Execution Of Foreign Awards And Decrees In India.

The Code of Civil Procedure, 1908 lays down the process for execution of Decrees/Judgements of Foreign Courts’ in India. The basic principle being followed while enforcing a foreign judgment or decree in India is to make sure that the decree is a conclusive decree (by virtue of Section 13), passed on the merits of the case and by a superior court having competent jurisdiction.
 

Under the Indian law there are two ways of getting a foreign judgement enforced.  Firstly, by filing an Execution Petition under Section 44A of the CPC (in case the conditions specified therein are fulfilled).  Secondly by filing a suit upon the foreign judgement/decree.

 

 Under Section 44A of the CPC, a decree of any of the Superior Courts of any reciprocating territory are executable as a decree passed by the domestic Court. Therefore, in case the decree does not pertain to a reciprocating territory or a superior Court of a reciprocating territory as notified by the Central Government in the Official Gazette, the decree is not directly executable in India.  In case the decree pertains to a country which is not a reciprocating territory then a fresh suit[1] will have to be filed in India on the basis of such a decree or judgement, which may be construed as a cause of action for the said suit. In the fresh suit, the said decree will be treated as another piece of evidence against the defendant.
 

In both cases the decree has to pass the test of Section 13 CPC which specifies certain exceptions under which the foreign judgement becomes inconclusive and is therefore not executable or enforceable in India.
 

Section 13: When foreign judgment not conclusive[2]—A foreign judgment shall be conclusive as to any
 

matter thereby directly adjudicated upon between the same parties or between parties under whom they or

 

any of them claim litigating under the same title except—
 

(a) where it has not been pronounced by a Court of competent jurisdiction;

(b) where it has not been given on the merits of the case;

(c) where it appears on the face of the proceedings to be founded on an incorrect view of
 

international law or a refusal to recognise the law of 2[India] in cases in which such law is applicable;
 

(d) where the proceedings in which the judgment was obtained are opposed to natural justice;

(e) where it has been obtained by fraud;

(f) where it sustains a claim founded on a breach of any law in force in 2[India].
 

Section 2(5)[3] lays down that “foreign Court” means a Court situate outside India and not established or continued by the
 

authority of the Central Government. Further, Subsection 2(6) clarifies that foreign Judgement means the judgement of a Foreign Court.
 

Section 44A[4] (1) provides that the Decree of a Superior Court will be executed as if it was passed by a District Court in India where a certified

 

copy of a decree of any of the Superior Courts of any reciprocating territory (territories described as such by a notification by the Government in official Gazette) has been filed in a
 

District Court.

 

A foreign decree is defined in Explanation II to section 44A of the CPC as, "Decree" with reference to a superior court means any decree or judgment of such court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty, but shall in no case include an arbitral award, even if such an award is enforceable as a decree or judgment.
 

The Courts have held that there is jurisdiction with the foreign Court in the following cases.
 

In the case of Shalig Ram v. Firm Daulatram Kundanmal[5], the Supreme Court held that filing of an application for leave to defend a summary suit in a foreign court amounted to voluntary submission to the jurisdiction of the foreign Court.
 

In the case of Chormal Balchand Firm v. Kasturi Chand[6], the Calcutta High Court while considering the issue of submission to jurisdiction held that in case a defendant appears in the Court where the suit is instituted and questions both the jurisdiction and challenges the action on merits, he is said to have submitted to the jurisdiction voluntarily.
 

In the case of Oomer Hajee Ayoob Sait v. Thirunavukkarasu Pandaram[7], the Madras High Court while dealing with the issue of submission to jurisdiction held that mere conduct or circumstances indicative of intention to submit to the jurisdiction is enough to derive a conclusion of submission to jurisdiction. In the present case, during the pendency of the suit, plaintiff effected attachment before judgment of certain property of the defendant and the defendant by a letter acknowledged the attachment and requested merely for a concession, which was not a conditional request and when the offer is refused and the defendant remained ex parte and the suit was decreed, it was deemed that the defendant submitted to the jurisdiction of the foreign Court.
 

Inference
 

From the aforesaid cases under Section 13(a) of CPC the following proposition may be laid:
 

In case of actions-in-personam, a Foreign Court may pass a decree or judgment against an Indian defendant, who is served with the summons but has chosen to remain ex parte. But the said judgment or decree may be enforceable against such a defendant in India, only if by fulfilling any of the following conditions it can be shown that the Foreign Court had jurisdiction upon the Indian defendant:
 

1. Where the person is a subject of the foreign country in which the judgment has been obtained against him on prior occasions.

2. Where he is a resident in foreign country when the action is commenced.

3. Where a person selects the foreign Court as the forum for taking action in the capacity of a plaintiff, in which forum he is sued later

4. Where the party on summons voluntarily appears

5. Where by an agreement a person has contracted to submit himself to the forum in which the judgment is obtained.
    

The following are the cases in which the Courts have held that the judgments were passed on the merits of the case.
 

