Indian Overseas Bank v Svil Agro Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 30 May 2014
• Date: 30 May 2014
• Docket Number: Suit No 438 of 2013
• Court: High Court (Singapore)

Indian Overseas Bank

Plaintiff

and

Svil Agro Pte Ltd and others

Defendant

[2014] SGHC 106

Judith Prakash J

Suit No 438 of 2013

High Court

Civil Procedure—Inherent powers—Defendants did not enter appearance—Defendants resident overseas—Whether court had power to try case in absence of defendants—Order 13 r 1, O 35 r 1 (2) and O 92 r 4 Rules of Court (Cap 322, R 5, 2006 Rev Ed)

Credit and Security—Guarantees and indemnities—Guarantor—Loans guaranteed by defendants—Defendants did not honour guarantee—Whether defendants liable to pay sums due to plaintiff

The plaintiff was an Indian bank, acting through its Singapore branch. The defendants were Svil Agro Pte Ltd (‘the first defendant’), Surya Vinayak Industries Ltd (‘the second defendant’), Sanjiv Jain (‘the third defendant’) and Rajiv Jain (‘the fourth defendant’). The second, third and fourth defendants were, at all times, resident in India. In 2010, the plaintiff granted credit facilities to the first defendant for the purposes of establishing letters of credit. As security for these facilities, the second, third and fourth defendants guaranteed the same.

Subsequently, the first defendant entered into three contracts to purchase soya-related commodities from Louis Dreyfus Commodities Asia Pte Ltd. It drew down on the credit facilities extended to it by the plaintiff to pay for the goods. The first defendant later failed to repay the borrowed sums to the plaintiff and by 2012 it owed the plaintiff about US$19 m in total. The plaintiff called on the guarantees but failed to obtain payment from the second to fourth defendants.

The plaintiff thus commenced proceedings in Singapore against the defendants, seeking to obtain judgment against the second to fourth defendants for enforcement in India. Initially it obtained a default judgment but that was set aside when the plaintiff realised that only a judgment on the merits could be enforced in India. The court subsequently ordered a full trial. When the trial commenced, the second, third and fourth defendants did not appear despite having been given notice of the trial dates. The issue that arose in the proceedings was, inter alia, whether the court had the inherent power to try a case on its merits in the absence of the defendants instead of granting a default judgment.

Held, allowing the claim:

(1) One had to be clear about what was meant by the inherent jurisdiction of the court. Here, what the plaintiff really meant in framing its case was that this court had the inherent power to make a judgment on the full merits of the case despite the second to fourth defendants' non-appearance: at [28] and [29] .

(2) Order 13 r 1 read with O 92 r 4 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) showed that the court's inherent power was not circumscribed by the default judgment mechanism. The court retained its inherent power under which it could exercise its discretion to meet the ends of justice. This was consistent with the legislative history of the Rules of Court and once the trial had started and a party did not appear, the judge possessed the full power to proceed with a trial on the merits even in the defendant's absence: at [30] and [32] .

(3) When the plaintiff requested a judgment on the merits, the most appropriate path to take was for the plaintiff to set down the proceedings for a full trial and adduce its evidence in the normal course: at [34] .

(4) In this case, refusing to grant the plaintiff a judgment on the merits simply because the second to fourth defendants were absent would be unjust to the plaintiff. The defendants had defaulted on their obligations towards the plaintiff and failed to enter their appearance in the proceedings despite submitting to the Singapore court's jurisdiction. The plaintiff had also tendered evidence showing that Indian courts would not enforce judgments not granted on the merits of the case. Refusing a judgment on the merits would cause the plaintiff further delay in obtaining relief and therefore the discretion to grant a judgment on the merits was exercised: at [35] , [36] and [38] .

(5) The liability of the second to fourth defendants as guarantors for the first defendant's debt was clear from the documentary evidence and the testimony of the plaintiff's witness. They were thus severally liable to pay the plaintiff the net principal sum of $19,822,678 with interest of $1,379,853.03. Interest on the net principal sum would continue to accrue from 1 April 2013 to the date of payment at the contractual rate provided for in the documents. The second, third and fourth defendants were to pay $30,000, $20,000 and $20,000 respectively in legal costs to the plaintiff: at [39] to [43] .

Berliner Bank AG v Karageorgis [1996] 1 Lloyd's Rep 426 (refd)

International Woollen Mills v Standard Wool (UK) Ltd (2001) 5 SCC 265 (refd)

Muhd Munir v Noor Hidah [1990] 2 SLR (R) 348; [1990] SLR 999 (refd)

OCBC Bank (M) Bhd v Sin Lee Meng Farm Sdn Bhd [2002] 6 MLJ 257 (folld)

Singapore Telecommunications Ltd v APM Infotech Pte Ltd [2011] SGHC 147 (folld)

Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR (R) 117; [2006] 2 SLR 117 (refd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 13 r 1, O 35 r 1 (2) , O 92 r 4 (consd)

Rules of the Supreme Court 1965 (UK) O 13 r 1 (1)

Code of Civil Procedure (Act No 5 of 1908) (India) s 13 (b)

Oon Thian Seng and Marian Chua (Oon & Bazul LLP) for the plaintiff;

Defendants absent.

Judgment reserved.

Judith Prakash J

1 This judgment involves parties from two different jurisdictions, Singapore and India. It involves the breach of both a corporate guarantee given by the second defendant and personal guarantees given by the third and fourth defendants in favour of the plaintiff. These defendants have not entered appearance to these proceedings and the plaintiff has sought to obtain judgment on the merits of its case as opposed to obtaining a default judgment under O 13 r 1 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (‘the ROC’). This is because a judgment on the merits is enforceable in India, the jurisdiction in which the defendants are present, while a default judgment is not.

The facts

2 The plaintiff, Indian Overseas Bank, is an Indian-registered bank with a branch office in Singapore. The first defendant, Svil Agro Pte Ltd (‘the Company’), is a Singapore-incorporated company involved in the business of general wholesale trade.

3 The second defendant, Surya Vinayak Industries Ltd, is the holding company and sole shareholder of the Company. It has a registered office in New Delhi, India. Mr Sanjiv Jain and Mr Rajiv Jain, the third and fourth defendants, are members of the Management Committee of the Board of Directors of the second defendant. They are Indian nationals and reside in New Delhi, India. I shall, when appropriate, hereafter refer to the second, third and fourth defendants collectively as ‘the Indian defendants’.

The credit facilities

4 By a letter dated 13 September 2010 (‘the Facility Letter’), the plaintiff...