England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		01/12/2016

Ms Sara Cockerill QC :

1. This is an application by the Defendants under CPR Part 11 for an order that the Court declines to exercise its jurisdiction to hear the claim or for an order that these proceedings be stayed.
2. The background to the case and to the application is set out in the witness statement of Mr Morriss served in support of the application. The First Claimant is a bank registered in the United Arab Emirates and the Second Claimant is the London branch of an Indian registered bank. They claim against the First, Second and Third Defendants under a Facility Agreement ("the Facility Agreement") dated 10 April 2008 which was amended and restated by an agreement dated 11 November 2009 ("the Amended Facility Agreement"). The Facility Agreement and the Amended Facility Agreement were both governed by English Law.
3. The First Defendant is a company incorporated in the United Arab Emirates and was the borrower under the Facility Agreement. The Second Defendant is a company incorporated in India and is the parent company of the First Defendant.
4. The loan encapsulated in the Facility Agreement and associated documents was for the purchasing of the vessel ADELEIDA, which was subsequently renamed DEVIGLORY I. The Third Defendant was the owner of the DEVIGLORY I.
5. The Fourth and Fifth Defendants are individuals resident in Mumbai, India, who are the directors of the First, Second and Third Defendants. On 11 April 2008, the Fourth and Fifth Defendants gave personal guarantees ("the Guarantees") guaranteeing the performance of the First Defendant's obligations under the Facility Agreement. The Guarantees were also governed by English Law.
6. The loan was drawn down on 14 April 2008. Payments commenced to be made under the Facility Agreement thereafter. However in 2010 the DEVIGLORY I was arrested following a collision in Bangladesh. That arrest, which proceeded under the Kolkata Admiralty jurisdiction, resulted in the judicial sale of the vessel later that same year. From 15 April 2011 the First Defendant ceased to make payments under the Amended Facility Agreement.
7. On 29 August 2012 the Claimants served an acceleration notice on the First Defendant demanding full payment of all outstanding sums under the Amended Facility Agreement.
8. In these present proceedings, which were commenced in February 2016, the following claims are advanced:

i) The First and Second Claimants claim as lenders against the First Defendant as borrower under the Amended Facility Agreement in the sum of US$15,640,000 plus accrued interest;

ii) The First and Second Claimants claim against the Second and Third Defendants as guarantors of the performance of the First Defendant under the Amended Facility Agreement;

iii) The Third Claimant claims against the Fourth and Fifth Defendants as Security Trustee under the Guarantees.

9. The Defendants' jurisdictional challenge falls into two parts. The first part relates to the service of the proceedings which was admittedly defective, and which the Defendants submit should result in a declaration that the Court does not have jurisdiction to hear the claim as set out in the Claim Form in these proceedings. The more complicated arguments relate to the existence of proceedings in India.

Defective service

10. Dealing first with the application based on defective service, the Amended Facility Agreement and the Guarantees both contained service provisions (clauses 37.2 and 24.3 respectively) providing that SH Process Agents Limited in London were appointed as the Defendants' agents for service in relation to any proceedings before the English Court. The current proceedings were purportedly served on them by a letter dated 29 February 2016 sent by special delivery to SH Process Agents. The letter appended one copy of the Claim Form and four original Response Packs. It is common ground that under CPR 6.3 each Defendant should have been served with a separate original Claim Form and Response pack.
11. While it was initially contended by Mr Curling of TLT in his witness statement that the proceedings were properly served, it was accepted by the date of the hearing that service was defective. Even if it might have been argued that the service provisions dispensed with the need for a separate copy of the Claim Form for each Defendant, it must be the case that this could only dispense with the need for anything over one copy per claim; and there are at least three claims under separate documents.
12. Three points were therefore deployed by the Claimants against the defective service point. First it was argued that a challenge to service was not one under CPR Part 11, and therefore the Part 11 challenge was not apt to question service. Secondly it was contended that the Acknowledgment of Service put in by the Defendants' solicitors operated as a waiver of any argument on service. Thirdly it was contended that if the defect could be challenged in this application, the defect was one which could be cured under CPR 3.10.
13. On the first two points it seems to me that the Defendants are correct. Although it was suggested for the Claimants that service could and should have been disputed by way of correspondence, that is clearly not practical, given the spectre of default judgments. The means which CPR offers to dispute service is via Part 11. This is reflected in paragraph 5.01 of Briggs, "Civil Jurisdiction and Judgments" (6th ed.) to which both parties referred for their different points:

"If it may be shown that service has not been properly made, it will be open to the defendant to dispute the jurisdiction and to ask the court to declare that it has no jurisdiction; it may be open to the claimant to ask the court to cure or overlook any shortcoming which may be regarded as an irregularity."

