The case involves a dispute between Vysya Bank and Bank of Baroda regarding a letter of credit issued for a transaction in 1992. After legal proceedings in London, a decree was ...
No Acts & Articles mentioned in this case
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2175 OF 2020
@ SPECIAL LEAVE PETITION (CIVIL) NO.8123 OF 2015
BANK OF BARODA …PETITIONER(S)
Versus
KOTAK MAHINDRA BANK LTD. …RESPONDENT(S)
J U D G M E N T
Deepak Gupta, J.
Leave granted.
2.“What is the limitation for filing an application for execution
of a foreign decree of a reciprocating country in India?” is the
short but interesting question which arises for decision in this
case.
3.Vysya Bank, which is the predecessor of the respondent
Kotak Mahindra Bank Ltd., issued a letter of credit for US
1
$1,794,258 on behalf of its customer M/s. Aditya Steel Industries
Limited in favour of M/s. Granada Worldwide Investment
Company, London. The appellant Bank of Baroda was the
confirming bank to the said letter of credit. The Vysya Bank
issued instructions to the London branch of the appellant on
12.10.1992 to honour the letter of credit. Acting on this
instruction the London branch of the appellant discounted the
letter of credit for a sum of US $ 1,742,376.41 and payment of
this amount was made to M/s Granada Worldwide Investment
Company on 13.10.1992.
4.The appellant Bank of Baroda filed a suit against the Vysya
Bank for recovery of its dues on 19.04.1993 in London. This suit
was decreed by the High Court of Justice, Queens Bench,
Divisional Commercial Court of London (hereinafter referred to as
the ‘London Court’) on 20.02.1995 and a decree for US
$1,267,909.26 along with interest thereon was passed in favour
of the appellant bank and against Vysya Bank. The decree was
not challenged and became final.
5.It appears that some talks went on between the two banks
with regard to the satisfaction of the decree. On 28.08.1995,
2
Vysya Bank placed an interbank deposit of US $ 1,400,000 with
the main branch of the Bank of Baroda on rollover basis with a
request that the decree passed by the London Court be not
executed. However, later in 2003 ING Vysya Bank, filed a petition
before the Debt Recovery Tribunal (DRT) for recovery of US
$1,400,000. Those proceedings are being contested by the Bank
of Baroda and it appears that the proceedings before the DRT are
still pending and we make it clear that anything said by us in this
appeal will not affect those proceedings, since we are only dealing
with the issue of limitation for filing an execution petition of a
decree passed by a foreign court of a reciprocating country.
6.On 05.08.2009, the appellant bank filed an execution
petition i.e. almost 14 years after the decree was passed by the
London Court for execution of the same in terms of Section 44A
read with Order 21 Rule 3 of the Code of Civil Procedure, 1908
(CPC) for recovery of Rs.16,43,88,187.86. This execution petition
was contested mainly on the ground that the same had not been
filed within the period of limitation. On 20.07.2013 the Additional
City Civil & Session Judge, Bangalore dismissed the execution
petition as time barred holding that Article 136 of the Limitation
3
Act, 1963 (for short ‘the Act’) applies and the execution petition
should have been filed within 12 years of the decree being passed
by the London Court. Aggrieved, the bank approached the High
Court which vide judgment dated 13.11.2014 upheld the view of
the trial court.
7.Sh. K. K. Venugopal, learned senior counsel appearing for
the appellant urged that the Act does not prescribe any period of
limitation for execution of a foreign decree passed in a
reciprocating country. He submits that in such eventuality
principles of delay and laches as applicable to writ proceedings
may apply and, therefore, he has relied upon a long list of dates
to show that the Bank of Baroda was pursuing the matter and
was trying its best to get the matter settled with Vysya Bank and
urges that there is no delay in filing the petition. His second
submission is that since no limitation is provided under the Act,
the cause of action to file an execution petition arises only when a
petition is filed under Section 44A of the CPC which provides that
a decree passed by a court in a reciprocating country should be
treated as an Indian decree and, therefore, the limitation for 12
years provided under Article 136 of the Act applies only from that
4
date because that is the date when the cause of action arises and
the decree is treated to be an Indian decree.
