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Claim No. CFI 027/2018

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) AMIRA C FOODS INTERNATIONAL DMCC
(2) AK GLOBAL BUSINESS FZE

Claimants

and

IDBI BANK LIMITED

Defendant

KARAN A CHANANA

Third Party

ORDER WITH REASONS OF JUSTICE ROGER GILES

UPON reviewing the Defendant’s Application No. CFI-027-2018/6 dated 7 October 2021 seeking orders for discharge of an injunction imposed by Order 2 of the Order of Justice Sir Jeremy Cooke issued 16 May 2018 as continued by Order 1 of the Order of Justice Roger Giles issued 22 January 2020 (the “Application”)

AND UPON reviewing the Claimants’ evidence in answer to the Application dated 26 October 2021

AND UPON reviewing the Defendant’s evidence in reply dated 3 November 2021

IT IS HEREBY ORDERED:

1. Direct that the Bank’s solicitors are at liberty to return to the Bank the cheques held pursuant to the order made by Justice Sir Jeremy Cooke on 16 May 2018.

2. That Amira pay the Bank’s costs of the Application, to be assessed by a Registrar if not agreed.

Issued by:
Nour Hineidi
Registrar
Date of issue: 20 December 2021
Time: 11am

SCHEDULE OF REASONS

1. This Application is the rump of protracted litigation between a bank and its customer. The customer, Amira C Foods International DMCC (“Amira“) obtained credit facilities from the bank, IDBI Bank Ltd (the “Bank”), as part of which it provided fourteen undated cheques to the Bank as security for payment of money due. The cheques are presently held by the Bank’s solicitors at the direction of the Court. The Bank applies for the “discharge“ of the orders pursuant to which they are held.

2. The litigation begin with CFI 027/2018, a claim by Amira inter alia to restrain the presentation of the cheques by the Bank on the ground that no money was due. Amira contended that the default alleged by the Bank had been caused by the Bank’s own default in payment under an Irrevocable Letter undertaking to pay a third party. The Bank had already presented four of the cheques for payment. On 16 May 2018, Justice Sir Jeremy Cooke ordered that the Bank make payment in accordance with the undertaking, and that the cheques be held by the Bank’s solicitors “pending the disputes which will need to be resolved relating both to the indebtedness of Amira to the Bank… and the resolution of Amira’s claim for damages for breach of the Irrevocable Letter”.

3. The proceedings then progressed to Amira’s claim for damages and a counter-claim by the Bank for what it said was the entire indebtedness under the credit facilities. (There were claims also by and against a guarantor, which need no further mention). The resolution of those matters at first instance came in a judgment issued on 7 October 2019. Amira obtain an award of damages of USD 12,603,791 plus a further sum to be agreed and interest, and the Bank’s counter-claim was dismissed.

4. The judgment left for determination what should be done about the cheques. After submissions, on 22 January 2020 it was ordered that the solicitors continue to hold them subject to the direction of the Court. By that time the Bank had been granted permission to appeal, and it was said that on one outcome of the appeal the Bank may be immediately entitled to present the cheques, or may claim that subsequent default entitled it to do so, but that the cheques should remain under the Court’s control and their fate should await the disposal of the appeal or prior application by the Bank.

5. The judgment in the appeal, CA-014-2019, was issued on 6 July 2020. The award of damages in favour of Amira was reduced to USD 3,578,723.61, but the appeal against dismissal of the counter-claim was dismissed.

6. The litigation then moved to CFI-022-2020, a renewed claim by the Bank for the entire indebtedness under the credit facilities. In a judgment issued on 30 November 2020, Justice Sir Richard Field ordered that there be judgment for the Bank for USD 6,421,224.71, to which interest of USD 2,043,877.75 was subsequently added with interest accruing thereafter at USD 1,919.99 per day.

