A judgement of the high court of England and Wales in favour of the Punjab National Bank’s international branch in a $22 million recovery case may set a precedent in the ongoing debt recovery bid in the UK by a consortium of Indian banks against businessman Vijay Mallya.
The PNB case involves two loans between 2012 and 2013 to defendants that include India-based businessman Pradeep Agrawal of Superior Drinks Pvt Ltd. and their non-payment of loans to purchase and operate a cruise liner, MV Delphin.
The PNB’s subsidiary in London operates under English law. The defendants accepted they entered into various guarantees but challenged the jurisdiction of the English court to hear the bank’s claim and also raised technicalities about notices served in India.
After a recent two-day hearing, conducted remotely due to the coronavirus pandemic, Justice Sara Cockerill rejected all of the defendants’ arguments and ordered them to make an interim payment towards the bank’s costs of £70,000The judgment is likely to be a useful precedent for other enforcement cases brought by Indian banks in the UK against promoters or guarantors, particularly the judge’s dismissal of the argument that the guarantees were invalid because of a lack of regulatory approval by the Reserve Bank of India.
On the point of whether a certificate of good service from a foreign (in this case Indian) judicial authority can be valid service of English judicial proceedings, Cockerill also found that there is a strong presumption of service and that a claimant need not look beyond the certificate.
Paul Gair of law firm TLT that represented PNB, said: “This is a significant victory for PNBIL as it means it can now pursue its enforcement action against the defendants in the English courts. It is also a landmark decision for similar cases, as the defendants’ arguments are commonly raised by Indian-based guarantors”.
“It follows a series of similar cases where Indian banks have successfully pursued wilful defaulters in the English courts who are either residing in or have assets in the UK, or where the finance agreements are subject to English law and jurisdiction. This shows that this can be a successful enforcement route when pursued properly and under the right circumstances.”
TLT is also currently advising the consortium of 13 Indian banks on a £1.05 billion debt recovery action in the UK against Mallya.