This article is written by Anindita Deb, a student of Symbiosis Law School, Noida. This article aims to deal with the technicalities of a foreign decree and its execution in India.
Table of Contents
Introduction
At present, money decrees passed by Superior Courts in other countries can be executed in India as if they were passed by the District Courts before which the execution of such decree is being sought. However, this was not the case before. Before the introduction of Section 44A of the Civil Procedure Code (1908), a suit needed to be filed on the basis of the foreign decree, before it could be executed in India.
What is a foreign decree
A foreign decree or a foreign judgment is defined under Section 2(6) of the CPC as a judgment given by a Foreign Court. Section 2(5) of CPC defines a Foreign Court as a court that is located outside India and has not been established or being continued by the authority of the Central Government.
Explanation II of Section 44A defines “decree” with reference to Superior Court as any decision or judgment of such Court requiring payment of a sum of money, other than a sum payable in respect of taxes or other charges of a similar nature, or fine or other penalties, but not an arbitration award, even if such an award is enforceable as a decree or judgment.
What does Section 44A of CPC impart
Under Section 44A of the CPC, foreign decrees can only be executed in India if they are passed by any “Superior Court” of any “reciprocating territory”. The Central Government notifies from time to time as to what are the Reciprocating territories and the respective Superior Courts. ‘Reciprocating territory’ refers to any country or territory outside India that the Central Government may declare a reciprocating territory for the purposes of Section 44-A by notification. When referring to any such territory, a “higher court” refers to the courts listed in the notification.
Recently, India added UAE to the list of reciprocating territories. With this, the reciprocating territories of India now include UAE, United Kingdom, Fiji, Singapore, Malaysia, Trinidad & Tobago, New Zealand, Hong Kong, Papua, and New Guinea, and Bangladesh. In the case of non-reciprocating territories, the foreign decree can be enforced only by filing a suit in the district court for a judgment based on that foreign judgment. Additionally, only decrees under which a specific sum of money (except for taxes and charges of similar nature or fine or any other penalty) is payable are eligible for execution under Section 44A of the CPC. According to Section 44A(1), where a certified copy of the decree is filed in the District Court, it may be treated as if it had been passed by that District Court.
Can a foreign decree be executed under Section 44A
If a foreign decree fulfills all the conditions provided under Section 44A, it can be executed in India as if it was a decree passed by the District Court. However, it is essential that the judgment passes the test of Section 13 of the CPC which states certain exceptions under which the foreign decrees become inconclusive and therefore unenforceable.
A foreign judgment acts as a res judicata except for the exceptions stated under Section 13 of the CPC, which states the circumstances in which a foreign decree becomes inconclusive and consequently unenforceable. The circumstances may be any of the following:
- Where the decree has not been pronounced by a Court of competent jurisdiction;
- Where a decree has not been given based on the merits of the case;
- Where it appears to be founded on an incorrect interpretation of International law on the face of it or a refusal to recognize Indian law in cases in which such law may be applicable;
- Where the judicial proceedings are opposed to natural justice;
- Where the judgment has been obtained by fraud;
- Where the decree sustains a claim that has been founded on a breach of any law that is in force in India.
If the decree passes all the above tests laid down by Section 13 and satisfies the conditions under Section 44A, it can be executed as it is in India without any further inquiry or fresh suit. Even in the case of decrees from non-reciprocating countries, if they pass the tests under Section 13, it is treated as conclusive evidence and is converted into a decree of the Domestic Court.
Furthermore, only a judgment debtor, or the party against whom the judgment or decree was rendered, can have a foreign decree executed against them. However, under the Code of Civil Procedure, 1908, an Indian court can issue a “garnishee order,” which instructs a third party owing money to a judgment debtor to pay the judgment creditor rather than the judgment debtor.
Indian Courts also have the authority to partially recognize and enforce a foreign judgment. This is possible if a part of the judgment or decree has already been satisfied or if the court has declared a part of the judgment or decree invalid.
Appeals on the conclusiveness of foreign decrees
Decisions in relation to the recognition and enforcement of foreign judgments can be appealed. In some cases, a court decision on the conclusiveness of a foreign judgment or decree can be appealed or reviewed under the Code of Civil Procedure, 1908. In addition, if these procedures fail to produce a result, any party can file a special leave petition before the Supreme Court of India challenging subordinate court orders. The applicant has the provision of seeking injunctive relief while the appeal is pending.
