If the law of a forum country is silent with regard to the limitation prescribed for execution of a foreign decree then the limitation of the cause country would apply: SC
A Supreme Court Bench of Justices Deepak Gupta and Anirudha Bose held that under Section 44A of the Code of Civil Procedure, 1908 (CPC), 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.The Supreme Court was hearing a petition by Bank of Baroda (appellant) against...
A Supreme Court Bench of Justices Deepak Gupta and Anirudha Bose held that under Section 44A of the Code of Civil Procedure, 1908 (CPC), 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.
The Supreme Court was hearing a petition by Bank of Baroda (appellant) against Vysya Bank, (the pre-decessor of Kotak Mahindra Bank). Bank of Baroda filed a suit against the Vysya Bank for recovery of its dues in 1993 in London. This suit was decreed by the High Court of Justice, Queens Bench, Divisional Commercial Court of London (the ‘London Court’) in 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.
In 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 CPC for recovery of the amount. This execution petition was contested on the ground that the same had not been filed within the period of limitation.
The trial court and the High Court dismissed the petition of the appellant. The appellant Bank appealed before the Supreme Court.
There were 3 issues for consideration before the Supreme Court which are as follows:
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?
In relation to the first question, the Apex Court ruled that Section 44A of the CPC empowers the District Court to execute the foreign decree as if it had been passed by the said District Court 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.
The Court observed, “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.”
The Court further ruled that if the law of a forum country [the country in which the decree is sought to be executed (in this case India)] is silent with regard to the limitation prescribed for execution of a foreign decree then the limitation of the cause country [the country in which the decree was issued (in this case England)] would apply.
The Court answered the second question 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.
The Court finally held that a party filing a petition for execution of a foreign decree must necessarily file a written application in terms of Order 21 Rule 11 clause (2). Without such an application it will be impossible for the Court to execute the decree. The Court further held that such application for executing a foreign decree will be an application covered under Article 137 of the Limitation Act and the applicable limitation would be 3 years.
In response to the third question, the Court held that the period of limitation would start running from the date when 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 (England), and the decree is not fully satisfied, then he can then file a petition for execution in India within a period of 3 years from the finalisation of the execution proceedings in the cause country.
The Supreme Court thus dismissed the petition of Bank of Baroda thereby upholding the orders of the Courts below.