8.On the other hand, Mr. V.V.S. Rao, learned senior counsel
appearing for the respondent urged that the law of limitation of
England would apply in this case. It is undisputed that the
limitation period as per English law is 6 years for execution of a
decree, and hence the respondent’s submission is that the decree
having been passed on 20.02.1995, no petition for execution of
that decree could be filed after 20.02.2001. The alternative
argument of learned senior counsel for the respondent is that
even if the Indian law of limitation were to apply, the limitation
period for execution of a foreign decree would be determined as
per Article 136 of the Act. Section 44A of the CPC clearly
provides that a decree passed in a reciprocating country should
be treated as an Indian decree and, therefore, the same must be
enforced within 12 years from the date of passing of the decree as
provided by Article 136 of the Act.
9.To appreciate the rival contentions of the parties, it would be
necessary to refer to Section 44A of the CPC which reads as
follows:
5
“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 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.”
10.At the outset, we may note that the aforesaid section was
inserted in the CPC in the year 1937. Prior to that, a decree
passed by any Court in a foreign country could not be executed in
6
India and only a suit could be filed on the basis of the judgment
passed by a foreign court. Section 44A brought about a change
in law in respect of reciprocating countries which agreed to
respect the judgments and decrees passed in each other’s courts.
From a bare reading of Section 44A CPC it is crystal clear that it
applies only to money decrees and not to other decrees.
11.Considering the rival arguments before us, the following
issues arise for consideration:
(i)Does Section 44A 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?
(ii)What is the period of limitation for executing a decree
passed by a foreign court (from a reciprocating country)
in India?
(iii)From which date the period of limitation will run in
relation to a foreign decree (passed in a reciprocating
country) sought to be executed in India?
Question No. 1
7
12.A careful analysis of Section 44A hereinabove shows that a
decree passed by any superior court of a reciprocating territory
can be executed in India as if it had been passed by the District
Court before whom it is filed. Subsection (2) of Section 44A
casts an obligation on the person filing such application to file a
certified copy of the decree. Such person must also file a
certificate from the superior court which passed the decree
stating the extent, if any, to which the decree has been satisfied
or adjusted. This certificate shall be conclusive proof of the
extent of such satisfaction/adjustment. Subsection (3) provides
that from the date of filing of certified copy of the decree, the
provisions of Section 47 of CPC shall apply to such proceedings.
The District Court can refuse to execute any such decree if it falls
within exceptions (a) to (f) of Section 13. The first Explanation
provides the definition of reciprocating territory and superior
courts. Explanation 2 is important which provides that a decree
must be a decree under which a sum of money is payable
excluding certain sums such as those payable as taxes, fines,
penalties etc. and also excludes arbitration awards by the foreign
courts.
8
13.At the outset, we may note that we are not at all in
agreement with the submission of Shri K.K. Venugopal that no
limitation is applicable. These are not writ proceedings but
execution proceedings. The Act is a complete code in itself and
Section 3 clearly sets out that subject to the provisions contained
in Section 4 to Section 24 of the Act, every suit instituted, appeal
preferred, and application made after the prescribed period shall
be dismissed even if limitation has not been set up as a defence.
The word ‘application’ used is wide enough to include an
application filed for execution of a decree, even a foreign decree.
Therefore, the principles of delay and laches which may be
applicable to writ proceedings cannot be applied to civil
proceedings and are not at all attracted in proceedings filed under
the CPC which, in our opinion, must be filed within the
prescribed period of limitation.
14.The main argument of Shri K.K. Venugopal is that limitation
will start running only after the petition under Section 44A is
filed. According to him, the cause of action for executing the
decree in India arises only after the application under Section
44A is filed. This view has also been taken by a Full Bench of the
9
Madras High Court in the case of Sheik Ali vs. Sheik
Mohamed
1
. This view is however contrary to the view taken by
the Punjab & Haryana High Court in Lakhpat Rai Sharma vs.
