Securing Claims Against Foreigners for Insufficient Indian Assets and Lack of Reciprocity

Posted In: Alert
Posted By: Singularity Legal
Tags: Section 151 CPC, Interim Relief, Patent Infringement, Security for Damages, Non-reciprocating Territories

Securing Claims Against Foreigners for Insufficient Indian Assets and Lack of Reciprocity

INTRODUCTION

On 1 July 2025, a Single Judge Bench of the Delhi High Court, exercising its inherent powers under Section 151 of the Code of Civil Procedure, 1908 (“CPC”), issued a significant order in Communication Components Antenna Inc. v. Ace Technologie Corp & Ors.^[1]The Single Judge Bench directed the Defendants to furnish security amounting to 25% of the claimed damages in the form of a bank guarantee or fixed deposit receipt, in a case concerning patent infringement.

BACKGROUND

Communication Components Antenna Inc. (“Plaintiff”) is a Canadian company engaged in supplying cellular base station equipment. Ace Technology Corporation (“First Defendant”) is a South Korean company engaged in manufacturing and selling antennas. Shin Ah Ltd (“Second Defendant”) is a Hong Kong company, and the remaining defendants are two Indian subsidiaries of the First Defendant (together with First and Second Defendants, “Defendants”).
In 2018, the Plaintiff instituted a commercial suit (“Suit”) seeking a permanent injunction to restrain the Defendants from infringing its registered Indian patent. The Plaintiff also filed an interlocutory application (“First IA”) under Order XXXIX, Rules 1 and 2 of the CPC for a temporary injunction.
The Court, by its order dated 27 July 2019, allowed the Defendants to continue selling antennae in India, subject to furnishing a bank guarantee equivalent to 10% of prior sales and depositing 10% of the value of ongoing sales (“July 2019 Order”).^[2] While deciding the appeal for stay of the July 2019 Order, the Division Bench, permitted the First Defendant to furnish a corporate guarantee and directed the other Defendants to file affidavits undertaking to comply with the decree in the event that the Plaintiff succeeds.^[3] The Plaintiff challenged this before the Hon’ble Supreme Court, which reinstated the July 2019 Order for a bank guarantee and cash deposit.^[4]
Subsequently, while adjudicating the appeal in toto, the Division Bench modified the July 2019 Order to allow the Defendants to furnish another bank guarantee instead of the cash deposits.^[5]
The Plaintiff then filed the present application under Section 151 of the CPC, seeking further security due to a sharp decline of 64.90% in the share value of the First Defendant.

PARTIES’ SUBMISSIONS

Plaintiff’s Submissions

The Plaintiff made the following arguments:
1. The Defendants were foreign entities with limited assets in India, rendering any decree passed by the Court effectively unenforceable.
2. Neither South Korea nor Hong Kong is a reciprocating territory under Section 44A of the CPC, and enforcement of Indian decrees in these jurisdictions is uncertain.
3. The Plaintiff’s estimated damages were INR 1,160 crores (approx. USD 140 million), while the Defendants’ own affidavit revealed Indian assets worth only around INR 28 crores. Therefore, the Defendants lacked sufficient presence in India to satisfy any eventual decree.
4. In an earlier case of patent infringement against a Chinese defendant, the Court had passed a decree for damages in favour of the Plaintiff. However, the same had been rendered infructuous due to China not being a reciprocating territory.^[6]
5. Order XXXVIII Rule 5 CPC does not apply in such cases; therefore, the Court must exercise its inherent powers under Section 151 CPC to secure the Plaintiff’s claim, as supported by the decision of the Karnataka High Court in M. Ramachandra Rao v. Varaprasad Rao (“Ramachandran Rao”).^[7] Moreover, the Delhi High Court in Nokia Technologies v. Guangdong Oppo Mobile Telecommunications Corp. Ltd. & Ors (“Nokia Technologies”),^[8] had directed the defendants to furnish a security deposit to “secure the ends of justice”, which was upheld by the Hon’ble Supreme Court.
Based on these submissions, the Plaintiff requested that the Defendants be directed to furnish a bank guarantee for 25% of the claimed damages.

