File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Enforcement of Foreign Decree in India

The procedure for enforcement and execution of a foreign judgment / decree in India, is governed by the Code of Civil Procedure 1908 ('CPC').

Section 2(5) of CPC defines foreign Courts as a Court situated outside India and not established or continued by the authority of Central Government, and Section 2(6) of CPC defines foreign judgment as a judgment passed by a foreign Court.

Section 44A of the CPC was originally introduced in the year 1937 by Act No. 8 of 1937, later amended by Act LXXI of 1952. Section of 44A of the CPC now provides a decree passed by a superior Court in any reciprocating territory which may be executed in India by filing a certified copy of the decree in a district Court, which will treat the decree as if it has been passed by itself.

A foreign judgment is not enforceable unless it is a conclusive one.
The test of conclusiveness is laid down under Section 13 of the CPC, which states that a foreign judgment shall be conclusive unless:
  1. it has not been pronounced by a Court of competent jurisdiction;
  2. it is 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 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.

Although India is not a signatory to Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, but has executed bilateral treaties with several countries which are treated as the reciprocating countries with respect to recognition and enforcement of foreign judgments in India.

The reciprocating countries with which India currently has bilateral treaties are:

  1. The United Kingdom[1],
  2. Fiji[2],
  3. Singapore[3],
  4. The Federation of Malaya[4],
  5. New Zealand[5],
  6. The Cook Islands (including Niue) and the Trust Territories of Western Samoa[6],
  7. Aden[7],
  8. Trinidad & Tobago[8],
  9. Hong Kong (Special Administrative Region)[9],
  10. Papua and New Guinea[10] and
  11. Bangladesh[11].

On 17th January 2020, by way of an Extraordinary Gazette Notification, issued by the Ministry of Law & Justice (Department of Legal Affairs), the Central Government of India declared the United Arab Emirates as a reciprocating territory.[12]

Section 44A of the CPC as amended from time to time now reads as:

44A. Execution of decrees passed by Courts in reciprocating territory:

  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.
     
  2. Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.
     
  3. The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13.

The term "reciprocating territory" has been defined in Explanation I to Section 44A of the CPC as any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section; and "superior Courts" with reference to any such territory, means such Courts as may be specified in the said notification.

Interestingly, Section 13 of the CPC does not make any distinction between judgments of a Court in a reciprocating territory, to that of the judgments passed by a Court in a non-reciprocating territory. It is Section 44A of the CPC which explains the term 'reciprocating territory' and the execution of the decrees passed by Courts in reciprocating territory.

However, a decree passed, both by reciprocating territory as well as by the non-reciprocating territory, must satisfy the tests laid under Section 13 of the CPC for it to get enforced in India. The question thus arises, how can a decree passed by non-reciprocating territory be executed.

The answer to which is that a Party cannot just simply seek for an execution of the foreign decree passed by a non-reciprocating territory; for the purposes of enforcing such a decree, one is required to file a suit on that foreign decree, or on the original underlying cause of action, or both.[13]

On the other hand, a person seeking enforcement of a foreign decree passed by a reciprocating territory, may simply file an execution application of the same by following the procedure under Section 44A and under Order XXI of the CPC (Execution of Decrees and Orders) before an Indian Court. For execution of such a decree, the Party is also required to file a certified copy of the decree along with a certificate from such superior Court stating the extent to which the decree has been satisfied or adjusted. In a recent judgment, the Supreme Court of India held that the High Courts of India having original civil jurisdiction were empowered to execute a foreign court's money decree falling within their pecuniary limits under Section 44A of the Civil Procedure Code, 1908.[14]

The term "Decree" is defined in Explanation II to Section 44A of the CPC as a decree with reference to a superior Court meaning 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 arbitration award, even if such an award is enforceable as a decree or judgment.

In the Judgment of Alcon Electronics Pvt. Ltd. v. Celem S.A. of FOS 34320 Roujan, France[15], the issue before the Hon'ble Supreme Court of India was whether the execution of an interlocutory order of an English Court pertaining to dismissal of challenge to its jurisdiction, including order for costs and interest thereon, would be maintainable before Indian Courts?

The Hon'ble Supreme Court of India held that penalty means a sum payable to the State, and not to a private claimant, therefore the costs (under Section 35A of the CPC) imposed on the basis of the indemnity, is neither a penalty nor tax. It was further held that the Explanation to Section 44A of CPC does not refer to the costs as contemplation under Section 35 of the CPC[16].

Accordingly, the costs which have been quantified are assumed the character of money decree for costs, and thus, cannot be equated with either fine or penalty imposed on a party by a Court or taxes claimed/payable to a local authority, Government of other charges of a like nature.

One of the major issues faced by a party in executing a foreign decree in India is the inordinate delay caused during the process of execution of decree before an Indian Court. The Hon'ble Supreme Court of India in the matter of Rahul S. Shah v. Jinendra Kumar Gandhi and Ors.[17] noted that as on 31st December 2018, there were 11,80,275 execution petitions pending before the subordinate courts.

