1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Chamber Summons No.967 of 2008 IN Execution Application No.173 of 2008 IN Hydrabad Suit No.80 of 2004 M/s.Hamsons Marketing Pvt. Ltd. .. .. Plaintiff V/s. M/s.Power Horse Middle East Company WL.L. & ors. .. .. .. Defendants And Power Horse India Pvt. Ltd. .. .. Applicant Mr.G.M. Mohinddin with Mr.A.P. Bagve for Decree-holder. Mr.Janak Dwarkadas, Sr.Advocate with Mr.R.Narichania i/by M/s.Desai Desai & Carrimjee for Applicant. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 7th August, 2008 P.C. : 1.The Applicant has moved this Chamber Summons for raising attachment levied on the Applicant's Bank Account bearing Current Account No.002107183001 with HSBC Bank, M.G. Road, Fort, Mumbai 400 023 and for setting aside the warrant of attachment against movable and immovable properties and the debts belonging to the Applicant pursuant to which the aforesaid Bank Account is attached. It is the 2 case of the Applicant that the Plaintiff had business relations and dealings with the Defendants in the Suit and the Applicant is a separate distinct corporate entity incorporated after the decree was passed in favour of the Plaintiff and has nothing to do with the Plaintiff's claim or the Defendants' liabilities thereunder. 2.It is the Plaintiff' s case that the Applicant is an alter ego of the Defendants and has same persons in the management and control of the Defendants' business who have incorporated a new entity to camouflage their business activities and dealings and to show themselves as a separate entity by fraudulent means to avoid and evade payment to be made by them under the guise of a separate incorporated entity. 3.The Applicant has relied upon only their certificate of incorporation in support of the Application. It shows that they have been incorporated on 4.8.2006. The Plaintiff has produced a number of documents to show the parties in management of the Defendants and the Applicant, in their Affidavit-in-reply. Pursuant to the directions of the Court, the Applicant has produced its Memorandum and Articles of Association and has sought to answer the allegations of the 3 Plaintiff in their Affidavit-in-rejoinder. The Plaintiff has sought to substantiate its contention relating to the parties in management of both the Defendants and the Applicant by further documentary evidence in its Affidavit in sur- rejoinder. The Applicant has sought to answer those documents in their further Affidavit. 4.The Defendants as well as the Applicant claim common parentage from a Company incorporated in Vienna, Austria called SPITZ KG Austria, which manufactures and sells an energy drink trade marked “Power Horse”. Defendant No.1 is shown as a subsidiary of the aforesaid Austrian Company. Defendant No.1-Company has its office in Bahrain. Defendant No.2-Company, which is also shown to be a subsidiary of the Austrian Company, has its office in Kochi, India. The Applicant claims to be a separate corporate entity. It has contended that it has business relations as well as management personnel from a subsidiary Company of the Austrian Company in Dubai, which is sought to be shown as a separately incorporated Company. The Plaintiff contends that each of these Companies being the Defendants, the Applicant as well as the Dubai Company are merely the branch offices or separate divisions of the Austrian parent Company having the same persons in 4 management and carrying on the same business of selling the same product in different parts of the world. 5.The documents relied upon by the parties would be required to consider their respective claims. To understand their relationship and legal position, a chronology of the dates and events, culled from the documents relied upon by both the parties, must first be considered. (i) Defendant No.1, by their letter dated 5.10.2002 to one Knight International at Kochi sought to appoint personnel for its branch office in Kerala, India for exporting its products to India. The office to be set up has been termed as Power Horse Zonal office C/o. Knight International. It carried on its trade operations from the office premises of Knight International. (ii)On 1.1.2003 the Austrian Company, as the manufacturer, supplier and brand owner of Power Horse Energy Drink, authorised Defendant No.2 C/o. M/s.Knight International to appoint Defendant No.3 as the sole importer of Power Horse Drink in India. 5 (iii)On 30.10.2003, Defendant No.2 through its Manager one M.J. Joseph sent an E-mail to one Suresh Menon, Senior Marketing Officer and others of Defendant No.1 relating to its contact in India. He referred to the Plaintiff as the marketing arm of Power Horse India. (iv) On 1.12.2003 M.J. Joseph, Thomas Joshi and Suresh Menon were authorised as Attorneys and Agents to act on behalf of Defendant No.1. (v) On 1.7.2004, a new partnership was declared to be announced at a Press Conference in Dubai (U.A.E.) addressed by the then Chief Executive Officer of Defendant No.1 as free Zone Power Horse Middle East Company with limited liability. [FZ PH, ME, WLL]. (vi) On 23.8.2005, an order came to be passed, consequent upon the dealings between the Plaintiff and the Defendants, by the City Civil Court at Hyderabad under which the Defendants herein were to furnish security to the extent of the Plaintiff's claim in the Suit on or before 12.9.2005, failing which they would be restrained from selling and marketing their product