The common law maxim “vigilantibus et non dormientibus jura subveniunt”, means the law helps those who are vigilant and not those who sleep over their rights.
Execution of court decrees is not an unchartered territory which has not had its fair share of controversy under law. A decree is precisely the trophy that a claimant litigant eyes at the time of approaching a court of law. However, as it has rightly been pointed out at several occasions, attaining a decree only proves to be less than half the battle won. The Supreme Court time and again has held that unreasonable delays in the execution of decrees just leaves the decree-holder devoid of its efforts, which are put in for attaining a decree. The Supreme Court in this regard held that “… We strongly feel that there should not be unreasonable delay in execution of a decree because if the decree holder is unable to enjoy the fruits of his success by getting the decree executed, the entire effort of successful litigant would be in vain…”[1]
For the purposes of this article, it is important to understand about foreign judgments and their enforceability in India. Foreign decrees or judgments are passed by a foreign court, which are held to be recognised and are capable of being enforced and executed in India. The Code of Civil Procedure, 1908 (“CPC”) provides for the mechanism for such enforcement. It is to be kept in mind that a foreign judgment, for the asking cannot be directly put to execution and enforcement. It is for this purpose that the CPC lays down the muster test for a foreign judgment to be ‘conclusive’ for being rendered as enforceable, vide Section 13[2] CPC. The six hurdles that such a judgment must cross over are:
- It ought to have been pronounced by a court of competent jurisdiction;
- It ought to have been passed on the merits of the case;
- It should appear, on the face of the proceedings, to be founded on a correct view of international law or should not be a refusal to recognise the law of India in cases in which such law is applicable;
- The proceedings in which the judgment was obtained ought not be opposed to natural justice;
- It ought not be obtained by fraud;
- It ought not be founded on a breach of any law in force in India.
Once the above hurdles are crossed, a foreign judgment can be held to be conclusive. Now foreign judgments, post 1937, have been bifurcated to either fall in the category of being passed from a reciprocating territory or a non-reciprocating territory.
However, the struggle for a foreign judgment does not end here. Section 44-A[3] CPC lays down the procedure for execution of decrees which are passed by courts of reciprocating territory. Hence, at this stage it becomes relevant to understand why the distinction between a reciprocating territory and a non-reciprocating territory, and its impact on foreign judgments being enforced in India.
A foreign judgment passed by a recognised and notified reciprocating territory(ies)[4], has been declared vide Section 44-A CPC to be directly enforced by filing execution proceedings which is laid down under Order 21 CPC. Thus, once a foreign judgment passes the thresholds under Section 13 CPC and is held to be conclusive, which is a money decree, must follow the next test i.e. of being well within the laws of limitation of India.
But what is the law of limitation for execution of a foreign decree passed by a reciprocating territory?
In order to address the lackadaisical approach that litigants at times adopt, the Supreme Court of India was recently posed with utmost important question(s) of law[5] i.e.
“What is the limitation for filing an application for executionof a foreign decree of a reciprocating country in India?
Does Section 44-A merely provide for manner of execution of foreign decrees or does it also indicate the period of limitation for filing execution proceedings for the same? and
From which date the period of limitation will run inrelation to a foreign decree (passed in a reciprocatingcountry) sought to be executed in India?”
It was sought to be argued before the Supreme Court that for this particular issue, there is no prescribed period of limitation. Striking down the argument, the Supreme Court was of the view that Section 3[6] of the Limitation Act includes ‘application’ and an execution application for enforcement of foreign decree would be included within the same, thus there ought to be a limitation period.
Another interesting point of contention raised was that the cause of action for executing a foreign decree only starts running, once an ‘application’ under Section 44-A CPC is filed. A reasoned decision appears to have been passed on this issue by the Supreme Court that, the concept of cause of action would not apply to an execution application unlike a suit. This now clarifies a long-standing confusion, that the clock does not start ticking for execution of a foreign decree upon filing of the application under Section 44-A CPC.
Rather, adopting the global best practices, the Supreme Court has held that the limitation for execution of a foreign decree in India would be dependent on the limitation period as prescribed in the laws of the ‘cause country’ i.e. the reciprocating territory which passed the judgment and India being the ‘forum country’ where it sought to be enforced. The reasoning propounded for this is that, at times a decree- holder sleeps over the enforcement of a decree and rises from slumber at its own discretion, which could be a recipe for disaster, when one could wake up after a century and ask for the execution.