The three-judge bench of the Hon'ble Supreme Court of India, comprising of former Chief Justice of India S.A. Bobde along with Justice L. Nageswara Rao and Justice S. Ravindra Bhat, issued fourteen mandatory directions to be followed by all Courts dealing with execution of decrees, in order to expedite the process of execution of decrees, which are as follow:
  1. In suits relating to delivery of possession, the court must examine the parties to the suit under Order X in relation to third party interest and further exercise the power under Order XI Rule 14 asking parties to disclose and produce documents, upon oath, which are in possession of the parties including declaration pertaining to third party interest in such properties.
     
  2. In appropriate cases where the possession is not in dispute and not a question of fact for adjudication before the Court, the Court may appoint Commissioner to assess the accurate description and status of the property.
     
  3. After examination of parties under Order X or production of documents under Order XI or receipt of commission report, the Court must add all necessary or proper parties to the suit, so as to avoid multiplicity of proceedings and also make such joinder of cause of action in the same suit.
     
  4. Under Order XL Rule 1 of CPC, a Court Receiver can be appointed to monitor the status of the property in question as custodia legis for proper adjudication of the matter.
     
  5. The Court must, before passing the decree, pertaining to delivery of possession of a property ensure that the decree is unambiguous so as to not only contain clear description of the property but also having regard to the status of the property.
     
  6. In a money suit, the Court must invariably resort to Order XXI Rule 11 of CPC, ensuring immediate execution of decree for payment of money on oral application.
     
  7. In a suit for payment of money, before settlement of issues, the defendant may be required to disclose his assets on oath, to the extent that he is being made liable in a suit. The Court may further, at any stage, in appropriate cases during the pendency of suit, using powers under Section 151 CPC, demand security to ensure satisfaction of any decree.
     
  8. The Court exercising jurisdiction under Section 47 or under Order XXI of CPC, must not issue notice on an application of third-party claiming rights in a mechanical manner. Further, the Court should refrain from entertaining any such application(s) that has already been considered by the Court while adjudicating the suit or which raises any such issue which otherwise could have been raised and determined during adjudication of suit if due diligence was exercised by the applicant.
     
  9. The Court should allow taking of evidence during the execution proceedings only in exceptional and rare cases where the question of fact could not be decided by resorting to any other expeditious method like appointment of Commissioner or calling for electronic materials including photographs or video with affidavits.
     
  10. The Court must in appropriate cases where it finds the objection or resistance or claim to be frivolous or mala fide, resort to Sub-rule (2) of Rule 98 of Order XXI of CPC as well as grant compensatory costs in accordance with Section 35A of CPC.
     
  11. Under section 60 of CPC the term "in name of the judgment-debtor or by another person in trust for him or on his behalf" should be read liberally to incorporate any other person from whom he may have the ability to derive share, profit or property.
     
  12. The Executing Court must dispose of the Execution Proceedings within six months from the date of filing, which may be extended only by recording reasons in writing for such delay.
     
  13. The Executing Court may on satisfaction of the fact that it is not possible to execute the decree without police assistance, direct the concerned Police Station to provide police assistance to such officials who are working towards execution of the decree. Further, in case an offence against the public servant while discharging his duties is brought to the knowledge of the Court, the same must be dealt stringently in accordance with law.
     
  14. The Judicial Academies must prepare manuals and ensure continuous training through appropriate mediums to 32 the Court personnel / staff executing the warrants, carrying out attachment and sale and any other official duties for executing orders issued by the Executing Courts.

The Hon'ble Supreme Court of India further directed the all High Courts of India to reconsider and update all the Rules relating to the execution of decrees, made under exercise of its powers under Article 227 of the Constitution of India[18] and Section 122 of the CPC[19], within one year from the date of the Order passed in the matter.

Limitation Period
In the judgment passed by Bank of Baroda v. Kotak Mahindra Bank Ltd.[20] passed by the Hon'ble Supreme Court of India, it was held that the limitation period for execution of a foreign decree passed by a reciprocating country in India, will be the limitation prescribed in the reciprocating foreign country.

If the Decree Holder first takes step-in-aid to execute the decree in the same reciprocating country itself, and the decree is not completely satisfied, the Decree Holder may then file an execution petition in India within a period of 3 years in terms of Article 137 of the Limitation Act 1963, from the finalisation of the execution proceedings in the reciprocating country.

Conversion Rate

The Supreme Court of India in the matter of Forasol v. Oil & Natural Gas Commission[21] held that the date of the foreign judgment or decree, should be construed as the relevant date for currency conversion to Indian rupees, for the calculation.

Conclusiveness of the Foreign Decree

As already stated, a foreign decree must satisfy the test laid under Section 13 of the CPC, in order for it be considered as a conclusive one[22]. In a situation, an appeal against a Foreign Decree is preferred by a party, which is pending in the same reciprocating country, it cannot be enforced in India until it is finally decided by the Appellant Court of that reciprocating territory. In other words, only the foreign decrees which have attained finality, may be enforced before the Indian Courts[23] [24].

