Calcutta High Court Directs Glocal Healthcare Systems Pvt Ltd Shareholders, Promoters, And Directors To Provide Affidavits Disclosing Assets

Calcutta High Court Directs Glocal Healthcare Systems Pvt Ltd Shareholders, Promoters, And Directors To Provide Affidavits Disclosing Assets

Justice Ravi Krishan Kapur of the Calcutta High Court has ruled in favor of UpHealth Holdings Inc., directing Glocal Healthcare Systems Private Limited shareholders, promoters, and directors, namely Dr. Syed Sabahat Azim, Ms. Richa Azim, Mr. Gautam Chowdhury, Mr. M. Damodaran, and M/s Kimberlite Social Infra Private Limited, to furnish affidavits detailing their assets and liabilities and a statement indicating their financial capability to fulfill obligations under the Award in favor of Uphealth Holdings Inc.

The petitioner, Uphealth Holdings Inc. (Uphealth), a healthcare Services Company incorporated in the USA, initiated legal action against Glocal Healthcare Systems Private Limited (Glocal) promoters, directors, and shareholders (respondents). The dispute originates from a Share Purchase Agreement (SPA) signed between the parties in October 2020, wherein Uphealth Holdings was to acquire a majority stake in Glocal Healthcare and assume control of its management.

Disputes arose due to alleged breaches of obligations under the SPA, despite substantial payments by the petitioner. Invoking the arbitration clause (Clause 14 of the SPA), Uphealth referred the matter to the International Chamber of Commerce (ICC). An emergency arbitrator was appointed, and proceedings concluded in November 2022, with the seat of arbitration in Chicago, Illinois.

Efforts were made to ensure each respondent had adequate notice of the arbitration proceedings. Despite opportunities to participate, the respondents chose not to engage, leading to the issuance of a final award on March 15, 2024, by the ICC Tribunal, awarding damages of USD 110 million to Uphealth against Glocal shareholders, finding them in breach of the SPA.

The petitioner submits in the petition that, despite court orders and directives, the respondents have refused to disclose relevant financial information. Additionally, they suspect the respondents may engage in asset transfers to undermine the award's validity, suggesting a lack of transparency and ulterior motives.

Pending the hearing and final disposal of the case and the enforcement of the March 15, 2024 Award, Uphealth seeks orders from the High Court directing the respondents to provide comprehensive details of all their assets, encompassing tangible, intangible, and intellectual properties, as well as bank accounts and receivables. Additionally, they seek disclosure of all encumbrances on their assets, along with information regarding their loans, liabilities, and ongoing litigation, supported by relevant documents. Furthermore, Uphealth seeks a statement indicating whether the respondents are financially capable of fulfilling the obligations under the award.

The respondents raised objections regarding the maintainability of the petition. Firstly, they argue that the court lacks jurisdiction to entertain the application due to insufficient specificity in invoking the court's jurisdiction. Additionally, they contend that the directive to file an affidavit of assets is premature and should be reserved for execution or enforcement proceedings.

Moreover, they asserted that the petitioner's ongoing liquidation proceedings under Chapter 11 of the Bankruptcy Code in the USA render them ineligible to pursue the current application. They maintained that the relief sought in the application is suitable only for enforcement proceedings and falls outside the scope of Section 9 of the Act.

The court emphasized the expansive nature of its powers under Section 9 of the Act, highlighting that they surpass those under the Code of Civil Procedure, 1908. It clarified that these powers enable it to secure an award at various stages, including before, during, or after the arbitral proceedings. Moreover, the court asserted that there are no limitations on its jurisdiction under Section 9, emphasizing its duty to protect the interests of parties involved.

The court observed that Section 2(1)(e) of the Act clearly designates the High Court as the sole authority to entertain the application in question. It underscored that recent amendments have reinforced the High Court's exclusive jurisdiction over all international commercial arbitrations, regardless of whether they possess ordinary original civil jurisdiction. Given that the disputes between the parties qualify as "international commercial disputes" under Section 2(i) of the Commercial Courts Act, 2015, the Commercial Division of the Court has unequivocal jurisdiction to hear this application.

The court observed that the balance of convenience and the risk of irreparable injury favored issuing orders at this stage. Given the circumstances, the court emphasized that unless measures were taken to secure the award, the petitioner would suffer irreparable prejudice and loss.

Consequently, the court directed the respondents to furnish affidavits detailing their assets and liabilities and a statement indicating whether they are financially capable of fulfilling the obligations under the award dated March 15, 2024, within two weeks.