The limitation period for execution of the foreign decree in India
The issue of the limitation period for execution of a foreign decree is one which various courts have struggled with for years until the Supreme Court ruled on the same last year. Following are the views given by lower courts on different cases regarding the limitation period for the execution of a foreign decree in the country:
The Madras High Court view:
In the case of Sheik Ali v. Sheik Mohamed (1967), the Madras High Court stated that the purpose of Section 44A(1) was solely to make the procedure for execution of Indian decrees applicable to foreign decrees and that the limitation period for execution of Indian decrees, i.e., 12 years (according to Article 136 of the Limitation Act, 1963) shall not apply to the execution of a foreign decree under Section 44A. What shall apply is the residuary provision, i.e., 3 years from the date on which the right to apply accrues (according to Article 137 of the Limitation Act, 1963) which in this case accrues only after a certified copy of the foreign decree has been submitted in the District Court. Also, while there isn’t any limitation period for filing a certified copy of the respective foreign decree, it is not possible for a foreign decree to be executed if its enforcement is barred by limitation in the reciprocation country whose Superior court delivered the judgment.
The Punjab & Haryana High Court view:
In Lakhpat Rai Sharma v. Atma Singh (1971), the Punjab & Haryana High Court held that the effect of Section 44A(1) is to treat a foreign decree as an Indian decree for all purposes. To simply put, the limitation period for the application for execution of an Indian Decree, i.e., 12 years from the date of the decree, shall apply to the application for execution of foreign decrees under Section 44A as well.
The Supreme Court view:
In its recent decision in the case of Bank of Baroda v. Kotak Mahindra Bank (2020), the Supreme Court delivered its ruling on the limitation period for the execution of a foreign decree in India under Section 44A of the Civil Procedure Code.
The Supreme Court laid down that Section 44A only empowers a District Court to execute a foreign decree as if it had been passed by the District Court but it does not have the power to deal with the period of limitation. The limitation period of 12 years from the date of the decree which applies to Indian decrees will not apply to foreign decrees under Section 44A of the CPC. Instead, the law of the cause country (the reciprocating territory whose Superior Court passed the decree) shall be used to determine the period of limitation. Simultaneously, the limitation period for making an application for the execution of a foreign decree will be 3 years from the date on which the right to apply accrues. There can be two distinct situations when the question arises as to when the right to apply accrues, which are as follows:
- If the decree-holder fails to take steps to execute the decree in the cause country, the right to apply accrues when the foreign court issues the decree. The limitation period in such cases would be what is prescribed under the laws of the cause country and would be deemed to have commenced on the date on which the decree had been passed in the cause country.
- If the decree-holder takes steps to execute the decree in the cause country but it is not fully satisfied, the right to apply accrues when the cause country’s execution proceedings are completed. From the date on which such execution proceedings are concluded, the decree-holder may make an application for the execution of the foreign decree before the relevant district court under Section 44A within 3 years, in accordance with Article 137 of the Limitation Act, 1963. The Supreme Court has also clarified that the time spent in obtaining the certified copies of these foreign decrees shall not be exempted from consideration in the process of calculating the limitation period.
Conclusion
If a foreign court issues a judgment or decree against an Indian defendant, the judgment or decree may not be enforceable against him due to the application of Section 13 of the CPC. The plaintiff must either come to India to have the foreign judgment executed under S. 44A or file a new suit to have the judgment enforced.
Hence, by obtaining a judgment in a foreign court, the plaintiff not only avoids the difficulty of having to present evidence in Indian courts but also exposes himself to a considerably greater danger under S. 13. Therefore, if the defendant is in India, it may be preferable for a foreign plaintiff to file claims in India if he is willing to go through the lengthy judicial procedures in civil disputes.
In India, the legislation governing foreign judgments is straightforward, and the process of enforcing them is simple. A foreign judgment can be implemented in India if a few conditions are met. India has a well-developed legal system for the enforcement of foreign judgments.
References
- https://corporate.cyrilamarchandblogs.com/2020/03/sc-rules-on-limitation-period-for-execution-of-foreign-decrees-under-section-44a/
- https://www.mondaq.com/inda/civil-law/905802/execution-of-foreign-decree-in-india-supreme-court-settles-law-on-the-limitation-period
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