being Power Horse Energy Drink until disposal 6 of that Suit. The security was not furnished. The injunction would operate. (vii) On 6.11.2005, soon after the aforesaid order was passed, one Power Horse Free Zone Limited Liability Company (PH, FZ-LLC) came to be incorporated in Dubai. This is despite the aforesaid existing partnership of Defendant No.1 in Dubai. Aside from the certificate of registration of that Company, no other documents are produced by the Applicant. The Managing Director of the Applicant claims parentage through the said Dubai Company. He claims to be appointed under an employment contract executed by the Dubai Company in his favour appointing him as a Country Manager. (viii) 20.12.2005 is the date of the said employment contract. The contract shows the appointment of one Ani Mohandas, who is shown as one of the Directors of the Applicant by PH FZ-LLC, the Company stated to have been incorporated in Dubai. The contract is signed on behalf of PH FZ-LLC by one Mohamed El- Gamal. The said Ani Mohandas is to act as the General Manager based in Mumbai, India. He is to 7 report directly to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of PH FZ-LLC in Dubai. Article 9(2) of the Employment Contract shows a non-competition clause applicable in various territories, including Bahrain. This relates to the manufacture, sale and supply of Power Horse Drink. Defendant No.1 is the Company in-charge of Power Horse Drink in Bahrain. Article 15 of the Contract shows the place of arbitration to be in Vienna, Austria for all disputes arising under the Agreement. (ix) On 8.2.2006, Mohamed El-Gamal, sent an E-mail to Ani Mohandas with a CC to one Rama. Brothers and one Matheu Estuardo calling upon Ani Mohandas to liase with Rama brothers for business in India. The E-mail is signed by Mohamed El-Gamal not as CEO, PH FZ-LLC, Dubai, but as CEO, Power Horse Middle East and Asia. (x) On 8.2.2006 itself, Ani Mohandas has replied to the said E- mail with copy to the aforesaid parties about the said business relationship. This E-mail has been signed by Ani Mohandas as Country Manager, India, Power Horse Middle East and 8 Asia. (xi) On 26.4.2006, a legal Notice came to be e-mailed by the Plaintiff's Advocates to Ani Mohandas at power-horse.com with regard to the aforesaid Suit and the order of security and injunction obtained. That E-mail has not been replied by Ani Mohandas. He claims not to have received it. (xii) About 4 months thereafter on 4.8.2006, the Applicant- Company came to be incorporated. Memorandum and Articles of Associations of the Applicant show Mohamed El-Gamal, Estuardo Matheu and Ani Mohandas as the subscribers of the Memorandum of Association of the Company. (xiii) On 25.8.2006 the aforesaid three persons were appointed the first Directors of the Applicant. This is shown in the Minutes of the meeting from the Minutes Book of the Applicant itself. (xiv) On 24.1.2007, a decree came to be passed by the Hydrabad City Civil Court in favour of the Plaintiff in the aforesaid Suit. 9 The Plaintiff has sought to execute the said decree by and under the warrants of attachment got executed to attach the movable and immovable properties of the Applicant in India and got the aforesaid Bank Account of the Applicant attached pursuant thereto. (xv) Five days thereafter i.e. on 29.1.2007, Mohamed El-Gamal resigned as Director of the Applicant. (xvi) On 5.2.2007, his resignation came to be accepted by the Board. (xvii) On 30.1.2008, one Suresh Kavikkal came to be appointed as Director of the Company. He has taken out this Application and filed an Affidavit- in-support thereof. (xviii) On 5.3.2008, Estuardo Matheu resigned as Director of the Applicant. The Register of members and Directors produced by the Applicant shows the aforesaid facts. 6. It is clear from the aforesaid chronology of facts that the same persons, who have been handling the divisions of 10 Power Horse, Austria, in Bahrain, Dubai and Kochi, have incorporated the Applicant in India soon after the above Suit was filed by the Plaintiff in the Hyderabad City Civil Court and the order for providing security was passed therein. Some of them have sought to resign from the Indian Company soon after the decree came to be passed in the aforesaid Suit. 7. The Plaintiff has produced the original newsletters of Power Horse, Vienna, Austria of prior dates. The newsletters show their website address on www.power-horse.com. These newsletters show various divisions of Power Horse, Austria in various parts of the world, including the Middle East and India. It shows the CEO Mr.Franz Crispel at the Bahrain Division in March 2002. It also shows the Plaintiff at Power Horse Press Conference held in Hotel Gulkanda in Hyderabad in April 2002. Newsletters show other divisions of Power Horse, including in Oman, Yemen Jeddah, Riyadh, Dubai, Saudi Arabia and Bahrain. The newsletters show Mr.Franz Crispel to be the Power Horse Middle East, CEO. All the divisions of the Middle East are, therefore, represented by the Company Power Horse Middle East. 8. The Plaintiff has shown the website extracts of the 11 contact details of all the Power Horse Divisions in Bahrain, Dubai and India. Pertinently there are two separate contact details of India being PH India and PH India Pvt. Ltd., both showing their Head Office in Vienna, Austria. The Bahrain and Dubai Divisions also similarly show the same Head Office. They are therefore, the divisions of the same Company in Austria. Interestingly, the newsletters, website details as well as the Employment Contact of Ani Mohandas refer to the Dubai Division in “Dubai Media City”. 