Daiichi Sankyo: Delhi HC says can't attach out-of-jurisdiction properties even for foreign arbitral award enforcement

The Delhi High Court recently clarified that it does not have the power to directly attach immovable properties situated outside its territorial jurisdiction even for enforcement of foreign arbitral awards [Daichii Sankyo Vs Malvinder Mohan Singh & Ors]..The restrictions contained in Code of Civil Procedure (CPC) apply even in cases relating to enforcement of foreign arbitral awards, the High Court held.Thus, while the Delhi High Court is the executing court for the Daiichi Sankyo award against former Ranbaxy promoters Malvinder and Shivinder Singh, any property located in another State must be dealt with by the court of competent territorial jurisdiction, Justice Anup Jairam Bhambhani ruled. The Court delivered the ruling on August 20 while disposing of a property dispute in the ongoing Daiichi Sankyo execution proceedings. "Though this court has passed the award decree, and the principal execution proceedings are pending before this court, since the subject property is situate outside its territorial jurisdiction, this court is not empowered to attach the subject property," the Court conclusively stated..The case stemmed from a foreign arbitral award dated April 29, 2016, rendered by the International Chamber of Commerce at Singapore in favor of Japanese pharmaceutical giant Daiichi Sankyo Company Limited. The award was secured against multiple Indian entities, including former Fortis Healthcare promoters Malvinder Mohan Singh and Shivinder Mohan Singh.The award attained finality after Supreme Court confirmation in 2018.Daiichi Sankyo is pursuing recovery of over ₹5,000 crores under the arbitral award but has recovered less than ₹100 crores to date. The current dispute involves a Gurugram property worth approximately ₹126 crores, which One Qube Realtors Private Limited claims to have purchased legitimately from Torus Buildcon Private Limited in 2017.Qube, now controlled by Blackstone Group entities, challenged the Delhi High Court's attachment orders arguing it was an innocent third-party purchaser with no connection to the judgment debtors. The company emphasized that its acquisition occurred before any court restraints were imposed on the disputed property.Daiichi alleged that the property transfer violated six solemn assurances given by judgment debtors to the court between 2016-2017, covering their entire asset base. SEBI orders from 2022 described Torus Buildcon as an "intermediate conduit entity" that was part of an elaborate scheme of diversion and misutilisation of funds..The High Court analysed the fundamental jurisdictional framework governing execution proceedings, referencing Sections 39 and 46 of the Code of Civil Procedure. Justice Bhambhani emphasized that a fundamental issue must be decided before any further directions relating to the subject property can be passed - namely the territorial jurisdiction limitation on courts executing decrees."Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction," the Court quoted from Section 39(4) of the CPC, establishing that these restrictions apply equally to foreign arbitral awards made executable as decrees.The judgment clarified that courts executing foreign arbitral awards must follow prescribed procedures when dealing with properties outside their territorial limits. The only correct, legal course of action for the High Court in the present case involves issuing precepts to competent territorial courts rather than attempting direct attachment, Justice Bhambhani ruled..Thus, the Court issued a fresh precept under Section 46 of the CPC to the District & Sessions Judge, Gurugram, directing property attachment within that court's territorial jurisdiction. "The Court to which a precept is sent shall proceed to attach the property in the manner prescribed in regard to the attachment of property in execution of a decree," the judgment stated.Significantly, the Court established that substantive ownership disputes must be resolved by territorially competent courts rather than the court executing the foreign award. "All questions (including questions relating to right, title or interest in the property attached) arising between the parties shall be determined by the Court dealing with the claim or objection and not by a separate suit," Justice Bhambhani clarified..Daiichi Sankyo Company Ltd was represented by Senior Advocate Arvind K Nigam and advocates Giriraj Subramanium, Nabik Syam, Samridhi Hota, Shivam Chanana, Anindita Barman, Astha Ahuja, Shyra Hoon, Tanmay Arora, Kunal Chatterji and Angish Aditya..One Qube Realtors Pvt. Ltd. (formerly Ashkit Properties Ltd.) was represented by Senior Advocates Harish Salve, Rajiv Nayyar and Shyel Trehan with advocates Gaurav Vutts, Pranav Sarthi, Krushi Barfiwala, Hitesh Jain, Vignesh Raj, Manjira Dasgupta, Shivalika Rubrabatla, Vidhi Jain, Apoorva Singh and Prachi Dhingra..[Read Judgment]