr. Rajeev Bhatia was writing as Managing Director of the Company, seeking an extension of the time for it to repay its indebtedness. Mr. Bhala was responding to that request and asking for information concerning the Company’s ability to repay to put before the risk team. The entire context was repayment by the Company and continuation of the Facility; and the threat was the presentation of the cheque, not demand on the Guarantors. There was nothing like a clear and unconditional requirement that the Guarantors make payment.


48. As a fallback, the Bank submitted that any “defect in procedure” in failing to serve a demand was waived by the contact of the Guarantors. FromStimson v Smith [1990] Ch 340 at 349 per Peter Gibson LJ and 354 per Tuckey LJ, it said that the requirement of a demand was a provision for the guarantor’s benefit which the guarantor could waive, and that inSlowikowskait was accepted (at [20]) that any defect in the communications to the director/ guarantor constituting a demand was waived by the conduct of the director/guarantor at the time in acting upon the communications in engaging with the creditor trying to agree on the terms of re-payment.

49. Again, this was an appeal to English law. No submissions were made on whether there is a doctrine of waiver under UAE law, or if so how it is given effect. This is not a matter of giving meaning to and applying the English language of the Guarantee Agreements, and in the absence of submissions in relation to UAE law I would not be prepared to find waiver according to English law in this application. But in any event, I do not think that waiver should be found.

50. I do not agree with the Bank’s reference to defect in procedure: demand is not procedural, but a necessary element in the Bank’s ability to bring its claim against the Guarantors. The Bank submitted that, with Mr. Rajeev Bhatia recognising the indebtedness and proffering re-payment plans for which the family, not just the Company, would provide funds, the Guarantors could not thereafter take what it described as the procedural objection of the absence of a conforming demand. However, the difficulty is the absence of a demand at all, not some formal defect in a clear requirement that the Guarantors make payment. Nor does the reference to family funds assist the Bank: the funds were to be injected into the business, that is, for payment by the Company, not by any individual, and from the global term “family” were not necessarily from the Guarantors. There was no recognition by the Guarantors of their liability as guarantors whereby demand was dispensed with.


51. Recalling that this is an application for immediate judgment, it is sufficient that for the reasons above there is at least a reasonable prospect of the Guarantors defending the claim against them in relation to their liability. The application must therefore be dismissed. However, conscious that it appears that the Guarantors are unlikely to participate at a trial if the Bank now takes the proceedings to trial, and that the same question of demand would then arise, I have given my reasons in more definite terms, in line with the “grasp the nettle” observation of Lewison J earlier cited and in this case with the decision adverse to the applicant for immediate judgment.

52. The Bank’s supplementary submissions referred to demands sent to the Guarantors on 24 February and 2 March 2022, after the commencement of the proceedings. The point of demand before action brought is that the creditor must have an accrued cause of action at the time of bringing the proceedings, and without demand it does not. It was not submitted that the demands in some manner rectified the absence of demand before action brought.


53. I order that the application for immediate judgment be dismissed.