Dealing with the interpretation of Section 44-A CPC, the Supreme Court held that the said provision of CPC at the very best is merely an enabling provision which allows the court concerned to execute the foreign decree as if it had been passed by an Indian court and does not deal with limitation. On a bare reading of the provision concerned, the said section does not by any means even refer to the word of limitation let alone provide any restrictions on the limitation front. If at all, the questions of limitation would be covered under Section 47[7] CPC and Order 21 CPC i.e. Execution of Decrees and Orders, but that does not get covered under Section 44-A CPC.
With passing of such observation, the long-standing decision of the Madras High Court in Sheikh Ali v. Sheikh Mohamed[8]was struck down partially wherein it was held that limitation starts to run upon filing of an application under Section 44-A CPC.
With the above issue laid to rest, the next issue which becomes important to understand, is the applicable limitation period for decrees in India. Article 136 of the Limitation Act lays down that the period of execution of any decree apart from decree of mandatory injunction is 12 years whereas for any ‘application’ for which no period is prescribed, the same shall be 3 years vide Article 137 of the Limitation Act.
The Supreme Court vide Bank of Baroda[9] judgment is of the opinion that Article 136 of the Limitation Act was applicable only to decrees passed by Indian courts and the fact that despite enactment of the new law of limitation in 1963, with no insertion of foreign courts decrees, the intent of the legislature was clear that they were guided by Section 44-A CPC then and an inference was drawn that the limitation clock would begin to run, upon filing of such an application.
The position with regard to filing of an application seeking execution of a foreign judgment now stands further clarified by the Supreme Court. It was laid down that the twin requirement of filing the application is that, there should be a certified copy of the decree and the same should be along with a certificate of the court concerned. Furthermore, the requirements as provided under Order 21 Rule 11(2)[10] CPC ought to be followed. In view of the requirements as laid down, the Supreme Court opined that foreign decrees would thus fall under the category of Article 137 of Limitation Act as it did not fall under any other Article and hence the limitation clock being 3 years.
In these times of rapid globalisation, where India is coming up as a dominant force, the judgment of the Supreme Court in Bank of Baroda[11]sends out a positive message across lines, by holding that limitation in execution of foreign decrees ought to be treated as a substantive law. A startling observation has also been brought to the fore, that since ages this important issue in India, was always treated as a procedural law issue whereas countries like USA, UK have by way of legislation or judicial decisions held that law of limitation cannot be purely an issue of procedural law. Taking cue from the position prevailing worldwide, it has now been held that the law of limitation for execution of foreign decrees by a reciprocating territory to India would be as per the law of limitation of the cause country i.e. where the judgment was passed and the same be applied in the forum country i.e. were sought to be executed.
But most importantly and to answer the main question now, when does the limitation clock start ticking? The Supreme Court went a step ahead by just not answering the question of law but also applied the same in two scenarios i.e. in which scenarios and when does the clock start ticking at different situations. In the first scenario, when a decree-holder does not take any action for execution of decree where the decree was passed i.e. cause country and the period of limitation for execution of decree in that country expires then he would automatically extinguish his right to execute the same in the forum country.
The situation before the Supreme Court in Bank of Baroda case[12] on hand was such that the decree was passed by the Queens Bench Division, United Kingdom and was sought to be executed in India. The law of limitation on execution of decrees in the UK is 6 years and that of a money decree in India is 12 years. The same was however filed for execution in India after 14 years and hence was held to be barred by limitation. However, it has been held that upon expiry of 6 years, the litigant decree-holder cannot come to India and start limitation afresh as per Indian laws where the decree is sought to be executed, since he is supposed to be bound by the clutches of the limitation as per the country where the decree was passed.
The second scenario being that, when a decree-holder does take some steps to enforce the decree in the cause country,but it takes time and is not fully satisfied. The Supreme Court has held that in such a scenario the accrual of right to apply under Section 44-A CPC would arise only after finalisation of proceedings in the cause country and three years from thereto to apply in India by application of Article 137 of the Limitation Act.
