Saturday 15 May 2021

Whether decree of the foreign court is enforceable even if it does not contain any reason?

 Section 2(9) defines a “judgment” to mean “the statement

given by the Judge of the grounds of a decree or order”. A “decree”, on the other hand, under Section 2(2), means “the formal expression of an adjudication” which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit. An order, on the other hand, defined in Section 2(14), means “the formal expression of any decision of a Civil Court which is not a decree”. The CPC consolidates and amends laws relating to the procedure of courts of civil judicature in India. So far as our civil courts are

concerned, the code makes a clear distinction between a judgment, on the

one hand, and a decree or order, on the other. The latter two are formal

expressions of adjudication or decision of civil courts, whereas the former, a

judgment, is a statement of the grounds of such decree or order given by

the Judge. In so far, however, as judgments of reciprocating territories or

foreign judgments are concerned, the expression “decree” is defined under

Section 44A to mean “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 fine or other penalty”. What

is executed under Section 44A is a “decree” of any superior court of a

reciprocating territory and such decree means a decree or judgment of such

court as explained in Explanation II of Section 44A. In other words, so far

as execution of foreign decrees is concerned, the Code does not make any

distinction between a “decree” and a “judgment”. Any adjudication by a

foreign court upon a matter before it, including a formal expression of such

adjudication, is executable under Section 44A. This much appears from a

plain reading of the relevant provisions of the CPC. {Para 11}

12 Privy Council in the case of Brijlal Ramjidas vs. Govindram G. Seksaria AIR 1947 PRIVY COUNCIL 192 held that a “judgment” within the meaning of Section 13 of the

CPC meant “an adjudication by a foreign court upon the matter before it” and not a statement of reasons for the order. Authorities cited by Mr.Sakhardande for the proposition that in order to constitute a judgment, the order must contain reasons (Balraj Taneja vs. Sunil Madan (1999) 8 SCC 396 and Assistant Commissioner vs. Shukla and Bros. (2010) 4 SCC 785) are quite beside the point, since they do not deal with foreign judgments, but with judgments rendered by civil courts in India.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

APPEAL NO. 14 OF 2020

IN

CHAMBER SUMMONS NO. 710 OF 2010

IN

EXECUTION APPLICATION NO. 37 OF 2005

IN

CASE NO. 1990-K-528

Arvind Jeram Kotecha Vs  Prabhudas Damodar Kotecha ..


CORAM : S.C. GUPTE & MADHAV JAMDAR, JJ.

PRONOUNCED ON : 9 NOVEMBER 2020

JUDGMENT (Per S.C. Gupte, J.) :

This appeal arises from an order passed by a learned Single

Judge of this court on a chamber summons taken out in an execution

application. The chamber summons was for leave to the decree holder

(Respondent herein) for prosecution of execution proceedings against the

judgment debtor (Appellant herein). The execution was sought of a decree

passed by the High Court of Justice of U.K., Queen’s Bench Division, in

Case No.1990-K-528, read with (i) final costs certificate dated 11

November 2004 and (ii) additional certificate dated 17 January 2005. The

decree holder also holds a certificate under Section 10 of the Foreign

Judgment (Reciprocal Enforcement) Act.

2 The original plaintiff had filed Case No.1990-K-528 against the

defendant in the Queen’s Bench Division of the High Court of Justice (U.K.)

for an order for release of a fund held in the joint names of the plaintiff

and the defendant and for damages. On 25 February 1993, a consent order

was passed in the case, under which a judgment was entered against the

defendant on the ground that no defence had been served by the defendant

pursuant to the order of Deputy Master Rose dated 3 August 1992 and

adjudging that the defendant shall pay the original plaintiff damages as

assessed. The original plaintiff accordingly proceeded to apply for damages.

The case for assessment of damages was tried and a decree was passed by

the Queen’s Bench Division (Judge Reach QC) on 22 January 1999. The

decree assessed the damages at nil, and was in the following terms :

“PURSUANT to the Consent Order of Master Foster Under Order 37

of the Rules of the Supreme Court the assessment of damages in this

action was tried before His Honour Judge Rich QC (sitting as a Judge

of the High Court) without a jury at the Royal Courts of Justice in

London on the 20th, 21st and 22nd days of January, 1999.

AND THE JUDGE having assessed the award of damages at nil.

THE JUDGE DIRECTED that judgment should be entered for the

Defendant with costs to be taxed if not agreed.

IT IS THIS DAY ADJUDGED that judgment be entered for the

Defendant and the Plaintiff do pay the Defendant his costs of the

assessment of damages in this action to be taxed if not agreed.