It also reflects both the structure of the CPR and the notes to Part 11 which indicate that any challenge to jurisdiction (including service) should proceed by way of Part 11 challenge. This position was recently confirmed by Popplewell J in IMS SA and others v Capital Oil and Gas [2016] EWHC 1956 (Comm).

14. That finding, it seems to me, effectively disposes of the Claimants' second point, waiver. While the Claimants relied on the decision of Mr Stephen Hofmeyr QC (sitting as a Deputy Judge of the High Court) in "The Conti Cartagena" [2014] 2 Lloyd's Rep 162 as supporting the proposition that an acknowledgment of service can operate as a waiver of service, there is an important distinction between that case and the present. That case was one where the acknowledgment was made before service had ever been effected and there therefore could be no dispute as to the effectiveness of service. Here there was a purported service and the acknowledgment of service filed plainly states that it is an acknowledgment for the purposes of contesting jurisdiction only. In those circumstances the acknowledgment cannot sensibly be read to operate as a waiver of defects in service which fall to be raised by way of the very jurisdictional challenge asserted.
15. This leaves only CPR 3.10, as Mr Watthey for the Claimants fairly acknowledged that this was not a case where CPR 6.16 could be prayed in aid. In support of the Claimants' submissions I was referred to the judgment of His Honour Judge Graham Wood QC in United Utilities Group PLC v Hart (Liverpool County Court, unreported, BAILII: [2015] EW Misc B48 (CC), 24 September 2015). That case concerned a question of whether purported defective service of a copy of the sealed version of the claim form can be cured by the court exercising discretion under any part of the CPR and where the defective service was held capable of being cured under CPR 3.10.
16. This case, as the Defendants correctly pointed out, was not on all fours with the current case. However it includes a very useful summary of the principles and recent authorities in the area, highlighting in particular Lord Brown's obiter dictum in Philips v Symes (No 3) [2008] 1 WLR 180 at [31] where in the context of a missing English language version of a claim form, he stated:

"It seems to me at least arguable that even without resort to rule 6.9 the court could simply order under paragraph (b) of rule 3.10 that the second and third defendants are to be regarded as properly served, certainly for the purposes of seisin. The "error of procedure" here was, of course, the omission of the English language claim form from the package of documents served: there was in this regard "a failure to comply with the rule" ( rule 7.5 ). But that, says paragraph (a) of rule 3.10 , "does not invalidate any step taken in the proceedings unless the court so orders"."

17. Judge Graham Wood QC also highlighted the careful analysis of the significance of that dictum by Popplewell J in Integral Petroleum SA v SCU Finanz AG [2014] EWHC 702 (Comm). Together these cases indicate the following:

i) Lord Brown's dictum can be taken as an indication of the view of the Judicial Committee that CPR 3.10 is a beneficial provision to be given very wide effect;

ii) This enables it to be used beneficially where a defect has had no prejudicial effect on the other party and prevents the triumph of form over substance;

iii) The key in considering whether a defect can be cured under this provision is to analyse whether there is "an error of procedure" which might otherwise invalidate a step taken in the proceedings. Thus the benefit of CPR 3.10 will be less easy to obtain where there has been no attempt at a procedural step (eg a complete failure of service) or the step taken is not permitted by or within the rules at all.

18. Is this therefore a case where CPR 3.10 can operate? There is no suggestion that the defect in service has had a prejudicial effect. The Defendants were effectively informed by the defective attempt at service that proceedings had been commenced against them. Nor was it argued that there was any limitation issue. If I were to accede to the Defendants' application, even though the validity of the Claim Form has now expired there would be nothing preventing the Claimants from issuing another Claim Form and serving it properly. This would, therefore, be a triumph of form over substance.
19. Further, while the error relates to originating process (which Popplewell J at [37] indicated should attract a more cautious approach) this is a case where a procedural step was taken defectively rather than omitted or performed directly contrary to a rule. So although on one analysis one might say that service on some of the Defendants was omitted in the absence of sufficient Claim Forms, the covering letter makes clear that service was being attempted to be effected against all the Defendants. Effectively some of the procedural boxes were ticked, but others were not. This therefore seems to me to be a case where the power under CPR 3.10 can and should be exercised. Given the fact that no limitation point arises, and the effect of the order will be to validate the steps taken before the Claim Form expired, I do not consider that the expiry of the Claim Form stands in the way of this order being made.
20. I also note that this result is consistent with the law as it existed before the CPR: in The Goldean Mariner [1990] 2 Lloyd's Rep. 215 (cited in passing by Popplewell J and also discussed by Lord Brown) four defendants received the wrong writs, while the fifth received no writ, only an acknowledgment of service form. These errors were all treated as capable of cure under RSC rule 2(1). It would be odd if the CPR, with its greater emphasis on substance, should produce a less favourable result to an erring claimant than would have been obtained under the RSC.