With respect to interlocutory Orders, the Hon'ble Supreme Court of India has stated that "The principles of comity of nation demand us to respect the order of English court. Even in regard to an interlocutory order, Indian courts have to give due weight to such order unless it falls under any of the exceptions under section 13 of the CPC".[25]

Upon a conjoint reading of Section 2(6), 2(9)[26], 2(14)[27] of the CPC along with the Explanation II to Section 44A of the CPC, it was further held that an Order passed by a reciprocating territory are also executable.

Conclusion
With the increase in globalization of various sectors, India still needs have reciprocating ties with many other developed nations. For example, despite having strong ties with powerful nations such as United States of America as well as Russia, India does not have any reciprocating arrangements with any of the two.

Although the Supreme Court of India has issued mandatory guidelines to be followed by all Courts dealing with execution of decrees, in order to expedite the process of execution of decrees, yet the process of executing a foreign judgment may be time consuming in India. As it has been rightly stated, that there is an old saying, the difficulties of the litigant in India begin when he has obtained a decree.[28]

The content of this Article is intended to provide a general information to the subject-matter and should not be construed as legal advice in any manner. Please feel free to contact the author for any additional information/ advice.

End-Note:
  1. Government of India - Ministry of Law, Notification No. SRO. 399 dated 01 March 1953
  2. Government of India - Ministry of Law, Notification No. SRO. 959 dated 22 March 1954
  3. Government of India - Ministry of Law, Notification No. SRO 1867 dated 01 September 1955
  4. Government of India - Ministry of Law, Notification No. SRO. 4 dated 03 January 1956
  5. Government of India - Ministry of Law, Notification No. SRO. 3282 dated 15 October 1957
  6. Government of India - Ministry of Law, Notification No. SRO. 3282 dated 15 October 1957
  7. Government of India - Ministry of Law, Notification No. G.S.R.183 dated 18 January 1956
  8. Government of India - Ministry of Law, Notification No. G.S.R. 1458-B dated 31 July 1968
  9. Government of India - Ministry of Law, Notification No. G.S.R. 2096 dated 18 November 1968 along with Notification No. GSR 561(E) dated 13 July 2012
  10. Government of India - Ministry of Law, Notification No. G.S.R. 1720 dated 26 September 1970
  11. Government of India - Ministry of Law, Notification No. G.S.R. 318 dated 11 February 1976
  12. Government of India - Ministry of Law, Notification No. G.S.R. 38(E) dated 17 January 2020 also available at https://egazette.nic.in/WriteReadData/2020/215535.pdf
  13. Marine Geotechnics LLC v/s Coastal Marine Construction & Engineering Ltd. 2014 (2) Bom CR 769, Para 21.
  14. Messer Griesheim GmbH v. Goyal Mg Gases Pvt. Ltd., Civil Appeal No. 521 of 2022
  15. Alcon Electronics Pvt. Ltd. v. Celem S.A. of FOS 34320 Roujan, France, 2017 (2) SCC 253
  16. Section 35 of the CPC deals with General Costs i.e. costs which may granted to a party of a Suit by the Court under its own discretion, while Section 35A deals with Compensatory costs and Section 35B delas towards costs causing delay.
  17. 2021 SCC OnLine SC 341, dated 22 April 2018
  18. Article 227 of the Constitution of India confers on every High Court of India, the power of superintendence over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction excepting any court or tribunal constituted by or under any law relating to the armed forces.
  19. Under Section 122 of the Code of Civil Procedure 1908, empowers each High Court to annual, alter or add to all or any of the rule set out in the First Schedule.
  20. Civil Appeal No. 2175 of 2020 (Arising out of Special Leave Petition (Civil) No. 8123 of 2015)
  21. 1984 AIR 241
  22. either passed by a reciprocating country or non-reciprocating territory
  23. Subject to the other conditions being satisfied under Section 13 of the CPC
  24. KB Walker v Gladys P Walker, AIR 1935 Rang 284 (DB), Baijnath v Vallabhadas AIR 1933 Mad 511.
  25. Alcon Electronics Pvt. Ltd., Supra
  26. "Judgment" means the statement given by the Judge of the grounds of a decree or order.
  27. "Order" means the formal expression of any decision of a Civil Court which is not a decree.
  28. Messer Griesheim GmbH v. Goyal Mg Gases Pvt. Ltd., Civil Appeal No. 521 of 2022
Written By: Kunal Kumar, Advocate
[email protected]/[email protected], Ph no: +91-9811420230

Also Read:

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers



Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


LawArticles

Increased Age For Girls Marriage

Titile

It is hoped that the Prohibition of Child Marriage (Amendment) Bill, 2021, which intends to inc...

How To File For Mutual Divorce In Delhi

Titile

How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Section 482 CrPc - Quashing Of FIR: Guid...

Titile

The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of t...

Facade of Social Media

Titile

One may very easily get absorbed in the lives of others as one scrolls through a Facebook news ...

Sexually Provocative Outfit Statement In...

Titile

Wednesday, Live Law reported that a Kerala court ruled that the Indian Penal Code Section 354, ...

UP Population Control Bill

Titile

Population control is a massive problem in our country therefore in view of this problem the Ut...

Lawyers Registration
Lawyers Membership - Get Clients Online


File caveat In Supreme Court Instantly