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International Reinsurance And Insurance Consultancy Services Pvt. Ltd. v/s Jenner Fenton Slade Limited

    NOTICE OF MOTION NO.3273 OF 2002 IN SUIT NO.3822 OF 2002

    Decided On, 22 January 2003

    At, High Court of Judicature at Bombay


    E.P. Bharucha with Z A. Kamdin instructed by Crawford Bayley and Co. for plaintiffs. Dr. Virendra Tulzapurkar with Ravi Kadam, K.A. Sampat and H.N. Tha instructed by Thakore Jariwala and Associates for defendants.

Judgment Text


The plaintiffs have filed the present notice of motion for the following interim reliefs during the pendency and disposal of the main suit.

(a) that pending the hearing and final disposal of the suit the defendant, its servant or agents whatsoever be restrained by an order and injunction of this Hon'ble Court from commencing and/or filing and or proceeding with any suit/proceeding against the plaintiff in any foreign court in respect of the reinsurance contracts arranged and placed by the defendant on behalf of the United Indian Insurance Co. Ltd. and/or retrocession contracts arranged and placed by the defendant on behalf of the direct/original reinsurers relating to the insurance cover granted by the United India Insurance Co. Ltd. in respect of the Essar Refinery Project and/or to be restrained from joining the plaintiff as a co-defendant in any suit/proceedings filed against the defendant by any third party in any foreign court in respect of the same.

2.The plaintiffs have in the main suit sought for following two reliefs, in addition to the above reliefs which they are seeking by way of interim orders. In support of the notice of motion, the plaintiffs have filed an affidavit of one Shri Poncha, the Executive Director and Chairman of the plaintiffs. The affiant has dealt with the facts as averred in the plaint for the purpose of seeking interim reliefs in the present notice of motion. He has tried to set out the whole background of the transaction of the business dealing between the plaintiffs and the defendants. The defendants have filed their limited affidavit in reply to oppose the interim reliefs. The plaintiffs have filed their rejoinder to the said affidavit. There are two further affidavits both dated 6th January 2003 filed on behalf of the plaintiffs.

3.The plaintiffs are a private limited company registered under the Companies Act, 1956. Its business appears to be that of rendering consultancy services in respect of insurance and re-insurance relating to requirement of risks emanating from India. The plaintiffs also claim to work with more than one overseas associates, including the present defendants which is a company incorporated under the laws of the United Kingdom having its office in London. The defendants appear to act as a global broker for insurance and re-insurance business and were appear to have been engaged in placing the re-insurance contracts on behalf of and at the instance of Indian insurance company. The defendants had appointed the plaintiffs, as consultants as per the terms of the appointment letter dated 15th April 1993 in respect of the business of re-insurance on the agreed financial terms between the parties.

4.It appears that the defendants were purchased by AON Corporation, a company incorporated in the United States. It, however, appears that the defendants were permitted to continue to operate under their own name.

5.It appears that a company known as Essar Oil Limited had proposed to ensure its oil refinery in the State of Gujarat insured through United India Insurance Co. Ltd. (Both the parties would be referred to hereinafter as Essar and United India). It further appears that due to the complexity and huge values under the insurance policies, and the very limited capacity for risk retention in India, the United India wanted to re-insure the said insurance of Essar Project in the overseas market. The said United India engaged the defendants to render the services as an international broker. The defendants were one of such broker selected. The defendants in turn appear to have appointed the plaintiffs as their local Indian consultant to advice them in respect of Essar Refinery Project. It further appears that with a view to advice the reinsurers of the United India in respect of the said project, the defendants required certain advice and information from time to time to enable the defendants to advice the re-insurers from time to time. According to the plaintiffs, they had rendered the whole information to the defendants (sic: plaintiffs) from time to time in respect of the said project. The plaintiffs have referred to several such documents and letters exchanged between the plaintiffs and the defendants. According to the plaintiffs, they had fully discharged their duties under the contract and had furnished all and every information which they gathered under the instructions from the defendants. To briefly state, there appears to have arisen a litigation between the re-insurers and the defendants. The re-insurers have sued the defendants for not advising them properly. According to the re-insurers they had acted on the basis of the information given by the defendants to them, which according to the former was not correct and proper and, therefore, they sustained damage and loss. Since the defendants were sued at London by the re-insurers, the defendants in turn appear to have filed a suit in the same court in London against the present plaintiffs. In that suit, the defendants have alleged professional negligence on the part of the present plaintiffs and, therefore, they have prayed for damages to be paid by the plaintiffs at London.