Atma Singh
2
.
15.We have carefully considered the matter and at the outset
we may note that there is no concept of cause of action in so far
as an execution petition is concerned. Cause of action is a
concept relating to civil suits and not to execution petitions.
Cause of action is nothing but a bundle of facts which gives rise
to a legal right enabling the plaintiff to file a suit. On the other
hand, a decree is a determination already made by a court on the
basis of a reasoned judgment. In case of a decree it becomes
enforceable the day it is passed. Therefore, we are clearly of the
view that filing of an application under Section 44A will not create
a fresh period for enforcing the decree.
16.We clarify that for the purpose of this judgment we have
used the expressions, “cause country” which will mean the
country in which the decree was issued (in this case England),
1
AIR 1967 Mad 45
2
AIR (58) 1971 P&H 476
10
and “forum country” which would mean the country in which the
decree is sought to be executed (in this case India).
17.If we accept the view urged by Shri K.K. Venugopal, that the
date from which the limitation will be considered, will be the date
of filing of certified copy of the decree it would lead to ludicrous
results. Taking the example of the present case, the limitation to
execute a decree in United Kingdom is 6 years. However, in India
it is 12 years. The decree becomes enforceable on the date it was
passed and, therefore, if the law of the cause country is to apply,
the limitation would be 6 years and if the law of forum country
were to apply, it would be 12 years. If the view urged is accepted
then the decree holder can keep silent for 100 years and,
thereafter, file a certified copy of the decree and the certificate
and then claim that the decree can be executed. That would
make a mockery of the legal process not only of the cause country
but also of the forum country. The clock of limitation cannot be
kept in abeyance for 100 years at the choice of the decree holder.
We, therefore, reject this contention.
18.The main argument raised on behalf of the appellant is that
subsection (1) of Section 44A is a deeming provision which
11
provides that the decree shall be executed as if it had been
passed by an Indian court. It is urged that this deeming
provision should be given its full meaning and when the statute
directs an imaginary state of affairs to be taken as real, one
should imagine also as real the consequences and incidents
which flow from the same. Reference has been made to the
judgment in East End Dwellings Co. Ltd. vs. Finsbury
Borough Council
3
wherein it was held as follows:
"…If one is bidden to treat an imaginary state of
affairs as real, one must surely, unless prohibited
from doing so, also imagine as real the consequences
and incidents which, if the putative state of affairs
had in fact existed, must inevitably have flowed from
or accompanied it. One of these in this case is
emancipation from the 1939 level of rents. The
statute says that one must imagine a certain state of
affairs. It does not say that, having done so, one
must cause or permit one’s imagination to boggle
when it comes to the inevitable corollaries of that
state of affairs."
The aforesaid observations by the House of Lords have been
approved by this Court in Income Tax Commissioner vs. S.
Teja Singh
4
. The Madras High Court
5
and the Punjab and
Haryana High Court
6
have taken the view that the foreign decree
3
1951 (2) All E.R. 587
4
AIR 1959 SC 352
5
In Uthamram vs. K. M. Abdul Kasim Co., AIR 1964 Mad 221
6
In Lakhpat Rai Sharma vs. Atma Singh, AIR (58) 1971 P&H 476
12
has to be executed in India as if it had been passed by an Indian
court and the legal fiction must be extended to its logical end.
Therefore, the foreign decree must be treated as an Indian decree
as on the date it was passed. However, the Punjab and Haryana
High Court held in Lakhpat Rai Sharma (supra) that if no step
for execution of the decree and no stepinaid for such an
execution is taken in an Indian court on or before the limitation
prescribed, then the execution petition has to be dismissed on the
ground that it is time barred. It rejected the contention that the
application for certificate of nonsatisfaction given to the foreign
court should be treated to be a stepinaid and excluded while
calculating the period of limitation.
