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Execution Of A Foreign Decree In India: Enforceability And Its Amplitude Over A Period Of Time

The rapid growth in digitalisation and globalisation of all the sectors in the Indian economy has brought in a wave of massive changes to dispute resolution mechanisms in the country. A great focus has been laid on improvising arbitration, in accordance with the global practices. India have reciprocal agreements with a lot of countries but still it's a long way out to cover most of the countries.

With the inclusion of various sections like sec.44A of CPC many other sections like these can be added to make India foreign decree friendly and to make procedures easy and give confidence to all for gaining justice in this global world.

This article aims to study in detail the execution of foreign decrees passed by a foreign court and the nature and scope of Sec. 13, Sec 14, Sec 44-A of the Civil Procedure Code, 1908. This paper also lays various decisions of the Supreme Court, High Courts and other Courts of India.

Background:
Before 1937 there was no way for the execution of a foreign judgement/decree in India, it was only after section 44A was inserted by the amendment in the Code of Civil Procedure, 1908 in 1937.

Before the introduction of the Section, there were no guidelines or statutory provisions by which decrees passed by Courts outside India could be enforced by the British Indian Courts. Madras High Court's judgments of N.P.A. K Muthiah Chettiar and Ors. Vs. K.S.Rm. Firm Shwebo Burma and Ors. (AIR 1957 Mad 25, (1955) 2 MLJ 608) and Sheik Ali Vs. Sheik Mohammad ((1966) 2 MLJ 346) sets out the historical aspect of the Section.

The section was an enabling provision for the enforcement of the foreign decree in India but restricted it only to the UK and a few reciprocating countries which are mentioned by the government or a bilateral treaty that has been signed.

The Section was significantly modified following Indian Independence. The words "United Kingdom or" were eliminated from sub-section (1) of the Section. The CPC Amendment Act No. 2 of 1951 changed the phrase "British India" to "the States," which was afterwards changed to "India."

Execution of the Foreign Decree:

A judgment given by a foreign reciprocating country is executed in the same way as if it has been passed by the Indian courts only. The application is needed to be filed under sec. 44A, Order XXI Rule 10 read with sec 151 of CPC. The format of the application for the same is given under Order XXI Rule 11 of CPC.

The Code of Civil Procedure, 1908 laid down the procedure for the execution of a foreign decree in India. Sec 2(5) defines "foreign Court" as a Court situated outside India and not established by the authority of the Central Government, Sec 2(6) defines "foreign judgment" and says that it means a judgment that has been given by a foreign Court.

Whereas Section 44A of the code enables the foreign judgment to be executed in India and provides certain conditions for the execution of the foreign decree:
  • Must be of a Reciprocating country
  • Must be of a superior court.
  • Must be conclusive/final.
  • Does not fall under any of the exceptions mentioned under sec.13 of CPC.

What are Reciprocating countries?

Any country or territory outside of India that the Central Government declares to be a reciprocating territory by means of a notification in the Official Gazette is referred to as a "Reciprocating territory" for the purposes of this section, and "Superior Courts" in respect to such territory. Till now there are only 12 countries which are mentioned as Reciprocating countries/territories with U.A.E. being the latest to join in 2020.

A list of all the Reciprocating countries are:
  1. United Kingdom
  2. Trinidad & Tobago
  3. Hong Kong (Special Administrative Region)
  4. Aden
  5. Fiji
  6. Papua and New Guinea
  7. Bangladesh
  8. Singapore
  9. Federation of Malaya
  10. New Zealand
  11. The Cook Islands and the Trust Territories of Western Samoa
  12. United Arab Emirates

In the case of Moloji Nar Singh Rao vs Shankar Saran (SC). held that a foreign judgment of a reciprocating territory but which is not from a superior court cannot be executed in India. For this fresh suit has to filed in the same manner as done in the case of Non-reciprocating countries.

In Marine Geotechnics LLC v. Coastal Marine Construction and Engineering Ltd, the Bombay High court held that the decrees of Non-Reciprocating countries cannot be executed directly in the courts of India. The decree holder needs to file a new/fresh suit in the district court while the judgement of the foreign court will just be seen as an evident one.

The decree of the Reciprocating country can be directly executed by just filing an execution application under sec.44A order XXI Rule 10 of CPC. The decree-holder need to present the certified copy of the judgment by the foreign court with the certificate to the extent that the decree has been satisfied.

The decree must also pass the test of conclusiveness as given under sec.13 of CPC. Section 13 of CPC states that the judgment is not conclusive if:
  1. It has not been pronounced by a Court of competent jurisdiction.
  2. It has not been given on the merits of the case.
  3. It appears, on the face of the proceedings, to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable.
  4. The proceedings in which the judgment was obtained are opposed to natural justice.
  5. It has been obtained by fraud.
  6. It sustains a claim founded on a breach of any law in force in India.
     
In the case of Brijlal Ramjidas v. Govindram Gordhandas Seksaria, SC held that Sec 13 speaks not only of "Judgment" but "any matter thereby directly adjudicated upon".

In the Alcon Electronics judgment (supra), the Supreme Court had observed that the reading of Section 13 of CPC clearly show that to be conclusive, order or decree must have been obtained after following the due judicial process by giving all proper opportunity necessary parties to put forth their case.

When these requirements are fulfilled, the executing Court cannot enquire about the validity, legality or otherwise of the judgment. The execution of the foreign decree which is conclusive the court passing the execution cannot deny the facts or question of law but only under the situations given under sec.13.

In the case of Saleem Abdulrahman Eracham Veetil vs. State of Gujarat & Ors. the High Court of Gujarat said that a rule of res judicata is enacted by Sections 13 and 14 of CPC in cases of foreign judgments. The judgment delivered by a foreign Court of competent jurisdiction can be executed by an Indian court and will operate as res judicata between the parties thereto except in the situations/conditions mentioned in Section 13. A foreign judgment except in the situations specified under Section 13 may operate as res judicata subject to the other conditions mentioned under Section 11 of CPC.