AND THE JUDGE DIRECTED that the Plaintiff’s application for leave

to appeal be refused.”

3 Pursuant to this judgment, on 23 March 2000, the decree

holder filed a bill of costs. A detailed hearing regarding assessment of costs

took place wherein points of dispute were served and replies filed. On 11

November 2004, pursuant to the judgment dated 22 January 1999, a final

costs certificate was issued by the Costs officer of the court directing the

original plaintiff to pay to the defendant costs of 57,175.25 GBP within 14

days. The final costs certificate reads as under :

“In accordance with the Judgment dated 22nd January, 1999.

Upon the Defendant filing a completed bill of costs in this claim

Costs Officer O-Riordan has assessed the total costs as £57,175.25

(being as to £39,272.63 in respect of the said bill of costs, £1,728.75

court fee for the detailed assessment, £12,648.87 for the costs of the

detailed assessment and £3,525 as costs of the costs of the detailed

assessment).

You the Claimant must pay the sum of £57,175.25 to the Defendant

within 14 days of the date of this order.

The date from which entitlement to interest under this certificate

commences under the Judgments Act 1838 at the rate of 8% per

annum is as follows:-

1. On the sum of £39,272.63 from 22nd January, 1999 except interest

shall not run for 1184 days.

2. On the sum of £1,728.75 from 29th April, 2004.

3. On the sum of £12,648.87 from 29th April 2004.

4. On the sum of £3,525 from 26th October, 2004.”

4 On 17 January 2005, an additional costs certificate was issued

levying 9,159 GBP as interest from 31 December 2004 and thereafter at the rate of 12.53 GBP per day until payment.

5 The original foreign judgment dated 22 January 1999, the

final costs certificate dated 11 November 2004 and the additional costs

certificate dated 17 January 2005 are all subject matters of the present

execution application. The decree holder filed a chamber summons in the

execution application for leave to execute the decree and dispensation of

notice under Order 21 Rule 22 of the Code of Civil Procedure. That

chamber summons was made absolute and notice under Order 21 Rule 22

was dispensed with. The judgment debtor filed an appeal challenging that

order. In appeal, the chamber summons was allowed to be withdrawn with

liberty to file a fresh chamber summons. Accordingly, the present chamber

summons (Chamber Summons No.710/2010) has been filed in the

execution application for leave to execute the foreign judgment together

with two costs certificates and the certificate under Section 10 of the

Foreign Judgments (Reciprocal Enforcement) Act.

6 A learned Single Judge heard the parties on the chamber

summons, and by his impugned order dated 28 November 2019, made the

chamber summons absolute, granting leave to execute the judgment dated

22 January 1999 of the High Court of Justice, Queen’s Bench Division

(U.K.), the final costs certificate dated 11 November 2004 and the

additional costs certificate dated 17 January 2005, both issued by that

court. This order has been challenged in the present appeal.

7 The principal submission of Mr.Sakhardande, learned Senior

Counsel appearing for the Appellant/judgment debtor, is that the foreign judgment dated 22 January 1999 including the two certificates of costs is not a judgment given on merits as contemplated by the provisions of Section 13(b) of the CPC. It is submitted that whether a foreign judgment is a judgment on merits or otherwise must be assessed from the judgment itself; it must be, in other words, apparent from the text of the judgment. It is submitted that to the extent that the present foreign judgment does not contain reasons, the same does not, on its face, reveal or disclose application of mind of the court to the truth or falsity of the case including evidence placed and submissions made before the court. Mr.Sakhardande submits that absent any reasons in the judgment, it would be impossible for a contesting party to raise any effective defence under Section 13 of the CPC. In other words, learned Counsel submits, reasons are essential to enable a party to raise a permissible defence under Section 13, particularly under Clauses (b), (c) and (f) of Section 13. It is submitted that but for such construction, these clauses would be rendered otiose and nugatory, and therefore, the rival contention that there need not be reasons in a foreign judgment ought to be eschewed. Without prejudice to these submissions, Mr.Sakhardande submits that the foreign judgment must at least indicate that the court has considered rival pleadings, evidence – oral and documentary – and submissions; only when the judgment gives such indication that it could be considered as having satisfied the test of a judgment on merits as laid down by Courts in India.