19.Does Section 44A create a fresh period of limitation by
extension of the deeming provision?. In our view, Section 44A is
only an enabling provision which enables the District Court to
execute the decree as if the decree had been passed by an Indian
court and it does not deal with the period of limitation. A plain
reading of Section 44A clearly indicates that it only empowers the
District Court to execute the foreign decree as if it had been
passed by the said District Court. It also provides that Section 47
13
of the Act shall, from the date of filing of certified copy of the
decree, apply. Section 47 deals with the questions to be
determined by the court executing a decree. Execution of a
decree is governed under Order 21 of CPC and, therefore, the
provisions of Section 47 of the Act and Order 21 of CPC will
apply. In our considered view, Section 44A has nothing to do
with limitation.
20.Section 44A clearly provides that it is only after the filing of
the certified copy and the certificate, that the provision of Section
47 CPC will become applicable. This clearly indicates that this
section only lays down the procedure to be followed by the
District Court. Though we do not approve of the view taken by
the Madras High Court in Sheik Ali (supra), that limitation will
start running on filing of an application under Section 44A, we
only approve the following observations:
“(19) To sum up of our conclusions, we are of the view
that S. 44A(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 subsection goes no
further and is not for all purposes, but is designed to
attract and apply to 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…”
14
21.In our view Section 44A only enables the District Court to
execute the decree and further provides that the District Court
shall follow the same procedure as it follows while executing an
Indian decree, but it does not lay down or indicate the period of
limitation for filing such an execution petition. We answer
question number 1 accordingly.
Question No.2
22.Articles 136 and 137 of the Act read as follows:
Article 136, Limitation Act, 1963:
For the execution of
any decree (other
than a decree
granting a
mandatory
injunction) or order
of any civil court.
Twelve
years
When the decree or
order becomes
enforceable or where
the decree or any
subsequent order
directs any payment
of money or the
delivery of any
property to be made
at a certain date or at
recurring periods,
when default in
making the payment
or delivery in respect
of which execution is
sought, takes place:
Provided that an
application for the
enforcement or
execution of a decree
15
granting a perpetual
injunction shall not
be subject to any
period of limitation.
Article 137, Limitation Act, 1963:
PART IIOTHER APPLICATIONS
Any other application
for which no period of
limitation is provided
elsewhere in this
division.
Three years When the right
to apply
accrues.
23.If we hold that Article 136 is to apply then the period of
limitation in case of any foreign decree would be 12 years
regardless of the limitation which may be prevalent in the country
where the decree was passed, i.e., the cause country. If the
decree is to be executed in another jurisdiction, i.e., the forum
country, which law should apply? Whether the law of limitation
as applicable in the cause country or the forum country would
apply?
24.There is also the issue of conflict of laws between the cause
country and the forum country. As far as the present case is
concerned, it is not disputed that the limitation for executing a
decree in England is 6 years in terms of Section 24 of the
Limitation Act of 1980 of the United Kingdom. Rule 40.7 of the
16
Civil Procedure Rules of England provides that a judgment or
order takes effect from the date it is given or made or such later
date as the court may specify. The decree therefore becomes
enforceable on the date when it was passed and as far as this
case is concerned, the date of passing of the decree is
20.02.1995. If the limitation is 6 years then obviously the
execution petition should have been filed on or before 20.02.2001
and if the limitation was 12 years in terms of Section 136 of the
Act, the execution petition would still be barred by limitation as
the execution petition was filed in 2009.
25.There is increasing interaction and interplay between the
people across the globe. There are more and more international
business deals being done. There is an increasing exchange of
views in the fields of art, literature, sports, etc. Goods are sold
across the world, online. All these could lead to litigation, which
may have the cause in one country but the judgment debtor may
not have any property in that cause country and the decreeholder
would have to go to another country ( forum country) to take
benefit of the decree.
17
26.The earlier view was that the law of limitation being a
procedural law, the law of the forum country would govern the
field. This is reflected in Dicey’s observations in ‘Conflict of Laws’,
6
th
Edition
7
, where it has been said as follows:
“Whilst, however, it is certain that all matters
which concern procedure are in an English court
governed by the law of England, it is equally clear
that everything which goes to the substance of a
party’s rights and does not concern procedure is
governed by the law appropriate to the case.
