ITC said the ruling is a major success in its attempt to recover its dues of $12 million from the Chitalias, its estranged US-based business partners. The Chitalias' counterclaim had formed the basis of several allegations made by the Chitalias against ITC to the enforcement directorate.

The ED began its investigations against ITC in 1996, after the Chitalias filed a case against the company in a US court. The alleged violations by ITC involved financial "irregularities" of over $100 million between 1991 and 1996 in commodities trading carried out by ITC Global, the Singapore-based trading arm nowunder liquidation.

ITC said that, on July 2, Judge Katharine S Hayden of the New Jersey district court accepted the March 1998 recommendations of a lower court that a default judgment of $12 million be imposed on the Chitalias and their counterclaim of $14 million be dismissed.

In October last year, ITC had complained to the New York Court that the Chitalias were "wilfully and in bad faith" withholding disclosure of vital documents and records in spite of court orders and thus were "flagrantly abusing" the discovery process to further their other extra-judicial purposes.

ITC prayed that this had substantially prejudiced ITC and the Chitalias should be penalised by an order entering a default judgment in ITC's favour, dismissing the balance counterclaim of the Chitalias and imposing substantial financial penalties on them.

ITC's application was contested by the Chitalias, and, in March this year, magistrate judge Hedges in his report recommended that a default judgment for $12 million be imposed on theChitalias and their counterclaim dismissed.

According to the ITC release, Hedges had noted that the Chitalias had disobeyed a court order in destroying copies of documents that they had provided to India's enforcement directorate to avoid making them available to ITC.

The judge also noted that they had resisted production of their books of accounts and other vital documents to ITC in support of their counterclaim.

The ITC release quoted the judge as saying that the Chitalias had even gone to the extent of interfering with ITC's efforts to obtain documents from third parties in the US despite an enabling court order to that effect.