Eraaya Lifespaces Limited v Elara Capital PLC and others

The Claimant (Eraaya), a listed Indian software and e-commerce company, issued certain bonds designed to provide it with the funding to buy a company, Ebix, a Delaware software and e-commerce company. Eraaya claimed that its agent, the First Defendant (Elara), was in breach of an obligation to pay over the proceeds of sale of the second tranche of those Bonds to Eraaya: [2]. Eraaya sought a final mandatory injunction requiring it to do so: [2]. Elara and certain Bondholders (who participated in the proceedings as Respondents by direction of the Court) resisted the injunction application: [3].

The Judge dismissed Eraaya’s injunction application. In so doing the Judge addressed the question of the threshold for mandatory interim relief ([78]-[91]), the Bondholders’ proprietary rights to the funds (including through a Quistclose trust)([[92]-[101]), as well as the American Cyanimid factors ([122]-[144]).

The Bondholders also applied successfully to be joined to the proceedings as Defendants. The judgment contains a valuable analysis of the relevant authorities regarding, among other things, when a party can be joined as a Defendant against the wishes of a Claimant ([143]-[160]).

Finally, the Elara and the Bondholders also sought declarations that they had not breached the CPR restrictions on collateral use, alternatively retrospective permission for such use. The Judge held that Elara and the Bondholders had breached the collateral use restrictions ([161]-[182]) – again highlighting the breadth of those restrictions - but that retrospective permission should be granted ([183]-[188]).

The judgment may be found here.

Harish Salve KC, Peter Head and Marlena Valles acted for Eraaya, with Viksit Arora, instructed by Gresham Legal.

Robert Anderson KC, Carmine Conte and Tom Watret represented the Bondholders, instructed by Hogan Lovells.