Our Rule is clear and well established. The
difficulty of its application to a given case lies in
discriminating between matters which belong to
procedure and matters which affect the substantive
rights of the parties. In the determination of this
question two considerations must be borne in mind:
(1)English lawyers give the widest possible
extension to the meaning of the term ‘procedure’.
The expression, as interpreted by our judges,
includes all legal remedies, and everything
connected with the enforcement of a right. It covers,
therefore, the whole field of practice; it includes the
question of setoff and counterclaim, the whole law
of evidence, as well as every rule in respect of the
limitation of an action or of any other legal
proceeding for the enforcement of a right, and hence
it further includes the methods, e.g., seizure of
goods or arrest of person, by which a judgment may
be enforced.”
xxx xxx xxx
Similar view was relied upon by the Division Bench of the Madras
High Court in the case of Uthamram vs. K. M. Abdul Kasim
7
J.H.C. Morris, et. al., (Eds.), “Dicey’s Conflict of Laws”, 6
th
Edn., Stevens & Sons Ltd.,
Sweet & Maxwell, Ltd., pp.860-861 (1949).
18
Co.
8
, which held that the law of limitation of the forum country
would apply.
27.Indian Courts have normally taken the view that the law of
limitation is a procedural law. We may point out that in Dicey’s
‘Conflict of Laws’ 14
th
Edition
9
, the view taken is entirely different.
The present thinking appears to be that law of limitation is not
procedural, especially when it leads to extinguishment of rights or
remedies. Hence, it cannot be termed as a procedural law.
28.At this stage we may refer to Dicey’s Conflict of Laws 14
th
Edn. which has summarised this change in view in the following
words:
“The traditional approach has been thrown into some
doubt by decisions in Australia and Canada. In John
Pfeiffer Pty Ltd v. Rogerson, the High Court of Australia
indicated (obiter) that, at common law, statutes of
limitation are substantive, rather than procedural. In
Tolofson v. Jensen the Supreme Court of Canada
rejected the traditional common law classification of
statutes of limitation and the distinction between right
and remedy on which it is based and held that statutes
of limitation are to be classified as substantive. This
approach was confirmed in Castillo v. Castillo. The
Supreme Court applied a one year limitation period
under the law applicable to the tort, Californian law,
despite a provision of Alberta law which provided that
Alberta limitation law (which had a two year period)
should apply “notwithstanding that, in accordance
with conflict of law rules, the claim will be adjudicated
8
AIR 1964 Mad 221
9
Sir Lawrence Collins et. al., “Dicey, Morris, & Collins on The Conflict of Laws”, 14
th
Edn.,
Sweet & Maxwell pp. 198-199 (2006).
19
under the substantive law of another jurisdiction.” A
majority of the Supreme Court of Canada held that this
provision had no application because the claim was
already timebarred when the action was brought.”
Even in relation to England it was observed:
“Under the Foreign Limitation Periods Act 1984. The
Act was based on the recommendations of the Law
Commission. It adopts the general principle, subject to
an exception based on public policy, that the limitation
rules of the lex causae are to be applied in actions in
England, even if those rules do not lay down any
limitation period for the claim. English limitation rules
are not to be applied unless English law is the lex
causae or one of two leges causae governing the
matter….”
29.This change in view can also be noted in the works of other
authors. In Cheshire & North’s Private International Law (10
th
Edn.) it can be seen that as per the older rules, the limitation of
English law would apply. Hence a claim would be allowed in
England if it fell within the limitation period prescribed in its
laws, even if the action was timebarred as per the foreign law
applicable to the transaction/contract/dispute in question.
However, this raised various issues which were also highlighted.
