In a major setback for ITC's estranged US partners, the Chitalias, a New Jersey court has struck down $41.86 million of their claim for more than $55 million in punitive and other damages.
The rejected claims include the Chitalias' demand for $15 million in punitive damages, $25 million for defamation of character, and $840,000 as repayment for a guarantee provided for ITC in Sri Lanka by Vaam Impex Warehousing and $646,390 as payment for goods sold by Sunny Trading to ITC Global.
New Jersey magistrate Joel A Pisano, who is presiding over the case, also dealt a rap on the knuckles for the Enforcement Directorate.
The United States district court judge sent a letter to the Indian finance ministry, asking for a copy of a 25-page sworn statement made by Suresh and Devang Chitalia, which has not been made available for the US court case.
The letter, dated July 14, reveals that Devang Chitalia testified that the Enforcement Directorate's special director M C Joshi took the only copy of the statement back to India with him - after instructing the Chitalias to destroy all other copies, both on paper and in the computer.
The Chitalias had provided the sworn statement after intensive questioning by Joshi in September-October last year. The statement was authenticated at the Indian consulate in New York on October 9, 1996.
Pisano, taking a stern view of the Enforcement Directorate's alleged actions, noted that the Chitalia document, while not made available to the New Jersey court, was apparently leaked to the Indian media.
The statement is necessary for the purpose of justice, he said in his letter to the Indian finance ministry.
Pisano showed little sympathy for the Chitalias' claims in a court hearing last Wednesday. The Chitalias had claimed that ITC and ITC Global had affected their business reputation by filing cases against them that amounted to an accusation of theft.
Pisano disagreed, arguing that the Chitalias may have jumped to
conclusions.
Mere commencement of suits cannot be defamatory, nor can any statements made in pleading, he said.
The New Jersey magistrate poked holes in the Chitalias' demand for repayment of funds to Vaam Impex and Sunny Trading. Pointing out that the Chitalias had argued that ITC controlled both Vaam and Sunny, Pisano said, One can't have it both ways.
If they do not control or have any authority with the right to either company, they cannot bring a claim on either. That would be irresponsible licence, he said.
The New Jersey court, however, is yet to decide on several other claims made by the Chitalias against ITC, including those made on behalf of the Chitalia-controlled EST Fibres (EST is the only corporation that the Chitalia say that they, and not ITC controlled.
The remaining claims include $1.4 million as compensation for buying out other shareholders in ITC's abortive attempt to set up Bukhara restaurants in the US, and compensation for other ventures at cashew processing, introducing ITC cigarettes in the US, and pysllium husk processing.
Besides, the Chitalias are also claiming more than $4 million as reimbursement for expenses incurred while doing business with ITC.
The Chitalias had filed their counterclaim after ITC took them to court in the United States asking for nearly $16 million as compensation for alleged advances that had reportedly not been repaid.
