Limitation Period For Executing A Decree Passed By A Foreign Court Will Be The Limitation Prescribed In The Reciprocating Foreign Country: SC [Read Judgment]

The Supreme Court has held 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 bench of Justices Deepak Gupta and Aniruddha Bose held 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 within a period of 3 years from the finalisation of the execution proceedings in the cause country, the bench said.

In an appeal filed by Bank of Baroda, the following questions was considered by the Apex Court

(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?

The Limitation Act does not prescribe any period of limitation for execution of a foreign decree passed in a reciprocating country. The crux of the submission made by Attorney General was that 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. The Court rejected this submission and observed:

"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"

Answering the first question, the bench held that 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.

While answering the other questions, the bench made the following observations:

Article 136 only deals with decrees passed by Indian civil courts

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 'including a foreign judgment' in Article 101 of this very Schedule which is part of the Act.. 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.

Law of limitation is not merely a procedural law

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 decree holder 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.

Written application in terms of Order 21 Rule 11(2) Necessary

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. 

Application for executing a foreign decree covered under Article 137

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.

Situation 1: 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 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.

Situation 2: When a decree holder takes steps ­in 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 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.

The Court clarified that applying in the cause country for a certified copy of the decree or the certificate of part­ satisfaction, if any, of the decree, as required by Section 44A will not tantamount to step­in­aid to execute the decree in the cause country.

Case name: BANK OF BARODA vs. KOTAK MAHINDRA BANK
Case no.: CIVIL APPEAL NO.2175 OF 2020  
Coram: Justices Deepak Gupta and Aniruddha Bose
Counsel: AG Sr. Adv K. K. Venugopal, Sr. Adv V.V.S. Rao

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