Presumption related to Foreign Judgment:

Section 14 of CPC raises the presumption that the judgment was pronounced by a court of competent jurisdiction subject to the presentation of the certified copy of the judgment unless the contrary is proved.

Where to file the Execution Application?

The main contention comes as to which court has the jurisdiction to execute the foreign decree.

Reading sec. 44A(1):
Where a certified copy of a decree of any of the superior Courts of any reciprocating territory has been filed in a District Court, the decree may be executed in [India] as if it had been passed by the District Court.

The section specifically mentions that the execution of the foreign decree must be filed in the District courts.

Section 2(4) of the Code defines "District" as:
"District" means the local limits of the jurisdiction of a principal Civil Court of original jurisdiction (hereinafter called a "District Court"), and includes the local limits of the ordinary original civil jurisdiction of a High Court.

Section 6 of the Code "Pecuniary Jurisdiction" defined as: -

"Save in so far as is otherwise expressly provided, nothing herein contained shall operate to give any Court jurisdiction over suits the amount or value of the subject matter of which exceeds the pecuniary limits (if any) of its ordinary jurisdiction."

In the matter of Messer Griesheim GmbH vs Goyal MG Gases Pvt. Ltd. (2022) the Supreme court observed that section 44A does not talk about the ordinary original civil jurisdiction of the High Court which has to be always exercised, based on pecuniary limits. It is not possible to read Section 44A of the Code by leaving the jurisdiction of a few of the High courts that have the ordinary civil jurisdiction based on the pecuniary jurisdiction of the Civil Court.

For the purpose of execution of a foreign decree, certain High courts that have a split jurisdiction can act as the District Court in respect to those matters which fall within the ordinary original civil jurisdiction of the High Court and the term "district" defined under Section 2(4) of the Code will have to be given its true effect. To read the expression "District Court" in Section 44A for the execution of a foreign decree, it will be seen that the court having the jurisdiction based on the pecuniary limit will follow.

So it is right to say that an execution application must be filed in the district courts and in the case of 4 cities i.e. Delhi, Mumbai, Kolkata and Madras where the High court has the original civil jurisdiction based on the pecuniary limits the execution application can be filed either in the district court or in the High court based on its pecuniary jurisdiction.

Limitation Period
Supreme court in the recent judgment of Bank of Baroda vs. Kotak Mahindra Bank, solved the issue of limitation for execution of a foreign decree in India. The limitation period under article 136 of the Limitation act, 1963 is 12 years for filing the execution application for a decree passed by the India courts.

But in the following judgment the SC. held that the limitation period for execution of a foreign decree will not be according to article 136 but will be done according to article 137 of the act since article 136 covers only the decrees passed in the Indian courts.

The Supreme court coined two terms:
  • cause country- country in which the decree is issued.
  • forum country- country in which the decree needs to be enforced.

Based on these the Supreme court gave two situations for the limitation:
  1. In a situation where the decree holder does not take any steps for executing the decree within the period of limitation prescribed in the cause country for the execution of the decree in that country, it was held that the limitation period would start running from the date of the decree passed in the cause country and the period of limitation prescribed in forum country would not apply.

    In this circumstance, the Supreme Court further ruled that the party at issue had forfeited their ability to carry out the judgement in the nation where the claim first surfaced. The decree holder cannot assert a new cause of action or argue that the limitation of the forum country should apply if they fail to take any action to execute the decree in the cause country within the cause country's stipulated period of limitation.
     
  2. In a situation when a decree holder takes steps-in-aid for the execution of the decree in the cause country, in such a case, the Supreme Court held that the right to apply under the Section will be enforceable only after the execution proceedings in the cause country are finalised and became conclusive and the limitation period for filing such application under the Section will be 3 years of the finalisation of the execution proceedings in the cause country as prescribed under Article 137 of the Limitation Act.

    This talks about a situation where the proceedings in execution may go on for some time and the decree may be satisfied partly (in the cause country) but not fully. Lastly, the Supreme Court also held that if a decree holder takes steps-in-aid to execute the decree in the cause country first and the decree is not satisfied at all, then in India a petition for executing the decree can be filed within a period of 3 years from the date of finalisation of execution proceedings in the cause country.


For Non-Reciprocating country:

The execution of the decree/judgment from the Non-reciprocating countries or territories can be executed only by filing a new/fresh suit in an Indian court for which a limitation period of 3 years has been specified under the Limitation Act 1963, the date of the judgment passed by the foreign court is considered as the beginning of the limitation period.

Conclusion:
India is a leading player in the international world and it becomes important for the country to have flexible laws for the enforcement of foreign decrees. Due to the increase in digitalization access to foreign legal matters are now easily available. There is a high need to recognize the foreign judgments based on bilateral or multilateral treaties or conventions or other International Instruments.

The "recognition" of the foreign decree means that the judgment of one country should be easily accepted in the court of the other country without going into the facts and other things and directly proceeds towards the execution of the judgment without any delay. Recognition of judgment can be denied if the judgment of the other country is incompatible with basic fundamental legal principles in the recognizing country.

India after the insertion of sec.44A made it easy for the foreign decree holders to be executed in the country. It was much needed in this global world to ensure justice to all whether within the country or outside the country. The decree-holder still has to keep in mind sec.13 to avoid any contentions under the section and to avoid any delays.

Therefore, it is important for the Indian business sectors to not take the summons issued by foreign courts lightly, as was highlighted by the discussion provided above on the legal challenges involved in the implementation of foreign decrees in India.

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