Mareva Injunction – Position in India
🛑 Mareva Injunction – Position in India
1. What is a Mareva Injunction?
Also known as a freezing order.
A court order restraining a party from disposing of or dealing with assets (usually money or property) to frustrate a judgment creditor.
Named after the English case Mareva Compania Naviera SA v International Bulkcarriers SA (1975).
Purpose: To prevent the defendant from transferring assets outside the court’s jurisdiction, which would make enforcement of a judgment ineffective.
2. Key Features of a Mareva Injunction
Interim and interlocutory: Granted before final judgment to preserve the status quo.
Worldwide scope: Can apply to assets globally (depending on the court’s power).
Ex parte or inter partes: Often granted ex parte initially due to risk of asset dissipation.
Requires the plaintiff to prove:
A prima facie case on merits.
A real risk of asset dissipation or removal.
That the balance of convenience favors granting the injunction.
That the plaintiff will suffer irreparable harm if injunction not granted.
3. Legal Basis in India
India has no specific statutory provision titled “Mareva Injunction,” but the concept is recognized and applied under the inherent powers of the courts and specific procedural rules.
Section 151 of the Code of Civil Procedure (CPC), 1908: Grants courts inherent powers to make orders necessary to meet the ends of justice.
Order XXXVIII Rule 5 CPC: Permits the court to grant injunctions to prevent a defendant from disposing of assets.
Courts often issue freezing orders in commercial disputes, arbitration matters, and insolvency proceedings.
4. Judicial Recognition and Leading Cases
✅ Mareva Compania Naviera SA v International Bulkcarriers SA (1975) – UK case
Established the principle of freezing assets to prevent defendants from evading enforcement.
✅ S.P. Chengalvaraya Naidu v. Jagannath (1994, SC)
Supreme Court acknowledged interim reliefs to prevent frustration of judicial remedies.
✅ Novelty Shoes v. Hira Industries (2000, Delhi HC)
Delhi High Court granted Mareva injunction recognizing risk of asset dissipation.
✅ McDonald's India Pvt. Ltd. v. Vikram Bakshi (2012, Delhi HC)
Affirmed that Indian courts could grant Mareva injunctions even against foreign defendants or assets outside India, provided jurisdictional requirements met.
5. Requirements to Grant Mareva Injunction in India
Plaintiff must establish:
A prima facie case on merits.
The defendant has assets within jurisdiction.
A real risk the defendant will dispose of or remove assets to frustrate enforcement.
The balance of convenience lies with the plaintiff.
Undertaking to compensate the defendant if injunction is wrongly granted.
6. Scope and Limitations
Usually applied to movable and immovable assets.
Courts may impose conditions such as undertaking for damages.
Not a substitute for final relief; only an interim protective measure.
Courts are cautious to avoid misuse or harassment.
Enforcement across borders requires cooperation or recognition under international treaties (India is not a party to the 1970 Hague Convention on Mareva injunctions).
7. Comparison with Other Jurisdictions
| Feature | India | England & Wales | USA |
|---|---|---|---|
| Legal Basis | Inherent powers, CPC Section 151 | Common law (Mareva principles) | Injunctions, asset freeze orders under state/federal laws |
| International Reach | Limited; based on jurisdiction | Wide, including worldwide scope | Varies; depends on court orders and treaties |
| Procedural Mechanism | CPC and court discretion | Common law principles | Federal and state procedural rules |
8. Practical Importance
Crucial in commercial disputes, arbitration, insolvency, and fraud prevention.
Helps ensure judgments and awards are enforceable.
Protects creditors from defendants who might hide or move assets.
✅ Summary Table
| Aspect | Position in India |
|---|---|
| Legal Basis | Section 151 CPC, Order XXXVIII Rule 5 CPC |
| Nature | Interim, interlocutory, freezing assets |
| Requirements | Prima facie case, risk of asset dissipation, balance of convenience, undertaking |
| Jurisdiction | Indian courts with assets under their control |
| Limitations | Not a final remedy; risk of misuse; cross-border enforcement limited |
| Leading Cases | S.P. Chengalvaraya, Novelty Shoes, McDonald's India |
RELATED Blog
0 comments