Defendants’ Submissions

The Defendants made the following arguments:
1. The absence of reciprocity under Section 44A of the CPC does not imply foreign judgments are unenforceable in such territory. South Korean law, under Article 217 of its Civil Procedure Act, does allow the enforcement of foreign judgments.
2. Nokia Technologies was distinguishable from the present case, as it involved Standard Essential Patents and the defendant therein was a prior licensee of the patent in dispute, whereas in the present case, the Plaintiff had yet to establish technical infringement, and no claim mapping had been submitted so far.
3. The Defendants had already deposited INR 70 crores with the Court pursuant to the July 2019 Order, reflecting their bona fides and cooperation.
4. Interim relief of this nature should be granted only in rare and exceptional cases, which the present matter is not. As per the Hon’ble Supreme Court in Deoraj v. State of Maharashtra (“Deoraj”),^[9] interim reliefs of such nature could only be granted if the court was satisfied that withholding the same would prick the conscience of the court and “would do violence to the sense of justice”. However, in the present case, the Defendants had a strong prima facie case with the test of balance of convenience and irreparable harm in their favour, the Plaintiff’s claimed damages of ₹1,160 crores were unproven, and the First Defendant’s role was limited to manufacturing antennas sold directly to Reliance Jio, with discontinuation based on lack of further orders. Moreover, the First Defendant’s CFO’s affidavit affirmed a healthy financial position, confirming the Defendants’ ability to satisfy any potential decree. The Plaintiff had shown no real risk of asset dissipation or flight from jurisdiction.
On this basis, the Defendants sought dismissal of the Plaintiff’s application for security.

issue

The Court had to decide whether the First Defendant should be directed to deposit 25% of the Plaintiff’s claimed damages under Section 151 of the CPC to secure the ends of justice.

THE COURT’S ANALYSIS AND DECISION

Inherent Powers under Section 151

The Court commenced its analysis by reaffirming that while statutory remedies under Indian law apply uniformly to all parties, domestic or foreign, their applicability must be evaluated contextually, based on the facts and circumstances of each case.
Section 151 of the CPC preserves the Court’s inherent powers to issue such orders as are necessary to secure the ends of justice or prevent abuse of process. Although the provision vests broad discretion, its use must be cautious and exceptional. Especially in a situation where the interim relief sought may border on the final relief itself, the court should grant the appropriate relief to meet the ends of justice under Section 151 only when it is satisfied that by the time the final relief becomes available, its execution will be impossible.
However, the court has to be persuaded while granting such a relief that there is a prima facie case, the balance of convenience is in the applicant’s favour, and there is a real risk of irreparable harm. The court may follow the rare and exceptional route of granting the discretionary remedy under Section 151, only where there is hardly any other choice left.
Relying on Deoraj, the Court noted that the case has to be “foolproof”, and the standards of prima facie case, balance of convenience, and irreparable injury must forcefully tilt in the applicant’s favour so much so that withholding the relief would “prick the conscience” of the Court. The Court also cited precedents, including Rahul S. Shah v. Jinendra Kumar Gandhi,^[10] Ramachandra Rao, and Nokia Technologies, where courts had directed security deposits under Section 151 CPC. Notably, it referred to Rxprism Health Systems v. Canva Pty Ltd.^[11], where the Delhi High Court had granted interim security by way of a bank guarantee and/ or a fixed deposit receipt in similar factual circumstances involving a foreign defendant with no Indian assets.

Limited Indian Assets, Enforcement Concerns, and Declining Financial Health

Assessing the factual matrix, the Court concluded that Order XXXVIII Rule 5 of the CPC was inapplicable in the present case since it presupposed the existence of attachable assets in India that are likely to be dissipated. These factors were not available in the present case since the First Defendant had limited assets in India and had ceased operations following the discontinuation of orders from Reliance Jio. In this context, the Court held that Section 151 was the only effective remedy open to the Plaintiff.
On the question of enforcement, the Court acknowledged that although Article 217 of the Korean Civil Procedure Act allows for recognition of foreign judgments, such enforcement is conditional upon reciprocity, which is currently not established between India and South Korea. This undermined the enforceability of any decree passed by an Indian court in South Korea and would leave the Plaintiff without a viable enforcement route, should it eventually succeed at trial.
Further, the Court took cognisance of the First Defendant’s declining financial condition, with a 64.90% decline in valuation and discontinuation of operations in India. These factors contributed to a serious and imminent risk of a decree in favour of the Plaintiff being rendered inexecutable. The balance of convenience and the risk of irreparable harm thus clearly tilted in favour of the Plaintiff.

Policy Considerations

The Court also stressed that upholding intellectual property rights and enabling effective adjudication require interim protection, especially when final relief may become illusory without it. This promotes a progressive patent regime while maintaining judicial efficacy.

Defendants’ Conduct

While the Defendants had previously deposited INR 70 crores following the July 2019 Order, they had not continued the deposits as mandated, citing ceased revenue generation in India. The Court found this non-compliance significant, especially in light of the continued use and infringement of the Plaintiff’s patent. The lack of ongoing Indian operations, the absence of attachable assets, and the declining financial health only exacerbated the Plaintiff’s apprehension, which the Court found reasonable and credible.