In the case of Ephrayim H. Ephrayim v. Turner Morrison & Co.[8], it was held that where no defence is raised and only an adjournment is sought, and the request for adjournment is refused and the judgment is proceeded on the evidence of the Plaintiff, it cannot be said that the judgment is not on the merits of the claim. Therefore S. 13(b) of CPC will not be able to come to the rescue of the defendant.
 

In the case of Gajanan Sheshadri Pandharpurkar v. Shantabai[9], the Bombay High Court held that the true test for determining whether a decree is passed on the merits of the claim or not is whether the judgment has been given as a penalty for any conduct of the defendant or whether it is based on a consideration of the truth or otherwise of the plaintiff’s case. Since in the present case, although the defendant was considered to be ex-parte, the claim of the plaintiff was investigated into, the objection under S. 13(b) was held to be unsustainable.
 

 In the case of Trilochan Choudhury v. Dayanidhi Patra[10], the defendant entered appearance in the foreign Court and filed his written Statement. However, on the appointed day for hearing the defendant’s advocate withdrew from the suit for want of instructions and also the defendant did not appear. The defendant was placed exparte. The Court heard the plaintiff on merits and passed the decree in his favour. The Court held that the foreign decree and the judgment was passed on the merits of the claim and was not excepted under S. 13(b) of the CPC.
 

In the case of S. Jayam Sunder Rajaratnam v. K. Muthuswami Kangani,[11], it was held that though the judgment and decree of a foreign court might have been passed ex parte, if it was passed on a consideration of the evidence adduced in the case, the decision must be deemed to have been on the merits.
 

Inference
 

The aforesaid cases under Section 13(b) of CPC asserts the following proposition:

A judgment or decree passed by a Foreign Court against an Indian defendant, who has chosen to remain ex-parte, may not be enforceable against him, until unless it can be shown that the said judgment was passed after investigation into, and leading of evidence on the plaintiff’s claim.

 

Where the judgment is passed in contravention of the Indian Law or the International Law.
 

In the case of I & G Investment Trust v. Raja of Khalikote[12], a suit was filed under the English Jurisdiction in order to evade the consequences of the Orissa Money Lenders Act. The Court held that the judgment was passed on an incorrect view         of the International law. The Court further observed that, although the judgment was based on the averment in the plaint that the Indian law did not apply, however there was no “refusal” to recognize the local laws by the Court.[13]
 

In case of Ganga Prasad v. Ganesh Lal[14], it was alleged by the defendant that since the suit if it was to be instituted in the domestic Courts, it would have been time-barred but under the foreign law it has been decreed and therefore there was a refusal to recognise the Indian law. The Allahabad High Court in this situation held that there was no refusal to recognise the Indian Law. The Court further held that the general rule is that the Court which entertains a suit on a foreign judgment cannot institute an enquiry into the merits of the original action, or the propriety of the decision.
 

Inference

 

From the aforesaid cases under Section 13(c) of CPC the following proposition may be laid:
 

1. A judgment or decree passed by a foreign Court upon a claim for immovable property which is situate in the Indian territory may not be enforceable since it offends International Law.

2.  A judgment or decree passed by the foreign Court to where before a contrary Indian law had been shown, but the Court had refused to recognise the law, then that Judgement or decree may not be enforceable. However, if the proper law of contract is the foreign law then this may not be applicable.
    

Where the proceedings in which judgment was obtained are opposed to natural justice:
 

In the case of Hari Singh v. Muhammad Said[15]the Court found that the foreign Court did not appoint a person willing to act as guardian ad litem of the minor defendant[16]. The court also held that proceedings could not have proceeded ex-parte against the minor. The Court further held that the minor defendant did not have any knowledge of the suit being pending against him even after he became a major which was before the judgment was passed. On this basis the court held that the passing of the judgment against the minor was opposed to natural justice within the meaning S. 13(d) of CPC.

 

“Apart from this it appears to me that the summary dismissal of the suit in this manner offends the principles of natural justice in that the plaintiff had fled to India and in October 1947 it was certainly not practicable either for him to send the pronote to his counsel at Bannu through the post or go there in person with it or to send it though any messenger from this side, and in such circumstances the refusal to allow any further adjournment for the production of the pronote appears to me to be extremely harsh and arbitrary.”
 

In the case of I&G Investment Trust v. Raja of Khalikote[17], the Court held that although the summons were issued but were never served and the decree was passed ex-parte, the proceedings were opposed to principles of natural justice and thus inconclusive.
 

Inference
 

By reading the aforesaid cases under Section 13(d) of CPC the following proposition may be laid:
 

The Foreign Court which delivers the judgment or decree must be composed of impartial persons, must act fairly, without bias in good faith, and it must give reasonable notice to the parties to the dispute and afford each party adequate opportunity of presenting his case, in order to avoid any allegation of not fulfilling the principles of natural justice in case the judgment or decree comes to the Indian court for enforcement. Unless this is done the judgment or decree passed by a foreign Court may be opposed to Principles of Natural Justice.
 

