Mareva Injunction in India
Mareva Compania Naviera SA v. International Bulkcarriers SA  2 Lloyd's Rep 509.-In this case the plaintiffs, Mareva Company (the ship-owners) issued a writ against the defendant company (the charters) for an unpaid hire and damages for repudiation of a charter party. On an ex parte application the Hon'ble Judge granted injunction restraining the defendant from removing or disposing out of the jurisdiction moneys standing to the credit of the charters' account at a London bank. Thereafter the plaintiff appealed against the judge’s refusal to extend the injunction. Here the plaintiffs are the owner of the vessel Mareva and they let it to the defendants. The hire was payable half monthly in advance. Later on the charters sub-chartered it. The defendants let the vessel on a voyage charters to the President of India. The Indian High Commission according to their obligation paid 90% of the freight, but paid it to a bank in London. Out of that the defendants paid it to the ship-owners, the plaintiffs, the first two installments of the half monthly hire. But subsequently the defendants were failed to pay the 3rd installment. Now the plaintiffs moved to the Court and filed a writ petition arguing that the defendants are failed to comply with their obligation.
The Hon'ble Judge opined that "in my opinion that principle applies to a creditor who has a right to be paid the debt owing to him, even before he has established his right by getting judgment for it. If it appears that the debt is due and owing, and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment, the Court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets. It seems to me that this is a proper case for the exercise of this jurisdiction. The Hon'ble Court also opined that "in my judgment the charters here have a strong case on the merits. We have not heard any argument from the other side because it is an ex parte application. In these circumstances I would reserve my own views until I have heard argument from the other side if any such argument is put forward. But, in the absence of any such argument, in my view this injunction should be continued”.
Thereafter, the appeal has been allowed and the injunction was continued.
Indian Scenario on ‘Mareva Injunction’:
In India there is no provision equivalent to section-45 of the Supreme Court of Judicature (Consolidation) Act 1925, a Mareva injunction, but there are some substantial case law in India where the Indian Court has applied the principle taken form 'Mareva case' while pronouncing the ex parte injunction order in order to meet the natural justice and equity.
The concept of Mareva Injunction evolved in the case of Mareva Compania Naviera SA v. International Bulkcarriers SA  2 Lloyd's Rep 509. Most of the common law countries recognizes this foreign judgment and its principle as a precedential case law and apply the principle of this case while dealing the injunction petition in their country Court of law.
Order-XXXVIII (Arrest and Attachment before Judgment), Rule-5 (Attachment before judgment) of Indian Code of Civil Procedure, 1908 envisages that-
“Where defendant may be called upon to furnish security for production of property
(1) Where, at any stage of a suit, the Court is satisfied, by affidavit or otherwise, that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him-
(a) Is about to dispose of the whole or any part of his property, or
(b) Is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court, the Court may direct the defendant, within a time to be fixed by it, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property or the value of the same, or such portion thereof as may be sufficient to satisfy the decree, or to appear and show cause why he should not furnish security.
(2) The plaintiff shall, unless the court otherwise directs, specify the property required to be attached and the estimated value thereof.
(3) The Court may also in the order direct the conditional attachment of the whole or any portion of the property so specified.
(4) If an order of attachment is made without complying with the provisions of sub-rule (1) of this rule such attachment shall be void”.
In M/S Rite Approach Group Ltd. v. M/S Rosoboronexport Ltd. (Arbitration matter, In the High Court of Delhi, FAO (OS) No. 102 of 2004, decided on March, 2007) where the appellant prayed for ex parte injunction order by relying upon the 'Mareva Case' as a case precedent. In this case the Court although rejected the injunction petition, but opined that- "injunction order even as per the Court of Appeal can be issued in extraordinary circumstances. Mareva or freezing injunction is passed when there is evidence or material to show that the debtor is acting in a manner or is likely to act in a manner to frustrate subsequent order/decree of the court or tribunal. The Court therefore freezes the assets of the debtor to prevent the assets from being dissipated, to prevent irreparable harm to the creditor. It prevents a foreign defendant from removing his assets from the jurisdiction of the court. It is like and akin to ‘attachment before judgment’ and conditions mentioned in the said provision should be satisfied before freezing injunction order is passed".
In an another case, Tata Sons Ltd. v. H. P. Singhal, where Tata Sons has obtained an ex parte injunction from the Delhi High Court in a suit filed against the defendant. The defendant was duping gullible employment seekers by offering jobs in a company called 'Tata India Ltd.', with its address in Delhi. The Hon'ble High Court Judge had passed an order in the nature of a 'Mareva Injunction', freezing the defendant’s assets, including bank accounts, as the defendant was involved deceiving people by using Tata’s brand name.
(Available at: http://tata.com/company/releases/inside.aspx?artid=N/JLyT5SbxY=)
In one article written by Justice R. K. Abichandani (Judge, High Court of Gujarat) on "Role of Judiciary in the Effective Protection of Intellectual Property Right" in the Gujarat High Court's Web portal; where the Hon'ble Judge while discussing about the injunction petition under Order-XXXIX of the Code of Civil Procedure, 1908 opined that "the Courts are empowered to make interlocutory orders under Order-XXXIX Rule-7 of the Code for detention, inspection or preservation of any property which is the subject matter of the suit and for this purpose to authorize any person to enter upon or into any premises in possession of any other party and authorize samples to be taken. Ex parte orders of this nature can be made under Rule-8(3). Thus it was already within the jurisdiction of the Indian Courts to make orders under the procedural rules contained in the Code like Anton Piller order or the Mareva injunction. Where no specific provision is made it has inherent jurisdiction under Section-151 of the Code to make orders necessary for the ends of justice."
In a Judgment i.e. Nirma Ltd. v. Lentjes Energy (India) Pvt. Ltd, 2001, pronounced by Gujarat High Court that recognized the 'Commentaries on Russell on arbitration' and the Court approved that 'power to grant an interim injunction extends to granting of a Mareva injunction in appropriate cases..'
In case of Mareva Injunction, the court has power to freeze defendant’s assets, where there exists a probability of the assets being dissipated or cancelled so as to make a judgment against him worthless and un-enforceable. This remedy appears to be similar to the interlocutory order to “attach property before judgment” under the Code of Civil Procedure, 1908. The Court may allow this injunction based on the affidavit of evidence alone filed by the plaintiff itself.
Therefore, the Indian Court has the power to pass orders of “attachment of property” before passing any award for securing the interest of the plaintiff in any ex parte injunction petition. The content of the power would same as the power exercised by the Court under that said Order-38, Rule-5 of the Code of Civil Procedure wherein appropriate cases the Court can order “attachment of the assets” of a party to survive till judgment is passed in this matter.
The main ingredients, which an applicant should satisfy on an ex-parte application to become entitled to a Mareva injunction, are -
a. There must be an arguable claim;
b. There must be a real risk that the final judgment in applicants favor would remain unsatisfied;
c. There must be full and frank disclosure of all the material facts;
d. The exercise of discretionary power by the court.