It would be apposite to refer to the following paragraphs:
“(I)The time within which an action must be brought
English law is unfortunately committed to the view
that statutes of limitation, if they merely specify a
certain time after which rights cannot be enforced by
action, affect procedure, not substance. They concern,
it is said, not the merits of the cause, but the manner
20
in which the remedy must be pursued. They ordain
that the procedure of the court is available only when
set in motion within a certain fixed time after the cause
of action arose. In the result, therefore, any relevant
statute of limitation that obtains in the lex fori may be
pleaded, while a statute of some foreign law, even
though it belongs to the proper law of the transaction,
must be disregarded.
xxx xxx xxx
The rules of English private international law upon
this matter, however, pay little attention to the proper
law of the transaction that is in issue. Thus in a report
of a judgment by ROCHE, J., it is said: “Foreign courts
might have decided that the laws of limitation were
part of the substantive law, but he was unable to apply
them as such.” The result of this attitude is twofold.
Firstly, an English statute of limitation is a good idea
plea to an action brought in England, notwithstanding
that the action is still maintainable according to the
proper law of the transaction.
xxx xxx xxx
Secondly, the extinction of the right of action by the
proper law of the transaction is not a bar to an action
in England. In other words, if the permissible period is
longer in England than in the foreign country the
plaintiff is at liberty to sustain his action here.
30.In Cheshire & North’s Private International Law (15
th
Edition) it is noted that this change of applying the law of
limitation as applicable in the cause country whose law applies to
the transaction/contract/dispute was a welcome one. The
following paragraphs are relevant:
“(a) The time within which a action must be brought
21
Until 1984, English law was committed to the view that
statutes of limitation, if they merely specified a certain
time after which rights could not be enforced by actin,
affected procedure and not substance. This meant
that limitation was governed by English law, as the law
of the forum, and any limitation provision of the
applicable law was ignored. Where, however, it could
be shown that the effect of a statute of limitation of the
foreign applicable law was not just to bar the plaintiff’s
remedy, but also to extinguish his cause of action,
then the English courts would be prepared to regard
the foreign rule as substantive and to be applied in
England.
The common law rule, which has been criticised in a
number of common law jurisdictions, tends to have no
counterpart in civil law countries which usually treat
statutes of limitations as substantive. Furthermore,
the Contracts (Applicable Law) Act 1990, implementing
the European Community Convention on the Law
Applicable to Contractual Obligations (1980), provides
that the law which governs the essential validity of a
contract is to govern “the various ways of extinguishing
obligations, and prescription and limitation of actions”.
In 1982 the Law Commission concluded that “there is
a clear case for the reform of the present English rule”
and their recommendations formed the basis of the
Foreign Limitation Periods Act 1984.
The general principle of the 1984 Act abandons the
common law approach which favoured the application
of the domestic law of limitation. Instead, the English
court is to apply the law which governs the substantive
issue according to English choice of law rules, and this
new approach is applied to both actions and
arbitrations in England. In the case of those few tort
claims, such as defamation, to which the common law
choice of law rules still apply, English law, as the law
of the forum, will remain relevant because of the choice
of law rule which requires actionability both by the law
of the forum and by the law of the place of the tort. The
corollary of the main rule is that English law is no
longer automatically to be applied. There is, of course,
a significant difference between a rule under which a
claim is to be held to be statute barred in England if
statute barred under the governing law, a reform which
22
seems widely to be welcomed, and a further rule that,
if the claim is not statute barred abroad, it must be
allowed to proceed in England.”
31.The old position under common law was that limitation was
treated as a procedural law. In countries following civil
jurisdiction, the law of limitation has never been treated as a
procedural law but as a substantive law. In recent years, almost
all the common law countries have either brought a new
legislation or by judicial decisions have now taken the view that
the law of limitation cannot be treated as a purely procedural
law. We may make reference to the law in the United Kingdom
and the United States of America.
32.Section 1 of the Foreign Limitation Periods Act, 1984 as
applicable to the United Kingdom reads as follows:
“Application of foreign limitation law.
1. – (1) Subject to the following provisions of this Act,
where in any action or proceedings in a court in
England and Wales the law of any other country falls
(in accordance with rules of private international law
applicable by any such court) to be taken into account
in the determination of any matter—
(a) the law of that other country relating to
limitation shall apply in respect of that matter for
the purposes of the action or proceedings, subject
to sections 1A and 1B; and
23
(b) except where that matter falls within subsection
(2) below, the law of England and Wales relating to
limitation shall not so apply.