7. This judgment also went on appeal, in CA-004-2021. On 24 August 2021, the appeal was dismissed.

8. In the result, there was a net indebtedness of Amira to the Bank of more than USD 5 million, with interest continuing to accrue. The money is due and payable. Through its solicitors, the Bank asked Amira to agree to discharge of the orders pursuant to which the cheques were held. There was no response from Amira’s solicitors, and this Application was brought.

9. Through the witness statements of Mr Derek Bayley of its solicitors, the Bank submitted that there was no further reason for the cheques to remain under the control of the Court, and that they should be returned to it to be held as security for the now established indebtedness of Amira to the Bank. Submissions in opposition to the Application were made through the witness statement of Ms Nicola Jackson of Amira’s solicitors. In her witness statement, Ms Jackson asked for the opportunity to “oppose the Application by referring the Court to relevant authorities in support of [the Banks] position”. A direction was given permitting Amira to file supplementary submissions, but none were filed within the stipulated time.

10. Five reasons can be seen in the submissions in opposition to the Application.

11. The first is that the orders pursuant to which the cheques are held by Amira’s solicitors were made in CFI-027-2018, that the result in those proceedings was that no money was owed to the Bank, and that the result in CFI-022-2020 was irrelevant. It was submitted that the cheques were held pending the outcome of the appeal in CA-014-2019, that any justification for the Bank retaining the cheques would have to be established in CFI-027-2018 as left by the outcome of the appeal, and there was no justification because in those proceedings no money was owed. That cannot be accepted. It is not a question of money owed, but a question of entitlement to hold the cheques. The cheques being held subject to the direction of the Court, the Court will direct that they be returned to the Bank if the occasion for quarantining them has passed. It has, and it does not matter that it has passed because of events outside CFI-027-2018.

12. The second is that costs orders had been made which had not yet been quantified, so that any indebtedness of Amira to the Bank was not certain or finalised. That also cannot be accepted. It is not conceivable that any quantification of costs between the parties will wipe out the net indebtedness of more than USD 5 million.

13. The third is difficult to understand. It was said that the cheques were to be held as security only and not for indebtedness. The distinction has no relevant meaning, and is contrary to the credit facilities documentation. The cheques were to be held as security for Amira’s indebtedness to the Bank, there is an indebtedness, and that entitles the Bank to hold them.

14. The fourth is that the four cheques earlier presented had expired for re-presentation, and also that because the original presentation was wrongful there could be no legitimate recourse by the Bank in relation to those cheques. However, the present question is also not one of recourse to the security, but a question of entitlement to hold the cheques – their possession. Whether or not the four cheques have expired, the Bank is entitled to hold them, and effective recourse to them is a different matter. The prior unjustified presentation does not preclude a later justified presentation, and again the Bank is entitled to hold the cheques and effective recourse to them is another matter.

15. It appears that the submission that there could be no legitimate recourse by the Bank in relation to the four cheques, was intended to take up a submission made in the determination of what should be done about the cheques. The submission was ruled against at that time, when it was said that despite the wrongful presentation the cheques remained available to the Bank if there were other default entitling it to resort to its security.

16. The fifth is that the remaining cheques were in aggregate value over USD 8 million, and that would not be “fair or proportionate“ for them to be returned to the Bank if the indebtedness was in the much lesser sum in the order of USD 5 million. However, the Bank is entitled to hold all the cheques as security, whether the indebtedness be for a lesser or greater sum. The amount of the indebtedness may come into it if and when the Bank seeks to realise its security, but that again is a different matter.

17. The original occasion for quarantining the cheques was precautionary. The Bank was entitled to hold the cheques, but Justice Sir Jeremy Cooke considered it warranted because there had been presentation of some of the cheques when there was dispute over whether money was due justifying presentation. That is no longer the case, and the cheques should be released to the Bank.

18. Amira’s opposition to the Application was without merit, and has failed; it should pay the Bank’s costs of the Application, to be assessed by a Registrar if not agreed.

19. I make the following orders: