Hooley Ltd v Ganges Jute Private Ltd
| Jurisdiction | Scotland |
| Judge | Lord Tyre |
| Judgment Date | 19 July 2019 |
| Neutral Citation | [2019] CSIH 40 |
| Court | Court of Session (Inner House) |
| Date | 19 July 2019 |
| Docket Number | No 39 |
[2019] CSIH 40
Second Division
Lord Tyre
Cumbria County Council v X sub nom Cumbria County Council, Petr [2016] CSIH 92; 2017 SC 451; 2017 SLT 34; 2017 Fam LR 15
R v Kennedy 1993 SC 417; 1993 SLT 910; 1993 SCLR 623
RS Macdonald Charitable Trust Trs v Scottish Society for the Prevention of Cruelty to Animals [2008] CSOH 11; 2009 SC 6; 2009 GWD 1-21
Tomkins v Cohen 1951 SC 22; 1951 SLT 65
Royal Commission, Report of the Royal Commission on the Court of Session and the Office of Sheriff Principal (Cmd 2801) (HMSO, Edinburgh, 1927), pp 49, 50
Process — Petition — Petitioner seeking certain declarators in respect of validity of missives of sale according to Scots law — Whether the granting of declaratory orders competent in petition procedure
Hooley ltd presented petitions to the Court of Session for declarators that: it had contracted to purchase the right, title and interest to certain assets situated in India of Titaghur plc, Victoria Jute Co Ltd and Samnuggur Jute Factory Ltd (all companies registered in Scotland and in administration); it had right, title and interest to those assets under Scots law; and, the administrators were entitled to sell those assets under Scots law and did not require the subsequent approval of the Scottish courts. On 11 October 2016, the commercial judge (Lord Tyre) held that the petitions were incompetent ([2016] CSOH 141).
The petitioner agreed to purchase the business and assets of certain companies registered in Scotland, but which conducted business almost entirely in India. The petitioner had appointed administrators to those companies as the holder of floating charges. An Indian public authority had also instituted insolvency proceedings in India, and special managers had been appointed, who had licensed the respondent to carry on the business of the companies. The respondent contested the Scottish administrators' powers to sell the assets.
The petitioner averred that it was required to take further steps to obtain judicial recognition in India of its title to the assets subject to the agreements. The petitioner required to satisfy the Indian courts that the administrators had acted in accordance with the powers conferred on them by the Insolvency Act 1986 (cap 45) and that the sale was otherwise valid according to the law of Scotland, which could be achieved by the presentation of an appropriate certified copy interlocutor of the Court of Session. The petitioner sought declarators that, under the law of Scotland: it had acquired title to the assets; the administrator had the power to sell those assets; and, ratification of the sale by the Scottish courts was unnecessary.
The Lord Ordinary held that petitions were incompetent and that the only proper way of proceeding was by means of an action. The petitioner reclaimed. There was no appearance for the respondent.
Held that: (1) the critical feature that determined whether or not petition procedure was required, and therefore competent, was the need for intervention by the court going beyond the determination of the existing rights and obligations of the parties, in which the court was obliged to exercise an independent element of judgment or discretion, either to innovate on the parties' existing rights and obligations or existing legal norms, or because the order sought had real effects on third parties who were not represented or who dissented from the proposals made, although those were not the sole criteria that may justify the use of petition procedure (paras 15, 16, 21); (2) if the effect on third parties was direct and reasonably significant, it was clearly desirable that the court should give independent consideration to the potential consequences of its order, to ensure that such third parties were not unfairly affected by it (paras 16, 17, 20); (3) the declarators sought in the present case were intended to provide a definitive statement of the application of Scots law to transactions that had taken place in Scotland, and were intended to be made available for consideration by the Indian courts in determining questions of entitlement to company assets located almost exclusively in India, declarators of that nature went beyond the mere determination of the existing rights of the parties and were intended to function as definitive and objective statements by the court as to the application of Scots law in particular circumstances which could be relied on by the Indian courts in deciding issues before them that turned on principles of Indian law and were likely to affect persons who had not been represented in the Scottish procedure but may be affected by the Indian proceedings (paras 22–24); (4) while an action could be used, the use of petition procedure had definite advantages from the point of view of the presentation of Scots law to the Indian courts, which justified its use by the petitioner in the present case (para 25); and reclaiming motion allowed.
Tomkins v Cohen 1951 SC 22 applied.
The cause called before the Second Division, comprising the Lord Justice-Clerk (Dorrian), Lord Drummond Young and Lord Malcolm, for a hearing on the summar roll, on 28 May 2019.
At advising, on 19 July 2019, the opinion of the Court was delivered by Lord Drummond Young—
Opinion of the Court—
[1] The petitioner has presented three petitions in which it seeks certain declarators relating to dealings involving the assets of three Scottish-registered companies, Titaghur plc (‘Titaghur’), The Victoria Jute Co Ltd (‘Victoria’) and The Samnuggur Jute Factory Ltd (‘Samnuggur’). Although the companies were registered in Scotland, their commercial activities were carried out almost entirely in India, where they were engaged in the production of jute cloth and jute products in the state of West Bengal.
[2] Until August 2001 Victoria and Samnuggur were subsidiaries of Titaghur. Each of the companies was made subject to an order of an Indian authority, the Employees' Provident Fund (‘the fund’), seizing its entire assets in consequence of an alleged failure to meet obligations to pay contributions to employees' pension funds. The sums involved are very substantial. Various orders were made by the Indian High Court in Calcutta in respect of Victoria and Samnuggur. Special managers were appointed to each company by the fund, and since about 1998 the business of both companies has been carried on by a licensee of the special managers; that licensee is Ganges Jute Private Ltd (‘Ganges’), who appeared as respondents to the present petitions throughout the proceedings in the Outer House. They have subsequently withdrawn from involvement. The appointment of special managers and their licensee was intended to generate profits from the trading activities of the three companies, and those profits were to be applied in payment of the debts due by the companies to their employees' pension funds.
[3] Titaghur's shares in Victoria and Samnuggur were sold by the fund in 2001. Titaghur was ordered to be wound up by an order of the Indian High Court, dated 12 December 2006, and has been in liquidation since that date. A petition to wind up Samnuggur is also before the High Court. The present petitioner...
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Ld Partnership For Return Of Missing Funds
...Petition procedure is appropriate where an action is inappropriate, or the law requires a petition: Hooley Ltd v Ganges Jute Private Ltd 2019 SC 632. A dispute about the parties’ patrimonial rights and obligations shou ld ordinarily be resolved in the course of the court’s ordinary procedur......