8 Mr.Andhyarujina, learned Senior Counsel appearing for the

Respondent / decree holder, counters these submissions. Learned Counsel

submits that the judgments relied upon by Mr.Sakhardande in support of

his proposition that a foreign judgment must contain reasons so as to make

it a judgment on merits are all cases of ex parte foreign judgments. Learned

Counsel submits that there is no requirement in law of reasons to be

contained in a foreign judgment so as to make it a conclusive judgment

within the meaning of Section 13 of CPC. Learned Counsel submits that a

judgment can be considered as having been passed on merits, when the

court deciding the case gives opportunity to the parties to put forth their

respective cases and after considering rival submissions, renders its

decision in a formal order or judgment. Learned Counsel submits that in

this case, proper judicial process has been followed as per applicable

procedural laws of U.K.; the parties were given adequate opportunity to

present their respective cases; the case was tried for three days; and

thereafter the judgment was delivered. As for assessment of costs, the

parties filed bills of costs, points of disputes and replies on disputes as to

costs and were heard and only thereafter certificates of costs were issued. It

is submitted that this judgment/decree (including the costs certificates) is

conclusive, having been passed on merits of the case.

9 The relevant provisions of the CPC for execution of a foreign

judgment are to be found in Sections 44A and 13 of the CPC. The sections are quoted below:

“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.

Explanation 1— "Reciprocating territory" means 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.

Explanation 2.— "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 arbitration award, even if such an award

is enforceable as a decree or judgment.”

“13. When foreign judgment not conclusive.— 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 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 India.”

10 The above provisions make it clear that execution in India of a

decree (defined in Section 44A to include a judgment) of any superior

court (defined in Section 44A) of any reciprocating territory (also defined

in Section 44A), upon filing of a certified copy of such decree in a district

court, the decree itself being conclusive as to matters adjudicated thereby,

is a rule; Clauses (a) to (f) of Section 13 of the CPC contain the only

exceptions to this rule. If it is shown to the satisfaction of the court that the

decree, i.e. the foreign decree or decree of a reciprocating territory, falls

within any of the exceptions specified in Clauses (a) to (f) of Section 13,

the district court is obliged to refuse execution of such decree. None of

these clauses, i.e. Clauses (a) to (f) of Section 13, advert to the

requirement of giving of reasons. It is, however, the case of the judgment

debtor that to the extent the judgment contains no reasons, it falls within

Clause (b), which excepts judgments not given on the merits of the case

from conclusive foreign judgments. It is also alternatively argued that to

assess the existence or otherwise of matters referred to in Clauses (a) to (f)

of Section 13 and particularly, Clauses (b), (c) and (f) thereof, the decree

or order must contain reasons. Learned Counsel for the judgment debtor

relies on the definition of “judgment” in Section 2(9) of the Code and case

law explaining that definition.

11 Section 2(9) defines a “judgment” to mean “the statement

given by the Judge of the grounds of a decree or order”. A “decree”, on the other hand, under Section 2(2), means “the formal expression of an adjudication” which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit. An order, on the other hand, defined in Section 2(14), means “the formal expression of any decision of a Civil Court which is not a decree”. The CPC consolidates and amends laws relating to the procedure of courts of civil judicature in India. So far as our civil courts are

concerned, the code makes a clear distinction between a judgment, on the

one hand, and a decree or order, on the other. The latter two are formal

expressions of adjudication or decision of civil courts, whereas the former, a

judgment, is a statement of the grounds of such decree or order given by

the Judge. In so far, however, as judgments of reciprocating territories or

foreign judgments are concerned, the expression “decree” is defined under

Section 44A to mean “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 fine or other penalty”. What

is executed under Section 44A is a “decree” of any superior court of a

reciprocating territory and such decree means a decree or judgment of such

court as explained in Explanation II of Section 44A. In other words, so far

as execution of foreign decrees is concerned, the Code does not make any

distinction between a “decree” and a “judgment”. Any adjudication by a

foreign court upon a matter before it, including a formal expression of such

adjudication, is executable under Section 44A. This much appears from a

plain reading of the relevant provisions of the CPC.

12 Privy Council in the case of Brijlal Ramjidas vs. Govindram G. Seksaria AIR 1947 PRIVY COUNCIL 192 held that a “judgment” within the meaning of Section 13 of the

CPC meant “an adjudication by a foreign court upon the matter before it” and not a statement of reasons for the order. Authorities cited by Mr.Sakhardande for the proposition that in order to constitute a judgment, the order must contain reasons (Balraj Taneja vs. Sunil Madan (1999) 8 SCC 396 and Assistant Commissioner vs. Shukla and Bros. (2010) 4 SCC 785) are quite beside the point, since they do not deal with foreign judgments, but with judgments rendered by civil courts in India.