9.The Plaintiff has also shown the photographs of the various management personnel of PH. These include the photographs of the aforesaid Mohamed-El-Gamal as CEO Middle East (ME) (not Dubai) and Ani Mohandas as Managing Director, India. Incidentally it shows Suresh Kavikkal, who filed the Affidavit-in-support of this application as Account Middle East (ME) (not Dubai). The statements of the Applicant in their last Affidavit filed to explain the documents produced by the Plaintiff, are completely without any substantiating documents and contrary to the documentary evidence provided by the Plaintiff. There is nothing to show any of those persons associated with Dubai as stated by the Applicant. 12 10. The aforesaid E-mails in the chronology show the exchange of E-mails between Mohamed El-Gamal and Ani Mohandas as CEOs of Power Horse Middle East. They have been the Directors in the Applicant-Company. They have always represented Power Horse Division in the Middle East. The Suit is filed against Power Horse Middle East Company and its branch office in India. All the aforesaid Directors of the Applicant, who resigned immediately after the decree came to be passed, represented Defendant No.1-Company as well as its divisions in India, which is Defendant No.2- Company. In fact, Ani Mohandas was appointed Country Manager, India, by Mohamed El-Gamal, who was the CEO of Power Horse Middle East and Asia (and not PH FZ, LLC Dubai). 11.Consequently, the Affidavit-in-rejoinder to this Application filed by Ani Mohandas as the Managing Director of the Applicant, showing that he was appointed by the CEO of Power Horse FZ-LLC, Dubai seeks to only pass off that the Applicant-Company in India has relations with a separately incorporated Company in Dubai. It does not. Though he may have been appointed by Mohamed El-Gamal, Mohamed El-Gamal was not the CEO of Power Horse FZ-LLC in Dubai. He is not shown as a Director of any Company based in 13 Dubai. The aforesaid E-mails show him only as CEO of Power Horse Middle East and Asia, which is Defendant No.1- Company. The employment contract relied upon by Ani Mohandas, in the Affidavit-in-rejoinder to this application could have been entered into at any later date by both Mohamed El-Gamal and Ani Mohandas acting in consort. The appointment in India of Ani Mohandas in a separately incorporated Company is, therefore, only to create an eyewash. The aforesaid documents have an unmistakable and uncanny resemblance and relationship with the Defendant Companies. A mere incorporation of a Company much after the filing of the Suit by the same persons who were in management of Defendant No.1 Company as the first Directors and subscribers to the Memorandum of Association of the Company would bring the Applicant- Company within the purview and umbrella of the operations of Defendant Nos.1 and 2. 12. Mr.Dwarkadas relied upon a judgment to show that a decree passed against a Company cannot be satisfied by attachment and sale of properties belonging to other Limited Companies even if they were managed by the same group of Directors since they are different and distinct juristic personalities with different sets of shareholders (Punjab 14 National Bank vs. Bareja Knipping Fasteners Ltd. & ors. reported in Vol.103 Company Cases 958) and that holding subsidiaries are separate legal entities [Turner Morrison & Co. Ltd. vs. Hungerford Investment Trust Ltd., reported in AIR 1969 Calcutta 238]. What Mr.Dwarkadas missed is that those Companies, though under the same management, are separate legal entities because they carry different businesses in different products. In the case of the Defendants and the Applicant, it is seen that they are, in fact, divisions of Austrian Company and have their Head Office in Austria. Consequently, the corporate garb at a much later date does not show themselves as separate legal entities. 13.In the case of Delhi Development Authority vs. Skipper Construction Company (P) Ltd. & anr. reported in AIR 1996 Supreme Court 2005, it has been held that corporate bodies created by an individual and his family members for committing illegalities and defrauding people can be treated as one entity. In such cases the Court would ignore the corporate character and will look at the reality behind the corporate veil to pass appropriate orders and do justice between the parties concerned. 14. The aforesaid facts of the present case show that 15 Defendant No.1, which was the Middle East Division of the Austrian Company and which was instrumental in forming Indian Division of Defendant No.1, had had business relations with the Plaintiff for which the Suit came to be filed and which has been decreed. That decree is sought to be executed against Defendant Nos.1 and 2. The creation of the Applicant is the camouflage for suppression of the assets of the Defendants. The Applicant is a mere division directly of the Company from whom they claim parentage. The Applicant- Company cannot be treated as a separate corporate entity which was incorporated after much water has flown. 15. Their Bank Account is, therefore, rightly attached. The Application for raising attachment is mischievous and misconceived. It is dismissed with costs of Rs.5,000/-. [SMT.ROSHAN DALVI, J.]