By James Mathew
The move follows India notifying last month UAE as a reciprocating territory for the purpose of enforcing foreign civil decrees in India
As many as 9 UAE-based banks are understood to be in the process of initiating legal action against Indian defaulters to recover around $7 billion.
The action follows the introduction of a new Indian reciprocal agreement last month aimed at deterring expats from fleeing debt and civil cases in the UAE.
The UAE-based banks are said to have approached Indian law firms to assist them in completing the legal process in India, such as serving notices on the defaulters and approaching India’s insolvency court - the National Company Law Tribunal (NCLT), according to a report in Economic Times.
The majority of the cases involve corporate loans taken by Dubai or Abu Dhabi-based subsidiaries of Indian companies, while others involve cases against individuals, the report said, quoting unnamed sources.
The Economic Times says that Emirates NBD, Abu Dhabi Commercial Bank and Mashreq Bank are among the UAE financial institutions that in the process of starting legal action.
In many cases, especially those of corporate loans, the amounts involved are substantial and so the UAE banks are moving fast to enforce the UAE court rulings on them through the legal channels in India.
Some of these cases are understood to have been pending for last 10-15 years, as previous recovery options open to banks were not very effective and highly time consuming, according to legal experts.
The enforcement of UAE courts’ rulings in cases involving Indian corporate or nationals are now be easier after the Indian government issued a notification on January 17 under section 44A of Civil Procedure Code, allowing the decrees of certain UAE courts in civil cases to be enforceable in India.
“UAE-based banks had no recourse earlier to enforce UAE court judgements to recover their corporate or individual loans given to Indians in the UAE. After the recent notification, now they can initiate execution proceedings in India,” S Prabhakar, a leading corporate lawyer, said.