(2) A matter falls within this subsection if it is a matter
in the determination of which both the law of England
and Wales and the law of some other country fall to be
taken into account.
(3) The law of England and Wales shall determine for
the purposes of any law applicable by virtue of
subsection (1)(a) above whether, and the time at which,
proceedings have been commenced in respect of any
matter; and, accordingly, section 35 of the Limitation
Act 1980 (new claims in pending proceedings) shall
apply in relation to time limits applicable by virtue of
subsection (1)(a) above as it applies in relation to time
limits under that Act.
(4) A court in England and Wales, in exercising in
pursuance of subsection (1)(a) above any discretion
conferred by the law of any other country, shall so far
as practicable exercise that discretion in the manner in
which it is exercised in comparable cases by the courts
of that other country.
(5) In this section “law”, in relation to any country,
shall not include rules of private international law
applicable by the courts of that country or, in the case
of England and Wales, this Act.”
Several States in the United States of America have adopted the
Uniform Conflict of Laws Limitation Act, 1982 evolved by the
National Conference of Commissioners on Uniform State Laws.
Sections 2 and 3 of this Act read as follows:
“Section 2: (a) Except as provided by sec 4, if a claim is
substantively based:
(1) upon the law of one other state, the limitation
period of that state applies; or
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(2) upon the law of more than one state, the
limitation period of one of those states chosen by
the law of conflicts of laws of this State, applies.
(b) The limitation period of this State applies to all
other claims.”
“Section 3: If the statute of limitations of another state
applies to the assertion of a claim in this State, the
other States’ relevant statutes and other rules of law
governing tolling and accrual apply in computing the
limitation period, but its statutes and other rules of
law governing conflict of laws do not apply.”
33.The view worldwide appears to be that the limitation law of
the cause country should be applied even in the forum country.
Furthermore, we are of the view that in those cases where the
remedy stands extinguished in the cause country it virtually
extinguishes the right of the decreeholder to execute the decree
and creates a corresponding right in the judgment debtor to
challenge the execution of the decree. These are substantive
rights and cannot be termed to be procedural. 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.
34.We have already clearly indicated that if the law of a forum
country is silent with regard to the limitation prescribed for
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execution of a foreign decree then the limitation of the cause
country would apply.
35.We answer question no. 2 by holding that the limitation
period for executing a decree passed by a foreign court (from
reciprocating country) in India will be the limitation prescribed in
the reciprocating foreign country. Obviously this will be subject to
the decree being executable in terms of Section 13 of the CPC.
Question No. 3
36.Coming to the third question, as far as Article 136 of the Act
is concerned, we are of the view that the same only deals with
decrees passed by Indian courts. The Limitation Act has been
framed mainly keeping in view the suits, appeals and applications
to be filed in Indian courts and wherever the need was felt to deal
with something outside India, the Limitation Act specifically deals
with that situation. We may refer to Article 39 of the Act which
specifically deals with dishonoured foreign bills. Article 101 of
the Act deals with suits filed upon a judgment including a foreign
judgment. The framers of the Act specifically mentioned
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‘including a foreign judgment’ in Article 101 of this very Schedule
which is part of the Act.
37.When dealing with the applications for execution of decrees
the law makers could have easily said ‘including foreign decrees’.
This having not been said, it appears that the intention of the
legislature was that Article 136 would be confined to decrees of
Indian courts. Furthermore, Article 136 clearly states that the
decree or order should be of a civil court. A civil court, as defined
in India, may not be the same as in a foreign jurisdiction. We
must also note the fact that the new Limitation Act was enacted
in 1963 and presumably the law makers were aware of the
provisions of Section 44A of the CPC. When they kept silent on
this aspect, the only inference that can be drawn is that Article
136 only deals with decrees passed by Indian civil courts.