The proceedings in India

21. Once the question of defective service is dealt with, the more substantial arguments concern the question of whether this court should decline jurisdiction because of the existence of proceedings in India. It is common ground that the burden lies on the Defendants to show that the court should not exercise jurisdiction.
22. The Defendants' case proceeds under three heads:

i) First it is said that the Claimants have taken proceedings in India within the meaning of the jurisdiction clauses, that the effect is an election in favour of Indian jurisdiction for the determination of the claims and that this is to be treated as rendering it an Indian jurisdiction clause and there should be a stay on Donohue v Armco principles.

ii) Second it is argued that if I were to agree that the Claimants took proceedings in India and either:

a) The Claimants are only saved from the first issue by the provision in the Facility Agreement of a clause permitting of parallel proceedings; or

b) I consider that the proceedings, although commenced by the Claimants, did not amount to an election in favour of India;

I should then conclude that India is the forum conveniens.

iii) Thirdly if I conclude that the Defendants, not the Claimants, commenced the Indian proceedings, I should nonetheless stay this action on what may be broadly termed "case management" grounds.

23. Before considering these points a summary of the relevant facts relating to the Indian proceedings is necessary.
24. The proceedings arise out of notices served under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 ("the SARFAESI Act"). This provides at section 13 of the Act:

"Enforcement of Security Interest:

(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of this Act.

(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under subsection. …

(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:--

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset:

PROVIDED that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:

PROVIDED FURTHER that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt.

(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;

(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt….

(10). Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower."

25. Section 17 of the Act provides:

"Appeal:

(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken …

(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the business to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditors as invalid and restore the possession of the secured assets to the borrower or restore the management of the business to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13."

26. On 29 August 2012 the Claimants served a section 13(2) SARFAESI Act notice on the First Defendant as borrower, and complementary notices on the other Defendants. These notices asserted that the First Defendant's loan account "has been classified as non-performing asset on 30.09.2011 in accordance with the Reserve Bank of India directives and guidelines" and in paragraph 5 stated that "failing payment of the above amount with interest till the date of payment, we shall be free to exercise all or any of the rights under sub­ section (4) of section 13 of the said Act".
27. The notices against the First Defendant listed as Primary Securities available under the Facility pledges and charges over the Borrower's shares and those of the Third Defendant, over the Borrower's cash flows and revenues, and over the Vessel and its receivables. It also listed as Secondary Securities mortgages over four flats in Mumbai ("the Flats") and the personal guarantees of the Fourth and Fifth Defendants. The notices against the remaining Defendants listed only the mortgages over the Flats.
28. Within the 60 day notice period the Defendants made complaint as to the propriety of proceeding under this route, and correspondence between the parties followed. On 13 March 2013 another notice was served on all the Defendants purporting to exercise powers under section 13(4) of the SARFAESI Act and calling for delivery up of the Flats.
29. Following this notice the Defendants applied to the Mumbai High Court to restrain the Claimants from enforcing their security. On 2 April 2013 the Mumbai High Court ordered that the Claimants should stop any enforcement steps and that the Defendants should refer the question of the Claimants' jurisdiction to invoke section 13 of the SARFAESI Act to the Mumbai Debt Recovery Tribunal ("the DRT") on or before 16 April 2013.
30. The Defendants made a Securitisation Application to the DRT under section 17 of the SARFAESI Act. Those proceedings are still ongoing. Following adjournments in April and July of this year a hearing is scheduled for 9 December 2016.
31. In those proceedings, both parties lodged lengthy affidavits which are not entirely easy to follow. However certain salient points emerge.
32. Firstly, there was a question as to whether the English law and jurisdiction provisions in the Amended Facility Agreement and Guarantees rendered the SARFAESI Act procedure inapplicable. The Defendants' application to the DRT was made subject to a reservation as to the DRT's jurisdiction. Other jurisdictional/threshold arguments were also raised. An issue was raised as to whether the claims fell within the admiralty exception in the SARFAESI Act and another as to the validity of the mortgages. There was also an argument as to proper service of some of the Defendants and arguments as to the true ownership of the Flats.
33. Secondly, in relatively brief passages in the documentation there is mention of a substantive defence to the Claimants' claims based on alleged wrongdoing by the Claimants in the context of the arrest proceedings. In essence at (W) of the Grounds the Defendants say that the Claimants were wrongfully inactive during the arrest process and had they been more active, the Vessel would either not have been forcibly sold or would have realised a greater sum on sale, and that by reason of this they are discharged from their obligations to the Claimants. This is used to found an argument at (EE) of the Grounds that the notices are therefore bad in law. In reply to this application the Claimants join issue on the various jurisdictional/threshold points. They also allege a fraud on the part of the Defendants with regard to the sale proceeds.
34. There was an issue between the parties in argument as to whether the DRT proceedings related to the Flats only, or extended to all the securities in the original notice to the First Defendant. If, as the Claimants suggested, it was the former, it appears likely that the amounts which would be realised by enforcement would fall some way short of the claim. If, as the Defendants contended, the proceedings related to all the securities, it would not be possible to conclude on the evidence before me that the proceedings in India could not result in a full recovery.
35. On this it appears to be the case that a s. 13(2) notice has been served on the First Defendant in relation to all securities but it is only in relation to the Flats that enforcement steps had been commenced under s. 13(4) prior to the commencement of the proceedings in the DRT. The step needed to commence enforcement against all the assets has been taken (see further below); but the only steps taken to actually enforce relate to the Flats. As the position lies somewhere between the parties' submissions, I do not therefore regard this as a point to which much weight can be given.
36. Turning then to the issues in the light of these facts, there are two key issues involved in the Defendants' first and second points. The first is whether the SARFAESI proceedings are proceedings by the Claimants within the meaning of the jurisdiction clauses (which question involves a consideration of the nature of those proceedings) and secondly whether merits are in issue in the SARFAESI proceedings so as to render those proceedings effectively substantively parallel proceedings.
37. On the first point there is conflicting evidence from the experts. Starting from a base of common ground the experts come to rather different conclusions.
38. It is common ground that:

i) The SARFAESI procedure is a statutory procedure and that it was introduced because the standard procedure for debt recovery, before the Debt Recovery Tribunal under the Recovery of Debts and Bankruptcy Act 1993 ("the RDDB Act") was subject to excessively long delays.

ii) In essence the SARFAESI Act procedure was designed to bypass DRT proceedings; it was intended as a self-help enforcement measure.

iii) The SARFAESI process is triggered by a notice from the claiming bank under s. 13(2) and unless challenged/appealed leads to the bank being entitled to sell, transfer or assign the security under s.13(4).

iv) Unless a challenge/appeal is made under section 17 of the Act no judicial process is involved.

v) There is a procedure for actual debt recovery actions in DRT under the RDDB Act which can be taken alongside SARFAESI proceedings (although permission is needed to start SARFAESI proceedings once DRT proceedings are under way).

39. However Mr Pandya for the Defendants says that issuing a s. 13(2) SARFAESI notice is tantamount to commencing debt recovery proceedings and the authorised officer serving notice acts in a quasi-judicial fashion, whereas Mr Kini insists that the only judicial proceedings are those brought by the borrowers – which may never occur. The SARFAESI process itself, he says, is a non-judicial process.
40. On the question of the nature of the review involved in a s. 17 SARFAESI review/appeal there was again a divergence on the evidence. Mr Pandya's position was that the s. 17 process is a true appeal and that the DRT can and will consider arguments by the borrower that there is no debt due or that the account has been wrongly classified as a non-performing asset. For his part Mr Kini stated that the nature of the review is simply as to the propriety of using the section 13 procedure; it does not involve an adjudication on or a determination of the validity of the debt or defences to the debt.
41. I was referred by the parties in the course of argument to two authorities which were cited by the experts and were said to assist on this issue. In the first, Ashok Sawmills v Indian Overseas Bank 2009 LawSuit (SC) 1298, the issue for the court was whether a s. 17 review could be made after the time period prescribed by the Act had elapsed and if so what arguments could be advanced – in particular as to events after the s. 13(4) notice had been served. There the recipient of the notice did not respond to it at all until after possession of assets had been taken under s. 13(4). Mr Byam-Cook for the Defendants submitted that the court, in rejecting the submissions of the appellant bank at paragraphs 22-24 of the judgment, imported an acceptance of propositions contrary to those advanced by the Bank earlier in the judgment at paragraphs [7] and [8] of the judgment – namely that the review process could entertain a debate as to whether the debt had become due and that the scope of the inquiry before the DRT is not confined to the action taken by the secured creditor.
42. On this basis he contended the s. 17 appeal was not concerned solely with the propriety of the s. 13 steps and there were no fetters on the DRT review. This, he said, reflected the way proceedings were in fact being conducted in this case.
43. Mr Watthey for the Claimants suggested that this summary did not fairly reflect the findings of the case. He pointed out that the section of the judgment at paragraphs 7-8 recited submissions which were not then germane to the central issue. The finding of the court was confined to a finding that the DRT did have jurisdiction to deal with a post s. 13(4) situation and did not therefore constitute a rejection of the argument in this case.
44. So far as the analysis of this case is concerned it seems to me that it was concerned with a rather different issue – the focus being (as the Claimants contend) on the ability to challenge late, and to refer to events after the service of the notice. The court was not really being asked to grapple with the question of the nature of the review process in a normal case. However having said that, it appears to me to be implicit in [7] of the judgment that a debate on whether the debt is due may arise under s. 17. In that passage Altamas Kabir J summarised the Bank's submission thus: "[once possession is taken] …the Tribunal could not entertain a debate on the question whether the debt had become due or not because the SARFAESI Act proceeds on the basis that the liability is crystallised and the debt becomes due the moment action under section 13(4) is taken…".
45. The Claimants placed greater reliance on the case of Transcore v Union of India (SC 29 November 2006) as explaining the non-adjudicatory nature of the process, especially at pages 23-25 of the judgment. In particular they relied upon the passages which state: "The very object of section 13 of [SARFAESI] Act is recovery by non-adjudicatory process … [the] Act proceeds on the basis that security interest … needs to be enforced expeditiously without the intervention of the court/tribunal ….[the] Act states that the enforcement could take place by non-adjudicatory process…" and "After filing of an OA [in the DRT] the bank can invoke the [SARFAESI] Act with or without the permission of the DRT… Withdrawal of the OA pending before the DRT under the DRT Act is not a precondition for taking recourse to the SARFAESI Act. It is for the Bank to exercise its discretion as to cases in which it may apply for leave and cases in which they may not apply for leave to withdraw..".
46. It seems to me that there is force in this submission. There are also a number of other passages in the judgment which echo the expert evidence summarised above. For example:

i) At p. 6 of the judgment the Court notes: "The [RDDB] Act is a complete Code by itself so far as recovery of debt is concerned. … It provides for adjudication of disputes so far as recovery of the debt is concerned."

ii) At p. 8 of the judgment the court stated: "Section 13 [of the SARFAESI Act] deals with enforcement of security interest, therefore the remedies of enforcement of security interest under the [SARFAESI] Act and the DRT Act are complementary to each other. There is no inherent or implied inconsistency between these two remedies under the two different Acts. Therefore the doctrine of election has no application in this case."

iii) At p. 10 "the notice under section 13(2) in effect operates as an attachment/injunction restraining the borrower from disposing of the secured assets and therefore such a notice … is not a mere show cause notice but it is an action taken under the provision of the [SARFAESI] Act."

iv) At p 11: "Under section 17(2) the DRT is required to consider whether any of the measures referred to in section 13(4) taken by the secured creditor are not in accordance with the [SARFAESI] Act."

47. On the two points in issue I have reached the following conclusions in the light of the argument, the expert evidence and the Indian authorities.
48. The question of the nature of the determination made by the DRT is a question which has an impact on the question which logically comes first in these proceedings – that of who has commenced proceedings in India. It is clear that the first step in the SARFAESI process was taken by the Claimants, but the first step in placing the matter before the DRT was that of the Defendants. Which of these actions was the "hallmark" should therefore be considered against the background of the nature of the proceedings.
49. On this question it seems to me that the common ground between the experts points more strongly in favour of the Claimants' approach. Whatever the position on the ability of the DRT under the appeals/review process to consider points of substance, it seems that the proceedings are not classic debt collecting proceedings which naturally include determination of liability. Such proceedings would be brought directly in the DRT under the original RDDB Act process.
50. I accept the point made by the Claimants (which was not disputed by the Defendants) that the original step in the process is a form of enforcement self- help and does not constitute suing in the Indian Courts.
51. It also appears to me that the evidence (including that of Mr Pandya at paragraph 19 of his statement) only goes so far as to say that questions of liability may arise and be considered so long as they are relevant to the challenge raised under section 17. This is reflected in the wording of section 17(2) of the Act, which defines the review thus: "… whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder".
52. This point naturally links to the question of whether these specific SARFAESI proceedings will determine the underlying merits of the claims. On this, the Defendants contend that the parties' submissions on the Securitisation Application reflect a recognition on their part that the DRT will consider the underlying merits of the claims. The Defendants have set out in their submissions a substantive defence to the claims (the argument as to the sale of the Vessel in 2011 and whether the sale and the proceeds thereof were negatively affected by wrongful and negligent conduct on the part of the Claimants). They also rely on the fact that, in response, the Claimants have contested those arguments and even gone so far as to accuse the Defendants of perpetrating a fraud.
53. The Claimants, for their part, says that most of the grounds raised are plainly jurisdictional and even the one "merits" ground is still only dealt with as part of the jurisdictional dispute. It was submitted that there should in fact be no finding on the merits argument as to do so would go beyond the statutory remit under s.17. Despite the limited apparent crossover there are, the Claimants say, effectively two different disputes in the different jurisdictions.
54. Overall the conclusion to which I come on the nature of the proceedings is that the balance of the evidence before me indicates that the SARFAESI Act proceedings before the DRT partake of the juridical nature of the original jurisdiction invoked under the SARFAESI Act. They are therefore limited enforcement proceedings and are not substantive debt collection proceedings. The question of the extent to which merits arguments may be raised does not appear to have been the subject of clarification in the Indian cases to date. However from the materials available it seems that while some aspects of the merits may come into play in the course of a challenge/appeal under section 17, this does not affect the nature of the proceedings. Further the issues which can be raised in this respect should go only to the basis on which the jurisdiction was invoked. I am reinforced in this conclusion by the fact that the Defendants' contention that the DRT "can and will decide whether the debts claimed … are due and owing" does not reflect the wording of the Act at s. 17.
55. Returning, against that background, to the question of invocation of jurisdiction, the limited nature of the proceedings ties in with the fact that there is no requirement to proceed under s. 17 at all. The pursuit of a s. 17 challenge is a choice on the part of the debtor against whom enforcement is sought under the SARFAESI procedure. As the wording of the Act explains - and the facts of Ashok Sawmills also makes plain - a SARFAESI process may proceed to a conclusion without the DRT or the judicial system ever being engaged. In those circumstances I consider that the correct analysis is that the involvement of the Indian Courts arose only with the DRT process under s. 17 in this case and was therefore invoked by the Defendants.
56. This being the case, the questions of election and forum conveniens do not arise. However for completeness I should indicate both the ambit of the arguments and the conclusions to which I have come on these points.
57. On election, it is necessary to consider Clause 37.1 of the Facility Agreement, which provides that:

"(1) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a "Dispute").

(2) 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.

(3) This Clause 37.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions."

58. It is common ground that clause 24 of the Guarantees, which confers non-exclusive jurisdiction on the courts of England but stipulate that this provision is for the benefit of the Banks only and that they may take proceedings in any other courts with jurisdiction, is to similar effect though less favourable to the Claimants. Argument therefore proceeded on the basis of Clause 37.
59. The Defendants say that by the SARFAESI proceedings the Claimants effectively commenced and pursued recovery proceedings in India and have thereby irrevocably elected in favour of Indian jurisdiction. In support of the contention that there is an election aside from the fact of the proceedings, and the substantive elements to the proceedings, they rely on the fact that the Claimants have resisted arguments in those proceedings that the SARFAESI Act does not apply by relying on their contractual option to sue in India.
60. The Defendants say that on its true construction the clause gives an option which can only be exercised once. The nature of a clause of this type is that once the creditor institution has exercised that option away from English jurisdiction and in favour of the jurisdiction of the foreign court, it has effectively made an election in favour of the jurisdiction of the foreign court.
61. They rely in particular on two authorities. The first is Continental Bank NA v Aeakos [1994] 1 WLR 588, and in particular the passage at 594E, where the clause containing a submission by the borrowers coupled with a reservation of a right on the part of the Bank to sue in the courts of any other country claiming or having jurisdiction in respect of the claim was characterised as an option in favour of the Bank.
62. The second authority on which the Defendants rely is Law Debenture v Elektrim [2005] 2 Lloyd's Rep 755, a case of an arbitration agreement with a unilateral option to litigate. The relevant clause in that case provided:

"29.7 Notwithstanding Clause 29.2, for the exclusive benefit of [A], [B and C] hereby agree that [A] shall have the exclusive right, at their option, to apply to the courts of England, who shall have non-exclusive jurisdiction to settle any disputes which may arise out of or in connection with these presents … and that accordingly any suit, action or proceedings … arising out of or in connection with any of the above may be brought in such courts.…"

63. At paragraph 42 Mann J summarised its effect thus:

"Thus clause 29.7 has the effect of giving Law Debenture an option which the Elektrim parties do not have. They may litigate, but the Elektrim parties can be forced to arbitrate (unless litigation is started, in which case they can counterclaim). Law Debenture cannot be forced to arbitrate if it wishes to commence its own proceedings covering the same subject matter. I have difficulty in seeing any arguable limits, let alone any substantive limits, on the rights of Law Debenture in that respect. The one limit that probably exists is that Law Debenture cannot blow hot and cold, as Mr Glick accepted. If Law Debenture starts an arbitration it would have waived its right (or option) to go by way of litigation. By the same token, if it participates sufficiently in an arbitration, it may well be held to have waived its rights to exercise its option. Subject to that, it has its clear rights."