13 Mr.Sakhardande contends that reasons would be necessary to

determine whether any of the exceptions given in Section 13 would apply

to a foreign judgment and therefore, reasons are necessary to constitute a

conclusive foreign judgment within the meaning of Section 13. This is a

circuitous argument. What Section 13 provides is circumstances where a

foreign judgment shall not be treated as conclusive. From this,

Mr.Sakhardande deduces that in every case, the court must be in a position

to assess whether any of the enumerated circumstances exists in the

context of a foreign judgment. He then follows it up by submitting that

such assessment is possible only if there are reasons stated in the foreign

judgment; the scheme of the CPC for executing foreign decrees (which

include judgments), as noticed above, requires the district court to refuse

execution “if it is shown to the satisfaction of the court that decree falls

within any of the exceptions specified in Clauses (a) to (f) of Section 13.”

He then sums up by insisting on the requirement of reasons as flowing

from this scheme. A perfect roundabout for inventing an altogether new

exception - “absence of reasons”. A simple answer to Mr.Sakhardande’s socalled

dilemma may be expressed thus :Clauses (a) to (f) are the only

exceptions to a conclusive and executable foreign judgment. The onus to

show to the satisfaction of the court that a decree falls within any of these

exceptions is upon the objector to execution. The very first and central

fallacy is in insisting on deducibility of these exceptions solely from the text

of the decree. There is no warrant for such insistence in Section 13 itself. If anything, the language of Section 13 suggests otherwise.

14 The first exception in Section 13, contained in clause (a), is

want of pronouncement by a court of competent jurisdiction. The decree could never reflect, on the face of it, competence or otherwise of the court pronouncing it; that would have to be gathered from the circumstances surrounding a case and the adjudication called for by it. Even clause (b) does not suggest the mere text of a foreign decree or judgment as the basis of assessment. A decree or judgment, for example, may contain reasons and yet these may have absolutely nothing to do with the merits of the case; if at all, these merits can only be noticed from the pleadings of the parties, and not from the mere text of the decree or judgment. Clause (c) of Section 13, on its very face, makes it clear that one must have regard to the proceedings before the foreign court to assess whether, on the face of such proceedings, the decree appears to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable. One cannot simply have recourse to a decree to consider whether circumstances provided under clause (c) are satisfied;

one must necessarily have regard to the proceedings. Ditto for clause (d) of

Section 13. By its very nature, it requires the executing court to have

regard to the proceedings in which the judgment was obtained to see

whether such proceedings were opposed to natural justice. Clause (e),

which is invoked in a case of fraud, almost by definition, could not imply

exclusive reference to the text of a decree or judgment for its assessment.

Even for assessing a case under clause (f), one must have regard to the

claim and the defence to come to any conclusion on founding of the claim

on breach of any law in force in India. Circumstances provided in Clauses

(a) to (f) of Section 13 are, thus, deducible from pleadings, circumstances

or proceedings of a case and there is nothing intrinsic in the text of a

decree so as to treat it as the sole basis for assessing existence or otherwise

of the exceptions provided therein. The text of the decree, indicating inter

alia whether or not it contains reasons, is but one circumstance; the court

must have regard to all circumstances to assess whether any of the

exceptions provided in Clauses (a) to (f) of Section 13 is made out. The

court cannot refuse to execute a foreign decree or judgment merely

because it is not apparent from such decree or judgment whether or not it

falls within any of the exceptions contained in Clauses (a) to (f) of Section

13.

15 Clauses (a) to (f) of Section 13, being exceptions to the rule,

the onus to show that the foreign judgment falls within any of these

exceptions is on the objector to the execution applied for. The objector

must positively show existence of the circumstances referred to in either of

these clauses. In the present case, the judgment debtor, who objects to the

execution, invokes clause (b), submitting that the judgment has not been

given on the merits of the case. As explained by the Supreme Court in

Alcon Electronics Pvt.Ltd. vs. Celem S.A.4, “when the court deciding the

case gives opportunity to the parties to the case to put forth their case and

after considering the rival submissions, gives its decision in the form of an

order or judgment, it is certainly an order on merits of the case ”. In the

case of Alcon Electronics the appellant, after submitting itself to the

jurisdiction of the court, had agreed to go for a summary adjudication of

costs. The order of costs did not have reasons. The appellant contended

before the court that the order of costs was not a judgment on merits. The

Supreme Court negatived the contention. This is what the Supreme Court

4 (2017) 2 SCC 253

held was the purport of Section 13 generally with its exceptions to

conclusiveness of a foreign judgment :

“A plain reading of Section 13 CPC would show that to be

conclusive an order or decree must have been obtained after

following the due judicial process by giving reasonable notice

and opportunity to all the proper and necessary parties to put

forth their case. When once these requirements are fulfilled,

the executing Court cannot enquire into the validity, legality or

otherwise of the judgment.”

