India
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. In civil proceedings, freezing orders (locally called temporary injunctions) can be granted as an injunctive relief. A temporary injunction is granted until the disposal of the main claim or until further order of the Court.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. Depending on the facts of the claim, interim orders may be issued in conjunction with a temporary injunction. Common orders issued with an injunction include reliefs such as:
(i) a status quo order; or
(ii) deposit of a security sum by the respondent. Courts also have an inherent power to make such orders as may be necessary for the ends of justice or to prevent an abuse of the process.
3. Briefly what is the relevant legal test?
The three main legal tests/principles which govern a temporary injunction are:
(i) prima facie case: a prima facie case implies the probability of the applicant obtaining a relief on the evidence placed before the Court. All preliminary evidence produced by the party has to be taken into consideration in deciding the existence of a prima facie case to justify the issuance of a temporary injunction;
(ii) balance of convenience: the applicant is required to establish the balance of convenience in their favor. The term balance of convenience refers to the comparative mischief or inconvenience caused to the parties. The Court must be satisfied that the inconvenience caused to the applicant by refusing the application, will be greater than the inconvenience caused to respondent in granting the application. Therefore, the balance of convenience needs to tilt in favor of the applicant, for a temporary injunction to be granted;
(iii) irreparable injury: a temporary injunction will not be granted where the applicant has a remedy by way of damages. The injury must be irreparable and continuous. The term irreparable injury means an injury which is substantial and cannot be adequately remedied by way of damages.
In claims related to property for example, the applicant must prove, in their application, that any one of the following three circumstances are met:
(i) any property in dispute is in danger of being wasted, damaged or alienated by any party to the proceedings, or wrongfully held in the execution of an order; or
(ii) the respondent has threatened, or intends, to remove or dispose of their property with a view to defraud their creditors; or
(iii) the respondent threatens to dispose the applicant or otherwise cause injury to the applicant in relation to any property in dispute.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant submits an affidavit to the Court, supported by an application setting out the reasons for the application and the basis on which the legal tests are met. Before granting a temporary injunction, if a case is not made out for an ex parte order, the Court will issue notice of the application to be given to the opposite party, and relevant third party, if such third party has an interest in the subject matter of the main claim. Ex parte orders may be issued where the applicant is able to establish that any delay would cause irreparable injury or loss.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
There are instances where the applicant may be required to put in place security. Compensation may be awarded to the respondent if the application was later found to be frivolous or deceitful.
6. Can it be sought against third parties?
No. As a general rule, temporary injunctions cannot be granted against a person who is not a party to the main claim. However, a Court may, if deemed appropriate and necessary, add parties to the main claim before granting such a relief. There are exceptions: for example, temporary injunctions may be granted against a tenant of a property in relation to the main claim. In cases where a third party is directly affected by a temporary injunction, such an order cannot ordinarily be issued without submissions from the third parties. Third parties with any interest in the main claim are bound by the outcome of the final decision of the Court.
7. What assets are covered by a freezing (or equivalent) order?
Cash assets held in bank accounts, shares, property, or any kind of investment, are assets that may be covered by a temporary injunction. The Court has ruled that assets within India and outside of the jurisdiction of India that form part of the main claim are covered by the temporary injunction.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes, however, this jurisdiction is exercised sparingly, and only where it is absolutely essential to meet the ends of justice.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
A temporary injunction may be granted at any stage of the proceedings, but prior to the final decision.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Generally, no. Exceptions may be granted based on the reliefs sought in the proceedings, and upon satisfaction of the Court on a case-by-case basis, including in relation to legal expenses, and ordinary living expenses. Typically, there would be leeway in relation to expenses incurred in the ordinary course of business so that the property which is the subject of the proceedings is not impacted.
12. What happens after a freezing (or equivalent) order is granted?
The Court will typically direct the applicant to duly notify the respondent and third parties, if applicable, of the freezing order. Unless specifically stayed or modified, the temporary injunction will stay in force until the disposal of the main claim.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The Court, through its final order or decision, may order either the applicant or the respondent to pay costs accrued in the proceedings. However, the initial costs before the final decision are to be borne by the applicant.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
The Court is only concerned with the parties to the claim. Therefore, typically, third parties are not offered any specific protections during the proceedings for a temporary injunction. It is the discretion of the Court to offer any protection in the interest of justice, and it is considered on a case-by-case basis.
15. What are the consequences of breach of a freezing (or equivalent) order?
The Court may order attachment of the property of the party in breach of the temporary injunction and may also order such party to be detained. Knowledge of the injunction is a necessary ingredient to make such party liable for consequences of breach of injunction. If the party is not aware of the order, in such case the party will not be held liable for breach thereof.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
Such a third party would owe a duty of care, but would not be bound by the injunction except where there is a specific direction to the third party.
17. Can a freezing (or equivalent) order be enforced abroad?
In principle, this is possible, subject to the laws of the jurisdiction where the enforcement is sought.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Injunctions from overseas jurisdictions may be enforced in India in certain circumstances, where the subject matter of the main claim or any relief sought has a sufficient connection with the territorial jurisdiction of India.
Contacts
Twisha Shrivastava Senior Associate J. Sagar Associates Gurugram, India twisha.shrivastava@jsalaw.com www.jsalaw.com Shivpriya Nanda Partner J. Sagar Associates Gurugram, India shippi@jsalaw.com www.jsalaw.com
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