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Rulings Of UAE Courts In Civil Cases Now Enforceable in India

By LawStreet News Network      08 February, 2020 09:02 PM      0 Comments
Rulings Of UAE Courts In Civil Cases Now Enforceable in India

On January 17, 2020, the Ministry of Law and Justice issued a notification allowing rulings of Emirati courts in civil cases to become enforceable in India. This means that loan defaulters who have fled to India without repaying loans in Dubai, can be sued by banks in UAE which can get a decree from Emirati courts in their favour and get them enforeced against defaulters in India. Many corporates had taken loans from UAE based banks and absconded to India without repaying their debts. Reportedly, at least 9 banks have initiated legal action to recover loans, which amount approximately to Rs. 50,000 crores, from defaulters in India.

“Earlier UAE-based banks had no recourse to enforce judgements directly to recover their corporate or retail loans given to Indians in the UAE, but now they can take action in India. So, now UAE banks can initiate execution proceedings in India after they take a decree from a UAE court and may also explore initiating proceedings under the IBC (India’s Insolvency and Bankruptcy Code),” said Ajay Monga, a partner at law firm SNG & Partners.

These banks include UAE-based Emirates NBD, Mashreq Bank and Abu Dhabi Commercial Bank. A few other lenders such as Doha Bank, National Bank of Oman and National Bank of Bahrain, which have exposure to Indian entities or citizens through their branches in Dubai or Abu Dhabi, have also either already moved courts in UAE or are in the process of doing so in the coming weeks, the people said.

Most of the loan defaulter from India are Corporates. Subsidiaries of Indian Companies based in Dubai borrowed loans there and fled back to India without repaying them. The culprits' list also includes personal loan defaulters who did the same. Most of the loans were taken in the last 10-15 years.

“Most of the cases are of corporate loans and that is also the priority for the banks as the amounts involved are huge. But some banks also have retail loan exposure to India,” said one of the people.

In its notification, the Ministry of Law and Justice said that UAE would be a ‘reciprocating territory’ under Section 44A of Civil Procedure Code, 1908.  Section 44A essentially says that any decree passed by the superior courts of any ‘reciprocating territory’ may be executed in India, as if it has been passed by Indian courts. Similarly, UAE will allow the execution of rulings of Indian courts in civil cases within it's territory. The government notification allows the ruling of two UAE-based federal courts and five other courts to be enforceable in India.


Author – Satwik Sharma

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