SC on limitation period for executing a decree passed by a foreign court

The Hon’ble Supreme Court, on 17th March 2020, in the matter of Bank Of Baroda v. Kotak Mahindra Bank Ltd. pronounced 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. However, if the decree holder first takes steps ­in ­aid to execute the decree in the country in which the decree was issued, 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 country in which the decree was issued.

Question before the Hon’ble Supreme Court

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?

Court’s observation(s)

The Limitation Act, 1963 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. (Para 13)

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, must be filed within the prescribed period of limitation. (Para 13)

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. (Para 15)

Filing of an application under Section 44A will not create a fresh period for enforcing the decree. (Para 15)

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. Section 44A has nothing to do with limitation. (Para 19)

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. (Para 21)

Question before the Hon’ble Supreme Court

What is the period of limitation for executing a decree passed by a foreign court (from a reciprocating country) in India?

Court’s observation(s)

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. (Para 31)

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. (Para 33)

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. (Para 35)

Question before the Hon’ble Supreme Court

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?

Court’s observation(s)

As far as Article 136 of The Limitation Act, 1963, the same only deals with decrees passed by Indian courts. (Para 36)

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. (Para 37)

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). 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 Article 137 of the Limitation Act and the applicable limitation would be 3 years. (Para 39)

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 steps ­in ­aid to execute the decree in the country in which the decree was issued, 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 country in which the decree was issued. (Para 43)

Copy of judgement: Judgement_17-Mar-2020

-Adv. Tushar Kaushik 

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