Satisfaction of the Trinity Test and the Court’s Decision

The Court found that the Plaintiff had established a strong prima facie case, relying on its earlier finding of infringement in its July 2019 Order, which had been upheld by the Division Bench. It noted that Defendants’ continued non-compliance, failure to deposit additional amounts with the Court, and admitted lack of recent sales, all of which indicated a “precarious” financial position. The Court concluded that without appropriate relief, the Plaintiff’s apprehension of the Defendants’ inability to satisfy the decree would materialise.
Given that the Plaintiff had demonstrated a strong prima facie case, a lack of alternative remedy, and the risk of irreparable harm, the Court was satisfied and that the balance of convenience was in favour of granting the relief and that this was a rare and exceptional case warranting the exercise of its inherent powers under Section 151.
Accordingly, it directed the First Defendant to furnish a security of INR 290 crores (25% of the claimed damages) by way of a bank guarantee from a Scheduled Commercial Bank or a fixed deposit receipt in the name of the Registrar General of the Court, within four weeks.

CONCLUSION

This decision strengthens the position of plaintiffs dealing with foreign defendants who operate through offshore structures or conduct cross-border business without maintaining substantial attachable assets in India. By granting security for damages even without final adjudication on the quantum, the Court has lowered the threshold for pre-decretal relief where the defendant has limited assets in India and enforcement abroad is uncertain.
This makes the ruling particularly significant in actions against defendants based in countries that do not have reciprocal arrangements with India under Section 44A of the CPC. India currently recognizes reciprocity with only a limited number of jurisdictions, including the UK, Singapore, UAE, Malaysia, New Zealand, and Bangladesh.^[12] However, many major jurisdictions from which India receives investments, such as the USA, several European nations, Japan, and Korea, as well as jurisdictions through which investments are made in India, such as the BVI, Cayman Islands, and Mauritius, are not notified as reciprocating territories.
By affirming that the risk of an unexecuted decree may, in appropriate circumstances, justify early judicial intervention under Section 151 of the CPC, this ruling provides plaintiffs with a strategic safeguard in cross-border litigation.

^[1] Communication Components Antenna Inc. v. Ace Technologies Corp. & Ors., Judgment dated 1 July 2025 of the Delhi High Court in CS(COMM) 1222/2018

^[2]Communication Components Antenna Inc. v. Ace Technologies Corp. & Ors., Judgment dated 12 July 2019 of the Delhi High Court in CS(COMM) 1222/2018

^[3]Ace Technologies Corp. & Ors. v. Communication Components Antenna Inc., Judgment dated 8 August 2019 of the Delhi High Court in CS(COMM) 1222/2018

^[4] Communication Components Antenna Inc. v. Ace Technologies Corp. & Ors., Judgment dated 20 September 2019 of the Supreme Court in SLP (C) No. 21938/2019

^[5]Ace Technologies Corp & Ors. v. Communication Components Antenna Inc., Judgment dated 10 April 2023 of the Delhi High Court in FAO(OS)(COMM) 186/2019

^[6]Communication Components Antenna Inc v. Mobi Antenna Technologies (Shenzhen) Co. Ltd. & Ors., 2022/DHC/000855

^[7] Nokia Technologies v. Guangdong Oppo Mobile Telecommunications Corp. Ltd. & Ors., 2023 SCC OnLine Del 3841

^[8] M. Ramachandra Rao v. Varaprasad Rao, 1999 SCC OnLine Kar 251

^[9]Deoraj v. State of Maharashtra & Ors., (2004) 4 SCC 697

^[10] Rahul S. Shah v. Jinendra Kumar Gandhi & Ors., (2021) 6 SCC 418

^[11]Rxprism Health Systems v. Canva Pty Ltd., 2023 SCC OnLine Del 4186

^[12] As of the date of this alert, the jurisdictions notified as reciprocating territories with India under Section 44A of the Code of Civil Procedure, 1908, include: the United Kingdom, Aden, the Fiji Islands, the Republic of Singapore, the Federation of Malaya, Trinidad and Tobago, New Zealand, the Cook Islands (including Niue) and the Trust Territories of Western Samoa, Hong Kong, Papua and New Guinea, Bangladesh, and the United Arab Emirates.

Author: Nitansha Nema & Prateek Bagaria

Securing Claims Against Foreigners for Insufficient Indian Assets and Lack of Reciprocity

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