Where it has been obtained by fraud:
 

In the case of Satya v. Teja Singh[18] the Supreme Court held that since the plaintiff had misled the foreign court as to its having jurisdiction over the matter, although it could not have had the jurisdiction, the judgment and decree was obtained by fraud and hence inconclusive.
 

In the case of Sankaran v. Lakshmi[19] the Supreme Court held as follows:
 

“In other words, though it is not permissible to show that the court was mistaken, it might be shown that it was misled. There is an essential distinction between mistake and trickery. The clear implication of the distinction is that an action to set aside a judgment cannot be brought on the ground that it has been decided wrongly, namely that on the merits, the decision was one which should not have been rendered but that it can be set aside if the Court was imposed upon or tricked into giving the judgment.”
 

In the case of T. Sundaram Pillai v. Kandaswami Pillai[20],  the court enunciated that “All that can be said on this point is that the case brought by the plaintiff was a false case and that defendant 1 assisted him in obtaining a decree by withdrawing from any resistance.  It does not seem to me that the words “by fraud” can possibly be applied to circumstances such as these.  It cannot be argued that merely because a plaintiff obtains a decree upon evidence which is believed by the Court but which in fact is not true, he has obtained that decree by fraud.  There must be fraud connected with the procedure in the suit itself to bring the matter within this clause.  This clause also therefore does not apply to the present case.”
 

In the case of Maganbhai Chhotubhai Patel v. Maniben[21], the court held that since the plaintiff had misled the court regarding his residence (domicile), the decree having been obtained by making false representation as to the jurisdictional facts, the decree was obtained by fraud and hence was inconclusive.
 

Inference
 

By reading the aforesaid cases under Section 13(e) of CPC the following proposition may be laid:

 

 In case the plaintiff misleads or lies to the Foreign court and the judgment is obtained on that basis, the said Judgment may not be enforceable, however if there is a mistake in the judgment then the Indian courts will not sit as an appeal Court to rectify the mistake

 

Where it sustains a claim founded on a breach of any law in force in India

 

In the case of T. Sundaram Pillai v. Kandaswami Pillai[22], (facts already stated above), the plea of the defendant was that the judgment was obtained in breach of the Contract Act since the defendants at the relevant time were minors when the contract was entered into and since under the Contract Act they were not competent to enter into a contract, the claim was founded on the breach of the Indian Law. The Court held as follows:

 

“This claim is founded partly perhaps upon a breach of the contract Act, but also partly upon a claim under the Contract Act which in no way involves its breach. Whether that claim is a good one or a bad one is not for me now to decide. The District Munsif of Trivandrum has given a decree to the appellant and that decree sustains a claim which was not wholly founded upon a breach of the Contract Act. It seems to me therefore that the appellant cannot be prevented by clause (f) of S. 13 from executing his decree in British India.”

Inference
 

By reading the aforesaid cases under Section 13(f) of CPC the following proposition may be laid:
 

A judgment or a decree, passed by a foreign court, on a claim founded on a breach of any law in force in India may not be enforceable. However, in case it is based upon a contract having a different “proper law of the contract” then it may be enforced.
 

BAR OF LIMITATION
 

Section 44A only empowers the District Court to execute the foreign decree as if it had been passed by the District Court and does not deal with the period of Limitation[23]. Accordingly, the limitation period for making an application for execution of an Indian Decree, i.e. 12 years[24] from the date of the decree, does not apply to an application for execution of a Foreign Decree under Section 44 A.  Instead, the applicable limitation period will be determined by the law of the country (i.e. reciprocating territory whose Court has passed the Decree). At the same time, the limitation period for making an application for execution of foreign decree in India is 3 years from the date on which the right to apply accrues[25]. On the issue when such a right to apply accrues, there are two situations:
 

1. If the decree-holder does not take steps to execute the decree in the cause country, then the right to apply accrues when the decree was passed by the foreign Court.
    

2. If the decree-holder takes steps to execute the decree in the cause country and the decree is not fully satisfied, then the right to apply accrues when the execution proceedings in the cause country are finalized.

 

CONCLUSION

 

It can be inferred from the above that even if a judgment or a decree is passed by a foreign Court against an Indian defendant, the judgment or decree may not be enforceable against him due to the operation of S. 13 of CPC. It can be seen that the plaintiff has to come to the Indian courts to either get the foreign judgment executed under S. 44A or file a fresh suit upon the judgment for its enforcement. Therefore, by getting a decree in the foreign Court, the plaintiff only avoids the inconvenience of leading evidence in the Indian Courts but runs a much bigger risk under S. 13.
 

 

For further information, please contact:

 

Mihir Gujjewar​, Atharva Legal

contact@atharvalegal.com