38.Having said so, we are clearly of the view that some
clarification needs to be given with regard to the period in which
an application under Section 44A can be filed. In this regard,
when we read subsection (1) and subsection (2) of Section 44A
together it is obvious that what is required to be filed is a certified
copy of the decree in terms of subsection (1) and also a certificate
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from the court in the cause country stating the extent, if any, to
which the decree has been satisfied or adjusted. These are the
twin requirements and no foreign decree can be executed unless
both the requirements are met. It is essential to file not only a
certified copy of the decree but also the certificate in terms of
subsection (2). That, however, does not mean that nothing else
has to be filed. The only inference is that the decree can be
executed only once these documents are filed. The executing
court cannot execute this decree and certificate unless the decree
holder also provides various details of the judgment debtor that
is, his address, etc. in India and the details of the property of the
judgment debtor. These particulars will have to be provided by a
written application filed in terms of clause (2) of Rule 11 of Order
21 of the CPC which reads as follows:
(2)Written application. – Save as otherwise
provided by subrule (1), every application for the
execution of a decree shall be in writing, signed and
verified 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;
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(e) whether any, and (if any) what, payment or other
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 crossdecree, 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.
39.Therefore, a party filing a petition for execution of a foreign
decree must also necessarily file a written application in terms of
Order 21 Rule 11 clause (2) quoted hereinabove. Without such
an application it will be impossible for the Court to execute the
decree. In our opinion, therefore, this application for executing a
foreign decree will be an application not covered under any other
article of the Limitation Act and would thus be covered under
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Article 137 of the Limitation Act and the applicable limitation
would be 3 years.
40.The question that then arises is that from which date the
limitation starts. We can envisage of 2 situations only. The first
situation is one where the decree holder does not take any steps
for execution of the decree during the period of limitation
prescribed in the cause country for execution of decrees in that
country. In such a case he has lost his right to execute the
decree in the country where the cause of action arose. It would
be a travesty of justice if the person having lost his rights to
execute the decree in the cause country is permitted to execute
the decree in a forum country. This would be against the principle
which we have accepted, that the law of limitation is not merely a
procedural law. This would mean that a person who has lost
his/her right or remedy to execute the foreign decree in the court
where the decree was passed could take benefit of the provisions
of the Indian law for extending the period of limitation. In the
facts of the present case, the limitation in India is 12 years for
executing a money decree whereas in England it is 6 years. There
30
may be countries where the limitation for executing such a decree
may be more than 12 years. The right of the litigant in the latter
situation would not come to an end at 12 years and it would
abide by the law of limitation of the cause country which passed
the decree. Hence, 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.
41.The second situation is when a decree holder takes stepsin
aid to execute the decree in the cause country. The proceedings
in execution may go on for some time, and the decree may be
executed, satisfied partly but not fully. The judgment debtor may
not have sufficient property or funds in the cause country to
satisfy the decree etc. In such eventuality what would be done?
In our considered view, in such circumstances the right to apply
31
under Section 44A will accrue only after the execution
proceedings in the cause country are finalised and the application
under Section 44A of the CPC can be filed within 3 years of the
finalisation of the execution proceedings in the cause country as
prescribed by Article 137 of the Act. The decree holder must
approach the Indian court along with the certified copy of the
decree and the requisite certificate within this period of 3 years.
42.It is clarified that applying in the cause country for a
certified copy of the decree or the certificate of partsatisfaction, if
any, of the decree, as required by Section 44A will not
tantamount to stepinaid to execute the decree in the cause
country.
43.We answer the third question accordingly and hold that the
period of limitation would start running from the date the decree
was passed in the foreign court of a reciprocating country.
However, if the decree holder first takes stepsinaid to execute
the decree in the cause country, and the decree is not fully
satisfied, then he can then file a petition for execution in India
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within a period of 3 years from the finalisation of the execution
proceedings in the cause country.
44.In view of the discussion above we dismiss the appeal and
uphold the orders of both the Courts below, though for different
reasons. No order as to costs. Pending applications(s), if any,
shall stand(s) disposed of.
………………………… ..J.
(Deepak Gupta)
………………………… ..J.
(Aniruddha Bose)
New Delhi
March 17, 2020
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