The plaintiffs have, therefore, approached this court for an injunction against the present defendants from proceedings with the said suit in London. According to the plaintiffs, they had furnished full information in respect of the project and had advised the defendants properly and that there was no professional negligence on their part. The plaintiffs have further pleaded that they had no relation or concern with the business or transaction between the defendants and their retrocessors (re-insurers) who grant re-insurance cover to original/direct re-insurers. The plaintiffs have further very strongly pleaded that they were not privy to the contracts between the defendants and the retrocessors who might have acted on the basis of the advise given by the defendants. According to the plaintiffs, they had furnished all the details required by the defendants from time to time in respect of Essar project. The plaintiffs have denied the charge of professional negligence on their part and they have further pointed out that the information in respect of the seawater intake was already in the schedule of the information furnished by them to the defendants. The plaintiffs have blamed the defendants for not having carefully gone through the letters. The plaintiffs have blamed the defendants for their omission to read the letters carefully. According to the plaintiffs, if the defendants were sued by the retrocessors, it is for them to meet that case and the plaintiffs have no concern of whatsoever nature in the said transaction. The plaintiffs have specifically relied on the fax dated 3rd April 1996 which clearly sets out the list of works covered by the insurance including the seawater intake and that the plaintiffs were not at all involved in any contracts of retrocession which the defendants had undertaken. They have disowned wholly any liability for acts of commission or omission on the part of the defendants towards the re-insurers and the retrocessors.

The plaintiffs have, therefore, prayed for a mandatory injunction against the defendants from proceeding with the said suit at London against the plaintiffs. The plaintiffs have pleaded that they are small company carrying on the business in India and abroad and if they are made to face the litigation at London, they would have to incur crushing cost for no fault of theirs. According to the plaintiffs, neither the defendants nor the retrocessors are required to pay anything under the cover of the insurance policy to Essar Project. The plaintiffs have further submitted that the suit filed by the defendants in London court is not only frivolous but premature.

6.In comparison with the defendants, the plaintiffs have pointed out that they are very small company employing 10 employees while the defendants are a multi-national company employing 53550 offices in 120 countries. They are the second largest broker in the world and that they have been in the business of insurance and re-insurance for decades. According to the plaintiffs, it would be a grave inconvenience for them to fight the litigation in London and will have to incur unbearable cost which would be sufficient to wipe them out of business.

7.According to the defendants, no such injunction can be granted by this Court unless the proceedings which sought to be injuncted are oppressive or abuse of the process of law and grant of such injunction will not cause any prejudice to the person against whom such injunction is sought. According to them, the issues in the suit filed by the plaintiffs are different from the issues in the suit filed by the defendants in English Court. In the present suit, the plaintiffs are seeking a declaration that the agreement to stop limitation from running as contained in the letter dated 29th October 2001 and 5th November 2001 is null and void. The other relief prayed for is to recover a sum of Rs. 90,000/- being the alleged damages for illegal threat of litigation held out against the plaintiffs. The defendants have pointed out that the suit in the English Court alleges professional negligence on the part of the plaintiffs in carrying out their work as an insurance sub-broker. The two issues according to the defendants are totally different and, therefore, the proceedings before the English Court cannot be considered to be oppressive. The outcome of both the proceedings instituted against the plaintiffs in English Court by the defendants are consequent upon the proceedings instituted against them by the re-insurers in the English Court. The proceedings against the plaintiff is for an indemnity by the plaintiffs which will be invoked only if the defendants in turn would be held liable to the third parties by the English Court in the suit filed against them by the retrocessors/third parties. According to the defendants, their action is a necessary and natural corollary to the action instituted against them in the English Court. As far as the factor of inconvenience is concerned, the defendants have very strongly contended that one Judge of the English Court would be seized of all the issues and would decide them conveniently in one proceedings and one trial.

It is also submitted that the witnesses and documents are in England and, therefore, it would always be more convenient and better for the English Court to decide the suit filed by the defendants in that Court, wherein, the issue of professional negligence would be adjudicated on the basis of the material that would be produced by the concerned parties including the present plaintiffs. It is further submitted by the defendants that a joint trial in London would reduce in considerable cost, sufferings and would also eliminate the risk of conflicting decisions. Furthermore, according to the plaintiffs, it is not a case of multiple proceedings or overlapping suits. The cause in both the proceedings is entirely different. According to the defendants, the plaintiffs are financially very sound though they are trying to make out a case that they are a small company. According to them, its worth is not less than Rs. 5 Crores per annum. They have international dealings and, therefore, they cannot run away from or avoid litigation as and when it arises abroad. It is further pointed out that if the present plaintiffs succeed in the English Court, they would be fully reimbursed and would be awarded entire cost which they would incur for defending themselves in the English Court. According to the defendants, the Indian Courts did not award cost to that scale and the cost would be absolutely meagre in comparison with the costs which are usually awarded by the foreign Courts. According to the defendants, if the plaintiffs finally succeed in establishing their case that they were not professionally negligence and that they had furnished the entire material and information required by the defendants, they would win the litigation. The liability of the defendants would depend upon the success of the plaintiffs before the English Court. If the plaintiffs succeed the defendants would lose in the litigation filed against them by the re-insurers. According to the defendants, therefore, all the issues can be very conveniently tried and disposed of by the English Court. The defendants have, therefore, very strongly opposed grant of any injunction against them from proceeding with the suit in English Court.