However, this scenario might cause some hindrances in the future as the Supreme Court ought to have clarified the meaning of ‘some steps’, as how much is enough, is a question which is yet to be answered. Further, another aspect that ought to have been clarified by the Supreme Court is the meaning of ‘finalisation of proceedings’. The first question that may arise is that would pendency of any appeal in the cause country defeat the definition of finality of proceedings and hinder the access to the forum country for filing the execution?
The issues which are now bound to create a furor after this decision of the Supreme Court is that time and again various courts have held that the arbitral awards are executed just like decrees. However, the Supreme Court, relying on the Explanations to Section 44-A CPC, have clarified that the decision concerned is only with regard to a money decree. Now the question which begs an answer is that whether the limitation parameters now having been set by the Supreme Court, will it also be applied to foreign arbitral awards?
Nonetheless, a contentious issue has now finally been put to rest and the position to hold field henceforth is that the clock of 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 for a foreign decree sought to be executed in India from a reciprocating territory.
*The authors of this article, Sanjeev Kumar is a Partner and Anshul Sehgal is a Managing Associate in the Litigation and Dispute Resolution Group at L&L Partners Law Offices, New Delhi, India who specialise in enforcement and execution matters. The views expressed are personal.
[1] Satyawati v. Rajinder Singh, (2013) 9 SCC 491
[2]Section 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.
[3] Section 44-A: 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 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.
[4] Notified reciprocating territories by India: UAE, United Kingdom, Fiji, Singapore, Malaysia, Trinidad & Tobago, New Zealand, Hong Kong, Papua and New Guinea and Bangladesh.
[5] Bank of Baroda v. Kotak Mahindra Bank Ltd., 2020 SCC Online SC 324
[6] Section 3. Bar of limitation. — (1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence.
(2) For the purposes of this Act, —
(a) a suit is instituted, —
(i) in an ordinary case, when the plaint is presented to the proper officer;
(ii) in the case of a pauper, when his application for leave to sue as a pauper is made; and
(iii) in the case of a claim against a company which is being wound up by the court, when the claimant first sends in his claim to the official liquidator;
(b) any claim by way of a set off or a counter claim, shall be treated as a separate suit and shall be
deemed to have been instituted—
(i) in the case of a set off, on the same date as the suit in which the set off is pleaded;
(ii) in the case of a counter claim, on the date on which the counter claim is made in court;
(c) an application by notice of motion in a High Court is made when the application is presented to the proper officer of that court.
[7] Section 47. Questions to be determined by the Court executing decree. – (1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
(3) Where a question arises as to whether any person is or is not the representative of a party, such question shall, for the purposes of this section, be determined by the Court.
Explanation I.-For the purposes of this section, a plaintiff whose suit has been dismissed and a defendant against whom a suit has been dismissed are parties to the suit.
Explanation II.-(a) For the purposes of this section, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed; and
(b) all questions relating to the delivery of possession of such property to such purchaser or his representativeshall be deemed to be questions relating to the execution, discharge or satisfaction of the decree within themeaning of this section.
[9] Bank of Baroda v. Kotak Mahindra Bank Ltd., 2020 SCC Online SC 324
[10] Order 21 Rule 11(2). Written application.– Save as otherwise provided by sub-rule(1), every application for the execution of a decree shall be in writing, signed andverified by the applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case, and shall contain in a tabular form the following particulars, namely :
(a) the number of the suit;
(b) the names of the parties;
(c) the date of the decree;
(d) whether any, appeal has been preferred from the decree; adjustment of the matter in controversy has been made between the parties subsequently to the decree;
(f) whether any, and (if any) what, previous applications have been made for the execution of the decree, the dates of such applications and their results;
(g) the amount with interest (if any) due upon the decree, or other relief granted thereby, together with particulars of any cross decree, whether passed before or after the date of the decree sought to be executed;
(h) the amount of the costs (if any) awarded;
(i) the name of the person against whom execution of the decree is sought; and
(j) the mode in which the assistance of the Court is required whether:
(i) by the delivery of any property specifically decreed;
(ii) by the attachment, or by the attachment and sale, or by the sale without attachment, of any property;
(iii) by the arrest and detention in prison of any person;
(iv) by the appointment of a receiver;
(v) otherwise, as the nature of the relief granted may require.
[11] Bank of Baroda v. Kotak Mahindra Bank Ltd., 2020 SCC Online SC 324
[12] Ibid.