MAREVA INJUNCTIONS BY R. SRAVYA

Mareva injunctions are a kind of temporary injunctions that are settled contrary to the defendant. These injunctions constitutes the personal relief and hence they are remedy against personem. The court while passing the mareva injunctions, freezes the defendant’s property in order to restrain the defendant to dispose of the property. They are introduced as the remedy to deal with the cases where the defendant ran way.

India has recognised these injunctions under section 151 of C.P.C. Section 151 of CPC saves the inherent powers of HC “to make such orders as may be necessary to meet the ends of Justice”. The Inherent powers can be invoked by the high court only when there are no clear provisions under the CPC on a particular issue.

They are otherwise known as freezing orders. Order 38 rule 5 talks about an attachment before Judgment. Both order 38 rule 5 and the mareva injunctions serve for the same purpose i.e. to enable the plaintiff to realise his amount from the defendant but the only difference between the Mareva injunctions and order 38 rule 5 is that the mareva injunctions results in an injunction and order 38 rule 5 results in attachment of property. An attachment imposes a lean on property and injunction does not. The court while passing a mareva injunction after fulfilling the following conditions:

1. The court should have a cause of action while granting the mareva injunction
2. The plaintiff has to show that there is an apprehension that the defendant would transfer the properties out of the court’s jurisdiction or that he may otherwise deal with them so as to make them unavailable and untraceable.
3. The plaintiff shall have the balance of convenience that the injunction order is passed in his favour
4. the plaintiff shall prove that the defendant may dispose of the property
5. the application for the grant of injunction must be filed within time

Where the Indian Government has ordered certain helicopters for defence purpose from a firm belonging to Russia through an Indian Firm. The Russian firm denied the payment of Commission to the Indian firm on sale of those helicopters. Russian firm was later taken over by the Russian government. So the firm in India has prayed the court for grant of mareva injunction in order to freeze the properties of the firm from Russia, restrain the firm in dealing with the helicopters and further prevent the Government of India from paying for the helicopters ordered. However the court denied to grant the mareva injunction as Indian firm failed to prove that the Russian firm would sell or dispose off the property and the requirements of mareva injunctions were not satisfied.

It is the discretion of the court to widen these injunctions to the third parties who were believed to be the creditors or garnishee like banks or any person holding the assets of the defendant in the context of privity of Contract. If the Courts order detains the defendant’s use of his cards and cheque books, the orders are served to the bank. The plaintiff will be asked towards the furnishing of security to cover the costs incurred by the bank in this manner. The order attaches both the existing and future assets of defendant from the date of order passed. While granting these orders, the court has to be careful as to it does not interfere with the rights of some third party. For example, if there is an account in the name of the defendant and a third party proves that the amount in the account is his own but not the defendant’s and he proves so, such amount cannot be attached. Where a married woman’s account was subjected to the garnishee order and the husband showed up the evidence that the amount in the account is his earned income, the court held that such accounts cannot be attached. Mareva injunction is a prudent remedy for a commercial litigant. The SC has notably did not make any decision on this point. It is only the HC which were discussing about these mareva injunctions. England has made these injunctions as a part of their law. Being a common law country, India can also make this injunction as a part of its law as it positively fits the bill.

 

Disclaimer: The views and opinions mentioned are that of the authors and do not necessarily reflect that of katcheri.in.

Leave a Reply

Your email address will not be published. Required fields are marked *

CALL FOR PAPERS [VOLUME 1, ISSUE 4] - JLSR JOURNAL [ISSN(O) : 2582-306X]

X
error: Content is protected !!