8.Shri Bharucha, the learned Counsel for the plaintiffs, has vehemently argued for injunction on the grounds set out by me hereinabove. He has relied upon the following judgments.

(i) (1981) 1 SCC 80, Ramji Dayawala and Sons (P) Ltd. vs. Invest Import

(ii) AIR (30) 1943 Bombay 206, Dhanraj Yugulkishore & Co. vs. Babulal Ramchandra

(iii) AIR 1987 SC 674, Oil and Natural Gas Commission vs. Western Company of North America

According to him, if the defendants are not injuncted from the proceedings with the trial of the suit in the English Court and if the plaintiffs are made to face the said litigation they would be almost ruined under the burden of the costs of litigation in the English Court.

9.Shri Ravi Kadam, the learned Counsel for the defendants has submitted with equal vehemence that the notice of motion deserves to be dismissed as, there is absolutely no case for the plaintiffs to get the order of injunction. Shri Kadam, further made a point that even if this Court grants injunction against the defendants and if the English Court refuses to stay the proceedings and insists to proceed with the matter failing which the suit would get dismissed, according to the Counsel, the English Court would be well within the jurisdiction to dismiss the suit if the defendants did not proceed with the said suit due to injunction by this Court. Shri Kadam has strongly supported the case of the defendants as set out by me hereinabove. He has relied upon the following judgments of the English Courts and also of the Supreme Court:

(i) (1936) King's Bench Division 382, St. Pierre & ors. vs. South American Stores (Gath and Chaves) Limited and ors.,

(ii) Vol X Probate Division 141 (1885) (Christiansborg).

(iii) Notice of Motion No.558 of 1987 in Suit No.645 of 1987 dated 12th November 1987 (H. Suresh, J);

(iv) Appeal No. 287 of 2002 in Notice of Motion No. 120 of 2002 in Suit No. 2422 of 2001 Dated 1st April 2002. (A. P. Shah and V. K Tahilramani, JJ).

(v) AIR 1995 SC 2372, M/s Gujarat Bottling Co. Ltd. & ors. Coca Cola Company and ors.

(vi) AIR 1962 SC 527, Manoharlal Chopra vs. Rai Bahadur Rao Raja Seth Hiralal.

10.In my opinion, the plaintiffs are not entitled to any reliefs in the present notice of motion for more than one reason. Considering the reliefs sought in the present notice of motion, and the present suit and the suit before the English Court filed by the defendants, there is no multiplicity of the proceedings. The cause of action in the English Court is the grievance of the defendants against the plaintiffs on the ground of professional negligence alleged by them in that suit. According to the defendants, in that suit, the re-insurers have claimed damages and certain reliefs against them, which entirely depend on the question whether the present plaintiffs had furnished all the relevant and necessary information required by the defendants in respect of the project. According to the defendants, the plaintiffs have committed several omissions and commissions in furnishing the details while, the plaintiffs are denying the said allegations. This issue would be a crucial issue to be decided by the English Court. The plaintiff would be at liberty to plead and prove before the English Court that they were not professionally negligent and that they did not commit any act of omission or commission while advising the defendants. If the plaintiffs fail in the said suit before the English Court, the defendants would succeed in the English Court. The issue of professional negligence allegedly committed by the plaintiffs would be a pivotal and crucial issue before the English Court. In the present suit, what the plaintiffs are seeking is only a declaration that the "stand still" agreement was null and void. They have also claimed the relief of Rs. 90,000/- by way of damages. Ex facie, the reliefs in the present suit and the reliefs before the English Court are entirely different, though the evidence to a great extent would be overlapping. The nature and character of both the proceedings is entirely different.

The plaintiffs before the English Court will have full opportunity to establish that they were not professionally negligent by producing sufficient evidence before the English Court. It is, therefore, not a case of multiplicity of the proceedings, nor is it a case of frivolous, false or vexatious litigation. It is a matter of record that the defendants were sued before the English Court by the retrocessors. To meet the said case, in turn, the defendants have sued the present plaintiffs before the same Court. According to the defendants, they had wholly relied upon the plaintiff as their consultants in respect of Essar project. If the defendants succeed in their case before the English Court, they would be absolved of the damages. Since the defendants themselves were involved in the litigation which in turn had direct and close relation with the plaintiffs, it cannot be said that the defendants have dragged the plaintiffs in the litigation vexatiously, frivolously or that they have abused the process of law. It cannot be said that the defendants have resorted to the litigation against the present plaintiffs oppressively. In any case, in fact, the plaintiffs have been given an opportunity before the English Court to defend themselves and to place before that Court that the plaintiffs were not guilty of professional negligence and that they had disclosed and communicated the whole information required by the defendants. It is true that the plaintiffs will have to incur some expenses but since the plaintiffs are internationally dealing in business, they cannot escape the occupational hazard of litigation either way. The plaintiffs, therefore, cannot be said to hear that they cannot afford huge litigative expenses in the foreign Court. Fortunately enough, the position in the English Courts is that the succeeding party is awarded full cost of the litigation. Besides, it cannot be said that it is the same cause of action or there is multiplicity of the proceedings.

In fact, the plaintiffs have sought for only a declaration of the stand still agreement as null and void and out of intimidation or threat of litigation. It is hard to believe that the plaintiffs who have been advised by reputed Solicitors in India and when the said Solicitors themselves had entered into the correspondence on behalf of the plaintiffs, that the plaintiffs would give in to the intimidation or threat of litigation by the defendants to enter into the said stand still agreement. In fact and as a matter of law, if the defendants fail in the English Court in their own litigation, initiated by the retrocessors and if they do not in turn sue the plaintiffs in the English Court for damages, the defendants would suffer huge loss on account of the decision of the English Court against the defendants and they will have no remedy of any nature thereafter. It would be most convenient that one English Court decides the issue which is of triangle nature simultaneously to avoid multiplicity of the proceedings and conflict of decisions from two forums. The cost, convenience and relative hardship to the plaintiffs cannot be given higher and more importance to injunct the defendants from pursuing their rightful and legitimate remedy before the competent Court of England. It would, therefore, not be legal, proper and just to injunct the defendants from pursuing with their suit in English Court and furthermore, if the English Court insists the defendants to go on with the suit or their proceedings against the present plaintiffs the same would be dismissed if it refuses to adjourn or stay the proceedings sine die till the disposal of the present suit, and in case if the English Court dismisses the suit or the proceedings, the defendants would suffer an irreparable loss for no fault of theirs.

11.As already stated by me above that both the learned Counsel have cited a number of judgments in support of their respective contentions, it is not necessary to discuss all the above cited judgments individually. The underlying "mantra" given in each of them can be precisely stated as under. That is the essence or ratio as understood by me.

i) It is not that this Court has no jurisdiction to injun

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ct a party from proceeding with its suit filed by it in a foreign Court between the same parties under a given set of existing circumstances. ii) However, this jurisdiction is to be exercised in a rare case and sparingly unless it is absolutely essential for meeting the ends of justice. iii) The Court must be satisfied that the proceedings initiated abroad or in another Court amount to abuse of process of law and is frivolous, vexatious, to harass the other side and is oppressive and/or useless. iv) That there is no multiplicity of proceedings for the very same cause of action between the same parties and when there is no evidence that the Court in which the action was first brought would not do full justice to the plaintiff. v) No injunction can be granted unless the institution of the proceedings in a foreign Court is in breach of the contract and an application for stay of such proceedings will have to be made before the agreed forum. vi) This power is to interfere with the proceedings in another jurisdiction, it should be exercised with great caution to avoid even the appearance of undue interference with another Court. vii) The conduct of the party invoking the equitable jurisdiction of the Court must be free from blame and should be fair and honest and that he was not at fault or responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief;. viii) That there is no occasion to create judicially chaotic situation for the parties to face two conflicting decisions from the two forums. ix) The foreign Court may insist upon the injuncted party to proceed with the matter or face disastrous consequence of dismissal of the proceedings. x) Cost, convenience and a relative hardship likely to be caused to the parties to be borne in mind as one of the relevant consideration. In view of the above legal position and the peculiar facts of the present case, which has no parallel in the aforesaid precedents, the Notice of Motion is dismissed with no orders as to costs. All concerned to act on a copy of this order duly authenticated by the Associate.