State Bank Of India V. Murjani Notes

State Bank of India v. Murjani

Facts

Mr Murjani is a Director of both the second defendant, Murjani Ltd, a company registered in the Virgin Islands, and of Murjani Marketing Group Ltd, the first defendant. Both these corporate defendants are part of the Murjani Group of Companies concerned in the manufacture and sale of clothing. They play no part in this appeal. On 28th October 1986 Mr Murjani agreed that on demand he would guarantee the debts of another company in the Murjani Group (Murjani Industries (Hong Kong) Ltd) to the State Bank of India (SBI), limited to US$8 million.

On 29th January 1989 Mr Murjani travelled to Hong Kong from New York, where he had been on business. His purpose was to negotiate with Mr Meyer of Credit Agricole. As a result, Heads of Agreement were signed by the two men in relation to the proposed sale of shares in Tommy Hilfiger. Mr Murjani intended then to fly back to New York on 5th February to conclude the deal. However, on 4th February SBI obtained, ex parte, a prohibition order from the Hong Kong Court preventing Mr Murjani from leaving Hong Kong. They did so knowing he intended to go to New York to effect the sale and despite the fact that they had made no demand upon him to honour his guarantee.

New York Proceedings by SBI: On 29th March 1989 SBI issued a summons in New York against Mr Murjani seeking payment of the same $7 million, the subject of their Hong Kong action, and moved for summary judgment. The summons was served upon Mr Murjani at the address in Hong Kong where he had been since his arrival on 29th January. Mr Murjani issued a cross-motion seeking dismissal of SBI's claim on the ground that the New York Court lacked jurisdiction to hear it. The case came before Justice Carol Huff in the Supreme Court of the State of New York, County of New York. On Mr Murjani's behalf it was submitted that the court had no jurisdiction but the merits were also raised. By a judgment entered on 25th August 1989 the learned judge held that the court had jurisdiction to hear the claim against Mr Murjani and granted an order for summary judgment in favour of SBI.

Note that Murjani was not present in New York at the time when the proceedings were initiated, but it was arguable that has was “resident” there.

Enforcement proceedings in England: Finally, SBI having sued Mr Murjani in the courts of Hong Kong and New York, pursued him to England, where he had returned after discharge of the second Hong Kong prohibition order on 19th October 1989. They issued a writ in England on 30th October 1989 seeking to enforce their New York judgment. As already indicated, on 3rd May 1990 the case came before Master Topley who granted SBI summary judgment, stayed...

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