16 The cases relied upon by Mr.Sakhardande in support of his

argument that want of reasons is suggestive of want of adjudication on

merits, particularly the cases of International Woollen Mills vs. Standard

Wool (U.K.) Ltd.5 and Atit Omprakash Agarwal vs. BNP Paribas6, deal with

judgments given for default of appearance of the defendant. That was why

they were treated as judgments not given on the merits of the case.

Whenever a defendant fails to enter appearance in response to a summons

to answer a claim, two scenarios may follow. The court may hear the

plaintiff in the absence of the defendant and pass a judgment on merits. In

some jurisdictions, the courts may instead pass a judgment in such case

simply on the footing that the defendant has failed to enter appearance. A

judgment delivered in the former case would be a judgment on merits in

spite of the defendant’s absence; whilst the latter would be a judgment not

on merits, but simply because of the defendant’s absence. The former is a

case of a conclusive judgment within the meaning of Section 13, the latter

is not since it is hit by clause (b) of Section 13.

17 Let us now consider how the subject foreign decree or

5 (2001) 5 SCC 265

6 (2017) SCC Online Bom 9827


judgment fares in the face of this law. The genesis of the decree in our case

is a consent order passed in an action initiated by the Appellant (plaintiff)

against the Respondent (defendant). By consent, a judgment was entered

against the defendant and it was ordered that he pay such damages as may

be assessed by the court. In the proceedings for assessment of damages, a

total of eleven affidavits of evidence as well as written arguments of

Counsel were filed by the respective parties. The case was heard without a

jury at the Royal Court of Justice in London for three days, whereafter the

presiding judge held against the plaintiff, assessing award of damages at

nil, and ordering that judgment be entered for the defendant and the

plaintiff do pay the defendant costs of the assessment of damages in the

action, such costs having to be taxed if not agreed. The plaintiff’s

application for leave to appeal from that order was refused by the judge.

These facts, collectively, negate any case that the main judgment on

assessment of damages was entered otherwise than on merits.

18 Let us now come to the order of costs which is the real bone of

contentions between the parties. Under English Law, costs follow the event; the party who looses in court pays the other party’s legal costs (Rule 44.3 of CPR). The court awarding costs usually, as was indeed done in our case, orders such “costs to be assessed, if not agreed”. Assessment of costs is a technical procedure under which the successful party submits its detailed bill of costs to a court official or a costs judge (Rule 47.6 read with practice direction 47) who then assesses how much of it the loosing party should pay. In case the paying party disputes any item in the bill of costs, it has to serve on the receiving party points of dispute (Rule 47.9). The receiving

party may then serve replies to these points of dispute (Rule 47.13). There

is a detailed assessment hearing if the receiving party so requires. (Rule

47.14). The costs are usually summarily assessed at the conclusion of

assessment proceedings (Rule 47.20). After the detailed assessment

hearing, a “completed bill” is filed, based on which a “final costs certificate”

is issued (Rule 47.17). As the English Court of Appeals held in Flannery vs. Halifax Estate Agencies Ltd. [2000] I WLR 377, where court makes a summary exercise of discretion, particularly in an order of costs, there is no duty to give reasons.

A party seeking reasons for a decision in detailed costs assessment

proceedings must do so by filing an appropriate request (Rule 47.23).

19 In our case, in keeping with these rules, a bill of costs was filed

by the defendant who was a successful party. The plaintiff filed points of dispute. The defendant filed replies. A detailed hearing regarding assessment of costs took place between 29 March 2004 and October 2004. The costs officer issued a final costs certificate assessing costs together with interest on such costs. By an additional costs certificate dated 17 January 2005, that interest was quantified. All of this was purely an assessment of costs on merits and not by default or any other mode, and the plaintiff, against whom costs were ordered, admittedly, did not apply for statement of reasons for such costs. There is no reason for us to hold, on these facts, that the decree or judgment on costs was not an order on merits.

20 The Appellant/judgment debtor has accordingly failed to

discharge his onus to show that the decree or judgment comes within the exception contained in clause (b) of Section 13 or any of the other exceptions in clauses (a) to (f) of Section 13. The learned Single Judge, in any event, has taken a perfectly possible, and even a probable view, and there is no reason for us to take another view and unsettle it.



21 The appeal is, in the premises, dismissed. The costs of the

appeal, quantified at Rs.2 lacs, shall be included in the costs of execution and recovered from the Appellant/judgment debtor.

22 Learned Counsel for the Appellant applies for stay. Stay is

refused.

(MADHAV JAMDAR, J.) (S.C. GUPTE, J.)


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