64. The Defendants submit that this clause is closely analogous to the clause in the present case and that the language of election used in that case is equally applicable here; the beneficiary of the option cannot "blow hot and cold". Once it has exercised the option, it must stick with it.
65. It follows, they say, that the Claimants exercised their option, and thus elected, in favour of the jurisdiction of the Indian Courts. The effect of that election is as if an Indian jurisdiction agreement had been written in the Facility Agreement from the outset: Reardon Smith v Ministry of Agriculture [1962] 1 QB 42, 115 where the effect of the nomination of one port was to effectively strike out all the other nominated ports.
66. So far as the clause is concerned they say that clause 37.1(3) ("To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions") does not avail the Claimants because parallel proceedings are not "allowed by law" if they are precluded by an election.
67. Against this the Claimants say that (putting aside the question of who commenced proceedings) election requires a communication or action which is clear and decisive and that this cannot be demonstrated in the present case. In particular they submit that they could sue substantively in India without that constituting an election under the clause and that the Defendants' approach gives insufficient weight to clause 37.1(3).
68. That provision, they say, specifically and in quite wide terms preserves the right to take concurrent proceedings – a critical distinction from both the Aekos and Elektrim cases, where there was no mention of concurrent proceedings in the clauses which the Court had to consider. In this connection they note that as a matter of English law, there is no bar to parallel proceedings; they are "allowed by law". As Briggs (§4.27) puts it:

"If the claimant brings the same claim in two courts he may be required to elect to pursue only one, though this point is very much weaker if the parties have specifically agreed in advance that no objection will be taken to parallel litigation".

69. The Claimants submit that the Defendants' reading of the clause as regards "allowed by law" and election would effectively denude the clause of meaning.
70. They also point out that clauses permitting of parallel proceedings are not uncommon in banking transactions, and cite an example: Royal Bank of Canada v. Cooperative Centrale Raiffeisen Boerenleenbank [2003] EWCA Civ 7, [2004] 1 Lloyd's Rep 471. In that case, which concerned fully substantively parallel proceedings, there was a bilateral agreement to submit to the jurisdiction of the English Courts accompanied by a provision that: "Nothing in this agreement precludes either party from bringing 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."
71. In relation to that case, the Defendants submit there is no true parallel since the case was not an election case and the clause was not limited to a freedom "to the extent allowed by law" as is the case here.
72. Even had I concluded that the Claimants and not the Defendants were the party who had commenced proceedings in the Indian Courts I would not have found that there was an election in favour of India so as to deprive the Claimants of their contractual right to bring proceedings in England (or elsewhere). I do not consider that the taking of proceedings in India alone or even taken together with the substantive argument deployed in the DRT proceedings and the assertion of a right to sue in India constituted an election in favour of the Indian Courts for the following reasons.
73. Firstly election requires a clear and unequivocal communication by the party making the election (whether by words or deeds). The original invocation of stage 1 of the SARFAESI process could not sensibly be regarded as this; a fact tacitly acknowledged by the Defendants who did not seek to argue the point on the basis of the commencement of those proceedings alone, but rather on a "rolled up" package of behaviour/action.
74. Secondly discerning an election from a rolled up package of behaviours itself offers considerable difficulties in terms of making out the unequivocal communication required. There may be cases where this is possible. In the present case Mr Byam-Cook was not able to point to any specific communication where he said the line was crossed. What he relied on was essentially an accretion of actions: invoking SARFAESI, combined with relying on the right to invoke Indian jurisdiction, combined with the substantive content to the proceedings. On the face of it these do not easily constitute the material of an election, even if there had been no complicating factor in the last provision of the jurisdiction clause.
75. However here the language of the jurisdiction clause did present a considerable further difficulty in the election analysis. On its face this clause gave the Claimants the clear right to pursue multiple proceedings in more than one jurisdiction – a provision which is not uncommon in finance contracts to facilitate enforcement. Any election would therefore have to be one to waive the benefit of this clause.
76. While the Defendants' argument that "allowed by law" meant that if there was an election, further proceedings were not allowed by law was ingenious, it seemed to me to be a circular argument. The purpose of the clause was to permit multiple proceedings. If simply pursuing them could amount to an election, the clause would be denuded of meaning. I therefore reject this approach. In fact it seems to me that this point ultimately reinforces the points made above about the need for clarity. An election might be possible, but in the face of the clause it would need to be very clear, to ensure that the person making it was abandoning its right to rely on the benefits of the clause.
77. Before considering the arguments on forum conveniens however I should note that while this case might appear to be one where Article 25 of Brussels I Regulation applied and the court therefore had no power to decline jurisdiction on the basis of forum conveniens arguments (see Popplewell J in IMS v Capital Oil (supra) at [44]) this was not a contention which was advanced on behalf of the Claimants. The Defendants submitted that service in this case on the process agents was service under the inherent jurisdiction of the Court, and that Article 6 therefore applied, with the corollary that the Court retained a discretion to stay its proceedings on forum conveniens grounds (see Briggs paragraph 2.309). This proposition was not disputed. The commentary on Soc Banque Privée Edmond de Rothschild Europe v. X Cass I civ, 26 September 2012, [2013] ILPr 181 at [2013] CLJ 24 was briefly alluded to but not explored.
78. The point is however not significant because without an election the arguments for forum conveniens do not bear scrutiny.
79. As always when forum conveniens is in issue the burden is on the party disputing jurisdiction to show that there is another forum which is clearly and distinctly more appropriate for the resolution of this dispute. This was common ground.
80. On this argument the Defendants rely on a number of factors as suggesting India as the clear and distinct forum conveniens: (i) the fact that the parties have both submitted to the proceedings before the Indian Debts Recovery Tribunal which they say are due to conclude soon, (ii) the fact that the Fourth and Fifth Defendants, who are also the directors and thus legal representatives of the First, Second and Third Defendants, live in India, the Third Claimant is an Indian bank and the Claimants' representatives are also likely to be based in India, and (iii) the Defendants' defence to the claims is based on the judicial arrest and sale of the vessel by the High Court of Calcutta and so will focus on matters occurring in India and details of Indian Court proceedings .
81. The Claimants on their side pray in aid the cases concerning the effect of a jurisdiction clause on the forum conveniens analysis. In particular they cited Marubeni Hong Kong v Mongolian Government [2002] 2 All ER (Comm) 873, where at [63] Aikens J held:

" …an agreement making England either the exclusive forum or an agreed forum for the resolution of disputes relating to the contract creates a strong prima facie case that England is the appropriate forum and so is the proper place to try the claim. The cases hold that this principle applies whether the jurisdiction clause is an exclusive or non-exclusive one. See: S & W Beresford Plc v New Hampshire Insurance co [1990] 1 Lloyd's Rep 254 at 463 per Hobhouse J; British Aerospace Plc v Dee Howard Co [1993] 1 Lloyd's Rep 368 at 375 to 377 per Waller J, Mercury Communications Ltd v Communications Telesystems International [1999] 2 All ER (Comm) 33 at 41 to 42 per Moore-Bick J; JP Morgan Securities Asia Private v Malaysian Newsprint Industries Sdn. Bhd [2001] 1 Lloyd's Rep 41 at paragraphs 41 to 54"

82. In such cases they suggest "strong reason" very probably involving some unforeseen factor will have to be shown to overcome the prima facie case in favour of English jurisdiction. (See Marubeni [64-5]).
83. The Defendants suggest that Marubeni is no true analogy as the discussion arose in the context of a service out argument rather than a forum non conveniens challenge and that the peculiarities of this case, in particular the existence of well advanced parallel proceedings drawing to a close demand and require a stay.
84. Attractively as the case was put by Mr Byam-Cook, it does not however meet up with the test. The distinction which he draws with the Marubeni line of authorities is not one which is of much assistance to the Defendants in that the distinction between the two is that the burden is on the party seeking a stay to satisfy the court that the action should be stayed (here, that India is clearly the most convenient forum) rather than on the claimant to show that England is the appropriate forum, as would be the case if service out were a matter of discretion (See Moore-Bick J in Mercury).
85. This is a case where it cannot be said that India is clearly the most appropriate forum for the parties' disputes to be determined. There are a number of factors which come together to compel this conclusion. Amongst them is the conclusion which I have already reached above, that there are no comparable parallel proceedings in India; the issues in the SARFAESI dispute focus on the security and while they may overlap with merits issues the fact remains that those proceedings are not genuine debt recovery proceedings on the claim. The existence of the jurisdiction clauses in favour of this Court is also a significant factor, especially when teamed with English Law provisions in the Amended Facility Agreement and the Guarantees.
86. This leaves only what has been referred to as the "case management stay". The Defendants submit that it remains open to the Court to stay the English proceedings on case management grounds and that the Court should do so in this case given the extended duration of the Indian proceedings, the fact that they are approaching their conclusion and the Claimants' extensive and active participation in them.
87. In support of this argument the Defendants rely on Standard Chartered Bank v Independent Power Tanzania [2016] 2 Lloyd's Rep 25, at [43] where Longmore LJ stated that such a stay might be ordered in:

""rare and compelling cases" particularly if such a stay were to promote (as in that case it did) an orderly process of litigation. Indeed the example given by Waller J in the British Aerospace case of large sums being spent and a case being nearly ready for trial in one jurisdiction perhaps justifying a stay, even when there is a non-exclusive jurisdiction clause, may be more appropriately viewed as a case management stay rather than a forum non conveniens stay."

88. The problem with this argument is the one of satisfying the court that this is one of the "rare and compelling cases" where the exercise of the power is appropriate. In this connection it is perhaps noteworthy that the Defendants did not seek to say that the present case was on all fours with either of the cases cited or the British Aerospace example. Thus while (as I have indicated above) I do not accept that it is necessarily the case, as the Claimants suggested, that the SARFAESI proceedings decision could be characterised as a partial determination relating to a small amount of the debt I do not consider that this high hurdle has been met. Indeed in circumstances where I have made the findings which I have made as to the nature of the SARFAESI Act proceedings, it would be hard to do so.
89. Accordingly for these reasons I decline to grant the relief sought and dismiss the Defendants' application.