This article is written by Mehreen Garg and Tanya Srivastava.
“As India becomes a global player in the international business arena, it cannot be one of the few countries where the law of limitation is considered entirely procedural.”
While India’s presence in the global market is undeniably growing, the need to ensure foreign parties that they are protected under the authority of Indian courts in terms of the execution of foreign judgments obtained through foreign courts in the event of a dispute has become increasingly pressing.[Section 2(5) of the Code of Civil Procedure defines foreign courts as the courts outside the territory of India which have neither been established nor continued under the authority of the Indian Central Government]. India is not a signatory of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters yet.
India, however, does have bilateral treaties with multiple countries for enforcing reciprocity in the execution of judgements and decrees. At the moment, India has a bilateral treaty with numerous nations such as Fiji, Aden, the Federation of Malaya, Bangladesh, Trinidad and Tobago, Papua New Guinea, New Zealand, the United Kingdom, Hong Kong, Singapore and the Cook Islands and the Trust Territories of Western Samoa; the United Arab Emirates is the newest addition to the list (as declared by the Ministry of Law and Justice of India via the Official Gazette of India as on 17th January 2020). With the existing bilateral treaty with these countries, the decrees and judgements passed in these nations become executable within the Indian territory, having the same effect as if they were passed by a local District Court in India, as long as the decree or judgement is in accordance with Section 13 of the Code of Civil Procedure (Algemene Bank Nederland Nv vs Satish Dayalal Choksi, AIR 1990 Bom 170).
This article aims to understand and analyse the limitations for the filing of an application for the execution of the foreign decree or judgement passed in a country which has a bilateral treaty for executing reciprocity in the execution of judgements and decrees in India.
Sources of Law
- Legislation: The principal statute governing and regulating foreign execution of judgements and decrees in India is the Indian Code of Civil Procedure (1908). It is Section 13 and Section 14 of the CPC which lay down the mechanism for recognizing and enforcing foreign judgements in India. However, it is Section 44 and Section 44A of the CPC that talk about the execution of foreign judgements from reciprocating territories. With regards to the applicability of S.44A of CPC, in the case of Middle East Bank Ltd. v. Rajendra singh Sethia, the court passed the decision that even for a foreign judgement to be enforced in India, it is essential for it to be executed under S.44A of CPC. The court also concluded that for the judgement to be executed under the S.44A, the judgement must be conclusive within the meaning of S. 13 of the act. However, for a decree or judgement from a reciprocating territory to be executed under S. 44A, the decree must be executing an amount of money which is to be paid (this does not include taxes, fines or penalties).
With respect to The Limitation Act (1963), Article 136 declares that for the execution of any decree (other than a decree granting a mandatory injunction) or order of any Civil Court, the period of limitation is twelve years. This period begins when the decree or order becomes enforceable. However, it is evident from the wording of this provision that it only deals with decrees that are passed by Indian courts, this is additionally confirmed because a Civil Court is not the same in a foreign jurisdiction. If for an application there is no specific period of limitation provided in the Act, the residuary provision of Article 137 is applied. The period of limitation as prescribed under this Article is three years, the period begins to run when the right to apply accrues.
- Judicial Precedents: The court in Maloji Nar Singh Rao v Shankar Saran found that a foreign decree which has not been obtained by a superior court from a reciprocating territory will not be allowed to be executed within the territory of India unless a new suit is filed where the before obtained foreign decree is merely used for its evidentiary value.
- Bilateral Treaties: India has existing bilateral treaties with multiple countries for the enforcement of executing foreign judgements and decrees. As mentioned previously, Fiji, Aden, the Federation of Malaya, Bangladesh, Trinidad and Tobago, Papua New Guinea, New Zealand, the United Kingdom, Hong Kong, Singapore and the Cook Islands and the Trust Territories of Western Samoa and the latest being the United Arab Emirates.
Madras High Court on the issue
Section 44A was added to the CPC in 1937 by Act No. 8, before which, any foreign decree could not be executed in India, the only option available was that a suit could be filed on the grounds of a judgment passed by a foreign court. In 1966, the Madras High Court addressed the issue of whether Section 44A provides not just the mechanism of executing a foreign judgment but also the period of limitation in the case of Sheik Ali vs Sheik Mohamed. The court in this case was of the opinion that the lone purpose of Section 44A was to apply and make the process of execution of Indian decrees similarly applicable to the execution of foreign decrees also. Additionally, the court ruled that Article 136 of the Limitation Act (1963) does not apply to the execution of a foreign decree under Section 44A.
Article 136 of the Limitation Act claims a period of twelve years for the execution of any decree (other than a decree granting a mandatory injunction) or order of any civil court. The Article prescribes that this limitation period starts when the decree or order becomes enforceable. Instead of this, the court declared that the residuary provision is applicable; it provides that limitation will be three years from the time “when the right to apply accrues”. The right to accrue occurs when a certified copy of the obtained foreign decree is filed in a District Court (there is no limitation for the filing of such foreign decree, but a decree can not be executed if it’s enforcement is barred by limitation in the cause country).
Punjab and Haryana High Court on the issue
The issue of limitation on the execution of a decree passed by a court in a foreign nation was addressed again in the judgement passed in the case of Lakhpat Rai Sharma vs Atma Singh by the Punjab and Haryana High Court in 1970. The court in this case interpreted Section 44A and suggested that in it’s effect, a foreign decree should be treated like an Indian decree for all purposes, implying that, the limitation period of the execution should be equivalent to twelve years from the date of passing of the decree. This view contradicted the judgement passed by the Madras High Court and made it even more challenging to interpret Section 44A.
Supreme Court on the issue
The Supreme Court, on the 17th of March 2020 tried to settle the concerns of various High Courts throughout the country which were ridden with conflict regarding the limitation period of filing a foreign decree passed by a superior court of a reciprocating territory. Giving regards to both the contradicting opinions of both the Punjab and Haryana High Court in the case of Lakhpat Rai Sharma v. Atma Singh, as well as Madras High Court in the case of Sheik Ali vs Sheik Mohamed the Supreme Court attempted to settle the confusion with the case Bank of Baroda vs. Kotak Mahindra Bank.
The court declared that upon applying S.47 of CPC, it becomes evident that S.44A of CPC has nothing to do with the period of limitation. The Supreme Court also set aside the judgement of the Madras High Court in the case of Sheik Ali v. Sheik Mohamed, declaring that the date on which a person files a certified copy of a foreign decree is not the starting date of the limitation period. However, the Supreme Court did not completely disregard the views on the Madras High Court on this issue, it kept weightage of the following view of the Madras High Court:
“…(19) To sum up our conclusions, we are of the view that Section 44-A(1) is confined to the powers and manner of execution and has nothing to do with the law of limitation. The fiction created by the Sub-Section goes no further and is not for all purposes, but is designed to attract and apply to the execution of foreign judgments by the District Court its own powers of execution and the manner of it in relation to its Decrees, without reference to limitation.”
The court, to settle the debate on the issue of the starting point of the period of limitation, further stated two possible situations that could arise for the application of the given issue. The first being the decree-holder failing to attempt to execute the obtained decree in the cause country in accordance with the limitation law of the said court, where the court claims that the limitation period starts from the date of passing of the decree in the reciprocating territory (cause country). Hence the declaration of the court that the time of limitation of a money decree in India stands to be 12 years and 6 years for England. However, it can be more than 12 years for some countries as well, hence, the court found that “40…the limitation would start running from the date the decree was passed in the cause country and the period of limitation prescribed in the forum country would not apply. In case the decree-holder does not take any steps to execute the decree in the cause country within the period of limitation prescribed in the country of the cause, it cannot come to the forum country and plead a new cause of action or plead that the limitation of the forum country should apply.”
Secondly, the court refers to a situation that may possibly arise where the decree-holder does try to execute the obtained decree well within the specified period of limitation of the cause country but the decree is only partially satisfied. The court decided that in such a circumstance, the right to file using S. 44A of the CPC is applicable after the cause court finalizes the proceedings to be executed. Once this step is taken care of, the decree-holder is to file the certificate and a certified copy of the foreign decree in the Indian Court within a period of three years.
Conclusion and Analysis
The judgement in the case of Sheik Ali v. Sheik Mohamed was passed in the year 1966 and in the case of Lakhpat Rai Sharma vs Atma Singh in the year 1970. Almost 50 years later, the Supreme Court passed its judgement, settling the debate on the issue of the period of limitation for decrees passed in foreign courts. While this case answered a lot of questions, it raised some new ones too. In its 193rd report, the Law Commission proposed an amendment in the Limitation Act (1963), aiming at an addition of a specific provision dealing with the aspect of limitation for foreign decrees. A separate provision would help fill the gap in the statute and put an end to all ambiguities, and thus such a gap should have been filled or a solution should have been introduced in the form of an amendment.
The Supreme Court in this case states that the Law of Limitation is supposed to be procedural law. Similarly, the Delhi High Court in NNR Global Logistics Shanghai Co. Ltd. Vs. Aargus Global Logistics Pvt. Ltd declared in its judgement that the Law of Limitation is procedural law, upholding its argument by citing 193rd report of the Law Commission of India:
“Transnational Litigation -Conflict of Laws – Law of Limitation’ discussed how in the context of expansion of international trade it has become necessary to take notice of the fundamental changes in the law of limitation in all common law countries. While recommending that India should adopt the practice in civil law countries, it was pointed out that as of now the law of limitation was considered in India as part of the procedural law and not the substantive law”.
The Supreme Court in Bank of Baroda vs. Kotak Mahindra Bank had also found that Article 136 of the Limitation Act is only concerned with the decrees passed in Indian courts and hence will not be applicable to foreign decrees. Hereby, arguably implying that this provision should be applicable to petitions pending execution.
This judgement given by the Supreme Court seems to raise a paradoxical situation where the question arises that which article of the Limitation Act will be applicable in an executing petition, in case the court while dealing with an executing petition declares Article 136 to be non-applicable. On the other hand, according to the judgement, Article 136 would be only applicable to decrees obtained in the domestic court and hence would not be applicable on the pending petitions which seek to enforce a foreign decree. These are some aspects of the judgement that still need clarification.
The Supreme Court tried to settle the debate regarding the limitation period of execution of foreign decrees. However, analysing the paradoxical situation created by the same judgement, we can say that the judgement was straightforward but it left some questions unanswered, and hence it will fall upon the various courts throughout the country to interpret this Supreme Court judgement to the best of their applicability, till the Supreme Court decides to comment on the issue again.
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